-----------------------------------
AMENDED AND RESTATED DECLARATION OF TRUST
TDS CAPITAL I
Dated as of November 18, 1997
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TABLE OF CONTENTS
ARTICLE I
INTERPRETATION AND DEFINITIONS . . . . . . . . . . . . . . . 1
SECTION 1.1. DEFINITIONS . . . . . . . . . . . . . . . . . 1
ARTICLE II
TRUST INDENTURE ACT. . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.1. TRUST INDENTURE ACT; APPLICATION. . . . . . . 11
SECTION 2.2. LISTS OF HOLDERS OF SECURITIES. . . . . . . . 11
SECTION 2.3. REPORTS BY THE PROPERTY TRUSTEE . . . . . . . 12
SECTION 2.4. PERIODIC REPORTS TO PROPERTY TRUSTEE. . . . . 12
SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS
PRECEDENT. . . . . . . . . . . . . . . . . . 12
SECTION 2.6. EVENTS OF DEFAULT; WAIVER . . . . . . . . . . 12
SECTION 2.7. EVENTS OF DEFAULT; NOTICE . . . . . . . . . . 14
ARTICLE III
ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.1. NAME. . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.2. OFFICE. . . . . . . . . . . . . . . . . . . . 15
SECTION 3.3. PURPOSE . . . . . . . . . . . . . . . . . . . 15
SECTION 3.4. AUTHORITY . . . . . . . . . . . . . . . . . . 15
SECTION 3.5. TITLE TO PROPERTY OF THE TRUST. . . . . . . . 15
SECTION 3.6. POWERS AND DUTIES OF THE REGULAR TRUSTEES . . 15
SECTION 3.7. PROHIBITION OF ACTIONS BY THE TRUST
AND THE TRUSTEES. . . . . . . . . . . . . . 19
SECTION 3.8. POWERS AND DUTIES OF THE PROPERTY TRUSTEE . . 19
SECTION 3.9. CERTAIN DUTIES AND RESPONSIBILITIES
OF THE PROPERTY TRUSTEE . . . . . . . . . . 21
SECTION 3.10. CERTAIN RIGHTS OF PROPERTY TRUSTEE. . . . . . 23
SECTION 3.11. DELAWARE TRUSTEE. . . . . . . . . . . . . . . 26
SECTION 3.12. EXECUTION OF DOCUMENTS. . . . . . . . . . . . 26
SECTION 3.13. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE
OF SECURITIES . . . . . . . . . . . . . . . 26
SECTION 3.14. DURATION OF TRUST . . . . . . . . . . . . . . 26
SECTION 3.15. MERGERS . . . . . . . . . . . . . . . . . . . 26
ARTICLE IV
SPONSOR. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.1. SPONSOR'S PURCHASE OF COMMON SECURITIES . . . 28
SECTION 4.2. RESPONSIBILITIES OF THE SPONSOR . . . . . . . 28
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ARTICLE V
TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.1. NUMBER OF TRUSTEES. . . . . . . . . . . . . . 29
SECTION 5.2. DELAWARE TRUSTEE. . . . . . . . . . . . . . . 29
SECTION 5.3. PROPERTY TRUSTEE; ELIGIBILITY . . . . . . . . 30
SECTION 5.4. QUALIFICATIONS OF REGULAR TRUSTEES AND
DELAWARE TRUSTEE GENERALLY. . . . . . . . . 30
SECTION 5.5. INITIAL TRUSTEES. . . . . . . . . . . . . . . 31
SECTION 5.6. APPOINTMENT, REMOVAL AND RESIGNATION OF
TRUSTEES. . . . . . . . . . . . . . . . . . 31
SECTION 5.7. VACANCIES AMONG TRUSTEES. . . . . . . . . . . 33
SECTION 5.8. EFFECT OF VACANCIES . . . . . . . . . . . . . 33
SECTION 5.9. MEETINGS. . . . . . . . . . . . . . . . . . . 33
SECTION 5.10. DELEGATION OF POWER . . . . . . . . . . . . . 34
ARTICLE VI
DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.1. DISTRIBUTIONS. . . . . . . . . . . . . . . . . 34
ARTICLE VII
ISSUANCE OF SECURITIES . . . . . . . . . . . . . . . . . . . 34
SECTION 7.1. GENERAL PROVISIONS REGARDING SECURITIES. . . . 34
ARTICLE VIII
TERMINATION OF TRUST . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.1. TERMINATION OF TRUST . . . . . . . . . . . . . 35
ARTICLE IX
TRANSFER OF INTERESTS. . . . . . . . . . . . . . . . . . . . 36
SECTION 9.1. TRANSFER OF SECURITIES . . . . . . . . . . . . 36
SECTION 9.2. TRANSFER OF CERTIFICATES . . . . . . . . . . . 37
SECTION 9.3. DEEMED SECURITY HOLDERS. . . . . . . . . . . . 37
SECTION 9.4. BOOK ENTRY INTERESTS . . . . . . . . . . . . . 38
SECTION 9.5. NOTICES TO CLEARING AGENCY . . . . . . . . . . 39
SECTION 9.6. APPOINTMENT OF SUCCESSOR CLEARING AGENCY . . . 39
SECTION 9.7. DEFINITIVE PREFERRED SECURITY CERTIFICATES . . 39
SECTION 9.8. MUTILATED, DESTROYED, LOST OR
STOLEN CERTIFICATES . . . . . . . . . . . . 40
ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF
SECURITIES, TRUSTEES OR OTHERS . . . . . . . . . . . . . . . 41
SECTION 10.1. LIABILITY . . . . . . . . . . . . . . . . . . 41
SECTION 10.2. EXCULPATION . . . . . . . . . . . . . . . . . 41
SECTION 10.3. FIDUCIARY DUTY. . . . . . . . . . . . . . . . 42
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SECTION 10.4. INDEMNIFICATION . . . . . . . . . . . . . . . 43
SECTION 10.5. OUTSIDE BUSINESSES. . . . . . . . . . . . . . 43
ARTICLE XI
ACCOUNTING . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 11.1. FISCAL YEAR . . . . . . . . . . . . . . . . . 44
SECTION 11.2. CERTAIN ACCOUNTING MATTERS. . . . . . . . . . 44
SECTION 11.3. BANKING . . . . . . . . . . . . . . . . . . . 45
SECTION 11.4. WITHHOLDING . . . . . . . . . . . . . . . . . 45
ARTICLE XII
AMENDMENTS AND MEETINGS. . . . . . . . . . . . . . . . . . . 45
SECTION 12.1. AMENDMENTS. . . . . . . . . . . . . . . . . . 45
SECTION 12.2. MEETINGS OF THE HOLDERS OF SECURITIES;
ACTION BY WRITTEN CONSENT . . . . . . . . . 47
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE . . 49
SECTION 13.1. REPRESENTATIONS AND WARRANTIES OF
PROPERTY TRUSTEE. . . . . . . . . . . . . . 49
SECTION 13.2. REPRESENTATIONS AND WARRANTIES OF
DELAWARE TRUSTEE. . . . . . . . . . . . . . 50
ARTICLE XIV
SUCCESSOR CORPORATION. . . . . . . . . . . . . . . . . . . . 50
SECTION 14.1. SPONSOR MAY CONSOLIDATE, ETC. . . . . . . . . 50
SECTION 14.2. SUCCESSOR PERSON SUBSTITUTED. . . . . . . . . 52
SECTION 14.3. EVIDENCE OF CONSOLIDATION, ETC. TO
PROPERTY TRUSTEE. . . . . . . . . . . . . . 52
ARTICLE XV
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 15.1. NOTICES . . . . . . . . . . . . . . . . . . . 53
SECTION 15.2. GOVERNING LAW . . . . . . . . . . . . . . . . 54
SECTION 15.3. INTENTION OF THE PARTIES. . . . . . . . . . . 54
SECTION 15.4. HEADINGS. . . . . . . . . . . . . . . . . . . 54
SECTION 15.5. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . 54
SECTION 15.6. PARTIAL ENFORCEABILITY. . . . . . . . . . . . 55
SECTION 15.7. COUNTERPARTS. . . . . . . . . . . . . . . . . 55
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CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
-------------------- -----------
310(a) 5.3(a)
310(b) 5.3(c)
310(c) Inapplicable
311(c) Inapplicable
312(a) 2.2(a)
312(b) 2.2(b)
313 2.3
314(a) 2.4
314(b) Inapplicable
314(c) 2.5
314(d) Inapplicable
314(f) Inapplicable
315(a) 3.9(b)
315(b) 2.8
315(c) 3.9(a)
315(d) 3.9(a)
316(a) Exhibit A, 2.6
316(c) 3.6(e)
* This Cross-Reference Table does not constitute part of the
Declaration and shall not affect the interpretation of any of
its terms or provisions.
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EXHIBIT A
TERMS OF SECURITIES
EXHIBIT B
PREFERRED SECURITIES GUARANTEE
EXHIBIT C
UNDERWRITING AGREEMENT
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AMENDED AND RESTATED DECLARATION OF TRUST
OF
TDS CAPITAL I
THIS AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration"),
dated and effective as of November 18, 1997, by the Trustees (as defined
herein), the Sponsor (as defined herein), and by the holders, from time to
time, of undivided beneficial interests in the Trust to be issued pursuant to
this Declaration;
W I T N E S S E T H:
WHEREAS, certain of the Trustees and the Sponsor have heretofore
established a trust (the "Trust") under the Business Trust Act (as defined
herein) pursuant to a Declaration of Trust dated October 15, 1997 (the
"Original Declaration") for the sole purpose of issuing and selling certain
securities representing undivided beneficial interests in the assets of the
Trust and investing the proceeds thereof in certain Subordinated Debentures
of the Subordinated Debenture Issuer;
WHEREAS, the parties hereto, by this Declaration, amend and restate
each and every term and provision of the Original Declaration;
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1. DEFINITIONS. Capitalized terms used in this
Declaration but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1. A term defined anywhere in
this Declaration has the same meaning throughout. A term defined in the
Trust Indenture Act has the same meaning when used in this Declaration unless
otherwise defined in this Declaration or unless the context otherwise
requires.
AFFILIATE:
The term "Affiliate" has the same meaning as given to that term in
Rule 405 of the Securities Act or any successor rule thereunder.
AUTHORIZED OFFICER:
The term "Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
BOOK ENTRY INTEREST:
The term "Book Entry Interest" means a beneficial interest in a
Global Certificate, ownership and transfers of which shall be maintained and
made through book entries by a Clearing Agency as described in Section 9.4.
BUSINESS DAY:
The term "Business Day" means any day other than a day on which
banking institutions in Chicago, Illinois or New York, New York are
authorized or required by law to close.
BUSINESS TRUST ACT:
The term "Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. Section 3801 ET SEQ., as it may be amended from time
to time.
CERTIFICATE:
The term "Certificate" means a Common Security Certificate or a
Preferred Security Certificate.
CLEARING AGENCY:
The term "Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting
as depository for the Preferred Securities and in whose name, or in the name
of a nominee of that organization, shall be registered a Global Certificate
and which shall undertake to effect book entry transfers and pledges of the
Preferred Securities.
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CLEARING AGENCY PARTICIPANT:
The term "Clearing Agency Participant" means a broker, dealer,
bank, other financial institution or other Person for whom, from time to
time, the Clearing Agency effects book entry transfers and pledges of
securities deposited with the Clearing Agency.
CLOSING DATE:
The term "Closing Date" means November 18, 1997.
CODE:
The term "Code" means the Internal Revenue Code of 1986.
COMMON SECURITY:
The term "Common Security" has the meaning specified in Section 7.1.
COMMON SECURITY CERTIFICATE:
The term "Common Security Certificate" means a definitive
certificate in fully registered form representing a Common Security
substantially in the form of Annex II to Exhibit A.
COVERED PERSON:
The term "Covered Person" means:
(a) any officer, director, shareholder, partner, member,
representative, employee or agent of:
(i) the Trust; or
(ii) the Trust's Affiliates; and
(b) any Holder of Securities.
DEBENTURE ISSUER:
The term "Debenture Issuer" means TDS, in its capacity as the issuer
of the Subordinated Debentures.
DEBENTURE TRUSTEE:
The term "Debenture Trustee" means The First National Bank of
Chicago, as trustee under the Indenture, until a successor
3
is appointed thereunder and thereafter means such successor trustee.
DELAWARE TRUSTEE:
The term "Delaware Trustee" has the meaning set forth in Section 5.2.
DEFINITIVE PREFERRED SECURITY CERTIFICATES:
The term "Definitive Preferred Security Certificates" has the meaning
set forth in Section 9.4.
DIRECTION:
The term "Direction" by a Person means a written direction signed:
(a) if the Person is a natural person, by that Person; or
(b) in any other case, in the name of such Person by one
or more Authorized Officers of that Person.
DISTRIBUTION:
The term "Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
DTC:
The term "DTC" means The Depository Trust Company, the initial
Clearing Agency.
EVENT OF DEFAULT:
The term "Event of Default" in respect of the Securities means an
Indenture Default has occurred and is continuing in respect of the Subordinated
Debentures.
EXCHANGE ACT:
The term "Exchange Act" means the Securities Exchange Act of 1934.
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GLOBAL CERTIFICATE:
The term "Global Certificate" has the meaning set forth in Section
9.4.
HOLDER:
The term "Holder" means the Person in whose name a Certificate
representing a Security is registered, such Person being a beneficial owner
within the meaning of the Business Trust Act; provided, however, that in
determining whether Holders of the requisite liquidation amount of Preferred
Securities have voted on any matter provided for in this Declaration, then
for the purpose of such determination only (and not for any other purpose
hereunder), if the Preferred Securities remain in the form of one or more
Global Certificates, the term "Holder" shall mean the holder of the Global
Certificate acting at the direction of the Preferred Security Beneficial
Owners.
