<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 1, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C> <C>
U S WEST, INC. COLORADO 84-0926774
U S WEST CAPITAL FUNDING, INC. COLORADO 84-1028672
U S WEST FINANCING I DELAWARE APPLIED FOR
U S WEST FINANCING II DELAWARE APPLIED FOR
U S WEST FINANCING III DELAWARE APPLIED FOR
(Exact name of Registrant as (State of other Jurisdiction of (I.R.S. Employer
Specified in its Charter) Incorporation or Organization) Identification Number)
</TABLE>
7800 EAST ORCHARD ROAD
ENGLEWOOD, COLORADO 80111
(303) 793-6500
(Name, address, including zip code, and telephone number, including area code,
of each registrant's principal executive offices)
------------------------
STEPHEN E. BRILZ, ESQ.
U S WEST, INC.
7800 EAST ORCHARD ROAD
ENGLEWOOD, COLORADO 80111
(303) 793-6626
(Name, address, including zip code, and telephone number
of agent for service for each registrant)
PLEASE SEND COPIES OF ALL COMMUNICATIONS TO:
DENNIS J. BLOCK, ESQ.
AKIKO MIKUMO, ESQ.
WEIL, GOTSHAL & MANGES
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153
(212) 310-8000
------------------------
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of the Registration Statement, as determined by
market conditions.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. /X/
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 1, 1995
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY __, 1995) [LOGO]
PREFERRED SECURITIES
U S WEST FINANCING I
% TRUST ORIGINATED PREFERRED SECURITIES-SM- ("TOPRS-SM- ")
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
U S WEST, INC.
------------
The % Trust Originated Preferred Securities (the "Preferred
Securities") offered hereby evidence preferred undivided beneficial interests in
the assets of U S WEST Financing I, a statutory business trust formed under the
laws of the State of Delaware ("U S WEST Financing"). U S WEST, Inc., a Colorado
corporation ("U S WEST"), will directly or indirectly own all the common
securities (the "Common Securities" and, together with the Preferred Securities,
the "Trust Securities") representing undivided beneficial interests in the
assets of U S WEST Financing. U S WEST Financing exists for the sole purpose of
issuing the Preferred Securities and Common Securities and investing the
proceeds thereof in an equivalent amount of % Subordinated Deferrable Interest
Notes due 2025 ("Subordinated Debt Securities") of U S WEST Capital Funding,
Inc., a Colorado corporation and wholly-owned subsidiary of U S WEST ("Capital
Funding"). The Subordinated Debt Securities are fully and unconditionally
guaranteed (the "Debt Guarantee") on a subordinated basis as to payment of
principal, premium, if any, and interest by U S WEST. Upon an event of default
under the Declaration (as defined herein), the holders of the Preferred
Securities will have a preference over the holders of the Common Securities with
respect to payments in respect of distributions and payments upon liquidation,
redemption and otherwise.
(CONTINUED ON NEXT PAGE)
------------------------
SEE "INVESTMENT CONSIDERATIONS" FOR CERTAIN INFORMATION RELEVANT TO AN
INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING THE PERIOD AND CIRCUMSTANCES
DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE PREFERRED SECURITIES MAY
BE DEFERRED AND THE RELATED UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The Preferred Securities have been approved for listing, subject to official
notice of issuance, on the New York Stock Exchange, Inc. (the "New York Stock
Exchange"). Trading of the Preferred Securities on the New York Stock Exchange
is expected to commence within a 30 day period after the initial delivery of the
Preferred Securities. See "Underwriting."
------------------------
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 TO
WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
PROCEEDS TO
INITIAL PUBLIC UNDERWRITING U S WEST
OFFERING PRICE (1) COMMISSION (2) FINANCING (3)(4)
<S> <C> <C> <C>
Per Preferred Security................. $25.00 (3) $25.00
Total.................................. (3)
<FN>
(1) Plus accrued distributions, if any, from , 1995.
(2) U S WEST, Capital Funding and U S WEST Financing have agreed to indemnify
the several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in Subordinated Debt Securities, Capital
Funding has agreed to pay to the Underwriters as compensation
("Underwriters' Compensation") for their arranging the investment therein
of such proceeds, $ per Preferred Security (or $ in the
aggregate); provided, that such compensation for sales of 10,000 or more
Preferred Securities to a single purchaser will be $ per Preferred
Security. Therefore, to the extent of such sales, the actual amount of
Underwriters Compensation will be less than the aggregate amount specified
in the preceding sentence. See "Underwriting."
(4) Expenses of the offering which are payable by Capital Funding are estimated
to be $ .
</TABLE>
------------------------
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Preferred Securities will be made only in book-entry form
through the facilities of The Depository Trust Company on or about ,
1995.
------------------------
<TABLE>
<CAPTION>
MERRILL LYNCH & CO.
<S> <C> <C>
</TABLE>
------------------------
The date of this Prospectus Supplement is May __, 1995.
- -SM-__ "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
____Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate of ___% of the liquidation amount of $25 per
Preferred Security, accruing from the date of original issuance and payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year commencing June 30, 1995 ("distributions"). The payment of distributions
out of moneys held by U S WEST Financing, and payments on liquidation of U S
WEST Financing or the redemption of Preferred Securities, as set forth below,
are guaranteed by U S WEST (the "Preferred Securities Guarantee") to the extent
U S WEST Financing has funds available therefor as described under "Description
of the Preferred Securities Guarantees" in the accompanying Prospectus. The
obligations of U S WEST under the Preferred Securities Guarantee are subordinate
and junior in right of payment to all other liabilities of U S WEST, including
the Debt Guarantee, and PARI PASSU with the most senior preferred stock issued
by U S WEST. The obligations of Capital Funding under the Subordinated Debt
Securities are subordinate and junior in right of payment to all present and
future Senior Indebtedness (as defined herein) of Capital Funding, which
aggregated approximately $1.4 billion at December 31, 1994, all of which is and
will be fully and unconditionally guaranteed by U S WEST. The obligations of U S
WEST under the Debt Guarantee are subordinate and junior in right of payment to
all present and future Senior Indebtedness of U S WEST, which aggregated
approximately $3.5 billion at December 31, 1994 (including the Senior
Indebtedness of Capital Funding).
____The distribution rate and the distribution and other payment dates for the
Preferred Securities will correspond to the interest rate and interest and other
payment dates on the Subordinated Debt Securities, which, together with the Debt
Guarantee, will be the sole assets of U S WEST Financing. As a result, if
principal or interest is not paid on the Subordinated Debt Securities, or
payments are not made under the Debt Guarantee, no amounts will be paid on the
Preferred Securities. If Capital Funding does not make principal or interest
payments on the Subordinated Debt Securities, and U S WEST does not make such
payments under the Debt Guarantee, U S WEST Financing will not have sufficient
funds to make distributions on the Preferred Securities, in which event the
Preferred Securities Guarantee will not apply to such distributions until U S
WEST Financing has sufficient funds available therefor.
____Capital Funding has the right to defer payments of interest on the
Subordinated Debt Securities by extending the interest payment period on the
Subordinated Debt Securities, at any time, for up to 20 consecutive quarters
(each, an "Extension Period"). If interest payments are so deferred,
distributions will also be deferred. Despite such deferral, distributions will
continue to accrue with interest thereon (to the extent permitted by applicable
law) at an annual rate of ___% per annum, and during any Extension Period,
holders of Preferred Securities will be required to include deferred interest
income in their gross income for United States federal income tax purposes in
advance of receipt of the cash interest payments attributable to such deferred
income. There could be multiple Extension Periods of varying lengths throughout
the term of the Subordinated Debt Securities. See "Description of the
Subordinated Debt Securities and the Debt Guarantee -- Options to Extend
Interest Payment Period," "Investment Considerations -- Option to Extend
Interest Payment Period" and "Certain Federal Income Tax Consequences --
Original Issue Discount, Premium and Market Discount."
____The Subordinated Debt Securities are redeemable by Capital Funding (in whole
or in part) from time to time, on or after ___________, 2000 or at any time in
certain circumstances upon the occurrence of a Tax Event (as defined herein). If
Capital Funding redeems Subordinated Debt Securities, U S WEST Financing must
redeem Trust Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Subordinated Debt Securities so redeemed at
$25 per Preferred Security plus accrued and unpaid distributions thereon (the
"Redemption Price") to the date fixed for redemption. See "Description of the
Preferred Securities -- Mandatory Redemption." The Preferred Securities will be
redeemed upon maturity of the Subordinated Debt Securities. The Subordinated
Debt Securities mature on ___________, 2025, but the maturity date may be
extended once only for up to an additional 19 years at the option of Capital
Funding, provided certain financial covenants are met. See "Description of the
Subordinated Debt Securities and the Debt Guarantee -- Option to Extend Maturity
Date." In addition, upon the occurrence of a Special Event (as defined herein)
arising from a change in law or a change in legal interpretation, unless the
Subordinated Debt Securities are redeemed in the limited circumstances described
below, U S WEST Financing shall be dissolved with the result that the
Subordinated Debt Securities, together with the Debt Guarantees, will be
distributed to the holders of the Preferred Securities, on a pro rata basis, in
lieu of any cash distribution. In the case of a Special Event that is a Tax
Event, Capital Funding will have the right in certain circumstances to redeem
the Subordinated Debt Securities, which would result in the redemption by U S
WEST Financing of the Trust Securities in the same amount on a pro rata basis.
If the Subordinated Debt Securities are distributed to the holders of the
Preferred Securities, Capital Funding will use its best efforts to have the
Subordinated Debt Securities listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities are then listed. See "Description of
the Preferred Securities -- Special Event Redemption or Distribution" and
"Description of the Subordinated Debt Securities and the Debt Guarantee."
____In the event of the voluntary or involuntary dissolution, winding up or
termination of U S WEST Financing, the holders of the Preferred Securities will
be entitled to receive, for each Preferred Security, a liquidation amount of $25
plus accrued and unpaid distributions thereon (including interest thereon) to
the date of payment, unless in connection with such dissolution, the
Subordinated Debt Securities are distributed to the holders of the Preferred
Securities. See "Description of the Preferred Securities -- Liquidation
Distribution Upon Dissolution."
-------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
S-2
<PAGE>
U S WEST, INC.
SUMMARY FINANCIAL INFORMATION
The summary financial data below should be read in conjunction with the
financial statements and notes thereto included in U S WEST's Annual Report on
Form 10-K for the year ended December 31, 1994. See "Incorporation of Certain
Documents by Reference" in the accompanying Prospectus. The summary financial
data for the five years ended December 31, 1994 are derived from the
consolidated financial statements of U S WEST which have been audited by Coopers
& Lybrand L.L.P., independent certified public accountants. See "Experts" in the
accompanying Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Sales and other revenues................... $ 10,953 $10,294 $ 9,823 $ 9,528 $ 9,369
Income from continuing
operations................................ 1,426(1) 476(2) 1,076 840(4) 1,145
Net income (loss).......................... 1,426 (2,806)(2) (614)(3) 553(4) 1,199
Earnings per common share from continuing
operations................................ 3.14(1) 1.13(2) 2.61 2.09(4) 2.97
Earnings (loss) per common share........... 3.14 (6.69)(2) (1.49)(3) 1.38(4) 3.11
Dividends per common share................. $ 2.14 $ 2.14 $ 2.12 $ 2.08 $ 2.00
Weighted average common shares outstanding
(in thousands)............................ 453,316 419,365 412,518 401,332 386,012
CONSOLIDATED BALANCE SHEET DATA (AT PERIOD
END):
Short-term borrowings...................... $ 2,837 $ 1,776 $ 583 $ 367 $ 438
Long-term debt............................. 5,101 5,423 4,847 5,602 4,709
Preferred stock subject to mandatory
redemption................................ 51 -- -- -- --
Shareholders' equity....................... 7,382 5,861 8,268 9,587 9,240
Total assets............................... 23,204 20,680 23,461 23,375 22,160
<FN>
- ------------------------
(1) 1994 income from continuing operations included a gain of $105 ($0.23 per
share) on the sale of 24.4 percent of U S WEST's joint venture interest in
cable television and telephone operations in the United Kingdom (TeleWest
Communications plc), a gain of $41 ($0.09 per share) on the sale of U S
WEST's paging unit and a gain of $51 ($0.11 per share) on the sale of
certain rural telephone exchanges.
(2) 1993 income from continuing operations included a restructuring charge of
$610 ($1.46 per share) and a charge of $54 ($0.13 per share) for the
cumulative effect on deferred taxes of the 1993 federally mandated increase
in income tax rates. Net income included charges of $100 ($0.24 per share)
for the estimated loss on disposal of discontinued operations and $20
($0.04 per share) for the cumulative effect on deferred taxes of the
federally mandated increase in income tax rates related to discontinued
operations. Net income also included extraordinary charges of $3,123 ($7.45
per share) for the discontinuance of SFAS No. 71, "Accounting for the
Effects of Certain Types of Regulation," and $77 ($0.18 per share) for the
early extinguishment of debt.
(3) 1992 net income included the effects of accounting charges totaling $1,793
($4.35 per share) related to the adoption of SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other than Pensions," and SFAS No.
112, "Employers' Accounting for Postemployment Benefits."
(4) 1991 includes a restructuring charge that reduced income from continuing
operations by $230 ($0.57 per share) and income from discontinued
operations by $360 ($0.90 per share).
</TABLE>
S-3
<PAGE>
THE FOLLOWING INFORMATION CONCERNING U S WEST, CAPITAL FUNDING, U S WEST
FINANCING, THE PREFERRED SECURITIES, THE PREFERRED SECURITIES GUARANTEE, THE
SUBORDINATED DEBT SECURITIES AND THE DEBT GUARANTEE SUPPLEMENTS, AND SHOULD BE
READ IN CONJUNCTION WITH, THE INFORMATION CONTAINED IN THE ACCOMPANYING
PROSPECTUS. CAPITALIZED TERMS USED IN THIS PROSPECTUS SUPPLEMENT HAVE THE SAME
MEANINGS AS IN THE ACCOMPANYING PROSPECTUS.
U S WEST, INC.
U S WEST is a diversified global communications company engaged in the
telecommunications, directory publishing, wireless communications and multimedia
businesses. Telecommunications services are provided by U S WEST's principal
subsidiary, U S WEST Communications, Inc. ("U S WEST Communications"), to more
than 25 million residential and business customers in the states of Arizona,
Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota,
Oregon, South Dakota, Utah, Washington and Wyoming (collectively, the "U S WEST
Region"). Directory publishing, wireless communications and multimedia services
are provided by other U S WEST subsidiaries to customers inside and outside the
U S WEST Region.
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 for the sole purpose of providing financing to U S WEST
and its affiliates through the issuance of indebtedness guaranteed by U S WEST
and has no independent operations.
U S WEST FINANCING I
U S WEST Financing is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust, dated as of March 1, 1995, executed by U
S WEST, as sponsor (the "Sponsor"), and the trustees of U S WEST Financing (the
"U S WEST Trustees") and (ii) the filing of a certificate of trust with the
Delaware Secretary of State on March 1, 1995. Such declaration will be amended
and restated in its entirety (as so amended and restated, the "Declaration")
substantially in the form filed as an exhibit to the Registration Statement of
which this Prospectus Supplement and the accompanying Prospectus form a part.
The Declaration will be qualified as an indenture under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"). Upon issuance of the Preferred
Securities, the purchasers thereof will own all of the Preferred Securities. U S
WEST will directly or indirectly acquire Common Securities in an aggregate
liquidation amount equal to 3% of the total capital of U S WEST Financing. U S
WEST Financing exists for the exclusive purposes of (i) issuing the Trust
Securities representing undivided beneficial interests in the assets of U S WEST
Financing, (ii) investing the gross proceeds of the Trust Securities in the
Subordinated Debt Securities and the Debt Guarantee and (iii) engaging in only
those other activities necessary or incidental thereto.
Pursuant to the Declaration, the number of U S WEST Trustees will initially
be five. Three of the U S WEST Trustees (the "Regular Trustees") will be persons
who are employees or officers of, or affiliated with, U S WEST. The fourth
trustee will be a financial institution unaffiliated with U S WEST that will
serve as property trustee under the Declaration and as indenture trustee for
purposes of the Trust Indenture Act (the "Property Trustee"). The fifth U S WEST
Trustee will be a financial institution or an affiliate thereof which maintains
a principal place of business or residence in the State of Delaware (the
"Delaware Trustee"). The First National Bank of Chicago will act as the Property
Trustee and its affiliate will act as the Delaware Trustee until removed or
replaced by the holder of the Common Securities. The First National Bank of
Chicago will also act as indenture trustee under the Preferred Securities
Guarantee (the "Preferred Guarantee Trustee"). See "Description of the Preferred
Securities Guarantees" in the accompanying Prospectus. In certain circumstances,
the holders of a majority of the Preferred Securities will be entitled to
appoint one Regular Trustee (a "Special Regular Trustee"), who need not be an
officer or employee of, or otherwise affiliated with, U S WEST. See "Description
of the Preferred Securities -- Voting Rights."
S-4
<PAGE>
The Property Trustee will hold title to the Subordinated Debt Securities and
the Debt Guarantee for the benefit of the holders of the Trust Securities and
the Property Trustee will have the power to exercise all rights, powers and
privileges under the Indenture (as defined herein) as the holder of the
Subordinated Debt Securities and the Debt Guarantee. In addition, the Property
Trustee will maintain exclusive control of a segregated non-interest bearing
bank account (the "Property Account") to hold all payments made in respect of
the Subordinated Debt Securities and the Debt Guarantee for the benefit of the
holders of Trust Securities. The Property Trustee will make payments of
distributions and payments on liquidation, redemption and otherwise to the
holders of the Trust Securities out of funds from the Property Account. The
Preferred Guarantee Trustee will hold the Preferred Securities Guarantee for the
benefit of the holders of the Preferred Securities. Subject to the right of the
holders of the Preferred Securities to appoint a Special Regular Trustee, U S
WEST, as the direct or indirect holder of all the Common Securities, will have
the right to appoint, remove or replace any U S WEST Trustee and to increase or
decrease the number of U S WEST Trustees, provided that the number of U S WEST
Trustees shall be at least three, a majority of which shall be Regular Trustees.
Capital Funding will pay all fees and expenses related to U S WEST Financing and
the offering of the Trust Securities, the payment of which will be fully and
unconditionally guaranteed by U S WEST. See "Description of the Subordinated
Debt Securities and the Debt Guarantee -- Miscellaneous."
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are as set forth in the
Declaration, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Preferred Securities."
RECENT DEVELOPMENTS
THE RECAPITALIZATION PLAN.__On April 10, 1995, U S WEST announced a plan
(the "Recapitalization Plan") to create two classes of common stock intended to
reflect separately the performance of U S WEST's telecommunications and
multimedia businesses. One class of common stock (the "Communications Stock")
would principally reflect the performance of the telecommunications businesses
of U S WEST Communications and certain other subsidiaries of U S WEST in the U S
WEST Region (the "Communications Group"). The other class of common stock (the
"MediaVision Stock") would reflect the performance of U S WEST's cable and
telephony operations outside the U S WEST Region, as well as U S WEST's
wireless, directory publishing and multimedia content and services operations
both inside and outside the U S WEST Region (the "MediaVision Group"). Under the
Recapitalization Plan, the existing common stock of U S WEST would be converted
into Communications Stock and shareholders of U S WEST would receive a tax-free
distribution of MediaVision Stock. The Recapitalization Plan would enable U S
WEST to report the results of the MediaVision Group separately from the results
of the Communications Group and thereby give shareholders a better understanding
of these businesses without diminishing the benefits of remaining a single
corporation. Investors would be afforded the ability to invest in either or both
stocks depending upon their investment objectives. The Recapitalization Plan
will require the approval of U S WEST's shareholders. U S WEST expects to seek
such approval at a special meeting of shareholders to be called for that purpose
in the fall of 1995. The Recapitalization Plan will not affect the offer and
sale of the Preferred Securities, the ability of U S WEST to issue the Debt
Guarantee or the Preferred Securities Guarantee, or the ability of Capital
Funding to issue the Subordinated Debt Securities. In addition, the
Recapitalization Plan will not result in the transfer of any assets from U S
WEST or any of its subsidiaries or alter the legal nature of U S WEST's
obligations to its creditors, including its obligations under the Preferred
Securities Guarantee and the Debt Guarantee. Creditors of U S WEST, including
the holders of the Preferred Securities, will continue to benefit from the cash
flow of the subsidiaries comprising both the Communications Group and the
MediaVision Group, subject to the satisfaction of obligations by such
subsidiaries. U S WEST does not believe the Recapitalization Plan will have any
adverse effect on its credit rating.
____CABLE ACQUISITION.__On December 6, 1994, U S WEST acquired Wometco Cable
Corp. and the assets of Atlanta Cable Partners, L.P. and Georgia Cable Partners
(the "Atlanta Cable Properties") for approximately $1.2 billion. Together, the
Atlanta Cable Properties serve approximately 65% of the cable customers in the
S-5
<PAGE>
Atlanta, Georgia metropolitan area. U S WEST expects that it will offer local
exchange services as well as multimedia services in the Atlanta area as a result
of this acquisition. The Atlanta Cable Properties will be included in the
MediaVision Group.
____WIRELESS JOINT VENTURES.__On July 25, 1994, AirTouch Communications
("AirTouch") and U S WEST announced an agreement to combine their domestic
cellular operations. This partnership will have a presence in 9 of the top 20
cellular markets in the country and will form the third largest cellular company
in the United States, with more than 53 million potential customers ("POPs").
The transaction is expected to close in the second quarter of 1995 upon
obtaining certain federal and state regulatory approvals. By combining their
domestic cellular operations, U S WEST and AirTouch will create opportunities
for new cost efficiencies in equipment purchasing, information systems,
distribution, marketing and advertising. Each company's cellular operations
initially will continue to operate as separately owned entities, but upon
closing will report to a wireless management company, which will oversee both
companies' domestic cellular operations and provide management and support
services. The wireless management company will be managed by a committee
comprised of the president and chief operating officer of AirTouch, three other
AirTouch representatives, three representatives of U S WEST and one mutually
agreed upon independent representative. AirTouch's initial equity ownership of
this partnership will be approximately 70% and U S WEST's will be 30%. A merger
of the two companies' domestic cellular operations will take place upon the
earlier of July 25, 1998, the lifting of certain restrictions imposed on U S
WEST in connection with the divestiture by AT&T Corp. of its local telephone
businesses, or at any time at AirTouch's option. The agreement gives U S WEST
strategic flexibility, including the right to exchange its interest in the joint
venture for up to 19.9% of AirTouch common stock, with any excess amounts to be
received in the form of AirTouch non-voting preferred stock. AirTouch and U S
WEST also formed an equally owned partnership to bid on personal communications
services ("PCS") licenses.
____In October 1994, a partnership between AirTouch and U S WEST and a
partnership between Bell Atlantic Corporation ("Bell Atlantic") and NYNEX
Corporation ("NYNEX") formed PCS Primeco, L.P. ("PCS Primeco") for the purpose
of bidding on PCS licenses being auctioned by the Federal Communications
Commission (the "FCC"). The objective of PCS Primeco is to build and operate PCS
networks where its partners do not operate cellular networks, thus enabling them
to establish a national wireless network. In the FCC auction, which concluded in
March 1995, PCS Primeco was awarded PCS licenses in 11 markets covering 57
million POPs, including licenses in Chicago, Dallas, Tampa, Houston, Miami and
New Orleans. PCS Primeco will be governed by a board made up of three Bell
Atlantic-NYNEX representatives and three AirTouch-U S WEST representatives. The
four companies also formed a partnership to develop a national branding and
marketing strategy and a common "look and feel" for wireless customers. The
cellular properties of AirTouch and U S WEST will not be merged with those of
Bell Atlantic and NYNEX.
____TELEWEST INITIAL PUBLIC OFFERING.__In 1994, TeleWest Communications plc
("TeleWest"), a venture with Tele-Communications, Inc., completed an initial
public offering of its common stock. U S WEST's interest in TeleWest was reduced
from 50% to 37.8% as a result of the offering, but based on the offering price,
its interest is valued at $1.1 billion. TeleWest provides cable television and
telephone services in the United Kingdom over a multimedia network which has
been designed to provide a wide range of interactive and integrated
entertainment, telecommunications and information services as they become
available in the future. TeleWest owns all or part of 23 franchises in the
United Kingdom that encompass 3.6 million homes. Through TeleWest, U S WEST
gains experience in packaging video and telephone services that it intends to
utilize in its operations outside the United Kingdom. U S WEST's interest in
TeleWest will be included in the MediaVision Group.
S-6
<PAGE>
INVESTMENT CONSIDERATIONS
____Prospective purchasers of Preferred Securities should carefully review the
information contained elsewhere in this Prospectus Supplement and in the
accompanying Prospectus and should particularly consider the following matters:
RANKING OF SUBORDINATED OBLIGATIONS UNDER PREFERRED SECURITIES GUARANTEE,
SUBORDINATED DEBT SECURITIES AND DEBT GUARANTEE
____U S WEST's obligations under the Preferred Securities Guarantee are
subordinate and junior in right of payment to all liabilities of U S WEST,
including the Debt Guarantee, and PARI PASSU with the most senior preferred
stock issued by U S WEST. The obligations of Capital Funding under the
Subordinated Debt Securities are subordinate and junior in right of payment to
all present and future Senior Indebtedness of Capital Funding, all of which are,
and will be, fully and unconditionally guaranteed by U S WEST. The obligations
of U S WEST under the Debt Guarantee are subordinate and junior in right of
payment to all present and future Senior Indebtedness of U S WEST. At December
31, 1994, Senior Indebtedness of U S WEST and Capital Funding aggregated
approximately $3.5 billion and $1.4 billion, respectively. There are no terms in
the Preferred Securities, the Subordinated Debt Securities, the Preferred
Securities Guarantee or the Debt Guarantee that limit U S WEST's ability to
incur additional indebtedness, including indebtedness that ranks senior to the
Preferred Securities Guarantee and the Debt Guarantee. See "Description of the
Preferred Securities Guarantees" and "Description of the Subordinated Debt
Securities and the Debt Guarantees -- Subordination" in the accompanying
Prospectus.
RIGHTS UNDER THE PREFERRED SECURITIES GUARANTEE
____The Preferred Securities Guarantee guarantees to the holders of the
Preferred Securities the payment of (i) any accrued and unpaid distributions
which are required to be paid on the Preferred Securities, to the extent U S
WEST Financing shall have funds available therefor, (ii) the Redemption Price,
including all accrued and unpaid distributions, with respect to Preferred
Securities called for redemption by U S WEST Financing, to the extent U S WEST
Financing has funds available therefor and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of U S WEST Financing (other than in
connection with the distribution of Subordinated Debt Securities to the holders
of Preferred Securities or a redemption of all of the Preferred Securities), the
lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid
distributions on the Preferred Securities to the date of payment, to the extent
U S WEST Financing has funds available therefor and (b) the amount of assets of
U S WEST Financing remaining available for distribution to holders of the
Preferred Securities in liquidation of U S WEST Financing. The holders of a
majority in liquidation amount of the Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Preferred Guarantee Trustee or to direct the exercise of any
trust or power conferred upon the Preferred Guarantee Trustee under the
Preferred Securities Guarantee. If the Preferred Guarantee Trustee fails to
enforce the Preferred Securities Guarantee, any holder of Preferred Securities
may, after a period of 30 days has elapsed from such holders written request to
the Preferred Guarantee Trustee to enforce the Preferred Securities Guarantee,
institute a legal proceeding directly against U S WEST to enforce the Preferred
Guarantee Trustee's rights under the Preferred Securities Guarantee, without
first instituting a legal proceeding against U S WEST Financing, the Preferred
Guarantee Trustee or any other person or entity. If Capital Funding were to
default in its obligation to pay amounts payable on the Subordinated Debt
Securities and U S WEST were to default on its obligations under the Debt
Guarantee, U S WEST Financing would lack available funds for the payment of
distributions or amounts payable on redemption of the Preferred Securities or
otherwise, and in such event holders of the Preferred Securities would not be
able to rely upon the Preferred Securities Guarantee for payment of such
amounts. Instead, holders of the Preferred Securities would rely on the
enforcement by the Property Trustee of its rights as registered holder of the
Subordinated Debt Securities against Capital Funding pursuant to the terms of
the Subordinated Debt Securities and against U S WEST under the Debt Guarantee
and may also vote to appoint a Special Regular Trustee, who shall have the same
rights, powers and privileges as the other Regular Trustees. See "Description of
the Preferred Securities Guarantees -- Status of the Preferred Securities
Guarantees" and "Description of the Subordinated Debt Securities and
S-7
<PAGE>
the Debt Guarantees -- Subordination" in the accompanying Prospectus. The
Declaration provides that each holder of Preferred Securities by acceptance
thereof agrees to the provisions of the Preferred Securities Guarantee and the
Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
____If (i) U S WEST fails to pay distributions in full on the Preferred
Securities for six consecutive quarterly distribution periods or (ii) a
Declaration Event of Default (as defined herein) occurs and is continuing, then
the holders of Preferred Securities would rely on the enforcement by the
Property Trustee of its rights as a holder of the Subordinated Debt Securities
and Debt Guarantee against Capital Funding and U S WEST. In addition, the
holders of a majority in aggregate liquidation amount of the Preferred
Securities will have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Property Trustee or to
direct the exercise of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the Property Trustee to
exercise the remedies available to it as a holder of the Subordinated Debt
Securities and Debt Guarantee. If the Property Trustee fails to enforce its
rights under the Subordinated Debt Securities or the Debt Guarantee, a holder of
Preferred Securities may, after a period of 30 days has elapsed from such
holder's written request to the Property Trustee to enforce such rights,
institute a legal proceeding directly against Capital Funding or U S WEST to
enforce the Property Trustee's rights under the Subordinated Debt Securities or
the Debt Guarantee, as the case may be, without first instituting any legal
proceeding against the Property Trustee or any other person or entity,
including, in the case of the Debt Guarantee, against Capital Funding. Upon the
occurrence of any of the events described in clauses (i) or (ii) above, the
holders of the Preferred Securities also will be entitled, by majority vote, to
appoint a Special Regular Trustee, who shall have the same rights, powers and
privileges as the other Regular Trustees.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
____Capital Funding has the right under the Indenture to defer payments of
interest on the Subordinated Debt Securities by extending the interest payment
period at any time, and from time to time, on the Subordinated Debt Securities.
As a consequence of such an extension, quarterly distributions on the Securities
would be deferred (but despite such deferral would continue to accrue with
interest thereon) by U S WEST Financing during any such extended interest
payment period. Such right to extend the interest payment period for the
Subordinated Debt Securities is limited to a period not exceeding 20 consecutive
quarters. In the event that Capital Funding exercises this right to defer
payments of interest, then (a) U S WEST and Capital Funding shall not (and, if
it is a wholly-owned subsidiary of U S WEST, U S WEST shall cause U S WEST
Communications not to) declare or pay any dividend on, make any distributions
with respect to, or redeem, purchase or make a liquidation payment with respect
to, any of its capital stock, including, in the case of U S WEST, the
Communications Stock and the Media Vision Stock, and (b) U S WEST and Capital
Funding shall not make any payment of interest, principal or premium, if any, on
or repay, repurchase or redeem any debt securities issued by U S WEST or Capital
Funding which rank pari passu with or junior to the Subordinated Debt
Securities. Prior to the termination of any such extension period, Capital
Funding may further extend the interest payment period, provided that such
Extension Period, together with all such previous and further extensions
thereof, may not exceed 20 consecutive quarters. Upon the termination of any
Extension Period and the payment of all amounts then due, Capital Funding may
select a new Extension Period, subject to the above requirements. See
"Description of the Preferred Securities -- Distributions" and "Description of
the Subordinated Debt Securities and the Debt Guarantee -- Option to Extend
Interest Payment Period."
____Should Capital Funding exercise its rights to defer payments of interest by
extending the interest payment period, each holder of Preferred Securities will
continue to accrue income for United States federal income tax purposes in
respect of the deferred interest allocable to its Preferred Securities. As a
result, holders of Preferred Securities will recognize income for United States
federal income tax purposes in advance of the receipt of cash and will not
receive the cash from U S WEST Financing related to such income if such holder
disposes of its Preferred Securities prior to the record date for the date on
which distributions of such amounts are made. Capital Funding has no current
intention of exercising its right to defer payments of interest by extending the
interest payment period on the Subordinated Debt Securities.
S-8
<PAGE>
However, should Capital Funding determine to exercise such right in the future,
the market price of the Preferred Securities is likely to be affected. A holder
that disposes of its Preferred Securities during an Extension Period, therefore,
might not receive the same return on its investment as a holder that continues
to hold its Preferred Securities. In addition, as a result of the existence of
Capital Funding's right to defer interest payments, the market price of the
Preferred Securities (which represent an undivided beneficial interest in the
Subordinated Debt Securities) may be more volatile than other securities on
which original issue discount accrues that do not have such rights. See "Certain
Federal Income Tax Consequences -- Original Issue Discount, Premium and Market
Discount."
SPECIAL EVENT DISTRIBUTION
____Upon the occurrence of a Special Event, U S WEST Financing shall be
dissolved, except in the limited circumstances described below, with the result
that the Subordinated Debt Securities, together with the Debt Guarantee, would
be distributed to the holders of the Trust Securities in connection with the
liquidation of U S WEST Financing. In the case of a Special Event that is a Tax
Event, in certain circumstances Capital Funding shall have the right to redeem
the Subordinated Debt Securities, in whole or in part, in which event U S WEST
Financing will redeem the Trust Securities on a pro rata basis to the same
extent as the Subordinated Debt Securities are redeemed. See "Description of the
Preferred Securities -- Special Event Redemption or Distribution."
____There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debt Securities that may be distributed in
exchange for Preferred Securities if a dissolution or liquidation of U S WEST
Financing were to occur. Accordingly, the Preferred Securities that an investor
may purchase, or the Subordinated Debt Securities that the investor may receive
on dissolution and liquidation of U S WEST Financing, may trade at a discount to
the price that the investor paid to purchase the Preferred Securities offered
hereby. Because holders of Preferred Securities may receive Subordinated Debt
Securities upon the occurrence of a Special Event, prospective purchasers of
Preferred Securities are also making an investment decision with regard to the
Subordinated Debt Securities and should carefully review all the information
regarding the Subordinated Debt Securities contained herein and in the
accompanying Prospectus. See "Description of the Preferred Securities -- Special
Event Redemption or Distribution" and "Description of the Subordinated Debt
Securities and the Debt Guarantee -- General."
LIMITED VOTING RIGHTS
____Holders of Preferred Securities will have limited voting rights and, except
for the rights of holders of Preferred Securities to appoint a Special Regular
Trustee upon the occurrence of certain events described herein, will not be
entitled to vote to appoint, remove or replace, or to increase or decrease the
number of, U S WEST Trustees, which voting rights are vested exclusively in the
holder of the Common Securities.
TRADING PRICE OF PREFERRED SECURITIES
____The Preferred Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying
Subordinated Debt Securities. A holder who disposes of his Preferred Securities
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest on the Subordinated Debt Securities through
the date of disposition in income as ordinary income (i.e., OID), and to add
such amount to his adjusted tax basis in his pro rata share of the underlying
Subordinated Debt Securities deemed disposed of. To the extent the selling price
is less than the holder's adjusted tax basis (which will include, in the form of
OID, all accrued but unpaid interest), a holder will recognize a capital loss.
Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes. See
"Certain Federal Income Tax Consequences -- Original Issue Discount, Premium and
Market Discount" and "-- Sale of Certificates."
FUTURE ACQUISITIONS
____In connection with the MediaVision Group's growth strategy, U S WEST from
time to time engages in preliminary discussions regarding acquisitions, some of
which may be significant and the funding for which may be obtained from
internally generated funds, the incurrence of indebtedness, the issuance of
equity or a combination thereof. The incurrence of indebtedness to fund such
acquisitions and/or the assumption of indebtedness in connection with such
acquisitions could result in a downgrading of U S WEST's credit rating and, as a
result, have an adverse effect upon the market value of the Preferred
Securities.
S-9
<PAGE>
CAPITALIZATION OF U S WEST
____The following table sets forth the unaudited consolidated capitalization of
U S WEST at December 31, 1994, and as adjusted to reflect the application of the
estimated net proceeds from the sale of the Preferred Securities. See "Use of
Proceeds." The table should be read in conjunction with U S WEST's consolidated
financial statements and notes thereto included in the documents incorporated by
reference herein. See "Incorporation of Certain Documents by Reference" in the
accompanying Prospectus.
<TABLE>
<CAPTION>
AT DECEMBER 31, 1994
--------------------------
ACTUAL AS ADJUSTED(1)
------- -----------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Short-term borrowings........................................ $ 2,837 $
------- -------
------- -------
Long-term borrowings......................................... $ 5,101 $
------- -------
Guaranteed minority interest in trust holding subordinated
debentures of subsidiary.................................... $ -- $
------- -------
Preferred stock subject to mandatory redemption.............. $ 51 $
------- -------
Common shareholders' equity:
Common shares -- no par, 2,000,000,000 authorized;
469,343,048 outstanding................................. 8,056
Cumulative deficit....................................... (458)
LESOP guarantee.......................................... (187)
Foreign currency translation adjustment.................. (29)
------- -------
Total common shareholders' equity............................ 7,382 (2)
------- -------
Total capitalization......................................... $12,534 $ (2)
------- -------
------- -------
<FN>
- ------------------------
(1) Does not give effect to the shares of common stock, without par value, of U
S WEST ("Common Stock"), that may be issued upon exercise of options to
purchase 2,374,394 shares of Common Stock that are currently exercisable
under U S WEST's stock option plans or upon conversion of U S WEST's Liquid
Yield Option Notes due 2011 ("LYONS") into up to 9,894,278 shares of Common
Stock (based on the number of options and LYONS outstanding on December 31,
1994).
(2) The Recapitalization Plan, if implemented, will not affect the total common
shareholders' equity or the total capitalization of U S WEST.
</TABLE>
S-10
<PAGE>
ACCOUNTING TREATMENT
____The financial statements of U S WEST Financing will be consolidated with U S
WEST's financial statements, with the Preferred Securities shown as a guaranteed
minority interest in trust holding subordinated debentures of a subsidiary.
USE OF PROCEEDS
____The proceeds of the sale of the Preferred Securities will be invested by U S
WEST Financing in Subordinated Debt Securities of Capital Funding. Capital
Funding will loan the proceeds from the issuance of such Subordinated Debt
Securities to U S WEST and its affiliates to be used for the reduction of short-
term indebtedness incurred in connection with the acquisition of the Atlanta
Cable Properties, and for general corporate purposes.
DESCRIPTION OF THE PREFERRED SECURITIES
____The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Property Trustee, the First National Bank of Chicago, will
act as the indenture trustee for purposes of compliance with the provisions of
the Trust Indenture Act. The terms of the Preferred Securities will include
those stated in the Declaration and those made part of the Declaration by the
Trust Indenture Act. The following summary of the principal terms and provisions
of the Preferred Securities does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the Declaration, a copy of which
is filed as an exhibit to the Registration Statement, of which this Prospectus
Supplement is a part, the Trust Act and the Trust Indenture Act.
GENERAL
____The Declaration authorizes the Regular Trustees to issue on behalf of U S
WEST Financing the Preferred Securities, which represent preferred undivided
beneficial interests in the assets of U S WEST Financing. All of the Common
Securities will be owned, directly or indirectly, by U S WEST. The Common
Securities rank pari passu, and payments will be made thereon on a pro rata
basis, with the Preferred Securities, except that upon the occurrence of a
Declaration Event of Default, the rights of the holders of the Common Securities
to receive payment of periodic distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities. The Declaration does not permit the issuance by U S
WEST Financing of any securities other than the Trust Securities or the
incurrence of any indebtedness by U S WEST Financing. Pursuant to the
Declaration, the Property Trustee will own the Subordinated Debt Securities and
the Debt Guarantee for the benefit of the holders of the Trust Securities. The
payment of distributions out of money held by U S WEST Financing, and payments
upon redemption of the Preferred Securities or liquidation of U S WEST
Financing, are guaranteed by U S WEST to the extent described under "Description
of the Preferred Securities Guarantees" in the accompanying Prospectus. The
Preferred Guarantee Trustee, will hold the Preferred Securities Guarantee for
the benefit of the holders of the Preferred Securities. The Preferred Securities
Guarantee does not cover payment of distributions when U S WEST Financing does
not have sufficient available funds to pay such distributions. In such event,
the remedy of a holder of Preferred Securities is to vote to appoint a Special
Regular Trustee and to direct the Property Trustee to enforce its rights under
the Subordinated Debt Securities and the Debt Guarantee. See "Description of the
Preferred Securities -- Voting Rights."
DISTRIBUTIONS
____Distributions on the Preferred Securities will be fixed at a rate per annum
of __% of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears for more than one quarter will bear interest thereon at
the rate per annum of __% thereof. The term "distributions" as used herein
includes any such interest payable unless otherwise stated. The amount of
distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months.
S-11
<PAGE>
____Distributions on the Preferred Securities will be cumulative, will accrue
from _________________ and will be payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year, commencing _________________
when, as and if available for payment by the Property Trustee, except as
otherwise described below.
____Capital Funding has the right under the Indenture to defer payments of
interest on the Subordinated Debt Securities by extending the interest payment
period from time to time on the Subordinated Debt Securities which, if
exercised, would defer quarterly distributions on the Preferred Securities
(though such distributions would continue to accrue with interest since interest
would continue to accrue on the Subordinated Debt Securities) during any such
extended interest payment period. Such right to extend the interest payment
period for the Subordinated Debt Securities is limited to a period not exceeding
20 consecutive quarters. In the event that Capital Funding exercises this right,
then (a) U S WEST and Capital Funding shall not (and, if it is a wholly-owned
subsidiary of U S WEST, U S WEST shall cause U S WEST Communications not to)
declear or pay any dividend on, make any distributions with respect to, or
redeem, purchase or make a liquidation payment with respect to, any of its
capital stock, including, in the case of U S WEST, the Communications Stock and
the Media Vision Stock, and (b) U S WEST and Capital Funding shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by U S WEST or Capital Funding which rank pari
passu with or junior to the Subordinated Debt Securities. Prior to the
termination of any such extension period, Capital Funding may further extend the
interest payment period, provided that such Extension Period together with all
such previous and further extensions thereof may not exceed 20 consecutive
quarters. Upon the termination of any Extension Period and the payment of all
amounts then due, Capital Funding may select a new Extension Period, subject to
the above requirements. See "Description of the Subordinated Debt Securities and
the Debt Guarantee -- Interest" and "-- Option to Extend Interest Payment
Period." If distributions are deferred, the deferred distributions and accrued
interest thereon shall be paid to holders of record of the Preferred Securities
as they appear on the books and records of U S WEST Financing on the record date
next following the termination of such deferral period.
____Distributions on the Preferred Securities must be paid on the dates payable
to the extent that U S WEST Financing has funds available for the payment of
such distributions in the Property Account. U S WEST Financing's funds available
for distribution to the holders of the Preferred Securities will be limited to
payments received under the Subordinated Debt Securities and the Debt Guarantee.
See "Description of the Subordinated Debt Securities and the Debt Guarantee."
The payment of distributions out of moneys held by U S WEST Financing is
guaranteed by U S WEST to the extent set forth under "Description of the
Preferred Securities Guarantees" in the accompanying Prospectus.
____Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of U S WEST Financing on the
relevant record dates, which, as long as the Preferred Securities remain in
book-entry only form, will be one Business Day (as defined herein) prior to the
relevant payment dates. Such distributions will be paid through the Property
Trustee, who will hold amounts received in respect of the Subordinated Debt
Securities and the Debt Guarantee in the Property Account for the benefit of the
holders of the Trust Securities. Subject to any applicable laws and regulations
and the provisions of the Declaration, each such payment will be made as
described under "-- Book-Entry Only Issuance -- The Depository Trust Company"
below. In the event the Preferred Securities shall not continue to remain in
book-entry only form, the Regular Trustees shall have the right to select
relevant record dates which shall be more than one Business Day prior to the
relevant payment dates. In the event that any date on which distributions are to
be made on the Preferred Securities is not a Business Day, then payment of the
distributions payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. A "Business
Day" shall mean any day other than a day on which banking institutions in the
City of New York are authorized or required by law to close.
S-12
<PAGE>
MANDATORY REDEMPTION
____The Subordinated Debt Securities will mature on ___________, 2025, unless
the maturity date is extended, and may be redeemed, in whole or in part, at any
time on or after ___________, 2000 or at any time in certain circumstances upon
the occurrence of a Tax Event. Upon the repayment of the Subordinated Debt
Securities, whether at maturity or upon redemption, the proceeds from such
repayment or payment shall simultaneously be applied to redeem Trust Securities
having an aggregate liquidation amount equal to the aggregate principal amount
of the Subordinated Debt Securities so repaid or redeemed at the Redemption
Price; provided that holders of Trust Securities shall be given not less than 30
nor more than 60 days notice of such redemption. See "Description of the
Subordinated Debt Securities and the Debt Guarantee." In the event that fewer
than all of the outstanding Preferred Securities are to be redeemed, the
Preferred Securities will be redeemed PRO RATA as described under "-- Book-Entry
Only Issuance -- The Depository Trust Company" below.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
____"Tax Event" means that the Regular Trustees shall have received an opinion
of a nationally recognized independent tax counsel experienced in such matters
(a "Dissolution Tax Opinion") to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to, or
change in, an interpretation or application of such laws or regulations, there
is more than an insubstantial risk that (i) U S WEST Financing would be subject
to United States federal income tax with respect to income accrued or received
on the Subordinated Debt Securities, (ii) interest payable to U S WEST Financing
on the Subordinated Debt Securities would not be deductible by Capital Funding
for United States federal income tax purposes or (iii) U S WEST Financing would
be subject to more than a DE MINIMIS amount of other taxes, duties or other
governmental charges, which change or amendment becomes effective on or after
the date of this Prospectus Supplement.
____"Investment Company Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized independent counsel to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority (a "Change
in 1940 Act Law"), there is more than an insubstantial risk that U S WEST
Financing is or will be considered an "investment company" which is required to
be registered under the Investment Company Act of 1940, as amended (the "1940
Act"), which Change in 1940 Act Law becomes effective on or after the date of
this Prospectus Supplement.
____If, at any time, a Tax Event or an Investment Company Event (each, as
defined above, a "Special Event") shall occur and be continuing, U S WEST
Financing shall, except in the circumstances described below, be dissolved with
the result that Subordinated Debt Securities with an aggregate principal amount
equal to the aggregate stated liquidation amount of, with an interest rate
identical to the distribution rate of, and accrued and unpaid interest equal to
accrued and unpaid distributions on, the Trust Securities would be distributed
to the holders of the Trust Securities, together with the Debt Guarantee, in
liquidation of such holders' interests in U S WEST Financing on a pro rata
basis, within 90 days following the occurrence of such Special Event; provided,
however, that in the case of the occurrence of a Tax Event, as a condition of
such dissolution and distribution, the Regular Trustees shall have received an
opinion of nationally recognized independent tax counsel experienced in such
matters (a "No Recognition Opinion"), which opinion may rely on published
revenue rulings of the Internal Revenue Service, to the effect that the holders
of the Trust Securities will not recognize any gain or loss for United States
federal income tax purposes as a result of such dissolution and distribution of
Subordinated Debt Securities; and, provided, further, that, if at the time there
is available to U S WEST Financing the opportunity to eliminate, within such 90
day period, the Special Event by taking some ministerial action, such as filing
a form or making an election, or pursuing some other similar reasonable measure,
which has no adverse effect on U S WEST Financing, Capital Funding, U S WEST or
the holders of the Trust Securities, U S WEST Financing will pursue such measure
in lieu of dissolution. Furthermore, if in the case of the occurrence of a Tax
Event, (i) Capital Funding has received an opinion (a "Redemption Tax Opinion")
of nationally recognized independent tax counsel experienced in such matters
that, as a result of a Tax Event, there is more than an insubstantial risk that
Capital Funding
S-13
<PAGE>
would be precluded from deducting the interest on the Subordinated Debt
Securities for United States federal income tax purposes even after the
Subordinated Debt Securities were distributed to the holders of Trust Securities
in liquidation of such holders' interests in U S WEST Financing as described
above or (ii) the Regular Trustees shall have been informed by such tax counsel
that a No Recognition Opinion cannot be delivered to U S WEST Financing, Capital
Funding shall have the right, upon not less than 30 nor more than 60 days
notice, to redeem the Subordinated Debt Securities in whole or in part for cash
within 90 days following the occurrence of such Tax Event, and, following such
redemption, Trust Securities with an aggregate liquidation amount equal to the
aggregate principal amount of the Subordinated Debt Securities so redeemed shall
be redeemed by U S WEST Financing at the Redemption Price on a pro rata basis;
provided, however, that, if at the time there is available to Capital Funding or
U S WEST Financing the opportunity to eliminate, within such 90 day period, the
Tax Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure which has no adverse
effect on U S WEST Financing, Capital Funding, U S WEST or the holders of the
Trust Securities, Capital Funding or U S WEST Financing will pursue such measure
in lieu of redemption.
____If Subordinated Debt Securities, together with the Debt Guarantee, are
distributed to the holders of the Preferred Securities, Capital Funding will use
its best efforts to have the Subordinated Debt Securities listed on the New York
Stock Exchange or on such other exchange as the Preferred Securities are then
listed.
____After the date for any distribution of Subordinated Debt Securities,
together with the Debt Guarantee, upon dissolution of U S WEST Financing, (i)
the Preferred Securities will no longer be deemed to be outstanding, (ii) the
depositary or its nominee, as the record holder of the Preferred Securities,
will receive a registered global certificate or certificates representing the
Subordinated Debt Securities and the Debt Guarantee to be delivered upon such
distribution and (iii) any certificates representing Preferred Securities not
held by the depositary or its nominee will be deemed to represent Subordinated
Debt Securities having an aggregate principal amount equal to the aggregate
stated liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid distribution on, such Preferred Securities, until such certificates are
presented to Capital Funding or its agent for transfer or reissuance.
____There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debt Securities that may be distributed in
exchange for the Preferred Securities if a dissolution and liquidation of U S
WEST Financing were to occur. Accordingly, the Preferred Securities that an
investor may purchase, or the Subordinated Debt Securities that the investor may
receive on dissolution and liquidation of U S WEST Financing, may trade at a
discount to the price that the investor paid to purchase the Preferred
Securities offered hereby.
REDEMPTION PROCEDURES
____U S WEST Financing may not redeem fewer than all of the outstanding
Preferred Securities unless all accrued and unpaid distributions have been paid
on all Preferred Securities for all quarterly distribution periods terminating
on or prior to the date of redemption.
____If U S WEST Financing gives a notice of redemption in respect of Preferred
Securities (which notice will be irrevocable), then, by 12:00 noon, New York
City time, on the redemption date, provided that Capital Funding has paid to the
Property Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Subordinated Debt Securities, U S WEST Financing
will irrevocably deposit with the depositary funds sufficient to pay the
applicable Redemption Price and will give the Depositary irrevocable
instructions and authority to pay the Redemption Price to the holders of the
Preferred Securities. See "-- Book-Entry Only Issuance -- The Depository Trust
Company." If notice of redemption shall have been given and funds deposited as
required, then immediately prior to the close of business on the date of such
deposit, distributions will cease to accrue and all rights of holders of such
Preferred Securities so called for redemption will cease, except the right of
the holders of such Preferred Securities to receive the Redemption Price, but
without interest on such Redemption Price. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other
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payment in respect of any such delay), except that, if such Business Day falls
in the next calendar year, such payment will be made on the immediately
preceding Business Day. In the event that payment of the Redemption Price in
respect of Preferred Securities is improperly withheld or refused and not paid
either by U S WEST Financing or by U S WEST pursuant to the Preferred Securities
Guarantee, distributions on such Preferred Securities will continue to accrue,
from the original redemption date to the actual date of payment, in which case
the actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.
____In the event that fewer than all of the outstanding Preferred Securities are
to be redeemed, the Preferred Securities will be redeemed pro rata as described
under "-- Book-Entry Only Issuance -- The Depository Trust Company" below.
____Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), U S WEST or its affiliates
may, at any time and from time to time, purchase outstanding Preferred
Securities by tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
____In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of U S WEST Financing, the holders of the Preferred
Securities at that time will be entitled to receive out of the assets of U S
WEST Financing, after satisfaction of liabilities to creditors, distributions in
an amount equal to the aggregate of the stated liquidation amount of $25 per
Preferred Security plus accrued and unpaid distributions thereon to the date of
payment (the "Liquidation Distribution"), unless, in connection with such
liquidation, dissolution, winding-up or termination, Subordinated Debt
Securities in an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the distribution rate
of, and accrued and unpaid interest equal to accrued and unpaid distributions
on, the Preferred Securities have been distributed on a pro rata basis to the
holders of Preferred Securities.
____If, upon any such dissolution, the Liquidation Distribution can be paid only
in part because U S WEST Financing has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by U S WEST Financing on the Preferred Securities shall be paid on a pro rata
basis. The holders of the Common Securities will be entitled to receive
distributions upon any such dissolution pro rata with the holders of the
Preferred Securities, except that if a Declaration Event of Default has occurred
and is continuing, the Preferred Securities shall have a preference over the
Common Securities.
____Pursuant to the Declaration, U S WEST Financing shall terminate (i) on
___________, 2050, the expiration of the term of U S WEST Financing, (ii) upon
the bankruptcy of U S WEST, Capital Funding or the holder of the Common
Securities, (iii) upon the filing of a certificate of dissolution or its
equivalent with respect to the holder of the Common Securities, U S WEST or
Capital Funding, the filing of a certificate of cancellation with respect to U S
WEST Financing, or the revocation of the charter of the holder of the Common
Securities, U S WEST or Capital Funding and the expiration of 90 days after the
date of revocation without a reinstatement thereof, (iv) upon the distribution
of the Subordinated Debt Securities, together with the Debt Guarantee, following
the occurrence of a Special Event, (v) upon the redemption of all of the Trust
Securities or (vi) upon the entry of a decree of a judicial dissolution of the
holder of the Common Securities, U S WEST, Capital Funding or U S WEST
Financing.
DECLARATION EVENTS OF DEFAULT
____An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"), provided that pursuant to the
Declaration, the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated. Until such Declaration Events of Default
with respect to the Preferred Securities have been so cured, waived or otherwise
eliminated, the Property Trustee will be deemed to be acting solely on behalf of
the holders of the Preferred Securities and only the holders of the Preferred
Securities will have the right to direct the Property Trustee with respect to
certain matters under the Declaration, and therefore the Indenture.
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____Upon the occurrence of a Declaration Event of Default, the Property Trustee,
as the sole holder of the Subordinated Debt Securities, will have the right
under the Indenture to declare the principal of and interest on the Subordinated
Debt Securities to be immediately due and payable.
VOTING RIGHTS
____Except as provided below, under the Trust Act, the Trust Indenture Act and
under "Description of the Preferred Securities Guarantees -- Amendments and
Assignment" in the accompanying Prospectus and as otherwise required by law and
the Declaration, the holders of the Preferred Securities will have no voting
rights.
____If (i) U S WEST Financing fails to pay distributions in full on the
Preferred Securities for 6 consecutive quarterly distribution periods or (ii) a
Declaration Event of Default occurs and is continuing (each, an "Appointment
Event"), then the holders of the Preferred Securities, acting as a single class,
will be entitled by the majority vote of such holders to appoint a Special
Regular Trustee. For purposes of determining whether U S WEST Financing has
failed to pay distributions in full for 6 consecutive quarterly distribution
periods, distributions shall be deemed to remain in arrears, notwithstanding any
payments in respect thereof, until full cumulative distributions have been or
contemporaneously are paid with respect to all quarterly distribution periods
terminating on or prior to the date of payment of such cumulative distributions.
Any holder of Preferred Securities (other than U S WEST or any of its
affiliates) shall be entitled to nominate any person to be appointed as Special
Regular Trustee. Not later than 30 days after such right to appoint a Special
Regular Trustee arises, the Regular Trustees shall convene a meeting of the
holders of Preferred Securities for the purpose of appointing a Special Regular
Trustee. If the Regular Trustees fail to convene such meeting within such 30-day
period, the holders of not less than 10% of the aggregate stated liquidation
amount of the outstanding Preferred Securities will be entitled to convene such
meeting. The provisions of the Declaration relating to the convening and conduct
of the meetings of the holders will apply with respect to any such meeting. Any
Special Regular Trustee so appointed shall cease to be a Special Regular Trustee
if the Appointment Event pursuant to which the Special Regular Trustee was
appointed and all other Appointment Events cease to be continuing.
Notwithstanding the appointment of any Special Regular Trustee, Capital Funding
shall retain all rights under the Indenture, including the right to defer
payments of interest by extending the interest payment period as provided under
"Description of the Subordinated Debt Securities and the Debt Guarantee --
Option to Extend Interest Payment Period." If such an extension occurs, there
will be no Indenture Event of Default, and therefore no Declaration Event of
Default, for failure to make any scheduled interest payment during the Extension
Period on the date originally scheduled.
____The holders of a majority in aggregate liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or to direct the
exercise of any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee, as the holder
of the Subordinated Debt Securities and Debt Guarantees, to (i) exercise the
remedies available under the Indenture with respect to the Subordinated Debt
Securities and Debt Guarantee, (ii) waive any past Indenture Event of Default
which is waivable under Section 6.06 of the Base Indenture (as defined herein),
or (iii) exercise any right to rescind or annul a declaration that the principal
of all the Subordinated Debt Securities shall be due and payable, provided that
where a consent under the Indenture would require the consent of more than a
majority of the holders (a "Super-Majority") affected thereby, only the holders
of at least such Super-Majority of the Preferred Securities may direct the
Property Trustee to give such consent. If the Property Trustee fails to enforce
its rights under the Subordinated Debt Securities or the Debt Guarantee, a
holder of Preferred Securities may, after a period of 30 days has elapsed from
such holder's written request to the Property Trustee to enforce such rights,
institute a legal proceeding directly against Capital Funding or U S WEST to
enforce the Property Trustee's rights under the Subordinated Debt Securities or
the Debt Guarantee, as the case may be, without first instituting any legal
proceeding against the Property Trustee or any other person or entity,
including, in the case of the Debt Guarantee, against Capital Funding. The
Property Trustee shall notify all holders of the Preferred Securities of any
notice of default received from the Debt Trustee with respect to the
Subordinated Debt Securities. Such notice shall state that such Indenture Event
of Default also constitutes a Declaration Event of Default. Except in the case
of directing the time, method and place of
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conducting a proceeding for a remedy, the Property Trustee shall not take any
action described in clauses (i), (ii) or (iii) above unless the Property Trustee
has obtained an opinion of tax counsel to the effect that, as a result of such
action, U S WEST Financing will not be classified as a corporation or a
partnership for United States federal income tax purposes and that, following
such action, each holder of Trust Securities will be treated as owning an
undivided beneficial interest in the Subordinated Debt Securities.
In the event the consent of the Property Trustee, as the holder of the
Subordinated Debt Securities and the Debt Guarantee, is required under the
Indenture with respect to any amendment, modification or termination of the
Indenture, the Property Trustee shall request the direction of the holders of
the Trust Securities with respect to such amendment, modification or termination
and shall vote with respect to such amendment, modification or termination as
directed by a majority in liquidation amount of the Trust Securities, voting
together as a single class, provided that where a consent under the Indenture
would require the consent of a Super-Majority, the Property Trustee may only
give such consent at the direction of the holders of at least the proportion in
liquidation amount of the Trust Securities which the relevant Super-Majority
represents of the aggregate principal amount of the Subordinated Debt Securities
outstanding. The Property Trustee shall not take any such action in accordance
with the directions of the holders of the Trust Securities unless the Property
Trustee has obtained an opinion of tax counsel to the effect that, as a result
of such action, U S WEST Financing will not be classified as a corporation or a
partnership for United States federal income tax purposes and that, following
such action, each holder of Trust Securities will be treated as owning an
undivided beneficial interest in the Subordinated Debt Securities.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for such
purpose, at a meeting of all of the holders of Trust Securities or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents. No vote or consent of the holders of Preferred
Securities will be required for U S WEST Financing to redeem and cancel
Preferred Securities or distribute Subordinated Debt Securities in accordance
with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities at such time that are owned by U S WEST or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, U S WEST shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "-- Book-Entry Only Issuance -- The
Depository Trust Company."
Except in the limited circumstances described above in connection with the
appointment of a Special Regular Trustee, holders of the Preferred Securities
will have no rights to appoint or remove the U S WEST Trustees, who may be
appointed, removed or replaced solely by U S WEST, as the direct or indirect
holder of all the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be amended or modified if approved and executed by a
majority of the Regular Trustees, provided that if any proposed amendment
provides for, or the Regular Trustees otherwise propose to effect, (i) any
action that would adversely affect the powers, preferences or special rights of
the Preferred Securities, whether by way of amendment to the Declaration or
otherwise or (ii) the dissolution, winding-up or termination of U S WEST
Financing other than pursuant to the terms of the Declaration, then the holders
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of the Trust Securities as a single class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of at least 66 2/3% in liquidation amount of the Trust
Securities affected thereby, provided that the right of holders of Preferred
Securities to appoint a Special Regular Trustee shall not be modified without
the consent of each holder of Preferred Securities, and provided, further, that
if any amendment or proposal referred to in clause (i) above would adversely
affect only the Preferred Securities or the Common Securities, then only the
affected class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of 66 2/3%
in liquidation amount of such class of Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause U S WEST
Financing to be characterized for purposes of United States federal income
taxation as an association taxable as a corporation or partnership or cause each
holder of Trust Securities not to be treated as owning an undivided beneficial
interest in the Subordinated Debt Securities, (ii) reduce or otherwise adversely
affect the powers of the Property Trustee or (iii) cause U S WEST Financing to
be deemed to be an "investment company" which is required to be registered under
the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
U S WEST Financing may not consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described below. U S WEST Financing may, with the consent of a majority of the
Regular Trustees and without the consent of the holders of the Trust Securities,
consolidate, amalgamate, merge with or into, or be replaced by a trust organized
as such under the laws of any State; provided, that (i) such successor entity
either (x) expressly assumes all of the obligations of U S WEST Financing under
the Trust Securities or (y) substitutes for the Preferred Securities other
securities having substantially the same terms as the Trust Securities (the
"Successor Securities") so long as the Successor Securities rank the same as the
Trust Securities rank with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) Capital Funding expressly
acknowledges a trustee of such successor entity possessing the same powers and
duties as the Property Trustee as the holder of the Subordinated Debt Securities
and U S WEST expressly acknowledges such trustee of such successor entity as the
holder of the Debt Guarantee, (iii) the Preferred Securities or any Successor
Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or other
organization on which the Preferred Securities are then listed, (iv) such
merger, consolidation, amalgamation or replacement does not cause the Preferred
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation or replacement does not adversely affect the rights,
preferences and privileges of the holders of the Trust Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of the holders' interest in the new entity), (vi) such successor entity
has a purpose identical to that of U S WEST Financing, (vii) prior to such
merger, consolidation, amalgamation or replacement, U S WEST has received an
opinion of a nationally recognized independent counsel to U S WEST Financing
experienced in such matters to the effect that (A) such merger, consolidation,
amalgamation or replacement does not adversely affect the rights, preferences
and privileges of the holders of the Trust Securities (including any Successor
Securities) in any material respect (other than with respect to any dilution of
the holders' interest in the new entity), and (B) following such merger,
consolidation, amalgamation or replacement, neither U S WEST Financing nor such
successor entity will be required to register as an investment company under the
1940 Act and (viii) U S WEST guarantees the obligations of such successor entity
under the Successor Securities at least to the extent provided by the Preferred
Securities Guarantee and the guarantee of the Common Securities. Notwithstanding
the foregoing, U S WEST Financing shall not, except with the consent of holders
of 100% in liquidation amount of the Trust Securities, consolidate, amalgamate,
merge with or into, or be replaced by any other entity or permit any other
entity to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger or replacement would cause U S WEST
Financing or the
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successor entity to be classified as a corporation or a partnership for United
States federal income tax purposes or, if as a result of such action, each
holder of Trust Securities would not be treated as owning an undivided
beneficial interest in the Subordinated Debt Securities.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
the Preferred Securities. The Preferred Securities will be issued only as fully
registered securities registered in the name of Cede & Co. (DTC's nominee). One
or more fully registered global Preferred Securities certificates will be
issued, representing in the aggregate the total number of Preferred Securities,
and will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in a global Preferred Security.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations ("Direct Participants"). DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, the American Stock Exchange,
Inc., and the National Association of Securities Dealers, Inc. Access to the DTC
system is also available to others such as securities brokers and dealers, banks
and trust companies that clear through or maintain a custodial relationship with
a Direct Participant, either directly or indirectly ("Indirect Participants").
The rules applicable to DTC and its Participants are on file with the Securities
and Exchange Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
each Preferred Securities ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Preferred Securities, except in the event that use
of the book-entry system for the Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities deposited
by Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Preferred Securities with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Preferred Securities. DTC's records reflect
only the identity of the Direct Participants to whose accounts such Preferred
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
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Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce pro rata the amount of
the interest of each Direct Participant in the Preferred Securities to be
redeemed; provided that if, as a result of such pro rata redemption, Direct
Participants would hold fractional interests in the Preferred Securities, DTC
will adjust the amount of the interest of each Direct Participant to be redeemed
to avoid such fractional interests.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to U S WEST Financing as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts the
Preferred Securities are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Distribution payments on the Preferred Securities will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payment date.
