<PAGE> 1
FILED PURSUANT TO RULE 424b(4)
FILE NO. 33-50047
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED SEPTEMBER 22, 1993
(U S WEST LOGO)
1,500,000 Shares
------------
U S WEST, Inc.
Common Stock
(without par value)
------------
The last reported sale price of the Common Stock on the New
York Stock Exchange on March 30, 1995 was $40.50 per share.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public Discounts Company*
<S> <C> <C> <C>
Per Share . . . . . . . $40.50 $0 $40.50
Total . . . . . . . . . $60,750,000 $0 $60,750,000
<FN>
<F1>
* Before deducting estimated expenses of $100,000 payable by the
Company. Proceeds to the Company will be in the form of a
reduction of the Company's liability with respect to the U S WEST
Benefit Assurance Trust.
----------------
The date of this Prospectus Supplement is March 30, 1995.
<PAGE> 2
ISSUANCE OF SHARES. U S WEST is issuing 1,500,000 shares of its
Common Stock, no par value, directly to the U S WEST Benefit
Assurance Trust for purposes of funding the post-retirement medical
benefits of certain employees. The issuance of these shares will
reduce the Company's liability with respect to the U S WEST Benefit
Assurance Trust by approximately $60,750,000. This liability is
included in the Company's financial statements in accordance with
Statement of Financial Accounting Standard No. 106.
EXPERTS. The consolidated financial statements and financial
statement schedules included in U S WEST's Annual Report on Form
10-K for the year ended December 31, 1994 are incorporated by
reference in reliance on the report of Coopers & Lybrand,
independent certified public accountants, given upon the authority
of that firm as experts in accounting and auditing.
<PAGE> 3
PROSPECTUS
$1,500,000,000
------------
U S WEST, Inc.
COMMON STOCK AND PREFERRED STOCK
------------
U S WEST Capital Funding, Inc.
DEBT SECURITIES
Unconditionally Guaranteed as to Payment of Principal,
Premium, If any, and Interest, by
U S WEST, Inc.
------------
U S WEST, Inc. ("U S WEST") from time to time may offer
shares of its Common Stock without par value (the "Common Stock")
or Preferred Stock having a par value of $1.00 per share (the
"Preferred Stock" and, together with the Common Stock, the "Equity
Securities") on terms to be determined at the time of the offering.
U S WEST Capital Funding, Inc., a wholly-owned subsidiary of
U S WEST ("Capital Funding"), from time to time may offer its notes,
debentures, or other debt securities (the "Debt Securities"), which
will be unconditionally guaranteed as to payment of principal,
premium, if any, and interest by U S WEST (the "Guaranties"). The
Equity Securities and the Debt Securities (collectively, the
"Securities") offered pursuant to this Prospectus may be issued in
one or more issuances or series and will be limited to
$1,500,000,000 aggregate public offering price.
Certain specific terms of the particular Securities will be
set forth in a supplement to this Prospectus (the "Prospectus
Supplement") which will be delivered together with this Prospectus,
including, where applicable, in the case of Preferred Stock, the
specific title and stated value, any dividend, liquidation,
redemption, voting and other rights, the initial public offering
price and other special terms, and, in the case of the Debt
Securities, the specific designation, aggregate principal amount,
denomination, maturity, premium, if any, the rate (which may be
fixed or variable), time and method of calculating payment of
interest, if any, the place or places where principal of, premium,
if any, and interest, if any, on such Debt Securities will be
payable, optional or mandatory redemption and sinking fund
provisions, if any, and any other specific terms in respect of the
offering and sale of the Securities.
The Securities may be offered and sold through one or more
underwriters, directly by U S WEST or Capital Funding, or through
dealers or agents. The names of any underwriters, dealers or agents
involved in the distribution of the Securities in respect of which
this Prospectus is being delivered, and any applicable discounts,
commissions or allowances, will be set forth in the applicable
Prospectus Supplement. See "Plan of Distribution" for possible
indemnification arrangements for any underwriters, dealers or
agents.
<PAGE> 4
U S WEST's Common Stock is listed on the New York Stock
Exchange (the "NYSE") and the Pacific Stock Exchange under the
symbol "USW." Unless otherwise provided in the Prospectus
Supplement relating thereto, the Preferred Stock and the Debt
Securities will not be listed on any securities exchange.
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
-----------------
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
-----------------
The date of this Prospectus is September 22, 1993.
<PAGE> 5
No dealer, salesperson or any other individual has been
authorized to give any information or to make any representation
other than those contained or incorporated by reference in this
Prospectus or any accompanying Prospectus Supplement and, if given
or made, such information or representation must not be relied upon
as having been authorized. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any of the
Securities offered hereby in any jurisdiction to any person to whom
it is unlawful to make such offer or solicitation in such
jurisdiction. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of U S WEST
or Capital Funding since the date hereof.
-----------------
AVAILABLE INFORMATION
U S WEST is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
and, in accordance therewith, files reports, proxy statements, and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements, and other information
concerning U S WEST can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and at the
Commission's Regional Offices at Seven World Trade Center, 13th
Floor, New York, New York 10048, and Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60601.
Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates. Such reports, proxy
statements and other information concerning U S WEST may also be
inspected at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005 and the Pacific Stock
Exchange, 301 Pine Street, San Francisco, California 94104, the
securities exchanges on which shares of U S WEST Common Stock are
listed.
U S WEST and Capital Funding have filed with the Commission
a registration statement on Form S-3 (herein, together with all
amendments and exhibits, referred to as the "Registration
Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts
of which are omitted in accordance with the rules and regulations
of the Commission. For further information, reference is hereby made
to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed by U S WEST
with the Commission (File No. 1-8611) are incorporated herein by
reference: (i) Annual Report on Form 10-K for the year ended
December 31, 1992, (ii) Quarterly Report on Form 10-Q for the
quarter ended March 31, 1993, (iii) Quarterly Report on Form 10-Q
for the quarter ended June 30, 1993, (iv) Current Reports on Form
8-K dated January 8, 1993, January 21, 1993, April 19, 1993, May
24, 1993, May 28, 1993, June 1, 1993, June 28, 1993, July 22, 1993,
August 5, 1993, (as amended by Form 8-KA dated August 11, 1993),
August 20, 1993 (the Current Report dated August 20, 1993 includes
audited financial statements that have been reclassified to reflect
PAGE 6
the discontinuance by U S WEST of the operations of its Capital
Assets segment, and a Management's Discussion and Analysis of
Financial Condition and Results of Operations that has been restated
for the same purpose) and September 17, 1993, (v) the description of
the Common Stock of U S WEST contained in Item 11 of U S WEST's
Registration Statement on Form 10, filed with the Commission on
November 16, 1983, as amended, and (vi) the description of the
Preferred Stock purchase rights as set forth in Item 1 of U S WEST's
Registration Statement on Form 8-A, filed with the Commission on
April 18, 1989.
All documents filed by U S WEST pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the offering of the
Securities shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date any such document
is filed.
Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein (or in any other subsequently
filed document which also is or is deemed to be incorporated by
reference herein) modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as
so modified or superseded, to constitute a part of this Prospectus.
U S WEST and Capital Funding will provide without charge to
each person to whom a Prospectus is delivered, upon written or oral
request of such person, a copy of any or all of the documents which
are incorporated by reference herein, other than exhibits to such
documents (unless such exhibits are specifically incorporated by
reference into such documents). Requests should be directed to the
Treasurer, U S WEST, Inc., 7800 East Orchard Road, Englewood,
Colorado 80111 (telephone number (303) 793-6500).
