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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of Earliest Event Reported): October 28, 1998
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MediaOne Group, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-8611 84-0926774
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(Commission File Number) (I.R.S. Employer Identification No.)
188 Inverness Drive West, Englewood, Colorado 80112
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(Address of Principal Executive Offices) (Zip Code)
(303) 585-3000
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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NYFS05...:\34\62634\0013\2220\FRMN028R.210
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Item 5. Other Events
On October 28, 1998, MediaOne Finance Trust III (the "Trust"), a
wholly-owned subsidiary of MediaOne Group, Inc. ("MediaOne Group"), issued
$500,000,000 aggregate liquidation amount of its 9.04% Trust Originated
Preferred Securities at a public offering price of $25 per preferred security.
The preferred securities are guaranteed by MediaOne Group based on several
obligations. The Trust invested the proceeds from such sale into $500,000,000
aggregate principal amount of 9.04% Subordinated Deferred Interest Notes due
2038 of MediaOne Group Funding, Inc., a wholly-owned subsidiary of MediaOne
Group, the payments of which are guaranteed by MediaOne Group.
Item 7. Exhibits
(c) Exhibits
1-A Purchase Agreement dated October 28, 1998 between MediaOne Group,
Inc. and Merrill, Lynch, Pierce, Fenner & smith Incorporated, A.G.
Edwards & Sons, Inc., Paine Webber Incorporated, Prudential
Securities Incorporated and Salomon Smith Barney Inc.
4-A Amended and Restated Declaration of Trust of MediaOne Finance Trust
III
4-B Third Supplemental Indenture dated october 28, 1998 among MediaOne
Group funding, Inc., MediaOne Group, Inc. and Norwest Bank
Minnesota, National Association, as Trustee, to its Indenture dated
June 12, 1998.
4-C Preferred Securities Guarantee dated October 28, 1998 by MediaOne
Group, Inc., as Guarantor, and the First Bank of Chicago, as Trustee
4-D Form of Preferred Security (included in exhibit 4-A).
4-E Form of Subordinated Note and Note Guarantee (included in exhibit
4-B).
page 2 of 4
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
MEDIAONE GROUP, INC.
By: /s/Stephen E. Brilz
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Stephen E. Brilz,
Corporate Counsel and
Assistant Secretary
Date: November 3, 1998
page 3 of 4
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EXHIBIT INDEX
Item No. Description Page No.
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1-A Purchase Agreement dated October 28, 1998 between MediaOne
Group, Inc. and Merrill, Lynch, Pierce, Fenner & smith
Incorporated, A.G. Edwards & Sons, Inc., Paine Webber
Incorporated, Prudential Securities Incorporated and Salomon
Smith Barney Inc.
4-A Amended and Restated Declaration of Trust of MediaOne
Finance Trust III
4-B Third Supplemental Indenture dated october 28, 1998 among
MediaOne Group funding, Inc., MediaOne Group, Inc. and
Norwest Bank Minnesota, National Association, as Trustee, to
its Indenture dated June 12, 1998.
4-C Preferred Securities Guarantee dated October 28, 1998 by
MediaOne Group, Inc., as Guarantor, and the First Bank of
Chicago, as Trustee
4-D Form of Preferred Security (included in exhibit 4-A).
4-E Form of Subordinated Note and Note Guarantee (included in exhibit
4-B).
page 4 of 4
MEDIAONE FINANCE TRUST III
(a Delaware business trust)
18,000,000 Preferred Securities
9.04% Trust Originated Preferred Securities ("TOPrS"SM)
(Liquidation Amount of $25 Per Preferred Security)
PURCHASE AGREEMENT
Dated: October 23, 1998
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SM "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
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Table of Contents
SCHEDULES
Schedule A - List of Underwriters Sch A-1
Schedule B - Pricing Information Sch B-1
EXHIBITS
Exhibit A - Form of Opinion of Weil, Gotshal & Manges LLP A-1
Exhibit B - Form of Opinion of Stephen E. Brilz, Esq. B-1
Exhibit C - Form of Opinion of Morris, Nichols, Arsht & Tunnell C-1
Exhibit D - Form of Opinion of Pepper Hamilton LLP D-1
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MEDIAONE FINANCE TRUST III
(a Delaware business trust)
18,000,000 Preferred Securities
9.04% Trust Originated Preferred Securities ("TOPrS"(sm))
(Liquidation Amount of $25 Per Preferred Security)
PURCHASE AGREEMENT
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October 23, 1998
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
A.G. EDWARDS & SONS, INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SALOMON SMITH BARNEY INC.
as Representatives of the several Underwriters
c/o MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
MEDIAONE FINANCE TRUST III (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. ss.ss. 3801 et
seq.), MediaOne Group, Inc., a Delaware corporation (the "Guarantor"), and
MediaOne Group Funding, Inc., a Delaware corporation ("MediaOne Group 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, A.G. Edwards & Sons, Inc., PaineWebber
Incorporated, Prudential Securities Incorporated and Salomon Smith Barney Inc.
are acting as
* "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
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representatives (in such capacity, the "Representatives"), with respect to the
issue and sale by the Trust and the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of 9.04% Trust Originated
Preferred Securities (liquidation amount of $25 per preferred security) of the
Trust (the "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 the additional Preferred Securities to cover over-allotments, if any.
The aforesaid 18,000,000 Preferred Securities (the "Initial Securities") to be
purchased by Underwriters and all or any part of the 2,700,000 Preferred
Securities subject to the option described in Section 2(b) hereof (the "Option
Securities") are hereinafter called, collectively, 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 Guarantee Agreement"), dated as of October
28, 1998, between the Guarantor and The First National Bank of Chicago, as
Trustee (the "Preferred Guarantee Trustee"), and entitled to the benefits of
certain backup undertakings described in the Prospectus (as defined herein) with
respect to MediaOne Group 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 Guarantee are referred to herein as the
"Securities".
The Offerors understand that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered. 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 such guarantee, with
respect to distributions and payments upon liquidation, and redemption (the
"Common Securities Guarantee" and together with the Preferred Securities
Guarantee and the Debt Guarantee (as defined herein), the "Guarantees") pursuant
to a Common Securities Guarantee Agreement (the "Common Securities Guarantee
Agreement" and, together with the Preferred Securities Guarantee Agreement, the
"Guarantee Agreements"), dated as of October 28, 1998, between the Guarantor and
The First National Bank of Chicago, as Trustee, and will be used by the Trust to
purchase approximately $463.918 million aggregate principal amount of 9.04%
Subordinated Deferrable Interest Notes due 2038 (the "Subordinated Debt
Securities") to be issued by MediaOne Group Funding and, if all or any part of
the Option Securities are purchased, up to approximately an additional $69.588
million aggregate principal amount of Subordinated Debt Securities (the "Option
Subordinated Debt Securities"). 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 October 28, 1998 (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 guarantee by the Guarantor of
the payment of principal, premium, if any, and interest on the Subordinated Debt
Securities (the "Debt Guarantee") will be issued pursuant to an indenture, dated
as of June 12, 1998 (the "Base Indenture"), among the Guarantor, a Delaware
corporation, MediaOne Group Funding and Norwest Bank, N.A., as trustee
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(the "Debt Trustee"), and a supplement to the Base Indenture, dated as of
October 28, 1998 (the "Supplemental Indenture," and together with the Base
Indenture and any other amendments or supplements thereto, the "Indenture"),
among the Guarantor, MediaOne Group Funding and the Debt Trustee.
The Offerors have filed with the Securities and Exchange Commission (the
"Commission") a shelf registration statement on Form S-3 (No. 333-65371)
covering the registration of (i) the Preferred Securities, (ii) the Preferred
Securities Guarantee, (iii) the Subordinated Debt Securities and (iv) the Debt
Guarantee under the Securities Act of 1933, as amended (the "1933 Act"), which
permits the delayed or continuous offering of securities pursuant to Rule 415 of
the rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations"). Promptly after execution and delivery of this Agreement, the
Offerors will either (i) prepare and file a prospectus in accordance with the
provisions of Rule 424(b) ("Rule 424(b)") of the 1933 Act Regulations or (ii) if
the Offerors have elected to rely upon Rule 434 ("Rule 434") of the 1933 Act
Regulations, prepare and file a term sheet (a "Term Sheet") in accordance with
the provisions of Rule 434 and 424(b). The information included in such Term
Sheet that was omitted from such registration statement at the time it became
effective but that is deemed part of such registration statement at the time it
became effective is referred to as "Rule 434 Information." Each prospectus used
before such Rule 424(b) prospectus has been filed and any prospectus that
omitted the Rule 434 Information, in each case that was used after such
effectiveness and prior to the execution and delivery of this Agreement, is
herein called a "preliminary prospectus." Such registration statement, including
the exhibits thereto, schedules thereto, if any, and the documents incorporated
by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, at the
time it became effective and including the Rule 434 Information is herein called
the "Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement" and after such filing the term "Registration Statement"
shall include the Rule 462 (b) Registration Statement. The final prospectus,
including the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act, in the form first furnished to the Underwriters for
use in connection with the offering of the Securities is herein called the
"Prospectus." If Rule 434 is relied on, the term "Prospectus" shall refer to the
preliminary prospectus dated October 16, 1998 together with the Term Sheet and
all references in this Agreement to the date of the Prospectus shall mean the
date of the Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any
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preliminary prospectus or the Prospectus shall be deemed to mean and include the
filing of any document under the Securities Exchange Act of 1934 (the "1934
Act") which is incorporated by reference in the Registration Statement, such
preliminary prospectus or the Prospectus, as the case may be.
SECTION 1. Representations and Warranties. The Offerors jointly and
severally represent and warrant to each Underwriter as of the date hereof and as
of the applicable delivery date, if any, (each such date being hereinafter
referred to as a "Delivery Date") as follows:
(a) Each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the 1933 Act. At the
respective times the Registration Statement became effective and at the
Delivery Date, the Registration Statement, any Rule 462(b) Registration
Statement and any post-effective amendment thereto complied and 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 Trust Indenture
Act of 1939 (the "1939 Act") and the rules and regulations of the
Commission under the 1939 Act (the "1939 Act Regulations"), and did not
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading. The Prospectus, as amended or
supplemented, if applicable, at the Delivery Date and at the 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.
Each preliminary prospectus and prospectus filed as part of the
Registration Statement as originally filed or as part of an amendment thereto,
or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all
material respects with the 1933 Act Regulations and each preliminary prospectus
and the Prospectus delivered to the Underwriters for use in connection with the
offering of the Securities was, at the time of such delivery, identical to any
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(b) The documents incorporated or deemed to be incorporated by
reference in the Registration Statement and the Prospectus, when they
became effective or at the time when they were or hereafter are filed with
the Commission, complied and will comply in all material respects with the
requirements of the 1933 Act, the 1933 Act Regulations, the 1934 Act and
1934 Act Regulations, as applicable, and, when read together with the
other information in the Prospectus, at the time the Registration
Statement became effective, at the
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time the Prospectus was issued and at each Delivery Date, did not and will
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(c) The financial statements of the Guarantor included in the
Registration Statement and the Prospectus, together with the related
schedules and notes, present fairly the financial position of the
Guarantor and its consolidated subsidiaries at the dates indicated and the
statement of operations, shareowners' equity and cash flows of the
Guarantor and its consolidated subsidiaries for the periods specified;
said financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout
the periods involved.
(d) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change in the financial
condition or results of operations of Media One Group Funding or of the
Guarantor and its subsidiaries, taken as a whole (a "Material Adverse
Effect"), and (B) there have been no transactions entered into by Media
One Group Funding or by the Guarantor or any of its subsidiaries other
than those in the ordinary course of business, which are material with
respect to MediaOne Group Funding or the Guarantor and its subsidiaries,
taken as a whole.
(e) This Agreement has been duly authorized, executed and delivered
by each of the Trust, MediaOne Group Funding, and the Guarantor.
(f) The Indenture has been duly authorized, executed and delivered
by each of MediaOne Group Funding and the Guarantor and (assuming the due
authorization, execution and delivery by the Debt Trustee) constitutes the
legal, valid and binding agreement of MediaOne Group Funding and the
Guarantor enforceable against each of them in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law); and the
Indenture has been duly qualified under the 1939 Act.
(g) The Subordinated Debt Securities have been duly authorized and,
at the Closing Time, will have been duly executed by MediaOne Group
Funding and, when authenticated, issued and delivered in the manner
provided for in the Indenture and delivered against payment of the
purchase price therefor as provided in this Agreement, will constitute
legal, valid and binding obligations of MediaOne Group Funding,
enforceable against Media One Group Funding in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of
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creditors' rights generally and except as enforcement thereof is subject
to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or law), and will be in the form
contemplated by, and entitled to the benefits of, the Indenture.