Payments by participants to Beneficial Owners will be governed by standing
instructions and customary practices, as in the case with securities held for
the account of customers in bearer form or registered in "street name," and will
be the responsibility of such Participant and not of DTC, U S WEST Financing,
Capital Funding or U S WEST, subject to any statutory or regulatory requirements
as may be in effect from time to time. Payment of distributions to DTC is the
responsibility of U S WEST Financing, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments to
the Beneficial Owners is the responsibility of Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Preferred Security
will not be entitled to receive physical delivery of Preferred Securities.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to U
S WEST Financing. Under such circumstances, in the event that a successor
securities depository is not obtained, Preferred Securities certificates are
required to be printed and delivered. Additionally, the Regular Trustees (with
the consent of U S WEST) may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor depositary) with respect to the
Preferred Securities. In that event, certificates for the Preferred Securities
will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that U S WEST and U S WEST Financing believe to
be reliable, but U S WEST and U S WEST Financing take no responsibility for the
accuracy thereof.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a default with respect to
the Trust Securities, undertakes to perform only such duties as are specifically
set forth in the Declaration and, after default, shall exercise the same degree
of care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Property Trustee is under no obligation
to exercise any of the powers vested in it by the Declaration at the request of
any holder of Preferred Securities, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities which might be incurred
thereby. The holders of Preferred Securities will not be required to offer such
indemnity in the event such holders, by exercising their voting rights, direct
the Property Trustee to take any action following a Declaration Event of
Default.
U S WEST and certain of its affiliates maintain a deposit account and
banking relationship with the Property Trustee. The Property Trustee serves as
trustee under the Preferred Securities Guarantee. The Property Trustee also
serves as trustee under other indentures pursuant to which unsecured debt
securities of affiliates of U S WEST are outstanding.
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REGISTRAR AND TRANSFER AGENT
In the event that the Preferred Securities do not remain in book-entry only
form, the following provisions would apply:
The Property Trustee will act as paying agent and may designate an
additional or substitute paying agent at any time.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of U S WEST Financing, but upon payment (with the giving
of such indemnity as U S WEST Financing or U S WEST may require) in respect of
any tax or other government charges which may be imposed in relation to it.
U S WEST Financing will not be required to register or cause to be
registered the transfer of Preferred Securities after such Preferred Securities
have been called for redemption.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate U S WEST
Financing in such a way so that (i) U S WEST Financing will not be deemed to be
an "investment company" required to be registered under the 1940 Act or
characterized for United States federal income tax purposes as an association
taxable as a corporation or as a partnership and (ii) each holder of Trust
Securities will be treated as owning an undivided beneficial interest in the
Subordinated Debt Securities. Capital Funding is authorized and directed to
conduct its affairs so that the Subordinated Debt Securities will be treated as
indebtedness of Capital Funding for United States federal income tax purposes.
In this connection, the Regular Trustees and Capital Funding are authorized to
take any action, not inconsistent with applicable law, the certificate of trust
of U S WEST Financing, the Declaration or the certificate of incorporation of
Capital Funding, that each of the Regular Trustees and Capital Funding
determines in their discretion to be necessary or desirable for such purposes,
as long as such action does not adversely affect the interests of the holders of
the Preferred Securities.
DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES AND THE DEBT GUARANTEE
Set forth below is a description of the specific terms of the Subordinated
Debt Securities in which U S WEST Financing will invest with the proceeds of the
issuance and sale of the Trust Securities. This description supplements the
description of the general terms and provisions of the Subordinated Debt
Securities set forth in the accompanying Prospectus under the caption
"Description of the Subordinated Debt Securities and the Debt Guarantees." The
following description does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the description in the accompanying
Prospectus and the Indenture (the "Base Indenture"), dated as of ,
1995, among Capital Funding, U S WEST and Norwest Bank Minnesota, National
Association, as Trustee (the "Debt Trustee"), as supplemented by a First
Supplemental Indenture, dated as of , 1995 (the Base Indenture, as so
supplemented, is hereinafter referred to as the "Indenture"), the forms of which
are filed as an exhibit to the Registration Statement of which this Prospectus
Supplement and the accompanying Prospectus form a part. Certain capitalized
terms used herein are defined in the Indenture.
Under certain circumstances involving the dissolution of U S WEST Financing
following the occurrence of a Special Event, Subordinated Debt Securities may be
distributed to the holders of Trust Securities in liquidation of U S WEST
Financing. See "Description of the Preferred Securities -- Special Event
Redemption or Distribution."
If the Subordinated Debt Securities are distributed to the holders of the
Trust Securities, Capital Funding will use its best efforts to have the
Subordinated Debt Securities listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities are then listed.
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GENERAL
The Subordinated Debt Securities will be issued as unsecured debt under the
Indenture. The Subordinated Debt Securities will be limited in aggregate
principal amount to approximately $ million, such amount being the sum of
the aggregate stated liquidation amount of the Preferred Securities and the
capital contributed by Capital Funding in exchange for the Common Securities
(the "U S WEST Payment").
The Subordinated Debt Securities are not subject to a sinking fund
provision. The entire principal amount of the Subordinated Debt Securities will
mature and become due and payable, together with any accrued and unpaid interest
thereon, including Additional Interest (as defined herein), if any, on
, 2025, subject to the election of Capital Funding to extend the
scheduled maturity date of the Subordinated Debt Securities to a date not later
than , 2044, provided that Capital Funding satisfies certain
financial covenants. See "-- Option to Extend Maturity Date." The Subordinated
Debt Securities will be fully and unconditionally guaranteed on a subordinated
basis as to principal, premium, if any, and interest by U S WEST. See
"Description of the Subordinated Debt Securities and the Debt Guarantees -- Debt
Guarantees" in the accompanying Prospectus.
If Subordinated Debt Securities are distributed to holders of the Preferred
Securities in liquidation of such holders' interests in U S WEST Financing, such
Subordinated Debt Securities will initially be issued as a Global Security (as
defined below). As described herein, under certain limited circumstances,
Subordinated Debt Securities may be issued in certificated form in exchange for
a Global Security. See "-- Book-Entry and Settlement." In the event Subordinated
Debt Securities are issued in certificated form, such Subordinated Debt
Securities will be in denominations of $25 and integral multiples thereof and
may be transferred or exchanged at the offices described below. Payments on
Subordinated Debt Securities issued as a Global Security will be made to the
depositary for the Subordinated Debt Securities. In the event Subordinated Debt
Securities are issued in certificated form, principal and interest will be
payable, the transfer of the Subordinated Debt Securities will be registrable
and Subordinated Debt Securities will be exchangeable for Subordinated Debt
Securities of other denominations of a like aggregate principal amount at the
corporate trust office of the Debt Trustee in New York, New York; provided, that
payment of interest may be made at the option of Capital Funding by check mailed
to the address of the persons entitled thereto.
SUBORDINATION
The Indenture provides that the Subordinated Debt Securities are
subordinated and junior in right of payment to all Senior Indebtedness of
Capital Funding and that the Debt Guarantee is subordinated and junior in right
of payment to all Senior Indebtedness of U S WEST. No payment of principal of
(including redemption and sinking fund payments), premium, if any, or interest
on, the Subordinated Debt Securities and no payment under the Debt Guarantee may
be made if any Senior Indebtedness of Capital Funding or U S WEST, as the case
may be, is not paid when due, any applicable grace period with respect to such
default has ended and such default has not been cured or waived or ceased to
exist, or if the maturity of any Senior Indebtedness of Capital Funding or U S
WEST, as the case may be, has been accelerated because of a default. Upon any
distribution of assets of Capital Funding or U S WEST to creditors upon any
dissolution, winding-up, liquidation or reorganization, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all
principal of, premium, if any, and interest due or to become due on, all Senior
Indebtedness of Capital Funding or U S WEST, as the case may be, must be paid in
full before the holders of Subordinated Debt Securities or the Debt Guarantee
are entitled to receive or retain any payment. The rights of the holders of the
Subordinated Debt Securities and the Debt Guarantee will be subrogated to the
rights of the holders of Senior Indebtedness of Capital Funding or U S WEST, as
the case may be, to receive payments or distributions applicable to Senior
Indebtedness until all amounts owing on the Subordinated Debt Securities or the
Debt Guarantee, as the case may be, are paid in full. In addition, the
Subordinated Debt Securities and the Debt Guarantee will rank at least pari
passu with all other subordinated debt securities and debt guarantees issued
under the Base Indenture to other U S WEST Trusts or to other trusts,
partnerships or other entities affiliated with U S WEST in connection with an
issuance of securities similar to the Preferred Securities.
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The term "Senior Indebtedness" means, with respect to Capital Funding or U S
WEST, (i) the principal, premium, if any, and interest in respect of (a)
indebtedness of such obligor for money borrowed and (b) indebtedness evidenced
by securities, debentures, bonds or other similar instruments issued by such
obligor including, without limitation, in the case of U S WEST, all obligations
under its Liquid Yield Option Notes due 2011; (ii) all capital lease obligations
of such obligor; (iii) all obligations of such obligor issued or assumed as the
deferred purchase price of property, all conditional sale obligations of such
obligor and all obligations of such obligor under any title retention agreement
(but excluding trade accounts payable arising in the ordinary course of
business); (iv) all obligations of such obligor for the reimbursement on any
letter of credit, banker's acceptance, security purchase facility or similar
credit transaction; (v) all obligations of the type referred to in clauses (i)
through (iv) above of other persons for the payment of which such obligor is
responsible or liable as obligor, guarantor or otherwise; and (vi) all
obligations of the type referred to in clauses (i) through (v) above of other
persons secured by any lien on any property or asset of such obligor (whether or
not such obligation is assumed by such obligor), except for (1) any such
indebtedness that is by its terms subordinated to or PARI PASSU with the
Subordinated Debt Securities or the Debt Guarantee, as the case may be, and (2)
any indebtedness between or among such obligor or its affiliates. Such Senior
Indebtedness shall continue to be Senior Indebtedness and be entitled to the
benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any term of such Senior Indebtedness.
The Indenture does not limit the aggregate amount of Senior Indebtedness
which may be issued by Capital Funding or U S WEST. As of December 31, 1994,
Senior Indebtedness of U S WEST and Capital Funding aggregated approximately
$3.5 billion and $1.4 billion, respectively.
OPTIONAL REDEMPTION
Capital Funding shall have the right to redeem the Subordinated Debt
Securities, in whole or in part, from time to time, on or after ,
2000, or at any time in certain circumstances upon the occurrence of a Tax Event
as described under "Description of the Preferred Securities -- Special Event
Redemption or Distribution," upon not less than 30 nor more than 60 days'
notice, at a redemption price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest, including Additional Interest, if
any, to the redemption date. If a partial redemption of the Preferred Securities
resulting from a partial redemption of the Subordinated Debt Securities would
result in the delisting of the Preferred Securities, Capital Funding may only
redeem the Subordinated Debt Securities in whole.
INTEREST
Each Subordinated Debt Security shall bear interest at the rate of % per
annum from the original date of issuance, payable quarterly in arrears on March
31, June 30, September 30 and December 31 of each year (each, an "Interest
Payment Date"), commencing June 30, 1995, to the person in whose name such
Subordinated Debt Security is registered, subject to certain exceptions, at the
close of business on the Business Day next preceding such Interest Payment Date.
In the event the Subordinated Debt Securities shall not continue to remain in
book-entry only form, Capital Funding shall have the right to select record
dates which shall be more than one Business Day prior to the Interest Payment
Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period will be computed on the basis of
the actual number of days elapsed per 30-day month. In the event that any date
on which interest is payable on the Subordinated Debt Securities is not a
Business Day, then payment of the interest payable on such date will be made on
the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date.
OPTION TO EXTEND MATURITY DATE
The maturity date of the Subordinated Debt Securities is , 2025
(the "Scheduled Maturity Date"). Capital Funding, however, may, before the
Scheduled Maturity Date, extend such maturity date no more than one time, for up
to an additional 19 years from the Scheduled Maturity Date, provided that (a)
Capital Funding is not in bankruptcy or otherwise insolvent, (b) Capital Funding
is not in default on any
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subordinated debt securities issued to a U S WEST Trust or to any trustee of
such trust in connection with an issuance of Trust Securities by such U S WEST
Trust, (c) Capital Funding has made timely payments on the Subordinated Debt
Securities for the immediately preceding 6 quarters without deferrals, (d) U S
WEST Financing is not in arrears on payments of distributions on the Preferred
Securities, (e) the Subordinated Debt Securities are rated Investment Grade by
Standard & Poor's Corporation, Moody's Investors Service, Inc., Fitch Investor
Services, Duff & Phelps Credit Rating Company or any other nationally recognized
statistical rating organization, and (g) the final maturity of the Subordinated
Debt Securities is not later than the 49th anniversary of the issuance of the
Preferred Securities. Pursuant to the Declaration, the Regular Trustees are
required to give notice of Capital Funding's election to extend the Scheduled
Maturity Date to the holders of the Preferred Securities.
OPTIONS TO EXTEND INTEREST PAYMENT PERIOD
Capital Funding shall have the right at any time, and from time to time,
during the term of the Subordinated Debt Securities to defer payments of
interest by extending the interest payment period for a period not exceeding 20
consecutive Extension Periods, at the end of which Extension Period, Capital
Funding shall pay all interest then accrued and unpaid (including any Additional
Interest (as defined herein)) (together with interest thereon at the rate
specified for the Subordinated Debt Securities to the extent permitted by
applicable law); provided, that, during any such Extension Period, (a) U S WEST
and Capital Funding shall not (and, if it is a wholly-owned subsidiary of U S
WEST, U S WEST shall cause U S WEST Communications not to) declare or pay any
dividend or, make any distributions with respect to, or redeem, purchase or make
a liquidation payment with respect to, any of its capital stock, including, in
the case of U S WEST, the Communications Stock and the Media Vision Stock, and
(b) U S WEST and Capital Funding shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by U S WEST or Capital Funding which rank pari passu with or
junior to the Subordinated Debt Securities. Prior to the termination of any such
Extension Period, Capital Funding may further defer payments of interest by
extending the interest payment period, provided that such Extension Period
together with all such previous and further extensions thereof may not exceed 20
consecutive quarters. Upon the termination of any Extension Period and the
payment of all amounts then due, Capital Funding may select a new Extension
Period, subject to the above requirements. No interest during an Extension
Period, except at the end thereof, shall be due and payable. Capital Funding has
no present intention of exercising its rights to defer payments of interest by
extending the interest payment period on the Subordinated Debt Securities. If
the Property Trustee shall be the sole holder of the Subordinated Debt
Securities, Capital Funding shall give the Regular Trustees and the Property
Trustee notice of its selection of such Extension Period one Business Day prior
to the earlier of (i) the date distributions on the Preferred Securities are
payable or (ii) the date the Regular Trustees are required to give notice to the
New York Stock Exchange or other applicable self-regulatory organization or to
holders of the Preferred Securities of the record date or the date such
distribution is payable, but in any event not less than one Business Day prior
to such record date. The Regular Trustees shall give notice of Capital Funding's
selection of such Extension Period to the holders of the Preferred Securities.
If the Property Trustee shall not be the sole holder of the Subordinated Debt
Securities, Capital Funding shall give the holders of the Subordinated Debt
Securities notice of its selection of such Extension Period ten Business Days
prior to the earlier of (i) the Interest Payment Date or (ii) the date Capital
Funding is required to give notice to the New York Stock Exchange or other
applicable self-regulatory organization or to holders of the Subordinated Debt
Securities of the record or payment date of such related interest payment.
ADDITIONAL INTEREST
If at any time U S WEST Financing shall be required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing authority,
then, in any such case, Capital Funding will pay as additional interest
("Additional Interest") such additional amounts as shall be required so that the
net amounts received and retained by U S WEST Financing after paying any such
taxes, duties, assessments or other governmental charges will be not less than
the amounts U S WEST Financing would have received had no such taxes, duties,
assessments or other governmental charges been imposed.
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INDENTURE EVENTS OF DEFAULT
In case any Indenture Event of Default shall occur and be continuing, the
Property Trustee, as the holder of the Subordinated Debt Securities, will have
the right to declare the principal of and the interest on the Subordinated Debt
Securities (including any Additional Interest, if any) and any other amounts
payable under the Indenture to be forthwith due and payable and to enforce its
other rights as a creditor with respect to the Subordinated Debt Securities. See
"Description of the Subordinated Debt Securities and the Debt Guarantees --
Events of Default" in the accompanying Prospectus for a description of the
Events of Default. An Indenture Event of Default also constitutes a Declaration
Event of Default. The holders of Preferred Securities in certain circumstances
have the right to direct the Property Trustee to exercise its rights as the
holder of the Subordinated Debt Securities and the Debt Guarantee. See
"Description of the Preferred Securities -- Declaration Events of Default" and
"-- Voting Rights."
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Preferred Securities in connection with the
voluntary or involuntary dissolution, winding-up or liquidation of U S WEST
Financing as a result of the occurrence of a Special Event, the Subordinated
Debt Securities will be issued in the form of one or more global certificates
(each, a "Global Security") registered in the name of the depositary or its
nominee. Except under the limited circumstances described below, Subordinated
Debt Securities represented by the Global Security will not be exchangeable for,
and will not otherwise be issuable as, Subordinated Debt Securities in
definitive form. The Global Securities described above may not be transferred
except by the depositary to a nominee of the depositary or by a nominee of the
depositary to the depositary or another nominee of the depositary or to a
successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Subordinated Debt
Securities in definitive form and will not be considered the holders (as defined
in the Indenture) thereof for any purpose under the Indenture, and no Global
Security representing Subordinated Debt Securities shall be exchangeable, except
for another Global Security of like denomination and tenor to be registered in
the name of the depositary or its nominee or to a successor depositary or its
nominee. Accordingly, each beneficial owner must rely on the procedures of the
depositary and, if such person is not a Participant, on the procedures of the
Participant through which such person owns its interest, to exercise any rights
of a Holder under the Indenture.
THE DEPOSITARY. If Subordinated Debt Securities are distributed to holders
of Preferred Securities in liquidation of such holders' interests in U S WEST
Financing, DTC will act as securities depositary for the Subordinated Debt
Securities. For a description of DTC and the specific terms of the depository
arrangements, see "Description of the Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company." As of the date of this Prospectus
Supplement, the description therein of DTC's book-entry system and DTC's
practices as they relate to purchases, transfers, notices and payments with
respect to the Preferred Securities apply in all material respects to any debt
obligations represented by one or more Global Securities held by DTC. Capital
Funding may appoint a successor to DTC or any successor depositary in the event
DTC or such successor depositary is unable or unwilling to continue as
depositary.
None of U S WEST, Capital Funding, U S WEST Financing, the Debt Trustee, any
paying agent and any other agent of U S WEST, Capital Funding or the Debt
Trustee will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in a
Global Security for such Subordinated Debt Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES. A Global Security shall be
exchangeable for Subordinated Debt Securities registered in the names of persons
other than the depositary or its nominee only if (i) the depositary notifies
Capital Funding that it is unwilling or unable to continue as a depositary for
such Global
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Security and no successor depositary shall have been appointed, or if at any
time the depositary ceases to be a clearing agency registered under the
Securities Exchange Act of 1934, as amended, at a time when the depositary is
required to be so registered to act as such depositary and no successor
depositary shall have been appointed, (ii) Capital Funding in its sole
discretion determines that such Global Security shall be so exchangeable or
(iii) there shall have occurred an Event of Default with respect to such
Subordinated Debt Securities. Any Global Security that is exchangeable pursuant
to the preceding sentence shall be exchangeable for Subordinated Debt Securities
registered in such names as the depositary shall direct. It is expected that
such instructions will be based upon directions received by the depositary from
its Participants with respect to ownership of beneficial interests in such
Global Security.
MISCELLANEOUS
The Indenture will provide that Capital Funding will pay all fees and
expenses related to (i) the offering of the Trust Securities and the
Subordinated Debt Securities, (ii) the organization, maintenance and dissolution
of U S WEST Financing, (iii) the retention of the U S WEST Trustees and (iv) the
enforcement by the Property Trustee of the rights of holders of Preferred
Securities. The payment of such fees and expenses will be fully and
unconditionally guaranteed by U S WEST.
EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED DEBT SECURITIES,
THE DEBT GUARANTEE AND THE PREFERRED SECURITIES GUARANTEE
As set forth in the Declaration, the sole purpose of U S WEST Financing is
to issue Trust Securities and invest the proceeds thereof in the Subordinated
Debt Securities.
As long as payments of interest and other payments are made when due on the
Subordinated Debt Securities, such payments will be sufficient to cover
distributions and payments due on the Trust Securities primarily because (i) the
aggregate principal amount of Subordinated Debt Securities will be equal to the
sum of the aggregate stated liquidation amount of the Trust Securities; (ii) the
interest rate and interest and other payment dates on the Subordinated Debt
Securities will match the distribution rate and distribution and other payment
dates for the Preferred Securities; (iii) Capital Funding shall pay for all
costs and expenses of U S WEST Financing; and (iv) the Declaration provides that
the U S WEST Trustees shall not cause or permit U S WEST Financing to, among
other things, engage in any activity that is not consistent with the purposes of
U S WEST Financing.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor are
available) are guaranteed by U S WEST as and to the extent set forth under
"Description of the Preferred Securities Guarantees" in the accompanying
Prospectus. If Capital Funding does not make interest payments on the
Subordinated Debt Securities purchased by U S WEST Financing and U S WEST does
not make payments under the Debt Guarantee, it is expected that U S WEST
Financing will not have sufficient funds to pay distributions on the Preferred
Securities. The Preferred Securities Guarantee is a full and unconditional
guarantee from the time of its issuance, but does not apply to any payment of
distributions unless and until U S WEST Financing has sufficient funds for the
payment of such distributions.
If Capital Funding fails to make interest or other payments on the
Subordinated Debt Securities when due (taking account of any Extension Period)
and U S WEST fails to make payments under the Debt Guarantee with respect to
such payments due on the Subordinated Debt Securities, the Declaration provides
a mechanism whereby the holders of the Preferred Securities, using the
procedures described in "Description of the Preferred Securities -- Voting
Rights," may (i) appoint a Special Regular Trustee and (ii) direct the Property
Trustee to enforce its rights under the Subordinated Debt Securities and Debt
Guarantee, including proceeding directly against U S WEST to enforce the Debt
Guarantee without first proceeding against Capital Funding under the
Subordinated Debt Securities. If the Property Trustee fails to enforce its
rights under the Subordinated Debt Securities or the Debt Guarantee, a holder of
Preferred Securities may, after a period of 30 days has elapsed from such
holder's written request to the Property Trustee to enforce such rights,
institute a legal proceeding directly against Capital Funding or U S WEST to
enforce the
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Property Trustee's rights under the Subordinated Debt Securities or the Debt
Guarantee, as the case may be, without first instituting any legal proceeding
against the Property Trustee or any other person or entity, including, in the
case of the Debt Guarantee, against Capital Funding.
If U S WEST fails to make payments under the Preferred Securities Guarantee,
the Preferred Securities Guarantee provides a mechanism whereby the holders of
the Preferred Securities may direct the Preferred Trustee to enforce its rights
thereunder. If the Preferred Trustee fails to enforce the Preferred Securities
Guarantee, any holder of Preferred Securities may, after a period of 30 days has
elapsed from such holders written request to the Preferred Trustee to enforce
the Preferred Securities Guarantee, institute a legal proceeding directly
against U S WEST to enforce the Preferred Trustee's rights under the Preferred
Securities Guarantee, without first instituting a legal proceeding against U S
WEST Financing, the Preferred Trustee or any other person or entity.
U S WEST and U S WEST Financing believe that the above mechanisms and
obligations, taken together, are equivalent to a full and unconditional
guarantee by U S WEST of payments due on the Preferred Securities. See
"Description of the Preferred Securities Guarantees -- General" in the
accompanying Prospectus.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain of the principal United States federal
income tax consequences of the purchase, ownership and disposition of the
Preferred Securities to a holder that is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized under
the laws of the United States or any state thereof or the District of Columbia
or an estate or trust the income of which is subject to United States federal
income taxation regardless of source (a "U.S. Holder"). This summary does not
address the United States federal income tax consequences to persons other than
U.S. Holders.
This summary is based on the United States federal income tax laws,
regulations and rulings and decisions now in effect, all of which are subject to
change, possibly on a retroactive basis. This summary does not address the tax
consequences applicable to investors that may be subject to special tax rules
such as banks, thrifts, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or currencies, tax-exempt
investors or persons that will hold the Preferred Securities as a position in a
"straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment or as other than a
capital asset. This summary also does not address the tax consequences to
persons that have a functional currency other than the U.S. dollar or the tax
consequences to shareholders, partners or beneficiaries of a holder of Preferred
Securities. Further, it does not include any description of any alternative
minimum tax consequences or the tax laws of any state or local government or of
any foreign government that may be applicable to the Preferred Securities.
CLASSIFICATION OF U S WEST FINANCING
Upon the issuance of the Preferred Securities, Weil, Gotshal & Manges,
counsel to U S WEST, Capital Funding and U S WEST Financing, will issue its
opinion (the "Tax Opinion") to the effect that, under then current law and
assuming full compliance with the terms of the Indenture and the Declaration
(and certain other documents), and based on certain facts and assumptions
contained in such opinion, U S WEST Financing will not be classified, for United
States federal income tax purposes, as an association taxable as a corporation
or a partnership, but rather, each holder of Preferred Securities will be
treated as owning an undivided beneficial interest in the Subordinated Debt
Securities. Accordingly, each holder will be required to include in its gross
income the original issue discount ("OID") accrued with respect to its allocable
share of those Subordinated Debt Securities. Investors should be aware that the
Tax Opinion does not address any other issue and is not binding on the Internal
Revenue Service (the "Service") or the courts.
ORIGINAL ISSUE DISCOUNT, PREMIUM AND MARKET DISCOUNT
Because of the option that Capital Funding has, under the terms of the
Subordinated Debt Securities, to defer payments of interest by extending
interest payment periods for up to 20 quarters, all of the stated interest
payments on those Subordinated Debt Securities will be treated as "original
issue discount."
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Holders of debt instruments issued with OID must include that discount in income
on an economic accrual basis before the receipt of cash attributable to the
interest, regardless of their method of tax accounting. The amount of OID that
accrues in any month will approximately equal the amount of the interest that
accrues in that month at the stated interest rate. In the event that the
interest payment period is extended, holders will continue to accrue OID
approximately equal to the amount of the interest payment due at the end of the
extended interest payment period on an economic accrual basis over the length of
the extended interest period. Because income on the Preferred Securities will
constitute OID, corporate holders of Preferred Securities will not be entitled
to a dividends-received deduction with respect to any income earned on the
Preferred Securities.
To the extent a holder acquires its Preferred Securities at a price that is
greater or less than the adjusted issue price of such holder's share of the
Subordinated Debt Securities (which generally should approximate par plus
accrued but unpaid interest), the holder may be deemed to have acquired its
interest in the Subordinated Debt Securities with acquisition premium or with
market discount, as the case may be. A holder who purchases Preferred Securities
at a premium will be permitted to reduce the amount of OID required to be
included in income to reflect the acquisition premium. A holder who purchases
Preferred Securities at a market discount will also include the amount of such
discount in income in accordance with the market discount rules described below.
A holder that acquires its undivided beneficial interest in the Subordinated
Debt Securities at a market discount generally will be required to recognize
ordinary income to the extent of accrued market discount on the Debt Securities
upon the retirement of the underlying Debt Securities or, to the extent of any
gain, upon the disposition of the Preferred Securities. Such market discount
would accrue ratably, or, at the election of the holder, under a constant yield
method over the remaining term of the Subordinated Debt Securities. A holder
will also be required to defer the deduction of a portion of the interest paid
or accrued on indebtedness incurred to purchase or carry Preferred Securities
that represent Subordinated Debt Securities acquired with market discount. In
lieu of the foregoing, a holder may elect to include market discount in income
currently as it accrues on all market discount instruments acquired by such
holder in the taxable year of the election or thereafter, in which case the
interest deferral rule will not apply.
A holder may elect, in lieu of applying the market discount or premium rules
described above, to account for all income under the Subordinated Debt
Securities as if it were OID. A holder that makes this election and that is
considered to have acquired its undivided beneficial interest in the
Subordinated Debt Securities with market discount will be considered to have
made the election described in the immediately preceding paragraph.
RECEIPT OF SUBORDINATED DEBT SECURITIES OR CASH UPON LIQUIDATION OF U S WEST
FINANCING
Under certain circumstances, as described under the caption "Description of
the Preferred Securities -- Special Event Redemption or Distribution,"
Subordinated Debt Securities may be distributed to holders in exchange for the
Preferred Securities and in liquidation of U S WEST Financing. Under a revenue
ruling issued by the Service, such a distribution would be treated as a
non-taxable event to each holder and each holder would receive an aggregate tax
basis in the Subordinated Debt Securities equal to such holder's aggregate tax
basis in its Preferred Securities. A holder's holding period in the Subordinated
Debt Securities so received in liquidation of U S WEST Financing would include
the period for which the Preferred Securities were held by such holder.
SALES OF CERTIFICATES
A holder that sells Preferred Securities will recognize gain or loss equal
to the difference between its adjusted tax basis in the securities and the
amount realized on the sale. A holder's adjusted tax basis in the Preferred
Securities generally will be its initial purchase price increased by original
issue discount previously includible in such holder's gross income to the date
of disposition (and the accrual of market discount, if any) and decreased by
payments received on the Preferred Securities. Subject to the market discount
rules described above, any such gain or loss generally will be capital gain or
loss.
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The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Subordinated Debt Securities. A holder who disposes of his Preferred Securities
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest on the Subordinated Debt Securities through
the date of disposition in income as ordinary income (i.e., OID), and to add
such amount to his adjusted tax basis in his pro rata share of the underlying
Subordinated Debt Securities deemed disposed of. To the extent the selling price
is less than the holder's adjusted tax basis (which will include, in the form of
OID, all accrued but unpaid interest), a holder will recognize a capital loss.
Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes.
INFORMATION REPORTING TO HOLDERS
Subject to the qualifications discussed below, income on the Preferred
Securities will be reported to holders on Forms 1099, which forms should be
mailed to holders of Preferred Securities by January 31 following each calendar
year.
U S WEST Financing will be obligated to report annually to Cede & Co., as
holder of record of the Preferred Securities, the OID related to the
Subordinated Debt Securities that accrued during that year. U S WEST Financing
currently intends to report such information on Form 1099 prior to January 31
following each calendar year even though U S WEST Financing is not legally
required to report to record holders until April 15 following each calendar
year. The Underwriters have indicated to U S WEST Financing that, to the extent
that they hold Preferred Securities as nominees for beneficial holders, they
currently expect to report to such beneficial holders on Forms 1099 by January
31 following each calendar year. Under current law, holders of Preferred
Securities who hold as nominees for beneficial holders will not have any
obligation to report information regarding the beneficial holders to U S WEST
Financing. U S WEST Financing, moreover, will not have any obligation to report
to beneficial holders who are not also record holders. Thus, beneficial holders
of Preferred Securities who hold their Preferred Securities through the
Underwriters will receive Forms 1099 reflecting the income on their Preferred
Securities from such nominee holders rather than U S WEST Financing.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification requirements. Any withheld amounts will be allowed
as a credit against the holder's federal income tax, provided the required
information is provided to the Service.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
S-29
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), U S WEST Financing has agreed to sell to each of
the Underwriters named below, and each of the Underwriters, for whom Merrill
Lynch, Pierce, Fenner & Smith Incorporated is acting as representatives (the
"Representatives"), has severally agreed to purchase the number of Preferred
Securities set forth opposite its name below. In the Underwriting Agreement, the
several Underwriters have agreed, subject to the terms and conditions set forth
therein, to purchase all the Preferred Securities offered hereby if any of the
Preferred Securities are purchased. In the event of default by an Underwriter,
the Underwriting Agreement provides that, in certain circumstances, the purchase
commitments of the nondefaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
PREFERRED
UNDERWRITER SECURITIES
- --------------------------------------------------------------------------------- ----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...........................................................
----------
Total..................................................................
----------
----------
</TABLE>
The Underwriters propose to offer the Preferred Securities in part directly
to the public at the initial public offering price, as set forth on the cover
page of this Prospectus Supplement, and in part to certain securities dealers at
such price less a concession of $. per Preferred Security. The Underwriters
may allow, and such dealers may reallow, a concession not in excess of $. per
Preferred Security to certain brokers and dealers. After the Preferred
Securities are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the Representatives.
In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Subordinated Debt Securities of Capital
Funding, the Underwriting Agreement provides that Capital Funding will agree to
pay as compensation ("Underwriters' Compensation") for the Underwriters'
arranging the investment therein of such proceeds, an amount in New York
Clearing House (next day) funds of $. per Preferred Security (or $ in the
aggregate) for the accounts of the several Underwriters, provided that such
compensation for sales of 10,000 or more Preferred Securities to any single
purchaser will be $. per Preferred Security. Therefore, to the extent of such
sales, the actual amount of Underwriter's Compensation will be less than the
aggregate amount specified in the preceding sentence.
During a period of 30 days from the date of the Prospectus Supplement,
neither U S WEST Financing, U S WEST nor Capital Funding will, without the prior
written consent of the Underwriters, directly or indirectly, sell, offer to
sell, grant any option for the sale of, or otherwise dispose of, any Preferred
Securities, any security convertible into or exchangeable into or exercisable
for Preferred Securities or any equity securities substantially similar to the
Preferred Securities (except for any series of subordinated debt securities and
the Preferred Securities offered hereby).
S-30
<PAGE>
The Preferred Securities have been approved for listing on the New York
Stock Exchange, subject to official notice of issuance. Trading of the Preferred
Securities on the New York Stock Exchange is expected to commence within a 30
day period after the initial delivery of the Preferred Securities. The
Representatives have advised U S WEST Financing that they intend to make a
market in the Preferred Securities prior to the commencement of trading on the
New York Stock Exchange. The Representatives will have no obligation to make a
market in the Preferred Securities, however, and may cease market making
activities, if commenced, at any time.
Prior to this offering, there has been no public market for the Preferred
Securities. In order to meet one of the requirements for listing the Preferred
Securities on the New York Stock Exchange, the Underwriters will undertake to
sell lots of 100 or more Preferred Securities to a minimum of 400 beneficial
holders.
U S WEST, Capital Funding and U S WEST Financing have agreed to indemnify
the Underwriters against, or contribute to payments that the Underwriters may be
required to make in respect of, certain liabilities, including liabilities under
the Securities Act of 1933, as amended.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, U S WEST and its subsidiaries in the ordinary
course of business.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of U S WEST Financing by Richards,
Layton & Finger, Wilmington, Delaware, special Delaware counsel to U S WEST
Financing. The validity of the Subordinated Debt Securities, the Preferred
Securities Guarantee, the Debt Guarantee and certain matters relating thereto
will be passed upon on behalf of U S WEST and Capital Funding by Weil, Gotshal &
Manges, New York, New York and on behalf of the Underwriters by Skadden, Arps,
Slate, Meagher & Flom, New York, New York. Weil, Gotshal & Manges and Skadden,
Arps, Slate, Meagher & Flom will rely on the opinion of Stephen E. Brilz, Senior
Attorney and Assistant Secretary of U S WEST, as to all matters of Colorado law.
Certain United States federal income taxation matters will be passed upon for U
S WEST, Capital Funding and U S WEST Financing by Weil, Gotshal & Manges.
S-31
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 1, 1995
PROSPECTUS [LOGO]
$1,000,000,000
U S WEST CAPITAL FUNDING, INC.
SUBORDINATED DEBT SECURITIES
UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF
PRINCIPAL, PREMIUM, IF ANY, AND INTEREST BY
U S WEST, INC.
------------
U S WEST FINANCING I
U S WEST FINANCING II
U S WEST FINANCING III
PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
U S WEST, INC.
------------
U S WEST Capital Funding, Inc., a Colorado corporation ("Capital Funding")
and a wholly-owned subsidiary of
U S WEST, Inc., a Colorado corporation ("U S WEST"), may from time to time offer
its subordinated debt securities (the "Subordinated Debt Securities") in one or
more series and in amounts, at prices and on terms to be determined at the time
of the offering. The Subordinated Debt Securities when issued will be unsecured
obligations of Capital Funding and will be fully and unconditionally guaranteed
as to payment of principal, premium, if any, and interest by U S WEST (the "Debt
Guarantees"). Capital Funding's obligations under the Subordinated Debt
Securities and U S WEST's obligations under the Debt Guarantees will be
subordinate and junior in right of payment to certain other indebtedness of
Capital Funding and U S WEST, respectively, as may be described in an
accompanying Prospectus Supplement (the "Prospectus Supplement").
U S WEST Financing I, U S WEST Financing II and U S WEST Financing III
(each, a "U S WEST Trust"), each a statutory business trust formed under the
laws of Delaware, may from time to time offer preferred securities evidencing
undivided beneficial interests in the assets of the respective U S WEST Trust
("Preferred Securities"). The payment of periodic cash distributions
("distributions") with respect to Preferred Securities of each of the U S WEST
Trusts, out of moneys held by each of the U S WEST Trusts, and payments on
liquidation, redemption or otherwise with respect to such Preferred Securities
will be guaranteed by U S WEST to the extent described herein (each, a
"Preferred Securities Guarantee"). U S WEST's obligations under the Preferred
Securities Guarantees will be subordinate and junior in right of payment to all
other liabilities of U S WEST and PARI PASSU with the most senior preferred
stock issued by U S WEST. Subordinated Debt Securities may be issued and sold
from time to time in one or more series by Capital Funding to a U S WEST Trust
in connection with the investment of the proceeds from the offering of Preferred
Securities and Common Securities (as defined herein) of such U S WEST Trust. The
Subordinated Debt Securities subsequently may be distributed pro rata to holders
of Preferred Securities and Common Securities in connection with the dissolution
of such U S WEST Trust upon the occurrence of certain events as may be described
in the Prospectus Supplement.
Specific terms of the particular Subordinated Debt Securities of any series
or the Preferred Securities of any U S WEST Trust in respect of which this
Prospectus is being delivered (the "Offered Securities") will be set forth in
the accompanying Prospectus Supplement with respect to such series of
Subordinated Debt Securities or such Preferred Securities, which will describe,
without limitation and where applicable the following: (i) in the case of
Subordinated Debt Securities, the specific designation, aggregate principal
amount, denomination, maturity, premium, if any, interest rate (or the method of
determining such rate), if any, dates on which premium, if any, and interest, if
any, will be payable, any redemption provisions, any sinking fund provisions,
the initial public offering price, the subordination terms, any listing on a
securities exchange and any other terms and (ii) in the case of Preferred
Securities, the specific designation, number of Preferred Securities,
distribution rate (or the method of determining such rate), dates on which
distributions will be payable, liquidation amount, voting rights (if any), any
redemption provisions, terms for any conversion or exchange into other
securities (if any), the initial public offering price, any listing on a
securities exchange, and any other rights, preferences, privileges, limitations
and restrictions.
The Offered Securities may be offered in amounts, at prices and on terms to
be determined at the time of offering; provided, however, that the aggregate
initial public offering price of all Offered Securities shall not exceed
$1,000,000,000. The Prospectus Supplement relating to any series of Offered
Securities will contain information concerning certain United States federal
income tax considerations, if applicable to the Offered Securities.
---------------------
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 May , 1995.
<PAGE>
The Offered Securities will be sold directly, through agents, underwriters
or dealers as designated from time to time, or through a combination of such
methods. If agents or any dealers or underwriters are involved in the sale of
the Offered Securities in respect of which this Prospectus is being delivered,
the names of such agents, dealers or underwriters and any applicable commissions
or discounts will be set forth in or may be calculated from the Prospectus
Supplement with respect to such Offered Securities.
NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED BY U S
WEST, CAPITAL FUNDING OR ANY OF THE U S WEST TRUSTS 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 CAPITAL FUNDING, ANY OF THE U S
WEST TRUSTS OR U S WEST 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 Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. 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's common stock are listed.
Capital Funding, the U S WEST Trusts and U S WEST 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") relating
to the Offered Securities 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.
No separate financial statements of Capital Funding or any of the U S WEST
Trusts have been included herein. U S WEST does not consider that such financial
statements would be material to holders of the Offered Securities because: (i)
Capital Funding and each U S WEST Trust is a direct or indirect wholly-owned
subsidiary of U S WEST, a reporting company under the Exchange Act, (ii) neither
Capital Funding nor any U S WEST Trust has any independent operations but exists
for the sole purpose of issuing, in the case of Capital Funding, debt securities
guaranteed by U S WEST, and, in the case of the U S WEST Trusts, securities
representing undivided beneficial interests in the assets of the U S WEST Trusts
and investing the proceeds thereof in Subordinated Debt Securities guaranteed by
U S WEST, and (iii) the obligations of Capital Funding under the Subordinated
Debt Securities are fully and unconditionally guaranteed by U S WEST, and the
obligations of each U S WEST Trust under the Trust Securities, to the extent
funds are available therefor, are fully and unconditionally guaranteed by U S
WEST. See "Description of the Preferred Securities Guarantees" and "Description
of the Subordinated Debt Securities and the Debt Guarantees."
2
<PAGE>
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, 1994, and (ii) Current
Reports on Form 8-K dated January 19, 1995, April 10, 1995 and April 18, 1995.
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 or in any Prospectus Supplement shall be deemed
to be modified or superseded for purposes of this Prospectus or in any
Prospectus Supplement to the extent that a statement contained herein or therein
(or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein or therein) 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 or
any Prospectus Supplement.
U S WEST 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).
------------------------
3
<PAGE>
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 for the sole purpose of providing 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).
THE U S WEST FINANCING TRUSTS
Each of U S WEST Financing I, U S WEST Financing II and U S WEST Financing
III is a statutory business trust formed under Delaware law pursuant to (i) a
separate declaration of trust (each, a "Declaration") executed by U S WEST, as
sponsor for such trust (the "Sponsor") and the U S WEST Trustees (as defined
herein) of such trust and (ii) the filing of a certificate of trust with the
Delaware Secretary of State on March 1, 1995. Each U S WEST Trust exists for the
exclusive purposes of (i) issuing the Preferred Securities and common securities
representing undivided beneficial interests in the assets of such Trust (the
"Common Securities" and, together with the Preferred Securities, the "Trust
Securities"), (ii) investing the gross proceeds of the Trust Securities in the
Subordinated Debt Securities and (iii) engaging in only those other activities
necessary or incidental thereto. All of the Common Securities will be directly
or indirectly owned by U S WEST. The Common Securities will rank pari passu, and
payments will be made thereon pro rata, with the Preferred Securities except
that upon an event of default under the Declaration, the rights of the holders
of the Common Securities to payment in respect of distributions and payments
upon liquidation, redemption and otherwise will be subordinated to the rights of
the holders of the Preferred Securities. U S WEST will, directly or indirectly,
acquire Common Securities in an aggregate liquidation amount equal to 3% of the
total capital of each U S WEST Trust. Each U S WEST Trust has a term of
approximately 55 years, but may earlier terminate as provided in the
Declaration. Each U S WEST Trust's business and affairs will be conducted by the
trustees (the "U S WEST Trustees") appointed by U S WEST, as the direct or
indirect holder of all the Common Securities. The holder of the Common
Securities will be entitled to appoint, remove or replace any of, or increase or
reduce the number of, the U S WEST Trustees of a U S WEST Trust. The duties and
obligations of such U S WEST Trustees shall be governed by the Declaration of
such U S WEST Trust. A majority of the U S WEST Trustees (the "Regular
Trustees") of each U S WEST Trust will be persons who are employees or officers
of or affiliated with U S WEST. In certain limited circumstances set forth in a
Prospectus Supplement, the holders of a majority of the Preferred Securities
will be entitled to appoint one additional Regular Trustee, who need not be an
employee or officer of or otherwise affiliated with U S WEST. One U S WEST
Trustee of each U S WEST Trust will be a financial institution which will be
unaffiliated with U S WEST and which shall act as property trustee and as
indenture trustee for purposes of the Trust Indenture Act of 1939 (the "Trust
Indenture Act"), pursuant to the terms set forth in a Prospectus Supplement (the
"Property Trustee"). In addition, unless the Property Trustee maintains a
principal place of business in the State of Delaware, and otherwise meets the
requirements of applicable law, one U S WEST Trustee of each U S WEST Trust will
have its principal place of business or reside in the State of Delaware. Capital
Funding will pay all fees and expenses related to the U S WEST Trusts and the
offering of Trust Securities, the payment of which will be guaranteed by U S
WEST. The office of the Delaware Trustee for each U S WEST Trust in the State of
Delaware is 300 King Street, Wilmington, Delaware 19801. The principal place of
business of each U S WEST Trust shall be c/o U S WEST, Inc., 7800 East Orchard
Road, Englewood, Colorado 80111 (telephone number (303) 793-6500).
U S WEST, INC.
U S WEST is a diversified global communications company engaged in the
telecommunications, directory publishing, wireless communications and multimedia
businesses. Telecommunications services are provided by U S WEST's principal
subsidiary to more than 25 million residential and business customers in the
states of Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New
Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming
(collectively, the "U S WEST Region"). Directory publishing, wireless
communications and multimedia services are provided by other U S WEST
subsidiaries
4
<PAGE>
to customers both inside and outside the U S WEST Region. U S WEST was
incorporated in 1983 under the laws of the State of Colorado and has its
principal executive offices at 7800 Orchard Road, Englewood, Colorado 80111
(telephone number (303) 793-6500).
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges from
continuing operations 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. Fixed charges include interest on indebtedness (excluding discontinued
operations) and the portion of rentals representative of the interest factor.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
4.07 3.11 3.85 2.38 4.85
</TABLE>
USE OF PROCEEDS
Each U S WEST Trust will invest all proceeds received from the sale of its
Trust Securities in Subordinated Debt Securities.
Unless otherwise specified in the Prospectus Supplement, Capital Funding
will apply the net proceeds from the sale of the Subordinated 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 the
reduction of short-term and long-term borrowings and other business
opportunities.
DESCRIPTION OF THE PREFERRED SECURITIES
Each U S WEST Trust may issue, from time to time, only one series of
Preferred Securities having terms described in the Prospectus Supplement
relating thereto. The Declaration of each U S WEST Trust authorizes the Regular
Trustees of such U S WEST Trust to issue on behalf of such U S WEST Trust one
series of Preferred Securities. The Declaration will be qualified as an
indenture under the Trust Indenture Act. The Preferred Securities will have such
terms, including distributions, redemption, voting, liquidation rights and such
other preferred, deferred or other special rights or such restrictions as shall
be set forth in the Declaration or made part of the Declaration by the Trust
Indenture Act. Reference is made to the Prospectus Supplement relating to the
Preferred Securities of a U S WEST Trust for specific terms, including (i) the
distinctive designation of such Preferred Securities; (ii) the number of
Preferred Securities issued by such U S WEST Trust; (iii) the annual
distribution rate (or method of determining such rate) for Preferred Securities
issued by such U S WEST Trust and the date or dates upon which such
distributions shall be payable; provided, however, that distributions on such
Preferred Securities shall be payable on a quarterly basis to holders of such
Preferred Securities as of a record date in each quarter during which such
Preferred Securities are outstanding; (iv) whether distributions on Preferred
Securities issued by such U S WEST Trust shall be cumulative, and, in the case
of Preferred Securities having such cumulative distribution rights, the date or
dates or method of determining the date or dates from which distributions on
Preferred Securities issued by such U S WEST Trust shall be cumulative; (v) the
amount or amounts which shall be paid out of the assets of such U S WEST Trust
to the holders of Preferred Securities of such U S WEST Trust upon voluntary or
involuntary dissolution, winding-up or termination of such U S WEST Trust; (vi)
the obligation, if any, of such U S WEST Trust to purchase or redeem Preferred
Securities issued by such U S WEST Trust and the price or prices at which, the
period or periods within which, and the terms and conditions upon which,
Preferred Securities issued by such U S WEST Trust shall be purchased or
redeemed, in whole or in part, pursuant to such obligation; (vii) the voting
rights, if any, of Preferred Securities issued by such U S WEST Trust in
addition to those required by law, including the number of votes per Preferred
Security and any requirement for the approval by the holders of Preferred
Securities, or of Preferred Securities issued by one or more U S WEST Trusts, or
of both, as a condition to specified action or amendments to the Declaration of
such U S WEST Trust; and (viii) any other relevant rights, preferences,
privileges, limitations or restrictions of Preferred Securities issued by such U
S WEST Trust not inconsistent with the Declaration
5
<PAGE>
of such U S WEST Trust or with applicable law. All Preferred Securities offered
hereby will be guaranteed by U S WEST to the extent set forth below under
"Description of the Preferred Securities Guarantees." Any applicable United
States federal income tax considerations applicable to any offering of Preferred
Securities will be described in the Prospectus Supplement relating thereto.
In connection with the issuance of Preferred Securities, each U S WEST Trust
will issue one series of Common Securities. The Declaration of each U S WEST
Trust authorizes the Regular Trustees of such trust to issue on behalf of such U
S WEST Trust one series of Common Securities having such terms including
distributions, redemption, voting, liquidation rights or such restrictions as
shall be set forth therein. The terms of the Common Securities issued by a U S
WEST Trust will be substantially identical to the terms of the Preferred
Securities issued by such trust and the Common Securities will rank pari passu,
and payments will be made thereon pro rata, with the Preferred Securities except
that, upon an event of default under the Declaration, the rights of the holders
of the Common Securities to payment in respect of distributions and payments
upon liquidation, redemption and otherwise will be subordinated to the rights of
the holders of the Preferred Securities. Except in certain limited
circumstances, the Common Securities will also carry the right to vote to
appoint, remove or replace any of the U S WEST Trustees of a U S WEST Trust. All
of the Common Securities of a U S WEST Trust will be directly or indirectly
owned by U S WEST.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the Preferred
Securities Guarantees which will be executed and delivered by U S WEST for the
benefit of the holders from time to time of Preferred Securities. Each Preferred
Securities Guarantee will be qualified as an indenture under the Trust Indenture
Act. The First National Bank of Chicago will act as indenture trustee under each
Preferred Securities Guarantee (the "Preferred Guarantee Trustee"). The terms of
each Preferred Securities Guarantee will be those set forth in such Preferred
Securities Guarantee and those made part of such Preferred Securities Guarantee
by the Trust Indenture Act. The summary does not purport to be complete and is
subject in all respects to the provisions of, and is qualified in its entirety
by reference to, the form of Preferred Securities Guarantee, which is filed as
an exhibit to the Registration Statement of which this Prospectus forms a part,
and the Trust Indenture Act. Each Guarantee will be held by the Preferred
Guarantee Trustee for the benefit of the holders of the Preferred Securities of
the applicable U S WEST Trust.
GENERAL
Pursuant to each Preferred Securities Guarantee, U S WEST will irrevocably
and unconditionally agree, to the extent set forth therein, to pay in full, to
the holders of the Preferred Securities issued by a U S WEST Trust, the
Guarantee Payments (as defined herein) (except to the extent paid by such U S
WEST Trust), as and when due, regardless of any defense, right of set-off or
counterclaim which such U S WEST Trust may have or assert. The following
payments with respect to Preferred Securities issued by a U S WEST Trust, to the
extent not paid by such U S WEST Trust (the "Guarantee Payments"), will be
subject to the Preferred Securities Guarantee thereon (without duplication): (i)
any accrued and unpaid distributions which are required to be paid on such
Preferred Securities, to the extent such U S WEST Trust shall have funds
available therefor, (ii) the redemption price, including all accrued and unpaid
distributions (the "Redemption Price"), to the extent such U S WEST Trust has
funds available therefor with respect to any Preferred Securities called for
redemption by such U S WEST Trust and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of such U S WEST Trust (other than in
connection with the distribution of Subordinated Debt Securities to the holders
of Preferred Securities or the redemption of all of the Preferred Securities),
the lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid distributions on such Preferred Securities to the date of payment, to the
extent such U S WEST Trust has funds available therefor and (b) the amount of
assets of such U S WEST Trust remaining available for distribution to holders of
such Preferred Securities in liquidation of such U S WEST Trust. U S WEST's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by U S WEST to the holders of Preferred Securities or by
causing the applicable U S WEST Trust to pay such amounts to such holders.
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Each Preferred Securities Guarantee will be a full and unconditional
guarantee with respect to the Preferred Securities issued by the applicable U S
WEST Trust from the time of issuance of such Preferred Securities, but will not
apply to any payment of distributions except to the extent such U S WEST Trust
shall have funds available therefor. If Capital Funding does not make interest
payments on the Subordinated Debt Securities purchased by a U S WEST Trust and U
S WEST does not fulfill its obligations under the Debt Guarantee relating to
such Subordinated Debt Securities, such U S WEST Trust will not pay
distributions on the Preferred Securities issued by such U S WEST Trust and will
not have funds available therefor. See "Description of the Subordinated Debt
Securities and the Debt Guarantees -- Certain Covenants."
U S WEST has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the U S WEST Trusts with respect to the Common
Securities (the "Common Securities Guarantees") to the same extent as the
Preferred Securities Guarantee, except that upon an event of default under the
Indenture, holders of Preferred Securities shall have priority over holders of
Common Securities with respect to distributions and payments on liquidation,
redemption or otherwise.
CERTAIN COVENANTS OF U S WEST
In each Preferred Securities Guarantee, U S WEST will covenant that, so long
as any Preferred Securities issued by the applicable U S WEST Trust remain
outstanding, if there shall have occurred any event that would constitute an
event of default under such Preferred Securities Guarantee or the Declaration of
such U S WEST Trust, then (a) U S WEST shall not (and shall cause Capital
Funding and, if it is a wholly-owned subsidiary of U S WEST, U S WEST
Communications, Inc. not to) declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase or make a liquidation payment
with respect to, any of its capital stock, and (b) U S WEST shall not (and shall
cause Capital Funding not to) make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued by
U S WEST or Capital Funding which rank pari passu with or junior to such
Subordinated Debt Securities.
MODIFICATION OF THE PREFERRED SECURITIES GUARANTEES; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required),
each Preferred Securities Guarantee may be amended only with the prior approval
of the holders of not less than 66 2/3% in liquidation amount of the outstanding
Preferred Securities issued by the applicable U S WEST Trust. The manner of
obtaining any such approval of holders of such Preferred Securities will be as
set forth in an accompanying Prospectus Supplement. All guarantees and
agreements contained in a Preferred Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of U S WEST and
shall inure to the benefit of the holders of the Preferred Securities of the
applicable U S WEST Trust then outstanding.
TERMINATION
Each Preferred Securities Guarantee will terminate as to the Preferred
Securities issued by the applicable U S WEST Trust upon full payment of the
Redemption Price of all Preferred Securities of such U S WEST Trust, upon
distribution of the Subordinated Debt Securities held by such U S WEST Trust to
the holders of the Preferred Securities of such U S WEST Trust or upon full
payment of the amounts payable in accordance with the Declaration of such U S
WEST Trust upon liquidation of such U S WEST Trust. Each Preferred Securities
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Preferred Securities issued by the applicable U
S WEST Trust must restore payment of any sums paid under such Preferred
Securities or such Preferred Securities Guarantee.
EVENTS OF DEFAULT
An event of default under a Preferred Securities Guarantee will occur upon
the failure of U S WEST to perform any of its payment or other obligations
thereunder.
The holders of a majority in liquidation amount of the Preferred Securities
relating to such Preferred Securities Guarantee have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Preferred Guarantee Trustee in respect of the such Preferred Securities
Guarantee or to direct the exercise of any trust or power conferred upon the
Preferred Guarantee Trustee
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under such Preferred Securities Guarantee. If the Preferred Guarantee Trustee
fails to enforce such Preferred Securities Guarantee, any holder of Preferred
Securities relating to such Preferred Securities Guarantee may, after a period
of 30 days has elapsed from such holders written request to the Preferred
Guarantee Trustee to enforce such Preferred Securities Guarantee, institute a
legal proceeding directly against U S WEST to enforce the Preferred Guarantee
Trustee's rights under such Preferred Securities Guarantee, without first
instituting a legal proceeding against the relevant U S WEST, the Preferred
Guarantee Trustee or any other person or entity.
STATUS OF THE PREFERRED SECURITIES GUARANTEES
The Preferred Securities Guarantees will constitute unsecured obligations of
U S WEST and will rank (i) subordinate and junior in right of payment to all
other liabilities of U S WEST, including the Debt Guarantees, (ii) PARI PASSU
with the most senior preferred or preference stock now or hereafter issued by U
S WEST and with any guarantee now or hereafter entered into by U S WEST in
respect of any preferred or preference stock of any affiliate of U S WEST and
(iii) senior to U S WEST's common stock. The terms of the Preferred Securities
provide that each holder of Preferred Securities issued by such U S WEST Trust
by acceptance thereof agrees to the subordination provisions and other terms of
the Preferred Securities Guarantee relating thereto.
The Preferred Securities Guarantees will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
guarantee without instituting a legal proceeding against any other person or
entity).
INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE
The Preferred Guarantee Trustee, prior to the occurrence of a default with
respect to a Preferred Securities Guarantee, undertakes to perform only such
duties as are specifically set forth in such Preferred Securities Guarantee and,
after default, shall exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject to such
provisions, the Preferred Guarantee Trustee is under no obligation to exercise
any of the powers vested in it by a Preferred Securities Guarantee at the
request of any holder of Preferred Securities, unless offered reasonable
indemnity against the costs, expenses and liabilities which might be incurred
thereby.
U S WEST and certain of its affiliates maintain a deposit account and
banking relationship with the Preferred Guarantee Trustee. The Preferred
Guarantee Trustee serves as trustee under other indentures pursuant to which
unsecured debt securities of affiliates of U S WEST are outstanding.
GOVERNING LAW
The Preferred Securities Guarantees will be governed by and construed in
accordance with the internal laws of the State of New York.
DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES AND THE DEBT GUARANTEES
Subordinated Debt Securities may be issued from time to time in one or more
series under an Indenture, dated as of , 1995 (the "Indenture"), among
U S WEST, Capital Funding and Norwest Bank Minnesota, National Association, as
Trustee (the "Debt Trustee"). The terms of the Subordinated Debt Securities will
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act. The following summary does not purport to
be complete and is subject in all respects to the provisions of, and is
qualified in its entirety by reference to, the Indenture, which is filed as an
exhibit to the Registration Statement of which this Prospectus forms a part, and
the Trust Indenture Act. Whenever particular provisions or defined terms in the
Indenture are referred to herein, such provisions or defined terms are
incorporated by reference herein. Section and Article references used herein are
references to provisions of the Indenture unless otherwise noted.
GENERAL
The Subordinated Debt Securities will be unsecured, subordinated obligations
of Capital Funding. The Indenture does not limit the aggregate principal amount
of Subordinated Debt Securities which may be
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issued thereunder and provides that the Subordinated Debt Securities may be
issued from time to time in one or more series. The Subordinated Debt Securities
are issuable in one or more series pursuant to an indenture supplemental to the
Indenture or a resolution of Capital Funding's Board of Directors or a special
committee thereof (each, a "Supplemental Indenture") (Section 2.01).
In the event Subordinated Debt Securities are issued to a U S WEST Trust or
a trustee of such trust in connection with the issuance of Trust Securities by
such U S WEST Trust, such Subordinated Debt Securities subsequently may be
distributed pro rata to the holders of such Trust Securities in connection with
the dissolution of such U S WEST Trust upon the occurrence of certain events
described in the Prospectus Supplement relating to such Trust Securities. Only
one series of Subordinated Debt Securities will be issued to a U S WEST Trust or
a trustee of such trust in connection with the issuance of Trust Securities by
such U S WEST Trust.
Reference is made to the Prospectus Supplement which will accompany this
Prospectus for the following terms of the series of Subordinated Debt Securities
being offered thereby: (i) the specific title of such Subordinated Debt
Securities; (ii) any limit on the aggregate principal amount of such
Subordinated Debt Securities; (iii) the date or dates on which the principal of
such Subordinated Debt Securities is payable and the right, if any, to extend
such date or dates; (iv) the rate or rates at which such Subordinated Debt
Securities will bear interest or the method of determination of such rate or
rates; (v) the date or dates from which such interest shall accrue, the interest
payment dates on which such interest will be payable or the manner of
determination of such interest payment dates and the record dates for the
determination of holders to whom interest is payable on any such interest
payment dates; (vi) the right, if any, to extend the interest payment periods
and the duration of such extension; (vii) the period or periods within which,
the price or prices at which, and the terms and conditions upon which, such
Subordinated Debt Securities may be redeemed, in whole or in part, at the option
of Capital Funding; (viii) the right and/or obligation, if any, of Capital
Funding to redeem or purchase such Subordinated Debt Securities pursuant to any
sinking fund or analogous provisions or at the option of the holder thereof and
the period or periods for which, the price or prices at which, and the terms and
conditions upon which, such Subordinated Debt Securities shall be redeemed or
purchased, in whole or part, pursuant to such right and/or obligation; (ix) the
terms of subordination; (x) the form of such Subordinated Debt Securities; (xi)
if other than denominations of $25 or any integral multiple thereof, the
denominations in which such Subordinated Debt Securities shall be issuable;
(xii) any and all other terms with respect to such series; and (xiii) whether
such Subordinated Debt Securities are issuable as a global security, and in such
case, the identity of the depositary. (Section 2.01).
The Indenture does not contain any provisions that afford holders of
Subordinated Debt Securities protection in the event of a highly leveraged
transaction involving U S WEST or Capital Funding.
DEBT GUARANTEES
The Indenture provides that U S WEST will fully and unconditionally
guarantee the due and punctual payment of the principal, premium, if any, and
interest on the Subordinated Debt Securities when and as the same shall become
due and payable, whether at maturity, upon redemption or otherwise. (Section
2.12) 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 Subordinated 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.
SUBORDINATION
The Subordinated Debt Securities will be subordinated and junior in right of
payment to certain other indebtedness of Capital Funding and the Debt Guarantees
will be subordinated and junior in right of payment to certain other
indebtedness of U S WEST to the extent set forth in the Prospectus Supplement
that will accompany this Prospectus.
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CERTAIN COVENANTS
If Subordinated Debt Securities are issued to a U S WEST Trust or a trustee
of such trust in connection with the issuance of Trust Securities by such U S
WEST Trust and (i) there shall have occurred any event that would constitute an
Event of Default or (ii) U S WEST shall be in default with respect to its
payment of any obligations under the related Preferred Securities Guarantee or
Common Securities Guarantee, then (a) U S WEST and Capital Funding shall not
(and, if it is a wholly-owned subsidiary of U S WEST, U S WEST shall cause U S
WEST Communications, Inc. not to) declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase or make a liquidation payment
with respect to, any of its capital stock, and (b) U S WEST and Capital Funding
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by U S WEST or Capital
Funding which rank pari passu with or junior to such Subordinated Debt
Securities.
If Subordinated Debt Securities are issued to a U S WEST Trust or a trustee
of such trust in connection with the issuance of Trust Securities by such U S
WEST Trust and Capital Funding shall have given notice of its election to defer
payments of interest on such Subordinated Debt Securities by extending the
interest payment period as provided in the Indenture and such period, or any
extension thereof, shall be continuing, then (a) U S WEST and Capital Funding
shall not (and, if it is a wholly-owned subsidiary of U S WEST, U S WEST shall
cause U S WEST Communications, Inc. not to) declare or pay any dividend on, make
any distributions with respect to, or redeem, purchase or make a liquidation
payment with respect to, any of its capital stock, and (b) U S WEST and Capital
Funding shall not make any payment of interest, principal or premium, if any, on
or repay, repurchase or redeem any debt securities issued by U S WEST or Capital
Funding which rank pari passu with or junior to such Subordinated Debt
Securities.
In the event Subordinated Debt Securities are issued to a U S WEST Trust or
a trustee of such trust in connection with the issuance of Trust Securities of
such U S WEST Trust, for so long as such Trust Securities remain outstanding, U
S WEST will covenant (i) to directly or indirectly maintain 100% ownership of
the Common Securities of such U S WEST Trust; provided, however, that any
permitted successor of U S WEST under the Indenture may succeed to U S WEST's
ownership of such Common Securities, (ii) to use its reasonable efforts to cause
such U S WEST Trust (a) to remain a statutory business trust, except in
connection with the distribution of Subordinated Debt Securities to the holders
of Trust Securities in liquidation of such U S WEST Trust, the redemption of all
of the Trust Securities of such U S WEST Trust, or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration of such U
S WEST Trust, and (b) to otherwise continue not to be classified as an
association taxable as a corporation or partnership for United States federal
income tax purposes and (iii) to use its reasonable efforts to cause each holder
of Trust Securities to be treated as owning an undivided beneficial interest in
the Subordinated Debt Securities. (Section 4.07).
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Subordinated Debt Securities of each series will be issued in registered
form and in either certificated form or represented by one or more global
securities. If not represented by one or more global securities, Subordinated
Debt Securities may be presented for registration of transfer (with the form of
transfer endorsed thereon duly executed) or exchange, at the office of the
Debenture Registrar or at the office of any transfer agent designated by Capital
Funding for such purpose with respect to any series of Subordinated Debt
Securities and referred to in an applicable Prospectus Supplement, without
service charge and upon payment of any taxes and other governmental charges as
described in the Indenture. Such transfer or exchange will be effected upon the
Debenture Registrar or such transfer agent, as the case may be, being satisfied
with the documents of title and identity of the person making the request.