-----------------
U S WEST, INC.
U S WEST was incorporated in 1983 under the laws of the
State of Colorado and has its principal executive offices at 7800
East Orchard Road, Englewood, Colorado 80111 (telephone number
(303) 793-6500). It is a diversified global communications company
whose businesses include telecommunications, information services
and marketing services. Its principal operating subsidiary provides
communication services and data solutions to more than 25 million
residential and business customers in 14 western and midwestern
states.
U S WEST CAPITAL FUNDING, INC.
Capital Funding is a wholly-owned subsidiary of U S WEST and
was incorporated under the laws of the State of Colorado in June
1986. Capital Funding was incorporated to provide financing to
U S WEST and its affiliates through the issuance of indebtedness
guaranteed by U S WEST. The principal executive offices of Capital
Funding are located at 7800 East Orchard Road, Englewood, Colorado
80111 (telephone number (303) 793-6500).
<PAGE> 7
RECENT DEVELOPMENTS
SALE OF ASSETS OF U S WEST FINANCIAL SERVICES, INC.
On July 28, 1993, U S WEST's wholly owned corporate finance
subsidiary, U S WEST Financial Services, Inc. ("USWFS"), entered
into an agreement with NationsBank pursuant to which NationsBank
will purchase from USWFS assets representing approximately
$2,300,000,000 of USWFS's finance receivables (on a consolidated
basis). The closing of the acquisition, which is expected to occur
in the fourth quarter of this year, is subject to a number of
conditions, including, among other things, the receipt by the
parties of necessary regulatory approvals.
ACQUISITION OF PARTNERSHIP INTEREST IN TIME WARNER ENTERTAINMENT
COMPANY, L.P.
On May 16, 1993, U S WEST entered into an Admission
Agreement (the "Agreement") with Time Warner Entertainment Company,
L.P. ("TWE") providing for the acquisition (the "Acquisition") by
U S WEST of a 25.51% residual limited partnership interest in TWE
for an aggregate purchase price of $2.5 billion (plus an amount
equal to interest at the rate of 10% per annum from June 30, 1993
to the closing of the Acquisition), payable $1.5 billion in cash
and $1 billion in the form of a four-year market rate, interest-
bearing promissory note (each subject to the interest adjustment as
described above). TWE is a Delaware limited partnership engaged in
the ownership and operation of filmed entertainment, cable
television and cable television programming businesses previously
owned and operated by Time Warner, Inc. At the closing, U S WEST
will also receive an option to increase its residual limited
partnership interest from 25.51 % to 31.84%. The option will be
exercisable, in whole or in part, between the fifth and eleventh
anniversaries of the closing of the Acquisition upon the obtainment
of certain earnings thresholds for an aggregate cash exercise
price of $1.25 billion to $1.8 billion (depending upon the year of
exercise). Either U S WEST or TWE may elect that the exercise
price of such option be paid by surrendering a portion of the
limited partnership interest receivable upon exercise of such
option.
The closing of the Acquisition is subject to, among other
conditions, the receipt of necessary regulatory and other third
party approvals. In addition, the closing is subject to the
completion by TWE of certain actions necessary to ensure compliance
with the Modification of Final Judgment which restricts the kinds
of activities and practices in which U S WEST and its affiliates
may engage. There can be no assurance that such conditions to
closing will be satisfied. The Agreement terminates by its terms
if the closing does not occur by May 16, 1994; U S WEST expects the
closing to occur by the end of 1993.
Under the Agreement, TWE and U S WEST have agreed that TWE
will use its best efforts to upgrade a substantial portion of its
cable systems to "Full Service Network (Trademark)", capacity over
the five years following the closing of the Acquisition. As cable
systems are designated for such upgrade and after any required
approvals are obtained, US WEST and TWE will share joint control
over those systems through a 50-50 management committee. In
consideration for its expertise and participation in the management
<PAGE> 8
of the Full Service Network (Trademark), U S WEST will receive a
fee of $130 million payable over five years.
ISSUANCE OF COMMON STOCK IN CONNECTION WITH SETTLEMENT OF ROSENBAUM
v. U S WEST
In connection with the settlement (the "Settlement") of
certain class action litigation brought against U S WEST and
certain individual defendants in Rosenbaum v. U S WEST, Inc. in the
United States District Court for the District of Colorado (the
"Court"), it is contemplated that U S WEST will issue to certified
class members in such litigation certain non-transferable rights
(the "Rights") to purchase shares of Common Stock directly from
U S WEST on a commission-free basis at a 3% discount from the
average of the high and low trading prices of such stock on the
NYSE on a trading day to be designated in accordance with the
Settlement (the "Settlement Day"). Class members eligible to
purchase shares pursuant to the Settlement will be limited to those
persons or entities who purchased more than twenty shares of Common
Stock during the period from February 15, 1990 through March 6,
1992 (the "Class Period") and who do not opt out of the settlement
class. The number of shares of Common Stock that any such class
member will be entitled to purchase will be determined by dividing
(a) the product of (i) the average of the high and low trading
prices of the Common Stock, less a 3% discount, on the NYSE on the
day the Court's order approving the Settlement becomes final, and
(ii) 1/10 of the total number of shares purchased by such member
during the Class Period by (b) the average of the high and low
trading prices of the Common Stock on the NYSE, less a 3% discount,
on the Settlement Day (which is expected to be approximately 60
days after the Court's order approving the Settlement becomes
final). Class members who purchased twenty or fewer shares during
the Class Period and who do not opt out of the settlement class
will be entitled to receive cash in lieu of Rights.
The Settlement is subject to approval by the Court and
certain other conditions. A hearing with respect to the fairness of
the Settlement is expected to be held in November 1993, and if the
Settlement is approved and the other conditions are satisfied,
U S WEST anticipates that shares of Common Stock will be issued to
participating class members in the first quarter of 1994. However,
because the Settlement is subject to approval of the Court and
certain other conditions, there can be no assurance that any Rights
or shares of Common Stock will be issued. In addition, the actual
number of shares of Common Stock issuable on exercise of the Rights
cannot be determined with certainty because such number of shares
will be determined based on future market prices, which may
fluctuate.
The issuance of shares of Common Stock in connection with
the Settlement may, among other things, have a dilutive effect on
the shares of Common Stock outstanding at the time of such
issuance, including shares of Common Stock issued in connection
with the offerings contemplated herein prior to the issuance of
the shares upon exercise of Rights. U S WEST estimates that
approximately 240,000,000 shares of Common Stock were purchased
during the Class Period by class members purchasing more than
twenty shares during such period. Based on this estimate, and
assuming that the average of the high and low trading prices of
<PAGE> 9
the Common Stock on the NYSE on both the day the Court's order
approving the Settlement becomes final and the Settlement Day
equals $45.00 (the average of the high and low trading prices of
Common Stock on the NYSE on August 19, 1993), if the Rights are
fully exercised, approximately 24,000,000 shares of Common Stock
would be issued and the net proceeds from such issuance, after
payment of estimated expenses, would be approximately
$1,043,600,000. U S WEST cannot predict how many, if any, Rights
will be exercised for shares of Common Stock. U S WEST intends
to use the net proceeds from the issuance of the shares of Common
Stock in the Settlement for the same purposes as described for
Equity Securities in "Use of Proceeds" below.