(h) The Debt Guarantee has been duly authorized and, at the Closing
time, will have been duly executed by the Guarantor and, when issued and
delivered in the manner provided for in the Indenture, will constitute
legal, valid and binding obligations of the Guarantor, enforceable against
the Guarantor in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights
generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law), and will be in the form contemplated by,
and entitled to the benefits of, the Indenture.
(i) The Preferred Securities Guarantee Agreement has been duly
authorized and, at the Closing Time, will have been duly executed by the
Guarantor and (assuming the due authorization execution and delivery by
the Preferred Guarantee Trustee) constitutes the legal, valid and binding
agreement of the Guarantor enforceable against the Guarantor in accordance
with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratoria or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or law).
(j) The Preferred Securities, the Subordinated Debt Securities, the
Debt Guarantees, the Preferred Securities Guarantee, the Declaration and
the Indenture will conform in all material respects to the respective
statements relating thereto contained in the Prospectus and will be in
substantially the respective forms filed or incorporated by reference, as
the case may be, as exhibits to the Registration Statement.
(k) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein (including,
without limitation, the issuance and sale of the Preferred Securities, the
Preferred Securities Guarantee, the Subordinated Debt Securities and the
Debt Guarantee) and compliance by the Trust, MediaOne Group Funding and
the Guarantor with their respective obligations hereunder have been duly
authorized by all necessary corporate or trust action and do not and will
not, whether with or without the giving of notice or passage of time or
both, conflict with or constitute breach of, or default or Repayment Event
(as defined below) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Trust,
MediaOne Group Funding, the Guarantor or any subsidiary of the Guarantor
pursuant to, any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which
the Trust, MediaOne Group Funding, the Guarantor
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or any subsidiary of the Guarantor is a party or by which it or any of
them may be bound, or to which any of the property or assets of the Trust,
MediaOne Group Funding, the Guarantor or any subsidiary of the Guarantor
is subject (collectively, "Agreements and Instruments") except for such
conflicts, breaches or defaults or liens, charges or encumbrances that
would not result in a Material Adverse Effect), nor will such action
result in any violation of the provisions of the charter or bylaws of
MediaOne Group Funding, the Guarantor or any subsidiary of the Guarantor
or of the certificate of trust of the Trust or , to the best knowledge of
the Trust, MediaOne Group Funding and the Guarantor, any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Trust, MediaOne Group Funding, the Guarantor
or any subsidiary the Guarantor or any of their assets, properties or
operations. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other evidence
of indebtedness of the Trust, MediaOne Group Funding, the Guarantor or any
subsidiary of the Guarantor (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Trust, MediaOne Group Funding, the
Guarantor or any subsidiary.
(l) Except as disclosed in the Registration Statement, there is not
pending or threatened any action, suit, proceeding, inquiry or
investigation to which the Trust, MediaOne Group Funding, the Guarantor or
any subsidiary of the Guarantor is a party or to which the assets,
properties or operations of the Trust, MediaOne Group Funding, the
Guarantor or any subsidiary of the Guarantor is subject, before or by any
court or governmental agency or body, domestic or foreign, which might
reasonably be expected to result in a Material Adverse Effect or which
might reasonably be expected to materiality and adversely effect the
assets, properties or operation of the Trust, Media One Group Funding, the
Guarantor or any subsidiary of the Guarantor of the consummation of the
transactions contemplated by this Agreement, the Declaration, the
Preferred Securities Guarantee or the Indenture or the performance by the
Trust, MediaOne Group Funding or the Guarantor of their respective
obligations thereunder.
(m) The Guarantor and its subsidiaries possesses such permits,
licences, approvals, consents and other authorizations (collectively,
"Governmental Licences") issued by the appropriate federal, state, local
or foreign regulatory agencies or bodies necessary to conduct the business
now operated by them; the Guarantor and its subsidiaries are in compliance
with the terms and conditions of all such Governmental Licenses, except
where the failure so to comply would not, singly or in the aggregate, have
a Material Adverse Effect; all of the Governmental Licenses are valid and
in full force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force
and effect would not have a Material Adverse Effect; and neither the
Guarantor nor any of its subsidiaries has received any notice of
proceedings related to the revocation or modification of any such
Governmental Licenses which, singly or in the
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aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect.
(n) The Declaration has been duly authorized by the Trustees, and,
at the Closing Time, will have been duly executed and delivered by the
Trustees, and assuming due authorization, execution and delivery of the
Declaration by the Property Trustee under the Declaration (the "Property
Trustee"), the Declaration will, at the Closing Time, be a valid and
binding obligation of the Trustees, enforceable against the Trustees in
accordance with its terms, except to the extent that enforcement thereof
may be limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law), and will conform in all material respects to all statements
relating thereto in the Prospectus; and at the Closing Time, the
Declaration will have been qualified under the 1939 Act.
(o) The Preferred Securities have been duly authorized by the
Declaration and, when issued and delivered pursuant to this Agreement
against payment of the consideration set forth herein, will be validly
issued and (subject to the terms of the Declaration) fully paid and
non-assessable undivided beneficial interests in the Trust, will be
entitled to the benefits of the Declaration and will conform in all
material respects to all statements relating thereto contained in the
Prospectus; the issuance of the Preferred Securities is not subject to
preemptive or other similar rights; and (subject to the terms of the
Declaration) holders of Preferred Securities will be entitled to the same
limitation of personal liability under Delaware law as extended to
stockholders of private corporations for profit.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. 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
purchase from the Trust, at the price per security set forth in Schedule
B, the number of Initial Securities set forth in Schedule A opposite the
name of such Underwriter, plus any additional number of Initial Securities
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(b) Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms
and conditions set forth, the Trust hereby grants an option to the
Underwriters, severally and not jointly, to purchase up to an additional
1,200,000 Preferred Securities at the price per Preferred Security set
forth in Schedule B, less an amount per Preferred Security equal to any
distributions declared by the Trust and payable on the Initial Securities
but not payable on the Option Securities. The option hereby granted will
expire 30 days after the date hereof and may be exercised in
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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 Securities upon notice by the Representatives
to the Trust and the Guarantor 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 a Delivery Date shall be determined by the
Representatives, 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. 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, subject in
each case to such adjustments as the Representatives in their discretion
shall make to eliminate any sales or purchases of fractional Preferred
Securities.
(c) Commission. As compensation to the Underwriters for their
commitments hereunder and in view of the fact that the proceeds of the
sale of the Securities will be used to purchase the Subordinated Debt
Securities of MediaOne Group Funding, MediaOne Group Funding hereby agrees
to pay to the Representatives, for the accounts of the several
Underwriters, a commission per security set forth in Schedule B as
compensation to the Underwriters for their commitments under this
Agreement.
(d) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New
York 10022, or at such other place as shall be agreed upon by the
Representatives and the Offerors, at 10:00 A.M. (Eastern time) on the
third (fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any
given day) business day after the date hereof (unless postponed in
accordance with the provisions of Section 10), or such other time not
later than ten business days after such date as shall be agreed upon by
the Representatives and the Offerors (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, or at such other place as shall be agreed upon by
the Representatives, the Company and the Trust, on each Delivery Date as
specified in the notice from the Representatives to the Guarantor and the
Trust.
Payment shall be made to the Trust by wire transfer of immediately
available funds to a bank account designated by the Trust, against
delivery to the Representatives for the respective accounts of the
Underwriters of certificates for the Securities to be purchased by them.
It is understood that each Underwriter has authorized the Representatives,
for its account, to accept delivery of, receipt for, and make payment of
the purchase price for, the
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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 funds have not been received
by the Closing Time or the Delivery Date, as the case may be, but such
payment shall not relieve such Underwriter from its obligations hereunder.
At the Closing Time and on each Delivery Date, MediaOne Group
Funding will pay, or cause to be paid, the commission payable at such time
to the Underwriters under Section 2(c) hereof by wire transfer of
immediately available funds to a bank account designated by Merrill Lynch.
(d) Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such
denominations and registered in such names as the Representatives may
request in writing at least one full business day before the Closing Time
or the relevant Delivery Date, as the case may be. The certificates for
the Securities will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M. (Eastern
time) on the business day prior to the Closing Time or the relevant
Delivery Date, as the case may be.
SECTION 3. Covenants of the Offerors. Each of the Offerors jointly and
severally covenants with each Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests.
The Offerors, subject to Section 3(b), will comply with the requirements
of Rule 434, as applicable, and will notify the Representatives
immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement shall become
effective, or any supplement to the Prospectus or any amended Prospectus
shall have been filed, (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 of any order preventing or suspending the use of
any preliminary prospectus, or of the suspension of the qualification of
the Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes. The
Offerors will promptly effect the filings necessary pursuant to Rule
424(b). The Offerors will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Offerors will give the Representatives
notice of their intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective
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or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act or
otherwise, will furnish the Representatives with copies of any such
documents a reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file or use any such document to
which the Representatives or counsel for the Underwriters shall reasonably
object unless the Offerors shall decide that such document must be filed
in accordance with applicable law.
(c) Delivery of Registration Statements. 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. The copies of the Registration Statement, the
Prospectus and all amendments and supplements to such documents furnished
to the Underwriters will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(d) Continued Compliance with Securities Laws. The Offerors will
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and
the 1934 Act Regulations so as to permit the completion of the
distribution of the Securities as contemplated in this Agreement and in
the Prospectus. If at any time when a prospectus is required by the 1933
Act to be delivered in connection with sales of the Securities, any event
shall occur or condition shall exist as a result of which it is necessary
to amend the Registration Statement or amend or supplement the Prospectus
in order that the Prospectus will not include any untrue statements of a
material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, or if it shall be
necessary at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the
1933 Act or the 1933 Act Regulations, the Offerors will promptly prepare
and file with the Commission, subject to Section 3(b), such amendment or
supplement as may be necessary to correct such statement or omission or to
make the Registration Statement or the Prospectus comply with such
requirements, and the Offerors will furnish to the Underwriters such
number of copies of such amendment or supplement as the Underwriters may
reasonably request.
(e) Blue Sky Qualifications. The Offerors will use its best efforts,
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 as the
Representatives may designate; provided, however, that each of the
Offerors shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject.
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(f) Rule 158. The Trust and the Guarantor will make generally
available to their securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(g) Listing. The Offerors will use their reasonable best 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, MediaOne Group Funding will use its reasonable best efforts to
effect the listing of the Subordinated Debt Securities on the exchange on
which the Preferred Securities were then listed.
(h) Restriction on Sale of Securities. During a period of 30 days
from the date of the Prospectus, neither the Trust, the Guarantor nor
MediaOne Group Funding will, without the prior written consent of Merrill
Lynch, directly or indirectly, offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise transfer
or dispose of any Preferred Securities or any securities convertible into
or exercisable or exchangeable for Preferred Securities or file any
registration statement under the 1933 Act with respect to any of the
foregoing. The foregoing sentence shall not apply to any of the Securities
to be sold hereunder.
SECTION 4. Payment of Expenses. (a) Expenses. MediaOne Group Funding will
pay all expenses incident to the performance of each Offeror's obligations under
this Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Agreement, any Agreement among
Underwriters and such other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Securities, (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, MediaOne Group Funding's and the Trust's counsel, accountants and
other advisors, (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(e) hereof, including filing fees and
the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectus and any amendments or supplements thereto, (vii) the preparation,
printing and delivery to the Underwriters of copies of the Blue Sky Survey and
any supplement thereto, (viii) the filing fees incident to, and the reasonable
fees and disbursements of counsel to the Underwriters in connection with, the
review, if any, by the National Association of Securities Dealers, Inc. (the
"NASD") of the terms of the sale of the Securities, (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) the fees and expenses of the Preferred Guarantee
Trustee, including the fees and disbursements of
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counsel for the Preferred Guarantee Trustee ; (xii) any fees charged by
securities rating services for rating the Preferred Securities and the
Subordinated Debt Securities, (xiii) 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, (xiv) the fees and
expenses of any transfer agent or registrar for the Securities, and (xv) the
cost of qualifying the Preferred Securities with The Depository Trust Company.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, MediaOne Group Funding shall reimburse the Underwriters for all
of their out-of-pocket expenses, including the reasonable fees and disbursements
of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Offerors contained in Section 1 hereof, to
the performance by the Offerors of their covenants and other obligations
hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective 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 in accordance with
Rule 424(b) or, if the Offerors have elected to rely upon Rule 434, a Term
Sheet shall have been filed with the Commission in accordance with Rule
424(b).
(b) Opinion of Counsel. At Closing Time the Representatives shall
have received:
(i) The favorable opinion, dated as of Closing Time, of Weil,
Gotshal & Manges LLP, counsel for the Offerors, in form and
substance reasonably satisfactory to counsel for the Underwriters,
substantially in the form set forth in Exhibit A.
(ii) The favorable opinion, dated as of Closing Time, of Stephen E.