Capital Funding has appointed the Debt Trustee as Debenture Registrar with
respect to the Subordinated Debt Securities. (Section 2.05). If a Prospectus
Supplement refers to any transfer agents (in addition to the Debenture
Registrar) initially designated by Capital Funding with respect to any series of
Subordinated Debt Securities, Capital Funding may at any time rescind the
designation of any such transfer agent or approve a change in
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the location through which any such transfer agent acts, except that Capital
Funding will be required to maintain a transfer agent in each Place of Payment
for such series. (Section 4.02). Capital Funding may at any time designate
additional transfer agents with respect to any series of Subordinated Debt
Securities.
In the event of any redemption in part, Capital Funding shall not be
required to (i) issue, register the transfer of or exchange any Subordinated
Debt Securities during a period beginning at the opening of business 15 days
before any selection for redemption of Subordinated Debt Securities of like
tenor and of the series of which such Subordinated Debt Securities are a part,
and ending at the close of business on the earliest date on which the relevant
notice of redemption is deemed to have been given to all holders of Subordinated
Debt Securities of like tenor and of such series to be redeemed and (ii)
register the transfer of or exchange any Subordinated Debt Securities so
selected for redemption, in whole or in part, except the unredeemed portion of
any Subordinated Debt Securities being redeemed in part. (Section 2.05).
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and premium (if any) on any Subordinated Debt Securities will be
made only against surrender to the Paying Agent of such Subordinated Debt
Securities. Unless otherwise indicated in an applicable Prospectus Supplement,
principal of and any premium and interest, if any, on Subordinated Debt
Securities will be payable, subject to any applicable laws and regulations, at
the office of such Paying Agent or Paying Agents as Capital Funding may
designate from time to time, except that at the option of Capital Funding
payment of any interest may be made by check mailed to the address of the person
entitled thereto as such address shall appear in the Debenture Register with
respect to such Subordinated Debt Securities. (Section 4.03). Unless otherwise
indicated in an applicable Prospectus Supplement, payment of interest on a
Subordinated Debt Security on any Interest Payment Date will be made to the
person in whose name such Subordinated Debt Security (or predecessor security)
is registered at the close of business on the Regular Record Date for such
interest payment. (Section 2.03).
Capital Funding will act as Paying Agent with respect to the Subordinated
Debt Securities. Capital Funding may at any time designate additional Paying
Agents or rescind the designation of any Paying Agents or approve a change in
the office through which any Paying Agent acts, except that Capital Funding will
be required to maintain a Paying Agent in each Place of Payment for each series
of the respective Subordinated Debt Securities. (Sections 4.02 and 4.03).
All moneys paid by Capital Funding to a Paying Agent for the payment of the
principal of or premium or interest, if any, on any Subordinated Debt Securities
of any series which remain unclaimed at the end of two years after such
principal, premium, if any, or interest shall have become due and payable will
be repaid to Capital Funding and the holder of such Subordinated Debt Securities
will thereafter look only to Capital Funding for payment thereof. (Section
11.05).
GLOBAL SECURITIES
If any Subordinated Debt Securities of a series are represented by one or
more global securities (each, a "Global Security"), the applicable Prospectus
Supplement will describe the circumstances, if any, under which beneficial
owners of interests in any such Global Security may exchange such interests for
Subordinated Debt Securities of such series and of like tenor and principal
amount in any authorized form and denomination. Principal of and any premium and
interest on a Global Security will be payable in the manner described in the
applicable Prospectus Supplement. (Section 2.11).
The specific terms of the depositary arrangement with respect to any portion
of a series of Subordinated Debt Securities to be represented by a Global
Security will be described in the applicable Prospectus Supplement.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting U S WEST, Capital Funding and
the Debt Trustee, with the consent of the holders of not less than a majority in
principal amount of the Subordinated Debt Securities of each series which are
affected by the modification, to modify the Indenture or any supplemental
indenture affecting that series or the rights of the holders of that series of
Subordinated Debt Securities;
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provided that no such modification may, without the consent of the holder of
each outstanding Subordinated Debt Security affected thereby, (i) extend the
fixed maturity of any Subordinated Debt Securities of any series, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any premium payable upon the redemption thereof,
without the consent of the holder of each Subordinated Debt Security so affected
or (ii) reduce the percentage of Subordinated Debt Securities, the holders of
which are required to consent to any such supplemental indenture, without the
consent of the holders of each then outstanding Subordinated Debt Security
affected thereby. (Section 9.02).
In addition, U S WEST, Capital Funding and the Debt Trustee may execute,
without the consent of any holder of Subordinated Debt Securities, any
supplemental indenture for certain other usual purposes including the creation
of any new series of Subordinated Debt Securities. (Sections 2.01, 9.01 and
10.01).
EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events which has occurred and is continuing constitutes an "Event of Default"
withrespect to each series of Subordinated Debt Securities:
(a) failure for 90 days to pay interest on the Subordinated Debt
Securities of that series, including any Additional Interest in respect
thereof, when due; provided, however, that a valid extension of the interest
payment period by Capital Funding shall not constitute a default in the
payment of interest for this purpose; or
(b) failure to pay principal or premium, if any, on the Subordinated
Debt Securities of that series when due whether at maturity, upon redemption
by declaration or otherwise, or to make any sinking fund payment with
respect to that series; provided, however, that a valid extension of the
maturity of such Subordinated Debt Securities shall not constitute a default
for this purpose; or
(c) failure to observe or perform any other covenant (other than those
specifically relating to another series) contained in the Indenture for 90
days after written notice to Capital Funding from the Debt Trustee or the
holders of at least 25% in principal amount of the outstanding Subordinated
Debt Securities of that series; or
(d) certain events in bankruptcy, insolvency or reorganization of U S
WEST or Capital Funding; or
(e) in the event Subordinated Debt Securities are issued to a U S WEST
Trust or a trustee of such trust in connection with the issuance of Trust
Securities by such U S WEST Trust, the voluntary or involuntary dissolution,
winding-up or termination of such U S WEST Trust, except in connection with
the distribution of Subordinated Debt Securities to the holders of Trust
Securities in liquidation of such U S WEST Trust, the redemption of all of
the Trust Securities of such U S WEST Trust, or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration of
such U S WEST Trust. (Section 6.01).
The holders of a majority in aggregate outstanding principal amount of any
series of the Subordinated Debt Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Debt Trustee for that series. (Section 6.06). The Debt Trustee or the holders of
not less than 25% in aggregate outstanding principal amount of any particular
series of the Subordinated Debt Securities may declare the principal due and
payable immediately on default with respect to such series, but the holders of a
majority in aggregate outstanding principal amount of such series may annul such
declaration and waive the default with respect to such series if the default has
been cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration and any applicable premium has been
deposited with the Debt Trustee. (Sections 6.01 and 6.06).
The holders of a majority in aggregate outstanding principal amount of any
series of the Subordinated Debt Securities affected thereby may, on behalf of
the holders of all the Subordinated Debt Securities of such series, waive any
past default, except (i) a default in the payment of principal, premium, if any,
or interest (unless such default has been cured and a sum sufficient to pay all
matured installments of interest and principal due otherwise than by
acceleration and any applicable premium has been deposited with the Debt
Trustee), (ii) a default in the covenant of each of U S WEST and certain of its
subsidiaries not to
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declare or pay dividends on, or redeem, purchase or acquire any of its capital
stock during an interest deferral period, or (iii) a default in the covenant of
Capital Funding to defer interest payments on all Subordinated Debt Securities
held by the other U S WEST Trusts during such interest deferral period. (Section
6.06).
CONSOLIDATION, MERGER AND SALE
The Indenture does not contain any covenant which restricts the ability of U
S WEST or Capital Funding to merge or consolidate with or into any other
corporation, sell or convey all or substantially all of its assets to any
person, firm or corporation or otherwise engage in restructuring transactions.
(Section 10.01).
DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, U S WEST and Capital Funding will be
discharged from any and all obligations in respect of the Subordinated Debt
Securities of any series (except in each case for certain obligations to
register the transfer or exchange of Subordinated Debt Securities, replace
stolen, lost or mutilated Subordinated Debt Securities, maintain paying agencies
and hold moneys for payment in trust) if Capital Funding deposits with the Debt
Trustee, in trust, moneys or Government Obligations, in an amount sufficient to
pay all the principal of, and interest on, the Subordinated Debt Securities of
such series on the dates such payments are due in accordance with the terms of
such Subordinated Debt Securities. (Sections 11.01 and 11.02).
GOVERNING LAW
The Indenture, the Subordinated Debt Securities and the Debt Guarantee will
be governed by, and construed in accordance with, the internal laws of the State
of New York. (Section 13.05).
INFORMATION CONCERNING THE DEBT TRUSTEE
The Debt Trustee, prior to default, undertakes to perform only such duties
as are specifically set forth in the Indenture and, after default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. (Section 7.01). Subject to such provision,
the Debt Trustee is under no obligation to exercise any of the powers vested in
it by the Indenture at the request of any holder of Subordinated Debt
Securities, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might be incurred thereby. (Section 7.02).
The Debt Trustee is not required to expand or risk its own funds or otherwise
incur personal financial liability in the performance of its duties if the Debt
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it. (Section 7.01).
U S WEST and certain of its affiliates, including Capital Funding, maintain
a deposit account and banking relationship with the Debt Trustee. The Debt
Trustee serves as trustee under other indentures pursuant to which unsecured
debt securities of U S WEST are outstanding.
MISCELLANEOUS
Capital Funding and U S WEST will have the right at all times to assign any
of their respective rights or obligations under the Indenture to a direct or
indirect wholly-owned subsidiary of U S WEST; provided that, in the event of any
such assignment, Capital Funding and U S WEST, as the case may be, will remain
liable for all of their respective obligations. Subject to the foregoing, the
Indenture will be binding upon and inure to the benefit of the parties thereto
and their respective successors and assigns. The Indenture provides that it may
not otherwise be assigned by the parties thereto. (Section 13.11).
PLAN OF DISTRIBUTION
Capital Funding may sell any series of Subordinated Debt Securities and the
U S WEST Trusts may sell the Preferred Securities being offered hereby in one or
more of the following ways from time to time: (i) to underwriters for resale to
the public or to institutional investors; (ii) directly to institutional
investors; or (iii) through agents to the public or to institutional investors.
The Prospectus Supplement with respect to any Offered Securities will set forth
the terms of the offering of such Offered Securities, including the name or
names of any underwriters or agents, the purchase price of such Offered
Securities and the proceeds to
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Capital Funding or the applicable U S WEST Trust, as the case may be, from such
sale, any underwriting discounts or agency fees and other item's constituting
underwriters' or agents' compensation, any initial public offering price, any
discounts or concessions allowed or reallowed or paid to dealers and any
securities exchanges on which such Offered Securities may be listed.
If underwriters are used in the sale, such Offered Securities will be
acquired by the underwriters for their own account and may be resold 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 Prospectus Supplement, the obligations of
the underwriters to purchase any series of Offered Securities will be subject to
certain conditions precedent and the underwriters will be obligated to purchase
all of such series of Offered Securities, if any are purchased.
Underwriters and agents may be entitled under agreements entered into with U
S WEST, Capital Funding and/or a U S WEST Trust to indemnification by U S WEST,
Capital Funding and/or such U S WEST Trust against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which the underwriters or agents may be required to make in respect
thereof. Underwriters and agents may be customers of, engage in transactions
with, or perform services for U S WEST and its affiliates in the ordinary course
of business.
Each series of Offered Securities will be a new issue of securities and will
have no established trading market. Any underwriters to whom Offered Securities
are sold by Capital Funding or by a U S WEST Trust for public offering and sale
may make a market in such Offered Securities, but such underwriters will not be
obligated to do so and may discontinue any market making at any time without
notice. The Offered Securities may or may not be listed on a national securities
exchange.
LEGAL OPINIONS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon for the U S WEST Trusts by Richards, Layton &
Finger, Wilmington, Delaware, special Delaware counsel to the U S WEST Trusts.
The validity of the Preferred Securities Guarantees, Subordinated Debt
Securities and Debt Guarantees and certain legal matters relating thereto will
be passed upon by Weil, Gotshal & Manges, New York, New York. Weil, Gotshal &
Manges will rely on the opinion of Stephen E. Brilz, Senior Attorney of U S
WEST, as to certain matters of Colorado law. Certain matters as to United States
federal income taxation will also be passed upon by Weil, Gotshal & Manges.
EXPERTS
The consolidated financial statements and the consolidated financial
statement schedule included in U S WEST's Annual Report on Form 10-K for the
year ended December 31, 1994 are incorporated herein by reference in reliance on
the reports of Coopers & Lybrand L.L.P., independent certified public
accountants, given upon the authority of that firm as experts in accounting and
auditing.
14
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY U S WEST INC., U S WEST FINANCING I OR THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF U S WEST INC. OR U S WEST FINANCING I SINCE THE DATE HEREOF. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICIATION.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Summary Financial Information.................. S-3
U S WEST, Inc.................................. S-4
U S WEST Capital Funding, Inc.................. S-4
U S WEST Financing I........................... S-4
Recent Developments............................ S-5
Investment Considerations...................... S-7
Capitalization of U S WEST..................... S-10
Accounting Treatment........................... S-11
Use of Proceeds................................ S-11
Descriptions of the Preferred Securities....... S-11
Description of the Subordinated Debt Securities
and the Debt Guarantee........................ S-21
Effect of Obligations Under the Subordinated
Debt Securities, The Debt Guarantee and the
Preferred Securities Guarantee................ S-26
Certain Federal Income Tax Consequences........ S-27
Underwriting................................... S-30
Legal Matters.................................. S-31
<CAPTION>
PROSPECTUS
<S> <C>
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 3
U S WEST Capital Funding, Inc.................. 4
The U S WEST Financing Trusts.................. 4
U S WEST, Inc.................................. 4
Ratio of Earnings to Fixed Charges............. 5
Use of Proceeds................................ 5
Description of the Preferred Securities........ 5
Description of the Preferred Securities
Guarantees.................................... 6
Description of the Subordinated Debt Securities
and the Debt Guarantees....................... 8
Plan of Distribution........................... 13
Legal Opinions................................. 14
Experts........................................ 14
</TABLE>
__,000,000
PREFERRED SECURITIES
[LOGO]
U S WEST FINANCING I
% TRUST ORIGINATED
PREFERRED SECURITIES ("TOPRS")
GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY
U S WEST, INC.
------------------------
PROSPECTUS SUPPLEMENT
------------------------
MERRILL LYNCH & CO.
____ __, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee.................. $344,827.59
Rating Agency Fees............................................. 200,000.00
Blue Sky Fees and Expenses..................................... 20,000.00
Trustee's Expenses............................................. 30,000.00
Printing and Engraving Fees.................................... 150,000.00
Accounting Fees and Expenses................................... 30,000.00
Legal Fees and Expenses........................................ 150,000.00
Miscellaneous.................................................. 5,172.41
----------
Total...................................................... $930,000.00
----------
----------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-laws of U S WEST and Capital Funding provide for the indemnification
of directors and officers to the extent permissible under applicable law.
Sections 7-109-101 through 7-109-110 of the Colorado Business Corporation Act
(the "CBCA") specify the circumstances under which a corporation may indemnify
its directors, officers, employees, fiduciaries or agents. For acts done in a
person's "official capacity," the CBCA generally requires that an act be done in
good faith and in a manner reasonably believed to be in the best interests of
the corporation. In all other civil cases, the person must have acted in good
faith and in a way that was not opposed to the corporation's best interests. In
criminal actions or proceedings, the CBCA imposes an additional requirement that
the actor had no reasonable cause to believe his conduct was unlawful. In any
proceeding by or in the right of the corporation, or charging a person with the
improper receipt of a personal benefit, no indemnification can be made, except
that in a proceeding by or in the right of the corporation, indemnification for
reasonable expenses incurred in connection with such proceeding is permitted.
Indemnification is mandatory when any director or officer is wholly successful,
on the merits or otherwise, in defending any civil or criminal proceeding.
The Declaration of each U S WEST Trust provides that no Regular Trustee,
affiliate of any Regular Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee,
or any employee or agent of such U S WEST Trust or its affiliates (each an
"Indemnified Person") shall be liable, responsible or accountable in damages or
otherwise to such U S WEST Trust or any employee or agent of the trust or its
affiliates for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith on behalf
of such U S WEST Trust and in a manner such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by such Declaration or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of such Indemnified
Person's gross negligence or willful misconduct with respect to such acts or
omission. The Declaration of each U S WEST Trust also provides that to the
fullest extent permitted by applicable law, U S WEST shall indemnify and hold
harmless each Indemnified Person from and against any loss, damage or claim
incurred by such Indemnified Person by reason of any act or omission performed
or omitted by such Indemnified Person in good faith on behalf of such U S WEST
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of authority conferred on such Indemnified Person by such Declaration,
except that no Indemnified Person shall be entitled to be indemnified in respect
of any loss, damage or claim incurred by such Indemnified Person by reason of
gross negligence or willful misconduct with respect to such act or omissions.
The Declaration of each U S WEST Trust further provides that, to the fullest
extent permitted by applicable law, expenses (including legal fees) incurred by
an Indemnified Person in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by U S WEST prior to the final disposition
of such claim, demand, action, suit or proceeding upon receipt by of an
undertaking by or on behalf of the Indemnified Person to repay such amount if it
shall be determined that the Indemnified Person is not entitled to be
indemnified for the underlying cause of action as authorized by such
Declaration.
II-1
<PAGE>
The directors and officers of Capital Funding and U S WEST and the Regular
Trustees are covered by insurance policies indemnifying against certain
liabilities, including certain liabilities arising under the Securities Act of
1933, as amended (the "Securities Act"), which might be incurred by them in such
capacities and against which they cannot be indemnified by Capital Funding, U S
WEST or the U S WEST Trusts.
Any agents, dealers or underwriters who execute any of the agreements filed
as Exhibit 1 to this registration statement will agree to indemnify Capital
Funding's and U S WEST's directors and officers and the U S WEST Trustees who
signed the registration statement against certain liabilities which might arise
under the Securities Act with respect to information furnished to Capital
Funding and U S WEST or any of the U S WEST Trusts by or on behalf of any such
indemnifying party.
ITEM 16. EXHIBITS.
Exhibits identified in parentheses below are on file with the SEC and are
incorporated herein by reference to such previous filings. All other exhibits
are provided as part of this electronic transmission.
<TABLE>
<S> <C> <C>
1 - Form of Underwriting Agreement for offering of Preferred
Securities.
*4-A - Certificate of Trust of U S WEST Financing I.
*4-B - Certificate of Trust of U S WEST Financing II.
*4-C - Certificate of Trust of U S WEST Financing III.
4-D - Form of Amended and Restated Declaration of Trust.
4-E - Form of Indenture among U S WEST, Inc., U S WEST Capital Funding,
Inc. and Norwest Bank Minnesota, National Association, as
Trustee.
4-F - Form of Supplemental Indenture to Indenture to be used in
connection with the issuance of Subordinated Debt Securities and
Preferred Securities.
4-G - Form of Preferred Security (included in 4-D above).
4-H - Form of Subordinated Debt Security and Debt Guarantee (included
in 4-F above).
4-I - Form of Preferred Securities Guarantee.
5-A - Opinion of Weil, Gotshal & Manges.
5-B - Opinions of Richards, Layton & Finger.
5-C - Opinion of Stephen E. Brilz, Esq.
8 - Opinion of Weil, Gotshal & Manges.
(12) - Computation of Ratio of Earnings to Fixed Charges of U S WEST,
Inc. (Exhibit 12 to Form 10-K for the year ending December 31,
1994, File No. 1-8611).
23-A - Consent of Independent Public Accountants.
23-B - Consent of Weil, Gotshal & Manges is contained in the opinions of
counsel filed as Exhibits 5-A and 8.
23-C - Consent of Richards, Layton & Finger is contained in the opinion
of counsel filed as Exhibit 5-B.
23-D - Consent of Stephen E. Brilz, Esq. is contained in the opinion of
counsel filed as Exhibit 5-C.
*24. - Powers of Attorney (the powers of attorney for the U S WEST
Trustees of U S WEST Financing I, U S WEST Financing II and U S
WEST Financing III are included in Exhibits 4-A, 4-B and 4-C,
respectively).
25-A - Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of Norwest Bank Minnesota, National Association, as
Trustee under the Indenture.
25-B - Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of the First National Bank of Chicago, as Trustee
under the Amended and Restated Declaration of Trust of U S WEST
Financing I and the Preferred Securities Guarantee of U S WEST,
Inc. for the benefit of the holders of Preferred Securities of U
S WEST Financing I.
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C> <C>
25-C - Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of the First National Bank of Chicago, as Trustee
under the Amended and Restated Declaration of Trust of U S WEST
Financing II and the Preferred Securities Guarantee of U S WEST,
Inc. for the benefit of the holders of Preferred Securities of U
S WEST Financing II.
25-D - Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of the First National Bank of Chicago, as Trustee
under the Amended and Restated Declaration of Trust of U S WEST
Financing III and the Preferred Securities Guarantee of U S
WEST, Inc. for the benefit of the holders of Preferred
Securities of U S WEST Financing III.
<FN>
- ------------------------
* Filed previously.
</TABLE>
ITEM 17. UNDERTAKINGS.
The Registrants hereby undertake that, for purposes of determining any
liability under the Securities Act, each filing of U S WEST's Annual Report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (and where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions referred to in Item 15 (other than the
insurance policies referred to therein), or otherwise, the Registrants have been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrants of expenses incurred
or paid by a director, officer or controlling person of the Registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
(iii) to include any material information with respect to the Plan of
Distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by U S WEST pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-3
<PAGE>
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of a registration
statement in reliance upon Rule 430A and contained in the form of prospectus
filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of the registration statement as of
the time it was declared effective.
(2) For the purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, U S WEST, INC.
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO. 1 TO
THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF DENVER, STATE OF COLORADO, ON THE 28TH
DAY OF APRIL, 1995.
U S WEST, Inc.
By /s/ STEPHEN E. BRILZ
------------------------------------
Stephen E. Brilz
Assistant Secretary
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT OR AMENDMENT THERETO HAS BEEN SIGNED BELOW BY THE
FOLLOWING DIRECTORS AND OFFICERS OF U S WEST, INC. IN THE CAPACITIES AND ON THE
DATE INDICATED.
PRINCIPAL EXECUTIVE OFFICER:
RICHARD D. McCORMICK* Chairman of the Board,
President and Chief
Executive Officer
PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER:
JAMES M. OSTERHOFF* Executive Vice
President and Chief
Financial Officer
DIRECTORS:
RICHARD B. CHENEY*
REMEDIOS DIAZ-OLIVER*
GRANT A. DOVE*
ALLAN D. GILMOUR*
PIERSON M. GRIEVE*
SHIRLEY M. HUFSTEDLER*
ALLEN F. JACOBSON*
RICHARD D. MCCORMICK*
MARILYN CARLSON NELSON*
FRANK POPOFF*
GLEN L. RYLAND*
JERRY O. WILLIAMS*
DANIEL YANKELOVICH*
*By /s/ STEPHEN E. BRILZ
--------------------------------------
Stephen E. Brilz
Attorney-in-Fact
Dated: April 28, 1995
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, U S WEST CAPITAL
FUNDING, INC. CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF DENVER, STATE OF
COLORADO, ON THE 28TH DAY OF APRIL, 1995.
U S WEST Capital Funding, Inc.
By /s/ STEPHEN E. BRILZ
------------------------------------
Stephen E. Brilz
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment thereto has been signed below by the
following directors and officers of U S WEST Capital Funding, Inc. in the
capacities and on the date indicated.
PRINCIPAL EXECUTIVE OFFICER:
JAMES T. ANDERSON* President
PRINCIPAL FINANCIAL OFFICER:
Vice President and
CHARLES J. BURDICK* Treasurer
PRINCIPAL ACCOUNTING OFFICER:
Vice President and
JAMES R. TAUCHER* Controller
DIRECTORS:
JAMES T. ANDERSON*
JAMES M. OSTERHOFF*
*By /s/ STEPHEN E. BRILZ
- -----------------------------------
Stephen E. Brilz
Attorney-in-Fact
Dated: April 28, 1995
II-6
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, U S WEST
FINANCING I, U S WEST FINANCING II AND U S WEST FINANCING III CERTIFY THAT THEY
HAVE REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE REQUIREMENTS FOR FILING
ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION
STATEMENT TO BE SIGNED ON THEIR BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF DENVER, STATE OF COLORADO, ON THE 28TH DAY OF APRIL,
1995.
U S WEST Financing I
By /s/ JAMES T. ANDERSON
------------------------------------
James T. Anderson, Trustee
By /s/ CHARLES J. BURDICK
------------------------------------
Charles J. Burdick, Trustee
By /s/ ROGER FOX
------------------------------------
Roger Fox, Trustee
U S WEST Financing II
By /s/ JAMES T. ANDERSON
------------------------------------
James T. Anderson, Trustee
By /s/ CHARLES J. BURDICK
------------------------------------
Charles J. Burdick, Trustee
By /s/ ROGER FOX
------------------------------------
Roger Fox, Trustee
U S WEST Financing III
By /s/ JAMES T. ANDERSON
------------------------------------
James T. Anderson, Trustee
By /s/ CHARLES J. BURDICK
------------------------------------
Charles J. Burdick, Trustee
By /s/ ROGER FOX
------------------------------------
Roger Fox, Trustee
II-7
<PAGE>
_________ Preferred Securities
U S WEST FINANCING [ ]
(a Delaware Trust)
___% Trust Originated Preferred Securities ("TOPrS")
(Liquidation Amount of $25 Per Preferred Security)SM
FORM OF UNDERWRITING AGREEMENT
------------------------------
__, 1995
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
as Representative of the several Underwriters
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281
Dear Sirs:
U S WEST FINANCING [ ] (the "Trust"), a statutory business trust
organized under the Business Trust Act (the "Delaware Act") of the State of
Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Section 3801 ET
SEQ.), U S WEST, Inc., a Colorado corporation (the "Guarantor"), and U S WEST
Capital Funding, Inc., a Colorado corporation ("Capital Funding" and, together
with the Trust and the Guarantor, the "Offerors") confirm their agreement (the
"Agreement") with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Merrill Lynch is acting as representative (in such capacity,
Merrill Lynch shall hereinafter be
____________________
SM "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE>
referred to as the "Representative"), with respect to the sale by the Trust and
the purchase by the Underwriters, acting severally and not jointly, of the
respective numbers of ___% Trust Originated Preferred Securities (liquidation
amount of $25 per preferred security) of the Trust ("Preferred Securities") set
forth in said Schedule A and with respect to the grant by the Trust to the
Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of _______ additional Preferred
Securities to cover over-allotments, in each case except as may otherwise be
provided in the Pricing Agreement, as hereinafter defined. The aforesaid ______
shares of Preferred Securities (the "Initial Securities") to be purchased by the
Underwriters and all or any part of the _______ shares of Common Stock subject
to the option described in Section 2(b) hereof (the "Option Securities") are
collectively hereinafter called the "Designated Securities". The Preferred
Securities will be guaranteed by the Guarantor with respect to distributions and
payments upon liquidation, redemption and otherwise (the "Preferred Securities
Guarantee") pursuant to the Preferred Securities Guarantee Agreement (the
"Preferred Securities Guaranty Agreement"), dated as of April __, 1995, between
the Guarantor and The First National Bank of Chicago, as Trustee, and entitled
to the benefits of certain backup undertakings described in the Prospectus with
respect to Capital Funding's agreement pursuant to the Supplemental Indenture
(as defined herein) to pay all expenses relating to administration of the Trust
and the Guarantor's guarantee pursuant to the Supplemental Indenture of that
undertaking (the "Undertakings"). The Preferred Securities and the related
Preferred Securities Guarantees are referred to herein as the "Securities".
Prior to the purchase and public offering of the Designated Securities
by the several Underwriters, the Offerors and the Representative, acting on
behalf of the several Underwriters, shall enter into an agreement substantially
in the form of Exhibit A hereto (the "Pricing Agreement"). The Pricing
Agreement may take the form of an exchange of any standard form of written
telecommunication between the Offerors and the Representative and shall specify
such applicable information as is indicated in Exhibit A hereto. The offering
of the Designated Securities will be governed by this Agreement, as supplemented
by the Pricing Agreement. From and after the date of the execution and delivery
of the Pricing Agreement, this Agreement shall be deemed to incorporate the
Pricing Agreement.
2
<PAGE>
The Offerors have filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No. 33-__) and a
related preliminary prospectus for the registration under the Securities Act of
1933 (the "1933 Act") of (i) the Preferred Securities, (ii) the Preferred
Securities Guarantee, (iii) $_______ million aggregate principal amount of
Subordinated Deferrable Interest Notes (the "Subordinated Debt Securities") to
be issued and sold to the Trust by Capital Funding and (iv) the guarantee by the
Guarantor of the payment of principal, premium, if any, and interest on the
Subordinated Debt Securities (the "Debt Guarantee"), have filed such amendments
thereto, if any, and such amended preliminary prospectuses as may have been
required to the date hereof, and will file such additional amendments thereto
and such amended prospectuses as may hereafter be required. Such registration
statement (as amended, if applicable) and the prospectus constituting a part
thereof (including, in each case, all documents incorporated or deemed to be
incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933
Act and the information, if any, deemed to be part thereof pursuant to Rule
430A(b) of the rules and regulations of the Commission under the 1933 Act (the
"1933 Act Regulations")), as from time to time amended or supplemented pursuant
to the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934
Act") or otherwise, are herein after referred to as the "Registration Statement"
and the "Prospectus", respectively, except that if any revised prospectus shall
be provided to the Underwriters by the Offerors for use in connection with the
offering of the Designated Securities, which differs from the Prospectus on file
at the Commission at the time the Registration Statement becomes effective
(whether or not such revised prospectus is required to be filed by the Offerors
pursuant to Rule 424(b) of the 1933 Act Regulations), the term "Prospectus"
shall refer to such revised prospectus from and after the time it is first
provided to the Underwriters for such use. All references in this Agreement to
financial statements and schedules and other information that is "contained,"
"included" or "stated" in the Registration Statement or the Prospectus (and all
other references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information that are or are deemed
to be incorporated by reference in the Registration Statement or the Prospectus,
as the case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement or the Prospectus shall be deemed to
mean and include the filing of any document under the 1934 Act that is or is
deemed to be incorporated by reference in the Registration Statement or the
Prospec-
3
<PAGE>
tus, as the case may be.
The Offerors understand that the Underwriters propose to make a public
offering of the Securities as soon as the Representative deems advisable after
the Pricing Agreement has been executed and delivered, and the Declaration (as
defined herein), the Indenture (as defined herein), and the Preferred Securities
Guarantee Agreement have been qualified under the Trust Indenture Act of 1939,
as amended (the "1939 Act"). The entire proceeds from the sale of the
Securities will be combined with the entire proceeds from the sale by the Trust
to the Guarantor of its common securities (the "Common Securities") guaranteed
by the Guarantor, to the extent set forth in the Prospectus, with respect to
distributions and payments upon liquidation, redemption and maturity (the
"Common Securities Guarantee" and together with the Preferred Securities
Guarantee and the Debt Guarantee, the "Guarantees") pursuant to the Common
Securities Guarantee Agreement (the "Common Securities Guarantee Agreement" and,
together with the Preferred Securities Guarantee Agreement, the "Guarantee
Agreements"), dated as of April __, 1995, between the Guarantor and The First
National Bank of Chicago, as Trustee, and will be used by the Trust to purchase
the Subordinated Debt Securities issued by Capital Funding. The Preferred
Securities and the Common Securities will be issued pursuant to the amended and
restated declaration of trust of the Trust, dated as of April __, 1995 (the
"Declaration"), among the Guarantor, as Sponsor, the trustees named therein (the
"Trustees") and the holders from time to time of undivided beneficial interests
in the assets of the Trust. The Subordinated Debt Securities and the Debt
Guarantee will be issued pursuant to an indenture, dated as of April __, 1995
(the "Base Indenture"), among the Guarantor, Capital Funding and Norwest Bank,
as trustee (the "Debt Trustee"), and a supplement to the Base Indenture, dated
as of April __, 1995 (the "Supplemental Indenture," and together with the Base
Indenture and any other amendments or supplements thereto, the "Indenture"),
among the Guarantor, Capital Funding and the Debt Trustee.
Section 1. REPRESENTATIONS AND WARRANTIES.
(a) The Offerors jointly and severally represent and warrant to
each Underwriter as of the date hereof and as of the date of the Pricing
Agreement (such latter date being hereinafter referred to as the "Representation
Date") as follows:
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(i) At the time the Registration Statement becomes
effective and at the Representation Date, the Registration Statement will
comply in all material respects with the requirements of the 1933 Act, the
1933 Act Regulations, the 1934 Act, the regulations of the Commission under
the 1934 Act (the "1934 Act Regulations"), and the 1939 Act and the rules
and regulations of the Commission under the 1939 Act (the "1939 Act
Regulations"), and will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Prospectus, at the
Representation Date (unless the term "Prospectus" refers to a prospectus
that has been provided to the Underwriters by the Trust for use in
connection with the offering of the Securities and that differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective, in which case, at the time it is first provided to the
Underwriters for such use) and at Closing Time referred to in Section 2
hereof, will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Offerors in writing by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement or Prospectus.
(ii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein, there has been no material adverse change or any
development involving a prospective material adverse change in the
financial condition or results of operation of the Guarantor and its
subsidiaries taken as a whole.
Section 2. SALE AND DELIVERY TO UNDER-
WRITERS; CLOSING.
(a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Trust
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to pur-
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chase from the Trust, at the price per security set forth in the Pricing
Agreement, the number of Initial Securities set forth in Schedule A opposite the
name of such Underwriter (except as otherwise provided in the Pricing
Agreement), plus any additional number of Initial Securities that such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
The purchase price per security to be paid by the several Underwriters
for the Designated Securities shall be an amount equal to the initial public
offering price. The initial public offering price per Preferred Security shall
be a fixed price to be determined by agreement between the Representative and
the Offerors. The initial public offering price and the purchase price, when so
determined, shall be set forth in the Pricing Agreement. In the event that such
prices have not been agreed upon and the Pricing Agreement has not been executed
and delivered by all parties thereto by the close of business on the fourth
business day following the date of this Agreement, this Agreement shall
terminate forthwith, without liability of any party to any other party, unless
otherwise agreed to by the Offerors and the Representative. As compensation to
the Underwriters for their commitments hereunder and in view of the fact that
the proceeds of the sale of the Preferred Securities will be used to purchase
the Subordinated Debt Securities of Capital Funding, Capital Funding hereby
agrees to pay at Closing Time (as defined below) to the Representative, for the
accounts of the several Underwriters, a commission per Preferred Security
determined by agreement between the Representative and the Guarantor for the
Preferred Securities to be delivered by the Trust hereunder at Closing Time or
relevant Date of Delivery (as defined below), as the case may be. The
commission, when so determined, shall be set forth in the Pricing Agreement.
(b) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Trust hereby grants an option to the Underwriters, severally and not
jointly, to purchase up to an additional _______ Preferred Stock at the price
per share set forth in the Pricing Agreement, less an amount per share equal to
any dividends declared by the Company and payable on the Initial Securities but
not payable on the Option Securities. The option hereby granted will expire 30
days after the Representation Date and may be exercised in whole or in part from
time to time only for the purpose of covering over-allotments which may be made
in connection with the offering and distribution of the Initial
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Securities upon notice by the Representative to the Trust setting forth the
number of Option Securities as to which the several Underwriters are then
exercising the option and the time and date of payment and delivery for such
Option Securities. Any such time and date of delivery (a "Date of Delivery")
shall be determined by the Representative, but shall not be later than seven
full business days after the exercise of said option, nor in any event prior to
the Closing Time, as hereinafter defined, unless otherwise agreed by the
Representative and the Trust. If the option is exercised as to all or any
portion of the Option Securities, each of the Underwriters, acting severally and
not jointly, will purchase that proportion of the total number of Option
Securities then being purchased which the number of Initial Securities set forth
in Schedule A opposite the name of such Underwriter bears to the total number of
Initial Securities (except as otherwise provided in the Pricing Agreement),
subject in each case to such adjustments as the Representative in its discretion
shall make to eliminate any sales or purchases of fractional securities.
(c) Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the office of Skadden,
Arps, Slate, Meagher & Flom, or at such other place as shall be agreed upon by
the Representative and the Trust, at 10:00 A.M. New York time on the fifth
business day (unless postponed in accordance with the provisions of Section 10)
following the fifth business day after execution of the Pricing Agreement, or
such other time not later than ten business days after such date as shall be
agreed upon by the Representative, the Trust, the Guarantor and Capital Funding
(such time and date of payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are purchased
by the Underwriters, payment of the purchase price for, and delivery of
certificates for, such Option Securities shall be made at the above-mentioned
offices of Skadden, Arps, Slate, Meagher & Flom, or at such other place as shall
be agreed upon by the Representative and the Trust, on each Date of Delivery as
specified in the notice from the Representative to the Trust. Payment shall be
made to the Company by certified or official bank check or checks drawn in New
York Clearing House funds or similar next day funds payable to the order of the
Trust to an account designated by the Trust, against delivery to the
Representative for the respective accounts of the Underwriters of certificates
for the Designated Securities to be purchased by them. Certificates for the
Initial Securities and the Option Securities, if any, shall be in such
denominations and registered in such names as the
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Representative may request in writing at least two business days before the
Closing Time or the relevant Date of Delivery, as the case may be. It is
understood that each Underwriter has authorized the Representative, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial Securities and the Option Securities, if any, which it
has agreed to purchase. Merrill Lynch, individually and not as representative
of the Underwriters, may (but shall not be obligated to) make payment of the
purchase price for the Initial Securities or the Option Securities, if any, to
be purchased by any Underwriter whose check has not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such Underwriter from its obligations hereunder.
The certificates for the Initial Securities and the Option Securities,
if any, will be made available for examination and packaging by the
Representative not later than 10:00 A.M. on the last business day prior to the
Closing Time or the relevant Date of Delivery, as the case may be.
At the Closing Time or each Date of Delivery, as the case may be,
Capital Funding will pay, or cause to be paid, the commission payable at such
time to the Underwriters under Section 2 hereof by certified or official bank
check or checks payable to Merrill Lynch, Pierce, Fenner & Smith Incorporated in
New York Clearing House funds or other similar next day funds.
Section 3. COVENANTS OF THE OFFERORS. Each of the Offerors jointly
and severally covenant with each Underwriter as follows:
(a) The Offerors will notify the Representative immediately, and
confirm the notice in writing, (i) of the effectiveness of the Registration
Statement and any amendment thereto (including any post-effective amendment),
(ii) of the receipt of any comments from the Commission, (iii) of any request by
the Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose.
The Offerors will make every reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the lifting thereof at
the earliest possible moment.
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(b) The Offerors will give the Representative notice of their
intention to file or prepare any amendment to the Registration Statement
(including any post-effective amendment) or any amendment or supplement to the
Prospectus (including any revised prospectus which the Offerors propose for use
by the Underwriters in connection with the offering of the Preferred Securities
which differs from the prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised prospectus
is required to be filed pursuant to Rule 424(b) of the 1933 Act Regulations),
whether pursuant to the 1933 Act, the 1934 Act or otherwise, will furnish the
Representative with copies of any such amendment or supplement a reasonable
amount of time prior to such proposed filing or use, as the case may be, and
will not file any such amendment or supplement or use any such prospectus to
which the Representative or counsel for the Underwriters shall reasonably
object unless the Company shall conclude that such amendment or supplement
must be filed in accordance with applicable law. Subject to the foregoing,
the Offerors will promptly prepare a supplement to the Prospectus to reflect
the terms of the Designated Securities and the terms of the Offering. The
Offerors will file the Prospectus as so supplemented pursuant to Rule 424(b)
under the Act not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Act.
(c) The Offerors will furnish to the Representatives copies
of the Registration Statement, including all exhibits thereto, the Prospectus
and all amendments and supplements to such documents, in each case as soon as
available and in such quantities as are reasonably requested.
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(e) If any event shall occur as a result of which it is
necessary to amend or supplement the Prospectus in order to make the Prospectus
not misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, the Offerors will forthwith amend or supplement the
Prospectus in accordance with paragraph (b) above so that, as so amended or
supplemented, the Prospectus will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time it is delivered
to a purchaser, not misleading, and the Offerors will furnish to the
Underwriters a reasonable number of copies of such amendment or supplement.
(f) The Offerors will endeavor, in cooperation with the
Underwriters, to qualify the Preferred Securities and Subordinated Debt
Securities for offering and sale under the applicable securities laws of such
states and other jurisdictions of the United States as the Representative may
designate; provided, however, that each of the Offerors shall not be obligated
to qualify as a foreign corporation in any jurisdiction in which it is not so
qualified.
(g) The Trust will make generally available to its security
holders as soon as practicable, an earnings statement (in form complying with
the provisions of Rule 158 of the 1933 Act Regulations) covering a twelve-month
period beginning not later than the first day of the Trust's fiscal quarter next
following the "effective date" (as defined in said Rule 158) of the Registration
Statement.
(h) The Offerors will use their reasonable efforts to effect the
listing of the Preferred Securities on the New York Stock Exchange; if the
Preferred Securities are exchanged for Subordinated Debt Securities, Capital
Funding will use its reasonable efforts to effect the listing of the
Subordinated Debt Securities on the exchange on which the Preferred
Securities were then listed.
(i) During a period of 30 days from the date of the Pricing
Agreement, neither the Trust, the Guarantor nor Capital Funding will, without
the Representative's prior written consent, directly or indirectly, sell, offer
to sell, grant any option for the sale of, or otherwise dispose of, any
Preferred Securities, any security convertible into or exchangeable into or
exercisable for Preferred Securities or any equity securities substantially
similar to the Preferred Securities (except
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for Preferred Securities issued pursuant to this Agreement).
Section 4. PAYMENT OF EXPENSES. Capital Funding will pay all
expenses incident to the performance of each Offeror's obligations under this
Agreement, including, but not limited to, (i) the printing and filing of the
Registration Statement as originally filed and of each amendment thereto, (ii)
the printing of this Agreement and the Pricing Agreement, (iii) the preparation,
issuance and delivery of the certificates for the Preferred Securities to the
Underwriters, (iv) the fees and disbursements of the Guarantor's, Capital
Funding's and the Trust's counsel and accountants, (v) the qualification of the
Preferred Securities and Subordinated Debt Securities under securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees and
the fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of any blue sky survey and any
legal investment survey, (vi) the printing and delivery to the Underwriters of
copies of the Registration Statement as originally filed and of each amendment
thereto, of each preliminary prospectus, and of the Prospectus and any
amendments or supplements thereto, (vii) the printing and delivery to the
Underwriters of copies of any blue sky survey and any legal investment survey,
(viii) the fee of the National Association of Securities Dealers, Inc. (ix) the
fees and expenses of the Debt Trustee, including the fees and disbursements of
counsel for the Debt Trustee in connection with the Indenture and the
Subordinated Debt Securities; (x) the fees and expenses of the Property Trustee
and Delaware Trustee, including the fees and disbursements of counsel for the
Property Trustee and Delaware Trustee in connection with the Declaration and the
Certificate of Trust; (xi) any fees payable in connection with the rating of the
Preferred Securities and Subordinated Debt Securities, (xii) the fees and
expenses incurred in connection with the listing of the Preferred Securities
and, if applicable, the Subordinated Debt Securities on the New York Stock
Exchange, and (xiii) the cost and charges of any transfer agent or registrar and
(xiv) the cost of qualifying the Preferred Securities with The Depository Trust
Company.
If this Agreement is terminated by the Representative in accordance
with the provisions of Section 5 or Section 9 hereof, Capital Funding shall
reimburse the Underwriters for all of their reasonable out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the Underwriters,
which shall not exceed the amount set forth in the applicable Terms Agreement.
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Section 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations
of the Underwriters hereunder are subject to the accuracy of the representations
and warranties of the Offerors herein contained, to the performance by the
Offerors of their obligations hereunder, and to the following further
conditions:
(a) The Registration Statement shall have become effective not
later than 5:30 P.M. on the date hereof, or with the consent of the
Representative, at a later time and date, not later, however, than 5:30 P.M. on
the first business day following the date hereof, or at such later time and date
as may be approved by the Representative; and at Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated or threatened by the
Commission. The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing by
the 1933 Regulations and in accordance with Section 3(b) and prior to Closing
Time the Offerors shall have provided evidence satisfactory to the
Representative of such timely filing.
(b) At Closing Time the Representative shall have received:
(1) The favorable opinion, dated as of Closing Time, of
Weil, Gotshal & Manges, counsel for the Offerors in form and substance
reasonably satisfactory to counsel for the Underwriters, substantially in the
form set forth in Annex 1.
(2) The favorable opinion, dated as of Closing Time, of
Stephen E. Brilz, Esq., Corporate Counsel for U S West, Inc., in form and
substance satisfactory to counsel for the Underwriters, substantially in the
form set forth in Annex 2.
(3) The favorable opinion, dated as of Closing Time, of
Richards, Layton & Finger, special Delaware counsel for the Offerors, the
Guarantor and the Capital Funding, in form and substance satisfactory to counsel
for the Underwriters, substantially in the form set forth in Annex 3.
(4) The favorable opinion, dated as of Closing Time, of the
Law Department of The First National Bank of Chicago, counsel of The First
National Bank of Chicago, as Property Trustee under the Declaration, in form and
substance satisfactory to counsel for the Underwriters, substantially in the
form of Annex 4.
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(5) The favorable opinion, dated as of Closing Time, of
Pepper, Hamilton & Scheetz, special Delaware counsel for the Property Trustee,
in form and substance satisfactory to counsel for the Underwriters,
substantially to the effect set forth in Annex 5.
(6) The favorable opinion, dated as of Closing Time, of
Skadden, Arps, Slate, Meagher & Flom ("SASM&F"), counsel for the Underwriters,
in form and substance satisfactory to the Underwriters.
In giving its opinion, SASM&F may rely as to certain matters of
Colorado law upon the opinion of Steven E. Brilz, Corporate Counsel for U S WEST
Inc., which shall be delivered in accordance with Section 5(b)2 hereto, as to
certain matters of Delaware law upon the opinion of Richards, Layton & Finger,
special Delaware counsel to the Trust, which opinion shall be delivered in
accordance with Section 5(b)3 hereto, as to certain matters of Illinois law upon
the opinion of ______________________________________, counsel to the Property
Trustee, which shall be delivered in accordance with Section 5(b)4 hereto, and
as to certain other matters of Delaware law upon the opinion of Pepper, Hamilton
& Scheetz, special Delaware counsel to the Property Trustee, which shall be
delivered in accordance with Section 5(b)5 hereto.
(c) At Closing Time, since the date of the Pricing Agreement (i)
there shall not have occurred any change, or any development involving a
prospective change, in or affecting particularly the business or properties of
the Guarantor and any of its subsidiaries, taken as a whole, which, in the
judgment of the Representatives, materially impairs the investment quality of
the Designated Securities and (ii) there has not been any decrease in the
ratings of any of the debt securities of the Guarantor or Capital Funding or of
the Preferred Securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act) and no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its ratings of any of the debt
securities of the Guarantor or Capital Funding or of the Preferred Securities.
(d) At the time of the execution of this Agreement, the
Representative shall have received from Coopers & Lybrand L.L.P. a letter dated
such date, in form and substance satisfactory to the Representative, to the
effect that:
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(i) they are independent public accountants with respect to
the Guarantor and its consolidated subsidiaries, including Capital Funding
within the meaning of the 1933 Act and the 1933 Act Regulations; and the
Trust is and will be treated as a consolidated subsidiary of the Guarantor
pursuant to generally accepted accounting principles;
(ii) in their opinion, the consolidated financial statements
and any supplementary financial information and schedules audited (and, if
applicable, prospective financial statements and/or pro forma financial
information examined) by them and included or incorporated by reference in
the Registration Statement or the Prospectus comply as to form in all
material respects with the applicable accounting requirements of the 1933
Act or the Exchange Act and the related published rules and regulations
thereunder; and if applicable, they have made a review in accordance with
standards established by the American Institute of Certified Public
Accountants of the consolidated interim financial statements, selected
financial data, statements and/or condensed financial statements derived
from audited financial statements of the Guarantor for the periods
specified in such letter, as indicated in their reports thereon, copies of
which have been furnished to the Representatives;
(iii) based upon limited procedures set forth in detail in
such letter, nothing has come to their attention which causes them to
believe that
(A) the unaudited consolidated financial statements and
supporting schedules of the Guarantor included in the Registration
Statement do not comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations or are not presented in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that
of the audited financial statements included in the Registration Statement,
(B) the unaudited amounts of revenues, net income and
net income per share set forth under "U S WEST, Inc. Summary Financial
Information" in the Prospectus were not determined on a basis substantially
consistent with that used in determining the corresponding amounts in the
audited financial statements included in the Registration Statement, or
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(C) at a specified date not more than five days prior
to the date of this Agreement, there has been any change in the capital
stock, the Guarantor and its subsidiaries, including Capital Funding, or
any increase in the consolidated long-term debt of the Guarantor and its
subsidiaries, including Capital Funding, or any decrease in consolidated
net current assets or net assets as compared with the amounts shown on the
date of the most recent consolidated balance sheet included in or
incorporated by reference in the Registration Statement and the Prospectus
(March 31, 1995 balance sheet included in the Registration Statement) or,
during the period from the date of the most recent consolidated balance
sheet included in or incorporated by reference in the Registration
Statement and the Prospectus to a specified date not more than five days
prior to the date of this Agreement, there were any decreases, as compared
with the corresponding period in the preceding year, in consolidated
revenues, net income or net income per share of the Guarantor and its
subsidiaries, including Capital Funding, except in all instances for
changes, increases or decreases which the Registration Statement and the
Prospectus disclose have occurred or may occur; and
(iv) in addition to the examination referred to in their
opinions and the limited procedures referred to in clause (iii) above, they
have carried out certain specified procedures, not constituting an audit,
with respect to certain amounts, percentages and financial information
which are included in the Registration Statement and Prospectus, or
incorporated therein by reference, and which are specified by the
Representative, and have found such amounts, percentages and financial
information to be in agreement with the relevant accounting, financial and
other records of the Guarantor and its subsidiaries, including Capital
Funding, identified in such letter.
(e) At Closing Time, the Representative shall have received from
Coopers & Lybrand L.L.P. a letter, dated as of Closing Time, to the effect that
they reaffirm the statements made in the letter furnished pursuant to subsection
(d) of this Section, except that the specified date referred to shall be a date
not more than five days prior to Closing Time.
(f) At the Closing Time, the Representative shall have received
(i) a certificate, dated as of
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the Closing Time, of a Vice President of the Guarantor, (ii) a certificate,
dated as of the Closing Time, of a Vice President of Capital Funding, and (iii)
a certificate, dated as of the Closing Time, of a Trustee of the Trust, in each
case in which such officers shall state that, to the best of their knowledge
after reasonable investigation, the representations and warranties of the
Offerors in this Agreement are true and correct, that the Offerors have complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Time, that no stop order
suspending the effectiveness of the Registration Statement is in effect and no
proceedings for that purpose are pending or are contemplated by the Commission
and that, subsequent to the date of the most recent financial statements in the
Prospectus, there has been no material adverse change in the financial position
or results of operations of the Guarantor and any of its subsidiaries, taken as
a whole, except as set forth in or contemplated by the Prospectus.
(g) At Closing Time and each Date of Delivery, if any, counsel
for the Underwriters shall have been furnished with such documents and opinions
as they may require for the purpose of enabling them to pass upon the issuance
and sale of the Preferred Securities as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Offeror, in connection with the issuance and
sale of the Preferred Securities as herein contemplated shall be satisfactory in
form and substance to the Representative and counsel for the Underwriters.
(h) In the event that the Underwriters exercise their option
provided in Section 2(b) hereof to purchase all or any portion of the Option
Securities, the representations and warranties of the Offerors contained herein
and the statements in any certificates furnished by the Offerors hereunder shall
be true and correct as of each Date of Delivery and, at the relevant Date of
Delivery, the Representative shall have received:
(1) The certificates, each dated such Date of Delivery, of the relevant
officer of the respective Offeror confirming that the respective
certificates delivered at the Closing Time pursuant to Section 5(f) hereof
remains true and correct as of such Date of Delivery.
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(2) The favorable opinion of Weil, Gotshal & Manges, counsel for the
Offerors, in form and substance satisfactory to counsel for the
Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to the
same effect as the opinion required by Sections 5(b)(l).
(3) The favorable opinion of Stephen E. Brilz, Esq., Corporate Counsel, in
form and substance satisfactory to counsel for the Underwriters, dated such
Date of Delivery, relating to the Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion required
by Sections 5(b)(2).
(4) The favorable opinion of Richard, Layton & Finger Special Delaware,
counsel for the Offerors, in form and substance satisfactory to counsel
for the Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to the
same effect as the opinion required by Sections 5(b)(3).
(5) The favorable opinion of The Legal Department of the First National
Bank of Chicago, counsel of the First National Bank of Chicago, in form and
substance satisfactory to counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by
Sections 5(b)(4).
(6) The favorable opinion of Pepper, Hamilton & Scheetz, special
Delaware counsel for the Property Trustee, in form and
substance satisfactory to counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by
Sections 5(b)(5).
(7) The favorable opinion of Skadden, Arps, Slate, Meagher & Flom, special
counsel for Underwriters, dated such Date of Delivery, relating to the
Option Securities to be purchased on such Date of Delivery and otherwise
to the same effect as the opinion required by Sections 5(b)(6).
(8) A letter from Coopers & Lybrand L.L.P., in form and substance
satisfactory to the Representative and
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dated such Date of Delivery, substantially the same in form and substance
as the letter furnished to the Representative pursuant to Section 5(d)
hereof, except that the "specified date" in the letter furnished pursuant
to this Section 5(h)(8) shall be a date not more than five days prior to
such Date of Delivery.
(i) At Closing Time, the Preferred Securities and the
Subordinated Debt Securities shall be rated in one of the four highest rating
categories for long term debt ("Investment Grade") by any nationally recognized
statistical rating agency, and the Trust shall have delivered to the
Representative a letter, dated the Closing Time, from such nationally recognized
statistical rating agency, or other evidence satisfactory to the Representative,
confirming that the Preferred Securities and the Subordinated Debt Securities
have Investment Grade ratings.
(j) At the Closing Time, the Preferred Securities shall have
been approved for listing on the New York Stock Exchange upon notice of
issuance.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Representative by notice to the Offerors at any time at or prior to
Closing Time, and such termination shall be without liability of any party to
any other party except as provided in Section 4 hereof.
Section 6. INDEMNIFICATION
(a) The Offerors agree to jointly and severally indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), including the
information deemed to be part of the Registration Statement pursuant
to Rule 430A(b) of the 1933 Act Regulations, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
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misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue
statement or omission, if such settlement is effected with the written
consent of the Guarantor; and
(iii) against any and all reasonable expense as
incurred (including, subject to Section 6(c) hereof, the fees and
disbursements of counsel chosen by Merrill Lynch), in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue
statement or omission, to the extent that any such expense is not paid
under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Trust, the
Guarantor or Capital Funding by any Underwriter through Merrill Lynch expressly
for use in the Registration Statement (or any amendment thereto) or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); and PROVIDED, FURTHER, that this indemnity agreement with respect to
any preliminary prospectus shall not inure to the benefit of any underwriter
from whom the person asserting any such losses, liabilities, claims, damages or
expenses purchased Securities, or any person controlling such Underwriter, if
the Offerors sustain the burden that a copy of the Prospectus (as then amended
or supplemented if the Company shall have furnished any such
19
<PAGE>
amendments or supplements thereto), but excluding documents incorporated or
deemed to be incorporated by reference, was not sent or given by or on behalf of
such Underwriter to such person, if such is required by law, at or prior to the
written confirmation of the sale of such Securities to such person and if the
Prospectus (as so amended or supplemented, but excluding documents incorporated
or deemed to be incorporated by reference therein) would have corrected the
defect giving rise to such loss, liability, claim, damage or expense, it being
understood that this proviso shall have no application if such defect shall have
been corrected in a document which is incorporated or deemed to be incorporated
by reference in the Prospectus.
(b) The Guarantor and Capital Funding agree jointly and
severally to indemnify the Trust against all loss, liability, claim, damage and
expense whatsoever, as due from the Trust under Section 6(a) hereunder.
(c) Each Underwriter severally agrees to indemnify and hold
harmless the Offerors, their directors, trustees, each of its officers who
signed the Registration Statement, and each person, if any, who controls the
Offerors within the meaning of Section 15 of the 1933 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto) in reliance upon and
in conformity with written information furnished to the Offerors by such
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(d) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability which it may have otherwise than on account of this indemnity
agreement. An indemnifying party may participate at its own expense in the
defense of any such action. If it so elects within a reasonable time after
receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume
20
<PAGE>
the defense of such action with counsel satisfactory to such indemnifying
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), unless such indemnified parties
reasonably object to such assumption on the ground that there may be legal
defenses available to them which are different from or in addition to those
available to such indemnifying party. If an indemnifying party assumes the
defense of such action, the indemnifying parties shall not be liable for any
fees and expenses of counsel for the indemnified parties incurred thereafter in
connection with such action. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances. The indemnifying party or parties shall not be liable under this
Agreement with respect to any settlement made by any indemnified party or
parties without prior written consent by the indemnifying party or parties to
such settlement.
Section 7. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Offerors and the
Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Offerors and one or more of the Underwriters, as incurred, in
such proportions that the Underwriters are responsible for that portion
represented by the percentage that the underwriting compensation paid by Capital
Funding appearing on the cover page of the Prospectus bears to the initial
public offering price appearing thereon and the Offerors are responsible for the
balance; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the 1933 Act shall
have the same rights to contribution as such Underwriter, and each director of
the Guarantor and Capital Funding, each officer of the Guarantor and Capital
Funding who signed the Registration Statement, each trustee of the Trust and
each person, if any, who controls an Offeror within the meaning of Section 15 of
the 1933 Act shall have the same rights to contribution as the Offerors.
21
<PAGE>
Section 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement and the Pricing Agreement, or contained in certificates of officers or
Trustees of the Offerors submitted pursuant hereto, shall remain operative and
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or controlling person, or by or on behalf of the Offerors and
shall survive delivery of the Preferred Securities to the Underwriters.
Section 9. TERMINATION OF AGREEMENT.
(a) The Representative may terminate this Agreement, by notice
to the Offerors, at any time at or prior to Closing Time (i) if there has been,
since the date of this Agreement or since the respective dates as of which
information is given in the Registration Statement, any material adverse change
or any development involving a prospective material adverse change, in the
financial condition or results of operations of the Guarantor and its
subsidiaries, taken as a whole, whether or not arising in the ordinary course of
business, or (ii) if there has occurred any outbreak of hostilities or material
escalation thereof or other calamity or crisis the effect of which is such as to
make it, in the judgment of the Representative, impracticable to market the
Designated Securities, (iii) if trading in the Designated Securities has been
suspended by the Commission, or if trading generally on the New York Stock
Exchange has been suspended, limited or restricted or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices for securities have
been required, by said exchange or by order of the Commission or any other
governmental authority, or if a banking moratorium has been declared by either
Federal, New York or Colorado authorities or (iv) if there has been any decrease
in the ratings of any of the debt securities of the Guarantor or Capital Funding
or of the Preferred Securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act) and such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the debt
securities of the Guarantor or Capital Funding or of the Preferred Securities.
(b) If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof.
22
<PAGE>
Section 10. DEFAULT BY ONE OR MORE OF THE
UNDERWRITERS. If one or more of the Underwriters shall fail at Closing Time to
purchase the Initial Securities that it or they are obligated to purchase under
this Agreement and the Pricing Agreement (the "Defaulted Securities"), the
Representative shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Representatives shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the number of Initial Securities, each of the non-defaulting Underwriters
shall be obligated, severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Initial Securities, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Representative, or the Offerors shall
have the right to postpone Closing Time for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or Prospectus
or in any other documents or arrangements.
Section 11. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representative at Merrill Lynch World
Headquarters, North Tower, World Financial Center, New York, New York 10281-
1201, attention of ____________, Vice President; notices to the Trust, the
Guarantor and Capital Funding shall be directed to them at 7800 East Orchard
Road, Englewood, CO 80111, attention of Stephen E. Brilz, Esq., Corporate
Counsel.
23
<PAGE>
Section 12. PARTIES. This Agreement and the Pricing Agreement shall
each inure to the benefit of and be binding upon the Underwriters and the Trust,
the Guarantor, and Capital Funding and their respective successors. Nothing
expressed or mentioned in this Agreement or the Pricing Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Trust, the Guarantor, and Capital Funding and their
respective successors and the controlling persons and officers, directors and
trustees referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or the Pricing Agreement or any provision herein or
therein contained. This Agreement and the Pricing Agreement and all conditions
and provisions hereof and thereof are intended to be for the sole and exclusive
benefit of the Underwriters and the Trust, the Guarantor, and Capital Funding
and their respective successors, and said controlling persons and officers,
directors and trustees and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
Section 13. GOVERNING LAW AND TIME. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in said
State. Except as otherwise set forth herein, specified times of day refer to
New York City time.
24
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Trust a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Trust, the Guarantor, and Capital Funding in
accordance with its terms.
Very truly yours,
U S WEST, INC.
By___________________________________________
Title:
U S WEST CAPITAL FUNDING, INC.
By___________________________________________
Title:
U S WEST FINANCING I
By___________________________________________
Title: Trustee
By___________________________________________
Title: Trustee
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By________________________________
Authorized Signatory
For itself and as Representative of the other
Underwriters named in Schedule A hereto.
25
<PAGE>
SCHEDULE A
Number
Name of Underwriter of Securities
------------------- -------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . -------------
-------------
<PAGE>
EXHIBIT A
400,000 Preferred Securities
U S WEST FINANCING I
(a Delaware business trust)
____% Trust Originated Preferred Securities ("TOPrS")
(Liquidation Amount of $25 Per Security)
PRICING AGREEMENT
-----------------
MERRILL LYNCH & CO. April __, 1995
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
as Representative of the several
Underwriters named in the within-
mentioned Purchase Agreement
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281
Dear Sirs:
Reference is made to the Underwriting Agreement, dated April __, 1995
(the "Underwriting Agreement"), relating to the purchase by the several
Underwriters named in Schedule A thereto, for whom Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated is acting as representative (the
"Representative"), of the above ____% Trust Originated Preferred Securities (the
"Preferred Securities"), of U S WEST FINANCING I, a Delaware business trust
(the "Trust").
Pursuant to Section 2 of the Underwriting Agreement, the Trust, U S
WEST, Inc. (the "Guarantor"), a Colorado corporation, and U S WEST Capital
Funding Inc. ("Capital Funding"), a Colorado corporation, agree with each
Underwriter as follows:
1. The initial public offering price per security for the
Preferred Securities, determined as provided in said Section 2, shall be
$25.00.
2. The purchase price per security for the Preferred Securities
to be paid by the several Underwriters shall be $25.00, being an amount
equal
<PAGE>
to the initial public offering price set forth above; PROVIDED that the
purchase price per Preferred Security for any Option Securities (as defined
in the Purchase Agreement) purchased upon exercise of the over-allotment
option described in Section 2(b) of the Purchase Agreement shall be reduced
by an amount per share equal to any distribution declared by the Trust and
payable on the Initial Securities (as defined in the Purchase Agreement)
but not payable on the Option Securities.
3. The compensation per Preferred Security to be paid by Capital
Funding to the several Underwriters in respect of their commitments
hereunder shall be $_____; provided, however, that the compensation per
Preferred Security for sales of 10,000 or more Preferred Securities to a
single purchaser shall be $_____.
28
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Trust a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Trust, the Guarantor, and Capital Funding in
accordance with its terms.
Very truly yours,
U S WEST, INC.
By________________________________________________
Title:
U S WEST CAPITAL FUNDING, INC.
By________________________________________________
Title:
U S WEST FINANCING I
By________________________________________________
Title: Trustee
By________________________________________________
Title: Trustee
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By________________________________
Authorized Signatory
For itself and as Representative of the other
Underwriters named in the Underwriting Agreement.