USE OF PROCEEDS
U S WEST intends to use the net proceeds from the sale of
the Equity Securities for general corporate purposes, including
financing the Acquisition referred to above in "Recent
Developments," investments in and advances to U S WEST's
subsidiaries, other possible acquisitions, the reduction of
short-term and long-term borrowings and other business
opportunities.
Capital Funding will apply the net proceeds from the sale
of the Debt Securities to its general funds to be used for loans to
U S WEST and affiliates of U S WEST, which will in turn use the
funds for general corporate purposes, including financing for the
Acquisition, other possible acquisitions, the reduction of
short-term and long-term borrowings and other business
opportunities. The amount and timing of these loans will depend
upon the future growth and financing requirements of U S WEST and
its affiliates.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to
fixed charges of U S WEST for the periods indicated. For the
purpose of calculating this ratio, earnings consist of income
before income taxes and fixed charges (which earnings have been
restated to reflect the classification of U S WEST's capital
assets segment as a discontinued operation). Fixed charges include
interest on indebtedness and the portion of rentals representative
of the interest factor.
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, Six Months Ended June 30,
----------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
1988 1989 1990 1991 1992 1992 1993
---- ---- ---- ---- ---- ---- ----
4.17 3.79 4.07 3.11 (a) (a) 4.35
<FN>
<F1>
--------------------
(a) U S WEST reported a net loss of $614 million in 1992, which
includes a charge of $1.793 billion for the transition effect of
certain accounting changes related to retirement and post-
employment benefits. Excluding such charge, this ratio would be
3.85 for the year ended December 31,1992 and 4.00 for the six
<PAGE> 10
months ended June 30, 1992.
</FN>
</TABLE>
DESCRIPTION OF COMMON STOCK
GENERAL
U S WEST's authorized capital stock consists of
2,000,000,000 shares of Common Stock without par value and
50,000,000 shares of Preferred Stock having a par value of $1.00
per share. At the close of business on July 31, 1993, there were
416,625,194 shares of Common Stock outstanding and no shares of
Preferred Stock outstanding.
The following summary does not purport to be complete and
is subject in all respects to the applicable provisions of the
Colorado Corporation Code and U S WEST's Articles of Incorporation
(the "Articles of Incorporation").
COMMON STOCK
All holders of Common Stock have full voting rights and
are entitled to one vote for each share held of record on all
matters submitted to a vote of the shareholders. The Board of
Directors of U S WEST is classified into three classes of
approximately equal size, one-third elected each year.
Shareholders do not have the right to cumulate votes in the
election of directors and do not have a right of redemption or
any preferential right of subscription for any securities of
U S WEST, except as described below under "Rights Plan." There
is no sinking fund related to the Common Stock. All outstanding
shares of Common Stock are, and all shares of Common Stock
offered by any Prospectus Supplement will, when issued, be, fully
paid and nonassessable.
Subject to preferences that may be applicable to any
shares of Preferred Stock outstanding at the time, holders of
Common Stock are entitled to dividends when and as declared by the
Board of Directors from funds legally available therefor and are
entitled, in the event of liquidation, to share ratably in all
assets remaining after payment of liabilities.
CHANGE OF CONTROL
U S WEST's Articles of Incorporation include provisions
designed to prevent the use of certain tactics in connection with
a potential takeover of U S WEST. Article Nine of U S WEST's
Articles of Incorporation includes a "fair price provision" which
requires the affirmative vote of 80% of the outstanding shares of
capital stock entitled to vote generally in the election of
directors to approve certain business combinations (including
certain mergers, security issuances, recapitalizations,
liquidations and the sale, lease or transfer of a substantial part
of U S WEST's assets) involving U S WEST or a subsidiary and an
owner of 10% or more of the outstanding Common Stock ("related
person"), unless either (i) such business combination is approved
by a majority of the directors unaffiliated with the related
person or (ii) the shareholders receive a "fair price" for their
holdings and other procedural requirements are met. A "fair
price" is an amount at least equal to the greater of (i) the
highest price per share paid by the related person for any shares
<PAGE> 11
acquired by it when it became a related person or within two years
prior to the announcement of the proposed business combination, or
(ii) the highest market value per share on the date of such
announcement or the date the related person became such. Except
as provided in Article Nine, the vote of a majority of the
outstanding shares of capital stock entitled to vote generally in
the election of directors is necessary to approve a plan of merger.
Article Nine also provides that a vote of 80% of the
outstanding shares of capital stock entitled to vote generally in
the election of directors is necessary to remove a member of the
Board of Directors, and that the Bylaws may be amended either by
a vote of 80% of such outstanding shares or by the affirmative
vote of two-thirds of the members of the Board of Directors.
Article Nine may be amended by a vote of 80% of the outstanding
shares unless the amendment was approved by two-thirds of the
Board of Directors, in which case the amendment may be approved
by a vote of sixty-six and two-thirds percent of the outstanding
shares.
RIGHTS PLAN
On April 7, 1989, the Board of Directors declared a
dividend of one preferred stock purchase right (the "Preferred
Stock Purchase Right") for each share of Common Stock, payable to
holders of record of Common Stock on or after April 19, 1989.
Pursuant to the Rights Agreement dated as of April 7, 1989, one
Preferred Stock Purchase Right automatically attaches to and
trades together with each share of Common Stock issued by
U S WEST, and will, therefore, attach to each share of Common
Stock offered hereby. The Preferred Stock Purchase Rights will
expire on April 6, 1999 unless redeemed earlier and will not be
exercisable or transferable separately from the shares of Common
Stock to which they are attached until the earlier of (i) 10 days
following a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has
acquired beneficial ownership of 20% or more of the outstanding
shares of Common Stock, other than pursuant to an offer for all
shares of Common Stock which the independent directors of U S WEST
determine to be fair to and in the best interests of U S WEST and
its shareholders ("Acquisition Trigger Date") or (ii) 10 business
days following a public announcement of the commencement of a
tender offer or exchange offer that would result in the offeror
beneficially owning 30% or more of the outstanding shares of
Common Stock ("Tender Offer Trigger Date").
At any time prior to an Acquisition Trigger Date the
Preferred Stock Purchase Rights are redeemable in whole but not in
part by the Board of Directors for $0.005 per Preferred Stock
Purchase Right. The holder of a Preferred Stock Purchase Right has
no rights as a shareholder of U S WEST unless and until such
Preferred Stock Purchase Right is exercised.
After an Acquisition Trigger Date, the Preferred Stock
Purchase Rights may be traded independently from the Common Stock,
and each Preferred Stock Purchase Right, except for those held
by the Acquiring Person (which Preferred Stock Purchase Rights
will be void), will entitle the holder thereof to acquire shares
of Common Stock (or, in certain circumstances, property or other
<PAGE> 12
securities) with a market value equal to two times the exercise
price of the Preferred Stock Purchase Right.
If, after an Acquisition Trigger Date, (i) U S WEST is
acquired in a merger or other business combination transaction in
which U S WEST is not the surviving corporation (other than a
merger which follows an offer approved by independent directors as
described above) or (ii) more than 50% of U S WEST's assets or
earning power is sold or transferred (other than in transactions
in the ordinary course of business), each holder of a Preferred
Stock Purchase Right, except for those Preferred Stock Purchase
Rights held by the Acquiring Person (which Preferred Stock
Purchase Rights will be void), will thereafter have the right to
acquire, upon exercise thereof, shares of common stock of the
acquiring company having a value equal to two times the exercise
price of the Preferred Stock Purchase Right.