Brilz, Esq., Corporate Counsel for MediaOne Group, Inc., in form and
substance satisfactory to counsel for the Underwriters,
substantially in the form set forth in Exhibit B.
(iii) The favorable opinion, dated as of Closing Time, of Morris,
Nichols, Arsht & Tunnell, special Delaware counsel for the Trust and
the Guarantor, in form and substance satisfactory to counsel for the
Underwriters, substantially in the form set forth in Exhibit C.
(iv) The favorable opinion, dated as of Closing Time, of the Pepper
Hamilton LLP, special Delaware counsel for The First National Bank
of Chicago, as Property
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Trustee and Preferred Guarantee Trustee and First Chicago Delaware
Inc., as Delaware Trustee under the Declaration, in form and
substance satisfactory to counsel for the Underwriters,
substantially in the form of Exhibit D.
(v) The favorable opinion, dated as of Closing Time, of Skadden,
Arps, Slate, Meagher & Flom LLP ("SASM&F"), special counsel for the
Underwriters, in form and substance satisfactory to the
Underwriters.
(c) Officers' Certificate. At Closing Time, since the date hereof or
since the respective dates as of which information is given in the
Prospectus, 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 the
Representatives shall have received (i) a certificate, dated as of the
Closing Time, of a Vice President of the Guarantor, (ii) a certificate,
dated as of the Closing Time, of a Vice President of MediaOne Group
Funding, and (iii) a certificate, dated as of the Closing Time, of a
Regular 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.
(d) Accountant's Comfort Letter. At the time of the execution of
this Agreement, the Representatives shall have received from each of
PricewaterhouseCoopers LLP and Arthur Andersen LLP a letter dated such
date, in form and substance satisfactory to the Representatives, together
with signed or reproduced copies of such letter for each of the other
Underwriters to the effect that:
(i) they are independent public accountants with respect to the
Guarantor and its consolidated subsidiaries, including MediaOne
Group Funding within the meaning of the 1933 Act and the 1933 Act
Regulations;
(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
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1933 Act or the Exchange Act and the related 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) as to the letter from Arthur Andersen LLP, based upon limited
procedures set forth in detail in such letter, nothing has come to
their attention which causes them to believe that:
(1) 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,
(2) the unaudited amounts of revenues, net income and net
income per share set forth under "MediaOne Group, 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
(3) 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 of the Guarantor and its subsidiaries, including
MediaOne Group Funding, or any increase in the consolidated
long-term debt of the Guarantor and its subsidiaries,
including MediaOne Group 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 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 MediaOne Group Funding, except in all
instances for changes, increases or decreases which the
Registration Statement and the Prospectus disclose have
occurred or may occur; and
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(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 Representatives, 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 MediaOne Group Funding, identified
in such letter.
(e) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from each of PricewaterhouseCoopers LLP and Arthur
Andersen LLP a letter, dated as of Closing Time, to the effect that they
reaffirm the statements made in their letters furnished pursuant to
subsection (d) of this Section, except that the specified date referred to
shall be a date not more than three business days prior to Closing Time.
(f) Maintenance of Rating. 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 Representatives a letter, dated the Closing Time, from
such nationally recognized statistical rating agency, or other evidence
satisfactory to the Representatives, confirming that the Preferred
Securities and the Subordinated Debt Securities have Investment Grade
ratings.
(g) Approval of Listing. At Closing Time, the Preferred Securities
shall have been approved for listing on the New York Stock Exchange,
subject only to official notice of issuance.
(h) Additional Documents. At Closing Time 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, or
in order to evidence the accuracy of any of the representations or
warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Offerors in connection with the issuance
and sale of the Preferred Securities as herein contemplated shall be
satisfactory in form and substance to the Representatives and counsel for
the Underwriters.
(i) Conditions to Purchase of Option Securities. 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 Delivery Date and, at the relevant Delivery Date, the
Representatives shall have received:
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(i) Officers' and Trustee's Certificates. A certificate, dated
such Delivery Date, of (i) a Vice-President of the Guarantor, (ii) a
Vice-President of MediaOne Group Funding, and (iii) a Regular
Trustee of the Trust confirming that the certificates delivered at
the Closing Time pursuant to Section 5(c) hereof, as the case may
be, remain true and correct as of such Delivery Date.
(ii) Opinions of Counsel for Company. The favorable opinion of
(A) Weil, Gotshal & Manges LLP, and (B) Stephen E. Brilz, Esq.,
Corporate Counsel for MediaOne Group, Inc., in form and substance
satisfactory to the Representatives and counsel for the
Underwriters, dated such Delivery Date, relating to the Option
Subordinated Debt Securities to be purchased on such Delivery Date
and otherwise to the same effect as the opinions required by Section
5(b)(i) and (ii) respectively hereof.
(iii) Opinion of Counsel for Trust and Guarantor Special. The
favorable opinion of Morris, Nichols, Arsht & Tunnell, special
counsel for the Trust, in form and substance satisfactory to the
Representatives and counsel for the Underwriters, dated such
Delivery Date, relating to the Option Securities to be purchased on
such Delivery Date and otherwise to the same effect as the opinion
required by Section 5(b)(iii) hereof.
(iv) Opinion of Counsel for Property and Administrative
Trustees. The favorable opinion of Pepper Hamilton LLP, special
counsel for the Property Trustee and the Delaware Trustee, in form
and substance satisfactory to the Representatives and counsel for
the Underwriters, dated such Date of Delivery, and otherwise to the
same effect as the opinion required by Section 5(b)(iv) hereof.
(v) Opinion of Counsel for Underwriters. The favorable opinion
of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel for the
Underwriters, relating to the Option Securities to be purchased on
such Delivery Date and otherwise to the same effect as the opinion
required by Section 5(b)(v) hereof.
(vi) Bring-down Comfort Letters. A letter from each of
PricewaterhouseCooopers LLP and Arthur Andersen LLP, in form and
substance satisfactory to the same form and substance as the letters
furnished to the Representatives pursuant to Section 5(d) hereof,
except that the "specified date" on the letters furnished pursuant
to this paragraph shall be a date not more than five days prior to
such Delivery Date.
(j) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the
purchase of Option Securities, on a Delivery Date which is after the
Closing Time, the obligations of the several Underwriters to purchase the
relevant Option Securities,
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may be terminated by the Representatives 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.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. 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 Rule 434 Information,
if applicable, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged
untrue statement of a material fact contained in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) or
the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or 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 MediaOne Group 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
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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 Offerors shall have furnished any such
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) Indemnification of the Trust. The Guarantor and MediaOne Group 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) Indemnification of Offerors, Directors and Officers. 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) Actions against Parties; Notification. 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 the
defense of such action with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
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 other than reasonable costs of investigation; provided, however,
that any indemnified party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless the indemnified party reasonably objects to such assumption on the
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ground that there may be legal defenses available to it which are different from
or in addition to those available to such indemnifying party in which case, if
such indemnified party so notified the indemnifying party in writing that such
indemnified party will employ separate counsel, the indemnified party shall be
entitled to employ separate counsel at the expense of the indemnifying party. 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. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand and
the Underwriters on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Underwriters, in
each case as set forth on the cover of the Prospectus, or, if Rule 434 is used,
the corresponding location on the Term Sheet, bear to the aggregate initial
public offering price of the Securities as set forth on such cover.
The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified
20
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party and referred to above in this Section 7 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1933 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Initial Securities set forth opposite their
respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or 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) Termination; General. The Representatives 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 change
in the financial condition of the Trust, MediaOne Group Funding or of the
Guarantor and its subsidiaries, taken as a whole, or in the earnings, affairs or
business prospects of the Trust, MediaOne Group Funding or of the Guarantor and
its subsidiaries, taken as a whole, whether or not arising in the ordinary
course of business, the effect of which is, in the judgment of the
Representatives, so material and adverse as to make it impracticable to market
the Designated Securities or enforce contracts for the sale thereof, (ii)
trading in the Guarantor's securities shall have
21
<PAGE>
been suspended by the Commission or the New York Stock Exchange or trading in
securities generally on the New York Stock Exchange shall have been suspended or
limited or minium prices shall have been established on such exchange, (iii) a
banking moratorium shall have been declared either by federal or New York State
authorities, (iv) there shall have occurred any material adverse change in the
financial markets of the United States or any outbreak or material escalation of
hostilities or other calamity or crisis the effect of which on the financial
markets of the United States is such as to make it, in the judgment of the
Representatives, impracticable to market the Securities or enforce contracts for
the sale thereof, or (v) any rating of any debt securities of MediaOne Group
funding or of the Guarantor shall have been lowered by Moody's Investors
Services, Inc. ("Moody's") or Standard & Poor's Ratings Group ("S&P") or either
Moody's or S&P consideration for possible downgrade.
(b) Liabilities. 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.
SECTION 10. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at Closing Time or a Delivery Date to purchase the
Designated Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the Representatives 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 Designated 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 Designated Securities, this Agreement or, with respect to any Delivery
Date which occurs after the Closing Time, the obligation of the
Underwriters to purchase and of the Offerors to sell the Option Securities
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, or, in the case of a Delivery Date which is after the Closing
Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Trust to sell the relevant Option Securities,
as the case may be, either the Representatives or the Offerors shall have the
right to postpone
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<PAGE>
Closing Time or the relevant Delivery Date, as the case may be, 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. As used
herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10.
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 Representatives at North Tower, World
Financial Center, New York, New York 10281-1201, attention of Michele Taub, Vice
President; notices to the Trust, the Guarantor and MediaOne Group Funding shall
be directed to them at 188 Inverness Drive West, Englewood, Colorado 80112,
attention of Stephen E. Brilz, Esq., Corporate Counsel.
SECTION 12. Parties. This Agreement shall each inure to the benefit of and
be binding upon the Underwriters and the Trust, the Guarantor, and MediaOne
Group Funding and their respective successors. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters and the Trust, the Guarantor, and
MediaOne Group Funding and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters and the Trust, the Guarantor, and
MediaOne Group Funding and their respective successors, and said controlling
persons and officers and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or corporation. No purchaser of
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 SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
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<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 MediaOne Group
Funding in accordance with its terms.
Very truly yours,
MEDIAONE GROUP, INC.
By /s/ Rahn K. Porter
----------------------------------------
Name: Rahn K. Porter
Title: Assistant Treasurer
MEDIAONE GROUP FUNDING, INC.
By /s/ Rahn K. Porter
----------------------------------------
Name: Rahn K. Porter
Title: Vice President and
Chief Financial Officer
MEDIAONE FINANCE TRUST III
By /s/ Rahn K. Porter
----------------------------------------
Name: Rahn K. Porter
Title: Trustee
By /s/ Stephen E. Brilz
----------------------------------------
Name: Stephen E. Brilz
Title: Trustee
24
<PAGE>
CONFIRMED AND ACCEPTED, as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
A.G. EDWARDS & SONS, INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SALOMON SMITH BARNEY INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/ Evan Ladouceur
----------------------------------------
Authorized Signatory
For themselves and as Representatives 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......................... 2,430,000
A.G. Edwards & Sons, Inc.............................. 2,430,000
PaineWebber Incorporated.............................. 2,430,000
Prudential Securities Incorporated.................... 2,430,000
Salomon Smith Barney Inc.............................. 2,430,000
ABN AMRO Incorporated................................. 180,000
BT Alex. Brown Incorporated........................... 180,000
Robert W. Baird & Co. Incorporated.................... 180,000
Bear, Stearns & Co. Inc............................... 180,000
CIBC Oppenheimer Corp................................. 180,000
Dain Rauscher Wessels................................. 180,000
Donaldson, Lufkin & Jenrette Securities Corporation... 180,000
EVEREN Securities, Inc................................ 180,000
Legg Mason Wood Walker, Incorporated.................. 180,000
J.P. Morgan Securities Inc............................ 180,000
NationsBanc Montgomery Securities LLC................. 180,000
Piper Jaffray Inc..................................... 180,000
Raymond James & Associates, Inc....................... 180,000
SG Cowen Securities Corporation....................... 180,000
Tucker Anthony Incorporated........................... 180,000
Warburg Dillon Read LLC............................... 180,000
Wheat First Securities, Inc........................... 180,000
J.C. Bradford & Co.................................... 90,000
Craigie Incorporated.................................. 90,000
Crowell, Weedon & Co.................................. 90,000
D. A. Davidson & Co................................... 90,000
Fahnestock & Co. Inc.................................. 90,000
Fidelity Capital Markets A division of National
Financial Services Corp.......................... 90,000
Fifth Third/The Ohio Company.......................... 90,000
First Albany Corporation.............................. 90,000
First of Michigan Corporation......................... 90,000
Gibraltar Securities Co............................... 90,000
Gruntal & Co., L.L.C.................................. 90,000
J.J.B. Hilliard, W.L. Lyons, Inc...................... 90,000
Wayne Hummer Investments LLC.......................... 90,000
Sch A-1
<PAGE>
Interstate/Johnson Lane Corporation................... 90,000
Janney Montgomery Scott Inc........................... 90,000
Kirkpatrick, Pettis, Smith, Polian Inc................ 90,000
McDonald & Company Securities, Inc.................... 90,000
McGinn, Smith & Co., Inc.............................. 90,000
Mesirow Financial, Inc................................ 90,000
Morgan Keegan & Company, Inc.......................... 90,000
David A. Noyes & Company.............................. 90,000
Parker/Hunter Incorporated............................ 90,000
Ragen MacKenzie Incorporated.......................... 90,000
The Robinson-Humphrey Company, LLC.................... 90,000
Roney Capital Markets A division of First Chicago
Capital Markets Inc.............................. 90,000
Scott & Stringfellow, Inc............................. 90,000
Muriel Siebert & Co., Inc............................. 90,000
Stephens Inc.......................................... 90,000
Stifel, Nicolaus & Company, Incorporated.............. 90,000
Stone & Youngberg..................................... 90,000
Utendahl Capital Partners, L.P........................ 90,000
Total ..........................................18,000,000
==========
Sch A-2
<PAGE>
SCHEDULE B
MEDIAONE FINANCE TRUST III
9.04% Trust Originated Preferred Securities ("TOPrS")
(Liquidation Amount of $25 Per Preferred Security)
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 to the
initial public offering price set forth above; provided that the purchase price
per Preferred Security for any Option Securities purchase upon exercise of the
over-allotment option described in Section 2(b) shall be increased by an amount
per Preferred Security equal to any accrued distributions through the Delivery
Date on which such Option Securities are purchased.