2
<PAGE>
------------------------------------------
------------------------------------------
AMENDED AND RESTATED DECLARATION
OF TRUST
U S WEST FINANCING [ ]
Dated as of __________, 1995
-------------------------------------------
-------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I INTERPRETATION AND DEFINITIONS.................. 2
SECTION 1.1 Definitions.............................. 2
ARTICLE II TRUST INDENTURE ACT............................ 10
SECTION 2.1 Trust Indenture Act; Application......... 10
SECTION 2.2 Lists of Holders of Securities........... 10
SECTION 2.3 Reports by the Property Trustee.......... 11
SECTION 2.4 Periodic Reports to Property
Trustee.................................. 11
SECTION 2.5 Evidence of Compliance with Conditions
Precedent................................ 11
SECTION 2.6 Events of Default; Waiver................ 11
SECTION 2.7 Event of Default; Notice................. 13
ARTICLE III ORGANIZATION..................................... 14
SECTION 3.1 Name..................................... 14
SECTION 3.2 Office................................... 14
SECTION 3.3 Purpose.................................. 14
SECTION 3.4 Authority................................ 14
SECTION 3.5 Title to Property of the Trust........... 15
SECTION 3.6 Powers and Duties of the Regular
Trustees................................. 15
SECTION 3.7 Prohibition of Actions by the
Trust and the Trustees................... 19
SECTION 3.8 Powers and Duties of the Property
Trustee.................................. 21
SECTION 3.9 Certain Duties and Responsibilities
of the Property Trustee.................. 24
SECTION 3.10 Certain Rights of Property Trustee....... 26
SECTION 3.11 Delaware Trustee......................... 29
SECTION 3.12 Execution of Documents................... 30
SECTION 3.13 Not Responsible for Recitals or
Issuance of Securities................... 30
SECTION 3.14 Duration of Trust........................ 30
SECTION 3.15 Mergers.................................. 30
ARTICLE IV SPONSOR.......................................... 33
i
<PAGE>
Page
----
SECTION 4.1 Sponsor's Purchase of Common
Securities............................... 33
SECTION 4.2 Responsibilities of the Sponsor.......... 33
ARTICLE V TRUSTEES....................................... 34
SECTION 5.1 Number of Trustees....................... 34
SECTION 5.2 Delaware Trustee......................... 35
SECTION 5.3 Property Trustee; Eligibility............ 35
SECTION 5.4 Qualifications of Regular Trustees
and Delaware Trustee Generally........... 36
SECTION 5.5 Initial Trustees......................... 36
SECTION 5.6 Appointment, Removal and Resignation
of Trustees.............................. 37
SECTION 5.7 Vacancies among Trustees................. 39
SECTION 5.8 Effect of Vacancies...................... 39
SECTION 5.9 Meetings................................. 40
SECTION 5.10 Delegation of Power...................... 40
ARTICLE VI DISTRIBUTIONS.................................... 41
SECTION 6.1 Distributions............................ 41
ARTICLE VII ISSUANCE OF SECURITIES........................... 41
SECTION 7.1 General Provisions Regarding
Securities............................... 41
ARTICLE VIII TERMINATION OF TRUST............................. 42
SECTION 8.1 Termination of Trust..................... 42
ARTICLE IX TRANSFER OF INTERESTS.......................... 44
SECTION 9.1 Transfer of Securities................... 44
SECTION 9.2 Transfer of Certificates................. 44
SECTION 9.3 Deemed Security Holders.................. 45
SECTION 9.4 Book Entry Interests..................... 45
SECTION 9.5 Notices to Clearing Agency............... 46
SECTION 9.6 Appointment of Successor Clearing
Agency................................... 46
SECTION 9.7 Definitive Preferred Security
Certificates............................. 47
ii
<PAGE>
Page
----
SECTION 9.8 Mutilated, Destroyed, Lost or
Stolen Certificates...................... 48
ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF
SECURITIES, TRUSTEES OR OTHERS................... 49
SECTION 10.1 Liability................................ 49
SECTION 10.2 Exculpation.............................. 49
SECTION 10.3 Fiduciary Duty........................... 50
SECTION 10.4 Indemnification.......................... 51
SECTION 10.5 Outside Businesses....................... 52
ARTICLE XI ACCOUNTING....................................... 52
SECTION 11.1 Fiscal Year.............................. 52
SECTION 11.2 Certain Accounting Matters............... 52
SECTION 11.3 Banking.................................. 54
SECTION 11.4 Withholding.............................. 54
ARTICLE XII AMENDMENTS AND MEETINGS........................ 54
SECTION 12.1 Amendments............................... 54
SECTION 12.2 Meetings of the Holders of Securities;
Action by Written Consent................ 56
ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE.............. 59
SECTION 13.1 Representations and Warranties
of Property Trustee...................... 59
ARTICLE XIV MISCELLANEOUS.................................. 60
SECTION 14.1 Notices.................................. 60
SECTION 14.2 Governing Law............................ 61
SECTION 14.3 Intention of the Parties................. 62
SECTION 14.4 Headings................................. 62
SECTION 14.5 Successors and Assigns................... 62
SECTION 14.6 Partial Enforceability................... 62
SECTION 14.7 Counterparts............................. 62
iii
<PAGE>
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- -------------------
310(a)............................................. 5.3(a)
310(b)............................................. 5.3(c)
310(c)............................................. Inapplicable
311(a)............................................. 2.2(b)
311(b)............................................. 2.2(b)
311(c)............................................. Inapplicable
312(a)............................................. 2.2(a)
312(b)............................................. 2.2(b)
313................................................ 2.3
314(a)............................................. 2.4
314(b)............................................. Inapplicable
314(c)............................................. 2.5
314(d)............................................. Inapplicable
314(f)............................................. Inapplicable
315(a)............................................. 3.9(b)
315(b)............................................. 2.8
315(c)............................................. 3.9(a)
315(d)............................................. 3.9(a)
316(a)............................................. Exhibit A, 2.6
316(c)............................................. 3.6(e)
- ----------------
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
iv
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
U S WEST FINANCING [ ]
_____ __, 1995
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of , 1995 by the undersigned trustees (together with
all other Persons from time to time duly appointed and serving as trustees in
accordance with the provisions of this Declaration, the "Trustees"), U S WEST,
Inc., a Colorado corporation, as trust sponsor (the "Sponsor"), and by the
holders, from time to time, of undivided beneficial interests in the Trust to be
issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established a trust (the
"Trust") under the Delaware Business Trust Act pursuant to a Declaration of
Trust, dated as of March 1, 1995 (the "Original Declaration") and a Certificate
of Trust filed with the Secretary of State of Delaware on March 1, 1995, for the
sole purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures of the Debenture Issuer and the Debenture
Guarantees of the Sponsor endorsed thereon;
WHEREAS, as of the date hereof, no interests in the Trust have been
issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration;
and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the
1
<PAGE>
Trust issued hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 DEFINITIONS.
(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Amended and Restated Declaration has
the same meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration of Trust as modified, supplemented or amended from
time to time;
(d) all references in this Declaration to Articles and Sections and
Exhibits are to Articles and Sections of and Exhibits to this
Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act or any successor rule thereunder.
"Appointment Event" means an event defined in the terms of the
Preferred Securities as set forth in Exhibit A which entitles the Holders of a
Majority in liquidation amount of the Preferred Securities to appoint a Special
Regular Trustee.
2
<PAGE>
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a day on which banking
institutions in New York, New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 DEL. C. Sections 3801 ET SEQ., as it may be amended from time to time.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depository
for the Preferred Securities and in whose name or in the name of a nominee of
that organization, shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means __, 1995.
"Code" means the Internal Revenue Code of 1986.
"Common Security" has the meaning specified in Section 7.1.
"Common Securities Guarantee" means the guarantee agreement to be
dated as of , 1995 of the Sponsor in respect of the Common Securities.
"Common Security Certificate" means a definitive certificate in
fully registered form representing a Common Security substantially in the form
of Annex II to Exhibit A.
3
<PAGE>
"Covered Person" means:
(a) any officer, director, shareholder, partner, member,
representative, employee or agent of:
(i) the Trust; or
(ii) the Trust's Affiliates; and
(b) any Holder of Securities.
"Debenture Guarantee" means the guarantee by the Sponsor of the
Debentures endorsed thereon.
"Debenture Issuer" means U S WEST Capital Funding, Inc., a
Colorado corporation.
"Debenture Trustee" means Norwest Bank Minnesota, National
Association, as trustee under the Indenture until a successor is appointed
thereunder and thereafter means such successor trustee.
"Debentures" means the series of Debentures to be issued by the
Debenture Issuer under the Indenture to be held by the Property Trustee
pursuant to Section 3.6(c), a specimen certificate for such series of
Debentures being Exhibit B.
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Definitive Preferred Security Certificates" has the meaning set
forth in Section 9.4.
"Direction" by a Person means a written direction signed:
(a) if the Person is a natural person, by that Person; or
(b) in any other case, in the name of such Person by one or more
Authorized Officers of that Person.
4
<PAGE>
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"DTC" means the Depository Trust Company, the initial Clearing
Agency.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time or any successor legislation.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Debentures.
"Global Certificate" has the meaning set forth in Section 9.4.
"Holder" means a Person in whose name a Certificate representing
a Security is registered, such Person being a beneficial owner within the
meaning of the Business Trust Act.
"Indemnified Person" means:
(a) any Trustee;
(b) any Affiliate of any Trustee;
(c) any officers, directors, shareholders, members, partners, employees,
representatives or agents of any Trustee;
or (d) any employee or agent of the Trust or its Affiliates.
"Indenture" means the Indenture dated as of , 1995 among
the Debenture Issuer, the Sponsor, as guarantor, and Norwest Bank Minnesota,
National Association, as trustee and any indenture supplemental thereto pursuant
to which the Debentures and the Debenture Guarantees are to be issued.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Ministerial Action" has the meaning set forth in the terms of the
Securities as set forth in Exhibit A.
5
<PAGE>
"Majority in liquidation amount of the Securities" means, except
as provided in the terms of the Preferred Securities and by the Trust Indenture
Act, Holder(s) of Securities voting together as a single class or, as the
context may require, Holder(s) of Preferred Securities or Common Securities
voting separately as a class, who vote Securities of a relevant class and the
aggregate liquidation amount (including the stated amount that would be paid
on redemption, liquidation or otherwise, plus accrued and unpaid Distributions
to the date upon which the voting percentages are determined) of the
Securities voted by such Holders represents more than 50% of the above stated
liquidation amount of all Securities of such class.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Certificate has read
the covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 3.8(i).
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
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"Preferred Securities Guarantee" means the guarantee agreement to be
dated as of , 1995 of the Sponsor in respect of the Preferred
Securities.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate representing
a Preferred Security substantially in the form of Annex I to Exhibit A.
"Pricing Agreement" means the pricing agreement between the Trust,
the Debenture Issuer, and the underwriters designated by the Regular Trustees
with respect to the offer and sale of the Preferred Securities.
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Property Trustee Account" has the meaning set forth in Section
3.8(c).
"Quorum" means a majority of the Regular Trustees or if there are
only two Regular Trustees, both of them.
"Regular Trustee" means any Trustee other than the Property
Trustee and the Delaware Trustee.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person which owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property Trustee,
the chairman of the board of direc-
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tors, the president, any vice-president, any assistant vice-president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, any
trust officer or assistant trust officer or any other officer of the Property
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"66-2/3% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities and by the Trust Indenture
Act, Holder(s) of Securities voting together as a single class or, as the
context may require, Holder(s) of Preferred Securities or Common Securities,
voting separately as a class, who vote Securities of a relevant class and the
aggregate liquidation amount (including the stated amount that would be paid
on redemption, liquidation or otherwise, plus accrued and unpaid Distributions,
to the date upon which the voting percentages are determined) of the Securities
voted by such Holders represents 66-2/3% of the above-stated liquidation amount
of all Securities of such class.
"Special Event" has the meaning set forth in the terms of the
Securities.
"Special Regular Trustee" means a Regular Trustee appointed by the
Holders of a Majority in liquidation amount of the Preferred Securities in
accordance with Section 5.6(a)(ii)(B).
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"Sponsor" means U S WEST, Inc., a Colorado corporation or any
successor entity in a merger, in its capacity as sponsor of the Trust.
"Successor Property Trustee" means a successor Trustee possessing
the qualifications to act as Property Trustee under Section 5.3(a).
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities by the Trust Indenture Act,
Holder(s) of Securities voting together as a single class or, as the context
may require, Holder(s) of Preferred Securities or Common Securities, voting
separately as a class, who vote Securities of a relevant class and the
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of the Securities
voted by such Holders represents 10% of the above stated liquidation amount of
all Securities of such class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Underwriting Agreement" means the Underwriting Agreement for the
offering and sale of Preferred Securities in the form of Exhibit C.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions;
(b) the Property Trustee shall be the only Trustee which is a
trustee for the purposes of the Trust Indenture Act;
(c) if and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control; and
(d) the application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES.
(a) Each of the Sponsor, the Debenture Issuer and the Regular
Trustees on behalf of the Trust shall provide the Property Trustee (i) within 14
days after each record date for payment of Distributions, a list, in such form
as the Property Trustee may reasonably require, of the names and addresses of
the Holders of the Securities ("List of Holders") as of such record date,
PROVIDED THAT none of the Sponsor, the Debenture Issuer or the Regular Trustees
on behalf of the Trust shall be obligated to provide such List of Holders at any
time the List of Holders does not differ from the most recent List of Holders
given to the Property Trustee by the Sponsor, the Debenture Issuer and the
Regular Trustees on behalf of the Trust, and (ii) at any other time, within 30
days of receipt by the Trust of a written request for a List of Holders as of a
date no more than 14 days before such List of Holders is given to the Property
Trustee. The Property Trustee shall preserve, in as current a form as is
reasonably practicable, all information contained in Lists of Holders given to
it or which it receives in its
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capacity as Paying Agent (if acting in such capacity) PROVIDED THAT the
Property Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders; and
(b) the Property Trustee shall comply with its obligations under
Section 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3 REPORTS BY THE PROPERTY TRUSTEE.
Within 60 days after May 15 of each year, the Property Trustee shall
provide to the Holders of the Securities such reports as are required by Section
313 of the Trust Indenture Act, if any, in the form and in the manner provided
by Section 313 of the Trust Indenture Act. The Property Trustee shall also
comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO PROPERTY TRUSTEE.
Each of the Sponsor, the Debenture Issuer and the Regular Trustees
on behalf of the Trust shall provide to the Property Trustee such documents,
reports and information as required by Section 314 (if any) and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Each of the Sponsor, the Debenture Issuer and the Regular Trustees
on behalf of the Trust shall provide to the Property Trustee such evidence of
compliance with any conditions precedent, if any, provided for in this
Declaration which relate to any of the matters set forth in Section 314(c) of
the Trust Indenture Act. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.6 EVENTS OF DEFAULT; WAIVER.
(a) The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences provided that if the underlying Event of
Default under the Indenture:
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(i) is not waivable under the Indenture, the Event of
Default under the Declaration shall also not be
waivable; or
(ii) requires the consent or vote of the holders of
greater than a majority in principal amount of the
Debentures affected thereby (a "Super Majority") to be
waived, the Event of Default under the Declaration may
only be waived by the vote of the Holders of at least
the proportion in liquidation amount the Preferred
Securities which the relevant Super Majority represents
of the aggregate principal amount of the Debentures
outstanding.
Upon such waiver, any such default shall cease to exist, and any Event of
Default with respect to the Preferred Securities arising therefrom shall be
deemed to have been cured, for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default with
respect to the Preferred Securities or impair any right consequent thereon. Any
waiver by the Holders of the Preferred Securities of an Event of Default with
respect to the Preferred Securities shall also be deemed to constitute a waiver
by the Holders of the Common Securities of any such Event of Default with
respect to the Common Securities for all purposes of this Declaration without
any further act, vote or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, PROVIDED THAT, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where
the Holders of the Common Securities are deemed to have
waived such Event of Default under the Declaration as
provided below in this Section 2.6(b), the Event of
Default under the Declaration shall also be not
waivable; or
(ii) requires the consent or vote of a Super Majority
to be waived, except where the Holders of the Common
Securities are deemed to have waived such, the Event of
Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the
Declaration may only be waived by the vote of the
Holders of at least the proportion in liquidation
amount the Preferred Securities which the relevant
Super Majority represents of the aggregate principal
amount of the Debentures outstanding,
PROVIDED THAT, each Holder of Common Securities will be deemed to have
waived any Event of Default with respect to the Common Securities and its
consequences until all Events of
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Default with respect to the Preferred Securities have been cured, waived or
otherwise eliminated and until such Events of Default have been so cured, waived
or otherwise eliminated, the Property Trustee will be deemed to be acting solely
on behalf of the Holders of the Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Property Trustee in
accordance with the terms of the Securities. Subject to the foregoing
provisions of this Section 2.6(b) upon such waiver, any such default shall
cease to exist and any Event of Default with respect to the Common Securities
arising therefrom shall be deemed to have been cured, for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or Event of Default with respect to the Common Securities or impair any right
consequent thereon.
(c) A waiver of any Event of Default under the Indenture by the
Property Trustee at the direction of the Holders of the Preferred Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration.
SECTION 2.7 EVENT OF DEFAULT; NOTICE
(a) The Property Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Securities, notices of all defaults with respect
to the Securities known to the Property Trustee, unless such defaults have been
cured before the giving of such notice (the term "defaults" for the purposes of
this Section 2.7(a) being hereby defined to be an Event of Default as defined
in the Indenture, not including any periods of grace provided for therein and
irrespective of the giving of any notice provided therein); PROVIDED, THAT,
except for a default in the payment of principal of (or premium, if any) or
interest on any of the Debentures or in the payment of any sinking fund
installment established for the Debentures, the Property Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee, or a trust committee of directors and/or Responsible
Officers, of the Property Trustee in good faith determine that the withholding
of such notice is in the interests of the Holders of the Securities.
(b) The Property Trustee shall not be deemed to have knowledge of
any default except:
(i) a default under Sections 6.01(a)(1) and 6.01(a)(2) of
the Indenture; or
(ii) any default as to which the Property Trustee shall have
received written
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notice or a Responsible Officer charged with the
administration of the Declaration shall have obtained
written notice of.
ARTICLE III
ORGANIZATION
SECTION 3.1 NAME.
The Trust is named "U S WEST Financing [ ]", as such name may be
modified from time to time by the Regular Trustees following written notice to
the Holders of Securities. The Trust's activities may be conducted under the
name of the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 OFFICE.
The address of the principal office of the Trust is 7800 East
Orchard Road, Englewood, CO 80111. On ten Business Days written notice to the
Holders of Securities, the Regular Trustees may designate another principal
office.
SECTION 3.3 PURPOSE.
The exclusive purposes and functions of the Trust are (a) to issue
and sell Securities and use the proceeds from such sale to acquire the
Debentures and the Debenture Guarantees, and (b) except as otherwise limited
herein, to engage in only those other activities necessary, or incidental
thereto. The Trust shall not borrow money, issue debt or reinvest proceeds
derived from investments, pledge any of its assets, or otherwise undertake (or
permit to be undertaken) any activity that would (i) cause the Trust to be
classified for United States federal income tax purposes as an association
taxable as a corporation or a partnership or (ii) cause each Holder of
Securities not to be treated as owning an undivided beneficial interest in the
Debentures at any time the Securities are outstanding.
SECTION 3.4 AUTHORITY.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property
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Trustee, the Regular Trustees shall have exclusive and complete authority to
carry out the purposes of the Trust. An action taken by the Regular Trustees in
accordance with their powers shall constitute the act of and serve to bind the
Trust and an action taken by the Property Trustee in accordance with its powers
shall constitute the act of and serve to bind the Trust. In dealing with the
Trustees acting on behalf of the Trust, no person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Declaration.
SECTION 3.5 TITLE TO PROPERTY OF THE TRUST.
Except as provided in Section 3.8 with respect to the Debentures,
the Debenture Guarantee and the Property Trustee Account or as otherwise
provided in this Declaration, legal title to all assets of the Trust shall be
vested in the Trust. The Holders shall not have legal title to any part of the
assets of the Trust, but shall have an undivided beneficial interest in the
assets of the Trust.
SECTION 3.6 POWERS AND DUTIES OF THE REGULAR TRUSTEES.
The Regular Trustees shall have the exclusive power and authority
and duty to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; PROVIDED,
HOWEVER, that the Trust may issue no more than one series of
Preferred Securities and no more than one series of Common
Securities, and, PROVIDED FURTHER, there shall be no
interests in the Trust other than the Securities and the
issuance of Securities shall be limited to a one-time,
simultaneous issuance of both Preferred Securities and Common
Securities on the Closing Date;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
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(i) execute and file with the Securities and Exchange
Commission (the "Commission") the registration statement
on Form S-3 prepared by the Sponsor in relation to the
Preferred Securities, including any amendments thereto
prepared by the Sponsor;
(ii) execute and file any documents prepared by the Sponsor,
or take any acts as determined by the Sponsor as
necessary in order to qualify or register all or part of
the Preferred Securities in any State in which the
Sponsor has determined to qualify or register such
Preferred Securities for sale;
(iii) execute and file an application prepared by the Sponsor
to the New York Stock Exchange or any other national
stock exchange or the Nasdaq National Market for listing
upon notice of issuance of any Preferred Securities;
(iv) execute and file with the Commission a registration
statement on Form 8-A prepared by the Sponsor relating
to the registration of the Preferred Securities under
Section 12(b) of the Exchange Act, including any
amendments thereto prepared by the Sponsor; and
(v) execute and enter into the Underwriting Agreement and
Pricing Agreement providing for the sale of the
Preferred Securities;
(c) to acquire the Debentures and the Debenture Guarantee with the
proceeds of the sale of the Preferred Securities and the
Common Securities; PROVIDED, HOWEVER, that the Regular
Trustees shall cause legal title to the Debentures and the
Debenture Guarantee to be held of record in the name of the
Property Trustee for the benefit of
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the Holders of the Preferred Securities and the Common
Securities;
(d) to give the Debenture Issuer, the Sponsor and the Property
Trustee prompt written notice of the occurrence of a Special
Event PROVIDED, THAT the Regular Trustees shall consult
with the Debenture Issuer, the Sponsor and the Property
Trustee before taking or refraining from taking any
Ministerial Action in relation to a Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established,
Section including for the purposes of Section 316(c) of the
Trust Indenture Act and with respect to Distributions, voting
rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Preferred Securities and Common
Securities as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the
Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands
of or against the Trust ("Legal Action"), unless pursuant to
Section 3.8(f), the Property Trustee has the exclusive power
to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors,
advisors, and consultants and pay reasonable compensation for
such services;
(i) to cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
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(j) to give the certificate to the Property Trustee required by
Section 314(a)(4) of the Trust Indenture Act which
certificate may be executed by any Regular Trustee;
(k) to incur expenses which are necessary or incidental to carry
out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities
of any notice received from the Debenture Issuer of its
election (i) to defer payments of interest on the Debentures
by extending the interest payment period under the Indenture
or, (ii) to extend the scheduled maturity date on the
Debentures;
(n) to execute all documents or instruments, perform all duties
and powers, and do all things for and on behalf of the Trust
in all matters necessary or incidental to the foregoing;
(o) to take all action which may be necessary or appropriate for
the preservation and the continuation of the Trust's valid
existence, rights, franchises and privileges as a statutory
business trust under the laws of the State of Delaware and of
each other jurisdiction in which such existence is necessary
to protect the limited liability of the Holders of the
Securities or to enable the Trust to effect the purposes for
which the Trust was created;
(p) to take any action, not inconsistent with this Declaration or
with applicable law, which the Regular Trustees determine in
their discretion to be necessary or desirable in carrying out
the activities of the Trust as set out in this Section 3.6
including, but not limited to:
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(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment
Company Act;
(ii) causing the Trust not to be characterized for United
States federal income tax purposes as an association
taxable as a corporation or a partnership but for each
Holder of Securities to be treated as owning an
undivided beneficial interest in the Debentures; and
(iii) cooperating with the Debenture Issuer to ensure that
the Debentures will be treated as indebtedness of the
Debenture Issuer for United States federal income tax
purposes,
provided that such action does not adversely affect the
interests of Holders; and
(q) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be
filed with respect to the Trust to be duly prepared and filed
by the Regular Trustees, on behalf of the Trust.
The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner which is consistent with the purposes and functions of
the Trust set out in Section 3.3 and the Regular Trustees shall not take any
action which is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
SECTION 3.7 PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES.
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(a) the Trust shall not, and the Trustees (including the Property
Trustee) shall cause the Trust not to, engage in any activity
other than as required or authorized by this Declaration. In
particular, the Trust shall not and the Trustees (including
the Property Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding
the Debentures, but shall distribute all such proceeds
to Holders of Securities pursuant to the terms of this
Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than
loans represented by the Debentures;
(v) possess any power or otherwise act in such a way as to
vary the Trust assets or the terms of the Securities
in any way whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust
other than the Securities; or
(vii) (A) direct the time, method and place of exercising
any trust or power conferred upon the Debenture
Trustee with respect to the Debentures, (B) waive
any past default that is waivable under Section 6.06
of the Indenture, (C) exercise any right to rescind
or annul any declaration that the principal of all
the Debentures shall be due and payable or (D) consent
to any amendment, modification or termination of
the Indenture or the Debentures, where such consent
shall be required, unless the Trust shall have
received an opinion of counsel to the effect that such
modification will not cause more than an insubstantial
risk that for United States federal income tax
purposes the Trust will be characterized as an
association taxable as a corporation or a partnership
and that
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each Holder of Securities will not be treated as
owning an undivided beneficial interest in the
Debentures.
SECTION 3.8 POWERS AND DUTIES OF THE PROPERTY TRUSTEE.
(a) The legal title to the Debentures and the Debenture Guarantee
shall be owned by and held of record in the name of the
Property Trustee in trust for the benefit of the Holders of
the Securities. The right, title and interest of the Property
Trustee to the Debentures and the Debenture Guarantee shall
vest automatically in each Person who may hereafter be
appointed as Property Trustee as set forth in Section 5.6.
Such vesting and cessation of title shall be effective whether
or not conveyancing documents have been executed and
delivered;
(b) the Property Trustee shall not transfer its right, title and
interest in the Debentures and the Debenture Guarantee to the
Regular Trustees or to the Delaware Trustee (if the Property
Trustee does not also act as Delaware Trustee);
(c) the Property Trustee shall:
(i) establish and maintain a segregated non-interest
bearing bank account (the "Property Trustee Account")
in the name of and under the exclusive control of the
Property Trustee on behalf of the Holders of the
Securities and, upon the receipt of payments of funds
made in respect of the Debentures and Debenture
Guarantee held by the Property Trustee, deposit such
funds into the Property Trustee Account and make
payments to the Holders of the Preferred Securities
and the Common Securities from the Property Trustee
Account in accordance with Sec-
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tion 6.1. Funds in the Property Trustee Account shall
be held uninvested until disbursed in accordance with
this Declaration. The Property Trustee Account shall
be an account which is maintained with a banking
institution the rating on whose long term unsecured
indebtedness is at least equal to the rating assigned
to the Preferred Securities by a "nationally
recognized statistical rating organization", as that
term is defined for purposes of Rule 436(g)(2) under
the Securities Act;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of
the Preferred Securities and the Common Securities to
the extent the Debentures are redeemed or mature; and
(iii) upon notice of distribution issued by the Regular
Trustees in accordance with the terms of the Preferred
Securities and the Common Securities, engage in such
ministerial activities as shall be necessary or
appropriate to effect the distribution of the
Debentures and the Debenture Guarantees to Holders of
Securities upon the occurrence of certain special
events (as may be defined in the terms of the
Securities) arising from a change in law or a change
in legal interpretation or other specified
circumstances pursuant to the terms of the Securities;
(d) the Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee
pursuant to the terms of the Securities;
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(e) the Property Trustee shall take any Legal Action which arises
out of or in connection with an Event of Default or the
Property Trustee's duties and obligations under this
Declaration or the Trust Indenture Act;
(f) the Property Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders
of Securities pursuant to the terms of the Securities;
or
(ii) a Successor Property Trustee has been appointed and
accepted that appointment in accordance with Section
5.6;
(g) the Property Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of
Debentures and the Debenture Guarantee under the Indenture
and, if an Event of Default occurs and is continuing, the
Property Trustee shall, for the benefit of Holders of the
Securities, enforce its rights as holder of the Debentures and
the Debenture Guarantee, subject to the rights of the Holders
pursuant to the terms of such Securities;
(h) the Property Trustee may authorize one or more Persons (each,
a "Paying Agent") to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to
the Preferred Securities and any such Paying Agent shall
Trustee required by Section comply with Section 317(b) of the
Trust Indenture Act. Any Paying Agent may be removed
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by the Property Trustee at any time and a successor Paying
Agent or additional Paying Agents may be appointed at any time
by the Property Trustee; and
(i) subject to this Section 3.8, the Property Trustee shall have
none of the powers or the authority of the Regular Trustees
set forth in Section 3.6;
The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner which is consistent with the purposes and
functions of the Trust set forth in Section 3.3 and the Property
Trustee shall not take any action which is inconsistent with the
purposes and functions of the Trust set out in Section 3.3.
SECTION 3.9 CERTAIN DUTIES AND RESPONSIBILITIES OF THE PROPERTY TRUSTEE
(a) The Property Trustee, before the occurrence of any Event of Default
and after the curing or waiver of all Events of Default that may
have occurred, shall undertake to perform only such duties as are
specifically set forth in this Declaration in Sections 2.2, 2.3,
2.7, 3.8, 3.9, 3.10 and 6.1 and in the terms of the Securities, and
no implied covenants shall be read into this Declaration against the
Property Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.6), the Property
Trustee shall exercise such of the rights and powers vested in it by
this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs;
(b) no provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except
that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of
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all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee
shall be determined solely by the express provisions
of this Declaration in Sections 2.2, 2.3, 2.7, 3.8,
3.9, 3.10 and 6.1 and in the terms of the Securities,
and the Property Trustee shall not be liable except
for the performance of such duties and obligations as
are specifically set forth in this Declaration, and no
implied covenants or obligations shall be read into
this Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may
conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the
Property Trustee and conforming to the requirements of
this Declaration; but in the case of any such
certificates or opinions that by any provision hereof
are specifically required to be furnished to the
Property Trustee, the Property Trustee shall be under
a duty to examine the same to determine whether or not
they conform to the requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Property Trustee, unless it shall be proved that the Property
Trustee was negligent in ascertaining the pertinent facts;
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(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than
a Majority in liquidation amount of the Securities at the time
outstanding relating to the time, method and place of
conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under this Declaration; and
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if
it shall have reasonable ground for believing that the
repayment of such funds or liability is not reasonably assured
to it under the terms of this Declaration or adequate
indemnity against such risk or liability is not reasonably
assured to it.
SECTION 3.10 CERTAIN RIGHTS OF PROPERTY TRUSTEE.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may rely and shall be fully
protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to
have been signed, sent or presented by the proper party
or parties;
(ii) any direction or act of the Sponsor or the Regular
Trustees contemplated by this Declaration shall be
sufficiently evidenced by a Direction or an Officers'
Certificate;
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(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or
omitting any action hereunder, the Property Trustee
(unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part and, if the
Trust is excluded from the definition of an Investment
Company solely by means of Rule 3a-7, subject to the
requirements of Rule 3a-7, request and rely upon an
Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Sponsor or
the Regular Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or
any rerecording, refiling or registration thereof);
(v) the Property Trustee may consult with counsel and the
written advice or opinion of such counsel with respect to
legal matters shall be full and complete authorization
and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may
be counsel to the Sponsor or any of its Affiliates, and
may include any of its employees. The Property Trustee
shall have the right at any time to seek instructions
concerning the administration of this Declaration from
any court of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Declaration at the request or direction of any Holder,
unless such Holder shall have provided to the Property
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Trustee adequate security and indemnity which would
satisfy a reasonable person in the position of the
Property Trustee, against the costs, expenses (including
attorneys' fees and expenses) and liabilities that might
be incurred by it in complying with such request or
direction, including such reasonable advances as may be
requested by the Property Trustee provided that, nothing
contained in this Section 3.10(a)(vi) shall be taken to
relieve the Property Trustee, upon the occurrence of an
Event of Default, of its obligation to exercise the
rights and powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
paper or document, but the Property Trustee, in its
discretion, may make such further inquiry or
investigation into such facts or matters as it may see
fit;
(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and the
Property Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the
Securities and the signature of the Property Trustee or
its agents alone shall be sufficient and effective to
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perform any such action; and no third party shall be
required to inquire as to the authority of the Property
Trustee to so act, or as to its compliance with any of
the terms and provisions of this Declaration, both of
which shall be conclusively evidenced by the Property
Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or
right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders of
the Securities which instructions may only be given by
the Holders of the same portion in liquidation amount of
the Securities as would be entitled to direct the
Property Trustee under the terms of the Securities in
respect of such remedy, right or action, (ii) may
refrain from enforcing such remedy or right or taking
such other action until such instructions are received,
and (iii) shall be protected in acting in accordance
with such instructions; and
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any
obligation to take any action that is discretionary under
the provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty
or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed
on it, in any jurisdiction in which it shall be illegal, or in which
the Property Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or
to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee
shall be construed to be a duty.
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SECTION 3.11 DELAWARE TRUSTEE
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Regular Trustees and the Property Trustee described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for
Trust Indenture Act. Any Paying the sole and limited purpose of fulfilling the
requirements of Section 3807 of the Business Trust Act.
SECTION 3.12 EXECUTION OF DOCUMENTS
Unless otherwise determined by the Regular Trustees and except as
otherwise required by the Business Trust Act, a majority of, or if there are
only two, both of the Regular Trustees are authorized to execute on behalf of
the Trust any documents which the Regular Trustees have the power and authority
to execute pursuant to Section 3.6, PROVIDED THAT any listing application
prepared by the Sponsor referred to in Section 3.6(b)(iii) may be executed by
any Regular Trustee.
SECTION 3.13 NOT RESPONSIBLE FOR RECITALS OR
ISSUANCE OF SECURITIES.
The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 DURATION OF TRUST.
The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have existence for 55 years from the Closing Date.
SECTION 3.15 MERGERS.
(a) The Trust may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its properties
and assets substantially as an entirety to
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any corporation or other body, except as described in Section
3.15(b) and (c);
(b) the Trust may, with the consent of a majority of the Regular
Trustees and without the consent of the Holders of the
Securities, the Delaware Trustee or the Property Trustee,
consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any
State; PROVIDED, THAT:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of
the Trust under the Securities; or
(B) substitutes for the Securities other
securities having substantially the same terms
as the Preferred Securities (the "Successor
Securities") so long as the Successor
Securities rank the same as the Preferred
Securities rank with respect to Distributions
and payments upon liquidation, redemption and
maturity;
(ii) the Debenture Issuer expressly acknowledges a trustee
of the Successor Entity which possesses the same
powers and duties as the Property Trustee as the
Holder of the Debentures and the Sponsor expressly
acknowledges such trustee of the Successor Entity as
the holder of the Debenture Guarantee;
(iii) the Preferred Securities or any Successor Securities
are listed, or any Successor Securities will be listed
upon notification of issu-
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ance, on any national securities exchange or other
organization on which the Preferred Securities are
then listed;
(iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities
(including any Successor Securities) to be downgraded
by any nationally recognized statistical rating
organization;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights,
preferences and privileges of the Holders of the
Securities (including any Successor Securities)
in any material respect (other than with respect
to any dilution of the Holders' interest in
the new entity);
(vi) such successor entity has a purpose identical to that
of the Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion of a
nationally recognized independent counsel to the Trust
experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights,
preferences and privileges of the Holders of the
Preferred Securities (including any Successor
Securities) in any material respect (other than with
respect to any dilution of the Holders' interest in
the new entity); and
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor
Entity will be required to register as an Investment
Company; and
(viii) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at
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least to the extent provided by the Preferred
Securities Guarantee; and
(c) notwithstanding Section 3.15(b), the Trust shall not
consolidate, amalgamate, merge with or into, or be replaced by
any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger or replacement would cause
the Trust or Successor Entity for United States federal income
tax purposes to be classified as an association taxable as a
corporation or a partnership and each Holder of the Securities
not to be treated as owning an undivided beneficial interest in
the Debentures, except with the consent of Holders of 100% in
liquidation amount of the Securities.
ARTICLE IV
SPONSOR
SECTION 4.1 SPONSOR'S PURCHASE OF COMMON SECURITIES.
On the Closing Date the Sponsor will purchase all the Common
Securities issued by the Trust, at the same time as the Preferred Securities are
sold, in an amount equal to 3% of the capital of the Trust.
SECTION 4.2 RESPONSIBILITIES OF THE SPONSOR.
In connection with the issue and sale of the Preferred Securities,
the Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Preferred
Securities, including any amendments thereto;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities
and to take any and all such acts, other than actions which must be
taken by the Trust, and advise the Trust of actions it must take,
and prepare for execution and filing any documents to be executed
and filed by the Trust, as the Sponsor
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deems necessary or advisable in order to comply with the applicable
laws of any such States;
(c) to prepare for filing by the Trust an application to the New York
Stock Exchange or any other national stock exchange or the Nasdaq
National Market for listing upon notice of issuance of any Preferred
Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of
the Preferred Securities under Section 12(b) of the Exchange Act,
including any amendments thereto; and
(e) to negotiate the terms of the Underwriting Agreement and Pricing
Agreement providing for the sale of the Preferred Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 NUMBER OF TRUSTEES.
The number of Trustees shall initially be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of
Trustees; and
(b) after the issuance of any Securities:
(i) and except as provided in Section 5.1(b)(ii) and
5.6(a)(ii)(B) with respect to the Special Regular
Trustee, the number of Trustees may be increased or
decreased by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as
a class at a meeting of the Holders of the Common
Securities; and
(ii) the number of Trustees shall be increased
automatically by one (1) if an Appointment Event has
occurred and is continuing and the Holders of a
Majority in liquidation amount of the Preferred
Securities appoint a Special Regular Trustee in
accordance with Section 5.6,
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PROVIDED THAT in any case, the number of Trustees shall be at least five (5)
unless the Trustee that acts as the Property Trustee also acts as the Delaware
Trustee pursuant to Section 5.2 in which case the number of Trustees shall be at
least three(3).
SECTION 5.2 DELAWARE TRUSTEE.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal
place of business in the State of Delaware and otherwise meets
the requirements of applicable law,
provided that if the Property Trustee has its principal place of business in the
State of Delaware and otherwise meets the requirements of applicable law, then
the Property Trustee shall also be the Delaware Trustee and Section 3.11 shall
have no application.
SECTION 5.3 PROPERTY TRUSTEE; ELIGIBILITY.
(a) There shall at all times be one Trustee which shall act as
Property Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State
or Territory thereof or of the District of Columbia,
or a corporation or Person permitted by the Commission
to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District
of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to
law or to the re-
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quirements of the supervising or examining authority
referred to above, then for the purposes of this
Section 5.3(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent
report of condition so published; and
(iii) if the Trust is excluded from the definition of an
Investment Company solely by means of Rule 3a-7 and to
the extent Rule 3a-7 requires a trustee having certain
qualifications to hold title to the "eligible assets"
of the Trust, the Property Trustee shall possess those
qualifications; and
(b) if at any time the Property Trustee shall cease to be eligible
to so act under Section 5.3(a), the Property Trustee shall
immediately resign in the manner and with the effect set
forth in Section 5.6(c);
(c) if the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Property Trustee and the Holder of the
Common Securities (as if it were the obligor referred to in
Section 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of Section 310(b) of the
Trust Indenture Act; and
(d) the Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of
clause (i) of the first proviso contained in Section 310(b)
of the Trust Indenture Act.
SECTION 5.4 QUALIFICATIONS OF REGULAR TRUSTEES AND DELAWARE TRUSTEE
GENERALLY.
Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity which shall act through one or more
Authorized Officers.
SECTION 5.5 INITIAL TRUSTEES.
The initial Regular Trustees shall be:
James T. Anderson
7800 East Orchard Road
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Englewood, CO 80111
Charles J. Burdick
7800 East Orchard Road
Englewood, CO 80111
Roger Fox
7800 East Orchard Road
Englewood, CO 80111
The initial Delaware Trustee shall be:
Michael J. Majchrzak
300 King Street
Wilmington, DE 19801
The initial Property Trustee shall be:
The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, IL 60670-0126
SECTION 5.6 APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES.
(a) Subject to Section 5.6(b), Trustees may be appointed or
removed without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities:
(A) other than in respect to a Special Regular
Trustee, by vote of the Holders of a
Majority in liquidation amount of the Common
Securities voting as a class at a meeting of
the Holders of the Common Securities; and
(B) if an Appointment Event has occurred and is
continuing, one (1) additional Regular
Trustee (the "Special Regular Trustee") may
be appointed by vote of the Holders of a
Majority in liquidation amount of the
Preferred Securities, vot-
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ing as a class at a meeting of the Holders
of the Preferred Securities and such Special
Regular Trustee may only be removed
(otherwise than by the operation of Section
5.6(c)), by vote of the Holders of a
Majority in liquidation amount of the
Preferred Securities voting as a class at a
meeting of the Holders of the Preferred
Securities;
(b) (i) the Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.6(a) until a
Successor Property Trustee has been appointed and has
accepted such appointment by written instrument
executed by such Successor Property Trustee and
delivered to the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with this Section 5.6(a) until a
successor Trustee possessing the qualifications to act
as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and
has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and
delivered to the Regular Trustees and the Sponsor; and
(c) a Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death,
removal or resignation, PROVIDED THAT a Special Regular
Trustee shall only hold office while an Appointment Event is
continuing and shall cease to hold office immediately after
the Appointment Event pursuant to which the Special Regular
Trustee was appointed and all other Appointment Events cease
to be continuing. Any Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in
writing signed by the
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Trustee and delivered to the Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such
later date as is specified therein; PROVIDED, HOWEVER,
that:
(i) no such resignation of the Trustee that acts as the
Property Trustee shall be effective until:
(A) a Successor Property Trustee has been appointed and
has accepted such appointment by instrument executed
by such Successor Property Trustee and delivered to
the Trust, the Sponsor and the resigning Property
Trustee; or
(B) if the Trust is excluded from the definition of an
Investment Company solely by reason of Rule 3a-7,
until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the
holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor
Delaware Trustee has been appointed and has accepted
such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust,
the Sponsor and the resigning Delaware Trustee; and
(iii) no such resignation of a Special Regular Trustee shall
be effective until the 60th day following delivery of
the instrument of resignation of the Special Regular
Trustee to the Sponsor and the Trust or such later
date specified in such instrument during which period
the Holders of the Preferred Securities shall have the
right to appoint a successor Special Trustee as
provided in this Section 5.6; and
(d) the Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or
Successor Property Trustee, as the case may be, if the
Property Trustee or the Delaware Trustee delivers an
instrument of registration in accordance with this Section 5.6
(e) if no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided
in this Section 5.6 within 60 days after delivery to the
Sponsor and the Trust of an instrument of resignation, the
resigning Property Trustee or Delaware Trustee may petition
any court of competent jurisdiction for appointment of a
Successor Property Trustee or Successor Delaware Trustee.
Such court may thereupon after such notice, if any, as it
may deem proper and prescribe, appoint a Successor Property
Trustee or Successor Delaware Trustee, as the case may be.
SECTION 5.7 VACANCIES AMONG TRUSTEES.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by a majority of the Regular Trustees
shall be conclusive evidence of the existence of such vacancy. The vacancy
shall be filled with a Trustee appointed in accordance with Section 5.6.
SECTION 5.8 EFFECT OF VACANCIES.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee, or any one
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of them, shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with Section 5.6, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
SECTION 5.9 MEETINGS.
Meetings of the Regular Trustees shall be held from time to time
upon the call of any Regular Trustee. Regular meetings of the Regular Trustees
may be held at a time and place fixed by resolution of the Regular Trustees.
Notice of any in-person meetings of the Regular Trustees shall be hand delivered
or otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 48 hours before such meeting. Notice of any
telephonic meetings of the Regular Trustees or any committee thereof shall be
hand delivered or otherwise delivered in writing (including by facsimile, with a
hard copy by overnight courier) not less than 24 hours before a meeting.
Notices shall contain a brief statement of the time, place and anticipated
purposes of the meeting. The presence (whether in person or by telephone) of a
Regular Trustee at a meeting shall constitute a waiver of notice of such meeting
except where a Regular Trustee attends a meeting for the express purpose of
objecting to the transaction of any activity on the ground that the meeting has
not been lawfully called or convened. Unless provided otherwise in this
Declaration, any action of the Regular Trustees may be taken at a meeting by
vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a
Quorum is present, or without a meeting by the unanimous written consent of the
Regular Trustees.
SECTION 5.10 DELEGATION OF POWER.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section 3.6
including any registration statement or amendment thereto filed with the
Commission or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the
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execution of such instruments either in the name of the Trust or the names of
the Regular Trustees or otherwise as the Regular Trustees may deem expedient, to
the extent such delegation is not prohibited by applicable law or contrary to
the provisions of the Trust, as set forth herein.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 DISTRIBUTIONS.
If and to the extent that the Debenture Issuer makes a payment of
interest and Additional Interest (as defined in the Indenture), premium and
principal on the Debentures (or the Sponsor makes a payment in respect of the
Debenture Guarantee) held by the Property Trustee (the amount of any such
payment being a "Payment Amount"), the Property Trustee shall and is directed,
to the extent funds are available for that purpose, to make a distribution (a
"Distribution") of the Payment Amount to Holders. Holders shall receive
Distributions in accordance with the applicable terms of the relevant Holder's
Securities. Distributions shall be made on the Preferred Securities and the
Common Securities in accordance with the preferences set forth in their
respective terms.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 GENERAL PROVISIONS REGARDING SECURITIES.
(a) The Regular Trustees shall, on behalf of the Trust, issue one
class of preferred securities representing undivided
beneficial interests in the assets of the Trust having such
terms as are set forth in Exhibit A and incorporated herein by
reference (the "Preferred Securities"), and one class of
common securities representing undivided beneficial interests
in the assets of the Trust having such terms as are set forth
in Exhibit A and incorporated herein by reference (the "Common
Securities"). The Trust shall have no securities or other
interests in the assets of the Trust other than the Preferred
Securities and the Common Securities;
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(b) the Certificates shall be signed on behalf of the Trust by the
Regular Trustees (or if there are more than two Regular
Trustees by any two of the Regular Trustees). Such signatures
may be the manual or facsimile signatures of the present or
any future Regular Trustee. Typographical and other minor
errors or defects in any such reproduction of any such
signature shall not affect the validity of any Certificate.
In case any Regular Trustee of the Trust who shall have signed
any of the Certificates shall cease to be such Regular Trustee
before the Certificate so signed shall be delivered by the
Trust, such Certificate nevertheless may be delivered as
though the person who signed such Certificate had not ceased
to be such Regular Trustee; and any Certificate may be signed
on behalf of the Trust by such persons who shall, at the
actual date of the execution of such Security, be the
Regular Trustees of the Trust, although at the date of the
execution and delivery of the Declaration any such person was
not such a Regular Trustee; Certificates shall be printed,
lithographed or engraved or may be produced in any other
manner as is reasonably acceptable to the Regular Trustees, as
evidenced by their execution thereof, and may have such
letters, numbers or other marks of identification or
designation and such legends or endorsements as the Regular
Trustees may deem appropriate, or as may be required to comply
with any law or with any rule or regulation of any stock
exchange on which Securities may be listed, or to conform to
usage;
(c) the consideration received by the Trust for the issuance of
the Securities shall constitute a contribution to the capital
of the Trust and shall not constitute a loan to the Trust;
(d) upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be
validly issued, fully paid and non-assessable; and
(e) every Person, by virtue of having become a Holder or a
Preferred Security Beneficial Owner in accordance with the
terms of this Declaration, shall be deemed to have expressly
assented and agreed to the terms of, and shall be bound by
this Declaration.
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ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 TERMINATION OF TRUST.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Holder of the Common
Securities, the Sponsor or the Debenture Issuer;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Holder of the Common
Securities, the Sponsor or the Debenture Issuer, the
filing of a certificate of cancellation with respect to
the Trust or the revocation of the Holder of the Common
Securities, the Sponsor's or the Debenture Issuer's
charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of
the Holder of the Common Securities, the Sponsor, the
Debenture Issuer or the Trust;
(iv) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption
thereof shall have been paid to the Holders in
accordance with the terms of the Securities;
(v) upon the occurrence and continuation of a Special
Event pursuant to which the Trust shall have been
dissolved in accordance with the terms of the
Securities and all of the Debentures and Debenture
Guarantees endorsed thereon shall have been
distributed to the Holders of Securities in exchange
for all of the Securities; or
(vi) before the issuance of any Securities, with the
consent of all of the Regular Trustees and the
Sponsor; and
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(b) as soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware; and
(c) the provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 TRANSFER OF SECURITIES.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this
Declaration and in the terms of the Securities. Any transfer
or purported transfer of any Security not made in accordance
with this Declaration shall be null and void;
(b) subject to this Article IX, Preferred Securities shall be
freely transferable; and
(c) subject to this Article IX, the Sponsor and any Related Party
may only transfer Common Securities to the Sponsor or a
Related Party of the Sponsor, PROVIDED, THAT, any such
transfer is subject to the condition precedent that the
transferor obtain the written opinion of nationally recognized
independent counsel experienced in such matters that such
transfer would not cause more than an insubstantial risk that:
(i) the Trust would be classified for United States
federal income tax purposes as an association taxable
as a corporation or a partnership and each Holder of
Securities would not be treated as owning an undivided
beneficial interest in the Debentures; and
(ii) the Trust or the transferee would be an Investment
Company.
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SECTION 9.2 TRANSFER OF CERTIFICATES.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges which may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration and
the documents incorporated by reference herein.
SECTION 9.3 DEEMED SECURITY HOLDERS.
The Trustees may treat the Person in whose name any Certificate
shall be registered on the books and records of the Trust as the sole holder of
such Certificate and of the Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trustees shall have
actual or other notice thereof.
SECTION 9.4 BOOK ENTRY INTERESTS.
Unless otherwise specified in the terms of the Preferred Securities,
the Preferred Securities Certificates, on original issuance, will be issued in
the form of one or more, fully registered, global Preferred Security
Certificates (each a "Global Certificate"), to be delivered to DTC, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner will
receive a definitive Preferred Security Certificate representing
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such Preferred Security Beneficial Owner's interests in such Global
Certificates, except as provided in Section 9.7. Unless and until definitive,
fully registered Preferred Security Certificates (the "Definitive Preferred
Security Certificates") have been issued to the Preferred Security Beneficial
Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration
(including the payment of Distributions on the Global
Certificates and receiving approvals, votes or consents
hereunder) as the Holder of the Preferred Securities and the
sole holder of the Global Certificates and shall have no
obligation to the Preferred Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions
of this Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial Owners shall
be exercised only through the Clearing Agency and shall be
limited to those established by law and agreements between
such Preferred Security Beneficial Owners and the Clearing
Agency and/or the Clearing Agency Participants. DTC will make
book entry transfers among the Clearing Agency Participants
and receive and transmit payments of Distributions on the
Global Certificates to such Clearing Agency Participants.
SECTION 9.5 NOTICES TO CLEARING AGENCY.
Whenever a notice or other communication to the Preferred Security
Holders is required under this Declaration, unless and until Definitive
Preferred Security Certificates shall have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.7, the Regular Trustees shall give all
such notices and communications, specified herein to be given to the Preferred
Security Holders, to the Clearing Agency, and shall have no notice obligations
to the Preferred Security Beneficial Owners.
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SECTION 9.6 APPOINTMENT OF SUCCESSOR CLEARING AGENCY.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to such Preferred Securities.
SECTION 9.7 DEFINITIVE PREFERRED SECURITY CERTIFICATES
If:
(a) a Clearing Agency elects to discontinue its services
as securities depositary with respect to the Preferred
Securities and a successor Clearing Agency is not
appointed within 90 days after such discontinuance
pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with the
Sponsor to terminate the book entry system through the
Clearing Agency with respect to the Preferred
Securities,
then:
(c) Definitive Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the
Trust with respect to such Preferred Securities; and
(d) upon surrender of the Global Certificates by the
Clearing Agency, accompanied by registration
instructions, the Regular Trustees shall cause
Definitive Certificates to be delivered to Preferred
Security Beneficial Owners in accordance with the
instructions of the Clearing Agency. Neither the
Trustees nor the Trust shall be liable for any delay
in delivery of such instructions and each of them may
conclusively rely on and shall be protected in relying
on, such
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instructions. The Definitive Preferred Security
Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is
reasonably acceptable to the Regular Trustees, as
evidenced by their execution thereof, and may have
such letters, numbers or other marks of identification
or designation and such legends or endorsements as the
Regular Trustees may deem appropriate, or as may be
required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which Preferred
Securities may be listed, or to conform to usage.
SECTION 9.8 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If:
(a) any mutilated Certificates should be surrendered to the
Regular Trustees, or if the Regular Trustees shall receive
evidence to their satisfaction of the destruction, loss or
theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security
or indemnity as may be required by them to keep each of them
harmless, then in the absence of notice that such Certificate
shall have been acquired by a bona fide purchaser, any two
Regular Trustees on behalf of the Trust shall execute and
deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of
like denomination. In connection with the issuance of any new
Certificate under this Section 9.8, the Regular Trustees may
require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection
therewith. Any duplicate Certificate issued pursuant to this
Section shall constitute conclusive evidence of an ownership
interest in the
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relevant Securities, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at
any time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 LIABILITY.
(a) Except as expressly set forth in this Declaration, the
Debenture Guarantee, the Securities Guarantees and the terms of the Securities
the Sponsor shall not be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the
Holders of the Securities which shall be made solely
from assets of the Trust; and
(ii) be required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust
or otherwise; and
(b) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the Securities shall be entitled to the same limitation
of personal liability extended to stockholders of private corporations.
SECTION 10.2 EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence (or, in
the case of the Property Trustee except as otherwise set forth in Section 3.9)
or willful misconduct with respect to such acts or omissions; and
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(b) an Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
SECTION 10.3 FIDUCIARY DUTY.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration, subject to any duties or obligations imposed on the Property
Trustee under Rule 3a-7, shall not be liable to the Trust or to any other
Covered Person for its good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise existing
at law or in equity (other than duties imposed on the Property Trustee under the
Trust Indenture Act), are agreed by the parties hereto to replace such other
duties and liabilities of such Indemnified Person;
(b) unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between an Indemnified Person and any Covered Persons;
or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provide that an
Indemnified Person shall act in a manner that is, or
provides terms that are, fair and reasonable to the
Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens
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relating to such interests, any customary or accepted industry practices, and
any applicable generally accepted accounting practices or principles. In the
absence of bad faith by the Indemnified Person, the resolution, action or term
so made, taken or provided by the Indemnified Person shall not constitute a
breach of this Declaration or any other agreement contemplated herein or of any
duty or obligation of the Indemnified Person at law or in equity or otherwise;
and
(c) whenever in this Declaration an Indemnified Person is permitted
or required to make a decision
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to
consider such interests and factors as it desires,
including its own interests, and shall have no duty or
obligation to give any consideration to any interest
of or factors affecting the Trust or any other Person;
or
(ii) in its "good faith" or under another express standard,
the Indemnified Person shall act under such express
standard and shall not be subject to any other or
different standard imposed by this Declaration or by
applicable law.
SECTION 10.4 INDEMNIFICATION.
(a) To the fullest extent permitted by applicable law, the Sponsor
shall indemnify and hold harmless each Indemnified Person from and against any
loss, damage or claim incurred by such Indemnified Person by reason of any act
or omission performed or omitted by such Indemnified Person in good faith on
behalf of the Trust and in a manner such Indemnified Person reasonably believed
to be within the scope of authority conferred on such Indemnified Person by this
Declaration, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such Indemnified
Person by reason of gross negligence (or, in the case of the Property Trustee,
except as otherwise set forth in Section 3.9) or willful misconduct with respect
to such acts or omissions; and
(b) to the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an
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Indemnified Person in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by the Sponsor prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the Sponsor of an undertaking by or on behalf of the Indemnified Person to repay
such amount if it shall be determined that the Indemnified Person is not
entitled to be indemnified as authorized in Section 10.4(a).
SECTION 10.5 OUTSIDE BUSINESSES.
Any Covered Person, the Sponsor, the Debenture Issuer, the Delaware
Trustee and the Property Trustee may engage in or possess an interest in other
business ventures of any nature or description, independently or with others,
similar or dissimilar to the business of the Trust, and the Trust and the
Holders of Securities shall have no rights by virtue of this Declaration in and
to such independent ventures or the income or profits derived therefrom and the
pursuit of any such venture, even if competitive with the business of the Trust,
shall not be deemed wrongful or improper. No Covered Person, the Sponsor, the
Debenture Issuer, the Delaware Trustee, or the Property Trustee shall be
obligated to present any particular investment or other opportunity to the Trust
even if such opportunity is of a character that, if presented to the Trust,
could be taken by the Trust, and any Covered Person, the Sponsor, the Debenture
Issuer, the Delaware Trustee and the Property Trustee shall have the right to
take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depository for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 FISCAL YEAR.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
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SECTION 11.2 CERTAIN ACCOUNTING MATTERS.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of
account, records and supporting documents, which shall reflect
in reasonable detail, each transaction of the Trust. The
books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting
principles, consistently applied. The Trust shall use the
accrual method of accounting for United States federal income
tax purposes. The books of account and the records of the
Trust shall be examined by and reported upon, as of the end of
each Fiscal Year, by a firm of independent certified public
accountants selected by the Regular Trustees;
(b) the Regular Trustees shall cause to be prepared and delivered
to each of the Holders of Securities, within 90 days after the
end of each Fiscal Year of the Trust, annual financial
statements of the Trust, including a balance sheet of the
Trust as of the end of such Fiscal Year, and the related
statements of income or loss;
(c) the Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, any annual
United States federal income tax information statement,
required by the Code, containing such information with regard
to the Securities held by each Holder as is required by the
Code and the Treasury Regulations. Notwithstanding any right
under the Code to deliver any such statement at a later date,
the Regular Trustees shall endeavor to deliver all such
statements within 30 days after the end of each Fiscal Year of
the Trust; and
(d) the Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States
federal income tax return, on a Form 1041 or such other form
required by United States federal income tax law, and
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any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or
local taxing authority.
SECTION 11.3 BANKING.
The Trust shall maintain one or more bank accounts in the name and
for the sole benefit of the Trust; PROVIDED, HOWEVER, that all payments of
funds in respect of the Debentures and the Debenture Guarantee held by the
Property Trustee shall be made directly to the Property Trustee Account and no
other funds of the Trust shall be deposited in the Property Trustee Account.
The sole signatories for such accounts shall be designated by the Regular
Trustees; PROVIDED, HOWEVER, that the Property Trustee shall designate the
sole signatories for the Property Trustee Account.
SECTION 11.4 WITHHOLDING.
The Trust and the Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the
Holder to applicable jurisdictions. To the extent that the Trust is required
to withhold and pay over any amounts to any authority with respect to
distributions or allocations to any Holder, the amount withheld shall be
deemed to be a distribution in the amount of the withholding to the Holder. In
the event of any claimed over-withholding, Holders shall be limited to an
action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.
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ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 AMENDMENTS.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may be
amended by, and only by, a written instrument approved and
executed by the Regular Trustees (or, if there are more than
two Regular Trustees a majority of the Regular Trustees);
PROVIDED, HOWEVER, that:
(i) no amendment shall be made, and any such purported
amendment shall be void and ineffective, to the extent
the result thereof would be to
(a) cause the Trust to be characterized for purposes
of United States federal income taxation as an
association taxable as a corporation or a
partnership and each Holder of Securities not to
be treated as owning an undivided beneficial
interest in the Debentures;
(b) reduce or otherwise adversely affect the powers
of the Property Trustee; or
(c) cause the Trust to be deemed to be an Investment
Company which is required to be registered under
the Investment Company Act;
(ii) at such time after the Trust has issued any Securities
which remain outstanding, any amendment which would
adversely affect the rights, privileges or preferences
of any Holder of Securities may be effected only with
such additional requirements as may be set forth in
the terms of such Securities;
(iii) Section 9.1(c) and this Section 12.1 shall not be
amended without
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the consent of all of the Holders of the Securities;
(iv) Article IV shall not be amended without the consent of
the Holders of a Majority in liquidation amount of the
Common Securities; and
(v) the rights of the holders of the Common Securities
under Article V to increase or decrease the number of,
and appoint and remove Trustees shall not be amended
without the consent of the Holders of a Majority in
liquidation amount of the Common Securities (except
to the extent that such amendment relates to the
Special Regular Trustee, in which case such amendment
may only be made in accordance with the terms of the
Preferred Securities).
(b) Notwithstanding Section 12.1(a)(ii), this Declaration may be
amended without the consent of the Holders of the Securities
to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this
Declaration that may be defective or inconsistent with
any other provision of this Declaration;
(iii) add to the covenants, restrictions or obligations
of the Sponsor; and
(iv) conform to any change in Rule 3a-7 or written
change in interpretation or application of Rule 3a-7
by any legislative body, court, government agency or
regulatory authority which amendment does not have a
material adverse effect on the right, preferences or
privileges of the Holders.
SECTION 12.2 MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY WRITTEN
CONSENT.
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Regular Trustees (or as provided in
the terms of the Securities) to consider and act on any matter
on which Holders of
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such class of Securities are entitled to act under the terms
of this Declaration, the terms of the Securities or the rules
of any stock exchange on which the Preferred Securities are
listed or admitted for trading. The Regular Trustees shall
call a meeting of such class of Holders, if directed to do so
by the Holders of at least 10% in liquidation amount of such
class of Securities. Such direction shall be given by
delivering to the Regular Trustees one or more calls in a
writing stating that the signing Holders of Securities wish to
call a meeting and indicating the general or specific purpose
for which the meeting is to be called. Any Holders of
Securities calling a meeting shall specify in writing the
Security Certificates held by the Holders of Securities
exercising the right to call a meeting and only those
specified shall be counted for purposes of determining whether
the required percentage set forth in the second sentence of
this paragraph has been met; and
(b) except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings
of Holders of Securities:
(i) notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat
at least 7 days and not more than 60 days before the
date of such meeting. Whenever a vote, consent or
approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any
stock exchange on which the Preferred Securities are
listed or admitted for trading, such vote, consent or
approval may be given at a meeting of the Holders of
Securities. Any action that may be taken at a meeting
of the Holders of Securities may be taken without a
meeting if a consent in writing setting forth the
action so taken is signed by the Holders of Securities
owning not less than the mini-
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mum amount of Securities in liquidation amount that
would be necessary to authorize or take such action at
a meeting at which all Holders of Securities having a
right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall
be given to the Holders of Securities entitled to vote
who have not consented in writing. The Regular
Trustees may specify that any written ballot submitted
to the Security Holder for the purpose of taking any
action without a meeting shall be returned to the
Trust within the time specified by the Regular
Trustees;
(ii) each Holder of a Security may authorize any Person to
act for it by proxy on all matters in which a Holder
of Securities is entitled to participate, including
waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid
after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the Holder
of Securities executing it. Except as otherwise
provided herein, all matters relating to the giving,
voting or validity of proxies shall be governed by the
General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations
thereunder, as if the Trust were a Delaware
corporation and the Holders of the Securities were
stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other
Person that the Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the
terms of the Secu-
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rities or the listing rules of any stock exchange on
which the Preferred Securities are then listed or
trading, otherwise provides, the Regular Trustees, in
their sole discretion, shall establish all other
provisions relating to meetings of Holders of
Securities, including notice of the time, place or
purpose of any meeting at which any matter is to be
voted on by any Holders of Securities, waiver of any
such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements,
voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
SECTION 13.1 REPRESENTATIONS AND WARRANTIES OF PROPERTY TRUSTEE.
The Trustee which acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a national banking association with
trust powers, duly organized, validly existing and in good standing under
the laws of the United States, with trust power and authority to execute
and deliver, and to carry out and perform its obligations under the terms
of, the Declaration.
(b) The execution, delivery and performance by the Property
Trustee of the Declaration has been duly authorized by all necessary
corporate action on the part of the Property Trustee. The Declaration has
been duly executed and delivered by the Property Trustee, and it
constitutes a legal, valid and binding obligation of the Property Trustee,
enforceable against it in accordance with its terms, subject to
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applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in
equity or at law).
(c) The execution, delivery and performance of the Declaration by
the Property Trustee does not conflict with or constitute a breach of the
Articles of Organization or By-laws of the Property Trustee.
(d) No consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Property Trustee, of the
Declaration.
(e) The Property Trustee, pursuant to the Declaration, shall hold
legal title and a valid ownership interest in the Debentures and the
Debenture Guarantee under the law of its place of incorporation and
Delaware law.
(f) If the Property Trustee does not also act as the Delaware
Trustee, the Delaware Trustee under Delaware law is a natural person who
is a resident of the State of Delaware.
(g) Pursuant to a Co-Trustee Agreement between the Property
Trustee and the Delaware Trustee dated as of March 1, 1995, the
Delaware Trustee has been authorized to perform its obligations under
the Certificate of Trust and the Declaration. The Declaration under
Delaware law constitutes a legal, valid and binding obligation of the
Delaware Trustee, enforceable against the Delaware Trustee in accordance
with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors'
rights generally and to general principles of equity and the discretion
of the court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law).
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ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 NOTICES.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address
as the Trust may give notice of to the Holders of the
Securities):
U S WEST FINANCING [ ]
7800 East Orchard Road
Englewood, CO 80111
Attention: [ ]
(b) if given to the Property Trustee, at the mailing address set
forth below (or such other address as the Property Trustee may
give notice of to the Holders of the Securities):
THE FIRST NATIONAL BANK OF CHICAGO
One First National Plaza
Suite 0126
Chicago, IL 60670-0126
Attention: [ ]
(c) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other
address as the Holder of the Common Securities may give notice
to the Trust):
U S WEST, Inc.
