__________ Shares
TELEPHONE AND DATA SYSTEMS, INC.
TDS Telecommunications Group Shares
INTERNATIONAL UNDERWRITING AGREEMENT
____________, 1998
SMITH BARNEY INC.
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL
GOLDMAN SACHS INTERNATIONAL
As Lead Managers of the Several Managers
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Telephone and Data Systems, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell an aggregate of _________ shares (the
"Firm Shares") of its TDS Telecommunications Group Shares, $0.01 par value
per share (the "TDS Telecom Group Common Stock"), to the several Managers
named in Schedule I hereto (the "Managers") for whom Smith Barney Inc. and
Credit Suisse First Boston Corporation are acting as representatives (the
"Lead Managers"). The Company also proposes to sell to the Managers, upon
the terms and conditions set forth in Section 2 hereof, up to an additional
_______________ shares (the "Additional Shares") of Common Stock. The Firm
Shares and the Additional Shares are hereinafter collectively referred to as
the "Shares."
It is understood that the Company is concurrently entering into a U.S.
Underwriting Agreement, dated the date hereof (the "U.S. Underwriting
Agreement"), providing for the sale of __________ shares of the TDS Telecom
Group Common Stock (the "Firm U.S. Shares") (plus an option granted by the
Company to purchase up to an additional _____ shares of Common Stock (the
"Additional U.S. Shares") solely for the purpose of covering over-allotments)
through arrangements with certain underwriters in the United States and
Canada (the "U.S. Underwriters"), for whom Smith Barney Inc., Credit Suisse
First Boston Corporation, Donaldson, Lufkin & Jenrette Securities Corporation
and Goldman, Sachs & Co. are acting as representatives (the
"Representatives"). All shares of Common Stock proposed to be offered to the
U.S. Underwriters pursuant to the U.S. Underwriting Agreement, including the
Firm U.S. Shares and the Additional U.S. Shares are herein called the U.S.
Shares. The Shares and the U.S. Shares, collectively, are herein called the
"Underwritten Shares."
The Company also understands that the Lead Managers and the
Representatives have entered into an agreement (the "Agreement Between U.S.
Underwriters and Managers") contemplating the coordination of certain
transactions between the Managers and U.S. Underwriters and that, pursuant
thereto and subject to the conditions set forth therein, the Managers may
purchase from the U.S. Underwriters a portion of the U.S. Shares or sell to
the Representatives a portion of the Shares. The Company understands that
any such purchases and sales between the Managers and the U.S. Underwriters
shall be governed by the Agreement Between U.S. Underwriters and Managers and
shall not be governed by the terms of this Agreement or the U.S. Underwriting
Agreement.
The Company wishes to confirm as follows its agreements with you and the
other several Managers on whose behalf you are acting, in connection with the
several purchases of the Shares by the Managers.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has prepared
and filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-3 under the Act (the "registration
statement"), including prospectuses subject to completion relating to the
Underwritten Shares. The term "Registration Statement" as used in this
Agreement means the registration statement (including all financial schedules
and exhibits), as amended at the time it becomes effective, or, if the
registration statement became effective prior to the execution of this
Agreement, as supplemented or amended prior to the execution of this
Agreement. If it is contemplated, at the time this Agreement is executed,
that a post-effective amendment to the registration statement will be filed
and must be declared effective before the offering of the Shares may
commence, the term "Registration Statement" as used in this Agreement means
the registration statement as amended by said post-effective amendment. If
an abbreviated registration statement is prepared and filed with the
Commission in accordance with Rule 462(b) under the Act (an "Abbreviated
Registration Statement"), the term "Registration Statement" as used in this
Agreement includes the Abbreviated Registration Statement. The term
"Prospectuses" as used in this Agreement means the prospectuses in the form
included in the Registration Statement, or, if the prospectuses included in
the Registration Statement omit information in reliance on Rule 430A under
the Act and such information is included in the prospectuses filed with the
Commission pursuant to Rule 424(b) under the Act, the term "Prospectuses" as
used in this Agreement means the prospectuses in the form included in the
Registration Statement as supplemented by the addition of the Rule 430A
information contained in the prospectuses filed with the Commission pursuant
to Rule 424(b). The term "Prepricing Prospectuses" as used in this Agreement
means the prospectuses subject to completion in the form included in the
registration statement at the time of the initial filing of the registration
statement with the Commission, and as such prospectuses shall have been
amended from time to time prior to the date of the Prospectuses.
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It is understood that two forms of Prepricing Prospectus and two forms
of Prospectus are to be used in connection with the offering and sale of the
Underwritten Shares: a Prepricing Prospectus and a Prospectus relating to
the U.S. Shares that are to be offered and sold in the United States (as
defined herein) or Canada (as defined herein) to U.S. or Canadian Persons
(the "U.S. Prepricing Prospectus" and the "U.S. Prospectus," respectively)
and a Prepricing Prospectus and a Prospectus relating to the Shares which are
to be offered and sold outside the United States or Canada to persons other
than U.S. or Canadian Persons (the "International Prepricing Prospectus" and
the "International Prospectus," respectively). The U.S. Prospectus and the
International Prospectus are herein collectively called the "Prospectuses,"
and the U.S. Prepricing Prospectus and the International Prepricing
Prospectus are herein called the "Prepricing Prospectuses." For purposes of
this Agreement: "U.S. or Canadian Person" means any resident or national of
the United States or Canada, any corporation, partnership or other entity
created or organized in or under the laws of the United States or Canada or
any estate or trust the income of which is subject to United States or
Canadian income taxation regardless of the source of its income (other than
the foreign branch of any U.S. or Canadian Person), and includes any United
States or Canadian branch of a person other than a U.S. or Canadian Person;
"United States" means the United States of America (including the states
thereof and the District of Columbia) and its territories, its possessions
and other areas subject to its jurisdiction; and "Canada" means Canada and
its territories, its possessions and other areas subject to its jurisdiction.
Any reference in this Agreement to the registration statement, the
Registration Statement, any Prepricing Prospectus or the Prospectuses shall
be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Act, as of the date of the
registration statement, the Registration Statement, such Prepricing
Prospectus or the Prospectuses, as the case may be, and any reference to any
amendment or supplement to the registration statement, the Registration
Statement, any Prepricing Prospectus or the Prospectus shall be deemed to
refer to and include any documents filed after such date under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") which, upon filing, are
incorporated by reference therein, as required by paragraph (b) of Item 12 of
Form S-3. As used herein, the term "Incorporated Documents" means the
documents which at the time are incorporated by reference in the registration
statement, the Registration Statement, any Prepricing Prospectus, the
Prospectuses, or any amendment or supplement thereto.