3. The commission per Preferred Security to be paid by MediaOne Group
Funding to the Underwriters for their commitments hereunder shall be $.7875;
provided, however, that the commission per Preferred Security for sales of
10,000 or more Preferred Securities to a single purchaser shall be $.50.
Sch B-1
<PAGE>
Exhibit A
FORM OF OPINION OF WEIL, GOTSHAL & MANGES LLP
TO BE DELIVERED PURSUANT TO
SECTION 5(b)(i)
(i) The Registration Statement is effective under the 1933 Act and, to the
best of their knowledge and information, no stop order suspending the
effectiveness of the Registration Statement has been issued under the 1933 Act
or proceedings therefor initiated or threatened by the Commission.
(ii) At the time the Registration Statement became effective and at the
Delivery Date, the Registration Statement (other than the Incorporated
Documents, the financial statements and supporting schedules, included therein
and other financial and statistical data included therein and those parts of the
Registration Statement that constitute the Debt Trustee's and the Property
Trustee's respective Statements of Eligibility and Qualification under the 1939
Act (Form T-1), as to which no opinion need be rendered) complied as to form in
all material respects with the requirements of the 1933 Act, the 1933 Act
Regulations, the 1939 Act, and the 1939 Act Regulations.
(iii) The statements in the Prospectus under the captions "Description of
the Preferred Securities", "Description of the Subordinated Notes and the Note
Guarantees", "Description of the Preferred Securities Guarantees," and
"Relationship among the Preferred Securities, the Preferred Securities
Guarantees, the Subordinated Notes and the Note Guarantee Held by Each Trust",
insofar as they constitute summaries of legal matters or documents, have been
reviewed by them and are accurate in all material respects.
(iv) The Purchase Agreement has been duly executed and delivered by the
Offerors.
(v) No federal authorization, approval, consent or order of any court or
governmental authority or agency is required in connection with the issuance and
sale of the Common Securities or the offering of the Preferred Securities, the
Subordinated Debt Securities or the Guarantees, except such as have been
obtained under the 1933 Act or the 1933 Act Regulations or the 1934 Act or the
1934 Act Regulations and the qualification of the Declaration and the Indenture
under the 1939 Act.
(vi) The Declaration and the Preferred Securities Guarantee have been duly
qualified under the 1939 Act.
(vii) The Preferred Securities Guarantee Agreement has been duly
authorized, executed and delivered by the Guarantor and assuming due
authorization, execution and delivery by First Chicago, constitutes a valid and
binding obligation of the Guarantor, enforceable against the
A-1
<PAGE>
Guarantor in accordance with its 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).
(viii)The Indenture has been duly authorized, executed and delivered by
each of the Guarantor and MediaOne Group Funding and assuming due authorization
, execution and delivery by the Debt Trustee is a valid and binding obligation
of each of the Guarantor and MediaOne Group Funding, enforceable against each of
the Guarantor and MediaOne Group Funding in accordance with its 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 the
Indenture has been duly qualified under the 1939 Act.
(ix) The Subordinated Debt Securities have been duly authorized and
executed by MediaOne Group Funding, and when authenticated in the manner
provided in the Indenture and delivered against payment therefor as described in
the Prospectus, will constitute valid and binding obligations of MediaOne Group
Funding, enforceable against MediaOne Group Funding 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).
(x) The Debt Guarantee has been duly authorized and executed by the
Guarantor, and when authenticated in the manner provided in the Indenture and
delivered against payment therefor as described in the Prospectus, constitute a
valid and binding obligation of the Guarantor, enforceable against the Guarantor
in accordance with its 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).
(xi) The Trust will be classified as a grantor trust and not as an
association taxable as a corporation for United States federal income tax
purposes.
(xii) The Trust is not an "investment company" or a company "controlled"
by an "investment company" within the meaning of the 1940 Act.
In addition, such counsel shall state that it has participated in
conferences with officers and other representatives of the Offerors,
representatives of the independent public accountants for the
A-2
<PAGE>
Offerors and with you and your counsel, at which conferences the contents of the
Registration Statement and the Prospectus and related matters were discussed;
such counsel has not independently verified the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus and the limitations inherent in the examination made by such counsel
and the nature and extent of such counsel's participation in such conferences
are such that such counsel is not passing upon, and is unable to assume, and
does not assume, any responsibility for, the accuracy, completeness or fairness
of such statements, except for those made under the captions "Description of the
Preferred Securities", "Description of the Subordinated Notes and the Note
Guarantees", "Description of the Preferred Securities Guarantees" and
"Relationship among the Preferred Securities, the Preferred Securities
Guarantee, the Subordinated Notes and the Note Guarantee Held by Each Trust";
however, based upon such counsel's participation in the aforesaid conferences,
no facts have come to its attention which lead it to believe that the
Registration Statement, and each amendment thereto, as of the date of
effectiveness of the Registration Statement (other than the financial statements
and the notes thereto, the financial statements schedules, the other financial
and statistical data therein and the operating data included in the Prospectus
Supplement under the caption "Summary Financial and other Data", as to which
such counsel need express no belief and those parts of the Registration
Statement that constitute the Debt Trustee's and the Property Trustee's
respective Statements of Eligibility and Qualification under the 1939 Act (Form
T-1)), contained any untrue statements of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or that, as of its date, the Prospectus or any further
amendments or supplement or supplement thereto made by the Offerors prior to the
Closing Time (except as aforesaid) includes any untrue statement of a material
fact or omits to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading or
that, as of such Closing Time, either the Prospectus or any further amendment or
supplement thereto made by the Offerors prior to such Closing Time (except as
aforesaid) includes any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
In giving such opinion, Weil, Gotshal & Manges LLP may rely as to as to
certain matters governed by the laws of the State of Delaware, on an opinion or
opinions of Morris, Nichols, Arsht & Tunnell, respectively, and as to certain
matters relating to The First National Bank of Chicago under the federal banking
laws on an opinion of Pepper, Hamilton & Scheetz, provided that such opinion or
opinions shall be addressed to the Underwriters, shall be dated as of such date
and shall expressly permit Weil, Gotshal & Manges LLP to rely thereon.
A-3
<PAGE>
Exhibit B
FORM OF OPINION OF STEPHEN E. BRILZ, ESQ.
TO BE DELIVERED PURSUANT TO
SECTION 5(b)(ii)
(i) The Guarantor has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and Prospectus
and to enter into and perform its obligations under the Purchase Agreement, the
Declaration, the Indenture and each of the Guarantee Agreements and to purchase,
own and hold the Common Securities issued by the Trust.
(ii) MediaOne Group Funding has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware with corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and Prospectus and to enter into and perform its obligations under the
Purchase Agreement and the Indenture.
(iii) The Declaration has been duly authorized, executed and delivered by
the Guarantor and each of the Regular Trustees.
(iv) The Purchase Agreement, the Guarantee Agreements, the Indenture, the
Subordinated Debt Securities and the Debt Guarantee have been duly authorized,
executed and delivered by the Guarantor.
(v) The Purchase Agreement, the Indenture, the Subordinated Debt
Securities, and the Debt Guarantee have been duly authorized, executed and
delivered by MediaOne Group Funding.
(vi) The execution, delivery and performance of the Purchase Agreement,
the Declaration, the Preferred Securities, the Common Securities, the Indenture,
the Subordinated Debt Securities, the Guarantee Agreements, the Indenture and
the Guarantees and the consummation of the transactions contemplated herein and
therein and compliance by the Offerors with their respective obligations
hereunder and thereunder will not conflict with in any material matter or result
in a material breach or violation of any term or provision of, or constitute a
default under any indenture, mortgage, deed of trust, loan agreement, or other
agreement or instrument known to such counsel to which the Guarantor, any of its
majority owned subsidiaries and MediaOne Group Funding (the "Subsidiaries") or
the Trust is a party or by which any of them may be bound, or to which any of
the property or assets of the Guarantor, any of the Subsidiaries or the Trust is
subject, nor will such action result in any violation of the provisions of the
charter or by-laws of the Guarantor or of
B-1
<PAGE>
MediaOne Group Funding or the Declaration or the Certificate of Trust, or any
statute (other than the Act or state securities or Blue Sky laws) or any order,
rule or regulation known to such counsel of any court or governmental agency or
body having jurisdiction over the Guarantor or any of its subsidiaries or any of
their properties; except any statute, order, rule or regulation the violation of
which would not have a material adverse effect on the consolidated financial
position, shareholders' equity or results of the Guarantor taken as a whole.
(vii) No state authorization, approval, consent or order of any court or
governmental authority or agency is required in connection with the issuance and
sale of the Common Securities or the offering of the Preferred Securities, the
Subordinated Debt Securities or the Guarantees, except such as have been
obtained under the 1933 Act or the 1933 Act Regulations and the qualification of
the Declaration and the Indenture under the 1939 Act and such as may be required
under state securities law.
(viii)All of the issued and outstanding Common Securities of the Trust are
directly owned by the Guarantor free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.
(ix) The Property Trustee is the record holder of Subordinated Debt
Securities and the Debt Guarantee and no security interest, mortgage, pledge,
lien, encumbrance, claim or equity is noted thereon or on the register.
(x) Each of the documents incorporated by reference in the Registration
Statement or Prospectus at the time they were filed or last amended (other than
the financial statements and related schedules and other financial or
statistical data included or incorporated by reference therein as to which such
counsel need express no opinion), complied as to form in all material respects
with the requirements of the 1933 Act, the 1933 Act Regulations, the 1934 Act,
the 1934 Act Regulations, as applicable.
(xi) To the best of such counsel's opinion, there is not pending or
threatened any action, suit, preceding, inquiry or investigation to which the
Trust, MediaOne Group Funding, the Guarantor or any subsidiary of the Guarantor
is a party or to which the assets, properties or operations of the Trust,
MediaOne Group Funding, the Guarantor or any subsidiary of the Guarantor is
subject, before or by any court or governmental agency or body, domestic or
foreign, which might reasonably be expected to materially and adversely affect
the assets, properties or operations thereof or the consummation of the
transactions contemplated by the Purchase Agreement, the Declaration, the
Preferred Securities Guarantee or the Indenture or the performance by the Trust,
MediaOne Group Funding or the Guarantor of their respective obligations
thereunder.
In giving such opinion, Stephen E. Brilz, Esq. may rely as to certain
matters governed by the laws of the State of Delaware or the State of New York
on an opinion or opinions of Morris, Nichols, Arsht & Tunnell and Weil, Gotshal
& Manges LLP, respectively, provided that such opinion or
B-2
<PAGE>
opinions shall be addressed to the Underwriters, shall be dated as of such date
and shall expressly permit Stephen E. Brilz, Esq. to rely thereon.
B-3
<PAGE>
Exhibit C
FORM OF OPINION OF MORRIS, NICHOLS, ARSHT & TUNNELL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)(iii)
(i) The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Act; all filings required under
the laws of the State of Delaware with respect to the creation and valid
existence of the Trust as a business trust have been made; under the Delaware
Act and the Declaration, the Trust has the business trust power and authority to
(x) own property and conduct its business, all as described in the Prospectus,
(y) enter into and perform its obligations under the Purchase Agreement, and (z)
issue and perform its obligations under the Preferred Securities and the Common
Securities.