7800 East Orchard Road
Englewood, CO 80111
Attention: [ ]
(d) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed
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address of which no notice was given, such notice or other document shall be
deemed to have been delivered on the date of such refusal or inability to
deliver.
SECTION 14.2 GOVERNING LAW.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 14.3 INTENTION OF THE PARTIES.
It is the intention of the parties hereto that the Trust not be
characterized for United States federal income tax purposes as an association
taxable as a corporation or a partnership but rather, the Trust be characterized
as a grantor trust or otherwise in a manner that each Holder of Securities be
treated as owning an undivided beneficial interest in the Debentures. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
SECTION 14.4 HEADINGS.
Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision hereof.
SECTION 14.5 SUCCESSORS AND ASSIGNS
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 14.6 PARTIAL ENFORCEABILITY.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
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SECTION 14.7 COUNTERPARTS.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
James T. Anderson
as Trustee
- -----------------------------------
Charles J. Burdick
as Trustee
- -----------------------------------
Roger Fox
as Trustee
- -----------------------------------
Michael J. Majchrzak
as Trustee
- -----------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
By:
-------------------------
Name:
Title:
U S WEST, INC.
as Sponsor
By:
-----------------------
Name:
Title:
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EXHIBIT A
TERMS OF
_% TRUST ORIGINATED PREFERRED SECURITIES
__% TRUST ORIGINATED COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of _________, 1995 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to below):
1. DESIGNATION AND NUMBER.
(a) PREFERRED SECURITIES. Preferred Securities of the
Trust with an aggregate liquidation amount with respect to the assets of the
Trust of $[_____ million ($_________)] and a liquidation amount with respect to
the assets of the Trust of $25 per Preferred Security, are hereby designated
for the purposes of identification only as "____% Trust Originated Preferred
Securities" (the "Preferred Securities"). The Preferred Security Certificates
evidencing the Preferred Securities shall be substantially in the form attached
hereto as Annex I, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice or to
conform to the rules of any stock exchange on which the Preferred Securities are
listed.
(b) COMMON SECURITIES. Common Securities of the Trust
with an aggregate liquidation amount with respect to the assets of the Trust of
$[_______ million ($______)] and a liquidation amount with respect to the
assets of the Trust of $25 per Common Security, are hereby designated for the
purposes of identification only as "__% Trust Originated Common Securities"
(the "Common Securities"). The Common Security Certificates evidencing the
Common Securities shall be substantially in the form attached hereto as Annex
II, with such changes and
<PAGE>
additions thereto or deletions therefrom as may be required by ordinary usage,
custom or practice.
2. DISTRIBUTIONS.
(a) Periodic Distributions payable on each Security will
be fixed at a rate per annum of [*.*]% (the "Coupon Rate") of the stated
liquidation amount of $25 per Security, such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee. Distributions
in arrears for more than one quarter will bear interest thereon at the Coupon
Rate (to the extent permitted by applicable law). The term "Distributions"
as used in these terms includes such periodic cash distributions and any such
interest payable unless otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the Debentures or the
Debenture Guarantee held by the Property Trustee. The amount of
Distributions payable for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year of twelve 30-day months,
and for any period shorter than a full quarterly Distribution period for
which Distributions are computed, Distributions will be computed on the basis
of the actual number of days elapsed in such a 30-day month.
(b) Distributions on the Securities will be cumulative, will
accrue from _________, 1995 and will be payable quarterly in arrears, on
March 31, June 30, September 30, and December 31 of each year, commencing on
__________, 1995, except as otherwise described below. The Debenture Issuer
has the right under the Indenture to defer payments of interest by extending
the interest payment period from time to time on the Debentures for a period
not exceeding 20 consecutive quarters (each, an "Extension Period") and, as a
consequence of such extension, Distributions will also be deferred. Despite
such deferral, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the Coupon Rate during
any such Extension Period. Prior to the termination of any such Extension
Period, the Debenture Issuer may further extend such Extension Period; PROVIDED
THAT such Extension Period together with all such previous and further
extensions thereof may not exceed 20 consecutive quarters. Payments of accrued
Distributions will be payable to Holders as they appear on the books and records
2
<PAGE>
of the Trust on the first record date after the end of the Extension Period.
Upon the termination of any Extension Period and the payment of all amounts then
due, the Debenture Issuer may commence a new Extension Period, subject to the
above requirements.
(c) Distributions on the Securities will be payable to the
Holders thereof as they appear on the books and records of the Trust on the
relevant record dates. While the Preferred Securities remain in book-entry only
form, the relevant record dates shall be one Business Day prior to the relevant
payment dates which payment dates correspond to the interest payment dates on
the Debentures. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment in respect of the Preferred
Securities will be made as described under the heading "Description of the
Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust
Company" in the Prospectus Supplement dated ______, 1995 to the Prospectus dated
______, 1995 (together, the "Prospectus") of the Trust included in the
Registration Statement on Form S-3 of the Sponsor, the Debenture Issuer, the
Trust and certain other business trusts. The relevant record dates for the
Common Securities shall be the same record date as the Preferred Securities.
If the Preferred Securities shall not continue to remain
in book-entry-only form, the relevant record dates for the Preferred Securities,
shall conform to the rules of any securities exchange on which the securities
are listed and, if none, shall be selected by the Regular Trustees, which dates
shall be at least one Business Day but less than 60 Business Days before the
relevant payment dates, which payment dates correspond to the interest payment
dates on the Debentures. Distributions payable on any Securities that are not
punctually paid on any Distribution payment date, as a result of the Debenture
Issuer or the Sponsor having failed to make a payment under the Debentures or
the Debenture Guarantee, as the case may be, will cease to be payable to the
Person in whose name such Securities are registered on the relevant record date,
and such defaulted Distribution will instead be payable to the Person in whose
name such Securities are registered on the special record date or other
specified date determined in accordance with the Indenture. If any date on
which Distributions are payable on the Securities is not a Business Day, then
payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
(d) In the event that there is any money or other property
held by or for the Trust that is not accounted for hereunder, such property
shall be distrib-
3
<PAGE>
uted Pro Rata (as defined herein) among the Holders of the Securities.
3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION.
In the event of any voluntary or involuntary dissolution,
winding-up or termination of the Trust, the Holders of the Securities on the
date of the dissolution, winding-up or termination as the case may be, will be
entitled to receive out of the assets of the Trust available for distribution to
Holders of Securities after satisfaction of liabilities to creditors, an amount
equal to the aggregate of the stated liquidation amount of $25 per Security plus
accrued and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"), unless, in connection with such
dissolution, winding-up or termination, Debentures in an aggregate principal
amount equal to the aggregate stated liquidation amount of such Securities, with
an interest rate equal to the Coupon Rate of, and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid Distributions on, such
Securities, shall be distributed on a Pro Rata basis to the Holders of the
Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Securities shall be paid on a Pro Rata basis.
4. REDEMPTION AND DISTRIBUTION.
(a) Upon the repayment of the Debentures in whole or in part,
whether at maturity or upon redemption, the proceeds from such repayment or pay-
ment shall be simultaneously applied to redeem Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
repaid or redeemed, at a redemption price of $25 per Security plus an amount
equal to accrued and unpaid Distributions thereon at the date of the redemption,
payable in cash (the "Redemption Price"). Holders will be given not less than
30 nor more than 60 days notice of such redemption.
4
<PAGE>
(b) If fewer than all the outstanding Securities are to be
so redeemed, the Common Securities and the Preferred Securities will be
redeemed Pro Rata and the Preferred Securities to be redeemed will be as
described in Paragraph 4(f)(ii) below.
(c) If, at any time, a Tax Event or an Investment Company
Event (each as defined below, and each a "Special Event") shall occur and be
continuing the Regular Trustees shall dissolve the Trust and, after satisfaction
of creditors, cause Debentures held by the Property Trustee, having an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the Coupon Rate of, and accrued and unpaid interest
equal to accrued and unpaid Distributions on and having the same record date for
payment as the Securities, to be distributed to the Holders of the Securities,
together with the Debt Guarantee in liquidation of such Holders' interests in
the Trust on a Pro Rata basis, within 90 days following the occurrence of such
Special Event (the "90 Day Period"), PROVIDED, HOWEVER, that in the case of
the occurrence of a Tax Event, as a condition of such dissolution and
distribution, the Regular Trustees shall have received an opinion of a
nationally recognized independent tax counsel experienced in such matters (a "No
Recognition Opinion"), which opinion may rely on published revenue rulings of
the Internal Revenue Service, to the effect that the Holders of the Securities
will not recognize any gain or loss for United States federal income tax
purposes as a result of the dissolution of the Trust and the distribution of
Debentures and PROVIDED, FURTHER, that, if at the time there is available to
the Trust the opportunity to eliminate, within the 90 Day Period, the Special
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure that has no adverse
effect on the Trust, the Debenture Issuer, the Sponsor or the Holders of the
Securities ("Ministerial Action"), the Trust will pursue such Ministerial Action
in lieu of dissolution.
If, in the case of the occurrence of a Tax Event (i) the Debenture
Issuer has received an opinion (a "Redemption Tax Opinion") of a nationally
recognized independent tax counsel experienced in such matters that, as a result
of a Tax Event, there is more than an insubstantial risk that the Debenture
Issuer would be preclud-
5
<PAGE>
ed from deducting the interest on the Debentures for United States federal
income tax purposes even after the Debentures were distributed to the Holders of
Securities in liquidation of such Holders' interests in the Trust as described
in this paragraph 4(c), or (ii) the Regular Trustees shall have been informed by
such tax counsel that a No Recognition Opinion cannot be delivered to the Trust,
the Debenture Issuer shall have the right at any time, upon not less than 30
nor more than 60 days notice, to redeem the Debentures in whole or in part for
cash within 90 days following the occurrence of such Tax Event, and following
such redemption, Securities with an aggregate liquidation amount equal to the
aggregate principal amount of the Debentures so redeemed shall be redeemed by
the Trust at the Redemption Price on a Pro Rata basis; PROVIDED, HOWEVER, that,
if at the time there is available to the Trust the opportunity to eliminate,
within such 90 day period, the Tax Event by taking some Ministerial Action, the
Trust or the Debenture Issuer will pursue such Ministerial Action in lieu of
redemption.
"Tax Event" means that the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced in such
matters (a "Dissolution Tax Opinion") to the effect that on or after the date of
the Prospectus Supplement, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority therefore or therein, or (b) any amendment to, or change in, an
interpretation or application of any such laws or regulations by any legislative
body, court, governmental agency or regulatory authority, which amendment or
change is enacted, promulgated, issued or announced or which interpretation or
pronouncement is issued or announced or which action is taken, in each case on
or after the date of the Prospectus Supplement, there is more than an
insubstantial risk that (i) the Trust is or will be within 90 days of the date
thereof, subject to United States federal income tax with respect to interest
accrued or received on the Debentures, (ii) the Trust is, or will be within 90
days of the date thereof, subject to more than a de minimis amount of taxes,
duties or other governmental charges, or (iii) interest payable by the Debenture
Issuer to the Trust on the Debentures is not, or within 90 days of the date
thereof will not be, deductible, in whole or in
6
<PAGE>
part, by the Debenture Issuer for United States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall
have received an opinion of a nationally recognized independent counsel
experienced in practice under the Investment Company Act that, as a result of
the occurrence of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act
Law"), there is more than an insubstantial risk that the Trust is or will
be considered an Investment Company which is required to be registered
under the Investment Company Act, which Change in 1940 Act Law becomes
effective on or after the date of the Prospectus Supplement.
On and from the date fixed by the Regular Trustees for any
distribution of Debentures and dissolution of the Trust: (i) the Securities will
no longer be deemed to be outstanding, (ii) The Depository Trust Company (the
"Depository") or its nominee (or any successor Clearing Agency or its nominee),
as the record Holder of the Preferred Securities, will receive a registered
global certificate or certificates representing the Debentures and the Debenture
Guarantee to be delivered upon such distribution and any certificates
representing Securities, except for certificates representing Preferred
Securities held by the Depository or its nominee (or any successor Clearing
Agency or its nominee), will be deemed to represent beneficial interests in the
Debentures having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the Coupon Rate of,
and accrued and unpaid interest equal to accrued and unpaid Distributions on
such Securities until such certificates are presented to the Debenture Issuer or
its agent for transfer or reissue.
(d) The Trust may not redeem fewer than all the outstanding
Securities unless all accrued and unpaid Distributions have been paid on all
Securities for all quarterly Distribution periods terminating on or before the
date of redemption.
(e) If the Debentures and the Debenture Guarantee are distributed
to holders of the Securities,
7
<PAGE>
pursuant to the terms of the Indenture, the Debenture Issuer will use its best
efforts to have the Debentures listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities were listed immediately prior to the
distribution of the Debentures.
(f) REDEMPTION OR DISTRIBUTION PROCEDURES. (i) Notice of any
redemption of, or notice of distribution of Debentures in exchange for the
Securities (a "Redemption/Distribution Notice") will be given by the Trust by
mail to each Holder of Securities to be redeemed or exchanged not fewer than 30
nor more than 60 days before the date fixed for redemption or exchange thereof
which, in the case of a redemption, will be the date fixed for redemption of the
Debentures. For purposes of the calculation of the date of redemption or
exchange and the dates on which notices are given pursuant to this paragraph
4(f)(i), a Redemption/Distribution Notice shall be deemed to be given on the day
such notice is first mailed, by first-class mail, postage prepaid, to Holders of
Securities. Each Redemption/Distribution Notice shall be addressed to the
Holders of Securities at the address of each such Holder appearing in the books
and records of the Trust. No defect in the Redemption/Distribution Notice or in
the mailing of either thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect to any other
Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata and, in
the event Preferred Securities are held in book-entry only form by the
Depository or its nominee (or any successor Clearing Agency or its nominee), the
Depository will reduce Pro Rata the amount of the interest of each Clearing
Agency Participant in the Preferred Securities to be redeemed; provided that if,
as a result of such Pro Rata redemption, Clearing Agency Participants would hold
fractional interests in the Preferred Securities, the Depository will adjust the
amount of the interest of each Clearing Agency Participant to be redeemed to
avoid such fractional interests.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice which notice may only be issued if the Debentures
are redeemed as set out in this paragraph 4 (which notice will be irrevoca-
8
<PAGE>
ble) then (a) while the Preferred Securities are in book-entry only form, with
respect to the Preferred Securities, by 12:00 noon, New York City time, on the
redemption date, provided that the Debenture Issuer has paid the Property
Trustee a sufficient amount of cash in connection with the related redemption or
maturity of the Debentures, the Property Trustee will deposit irrevocably with
the Depository (or successor Clearing Agency) funds sufficient to pay the
applicable Redemption Price with respect to the Preferred Securities and will
give the Depositary irrevocable instructions and authority to pay the Redemption
Price to the Holders of the Preferred Securities, and (b) if the Preferred
Securities are issued in definitive form, with respect to the Preferred
Securities, and with respect to the Common Securities, provided that the
Debenture Issuer has paid the Property Trustee a sufficient amount of cash in
connection with the related redemption or maturity of the Debentures, the
Property Trustee will pay the relevant Redemption Price to the Holders of such
Securities by check mailed to the address of the relevant Holder appearing on
the books and records of the Trust on the redemption date. If a
Redemption/Distribution Notice shall have been given and funds deposited as
required, if applicable, then immediately prior to the close of business on the
date of such deposit, or on the redemption date, as applicable, Distributions
will cease to accrue on the Securities so called for redemption and all rights
of Holders of such Securities so called for redemption will cease, except the
right of the Holders of such Securities to receive the Redemption Price, but
without interest on such Redemption Price. Neither the Regular Trustees nor the
Trust shall be required to register or cause to be registered the transfer of
any Securities which have been so called for redemption. If any date fixed for
redemption of Securities is not a Business Day, then payment of the Redemption
Price payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date fixed for redemption. If
payment of the Redemption Price in respect of Securities is improperly withheld
or refused and not paid either by the Property Trustee or by the Sponsor as
guarantor pursuant to the relevant Securities Guarantee, Distributions on such
Securities will continue to accrue, from the origi-
9
<PAGE>
nal redemption date to the actual date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the
Regular Trustees on behalf of the Trust to (a) in respect of the Preferred
Securities, the Depository or its nominee (or any successor Clearing Agency
or its nominee) if the Global Certificates have been issued or if Definitive
Preferred Security Certificates have been issued, to the Holder thereof, and
(b) in respect of the Common Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws), provided the
acquiror is not the Holder of the Common Securities or the obligor under the
Indenture, the Sponsor or any of its subsidiaries may at any time and from
time to time purchase outstanding Preferred Securities by tender, in the open
market or by private agreement.
5. VOTING RIGHTS - PREFERRED SECURITIES.
(a) Except as provided under paragraphs 5(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Preferred
Securities will have no voting rights.
(b) If (i) the Trust fails to make Distributions in full on the
Preferred Securities for 6 consecutive quarterly Distribution periods, or (ii)
an Event of Default occurs and is continuing (each of (i) and (ii) being an
"Appointment Event"), then the Holders of the Preferred Securities, acting as a
single class, will be entitled by the vote of a Majority in liquidation amount
of the Preferred Securities to appoint a Special Regular Trustee in accordance
with Section 5.6(a)(ii)(b) of the Declaration. Any Holder of Preferred
Securities (other than the Sponsor, or any entity directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Sponsor) will be entitled to nominate any person to be appointed as Special
Regular Trustee. For purposes of determining whether the Trust has failed to
make Distributions in full for 6 consecutive quarterly Distribution periods,
Distributions shall be deemed to remain in arrears,
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<PAGE>
notwithstanding any payments in respect thereof, until full cumulative
Distributions have been or contemporaneously are paid with respect to all
quarterly Distribution periods terminating on or prior to the date of payment of
such cumulative Distributions.
Not later than 30 days after such right to appoint a Special
Regular Trustee arises, the Regular Trustees will convene a meeting for the
purpose of appointing a Special Regular Trustee. If the Regular Trustees
fail to convene such meeting within such 30-day period, the Holders of 10% in
liquidation amount of the Preferred Securities will be entitled to convene
such meeting in accordance with Section 12.2 of the Declaration. The record
date for such meeting will be the close of business on the Business Day which
is one Business Day before the day on which notice of the meeting is sent to
Holders. The provisions of the Declaration relating to the convening and
conduct of the meetings of the Holders will apply with respect to any such
meeting.
A Special Regular Trustee may be removed without cause at any time
by vote of the Holders of a Majority in liquidation amount of the Preferred
Securities at a meeting of the Holders of the Preferred Securities in accordance
with Section 5.6(a)(ii)(b) of the Declaration. The Holders of 10% in
liquidation amount of the Preferred Securities will be entitled to convene such
a meeting in accordance with Section 12.2 of the Declaration. The record date
for such meeting will be the close of business on the Business Day which is one
Business Day before the day on which the notice of meeting is sent to Holders.
Notwithstanding the appointment of a Special Regular Trustee, the Debenture
Issuer shall retain all rights under the Indenture, including the right to
extend the interest payment period on the Debentures.
Subject to the requirements of the second to last sentence of
this paragraph, the Holders of a Majority in liquidation amount of the
Preferred Securities voting separately as a class may direct the time,
method, and place of conducting any proceeding for any remedy available to
the Property Trustee, or exercising any trust or power conferred upon the
Property Trustee under the Declaration, including (i) directing the time,
method, place of conducting any pro-
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<PAGE>
ceeding for any remedy available to the Debenture Trustee, or exercising any
trust or power conferred on the Debenture Trustee with respect to the
Debentures, (ii) waive any past default and its consequences that is waivable
under Section 6.06 of the Indenture, or (iii) exercise any right to rescind
or annul a declaration that the principal of all the Debentures shall be due
and payable, provided, however, that where a consent under the Indenture
would require the consent or act of the Holders greater than a majority in
principal amount of Debentures affected thereby (a "Super Majority"), the
Property Trustee may only give such consent or take such action at the
direction of the Holders of at least the proportion in liquidation amount of
the Preferred Securities which the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding. The Property
Trustee shall not revoke any action previously authorized or approved by a
vote of the Holders of the Preferred Securities. Other than with respect to
directing the time, method and place of conducting any remedy available to
the Property Trustee or the Debenture Trustee as set forth above, the
Property Trustee shall not take any action in accordance with the directions
of the Holders of the Preferred Securities under this paragraph unless the
Property Trustee has obtained an opinion of tax counsel to the effect that
for the purposes of United States federal income tax the Trust will not be
classified as an association taxable as a corporation or a partnership and
that each Holder of the Securities will be treated as owning an undivided
beneficial interest in the Debentures on account of such action. If the
Property Trustee fails to enforce its rights under the Declaration, any
Holder of Preferred Securities may, after a period of 30 days has elapsed
from such holder's written request to the Property Trustee to enforce such
rights, institute a legal proceeding directly against any Person to enforce
the Property Trustee's rights under the Declaration, without first
instituting a legal proceeding against the Property Trustee or any other
Person.
Any approval or direction of Holders of Preferred Securities may be
given at a separate meeting of Holders of Preferred Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Preferred Securities. Each such notice
will
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<PAGE>
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Preferred Securities will
be required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Sponsor, or by any entity directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Sponsor shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
6. VOTING RIGHTS - COMMON SECURITIES.
(a) Except as provided under paragraphs 6(b), 6(c) and 7 and as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees subject
to the exclusive right of the Holders of the Preferred Securities to appoint,
remove or replace a Special Regular Trustee.
(c) Subject to Section 2.6 of the Declaration and only after
all Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated and subject to the requirements of the
second to last sentence of this paragraph, the Holders of a Majority in
liquidation amount of the Common Securities voting separately as a class may
direct the time, method, and place of conducting any proceeding for any
remedy available to the Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under the Declaration, including (i)
directing the time, method, place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred
on the Debenture Trustee with respect to the Debentures, (ii) waive any past
default and its consequences that is
13
<PAGE>
waivable under Section 6.06 of the Indenture, or (iii) exercise any right to
rescind or annul a declaration that the principal of all the Debentures shall
be due and payable, provided, however, that where a consent or action
under the Indenture would require the consent or act of the Holders of greater
than a majority in principal amount of Debentures affected thereby (a "Super
Majority"), the Property Trustee may only give such consent or take such
action at the direction of the Holders of at least the proportion in
liquidation amount of the Common Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding.
Pursuant to this paragraph 6(c), the Property Trustee shall not revoke any
action previously authorized or approved by a vote of the Holders of the
Preferred Securities. Other than with respect to directing the time, method
and place of conducting any remedy available to the Property Trustee or the
Debenture Trustee as set forth above, the Property Trustee shall not take any
action in accordance with the directions of the Holders of the Common
Securities under this paragraph unless the Property Trustee has obtained an
opinion of tax counsel to the effect that for the purposes of United States
federal income tax the Trust will not be classified as an association taxable
as a corporation or a partnership and that each Holder of the Securities will
be treated as owning an undivided beneficial interest in the Debentures on
account of such action. If the Property Trustee fails to enforce its rights
under the Declaration, any Holder of Common Securities may, after a period of
30 days has elapsed from such holder's written request to the Property
Trustee to enforce such rights, institute a legal proceeding directly against
any Person to enforce the Property Trustee's rights under the Declaration,
without first instituting a legal proceeding against the Property Trustee or
any other Person.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought
14
<PAGE>
and (iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. AMENDMENTS TO DECLARATION AND INDENTURE.
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or
the Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Preferred
Securities, whether by way of amendment to the Declaration or otherwise, or
(ii) the dissolution, winding-up or termination of the Trust, other than as
described in Section 8.1 of the Declaration, then the Holders of outstanding
Preferred Securities as a class, will be entitled to vote on such amendment
or proposal (but not on any other amendment or proposal) and such amendment
or proposal shall not be effective except with the approval of the Holders of
at least 66-2/3% in liquidation amount of the Securities, voting together as
a single class, provided, however, that the rights of Holders of Preferred
Securities under Article V of the Declaration to appoint, remove or replace a
Special Regular Trustee shall not be amended without the consent of each
Holder of Preferred Securities, provided, further, if any amendment or
proposal referred to in clause (i) above would adversely affect only the
Preferred Securities or the Common Securities, then only the affected class
will be entitled to vote on such amendment or proposal and such amendment or
proposal shall not be effective except with the approval of 66-2/3% in
liquidation amount of such class of Securities.
(b) In the event the consent of the Property Trustee as the holder of the
Debentures and the Debenture Guarantee is required under the Indenture with
respect to any amendment, modification or termination of the Indenture, the
Debentures or the Debenture Guarantee, the Property Trustee shall request the
direction of the Holders of the Securities with respect to such amendment,
modification or termination and shall vote with respect to such amendment,
modification or termination as directed by a Majority in liquidation amount
of the Securities voting together as a single class; provided, however, that
where a consent under the Indenture would require the consent of the holders
of greater than a majority in aggregate principal amount of the Debentures (a
"Super Majority"), the Property Trustee may only give such consent at the
direction of the Holders of at least the proportion in liquidation amount of
the Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding; provided, further, that the
Property Trustee shall not take any action in accordance with the directions
of the Holders of the Securities under this paragraph 7(b) unless the
Property Trustee has obtained an opinion of tax counsel to the effect that
for the purposes of United Stated federal income tax the Trust will not be
classified as an association taxable as a corporation or a partnership and
that each Holder of the Securities will be treated as owning an undivided
beneficial interest in the Debentures on account of such action.
8. PRO RATA.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
of Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, in relation to a payment, an Event of Default
under the Indenture has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
Preferred Securities pro rata according to the aggregate liquidation amount of
Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate liquidation
amount of Common Securities held by the relevant Holder relative to the
15
<PAGE>
aggregate liquidation amount of all Common Securities outstanding.
9. RANKING.
The Preferred Securities rank PARI PASSU and payment thereon
shall be made Pro Rata with the Common Securities except that where an Event of
Default occurs and is continuing under the Indenture in respect of the
Debentures held by the Property Trustee, the rights of Holders of the Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption and otherwise are subordinated to the rights to payment of the
Holders of the Preferred Securities.
10. LISTING.
The Regular Trustees shall use their best efforts to cause the
Preferred Securities to be listed for quotation on the New York Stock Exchange
Limited.
11. ACCEPTANCE OF SECURITIES
GUARANTEE AND INDENTURE.
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture.
12. NO PREEMPTIVE RIGHTS.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional Securities.
13. MISCELLANEOUS.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the
Preferred Securities Guarantee and the Indenture to a Holder without charge on
written request to the Trust at its principal place of business.
16
<PAGE>
ANNEX I
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT -]
This Preferred Security is a Global Certificate within the meaning of the
Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depository") or a nominee of the Depository.
This Preferred Security is exchangeable for Preferred Securities registered in
the name of a person other than the Depository or its nominee only in the
limited circumstances described in the Declaration and no transfer of this
Preferred Security (other than a transfer of this Preferred Security as a whole
by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository) may be
registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York) to
the Trust or its agent for registration of transfer, exchange or payment, and
any Preferred Security issued is registered in the name of Cede & Co. or such
other name as requested by an authorized representative of The Depository Trust
Company and any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the
registered owner hereof, Cede & Co., has an interest herein.]
Certificate Number Number of Preferred Securities
CUSIP NO.
Certificate Evidencing Preferred Securities
of
U S WEST FINANCING [ ]
Preferred Securities.
(liquidation amount $25 per Preferred Security)
17
<PAGE>
U S WEST FINANCING [ ], a business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that __________ (the
"Holder") is the registered owner of preferred securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the _______ Trust Originated Preferred Securities (liquidation amount
$25 per Preferred Security) (the "Preferred Securities"). The Preferred
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Preferred
Securities represented hereby are issued and shall in all respects be subject to
the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of __________, 1995, as the same may be amended from time to time
(the "Declaration") including the designation of the terms of the Preferred
Securities as set forth in Exhibit A to the Declaration. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration. The
Holder is entitled to the benefits of the Preferred Securities Guarantee to the
extent provided therein. The Sponsor will provide a copy of the Declaration,
the Preferred Securities Guarantee and the Indenture to a Holder without charge
upon written request to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Preferred
Securities as evidence of indirect beneficial ownership in the Debentures.
18
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this day
of __________ , 199_.
[ ]
as Trustee
_______________________________________________________
[ ]
as Trustee
_______________________________________________________
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee) and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________ agent
to transfer this Preferred Security Certificate on the books of the Trust. The
agent may substitute another to act for him or her.
Date: ___________________________________________________
Signature: ______________________________________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
19
<PAGE>
ANNEX II
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
U S WEST FINANCING [ ]
Common Securities.
(liquidation amount $25 per Common Security)
U S WEST FINANCING [ ], a business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that ___________ (the
"Holder") is the registered owner of Common securities of the Trust representing
undivided beneficial interests in the assets of the Trust designated the _______
Trust Originated Common Securities (liquidation amount $25 per Common Security)
(the "Common Securities"). The Common Securities are transferable on the books
and records of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer.
The designation, rights, privileges, restrictions, preferences and other terms
and provisions of the Common Securities represented hereby are issued and shall
in all respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of ____________, 1995, as the same
may be amended from time to time (the "Declaration") including the designation
of the terms of the Common Securities as set forth in Exhibit A to the
Declaration. Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Common Securities Guarantee to the extent provided therein. The Sponsor will
provide a copy of the Declaration, the Common Securities Guarantee and the
Indenture to a Holder without charge upon written request to the Trust at its
principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
20
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this day
of ____________, 199__.
[ ]
as Trustee
________________________________________________________
[ ]
as Trustee
________________________________________________________
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee) and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________ agent
to transfer this Common Security Certificate on the books of the Trust. The
agent may substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
21
<PAGE>
EXHIBIT B
SPECIMEN OF DEBENTURE
<PAGE>
EXHIBIT C
UNDERWRITING AGREEMENT
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U S WEST CAPITAL FUNDING, INC.,
Issuer
U S WEST, INC.,
Guarantor
AND
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
Trustee
___________________________________
INDENTURE
Dated as of __________, 1995
___________________________________
Guaranteed Subordinated Debt Securities
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Indenture
- ------------------- ------------
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.09
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08
7.10
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.13(a)
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.13(b)
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.01
5.02(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.02(b)
312(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.02(c)
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.04(a)
313(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.04(b)
313(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.04(a)
5.04(b)
313(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.04(c)
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.03
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.06
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.06
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(a)
7.02
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(b)
7.01(c)
315(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.06
8.04
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.02
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.03
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.08
____________________
* This Cross-Reference Table does not constitute part of the Indenture and
shall not have any bearing on the interpretation of any of its terms or
provisions.
<PAGE>
TABLE OF CONTENTS*
Page
----
PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I.
DEFINITIONS
SECTION 1.01. Definitions of Terms. . . . . . . . . . . . . . . . . . . . . 1
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Bankruptcy Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Common Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Declaration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Debt Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Global Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Governmental Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Guarantor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"herein", "hereof" and "hereunder. . . . . . . . . . . . . . . . . . . . . . 5
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Interest Payment Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Officers' Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Predecessor Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Preferred Securities Guarantee . . . . . . . . . . . . . . . . . . . . . . . 6
Responsible Officer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
____________________
* This Table of Contents does not constitute part of the Indenture and shall
not have any bearing upon the interpretation of any of its terms or
provisions.
i
<PAGE>
Page
----
Securityholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Trust Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
U S WEST Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Voting Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II.
ISSUE, DESCRIPTION, TERMS, EXECUTION,
REGISTRATION AND EXCHANGE OF SECURITIES
SECTION 2.01. Designation and Terms of Securities . . . . . . . . . . . 8
SECTION 2.02. Form of Securities and Trustee's Certificate. . . . . . . 10
SECTION 2.03. Denominations: Provisions for Payment. . . . . . . . . . 10
SECTION 2.04. Execution and Authentications . . . . . . . . . . . . . . 13
SECTION 2.05. Registration of Transfer and Exchange . . . . . . . . . . 14
SECTION 2.06. Temporary Securities. . . . . . . . . . . . . . . . . . . 15
SECTION 2.07. Mutilated, Destroyed, Lost or Stolen
Securities. . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.08. Cancellation. . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.09. Benefits of Indenture . . . . . . . . . . . . . . . . . . 17
SECTION 2.10. Authenticating Agent. . . . . . . . . . . . . . . . . . . 18
SECTION 2.11. Global Securities . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.12. Unconditional Guarantees. . . . . . . . . . . . . . . . . 20
SECTION 2.13. Execution of Guarantee. . . . . . . . . . . . . . . . . . 21
SECTION 2.14. Assumption by Guarantor . . . . . . . . . . . . . . . . . 22
ARTICLE III.
REDEMPTION OF DEBT SECURITIES AND SINKING FUND PROVISIONS
SECTION 3.01. Redemption. . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.02. Notice of Redemption. . . . . . . . . . . . . . . . . . . 23
SECTION 3.03. Payment Upon Redemption . . . . . . . . . . . . . . . . . 24
SECTION 3.04. Sinking Fund. . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.05. Satisfaction of Sinking Fund
Payments with Debt Securities . . . . . . . . . . . . . . 25
SECTION 3.06. Redemption of Debt Securities for Sinking
Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IV.
SECTION 4.01. Payment of Principal, Premium and
Interest. . . . . . . . . . . . . . . . . . . . . . . . . 26
ii
<PAGE>
Page
----
SECTION 4.02. Maintenance of Office or Agency . . . . . . . . . . . . . . . 26
SECTION 4.03. Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.04. Appointment to Fill Vacancy in Office of
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.05. Compliance with Consolidation Provisions. . . . . . . . . 28
SECTION 4.06. Limitation on Dividends; Transactions with
Affiliates. . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.07. Covenants as to U S WEST Trusts . . . . . . . . . . . . . . . 29
ARTICLE V.
SECURITYHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
SECTION 5.01. Company to Furnish Trustee Names and
Addresses of Securityholders. . . . . . . . . . . . . . . 30
SECTION 5.02. Preservation Of Information;
Communications With Securityholders . . . . . . . . . . . 30
SECTION 5.03. Reports by the Guarantor. . . . . . . . . . . . . . . . . 31
SECTION 5.04. Reports by the Trustee. . . . . . . . . . . . . . . . . . 31
ARTICLE VI.
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.02. Collection of Indebtedness and Suits
for Enforcement by Trustee. . . . . . . . . . . . . . . . 34
SECTION 6.03. Application of Moneys Collected . . . . . . . . . . . . . 36
SECTION 6.04. Limitation on Suits . . . . . . . . . . . . . . . . . . . 37
SECTION 6.05. Rights and Remedies Cumulative; Delay or
Omission Not Waiver . . . . . . . . . . . . . . . . . . . 38
SECTION 6.06. Control by Securityholders. . . . . . . . . . . . . . . . 39
SECTION 6.07. Undertaking to Pay Costs. . . . . . . . . . . . . . . . . 39
ARTICLE VII.
CONCERNING THE TRUSTEE
SECTION 7.01. Certain Duties and Responsibilities
of Trustee. . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.02. Certain Rights of Trustee . . . . . . . . . . . . . . . . 42
SECTION 7.03. Trustee Not Responsible for Recitals or
Issuance or Securities. . . . . . . . . . . . . . . . . . 43
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SECTION 7.04. May Hold Securities . . . . . . . . . . . . . . . . . . . 44
SECTION 7.05. Moneys Held in Trust. . . . . . . . . . . . . . . . . . . 44
SECTION 7.06. Compensation and Reimbursement. . . . . . . . . . . . . . 44
SECTION 7.07. Reliance on Officers' Certificate . . . . . . . . . . . . 45
SECTION 7.08. Disqualification; Conflicting Interests . . . . . . . . . 45
SECTION 7.09. Corporate Trustee Required; Eligibility . . . . . . . . . 45
SECTION 7.10. Resignation and Removal;
Appointment of Successor. . . . . . . . . . . . . . . . . 46
SECTION 7.11. Acceptance of Appointment By Successor. . . . . . . . . . 48
SECTION 7.12. Merger, Conversion, Consolidation or
Succession to Business. . . . . . . . . . . . . . . . . . 49
SECTION 7.13. Preferential Collection of Claims
Against the Company . . . . . . . . . . . . . . . . . . . 50
ARTICLE VIII.
CONCERNING THE SECURITYHOLDERS
SECTION 8.01. Evidence of Action by Securityholders . . . . . . . . . . 50
SECTION 8.02. Proof of Execution by Securityholders . . . . . . . . . . 51
SECTION 8.03. Who May be Deemed Owners. . . . . . . . . . . . . . . . . 51
SECTION 8.04. Certain Securities Owned by
Company or Guarantor Disregarded. . . . . . . . . . . . . 52
SECTION 8.05. Actions Binding on Future
Securityholders.. . . . . . . . . . . . . . . . . . . . . 52
ARTICLE IX.
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without the
Consent of Securityholders. . . . . . . . . . . . . . . . 53
SECTION 9.02. Supplemental Indentures With Consent
of Securityholders. . . . . . . . . . . . . . . . . . . . 54
SECTION 9.03. Effect of Supplemental Indentures . . . . . . . . . . . . 55
SECTION 9.04. Securities Affected by Supplemental
Indentures. . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.05. Execution of Supplemental Indentures. . . . . . . . . . . 55
ARTICLE X.
SUCCESSOR CORPORATION
SECTION 10.01. Company or Guarantor May Consolidate,
Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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SECTION 10.02. Successor Corporation Substituted . . . . . . . . . . . . 57
SECTION 10.03. Evidence of Consolidation, Etc. to
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE XI.
SATISFACTION AND DISCHARGE
SECTION 11.01. Satisfaction and Discharge of Indenture . . . . . . . . . 58
SECTION 11.02. Discharge of Obligations. . . . . . . . . . . . . . . . . 59
SECTION 11.03. Deposited Moneys to be Held in Trust. . . . . . . . . . . 59
SECTION 11.04. Payment of Moneys Held by Paying Agents . . . . . . . . . 59
SECTION 11.05. Repayment to Company. . . . . . . . . . . . . . . . . . . 60
ARTICLE XII.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS
SECTION 12.01. No Recourse . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE XIII.
MISCELLANEOUS PROVISIONS
SECTION 13.01. Effect on Successors and Assigns. . . . . . . . . . . . . 61
SECTION 13.02. Actions by Successor. . . . . . . . . . . . . . . . . . . 61
SECTION 13.03. Surrender of Company Powers . . . . . . . . . . . . . . . 61
SECTION 13.04. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 13.05. Governing Law . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 13.06. Treatment of Debt Securities as Debt. . . . . . . . . . . 62
SECTION 13.07. Compliance Certificates and Opinions. . . . . . . . . . . 62
SECTION 13.08. Payments on Business Days . . . . . . . . . . . . . . . . 63
SECTION 13.09. Conflict with Trust Indenture Act . . . . . . . . . . . . 63
SECTION 13.10. Counterparts. . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 13.11. Separability. . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 13.12. Assignment. . . . . . . . . . . . . . . . . . . . . . . . 64
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ARTICLE XIV.
SUBORDINATION OF SECURITIES
SECTION 14.01. Subordination Terms. . . . . . . . . . . . . . . . . . . . . 64
TESTIMONIUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SIGNATURES AND SEALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ACKNOWLEDGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
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INDENTURE, dated as of _________________, 1995, among U S WEST Capital
Funding, Inc., a Colorado corporation (the "Company"), U S WEST, Inc., a
Colorado corporation (the "Guarantor") and Norwest Bank Minnesota, National
Association, a national banking association, as trustee (the "Trustee"):
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the execution and delivery of this Indenture to provide for the
issuance of unsecured subordinated debt secu-rities (hereinafter referred to as
the "Debt Securities"), in an unlimited aggregate principal amount to be issued
from time to time in one or more series as in this Indenture provided, as
registered Debt Securities without coupons, to be authenticated by the
certificate of the Trustee;
WHEREAS, for its lawful corporate purposes, the Guarantor has duly
authorized the execution and delivery of this Indenture and deems it appropriate
from time to time to issue its guarantee of the Securities on the terms herein
provided (the "Guarantees" and, together with the Debt Securities, the
"Securities");
WHEREAS, to provide the terms and conditions upon which the Debt
Securities are to be authenticated, issued and delivered, the Company has duly
authorized the execution of this Indenture; and
WHEREAS, all things necessary to make this Indenture a valid agreement
of the Company and the Guarantor, in accordance with its terms, have been done.
NOW, THEREFORE, in consideration of the premises and the purchase of
the Securities by the holders thereof, it is mutually covenanted and agreed as
follows for the equal and ratable benefit of the holders of Securities:
ARTICLE I.
DEFINITIONS
SECTION 1.01. DEFINITIONS OF TERMS.
The terms defined in this Section (except as in this Indenture
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Indenture and of any indenture supplemental hereto shall have
the respective meanings specified in this Section and shall include the plural
as well as
<PAGE>
the singular. All other terms used in this Indenture that are defined in the
Trust Indenture Act of 1939, as amended, or that are by reference in such Act
defined in the Securities Act of 1933, as amended (except as herein otherwise
expressly provided or unless the context otherwise requires), shall have the
meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of the execution of this instrument.
"Affiliate" means, with respect to a specified Person, (a) any Person
directly or indirectly owning, controlling or holding with power to vote 10% or
more of the outstanding voting securities or other ownership interests of the
specified Person, (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person, (c) any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person, (d) a partnership in which the specified Person is a
general partner, (e) any officer or director of the specified Person, and (f) if
the specified Person is an individual, any entity of which the specified Person
is an officer, director or general partner.
"Authenticating Agent" means an authenticating agent with respect to
all or any of the series of Securities appointed with respect to all or any
series of the Securities by the Trustee pursuant to Section 2.10.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company or
the Guarantor, as the case may be, or any duly authorized committee of such
Board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company or Guarantor, as the case may
be, to have been duly adopted by the Board of Directors and to be in full force
and effect on the date of such certification.
"Business Day" means, with respect to any series of Securities, any
day other than a day on which Federal or State banking institutions in the
Borough of Manhattan, The City of New York, are authorized or obligated by law,
executive order or regulation to close.
2
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"Certificate" means a certificate signed by the principal executive
officer, the principal financial officer or the principal accounting officer of
the Company or the Guarantor, as the case may be. The Certificate need not
comply with the provisions of Section 13.06.
"Common Securities" means undivided beneficial interests in the assets
of a U S WEST Trust which rank pari passu with Preferred Securities issued by
such U S WEST Trust; PROVIDED, HOWEVER, that upon the occurrence of an Event of
Default, the rights of holders of Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise are
subordinated to the rights of holders of Preferred Securities.
"Common Securities Guarantee" means any guarantee that the Guarantor
may enter into with The First National Bank of Chicago or other Persons that
operate directly or indirectly for the benefit of holders of Common Securities
of such U S WEST Trust.
"Company" means U S WEST Capital Funding, Inc., a corporation duly
organized and existing under the laws of the State of Colorado, and, subject to
the provisions of Article Ten, shall also include its successors and assigns.
"Corporate Trust Office" means the office of the Trustee at which, at
any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at 6th Street &
Marquette Avenue, Minneapolis, Minnesota 55479-0069, Attention: Corporate Trust
Services Division, except that whenever a provision herein refers to an office
or agency of the Trustee in the Borough of Manhattan, The City of New York, such
office is located, at the date hereof, at 3 New York Plaza, New York, New York
10004.
"Custodian" means any receiver, trustee, assignee, liquidator, or
similar official under any Bankruptcy Law.
"Declaration", with respect to a U S WEST Trust, means the Amended and
Restated Declaration of Trust, dated ________________, of such U S WEST Trust.
"Debt Securities" means the Debt Securities authenticated and
delivered under this Indenture.
"Default" means any event, act or condition that with notice or lapse
of time, or both, would constitute an Event of Default.
3
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"Depositary" means, with respect to Securities of any series, for
which the Company shall determine that such Securities will be issued as a
Global Security, The Depository Trust Company, New York, New York, another
clearing agency, or any successor registered as a clearing agency under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or other
applicable statute or regulation, which, in each case, shall be designated by
the Company pursuant to either Section 2.01 or 2.11.
"Event of Default" means, with respect to Securities of a particular
series any event specified in Section 6.01, continued for the period of time, if
any, therein designated.
"Global Security" means, with respect to any series of Securities, a
Security executed by the Company and delivered by the Trustee to the Depositary
or pursuant to the Depositary's instruction, all in accordance with the
Indenture, which shall be registered in the name of the Depositary or its
nominee.
"Governmental Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America that, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act of 1933, as amended) as custodian with respect to any such
Governmental Obligation or a specific payment of principal of or interest on any
such Governmental Obligation held by such custodian for the account of the
holder of such depositary receipt; PROVIDED, HOWEVER, that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depositary receipt from any amount received by the
custodian in respect of the Governmental Obligation or the specific payment of
principal of or interest on the Governmental Obligation evidenced by such
depositary receipt.
"Guarantee" means the agreement of the Guarantor, in the form set
forth in Section 2.12 hereof, to be endorsed on the Debt Securities
authenticated and delivered under this Indenture.
"Guarantor" means U S WEST, Inc., a corporation duly organized and
existing under the laws of the State of Colorado,
4
<PAGE>
and, subject to the provisions of Article Ten, shall also include its successors
and assigns.
"herein", "hereof" and "hereunder", and other words of similar import,
refer to this Indenture as a whole and not to any particular Article, Section or
other subdivision.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into in accordance with the terms hereof.
"Interest Payment Date", when used with respect to any installment of
interest on a Debt Security of a particular series, means the date specified in
such Debt Security or in a Board Resolution or in an indenture supplemental
hereto with respect to such series as the fixed date on which an installment of
interest with respect to Debt Securities of that series is due and payable.
"Officers' Certificate" means a certificate signed by the President or
a Vice President and by the Treasurer or an Assistant Treasurer or the
Controller or an Assistant Controller or the Secretary or an Assistant Secretary
of the Company or the Guarantor, as the case may be, that is delivered to the
Trustee in accordance with the terms hereof. Each such certificate shall
include the statements provided for in Section 13.06, if and to the extent
required by the provisions thereof.
"Opinion of Counsel" means an opinion in writing of legal counsel, who
may be an employee of or counsel for the Company or the Guarantor, as the case
may be, that is delivered to the Trustee in accordance with the terms hereof.
Each such opinion shall include the statements provided for in Section 13.06, if
and to the extent required by the provisions thereof.
"Outstanding", when used with reference to Debt Securities of any
series, means, subject to the provisions of Section 8.04, as of any particular
time, all Debt Securities of that series theretofore authenticated and delivered
by the Trustee under this Indenture, except (a) Debt Securities theretofore
canceled by the Trustee or any paying agent, or delivered to the Trustee or any
paying agent for cancellation or that have previously been canceled; (b) Debt
Securities or portions thereof for the payment or redemption of which moneys or
Governmental Obligations in the necessary amount shall have been deposited in
trust with the Trustee or with any paying agent (other than the Company) or
shall have been set aside and
5
<PAGE>
segregated in trust by the Company (if the Company shall act as its own paying
agent); PROVIDED, HOWEVER, that if such Debt Securities or portions of such Debt
Securities are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given as in Article Three provided, or provision
satisfactory to the Trustee shall have been made for giving such notice; and
(c) Debt Securities in lieu of or in substitution for which other Debt
Securities shall have been authenticated and delivered pursuant to the terms of
Section 2.07.
"Person" means any individual, corporation, partnership, joint-
venture, joint-stock company, unincorporated organization or government or any
agency or political subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt and guarantee as that
evidenced by such particular Security; and, for the purposes of this definition,
any Security authenticated and delivered under Section 2.07 in lieu of a lost,
destroyed or stolen Security shall be deemed to evidence the same debt as the
lost, destroyed or stolen Security.
"Preferred Securities" means undivided beneficial interests in the
assets of a U S WEST Trust which rank pari passu with Common Securities issued
by such U S WEST Trust; PROVIDED, HOWEVER, that upon the occurrence of an Event
of Default, the rights of holders of Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise are
subordinated to the rights of holders of Preferred Securities.
"Preferred Securities Guarantee" means any guarantee that the
Guarantor may enter into with The First National Bank of Chicago or other
Persons that operate directly or indirectly for the benefit of holders of
Preferred Securities of such U S WEST Trust.
"Responsible Officer" when used with respect to the Trustee means the
Chairman of the Board of Directors, the President, any Vice President, the
Secretary, the Treasurer, any trust officer, any corporate trust officer or any
other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of his or her knowledge of and familiarity with the particular subject.
6
<PAGE>
"Securities" means any Debt Securities with a Guarantee endorsed
thereon.
"Securityholder", "holder of Securities", "registered holder", or
other similar term, means the Person or Persons in whose name or names a
particular Security shall be registered on the books of the Company kept for
that purpose in accordance with the terms of this Indenture.
"Subsidiary" means, with respect to any Person, (i) any corporation at
least a majority of whose outstanding Voting Stock shall at the time be owned,
directly or indirectly, by such Person or by one or more of its Subsidiaries or
by such Person and one or more of its Subsidiaries, (ii) any general
partnership, joint venture or similar entity, at least a majority of whose
outstanding partnership or similar interests shall at the time be owned by such
Person, or by one or more of its Subsidiaries, or by such Person and one or more
of its Subsidiaries and (iii) any limited partnership of which such Person or
any of its Subsidiaries is a general partner.
"Trustee" means Norwest Bank Minnesota, National Association, and,
subject to the provisions of Article Seven, shall also include its successors
and assigns, and, if at any time there is more than one Person acting in such
capacity hereunder, "Trustee" shall mean each such Person. The term "Trustee"
as used with respect to a particular series of the Securities shall mean the
trustee with respect to that series.
"Trust Indenture Act", means the Trust Indenture, subject to the
provisions of Sections 9.01, 9.02, and 10.01, as in effect at the date of
execution of this instrument.
"Trust Securities" means Common Securities and Preferred Securities.
"U S WEST Trust" means each of U S WEST Financing I, U S WEST
Financing II and U S WEST Financing III, each, a Delaware business trust.
"Voting Stock", as applied to stock of any Person, means shares,
interests, participations or other equivalents in the equity interest (however
designated) in such Person having ordinary voting power for the election of a
majority of the directors (or the equivalent) of such Person, other than shares,
interests, participations or other equivalents having such power only by reason
of the occurrence of a contingency.
7
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ARTICLE II.
ISSUE, DESCRIPTION, TERMS, EXECUTION,
REGISTRATION AND EXCHANGE OF SECURITIES
SECTION 2.01. DESIGNATION AND TERMS OF SECURITIES.
(a) The aggregate principal amount of Debt Securities that may be
authenticated and delivered under this Indenture is unlimited. The Debt
Securities may be issued in one or more series up to the aggregate principal
amount of Debt Securities of that series from time to time authorized by or
pursuant to a Board Resolution of the Company or pursuant to one or more
indentures supplemental hereto, prior to the initial issuance of Debt Securities
of any series, there shall be established in or pursuant to a Board Resolution
of the Company, and set forth in an Officers' Certificate of the Company, or
established in one or more indentures supplemental hereto:
(1) the title of the Debt Security of the series (which shall
distinguish the Debt Securities of the series from all other Debt
Securities);
(2) any limit upon the aggregate principal amount of the Debt
Securities of that series that may be authenticated and delivered under
this Indenture (except for Debt Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Debt
Securities of that series);
(3) the date or dates on which the principal of the Debt Securities
of the series is payable;
(4) the rate or rates at which the Debt Securities of the series
shall bear interest or the manner of calculation of such rate or rates, if
any;
(5) the date or dates from which such interest shall accrue, the
Interest Payment Dates on which such interest will be payable or the manner
of determination of such Interest Payment Dates and the record date for the
determination of holders to whom interest is payable on any such Interest
Payment Dates;
(6) the right, if any, to extend the interest payment periods and the
duration of such extension;
8
<PAGE>
(7) the period or periods within which, the price or prices at which
and the terms and conditions upon which, Debt Securities of the series may
be redeemed, in whole or in part, at the option of the Company;
(8) the obligation, if any, of the Company to redeem or purchase Debt
Securities of the series pursuant to any sinking fund or analogous
provisions (including payments made in cash in participation of future
sinking fund obligations) or at the option of a holder thereof and the
period or periods within which, the price or prices at which, and the terms
and conditions upon which, Debt Securities of the series shall be redeemed
or purchased, in whole or in part, pursuant to such obligation;
(9) the subordination terms of the Debt Securities of the series;
(10) the form of the Debt Securities of the series including the form
of the Certificate of Authentication for such series;
(11) if other than denominations of twenty-five U.S. dollars ($25) or
any integral multiple thereof, the denominations in which the Debt
Securities of the series shall be issuable;
(12) any and all other terms with respect to such series (which terms
shall not be inconsistent with the terms of this 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 that series; and
(13) whether the Debt Securities are issuable as a Global Security
and, in such case, the identity for the Depositary for such series.
All Debt Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to any such Board Resolution or in any indentures supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution of the Company, a copy of an appropriate record
of such action shall be certified by the Secretary or an Assistant Secretary of
the Company and delivered to the Trustee at or prior to the delivery of the
9
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Officers' Certificate of the Company setting forth the terms of the series.
(b) Prior to the issuance of any of the Guarantees, the exact form
and terms of such Guarantees, which shall comply with the terms of Section 2.12
hereof and contain such additional terms as are permitted by this Indenture,
shall be established by an Officers' Certificate of the Guarantor or in an
indenture supplemental hereto.
SECTION 2.02. FORM OF SECURITIES AND TRUSTEE'S CERTIFICATE.
The Securities of any series and the Trustee's certificate of
authentication to be borne by such Securities shall be substantially of the
tenor and purport as set forth in one or more indentures supplemental hereto or
as provided in a Board Resolution of the Company and as set forth in an
Officers' Certificate of the Company and the Guarantor, and may have such
letters, numbers or other marks of identification or designation and such
legends or endorsements printed, lithographed or engraved thereon as the Company
may deem appropriate and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which Securities of that series may be listed, or to conform to
usage.
SECTION 2.03. DENOMINATIONS: PROVISIONS FOR PAYMENT.
The Securities shall be issuable as registered Securities and in the
denominations of twenty-five U.S. dollars ($25) or any integral multiple
thereof, subject to Section 2.01(10). The Securities of a particular series
shall bear interest payable on the dates and at the rate specified with respect
to that series. The principal of and the interest on the Securities of any
series, as well as any premium thereon in case of redemption thereof prior to
maturity, shall be payable in the coin or currency of the United States of
America that at the time is legal tender for public and private debt, at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, the City and State of New York. Each Security shall be dated the
date of its authentication. Interest on the Securities shall be computed on the
basis of a 360-day year composed of twelve 30-day months.
The interest installment on any Security that is payable, and is
punctually paid or duly provided for, on any Interest Payment Date for
Securities of that series shall be paid to the Person in whose name said
Security (or one or more Prede-
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cessor Securities) is registered at the close of business on the regular record
date for such interest installment. In the event that any Security of a
particular series or portion thereof is called for redemption and the redemption
date is subsequent to a regular record date with respect to any Interest Payment
Date and prior to such Interest Payment Date, interest on such Security will be
paid upon presentation and surrender of such Security as provided in Section
3.03.
Any interest on any Security that is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date for Security of the same
series (herein called "Defaulted Interest") shall forthwith cease to be payable
to the registered holder on the relevant regular record date by virtue of having
been such holder; and such Defaulted Interest shall be paid by the Company, at
its election, as provided in clause (1) or clause (2) below:
(1) The Company may make payment of any Defaulted Interest on
Securities to the Persons in whose names such Securities (or their
respective Predecessor Securities) are registered at the close of
business on a special record date for the payment of such Defaulted
Interest, which shall be fixed in the following manner: the Company
shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each such Security and the date of the
proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall fix
a special record date for the payment of such Defaulted Interest which
shall not be more than 15 nor less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such special record date and, in the
name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the special record
date therefor to be mailed, first class postage prepaid, to each
Securityholder at his or her address as it appears in the Security
Register (as hereinafter defined), not
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less than 10 days prior to such special record date. Notice of the
proposed payment of such Defaulted Interest and the special record
date therefor having been mailed as aforesaid, such Defaulted Interest
shall be paid to the Persons in whose names such Securities (or their
respective Predecessor Securities) are registered on such special
record date and shall be no longer payable pursuant to the following
clause (2).
(2) The Company may make payment of any Defaulted Interest on
any Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may
be listed, and upon such notice as may be required by such exchange,
if, after notice given by the Company to the Trustees of the proposed
payment pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee.
Unless otherwise set forth in a Board Resolution of the Company or one
or more indentures supplemental hereto establishing the terms of any series of
Securities pursuant to Section 2.01 hereof, the term "regular record date" as
used in this Section with respect to a series of Securities with respect to any
Interest Payment Date for such series shall mean either the fifteenth day of the
month immediately preceding the month in which an Interest Payment Date
established for such series pursuant to Section 2.01 hereof shall occur, if such
Interest Payment Date is the first day of a month, or the last day of the month
immediately preceding the month in which an Interest Payment Date established
for such series pursuant to Section 2.01 hereof shall occur, if such Interest
Payment Date is the fifteenth day of a month, whether or not such date is a
Business Day.
Subject to the foregoing provisions of this Section, each Security of
a series delivered under this Indenture upon transfer of or in exchange for or
in lieu of any other Security of such series shall carry the rights to interest
accrued and unpaid, and to accrue, that were carried by such other Security.
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SECTION 2.04. EXECUTION AND AUTHENTICATIONS.
The Debt Securities shall be signed on behalf of the Company by, and
the Guarantees endorsed thereon shall be signed on behalf of the Guarantor by,
its President or one of its Vice Presidents, under its corporate seal attested
by its Secretary or one of its Assistant Secretaries. Signatures may be in the
form of a manual or facsimile signature. The Company and the Guarantor may use
the facsimile signature of any Person who shall have been a President or Vice
President thereof, or of any Person who shall have been a Secretary or Assistant
Secretary thereof, notwithstanding the fact that at the time the Securities
shall be authenticated and delivered or disposed of such Person shall have
ceased to be the President or a Vice President, or the Secretary or an Assistant
Secretary, of the Company or the Guarantor, as the case may be. The seal of the
Company and the Guarantor may be in the form of a facsimile of such seal and may
be impressed, affixed, imprinted or otherwise reproduced on the Securities. The
Securities may contain such notations, legends or endorsements required by law,
stock exchange rule or usage. Each Security shall be dated the date of its
authentication by the Trustee.
A Security shall not be valid until authenticated manually by an
authorized signatory of the Trustee, or by an Authenticating Agent. Such
signature shall be conclusive evidence that the Security so authenticated has
been duly authenticated and delivered hereunder and that the holder is entitled
to the benefits of this Indenture.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed by the
Company and the Guarantor to the Trustee for authentication, together with a
written order of the Company for the authentication and delivery of such
Securities, signed by its President or any Vice President and its Treasurer or
any Assistant Treasurer, and the Trustee in accordance with such written order
shall authenticate and deliver such Securities.
In authenticating such Securities and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 7.01) shall be
fully protected in relying upon, an Opinion of Counsel stating that the form and
terms thereof have been established in conformity with the provisions of this
Indenture.
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The Trustee shall not be required to authenticate such Securities if
the issue of such Securities pursuant to this Indenture will affect the
Trustee's own rights, duties or immunities under the Securities and this
Indenture or otherwise in a manner that is not reasonably acceptable to the
Trustee.
SECTION 2.05. REGISTRATION OF TRANSFER AND EXCHANGE.
(a) Securities of any series may be exchanged upon presentation
thereof at the office or agency of the Company designated for such purpose in
the Borough of Manhattan, the City and State of New York, for other Securities
of such series of authorized denominations, and for a like aggregate principal
amount, upon payment of a sum sufficient to cover any tax or other governmental
charge in relation thereto, all as provided in this Section. In respect of any
Securities so surrendered for exchange, the Company shall execute, the Trustee
shall authenticate and such office or agency shall deliver in exchange therefor
the Security or Securities of the same series that the Securityholder making the
exchange shall be entitled to receive, bearing numbers not contemporaneously
outstanding.
(b) The Company shall keep, or cause to be kept, at its office or
agency designated for such purpose in the Borough of Manhattan, the City and
State of New York, or such other location designated by the Company a register
or registers (herein referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Company shall register
the Securities and the transfers of Securities as in this Article provided and
which at all reasonable times shall be open for inspection by the Trustee. The
registrar for the purpose of registering Securities and transfer of Securities
as herein provided shall be appointed as authorized by Board Resolution (the
"Security Registrar").
Upon surrender for transfer of any Security at the office or agency of
the Company designated for such purpose, the Company shall execute, the Trustee
shall authenticate and such office or agency shall deliver in the name of the
transferee or transferees a new Security or Securities of the same series as
the Security presented for a like aggregate principal amount.
All Securities presented or surrendered for exchange or registration
of transfer, as provided in this Section, shall be accompanied (if so required
by the Company or the Security Registrar) by a written instrument or instruments
of transfer, in form satisfactory to the Company or the Security Registrar, duly
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executed by the registered holder or by such holder's duly authorized attorney
in writing.
(c) No service charge shall be made for any exchange or registration
of transfer of Securities, or issue of new Securities in case of partial
redemption of any series, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge in relation thereto,
other than exchanges pursuant to Section 2.06, the second paragraph of Section
3.03 and Section 9.04 not involving any transfer.
(d) The Company shall not be required (i) to issue, exchange or
register the transfer of any Securities during a period beginning at the opening
of business 15 days before the day of the mailing of a notice of redemption of
less than all the Outstanding Securities of the same series and ending at the
close of business on the day of such mailing, nor (ii) to register the transfer
of or exchange any Securities of any series or portions thereof called for
redemption. The provisions of this Section 2.05 are, with respect to any Global
Security, subject to Section 2.11 hereof.
SECTION 2.06. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities of any series, the
Company and the Guarantor may execute, and the Trustee shall authenticate and
deliver, temporary Securities (printed, lithographed or typewritten) of any
authorized denomination. Such temporary Securities shall be substantially in
the form of the definitive Securities in lieu of which they are issued, but with
such omissions, insertions and variations as may be appropriate for temporary
Securities, all as may be determined by the Company. Every temporary Security
of any series shall be executed by the Company and the Guarantor and be
authenticated by the Trustee upon the same conditions and in substantially the
same manner, and with like effect, as the definitive Securities of such series.
Without unnecessary delay the Company and the Guarantor will execute and will
furnish definitive Securities of such series and thereupon any or all temporary
Securities of such series may be surrendered in exchange therefor (without
charge to the holders), at the office or agency of the Company designated for
the purpose in the Borough of Manhattan, the City and State of New York, and the
Trustee shall authenticate and such office or agency shall deliver in exchange
for such temporary Securities an equal aggregate principal amount of definitive
Securities of such series, unless the Company advises the Trustee to the effect
that definitive Securities need not be executed and furnished until
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further notice from the Company. Until so exchanged, the temporary Securities
of such series shall be entitled to the same benefits under this Indenture as
definitive Securities of such series authenticated and delivered hereunder.
SECTION 2.07. MUTILATED, DESTROYED, LOST OR STOLEN SECURITIES.
In case any temporary or definitive Security shall become mutilated or
be destroyed, lost or stolen, the Company and the Guarantor (subject to the next
succeeding sentence) shall execute, and upon the Company's request the Trustee
(subject as aforesaid) shall authenticate and deliver, a new Security of the
same series, bearing a number not contemporaneously outstanding, in exchange and
substitution for the mutilated Security, or in lieu of and in substitution for
the Security so destroyed, lost or stolen. In every case the applicant for a
substituted Security shall furnish to the Company, the Guarantor and the Trustee
such security or indemnity as may be required by them to save each of them
harmless, and, in every case of destruction, loss or theft, the applicant shall
also furnish to the Company, the Guarantor and the Trustee evidence to their
satisfaction of the destruction, loss or theft of the applicant's Security and
of the ownership thereof. The Trustee may authenticate any such substituted
Security and deliver the same upon the written request or authorization of any
officer of the Company. Upon the issuance of any substituted Security, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
In case any Security that has matured or is about to mature shall become
mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a
substitute Security, pay or authorize the payment of the same (without surrender
thereof except in the case of a mutilated Security) if the applicant for such
payment shall furnish to the Company, the Guarantor and the Trustee such
security or indemnity as they may require to save them harmless, and, in case of
destruction, loss or theft, evidence to the satisfaction of the Company, the
Guarantor and the Trustee of the destruction, loss or theft of such Security and
of the ownership thereof.
Every replacement Security issued pursuant to the provisions of this
Section shall constitute an additional contractual obligation of the Company or
the Guarantor, as the case may be, whether or not the mutilated, destroyed, lost
or stolen Security shall be found at any time, or be enforceable by anyone, and
shall be entitled to all the benefits of this
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Indenture equally and proportionately with any and all other Securities of the
same series duly issued hereunder. All Securities shall be held and owned upon
the express condition that the foregoing provisions are exclusive with respect
to the replacement or payment of mutilated, destroyed, lost or stolen
Securities, and shall preclude (to the extent lawful) any and all other rights
or remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.
SECTION 2.08. CANCELLATION.
All Securities surrendered for the purpose of payment, redemption,
exchange or registration of transfer shall, if surrendered to the Company, the
Guarantor or any paying agent, be delivered to the Trustee for cancellation, or,
if surrendered to the Trustee, shall be cancelled by it, and no Securities shall
be issued in lieu thereof except as expressly required or permitted by any of
the provisions of this Indenture. On request of the Company at the time of such
surrender, the Trustee shall deliver to the Company canceled Securities held by
the Trustee. In the absence of such request the Trustee may dispose of canceled
Securities in accordance with its standard procedures and deliver a certificate
of disposition to the Company. If the Company or the Guarantor shall otherwise
acquire any of the Securities, however, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Securities
unless and until the same are delivered to the Trustee for cancellation.