2. AGREEMENTS TO SELL AND PURCHASE. Subject to such adjustments as
you may determine in order to avoid fractional shares, the Company hereby
agrees, subject to all the terms and conditions
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set forth herein, to issue and sell to each Manager and, upon the basis of
the representations, warranties and agreements of the Company herein
contained and subject to all the terms and conditions set forth herein, each
Manager agrees, severally and not jointly, to purchase from the Company, at a
purchase price of $ per Share (the "purchase price per share"), the
number of Firm Shares which bears the same proportion to the aggregate number
of Firm Shares to be issued and sold by the Company as the number of Firm
Shares set forth opposite the name of such Manager in Schedule I hereto (or
such number of Firm Shares increased as set forth in Section 10 hereof) bears
to the aggregate number of Firm Shares to be sold by the Company.
The Company also agrees, subject to all the terms and conditions set
forth herein, to sell to the Managers, and, upon the basis of the
representations, warranties and agreements of the Company herein contained
and subject to all the terms and conditions set forth herein, the Managers
shall have the right to purchase from the Company, at the purchase price per
share, pursuant to an option (the "over-allotment option") which may be
exercised at any time and from time to time prior to 9:00 P.M., New York City
time, on the 30th day after the date of the U.S. Prospectus (or, if such 30th
day shall be a Saturday or Sunday or a holiday, on the next business day
thereafter when the American Stock Exchange is open for trading), up to an
aggregate of Additional Shares. Additional Shares may be purchased
only for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. Upon any exercise of the over-allotment option,
each Manager, severally and not jointly, agrees to purchase from the Company
the number of Additional Shares (subject to such adjustments as you may
determine in order to avoid fractional shares) which bears the same
proportion to the number of Additional Shares as the number of Firm Shares
set forth opposite the name of such Manager in Schedule I hereto (or such
number of Firm Shares increased as set forth in Section 10 hereof) bears to
the aggregate number of Firm Shares.
3. TERMS OF PUBLIC OFFERING. The Company has been advised by you that
the Managers propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement and this Agreement
have become effective as in your judgment is advisable and initially to offer
the Shares upon the terms set forth in the U.S. Prospectus.
4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR. Delivery to the
Managers of and payment for the Firm Shares shall be made at the office of
Smith Barney Inc., 388 Greenwich Street, New York, NY 10013, at 10:00 A.M.,
New York City time, on , 1998 (the "Closing Date"). The place of
closing for the Firm Shares and the Closing Date may be varied by agreement
between you and the Company.
Delivery to the Managers of and payment for any Additional Shares to be
purchased by the Managers shall be made at the aforementioned office of Smith
Barney Inc. at such time on such date (the "Option Closing Date"), which may
be the same as the Closing
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Date but shall in no event be earlier than the Closing Date nor earlier than
two nor later than ten business days after the giving of the notice
hereinafter referred to, as shall be specified in a written notice from you
on behalf of the Managers to the Company of the Managers' determination to
purchase a number, specified in such notice, of Additional Shares. The place
of closing for any Additional Shares and the Option Closing Date for such
Shares may be varied by agreement between you and the Company.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such
denominations as you shall request prior to 9:30 A.M., New York City time, on
the second business day preceding the Closing Date or any Option Closing
Date, as the case may be. Such certificates shall be made available to you
in New York City for inspection and packaging not later than 9:30 A.M., New
York City time, on the business day next preceding the Closing Date or the
Option Closing Date, as the case may be. The certificates evidencing the
Firm Shares and any Additional Shares to be purchased hereunder shall be
delivered to you on the Closing Date or the Option Closing Date, as the case
may be, against payment of the purchase price therefor in immediately
available funds.
5. AGREEMENTS OF THE COMPANY. The Company agrees with the several
Managers as follows:
(a) If, at the time this Agreement is executed and delivered, it
is necessary for the Registration Statement or a post-effective amendment
thereto to be declared effective before the offering of the Shares may
commence, the Company will endeavor to cause the Registration Statement or
such post-effective amendment to become effective as soon as possible and
will advise you promptly and, if requested by you, will confirm such advice
in writing, when the Registration Statement or such post-effective amendment
has become effective.
(b) The Company will advise you promptly and, if requested by you,
will confirm such advice in writing: (i) of any request by the Commission for
amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus or the Prospectuses or for additional information; (ii) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of the suspension of qualification of the
Shares for offering or sale in any jurisdiction or the initiation of any
proceeding for such purpose; and (iii) within the period of time referred to
in paragraph (f) below, of any change in the Company's condition (financial
or other), business, properties, net worth or results of operations, or of
the happening of any event, which makes any statement of a material fact made
in the Registration Statement or the Prospectuses (as then amended or
supplemented) untrue or which requires the making of any additions to or
changes in the Registration Statement or the Prospectuses (as then amended or
supplemented) in order to state a material fact required by the Act or the
regulations thereunder to be stated therein or necessary in
5
order to make the statements therein not misleading, or of the necessity to
amend or supplement the Prospectuses (as then amended or supplemented) to
comply with the Act or any other law. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration
Statement, the Company will make every reasonable effort to obtain the
withdrawal of such order at the earliest possible time.
(c) The Company will furnish to you, without charge (i) five
signed copies of the registration statement as originally filed with the
Commission and of each amendment thereto, including financial statements and
all exhibits to the registration statement, (ii) such number of conformed
copies of the registration statement as originally filed and of each
amendment thereto, but without exhibits, as you may reasonably request, (iii)
such number of copies of the Incorporated Documents, without exhibits, as you
may reasonably request, and (iv) five copies of the exhibits to the
Incorporated Documents.
(d) The Company will not file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectuses or, prior
to the end of the period of time referred to in the first sentence in
paragraph (f) below, file any document which, upon filing becomes an
Incorporated Document, of which you shall not previously have been advised or
to which, after you shall have received a copy of the document proposed to be
filed, you shall reasonably object.
(e) Prior to the execution and delivery of this Agreement, the
Company has delivered to you, without charge, in such quantities as you have
reasonably requested, copies of each form of the International Prepricing
Prospectus. The Company consents to the use, in accordance with the
provisions of the Act and with the securities or Blue Sky laws of the
jurisdictions in which the Shares are offered by the several Managers and by
dealers, prior to the date of the International Prospectus, of each
International Prepricing Prospectus so furnished by the Company.