(ii) Assuming the Declaration has been duly authorized, executed and
delivered by the Trustees and the Sponsor, the Declaration is a valid and
binding obligation of the Sponsor and the Trustees, enforceable against the
Sponsor and the Trustees, in accordance with its terms, except as enforcement
thereof may be limited by the (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance and other
similar laws relating to or affecting the rights and remedies of creditors
generally, (ii) principles of equity (regardless of whether considered and
applied in a proceeding in equity or at law), and (iii) considerations of public
policy or the effect of applicable law relating to fiduciary duties.
(iii) Under the Delaware Act and the Declaration, the execution and
delivery by the Trust of the Purchase Agreement, and the performance by the
Trust of its obligations thereunder, have been duly authorized by all necessary
business trust action on the part of the Trust; and the Purchase Agreement has
been duly executed by the Trust under the laws of Delaware.
(iv) The Common Securities have been duly authorized for issuance by the
Declaration and, when issued and delivered pursuant to the Common Securities
Subscription Agreement, will be validly issued and represent undivided
beneficial interests in the assets of the Trust; and under the Delaware Act and
the Declaration, the issuance of the Common Securities is not subject to
preemptive rights.
(v) The Preferred Securities have been duly authorized for issuance by the
Declaration and, when issued, delivered and paid for pursuant to this Agreement,
will be validly issued, and (subject to the qualifications set forth herein)
fully paid and non-assessable undivided beneficial interests in the assets of
the Trust; the holders of the Preferred Securities, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware;
C-1
<PAGE>
provided that such counsel need not express an opinion as to any holder of a
Preferred Security that is, was or becomes a named Trustee of the Trust; and
under the Delaware Act and the Declaration, the issuance of the Preferred
Securities is not subject to preemptive rights. Such counsel may note that the
Preferred Security holders will be subject to the withholding provisions of
Section 11.4 of the Declaration and may be required to make payment or provide
indemnity or security as set forth in the Declaration.
(vi) The issuance and sale by the Trust of the Preferred Securities and
Common Securities; the execution, delivery and performance by the Trust of the
Purchase Agreement; the consummation of the transactions contemplated herein;
and compliance by the Trust with its obligations hereunder will not violate any
of the provisions of the Certificate of Trust or the Declaration, or any
applicable Delaware law or administrative regulation.
(vii) Assuming that the Trust derives no income from or in connection with
sources within the State of Delaware and has no assets, activities (other than
having a Delaware Trustee as required by the Delaware Act and the filing of
documents with the Delaware Secretary of State) or employees in the State of
Delaware, no authorization, approval, consent or order of any Delaware court or
governmental authority or agency is required to be obtained by the Trust solely
in connection with the issuance and sale of the Common Securities and the
Preferred Securities or the purchase by the Trust of the Subordinated Debt
Securities and the Guarantees except such as have been obtained and such as may
be required by state securities laws (as to which such counsel need not express
an opinion).
C-2
<PAGE>
Exhibit D
FORM OF OPINION OF PEPPER HAMILTON LLP
TO BE DELIVERED PURSUANT TO
SECTION 5(b)(iv)
(i) The First National Bank of Chicago ("FNBC") is a national banking
association with trust powers, duly organized, validly existing and in good
standing under the laws of the United States, with all necessary power and
authority to execute and deliver, and to carry out and perform its obligations
under the terms of the Declaration and the Preferred Securities Guarantee.
(ii) First Chicago Delaware Inc. ("FCD") is a Delaware corporation duly
organized, validly existing and in good standing under the laws of Delaware,
with full power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of the Declaration.
(iii) The execution, delivery and performance by each of FNBC and FCD of
the Declaration, and the execution, delivery and performance by FNBC, in its
capacity as the Guarantee Trustee, of the Preferred Securities Guarantee, have
been duly authorized by all necessary corporate action on the part of FNBC and
FCD, respectively, in the case of the Declaration, and by FNBC, in the case of
the Preferred Securities Guarantee. The Declaration and the Preferred Securities
Guarantee, when duly executed and delivered by FNBC and FCD, respectively, in
the case of the Declaration, and by FNBC, in its capacity as the Guarantee
Trustee, in the case of the Preferred Securities Guarantee, will constitute the
legal, valid and binding obligation of FNBC and FCD, in the case of the
Declaration, and by FNBC, in the case of the Preferred Securities Guarantee,
enforceable against FNBC and FCD in the case of the Declaration, and by FNBC, in
its capacity as the Guarantee Trustee, in the case of the Preferred Securities
Guarantee, in accordance with their terms.
(iv) Based on an Officer's Certificate of each of FNBC and FCD, there are
no actions, proceedings or investigations pending or threatened against or
affecting FNBC or FCD before any court, arbitrator, administrative agency or
other governmental authority which, if adversely decided, would materially and
adversely affect either of FNBC or FCD's ability to carry out the transactions
contemplated in the Declaration or, in the case of FNBC, in its capacity as the
Guarantee Trustee, in the Preferred Securities Guarantee.
(v) The execution, delivery and performance by each of FNBC and FCD of the
Declaration, and the execution, delivery and performance by FNBC, in its
capacity as the Guarantee Trustee, of the Preferred Securities Guarantee, do not
conflict with, or constitute a breach of, the articles of association or the
certificate of incorporation, as the case may be, or bylaws.
(vi) No consent, approval or authorization of, or registration with or
notice to, any Delaware or federal banking authority is required for the
execution, delivery or performance by each
D-1
<PAGE>
of FNBC and FCD of the Declaration, or by FNBC, in its capacity as the Guarantee
Trustee, of the Preferred Securities Guarantee.
D-2
----------------------------------
AMENDED AND RESTATED DECLARATION
OF TRUST
MediaOne Finance Trust III
Dated as of October 28, 1998
------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I
INTERPRETATION AND DEFINITIONS
Section 1.1 Definitions.............................................2
ARTICLE II
TRUST INDENTURE ACT
Section 2.1 Trust Indenture Act; Application........................9
Section 2.2 Lists of Holders of Securities..........................9
Section 2.3 Reports by the Property Trustee........................10
Section 2.4 Periodic Reports to Property Trustee...................10
Section 2.5 Evidence of Compliance with Conditions Precedent. .....10
Section 2.6 Events of Default; Waiver..............................10
Section 2.7 Event of Default; Notice...............................12
ARTICLE III
ORGANIZATION
Section 3.1 Name...................................................13
Section 3.2 Office.................................................13
Section 3.3 Purpose................................................13
Section 3.4 Authority..............................................14
Section 3.5 Title to Property of the Trust.........................14
Section 3.6 Powers and Duties of the Regular Trustees..............14
Section 3.7 Prohibition of Actions by the Trust and the Trustees...18
Section 3.8 Powers and Duties of the Property Trustee..............19
Section 3.9 Certain Duties and Responsibilities of the Property
Trustee...............................................22
Section 3.10 Certain Rights of Property Trustee.....................24
Section 3.11 Delaware Trustee.......................................27
Section 3.12 Execution of Documents.................................27
Section 3.13 Not Responsible for Recitals or Issuance of Securities.27
Section 3.14 Duration of Trust......................................28
Section 3.15 Mergers................................................28
i
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ARTICLE IV
SPONSOR
Section 4.1 Sponsor's Purchase of Common Securities................30
Section 4.2 Responsibilities of the Sponsor........................30
Section 4.3 Right to Proceed.......................................31
ARTICLE V
TRUSTEES
Section 5.1 Number of Trustees.....................................31
Section 5.2 Delaware Trustee.......................................32
Section 5.3 Property Trustee; Eligibility..........................32
Section 5.4 Qualifications of Regular Trustees and Delaware
Trustee Generally......................................33
Section 5.5 Initial Trustees.......................................34
Section 5.6 Appointment, Removal and Resignation of Trustees.......34
Section 5.7 Vacancies among Trustees...............................36
Section 5.8 Effect of Vacancies....................................36
Section 5.9 Meetings...............................................37
Section 5.10 Delegation of Power....................................37
Section 5.11 Merger, Conversion, Consolidation or Succession to
Business..............................................38
ARTICLE VI
DISTRIBUTIONS
Section 6.1 Distributions..........................................38
ARTICLE VII
ISSUANCE OF SECURITIES
Section 7.1 General Provisions Regarding Securities................38
ARTICLE VIII
DISSOLUTION AND TERMINATION OF TRUST
Section 8.1 Dissolution and Termination of Trust...................40
ii
<PAGE>
ARTICLE IX
TRANSFER OF INTERESTS
Section 9.1 Transfer of Securities.................................42
Section 9.2 Transfer of Certificates...............................42
Section 9.3 Deemed Security Holders................................43
Section 9.4 Book Entry Interests...................................43
Section 9.5 Notices to Clearing Agency.............................44
Section 9.6 Appointment of Successor Clearing Agency...............44
Section 9.7 Definitive Preferred Security Certificates.............44
Section 9.8 Mutilated, Destroyed, Lost or Stolen Certificates......45
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
Section 10.1 Liability..............................................46
Section 10.2 Exculpation............................................47
Section 10.3 Fiduciary Duty.........................................47
Section 10.4 Indemnification........................................48
Section 10.5 Outside Businesses.....................................49
ARTICLE XI
ACCOUNTING
Section 11.1 Fiscal Year............................................50
Section 11.2 Certain Accounting Matters.............................50
Section 11.3 Banking................................................50
Section 11.4 Withholding............................................51
ARTICLE XII
AMENDMENTS AND MEETINGS
Section 12.1 Amendments.............................................51
Section 12.2 Meetings of the Holders of Securities; Action by
Written Consent........................................53
iii
<PAGE>
ARTICLE XIII
REPRESENTATIONS OF THE PROPERTY TRUSTEE AND
THE DELAWARE TRUSTEE
Section 13.1 Representations and Warranties of Property Trustee.....55
Section 13.2 Representations and Warranties of Delaware Trustee.....56
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Notices................................................57
Section 14.2 Governing Law. .......................................58
Section 14.3 Intention of the Parties...............................59
Section 14.4 Headings...............................................59
Section 14.5 Successors and Assigns.................................59
Section 14.6 Partial Enforceability.................................59
Section 14.7 Counterparts...........................................60
iv
<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.
v
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
MediaOne Finance Trust III
October 28, 1998
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of October 28, 1998 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"), MediaOne
Group, Inc., a Delaware 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, certain of 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 October 5, 1998 (the "Original Declaration") and a
Certificate of Trust filed with the Secretary of State of Delaware on October 5,
1998, 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 Guarantee 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 Trust issued
hereunder, subject to the provisions of this Declaration.
1
<PAGE>
ARTICLE I
INTERPRETATION AND DEFINITIONS
Section 1.1 Definitions.
Unless the context otherwise requires:
(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 Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Amended and Restated 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; 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.
"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
Certifi cate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
2
<PAGE>
"Business Day" means any day other than a day on which banking
institutions in New York, New York or Chicago, Illinois are authorized or
required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. ss.ss.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 depositary
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 October 28, 1998.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Security" has the meaning specified in Section 7.1.
"Common Securities Guarantee" means the guarantee agreement to be
dated as of October 28, 1998 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.
"Covered Person" means:
(a) any officer, director, shareholder, partner, member, representa
tive, employee or agent of:
3
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(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 Guarantor" means the Sponsor in its capacity as guarantor
under the Debenture Guarantee.
"Debenture Issuer" means MediaOne Group Funding, Inc., a Dela ware
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.
"Direct Action" has the meaning set forth in Section 3.8(e).
"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.
4
<PAGE>
"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
(i) any Trustee;
(ii) any Affiliate of any Trustee;
(iii) any officers, directors, shareholders, members, partners, em
ployees, representatives or agents of any Trustee; or
(iv) any employee or agent of the Trust or its Affiliates.
"Indenture" means the Indenture dated as of June 12, 1998 among the
Debenture Issuer, MediaOne Group, Inc., a Delaware corporation, as guarantor,
and Norwest Bank Minnesota, National Association, as trustee, as supplemented by
a Third Supplemental Indenture dated as of October 28, 1998 among the Debenture
Issuer, the Sponsor, as guarantor, and Norwest Bank Minnesota, National Associa
tion, as trustee, and any indenture supplemental thereto pursuant to which the
Debentures and the Debenture Guarantee 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).
"Majority in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities and by the Trust Indenture
Act,
5
<PAGE>
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(h).
"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 Securities Guarantee" means the guarantee agreement to be
dated as of October 28, 1998 of the Sponsor in respect of the Preferred
Securities.
"Preferred Security" has the meaning specified in Section 7.1.
6
<PAGE>
"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 maintain ing 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.
"Property Trustee" means the Trustee meeting the eligibility require
ments set forth in Section 5.3.
"Property Trustee Account" has the meaning set forth in Section
3.8(c).
"Purchase Agreement" means the Purchase Agreement for the offering
and sale of Preferred Securities in the form of Exhibit 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.