After a Tender Offer Trigger Date, the Preferred Stock
Purchase Rights may be traded independently of the Common Stock,
but remain redeemable by the Board of Directors until an
Acquisition Trigger Date. This provision allows U S WEST to
distribute the Preferred Stock Purchase Rights to shareholders in
circumstances when an Acquisition Trigger Date is likely to occur.
The Preferred Stock Purchase Rights have certain
anti-takeover effects. The Preferred Stock Purchase Rights will
cause substantial dilution to a person or group that attempts to
acquire U S WEST unless the acquisition is conditional on a
substantial number of Preferred Stock Purchase Rights being
acquired. The Preferred Stock Purchase Rights, however, should
not affect any prospective offeror willing to make an offer at an
equitable price and which is otherwise in the best interests of
U S WEST and its shareholders, as determined by the Board of
Directors. The Preferred Stock Purchase Rights should not
interfere with any merger or other business combination approved
by the Board of Directors since the Board of Directors may, at
its option, redeem the Preferred Stock Purchase Rights at any time
until an Acquisition Trigger Date.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is
Boston Financial Data Services, Inc., The BFDS Building, Two
Heritage Drive, Quincy, Massachusetts 02171.
DESCRIPTION OF PREFERRED STOCK
GENERAL
The following description of the terms of the Preferred
Stock sets forth certain general terms and provisions of the
Preferred Stock to which any Prospectus Supplement may relate.
The particular terms of the Preferred Stock offered by any
Prospectus Supplement and the extent, if any, to which such
general terms do not apply to such Preferred Stock will be
described in such Prospectus Supplement. The description of
certain provisions of the Preferred Stock set forth below and in
any Prospectus Supplement does not purport to be complete and is
subject to and qualified in its entirety by reference to the
Articles of Incorporation and to any resolution that may be
adopted by the Board of Directors of U S WEST prescribing the
<PAGE> 13
designation, powers, and relative rights and preferences of the
applicable series of the Preferred Stock (a "Resolution"). The
Resolution, following its adoption by the Board of Directors of
U S WEST, will be incorporated into a statement which will be
filed with the Secretary of State of the State of Colorado prior
to the issuance of the related series of Preferred Stock.
Under the Articles of Incorporation and Colorado law, the
Board of Directors of U S WEST has the authority, without further
shareholder action, to provide for the issuance from time to time
of a maximum of 50,000,000 shares of Preferred Stock, including
shares issued or reserved for issuance, in one or more series and
with such terms and at such times and for such consideration as
the Board of Directors of U S WEST may determine. As of August 20,
1993, there were no outstanding shares of Preferred Stock.
The Preferred Stock shall have the dividend, liquidation,
redemption and voting rights set forth below unless otherwise
specified in the applicable Prospectus Supplement. Reference is
made to the Prospectus Supplement relating to the particular
series of Preferred Stock offered thereby for specific terms.
The authority of the Board of Directors of U S WEST includes the
determination of the following with respect to the shares of any
series of preferred stock: (i) the number of shares constituting
that series and the distinctive designation of that series; (ii)
the dividend rate on the shares of that series, whether dividends
shall be cumulative, and if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on
shares of that series; (iii) whether shares of that series shall
have voting rights, in addition to the voting rights provided by
law, and, if so, the terms of such voting rights; (iv) the stated
value thereof; (v) whether or not the shares of that series shall
be redeemable, and if so, the terms and conditions of such
redemption, including the date or dates upon or after which they
shall be redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions and
at different redemption dates; (vi) whether that series shall have
a sinking fund for the redemption or purchase of shares of that
series, and, if so, the terms and amount of such sinking fund;
(vii) the rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up
of the affairs of U S WEST, and the relative rights of priority,
if any, of payment of shares of that series; and (viii) any other
relative rights, preferences and limitations of that series as
well as other variations in the relative rights and preferences
as among different series.
The Preferred Stock will, when issued, be fully paid and
nonassessable. Unless otherwise specified in the Prospectus
Supplement relating to a particular series of Preferred Stock,
each series of Preferred Stock will rank senior to U S WEST's
Common Stock. The holders of Preferred Stock will have no
preemptive rights to subscribe for any additional securities which
may be issued by U S WEST. The transfer agent, dividend
disbursing agent and registrar for each series of Preferred Stock
to be issued will be specified in the applicable Prospectus
Supplement.
<PAGE> 14
DIVIDENDS
The holders of Preferred Stock of each series will be
entitled to receive, when, as and if declared by the Board of
Directors of U S WEST, out of funds legally available therefor,
cash dividends at such rates and on such dates as will be set
forth in the Prospectus Supplement relating to such series. Such
rates may be fixed or variable or both. If variable, the formula
used for determining the dividend rate for each dividend period
will be set forth in the Prospectus Supplement. Dividends will be
payable to the holders of record of the applicable series of
Preferred Stock as they appear in the stock registry of U S WEST
on such record dates as will be fixed by the Board of Directors of
U S WEST or in a Resolution.
Dividends on any series of Preferred Stock may be
cumulative ("Cumulative Preferred Stock") or noncumulative
("Noncumulative Preferred Stock"), as provided in the applicable
Prospectus Supplement. If the Board of Directors of U S WEST
fails to declare a dividend payable on a dividend payment date on
any series of Noncumulative Preferred Stock, then the holders of
such series of Preferred Stock will have no right to receive a
dividend in respect of the dividend period ending on such dividend
payment date, and U S WEST will have no obligation to pay the
dividend accrued for such period, whether or not dividends on such
series or on any securities ranking junior with respect to dividend
payments to such series are declared payable on any future dividend
payment dates.
No full dividends will be declared or paid or set apart for
payment on any stock of U S WEST ranking, as to dividends, on a
parity with or junior to the Preferred Stock for any period unless
full dividends with respect to such period on the Preferred Stock
of each series (and any accumulated dividends on Cumulative
Preferred Stock) have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof is
set apart for such payment. When dividends with respect to such
period are not paid in full upon any series of Preferred Stock and
any other preferred stock of U S WEST ranking on a parity, as to
dividends, with the Preferred Stock, all dividends declared or
made with respect to such period upon the Preferred Stock of each
series and any other preferred stock of U S WEST ranking on a
parity, as to dividends, with the Preferred Stock shall be
declared pro rata so that the amount of dividends declared per
share on the Preferred Stock of each series and such other
preferred stock shall in all cases bear to each other the same
ratio that accrued dividends per share (which, in the case of
Noncumulative Preferred Stock, shall not include any accumulation
in respect of unpaid dividends for prior dividend periods) on
shares of each series of Preferred Stock and such other preferred
stock bear to each other. Except as provided in the preceding
sentence, no dividend (other than dividends or distributions paid
in shares of, or options, warrants or rights to subscribe for or
purchase shares of, the Common Stock or any other stock of
U S WEST ranking junior to the Preferred Stock as to dividends and
upon liquidation) may be declared or paid or set aside for payment
or other distribution declared or made upon the Common Stock or
any other stock of U S WEST ranking junior to or on a parity
with the Preferred Stock as to dividends or upon liquidation.
<PAGE> 15
No Common Stock or any other stock of U S WEST ranking junior to
or on a parity with the Preferred Stock as to dividends or upon
liquidation may be redeemed, purchased or otherwise acquired for
any consideration (or any moneys be paid to or made available for
a sinking fund for the redemption of any shares of any such stock)
by U S WEST (except by conversion into or exchange for stock of
U S WEST ranking junior to the Preferred Stock as to dividends
and upon liquidation) unless, in each case, the full dividends on
each series of the Preferred Stock (including any accumulated
dividends on Cumulative Preferred Stock) shall have been paid or
declared and set aside for payment. No interest, or sum of money
in lieu of interest, shall be payable in respect of any dividend
payment or payments on any series of Preferred Stock which may be
in arrears.