(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as a prospectus is
required by the Act to be delivered in connection with sales by any Manager
or dealer, the Company will deliver to each Manager and each dealer, without
charge, as many copies of the International Prospectus (and of any amendment
or supplement thereto) as you may reasonably request. The Company consents
to the use of the International Prospectus (and of any amendment or
supplement thereto) in accordance with the provisions of the Act and with the
securities laws of the jurisdictions in which the Shares are offered by the
several Managers and by all dealers to whom Shares may be sold, both in
connection with the offering and sale of the Shares and for such period of
time thereafter as the International Prospectus is required by the Act to be
delivered in connection with sales by any Manager or dealer. If during such
period of time any event shall occur that in the judgment of the
6
Company or in the opinion of counsel for the Managers is required to be set
forth in the International Prospectus (as then amended or supplemented) or
should be set forth therein in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or if
it is necessary to supplement or amend the International Prospectus (or to
file under the Exchange Act any document which, upon filing, becomes an
Incorporated Document) in order to comply with the Act or any other law, the
Company will forthwith prepare and, subject to the provisions of paragraph
(d) above, file with the Commission an appropriate supplement or amendment
thereto (or to such document), and will furnish to the Managers and dealers a
reasonable number of copies thereof.
(g) The Company will cooperate with you and with counsel for the
Managers in connection with the registration or qualification of the Shares
for offering and sale by the Managers and by dealers under the securities
laws of such jurisdictions as you may designate and will file such consents
to service of process or other documents necessary or appropriate in order to
effect such registration or qualification; provided that in no event shall
the Company be obligated to qualify to do business in any jurisdiction where
it is not now so qualified or to take any action which would subject it to
service of process in suits, other than those arising out of the offering or
sale of the Shares, in any jurisdiction where it is not now so subject.
(h) The Company will make generally available to its security
holders a consolidated earnings statement, which need not be audited,
covering a twelve-month period commencing after the effective date of the
Registration Statement and ending not later than 15 months thereafter, as
soon as practicable after the end of such period, which consolidated earnings
statement shall satisfy the provisions of Section ll(a) of the Act.
(i) During the period of three years hereafter, the Company will
furnish to you (i) as soon as available, a copy of each report of the Company
mailed to stockholders or filed with the Commission, and (ii) from time to
time such other information concerning the Company as you may reasonably
request.
(j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 10 hereof or by notice given by you terminating
this Agreement pursuant to Section 10 or Section 11 hereof) or if this
Agreement shall be terminated by the Managers because of any failure or
refusal on the part of the Company to comply with the terms or fulfill any of
the conditions of this Agreement, the Company agrees to reimburse the Lead
Managers for all reasonable out-of-pocket expenses (including fees and
expenses of counsel for the Managers) incurred by you in connection herewith.
7
(k) The Company will apply the net proceeds from the sale of the
Underwritten Shares substantially in accordance with the description set
forth in the Prospectuses.
(l) If Rule 430A of the Act is employed, the Company will timely
file the Prospectuses pursuant to Rule 424(b) under the Act and will advise
you of the time and manner of such filing.
(m) Except as provided in this Agreement, the Company will not
sell, contract to sell or otherwise dispose of any TDS Telecom Group Common
Stock or any securities convertible into or exercisable or exchangeable for
TDS Telecom Group Common Stock, or grant any options or warrants to purchase
TDS Telecom Group Common Stock, except as permitted as described in the
Prospectuses under the heading "Underwriting," for a period of 180 days after
the date of the Prospectuses, without the prior written consent of the
Representatives.
(n) The Company has furnished or will furnish to you "lock-up"
letters, in form and substance satisfactory to you, signed by each of its
current executive officers and directors and by the trustee of the TDS Voting
Trust.
(o) Except as stated in this Agreement and in the Prepricing
Prospectuses and Prospectuses, the Company has not taken, nor will it take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of
any class of Common Stock to facilitate the sale or resale of the Shares.
(p) The Company will use its best efforts to have the shares of
Common Stock which it agrees to sell under this Agreement listed, subject to
notice of issuance, on the American Stock Exchange on or before the Closing
Date.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Manager that:
(a) Each International Prepricing Prospectus included as part of
the registration statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Act, complied
when so filed in all material respects with the provisions of the Act. The
Commission has not issued any order preventing or suspending the use of any
Prepricing Prospectus.
(b) The Company and the transactions contemplated by this
Agreement meet the requirements for using Form S-3 under the Act. The
registration statement in the form in which it became or becomes effective
and also in such form as it may be when any post-effective amendment thereto
shall become effective and the prospectuses and any supplement or amendment
thereto when filed with the Commission under Rule 424(b) under the Act,
complied or will comply in all material respects with the provisions of the
Act and will not at any such times contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make
8
the statements therein not misleading, except that this representation and
warranty does not apply to statements in or omissions from the registration
statement or the prospectuses made in reliance upon and in conformity with
information relating to any Manager or U.S. Underwriter furnished to the
Company in writing by or on behalf of any Manager or U.S. Underwriter through
you expressly for use therein.
(c) The Incorporated Documents heretofore filed, when they were
filed (or, if any amendment with respect to any such document was filed, when
such amendment was filed), conformed in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
any further Incorporated Documents so filed will, when they are filed,
conform in all material respects with the requirements of the Exchange Act
and the rules and regulations thereunder; no such document when it was filed
(or, if an amendment with respect to any such document was filed, when such
amendment was filed), contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading; and no such further
document, when it is filed, will contain an untrue statement of a material
fact or will omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
(d) All the outstanding shares of each class of Common Stock of
the Company have been duly authorized and validly issued, are fully paid and
nonassessable and, except for the Series A Common Shares, are free of any
preemptive or similar rights; the Shares to be issued and sold by the Company
have been duly authorized and, when issued and delivered to the Managers
against payment therefor in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable and free of any preemptive or similar
rights; and the capital stock of the Company conforms in all material
respects to the description thereof in the Registration Statement and the
Prospectuses.
(e) The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectuses, and is duly registered and qualified to conduct its business
and is in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does not
have a material adverse effect on the condition (financial or other),
business, properties, net worth or results of operations of the Company and
the Subsidiaries (as hereinafter defined) taken as a whole.
(f) All the Company's subsidiaries required to be listed in an
exhibit are listed in an exhibit to the Company's Annual Report on Form 10-K
which is incorporated by reference into the Registration
9
Statement. Each of the Company's subsidiaries (the "Subsidiaries") is a
corporation duly organized, validly existing and in good standing in the
jurisdiction of its incorporation, with full corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectuses, and is duly
registered and qualified to conduct its business and is in good standing in
each jurisdiction or place where the nature of its properties or the conduct
of its business requires such registration or qualification, except where the
failure so to register or qualify does not have a material adverse effect on
the condition (financial or other), business, properties, net worth or
results of operations of the Company and its Subsidiaries taken as a whole;
all the outstanding shares of capital stock of each of the Subsidiaries have
been duly authorized and validly issued, are fully paid and nonassessable,
and are owned by the Company directly, or indirectly through one of the other
Subsidiaries, free and clear of any lien, adverse claim, security interest,
equity or other encumbrance.