INDEMNIFIED PERSON:
The term "Indemnified Person" means any Trustee, any Affiliate of
any Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Trustee, or any employee or agent
of the Trust or its Affiliates.
INDENTURE:
The term "Indenture" means the Indenture dated as of October 15,
1997 between the Debenture Issuer and the Debenture Trustee, and any
amendment thereto and any indenture supplemental thereto pursuant to which
the Subordinated Debentures are to be issued.
INDENTURE DEFAULT:
The term "Indenture Default" means an "Event of Default" as such
term is defined in the Indenture.
INVESTMENT COMPANY:
The term "Investment Company" means an investment company as
defined in the Investment Company Act.
INVESTMENT COMPANY ACT:
The term "Investment Company Act" means the Investment Company Act of
1940.
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LEGAL ACTION:
The term "Legal Action" has the meaning set forth in Section 3.6(g).
MAJORITY IN LIQUIDATION AMOUNT OF THE SECURITIES:
The term "Majority in liquidation amount of the Securities" means,
except as provided in the terms of the Preferred Securities or the Trust
Indenture Act, Holder(s) of outstanding Securities voting together as a
single class or, as the context may require, Holder(s) of outstanding
Preferred Securities or outstanding Common Securities voting separately as a
class, representing more than 50% of the aggregate stated liquidation amount
(in cluding the stated amount that would be paid on redemption, liquidation
or maturity, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities of such
class.
OFFICER'S CERTIFICATE:
The term "Officer's Certificate" means, with respect to any Person,
a certificate signed by an Authorized Officer of such Person. Any Officer's
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each such officer signing the
Certificate has read the covenant or condition and the definition(s)
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each such officer in
rendering the Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
6
PAYING AGENT:
The term "Paying Agent" has the meaning specified in Section 3.8(h).
PERSON:
The term "Person" means any individual, corporation, partnership,
limited liability company, joint venture, joint stock company, unincorporated
association or government or any agency or political subdivision thereof, or
any other entity of whatever nature.
PREFERRED SECURITIES GUARANTEE:
The term "Preferred Securities Guarantee" means the Preferred
Securities Guarantee Agreement to be dated as of November 18, 1997 of the
Sponsor in respect of the Preferred Securities in the form of Exhibit B.
PREFERRED SECURITY:
The term "Preferred Security" has the meaning specified in Section
7.1.
PREFERRED SECURITY BENEFICIAL OWNER:
The term "Preferred Security Beneficial Owner" means, with respect
to a Book Entry Interest, a Person who is the beneficial owner of such Book
Entry Interest, as reflected on the books of the Clearing Agency, or on the
books of a Person maintaining an account with such Clearing Agency (directly
as a Clearing Agency Participant or as an indirect participant, in each case
in accordance with the rules of such Clearing Agency).
PREFERRED SECURITY CERTIFICATE:
The term "Preferred Security Certificate" means a certificate
representing a Preferred Security substantially in the form of Annex I to
Exhibit A.
PROPERTY TRUSTEE:
The term "Property Trustee" means the Trustee meeting the
eligibility requirements set forth in Section 5.3.
7
PROPERTY TRUSTEE ACCOUNT:
The term "Property Trustee Account" has the meaning set forth in
Section 3.8(c)(i).
QUORUM:
The term "Quorum" means a majority of the Regular Trustees or, if
there are only two Regular Trustees, both of them.
REGULAR TRUSTEE:
The term "Regular Trustee" means any Trustee other than the
Property Trustee and the Delaware Trustee.
RELATED PARTY:
The term "Related Party" means, with respect to the Sponsor, any
direct or indirect wholly owned subsidiary of the Sponsor or any other Person
which owns, directly or indirectly, 100% of the outstanding voting securities
of the Sponsor.
RESPONSIBLE OFFICER:
The term "Responsible Officer", when used with respect to the
Property Trustee, means the chairman of the board of directors, the
President, any Vice President, the Secretary, the Treasurer, any trust
officer or any corporate trust officer or any other officer or assistant
officer of the Property Trustee customarily performing functions similar to
those performed by any of the persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of
that officer's knowledge of and familiarity with the particular subject.
RULE 3A-5:
The term "Rule 3a-5" means Rule 3a-5 under the Investment Company
Act.
SECURITIES:
The term "Securities" mean the Common Securities and the Preferred
Securities.
SECURITIES ACT:
The term "Securities Act" means the Securities Act of 1933, as
amended.
8
66-2/3% IN LIQUIDATION AMOUNT OF THE SECURITIES:
The term "66-2/3% in liquidation amount of the Securities" means,
except as provided in the terms of the Preferred Securities or the Trust
Indenture Act, Holder(s) of outstanding Securities voting together as a
single class or, as the context may require, Holder(s) of outstanding
Preferred Securities or outstanding Common Securities, voting separately as a
class, representing 66-2/3% of the aggregate stated liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
maturity, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities of such
class.
SPONSOR:
The term "Sponsor" means TDS, in its capacity as sponsor of the
Trust, and its successor or successors by merger, consolidation or purchase
of all or substantially all of its assets.
SUBORDINATED DEBENTURES:
The term "Subordinated Debentures" means the series of Subordinated
Debentures to be issued by the Debenture Issuer under the Indenture to the
Property Trustee for the benefit of the Trust and the Holders.
SUCCESSOR PROPERTY TRUSTEE:
The term "Successor Property Trustee" means a successor Trustee
possessing the qualifications to act as Property Trustee under Section 5.3(a).
10% IN LIQUIDATION AMOUNT OF THE SECURITIES:
The term "10% in liquidation amount of the Securities" means,
except as provided in the terms of the Preferred Securities or the Trust
Indenture Act, Holder(s) of outstanding Securities voting together as a
single class or, as the context may require, Holder(s) of outstanding
Preferred Securities or outstanding Common Securities, voting separately as a
class, representing 10% of the aggregate stated liquidation amount (including
the stated amount that would be paid on redemption, liquidation or maturity,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of such class.
9
TDS:
The term "TDS" means Telephone and Data Systems, Inc., an Iowa
corporation, or any successor entity in a merger or consolidation.
TAX EVENT:
The term "Tax Event" means a "Tax Event" as defined in the Indenture.
TREASURY REGULATIONS:
The term "Treasury Regulations" means the income tax regulations
including temporary and proposed regulations, promulgated under the Code by
the United States Treasury Department, as amended.
TRUSTEE OR TRUSTEES:
The terms "Trustee" or "Trustees" means each Person who has signed
this Declaration as a trustee, so long as such Person shall continue in
office in accordance with the terms hereof, and all other Persons who may
from time to time be duly appointed, qualified and serving as Trustees in
accordance with the provisions hereof, and references herein to a Trustee or
the Trustees shall refer to such Person or Persons solely in their capacity
as trustees hereunder.
TRUST INDENTURE ACT:
The term "Trust Indenture Act" means the Trust Indenture Act of 1939.
UNDERWRITING AGREEMENT:
The term "Underwriting Agreement" means the Underwriting Agreement
for the offering and sale of Preferred Securities in the form of Exhibit C.
SECTION 1.2. INTERPRETATION. Each definition in this Declaration
includes the singular and the plural, and references to the neuter gender
include the masculine and feminine where appropriate. Terms which relate to
accounting matters shall be interpreted in accordance with generally accepted
accounting principles in effect from time to time. References to any statute
mean such statute as amended at the time and include any successor
legislation. The word "or" is not exclusive, and the words
10
"herein," "hereof" and "hereunder" refer to this Declaration as a whole. The
headings to the Articles and Sections are for convenience of reference and
shall not affect the meaning or interpretation of this Declaration.
References to Articles, Sections, Annexes and Schedules mean the Articles,
Sections, Annexes and Schedules of this Declaration. The Annexes, if any,
and Schedules are hereby incorporated by reference into and shall be deemed a
part of this Declaration.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. TRUST INDENTURE ACT; APPLICATION. (a) This
Declaration is subject to the provisions of the Trust Indenture Act that are
required to be part of this Declaration and shall, to the extent applicable,
be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
trustee for the purposes of the Trust Indenture Act. If and to the extent
that any provision of this Declaration limits, qualifies or conflicts with
the duties imposed by sections 310 to 317, inclusive, of the Trust Indenture
Act, such imposed duties shall control.
(c) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2. LISTS OF HOLDERS OF SECURITIES. (a) Each of the
Sponsor and the Regular Trustee(s) on behalf of the Trust shall provide the
Property Trustee (i) within fourteen (14) days after each record date for
payment of Distributions a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Holders of the
Securities ("List of Holders") as of such record date, PROVIDED that none of
the Sponsor or the Regular Trustees on behalf of the Trust shall be obligated
to provide such List of Holders at any time the List of Holders does not
differ from the most recent List of Holders given to the Property Trustee by
the Sponsor and the Regular Trustees on behalf of the Trust, and (ii) at any
other time, within thirty (30) days of receipt by the Trust of a written
request for a List of Holders as of a date no more than fourteen (14) days
before such List of Holders is given to the Property Trustee. The Property
Trustee shall preserve, in as current a form as is reasonably practicable,
all information contained in Lists of Holders given to it or which it
receives in its capacity as Paying Agent (if acting in such
11
capacity) PROVIDED that the Property Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3. REPORTS BY THE PROPERTY TRUSTEE. Within 60 days
after May 15 of each year, the Property Trustee shall provide to the Holders
of the Preferred Securities such reports, if any, as are required by Section
313 of the Trust Indenture Act, in the form and in the manner and to the
Person or Persons provided by section 313 of the Trust Indenture Act.
SECTION 2.4. PERIODIC REPORTS TO PROPERTY TRUSTEE. Each of the
Sponsor and the Regular Trustees on behalf of the Trust shall provide to the
Property Trustee such documents, reports and information as required by
section 314 (if any) and the compliance certificate as required by section
314 of the Trust Indenture Act.
SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall
provide to the Property Trustee such evidence of compliance with the
conditions precedent, if any, provided for in this Declaration which relate
to any of the matters set forth in section 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given by an officer pursuant to
section 314(c)(1) may be given in the form of an Officer's Certificate.
SECTION 2.6. EVENTS OF DEFAULT; WAIVER. (a) The Holders of a
Majority in liquidation amount of Preferred Securities may, by vote, on
behalf of the Holders of all of the Preferred Securities, waive any past
Event of Default in respect of the Preferred Securities and its consequences,
PROVIDED that if the Event of Default:
(i) is not waivable under the Indenture, the Event of Default under
this Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
principal amount of the holders of the Subordinated Debentures (a "Super-
Majority") to be waived under the Indenture, the Event of Default under
this Declaration may only be waived by the vote of the Holders of at least
the proportion in liquidation amount of the Preferred Securities that the
relevant Super Majority represents to the
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aggregate principal amount of the Subordinated Debentures outstanding.
Upon such waiver, any such default shall cease to exist, and any Event of
Default with respect to the Preferred Securities arising therefrom shall be
deemed to have been cured, for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon. Any waiver by the Holders of the
Preferred Securities of an Event of Default with respect to the Preferred
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act,
vote, or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default in respect of the Common
Securities and its consequences, PROVIDED that if the Event of Default:
(i) is not waivable under the Indenture, except where the Holders of
the Common Securities are deemed to have waived such Event of Default
under this Declaration as provided below, the Event of Default under this
Declaration is not waivable; or
(ii) requires the consent or vote of all of the holders of the
Subordinated Debentures to be waived, the Event of Default under this
Declaration may only be waived by the vote of all of the Holders of the
Preferred Securities, PROVIDED that each Holder of Common Securities will
be deemed to have waived any such Event of Default and all Events of
Default with respect to the Common Securities and its consequences until
all Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated and until such Events of Default
have been so cured, waived or otherwise eliminated, the Property Trustee
will be deemed to be acting solely on behalf of the Holders of the
Preferred Securities and only the Holders of the Preferred Securities will
have the right to direct the Property Trustee in accordance with the terms
of the Securities. Subject to the foregoing proviso, upon such waiver,
any such default shall cease to exist, and any Event of Default with
respect to the Common Securities arising therefrom shall be deemed to have
been cured, for every purpose of this Declaration, but no such waiver
shall extend to any subsequent or other default or
13
Event of Default with respect to the Common Securities or impair any right
consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee at the direction of the Holders of the Preferred Securities
constitutes a waiver of the corresponding Event of Default under this
Declaration.
SECTION 2.7. EVENTS OF DEFAULT; NOTICE. (a) The Property Trustee
shall, within 90 days after the occurrence of an Event of Default known to
the Property Trustee, transmit by mail, first class postage prepaid, to the
Holders of the Securities, notices of all defaults with respect to the
Securities known to the Property Trustee, unless such defaults have been
cured before the giving of such notice (the term "defaults", for the purposes
of this Section 2.7(a), is hereby defined as an Event of Default as defined
in the Indenture, not including any periods of grace provided for therein and
irrespective of the giving of any notice provided therein); PROVIDED that,
except for a default in the payment of the principal of (or the premium, if
any) or the interest on any of the Subordinated Debentures or in the payment
of any sinking fund in stallment established for the Subordinated Debentures,
the Property Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee, or a trust committee
of directors and/or Responsible Officers, of the Property Trustee in good
faith determine that the withholding of such notice is in the interests of
the Holders of the Securities.
(b) The Property Trustee shall not be deemed to have knowledge of
any default except:
(i) a default arising under Sections 6.01(a)(1) and 6.01(a)(2) of
the Indenture; or
(ii) any default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer of the Property
Trustee charged with the administration of this Declaration shall have
obtained written notice.