REDEMPTION
A series of Preferred Stock may be redeemable, in whole or
in part, at the option of U S WEST, and may be subject to
mandatory redemption pursuant to a sinking fund or otherwise, in
each case upon terms, at the times and at the redemption prices
set forth in the Prospectus Supplement relating to such series.
Shares of Preferred Stock redeemed by U S WEST will generally be
restored to the status of authorized but unissued shares of
preferred stock.
The Prospectus Supplement relating to a series of
Preferred Stock which is subject to mandatory redemption will
specify the number of shares of such series of Preferred Stock
which shall be redeemed by U S WEST in each year commencing after
a date to be specified, at a redemption price per share to be
specified, together with an amount equal to all accrued and unpaid
dividends thereon (including any accumulated dividends on
cumulative Preferred Stock) to the date of redemption. The
redemption price may be payable in cash, in capital stock, in cash
received from the net proceeds of the issuance of capital stock of
U S WEST or in other property, as specified in the Prospectus
Supplement relating to such series of Preferred Stock.
If fewer than all of the outstanding shares of any series
of Preferred Stock are to be redeemed, the number of shares to be
redeemed will be determined by the Board of Directors of U S WEST
and such shares shall be redeemed pro rata (to the nearest whole
share per holder) among the holders of record of such shares in
proportion to the number of such shares held by such holders (with
adjustment to avoid redemption of fractional shares).
Notwithstanding the foregoing, if any dividends, including
any applicable accumulation, on the Preferred Stock of any series
are in arrears, no shares of Preferred Stock of such series may be
redeemed unless all outstanding Preferred Stock of such series are
simultaneously redeemed, and U S WEST may not purchase or otherwise
acquire any shares of Preferred Stock of such series; provided,
however, that the foregoing will not prevent the purchase or
acquisition of the Preferred Stock of such series pursuant to a
purchase or exchange offer made on the same terms to all holders
of such series of Preferred Stock.
<PAGE> 16
Notice of redemption will be given by mailing the same to
each record holder of the shares to be redeemed, not less than 30
nor more than 60 days prior to the date fixed for redemption
thereof, to the respective addresses of such holders as the same
appears in the stock registry of U S WEST. Each such notice will
state: (i) the redemption date; (ii) the number of shares and
<PAGE> 16
series of Preferred Stock to be redeemed; (iii) the redemption
price; (iv) the place or places where certificates for such
Preferred Stock are to be surrendered for payment of the
redemption price; and (v) that dividends on the shares to be
redeemed will cease to accrue on such redemption date. If fewer
than all shares of any series of Preferred Stock held by any
holder are to be redeemed, the notice mailed to such holder shall
also specify the number of shares to be redeemed from such holder.
If notice of redemption has been given, from and after the
redemption date for the shares of the series of Preferred Stock
called for redemption (unless default shall be made by U S WEST in
providing money for the payment of the redemption price of the
shares so called for redemption), dividends on the shares of
Preferred Stock so called for redemption cease to accrue and such
shares will no longer be deemed to be outstanding, and all rights
of the holders thereof as shareholders of U S WEST (except the
right to receive the redemption price) will cease. Upon surrender
in accordance with such notice of the certificates representing
any shares so redeemed (properly endorsed or assigned for
transfer, if the Board of Directors of U S WEST shall so require
and the notice shall so state), the redemption price set forth
above will be paid out of funds provided by U S WEST. If fewer
than all of the shares represented by any such certificate are
redeemed, a new certificate will be issued representing the
unredeemed shares without cost to the holder thereof.
LIQUIDATION
In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of U S WEST, the holders
of shares of each series of Preferred Stock and any other
preferred stock ranking on a parity with such series of Preferred
Stock upon liquidation will be entitled to receive out of the
assets of U S WEST available for distribution to shareholders,
before any distribution of assets is made to holders of the Common
Stock or any other class or series of stock of U S WEST ranking
junior to such series of Preferred Stock upon liquidation,
liquidating distributions in the amount set forth in the Prospectus
Supplement relating to such series of Preferred Stock plus an
amount equal to the sum of all accrued and unpaid dividends
(whether or not earned or declared) for the then-current dividend
period and, as to Cumulative Preferred Stock, for all dividend
periods prior thereto. Neither the sale of all or substantially
all of the property and assets of U S WEST, nor the merger or
consolidation of U S WEST into or with any other corporation nor
the merger or consolidation of any other corporation into or with
U S WEST will be deemed to be a dissolution, liquidation or
winding up of the affairs of U S WEST. If, upon any voluntary or
involuntary liquidation, dissolution or winding up of the affairs
of U S WEST, the assets of U S WEST available for distribution to
<PAGE> 17
the holders of the Preferred Stock of any series and any other
shares of stock of U S WEST ranking, as to any such distribution,
on a parity with such series of Preferred Stock are insufficient
to pay in full all amounts to which such holders are entitled, no
such distribution will be made on account of any shares of any
other series of Preferred Stock or other securities of U S WEST
ranking, as to any such distribution, on a parity with the
Preferred Stock of such series upon such dissolution, liquidation
or winding up of the affairs of U S WEST unless proportionate
distributive amounts are paid on account of the shares of
Preferred Stock of such series, ratably, in proportion to the full
distributive amounts to which holders of all such shares are
respectively entitled upon such dissolution, liquidation or
winding up of the affairs of U S WEST. After payment of the full
amount of the liquidation distribution to which they are entitled,
the holders of such series of Preferred Stock will have no right
or claim to any of the remaining assets of U S WEST.
VOTING
Unless otherwise determined by the Board of Directors of
U S WEST and indicated in the Prospectus Supplement applicable to
a particular series of Preferred Stock, holders of Preferred Stock
of that series will not have any voting rights except as set forth
below or as otherwise from time to time required by law or by the
requirements of any securities exchange on which such series of
Preferred Stock is listed for trading. In the event U S WEST
issues a series of Preferred Stock with voting rights, including
any voting rights in the case of dividend arrearage, unless
otherwise specified in the Prospectus Supplement relating to such
series, each share will be entitled to one vote on matters on
which holders of such shares are entitled to vote. In the case of
any series of Preferred Stock having one vote per share on
matters on which holders of such series are entitled to vote,
the voting power of such series, on matters on which holders of
such series and holders of any other series of Preferred Stock or
another series of preferred stock of U S WEST are entitled to vote
as a single class, will depend on the number of shares in such
series, not the aggregate stated value, liquidation preference or
initial offering price of the shares of such series of Preferred
Stock.