(g) There are no legal or governmental proceedings pending or, to
the knowledge of the Company, threatened, against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or to which
any of their respective properties is subject, that are required to be
described in the Registration Statement or the Prospectuses but are not
described as required, and there are no agreements, contracts, indentures,
leases or other instruments that are required to be described in the
Registration Statement or the Prospectuses or to be filed as an exhibit to
the Registration Statement or any Incorporated Document that are not
described or filed as required by the Act or the Exchange Act.
(h) Neither the Company nor any of the Subsidiaries is in
violation of its certificate or articles of incorporation or by-laws, or
other organizational documents, or of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of the
Subsidiaries or of any decree of any court or governmental agency or body
having jurisdiction over the Company or any of the Subsidiaries, which
violation would not have a material adverse effect on the condition
(financial or other), business, prospects, net worth or results of operations
of the TDS Telecommunications Group or the Company and the Subsidiaries taken
as a whole; or in default, in any respect material to the TDS
Telecommunications Group or the Company and the Subsidiaries taken as a whole
or the Company's ability to perform its obligations under this Agreement, in
the performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any
material agreement, indenture, lease or other instrument to which the Company
or any of the Subsidiaries is a party or by which any of them or any of their
respective properties may be bound.
(i) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or the U.S. Underwriting Agreement
by the Company nor the consummation by the
10
Company of the transactions contemplated hereby or thereby (i) requires any
consent, approval, authorization or other order of or registration or filing
with, any court, regulatory body, administrative agency or other governmental
body, agency or official (except such as may be required for the registration
of the Shares under the Act and the Exchange Act and compliance with the
securities or Blue Sky laws of various jurisdictions) or conflicts or will
conflict with or constitutes or will constitute a breach of, or a default
under, the certificate or articles of incorporation or bylaws, or other
organizational documents, of the Company or any of the Subsidiaries or (ii)
conflicts or will conflict with or constitutes or will constitute a breach
of, or a default under, any material agreement, indenture, lease or other
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties may be bound, or
violates or will violate any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Company or any of the
Subsidiaries or any of their respective properties, or will result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any of the Subsidiaries pursuant to the terms of
any agreement or instrument to which any of them is a party or by which any
of them may be bound or to which any of the property or assets of any of them
is subject.
(j) The accountants, Arthur Andersen LLP, who have certified or
shall certify the financial statements included or incorporated by reference
in the Registration Statement and the Prospectuses (or any amendment or
supplement thereto) are independent public accountants as required by the
Act.
(k) The financial statements, together with related schedules and
notes, included or incorporated by reference in the Registration Statement
and the Prospectuses (and any amendment or supplement thereto), present
fairly the financial position, results of operations and changes in financial
position of each of (i) the Company and its consolidated Subsidiaries and
(ii) the TDS Telecommunications Group on the basis stated in the Registration
Statement at the respective dates or for the respective periods to which they
apply; such statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; and the other
financial information and data included or incorporated by reference in the
Registration Statement and the Prospectuses (and any amendment or supplement
thereto) are accurately presented and prepared on a basis consistent with
such financial statements and the books and records of the Company and the
Subsidiaries.
(l) The execution and delivery of, and the performance by the
Company of its obligations under, each of this Agreement and the U.S.
Underwriting Agreement have been duly and validly authorized by the Company,
and each of this Agreement and the U.S. Underwriting Agreement has been duly
executed and delivered by the Company and constitutes the valid and legally
binding agreement of the Company,
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enforceable against the Company in accordance with its terms, except as
rights to indemnity and contribution hereunder may be limited by federal or
state securities laws.
(m) Except as disclosed in the Registration Statement and the
Prospectuses (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectuses (or any amendment or supplement thereto),
neither the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the TDS Telecommunications
Group or the Company and the Subsidiaries taken as a whole, and there has not
been any change in the capital stock, or material increase in the short-term
debt or long-term debt, of the TDS Telecommunications Group or the Company
and the Subsidiaries taken as a whole, or any material adverse change, or any
development involving or which may reasonably be expected to involve, a
prospective material adverse change, in the condition (financial or other),
business, net worth or results of operations of the Company and the
Subsidiaries taken as a whole.
(n) Each of the Company and the Subsidiaries has good and
marketable title to all real property described in the Prospectuses as being
owned by it and good title to all other properties described in the
Prospectuses as being owned by it that are material to the business of the
Company and the Subsidiaries taken as a whole, free and clear of all liens,
claims, security interests or other encumbrances except such as are described
in the Registration Statement and the Prospectuses or in a document filed as
an exhibit to the Registration Statement or those which do not individually
or in the aggregate materially affect the value of such property and do not
interfere with the use of such property by the Company or the Subsidiaries
and all the property described in the Prospectuses as being held under lease
by each of the Company and the Subsidiaries is held by it under valid,
subsisting and enforceable leases.
(o) The Company has not distributed and, prior to the later to
occur of (i) the Closing Date and (ii) completion of the distribution of the
Shares, will not distribute any offering material in connection with the
offering and sale of the Shares other than the Registration Statement, the
Prepricing Prospectuses, the Prospectuses or other materials, if any,
permitted by the Act.
(p) The Company and each of the Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own its respective properties and
to conduct its business in the manner described in the Prospectuses, subject
to such qualifications as may be set forth in the Prospectuses and except for
such permits, licenses, franchises and authorizations, the failure of which
to obtain would not, individually or in the aggregate, have a material
adverse effect on the condition (financial or other), business, prospects,
net worth or results of operations of the TDS Telecommunications Group or the
Company and the Subsidiaries taken as
12
a whole; the Company and each of the Subsidiaries has fulfilled and performed
all its material obligations with respect to such permits and no event has
occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material impairment
of the rights of the holder of any such permit which such revocation,
termination or impairment would have a material adverse effect on the
condition (financial or other), business, prospects, net worth or results of
operations of the TDS Telecommunications Group or the Company and the
Subsidiaries taken as a whole, subject in each case to such qualification as
may be set forth in the Prospectuses; and, except as described in the
Prospectuses, none of such permits contains any restriction that is
materially burdensome to the TDS Telecommunications Group or the Company and
the Subsidiaries taken as a whole.
(q) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets
is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(r) To the Company's knowledge, neither the Company nor any of its
Subsidiaries nor any employee or agent of the Company or any Subsidiary has
made any payment of funds of the Company or any Subsidiary or received or
retained any funds in violation of any law, rule or regulation, which
payment, receipt or retention of funds is of a character required to be
disclosed in the Prospectuses.
(s) The Company and each of the Subsidiaries have filed all tax
returns required to be filed, which returns are complete and correct, and
neither the Company nor any Subsidiary is in default in the payment of any
taxes which were payable pursuant to said returns or any assessments with
respect thereto.