"Responsible Officer" means, with respect to the Property 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 Prop erty 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.
"Securities" means the Common Securities and the Preferred Securi
ties.
"Securities Act" means the Securities Act of 1933, as amended.
7
<PAGE>
"Special Event" has the meaning set forth in the terms of the Securi
ties.
"Sponsor" means MediaOne Group, Inc., a Delaware corporation or any
permitted successor thereof under the Indenture, 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 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
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).
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"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.
8
<PAGE>
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 ss.ss. 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 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
9
<PAGE>
(b) the Property Trustee shall comply with its obligations under
ss.ss. 311(a), 311(b) and ss. 312(b) of the Trust Indenture Act.
Section 2.3 Reports by the Property Trustee.
Within 60 days after May 15 of each year, commencing May 1999 the
Property Trustee shall provide to the Holders of the Securities such reports as
are required by ss. 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by ss. 313 of the Trust Indenture Act. The Property Trustee
shall also comply with the requirements of ss. 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 ss. 314 (if any) and the compliance
certificate required by ss. 314 of the Trust Indenture Act in the form, in the
manner and at the times required by ss. 314 of the Trust Indenture Act.
Section 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any condi
tions precedent, if any, provided for in this Declaration which relate to any of
the matters set forth in ss. 314(c) of the Trust Indenture Act. Any certificate
or opinion required to be given by an officer pursuant to ss. 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 conse quences provided that if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default
under the Declaration shall also not be waivable; or
10
<PAGE>
(ii) requires the consent or vote of the holders of greater
than a majority in principal amount of the Debentures af
fected 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 propor tion in
liquidation amount of 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 the proviso to 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 Secu
rities are deemed to have waived such Event of Default
under the Declaration as provided below in the proviso to
this Section 2.6(b), the Event of Default under the
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<PAGE>
Declaration may only be waived by the vote of the Hold
ers 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 De bentures 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 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,
consti tutes 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 with respect to the Securities known to the Property
Trustee, transmit by mail, first class postage prepaid, to the Holders of the
Securities, notices of all such defaults 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,
12
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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 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 "MediaOne Finance Trust III", 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 188 Inverness
Drive West, Englewood, Colorado 80112. 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 Guarantee, 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
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cause the Trust not to be classified for United States federal income tax
purposes as a grantor trust. It is the intention of all of the parties hereto
that the Trust created hereunder constitutes a "grantor trust" for federal
income tax purposes under the Code, and all parties hereto, and the Holders of
the Preferred Securities by the purchase of the Preferred Securities will be
deemed to, agree to treat the Trust with such characterization. The provisions
of this Agreement shall be interpreted consis tently with such characterization.
Section 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee in accordance with its powers shall constitute the act of and
serve to bind the Trust. In dealing with 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 simulta neous issuance of both Preferred Securities and
Common Securities on the Closing Date and any other date Preferred Securities
and Common Securities are sold pursuant to the over-allotment option granted in
the Purchase Agreement;
(b) in connection with the issue and sale of the Preferred Securi
ties, at the direction of the Sponsor, to:
(i) execute and file with the Securities and Exchange Com
mission (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 neces
sary in order to qualify or register all or part of the
Pre ferred Securities in any State in which the Sponsor
has determined to qualify or register such Preferred
Securi ties 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 Sec
tion 12(b) of the Exchange Act, including any amend ments
thereto prepared by the Sponsor; and
(v) execute and enter into, and perform its obligations
under, the Purchase Agreement providing for the sale of
the Preferred Securities;
(c) in connection with the issue and sale of Common Securities, to
execute and enter into, and perform its obligations under, the Common Securities
Subscription Agreement dated as of October 28, 1998 between the Trust and the
Sponsor;
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(d) to execute and enter into, and perform its obligations under,
the Debenture Subscription Agreement dated as of October 28, 1998 between the
Trust, and the Sponsor and the Debenture Issuer 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 owned by and held of record in the name of the Property Trustee for the
benefit of the Holders of the Preferred Securities and the Common Securities;
(e) to give the Debenture Issuer, the Sponsor and the Property
Trustee prompt written notice of the occurrence of a Special Event;
(f) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including for the
purposes of ss.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;
(g) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the Securities;
(h) 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;
(i) 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;
(j) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(k) to give the certificate to the Property Trustee required by ss.
314(a)(4) of the Trust Indenture Act which certificate may be executed by any
Regular Trustee;
(l) to incur expenses which are necessary or incidental to carrying
out any of the purposes of the Trust;
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(m) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(n) to give prompt written notice to the Holders of the Securities
of any notice received from the Debenture Issuer of its election to defer
payments of interest on the Debentures by extending the interest payment period
under the Indenture;
(o) 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;
(p) 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;
(q) to take any action, not inconsistent with this Declaration or
with applicable law, which the Regular Trustees determine in their discretion to
be necessary or desirable in carrying out the activities of the Trust as set out
in this Section 3.6 including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment
Company Act;
(ii) causing the Trust to be classified for United States fed
eral income tax purposes as a grantor trust; and
(iii)cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Deben
ture Issuer for United States federal income tax
purposes,
provided that such action does not adversely affect the interests of Holders;
and
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(r) 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, functions and
charac terization for federal income tax purposes of the Trust set out in
Section 3.3 and the Regular Trustees shall not take any action which is
inconsistent with the purposes, functions and characterization for federal
income tax purposes 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.
(a) Notwithstanding any provision herein to the contrary, 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 Decla
ration 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;
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(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other
than the Securities; or
(vii)other than as expressly provided in this Declaration and
Exhibit A hereto, (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
Deben tures 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 coun sel to the effect that such modification will not
cause more than an insubstantial risk that for United
States federal income tax purposes the Trust will not be
classi fied as a grantor trust.
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 for the
benefit of the Trust and 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
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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 Section 6.1.
Funds in the Property Trustee Account shall be held
uninvested until disbursed in accordance with this Decla
ration. The Property Trustee Account shall be an ac count
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 Securi ties
by a "nationally recognized statistical rating organi
zation", 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 Trust
ees in accordance with the terms of the Preferred Securi
ties and the Common Securities, engage in such ministe
rial activities as shall be necessary or appropriate to
effect the distribution of the Debentures and the Deben
ture Guarantee to Holders of Securities upon the Spon
sor's election to dissolve the Trust in accordance with
Section 8.1(a)(v);
(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;
(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. If the
Property Trustee fails to enforce its rights under the Debentures and/or the
Debenture Guarantee after
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a Holder of Preferred Securities has made a written request, such Holder may
institute a legal proceeding against the Debenture Issuer and/or the Debenture
Guarantor, as the case may be, to enforce the Property Trustee's rights under
the Debentures and/or the Debenture Guarantee, as the case may be, without first
instituting any legal proceeding against the Property Trustee or any other
person or entity. Notwithstanding the foregoing, if an Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Debenture Issuer to pay interest, premium, if any, or principal on the
Debentures on the date such interest, premium, if any, or principal is otherwise
payable (or in the case of redemption, on the redemption date) or a failure of
the Debenture Guarantor to make a payment under the Debenture Guarantee when
payable, then a Holder of Preferred Securities may directly institute a
proceeding for enforcement of payment to such Holder of the principal of,
premium, if any, or interest on, the Debentures having a principal amount equal
to the aggregate liquidation amount of the Preferred Securities of such Holder
(a "Direct Action"). Notwithstanding any payments made to such Holder of
Preferred Securities by the Debenture Issuer or the Debenture Guarantor in
connec tion with a Direct Action, the Debenture Issuer and the Debenture
Guarantor shall remain obligated to pay the principal of premium, if any, or
interest on the Deben tures held by the Trust or the Property Trustee of the
Trust, and the Debenture Issuer and the Debenture Guarantor shall be subrogated
to the rights of the Holder of such Preferred Securities with respect to
payments on the Preferred Securities. Except as provided in the preceding
sentences and in the Preferred Securities Guarantee, the Holders of Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of the Debentures and the Debenture Guarantee.
(f) no resignation of the Property Trustee shall be effective unless
either:
(i) the Trust has been completely liquidated and the pro
ceeds 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,
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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 pay
ments on behalf of the Trust with respect to the Preferred Securities and any
such Paying Agent shall comply with ss. 317(b) of the Trust Indenture Act. Any
Paying Agent may be removed by the Property Trustee at any time and a successor
Paying Agent or additional Paying Agents may be appointed at any time by the
Property Trustee; 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, functions and
charac terization for federal income tax purposes of the Trust set forth in
Section 3.3 and the Property Trustee shall not take any action which is
inconsistent with the purposes, functions and characterization for federal
income tax purposes 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 oc
curred, 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:
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(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that
may have occurred:
(A) the duties and obligations of the Property Trustee
shall be determined solely by the express provi sions
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 Secu
rities, and the Property Trustee shall not be liable
except for the performance of such duties and obli
gations as are specifically set forth in this Declara
tion, 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 Prop
erty Trustee, the Property Trustee may conclu sively
rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Prop
erty Trustee and conforming to the requirements of
this Declaration; but in the case of any such certifi
cates 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 Declara tion;
(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 perti
nent facts;
(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
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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 Prop
erty 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 rea sonably 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 pro
tected in acting or refraining from acting upon any reso
lution, 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 tobe genuine and to have
been signed, sent or presented by the proper party or
parties;
(ii) any act of the Sponsor or the Regular Trustees contem
plated by this Declaration shall be sufficiently
evidenced by an Officers' Certificate;
(iii)whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or
omitting any action hereunder, the Property Trustee
(unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and
rely upon an
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Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Sponsor or
the Regu lar 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 coun
sel to the Sponsor or any of its Affiliates, and may in
clude 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
Trustee adequate security and indemnity which would
satisfy a reasonable person in the position of the Prop
erty Trustee, against the costs, expenses (including
attor neys' fees and expenses) and liabilities that might
be incurred by it in complying with such request or direc
tion, 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
reso lution, certificate, statement, instrument, opinion,
report,
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notice, request, direction, consent, order, bond, deben
ture, 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 miscon
duct or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the
Securities and the signature of the Property Trustee or
its agents alone shall be sufficient and effective to
perform any such action; 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 in
structions 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 proportion in liquidation amount
of the Securities as would be entitled to direct the Prop
erty 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
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(xi) except as otherwise expressly provided by this Declara
tion, the Property Trustee shall not be under any obliga
tion 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.
Section 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Trustees described in this Declaration, except as mandated by the Business
Trust Act. Except as set forth in Section 5.2, the Delaware Trustee shall be a
Trustee for the sole and limited purpose of fulfilling the requirements of ss.
3807(a) 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, each 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.
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
responsi bility 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.
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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
substan tially as an entirety to 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 Preferred Securities other securi
ties 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 Distri
butions 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
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notification of issuance, on any national securities ex
change or other organization on which the Preferred
Securities are then listed;
(iv) such merger, consolidation, amalgamation or replace ment
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 replace ment
does not adversely affect the rights, preferences and
privileges of the Holders of the Securities (including
any Successor Securities) in any material respect (other
than with respect to any dilution of the Holders'
interest in the new entity);
(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 re
placement does not adversely affect the rights,
preferences and privileges of the Holders of the
Securities (including any Successor Securities) in
any material respect (other than with respect to any
dilution of the Holders' interest in the new entity);
and
(B) following such merger, consolidation, amalgam ation
or replacement, neither the Trust nor the Suc cessor
Entity will be required to register as an In vestment
Company; and
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(viii) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities at least to the ex
tent provided by the Preferred Securities Guarantee; and
(c) notwithstanding Section 3.15(b), the Trust shall not consoli
date, 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 to be classified as other than a grantor
trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
Section 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date and any other date Preferred Securities and
Common Securities are sold pursuant to the over-allotment option granted in the
Purchase Agreement 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 deems
necessary or advisable in order to comply with the applicable laws of any such
States;
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(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 Purchase Agreement providing for
the sale of the Preferred Securities.
Section 4.3 Right to Proceed.
The Sponsor acknowledges the rights of Holders to institute a Direct
Action as set forth in Section 3.8(e) hereto.
ARTICLE V
TRUSTEES
Section 5.1 Number of Trustees.
The number of Trustees shall initially be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a Majority in liquidation
amount of the Common Securities voting as a class at a meeting of the Holders of
the Common Securities; provided, however, that the number of Trustees shall in
no event be less than three (3); provided further that (1) one Trustee, in the
case of a natural person, shall be a person who is a resident of the State of
Delaware or that, if not a natural person, is an entity which has its principal
place of business in the State of Delaware, (2) there shall be at least two
Trustees who are employees or officers of, or are affiliated with the Sponsor;
and (3) one Trustee shall be the Property Trustee for so long as this
Declaration is required to qualify as an indenture under the Trust
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Indenture Act, and such Trustee may also serve as Delaware Trustee if it meets
the applicable requirements.