As long as any shares of Preferred Stock remain
outstanding, U S WEST will not, without the affirmative vote or
consent of the holders of at least a majority of all of the shares
of Preferred Stock outstanding at the time (and all other series
of preferred stock ranking on a parity with the Preferred Stock
with respect to the payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up of the affairs
of U S WEST and upon which like voting rights have been conferred
and are then exercisable voting together as a single class without
regard to series), given in person or by proxy, either in writing
or at a meeting, (i) authorize, create or issue, or increase the
authorized or issued amount of, any class or series of stock
ranking prior to the Preferred Stock with respect to the payment
of dividends or the distribution of assets upon liquidation,
dissolution or winding up of the affairs of U S WEST, or (ii)
amend, alter or repeal, whether by merger, consolidation or
otherwise, the provisions of the Articles of Incorporation or of
<PAGE> 18
the Resolution for any series of Preferred Stock designating such
series of Preferred Stock and the rights and preferences thereof,
so as to materially and adversely affect any rights and
preferences of the Preferred Stock or the holders thereof;
provided, however, that any increase in the amount of the
authorized preferred stock or the creation and issuance of other
series of preferred stock, or any increase in the amount of
authorized shares of Preferred Stock of any series, in each case
ranking on a parity with or junior to Preferred Stock with respect
to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up of the affairs of U S WEST
will not be deemed to materially and adversely affect such rights
and preferences, privileges or voting powers.
DESCRIPTION OF DEBT SECURITIES AND GUARANTEES
The following description sets forth certain general terms
and provisions of the Debt Securities and Guarantees to which any
Prospectus Supplement may relate. The particular terms and
provisions of the series of Debt Securities offered by a
Prospectus Supplement, and the extent to which such general terms
and provisions described below may apply thereto, will be
described in the Prospectus Supplement relating to such series of
Debt Securities.
The Debt Securities are to be issued under an Indenture
("Indenture"), dated as of April 15, 1988, among U S WEST, Capital
Funding and First National Bank of Santa Fe (the "Trustee"). As of
the date of this Prospectus, $215,000,000 of Debt Securities have
been issued under the Indenture and $165,000,000 of such Debt
Securities remain outstanding. The following summaries of certain
provisions of the Debt Securities, the Guarantees and the
Indenture do not purport to be complete and are subject to, and
are qualified in their entirety by reference to, all provisions of
the Debt Securities, the Guarantees and the Indenture, including
the definitions therein of certain terms. Wherever particular
sections or defined terms of the Indenture are referred to, it is
intended that such sections or defined terms shall be incorporated
herein by reference.
GENERAL
The Indenture does not limit the aggregate principal
amount of Debt Securities that can be issued thereunder and debt
securities may be issued thereunder up to the aggregate principal
amount which may be authorized from time to time by, or pursuant
to a resolution of, Capital Funding's Board of Directors or by a
supplemental indenture. Reference is made to the Prospectus
Supplement for the following terms of the particular series of
Debt Securities being offered hereby: (i) the title of the Debt
Securities of the series; (ii) any limit upon the aggregate
principal amount of the Debt Securities of the series; (iii) the
date or dates on which the principal of the Debt Securities of the
series will mature; (iv) the rate or rates (or manner of
calculations thereof), if any, at which the Debt Securities of the
series will bear interest, the date or dates from which any such
interest will accrue and on which such interest will be payable,
and, with respect to Debt Securities of the series in registered
form, the record date for the interest payable on any interest
<PAGE> 19
payment date; (v) the place or places where the principal of and
interest, if any, on the Debt Securities of the series will be
payable; (vi) any redemption or sinking fund provisions; (vii) if
other than the entire principal amount thereof, the portion of the
principal amount of Debt Securities of the series which will be
payable upon declaration of acceleration of the maturity thereof;
(viii) whether the Debt Securities of the series will be issuable
in registered or bearer form or both, any restrictions applicable
to the offer, sale, or delivery of Debt Securities in bearer form
("bearer Debt Securities"), and whether and the terms upon which
bearer Debt Securities will be exchangeable for Debt Securities in
registered form ("registered Debt Securities") and vice versa;
(ix) whether and under what circumstances Capital Funding will pay
additional amounts on the Debt Securities of the series held by a
person who is not a U.S. person (as defined below) in respect of
taxes or similar charges withheld or deducted and, if so, whether
Capital Funding will have the option to redeem such Debt
Securities rather than pay such additional amounts; (x) whether
the Debt Securities will be denominated or provide for payment in
United States dollars or a foreign currency or units of two or
more such foreign currencies; and (xi) any additional provisions
or other special terms not inconsistent with the provisions of the
Indenture, including any terms which may be required by or
advisable under United States laws or regulations or advisable in
connection with the marketing of Debt Securities of such series.
(Sections 2.01 and 2.02.) To the extent not described herein,
principal, premium, if any, and interest will be payable, and the
Debt Securities of a particular series will be transferable, in
the manner described in the Prospectus Supplement relating to such
series.
Each series of Debt Securities will constitute unsecured
and unsubordinated indebtedness of Capital Funding, and will rank
on a parity with Capital Funding's other indebtedness, and will
have the benefit of the Guarantees described herein. However,
since U S WEST is a holding company, the right of U S WEST and,
hence, the right of creditors of U S WEST (including the holders
of the Debt Securities) to participate in any distribution of the
assets of any subsidiaries of U S WEST, whether upon liquidation,
reorganization, or otherwise, is subject to prior claims of
creditors of the subsidiary, except to the extent that claims of
U S WEST itself as a creditor of a subsidiary may be recognized.
Debt Securities of any series may be issued as registered
Debt Securities or bearer Debt Securities or both as specified in
the terms of the series. Unless otherwise indicated in the
Prospectus Supplement, Debt Securities will be issued in
denominations of $1,000 and integral multiples thereof, and bearer
Debt Securities will not be offered, sold, resold or delivered to
U.S. persons in connection with their original issuance. For
purposes of this Prospectus, "U.S. person" means a citizen,
national or resident of the United States, a corporation,
partnership or other entity created or organized in or under the
laws of the United States, or any political subdivision thereof,
or an estate or trust which is subject to United States federal
income taxation regardless of its source of income.
<PAGE> 20
To the extent set forth in the Prospectus Supplement,
except in special circumstances set forth in the Indenture,
interest on bearer Debt Securities will be payable only against
presentation and surrender of the coupons for the interest
installments evidenced thereby as they mature at a paying agency
of Capital Funding located outside of the United States and its
possessions. (Section 2.05(c).) Capital Funding will maintain such
an agency for a period of two years after the principal of such
bearer Debt Securities has become due and payable. During any
period thereafter for which it is necessary in order to conform to
United States tax law or regulations, Capital Funding will
maintain a paying agent outside the United States and its
possessions to which the bearer Debt Securities may be presented
for payment and will provide the necessary funds therefor to such
paying agent upon reasonable notice. (Section 2.04.)
Bearer Debt Securities and the coupons related thereto
will be transferable by delivery. (Section 2.08(e).)
If appropriate, federal income tax consequences applicable
to a series of Debt Securities will be described in the Prospectus
Supplement relating thereto.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in the form
of one or more fully registered global securities (each a "Global
Security") that will be deposited with, or on behalf of, a
depositary (the "Depositary") identified in the Prospectus
Supplement relating to such series. Unless and until it is
exchanged for Debt Securities in definitive registered form, a
Global Security may not be transferred except as a whole by the
Depositary for such Global Security to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by such Depositary or any
such nominee to a successor of such Depositary or a nominee of
such successor.
The specific terms of the depositary arrangements with
respect to a series of Debt Securities will be described in the
Prospectus Supplement relating to such series. Capital Funding
anticipates that the following provisions will apply to all
depositary arrangements.