(t) No holder of any security of the Company has any right to
require registration of shares of Common Stock or any other security of the
Company because of the filing of the registration statement or consummation
of the transactions contemplated by this Agreement.
(u) The Company and the Subsidiaries own or possess all patents,
trademarks, trademark registrations, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, trade secrets
and rights described in the Prospectuses as being owned by them or any of
them or necessary for the conduct of their respective businesses, and the
Company is not aware of any claim to the contrary or any challenge by any
other person to the rights of the Company and the Subsidiaries with respect
to the foregoing.
13
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each of you and each other Manager and each
person, if any, who controls any Manager within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act from and against any and all
losses, claims, damages, liabilities and expenses (including reasonable costs
of investigation) arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any International
Prepricing Prospectus or in the Registration Statement or the International
Prospectus or in any amendment or supplement thereto, or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information relating to
such Manager furnished in writing to the Company by or on behalf of any
Manager through you expressly for use in connection therewith; provided,
however, that the indemnification contained in this paragraph (a) with
respect to any International Prepricing Prospectus shall not inure to the
benefit of any Manager (or to the benefit of any person controlling such
Manager) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Shares by such Manager to any person if a copy
of the International Prospectus shall not have been delivered or sent to such
person on or prior to written confirmation of such sale, and the untrue
statement or alleged untrue statement or omission or alleged omission of a
material fact contained in such International Prepricing Prospectus was
corrected in the International Prospectus, provided that the Company has
delivered the International Prospectus to the several Managers in requisite
quantity on a timely basis to permit such delivery or sending. The foregoing
indemnity agreement shall be in addition to any liability which the Company
may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Manager or any person controlling any Manager in respect of which indemnity
may be sought against the Company, such Manager or such controlling person
shall promptly notify the parties against whom indemnification is being
sought (the "indemnifying parties"), and such indemnifying parties shall
assume the defense thereof, including the employment of counsel and payment
of all fees and expenses. Such Manager or any such controlling person shall
have the right to employ separate counsel in any such action, suit or
proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Manager or such
controlling person unless (i) the indemnifying parties have agreed in writing
to pay such fees and expenses, (ii) the indemnifying parties have failed to
assume the defense and employ counsel, or (iii) the named parties to any such
action, suit or proceeding (including any impleaded parties) include both
such Manager or such controlling person and the indemnifying parties and such
Manager or such controlling person shall have been advised by its counsel
that representation of such indemnified party and any
14
indemnifying party by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such
representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the indemnifying
party shall not have the right to assume the defense of such action, suit or
proceeding on behalf of such Manager or such controlling person). It is
understood, however, that the indemnifying parties shall, in connection with
any one such action, suit or proceeding or separate but substantially similar
or related actions, suits or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of only one separate firm of attorneys (in
addition to any local counsel) at any time for all such Managers and
controlling persons not having actual or potential differing interests with
you or among themselves, which firm shall be designated in writing by Smith
Barney Inc., and that all such fees and expenses shall be reimbursed as they
are incurred. The indemnifying parties shall not be liable for any
settlement of any such action, suit or proceeding effected without their
written consent, but if settled with such written consent, or if there be a
final judgment for the plaintiff in any such action, suit or proceeding, the
indemnifying parties agree to indemnify and hold harmless any Manager, to the
extent provided in the preceding paragraph, and any such controlling person
from and against any loss, claim, damage, liability or expense by reason of
such settlement or judgment.
(c) Each Manager agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, to the
same extent as the foregoing indemnity from the Company to each Manager, but
only with respect to information relating to such Manager furnished in
writing by or on behalf of such Manager through you expressly for use in the
Registration Statement, the International Prospectus or any International
Prepricing Prospectus, or any amendment or supplement thereto. If any
action, suit or proceeding shall be brought against the Company, any of its
directors, any such officer, or any such controlling person based on the
Registration Statement, the International Prospectus or any International
Prepricing Prospectus, or any amendment or supplement thereto, and in respect
of which indemnity may be sought against any Manager pursuant to this
paragraph (c), such Manager shall have the rights and duties given to the
Company by paragraph (b) above (except that if the Company shall have assumed
the defense thereof such Manager shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof, but
the fees and expenses of such counsel shall be at such Manager's expense),
and the Company, its directors, any such officer, and any such controlling
person shall have the rights and duties given to the Managers by paragraph
(b) above. The foregoing indemnity agreement shall be in addition to any
liability which any Manager may otherwise have.
15
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraph (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities or expenses
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Managers on the other hand
from the offering of the Shares, or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and the
Managers on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Managers on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Managers, in each case
as set forth in the table on the cover page of the International Prospectus;
provided that, in the event that the Managers shall have purchased any
Additional Shares hereunder, any determination of the relative benefits
received by the Company, or the Managers from the offering of the Shares
shall include the net proceeds (before deducting expenses) received by the
Company, and the underwriting discounts and commissions received by the
Managers, from the sale of such Additional Shares, in each case computed on
the basis of the respective amounts set forth in the notes to the table on
the cover page of the International Prospectus. The relative fault of the
Company on the one hand and the Managers on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company on the
one hand or by the Managers on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(e) The Company and the Managers agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by a
pro rata allocation (even if the Managers were treated as one entity for such
purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities and expenses referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection
with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 7, no Manager
shall be required to contribute any amount in excess of the amount by which
the total price of the Shares
16
underwritten by it and distributed to the public exceeds the amount of any
damages which such Manager has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Managers' obligations
to contribute pursuant to this Section 7 are several in proportion to the
respective numbers of Firm Shares set forth opposite their names in Schedule
I hereto (or such numbers of Firm Shares increased as set forth in Section 10
hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under
this Section 7 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses are incurred.
The indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company set forth in this Agreement
shall remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Manager or any person controlling
any Manager, the Company, its directors or officers or any person controlling
the Company, (ii) acceptance of any Shares and payment therefor hereunder,
and (iii) any termination of this Agreement. A successor to any Manager or
any person controlling any Manager, or to the Company, its directors or
officers, or any person controlling the Company, shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 7.