ARTICLE III
ORGANIZATION
SECTION 3.1. NAME. The Trust is named "TDS Capital I", as such
name may be modified from time to time by the Regular Trustees following
written notice to the Holders of Securities.
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The Trust's activities may be conducted under the name of the Trust or any
other name deemed advisable by the Regular Trustees.
SECTION 3.2. OFFICE. The address of the principal office of the
Trust is 30 North LaSalle Street, Chicago Illinois 60602. On ten Business
Days written notice to the Holders of Securities, the Regular Trustees may
designate another principal office.
SECTION 3.3. PURPOSE. The exclusive purposes and functions of the
Trust are (a) to issue and sell Securities and use the proceeds from such
sale to acquire the Subordinated Debentures and (b) except as otherwise
limited herein, to engage in only those other activities necessary or
incidental thereto. The Trust shall not borrow money, issue debt or reinvest
proceeds derived from investments, pledge any of its assets, or otherwise
undertake (or permit to be undertaken) any activity that would cause the
Trust not to be classified for United States federal income tax purposes as a
grantor trust.
SECTION 3.4. AUTHORITY. Subject to the limitations provided in
this Declaration and to the specific duties of the Property Trustee, the
Regular Trustees shall have exclusive and complete authority to carry out the
purposes of the Trust. An action taken by the Regular Trustees in accordance
with their powers shall constitute the act of and serve to bind the Trust,
and an action taken by the Property Trustee in accordance with its powers
shall constitute the act of and serve to bind the Trust. In dealing with a
Trustee or the Trustees acting on behalf of the Trust, no Person shall be
required to inquire into the authority of such Trustee or Trustees to bind
the Trust. Persons dealing with the Trust are entitled to rely conclusively
on the power and authority of a Trustee or the Trustees as set forth in this
Declaration.
SECTION 3.5. TITLE TO PROPERTY OF THE TRUST. Except as provided
in Section 3.8 with respect to the Subordinated Debentures and the Property
Trustee Account or as otherwise provided in this Declaration, legal title to
all assets of the Trust shall be vested in the Trust. The Holders shall not
have legal title to any part of the assets of the Trust, but shall have an
undivided beneficial interest in the assets of the Trust.
SECTION 3.6. POWERS AND DUTIES OF THE REGULAR TRUSTEES. The
Regular Trustees shall have the exclusive power and authority and duty to
cause the Trust to engage in the following activities:
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(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; PROVIDED, HOWEVER, that
the Trust may issue no more than one series of Preferred Securities and no
more than one series of Common Securities, and, PROVIDED FURTHER, there
shall be no interests in the Trust other than the Securities and the
issuance of Securities shall be limited to a one-time, simultaneous
issuance of both Preferred Securities and Common Securities on the Closing
Date;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Securities and Exchange
Commission (the "Commission") the registration statement on Form S-3
prepared by the Sponsor in relation to the Preferred Securities,
including any amendments thereto prepared by the Sponsor;
(ii) execute and file any documents prepared by the
Sponsor, or take any acts as determined by the Sponsor as necessary
in order to qualify or register all or part of the Preferred
Securities in any state in which the Sponsor has determined to
qualify or register such Preferred Securities for sale;
(iii) execute and file an application prepared by the
Sponsor to the American Stock Exchange, Inc. or any other national
stock exchange or the Nasdaq Stock Market's National Market for
listing upon notice of issuance of any Preferred Securities; and
(iv) execute and file with the Commission a registration
statement on Form 8-A prepared by the Sponsor relating to the
registration of the class of Preferred Securities under Section 12(b)
of the Exchange Act, including any amendments thereto prepared by the
Sponsor;
(c) to acquire the Subordinated Debentures with the proceeds of
the sale of the Preferred Securities and the Common Securities;
PROVIDED, HOWEVER, that the Regular Trustees shall cause legal title to
the Subordinated Debentures to be held of record in the name of the
Property Trustee for the benefit of the Trust and the Holders of the
Preferred Securities and the Holders of the Common Securities;
16
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Tax Event, PROVIDED that the Regular
Trustees shall consult with the Sponsor and the Property Trustee before
taking any Ministerial Action in relation to a Tax Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date to be established, including
for the purposes of section 316(c) of the Trust Indenture Act and with
respect to Distributions, voting rights, redemptions and exchanges, and to
issue relevant notices to the Holders of Preferred Securities and the
Holders of Common Securities as to such actions and applicable record
dates;
(f) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless, pursuant to Section 3.8(e), the Property
Trustee has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors
and consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate to the Property Trustee required by
section 314(a)(4) of the Trust Indenture Act, which certificate may be
executed by any Regular Trustee;
(k) to incur expenses which are necessary or incidental to carry out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, transfer agent
for the Securities;
(m) to give prompt written notice to the Holders of the Securities
of any notice received from the Debenture Issuer of its election (i) to
defer payments of interest on the Subordinated Debentures by extending the
interest payment
17
period under the Indenture or (ii) to shorten the scheduled maturity date
on the Subordinated Debentures;
(n) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing;
(o) to take all action which may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of
the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Holders of
the Securities or to enable the Trust to effect the purposes for which the
Trust was created;
(p) to take any action, not inconsistent with this Declaration or
with applicable law, which the Regular Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of
the Trust as set out in this Section 3.6 including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
(ii) causing the Trust to be characterized for United
States federal income tax purposes as a grantor trust and causing
each Holder of Securities to be treated as owning an undivided
beneficial interest in the Subordinated Debentures; and
(iii) co-operating with the Debenture Issuer to ensure that
the Subordinated Debentures will be treated as indebtedness of the
Debenture Issuer for United States federal income tax purposes,
PROVIDED that such action does not materially and adversely affect the
interests of the Holders; and
(q) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to
the Trust to be duly prepared and filed by the Regular Trustees, on behalf
of the Trust.
The Regular Trustees must exercise the powers set forth in this Section 3.6 in
a manner which is consistent with the purposes and functions of the Trust set
out in Section 3.3 and the Regular
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Trustees shall not take any action which is inconsistent with the purposes
and functions of the Trust set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
SECTION 3.7. PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES.
The Trust shall not, and the Trustees (including the Property Trustee) shall
cause the Trust not to, engage in any activity other than as required or
authorized by this Declaration. In particular, the Trust shall not, and the
Trustees (including the Property Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Subordinated Debentures but shall distribute all such proceeds to Holders
of Securities pursuant to the terms of this Declaration and of the
Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Subordinated Debentures;
(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the Securities; or
(vii) consent to the modification of the Subordinated Debentures or
any other asset of the Trust, unless the Trust shall have received an
opinion of counsel to the effect that such modification will not cause
more than an insubstantial risk that for United States federal income tax
purposes the Trust will not be characterized as a grantor trust.
SECTION 3.8. POWERS AND DUTIES OF THE PROPERTY TRUSTEE. (a) The
legal title to the Subordinated Debentures shall be owned by and held of record
in the name of the Property Trustee in trust for the benefit of the Trust and
the Holders of the Securities. The right, title and interest of the Property
Trustee to the
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Subordinated Debentures shall vest automatically in each Person who may
hereafter be appointed as Property Trustee as set forth in Section 5.6. Such
vesting and cessation of title shall be effective whether or not
conveyancing documents with respect to the Subordinated Debentures have been
executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Subordinated Debentures to the Regular Trustees or to the
Delaware Trustee (if the Property Trustee does not also act as Delaware
Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing bank
account (the "Property Trustee Account") in the name of and under the
exclusive control of the Property Trustee on behalf of the Holders of
the Securities and, upon the receipt of payments of funds made in
respect of the Subordinated Debentures held by the Property Trustee,
deposit such funds into the Property Trustee Account and make payments
to the Holders of the Preferred Securities and the Holders of the Common
Securities from the Property Trustee Account in accordance with Section
6.1. Funds in the Property Trustee Account shall be held uninvested
until disbursed in accordance with this Declaration. The Property
Trustee Account shall be an account which is maintained with a banking
institution the rating on whose long-term unsecured indebtedness is at
least equal to the rating assigned to the Preferred Securities by a
"nationally recognized statistical rating organization", as that term is
defined for purposes of Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Preferred Securities and the
Common Securities to the extent the Subordinated Debentures are redeemed
or mature; and
(iii) upon notice of distribution issued by the Regular Trustees in
accordance with the terms of the Preferred Securities and the Common
Securities, engage in such ministerial activities as shall be necessary or
appropriate to effect the distribution of the Subordinated Debentures to
Holders of Securities upon the liquidation and dissolution of the Trust.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Securities.
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(e) The Property Trustee shall take any Legal Action which arises
out of or in connection with an Event of Default or the Property Trustee's
duties and obligations under this Declaration (including the Preferred
Securities Guarantee) or the Trust Indenture Act.
(f) The Property Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of Securities pursuant to the terms
of the Securities; or
(ii) a Successor Property Trustee has been appointed and accepted
that appointment in accordance with Section 5.6.
(g) The Property Trustee shall have the legal power to exercise all
of the rights, powers and privileges of a holder of Subordinated Debentures
under the Indenture and, if an Event of Default occurs and is continuing, the
Property Trustee shall, for the benefit of the Holders of the Securities,
enforce its rights under the Indenture with respect to the Subordinated
Debentures and its rights under the Preferred Securities Guarantee in
accordance with the terms of the Preferred Securities Guarantee, subject to the
rights of the Holders pursuant to the terms of such Securities and the
Preferred Securities Guarantee.
(h) The Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to the Preferred Securities and
the Common Securities and any such Paying Agent shall comply with section
317(b) of the Trust Indenture Act. Any Paying Agent may be removed by the
Property Trustee at any time and a successor Paying Agent or additional Paying
Agents may be appointed at any time by the Property Trustee.
(i) Subject to this Section 3.8, the Property Trustee shall have
none of the powers or the authority of the Regular Trustees set forth in
Section 3.6.
The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner which is consistent with the purposes and functions of
the Trust set forth in Section 3.3 and the Property Trustee shall not take any
action which is inconsistent with the purposes and functions of the Trust set
out in Section 3.3.
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SECTION 3.9. CERTAIN DUTIES AND RESPONSIBILITIES OF THE PROPERTY
TRUSTEE. (a) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and in the terms of the Securities, and no implied covenants
shall be read into this Declaration against the Property Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 2.6), the Property Trustee shall exercise such of the rights and powers
vested in it by this Declaration, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee
shall be determined solely by the express provisions of this
Declaration and in the terms of the Securities, and the Property
Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Declaration,
and no implied covenants or obligations shall be read into this
Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Property
Trustee and conforming to the requirements of this Declaration; but
in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the
Property Trustee, the Property Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the
22
Property Trustee was negligent in ascertaining the pertinent facts upon
which such judgment was made;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a Majority in liquidation
amount of the Securities at the time outstanding relating to the time,
method and place of conducting any proceeding for any remedy available to
the Property Trustee, or exercising any trust or power conferred upon the
Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if there is reasonable ground for
believing that the repayment of such funds or liability is not reasonably
assured to it under the terms of this Declaration or adequate indemnity
against such risk is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Subordinated Debentures and
the Property Trustee Account shall be to deal with such property in a
similar manner as the Property Trustee deals with similar property for its
own account, subject to the protections and limitations on liability
afforded to the Property Trustee under this Declaration and the Trust
Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of the
Subordinated Debentures or the payment of any taxes or assessments levied
thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree with the
Sponsor. Money held by the Property Trustee need not be segregated from
other funds held by it except in relation to the Property Trustee Account
maintained by the Property Trustee pursuant to Section 3.8(c)(i) and
except to the extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Regular Trustees or the Sponsor with their
respective duties under this Declaration,
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nor shall the Property Trustee be liable for the default or misconduct of
the Regular Trustees or the Sponsor.
SECTION 3.10. CERTAIN RIGHTS OF PROPERTY TRUSTEE. (a) Subject to
the provisions of Section 3.9:
(i) the Property Trustee may rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, approval, bond, security or other paper or document
believed by it to be genuine and to have been signed, sent or presented by
the proper party or parties.
(ii) Any direction or act of the Sponsor or the Regular Trustees
contemplated by this Declaration shall be sufficiently evidenced by a
Direction or an Officer's Certificate.
(iii) Whenever in the administration of this Declaration the Property
Trustee shall deem it desirable that a matter be proved or established
before taking, suffering or omitting any action hereunder, the Property
Trustee (unless other evidence is herein specifically prescribed) may, in
the absence of bad faith on its part and, if the Trust is excluded from
the definition of an Investment Company solely by means of Rule 3a-5,
subject to the requirements of Rule 3a-5, request and rely upon an
Officer's Certificate which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Regular Trustees.
(iv) The Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (or any rerecording, refiling or
reregistration thereof).
(v) The Property Trustee may consult with counsel and the written
advice or opinion of such counsel with respect to legal matters shall be
full and complete authorization and protection in respect of any action
taken or suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be counsel to
the Sponsor or any of its Affiliates and may include any of its employees.
The Property Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of
competent jurisdiction.
(vi) The Property Trustee shall be under no obligation to exercise
any rights or powers vested in it under this
24
Declaration at the request or direction of any Holder, unless such Holder
shall have provided to the Property Trustee reasonable security or
indemnity against the costs, expenses (including attorneys' fees and
expenses) and liabilities that might be incurred by it in complying with
such request or direction, including such reasonable advances as may be
requested by the Property Trustee, PROVIDED that nothing contained in this
Section 3.10(a)(vi) shall, however, relieve the Property Trustee, upon the
occurrence of an Event of Default, from exercising the rights and powers
vested in it by this Declaration.