Upon the issuance of a Global Security, the Depositary for
such Global Security will credit the accounts held with it with
the respective principal amounts of the Debt Securities
represented by such Global Security. Such accounts shall be
designated by the underwriters or agents with respect to such Debt
Securities or by Capital Funding if such Debt Securities are
offered and sold directly by Capital Funding. Ownership of
beneficial interests in a Global Security will be limited to
persons that have accounts with the Depositary for such Global
Security ("participants") or persons that may hold interests
through participants. Ownership of beneficial interests in such
Global Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the
Depositary for such Global Security or on the records of
participants. The laws of some states require that certain
<PAGE> 21
purchasers of securities take physical delivery of such securities
in definitive form. Such limits and such laws may impair the
ability to transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its
nominee, is the registered owner of such Global Security, such
Depositary or such nominee, as the case may be, will be considered
the sole owner or holder of the Debt Securities represented by
such Global Security for all purposes under the Indenture
governing such Debt Securities. Except as provided below, owners
of beneficial interests in a Global Security will not be entitled
to have Debt Securities of the series represented by such Global
Security registered in their names, will not receive or be
entitled to receive physical delivery of Debt Securities of such
series in definitive form and will not be considered the owners or
holders thereof under the Indenture governing such Debt Securities.
Principal, premium, if any, and interest payments on Debt
Securities registered in the name of a Depositary or its nominee
will be made to the Depositary or its nominee, as the case may be,
as the registered owner of the Global Security representing such
Debt Securities. Neither Capital Funding, the Trustee for such
Debt Securities, any Paying Agent nor the Security Registrar for
such Debt Securities will have any responsibility or liability for
any aspect of the records relating to or payments made on account
of beneficial ownership interests in the Global Security for such
Debt Securities or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Capital Funding expects that the Depositary for a series
of Debt Securities issued in the form of a Global Security, upon
receipt of any payment of principal, premium or interest, will
credit immediately participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the
principal amount of the Global Security for such Debt Securities
as shown on the records of such Depositary. Capital Funding also
expects that payments by participants to owners of beneficial
interests in such Global Security held through such participants
will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will
be the responsibility of such participants.
If a Depositary for a series of Debt Securities is at any
time unwilling or unable to continue as depositary and a successor
depositary is not appointed by Capital Funding within 90 days,
Capital Funding will issue Debt Securities of such series in
definitive form in exchange for the Global Security representing
such series of Debt Securities. In addition, Capital Funding may
at any time and in its sole discretion determine not to have the
Debt Securities of a series represented by a Global Security and,
in such event, will issue Debt Securities of such series in
definitive form in exchange for the Global Security representing
such series of Debt Securities. In either instance, an owner of a
beneficial interest in a Global Security will be entitled to have
Debt Securities of the series represented by such Global Security
equal in principal amount to such beneficial interest registered
in its name and will be entitled to physical delivery of such Debt
<PAGE> 22
Securities in definitive form. Debt Securities of such series so
issued in definitive form will be issued in denominations of
$1,000 and integral multiples thereof and will be issued in
registered form only, without coupons.
GUARANTEES
U S WEST will unconditionally guarantee the due and
punctual payment of the principal, premium, if any, and interest
on the Debt Securities when and as the same shall become due and
payable, whether at maturity, upon redemption or otherwise.
(Section 2.15.) The Guarantees will rank equally with all other
unsecured and unsubordinated obligations of U S WEST.
EXCHANGE OF SECURITIES
To the extent permitted by the terms of a series of Debt
Securities authorized to be issued in registered form and bearer
form, bearer Debt Securities may be exchanged for an equal
aggregate principal amount of registered Debt Securities of the
same series and date of maturity in such authorized denominations
as may be requested upon surrender of the bearer Debt Securities
with all unpaid coupons relating thereto, at an agency of Capital
Funding maintained for such purpose and upon fulfillment of all
other requirements of such agent. (Section 2.08(b).) As of the
date of this Prospectus, United States Treasury regulations do not
permit exchanges of registered Debt Securities for bearer Debt
Securities and, unless such regulations are modified, the terms of
a series of Debt Securities will not permit registered Debt
Securities to be exchanged for bearer Debt Securities.
LIENS ON ASSETS
If, at any time, Capital Funding mortgages, pledges or
otherwise subjects to any lien the whole or any part of any
property or assets now owned or hereafter acquired by it, except
as hereinafter provided, Capital Funding will secure the
outstanding Debt Securities, and any other obligations of Capital
Funding which may then be outstanding and entitled to the benefit
of a covenant similar in effect to this covenant, equally and
ratably with the indebtedness or obligations secured by such
mortgage, pledge or lien, for as long as any such indebtedness or
obligation is so secured. The foregoing covenant does not apply to
the creation, extension, renewal, or refunding of mortgages or
liens created or existing at the time property is acquired,
created within 180 days thereafter, or created for the purpose of
securing the cost of construction and improvement of property, or
to the making of any deposit or pledge to secure public or
statutory obligations or with any governmental agency at any time
required by law in order to qualify Capital Funding to conduct its
business or any part thereof or in order to entitle it to maintain
self-insurance or to obtain the benefits of any law relating to
workers' compensation, unemployment insurance, old age pensions or
other social security, or with any court, board, commission or
governmental agency as security incident to the proper conduct of
any proceeding before it. Nothing contained in the Indenture
prevents any entity other than Capital Funding from mortgaging,
pledging or subjecting to any lien any of its property or assets,
whether or not acquired from U S WEST or Capital Funding.
(Section 4.03.)
<PAGE> 23
AMENDMENT AND WAIVER
Subject to certain exceptions, the Indenture may be amended
or supplemented by Capital Funding, U S WEST and the Trustee with
the consent of the holders of a majority in principal amount of
the outstanding Debt Securities of each series affected by the
amendment or supplement (with each series voting as a class), or
compliance with any provision may be waived with the consent of
the holders of a majority in principal amount of the outstanding
Debt Securities of each series affected by such waiver (with each
series voting as a class). However, without the consent of each
Debt Securityholder affected, an amendment or waiver may not (i)
reduce the amount of Debt Securities whose holders must consent to
an amendment or waiver; (ii) change the rate of or change the time
for payment of interest on any Debt Security; (iii) change the
principal of or change the fixed maturity of any Debt Security;
(iv) waive a default in the payment of the principal of or
interest on any Debt Security; (v) make any Debt Security payable
in money other than that stated in the Debt Security; or (vi)
impair the right to institute suit for the enforcement of any
payment on or with respect to any Debt Security. (Section 9.02.)
The Indenture may be amended or supplemented without the consent
of any Debt Securityholder (i) to cure any ambiguity, defect or
inconsistency in the Indenture, the Debt Securities of any series
or the Guarantees; (ii) to provide for the assumption of all the
obligations of U S WEST or Capital Funding under the Debt
Securities, any coupons related thereto, the Guarantees and the
Indenture by any corporation in connection with a merger,
consolidation, transfer or lease of Capital Funding's or
U S WEST's property and assets substantially as an entirety, as
provided for in the Indenture; (iii) to provide for uncertificated
Debt Securities in addition to or in place of certificated Debt
Securities; (iv) to make any change that does not adversely affect
the rights of any Debt Securityholder; (v) to provide for the
issuance of and establish the form and terms and conditions of a
series of Debt Securities or the Guarantees endorsed thereon or to
establish the form of any certifications required to be furnished
pursuant to the terms of the Indenture or any series of Debt
Securities; or (vi) to add to the rights of Debt Securityholders.
(Section 9.01.)