8. CONDITIONS OF MANAGERS' OBLIGATIONS. The several obligations of the
Managers to purchase the Firm Shares hereunder are subject to the following
conditions:
(a) If, at the time this Agreement is executed and delivered, it
is necessary for the registration statement or a post-effective amendment
thereto to be declared effective before the offering of the Shares may
commence, the registration statement or such post-effective amendment shall
have become effective not later than 5:30 P.M., New York City time, on the
date hereof, or at such later date and time as shall be consented to in
writing by you, and all filings, if any, required by Rules 424 and 430A under
the Act shall have been timely made; no stop order suspending the
effectiveness of the registration statement shall have been issued and no
proceeding for that purpose shall have been instituted or, to
17
the knowledge of the Company or any Manager, threatened by the Commission,
and any request of the Commission for additional information (to be included
in the registration statement or the prospectuses or otherwise) shall have
been complied with to your satisfaction.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of the Company or
the Subsidiaries not contemplated by the Prospectuses, which in your opinion,
as Lead Managers of the several Managers, would materially adversely affect
the market for the Shares, or (ii) any event or development relating to or
involving the Company or any officer or director of the Company which makes
any statement made in the Prospectuses untrue or which, in the opinion of the
Company and its counsel or the Managers and their counsel, requires the
making of any addition to or change in the Prospectuses in order to state a
material fact required by the Act or any other law to be stated therein or
necessary in order to make the statements therein not misleading, if amending
or supplementing the Prospectuses to reflect such event or development would,
in your opinion, as Lead Managers of the several Managers, materially
adversely affect the market for the Shares.
(c) You shall have received on the Closing Date, an opinion of
Sidley & Austin, counsel for the Company, dated the Closing Date and
addressed to you, as Lead Managers of the several Managers, to the effect
that:
(i) The Company is a corporation duly incorporated and validly existing
in good standing under the laws of the State of Delaware with corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectuses (and
any amendment or supplement thereto), and is duly registered and qualified to
conduct its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires
such registration or qualification, except where the failure so to register
or qualify could not be reasonably expected to have a material adverse
effect on the condition (financial or other), business, properties, net worth
or results of operations of the Company and the Subsidiaries taken as a whole;
(ii) Each of United States Cellular Corporation, United States Cellular
Operating Company, United States Cellular Investment Company, TDS
Telecommunications Corporation and Aerial Communications, Inc. (the
"Significant Subsidiaries") is a corporation duly organized and validly
existing in good standing under the laws of the jurisdiction of its
organization, with full corporate power and authority to own, lease, and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectuses (and any amendment or supplement
thereto); and all the outstanding shares of capital stock
18
of each of the Significant Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable, and are owned by the Company
directly, or indirectly through one of the other Subsidiaries, free and clear
of any perfected security interest, or, to the knowledge of such counsel, any
other security interest, lien, adverse claim, equity or other encumbrance;
(iii) The authorized and outstanding capital stock of the Company is
as set forth under the caption "Capitalization" in the Prospectuses; and the
authorized capital stock of the Company conforms in all material respects as
to legal matters to the description thereof contained in the Prospectuses
under the caption "Description of Capital Stock";
(iv) All the shares of capital stock of the Company outstanding prior to
the issuance of the Shares to be issued and sold by the Company hereunder,
have been duly authorized and validly issued, and are fully paid and
nonassessable;
(v) The Underwritten Shares to be issued and sold to the U.S.
Underwriters and the Managers by the Company hereunder and under the
International Underwriting Agreement have been duly authorized and, when
issued and delivered to the U.S. Underwriters and the Managers against
payment therefor in accordance with the terms hereof and the terms of the
International Underwriting Agreement, will be validly issued, fully paid and
nonassessable and free of any preemptive, or to the knowledge of such
counsel, similar rights that entitle or will entitle any person to acquire
any Shares upon the issuance thereof by the Company;
(vi) The form of certificates for the Shares conforms to the
requirements of the Delaware General Corporation Law;
(vii) The Registration Statement and all post-effective amendments,
if any, have become effective under the Act and, to the best knowledge of
such counsel after reasonable inquiry, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose are pending before or contemplated by the
Commission; and any required filing of the Prospectuses pursuant to Rule
424(b) has been made in accordance with Rule 424(b);
(viii) The Company has corporate power and authority to enter into
this Agreement and the International Underwriting Agreement and to issue,
sell and deliver the Underwritten Shares to be sold by it to the U.S.
Underwriters and the Managers as provided herein and therein, and each of
this Agreement and the International Underwriting Agreement has been duly
authorized, executed and delivered by the Company;
(ix) To the knowledge of such counsel, neither the Company nor any of
the Significant Subsidiaries is in violation of its respective certificate or
articles of incorporation or bylaws, or other organizational documents, or is
in default in the performance
19
of any material obligation, agreement or condition contained in any bond,
debenture, note or other evidence of indebtedness, except as may be disclosed
in the Prospectuses;
(x) Neither the offer, sale or delivery of the Shares, the execution,
delivery or performance of this Agreement or the International Underwriting
Agreement, compliance by the Company with the provisions hereof or thereof
nor consummation by the Company of the transactions contemplated hereby or
thereby conflicts or will conflict with or constitutes or will constitute a
breach of, or a default under, the certificate or articles of incorporation
or bylaws, or other organizational documents, of the Company or any of the
Significant Subsidiaries or any agreement, indenture, lease or other
instrument to which the Company or any of the Significant Subsidiaries is a
party or by which any of them or any of their respective properties is bound
that is an exhibit to the Registration Statement or to any Incorporated
Document, or is known to such counsel, or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of the Subsidiaries, nor will any such action result in
any violation of any existing law, regulation, ruling (assuming compliance
with all applicable state securities and Blue Sky laws), judgment,
injunction, order or decree known to such counsel, applicable to the Company,
the Significant Subsidiaries or any of their respective properties;
(xi) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency, or official is required on the
part of the Company (except as have been obtained under the Act and the
Exchange Act or such as may be required under state securities or Blue Sky
laws governing the purchase and distribution of the Shares) for the valid
issuance and sale of the Underwritten Shares to the U.S. Underwriters and the
Managers as contemplated by this Agreement and the International Underwriting
Agreement;
(xii) The Registration Statement and the Prospectuses and any
supplements or amendments thereto (except for the financial statements and
the notes thereto and the schedules and other financial and statistical data
included therein, as to which such counsel need not express any opinion)
comply as to form in all material respects with the requirements of the Act;
and each of the Incorporated Documents (except for the financial statements
and the notes thereto and the schedules and other financial and statistical
data included therein, as to which counsel need not express any opinion)
complied as to form in all material respects with the Exchange Act and the
rules and regulations of the Commission thereunder at the time filed;
(xiii) To the knowledge of such counsel, (A) other than as described
or contemplated in the Prospectuses (or any supplement thereto), there are no
legal or governmental proceedings pending or threatened against the Company
or any of the Subsidiaries, or to
20
which the Company or any of the Subsidiaries, or any of their property, is
subject, which are required to be described in the Registration Statement or
Prospectuses (or any amendment or supplement thereto) and (B) there are no
agreements, contracts, indentures, leases or other instruments, that are
required to be described in the Registration Statement or the Prospectuses
(or any amendment or supplement thereto) or to be filed as an exhibit to the
Registration Statement or any Incorporated Document that are not described or
filed as required, as the case may be;
(xiv) The statements in the Registration Statement and
Prospectuses, insofar as they are descriptions of contracts, agreements or
other legal documents, or refer to statements of law or legal conclusions,
including, but not limited to, the statements under the heading "Federal
Income Tax Consequences", are accurate in all material respects and present
fairly the information required to be shown;
(xv) Upon delivery of the Underwritten Shares pursuant to this Agreement
and the International Underwriting Agreement and payment therefor as
contemplated herein the U.S. Underwriters and the Managers will acquire good
and marketable title to the Shares free and clear of any lien, claim,
security interest, or other encumbrance, restriction on transfer or other
defect in title; and
Such opinion shall additionally state that although counsel
has not undertaken, except as otherwise indicated in their opinion, to
determine independently, and does not assume any responsibility for, the
accuracy, completeness or fairness of the statements in the Registration
Statement, such counsel has participated in the preparation of the
Registration Statement and the Prospectuses, including review and discussion
of the contents thereof (including review and discussion of the contents of
all Incorporated Documents), and nothing has come to the attention of such
counsel that has caused them to believe that the Registration Statement
(including the Incorporated Documents) at the time the Registration Statement
became effective, or the Prospectuses, as of their date and as of the Closing
Date or the Option Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein not misleading
or that any amendment or supplement to the Prospectuses, as of its respective
date, and as of the Closing Date or the Option Closing Date, as the case may
be, contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and the notes thereto and the schedules and other
financial data included in the Registration Statement or the Prospectuses or
any Incorporated Document).