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; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Commission to act
as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject
to supervision or examination by Federal, State, Territo
rial or District of Columbia authority. If such corpora
tion publishes reports of condition at least annually,
pursuant to law or to the requirements of the supervising
or examining authority referred to above, then for the
purposes of this Section 5.3(a)(ii), the combined capital
and surplus of such corporation shall be deemed to be its
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combined capital and surplus as set forth in its most
recent report of condition so published;
(b) if at any time the Property Trustee shall cease to be eligible
to so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 5.6(c);
(c) if the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of ss. 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 ss. 310(b) of the Trust Indenture Act) shall in all
respects comply with the provi sions of ss. 310(b) of the Trust Indenture Act;
and
(d) (i) the Preferred Securities Guarantee, (ii) the Preferred
Securities Guarantee Agreement dated June 12, 1998 relating to MediaOne Finance
Trust I, (iii) the Preferred Securities Guarantee Agreement dated June 12, 1998
relating to MediaOne Finance Trust II, (iv) the Preferred Securities Guarantee
Agreement dated September 11, 1995 relating to MediaOne Financing A, (v) the
Preferred Securities Guarantee Agreement dated October 29, 1996 relating to
MediaOne Financing B, (vi) the Amended and Restated Declaration of Trust dated
June 12, 1998 of MediaOne Finance Trust I, (vii) the Amended and Restated
Declaration of Trust dated June 12, 1998 of MediaOne Finance Trust II, (viii)
the Amended and Restated Declaration of Trust dated September 11, 1995 of
MediaOne Financing A and (ix) the Amended and Restated Declaration of Trust
dated October 29, 1996 of MediaOne Financing B shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first proviso contained in ss. 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.
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Section 5.5 Initial Trustees.
The initial Regular Trustees under this Declaration shall be:
Constance P. Campbell
188 Inverness Drive West
Englewood, Colorado 80112
Rahn K. Porter
188 Inverness Drive West
Englewood, Colorado 80112
Stephen E. Brilz
188 Inverness Drive West
Englewood, Colorado 80112
The initial Delaware Trustee under this Declaration shall be:
First Chicago Delaware, Inc.
300 King Street
Wilmington, Delaware 19801
Attn: Michael J. Majchrzak
The initial Property Trustee shall be:
The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, Illinois 60670-0126
Attn: Corporate Trust Services Division
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 instru
ment executed by the Sponsor; and
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(ii) after the issuance of any Securities by vote of the Hold
ers 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) (i) the Trustee that acts as Property Trustee shall not
be removed in accordance with Section 5.6(a) until a Suc
cessor Property Trustee has been appointed and has
accepted such appointment by written instrument exe cuted
by such Successor Property Trustee and delivered to the
Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with Section 5.6(a) until a suc
cessor Trustee possessing the qualifications to act as
Delaware Trustee under Sections 5.2 and 5.4 (a "Succes
sor Delaware Trustee") has been appointed and has ac
cepted 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.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:
(i) no such resignation of the Trustee that acts as the Prop
erty Trustee shall be effective until a Successor Property
Trustee has been appointed and has accepted such ap
pointment by instrument executed by such Successor
Property Trustee and delivered to the Trust, the Sponsor
and the resigning Property Trustee; or until the assets of
the Trust have been completely liquidated and the pro
ceeds thereof distributed to the holders of the Securities;
and
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(ii) no such resignation of the Trustee that acts as the Dela
ware Trustee shall be effective until a Successor Dela
ware 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
(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 resignation in accordance with this Section 5.6; and
(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 instru ment
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 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 Declara tion.
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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 Commis
sion 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 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 provi sions of the Trust, as set forth herein.
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Section 5.11 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Property Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either may
be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the case
may be, shall be bound by this Declaration, or any corporation succeeding to all
or substantially all the corporate trust business of the Property Trustee or the
Delaware Trustee, as the case may be, shall be the successor of the Property
Trustee or the Delaware Trustee, as the case may be, hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
Section 6.1 Distributions.
Holders shall receive Distributions in accordance with the
applicable terms of the relevant Holder's Securities. Distributions shall be
made on the Pre ferred Securities and the Common Securities in accordance with
the preferences set forth in their respective terms. If and to the extent that
the Debenture Issuer makes a payment of interest (including Additional Interest
(as defined in the Indenture)), premium, if any, 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.
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
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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 "Com mon Securities"). The Trust shall have no securities or other
interests in the assets of the Trust other than the Preferred Securities and the
Common Securities;
(b) the 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
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, litho graphed 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 Declara tion,
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
DISSOLUTION AND TERMINATION OF TRUST
Section 8.1 Dissolution and Termination of Trust.
(a) The Trust shall dissolve:
(i) upon the bankruptcy of the Sponsor or the Debenture
Issuer;
(ii) upon the filing of a certificate of dissolution or its
equiv alent with respect to the Sponsor or the Debenture
Issuer, upon the consent (other than in connection with a
disso lution of the Trust pursuant to clause (v) of this
Section 8.1(a)) of the Holders of at least a Majority in
liquidation amount of the Securities, voting together as
a single class, to file a certificate of cancellation
with respect to the Trust, or the revocation of the
charter of the Sponsor or the Debenture Issuer 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
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 election by the Sponsor, effective upon notice
to the Trust, the Property Trustee and the Delaware
Trustee, to dissolve the Trust 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) and upon the completion of the winding up of the
Trust, one of the Regular Trustees (each Regular Trustee being hereby authorized
to take such action) shall file a certificate of cancellation with the Secretary
of State of the State of Delaware terminating the Trust; and
(c) the provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
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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) the Sponsor may not transfer the Common Securities.
Section 9.2 Transfer of Certificates.
(a) 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.
(b) Notwithstanding any other provisions of this Declaration, a
Global Certificate may not be transferred as a whole, except by the Clearing
Agency to a nominee of the Clearing Agency or by the Clearing Agency or any such
nominee to a successor Clearing Agency or a nominee of such successor Clearing
Agency.
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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 Certifi cate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trustees shall have
actual or other notice thereof.
Section 9.4 Book Entry Interests.
Unless otherwise specified in the terms of the Preferred Securities,
the Preferred Securities Certificates, on original issuance, will be issued in
the form of one or more, fully registered, global Preferred Security
Certificates (each a "Global Certificate"), to be delivered to DTC, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner will
receive a definitive Preferred Security Certificate representing such Preferred
Security Beneficial Owner's interests in such Global Certificates, except as
provided in Section 9.7. Unless and until definitive, fully registered Preferred
Security Certificates (the "Definitive Preferred Security Certificates") have
been issued to the Preferred Security Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the payment of
Distributions on the Global Certificates and receiving 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
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by law and agreements between such Preferred Security Beneficial Owners and the
Clearing Agency and/or the Clearing Agency Participants. DTC will make book
entry transfers among the Clearing Agency Participants and receive and transmit
payments of Distributions on the Global Certificates to such Clearing Agency
Participants; provided, that solely for the purposes of determining whether the
Holders of the requisite amount of Preferred Securities have voted on any matter
provided for in this Declaration, so long as Definitive Preferred Securities
have not been issued, the Trustees may conclusively rely on, and shall be
protected in relying on, any written instrument (including a proxy) delivered to
the Trustees by the Clearing Agency setting forth the Preferred Security
Beneficial Owners' votes or assigning the right to vote on any matter to any
other Persons either in whole or in part.
Section 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred Security
Holders is required under this 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.
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
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(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 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 endorse ments 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.
Preferred Security Certificates issued in exchange for a beneficial
interest in a Global Certificate shall be registered in such names and in such
autho rized denominations as the Clearing Agency, pursuant to instructions from
Clearing Agency Participants or indirect participants or otherwise, shall
instruct the Property Trustee. The Property Trustee shall deliver such Preferred
Security Certificate to the persons in whose names such Preferred Securities are
so registered in accordance with the instruction of the Clearing Agency.
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 satisfac
tion of the destruction, loss or theft of any Certificate; and
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(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 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 10.1Liability.
(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 Hold
ers 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 Secu
rities any deficit upon dissolution of the Trust or other
wise; and
(b) Pursuant to ss. 3803(a) of the Business Trust Act, the Holders
of the Securities, in their capacity as such, shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit orga nized under the General Corporation Law of the
State of Delaware.
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Section 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or account
able 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
(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 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
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(ii) whenever this Declaration or any other agreement con
templated 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 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 inter ests, 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
Declara tion, 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 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 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
proceed ing 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); and
(c) the provisions of this Section 10.4 shall survive the termina
tion of this Declaration or resignation or removal of any Trustee.
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 invest ment 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 depositary for, trustee or agent for, or
act on any commit tee or body of holders of, securities or other obligations of
the Sponsor or its Affili ates.
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ARTICLE XI
ACCOUNTING
Section 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
Section 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
support ing 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 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
(c) the Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
Section 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name and
for the sole benefit of the Trust; provided, however, that all payments of funds
in respect of the 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
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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 require
ments under United States federal, state and local law. The Trust shall request,
and the Holders shall provide to the Trust, such forms or certificates as are
necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustee shall file required forms with
applicable jurisdictions and, unless an exemp tion 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
applica ble 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.
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
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(A) cause the Trust to fail to be classified for the pur
poses of United States federal income taxation as a
grantor trust;
(B) affect the powers or the rights of the Property
Trustee or the Delaware Trustee without the written
consent of the Property Trustee or the Delaware
Trustee, as the case may be; 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 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 with out
the consent of the Holders of a Majority in liquida tion
amount of the Common 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;
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(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) to ensure the Trust's status as a grantor trust for
federal income tax purposes.
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 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
determin ing 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 Hold
ers 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 meet
ing of the Holders of Securities. Any action that may be
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taken at a meeting of the Holders of Securities may be
taken without a meeting if a consent in writing setting
forth the action so taken is signed by the Holders of
Securities owning not less than the minimum amount of
Securities in liquidation amount that would be necessary
to authorize or take such action at a meeting at which
all Holders of Securities having a right to vote thereon
were present and voting. Prompt notice of the taking of
action without a meeting shall be given to the Holders of
Secu rities 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 tak ing 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 pro
vided 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 thereun
der, as if the Trust were a Delaware corporation and the
Holders of the Securities were stockholders of a Dela
ware 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, the Trust Indenture Act,
this Declaration, the terms of the Securities or the
listing rules of any stock exchange on which the
Preferred Securities are then listed or trading,
otherwise provides, the Regular Trustees, in their sole
discretion, shall estab lish all other provisions
relating to meetings of Holders of Securities, including
notice of the time, place or pur pose 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 estab lishment 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 THE PROPERTY TRUSTEE AND
THE DELAWARE TRUSTEE
Section 13.1 Representations and Warranties of Property Trustee.
The Trustee which acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each 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 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;
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(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;
and
(e) if the Property Trustee also acts as the Delaware Trustee, the
Delaware Trustee under Delaware law is either a natural person who is a resident
of the State of Delaware or if not a natural person, an entity which maintains
its principal place of business in the State of Delaware.
Section 13.2 Representations and Warranties of Delaware Trustee.
The Trustee which acts as Delaware Trustee represents and warrants
to the Trust and to the Sponsor at the date of this Declaration, and each
Successor Delaware Trustee represents and warrants to the Trust and the Sponsor
at the time of the Successor Delaware Trustee's acceptance of its appointment as
such that:
(a) The Delaware Trustee under Delaware law is either a natural
person who is a resident of the State of Delaware or if not a natural person, an
entity which maintains its principal place of business in the State of Delaware;
(b) the Delaware Trustee satisfies the requirements set forth in
Section 5.2 and has the power and authority to execute and deliver, and to carry
out and perform its obligations under the terms of, this Declaration and, if it
is not a natural person, is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization;
(c) the Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and this Declaration. This
Declaration under Delaware law constitutes a legal, valid and binding obligation
of the Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency and
other similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity or at law);
and
(d) no consent, approval or authorization of, or registration with
or notice to, any Delaware State or Federal banking authority is required for
the execution, delivery or performance by the Delaware Trustee of this
Declaration.
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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):
MediaOne Finance Trust III
c/o MediaOne Group, Inc.
188 Inverness Drive West
Englewood, Colorado 80112
Attention: Treasurer
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice of to
the Holders of the Securities):
First Chicago Delaware Inc.
300 King Street
Wilmington, Delaware 19801
(c) 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, Illinois 60670-0126
Attention: Corporate Trust Administration
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(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice to the Trust):
MediaOne Group, Inc.
188 Inverness Drive West
Englewood, Colorado 80112
Attention: Treasurer
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
Section 14.2 Governing Law.