SECTION 2.09. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Securities, express or implied,
shall give or be construed to give to any Person, other than the parties hereto
and the holders of the Securities (and, with respect to the provisions of
Article Fourteen, the holders of Senior Indebtedness) any legal or equitable
right, remedy or claim under or in respect of this Indenture, or under any
covenant, condition or provision herein contained; all such covenants,
conditions and provisions being for the sole benefit of the parties hereto and
of the holders of the Securities (and, with respect to the provisions of Article
Fourteen, the holders of Senior Indebtedness).
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SECTION 2.10. AUTHENTICATING AGENT.
So long as any of the Securities of any series remain Outstanding
there may be an Authenticating Agent for any or all such series of Securities
which the Trustee shall have the right to appoint. Said Authenticating Agent
shall be authorized to act on behalf of the Trustee to authenticate Securities
of such series issued upon exchange, transfer or partial redemption thereof, and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. All references in this Indenture to the authentication of
Securities by the Trustee shall be deemed to include authentication by an
Authenticating Agent for such series. Each Authenticating Agent shall be
acceptable to the Company and shall be a corporation that has a combined capital
and surplus, as most recently reported or determined by it, sufficient under the
laws of any jurisdiction under which it is organized or in which it is doing
business to conduct a trust business, and that is otherwise authorized under
such laws to conduct such business and is subject to supervision or examination
by Federal or State authorities. If at any time any Authenticating Agent shall
cease to be eligible in accordance with these provisions, it shall resign
immediately.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time (and upon request by the Company shall) terminate the agency of any
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and to the Company. Upon resignation, termination or
cessation of eligibility of any Authenticating Agent, the Trustee may appoint an
eligible successor Authenticating Agent acceptable to the Company. Any
successor Authenticating Agent, upon acceptance of its appointment hereunder,
shall become vested with all the rights, powers and duties of its predecessor
hereunder as if originally named as an Authenticating Agent pursuant hereto.
SECTION 2.11. GLOBAL SECURITIES.
(a) If the Company shall establish pursuant to Section 2.01 that the
Securities of a particular series are to be issued as a Global Security, then
the Company shall execute and the Trustee shall, in accordance with Section
2.04, authenticate and deliver, a Global Security that (i) shall represent, and
shall be denominated in an amount equal to the aggregate principal amount of,
all of the Outstanding Securities of such series, (ii) shall be registered in
the name of the Depositary or its nominee, (iii)
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shall be delivered by the Trustee to the Depositary or pursuant to the
Depositary's instruction and (iv) shall bear a legend substantially to the
following effect: "Except as otherwise provided in Section 2.11 of the
Indenture, this Security may be transferred, in whole but not in part, only to
another nominee of the Depositary or to a successor Depositary or to a nominee
of such successor Depositary."
(b) Notwithstanding the provisions of Section 2.05, the Global
Security of a series may be transferred, in whole but not in part and in the
manner provided in Section 2.05, only to another nominee of the Depositary for
such series, or to a successor Depositary for such series selected or approved
by the Company or to a nominee of such successor Depositary.
(c) If at any time the Depositary for a series of the Securities
notifies the Company that it is unwilling or unable to continue as Depositary
for such series or if at any time the Depositary for such series shall no longer
be registered or in good standing under the Exchange Act, or other applicable
statute or regulation, and a successor Depositary for such series is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such condition, as the case may be, this Section 2.11 shall
no longer be applicable to the Securities of such series and the Company will
execute, and subject to Section 2.05, the Trustee will authenticate and deliver
the Securities of such series in definitive registered form without coupons, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Security of such series in exchange for such
Global Security. In addition, the Company may at any time determine that the
Securities of any series shall no longer be represented by a Global Security and
that the provisions of this Section 2.11 shall no longer apply to the Securities
of such series. In such event the Company and the Guarantor will execute and
subject to Section 2.05, the Trustee, upon receipt of an Officers' Certificate
evidencing such determination by the Company, will authenticate and deliver the
Securities of such series in definitive registered form without coupons, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Security of such series in exchange for such
Global Security. Upon the exchange of the Global Security for such Securities
in definitive registered form without coupons, in authorized denominations, the
Global Security shall be canceled by the Trustee. Such Securities in definitive
registered form issued in exchange for the Global Security pursuant to this
Section 2.11(c) shall be registered in such names and in such authorized
denominations as the Depositary,
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pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. The Trustee shall deliver such Securities to the
Depositary for delivery to the Persons in whose names such Securities are so
registered.
SECTION 2.12. UNCONDITIONAL GUARANTEES.
(FORM OF GUARANTEE)
FOR VALUE RECEIVED, the Guarantor, hereby unconditionally guarantees
to the holder of the Security upon which this Guarantee is endorsed the due and
punctual payment of the principal of, sinking fund payment, if any, premium, if
any, or interest on said Security, when and as the same shall become due and
payable, whether at maturity, upon redemption or otherwise, according to the
terms thereof and of the Indenture referred to therein.
The Guarantor agrees to determine, at least one business day prior to
the date upon which a payment of principal of, sinking fund payment, if any,
premium, if any, or interest on said Security is due and payable, whether the
Company has available the funds to make such payment as the same shall become
due and payable. In case of the failure of the Company punctually to pay any
such principal, sinking fund payment, if any, premium, if any, or interest, the
Guarantor hereby agrees to cause any such payment to be made punctually when and
as the same shall become due and payable, whether at maturity, upon redemption,
or otherwise, and as if such payment were made by the Company.
The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrevocable, and absolute, irrespective of the validity,
regularity, or enforceability of said Security or said Indenture, the absence of
any action to enforce the same, any waiver or consent by the Holder of said
Security with respect to any provisions thereof, the recovery of any judgment
against the Company or any action to enforce the same, or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. The Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy of
the Company, any right to require a proceeding first against the Company,
protest or notice with respect to said Security or indebtedness evidenced
thereby, and all demands whatsoever and covenants that this Guarantee will not
be
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discharged except by complete performance of the obligations contained in
said Security and in this Guarantee.
The Guarantor shall be subrogated to all rights of the holder of said
Security against the Company in respect of any amounts paid by the Guarantor
pursuant to the provisions of this Guarantee; provided, however, that the
Guarantor shall not, without the consent of the holders of all of the Securities
then outstanding, be entitled to enforce or to receive any payments arising out
of or based upon such right of subrogation until the principal of and premium,
if any, and interest on all Securities shall have been paid in full or payment
thereof shall have been provided for in accordance with said Indenture.
Notwithstanding anything to the contrary contained herein, if
following any payment of principal or interest by the Company on the Securities
to the holders of the Securities it is determined by a final decision of a court
of competent jurisdiction that such payment shall be avoided by a trustee in
bankruptcy (including any debtor-in-possession) as a preference under 11 U.S.C.
Section 547 and such payment is paid by such holder to such trustee in
bankruptcy, then and to the extent of such repayment, the obligations of the
Guarantor hereunder shall remain in full force and effect.
This Guarantee shall not be valid or become obligatory for any purpose
with respect to a Security until the certificate of authentication on such
Security shall have been signed by the Trustee (or the Authentication Agent).
This Guarantee shall be governed by the laws of the State of New York.
IN WITNESS WHEREOF, U S WEST, Inc. has caused this Guarantee to be
signed in its corporate name by the facsimile signature of two of its officers
thereunto duly authorized and has caused a facsimile of its corporate seal to be
affixed hereunto or imprinted or otherwise reproduced hereon.
SECTION 2.13. EXECUTION OF GUARANTEE.
To evidence the Guarantee to the Securityholders specified in Section
2.12, the Guarantor hereby agrees to execute the Guarantees, in substantially
the form above recited, to be endorsed on each Security authenticated and
delivered by the Trustee (or the Authenticating Agent). Each such Guarantee
shall be signed on behalf of the Guarantor as set forth in Section 2.04 prior to
the authentication of the Security on which it is
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endorsed, and the delivery of such Security by the Trustee (or the
Authenticating Agent), after the authentication thereof hereunder, shall
constitute due delivery of such Guarantee on behalf of the Guarantor.
SECTION 2.14. ASSUMPTION BY GUARANTOR.
(a) The Guarantor may, without the consent of the Securityholders,
assume all of the rights and obligations of the Company hereunder with respect
to a series of Securities and under the Securities of such series if, after
giving effect to such assumption, no Default or Event of Default shall have
occurred and be continuing. Upon such an assumption, the Guarantor shall
execute a supplemental indenture evidencing its assumption of all such rights
and obligations of the Company and the Company shall be released from its
liabilities hereunder and under such Securities as obligor on the Securities of
such series.
(b) The Guarantor shall assume all of the rights and obligations of
the Company hereunder with respect to a series of Securities and under the
Securities of such series if, upon a default by the Company in the due and
punctual payment of the principal, sinking fund payment, if any, premium, if
any, or interest on such Securities, the Guarantor is prevented by any court
order or judicial proceeding from fulfilling its obligations under Section 2.12
with respect to such series of Securities. Such assumption shall result in the
Securities of such series becoming the direct obligations of the Guarantor and
shall be effected without the consent of the holders of the Securities of any
series. Upon such an assumption, the Guarantor shall execute a supplemental
indenture evidencing its assumption of all such rights and obligations of the
Company, and the Company shall be released from its liabilities hereunder and
under such Securities as obligor on the Securities of such series.
ARTICLE III.
REDEMPTION OF DEBT SECURITIES AND SINKING FUND PROVISIONS
SECTION 3.01. REDEMPTION.
The Company may redeem the Debt Securities of any series issued
hereunder on and after the dates and in accordance with the terms established
for such series pursuant to Section 2.01 hereof.
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SECTION 3.02. NOTICE OF REDEMPTION.
(a) In case the Company shall desire to exercise such right to redeem
all or, as the case may be, a portion of the Debt Securities of any series in
accordance with the right reserved so to do, the Company shall, or shall cause
the Trustee to, give notice of such redemption to holders of the Debt Securities
of such series to be redeemed by mailing, first class postage prepaid, a notice
of such redemption not less than 30 days and not more than 90 days before the
date fixed for redemption of that series to such holders at their last addresses
as they shall appear upon the Security Register unless a shorter period is
specified in the Debt Securities to be redeemed. Any notice that is mailed in
the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the registered holder receives the notice. In any case,
failure duly to give such notice to the holder of any Security of any series
designated for redemption in whole or in part, or any defect in the notice,
shall not affect the validity of the proceedings for the redemption of any other
Debt Securities of such series or any other series. In the case of any
redemption of Debt Securities prior to the expiration of any restriction on such
redemption provided in the terms of such Debt Securities or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with any such restriction.
Each such notice of redemption shall specify the date fixed for
redemption and the redemption price at which Debt Securities of that series are
to be redeemed, and shall state that payment of the redemption price of such
Debt Securities to be redeemed will be made at the office or agency of the
Company in the Borough of Manhattan, the City and State of New York, upon
presentation and surrender of such Debt Securities, that interest accrued to the
date fixed for redemption will be paid as specified in said notice, that from
and after said date interest will cease to accrue and that the redemption is for
a sinking fund, if such is the case. If less than all the Debt Securities of a
series are to be redeemed, the notice to the holders of Debt Securities of that
series to be redeemed in whole or in part shall specify the particular Debt
Securities to be so redeemed. In case any Security is to be redeemed in part
only, the notice that relates to such Security shall state the portion of the
principal amount thereof to be redeemed, and shall state that on and after the
redemption date, upon surrender of such Security, a new Security or Debt
Securities of such series in principal amount equal to the unredeemed portion
thereof and having endorsed thereon a duly executed Guarantee will be issued.
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(b) If less than all the Debt Securities of a series are to be
redeemed, the Company shall give the Trustee at least 45 days' notice in advance
of the date fixed for redemption as to the aggregate principal amount of Debt
Securities of the series to be redeemed, and thereupon the Trustee shall select,
by lot or in such other manner as it shall deem appropriate and fair in its
discretion and that may provide for the selection of a portion or portions
(equal to twenty-five U.S. dollars ($25) or any integral multiple thereof) of
the principal amount of such Debt Securities of a denomination larger than $25,
the Debt Securities to be redeemed and shall thereafter promptly notify the
Company in writing of the numbers of the Debt Securities to be redeemed, in
whole or in part.
The Company may, if and whenever it shall so elect, by delivery of
instructions signed on its behalf by its President or any Vice President,
instruct the Trustee or any paying agent to call all or any part of the Debt
Securities of a particular series for redemption and to give notice of
redemption in the manner set forth in this Section, such notice to be in the
name of the Company or its own name as the Trustee or such paying agent may deem
advisable. In any case in which notice of redemption is to be given by the
Trustee or any such paying agent, the Company shall deliver or cause to be
delivered to, or permit to remain with, the Trustee or such paying agent, as the
case may be, such Security Register, transfer books or other records, or
suitable copies or extracts therefrom, sufficient to enable the Trustee or such
paying agent to give any notice by mail that may be required under the
provisions of this Section.
SECTION 3.03. PAYMENT UPON REDEMPTION.
(a) If the giving of notice of redemption shall have been completed
as above provided, the Debt Securities or portions of Debt Securities of the
series to be redeemed specified in such notice shall become due and payable on
the date and at the place stated in such notice at the applicable redemption
price, together with interest accrued to the date fixed for redemption and
interest on such Debt Securities or portions of Debt Securities shall cease to
accrue on and after the date fixed for redemption, unless the Company shall
default in the payment of such redemption price and accrued interest with
respect to any such Security or portion thereof. On presentation and surrender
of such Debt Securities on or after the date fixed for redemption at the place
of payment specified in the notice, said Debt Securities shall be paid and
redeemed at the applicable redemption price for such series, together with
interest accrued thereon to the date fixed for redemption (but if the date fixed
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for redemption is an interest payment date, the interest installment payable on
such date shall be payable to the registered holder at the close of business on
the applicable record date pursuant to Section 2.03).
(b) Upon presentation of any Security of such series that is to be
redeemed in part only, the Company shall execute and the Trustee shall
authenticate and the office or agency where the Security is presented shall
deliver to the holder thereof, at the expense of the Company, a new Security or
Debt Securities of the same series, having endorsed thereon a duly executed
Guarantee, of authorized denominations in principal amount equal to the
unredeemed portion of the Security so presented.
SECTION 3.04. SINKING FUND.
The provisions of Sections 3.04, 3.05 and 3.06 shall be applicable to
any sinking fund for the retirement of Debt Securities of a series, except as
otherwise specified as contemplated by Section 2.01 for Debt Securities of such
series.
The minimum amount of any sinking fund payment provided for by the
terms of Debt Securities of any series is herein referred to as a "mandatory
sinking fund payment," and any payment in excess of such minimum amount provided
for by the terms of Debt Securities of any series is herein referred to as an
"optional sinking fund payment". If provided for by the terms of Debt
Securities of any series, the cash amount of any sinking fund payment may be
subject to reduction as provided in Section 3.05. Each sinking fund payment
shall be applied to the redemption of Debt Securities of any series as provided
for by the terms of Debt Securities of such series.
SECTION 3.05. SATISFACTION OF SINKING FUND PAYMENTS WITH DEBT
SECURITIES.
The Company (i) may deliver Outstanding Debt Securities of a series
(other than any Debt Securities previously called for redemption) and (ii) may
apply as a credit Debt Securities of a series that have been redeemed either at
the election of the Company pursuant to the terms of such Debt Securities or
through the application of permitted optional sinking fund payments pursuant to
the terms of such Debt Securities, in each case in satisfaction of all or any
part of any sinking fund payment with respect to the Debt Securities of such
series required to be made pursuant to the terms of such Debt Securities as
provided for by the terms of such series, PROVIDED that such Debt Securities
have not been previously so credited. Such Debt Securities shall be
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received and credited for such purpose by the Trustee at the redemption price
specified in such Debt Securities for redemption through operation of the
sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
SECTION 3.06. REDEMPTION OF DEBT SECURITIES FOR SINKING FUND.
Not less than 45 days prior to each sinking fund payment date for any
series of Debt Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of the series, the portion thereof, if any,
that is to be satisfied by delivering and crediting Debt Securities of that
series pursuant to Section 3.05 and the basis for such credit and will, together
with such Officers' Certificate, deliver to the Trustee any Debt Securities to
be so delivered. Not less than 30 days before each such sinking fund payment
date the Trustee shall select the Debt Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 3.02 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Company in the manner provided in Section 3.02. Such notice having been
duly given, the redemption of such Debt Securities shall be made upon the terms
and in the manner stated in Section 3.03.
ARTICLE IV.
SECTION 4.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company will duly and punctually pay or cause to be paid the
principal of (and premium, if any) and interest on the Debt Securities of that
series at the time and place and in the manner provided herein and established
with respect to such Debt Securities.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
So long as any series of the Securities remain Outstanding, the
Company agrees to maintain an office or agency in the Borough of Manhattan, the
City and State of New York, with respect to each such series and at such other
location or locations as may be designated as provided in this Section 4.02,
where (i) Securities of that series may be presented for payment, (ii)
Securities of that series may be presented as hereinabove
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authorized for registration of transfer and exchange, and (iii) notices and
demands to or upon the Company in respect of the Securities of that series and
this Indenture may be given or served, such designation to continue with respect
to such office or agency until the Company shall, by written notice signed by
its President or a Vice President and delivered to the trustee, designate some
other office or agency for such purposes or any of them. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations, notices and
demands may be made or served at the Corporate Trust Office of the Trustee, and
the Company hereby appoints the Trustee as its agent to receive all such
presentations, notices and demands.
SECTION 4.03. PAYING AGENTS.
(a) If the Company shall appoint one or more paying agents for all or
any series of the Securities, other than the Trustee, the Company will cause
each such paying agent to execute and deliver to the Trustee an instrument in
which such agent shall agree with the Trustee, subject to the provisions of this
Section:
(1) that it will hold all sums held by it as such agent for the
payment of the principal of (and premium, if any) or interest on the
Securities of that series (whether such sums have been paid to it by the
Company or by any other obligor of such Securities) in trust for the
benefit of the Persons entitled thereto;
(2) that it will give the Trustee notice of any failure by the
Company (or by any other obligor of such Securities) to make any payment of
the principal of (and premium, if any) or interest on the Securities of
that series when the same shall be due and payable;
(3) that it will, at any time during the continuance of any failure
referred to in the preceding paragraph (a)(2) above, upon the written
request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such paying agent; and
(4) that it will perform all other duties of paying agent as set
forth in this Indenture.
(b) If the Company shall act as its own paying agent with respect to
any series of the Securities, it will on or before each due date of the
principal of (and premium, if any) or
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interest on Securities of that series, set aside, segregate and hold in trust
for the benefit of the Persons entitled thereto a sum sufficient to pay such
principal (and premium, if any) or interest so becoming due on Securities of
that series until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and will promptly notify the Trustee of such action, or
any failure (by it or any other obligor on such Securities) to take such action.
Whenever the Company shall have one or more paying agents for any series of
Securities, it will, prior to each due date of the principal of (and premium, if
any) or interest on any Securities of that series, deposit with the paying agent
a sum sufficient to pay the principal (an premium, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such paying agent
is the Trustee) the Company will promptly notify the Trustee of this action or
failure so to act.
(c) Notwithstanding anything in this Section to the contrary, (i) the
agreement to hold sums in trust as provided in this Section is subject to the
provisions of Section 11.05, and (ii) the Company may at any time, for the
purpose of obtaining the satisfaction and discharge of this Indenture or for any
other purpose, pay, or direct any paying agent to pay, to the Trustee all sums
held in trust by the Company or such paying agent, such sums to be held by the
Trustee upon the same terms and conditions as those upon which such sums were
held by the Company or such paying agent; and, upon such payment by any paying
agent to the Trustee, such paying agent shall be released from all further
liability with respect to such money.
SECTION 4.04. APPOINTMENT TO FILL VACANCY IN OFFICE OF TRUSTEE.
The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 7.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
SECTION 4.05. COMPLIANCE WITH CONSOLIDATION PROVISIONS.
Neither the Company nor the Guarantor will, while any of the
Securities remain Outstanding, consolidate with, or merge into, or merge into
itself, or sell or convey all or substantially all of its property to any other
company unless the provisions of Article Ten hereof are complied with.
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SECTION 4.06. LIMITATION ON DIVIDENDS; TRANSACTIONS WITH AFFILIATES.
(a) If Securities are issued to a U S WEST Trust or a trustee
of such trust in connection with the issuance of Trust Securities by such U S
WEST Trust and (i) there shall have occurred any event that would
constitute an Event of Default or (ii) U S WEST shall be in default with
respect to its payment of any obligations under the Preferred Securities
Guarantee or Common Securities Guarantee relating to such U S
WEST Trust, then (a) the Guarantor and the Company shall not (and, if it is
a wholly-owned subsidiary of the Guarantor, the Guarantor shall cause U S WEST
Communications, Inc. not to) declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase or make a liquidation
payment with respect to, any of its capital stock, and (b) the Guarantor and
the Company shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities issued by the
Guarantor or the Company which rank pari passu with or junior to such
Securities.
(b) If Securities are issued to a U S WEST Trust or a trustee of such trust
in connection with the issuance of Trust Securities by such U S WEST Trust and
the Company shall have given notice of its election to defer payments of
interest on such Securities by extending the interest payment period as
provided in the Indenture and such period, or any extension thereof,
shall be continuing, then (a) the Guarantor and the Company shall not (and,
if it is a wholly-owned subsidiary of the Guarantor, the Guarantor shall cause
U S WEST Communications, Inc. not to) declare or pay any dividend or, make any
distributions with respect to, or redeem, purchase or make a liquidation
payment with respect to, any of its capital stock, and (b) the Guarantor and
the Company shall not make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities issued by the
Guarantor or the Company which rank pari passu with or junior to such
Securities.
SECTION 4.07. COVENANTS AS TO U S WEST TRUSTS.
In the event Securities are issued to a U S WEST Trust or a trustee
of such trust in connection with the issuance of Trust Securities by such U S
WEST Trust, for so long as such Trust Securities remain outstanding, the
Guarantor will (i) maintain 100% direct or indirect ownership of the Common
Securities of such U S WEST Trust; PROVIDED, HOWEVER, that any permitted
successor of the Guarantor under the Indenture may succeed to the Guarantor's
ownership of the Common Securities, (ii) use its reasonable efforts to cause
such U S WEST Trust (a) to remain a business trust, except in connection with
a distribution of Securities, the redemption of all of the Trust Securities
of such U S West Trust or certain mergers, consolidations or amalgamations,
each as permitted by the Declaration of such U S WEST Trust, and (b) to
otherwise continue not to be treated as an association
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taxable as a corporation or partnership for United States federal income tax
purposes and (iii) to use its reasonable efforts to cause each holder of
Trust Securities to be treated as owning an individual beneficial interest in
the Securities.
ARTICLE V.
SECURITYHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
SECTION 5.01. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
SECURITYHOLDERS.
The Company will furnish or cause to be furnished to the Trustee (a)
on a monthly basis on each regular record date (as defined in Section 2.03) a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the holders of each series of Securities as of such regular record
date, PROVIDED that the Company shall not be obligated to furnish or cause to
furnish such list at any time that the list shall not differ in any respect from
the most recent list furnished to the Trustee by the Company and (b) at such
other times as the Trustee may request in writing within 30 days after the
receipt by the Company of any such request, a list of similar form and content
as of a date not more than 15 days prior to the time such list is furnished;
PROVIDED, HOWEVER, that, in either case, no such list need be furnished for any
series for which the Trustee shall be the Security Registrar.
SECTION 5.02. PRESERVATION OF INFORMATION; COMMUNICATIONS WITH
SECURITYHOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the holders of
Securities contained in the most recent list furnished to it as provided in
Section 5.01 and as to the names and addresses of holders of Securities received
by the Trustee in its capacity as Security Registrar (if acting in such
capacity).
(b) The Trustee may destroy any list furnished to it as provided in
Section 5.01 upon receipt of a new list so furnished.
(c) Securityholders may communicate as provided in Section 312(b) of
the Trust Indenture Act with other Securityholders with respect to their rights
under this Indenture or under the Securities.
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SECTION 5.03. REPORTS BY THE GUARANTOR.
(a) The Guarantor covenants and agrees to file with the Trustee,
within 15 days after the Guarantor is required to file the same with the
Commission, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) that the
Guarantor may be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Exchange Act; or, if the Guarantor is not required to file
information, documents or reports pursuant to either of such sections, then to
file with the Trustee and the Commission, in accordance with the rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports that may be
required pursuant to Section 13 of the Exchange Act, in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations.
(b) The Guarantor covenants and agrees to file with the Trustee and
the Commission, in accordance with the rules and regulations prescribed from to
time by the Commission, such additional information, documents and reports with
respect to compliance by the Guarantor and the Company with the conditions and
covenants provided for in this Indenture as may be required from time to time by
such rules and regulations.
(c) The Guarantor covenants and agrees to transmit by mail, first
class postage prepaid, or reputable over-night delivery service that provides
for evidence of receipt, to the Securityholders, as their names and addresses
appear upon the Security Register, within 30 days after the filing thereof with
the Trustee, such summaries of any information, documents and reports required
to be filed by the Guarantor pursuant to subsections (a) and (b) of this Section
as may be required by rules and regulations prescribed from time to time by the
Commission.
SECTION 5.04. REPORTS BY THE TRUSTEE.
(a) On or before July 15 in each year in which any of the Securities
are Outstanding, the Trustee shall transmit by mail, first class postage
prepaid, to the Securityholders, as their names and addresses appear upon the
Security Register, a brief report dated as of the preceding May 15, if and to
the extent required under Section 313(a) of the Trust Indenture Act.
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(b) The Trustee shall comply with Section 313(b) and 313(c) of the
Trust Indenture Act.
(c) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the Trustee with the Company, with
each stock exchange upon which any Securities are listed (if so listed) and also
with the Commission. The Company agrees to notify the Trustee when any
Securities become listed on any stock exchange.
ARTICLE VI.
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 6.01. EVENTS OF DEFAULT.
(a) Whenever used herein with respect to Securities of a particular
series, "Event of Default" means any one or more of the following events that
has occurred and is continuing:
(1) the Company or the Guarantor defaults in the payment of any
installment of interest upon any of the Securities of that series, as and
when the same shall become due and payable, and continuance of such default
for a period of 90 days; PROVIDED, HOWEVER, that a valid extension of an
interest payment period by the Company in accordance with the terms of any
indenture supplemental hereto, shall not constitute a default in the
payment of interest for this purpose;
(2) the Company or the Guarantor defaults in the payment of the
principal of (or premium, if any, on) any of the Securities of that series
as and when the same shall become due and payable whether at maturity, upon
redemption, by declaration or otherwise, or in any payment required by any
sinking or analogous fund established with respect to that series;
PROVIDED, HOWEVER, that a valid extension of the maturity of such
Securities in accordance with the terms of any indenture supplemental
hereto shall not constitute a default in the payment of principal or
premium, if any;
(3) the Company or the Guarantor fails to observe or perform any
other of its covenants or agreements with respect to that series contained
in this Indenture or otherwise established with respect to that series of
Securities pursuant to Section 2.01 hereof (other than a covenant or
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agreement that has been expressly included in this Indenture solely for the
benefit of one or more series of Securities other than such series) for a
period of 90 days after the date on which written notice of such failure,
requiring the same to be remedied and stating that such notice is a "Notice
of Default" hereunder, shall have been given to the Company by the Trustee,
by registered or certified mail, or to the Company and the Trustee by the
holders of at least 25% in principal amount of the Securities of that
series at the time Outstanding;
(4) the Company or the Guarantor pursuant to or within the meaning of
any Bankruptcy Law (i) commences a voluntary case, (ii) consents to the
entry of an order for relief against it in an involuntary case, (iii)
consents to the appointment of a Custodian of it or for all or
substantially all of its property or (iv) makes a general assignment for
the benefit of its creditors;
(5) a court of competent jurisdiction enters an order under any
Bankruptcy Law that (i) is for relief against the Company or the Guarantor
in an involuntary case, (ii) appoints a Custodian of the Company or the
Guarantor for all or substantially all of their respective property, or
(iii) orders the liquidation of the Company or the Guarantor, and the order
or decree remains unstayed and in effect for 90 days; or
(6) in the event Securities are issued to a U S WEST Trust or a
trustee of such trust in connection with the issuance of Trust Securities
by such U S WEST Trust, such U S WEST Trust shall have voluntarily or
involuntarily dissolved, wound-up its business or otherwise terminated
its existence except in connection with (i) the distribution of Securities
to holders of Trust Securities in liquidation of their interests in such
U S WEST Trust, (ii) the redemption of all of the outstanding Trust
Securities of such U S WEST Trust or (iii) certain mergers, consolidations
or amalgamations, each as permitted by the Declaration of such U S WEST
Trust.
(b) In each and every such case, unless the principal of all the
Securities of that series shall have already become due and payable, either the
Trustee or the holders of not less than 25% in aggregate principal amount of the
Securities of that series then Outstanding hereunder, by notice in writing to
the Company and the Guarantor (and to the Trustee if given by such
Securityholders), may declare the principal of all the Securities of that series
to be due and payable immediately, and upon any
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such declaration the same shall become and shall be immediately due and payable,
notwithstanding anything contained in this Indenture or in the Securities of
that series or established with respect to that series pursuant to Section 2.01
to the contrary.
(c) At any time after the principal of the Securities of that series
shall have been so declared due and payable, and before any judgment or decree
for the payment of the moneys due shall have been obtained or entered as
hereinafter provided, the holders of a majority in aggregate principal amount of
the Securities of that series then Outstanding hereunder, by written notice to
the Company and the Trustee, may rescind and annul such declaration and its
consequences if: (i) the Company or the Guarantor has paid or deposited with
the Trustee a sum sufficient to pay all matured installments of interest upon
all the Securities of that series and the principal of (and premium, if any, on)
any and all Securities of that series that shall have become due otherwise than
by acceleration (with interest upon such principal and premium, if any, and, to
the extent that such payment is enforceable under applicable law, upon overdue
installments of interest, at the rate per annum expressed in the Securities of
that series to the date of such payment or deposit) and the amount payable to
the Trustee under Section 7.06, and (ii) any and all Events of Default under the
Indenture with respect to such series, other than the nonpayment of principal on
Securities of that series that shall not have become due by their terms, shall
have been remedied or waived as provided in Section 6.06.
No such rescission and annulment shall extend to or shall affect any
subsequent default or impair any right consequent thereon.
(d) In case the Trustee shall have proceeded to enforce any right
with respect to Securities of that series under this Indenture and such
proceedings shall have been discontinued or abandoned because of such rescission
or annulment or for any other reason or shall have been determined adversely to
the Trustee, then and in every such case the Company, the Guarantor and the
Trustee shall be restored respectively to their former positions and rights
hereunder, and all rights, remedies and powers of the Company and the Trustee
shall continue as though no such proceedings had been taken.
SECTION 6.02. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
(a) The Company and the Guarantor covenant that (1) in case it shall
default in the payment of any installment of
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interest on any of the Securities of a series, or any payment required by any
sinking or analogous fund established with respect to that series as and when
the same shall have become due and payable, and such default shall have
continued for a period of 90 Business Days, or (2) in case it shall default
in the payment of the principal of (or premium, if any, on) any of the
Securities of a series when the same shall have become due and payable,
whether upon maturity of the Securities of a series or upon redemption or
upon declaration or otherwise, then, upon demand of the Trustee, the Company
or the Guarantor will pay to the Trustee, for the benefit of the holders of
the Securities of that series, the whole amount that then shall have been
become due and payable on all such Securities for principal (and premium, if
any) or interest, or both, as the case may be, with interest upon the overdue
principal (and premium, if any) and (to the extent that payment of such
interest is enforceable under applicable law and, if the Securities are held
by a U S WEST Trust or a trustee of such trust, without duplication of any
other amounts paid by the Guarantor or such U S WEST Trust or trustee in
respect thereof) upon overdue installments of interest at the rate per annum
expressed in the Securities of that series; and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, and the amount payable to the Trustee under Section 7.06.
(b) If the Company or the Guarantor shall fail to pay such amounts
forthwith upon such demand, the Trustee, in its own name and as trustee of an
express trust, shall be entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceeding to judgment or final
decree, and may enforce any such judgment or final decree against the Company or
the Guarantor or other obligor upon the Securities of that series and collect
the moneys adjudged or decreed to be payable in the manner provided by law out
of the property of the Company or the Guarantor or other obligor upon the
Securities of that series, wherever situated.
(c) In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, readjustment, arrangement, composition or judicial proceedings
affected the Company or the Guarantor, or the creditors or property of either,
the Trustee shall have power to intervene in such proceedings and take any
action therein that may be permitted by the court and shall (except as may be
otherwise provided by law) be entitled to file such proofs of claim and other
papers and documents as may be necessary or advisable in order to have the
claims of the Trustee and of the holders of Securities of such series allowed
for the
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entire amount due and payable by the Company or the Guarantor under the
Indenture at the date of institution of such proceedings and for any additional
amount that may become due and payable by the Company or the Guarantor after
such date, and to collect and receive any moneys or other property payable or
deliverable on any such claim, and to distribute the same after the deduction of
the amount payable to the Trustee under Section 7.06; and any receiver, assignee
or trustee in bankruptcy or reorganization is hereby authorized by each of the
holders of Securities of such series to make such payments to the Trustee, and,
in the event that the Trustee shall consent to the making of such payments
directly to such Securityholders, to pay to the Trustee any amount due it under
Section 7.06.
(d) All rights of action and of asserting claims under this
Indenture, or under any of the terms established with respect to Securities of
that series, may be enforced by the Trustee without the possession of any of
such Securities, or the production thereof at any trial or other proceeding
relative thereto, and any such suit or proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for payment to the Trustee of any
amounts due under Section 7.06, be for the ratable benefit of the holders of the
Securities of such series.
In case of an Event of Default hereunder, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in the Indenture or in aid of the exercise
of any power granted in this Indenture, or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.
Nothing contained herein shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Securities of that series or the rights of any holder thereof or to authorize
the Trustee to vote in respect of the claim of any Securityholder in any such
proceeding.
SECTION 6.03. APPLICATION OF MONEYS COLLECTED.
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Any moneys collected by the Trustee pursuant to this Article with
respect to a particular series of Securities shall be applied in the following
order, at the date or dates fixed by the Trustee and, in case of the
distribution of such moneys on account of principal (or premium, if any) or
interest, upon presentation of the Securities of that series, and notation
thereon the payment, if only partially paid, and upon surrender thereof if fully
paid:
FIRST: To the payment of costs and expenses of collection and of all
amounts payable to the Trustee under Section 7.06;
SECOND: To the payment of all Senior Indebtedness of the Company if
and to the extent required by Article Fourteen; and
THIRD: To the payment of the amounts then due and unpaid upon
Securities of such series for principal (and premium, if any) and interest,
in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for principal (and
premium, if any) and interest, respectively.
SECTION 6.04. LIMITATION ON SUITS.
No holder of any Security of any series shall have any right by virtue
or by availing of any provision of this Indenture to institute any suit, action
or proceeding in equity or at law upon or under or with respect to this
Indenture or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless (i) such holder previously shall have given to the
Trustee written notice of an Event of Default and of the continuance thereof
with respect to the Securities of such series specifying such Event of Default,
as hereinbefore provided; (ii) the holders of not less than 25% in aggregate
principal amount of the Securities of such series then Outstanding shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as trustee hereunder; (iii) such holder or holders
shall have offered to the Trustee such reasonable indemnity as it may require
against the costs, expenses and liabilities to be incurred therein or thereby;
and (iv) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity, shall have failed to institute any such action, suit or
proceeding and (v) during such 60 day period, the holders of a majority in
principal amount of the Securities of
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that series do not give the Trustee a direction inconsistent with the request.
Notwithstanding anything contained herein to the contrary, any other
provisions of this Indenture, the right of any holder of any Security to receive
payment of the principal of (and premium, if any) and interest on such Security,
as therein provided, on or after the respective due dates expressed in such
Security (or in the case of redemption, on the redemption date), or to institute
suit for the enforcement of any such payment on or after such respective dates
or redemption date, shall not be impaired or affected without the consent of
such holder and by accepting a Security hereunder it is expressly understood,
intended and covenanted by the taker and holder of every Security of such series
with every other such taker and holder and the Trustee, that no one or more
holders of Securities of such series shall have any right in any manner
whatsoever by virtue or by availing of any provision of this Indenture to
affect, disturb or prejudice the rights of the holders of any other of such
Securities, or to obtain or seek to obtain priority over or preference to any
other such holder, or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all
holders of Securities of series. For the protection and enforcement of the
provisions of this Section, each and every Securityholder and the Trustee shall
be entitled to such relief as can be given either at law or in equity.
SECTION 6.05. RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT
WAIVER.
(a) Except as otherwise provided in Section 2.07, all powers and
remedies given by this Article to the Trustee or to the Securityholders shall,
to the extent permitted by law, be deemed cumulative and not exclusive of any
other powers and remedies available to the Trustee or the holders of the
Securities, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Indenture or
otherwise established with respect to such Securities.
(b) No delay or omission of the Trustee or of any holder of any of
the Securities to exercise any right or power accruing upon any Event of Default
occurring and continuing as aforesaid shall impair any such right or power, or
shall be construed to be a waiver of any such default or on acquiescence
therein; and, subject to the provisions of Section 6.04, every power and remedy
given by this Article or by law to the Trustee
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or the Securityholders may be exercised from time to time, and as often as shall
be deemed expedient, by the Trustee or by the Securityholders.
SECTION 6.06. CONTROL BY SECURITYHOLDERS.
The holders of a majority in aggregate principal amount of the
Securities of any series at the time Outstanding, determined in accordance with
Section 8.04, shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee with respect to such series;
PROVIDED, HOWEVER, that such direction shall not be in conflict with any rule of
law or with this Indenture or be unduly prejudicial to the rights of holders of
Securities of any other series at the time Outstanding determined in accordance
with Section 8.04. Subject to the provisions of Section 7.01, the Trustee shall
have the right to decline to follow any such direction if the Trustee in good
faith shall, by a Responsible Officer or Officers of the Trustee, determine that
the proceeding so directed would involve the Trustee in personal liability. The
holders of a majority in aggregate principal amount of the Securities of any
series at the time Outstanding affected thereby, determined in accordance with
Section 8.04, may on behalf of the holders of all of the Securities of such
series waive any past default in the performance of any of the covenants
contained herein or established pursuant to Section 2.01 with respect to such
series and its consequences, except (i) a default in the payment of the
principal of, or premium, if any, or interest on, any of the Securities of that
series as and when the same shall become due by the terms of such Securities
otherwise than by acceleration (unless such default has been cured and a sum
sufficient to pay all matured installments of interest and principal and any
premium has been deposited with the Trustee (in accordance with Section 6.01(c))
or (ii) a default in the covenants contained in Section 4.06(a)(iii) or 4.06(b).
Upon any such waiver, the default covered thereby shall be deemed to be cured
for all purposes of this Indenture and the Company, the Trustee and the holders
of the Securities of such series shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 6.07. UNDERTAKING TO PAY COSTS.
All parties to this Indenture agree, and each holder of any Securities
by such holder's acceptance thereof shall be deemed to have agreed, that any
court may in its discretion
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require, in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken or omitted by
it as Trustee, the filing by any party litigant in such suit of an undertaking
to pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Securityholder, or group of Securityholders, holding more than
10% in aggregate principal amount of the Outstanding Securities of any series,
or to any suit instituted by any Securityholder for the enforcement of the
payment of the principal of (or premium, if any) or interest on any Security of
such series, on or after the respective due dates expressed in such Security or
established pursuant to this Indenture.
ARTICLE VII.
CONCERNING THE TRUSTEE
SECTION 7.01. CERTAIN DUTIES AND RESPONSIBILITIES OF TRUSTEE.
(a) The Trustee, prior to the occurrence of an Event of Default with
respect to the Securities of a series and after the curing of all Events of
Default with respect to the Securities of that series that may have occurred,
shall undertake to perform with respect to the Securities of such series such
duties and only such duties as are specifically set forth in this Indenture, and
no implied covenants shall be read into this Indenture against the Trustee. In
case an Event of Default with respect to the Securities of a series has occurred
(that has not been cured or waived), the Trustee shall exercise with respect to
Securities of that series such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(1) prior to the occurrence of an Event of Default with respect to the
Securities of a series and after the curing or
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waiving of all such Events of Default with respect to that series that may have
occurred:
(i) the duties and obligations of the Trustee shall with respect
to the Securities of such series be determined solely by the express
provisions of this Indenture, and the Trustee shall not be liable with
respect to the Securities of such series except for the performance of
such duties and obligations as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may with respect to the Securities of such series conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or opinions that
by any provision hereof are specifically required to be furnished to
the Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirement of this
Indenture;
(2) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer or Responsible Officers of the Trustee, unless it
shall be proved that the Trustee, was negligent in ascertaining the pertinent
facts;
(3) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
holders of not less than a majority in principal amount of the Securities of any
series at the time Outstanding relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee under this Indenture with respect
to the Securities of that series; and
(4) None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or liability is not reasonably assured to
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it under the terms of this Indenture or adequate indemnity against such risk is
not reasonably assured to it.
SECTION 7.02. CERTAIN RIGHTS OF TRUSTEE.
Except as otherwise provided in Section 7.01:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond, security or other paper or document believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(b) Any request, direction, order or demand of the Company or the
Guarantor mentioned herein shall be sufficiently evidenced by a Board
Resolution or an instrument signed in the name of the Company or the
Guarantor, as the case may be, by the President or any Vice President and
by the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer thereof (unless other evidence in respect thereof is specifically
prescribed herein);
(c) The Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted hereunder in good faith and in reliance thereon;
(d) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders, pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby; nothing contained
herein shall, however, relieve the Trustee of the obligation, upon the
occurrence of an Event of Default with respect to a series of the
Securities (that has not been cured or waived) to exercise with respect to
Securities of that series such of the rights and powers vested in it by
this Indenture, and to use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in
the conduct of his own affairs;
(e) The Trustee shall not be liable for any action taken or omitted
to be taken by it in good faith and
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believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Indenture;
(f) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond, security, or other papers or documents, unless requested in writing
so to do by the holders of not less than a majority in principal amount of
the Outstanding Securities of the particular series affected thereby
(determined as provided in Section 8.04); PROVIDED, HOWEVER, that if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Indenture, the Trustee may
require reasonable indemnity against such costs, expenses or liabilities as
a condition to so proceeding. The reasonable expense of every such
examination shall be paid by the Company and the Guarantor or, if paid by
the Trustee, shall be repaid by the Company and the Guarantor upon demand;
and
(g) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
SECTION 7.03. TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OR
SECURITIES.
(a) The recitals contained herein and in the Securities shall be
taken as the statements of the Company and the Guarantor, and the Trustee
assumes no responsibility for the correctness of the same.
(b) The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities.
(c) The Trustee shall not be accountable for the use or application
by the Company or the Guarantor of any of the Securities or of the proceeds of
such Securities, or for the use or application of any moneys paid over by the
Trustee in accordance with any provision of this Indenture or established
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pursuant to Section 2.01, or for the use or application of any moneys received
by any paying agent other than the Trustee.
SECTION 7.04. MAY HOLD SECURITIES.
The Trustee or any paying agent or Security Registrar, in its
individual or any other capacity, may become the owner or pledgee of Securities
with the same rights it would have if it were not Trustee, paying agent or
Security Registrar.
SECTION 7.05. MONEYS HELD IN TRUST.
Subject to the provisions of Section 11.05, all moneys received by the
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received, but need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no
liability for interest on any moneys received by it hereunder except such as it
may agree with the Company and the Guarantor to pay thereon.
SECTION 7.06. COMPENSATION AND REIMBURSEMENT.
(a) The Company and the Guarantor covenant and agree to pay to the
Trustee, and the Trustee shall be entitled to, such reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), as the Company, the Guarantor
and the Trustee may from time to time agree in writing, for all services
rendered by it in the execution of the trusts hereby created and in the exercise
and performance of any of the powers and duties hereunder of the Trustee, and,
except as otherwise expressly provided herein, the Company and the Guarantor
will pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Indenture (including the reasonable compensation
and the expenses and disbursements of its counsel and of all Persons not
regularly in its employ) except any such expense, disbursement or advance as may
arise from its negligence or bad faith. The Company and the Guarantor also
covenant to indemnify the Trustee (and its officers, agents, directors and
employees) for, and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on the part of the Trustee and arising
out of or in connection with the acceptance or administration of this trust,
including the costs and expenses of defending itself against any claim of
liability in the premises.
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(b) The obligations of the Company and the Guarantor under this
Section to compensate and indemnify the Trustee and to pay or reimburse the
Trustee for expenses, disbursements and advances shall constitute additional
indebtedness hereunder. Such additional indebtedness shall be secured by a lien
prior to that of the Securities upon all property and funds held or collected by
the Trustee as such, except funds held in trust for the benefit of the holders
of particular Securities.
SECTION 7.07. RELIANCE ON OFFICERS' CERTIFICATE.
Except as otherwise provided in Section 7.01, whenever in the
administration of the provisions of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or
suffering or omitting to take any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to the
Trustee and such certificate, in the absence of negligence or bad faith on the
part of the Trustee, shall be full warrant to the Trustee for any action taken,
suffered or omitted to be taken by it under the provisions of this Indenture
upon the faith thereof.
SECTION 7.08. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or shall acquire any "conflicting interest" within
the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the
Company shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.
SECTION 7.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee with respect to the Securities
issued hereunder which shall at all times be a corporation organized and doing
business under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a corporation or other
Person permitted to act as trustee by the Commission, authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial, or District of Columbia authority.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this
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Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. The Company and the Guarantor may not, nor may any
Person directly or indirectly controlling, controlled by, or under common
control with the Company or the Guarantor, serve as Trustee. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions of
this Section, the Trustee shall resign immediately in the manner and with the
effect specified in Section 7.10.
SECTION 7.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) The Trustee or any successor hereafter appointed, may at any time
resign with respect to the Securities of one or more series by giving written
notice thereof to the Company and the Guarantor and by transmitting notice of
resignation by mail, first class postage prepaid, to the Securityholders of such
series, as their names and addresses appear upon the Security Register. Upon
receiving such notice of resignation, the Company and the Guarantor shall
promptly appoint a successor trustee with respect to Securities of such series
by written instrument, in duplicate, executed by order of the Board of
Directors, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee. If no successor trustee shall
have been so appointed and have accepted appointment within 30 days after the
mailing of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee with
respect to Securities of such series, or any Securityholder of that series who
has been a bona fide holder of a Security or Securities for at least six months
may, subject to the provisions of Section 6.08, on behalf of himself and all
others similarly situated, petition any such court for the appointment of a
successor trustee. Such court may thereupon after such notice, if any, as it
may deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any one of the following shall occur:
(1) the Trustee shall fail to comply with the provisions of
subsection (a) of Section 7.08 after written request therefor by the
Company or the Guarantor or by any Securityholder who has been a bona fide
holder of a Security or Securities for at least six months; or
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(2) the Trustee shall cease to be eligible in accordance with the
provisions of Section 7.09 and shall fail to resign after written request
therefor by the Company or the Guarantor or by any such Securityholder; or
(3) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or commence a voluntary bankruptcy
proceeding, or a receiver of the Trustee or of its property shall be
appointed or consented to, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then, in any such case, the
Company or the Guarantor may remove the Trustee with respect to all
Securities and appoint a successor trustee by written instrument, in
duplicate, executed by order of the Board of Directors, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee, or, subject to the provisions of Section 6.08, unless
the Trustee's duty to resign is stayed as provided herein, any
Securityholder who has been a bona fide holder of a Security or Securities
for at least six months may, on behalf of that holder and all others
similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor trustee. Such
court may thereupon after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Securities of any series at the time Outstanding may at any time remove the
Trustee with respect to such series by so notifying the Trustee, the Company and
the Guarantor and may appoint a successor Trustee for such series with the
consent of the Company and the Guarantor.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee with respect to the Securities of a series pursuant to any of
the provisions of this Section shall become effective upon acceptance of
appointment by the successor trustee as provided in Section 7.11.
(e) Any successor trustee appointed pursuant to this Section may be
appointed with respect to the Securities of one or more series or all of such
series, and at any time there shall be only one Trustee with respect to the
Securities of any particular series.
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SECTION 7.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor trustee with
respect to all Securities, every such successor trustee so appointed shall
execute, acknowledge and deliver to the Company and the Guarantor and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Company or the Guarantor or the successor trustee,
such retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor trustee all the rights, powers, and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor trustee all property and money held by such retiring Trustee
hereunder.
(b) In case of the appointment hereunder of a successor trustee with
respect to the Securities of one or more (but not all) series, the Company, the
Guarantor, the retiring Trustee and each successor trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor trustee shall accept such appointment
and which (1) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
trustee relates, (2) shall contain such provisions as shall be deemed necessary
or desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust, that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee and that no Trustee shall be responsible
for any act or failure to act on the part of any other Trustee hereunder; and
upon the execution and delivery of such supplemental indenture the resignation
or removal of the retiring Trustee shall become effective to the extent provided
therein, such retiring Trustee shall with respect to the Securities of that or
those series to
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which the appointment of such successor trustee relates have no further
responsibility for the exercise of rights and powers or for the performance of
the duties and obligations vested in the Trustee under this Indenture, and each
such successor trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor trustee relates; but, on request of the Company or
the Guarantor or any successor trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor trustee, to the extent contemplated by
such supplemental indenture, the property and money held by such retiring
Trustee hereunder with respect to the Securities of that or those series to
which the appointment of such successor trustee relates.
(c) Upon request of any such successor trustee, the Company and the
Guarantor shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor trustee all such rights, powers and
trusts referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor trustee shall accept its appointment unless at the
time of such acceptance such successor trustee shall be qualified and eligible
under this Article.
(e) Upon acceptance of appointment by a successor trustee as provided
in this Section, the Company and the Guarantor shall transmit notice of the
succession of such trustee hereunder by mail, first class postage prepaid, to
the Securityholders, as their names and addresses appear upon the Security
Register. If the Company and the Guarantor fail to transmit such notice within
ten days after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be transmitted at the expense of the Company
and the Guarantor.
SECTION 7.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, PROVIDED that such corporation shall be
qualified under the provisions of Section 7.08 and eligible under the provisions
of
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Section 7.09, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding. In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.
SECTION 7.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee shall comply with Section 311(a) of the Trust Indenture
Act, excluding any creditor relationship described in Section 311(b) of the
Trust Indenture Act. A Trustee who has resigned or been removed shall be
subject to Section 311(a) of the Trust Indenture Act to the extent included
therein.
ARTICLE VIII.
CONCERNING THE SECURITYHOLDERS
SECTION 8.01. EVIDENCE OF ACTION BY SECURITYHOLDERS.
Whenever in this Indenture it is provided that the holders of a
majority or specified percentage in aggregate principal amount of the Securities
of a particular series may take any action (including the making of any demand
or request, the giving of any notice, consent or waiver or the taking of any
other action), the fact that at the time of taking any such action the holders
of such majority or specified percentage of that series have joined therein may
be evidenced by any instrument or any number of instruments of similar tenor
executed by such holders of Securities of that series in Person or by agent or
proxy appointed in writing.
If the Company or the Guarantor shall solicit from the Securityholders
of any series any request, demand, authorization, direction, notice, consent,
waiver or other action, the Company or the Guarantor may, at its option, as
evidenced by an Officers' Certificate, fix in advance a record date for such
series for the determination of Securityholders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other action, but
the Company or the Guarantor shall have no obligation to do so. If such a
record date is fixed, such
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request, demand, authorization, direction, notice, consent, waiver or other
action may be given before or after the record date, but only the
Securityholders of record at the close of business on the record date shall be
deemed to be Securityholders for the purposes of determining whether
Securityholders of the requisite proportion of Outstanding Securities of that
series have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other action, and for that
purpose the Outstanding Securities of that series shall be computed as of the
record date; PROVIDED, HOWEVER, that no such authorization, agreement or consent
by such Securityholders on the record date shall be deemed effective unless it
shall become effective pursuant to the provisions of this Indenture not later
than six months after the record date.
SECTION 8.02. PROOF OF EXECUTION BY SECURITYHOLDERS.
Subject to the provisions of Section 7.01, proof of the execution of
any instrument by a Securityholder (such proof will not require notarization) or
his agent or proxy and proof of the holding by any Person of any of the
Securities shall be sufficient if made in the following manner:
(a) The fact and date of the execution by any such Person of any
instrument may be proved in any reasonable manner acceptable to the
Trustee.
(b) The ownership of Securities shall be proved by the Security
Register of such Securities or by a certificate of the Security Registrar
thereof.
(c) The Trustee may require such additional proof of any matter
referred to in this Section as it shall deem necessary.
SECTION 8.03. WHO MAY BE DEEMED OWNERS.
Prior to the due presentment for registration of transfer of any
Security, the Company, the Guarantor, the Trustee, any paying agent and any
Security Registrar may deem and treat the Person in whose name such Security
shall be registered upon the books of the Company as the absolute owner of such
Security (whether or not such Security shall be overdue and notwithstanding any
notice of ownership or writing thereon made by anyone other than the Security
Registrar) for the purpose of receiving payment of or on account of the
principal of, premium, if any, and (subject to Section 2.03) interest on such
Security and for all other purposes; and neither the Company nor the
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Guarantor nor the Trustee nor any paying agent nor any Security Registrar shall
be affected by any notice to the contrary.
SECTION 8.04. CERTAIN SECURITIES OWNED BY COMPANY OR GUARANTOR
DISREGARDED.
In determining whether the holders of the requisite aggregate
principal amount of Securities of a particular series have concurred in any
direction, consent of waiver under this Indenture, the Securities of that series
that are owned by the Company or the Guarantor or any other obligor on the
Securities of that series or by any Person directly or indirectly controlling or
controlled by or under common control with the Company or the Guarantor or any
other obligor on the Securities of that series shall be disregarded and deemed
not to be Outstanding for the purpose of any such determination, except that for
the purpose of determining whether the Trustee shall be protected in relying on
any such direction, consent or waiver, only Securities of such series that the
Trustee actually knows are so owned shall be so disregarded. The Securities so
owned that have been pledged in good faith may be regarded as Outstanding for
the purposes of this Section, if the pledgee shall establish to the satisfaction
of the Trustee the pledgee's right so to act with respect to such Securities and
that the pledgee is not a Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or the
Guarantor or any such other obligor. In case of a dispute as to such right, any
decision by the Trustee taken upon the advice of counsel shall be full
protection to the Trustee.
SECTION 8.05. ACTIONS BINDING ON FUTURE SECURITYHOLDERS.
At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 8.01, of the taking of any action by the holders of the
majority or percentage in aggregate principal amount of the Securities of a
particular series specified in this Indenture in connection with such action,
any holder of a Security of that series that is shown by the evidence to be
included in the Securities the holders of which have consented to such action
may, by filing written notice with the Trustee, and upon proof of holding as
provided in Section 8.02, revoke such action so far as concerns such Security.
Except as aforesaid any such action taken by the holder of any Security shall be
conclusive and binding upon such holder and upon all future holders and owners
of such Security, and of any Security issued in exchange therefor, on
registration of transfer thereof or in place thereof, irrespective of whether or
not any notation
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in regard thereto is made upon such Security. Any action taken by the holders
of the majority or percentage in aggregate principal amount of the Securities of
a particular series specified in this Indenture in connection with such action
shall be conclusively binding upon the Company, the Guarantor, the Trustee and
the holders of all the Securities of that series.
ARTICLE IX.
SUPPLEMENTAL INDENTURES
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT OF
SECURITYHOLDERS.
In addition to any supplemental indenture otherwise authorized by this
Indenture, the Company and the Guarantor and the Trustee may from time to time
and at any time enter into an indenture or indentures supplemental hereto (which
shall conform to the provisions of the Trust Indenture Act as then in effect),
without the consent of the Securityholders, for one or more of the following
purposes:
(a) to cure any ambiguity, defect, or inconsistency herein, in the
Securities of any series or in the Guarantees;
(b) to comply with Article Ten;
(c) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(d) to add to the covenants of the Company or the Guarantor for the
benefit of the holders of all or any Series of Securities (and if such covenants
are to be for the benefit of less than all series of Securities, stating that
such covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the Company or
the Guarantor;
(e) to add to, delete from, or revise the conditions, limitations,
and restrictions on the authorized amount, terms, or purposes of issue,
authentication, and delivery of Securities, as herein set forth;
(f) to make any change that does not adversely affect the rights of
any Securityholder in any material respect; or
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(g) to provide for the issuance of and establish the form and terms
and conditions of the Securities of any series and the Guarantees as provided in
Section 2.01, to establish the form of any certifications required to be
furnished pursuant to the terms of this Indenture or any series of Securities,
or to add to the rights of the holders of any series of Securities.
The Trustee is hereby authorized to join with the Company and the
Guarantor in the execution of any such supplemental indenture, and to make any
further appropriate agreements and stipulations that may be therein contained,
but the Trustee shall not be obligated to enter into any such supplemental
indenture that affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section may be executed by the Company, the Guarantor and the Trustee without
the consent of the holders of any of the Securities at the time Outstanding,
notwithstanding any of the provisions of Section 9.02.
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF
SECURITYHOLDERS.
With the consent (evidenced as provided in Section 8.01) of the
holders of not less than a majority in aggregate principal amount of the
Securities of each series affected by such supplemental indenture or indentures
at the time Outstanding, the Company and the Guarantor, when authorized by
Board Resolutions, and the Trustee may from time to time and at any time enter
into an indenture or indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as then in effect) for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying in
any manner not covered by Section 9.01 the rights of the holders of the
Securities of such series under this Indenture; PROVIDED, HOWEVER, that no such
supplemental indenture shall, without the consent of the holders of each
Debenture then Outstanding and affected thereby, (i) extend the fixed maturity
of any Securities of any series, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or reduce any
premium payable upon the redemption thereof, without the consent of the holder
of each Security so affected or (ii) reduce the aforesaid percentage of
Securities, the holders of which are required to consent to any such
supplemental indenture.
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It shall not be necessary for the consent of the Securityholders of
any series affected thereby under this Section to approve the particular form of
any proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
SECTION 9.03. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture pursuant to the
provisions of this Article or of Section 10.01, this Indenture shall, with
respect to such series, be and be deemed to be modified and amended in
accordance therewith and the respective rights, limitations of rights,
obligations, duties and immunities under this Indenture of the Trustee, the
Company, the Guarantor and the holders of Securities of the series affected
thereby shall thereafter be determined, exercised and enforced hereunder subject
in all respects to such modifications and amendments, and all the terms and
conditions of any such supplemental indenture shall be and be deemed to be part
of the terms and conditions of this Indenture for any and all purposes.
SECTION 9.04. SECURITIES AFFECTED BY SUPPLEMENTAL INDENTURES.
Securities of any series, affected by a supplemental indenture,
authenticated and delivered after the execution of such supplemental indenture
pursuant to the provisions of this Article or of Section 10.01, may bear a
notation in form approved by the Company, provided such form meets the
requirements of any exchange upon which such series may be listed, as to any
matter provided for in such series may be listed, as to any matter provided for
in such supplemental indenture. If the Company and the Guarantor shall so
determine, new Securities of that series so modified as to conform, in the
opinion of the Board of Directors of the Company and the Guarantor, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Company and the Guarantor, authenticated by the Trustee and
delivered in exchange for the Securities of that series then Outstanding.
SECTION 9.05. EXECUTION OF SUPPLEMENTAL INDENTURES.
Upon the request of the Company and the Guarantor, accompanied by
their Board Resolutions authorizing the execution of any such supplemental
indenture, and upon the filing with the Trustee of evidence of the consent of
Securityholders required to consent thereto as aforesaid, the Trustee shall join
with the Company and the Guarantor in the execution of such supplemental
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indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion but shall not be obligated to enter into such
supplemental indenture. The Trustee, subject to the provisions of Section 7.01,
may receive an Opinion of Counsel as conclusive evidence that any supplemental
indenture executed pursuant to this Article is authorized or permitted by, and
conforms to, the terms of this Article and that it is proper for the Trustee
under the provisions of this Article to join in the execution thereof.
Promptly after the execution by the Company, the Guarantor and the
Trustee of any supplemental indenture pursuant to the provisions of this
Section, the Trustee shall transmit by mail, first class postage prepaid, a
notice, setting forth in general terms the substance of such supplemental
indenture, to the Securityholders of all series affected thereby as their names
and addresses appear upon the Security Register. Any failure of the Trustee to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture.
ARTICLE X.
SUCCESSOR CORPORATION
SECTION 10.01. COMPANY OR GUARANTOR MAY CONSOLIDATE, ETC.
Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of the Company or the Guarantor with or into
any other corporation or corporations (whether or not affiliated with the
Company or the Guarantor, as the case may be), or successive consolidations or
mergers in which the Company or the Guarantor, as the case may be, or its
successor or successors shall be a party or parties, or shall prevent any sale,
conveyance, transfer or other disposition of the property of the Company or the
Guarantor, as the case may be, or its successor or successors as an entirety, or
substantially as an entirety, to any other corporation (whether or not
affiliated with the Company or the Guarantor, as the case may be, or its
successor or successors) authorized to acquire and operate the same; PROVIDED,
HOWEVER, the Company and the Guarantor hereby covenant and agree that, upon any
such consolidation, merger, sale, conveyance, transfer or other disposition, the
due and punctual payment, in the case of the Company, of the principal of
(premium, if any) and interest on
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all of the Debt Securities of all series in accordance with the terms of each
series, according to their tenor or, in the case of the Guarantor, the
performance of all obligations under the Guarantees, and the due and punctual
performance and observance of all the covenants and conditions of this Indenture
with respect to each series or established with respect to such series pursuant
to Section 2.01 to be kept or performed by the Company or the Guarantor, as the
case may be, shall be expressly assumed, by supplemental indenture (which shall
conform to the provisions of the Trust Indenture Act, as then in effect)
satisfactory in form to the Trustee executed and delivered to the Trustee by the
entity formed by such consolidation, or into which the Company or the Guarantor,
as the case may be, shall have been merged, or by the entity which shall have
acquired such property.
SECTION 10.02. SUCCESSOR CORPORATION SUBSTITUTED.
(a) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition and upon the assumption by the successor
corporation, by supplemental indenture, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of, in the case of the Company, the due
and punctual payment of the principal of, premium, if any, and interest on all
of the Debt Securities of all series Outstanding or, in the case of the
Guarantor, the performance of all obligations under the Guarantees, and the due
and punctual performance of all of the covenants and conditions of this
Indenture or established with respect to each series of the Securities pursuant
to Section 2.01 to be performed by the Company or the Guarantor, as the case may
be, with respect to each series, such successor corporation shall succeed to and
be substituted for the Company or the Guarantor, as the case may be, with the
same effect as if it had been named as the Company or the Guarantor, as the case
may be, herein, and thereupon the predecessor corporation shall be relieved of
all obligations and covenants under this Indenture and the Securities.
(b) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition such changes in phraseology and form (but not in
substance) may be made in the Securities thereafter to be issued as may be
appropriate.
(c) Nothing contained in this Indenture or in any of the Securities
shall prevent the Company or the Guarantor from merging into itself or acquiring
by purchase or otherwise all or any part of the property of any other Person
(whether or not affiliated with the Company or the Guarantor).
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SECTION 10.03. EVIDENCE OF CONSOLIDATION, ETC. TO TRUSTEE.
The Trustee, subject to the provisions of Section 7.01, may receive an
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, conveyance, transfer or other disposition, and any such assumption, comply
with the provisions of this Article.
ARTICLE XI.
SATISFACTION AND DISCHARGE
SECTION 11.01. SATISFACTION AND DISCHARGE OF INDENTURE.
If at any time: (a) the Company or the Guarantor shall have delivered
to the Trustee for cancellation all Securities of a series theretofore
authenticated (other than any Securities that shall have ben destroyed, lost or
stolen and that shall have been replaced or paid as provided in Section 2.07)
and Securities for whose payment money or Governmental Obligations have
theretofore been deposited in trust or segregated and held in trust by the
Company or the Guarantor (and thereupon repaid to the Company or the Guarantor
or discharged from such trust, as provided in Section 11.05); or (b) all such
Securities of a particular series not theretofore delivered to the Trustee for
cancellation shall have become due and payable, or are by their terms to become
due and payable within one year or are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the giving of notice of
redemption, and the Company or the Guarantor shall deposit or cause to be
deposited with the Trustee as trust funds the entire amount in moneys or
Governmental Obligations sufficient or a combination thereof, sufficient in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay at
maturity or upon redemption all Securities of that series not theretofore
delivered to the Trustee for cancellation, including principal (and premium, if
any) and interest due or to become due to such date of maturity or date fixed
for redemption, as the case may be, and if the Company or the Guarantor shall
also pay or cause to be paid all other sums payable hereunder with respect to
such series by the Company and the Guarantor; then this Indenture shall
thereupon cease to be of further effect with respect to such series except for
the provisions of Sections 2.03, 2.05, 2.07, 4.01, 4.02, 4.03 and 7.10, that
shall survive until the date of maturity or redemption date, as the case may
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be, and Sections 7.06 and 11.05, that shall survive to such date and thereafter,
and the Trustee, on demand of the Company and the Guarantor and at the cost and
expense of the Company and the Guarantor, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture with respect to
such series.