(vii) The Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, approval, bond, security or other papers or
documents, but the Property Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may
see fit.
(viii) The Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys, and the Property Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
(ix) Any action taken by the Property Trustee or its agents hereunder
shall bind the Trust and the Holders of the Securities, and the signature
of the Property Trustee or its agents alone shall be sufficient and
effective to perform any such action. No third party shall be required to
inquire as to the authority of the Property Trustee to so act or as to its
compliance with any of the terms and provisions of this Declaration, both
of which shall be conclusively evidenced by the Property Trustee's or its
agent's taking such action.
(x) Whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the
Property Trustee (i) may request instructions from the Holders of the
Securities representing the aggregate liquidation amount of all
outstanding Securities of such class required under the terms of the
Securities to direct the Property Trustee to enforce such remedy or right
or take such action, (ii) may refrain from enforcing such remedy or right
or taking such other
25
action until such instructions are received and (iii) shall be protected in
acting in accordance with such instructions.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11. DELAWARE TRUSTEE. Notwithstanding any other provision
of this Declaration other than Section 5.2, the Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of the
duties and responsibilities of the Trustees described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Business Trust Act.
SECTION 3.12. EXECUTION OF DOCUMENTS. A majority of, or if there
are only two, both of the Regular Trustees are authorized to execute on behalf
of the Trust any documents which the Regular Trustees have the power and
authority to execute pursuant to Section 3.6, PROVIDED that any listing
application prepared by the Sponsor referred to in Section 3.6(b)(iii) may be
executed by any Regular Trustee.
SECTION 3.13. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES. The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14. DURATION OF TRUST. The Trust, unless dissolved
pursuant to the provisions of Article VIII hereof, shall have existence for
fifty (50) years from the Closing Date.
SECTION 3.15. MERGERS. (a) The Trust may not consolidate,
amalgamate, merge with or into, or be replaced by, or convey, transfer or lease
its properties and assets substantially as an entirety to any Person, except as
described in
26
Section 3.15(b) and (c) of this Declaration or Section 3 of Annex I hereto.
(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Property Trustee, the Delaware Trustee or the Holders of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by a
trust organized as such under the laws of any State; PROVIDED that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
with respect to the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Preferred Securities and Common
Securities, respectively (the "Successor Securities"), so long as the
Successor Securities rank the same as the Preferred Securities and
Common Securities rank with respect to Distributions and payments
upon liquidation, redemption, maturity and otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee of the
Successor Entity which possesses the same powers and duties as the
Property Trustee as the Holder of the Subordinated Debentures;
(iii) the Preferred Securities or any Successor Securities thereof are
listed, or any such Successor Securities will be listed upon notification
of issuance, on (A) any national securities exchange or (B) on such other
organization on which the Preferred Securities are then listed;
(iv) such merger, consolidation, amalgamation or replacement does not
cause the Preferred Securities (including any Successor Securities
thereof) to be downgraded by any nationally recognized statistical rating
organization;
(v) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the Holders of
the Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the Holders' interest
in the new entity);
27
(vi) such Successor Entity has a purpose identical to that of the
Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion from independent counsel
to the Trust experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation or replace-
ment does not adversely affect the rights, preferences and
privileges of the Holders of the Securities (including any
Successor Securities) in any material respect (other than with
respect to any dilution of the Holders' interest in the new
entity); and
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will be
required to register as an Investment Company; and
(viii) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities of the Preferred Securities at least
to the extent provided by the Preferred Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger or replacement would
cause the Trust or Successor Entity for United States federal income tax
purposes to be classified as other than a grantor trust and each Holder of the
Securities not to be treated as owning an undivided beneficial interest in the
Subordinated Debentures, except with the consent of Holders of 100% in
liquidation amount of the Securities.
ARTICLE IV
SPONSOR
SECTION 4.1. SPONSOR'S PURCHASE OF COMMON SECURITIES. On the
Closing Date, the Sponsor will purchase all of the Common Securities issued by
the Trust, in an amount equal to approximately 3% of the capital of the Trust
at the same time as the Preferred Securities are sold.
SECTION 4.2. RESPONSIBILITIES OF THE SPONSOR. In connection with
the issue and sale of the Preferred Securities, the
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Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Preferred
Securities, including any amendments thereto;
(b) to determine the states in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities and
to take any and all such acts, other than actions which must be taken by
the Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust,
as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such states;
(c) to prepare for filing by the Trust an application to the
American Stock Exchange, Inc. or any other national stock exchange or the
Nasdaq Stock Market's National Market for listing upon notice of issuance
of any Preferred Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the
class of Preferred Securities under Section 12(b) of the Exchange Act,
including any amendments thereto; and
(e) to negotiate the terms of, and execute and deliver, the
Underwriting Agreement providing for the sale of the Preferred Securities.
ARTICLE V
TRUSTEES
SECTION 5.1. NUMBER OF TRUSTEES. The number of Trustees shall
initially be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees;
and
(b) after the issuance of any Securities, the number of Trustees
may be increased or decreased by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as a class at a
meeting of the Holders of the Common Securities;
29
PROVIDED that in any case, the number of Trustees shall be at least four (4)
unless the Trustee that acts as the Property Trustee also acts as the Delaware
Trustee pursuant to Section 5.2, in which case the number of Trustees shall be
at least three (3).
SECTION 5.2. DELAWARE TRUSTEE. If required by the Business Trust
Act, one Trustee (the "Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware and otherwise meets the requirements
of applicable law,
PROVIDED that if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
SECTION 5.3. PROPERTY TRUSTEE; ELIGIBILITY. (a) There shall at all
times be one Trustee which shall act as Property Trustee and which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any state or territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least fifty million U.S. dollars
($50,000,000), and subject to supervision or examination by federal,
state, territorial or District of Columbia authority (if such corporation
publishes reports of condition at least annually, pursuant to law or to
the requirements of the supervising or examining authority referred to
above, then for the purposes of this Section 5.3(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published).
(b) If at any time the Property Trustee shall cease to be eligible
to so act under Section 5.3(a), the Property Trustee shall immediately resign
in the manner and with the effect set out in Section 5.6(c).
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(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holders of the Common Securities (as if they were the
obligor referred to in Section 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 5.4. QUALIFICATIONS OF REGULAR TRUSTEES AND DELAWARE TRUSTEE
GENERALLY. Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least twenty-one (21) years of age or a legal entity which shall act through
one or more Authorized Officers.
SECTION 5.5. INITIAL TRUSTEES. The three initial Regular Trustees
shall be:
LeRoy T. Carlson, Jr.
Murray L. Swanson
Greg Wilkinson
c/o Telephone and Data Systems, Inc.
30 S. LaSalle St.
Chicago, Illinois 60602
The initial Property Trustee shall be:
The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, Illinois 60603
The initial Delaware Trustee shall be:
First Chicago Delaware Inc.
300 King Street
Wilmington, Delaware 19801
SECTION 5.6. APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES. (a)
Subject to Section 5.6(b), Trustees may be appointed or removed without cause
at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the Holders of
a Majority in liquidation amount of the Common
31
Securities, voting as a class at a meeting of the Holders of the Common
Securities.
(b) (i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.6(a) until a Successor Property
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Property Trustee and delivered to
the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with Section 5.6(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until the
successor of such Trustee shall have been appointed or until the death, removal
or resignation of such Trustee. Any Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing signed by
the Trustee and delivered to the Sponsor and the Trust, which resignation shall
take effect upon such delivery or upon such later date as is specified therein;
PROVIDED, HOWEVER, that:
(i) no such resignation of the Trustee that acts as the Property
Trustee shall be effective until:
(A) a Successor Property Trustee has been appointed and
has accepted such appointment by instrument executed by such
Successor Property Trustee and delivered to the Trust and the
Sponsor; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the holders of the
Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by
such Successor Delaware Trustee and delivered to the Trust and the
Sponsor.
(d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor Property
Trustee as the case may be if the Property
32
Trustee or the Delaware Trustee delivers an instrument of resignation in
accordance with this Section 5.6.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.6 within 60 days after delivery to the Sponsor and the Trust of an instrument
of resignation, the resigning Property Trustee or Delaware Trustee, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.
SECTION 5.7. VACANCIES AMONG TRUSTEES. If a Trustee ceases to hold
office for any reason and the number of Trustees is not reduced pursuant to
Section 5.1, or if the number of Trustees is increased pursuant to Section 5.1,
a vacancy shall occur. A resolution certifying the existence of such vacancy
by a majority of the Regular Trustees shall be conclusive evidence of the
existence of such vacancy. The vacancy shall be filled with a Trustee
appointed in accordance with Section 5.6.
SECTION 5.8. EFFECT OF VACANCIES. The death, resignation,
retirement, removal, bankruptcy, dissolution, liquidation, incompetence or
incapacity to perform the duties of a Trustee, or any one of them, shall not
operate to annul, dissolve or terminate the Trust. Whenever a vacancy in the
number of Regular Trustees shall occur, until such vacancy is filled by the
appointment of a Regular Trustee in accordance with Section 5.6, the Regular
Trustees in office, regardless of their number, shall have all the powers
granted to the Regular Trustees and shall discharge all the duties imposed upon
the Regular Trustees by this Declaration.
SECTION 5.9. MEETINGS. Meetings of the Regular Trustees shall be
held from time to time upon the call of any Regular Trustee. Regular meetings
of the Regular Trustees may be held at a time and place fixed by resolution of
the Regular Trustees. Notice of any in-person meetings of the Regular Trustees
shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 48 hours before
such meeting. Notice of any telephonic meetings of the Regular Trustees or any
committee thereof shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than
24 hours before a meeting. Notices shall contain a brief statement of the
time, place and anticipated purposes of the meeting. The presence
33
(whether in person or by telephone) of a Regular Trustee at a meeting shall
constitute a waiver of notice of such meeting except where a Regular Trustee
attends a meeting for the express purpose of objecting to the transaction of
any activity on the ground that the meeting has not been lawfully called or
convened. Unless provided otherwise in this Declaration, any action of the
Regular Trustees may be taken at a meeting by vote of a majority of the
Regular Trustees present (whether in person or by telephone) and eligible to
vote with respect to such matter, PROVIDED that a Quorum is present, or
without a meeting by the unanimous written consent of the Regular Trustees.
In the event there is only one Regular Trustee, any action of such Regular
Trustee shall be evidenced by a written consent of such Regular Trustee.
SECTION 5.10. DELEGATION OF POWER. (a) Any Regular Trustee may, by
power of attorney consistent with applicable law, delegate to any other natural
person over the age of 21 his or her power for the purpose of executing any
documents contemplated in Section 3.6, including any registration statement or
amendment thereto filed with the Commission or making any other governmental
filing.
(b) The Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1. DISTRIBUTIONS. Holders shall receive Distributions in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Preferred Securities and the Common
Securities in accordance with the preferences set forth in their respective
terms. If and to the extent that the Debenture Issuer makes a payment of
interest (including Compounded Interest (as defined in the Indenture) and
Additional Interest (as defined in the Indenture)), premium and principal on
the Subordinated Debentures held by the Property Trustee (the amount of any
such payment being a "Payment Amount"), the Property Trustee shall and is
directed, to the extent funds are available for that purpose, to make a
Distribution of the Payment Amount to the Holders.
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ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1. GENERAL PROVISIONS REGARDING SECURITIES. (a) The
Regular Trustees shall, on behalf of the Trust, issue one class of preferred
securities representing undivided beneficial interests in the assets of the
Trust having such terms as are set forth in Exhibit A and incorporated herein
by reference (the "Preferred Securities"), and one class of common securities
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Exhibit A and incorporated herein by reference
(the "Common Securities"). The Trust shall have no securities or other
interests in the assets of the Trust other than the Preferred Securities and
the Common Securities.
(b) The Securities shall be signed on behalf of the Trust by the
Regular Trustees (or, if there are more than two Regular Trustees, by any two
of the Regular Trustees). Such signatures may be the manual or facsimile
signatures of the present or any future Regular Trustee. Typographical and
other minor errors or defects in any such reproduction of any such signature
shall not affect the validity of any Security. In case any Regular Trustee of
the Trust who shall have signed any of the Securities shall cease to be such
Regular Trustee before the Security so signed shall be delivered by the Trust,
such Security nevertheless may be delivered as though the person who signed
such Security had not ceased to be such Regular Trustee; and any Security may
be signed on behalf of the Trust by such persons as, at the actual date of the
execution of such Security, are the Regular Trustees of the Trust, although at
the date of the execution and delivery of the Declaration any such person was
not such a Regular Trustee.
(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable, subject to Section 10.1(b) with respect to the Common
Securities.
(e) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and
shall be bound by, this Declaration.
35
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1. TERMINATION OF TRUST. (a) The Trust shall dissolve
upon the earliest to occur of the following events:
(i) November 18, 2047;
(ii) upon the bankruptcy of the Holder of the Common Securities or
the Sponsor;
(iii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Holder of the Common Securities or the
Sponsor, the filing of a certificate of cancellation with respect to the
Trust or the revocation of the charter of the Holder of the Common
Securities or of the Sponsor and the expiration of ninety (90) days after
the date of revocation without a reinstatement thereof;
(iv) upon the entry of a decree of judicial dissolution of the
Holder of the Common Securities, the Sponsor or the Trust;
(v) when all of the Securities shall have been called for redemption
and the amounts necessary for redemption thereof shall have been paid to
the Holders in accordance with the terms of the Securities;
(vi) upon the dissolution of the Trust in accordance with the terms
of the Securities and pursuant to which all of the Subordinated Debentures
shall have been distributed to the Holders of Securities in exchange for
all of the Securities; or
(vii) upon delivery of written direction to the Property Trustee by
the Sponsor at any time (which direction is wholly optional and within the
discretion of the Sponsor) to dissolve the Trust and distribute the
Subordinated Debentures to the Holders of the Securities in accordance
with Section 3 of EXHIBIT A hereto.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), after the completion of the winding up of the
affairs of the Trust, the Trustees shall file a certificate of cancellation
with the Secretary of State of the State of Delaware.