MERGER
U S WEST or Capital Funding may consolidate with or merge
into, or transfer or lease its property and assets substantially
as an entirety to, another entity if the successor entity is a
corporation and assumes all the obligations, as the case may be,
of Capital Funding, under the Debt Securities and any coupons
related thereto and the Indenture, or of U S WEST, under the
Guarantees and the Indenture, and if, after giving effect to such
transaction, a Default or Event of Default would not occur or be
continuing. Thereafter, all such obligations of U S WEST or
Capital Funding, as the case may be, shall terminate. (Sections
5.01 and 5.02.)
The general provisions of the Indenture do not afford
holders of the Debt Securities protection in the event of a
highly-leveraged transaction, reorganization, merger or similar
transaction involving U S WEST or Capital Funding that may
adversely affect holders of the Debt Securities.
<PAGE> 24
EVENTS OF DEFAULT
The following events are defined in the Indenture as
"Events of Default" with respect to a series of Debt Securities:
(i) default in the payment of interest on any Debt Security of
such series for 90 days; (ii) default in the payment of the
principal of any Debt Security of such series; (iii) failure by
U S WEST or Capital Funding for 90 days after notice to it to
comply with any of its other agreements in the Debt Securities of
such series, in the Indenture, in the Guarantees, or in any
supplemental indenture; and (iv) certain events of bankruptcy or
insolvency of U S WEST or Capital Funding. (Section 6.01.) If an
Event of Default occurs with respect to the Debt Securities of any
series and is continuing, the Trustee or the holders of at least
25% in principal amount of all of the outstanding Debt Securities
of that series may declare the principal (or, if the Debt
Securities of that series are original issue discount Debt
Securities, such portion of the principal amount as may be
specified in the terms of that series) of all the Debt Securities
of that series to be due and payable. Upon such declaration, such
principal (or, in the case of original issue discount Debt
Securities, such specified amount) shall be due and payable
immediately. (Section 6.02).
Securityholders may not enforce the Indenture, the Debt
Securities or the Guarantees, except as provided in the Indenture.
The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Debt Securities. (Section 7.01.)
Subject to certain limitations, holders of a majority in principal
amount of the Debt Securities of each series affected (with each
series voting as a class) may direct the Trustee in its exercise
of any trust power. (Section 6.05.) The Trustee may withhold from
holders of Debt Securities notice of any continuing default
(except a default in payment of principal or interest) if it
determines that withholding notice is in their interests.
(Section 7.05.)
CONCERNING THE TRUSTEE
U S WEST and certain of its affiliates, including Capital
Funding, maintain banking relationships in the ordinary course of
business with the Trustee. In addition, the Trustee and certain of
its affiliates serve as trustee, authenticating agent or paying
agent with respect to certain debt securities of U S WEST and its
affiliates.
ERISA CONSIDERATIONS
Unless otherwise indicated in the applicable Prospectus
Supplement, the Securities may, subject to certain legal
restrictions, be purchased and held by an employee benefit plan
(a "Plan") subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or an individual
retirement account or an employee benefit plan subject to section
4975 of the Internal Revenue Code of 1986, as amended (the "Code").
A fiduciary of a Plan must determine that the purchase and holding
of the Securities is consistent with its fiduciary duties under
ERISA and does not result in a non-exempt prohibited transaction
as defined in section 406 of ERISA or section 4975 of the Code.
Employee benefit plans which are governmental plans (as defined in
section 3(32) of ERISA) and certain church plans (as defined in
<PAGE> 25
section 3(33) of ERISA) are not subject to Title I of ERISA or
section 4975 of the Code. The Securities may, subject to certain
legal restrictions, be purchased and held by such plans.
PLAN OF DISTRIBUTION
DISTRIBUTION OF SECURITIES
U S WEST may offer and sell the Equity Securities and
Capital Funding may offer and sell the Debt Securities (i) to or
through underwriting syndicates represented by managing
underwriters, (ii) to or through underwriters without a syndicate,
(iii) through dealers, (iv) through agents or (v) through a
combination of any such methods of sale. The Prospectus Supplement
with respect to each series of Securities will set forth the terms
of the offering, including the name or names of any underwriters,
dealers or agents, the purchase price and the net proceeds to
U S WEST or Capital Funding, as the case may be, from such sale,
any underwriting discounts, agency fees and other items
constituting underwriters' or agents' compensation, the initial
public offering price and any discounts or concessions allowed,
reallowed or paid to dealers.
If any underwriters are involved in the offer and sale,
the Securities will be acquired by the underwriters and may be
resold by them from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. Unless
otherwise set forth in the accompanying Prospectus Supplement, the
obligations of the underwriters to purchase the Securities will be
subject to certain conditions precedent and the underwriters will
be obligated to purchase all the Securities described in such
Prospectus Supplement if any are purchased. Any initial public
offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
The Securities may be offered and sold by U S WEST or
Capital Funding directly or through an agent or agents designated
by U S WEST or Capital Funding from time to time, as the case may
be. Unless otherwise indicated in the applicable Prospectus
Supplement, any such agent or agents will be acting on a best
efforts basis for the period of its or their appointment. Any
agent participating in the distribution of the Securities may be
deemed to be an "underwriter," as that term is defined in the
Securities Act, of the Securities so offered and sold. The
Securities also may be sold to dealers, at the applicable price to
the public set forth in the applicable Prospectus Supplement
relating to a particular series of the Securities, who later
resell to investors. Such dealers may be deemed to be
"underwriters" within the meaning of the Securities Act.
U S WEST may issue Equity Securities directly to one or
more of its pension plans for a purchase price per share equal to
the public offering price less underwriting discounts and
commissions, if any, or such other price as set forth in the
applicable Prospectus Supplement.
Underwriters, dealers and agents may be entitled, under
agreements entered into with U S WEST and Capital Funding, to
<PAGE> 26
indemnification by U S WEST against certain liabilities, including
liabilities under the Securities Act.
The place and time of delivery for the Securities in
respect of which this Prospectus is delivered will be set forth in
the accompanying Prospectus Supplement, if appropriate.
DELAYED DELIVERY ARRANGEMENTS
If so indicated in the Prospectus Supplement, Capital
Funding will authorize dealers or other persons acting as Capital
Funding's agents to solicit offers by certain institutions to
purchase Debt Securities from Capital Funding pursuant to
contracts providing for payment and delivery on a future date.
Institutions with which such contracts may be made include
commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions, and
others, but in all cases such institutions must be approved by
Capital Funding. The obligations of any purchaser under any such
contract will not be subject to any conditions except that (a) the
purchaser of the Debt Securities shall not at the time of delivery
be prohibited from purchasing such securities under the laws of
the jurisdiction to which such purchaser is subject and (b) if the
Debt Securities are also being sold to underwriters, Capital
Funding shall have sold to such underwriters the Debt Securities
not sold for delayed delivery. The dealers and such other persons
will not have any responsibility in respect of the validity or
performance of such contracts.
EXPERTS
The consolidated financial statements and the financial
statement schedules included in U S WEST's Annual Report on Form
10-K for the year ended December 31, 1992, as well as the
consolidated financial statements included in U S WEST's Current
Report on Form 8-K dated August 20, 1993, are incorporated herein
by reference in reliance on the reports of Coopers & Lybrand,
independent certified public accountants, given upon the authority
of that firm as experts in accounting and auditing.
LEGAL OPINIONS
The validity of the Equity Securities and certain legal
matters relating thereto will be passed upon for U S WEST by
Stephen E. Brilz, Senior Attorney of U S WEST. Certain legal
matters relating to the Debt Securities and the Guarantees to be
offered hereby will be passed upon for U S WEST and Capital
Funding by Stephen E. Brilz.