SECTION 11.02. DISCHARGE OF OBLIGATIONS.
If at any time all such Securities of a particular series not
heretofore delivered to the Trustee for cancellation or that have not become due
and payable as described in Section 11.01 shall have been paid by the Company or
the Guarantor by depositing irrevocably with the Trustee as trust funds moneys
or an amount of Governmental Obligations sufficient to pay at maturity or upon
redemption all such Securities of that series not theretofore delivered to the
Trustee for cancellation, including principal (and premium, if any) and interest
due or to become due to such date of maturity or date fixed for redemption, as
the case may be, and if the Company or the Guarantor shall also pay or cause to
be paid all other sums payable hereunder by the Company and the Guarantor with
respect to such series, then after the date such moneys or Governmental
Obligations, as the case may be, are deposited with the Trustee the obligations
of the Company and the Guarantor under this Indenture with respect to such
series shall cease to be of further effect except for the provisions of Sections
2.03, 2.05, 2.07, 4,01, 4.02, 4,03, 7.06, 7.10 and 11.05 hereof that shall
survive until such Securities shall mature and be paid. Thereafter, Sections
7.06 and 11.05 shall survive.
SECTION 11.03. DEPOSITED MONEYS TO BE HELD IN TRUST.
All moneys or Governmental Obligations deposited with the Trustee
pursuant to Sections 11.01 or 11.02 shall be held in trust and shall be
available for payment as due, either directly or through any paying agent
(including the Company acting as its own paying agent), to the holders of the
particular series of Securities for the payment or redemption of which such
moneys or Governmental Obligations have been deposited with the Trustee.
SECTION 11.04. PAYMENT OF MONEYS HELD BY PAYING AGENTS.
In connection with the satisfaction and discharge of this Indenture
all moneys or Governmental Obligations then held by any paying agent under the
provisions of this Indenture shall, upon demand of the Company or the Guarantor,
be paid to the Trustee and thereupon such paying agent shall be released from
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all further liability with respect to such moneys or Governmental Obligations.
SECTION 11.05. REPAYMENT TO COMPANY.
Any moneys or Governmental Obligations deposited with any paying agent
or the Trustee, or then held by the Company or the Guarantor, as the case may
be, in trust for payment of principal of or premium or interest on the
Securities of a particular series that are not applied but remain unclaimed by
the holders of such Securities for at least two years after the date upon which
the principal of (and premium, if any) or interest on such Securities shall have
respectively become due and payable, shall be repaid to the Company or the
Guarantor, as the case may be, on May 31 of each year or (if then held by the
Company or the Guarantor) shall be discharged from such trust; and thereupon the
paying agent and the Trustee shall be released from all further liability with
respect to such moneys or Governmental Obligations, and the holder of any of the
Securities entitled to receive such payment shall thereafter, as an unsecured
general creditor, look only to the Company or the Guarantor for the payment
thereof.
ARTICLE XII.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS
SECTION 12.01. NO RECOURSE.
No recourse under or upon any obligation, covenant or agreement of
this Indenture, or of any Security or Guarantee, or for any claim based thereon
or otherwise in respect thereof, shall be had against any incorporator,
stockholder, officer or director, past, present or future as such, of the
Company or the Guarantor or of any predecessor or successor corporation, either
directly or through the Company or the Guarantor or any such predecessor or
successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that this Indenture and the obligations issued hereunder
are solely corporate obligations, and that no such personal liability whatever
shall attach to, or is or shall be incurred by, the incorporators, stockholders,
officers or directors as such, of the Company or the Guarantor or of any
predecessor or successor corporation, or any of them, because of the creation of
the indebtedness hereby authorized, or under or
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by reason of the obligations, covenants or agreements contained in this
Indenture or in any of the Securities or implied therefrom; and that any and all
such personal liability of every name and nature, either at common law or in
equity or by constitution or statute, of, and any and all such rights and claims
against, every such incorporator, stockholder, officer or director as such,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any of the Securities or implied therefrom, are hereby expressly waived
and released as a condition of, and as a consideration for, the execution of
this Indenture and the issuance of such Securities.
ARTICLE XIII.
MISCELLANEOUS PROVISIONS
SECTION 13.01. EFFECT ON SUCCESSORS AND ASSIGNS.
All the covenants, stipulations, promises and agreements in this
Indenture contained by or on behalf of the Company or the Guarantor shall bind
their respective successors and assigns, whether so expressed or not.
SECTION 13.02. ACTIONS BY SUCCESSOR.
Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company or the Guarantor shall and may be done and performed with like force and
effect by the corresponding board, committee or officer of any corporation that
shall at the time be the lawful sole successor of the Company or the Guarantor,
as the case may be.
SECTION 13.03. SURRENDER OF COMPANY POWERS.
The Company or the Guarantor by instrument in writing executed by
authority of 2/3 (two-thirds) of its Board of Directors and delivered to the
Trustee may surrender any of the powers reserved to the Company or the
Guarantor, as the case may be, and thereupon such power so surrendered shall
terminate both as to the Company or the Guarantor, as the case may be, and as to
any successor corporation.
SECTION 13.04. NOTICES.
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Except as otherwise expressly provided herein any notice or demand
that by any provision of this Indenture is required or permitted to be given or
served by the Trustee or by the holders of Securities to or on the Company or
the Guarantor may be given or served by being deposited first class postage
prepaid in a post-office letterbox addressed (until another address is filed in
writing by the Company with the Trustee), as follows: c/o U S WEST, Inc., 7800
East Orchard Road, Englewood, Colorado 80111, Attention: Treasurer. Any
notice, election, request or demand by the Company or any Securityholder to or
upon the Trustee shall be deemed to have been sufficiently given or made, for
all purposes, if given or made in writing at the Corporate Trust Office of the
Trustee.
SECTION 13.05. GOVERNING LAW.
This Indenture and each Security shall be deemed to be a contract made
under the internal laws of the State of New York, and for all purposes shall be
construed in accordance with the laws of said State.
SECTION 13.06. TREATMENT OF DEBT SECURITIES AS DEBT.
It is intended that the Debt Securities will be treated as
indebtedness and not as equity for federal income tax purposes. The provisions
of this Indenture shall be interpreted to further this intention.
SECTION 13.07. COMPLIANCE CERTIFICATES AND OPINIONS.
(a) Upon any application or demand by the Company or the Guarantor to
the Trustee to take any action under any of the provisions of this Indenture,
the Company or the Guarantor, as the case may be, shall furnish to the Trustee
an Officers' Certificate stating that all conditions precedent provided for in
this Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent have been complied with, except that in the case of any
such application or demand as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.
(b) Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
in this Indenture shall include (1) a statement that the Person making such
certificate or opinion
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has read such covenant or condition; (2) a brief statement as to the nature and
scope of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; (3) a statement that, in the
opinion of such Person, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and (4) a statement as to whether
or not, in the opinion of such Person, such condition or covenant has been
complied with.
SECTION 13.08. PAYMENTS ON BUSINESS DAYS.
Except as provided pursuant to Section 2.01 pursuant to a Board
Resolution, and as set forth in an Officers' Certificate, or established in one
or more indentures supplemental to this Indenture, in any case where the date of
maturity of interest or principal of any Security or the date of redemption of
any Security shall not be a Business Day, then payment of interest or principal
(and premium, if any) may be made on the next succeeding Business Day with the
same force and effect as if made on the nominal date of maturity or redemption,
and no interest shall accrue for the period after such nominal date.
SECTION 13.09. CONFLICT WITH TRUST INDENTURE ACT.
If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 13.10. COUNTERPARTS.
This Indenture may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together constitute but
one and the same instrument.
SECTION 13.11. SEPARABILITY.
In case any one or more of the provisions contained in this Indenture
or in the Securities of any series shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Indenture or of
such Securities, but this Indenture and such Securities shall be construed as if
such invalid or illegal or unenforceable provision had never been contained
herein or therein.
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SECTION 13.12. ASSIGNMENT.
Each of the Company and the Guarantor will have the right at all times
to assign any of its respective rights or obligations under this Indenture to a
direct or indirect wholly-owned Subsidiary of the Guarantor, PROVIDED that, in
the event of any such assignment, the Company or the Guarantor, as the case may
be, will remain liable for all such obligations. Subject to the foregoing, the
Indenture is binding upon and inures to the benefit of the parties thereto and
their respective successors and assigns. This Indenture may not otherwise be
assigned by the parties thereto.
ARTICLE XIV.
SUBORDINATION OF SECURITIES
SECTION 14.01. SUBORDINATION TERMS.
The payment by the Company of the principal of, premium, if any, and
interest on any series of Debt Securities issued hereunder shall be subordinated
to the extent set forth in an indenture supplemental hereto relating to such
Debt Securities. The payment by the Guarantor of any obligation due under any
Guarantees issued hereunder shall be subordinated to the extent set forth in an
indenture supplemental hereto relating to such Guarantees.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
U S WEST CAPITAL FUNDING, INC.
By
--------------------------------------
Attest:
By
---------------------------------
U S WEST, INC.
By
--------------------------------------
Attest:
By
---------------------------------
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By
--------------------------------------
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STATE OF )
COUNTY OF ) ss.:
On the ____ day of ___________, 1995, before me personally came
_______________________________ to me known, who, being by me duly sworn, did
depose and say that he is the ______________ ___________________________________
of U S WEST CAPITAL FUNDING, INC., one of the corporations described in and
which executed the above instrument; that he knows the corporate seal of said
corporation; that the seal affixed to the said instrument is such corporation
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
--------------------------------------------------
NOTARY PUBLIC
[seal] Commission expires
STATE OF )
COUNTY OF ) ss.:
On the ____ day of ___________, 1995, before me personally came
_______________________________ to me known, who, being by me duly sworn, did
depose and say that he is the ______________ ___________________________________
of U S WEST, INC., one of the corporations described in and which executed the
above instrument; that he knows the corporate seal of said corporation; that the
seal affixed to the said instrument is such corporation seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that he
signed his name thereto by like authority.
--------------------------------------------------
NOTARY PUBLIC
[seal] Commission expires
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FIRST SUPPLEMENTAL INDENTURE, dated as of April __, 1995 (the
"First Supplemental Indenture"), between U S WEST Capital Funding, Inc., a
Colorado corporation (the "Company"), U S WEST, Inc., a Colorado corporation
(the "Guarantor") and Norwest Bank Minnesota, National Association, as trustee
(the "Trustee") under the Indenture dated as of April __, 1995 between the
Company, the Guarantor and the Trustee (the "Indenture").
WHEREAS, the Company and the Guarantor executed and delivered the
Indenture to the Trustee to provide for the future issuance of the Company's
unsecured subordinated debt securities guaranteed by the Guarantor, to be issued
from time to time in one or more series as might be determined by the Company
under the Indenture, in an unlimited aggregate principal amount which may be
authenticated and delivered as provided in the Indenture;
WHEREAS, pursuant to the terms of the Indenture, the Company desires
to provide for the establishment of a new series of its Debt Securities to be
known as its ___% Subordinated Deferrable Interest Notes due 2025 (the "Notes"),
and the Guarantor desires to provide for the issuance of a Guarantee of such
Debt Securities (the "Note Guarantee"), the form and substance of such Notes and
the Note Guarantee and the terms, provisions and conditions thereof to be set
forth as provided in the Indenture and this First Supplemental Indenture;
WHEREAS, U S WEST Financing [ ], a Delaware statutory business trust
(the "Trust"), has offered to the public $[ ] aggregate liquidation amount of
its ___% Trust Originated Preferred Securities (the "Preferred Securities"),
representing undivided beneficial interests in the assets of the Trust and
proposes to invest the proceeds from such offering in $[ ] aggregate
principal amount of the Notes; and
WHEREAS, the Company and the Guarantor have requested the Trustee
execute and deliver this First Supplemental Indenture, and all requirements
necessary to make this First Supplemental Indenture a valid instrument, in
accordance with its terms, and to make the Notes, when executed by the Company
and authenticated and delivered by the Trustee, the valid obligations of the
Company and to make the Guarantee endorsed thereon when executed by the
Guarantor a valid obligation of the Guarantor, have been performed, and the
execution and
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delivery of this First Supplemental Indenture has been duly authorized in all
respects:
NOW THEREFORE, in consideration of the purchase and acceptance of
the Notes by the holders thereof, and for the purpose of setting forth, as
provided in the Indenture, the form and substance of the Notes and the terms,
provisions and conditions thereof, the Company and the Guarantor covenant and
agree with the Trustee as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITION OF TERMS
Unless the context otherwise requires:
(a) a term defined in the Indenture has the same meaning when used
in this First Supplemental Indenture;
(b) a term defined anywhere in this First Supplemental Indenture
has the same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) a reference to a Section or Article is to a Section or Article
of this First Supplemental Indenture;
(e) headings are for convenience of reference only and do not
affect interpretation;
(f) the following terms have the meanings given to them in the
Declaration: (i) Clearing Agency (ii) Delaware Trustee; (iii)
Dissolution Tax Opinion; (iv) No Recognition Opinion; (v)
Property Trustee; (vi) Preferred Security Certificate; (vii)
Regular Trustees; (viii) Special Event; and (ix) Tax Event;
and
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(g) the following terms have the meanings given to them in this
Section 1.1(g):
"Declaration" means the Amended and Restated Declaration of Trust
of U S WEST Financing I, a Delaware business trust, dated as of ___ April
1995.
"Dissolution Event" means that as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance with
the Declaration and the Notes held by the Property Trustee are to be distributed
to the holders of the Trust Securities issued by the Trust pro rata in
accordance with the Declaration.
"Extended Maturity Date" means, if the Company elects to extend the
Maturity Date in accordance with Section 2.2(b), the date selected by the
Company which is after the Scheduled Maturity Date but before _________, 2044.
"Maturity Date" means the date on which the Notes mature and on
which the principal shall be due and payable together with all accrued and
unpaid interest thereon including Compounded Interest and Additional Interest,
if any.
"Scheduled Maturity Date" means ______________, 2025.
"Senior Indentures" means with respect to the Company or Guarantor,
(i) the principal, premium, if any, and interest in respect of (a) indebtedness
of such obligor for money borrowed and (b) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such obligor including,
without limitation, in the case of the Guarantor, all obligations under its
Liquid Yield Option Notes due 2011; (ii) all capital lease obligations of such
obligor; (iii) all obligations of such obligor issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such obligor and
all obligations of such obligor under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of business);
(iv) all obligations of such obligor for the reimbursement on any letter of
credit, banker's acceptance, security purchase facility or similar credit
transaction; (v) all obligations of the type referred to
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in clauses (i) through (iv) of other persons for the payment of which such
obligor is responsible or liable as obligor, guarantor or otherwise; and (vi)
all obligations of the type referred to in clauses (i) through (v) of other
persons secured by any lien on any property or asset of such obligor (whether or
not such obligation is assumed by such obligor), except for (1) any such
indebtedness that is by its terms subordinated to or pari passu with the Notes,
as the case may be, and (2) any indebtedness between or among such obligor and
its Affiliates, including all other debt securities and guarantees in respect
of those debt securities, issued to (y) any other U S WEST Trust or (z) any
trusts, partnerships or any other entities affiliated with the Guarantor which
is a financing vehicle of the Guarantor ("Financing Entity") in connection with
an issuance by such Financing Entity of preferred securities or other
securities which rank pari passu with, or junior to, the Preferred Securities.
ARTICLE II
GENERAL TERMS AND CONDITIONS OF
THE NOTES
SECTION 2.1 DESIGNATION AND PRINCIPAL AMOUNT
There is hereby authorized:
(a) a series of Debt Securities designated the "____% Subordinated
Deferrable Interest Notes - due 2025", limited in aggregate principal amount to
$[ million], which amount shall be as set forth in any written order of the
Company for the authentication and delivery of Notes pursuant to Section 2.4 of
the Indenture; and
(b) a Guarantee of such Debt Securities.
SECTION 2.2 MATURITY
(a) The Maturity Date will be either:
(i) the Scheduled Maturity Date; or
(ii) if the Company elects to extend the Maturity Date
beyond the Scheduled Maturity Date in accordance with
Section 2.2(b), the Extended Maturity Date;
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(b) the Company may at any time before the day which is 90 days
before the Scheduled Maturity Date, elect to extend the
Maturity Date only once to the Extended Maturity Date provided
that the following conditions in this Section 2.2(b) are
satisfied both at the date the Company gives notice in
accordance with Section 2.2(c) of its election to extend the
Maturity Date and at the Scheduled Maturity Date:
(i) the Company is not in bankruptcy or otherwise
insolvent;
(ii) the Company is not in default on any Securities issued
to any U S WEST Trust or any trustee of such U S WEST
Trust in connection with the issuance of Trust
Securities by such U S WEST Trust;
(iii) the Company has made timely payments on the Debenture
for the immediately preceding 18 months without
deferrals;
(iv) the Trust is not in arrears on payments of
Distributions on the Trust Securities issued by it;
and
(v) the Notes are rated Investment grade or the equivalent
by Standard & Poor's Corporation, Moody's Investors
Service, Inc., Fitch Investor Services, Duff & Phelps
Credit Rating Company or any other nationally
recognized statistical rating organization; and
(c) if the Company elects to extend the Maturity Date in
accordance with Section 2.2(b), the Company shall give notice
to registered holders of the Notes, the Property Trustee and
the Trust of the extension of the Maturity Date and the
Extended Maturity Date at least [90] days before the Scheduled
Maturity Date.
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SECTION 2.3 FORM AND PAYMENT
Except as provided in Section 2.4, the Notes shall be issued in
fully registered certificated form without interest coupons. Principal and
interest on the Notes issued in certificated form will be payable, the transfer
of such Notes will be registrable and such Notes will be exchangeable for Notes
bearing identical terms and provisions at the office or agency of the Trustee;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the registered holder at such address as shall appear
in the Security Register. Notwithstanding the foregoing, so long as the
registered holder of any Notes is the Property Trustee, the payment of the
principal of and interest (including Compounded Interest and Additional
Interest, if any) on such Notes held by the Property Trustee will be made at
such place and to such account as may be designated by the Property Trustee.
SECTION 2.4 GLOBAL NOTE
In connection with a Dissolution Event;
(a) the Notes in certificated form may be presented to the Trustee
by the Property Trustee in exchange for a Global Note in an
aggregate principal amount equal to all Outstanding Notes, to
be registered in the name of the Depository, or its nominee,
and delivered by the Trustee to the Depository for crediting
to the accounts of its participants pursuant to the
instructions of the Regular Trustees. The Company upon any
such presentation shall execute a Global Note in such
aggregate principal amount and deliver the same to the Trustee
for authentication and delivery in accordance with the
Indenture and this First Supplemental Indenture. Payments on
the Notes issued as a Global Note will be made to the
Depository; and
(b) if any Preferred Securities are held in non book-entry
certificated form, the Notes in certificated form may be
present-
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ed to the Trustee by the Property Trustee and any
Preferred Security Certificate which represents Preferred
Securities other than Preferred Securities held by the
Clearing Agency or its nominee ("Non Book-Entry Preferred
Securities") will be deemed to represent beneficial interests
in Notes presented to the Trustee by the Property Trustee
having an aggregate principal amount equal to the aggregate
liquidation amount of the Non Book-Entry Preferred Securities
until such Preferred Security Certificates are presented to
the Security Registrar for transfer or reissuance at which
time such Preferred Security Certificates will be cancelled
and a Note, registered in the name of the holder of the
Preferred Security Certificate or the transferee of the holder
of such Preferred Security Certificate as the case may be,
with an aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Security Certificate
cancelled will be executed by the Company and delivered to the
Trustee for authentication and delivery in accordance with the
Indenture and this First Supplemental Indenture. On issue of
such Notes, Notes with an equivalent aggregate principal
amount that were presented by the Property Trustee to the
Trustee will be deemed to have been cancelled.
SECTION 2.5 INTEREST
(a) Each Note will bear interest at the rate of ___% per annum (the
"Coupon Rate") from the original date of issuance until the principal thereof
becomes due and payable, and on any overdue principal and (to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the Coupon Rate, payable (subject to the provisions
of Article Four) quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year (each, an "Interest Payment Date", commencing
on ________ __, 1995), to the person in whose name such Note or any predecessor
Note is registered, at the close of
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business on the regular record date for such interest installment, which in
respect of any Notes of which the Property Trustee is the registered holder of
or a Global Note, shall be the close of business on the Business Day next
preceding that Interest Payment Date. Notwithstanding the foregoing
sentence, if the Preferred Securities are no longer in book-entry only form
or if pursuant to the provisions of Section 2.11(c) of the Indenture the Notes
are not represented by a Global Note, the Company may select a regular record
date for such interest installment which shall be any date at least one
Business Day before an Interest Payment Date.
(b) The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. Except as provided in
the following sentence, the amount of interest payable for any period shorter
than a full quarterly period for which interest in computed, will be computed
on the basis of the actual number of days elapsed per 30-day month. In the
event that any date on which interest is payable on the Notes is not a
Business Day, then payment of interest payable on such date will be made on
the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business
Day is in the next succeeding calendar year, such payment shall be made on
the immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
(c) If at any time while the Property Trustee is the holder of any
Notes, the Trust or the Property Trustee is required to pay any taxes, duties
assessments or governmental changes of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
case, the Company will pay as additional interest ("Additional Interest") on the
Notes held by the Property Trustee, such additional amounts as shall be required
so that the net amounts received and retained by the Trust and the Property
Trustee after paying such taxes, duties assessments or other governmental
changes will be equal to the amounts the Trust and the Property Trustee would
have received had no such taxes, duties, assessments or other government changes
been imposed.
ARTICLE III
REDEMPTION OF THE NOTES
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SECTION 3.1 SPECIAL EVENT REDEMPTION
If a Tax Event has occurred and is continuing and:
(a) the Company has received a Redemption Tax Opinion; or
(b) after receiving a Dissolution Tax Opinion, the Regular
Trustees shall have been informed by tax counsel rendering the
Dissolution Tax Opinion that a No Recognition Opinion cannot
be delivered to the Trust,
then, notwithstanding Section 3.2(a) but subject to Section 3.2(b), the Company
shall have the right upon not less than 30 days nor more than 60 days notice to
the registered holders of the Notes to redeem the Notes in whole or in part for
cash within 90 days following the occurrence of such Tax Event (the "90 Day
Period"), provided that, if at the time there is available to the Company the
opportunity to eliminate within the 90 Day Period, the Tax Event by taking some
ministerial action ("Ministerial Action"), such as filing a form or making an
election, or pursuing some other similar reasonable measure which has no adverse
effect on the Company, the Trust, the Guarantor or the Holders of the Trust
Securities issued by the Trust, the Company shall pursue such Ministerial Action
in lieu of redemption; and provided, further, that the Company shall have no
right to redeem the Notes while the Trust is pursuing any Ministerial Action
pursuant to its obligations under the Declaration.
SECTION 3.2 OPTIONAL REDEMPTION BY COMPANY
(a) Subject to the provisions of Article Three of the Indenture
and to Section 3.2(b), the Company shall have the right to
redeem the Notes, in whole or in part, from time to time, on
or after __________ __,2000, at a redemption price equal to
100% of the principal amount to be redeemed plus any accrued
and unpaid interest thereon to the date of such redemption
(the "Optional Redemption Price"). Any redemption pursuant to
this paragraph will be made upon not less than 30 nor more
than 60 days' notice
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to the registered holder of the Notes, at the Optional
Redemption Price. If the Notes are only partially redeemed
pursuant to this Section 3.2, the Notes will be redeemed pro
rata or by lot or by any other method utilized by the Trustee;
provided, that if at the time of redemption, the Notes are
registered as a Global Note, the Depository shall determine by
lot the principal amount of such Notes held by each Noteholder
to be redeemed.
(b) If a partial redemption of the Notes would result in the
delisting of the Preferred Securities issued by the Trust from
any national securities exchange or other organization on
which the Preferred Securities are then listed, the Company
shall not be permitted to effect such partial redemption and
may only redeem the Notes in whole.
SECTION 3.3 NO SINKING FUND
The Notes are not entitled to the benefit of any sinking fund.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1 EXTENSION OF INTEREST PAYMENT PERIOD
The Company shall have the right, at any time during the term of the
Notes, from time to time to extend the interest payment period of such Notes for
up to 20 consecutive quarters (the "Extended Interest Payment Period"). To the
extent permitted by applicable law, interest, the payment of which has been
deferred because of the extension of the interest payment period pursuant to
this Section 4.1, will bear interest thereon at the Coupon Rate for each quarter
of the Extended Interest Payment Period. At the end of the Extended Interest
Payment Period the Company shall pay all interest accrued and unpaid on the
Notes including any Additional Interest
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("Deferred Interest") which shall be payable to the holders of the Notes in
whose names the Notes are registered in the Security Register on the first
record date after the end of the Extended Interest Payment Period. Before the
termination of any Extended Interest Payment Period, the Company may further
extend such period, provided that such period together with all such further
extensions thereof shall not exceed 20 consecutive quarters. Upon the
termination of any Extended Interest Payment Period and upon the payment of all
Deferred Interest then due, the Company may select a new Extended Interest
Payment Period, subject to the foregoing requirements. No interest shall be due
and payable during an Extended Interest Payment Period, except at the end
thereof.
SECTION 4.2 NOTICE OF EXTENSION
(a) If the Property Trustee is the only registered holder of the
Notes at the time the Company selects an Extended Interest
Payment Period, the Company shall give written notice to both
the Regular Trustees and the Property Trustee of its selection
of such Extended Interest Payment Period one Business Day
before the earlier of (i) the next succeeding date on which
Distributions on the Trust Securities issued by the Trust are
payable, or (ii) the date the Trust is required to give notice
of the record date or the date such Distributions are payable
to the New York Stock Exchange or other applicable
self-regulatory organization or to holders of the Preferred
Securities issued by the Trust, but in any event at least one
Business Day before such record date.
(b) If the Property Trustee is not the only holder of the Notes at
the time the Company selects an Extended Interest Payment
Period, the Company shall give the holders of the Notes
written notice of its selection of such Extended Interest
Payment Period 10 Business Days before the earlier of (i) the
next succeeding Interest Payment Date, or (ii) the date the
Company is
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required to give notice of the record or payment date of such
interest payment to the New York Stock Exchange or other
applicable self-regulatory organization or to holders of the
Notes.
(c) The quarter in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 4.2 shall be counted
as one of the 20 quarters permitted in the maximum Extended
Interest Payment Period permitted under Section 4.1.
ARTICLE V
EXPENSES AND GUARANTEE
SECTION 5.1 PAYMENT OF EXPENSES
In connection with the offering, sale and issuance of the Notes to
the Property Trustee in connection with the sale of the Trust Securities by the
Trust, the Company shall:
(a) pay for all costs and expenses relating to the offering, sale
and issuance of the Note, including commissions to the
underwriters payable pursuant to the Underwriting Agreement
and the Pricing Agreement and compensation of the Trustee
under the Indenture in accordance with the provisions of
Section 7.06 of the Indenture;
(b) pay for all costs and expenses of the Trust (including, but
not limited to, costs and expenses relating to the
organization of the Trust, the offering, sale and issuance of
the Trust Securities (including commissions to the
underwriters in connection therewith), the fees and expenses
of the Property Trustee and the Delaware Trustee, the costs
and expenses relating to the operation of the Trust,
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including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services,
expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s), transfer
agent(s), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in
connection with the acquisition, financing, and disposition of
Trust assets); and
(c) pay any and all taxes (other than United States withholding
taxes attributable to the Trust or its assets) and all
liabilities, costs and expenses with respect to such taxes of
the Trust.
SECTION 5.2 GUARANTEE OF PAYMENT OF EXPENSES
The Guarantor hereby fully and unconditionally guarantees the due
and punctual payment of all amounts that become due and payable by the
Company to any Person pursuant to Section 5.1.
ARTICLE VI
SUBORDINATION
SECTION 6.1 AGREEMENT TO SUBORDINATE.
The Company and the Guarantor covenant and agree, and each holder
of Notes issued hereunder by holder's acceptance thereof likewise covenants
and agrees, that all Notes shall be issued subject to the provisions of this
Article Six; and each holder of a Note, whether upon original issue or upon
transfer or assignment thereof, accepts and agrees to be bound by such
provisions.
The payment by the Company of the principal of, premium, if any, and
interest on all Notes issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and subject in right of payment to the
prior payment in full of all Senior Indebted-
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ness of the Company, whether outstanding at the date of this Indenture or
thereafter incurred. The payment by the Guarantor of any obligation due under
the Guarantees issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and subject in right of payment to the
prior payment in full of all Senior Indebtedness of the Guarantor, whether
outstanding at the date of this Indenture or thereafter incurred.
No provision of this Article Six shall prevent the occurrence of
any default or Event of Default hereunder.
SECTION 6.2 DEFAULT ON SENIOR INDEBTEDNESS.
In the event and during the continuation of any default by the
Company or the Guarantor in the payment of principal, premium, interest or any
other payment due on any Senior Indebtedness of the Company or the Guarantor,
as the case may be, or in the event that the maturity of any Senior Indebtedness
of the Company or the Guarantor, as the case may be, has been accelerated
because of a default, then, in either case, no payment shall be made by the
Company with respect to the principal (including redemption and sinking fund
payments) of, or premium, if any, or interest on the Notes, including payment
with respect to any obligation due under the Guarantees.
In the event that, notwithstanding the foregoing, any payment shall
be received by the Trustee or any holder when such payment is prohibited by the
preceding paragraph of this Section 6.2, such payment shall be held in trust for
the benefit of, and shall be paid over or delivered to, the holders of Senior
Indebtedness or their respective representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Indebtedness may have
been issued, as their respective interests may appear, but only to the extent
that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee within 90 days of such payment
of the amounts then due and owing on the Senior Indebtedness and only the
amounts specified in such notice to the Trustee shall be paid to the holders of
Senior Indebtedness.
SECTION 6.3 LIQUIDATION; DISSOLUTION; BANKRUPTCY.
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Upon any payment by the Company or the Guarantor, or distribution of
assets of the Company or the Guarantor of any kind or character, whether in
cash, property or securities, to creditors upon any dissolution or winding-up or
liquidation or reorganization of the Company or the Guarantor, whether voluntary
or involuntary or in bankruptcy, insolvency, receivership or other proceedings,
all amounts due upon all Senior Indebtedness of the Company or the Guarantor, as
the case may be, shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made by the Company or
the Guarantor, as the case may be, on account of the principal (and premium, if
any) or interest on the Notes; and upon any such dissolution or winding-up or
liquidation or reorganization any payment by the Company or the Guarantor, or
distribution of assets of the Company or the Guarantor of any kind or character,
whether in cash, property or securities, to which the holders of the Note or the
Trustee would be entitled to receive from the Company or the Guarantor, as the
case may be, except for the provisions of this Article Six, shall be paid by
the Company or the Guarantor, as the case may be, or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the holders of the Notes or by the Trustee under this
Indenture if received by them or it, directly to the holders of Senior
Indebtedness of the Company or the Guarantor, as the case may be (pro rata to
such holders on the basis of the respective amounts of Senior Indebtedness held
by such holders, as calculated by the Company or the Guarantor, as the case may
be) or their representative or representatives, or to the trustee or trustees
under any indenture pursuant to which any instruments evidencing such Senior
Indebtedness may have been issued, as their respective interests may appear, to
the extent necessary to pay such Senior Indebtedness in full, in money or
money's worth, after giving effect to any concurrent payment or distribution to
or for the holders of such Senior Indebtedness, before any payment or
distribution is made to the holders of Notes or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company or the Guarantor of any kind or character,
whether in cash, property or securities, prohibited by the foregoing, shall be
received by the Trustee or the holders of
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the Notes before all Senior Indebtedness of the Company or the Guarantor is paid
in full, or provision is made for such payment in money in accordance with its
terms, such payment or distribution shall be held in trust for the benefit of
and shall be paid over or delivered to the holders such Senior Indebtedness or
their representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, and their respective interests may appear, as calculated
by the Company or the Guarantor, for application to the payment of all Senior
Indebtedness of the Company or the Guarantor, as the case may be, remaining
unpaid to the extent necessary to pay such Senior Indebtedness in full in money
in accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.
For purposes of this Article Six, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company or the
Guarantor as reorganized or readjusted, or securities of the Company or the
Guarantor or any other corporation provided for by a plan of reorganization or
readjustment, the payment of which is subordinated at least to the extent
provided in this Article Six with respect to the Notes to the payment of all
Senior Indebtedness of the Company or the Guarantor, as the case may be, that
may at the time be outstanding, PROVIDED that (i) such Senior Indebtedness is
assumed by the new corporation, if any, resulting from any such reorganization
or readjustment, and (ii) the rights of the holders of such Senior Indebtedness
are not, without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company or the Guarantor with, or the
merger of the Company or the Guarantor into, another corporation or the
liquidation or dissolution of the Company or the Guarantor following the
conveyance or transfer of its property as an entirety, or substantially as an
entirety, to another corporation upon the terms and conditions provided for in
Article Ten of the Indenture shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section 6.3 if such other
corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Article Ten of the Indenture.
Nothing in Section 6.2 or in this Section 6.3 shall apply to claims
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of, or payments to, the Trustee under or pursuant to Section 7.6 of the
Indenture.
SECTION 6.4 SUBROGATION.
Subject to the payment in full of all Senior Indebtedness of the
Company or the Guarantor, the rights of the holders of the Notes shall be
subrogated to the rights of the holders of such Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company or the
Guarantor, as the case may be, applicable to such Senior Indebtedness until the
principal of (and premium, if any) and interest on the Notes shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions to
the holders for such Senior Indebtedness of any cash, property or securities to
which the holders of the Notes or the Trustee would be entitled except for the
provisions of this Article Six, and no payment over pursuant to the provisions
of this Article Six, to or for the benefit of the holders of such Senior
Indebtedness by holders of the Notes or the Trustee, shall, as between (i) the
Company, its creditors other than holders of Senior Indebtedness of the Company,
and the holders of the Notes or (ii) the Guarantor, its creditors other than the
holders of Senior Indebtedness of the Guarantor, and the holders of the Notes,
be deemed to be a payment by the Company or the Guarantor, as the case may be,
to or on account of such Senior Indebtedness. It is understood that the
provisions of this Article Six are and are intended solely for the purposes of
defining the relative rights of the holders of the Notes, on the one hand, and
the holders of such Senior Indebtedness on the other hand.
Nothing contained in this Article Six or elsewhere in this Indenture
or in the Notes is intended to or shall impair, as between (i) the Company, its
creditors other than the holders of Senior Indebtedness of the Company, and the
holders of the Notes or (ii) the Guarantor, its creditors other than the holders
of Senior Indebtedness of the Guarantor, and the holders of the Notes, the
obligation of the Company or the Guarantor, as the case may be, which is
absolute and unconditional, to pay to the holders of the Notes the principal of
(and premium, if any) and interest on the Notes as and when the same shall
become due and payable in accordance with
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their terms, or is intended to or shall affect the relative rights of the
holders of the Notes and creditors of the Company or the Guarantor, as the case
may be, other than the holders of Senior Indebtedness of the Company or the
Guarantor, as the case may be, nor shall anything herein or therein prevent the
Trustee or the holder of any Note from exercising all remedies otherwise
permitted by applicable law upon default under the Indenture, subject to the
rights, if any, under this Article Six of the holders of such Senior
Indebtedness in respect of cash, property or securities of the Company or the
Guarantor, as the case may be, received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company or the
Guarantor referred to in this Article Six, the Trustee, subject to the
provisions of Section 7.1 of the Indenture, and the holders of the Notes, shall
be entitled to rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Trustee or to the holders of the
Notes, for the purposes of ascertaining the Persons entitled to participate in
such distribution, the holders of Senior Indebtedness and other indebtedness of
the Company or the Guarantor, as the case may be, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article Six.
SECTION 6.5 TRUSTEE TO EFFECTUATE SUBORDINATION.
Each holder of Notes by such holder's acceptance thereof authorizes
and directs the Trustee on such holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Six and appoints the Trustee such holder's attorney-in-fact for any and
all such purposes.
SECTION 6.6 NOTICE BY THE COMPANY AND THE GUARANTOR.
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The Company or the Guarantor shall give prompt written notice to a
Responsible Officer of the Trustee of any fact known to the Company or the
Guarantor that would prohibit the making of any payment of monies to or by the
Trustee in respect of the Notes pursuant to the provisions of this Article Six.
Notwithstanding the provisions of this Article Six or any other provision of the
Indenture and this First Supplemental Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts that would prohibit the
making of any payment of monies to or by the Trustee in respect of the Notes
pursuant to the provisions of this Article Six, unless and until a Responsible
Officer of the Trustee shall have received written notice thereof at the
Principal Office of the Trustee from the Company or the Guarantor or a holder or
holders of Senior Indebtedness or from any trustee therefor; and before the
receipt of any such written notice, the Trustee, subject to the provisions of
Section 7.1 of the Indenture, shall be entitled in all respects to assume that
no such facts exist; PROVIDED, HOWEVER, that if the Trustee shall not have
received the notice provided for in this Section 6.6 at least two Business Days
prior to the date upon which by the terms hereof any money may become payable
for any purpose (including, without limitation, the payment of the principal of
(or premium, if any) or interest on any Note), then, anything herein contained
to the contrary notwithstanding, the Trustee shall have full power and authority
to receive such money and to apply the same to the purposes for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it within two Business Days prior to such date.
The Trustee, subject to the provisions of Section 7.1 of the
Indenture, shall be entitled to rely on the delivery to it of a written notice
by a Person representing himself to be a holder of Senior Indebtedness of the
Company or the Guarantor, as the case may be (or a trustee on behalf of such
holder) to establish that such notice has been given by a holder of such Senior
indebtedness or a trustee on behalf of any such holder or holders. In the event
that the Trustee determines in good faith that further evidence is required with
respect to the right of any Person as a holder of such Senior Indebtedness to
participate in any payment or distribution pursuant to this Article Six, the
Trustee may request such Person to furnish evidence to the reasonable
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satisfaction of the Trustee as to the amount of such Senior Indebtedness held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article Six, and if such evidence is not furnished the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
SECTION 6.7 RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR
INDEBTEDNESS.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article Six in respect of any Senior Indebtedness at
any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
With respect to the holders of Senior Indebtedness of the Company or
the Guarantor, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article Six,
and no implied covenants or obligations with respect to the holders of such
Senior Indebtedness shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of such
Senior Indebtedness and, subject to the provisions of Section 7.1 of the
Indenture, the Trustee shall not be liable to any holder of such Senior
Indebtedness if it shall pay over or deliver to holders of Notes, the Company,
the Guarantor or any other Person money or assets to which any holder of such
Senior Indebtedness shall be entitled by virtue of this Article Six or
otherwise.
SECTION 6.8 SUBORDINATION MAY NOT BE IMPAIRED.
No right of any present or future holder of any Senior Indebtedness
of the Company or the Guarantor to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or the Guarantor, as the case may be, or by any
act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company or the Guarantor, as the case may be,
20
<PAGE>
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof that any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Company or the Guarantor
may, at any time and from time to time, without the consent of or notice to the
Trustee or the holders of the Notes, without incurring responsibility to the
holders of the Notes and without impairing or releasing the subordination
provided in this Article Six or the obligations hereunder of the holders of
the Notes to the holders of such Senior Indebtedness, do any one or more the
following: (i) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, such Senior Indebtedness, or otherwise amend
or supplement in any manner such Senior Indebtedness or any instrument
evidencing the same or any agreement under which such Senior Indebtedness is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing such Senior Indebtedness; (iii) release
any Person liable in any manner for the collection of such Senior Indebtedness;
and (iv) exercise or refrain from exercising any rights against the Company or
the Guarantor, as the case may be, and any other Person.
ARTICLE VII
21
<PAGE>
COVENANT TO LIST ON EXCHANGE
SECTION 7.1 LISTING ON EXCHANGES
If the Notes are to be issued as a Global Note in connection with
the distribution of the Notes to the holders of the Preferred Securities issued
by the Trust upon a Dissolution Event, the Company will use its best efforts to
list such Notes on the New York Stock Exchange or on such other exchange as the
Preferred Securities are then listed.
ARTICLE VIII
FORM OF NOTE
SECTION 8.1 FORM OF NOTE
The Notes, the Note Guarantee and the Trustee's Certificate of
Authentication to be endorsed thereon are to be substantially in the following
forms:
(FORM OF FACE OF NOTE)
[IF THE NOTE IS TO BE A GLOBAL NOTE, INSERT - This Note is a Global]
Note within the meaning of the Indenture hereinafter referred to and is
registered in the name of a Depository or a nominee of a Depository. This Note
is exchangeable for Notes registered in the name of a person other than the
Depository or its nominee only in the limited circumstances described in the
Indenture, and no transfer of this Note (other than a transfer of this Note as a
whole by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository) may be
registered except in limited circumstances.
Unless this Note is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the issuer or
its agent for registration of transfer, exchange or payment, and any Note issued
is registered in the name of Cede & Co. or such other name as requested by an
authorized representative of The Depository Trust Company and any payment hereon
is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS
22
<PAGE>
WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.]
No. __________________ $_____________
CUSIP No._____________
U S WEST Capital Funding, Inc.
____% SUBORDINATED DEFERRABLE INTEREST NOTE
DUE 2025
U S WEST CAPITAL FUNDING, INC., a Colorado corporation (the
"Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
_______________ or registered assigns, the principal sum of _____________
Dollars on ____________, 2025 (or on such later date before ____, 2044 if the
Company elects to extend the maturity date as further described herein), and to
pay interest on said principal sum from ____________, 1995 or from the most
recent interest payment date (each such date, an "Interest Payment Date") to
which interest has been paid or duly provided for, quarterly (subject to
deferral as set forth herein) in arrears on March 31, June 30, September 31 and
December 31 of each year commencing _____________, 1995 at the rate of _____%
per annum until the principal hereof shall have become due and payable, and on
any overdue principal and premium, if any, and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the same rate per annum. The amount of
interest payable on any Interest Payment Date shall be computed on the basis of
a 360-day year of twelve 30-day months. In the event that any date on which
interest is payable on this Note is not a Business Day, then payment of interest
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in
23
<PAGE>
each case with the same force and effect as if made on such date. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the person
in whose name this Note (or one or more Predecessor Notes, as defined in said
Indenture) is registered at the close of business on the regular record date for
such interest installment [which shall be the close of business on the business]
day next preceding such Interest Payment Date]. [IF PURSUANT TO THE PROVISIONS]
OF SECTION 2.11(c) OF THE INDENTURE THE NOTES ARE NO LONGER REPRESENTED BY A
GLOBAL NOTE -- which shall be the close of business on the ____ business day
next preceding such Interest Payment Date]. Any such interest installment not
punctually paid or duly provided for shall forthwith cease to be payable to the
registered holders on such regular record date, and may be paid to the person in
whose name this Note (or one or more Predecessor Notes) is registered at the
close of business on a special record date to be fixed by the Trustee for the
payment of such defaulted interest, notice whereof shall be given to the
registered holders of this series of Notes not less than 10 days prior to such
special record date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the Notes
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in the Indenture. The principal of (and premium, if any)
and the interest on this Note shall be payable at the office or agency of the
Trustee maintained for that purpose in any coin or currency of the United States
of America which at the time of payment is legal tender for payment of public
and private debts; provided, however, that payment of interest may be made at
the option of the Company by check mailed to the registered holder at such
address as shall appear in the Security Register. Notwithstanding the
foregoing, so long as the Holder of this Note is the Property Trustee, the
payment of the principal of (and premium, if any) and interest on this Note will
be made at such place and to such account as may be designated by the Property
Trustee.
The indebtedness evidenced by this Note is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full
24
<PAGE>
of all Senior Indebtedness, and this Note is issued subject to the provisions of
the Indenture with respect thereto. Each Holder of this Note, by accepting the
same, (a) agrees to and shall be bound by such provisions, (b) authorizes and
directs the Trustee on his or her behalf to take such action as may be necessary
or appropriate to acknowledge or effectuate the subordination so provided and
(c) appoints the Trustee his or her attorney-in-fact for any and all such
purposes. Each Holder hereof, by his or her acceptance hereof, hereby waives
all notice of the acceptance of the subordination provisions contained herein
and in the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such Holder upon
said provisions.
This Note shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
Unless the Certificate of Authentication hereon has been executed by
the Trustee referred to on the reverse side hereof, this Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
The provisions of this Note are continued on the reverse side hereof
and such continued provisions shall for all purposes have the same effect as
though fully set forth at this place.
25
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
Dated___________________
U S WEST CAPITAL FUNDING, INC.
By______________________
[ ]
Attest:
By_____________________
Secretary
26
<PAGE>
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Notes of the series of Notes described in the
within-mentioned Indenture.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
_________________________ ______________________
as Trustee or as Authentication Agent
By_______________________ By_____________________
Authorized Signatory Authorized Signatory
[FORM OF GUARANTEE]
FOR VALUE RECEIVED, U S WEST, Inc., a Colorado corporation (the
"Guarantor"), hereby unconditionally guarantees to the holder of the
Security upon which this Guarantee is endorsed the due and punctual payment of
the principal of, sinking fund payment, if any, premium, if any, or interest on
said Security, when and as the same shall become due and payable, whether at
maturity, upon redemption or otherwise, according to the terms thereof and of
the Indenture referred to therein.
The Guarantor agrees to determine, at least one Business Day prior
to the date upon which a payment of principal of, sinking fund payment, if any,
premium, if any, or interest on said Security is due and payable, whether the
Company has available the funds to make such payment as the same shall become
due and payable. In case of the failure of the Company punctually to pay any
such principal, sinking fund payment, if any, premium, if any, or interest, the
Guarantor hereby agrees to cause any such payment to be made punctually when and
as the same shall become due and payable, whether at maturity, upon redemption,
or otherwise, and as if such payment were made by the Company.
27
<PAGE>
The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrevocable, and absolute, irrespective of the validity,
regularity, or enforceability of said Security of said Indenture, the absence of
any action to enforce the same, any waiver or consent by the Holder of said
Security with respect to any provisions thereof, the recovery of any judgment
against the Company or any action to enforce the same, or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. The Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy of
the Company, any right to require a proceeding first against the Company,
protest or notice with respect to said Security or indebtedness evidenced
thereby, and all demands whatsoever and covenants that this Guarantee will not
be discharged except by complete performance of the obligations contained in
said Security and in this Guarantee.
The Guarantor shall be subrogated to all rights of the holder of
said Security against the Company in respect of any amounts paid by the
Guarantor pursuant to the provisions of this Guarantee; provided, however, that
the Guarantor shall not, without the consent of the holders of all of the
Securities then outstanding, be entitled to enforce or to receive any payments
arising out of or based upon such right of subrogation until the principal of
and premium, if any, and interest on all Securities shall have been paid in full
or payment thereof shall have been provided for in accordance with said
Indenture.
Notwithstanding anything to the contrary contained herein, if
following any payment of principal or interest by the Company on the Securities
to the holders of the Securities it is determined by a final decision of a court
of competent jurisdiction that such payment shall be avoided by a trustee in
bankruptcy (including any debtor-in-possession) as a preference under 11 U.S.C.
Section 547 and such payment is paid by such holder to such trustee in
bankruptcy, then and to the extent of such repayment, the obligations of the
Guarantor hereunder shall remain in full force and effect.
The obligations of the Guarantor under this Guarantee are, to the
extent provided in the Indenture, subordinate and junior in right of payment
to the prior payment in full of all Senior Indebtedness, and this Guarantee
is issued subject to the provisions of the Indenture with respect thereto.
Each Holder of the Security upon which this Guarantee is endorsed,
by accepting the same, (a) agrees to and shall be bound by such provisions,
(b) authorizes and directs the Trustee on his or her behalf to take such action
as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each Holder of the Security
upon which this guarantee is endorsed, by his or her acceptance thereof, hereby
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior Indebtedness, whether
now outstanding or hereafter incurred, and waives reliance by each Holder upon
said provisions.
This Guarantee shall not be valid or become obligatory for any
purpose with respect to a Security until the certificate of authentication on
such Security shall have been signed by the Trustee (or the Authentication
Agent).
28
<PAGE>
This Guarantee shall be governed by the laws of the State of New
York.
IN WITNESS WHEREOF, U S WEST, Inc. has caused this Guarantee to be
signed in its corporate name by the facsimile signature of two of its officers
thereunto duly authorized and has caused a facsimile of its corporate seal to be
affixed hereunto or imprinted or otherwise reproduced hereon.
U S WEST, Inc.
_________________________[seal] _________________________
[Title] [Title]
(FORM OF REVERSE OF NOTE)
This Note is one of a duly authorized series of Notes of the Company
(herein sometimes referred to as the "Notes"), specified in the Indenture, all
issued or to be issued in one or more series under and pursuant to an Indenture
dated as of ____________ __, 1995 duly executed and delivered between the
Company and Norwest Bank Minnesota, National Association, as Trustee (the
"Trustee")and U S WEST Inc., a Colorado corporation as Guarantor (the
"Guarantor"), as supplemented by the First Supplemented Indenture dated as of
____________, 1995 between the Company and the Trustee (the Indenture as so
supplemented, the "Indenture"), to which indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Notes. By the terms of the
Indenture, the Notes are issuable in series which may vary as to amount, date of
maturity, rate of interest and in other respects as in the Indenture provided.
This series of Notes is limited in aggregate principal amount as specified in
said First Supplemental Indenture.
Because of the occurrence and continuation of a Tax Event, in
certain circumstances this Note will become due and payable at the principal
amount together with any interest accrued thereon, (the "Redemption Price").
The Redemption Price shall be paid prior to 12:00 noon, New York time, on the
date of such redemption or at such earlier time as the Company determines. The
Company shall have the right to
29
<PAGE>
redeem this Note at the option of the Company, without premium or penalty, in
whole or in part at any time on or after _____________, 2000 (an "Optional
Redemption"), at a redemption price equal to 100% of the principal amount plus
any accrued but unpaid interest, to the date of such redemption (the "Optional
Redemption Price"). Any redemption pursuant to this paragraph will be made
upon not less than 30 nor more than 60 days' notice, at the Optional Redemption
Price. If the Notes are only partially redeemed by the Company pursuant to an
Optional Redemption, the Notes will be redeemed pro rata or by lot or by any
other method utilized by the Trustee; provided that if, at the time of
redemption, the Notes are registered as a Global Note, the Depository shall
determine by lot the principal amount of such Notes held by each Noteholder to
be redeemed.
In the event of redemption of this Note in part only, a new Note or
Notes of this series for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Notes may be declared,
and upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Notes of each series affected at the time
outstanding, as defined in the Indenture, to execute supplemental indentures for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Notes; provided,
however, that no such supplemental indenture shall (i) extend the fixed maturity
of any Notes of any series, or reduce the principal amount thereof, or reduce
the rate or extend the time of payment of interest thereon, or reduce any
premium payable upon the redemption thereof, without the consent of the Holder
of each Note so affected or (ii) reduce the aforesaid percentage of Notes, the
Holders of which are required to consent to any such supplemental indenture,
without the consent of the Holders of each Note then outstanding and affected
thereby. The Indenture also contains provisions
30
<PAGE>
permitting the Holders of a majority in aggregate principal amount of the Notes
of any series at the time outstanding affected thereby, on behalf of all of the
Holders of the Notes of such series, to waive any past default in the
performance of any of the covenants contained in the Indenture, or established
pursuant to the Indenture with respect to such series, and its consequences,
except a default in the payment of the principal of or premium, if any, or
interest on any of the Notes of such series. Any such consent or waiver by the
registered Holder of this Note (unless revoked as provided in the Indenture)
shall be conclusive and binding upon such Holder and upon all future Holders and
owners of this Note and of any Note issued in exchange herefor or in place
hereof (whether by registration of transfer or otherwise), irrespective of
whether or not any notation of such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Note at the time and place and at the rate and in the money
herein prescribed.
The Company shall have the right at any time during the term of the
Notes from time to time to extend the interest payment period of such Notes to
up to 20 consecutive quarters (an "Extended Interest Payment Period"), at the
end of which period the Company shall pay all interest then accrued and unpaid
(together with interest thereon at the rate specified for the Notes to the
extent that payment of such interest is enforceable under applicable law).
Before the termination of any such Extended Interest Payment Period, the Company
may further extend such Extended Interest Payment Period, provided that such
Extended Interest Payment Period together with all such further extensions
thereof shall not exceed 20 consecutive quarters. At the termination of any
such Extended Interest Payment Period and upon the payment of all accrued and
unpaid interest and any additional amounts then due, the Company may select a
new Extended Interest Payment Period.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is transferable by the registered holder hereof on
the Security Register of the Company, upon surrender of this Note for
registration of transfer at the office or agency of the Company in the bor-
31
<PAGE>
ough of Manhattan, the City and State of New York accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company or
the Trustee duly executed by the registered holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Notes of authorized
denominations and for the same aggregate principal amount and series will be
issued to the designated transferee or transferees. No service charge will be
made for any such transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.
Prior to due presentment for registration of transfer of this Note,
the Company, the Trustee, any paying agent and any Security Registrar may deem
and treat the registered holder hereof as the absolute owner hereof (whether or
not this Note shall be overdue and notwithstanding any notice of ownership or
writing hereon made by anyone other than the Security Registrar) for the purpose
of receiving payment of or on account of the principal hereof and premium, if
any, and interest due hereon and for all other purposes, and neither the Company
nor the Trustee nor any paying agent nor any Note Registrar shall be affected by
any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Note, or for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture, against any incorporator,
stockholder, officer or director, past, present or future, as such, of the
Company or of any predecessor or successor corporation, whether by virtue of
any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
[The debentures of this series are issuable only in registered form]
without coupons in denominations of $25 and any integral multiple thereof.]
[This Global Note is exchangeable for Notes in definitive form only under]
certain limited circumstances set forth in the Indenture. Notes of this series
so issued are issuable only in registered form without coupons in denominations
of $25 and any integral multiple thereof.] As provided in the Indenture and
subject to certain limitations [herein and] therein set forth, Notes of this
series [so issued] are exchangeable for a like aggre-
32
<PAGE>
gate principal amount of Notes of this series of a different authorized
denomination, as requested by the Holder surrendering the same.
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
ARTICLE IX
ORIGINAL ISSUE OF NOTES
SECTION 9.1 ORIGINAL ISSUE OF NOTES
Notes in the aggregate principal amount of $________ may, upon
execution of this First Supplemental Indenture, be executed by the Company and
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Notes to or upon the written order of the Company,
signed by its Chairman, its President, or any Vice President and its Treasurer
or an Assistant Treasurer, without any further action by the Company.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 RATIFICATION OF INDENTURE
The Indenture, as supplemented by this First Supplemental
Indenture, is in all respects ratified and confirmed, and this First
Supplemental Indenture shall be deemed part of the Indenture in the
manner and to the extent herein and therein provided.
SECTION 10.2 TRUSTEE NOT RESPONSIBLE FOR RECITALS
The recitals herein contained are made by the Company and not by
the Trustee, and the Trustee assumes no responsibility for the correctness
thereof. The Trustee makes no representation as to the validity or sufficiency
of this First Supplemental Indenture.
SECTION 10.3 GOVERNING LAW
33
<PAGE>
This First Supplemental Indenture and each Note shall be deemed to
be a contract made under the internal laws of the State of New York, and for
all purposes shall be construed in accordance with the laws of said State.
SECTION 10.4 SEPARABILITY
In case any one or more of the provisions contained in this First
Supplemental Indenture or in the Notes shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provisions of this First
Supplemental Indenture or of the Notes, but First Supplemental Indenture and
the Notes shall be construed as if such invalid or illegal or unenforceable
provision had never been contained herein or therein.
SECTION 10.5 COUNTERPARTS
This First Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
34
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, on the date or dates indicated in
the acknowledgements and as of the day and year first above written.
U S WEST Capital Funding, Inc.
By____________________________
Attest:
_____________________________
Secretary
U S WEST, Inc.
By____________________________
Attest:
_____________________________
Secretary
35
<PAGE>
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
as Trustee
By_______________________________
36
<PAGE>
STATE OF )
COUNTY OF ) ss.:
On the ________ day of _____________, 1995, before me personally came
________________________ to be known, who, being by me duly sworn, did depose
and say that he is the ________________________________ of U S WEST CAPITAL
FUNDING, INC., one of the corporations described in and which executed the
above instrument; that he knows the corporate seal of said corporation; that
the seal affixed to the said instrument is such corporation seal; that it was
so affixed by authority of the Board of Directors of said corporation, and that
he signed his name thereto by like authority.
__________________________________
NOTARY PUBLIC
[seal] Commission expires
STATE OF )
COUNTY OF ) SS.:
On the ______ day of ________________, 1995, before me personally came
______________________________ to be known, who, being by me duly sworn, did
depose and say that he is the ____________________________________ of U S WEST,
INC., one of the corporations described in and which executed the above
instrument; that he knows the corporate seal of said corporation; that the
seal affixed to the said instrument is such corporation seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that he
signed his name thereto by like authority.
_________________________________
NOTARY PUBLIC
[seal] Commission expires
37
<PAGE>
____________________________________
PREFERRED SECURITIES GUARANTEE AGREEMENT
[ ]
Dated as of __________, 1995
____________________________________
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
------------------- ---------
<S> <C>
310(a) . . . . . . . . . . . . . . . . . . 4.1(a)
310(b) . . . . . . . . . . . . . . . . . . 4.1(c)
310(c) . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . 2.2(b)
311(b) . . . . . . . . . . . . . . . . . . 2.2(b)
311(c) . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . 2.2(b)
313. . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . . 2.4
314(b) . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . 2.5
314(d) . . . . . . . . . . . . . . . . . . Inapplicable
314(f) . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . 3.1(b)
315(b) . . . . . . . . . . . . . . . . . . 2.7
315(c) . . . . . . . . . . . . . . . . . . 3.1(a)
315(d) . . . . . . . . . . . . . . . . . . 3.1(a)
316(a) . . . . . . . . . . . . . . . . . . 5.4(a), 2.6
</TABLE>
_______________
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
<PAGE>
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of
_____________, 1995, is executed and delivered by U S WEST, Inc., a Colorado
corporation (the "Guarantor"), and The First National Bank of Chicago, National
Association, as trustee (the "Preferred Guarantee Trustee"), for the benefit of
the Holders (as defined herein) from time to time of the Preferred Securities
(as defined herein) of U S WEST Financing [ ], a Delaware statutory business
trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of _________, 1995, among the trustees of the Issuer
named therein, the Guarantor as Sponsor and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof $__________ aggregate stated liquidation amount of
Preferred Securities designated the ____% Trust Originated Preferred Securities
(the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires to irrevocably and unconditionally to agree,
to the extent set forth in this Guarantee Agreement, to pay to the Holders of
the Preferred Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein.
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee Agreement") in substantially
identical terms to this Guarantee Agreement for the benefit of the holders of
the Common Securities (as defined herein) except that if an Event of Default (as
defined in the Indenture (as defined herein)), has occurred and is continuing,
the rights of holders of the Common Securities to receive Guarantee Payments
under the Common Securities Guarantee are subordinated to the rights of Holders
of Preferred Securities to receive Guarantee Payments under this Guarantee
Agreement.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the
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Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS AND INTERPRETATION
In this Guarantee Agreement, unless the context otherwise requires:
(a) Capitalized terms used in this Guarantee Agreement but not
defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified,
supplemented or amended from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement
unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in
this Guarantee Agreement or unless the context otherwise
requires; and
(f) a reference to the singular includes the plural and vice versa.
"AFFILIATE" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933 as amended or any successor rule thereunder.
"COMMON SECURITIES" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
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"COVERED PERSON" means any Holder of Preferred Securities.
"EVENT OF DEFAULT" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement.
"GUARANTEE PAYMENTS" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by the Issuer: (i) any accrued and unpaid Distributions which are
required to be paid on such Preferred Securities to the extent the Issuer shall
have funds available therefore, (ii) the redemption price, including all accrued
and unpaid Distributions to the date of redemption (the "Redemption Price") to
the extent the Issuer has funds available therefor, with respect to any
Preferred Securities called for redemption by the Issuer, and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Issuer
(other than in connection with the distribution of Debentures to the Holders in
exchange for Preferred Securities as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Preferred Securities to the date of payment, and (b) the
amount of assets of the Issuer remaining available for distribution to Holders
in liquidation of the Issuer (in either case, the "Liquidation Distribution").
If an Event of Default (as defined in the Indenture), has occurred and is
continuing, the rights of Holders of the Common Securities to receive Guarantee
Payments under the Common Securities Guarantee Agreement are subordinated to the
rights of Holders of Preferred Securities to receive Guarantee Payments.
"HOLDER" shall mean any holder, as registered on the books and records
of the Issuer, of any Preferred Securities; provided, however, that in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any entity directly or indirectly controlling
or controlled by or under direct or indirect common control with the Guarantor.
"INDEMNIFIED PERSON" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee
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Trustee, or any officers, directors, shareholders, members, partners, employees,
representatives or agents of the Preferred Guarantee Trustee.
"INDENTURE" means the Indenture dated as of April __, 1995 among U S
WEST Capital Funding, Inc., a Colorado corporation (the "Debenture Issuer"), the
Guarantor, as guarantor and Norwest Bank Minnesota, National Association, as
trustee and any indenture supplemental thereto pursuant to which certain
subordinated debt securities of the Debenture Issuer and the guarantee of the
Guarantor endorsed thereon are to be issued to the Property Trustee of the
Issuer.
"MAJORITY IN LIQUIDATION AMOUNT OF THE SECURITIES" means, except as
provided by the Trust Indenture Act, Holder(s) of Preferred Securities voting
separately as a class, who vote Preferred Securities and the aggregate
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of the Preferred
Securities voted by such Holders represents more than 50% of the above stated
liquidation amount of all Preferred Securities.
"OFFICERS' CERTIFICATE" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee Agreement shall include:
(a) a statement that each officer signing the Certificate has read
the covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
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(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"PERSON" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"PREFERRED GUARANTEE TRUSTEE" means The First National Bank of Chicago
until a Successor Preferred Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Guarantee Agreement and
thereafter means each such Successor Preferred Guarantee Trustee.
"RESPONSIBLE OFFICER" means, with respect to the Preferred Guarantee
Trustee, the chairman of the board of directors, the president, any vice-
president, any assistant vice-president, the secretary, any assistant secretary,
the treasurer, any assistant treasurer, any trust officer or assistant trust
officer or any other officer of the Preferred Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"SUCCESSOR PREFERRED GUARANTEE TRUSTEE" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.
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(a) This Guarantee Agreement is subject to the provisions of the
Trust Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by Sections 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control;
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES.
(a) The Guarantor shall provide the Preferred Securities Trustee (i)
within 14 days after January 1 and June 30 of each year, a list, in such form as
the Preferred Guarantee Trustee may reasonably require, of the names and
addresses of the Holders of the Preferred Securities ("List of Holders") as of
such date, PROVIDED THAT the Guarantor shall not be obligated to provide such
List of Holders at any time the List of Holders does not differ from the most
recent List of Holders given to the Preferred Guarantee Trustee by the
Guarantor, and (ii) at any other time, within 30 days of receipt by the
Guarantor of a written request for a List of Holders as of a date no more than
14 days before such List of Holders is given to the Preferred Guarantee Trustee.
The Preferred Guarantee may destroy any List of Holders previously given to it
on receipt of a new List of Holders; and
(b) the Preferred Guarantee Trustee shall comply with its obligations
under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3 REPORTS BY THE PREFERRED GUARANTEE TRUSTEE.
Within 60 days after May 15 of each year, the Preferred Guarantee
Trustee shall provide to the Holders of the Preferred Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Preferred
Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.
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SECTION 2.4 PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE.
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Guarantee Agreement which relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion required
to be given by an officer pursuant to Section 314(c)(1) may be given in the form
of an Officers' Certificate.
SECTION 2.6 EVENTS OF DEFAULT; WAIVER.
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Guarantee Agreement, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
SECTION 2.7 EVENT OF DEFAULT; NOTICE
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default known to the Preferred Guarantee Trustee, unless such defaults have been
cured before the giving of such notice, PROVIDED, THAT, the Preferred Guarantee
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
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and/or Responsible Officers, of the Preferred Guarantee Trustee in good faith
determine that the withholding of such notice is in the interests of the Holders
of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default except any Event of Default as to which the
Preferred Guarantee Trustee shall have received written notice or a Responsible
Officer charged with the administration of the Declaration shall have obtained
written notice of.
SECTION 2.8 CONFLICTING INTERESTS
The Declaration shall be deemed to be specifically described in this
Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE
(a) This Guarantee Agreement shall be held by the Preferred Guarantee
Trustee for the benefit of the Holders of the Preferred Securities and the
Preferred Guarantee Trustee shall not transfer this Guarantee Agreement to any
Person except a Holder of Preferred Securities exercising his or her rights
pursuant to Section 5.4(b) or to a Successor Preferred Guarantee Trustee on
acceptance by such Successor Preferred Guarantee Trustee of its appointment to
act as Preferred Guarantee Trustee The right, title and interest of the
Preferred Guarantee Trustee shall automatically vest in any Successor Preferred
Guarantee Trustee and such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered.