36
(c) The provisions of Article X shall survive the termination of the
Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1. TRANSFER OF SECURITIES. (a) Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration and in the terms of the Securities. Any
transfer or purported transfer of any Security not made in accordance with
this Declaration shall be null and void.
(b) Subject to this Article IX, Preferred Securities shall be
freely transferable.
(c) Subject to this Article IX, the Sponsor and any Related Party
may only transfer Common Securities to the Sponsor or a Related Party of the
Sponsor, PROVIDED that any such transfer is subject to the condition
precedent that the transferor obtain the written opinion of nationally
recognized independent counsel experienced in such matters that such transfer
would not cause more than an insubstantial risk that:
(i) the Trust would not be classified for United States federal
income tax purposes as a grantor trust and each Holder of Securities would
not be treated as owning an undivided beneficial interest in the
Subordinated Debentures; and
(ii) the Trust would be an Investment Company or the transferee would
be an Investment Company if the transferee was not an Investment Company
before the transfer.
SECTION 9.2. TRANSFER OF CERTIFICATES. The Regular Trustees shall
provide for the registration of Certificates and of transfers of
Certificates, which will be effected without charge but only upon payment
(with such indemnity as the Regular Trustees may require) in respect of any
tax or other government charges which may be imposed in relation to it. Upon
surrender for registration of transfer of any Certificate, the Regular
Trustees shall cause one or more new Certificates to be issued in the name of
the designated transferee or transferees. Every Certificate surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Regular Trustees duly executed by the
Holder or such Holder's attorney duly authorized in writing. Each
Certificate surrendered for registration of transfer shall be canceled by the
Regular Trustees.
37
A transferee of a Certificate shall be entitled to the rights and subject to
the obligations of a Holder hereunder upon the receipt by such transferee of
a Certificate. By acceptance of a Certificate, each transferee shall be
deemed to have agreed to be bound by this Declaration and the documents
incorporated by reference herein.
SECTION 9.3. DEEMED SECURITY HOLDERS. The Trustees may treat the
Person in whose name any Certificate shall be registered on the books and
records of the Trust as the sole holder of such Certificate and of the
Securities represented by such Certificate for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall
not be bound to recognize any equitable or other claim to or interest in such
Certificate or in the Securities represented by such Certificate on the part
of any Person, whether or not the Trustees shall have actual or other notice
thereof.
SECTION 9.4. BOOK ENTRY INTERESTS. Unless otherwise specified in
the terms of the Preferred Securities, the Preferred Securities Certificates,
on original issuance, will be issued in the form of one or more, fully
registered, global Preferred Security Certificates (each a "Global
Certificate"), to be delivered to DTC, the initial Clearing Agency, by, or on
behalf of, the Trust. Such Global Certificates shall initially be registered
on the books and records of the Trust in the name of Cede & Co., the nominee
of DTC, and no Preferred Security Beneficial Owner will receive a definitive
Preferred Security Certificate representing such Preferred Security
Beneficial Owner's interests in such Global Certificates, except as provided
in Section 9.7. Unless and until definitive, fully registered Preferred
Security Certificates (the "Definitive Preferred Security Certificates") have
been issued to the Preferred Security Beneficial Owners pursuant to Section
9.7:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Certificates and receiving approv-
als, votes or consents hereunder) as the Holder of the Preferred
Securities and the sole holder of the Global Certificates and shall have
no obligation to the Preferred Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
38
(d) the rights of the Preferred Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Preferred Security
Beneficial Owners and the Clearing Agency and/or the Clearing Agency
Participants. DTC will make book entry transfers among the Clearing
Agency Participants and receive and transmit payments of Distributions on
the Global Certificates to such Clearing Agency Participants, PROVIDED,
that solely for the purposes of determining whether the Holders of the
requisite amount of Preferred Securities have voted on any matter provided
for in this Declaration, so long as Definitive Preferred Securities
Certificates have not been issued, the Trustees may conclusively rely on,
and shall be protected in relying on, any written instrument (including a
proxy) delivered to the Trustees by the Clearing Agency setting forth the
Preferred Securities Beneficial Owners' votes or assigning the right to
vote on any matter to any other Persons either in whole or in part.
SECTION 9.5. NOTICES TO CLEARING AGENCY. Whenever a notice or
other communication to the Preferred Security Holders is required under this
Decla ration, unless and until Definitive Preferred Security Certificates
shall have been issued to the Preferred Security Beneficial Owners pursuant
to Section 9.7, the Regular Trustees shall give all such notices and
communications specified herein to be given to the Preferred Security Holders
to the Clearing Agency, and shall have no notice obligations to the Preferred
Security Benefi cial Owners.
SECTION 9.6. APPOINTMENT OF SUCCESSOR CLEARING AGENCY. If any
Clearing Agency elects to discontinue its services as securities depositary
with respect to the Preferred Securities, the Regular Trustees may, in their
sole discretion, appoint a successor Clearing Agency with respect to such
Preferred Securities.
SECTION 9.7. DEFINITIVE PREFERRED SECURITY CERTIFICATES. If:
(a) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities and a
successor Clearing Agency is not appointed within ninety (90) days after
such discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect, after consultation with the Sponsor,
to terminate the book entry system through the Clearing Agency with
respect to the Preferred Securities,
39
then:
(c) Definitive Preferred Security Certificates shall be prepared by
the Regular Trustees on behalf of the Trust with respect to such Preferred
Securities; and
(d) upon surrender of the Global Certificates by the Clearing
Agency, accompanied by registration instructions, the Regular Trustees
shall cause Definitive Preferred Security Certificates to be delivered to
Preferred Security Beneficial Owners in accordance with the instructions
of the Clearing Agency. Neither the Trustees nor the Trust shall be
liable for any delay in delivery of such instructions and each of them may
conclusively rely on, and shall be protected in relying on, such
instructions. The Definitive Preferred Security Certificates shall be
printed, lithographed or engraved or may be produced in any other manner
as is reasonably acceptable to the Regular Trustees, as evidenced by their
execution thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the
Regular Trustees may deem appropriate, or as may be required to comply
with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which Preferred Securities
may be listed, or to conform to usage.
SECTION 9.8. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If:
(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security
or indemnity as may be required by them to keep each of them harmless,
then in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, any two Regular Trustees on behalf of the Trust shall
execute and deliver, in exchange for or in lieu of any such mutilated, de-
stroyed, lost or stolen Certificate, a new Certificate of like denomination.
In connection with the issuance of any new Certificate under this Section 9.8,
the Regular Trustees may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Certificate issued pursuant to this Section shall constitute
conclusive evidence of an ownership
40
interest in the relevant Securities, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1. LIABILITY. (a) Except as expressly set forth in this
Declaration, the Subordinated Debentures, the Preferred Securities Guarantee
and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities
which shall be made solely from assets of the Trust; and
(ii) be required to pay to the Trust or to any Holder of Securities
any deficit upon dissolution of the Trust or otherwise.
(b) The Sponsor shall be liable for all of the debts and obligations
of the Trust (other than with respect to the Securities) to the extent not
satisfied out of the Trust's assets.
SECTION 10.2. EXCULPATION. (a) No Indemnified Person shall be
liable, responsible or accountable in damages or otherwise to the Trust or
any Covered Person for any loss, damage or claim incurred by reason of any
act or omission performed or omitted by such Indemnified Person in good faith
on behalf of the Trust and in a manner such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such
Indemnified Person by this Declaration or by law, except that an Indemnified
Person shall be liable for any such loss, damage or claim incurred by reason
of such Indemnified Person's gross negligence (or, in the case of the
Property Trustee, subject to Section 3.9) or willful misconduct with respect
to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Trust, including information, opinions, reports
or statements as to the value and amount of the assets, liabilities,
41
profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders of Securities might properly be
paid.
SECTION 10.3. FIDUCIARY DUTY. (a) To the extent that, at law or
in equity, an Indemnified Person has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to any other Covered Person, an
Indemnified Person acting under this Declaration shall not be liable to the
Trust or to any other Covered Person for its good faith reliance on the
provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of an Indemnified Person
otherwise existing at law or in equity (other than duties imposed on the
Property Trustee under the Trust Indenture Act), are agreed by the parties
hereto to replace such other duties and liabilities of such Indemnified
Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between an
Indemnified Person and Covered Persons; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a
manner that is, or provides terms that are, fair and reasonable to the
Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest
of each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or terms so made,
taken or provided by the Indemnified Person shall not constitute a breach of
this Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no duty
or obligation to
42
give any consideration to any interest of, or factors affecting, the
Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 10.4. INDEMNIFICATION. (a) To the fullest extent
permitted by applicable law, the Sponsor shall indemnify and hold harmless
each Indemnified Person from and against any loss, damage, liability, tax,
penalty, expense or claim incurred by such Indemnified Person by reason of
the creation, operation or termination of the Trust or any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of
the Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person by this
Declaration, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of gross negligence (or, in the case of the
Property Trustee, subject to Section 3.9) or willful misconduct with respect
to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any
claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Sponsor prior to the final disposition of such claim, demand,
action, suit or proceeding upon receipt by the Sponsor of an undertaking by
or on behalf of the Indemnified Person to repay such amount if it shall be
determined that the Indemnified Person is not entitled to be indemnified as
authorized in Section 10.4(a). The rights to indemnification set forth
herein shall survive the termination of this Declaration.
SECTION 10.5. OUTSIDE BUSINESSES. Any Covered Person, the
Sponsor, the Delaware Trustee and the Property Trustee (subject to Section
5.3(c)) may engage in or possess an interest in other business ventures of
any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom and the
pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. No Covered Person, the
Sponsor, the Delaware Trustee or the Property Trustee shall be obligated to
present any particular investment or other opportunity to the Trust even if
such opportunity is of a character that, if
43
presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor, the Delaware Trustee and the Property Trustee shall have the
right to take for its own account (individually or as a partner or fiduciary)
or to recommend to others any such particular investment or other
opportunity. Any Covered Person, the Delaware Trustee and the Property
Trustee may engage or be interested in any financial or other transaction
with the Sponsor or any Affiliate of the Sponsor, or may act as depository
for, trustee or agent for, or act on any committee or body of holders of,
securities or other obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1. FISCAL YEAR. The fiscal year ("Fiscal Year") of the
Trust shall be the calendar year, or such other year as is required by the
Code.
SECTION 11.2. CERTAIN ACCOUNTING MATTERS. (a) At all times
during the existence of the Trust, the Regular Trustees shall keep, or cause
to be kept, full books of account, records and supporting documents, which
shall reflect in reasonable detail, each transaction of the Trust. The books
of account shall be maintained on the accrual method of accounting, in
accordance with generally accepted accounting principles consistently
applied. The Trust shall use the accrual method of accounting for United
States federal income tax purposes. The books of account and the records of
the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants
selected by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered
to each of the Holders of Securities, within 90 days after the end of each
Fiscal Year of the Trust, annual financial statements of the Trust, including
a balance sheet of the Trust as of the end of such Fiscal Year, and the
related statements of income or loss.
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, an annual United States
federal income tax information statement, if one is required by the Code,
containing such information with regard to the Securities held by each Holder
as is re quired by the Code and the Treasury Regulations. Notwithstanding
any right under the Code to deliver any such statement at a later date, the
Regular Trustees
44
shall endeavor to deliver all such statements within thirty (30) days after
the end of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on a Form 1041 or such other form required by United States
federal income tax law, and any other annual income tax returns required to
be filed by the Regular Trustees on behalf of the Trust with any state or
local taxing authority.
SECTION 11.3. BANKING. The Trust shall maintain one or more bank
accounts in the name and for the sole benefit of the Trust; PROVIDED,
HOWEVER, that all payments of funds in respect of the Subordinated Debentures
held by the Property Trustee shall be made directly to the Property Trustee
Account and no other funds of the Trust shall be deposited in the Property
Trustee Account. The sole signatories for such accounts shall be designated
by the Regular Trustees; PROVIDED, HOWEVER, that the Property Trustee shall
designate the signatories for the Property Trustee Account.
SECTION 11.4. WITHHOLDING. The Trust and the Trustees shall
comply with all withholding requirements under United States federal, state
and local law. The Trust shall request, and the Holders shall provide to the
Trust, such forms or certificates as are necessary to establish an exemption
from withholding with respect to each Holder, and any representations and
forms as shall reasonably be requested by the Trust to assist it in
determining the extent of, and in fulfilling, its withholding obligations.
The Regular Trustee(s) shall file required forms with applicable
jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the
Holder to applicable jurisdictions. To the extent that the Trust is required
to withhold and pay over any amounts to any authority with respect to
distributions or allocations to any Holder, the amount withheld shall be
deemed to be a distribution in the amount of the withholding to the Holder.