21
Such opinion shall be limited to the laws of the State of New York, the
State of Illinois, the General Corporation Law of the State of Delaware and
the federal law of the United States (other than the Communications Act of
1934, as amended (the "Communications Act"), and the rules and regulations
thereunder).
(d) You shall have received on the Closing Date, an opinion of Koteen
and Naftalin, special counsel for the Company, dated the Closing Date and
addressed to you, as Lead Managers of the several Managers, to the effect
that:
(i) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, the Federal Communications
Commission (the "FCC"), is necessary or required for the due authorization,
execution or delivery by the Company of this Agreement or the International
Underwriting Agreement or for the performance by the Company of the
transactions contemplated under the Prospectuses, this Agreement, or the
International Underwriting Agreement.
(ii) The execution and delivery of this Agreement and the International
Underwriting Agreement, the issuance of the Underwritten Shares, the
compliance by the Company with all of the provisions of this Agreement and
the International Underwriting Agreement, and the consummation of the
transactions contemplated herein, therein and in the Registration Statement
and the Prospectuses (including the issuance and sale of the Underwritten
Shares) do not and will not, to such counsel's knowledge, conflict with or
result in any violation of, or the creation of any lien, charge or
encumbrance upon, the property or assets of the Company or, to such counsel's
knowledge, its Subsidiaries, under the Communications Act or any rule,
regulation, judgment, order or administrative or court decree issued, enacted
or promulgated thereunder; neither will any such action conflict with or have
a material adverse effect on any of the certificates, authorities, licenses
or permits, if any, issued or to be issued by the FCC to the Company or, to
such counsel's knowledge, any of the Company's Subsidiaries that enable them
to carry on the business and operations now operated by them and which are
material to the business of the Company and its consolidated subsidiaries
considered as one enterprise.
(iii) The information in the Registration Statement or the
Prospectuses purporting to describe FCC regulatory matters or the
Communications Act, to the extent that it constitutes matters of law,
summaries of legal matters or legal conclusions, has been reviewed by such
counsel and is correct in all material respects.
(iv) Although counsel has not undertaken, except as otherwise indicated
in their opinion, to determine independently, and does not assume any
responsibility for, the accuracy or completeness of the statements in the
Registration Statement, nothing has come to the attention of such counsel
that has caused them to believe that the descriptions of FCC regulatory
matters and the Communications Act contained in the Registration Statement
(including the Incorporated
22
Documents) at the time the Registration Statement became effective, or the
Prospectuses, as of their date and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
descriptions of FCC regulatory matters and the Communications Act contained
in any amendment or supplement to the Prospectuses, as of its respective
date, and as of the Closing Date or the Option Closing Date, as the case may
be, contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and the notes thereto and the schedules and other
financial data included in the Registration Statement or the Prospectuses or
any Incorporated Document).
(e) You shall have received on the Closing Date an opinion of Skadden,
Arps, Slate, Meagher & Flom LLP, counsel for the Managers, dated the Closing
Date and addressed to you, as Lead Managers of the several Managers, with
respect to such matters as you may reasonably request.
(f) You shall have received letters addressed to you, as Lead Managers
of the several Managers, and dated the date hereof and the Closing Date from
Arthur Andersen LLP, independent certified public accountants, substantially
in the forms heretofore approved by you.
(g)(i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been taken or, to the knowledge of the Company, shall be contemplated by
the Commission at or prior to the Closing Date; (ii) there shall not have
been any change in the capital stock of the Company nor any material increase
in the short-term or long-term debt of the Company (other than in the
ordinary course of business) from that set forth or contemplated in the
Registration Statement or the Prospectuses (or any amendment or supplement
thereto); (iii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement and the Prospectuses
(or any amendment or supplement thereto), except as may otherwise be stated
in the Registration Statement and Prospectuses (or any amendment or
supplement thereto), any material adverse change in the condition (financial
or other), business, properties, net worth or results of operations of the
Company and the Subsidiaries taken as a whole; (iv) the Company and the
Subsidiaries shall not have any liabilities or obligations, direct or
contingent (whether or not in the ordinary course of business), that are
material to the Company and the Subsidiaries, taken as a whole, other than
those reflected in the Registration Statement or the Prospectuses (or any
amendment or supplement thereto); and (v) all the representations and
warranties of the Company contained in Section 6 of this Agreement shall be
true and
23
correct on and as of the date hereof and on and as of the Closing Date as if
made on and as of the Closing Date, and you shall have received a
certificate, dated the Closing Date and signed by the chief executive officer
and the chief financial officer of the Company (or such other officers as are
acceptable to you), to the effect set forth in this Section 8(g) and in
Section 8(h) hereof.
(h) The Company shall not have failed at or prior to the Closing Date
to have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it hereunder at or prior to the
Closing Date.
(i) Prior to the Closing Date the Underwritten Shares shall have been
listed, subject to notice of issuance, on the American Stock Exchange.
(j) The closing under the U.S. Underwriting Agreement shall have
occurred concurrently with the closing hereunder on the Closing Date.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form
and substance to you and your counsel.
Any certificate or document signed by any officer of the Company and
delivered to you, as Lead Managers of the Managers, or to counsel for the
Managers, shall be deemed a representation and warranty by the Company to
each Manager as to the statements made therein.