(b) If an Event of Default has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce
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this Guarantee Agreement for the benefit of the Holders of the Preferred
Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Guarantee Agreement, and no implied covenants shall be read into
this Guarantee Agreement against the Preferred Guarantee Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 2.6), the Preferred Guarantee Trustee shall exercise such of the rights
and powers vested in it by this Guarantee Agreement, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs;
(d) no provision of this Guarantee Agreement shall be construed to
relieve the Preferred Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Preferred Guarantee
Trustee shall be determined solely by the express provisions
of this Guarantee Agreement, and the Preferred Guarantee
Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in
this Guarantee Agreement, and no implied covenants or
obligations shall be read into this Guarantee Agreement
against the Preferred Guarantee; and
(B) in the absence of bad faith on the part of the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee may
conclusively rely, as to
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the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or
opinions furnished to the Preferred Guarantee Trustee and
conforming to the requirements of this Guarantee Agreement;
but in the case of any such certificates or opinions that by
any provision hereof are specifically required to be
furnished to the Preferred Guarantee Trustee, the Preferred
Guarantee Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements
of this Declaration;
(ii) the Preferred Guaranty Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the
Preferred Guarantee Trustee, unless it shall be proved that the
Preferred Guarantee Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Preferred Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Preferred Securities at the
time outstanding relating to the time, method and place of
conducting any proceeding for any remedy available to the
Preferred Trustee, or exercising any trust or power conferred
upon the Preferred Guarantee Trustee under this Guarantee
Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Preferred Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance
of any of its duties or in the exercise of any of its rights or
powers, if it shall have reasonable ground for believing that the
repay-
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ment of such funds or liability is not reasonably assured to it
under the terms of this Guarantee Agreement or adequate indemnity
against such risk or liability is not reasonably assured to it.
SECTION 3.2 CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE.
(a) Subject to the provisions of Section 3.1:
(i) the Preferred Guarantee Trustee may rely and shall be fully
protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have
been signed, sent or presented by the proper party or
parties;
(ii) any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by a
Direction or an Officers' Certificate;
(iii) whenever in the administration of this Guarantee Agreement,
the Preferred Guarantee Trustee shall deem it desirable that
a matter be proved or established before taking, suffering or
omitting any action hereunder, the Preferred Guarantee
Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part and
request and rely upon an Officers' Certificate which, upon
receipt of such request, shall be promptly delivered by the
Guarantor;
(iv) the Preferred Guarantee Trustee shall have no duty to see to
any recording, filing or registration of any instru-
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ment (or any rerecording, refiling or registration thereof);
(v) the Preferred Guarantee Trustee may consult with counsel and
the written advice or opinion of such counsel with respect to
legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in accordance with
such advice or opinion. Such counsel may be counsel to the
Guarantor or any of its Affiliates, and may include any of
its employees. The Preferred Guarantee Trustee shall have
the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of
competent jurisdiction;
(vi) the Preferred Guarantee Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this
Guarantee Agreement at the request or direction of any
Holder, unless such Holder shall have provided to the
Preferred Guarantee Trustee adequate security and indemnity
which would satisfy a reasonable person in the position of
the Preferred Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses) and liabilities that
might be incurred by it in complying with such request or
direction, including such reasonable advances as may be
requested by the Preferred Guarantee Trustee provided, that,
nothing contained in this Section 3.2(a)(vi) shall be taken
to relieve the Preferred Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Guarantee
Agreement;
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(vii) the Preferred Guarantee Trustee shall not be bound to make
any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
paper or document, but the Preferred Guarantee Trustee, in
its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit;
(viii) the Preferred Guarantee Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and the
Preferred Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(ix) any action taken by the Preferred Guarantee Trustee or its
agents hereunder shall bind the Holders of the Preferred
Securities and the signature of the Preferred Guarantee
Trustee or its agents alone shall be sufficient and effective
to perform any such action; and no third party shall be
required to inquire as to the authority of the Preferred
Guarantee Trustee to so act, or as to its compliance with any
of the terms and provisions of this Guarantee Agreement, both
of which shall be conclusively evidenced by the Preferred
Guarantee Trustee's or its agent's taking such action; and
(x) whenever in the administration of this Guarantee Agreement
the Preferred Guarantee Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or
right
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or taking any other action hereunder the Preferred
Guarantee Trustee (i) may request instructions from the
Holders of the Preferred Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be
protected in acting in accordance with such instructions; and
(b) No provision of this Guarantee Agreement shall be deemed to impose any
duty or obligation on the Preferred Guarantee Trustee to perform any act or acts
or exercise any right, power, duty or obligation conferred or imposed on it, in
any jurisdiction in which it shall be illegal, or in which the Preferred
Guarantee Trustee shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the
Preferred Guarantee Trustee shall be construed to be a duty.
SECTION 3.3 NOT RESPONSIBLE FOR RECITALS OR
ISSUANCE OF GUARANTEE.
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor and the Preferred Guarantee Trustee does not assume
any responsibility for their correctness. The Preferred Guarantee Trustee makes
no representations as to the validity or sufficiency of this Guarantee
Agreement.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a preferred Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor;
(ii) be a corporation organized and doing business under the
laws of the
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United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person
permitted by the Securities and Exchange Commission to act
as an institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial
or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or
examining authority referred to above, then for the
purposes of this Section 4.1(a)(ii), the combined capital
and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most
recent report of condition so published;
(b) if at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c);
and
(c) if the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED GUARANTEE
TRUSTEE.
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor;
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(b) the Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(b) until a Successor Preferred Guarantee Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Preferred Guarantee Trustee and delivered to the Guarantor;
(c) the Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee; and
(d) if no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon after such notice, if any, as it may deem proper and
prescribe, appoint a Successor Preferred Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1 GUARANTEE
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense, right of set-
off or counterclaim which the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
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SECTION 5.2 WAIVER OF NOTICE AND DEMAND
The Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 5.3 OBLIGATIONS NOT AFFECTED
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities
to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Preferred Securities (other than
an extension of time for payment of Distributions, Redemption Price,
Liquidation Distribution or other sum payable that results from the
extension of any interest payment period on the Debentures or any extension
of the maturity date of the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
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(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer
or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the
intent of this Section 2.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation on the Holders or any other Person to give notice
to, or obtain consent of, the Guarantor with respect to the happening of any of
the foregoing.
SECTION 5.4 RIGHTS OF HOLDERS
(a) The Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of this Guarantee Agreement or exercising any trust or power conferred
upon Preferred Guarantee Trustee under this Guarantee Agreement; and
(b) if the Preferred Guarantee Trustee fails to enforce this Guarantee
Agreement, any Holder of Preferred Securities may, after a period of 30 days has
elapsed from such Holder's written request to the Preferred Guarantee Trustee to
enforce this Guarantee Agreement, institute a legal proceeding directly against
the Guarantor to enforce its rights under this Guarantee Agreement, without
first instituting a legal proceeding against the Issuer, the Preferred Guarantee
Trustee or any other Person.
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SECTION 5.5 GUARANTEE OF PAYMENT
This Guarantee Agreement creates a guarantee of payment and not of
collection.
SECTION 5.6 SUBROGATION
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Guarantee Agreement; PROVIDED,
HOWEVER, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any rights which
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust for
the Holders and to pay over such amount to the Holders.
SECTION 5.7 INDEPENDENT OBLIGATIONS
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS;
SUBORDINATION
SECTION 6.1 LIMITATION OF TRANSACTIONS
So long as any Preferred Securities remain outstanding, if there
shall have occurred any event that would constitute an Event of Default or an
event of default under the Declaration, then (a) the Guarantor shall not (and
shall cause the Debenture Issuer and, if it is a wholly-owned subsidiary of
the Guarantor, shall cause U S WEST Communications, Inc. not to) declare or
pay any dividend on, make any distributions with respect to, or redeem,
19
<PAGE>
purchase or make a liquidation payment with respect to, any of its capital
stock, and (b) U S WEST shall not (and shall cause the Debenture Issuer not
to) make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by the Guarantor or the
Debenture Issuer which rank pari passu with or junior to the Debenture.
SECTION 6.2 RANKING
This Guarantee Agreement will constitute an unsecured obligation of
the Guarantor and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Guarantor, including the Debenture Guarantee, (ii)
pari passu with the most senior preferred or preference stock now or hereafter
issued by the Guarantor and with any guarantee now or hereafter entered into by
the Guarantor in respect of any preferred or preference stock of any Affiliate
of the Guarantor, and (iii) senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION
This Guarantee Agreement shall terminate upon full payment of the
Redemption Price of all Securities, upon the distribution of the Debentures to
the Holder's of all of the Preferred Securities or upon full payment of the
amounts payable in accordance with the Declaration upon liquidation of the
Issuer. Notwithstanding the foregoing, this Guarantee Agreement will continue
to be effective or will be reinstated, as the case may be, if at any time any
Holder of Preferred Securities must restore payment of any sums paid under the
Preferred Securities or under this Preferred Securities Guarantee.
20
<PAGE>
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Guarantee
Agreement and in a manner such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Guarantee Agreement or by law, except that an Indemnified Person shall be liable
for any such loss, damage or claim incurred by reason of such Indemnified
Person's negligence or willful misconduct with respect to such acts or
omissions; and
(b) an Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions (as defined in the Declaration) to Holders of Preferred
Securities might properly be paid.
SECTION 8.2 INDEMNIFICATION.
(a) To the fullest extent permitted by applicable law, the Guarantor
shall indemnify and hold harmless each Indemnified Person from and against any
loss, damage or claim incurred by such Indemnified Person by reason of any act
or omission performed or omitted by such Indemnified Person in good faith in
accordance with this Guarantee Agreement and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this in accordance with this Guarantee Agreement, except
that no Indemnified Person shall be entitled to be indemnified in
21
<PAGE>
respect of any loss, damage or claim incurred by such Indemnified Person by
reason of negligence or willful misconduct with respect to such acts or
omissions; and
(b) to the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Guarantor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Guarantor of an undertaking by or on behalf of
the Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
8.2(a).
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 SUCCESSORS AND ASSIGNS
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding.
SECTION 9.2 AMENDMENTS
Except with respect to any changes which do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Guarantee Agreement may only be amended with the prior approval of the Holders
of at least 66-2/3% in liquidation amount of all the outstanding Preferred
Securities. The provisions of Section 12.2 of the Declaration with respect to
meetings of Holders of the Securities apply to the giving of such approval.
SECTION 9.3 NOTICES
All notices provided for in this Guarantee Agreement shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
22
<PAGE>
(a) if given to the Preferred Guarantee Trustee at the Preferred
Guarantee Trustee's mailing address set forth below (or such
other address as the Preferred Guarantee Trustee may give notice
of to the Holders of the Preferred Securities):
The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago IL 60670-0126
(b) if given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give
notice of to the Holders of the Preferred Securities):
U S WEST, Inc.
7800 East Orchard Road
Englewood, CO 80111
(c) if given to any Holder of Preferred Securities, at the address
set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.4 BENEFIT
This Guarantee Agreement is solely for the benefit of the Holders of
the Preferred Securities and subject to Section 3.1(a) is not separately
transferable from the Preferred Securities.
SECTION 9.5 GOVERNING LAW
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
23
<PAGE>
THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
U S WEST, Inc.
By:________________________
Name:
Title:
THE FIRST NATIONAL BANK
OF CHICAGO
as Preferred Guarantee Trustee
By:________________________
Name:
Title:
24
<PAGE>
Weil, Gotshal & Manges
(a partnership including professional corporations)
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
April 28, 1995
U S WEST, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
Ladies and Gentlemen:
We have acted as counsel to U S WEST, Inc., a Colorado corporation
("U S WEST"), U S WEST Capital Funding, Inc., a Colorado corporation ("Capital
Funding"), and U S WEST Financing I, U S WEST Financing II and U S WEST
Financing III, each a Delaware business trust ("U S WEST Financing"), in
connection with the preparation of the registration statement of U S WEST,
Capital Funding and the Trusts on Form S-3 (33-57889), filed with the
Securities and Exchange Commission (the "Commission") on March 1, 1995 and
amended by Amendment No. 1 filed with the Commission on April 28, 1995 (as
amended, the "Registration Statement"), relating to the registration under the
Securities Act of 1933, as amended (the "Securities Act"), of preferred
securities of the Trusts (the "Preferred Securities") and subordinated debt
securities of Capital Funding (the "Subordinated Debt Securities"). The
Subordinated Debt Securities will be fully and unconditionally guaranteed by
U S WEST (the "Debt Guarantees"). The Subordinated Debt Securities and the Debt
Guarantee will be issued in accordance with the provisions of an indenture (the
"Indenture") to be executed by U S WEST, Capital Funding and Norwest Bank
Minnesota, National Association, as trustee (the "Trustee"), the form of which
is being filed as an exhibit to the Registration Statement. The Preferred
Securities will be guaranteed by U S WEST in the manner and to the extent set
forth in a Guarantee Agreement (the "Preferred Securities Guarantees"), the form
<PAGE>
of which is being filed as an exhibit to the Registration Statement.
In so acting, we have reviewed the Registration Statement, including
the prospectus (the "Prospectus") and prospectus supplement (the "Prospectus
Supplement") contained therein, and the form of Indenture, form of Subordinated
Debt Security, form of Debt Guarantee and form of Preferred Securities Guarantee
being filed with the Commission as exhibits to the Registration Statement. In
addition, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of such corporate records, agreements, documents
and other instruments, and such certificates or comparable documents of public
officials and of officers and representatives of U S WEST and Capital Funding,
and have made such inquiries of such officers and representatives, as we have
deemed relevant and necessary as a basis for the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions of
fact material to this opinion that have not been independently established, we
have relied upon certificates or comparable documents of officers and
representatives of U S WEST and Capital Funding.
Based on the foregoing, and subject to the qualifications stated
herein, we are of the opinion that:
1. The Subordinated Debt Securities have been duly and validly
authorized by Capital Funding and, when executed, authenticated, issued and
delivered in the manner contemplated in the Indenture, will constitute legal,
valid and binding obligations of Capital Funding, entitled to the benefits of
the Indenture and enforceable against it in accordance with their terms, subject
to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity) and except
to the extent
2
<PAGE>
that rights to indemnification thereunder may be limited by federal or state
securities laws or public policy relating thereto.
2. The Debt Guarantees have been duly and validly authorized by U S
WEST and, when executed, authenticated, issued and delivered in the manner
contemplated in the Indenture, will constitute the legal, valid and binding
obligations of U S WEST, entitled to the benefits of the Indenture and
enforceable against it in accordance with their terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity) and except to the
extent that rights to indemnification thereunder may be limited by federal or
state securities laws or public policy relating thereto.
3. The Preferred Securities Guarantees has been duly and validly
authorized by U S WEST and, when executed and delivered by U S WEST, will
constitute the legal, valid and binding obligation of U S WEST, enforceable
against it in accordance with their terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
The opinions expressed herein are limited to the laws of the State of
New York and we express no opinion as to the effect on the matters covered by
this letter of the laws of any other jurisdiction, except that as to matters of
Colorado law we have relied upon the opinion of Stephen E. Brilz, Esq. being
filed as an exhibit to the Registration Statement.
The opinions expressed herein are rendered solely for your benefit in
connection with the transactions described herein. These opinions may not be
used or relied upon by any other person, nor may this letter or any copies
thereof be furnished to a third party, filed with a governmental agency, quoted,
cited or otherwise referred to without our prior written consent.
3
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm under the headings
"Legal Opinions" in the Prospectus and "Legal Matters" in the Prospectus
Supplement, without admitting that we are "experts" under the Securities Act or
the rules and regulations of the Commission issued thereunder with respect to
any part of the Registration Statement, including this exhibit thereto.
Very truly yours,
/s/ Weil, Gotshal & Manges
4
<PAGE>
Exhibit 5-B
Richards, Layton & Finger
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
Telephone (302) 658-6541
Telecopier (302) 658-6548
April 28, 1995
U S West Financing I
c/o U S West, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
Re: U S West Financing I
Ladies and Gentlemen:
We have acted as special Delaware counsel for U S West, Inc., a
Colorado corporation ("U S West"), and U S West Financing I, a Delaware business
trust (the "Trust"), in connection with the matters set forth herein. At your
request, this opinion is being furnished to you.
For purpose of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated March 1,
1995 (the "Certificate"), as filed in the office of the Secretary of State of
the State of Delaware (the "Secretary of State") on March 1, 1995;
(b) The Declaration of Trust of the Trust, dated March 1,
1995, between U S West and the trustees of the Trust named therein;
(c) Amendment No. 1 to the Registration Statement (the "Registration
Statement") on Form S-3, including a preliminary prospectus subject to
completion, dated April 28, 1995 (the "Prospectus"), and a preliminary
prospectus supplement subject to completion, dated April 28, 1995 (the
"Prospectus
<PAGE>
U S West Financing I
April 28, 1995
Page 2
Supplement"), relating to the __% Trust Originated Preferred Securities of the
Trust representing preferred undivided beneficial interests in the assets of the
Trust (each, a "Preferred Security" and collectively, the "Preferred
Securities"), as proposed to be filed by U S West and the Trust with the
Securities and Exchange Commission on or about April 28, 1995;
(d) A form of Amended and Restated Declaration of Trust of the Trust,
to be entered into between U S West, the trustees of the Trust named therein,
and the holders, from time to time, of the undivided beneficial interests in the
assets of the Trust (including Exhibit A thereto) (the "Declaration"),
attached as an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated April 28,
1995, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Declaration.
For purpose of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (e) above. In particular, we
have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our own
but rather have relied solely upon the foregoing documents, the statements and
information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Declaration
constitutes the entire agreement among the parties thereto with respect to the
subject matter thereof, including with respect to the creation, operation and
termination of the Trust, and that the Declaration and the Certificate are in
full force and effect and have not been amended, (ii) except to the extent
provided in paragraph 1 below, the due organization or due formation, as the
case may be, and valid existence in good standing
<PAGE>
U S West Financing I
April 28, 1995
Page 3
of each party to the documents examined by us under the laws of the jurisdiction
governing its organization or formation, (iii) the legal capacity of natural
persons who are parties to the documents examined by us, (iv) that each of the
parties to the documents examined by us has the power and authority to execute
and deliver, and to perform its obligations under, such documents, (v) the due
authorization, execution and delivery by all parties thereto of all documents
examined by us, (vi) the receipt by each Person to whom a Preferred Security is
to be issued by the Trust (collectively, the "Preferred Security Holders") of a
Preferred Security Certificate for such Preferred Security and the payment for
the Preferred Security acquired by it, in accordance with the Declaration and
the Registration Statement, and (vii) that the Preferred Securities are issued
and sold to the Preferred Security Holders in accordance with the Declaration
and the Registration Statement. We have not participated in the preparation of
the Registration Statement and assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Business Trust Act.
2. The Preferred Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitations of personal liability extended
to stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated, pursuant to the Declaration, to (i) provide indemnity
and/or security in connection with and pay taxes or governmental charges
arising from transfers of Preferred Security Certificates and the issuance of
replacement Preferred Security Certificates, and (ii) provide security and
indemnity in connection with requests of or directions to the Property
Trustee to exercise its rights and powers under the Declaration.
<PAGE>
U S West Financing I
April 28, 1995
Page 4
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. We hereby
consent to the use of our name under the heading "Legal Matters" in the
Prospectus Supplement and "Legal Opinions" in the Prospectus. In giving the
foregoing consents, we do not thereby admit that we come within the category of
Persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder. Except as stated above, without our prior written
consent, this opinion may not be furnished or quoted to, or relied upon by, any
other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
<PAGE>
Richards, Layton & Finger
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
Telephone (302) 658-6541
Telecopier (302) 658-6548
April 28, 1995
U S West Financing II
c/o U S West, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
Re: U S West Financing II
Ladies and Gentlemen:
We have acted as special Delaware counsel for U S West, Inc., a
Colorado corporation ("U S West"), and U S West Financing II, a Delaware
business trust (the "Trust"), in connection with the matters set forth herein.
At your request, this opinion is being furnished to you.
For purpose of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated as of March 1,
1995 (the "Certificate"), as filed in the office of the Secretary of State of
the State of Delaware (the "Secretary of State") on March 1, 1995;
(b) The Declaration of Trust of the Trust, dated as of March 1,
1995, between U S West and the trustees of the Trust named therein;
(c) Amendment No. 1 to the Registration Statement (the "Registration
Statement") on Form S-3, including a preliminary prospectus subject to
completion, dated April 28, 1995 (the "Prospectus"), and a preliminary
prospectus supplement subject to completion, dated April 28, 1995 (the
"Prospectus
<PAGE>
U S West Financing II
April 28, 1995
Page 2
Supplement"), relating to the __% Trust Originated Preferred Securities of the
Trust representing preferred undivided beneficial interests in the assets of the
Trust (each, a "Preferred Security" and collectively, the "Preferred
Securities"), as proposed to be filed by U S West and the Trust with the
Securities and Exchange Commission on or about April 28, 1995;
(d) A form of Amended and Restated Declaration of Trust of the Trust,
to be entered into between U S West, the trustees of the Trust named therein,
and the holders, from time to time, of the undivided beneficial interests in the
assets of the Trust (including Exhibit A thereto) (the "Declaration"),
attached as an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated April 28,
1995, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Declaration.
For purpose of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (e) above. In particular, we
have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our own
but rather have relied solely upon the foregoing documents, the statements and
information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Declaration
constitutes the entire agreement among the parties thereto with respect to the
subject matter thereof, including with respect to the creation, operation and
termination of the Trust, and that the Declaration and the Certificate are in
full force and effect and have not been amended, (ii) except to the extent
provided in paragraph 1 below, the due organization or due formation, as the
case may be, and valid existence in good standing
<PAGE>
U S West Financing II
April 28, 1995
Page 3
of each party to the documents examined by us under the laws of the jurisdiction
governing its organization or formation, (iii) the legal capacity of natural
persons who are parties to the documents examined by us, (iv) that each of the
parties to the documents examined by us has the power and authority to execute
and deliver, and to perform its obligations under, such documents, (v) the due
authorization, execution and delivery by all parties thereto of all documents
examined by us, (vi) the receipt by each Person to whom a Preferred Security is
to be issued by the Trust (collectively, the "Preferred Security Holders") of a
Preferred Security Certificate for such Preferred Security and the payment for
the Preferred Security acquired by it, in accordance with the Declaration and
the Registration Statement, and (vii) that the Preferred Securities are issued
and sold to the Preferred Security Holders in accordance with the Declaration
and the Registration Statement. We have not participated in the preparation of
the Registration Statement and assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Business Trust Act.
2. The Preferred Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitations of personal liability extended
to stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated, pursuant to the Declaration, to (i) provide indemnity
and/or security in connection with and pay taxes or governmental charges
arising from transfers of Preferred Security Certificates and the issuance of
replacement Preferred Security Certificates, and (ii) provide security and
indemnity in connection with requests of or directions to the Property
Trustee to exercise its rights and powers under the Declaration.
<PAGE>
U S West Financing II
April 28, 1995
Page 4
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. We hereby
consent to the use of our name under the heading "Legal Matters" in the
Prospectus Supplement and "Legal Opinions" in the Prospectus. In giving the
foregoing consents, we do not thereby admit that we come within the category of
Persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder. Except as stated above, without our prior written
consent, this opinion may not be furnished or quoted to, or relied upon by, any
other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
<PAGE>
Richards, Layton & Finger
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
Telephone (302) 658-6541
Telecopier (302) 658-6548
April 28, 1995
U S West Financing III
c/o U S West, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
Re: U S West Financing III
Ladies and Gentlemen:
We have acted as special Delaware counsel for U S West, Inc., a
Colorado corporation ("U S West"), and U S West Financing III, a Delaware
business trust (the "Trust"), in connection with the matters set forth herein.
At your request, this opinion is being furnished to you.
For purpose of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated March 1,
1995 (the "Certificate"), as filed in the office of the Secretary of State of
the State of Delaware (the "Secretary of State") on March 1, 1995;
(b) The Declaration of Trust of the Trust, dated March 1,
1995, between U S West and the trustees of the Trust named therein;
(c) Amendment No. 1 to the Registration Statement (the "Registration
Statement") on Form S-3, including a preliminary prospectus subject to
completion, dated April 28, 1995 (the "Prospectus"), and a preliminary
prospectus supplement subject to completion, dated April 28, 1995 (the
"Prospectus
<PAGE>
U S West Financing III
April 28, 1995
Page 2
Supplement"), relating to the __% Trust Originated Preferred Securities of the
Trust representing preferred undivided beneficial interests in the assets of the
Trust (each, a "Preferred Security" and collectively, the "Preferred
Securities"), as proposed to be filed by U S West and the Trust with the
Securities and Exchange Commission on or about April 28, 1995;
(d) A form of Amended and Restated Declaration of Trust of the Trust,
to be entered into between U S West, the trustees of the Trust named therein,
and the holders, from time to time, of the undivided beneficial interests in the
assets of the Trust (including Exhibit A thereto) (the "Declaration"),
attached as an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated April 28,
1995, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Declaration.
For purpose of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (e) above. In particular, we
have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our own
but rather have relied solely upon the foregoing documents, the statements and
information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Declaration
constitutes the entire agreement among the parties thereto with respect to the
subject matter thereof, including with respect to the creation, operation and
termination of the Trust, and that the Declaration and the Certificate are in
full force and effect and have not been amended, (ii) except to the extent
provided in paragraph 1 below, the due organization or due formation, as the
case may be, and valid existence in good standing
<PAGE>
U S West Financing III
April 28, 1995
Page 3
of each party to the documents examined by us under the laws of the jurisdiction
governing its organization or formation, (iii) the legal capacity of natural
persons who are parties to the documents examined by us, (iv) that each of the
parties to the documents examined by us has the power and authority to execute
and deliver, and to perform its obligations under, such documents, (v) the due
authorization, execution and delivery by all parties thereto of all documents
examined by us, (vi) the receipt by each Person to whom a Preferred Security is
to be issued by the Trust (collectively, the "Preferred Security Holders") of a
Preferred Security Certificate for such Preferred Security and the payment for
the Preferred Security acquired by it, in accordance with the Declaration and
the Registration Statement, and (vii) that the Preferred Securities are issued
and sold to the Preferred Security Holders in accordance with the Declaration
and the Registration Statement. We have not participated in the preparation of
the Registration Statement and assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Business Trust Act.
2. The Preferred Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitations of personal liability extended
to stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated, pursuant to the Declaration, to (i) provide indemnity
in connection with and pay taxes or governmental charges arising from transfers
of Preferred Security Certificates, and (ii) provide security or indemnity in
connection with and pay taxes or governmental charges arising from the issuance
of replacement Preferred Security Certificates.
<PAGE>
U S West Financing III
April 28, 1995
Page 4
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. We hereby
consent to the use of our name under the heading "Legal Matters" in the
Prospectus Supplement and "Legal Opinions" in the Prospectus. In giving the
foregoing consents, we do not thereby admit that we come within the category of
Persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder. Except as stated above, without our prior written
consent, this opinion may not be furnished or quoted to, or relied upon by, any
other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
<PAGE>
EXHIBIT 5-C
April 28, 1995
U S WEST, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
Re: U S WEST REGISTRATION STATEMENT ON FORM S-3
Gentlemen and Ladies:
I have examined the Registration Statement on Form S-3 (File No. 33-57889)
filed with the Securities and Exchange Commission (the "Commission") on March 1,
1995, and Amendment No.1 thereto filed with the Commission on April 28, 1995 (as
amended, the "Registration Statement"), by U S WEST, Inc., a Colorado
corporation (the "Company"), U S WEST Capital Funding, Inc., a Colorado
corporation ("Capital Funding"), and U S WEST Financing I, U S WEST Financing II
and U S WEST Financing III, each a Delaware Business Trust (the "Trusts"),
relating to the registration under the Securities Act of 1933, as amended, of
preferred securities of the Trusts (the "Preferred Securities") and subordinated
debt securities of Capital Funding (the "Subordinated Debt Securities"). The
Subordinated Debt Securities will be fully and unconditionally guaranteed by U S
WEST (the "Debt Guarantees"). The Subordinated Debt Securities and the Debt
Guarantees will be issued in accordance with the provisions of an indenture
(the "Indenture") to be executed by the Company, Capital Funding and
Norwest Bank Minnesota, National Association, as trustee, the form of which is
being filed as an exhibit to the Registration Statement. The Preferred
Securities will be guaranteed by U S WEST in the manner and to the extent set
forth in a Guarantee Agreement (the "Preferred Securities Guarantees"), the form
of which is being filed as an exhibit to the Registration Statement.
In so acting, I have reviewed the Registration Statement, including the
prospectus and prospectus supplement contained therein, the form of Indenture,
the form of Debt Guarantee, the form of Preferred Securities Guarantee and the
form of Subordinated Debt Securities being filed with the Commission as exhibits
to the Registration Statement. In addition, I have examined originals or copies,
certified or otherwise identified to my satisfaction, of such corporate records,
agreements, documents and other instruments, and such certificates or comparable
documents of public officials and of officers and representatives of the Company
and Capital Funding, and have made such inquiries of such officers and
representatives, as I have deemed relevant and necessary as a basis for the
opinions hereinafter set forth.
In such examination, I have assumed the genuineness of all signatures, the legal
capacity of natural persons, the authenticity of all documents submitted to me
as originals, the
<PAGE>
conformity to original documents of all documents submitted to me as certified
or photostatic copies and the authenticity of the originals of such latter
documents. As to all questions of fact material to this opinion that have not
been independently established, I have relied upon certificates or comparable
documents of officers and representatives of the Company and Capital
Funding.
Based on the foregoing, and subject to the qualifications stated herein, I
am of the opinion that:
1. The Company and Capital Funding are corporations duly incorporated and
validly existing under the laws of the State of Colorado.
2. The Company has all requisite corporate power and authority to execute
and deliver the Debt Guarantees, the Indenture and the Preferred Securities
Guarantees and to perform its obligations thereunder. Capital Funding has all
requisite corporate power and authority to execute and deliver the Subordinated
Debt Securities and the Indenture and to perform its obligations thereunder.
3. The execution and delivery of the Debt Guarantees, the Indenture and the
Preferred Securities Guarantees by the Company has been duly authorized by all
necessary corporate action on the part of the Company. The execution and
delivery of the Subordinated Debt Securities and the Indenture by Capital
Funding has been duly authorized by all necessary corporate action on the part
of Capital Funding.
This opinion is rendered solely for your benefit in connection with the
transactions described herein. Without my prior written consent, this opinion
may not be relied upon by you in any other context or by any other person,
except that your outside counsel, Weil, Gotshal & Manges, and counsel to your
underwriters, Skadden, Arps, Slate, Meagher & Flom, may rely on this opinion as
to matters governed by the laws of the State of Colorado in rendering to you
their respective opinions, copies of which are included as exhibits to the
Registration Statement.
This opinion is limited to the present laws of the State of Colorado, to
present judicial interpretations thereof, and to the facts as they presently
exist, and I assume no responsibility as to the applicability or effect of the
laws of any other jurisdiction. In rendering this opinion, I assume no
obligation to revise or supplement this opinion should the present laws of the
State of Colorado be changed by legislative action, judicial decision, or
otherwise.
<PAGE>
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and I further consent to the use of my name under the
captions "Legal Opinions" in the prospectus and "Legal Matters" in the
prospectus supplement forming a part of the Registration Statement.
Very truly yours,
/s/ Stephen E. Brilz
Stephen E. Brilz
<PAGE>
EXHIBIT 8
April 28, 1995
U S WEST, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
Ladies and Gentlemen:
We have acted as special counsel to U S WEST, Inc., a Colorado
corporation ("U S WEST"), U S WEST Capital Funding, Inc., a Colorado corporation
and a wholly-owned subsidiary of U S WEST ("Capital Funding"), and U S WEST
Financing I, a Delaware business trust ("U S WEST Financing"), in connection
with the preparation of the registration statement on Form S-3 (33-57889),
filed with the Securities and Exchange Commission (the "Commission") on March 1,
1995 and amended by Amendment No. 1 filed with the Commission on April 28, 1995
(as amended, the "Registration Statement"), relating to the registration under
the Securities Act of 1933, as amended (the "Securities Act"), of U S WEST
Financing's Trust Originated Preferred Securities (the "Preferred Securities")
and Capital Funding's Subordinated Deferrable Interest Notes due 2025 (the
"Subordinated Debt Securities"). The Preferred Securities will be issued in
accordance with the provisions of the Amended and Restated Declaration of Trust
(the "Declaration") to be executed by U S WEST, as sponsor, and the trustees of
U S WEST Financing. Capitalized terms not otherwise defined herein shall have
the same meaning ascribed thereto in the prospectus supplement contained in the
Registration Statement (the "Prospectus Supplement").
In so acting, we have reviewed the Registration Statement, including
the Prospectus Supplement and the prospectus contained therein (the
"Prospectus"), the Declaration, the form
<PAGE>
U S WEST, Inc.
April 28, 1995
Page 2
of Preferred Securities and the form of Common Securities contained in the
Declaration, and the form of Indenture and the form of the Preferred Securities
Guarantee being filed with the Commission as exhibits to the Registration
Statement (collectively, the "Agreements"). In addition, we have examined
originals or copies, certified or otherwise identified to our satisfaction, of
such corporate records, agreements, documents and other instruments, and have
made such inquiries of such officers and representatives of U S WEST, Capital
Funding and U S WEST Financing, as we have deemed relevant and necessary as a
basis for the opinion hereinafter set forth.
In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of documents submitted to us as certified or
photostatic copies and the authenticity of the originals of such latter
documents. We have further assumed (i) that the Securities as executed
and delivered by the requisite signatories thereto will conform in substance
and form in all material respects to the respective forms thereof examined
by us, (ii) timely compliance by all parties to the various Agreements to the
terms thereof (without waiver or amendment of any of the terms thereof)
and (iii) that the Agreements constitute all the agreements, arrangements and
understandings between or among the parties thereto with respect to the
transactions contemplated therein and to the Securities and that the
representations and warranties contained therein are true.
The terms of the Agreements and the Securities are incorporated
herein by reference.
Based on the foregoing, it is our opinion that, assuming full
compliance with the Agreements, U S WEST Financing will not be classified,
for United States federal income tax purposes, as an association taxable as a
corporation or a partnership, but rather, each holder of Preferred Securities
will be treated as owning an undivided beneficial interest in the Subordinated
Debt Securities.
The foregoing opinion is based on current provisions of the Code, the
Treasury Regulations promulgated thereunder (including proposed Treasury
Regulations), published pronouncements of the Internal Revenue Service, and case
law, any of which may be changed at any time with retroactive effect. We
express no opinion as to any matters not specifically covered by
<PAGE>
U S WEST, Inc.
April 28, 1995
Page 3
the foregoing opinion or as to the effect on the matters covered by this
opinion of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm under the headings
"Legal Opinions" in the Prospectus and "Certain Federal Income Tax
Consequences" and "Legal Matters" in the Prospectus Supplement, without
admitting that we are "experts" under the Securities Act or the rules and
regulations of the Commission issued thereunder with respect to any part of the
Registraton Statement. This opinion may not be used for any other purpose and
may not otherwise be relied upon by, or disclosed to, any other person, quoted
or referred to.
Very truly yours,
/s/ Weil, Gotshal & Manges
<PAGE>
Exhibit 23-A
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
of U S WEST, Inc. (the "Company") on Form S-3 (File Nos. 33-57889) of our
reports, which include an explanatory paragraph regarding the discontinuance of
accounting for the operations of U S WEST Communications, Inc. in accordance
with Statement of Financial Accounting Standard No. 71, "Accounting for the
Effects of Certain Types of Regulation," in 1993, and a change in the method of
accounting for postretirement benefits other than pensions and other
postemployment benefits in 1992, dated January 18, 1995, on our audits of the
consolidated financial statements and the consolidated financial statement
schedule of U S WEST, Inc., as of December 31, 1994 and 1993, and for the three
years ended December 31, 1994, 1993 and 1992. We also consent to the reference
to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Denver, Colorado
April 28, 1995
<PAGE>
- --------------------------------------------------------------------------------
Exhibit 25-A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
----------------------------
___ CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT
TO SECTION 305(b)(2)
NORWEST BANK MINNESOTA NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
A NATIONAL BANKING ASSOCIATION 41-1592157
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national Identification No.
bank)
SIXTH STREET AND MARQUETTE AVENUE
MINNEAPOLIS, MINNESOTA 55479
(Address of principal executive offices) (Zip code)
-----------------------------
U.S. WEST, INC.
U.S. WEST CAPITAL FUNDING, INC.
(Exact name of obligor as specified in its charter)
COLORADO 84-0926774
COLORADO 84-1028672
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7800 EAST ORCHARD ROAD
ENGLEWOOD, COLORADO 80111
(Address of principal executive offices) (Zip code)
------------------------------
GUARANTEE OF SUBORDINATED DEBT SECURITIES BY U.S. WEST, INC.
SUBORDINATED DEBT SECURITIES OF U.S. WEST CAPITAL FUNDING, INC.
(Title of the indenture securities)
- --------------------------------------------------------------------------------
<PAGE>
Item 1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve System
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
Item 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the
trustee, describe each such affiliation.
None with respect to the trustee.
No responses are included for Items 3-15 of this Form T-1 because the obligor is
not in default as provided under Item 13.
Item 16. LIST OF EXHIBITS. List below all exhibits filed as a part of this
Statement of Eligibility. Norwest Bank
incorporates by reference into this Form T-1 the
exhibits attached hereto.
Exhibit 1. a. A copy of Articles of Association of the trustee
now in effect.*
Exhibit 2. a. A copy of the certificate of authority of the
trustee to commence business issued June 28, 1872,
by the Comptroller of the Currency to The
Northwestern National Bank of Minneapolis.*
b. A copy of the certificate of the Comptroller of
the Currency dated January 2, 1934, approving the
consolidation of the Northwestern National Bank of
Minneapolis and the Minnesota Loan and Trust
Company of Minneapolis.*
c. A copy of the certificate of the Acting
Comptroller of the Currency dated January 12,
1943, as to change of corporate title of
Northwestern National Bank and Trust Company of
Minneapolis to Northwestern National Bank of
Minneapolis.*
d. A copy of the certificate of the Comptroller of
the Currency dated May 1, 1983, authorizing
Norwest Bank Minneapolis, National Association, to
set as fiduciary.*
<PAGE>
Exhibit 3. A copy of the authorization of the trustee to exercise
corporate trust powers issued January 2, 1934, by the
Federal Reserve Board.*
Exhibit 4. Copy of By-laws of the trustee as now in effect.*
Exhibit 5. Not Applicable.
Exhibit 6. The consent of the trustee required by Section 321(b)
of the Act.
Exhibit 7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.**
Exhibit 8. A copy of the certificate dated May 10, 1983 of name
change from Northwestern National Bank Minneapolis to
Norwest Bank Minneapolis, National Association.*
Exhibit 9. A copy of the certificate dated January 11, 1988, of
name change from Norwest Bank Minneapolis, National
Association to Norwest Bank Minnesota, National
Association.*
* Incorporated by reference to the exhibit of the same number filed
with the registration statement number 33-66086.
** Incorporated by reference to the exhibit of the same number filed
with the registration statement number 33-90108.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, Norwest Bank Minnesota, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Minneapolis and State of Minnesota on the 17th day of April, 1995.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Raymond S. Haverstock
-----------------------
Raymond S. Haverstock
Assistant Vice President
<PAGE>
EXHIBIT 6
April 17,1995
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In accordance with Section 321 (b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal or State authorities authorized to make such
examination may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.
Very truly yours,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
Raymond S. Haverstock
Assistant Vice President
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) ___
--------
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
--------
U S WEST FINANCING I
(Exact name of co-registrant as specified in its charter)
Delaware To Be Applied For
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
7800 East Orchard Road
Englewood, Colorado 80111
(Address of Principal Executive Offices) (Zip Code)
<PAGE>
U S WEST, INC.
(Exact name of co-registrant as specified in its charter)
Colorado To Be Applied For
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
7800 East Orchard Road
Englewood, Colorado 80111
(Address of principal executive office) (Zip Code)
Preferred Securities of U S WEST Financing I
Guarantee of Preferred Securities of U S WEST, Inc.
(Title of the indenture securities)
<PAGE>
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISION AUTHORITY TO
WHICH IT IS SUBJECT.
Comptroller of Currency, Washington, D.C., Federal Deposit
Insurance Corporation, Washington, D.C., The Board of Governors
of the Federal Reserve System, Washington, D.C..
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE
TRUSTEE, DESCRIBE EACH SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS
STATEMENT OF ELIGIBILITY.
1. A copy of the articles of association of the trustee now in
effect.*
2. A copy of the certificates of authority of the trustee to
commence business.*
3. A copy of the authorization of the trustee to exercise corporate
trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not applicable.
6. The consent of the trustee required by Section 321(b) of the Act.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or
examining authority.
8. Not applicable.
9. Not applicable.
* EXHIBIT 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS BEARING
IDENTICAL NUMBERS IN ITEM 12 OF THE FORM T-1 OF THE FIRST NATIONAL BANK OF
CHICAGO, FILED AS EXHIBIT 26 TO THE REGISTRATION STATEMENT ON FORM S-3 OF THE
CIT GROUP HOLDINGS, INC., FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
FEBRUARY 16, 1993 (REGISTRATION NO. 33-58418).
<PAGE>
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, The First National Bank of Chicago, a national banking association
organized and existing under the laws of the United States of America, has duly
caused this Statement of Eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Chicago, and State of
Illinois, on the 13th day of April, 1995.
The First National Bank of Chicago,
Trustee,
By: /S/ STEVEN M. WAGNER
-------------------------------------
Steven M. Wagner, Vice President
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
April 13, 1995
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of (i) an Amended and Restated Declaration
of Trust of U S West Financing I and (ii) a Preferred Securities Guarantee
Agreement of U S WEST, Inc. for the benefit of the holders of Preferred
Securities of U S WEST Financing I, the undersigned, in accordance with
Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents
that the reports of examinations of the undersigned, made by Federal or State
Authorities authorized to make such examinations, may be furnished by such
authorities to the Securities and Exchange Commission upon its request therefor.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
By: /S/ STEVEN M. WAGNER
-------------------------------------
Steven M. Wagner, Vice President
<PAGE>
EXHIBIT 7
A copy of the latest report of condition of the trustee published pursuant
to law or the requirements of its supervising or examining authority.
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: The First National Bank of Chicago Call Date: 12/31/94 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Suite 0460 Page RC-1
City, State Zip: Chicago, IL 60670-0460
FDIC Certificate No.: 0/3/6/1/8
---------
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 1994
All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last
business day of the quarter.
SCHEDULE RC-BALANCE SHEET
C400 (--
DOLLAR AMOUNTS IN ------------ --------
THOUSANDS RCFD BIL MIL THOU
----------------- ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions
(from Schedule RC-A):
a. Noninterest-bearing balances and currency and
coin(1) . . . . . . . . . . . . . . . . . . . . . . . 0081 3,776,149 1.a.
b. Interest-bearing balances(2). . . . . . . . . . . . . 0071 7,670,634 1.b.
2. Securities
a. Held-to-maturity securities (from Schedule RC-B,
column A) . . . . . . . . . . . . . . . . . . . . . . 1754 163,225 2.a.
b. Available-for-sale securities (from Schedule RC-B,
column D) . . . . . . . . . . . . . . . . . . . . . . 1773 533,857 2.b.
3. Federal funds sold and securities purchased under
agreements to resell in domestic offices of the bank
and its Edge and Agreement subsidiaries, and in IBFs:
a. Federal Funds sold. . . . . . . . . . . . . . . . . . 0276 4,037,205 3.a.
b. Securities purchased under agreements to resell . . . 0277 423,381 3.b.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from
Schedule RC-C). . . . . . . . . . . . . . . . . . . . RCFD 2122 15,617,618 4.a.
b. LESS: Allowance for loan and lease losses. . . . . . RCFD 3123 351,191 4.b.
c. LESS: Allocated transfer risk reserve. . . . . . . . RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance,
and reserve (item 4.a minus 4.b and 4.c). . . . . . . 2125 15,266,427 4.d.
5. Assets held in trading accounts. . . . . . . . . . . . . 3545 8,227,304 5.
6. Premises and fixed assets (including capitalized
leases). . . . . . . . . . . . . . . . . . . . . . . . . 2145 512,222 6.
7. Other real estate owned (from Schedule RC-M) . . . . . . 2150 46,996 7.
8. Investments in unconsolidated subsidiaries and
associated companies (from Schedule RC-M). . . . . . . . 2130 7,571 8.
9. Customers' liability to this bank on acceptances
outstanding. . . . . . . . . . . . . . . . . . . . . . . 2155 507,151 9.
10. Intangible assets (from Schedule RC-M) . . . . . . . . . 2143 120,504 10.
11. Other assets (from Schedule RC-F). . . . . . . . . . . . 2160 1,250,306 11.
12. Total assets (sum of items 1 through 11) . . . . . . . . 2170 42,542,932 12.
<FN>
- ----------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposits not held in trading accounts.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: The First National Bank of Chicago Call Date: 12/31/94 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Suite 0460 Page RC-2
City, State Zip: Chicago, IL 60670-0460
FDIC Certificate No.: 0/3/6/1/8
---------
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN
THOUSANDS BIL MIL THOU
----------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part I) . . . . . . . . . . . . . RCON 2200 15,103,504 13.a.
(1) Noninterest-bearing(1). . . . . . . . . . . . . . RCON 6631 6,129,078 13.a.(1)
(2) Interest-bearing. . . . . . . . . . . . . . . . . RCON 6636 8,974,426 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries,
and IBFs (from Schedule RC-E, part II). . . . . . . . RCFN 2200 10,633,999 13.b.
(1) Noninterest bearing . . . . . . . . . . . . . . . RCFN 6631 460,916 13.b.(1)
(2) Interest-bearing. . . . . . . . . . . . . . . . . RCFN 6636 10,173,083 13.b.(2)
14. Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of the
bank and of its Edge and Agreement subsidiaries, and
in IBFs:
a. Federal funds purchased . . . . . . . . . . . . . . . RCFD 0278 2,883,499 14.a.
b. Securities sold under agreements to repurchase. . . . RCFD 0279 502,401 14.b.
15. a. Demand notes issued to the U.S. Treasury. . . . . . . RCON 2840 112,289 15.a.
b. Trading Liabilities . . . . . . . . . . . . . . . . . RCFD 3548 4,798,720 15.b.
16. Other borrowed money:
a. With original maturity of one year or less. . . . . . RCFD 2332 2,355,421 16.a.
b. With original maturity of more than one year. . . . . RCFD 2333 382,801 16.b.
17. Mortgage indebtedness and obligations under capitalized
leases . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2910 275,794 17.
18. Bank's liability on acceptance executed and
outstanding. . . . . . . . . . . . . . . . . . . . . . . RCFD 2920 507,151 18.
19. Subordinated notes and debentures. . . . . . . . . . . . RCFD 3200 1,225,000 19.
20. Other liabilities (from Schedule RC-C) . . . . . . . . . RCFD 2930 860,989 20.
21. Total liabilities (sum of items 13 through 20) . . . . . RCFD 2948 39,641,568 21.
22. Limited-Life preferred stock and related surplus . . . . RCFD 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus. . . . . . RCFD 3838 0 23.
24. Common stock . . . . . . . . . . . . . . . . . . . . . . RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred
stock) . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3839 2,273,657 25.
26. a. Undivided profits and capital reserves. . . . . . . . RCFD 3632 431,545 26.a.
b. Net unrealized holding gains (losses) on
available-for-sale securities . . . . . . . . . . . . RCFD 8434 (4,184) 26.b.
27. Cumulative foreign currency translation adjustments. . . RCFD 3284 (512) 27.
28. Total equity capital (sum of items 23 through 27). . . . RCFD 3210 2,901,364 28.
29. Total liabilities, limited-life preferred stock, and
equity capital (sum of items 21, 22, and 28) . . . . . . RCFD 3300 42,542,932 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the
most comprehensive level of auditing work performed for the bank by independent external Number
auditors as of any date during 1993. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ./RCFD 6724 N/A/ M.1.
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a
certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public
accounting firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
<FN>
- ----------------
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
</TABLE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) ___
--------
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
--------
U S WEST FINANCING II
(Exact name of co-registrant as specified in its charter)
Delaware To Be Applied For
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
7800 East Orchard Road
Englewood, Colorado 80111
(Address of Principal Executive Offices) (Zip Code)
<PAGE>
U S WEST, INC.
(Exact name of co-registrant as specified in its charter)
Colorado To Be Applied For
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
7800 East Orchard Road
Englewood, Colorado 80111
(Address of principal executive office) (Zip Code)
Preferred Securities of U S WEST Financing II
Guarantee of Preferred Securities of U S WEST, Inc.
(Title of the indenture securities)
<PAGE>
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISION AUTHORITY TO
WHICH IT IS SUBJECT.
Comptroller of Currency, Washington, D.C., Federal Deposit
Insurance Corporation, Washington, D.C., The Board of Governors
of the Federal Reserve System, Washington, D.C..
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE
TRUSTEE, DESCRIBE EACH SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS
STATEMENT OF ELIGIBILITY.
1. A copy of the articles of association of the trustee now in
effect.*
2. A copy of the certificates of authority of the trustee to
commence business.*
3. A copy of the authorization of the trustee to exercise corporate
trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not applicable.
6. The consent of the trustee required by Section 321(b) of the Act.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or
examining authority.
8. Not applicable.
9. Not applicable.
* EXHIBIT 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS BEARING
IDENTICAL NUMBERS IN ITEM 12 OF THE FORM T-1 OF THE FIRST NATIONAL BANK OF
CHICAGO, FILED AS EXHIBIT 26 TO THE REGISTRATION STATEMENT ON FORM S-3 OF THE
CIT GROUP HOLDINGS, INC., FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
FEBRUARY 16, 1993 (REGISTRATION NO. 33-58418).
<PAGE>
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, The First National Bank of Chicago, a national banking association
organized and existing under the laws of the United States of America, has duly
caused this Statement of Eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Chicago, and State of
Illinois, on the 13th day of April, 1995.
The First National Bank of Chicago,
Trustee,
By: /S/ STEVEN M. WAGNER
-------------------------------------
Steven M. Wagner, Vice President
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
April 13, 1995
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of (i) an Amended and Restated Declaration
of Trust of U S West Financing II and (ii) a Preferred Securities Guarantee
Agreement of U S WEST, Inc. for the benefit of the holders of Preferred
Securities of U S WEST Financing II, the undersigned, in accordance with Section
321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the
reports of examinations of the undersigned, made by Federal or State Authorities
authorized to make such examinations, may be furnished by such authorities to
the Securities and Exchange Commission upon its request therefor.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
By: /S/ STEVEN M. WAGNER
-------------------------------------
Steven M. Wagner, Vice President
<PAGE>
EXHIBIT 7
A copy of the latest report of condition of the trustee published pursuant
to law or the requirements of its supervising or examining authority.
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: The First National Bank of Chicago Call Date: 12/31/94 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Suite 0460 Page RC-1
City, State Zip: Chicago, IL 60670-0460
FDIC Certificate No.: 0/3/6/1/8
---------
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 1994
All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last
business day of the quarter.
SCHEDULE RC-BALANCE SHEET
C400 (--
DOLLAR AMOUNTS IN ------------ --------
THOUSANDS RCFD BIL MIL THOU
----------------- ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions
(from Schedule RC-A):
a. Noninterest-bearing balances and currency and
coin(1) . . . . . . . . . . . . . . . . . . . . . . . 0081 3,776,149 1.a.
b. Interest-bearing balances(2). . . . . . . . . . . . . 0071 7,670,634 1.b.
2. Securities
a. Held-to-maturity securities (from Schedule RC-B,
column A) . . . . . . . . . . . . . . . . . . . . . . 1754 163,225 2.a.
b. Available-for-sale securities (from Schedule RC-B,
column D) . . . . . . . . . . . . . . . . . . . . . . 1773 533,857 2.b.
3. Federal funds sold and securities purchased under
agreements to resell in domestic offices of the bank
and its Edge and Agreement subsidiaries, and in IBFs:
a. Federal Funds sold. . . . . . . . . . . . . . . . . . 0276 4,037,205 3.a.
b. Securities purchased under agreements to resell . . . 0277 423,381 3.b.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from
Schedule RC-C). . . . . . . . . . . . . . . . . . . . RCFD 2122 15,617,618 4.a.
b. LESS: Allowance for loan and lease losses. . . . . . RCFD 3123 351,191 4.b.
c. LESS: Allocated transfer risk reserve. . . . . . . . RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance,
and reserve (item 4.a minus 4.b and 4.c). . . . . . . 2125 15,266,427 4.d.
5. Assets held in trading accounts. . . . . . . . . . . . . 3545 8,227,304 5.
6. Premises and fixed assets (including capitalized
leases). . . . . . . . . . . . . . . . . . . . . . . . . 2145 512,222 6.
7. Other real estate owned (from Schedule RC-M) . . . . . . 2150 46,996 7.
8. Investments in unconsolidated subsidiaries and
associated companies (from Schedule RC-M). . . . . . . . 2130 7,571 8.
9. Customers' liability to this bank on acceptances
outstanding. . . . . . . . . . . . . . . . . . . . . . . 2155 507,151 9.
10. Intangible assets (from Schedule RC-M) . . . . . . . . . 2143 120,504 10.
11. Other assets (from Schedule RC-F). . . . . . . . . . . . 2160 1,250,306 11.
12. Total assets (sum of items 1 through 11) . . . . . . . . 2170 42,542,932 12.
<FN>
- ----------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposits not held in trading accounts.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: The First National Bank of Chicago Call Date: 12/31/94 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Suite 0460 Page RC-2
City, State Zip: Chicago, IL 60670-0460
FDIC Certificate No.: 0/3/6/1/8
---------
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN
THOUSANDS BIL MIL THOU
----------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part I) . . . . . . . . . . . . . RCON 2200 15,103,504 13.a.
(1) Noninterest-bearing(1). . . . . . . . . . . . . . RCON 6631 6,129,078 13.a.(1)
(2) Interest-bearing. . . . . . . . . . . . . . . . . RCON 6636 8,974,426 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries,
and IBFs (from Schedule RC-E, part II). . . . . . . . RCFN 2200 10,633,999 13.b.
(1) Noninterest bearing . . . . . . . . . . . . . . . RCFN 6631 460,916 13.b.(1)
(2) Interest-bearing. . . . . . . . . . . . . . . . . RCFN 6636 10,173,083 13.b.(2)
14. Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of the
bank and of its Edge and Agreement subsidiaries, and
in IBFs:
a. Federal funds purchased . . . . . . . . . . . . . . . RCFD 0278 2,883,499 14.a.
b. Securities sold under agreements to repurchase. . . . RCFD 0279 502,401 14.b.
15. a. Demand notes issued to the U.S. Treasury. . . . . . . RCON 2840 112,289 15.a.
b. Trading Liabilities . . . . . . . . . . . . . . . . . RCFD 3548 4,798,720 15.b.
16. Other borrowed money:
a. With original maturity of one year or less. . . . . . RCFD 2332 2,355,421 16.a.
b. With original maturity of more than one year. . . . . RCFD 2333 382,801 16.b.
17. Mortgage indebtedness and obligations under capitalized
leases . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2910 275,794 17.
18. Bank's liability on acceptance executed and
outstanding. . . . . . . . . . . . . . . . . . . . . . . RCFD 2920 507,151 18.
19. Subordinated notes and debentures. . . . . . . . . . . . RCFD 3200 1,225,000 19.
20. Other liabilities (from Schedule RC-C) . . . . . . . . . RCFD 2930 860,989 20.
21. Total liabilities (sum of items 13 through 20) . . . . . RCFD 2948 39,641,568 21.
22. Limited-Life preferred stock and related surplus . . . . RCFD 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus. . . . . . RCFD 3838 0 23.
24. Common stock . . . . . . . . . . . . . . . . . . . . . . RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred
stock) . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3839 2,273,657 25.
26. a. Undivided profits and capital reserves. . . . . . . . RCFD 3632 431,545 26.a.
b. Net unrealized holding gains (losses) on
available-for-sale securities . . . . . . . . . . . . RCFD 8434 (4,184) 26.b.
27. Cumulative foreign currency translation adjustments. . . RCFD 3284 (512) 27.
28. Total equity capital (sum of items 23 through 27). . . . RCFD 3210 2,901,364 28.
29. Total liabilities, limited-life preferred stock, and
equity capital (sum of items 21, 22, and 28) . . . . . . RCFD 3300 42,542,932 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the
most comprehensive level of auditing work performed for the bank by independent external Number
auditors as of any date during 1993. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ./RCFD 6724 N/A/ M.1.
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a
certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public
accounting firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
<FN>
- ----------------
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
</TABLE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) ___
--------
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
--------
U S WEST FINANCING III
(Exact name of co-registrant as specified in its charter)
Delaware To Be Applied For
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
7800 East Orchard Road
Englewood, Colorado 80111
(Address of Principal Executive Offices) (Zip Code)
<PAGE>
U S WEST, INC.
(Exact name of co-registrant as specified in its charter)
Colorado To Be Applied For
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
7800 East Orchard Road
Englewood, Colorado 80111
(Address of principal executive office) (Zip Code)
Preferred Securities of U S WEST Financing III
Guarantee of Preferred Securities of U S WEST, Inc.
(Title of the indenture securities)
<PAGE>
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISION AUTHORITY TO
WHICH IT IS SUBJECT.
Comptroller of Currency, Washington, D.C., Federal Deposit
Insurance Corporation, Washington, D.C., The Board of Governors
of the Federal Reserve System, Washington, D.C..
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE
TRUSTEE, DESCRIBE EACH SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS
STATEMENT OF ELIGIBILITY.
1. A copy of the articles of association of the trustee now in
effect.*
2. A copy of the certificates of authority of the trustee to
commence business.*
3. A copy of the authorization of the trustee to exercise corporate
trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not applicable.
6. The consent of the trustee required by Section 321(b) of the Act.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or
examining authority.
8. Not applicable.
9. Not applicable.
* EXHIBIT 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS BEARING
IDENTICAL NUMBERS IN ITEM 12 OF THE FORM T-1 OF THE FIRST NATIONAL BANK OF
CHICAGO, FILED AS EXHIBIT 26 TO THE REGISTRATION STATEMENT ON FORM S-3 OF THE
CIT GROUP HOLDINGS, INC., FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
FEBRUARY 16, 1993 (REGISTRATION NO. 33-58418).
<PAGE>
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, The First National Bank of Chicago, a national banking association
organized and existing under the laws of the United States of America, has duly
caused this Statement of Eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Chicago, and State of
Illinois, on the 13th day of April, 1995.
The First National Bank of Chicago,
Trustee,
By: /S/ STEVEN M. WAGNER
-------------------------------------
Steven M. Wagner, Vice President
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
April 13, 1995
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of (i) an Amended and Restated Declaration
of Trust of U S West Financing III and (ii) a Preferred Securities Guarantee
Agreement of U S WEST, Inc. for the benefit of the holders of Preferred
Securities of U S WEST Financing III, the undersigned, in accordance with
Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents
that the reports of examinations of the undersigned, made by Federal or State
Authorities authorized to make such examinations, may be furnished by such
authorities to the Securities and Exchange Commission upon its request therefor.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
By: /S/ STEVEN M. WAGNER
-------------------------------------
Steven M. Wagner, Vice President
<PAGE>
EXHIBIT 7
A copy of the latest report of condition of the trustee published pursuant
to law or the requirements of its supervising or examining authority.
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: The First National Bank of Chicago Call Date: 12/31/94 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Suite 0460 Page RC-1
City, State Zip: Chicago, IL 60670-0460
FDIC Certificate No.: 0/3/6/1/8
---------
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 1994
All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last
business day of the quarter.
SCHEDULE RC-BALANCE SHEET
C400 (--
DOLLAR AMOUNTS IN ------------ --------
THOUSANDS RCFD BIL MIL THOU
----------------- ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions
(from Schedule RC-A):
a. Noninterest-bearing balances and currency and
coin(1) . . . . . . . . . . . . . . . . . . . . . . . 0081 3,776,149 1.a.
b. Interest-bearing balances(2). . . . . . . . . . . . . 0071 7,670,634 1.b.
2. Securities
a. Held-to-maturity securities (from Schedule RC-B,
column A) . . . . . . . . . . . . . . . . . . . . . . 1754 163,225 2.a.
b. Available-for-sale securities (from Schedule RC-B,
column D) . . . . . . . . . . . . . . . . . . . . . . 1773 533,857 2.b.
3. Federal funds sold and securities purchased under
agreements to resell in domestic offices of the bank
and its Edge and Agreement subsidiaries, and in IBFs:
a. Federal Funds sold. . . . . . . . . . . . . . . . . . 0276 4,037,205 3.a.
b. Securities purchased under agreements to resell . . . 0277 423,381 3.b.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from
Schedule RC-C). . . . . . . . . . . . . . . . . . . . RCFD 2122 15,617,618 4.a.
b. LESS: Allowance for loan and lease losses. . . . . . RCFD 3123 351,191 4.b.
c. LESS: Allocated transfer risk reserve. . . . . . . . RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance,
and reserve (item 4.a minus 4.b and 4.c). . . . . . . 2125 15,266,427 4.d.
5. Assets held in trading accounts. . . . . . . . . . . . . 3545 8,227,304 5.
6. Premises and fixed assets (including capitalized
leases). . . . . . . . . . . . . . . . . . . . . . . . . 2145 512,222 6.
7. Other real estate owned (from Schedule RC-M) . . . . . . 2150 46,996 7.
8. Investments in unconsolidated subsidiaries and
associated companies (from Schedule RC-M). . . . . . . . 2130 7,571 8.
9. Customers' liability to this bank on acceptances
outstanding. . . . . . . . . . . . . . . . . . . . . . . 2155 507,151 9.
10. Intangible assets (from Schedule RC-M) . . . . . . . . . 2143 120,504 10.
11. Other assets (from Schedule RC-F). . . . . . . . . . . . 2160 1,250,306 11.
12. Total assets (sum of items 1 through 11) . . . . . . . . 2170 42,542,932 12.
<FN>
- ----------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposits not held in trading accounts.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: The First National Bank of Chicago Call Date: 12/31/94 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Suite 0460 Page RC-2
City, State Zip: Chicago, IL 60670-0460
FDIC Certificate No.: 0/3/6/1/8
---------
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN
THOUSANDS BIL MIL THOU
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<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part I) . . . . . . . . . . . . . RCON 2200 15,103,504 13.a.
(1) Noninterest-bearing(1). . . . . . . . . . . . . . RCON 6631 6,129,078 13.a.(1)
(2) Interest-bearing. . . . . . . . . . . . . . . . . RCON 6636 8,974,426 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries,
and IBFs (from Schedule RC-E, part II). . . . . . . . RCFN 2200 10,633,999 13.b.
(1) Noninterest bearing . . . . . . . . . . . . . . . RCFN 6631 460,916 13.b.(1)
(2) Interest-bearing. . . . . . . . . . . . . . . . . RCFN 6636 10,173,083 13.b.(2)
14. Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of the
bank and of its Edge and Agreement subsidiaries, and
in IBFs:
a. Federal funds purchased . . . . . . . . . . . . . . . RCFD 0278 2,883,499 14.a.
b. Securities sold under agreements to repurchase. . . . RCFD 0279 502,401 14.b.
15. a. Demand notes issued to the U.S. Treasury. . . . . . . RCON 2840 112,289 15.a.
b. Trading Liabilities . . . . . . . . . . . . . . . . . RCFD 3548 4,798,720 15.b.
16. Other borrowed money:
a. With original maturity of one year or less. . . . . . RCFD 2332 2,355,421 16.a.
b. With original maturity of more than one year. . . . . RCFD 2333 382,801 16.b.
17. Mortgage indebtedness and obligations under capitalized
leases . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2910 275,794 17.
18. Bank's liability on acceptance executed and
outstanding. . . . . . . . . . . . . . . . . . . . . . . RCFD 2920 507,151 18.
19. Subordinated notes and debentures. . . . . . . . . . . . RCFD 3200 1,225,000 19.
20. Other liabilities (from Schedule RC-C) . . . . . . . . . RCFD 2930 860,989 20.
21. Total liabilities (sum of items 13 through 20) . . . . . RCFD 2948 39,641,568 21.
22. Limited-Life preferred stock and related surplus . . . . RCFD 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus. . . . . . RCFD 3838 0 23.
24. Common stock . . . . . . . . . . . . . . . . . . . . . . RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred
stock) . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3839 2,273,657 25.
26. a. Undivided profits and capital reserves. . . . . . . . RCFD 3632 431,545 26.a.
b. Net unrealized holding gains (losses) on
available-for-sale securities . . . . . . . . . . . . RCFD 8434 (4,184) 26.b.
27. Cumulative foreign currency translation adjustments. . . RCFD 3284 (512) 27.
28. Total equity capital (sum of items 23 through 27). . . . RCFD 3210 2,901,364 28.
29. Total liabilities, limited-life preferred stock, and
equity capital (sum of items 21, 22, and 28) . . . . . . RCFD 3300 42,542,932 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the
most comprehensive level of auditing work performed for the bank by independent external Number
auditors as of any date during 1993. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ./RCFD 6724 N/A/ M.1.
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a
certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public
accounting firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
<FN>
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(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
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