In the event of any claimed over-withholding, Holders shall be limited to an
action against the applicable jurisdiction. If the amount withheld was not
withheld from actual Distributions made, the Trust may reduce subsequent
Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1. AMENDMENTS. (a) Except as otherwise provided in
this Declaration or by any applicable terms of the
45
Securities, this Declaration may be amended by, and only by, a written
instrument approved and executed by the Regular Trustees (or, if there are
more than two Regular Trustees, a majority of the Regular Trustees);
PROVIDED, HOWEVER, that:
(i) no amendment shall be made, and any such purported amendment
shall be void and ineffective:
(1) unless, in the case of any proposed amendment, the
Property Trustee shall have first received an Officer's
Certificate from each of the Trust and the Sponsor that
such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the
Securities);
(2) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or
immunities of the Property Trustee, the Property Trustee
shall have first received:
(A) an Officer's Certificate from each of the Trust and
the Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities);
and
(B) an opinion of counsel (who may be counsel to the
Sponsor or the Trust) that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms of
the Securities); and
(ii) no amendment shall be made, and any such purported amendment
shall be void and ineffective, to the extent the result thereof would be
to
(A) cause the Trust not to be characterized for purposes
of United States federal income taxation as a grantor trust and each
Holder of Securities not to be treated as owning an undivided
beneficial interest in the Subordinated Debentures, as evidenced by
an Opinion of Counsel to the effect that such amendment shall not
result in the foregoing;
(B) affect adversely the rights, powers, duties,
obligations or immunities of the Property Trustee or the Delaware
Trustee; or
46
(C) cause the Trust to be deemed to be an Investment
Company which is required to be registered under the Investment
Company Act;
(iii) at such time after the Trust has issued any Securities which
remain outstanding, any amendment which would adversely affect the rights,
privileges or preferences of any Holder of Securities may be effected only
with such additional requirements as may be set forth in the terms of such
Securities;
(iv) Section 9.1(c) and this Section 12.1 shall not be amended without
the consent of all of the Holders of the Securities;
(v) Article IV shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities; and
(vi) the rights of the Holders of the Common Securities under
Article V to increase or decrease the number of, and appoint and remove,
Trustees shall not be amended without the consent of the Holders of a
Majority in liquidation amount of the Common Securities.
(b) Notwithstanding Section 12.1(a)(iii), this Declaration may be
amended without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that
may be defective or inconsistent with any other provision of this Declara-
tion;
(iii) to add to the covenants, restrictions or obligations of the
Sponsor; and
(iv) to conform to any change in Rule 3a-5 or written change in
interpretation or application of Rule 3a-5 by any legislative body, court,
government agency or regulatory authority which amendment does not have a
material adverse effect on the rights, preferences or privileges of the
Holders.
SECTION 12.2. MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY
WRITTEN CONSENT. (a) Meetings of the Holders of any class of Securities may
be called at any time by the Regular
47
Trustees (or as provided in the terms of the Securities) to consider and act
on any matter on which Holders of such class of Securities are entitled to
act under the terms of this Declaration, the terms of the Securities or the
rules of any stock exchange on which the Pre ferred Securities are listed or
admitted for trading. The Regular Trustees shall call a meeting of such
class of Holders, if directed to do so by the Holders of at least 10% in
liquidation amount of such class of Securities. Such direction shall be given
by delivering to the Regular Trustees one or more calls in a writing stating
that the signing Holders of Securities wish to call a meeting and indicating
the general or specific purpose for which the meeting is to be called. Any
Holders of Securities calling a meeting shall specify in writing the Security
Certificates held by the Holders of Securities exercising the right to call a
meeting and only those specified shall be counted for purposes of determining
whether the required percentage set forth in the second sentence of this
paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) Notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least seven (7) days and not
more than sixty (60) days before the date of such meeting. Whenever a
vote, consent or approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any stock exchange on
which the Preferred Securities are listed or admitted for trading, such
vote, consent or approval may be given at a meeting of the Holders of
Securities. Any action that may be taken at a meeting of the Holders of
Securities may be taken without a meeting if a consent in writing setting
forth the action so taken is signed by the Holders of Securities owning
not less than the minimum amount of Securities in liquidation amount that
would be necessary to authorize or take such action at a meeting at which
all Holders of Securities having a right to vote thereon were present and
voting. Prompt notice of the taking of action without a meeting shall be
given to the Holders of Securities entitled to vote who have not consented
in writing. The Regular Trustees may specify that any written ballots
submitted to the Holders of Securities for the purpose of taking any
action without a meeting shall be returned to the Trust within the time
specified by the Regular Trustees.
(ii) Each Holder of a Security may authorize any Person to act for it
by proxy on all matters in which such Holder of Securities is entitled to
participate, including waiving no-
48
tice of any meeting, or voting or participating at a meeting. No proxy
shall be valid after the expiration of eleven (11) months from the date
thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Holder of Securities executing it.
Except as otherwise provided herein, all matters relating to the giving,
voting or validity of proxies shall be governed by the General Corporation
Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware corporation
and the Holders of the Securities were stockholders of a Delaware
corporation.
(iii) Each meeting of the Holders of the Securities shall be conducted
by the Regular Trustees or by such other Person that the Regular Trustees
may designate.
(iv) Unless the Business Trust Act, this Declaration, the Trust
Indenture Act, the terms of the Securities or the listing rules of any
stock exchange on which the Preferred Securities are then listed or
trading otherwise provides, the Regular Trustees, in their sole
discretion, shall establish all other provisions relating to meetings of
Holders of Securities, including notice of the time, place or purpose of
any meeting at which any matter is to be voted on by any Holders of
Securities, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements, voting
in person or by proxy or any other matter with respect to the exercise of
any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1. REPRESENTATIONS AND WARRANTIES OF PROPERTY TRUSTEE.
The Trustee which acts as initial Property Trustee represents and warrants to
the Trust and to the Sponsor at the date of this Declaration, and each Succes
sor Property Trustee represents and warrants to the Trust and the Sponsor at
the time of the Successor Property Trustee's acceptance of its appointment as
Property Trustee that:
(a) The Property Trustee is a national banking association duly
organized under the laws of the United States of America, with trust power
and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, this Declaration.
49
(b) The execution, delivery and performance by the Property Trustee
of this Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee. This Declaration has been
duly executed and delivered by the Property Trustee, and it constitutes a
legal, valid and binding obligation of the Property Trustee, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency and other similar laws affecting
creditors' rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law).
(c) The execution, delivery and performance of this Declaration by
the Property Trustee does not conflict with or constitute a breach of the
Articles of Organization or By-Laws of the Property Trustee.
(d) No consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Property Trustee of this
Declaration.
SECTION 13.2. REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE.
The Delaware Trustee represents and warrants to the Trust and the Sponsor at
the date of this Declaration, that the Delaware Trustee has been authorized to
perform its obligations under the Certificate of Trust and this Declaration.
This Declaration under Delaware law constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in
equity or at law). The Delaware Trustee satisfies for the Trust Section 3807
of the Business Trust Act.
ARTICLE XIV
SUCCESSOR CORPORATION
SECTION 14.1. SPONSOR MAY CONSOLIDATE, ETC. Nothing contained in
this Declaration or in any of the Securities shall prevent any consolidation or
merger of the Sponsor with or into any other Person or Persons (whether or not
affiliated with the Sponsor), or successive consolidations or mergers in which
the
50
Sponsor or its successor or successors shall be a party or parties, or shall
prevent any sale, conveyance, transfer or other disposition of the property
of the Sponsor or its successor or successors as an entirety, or
substantially as an entirety, to any other Person (whether or not affiliated
with the Sponsor or its successor or successors) authorized to acquire and
operate the same provided that (a) any Person formed in such consolidation or
into which the Sponsor is merged or to which the Sponsor has sold, conveyed,
transferred or otherwise disposed of its properties as an entirety or
substantially as an entirety is an entity validly existing under the laws of
the jurisdiction of its organization and such Person assumes the Sponsor's
obligations under this Declaration and (b) immediately after giving effect to
the transaction no Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default, shall have occurred
and be continuing; PROVIDED, FURTHER, the Sponsor hereby covenants and agrees
that, upon any such consolidation, merger, sale, conveyance, transfer or
other disposition, the due and punctual payment, performance and observance
of all the covenants and conditions of this Declaration to be paid, performed
or observed by the Sponsor, shall be expressly assumed, by supplemental
indenture (which shall conform to the provisions of the Trust Indenture Act,
as then in effect) satisfactory in form to the Property Trustee executed and
delivered to the Property Trustee by the entity formed by such consolidation,
or into which the Sponsor shall have been merged, or by the entity which
shall have acquired such property; and PROVIDED FURTHER that, if the Person
formed in such consolidation or into which the Sponsor is merged or to which
the Sponsor has sold, conveyed, transferred or otherwise disposed of its
properties as an entirety or substantially as an entirety is not organized
and validly existing under the laws of the United States, any state thereof
or the District of Columbia, the supplemental indenture described in this
Section 14.1 shall also contain the following provisions:
"(a) [Such Person] hereby agrees to pay to the Holders of Trust
Securities any additional amounts as may be necessary in order that every net
payment or other amount due on the Trust Securities, after withholding for or
on account of any present or future tax, assessment or governmental charge
imposed upon such Holder of Trust Securities (except for a tax, assessment or
charge imposed solely as a result of a connection between the recipient and
the jurisdiction imposing such tax, assessment or charge) by reason of or as
a result of such payment or other amount being paid by an entity which is not
an entity existing under the laws of the United States or any state thereof
or the District of Columbia, will not be less than the amount provided for in
the Indenture, this Indenture Supplement, the Trust Securities or the
Preferred
51
Securities Guarantee related to the Preferred Securities, as the case may be,
to be then due and payable.
(b) Any litigation based hereon, or arising out of, under, or in
connection with, the Indenture and/or this Supplemental Indenture or any
other document relating hereto or thereto, or any course of conduct, course
of dealing, statements (whether verbal or written) or actions of the Trustee
or [such Person] shall be brought and maintained exclusively in the courts of
the State of Illinois or in the United States District court for the Northern
District of Illinois; PROVIDED, HOWEVER, that any suit seeking enforcement
against any property may be brought at Trustee's or [such Person's] option, in
the courts of any jurisdiction where such property may be found. [Such Person]
hereby expressly and irrevocably submits to the jurisdiction of the courts of
the State of Illinois and of the United States District Court for the Northern
District of Illinois for the purpose of any such litigation as set forth above
and irrevocably agrees to be bound by any judgment rendered thereby in
connection with such litigation. [Such Person] further irrevocably consents to
the service of process by registered mail, postage prepaid, or by personal
service within or without the State of Illinois. [Such Person] hereby
expressly and irrevocably waives, to the fullest extent permitted by law, any
objection which it may have or hereafter may have to the laying of venue of
any such litigation brought in any such court referred to above and any claim
that any such litigation has been brought in an inconvenient forum. To the
extent that [such Person] has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service
or notice, attachment prior to judgment, attachment in aid of execution or
otherwise) with respect to itself or its property, [such Person] hereby
irrevocably waives such immunity in respect of its obligations under the
Indenture and this Supplemental Indenture."
SECTION 14.2. SUCCESSOR PERSON SUBSTITUTED.
(a) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition and upon the assumption by the successor
Person, by supplemental indenture, executed and delivered to the Property
Trustee and satisfactory in form to the Property Trustee, of the due and
punctual payment, performance and observance of all of the covenants and
conditions of this Declaration to be paid, performed or observed by the
Sponsor, such successor Person shall succeed to and be substituted for the
Sponsor with the same effect as if it had been named as the Sponsor herein.
52
(b) Nothing contained in this Declaration or in any of the
Securities shall prevent the Sponsor from merging into itself or acquiring by
purchase or otherwise all or any part of the property of any other Person
(whether or not affiliated with the Sponsor).
SECTION 14.3. EVIDENCE OF CONSOLIDATION, ETC. TO PROPERTY TRUSTEE.
The Property Trustee, subject to the provisions of Section 3.9, may receive
an opinion of counsel as conclusive evidence that any such consolidation,
merger, sale, conveyance, transfer or other disposition, and any such
assumption, comply with the provisions of this Article.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1. NOTICES. All notices provided for in this
Declaration shall be in writing, duly signed by the party giving such notice,
and shall be delivered, telecopied or mailed by registered or certified mail,
as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Holders of the Securities):
TDS CAPITAL I
c/o Telephone and Data Systems, Inc.
30 North LaSalle Street
Chicago, Illinois 60602
Attention: President and
Chief Executive Officer
Facsimile: 312-630-9299
(b) if given to the Property Trustee, at the mailing address set
forth below (or such other address as the Property Trustee may give notice
of to the Holders of the Securities):
The First National Bank of Chicago
One First National Plaza, Suite 0216
Chicago, Illinois 60670-0216
Attention: Corporate Trust Administration
Facsimile: 312-407-4656
(c) if given to the Delaware Trustee, at the mailing address of the
Property Trustee with a copy to the address set
53
forth below (or such other address as the Delaware Trustee may give notice
of to the Holders of the Securities):
First Chicago Delaware Inc.
300 King Street
Wilmington, Delaware 19801
Facsimile: 815-356-0391
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice of to the Trust):
Telephone and Data Systems, Inc.
30 North LaSalle Street
Chicago, Illinois 60602
Attention: President and
Chief Executive Officer
Facsimile: 312-630-9299
(d) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 15.2. GOVERNING LAW. This Declaration and the rights of the
parties hereunder shall be governed by and interpreted in accordance with the
laws of the State of Delaware and all rights and remedies shall be governed by
such laws without regard to principles of conflict of laws.
SECTION 15.3. INTENTION OF THE PARTIES. It is the intention of the
parties hereto that the Trust not be characterized for United States federal
income tax purposes as an association taxable as a corporation or a partnership
but rather, that the Trust be characterized as a grantor trust or otherwise in
a manner such that each Holder of Securities be treated as owning an undivided
beneficial interest in the Subordinated Debentures. The provisions of this
Declaration shall be interpreted to further this intention of the parties.