The several obligations of the Managers to purchase Additional Shares
hereunder are subject to the satisfaction on and as of any Option Closing
Date of the conditions set forth in this Section 8, except that, if any
Option Closing Date is other than the Closing Date, the certificates,
opinions and letters referred to in paragraphs (c) through (g) shall be dated
the Option Closing Date in question and the opinions called for by paragraphs
(c), (d) and (e) shall be revised to reflect the sale of Additional Shares.
9. EXPENSES. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it
of its obligations hereunder: (i) the preparation, printing or reproduction,
and filing with the Commission of the registration statement (including
financial statements and exhibits thereto), each Prepricing Prospectus, the
Prospectuses, and each amendment or supplement to any of them; (ii) the
printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
registration statement, each Prepricing Prospectus, the Prospectuses, the
Incorporated Documents, and all amendments or supplements to any of them, as
may be reasonably requested for use in connection with the offering and sale
of the Shares; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Shares, including any stamp taxes in
connection with the original issuance
24
and sale of the Shares; (iv) the printing (or reproduction) and delivery of
this Agreement and all other agreements or documents printed (or reproduced)
and delivered in connection with the offering of the Shares; (v) the listing
of the Shares on the American Stock Exchange; (vi) the registration or
qualification of the Shares for offer and sale under the securities laws of
the several jurisdictions as provided in Section 5(g) hereof (including the
reasonable fees, expenses and disbursements of counsel for the U.S.
Underwriters and Managers relating thereto; (vii) the filing fees and the
fees and expenses of counsel for the U.S. Underwriters and Managers in
connection with any filings required to be made with the National Association
of Securities Dealers, Inc.; (viii) the transportation and other expenses
incurred by or on behalf of Company representatives in connection with
presentations to prospective purchasers of the Shares; and (ix) the fees and
expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company.
10. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto;
or (ii) if, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment
thereto to be declared effective before the offering of the Shares may
commence, when notification of the effectiveness of the registration
statement or such post-effective amendment has been released by the
Commission. Until such time as this Agreement shall have become effective,
it may be terminated by the Company, by notifying you, or by you, as Lead
Managers of the several Managers, by notifying the Company.
If any one or more of the Managers shall fail or refuse to purchase
Shares which it or they are obligated to purchase hereunder on the Closing
Date, and the aggregate number of Shares which such defaulting Manager or
Managers are obligated but fail or refuse to purchase is not more than
one-tenth of the aggregate number of Shares which the Managers are obligated
to purchase on the Closing Date, each non-defaulting Manager shall be
obligated, severally, in the proportion which the number of Firm Shares set
forth opposite its name in Schedule I hereto bears to the aggregate number of
Firm Shares set forth opposite the names of all non-defaulting Managers or in
such other proportion as you may specify in accordance with Section 20 of the
Master Agreement Among Underwriters of Smith Barney Inc., to purchase the
Shares which such defaulting Manager or Managers are obligated, but fail or
refuse, to purchase. If any one or more of the Managers shall fail or refuse
to purchase Shares which it or they are obligated to purchase on the Closing
Date and the aggregate number of Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Shares which the
Managers are obligated to purchase on the Closing Date and arrangements
satisfactory to you and the Company for the purchase of such Shares by one or
more non-defaulting Managers or other party or parties approved by you and
the Company are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Manager or
the Company. In any
25
such case which does not result in termination of this Agreement, either you
or the Company shall have the right to postpone the Closing Date, but in no
event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and the International Prospectus or any other
documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Manager from liability in respect
of any such default of any such Manager under this Agreement. The term
"Manager" as used in this Agreement includes, for all purposes of this
Agreement, any party not listed in Schedule I hereto who, with your approval
and the approval of the Company, purchases Shares which a defaulting Manager
is obligated, but fails or refuses, to purchase.
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
11. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Manager to the Company, by notice to the Company, if prior to the Closing
Date or any Option Closing Date (if different from the Closing Date and then
only as to the Additional Shares), as the case may be, (i) trading in
securities generally on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market shall have been suspended or
materially limited, (ii) a general moratorium on commercial banking
activities in New York or Illinois shall have been declared by either federal
or state authorities, or (iii) there shall have occurred any outbreak or
escalation of hostilities or other international or domestic calamity, crisis
or change in political, financial or economic conditions, the effect of which
on the financial markets of the United States is such as to make it, in your
judgment, impracticable or inadvisable to commence or continue the offering
of the Shares at the offering price to the public set forth on the cover page
of the International Prospectus or to enforce contracts for the resale of the
Shares by the Managers. Notice of such termination may be given to the
Company by telegram, telecopy or telephone and shall be subsequently
confirmed by letter.
12. INFORMATION FURNISHED BY THE MANAGERS. The statements set forth in
the last paragraph on the cover page, the stabilization legend on the inside
cover page, and the statements in the first, second and twelfth paragraphs
under the caption "Underwriting" in any International Prepricing Prospectus
and in the International Prospectus, constitute the only information
furnished by or on behalf of the Managers through you as such information is
referred to in Sections 6(b) and 7 hereof.
13. MISCELLANEOUS. Except as otherwise provided in Sections 5, 10 and
11 hereof, notice given pursuant to any provision of this Agreement shall be
in writing and shall be delivered (i) if to the Company, at the office of the
Company at ______________, Attention: ______________________; or (ii) if to
you, as Lead Managers of the several Managers, care of Smith Barney Inc., 388
Greenwich Street, New York, New York 10013, Attention: Manager, Investment
Banking Division.
26
This Agreement has been and is made solely for the benefit of the
several Managers, the Company, its directors and officers, and the other
controlling persons referred to in Section 7 hereof and their respective
successors and assigns, to the extent provided herein, and no other person
shall acquire or have any right under or by virtue of this Agreement.
Neither the term "successor" nor the term "successors and assigns" as used in
this Agreement shall include a purchaser from any Manager of any of the
Shares in his status as such purchaser.
14. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
27
Please confirm that the foregoing correctly sets forth the agreement
between the Company, and the several Managers.
Very truly yours,
TELEPHONE AND DATA SYSTEMS, INC.
By_______________________________
Chairman of the Board
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Managers named in Schedule I
hereto.
SMITH BARNEY INC.
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
DONALDSON, LUFKIN & JENRETTE INTERNATIONAL
GOLDMAN SACHS INTERNATIONAL
As Lead Managers of the Several Managers
By SMITH BARNEY INC.
By_____________________________
Managing Director
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SCHEDULE I
NAME OF COMPANY
Number of
Manager Firm Shares
- ------- -----------
Smith Barney Inc. . . . . . . . . . . . . . . .
Credit Suisse First
Boston (Europe) Limited . . . . . . . . . . .
Donaldson, Lufkin &
Jenrette International . . . . . . . . . . . .
Goldman Sachs International . . . . . . . . . . .
Total . . . . . . . . . . . . . . .
29