54
SECTION 15.4. HEADINGS. Headings contained in this Declaration are
inserted for convenience of reference only and do not affect the interpretation
of this Declaration or any provision hereof.
SECTION 15.5. SUCCESSORS AND ASSIGNS. Whenever in this Declaration
any of the parties hereto is named or referred to, the successors and assigns
of such party shall be deemed to be included, and all covenants and agreements
in this Declaration by the Sponsor and the Trustees shall bind and inure to the
benefit of their respective successors and assigns, whether so expressed.
SECTION 15.6. PARTIAL ENFORCEABILITY. If any provision of this
Declaration, or the application of such provision to any Person or circum-
stance, shall be held invalid, the remainder of this Declaration, or the
application of such provision to persons or circumstances other than those to
which it is held invalid, shall not be affected thereby.
SECTION 15.7. COUNTERPARTS. This Declaration may contain more than
one counterpart of the signature page and this Declaration may be executed by
the affixing of the signature of each of the Trustees to one of such
counterpart signature pages. All of such counterpart signature pages shall be
read as though one, and they shall have the same force and effect as though all
of the signers had signed a single signature page.
55
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
--------------------------
as Trustee
--------------------------
as Trustee
--------------------------
as Trustee
THE FIRST NATIONAL BANK OF CHICAGO
Not in its individual capacity but
solely as Property Trustee
By:
------------------------------
Title:
FIRST CHICAGO DELAWARE INC.
Not in its individual capacity
but solely as Delaware Trustee
By:
------------------------------
Title:
TELEPHONE AND DATA SYSTEMS, INC.
as Sponsor
By:
------------------------------
Title:
56
EXHIBIT A
TERMS OF
8.50% TRUST ORIGINATED PREFERRED SECURITIES
8.50% TRUST ORIGINATED COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust
of TDS Capital I dated as of November 18, 1997 (as amended from time to time,
the "Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities and
the Common Securities are set out below (each capitalized term used but not
defined herein has the meaning set forth in the Declaration or, if not
defined in such Declaration, as defined in the Prospectus referred to below):
1. DESIGNATION AND NUMBER.
(a) PREFERRED SECURITIES. Preferred Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of One
hundred fifty million dollars ($150,000,000) and a liquidation amount with
respect to the assets of the Trust of $25 per Preferred Security, are hereby
designated for the purposes of identification only as "8.50% Trust Originated
Preferred Securities" (the "Preferred Securities"). The Preferred Security
Certificates evidencing the Preferred Securities shall be substantially in
the form attached hereto as Annex I, with such changes and additions thereto
or deletions therefrom as may be required by ordinary usage, custom or
practice.
(b) COMMON SECURITIES. Common Securities of the Trust with an aggregate
liquidation amount with respect to the assets of the Trust of Four million
six hundred forty thousand dollars ($4,640,000) and a liquidation amount with
respect to the assets of the Trust of $25 per Common Security, are hereby
designated for the purposes of identification only as "8.50% Trust Originated
Common Securities" (the "Common Securities"). The Common Security
Certificates evidencing the Common Securities shall be substantially in the
form attached hereto as Annex II, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice.
2. DISTRIBUTIONS. (a) Distributions payable on each Security will be
fixed at a rate per annum of 8.50% (the "Coupon Rate") of the stated
liquidation amount of $25 per Security, such
A-1
rate being the rate of interest payable on the Subordinated Debentures to be
held by the Property Trustee. Distributions in arrears will bear interest
compounded quarterly at the Coupon Rate to the extent permitted by applicable
law. The term "Distributions," as used herein, includes any such interest
payable unless otherwise stated. A Distribution is payable only to the
extent that payments are made in respect of the Subordinated Debentures held
by the Property Trustee. Distributions on Preferred Securities shall be paid
to the extent that the Trust has funds available for the payment of
distributions in the Property Trustee Account. The amount of Distributions
payable for any period will be computed for any full quarterly Distribution
period on the basis of a 360-day year of twelve 30-day months, and for any
period shorter than a full quarterly Distribution period, on the basis of the
actual number of days elapsed in such a 90-day quarter.
(b) Distributions on the Securities will be cumulative, will accrue from
the date of initial issuance of such Securities and will be payable quarterly
in arrears, on March 31, June 30, September 30, and December 31 of each year,
commencing on December 31, 1997, except as otherwise described below. The
Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period from time to time on the
Subordinated Debentures for a period not exceeding twenty consecutive
quarters (each such period, an "Extension Period") and, as a consequence of
such extension, Distributions will also be deferred. Despite such deferral,
quarterly Distributions will continue to accrue with interest thereon (to the
extent permitted by applicable law) at the Coupon Rate, compounded quarterly
during any such Extension Period. Prior to the termination of any such
Extension Period, the Debenture Issuer may further extend such Extension
Period; PROVIDED that such Extension Period, together with all such previous
and further extensions thereof, may not exceed twenty consecutive quarters or
extend beyond the maturity of the Subordinated Debentures. Payments of
accrued Distributions will be payable to Holders as they appear on the books
and records of the Trust on the first record date after the end of the
Extension Period. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates. While the Preferred Securities remain in book-entry only form,
the relevant record dates shall be one Business Day prior to the relevant
payment dates which payment dates correspond to the interest payment dates on
the Subordinated
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Debentures. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment in respect of the Preferred
Securities will be made as described under the heading "Description of the
Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust
Company" in the Prospectus dated October 30, 1997, as supplemented by the
Prospectus Supplement dated November 13, 1997 (the "Prospectus") of the Trust
included in the Registration Statement on Form S-3 of the Sponsor and the
Trust. The relevant record dates for the Common Securities, and if the
Preferred Securities shall not continue to remain in book-entry-only form,
the relevant record dates for the Preferred Securities, shall conform to the
rules of any securities exchange on which the securities are listed and, if
none, shall be selected by the Regular Trustees, which dates shall be at
least one Business Day but less than 60 Business Days before the relevant
payment dates which payment dates correspond to the interest payment dates on
the Subordinated Debentures. Distributions payable on any Securities that
are not punctually paid on any Distribution payment date, as a result of the
Debenture Issuer having failed to make a payment under the Subordinated
Debentures, will cease to be payable to the Person in whose name such
Securities are registered on the relevant record date, and such defaulted
Distribution will instead be payable to the Person in whose name such
Securities are registered on the special record date or other specified date
determined in accordance with the Indenture. If any date on which
Distributions are payable on the Securities is not a Business Day, then
payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
(d) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION. In the event of any
voluntary or involuntary dissolution, winding-up or termination of the Trust,
the Holders of the Securities will be entitled to receive out of the assets
of the Trust available for distribution to Holders of Securities, after
paying or making reasonable provision to pay all claims and obligations of
the Trust in accordance with Section 3808(e) of the Business Trust Act, an
amount equal to the aggregate of the stated liquidation amount of $25 per
Security plus accrued and unpaid Distributions thereon to
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the date of payment (such amount being the "Liquidation Distribution"),
unless, in connection with such dissolution, winding-up or termination,
Subordinated Debentures in an aggregate principal amount equal to the
aggregate stated liquidation amount of such Securities, with an interest rate
equal to the Coupon Rate of, and bearing accrued and unpaid interest in an
amount equal to the accrued and unpaid Distributions on, such Securities,
shall be distributed on a Pro Rata basis to the Holders of the Securities in
exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities shall be paid on a Pro Rata basis.
4. REDEMPTION. (a) Upon the repayment of the Subordinated Debentures
in whole or in part, whether at maturity or upon acceleration, redemption or
otherwise, the proceeds from such repayment or payment shall be
simultaneously applied to redeem Securities having an aggregate stated
liquidation amount equal to the aggregate principal amount of the
Subordinated Debentures so repaid or redeemed at a redemption price of $25
per Security plus an amount equal to accrued and unpaid Distributions thereon
at the date of the redemption, payable in cash (the "Redemption Price").
Holders will be given not less than 30 nor more than 60 days notice of such
redemption except in the case of payments upon maturity.
(b) If fewer than all the outstanding Securities are to be so redeemed,
the Common Securities and the Preferred Securities will be redeemed Pro Rata
and the Preferred Securities to be redeemed will be as described in Section
4(f)(ii) below.
(c) If, at any time, a Tax Event (as defined below) shall occur and be
continuing, the Regular Trustees, upon not less than 30 nor more than 60 days
notice, may redeem the Securities in whole or in part for cash within 90 days
following the occurrence of such Tax Event (the "90 Day Period") at the
Redemption Price on a Pro Rata basis PROVIDED, that, if at the time there is
available to the Sponsor or Trust the opportunity to eliminate, within the 90
Day Period, the Tax Event by taking some ministerial action ("Ministerial
Action"), such as filing a form or making an election, or pursuing some other
similar reasonable measure that has no adverse effect on the Sponsor, the
Trust, the Debenture Issuer or the Holders of the Securities, the Trust will
pursue such Ministerial Action in lieu of redemption.
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"TAX EVENT" means that the Regular Trustees shall have received an
opinion from independent tax counsel experienced in such matters (a
"Redemption Tax Opinion") to the effect that, on or after the latest date of
the Prospectus, as a result of (a) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein, or (b) any amendment to, or change in, an interpretation or
application of any such laws or regulations by any legislative body, court,
governmental agency or regulatory authority, which amendment or change is
enacted, promulgated, issued or announced or which interpretation or
pronouncement is issued or announced or which action is taken, in each case
on or after the latest date of the Prospectus, there is more than an
insubstantial risk that interest payable by the Debenture Issuer to the Trust
on the Subordinated Debentures is not, or within 90 days of the date thereof
will not be, deductible, in whole or in part, by the Debenture Issuer for
United States federal income tax purposes.
(d) The Trust may not redeem fewer than all the outstanding Securities
unless all accrued and unpaid Distributions have been paid on all Securities
for all quarterly Distribution periods terminating on or before the date of
redemption.
5. DISTRIBUTION OF SUBORDINATED DEBENTURES IN EXCHANGE FOR SECURITIES.
(a) On and from the date fixed by the Trustees for any distribution of
Subordinated Debentures upon dissolution of the Trust: (i) the Securities
will no longer be deemed to be outstanding, (ii) The Depository Trust Company
(the "Depositary") or its nominee (or any successor Clearing Agency or its
nominee), as the record Holder of the Preferred Securities, will receive a
registered global certificate or certificates representing the Subordinated
Debentures to be delivered upon such distribution, and (iii) any certificates
representing Securities, except for certificates representing Preferred
Securities held by the Depository or its nominee (or any successor Clearing
Agency or its nominee), will be deemed to represent beneficial interests in
the Subordinated Debentures having an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to
the Coupon Rate of, and accrued and unpaid interest equal to accrued and
unpaid Distributions on, such Securities until such certificates are
presented to the Debenture Issuer or its agent for transfer or reissue.
(b) If the Subordinated Debentures are distributed to holders of the
Securities, pursuant to the terms of the Indenture, the Debenture Issuer will
use its best efforts to have the Subordinated Debentures listed on the
American Stock Exchange or on
A-5
such other exchange as the Preferred Securities were listed immediately prior
to the distribution of the Subordinated Debentures.
6. REDEMPTION OR DISTRIBUTION PROCEDURES. (a) Notice of any redemption
of, or notice of distribution of Subordinated Debentures in exchange for, the
Securities (a "Redemption/Distribution Notice") will be given by the Trust by
mail to each Holder of Securities to be redeemed or exchanged not fewer than
30 nor more than 60 days before the date fixed for redemption or exchange
thereof which, in the case of a redemption, will be the date fixed for
redemption of the Subordinated Debentures. For purposes of the calculation
of the date of redemption or exchange and the dates on which notices are
given pursuant to this Section 6(a), a Redemption/Distribution Notice shall
be deemed to be given on the day such notice is first mailed by first-class
mail, postage prepaid, to Holders of Securities. Each
Redemption/Distribution Notice shall be addressed to the Holders of
Securities at the address of each such Holder appearing in the books and
records of the Trust. No defect in the Redemption/Distribution Notice or in
the mailing of either thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect to any other
Holder.
(b) In the event that fewer than all the outstanding Securities are to
be redeemed, the Securities to be redeemed shall be redeemed Pro Rata from
each Holder of Preferred Securities; PROVIDED that if, as a result of such
Pro Rata redemption, Clearing Agency Participants would hold fractional
interests in the Preferred Securities, the Depositary will adjust the amount
of the interest of each Clearing Agency Participant to be redeemed to avoid
such fractional interests.
(c) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Subordinated Debentures are redeemed as set out in this Section 4 (which
notice will be irrevocable), then (i) while the Preferred Securities are in
book entry only form, with respect to the Preferred Securities, by 12:00
noon, New York City time, on the redemption date, PROVIDED that the Debenture
Issuer has paid the Property Trustee a sufficient amount of cash in
connection with the related redemption or maturity of the Subordinated
Debentures, the Property Trustee will deposit irrevocably with the Depositary
or its nominee (or successor Clearing Agency or its nominee) funds sufficient
to pay the applicable Redemption Price with respect to the Preferred
Securities and will give the Depositary irrevocable instructions and
authority to pay the Redemption Price to the Holders of the Preferred
Securities, and (ii) if the Preferred Securities are issued in definitive
form, with respect to the
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Preferred Securities, and with respect to the Common Securities, PROVIDED
that the Debenture Issuer has paid the Property Trustee a sufficient amount
of cash in connection with the related redemption or maturity of the
Subordinated Debentures, the Property Trustee will pay the relevant
Redemption Price to the Holders of such Securities by check mailed to the
address of the relevant Holder appearing on the books and records of the
Trust on the redemption date. If a Redemption/Distribution Notice shall have
been given and funds have been deposited as required, if applicable, then
immediately prior to the close of business on the date of such deposit, or on
the redemption date, as applicable, all rights of Holders of such Securities
so called for redemption will cease, except the right of the Holders of such
Securities to receive the Redemption Price, but without interest on such
Redemption Price. Neither the Regular Trustees nor the Trust shall be
required to register or cause to be registered the transfer of any Securities
which have been so called for redemption. If any date fixed for redemption
of Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect of Securities is
improperly withheld or refused and not paid either by the Property Trustee or
by the Sponsor as Guarantor pursuant to the Preferred Securities Guarantee,
Distributions on such Securities will continue to accrue, from the original
redemption date to the actual date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
(d) Redemption/Distribution Notices shall be sent to (i) in respect of
the Preferred Securities, the Depositary or its nominee (or any successor
Clearing Agency or its nominee) if Global Certificates have been issued or if
Definitive Preferred Security Certificates have been issued, to the Holders
thereof, and (ii) in respect of the Common Securities, to the Holders thereof.
(e) Subject to applicable law (including, without limitation, United
States federal securities laws), the Sponsor or any of its Affiliates may at
any time and from time to time purchase outstanding Preferred Securities by
tender, in the open market or by private agreement.
7. VOTING RIGHTS - PREFERRED SECURITIES. (a) Except as provided under
Sections 7(b) and 9 and as otherwise required by law
A-7
and the Declaration, the Holders of the Preferred Securities will have no
voting rights.
(b) The Holders of a Majority in liquidation amount of the Preferred
Securities, voting separately as a class, may direct the time, method and
place of conducting any proceeding for any remedy available to the Property
Trustee, or direct the of exercise of any trust or power conferred upon the
Property Trustee under the Declaration, including (i) directing the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee, or executing any trust or power conferred on the Debenture
Trustee with respect to the Subordinated Debentures, (ii) waive any past
default and its consequences that are waivable under the Indenture, (iii)
exercise any right to rescind or annul a declaration that the principal of
all the Subordinated Debentures shall be due and payable, or (iv) consent to
any amendment, modification or termination of the Indenture or the
Subordinated Debentures, where such consent shall be required, PROVIDED,
HOWEVER, that where a consent under the Indenture would require the consent
of greater than a majority of the Holders in principal amount of Subordinated
Debentures affected thereby (a "Super Majority"), the Property Trustee may
only give such consent at the direction of the Holders of at least the
proportion in liquidation amount of the Preferred Securities which the
relevant Super Majority represents of the aggregate principal amount of the
Subordinated Debentures. The Property Trustee shall not take any action in
accordance with the directions of the Holders of the Preferred Securities
under this paragraph unless the Property Trustee has obtained an opinion of
independent tax counsel to the effect that, for the purposes of United States
federal income tax, the Trust will not be classified as other than a grantor
trust on account of such action and that each Holder of Securities will
continue to be treated as owning an undivided beneficial interest in the
Subordinated Debentures on account of such action. If the Property Trustee
fails to enforce its rights under the Declaration, any Holder of Preferred
Securities may, to the fullest extent permitted by law, institute a legal
proceeding directly against any Person to enforce the Property Trustee's
rights under the Declaration, without first instituting a legal proceeding
against the Property Trustee or any other Person.
Any approval or direction of Holders of Preferred Securities may be given
at a separate meeting of Holders of Preferred Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such Holders
A-8
is to be taken, to be mailed to each Holder of record of Preferred
Securities. Each such notice will include a statement setting forth (i) the
date of such meeting or the date by which such action is to be taken, (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matter upon which written
consent is sought and (iii) instructions for the delivery of proxies or
consents.
No vote or consent of the Holders of the Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities or to
distribute the Subordinated Debentures in accordance with the Declaration and
the terms of the Securities.
Notwithstanding that Holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Sponsor, or by any entity directly
or indirectly controlling or controlled by or under direct or indirect common
control with the Sponsor, shall not be entitled to vote or consent and shall,
for purposes of such vote or consent, be treated as if they were not
outstanding.
8. VOTING RIGHTS - COMMON SECURITIES. (a) Except as provided under
Section 8(b) and (c) and as otherwise required by law and the Declaration,
the Holders of the Common Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees.
(c) Only after the Event of Default with respect to the Preferred
Securities has been cured, waived or otherwise eliminated, the Holders of a
Majority in liquidation amount of the Common Securities, voting separately as
a class, may direct the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee, or exercising any trust or
power conferred upon the Property Trustee under the Declaration, including
(i) directing the time, method and place of conducting any proceeding for any
remedy available to the Debenture Trustee, or executing any trust or power
conferred on the Debenture Trustee with respect to the Subordinated
Debentures, (ii) waive any past default and its consequences that is waivable
under Section 6.06 of the Indenture, (iii) exercise any right to rescind or
annul a declaration that the principal of all the Subordinated Debentures
shall be due and payable, or (iv) consent to any amendment, modification or
termination of the Indenture or the Subordinated
A-9
Debentures, where such consent shall be required, PROVIDED, HOWEVER,
that where a consent under the Indenture would require the consent of
a Super Majority, the Property Trustee may only give such consent at the
direction of the Holders of at least the proportion in liquidation amount of
the Common Securities which the relevant Super Majority represents of the
aggregate principal amount of the Subordinated Debentures. The Property
Trustee shall not take any action in accordance with the direc tions of the
Holders of the Common Securities under this paragraph unless the Property
Trustee has obtained an opinion of independent tax counsel to the effect
that, for the purposes of United States federal income tax, the Trust will
not be classified as other than a grantor trust on account of such action and
that each Holder of Securities will continue to be treated as owning an
undivided beneficial interest in the Subordinated Debentures on account of
such action. If the Property Trustee fails to enforce its rights under the
Declaration, any Holder of Common Securities may, to the fullest extent
permitted by law, institute a legal proceeding directly against any Person to
enforce the Property Trustee's rights under the Declaration, without first
instituting a legal proceeding against the Property Trustee or any other
Person.
Any approval or direction of Holders of Common Securities may be given at
a separate meeting of Holders of Common Securities convened for such purpose,
at a meeting of all of the Holders of Securities in the Trust or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which Holders of Common Securities are entitled to vote, or of any matter
upon which action by written consent of such Holders is to be taken, to be
mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to
vote or of such matter upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to
distribute the Subordinated Debentures in accordance with the Declaration and
the terms of the Securities.
9. AMENDMENTS. If any proposed amendment to the Declaration provides
for, or the Regular Trustees otherwise propose to effect, (i) any action that
would adversely affect the powers, preferences or special rights of the
Securities, whether by way of amendment to the Declaration or otherwise, or
(ii) the dissolution, winding-up or termination of the Trust, other than as
described in
A-10
Section 8.1 of the Declaration, then the Holders of outstanding Securities,
as a single class, will be entitled to vote on such amendment or proposal
(but not on any other amendment or proposal) and such amendment or proposal
shall not be effective except with the approval of the Holders of at least
66-2/3 in liquidation amount of the Securities affected thereby, provided
that a reduction of the aggregate liquidation amount or the distribution
rate, or a change in the payment dates or maturities of the Preferred
Securities shall not be permitted without the consent of each holder of the
Preferred Securities. In the event any amendment or proposal referred to in
clause (i) above would adversely affect only the Preferred Securities or the
Common Securities, then only the affected class will be entitled to vote on
such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of 66-2/3 in liquidation amount of such
class of Securities.
10. PRO RATA. A reference in these terms of the Securities to any
payment, distribution or treatment as being "Pro Rata" shall mean pro rata to
each Holder of Securities according to the aggregate liquidation amount of
the Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities outstanding unless, in relation to a
payment, an Event of Default under the Indenture has occurred and is
continuing, in which case any funds available to make such payment shall be
paid first to each Holder of the Preferred Securities pro rata according to
the aggregate liquidation amount of Preferred Securities held by the relevant
Holder relative to the aggregate liquidation amount of all Preferred
Securities outstanding, and only after satisfaction of all amounts owed to
the Holders of the Preferred Securities, to each Holder of Common Securities
pro rata according to the aggregate liquidation amount of Common Securities
held by the relevant Holder relative to the aggregate liquidation amount of
all Common Securities outstanding.
11. RANKING. The Preferred Securities rank PARI PASSU and payment
thereon shall be made Pro Rata with the Common Securities except that when an
Event of Default occurs and is continuing, the rights of Holders of the
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to
payment of the Holders of the Preferred Securities.
12. LISTING. The Regular Trustees shall use their best efforts to
cause the Preferred Securities to be listed for quotation on the American
Stock Exchange, Inc.
A-11
13. ACCEPTANCE OF SECURITIES GUARANTEE AND INDENTURE. Each Holder of
Preferred Securities and Common Securities, by the acceptance thereof, agrees
to the provisions of the Preferred Securities Guarantee, including the
subordination provisions therein and to the provisions therein and to the
provisions of the Indenture.
14. NO PREEMPTIVE RIGHTS. The Holders of the Securities shall have no
preemptive rights to subscribe for any additional Securities.
15. MISCELLANEOUS. These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration and the Preferred
Securities Guarantee to a Holder without charge on written request to the
Sponsor at its principal place of business.
A-12
ANNEX I
FORM OF PREFERRED SECURITY CERTIFICATE
(IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT-
This Preferred Security is a Global Certificate within the meaning of the
Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the Depositary.
This Preferred Security is exchangeable for Preferred Securities registered
in the name of a person other than the Depositary or its nominee only in the
limited circumstances described in the Declaration and no transfer of this
Preferred Security as a whole (except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depository) may be registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York,
New York) to the Trust or its agent for registration of transfer, exchange or
payment, and any Preferred Security issued is registered in the name of Cede
& Co. or such other name as is requested by an authorized representative of
The Depository Trust Company and any payment hereon is made to Cede & Co.,
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON
IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest
herein.]
Certificate Number Number of Preferred Securities
CUSIP NO. ___________
Certificate Evidencing Preferred Securities
of
TDS Capital I
Preferred Securities
(Liquidation Amount $25 per Preferred Security)
TDS CAPITAL I, a business trust formed under the laws of the State of
Delaware (the "TRUST"), hereby certifies that ________ (the "Holder") is the
registered owner of preferred securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated the ___% Trust
Originated Preferred Securities (liquidation amount $25 per Preferred Security)
(the "Preferred Securities"). The Preferred Securities are transferable
I-1
on the books and records of the Trust, in person or by a duly authorized
attorney, upon surrender of this certificate duly endorsed and in proper
form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities
represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of _______, 1997, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Preferred
Securities as set forth in Exhibit A to the Declaration. Capitalized terms
used herein but not defined herein shall have the respective meanings given
them in the Declaration. The Holder is entitled to the benefits of the
Preferred Securities Guarantee to the extent provided therein and, by
acceptance hereof, agrees to the subordination provisions and other terms of
the Preferred Securities Guarantee. The Trust will provide a copy of the
Declaration and the Preferred Securities Guarantee to the Holder without
charge upon written request to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat the Subordinated
Debentures as indebtedness and the Preferred Securities as evidence of
indirect beneficial ownership in the Subordinated Debentures.
I-2
IN WITNESS WHEREOF, the Trust has executed this certificate this
________ day of ________, 1997.
TDS CAPITAL I
By:
-------------------------
as Regular Trustee
By:
-------------------------
as Regular Trustee
By:
-------------------------
as Regular Trustee
--------------------------
I-3
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Preferred Security Certificate to:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -----------------------------
(Insert assignee's social security or tax identification number)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -----------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
agent to
- -----------------------------------------------------------------
transfer this Preferred Security Certificate on the books of the Trust. The
agent may substitute another to act for him or her.
Date: -------------------------
Signature:
---------------------
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate.)
ANNEX II
FORM OF COMMON SECURITY CERTIFICATE
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
TDS CAPITAL I
Common Securities
(Liquidation Amount $25 per Common Security)
TDS CAPITAL I, a business trust formed under the laws of the State
of Delaware (the "Trust"), hereby certifies that _____ (the "Holder") is the
registered owner of common securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated the ___% Trust
Originated Common Securities (liquidation amount $25 per Common Security)
(the "Common Securities"). Except as set forth in the Declaration (as
defined below), the Common Securities are transferable on the books and
records of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer.
The designation, rights, privileges, restrictions, preferences and other
terms and provisions of the Common Securities represented hereby are issued
and shall in all respects be subject to the provisions of the Amended and
Restated Declaration of Trust of the Trust dated as of ________, 1997, as the
same may be amended from time to time (the "Declaration"), including the
designation of the terms of the Common Securities as set forth in Exhibit A
to the Declaration. Capitalized terms used herein but not defined herein
shall have the respective meanings given them in the Declaration. The Trust
will provide a copy of the Declaration to the Holder without charge upon
written request to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat the Subordinated Debentures
as indebtedness and the Common Securities as evidence of indirect beneficial
ownership in the Subordinated Debentures.
II-1
IN WITNESS WHEREOF, the Trust has executed this certificate this ____
day of ________, 1997.
TDS CAPITAL I
By:
-------------------------
as Regular Trustee
By:
-------------------------
as Regular Trustee
By:
-------------------------
as Regular Trustee
------------------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
- -------------------------------------------------------------------------------
- ---------------------------------------------------
(Insert assignee's social security or tax identification number)
- -------------------------------------------------------------------------------
- ---------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
agent to
- ---------------------------------------------------------------
transfer this Common Security Certificate on the books of the Trust. The agent
may substitute another to act for him or her.
Date:
-------------------------
Signature:
--------------------
(Sign exactly as your name appears on the other side of this Common Security
Certificate.)
II-2