THE DECLARATION AND THE RIGHTS AND OBLIGATIONS OF THE HOLDERS, THE
TRUST, THE SPONSOR AND THE TRUSTEES SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE AND ALL RIGHTS AND REME DIES
SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF
LAWS OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION OTHER THAN THE STATE OF
DELAWARE; PROVIDED, HOWEVER, THAT THERE SHALL NOT BE APPLICABLE TO THE HOLDERS,
THE TRUST, THE SPONSOR , THE TRUSTEES OR THIS DECLARATION ANY PROVISION OF THE
LAWS (STATUTORY OR COM MON) OF THE STATE OF DELAWARE PERTAINING TO TRUSTS THAT
RELATE TO OR REGULATE, IN A MANNER INCONSISTENT WITH THE TERMS HEREOF (A) THE
FILING WITH ANY COURT OR GOVERNMENTAL BODY OR AGENCY OF TRUSTEE ACCOUNTS OR
SCHEDULES OF TRUSTEE FEES AND CHARGES, (B) AFFIRMATIVE REQUIREMENTS TO POST
BONDS FOR TRUSTEES, OFFICERS AGENTS OR EMPLOYEES OF A TRUST, (C) THE NECESSITY
FOR OBTAINING COURT OR OTHER GOV ERNMENTAL APPROVAL CONCERNING THE ACQUISITION,
HOLDING OR DISPOSITION OF REAL OR PERSONAL PROPERTY, (D) FEES OR OTHER
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SUMS PAYABLE TO THE TRUSTEES, OFFICERS, AGENTS OR EMPLOYEES OF A TRUST, (E) THE
ALLOCATION OF RECEIPTS AND EXPENDITURES TO INCOME OR PRINCIPAL, (F) RESTRICTIONS
OR LIMITATIONS ON THE PERMISSIBLE NATURE, AMOUNT OR CONCENTRATION OF TRUST
INVESTMENTS OR REQUIREMENTS RELATING TO THE TITLING, STOR AGE OR OTHER MANNER OF
HOLDING OR INVESTING TRUST ASSETS, (G) THE ESTABLISHMENT OF FIDUCIARY OR OTHER
STANDARDS OF RESPONSIBILITY OR LIMITATIONS ON THE ACTS OR POWERS OF TRUSTEES
THAT ARE INCONSISTENT WITH THE LIMITATIONS OR LIABILITIES OR AUTHORITIES AND
POWERS OF THE TRUSTEES AS SET FORTH OR REFERENCED IN THIS DECLARATION. SECTION
3540 OF TITLE 12 OF THE DELAWARE CODE SHALL NOT APPLY TO THE TRUST.
Section 14.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust. 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 provi sion 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.
Constance P. Campbell
as Regular Trustee
/s/ Constance P. Campbell
- -----------------------------
Rahn K. Porter
as Regular Trustee
/s/ Rahn K. Porter
- -----------------------------
Stephen E. Brilz
as Regular Trustee
/s/ Stephen E. Brilz
- -----------------------------
FIRST CHICAGO DELAWARE INC.
as Delaware Trustee
By: /s/ Steven M. Wagner
----------------------------
Name: Steven M. Wagner
Title: Vice President
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THE FIRST NATIONAL BANK OF CHICAGO
as Property Trustee
By: /s/ Steven M. Wagner
----------------------------
Name: Steven M. Wagner
Title: Vice President
MEDIAONE GROUP, INC.
as Sponsor
By: /s/ Rahn K. Porter
----------------------------
Name: Rahn K. Porter
Title: Assistant Treasurer
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EXHIBIT A
TERMS OF
9.04% PREFERRED SECURITIES
9.04% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of October 28, 1998 (as amended from time to time, the "Declara
tion"), 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. 20,000,000 Preferred Securities (including
2,000,000 Preferred Securities of the Trust sold pursuant to an over-allotment
option provided for in the Purchase Agreement) of the Trust with an aggregate
liquidation amount with respect to the assets of the Trust of Five Hundred
Million Dollars ($500,000,000) (plus up to an additional 700,000 Preferred
Securi ties with an aggregate liquidation amount with the respect to the assets
of the Trust of Seventeen Million Five Hundred Thousand Dollars ($17,500,000)
solely to cover over-allotments, as provided for in the Purchase Agreement (the
"Additional Pre ferred Securities")), 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 "9.04% 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 dele tions 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.618,557 Common Securities (including 61,855
Common Securities of the Trust sold pursuant to an over-allotment option) of the
Trust with an aggregate liquidation amount with respect to the assets of the
Trust of Fifteen Million Four Hundred Sixty-Three Thousand Nine Hundred
Twenty-Five Dollars ($15,463,925) (plus up to an additional 21,650 Common
Securities of the Trust with an aggregate liquidation amount with respect to the
assets of the Trust of Five Hundred Forty-One Thousand Two Hundred Fifty Dollars
($541,250) to meet
A-1
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capital requirements of the Trust in the event of an issuance of Additional
Preferred Securities), 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 "9.04% Common Securities" (the "Common Securities"). The
Common Security Certificates evidencing the Common Securities shall be
substantially in the form attached hereto as Annex II, with such changes and
additions thereto or deletions therefrom as may be required by ordinary usage,
custom or practice.
2. Distributions.
a. Periodic Distributions payable on each Security will be fixed at
a rate per annum of 9.04% (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 quarterly period 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 Distribu tion 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 October 28, 1998 and will be payable quarterly in arrears, on March 31,
June 30, September 30 and December 31 of each year, commencing on December 31,
1998, 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 quarterly periods (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 quarterly periods. Payments of accrued
Distributions will be payable to Holders as they appear on the books and records
of the Trust on the first record date after the end of the
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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 "Certain Terms of the Preferred
Securities -- Book-Entry-Only Issuance -- The Depository Trust Company" in the
Prospectus Supplement dated October 23, 1998 (the "Prospectus Supplement") to
the Prospectus dated October 15, 1998 (as so supplemented 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 dates as for the
Preferred Securities. If the Preferred Securities shall not continue to remain
in book-entry only form, the relevant record dates for the Pre ferred
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 punctu ally 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 Distri bution 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.
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d. In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution, winding-up
or termination of the Trust, the Holders of the Securities on the date of the
dissolu tion, 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 paying or making reasonable provision to pay all claims and
obligations of the Trust in accordance with Section 3808(e) of the Business
Trust Act, an amount equal to the aggregate of the stated liquidation amount of
$25 per Security plus accrued and unpaid Distributions thereon to the date of
payment (such amount being the "Liqui dation 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, after paying or
making reasonable provision to pay all claims and obligations of the Trust in
accordance with Section 3808(e) of the Business Trust Act.
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 payment
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 the redemption price for the Debentures, payable in cash
(the "Redemption Price"). Holders will be given not less than 30 nor more than
60 days notice of such redemption.
b. If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Preferred Securities will be redeemed
Pro
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Rata and the Preferred Securities to be redeemed will be as described in
Paragraph 4(g)(ii) below.
c. The Debentures are redeemable, in whole or in part, at the option
of the Debenture Issuer, on or after October 28, 2003, at a redemption price
equal to 100% of the principal amount per Debenture, plus, in each case, accrued
and unpaid interest thereon at the date of the redemption for the Debentures.
d. 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
Debenture Issuer shall have the right, 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 Special Event, 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 and, following such redemption,
Securities with an aggregate liquidation amount equal to the aggregate principal
amount of the Deben tures so redeemed shall be redeemed by the Trust at the
Redemption Price on a Pro Rata basis in accordance with paragraph 8 hereof. The
Common Securities will be redeemed Pro Rata with the Preferred Securities,
except that if an Event of Default has occurred and is continuing, the Preferred
Securities will have priority over the Common Securities with respect to payment
of the Redemption Price.
e. The following terms used herein shall be defined as follows:
"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.
"Tax Event" means that the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced in such
matters 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
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change in, an interpretation or application of any such laws or regulations by
any legislative body, court, governmental agency or regulatory authority, which
amend ment 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 Deben tures, (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 part, by the Debenture
Issuer for United States federal income tax purposes.
f. The Trust may not redeem fewer than all the outstanding
Securities unless all accrued and unpaid Distributions have been paid on all
Securi ties for all quarterly Distribution periods terminating on or before the
date of redemption.
g. In the event that the Sponsor makes the election referred to in
Section 8.1(a)(v) of the Declaration, the Regular Trustees shall dissolve the
Trust and, after paying or making reasonable provision to pay all claims and
obligations of the Trust in accordance with Section 3808(e) of the Business
Trust Act, cause Debentures, held by the Property Trustee, having an 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 in liquidation of such Holders'
interests in the Trust on a Pro Rata basis in accordance with paragraph 8
hereof. 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 (iii) any certificates represent ing
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
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the Debenture Issuer or its agent for transfer or reissue. If the Debentures are
distributed to Holders of the Securities, pursuant to the terms of the
Indenture, the Debenture Issuer will use its best efforts to have the 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.
h. 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 ex changed not fewer than 30 nor more than 60 days before the date fixed for
redemp tion 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 redemp tion or exchange and the dates on which notices are given
pursuant to this paragraph 4(h)(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 Securi ties. 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 will be redeemed
Pro Rata from each Holder of Securities, it being understood that, in respect of
Preferred Securities registered in the name of and held of record by DTC (or any
successor Clearing Agency) or any other nominee, the distribution of the
proceeds of such redemption will be made to each Clearing Agency Participant (or
person on whose behalf such nominee holds such securities) in accordance with
the procedures applied by such agency or nominee.
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 irrevocable)
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
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Agency) funds sufficient to pay the Redemption Price with respect to the
Preferred Securities and will give the Depository 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 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 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.
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 Certifi cates 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
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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 Securi ties
will have no voting rights.
b. Subject to the requirements of the third 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, and 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) waiving any past default and its consequences that is waivable
under Section 6.06 of the Indenture, or (iii) exercising 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 Prop erty
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 Securi ties. 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 direc tions 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 other than a grantor
trust on account of such action. If the Property Trustee fails to enforce its
rights under the Declaration, any Holder of Preferred Securities may 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. Notwithstanding the foregoing,
if an Event of Default has occurred and is continuing with respect to the
Preferred Securities and such event is attributable to the failure of the
Debenture Issuer or the Sponsor to pay interest,
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premium, if any, or principal on the Debentures on the date such interest,
premium, if any, or principal is otherwise payable (or in the case of
redemption, on the redemp tion date), then a holder of Preferred Securities may
institute a Direct Action for enforcement of payment to such holder of the
principal of, premium, if any, or interest on, Debentures having a principal
amount equal to the aggregate liquidation amount of the Preferred Securities of
such holder on or after the respective due date specified in the Debentures.
Notwithstanding any payments made to such Holder of Preferred Securities by the
Debenture Issuer or the Debenture Guarantor in connec tion with a Direct Action,
the Debenture Issuer and the Debenture Guarantor shall remain obligated to pay
the principal of, premium, if any, and interest on the Deben tures held by the
Trust or the Property Trustee, and the Debenture Issuer and the Debenture
Guarantor shall be subrogated to the rights of the Holder of such Preferred
Securities with respect to payments on the Preferred Securities to the extent of
any payment made by the Debenture Issuer or the Debenture Guarantor, as the case
may be, to such Holder in any Direct Action.
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 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.
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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 Securi
ties will have no voting rights.
b. The Holders of the Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees.
c. 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 Declara tion, 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) waiving any past default and its consequences that is
waivable under Section 6.06 of the Inden ture, or (iii) exercising 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 Common 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 other than a grantor trust on account of such action. If the
Property Trustee fails to enforce its rights under the Declaration, any Holder
of
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Common Securities may 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.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing with respect to the Common Securities and such event is attributable
to the failure of the Debenture Issuer or the Sponsor to pay interest or
principal on the Debentures on the date such interest or principal is otherwise
payable (or in the case of redemption, on the redemption date), then a holder of
Common Securities may institute a proceeding for enforcement of payment to such
holder of the principal of, or interest on, Debentures having a principal amount
equal to the aggregate liquidation amount of the Common Securities of such
holder on or after the respective due date specified in the Deben tures.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the 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 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 Securities as a
class, will be entitled to vote on such amendment or proposal (but not on any
other amendment or proposal) and such
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amendment or proposal shall not be effective except with the approval of the
Holders of at least a Majority in liquidation amount of the Securities, voting
together as a single class; provided, however, 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 a Majority 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
Deben tures 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 termina tion 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 aggre gate
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 been furnished 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
other than a grantor trust on account of such action.
8. Pro Rata.
A reference in these terms of the Securities to any payment,
distribu tion 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 aggre gate 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
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amount of Common Securities held by the relevant Holder relative to the
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. 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 provi sions therein and to the provisions of the Indenture.
11. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional Securities.
12. 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.
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Annex I
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIF ICATE 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
represen tative 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
MEDIAONE FINANCE TRUST III
9.04% Preferred Securities.
(liquidation amount $25 per Preferred Security)
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MEDIAONE FINANCE TRUST III, a business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that CEDE & CO. (the
"Holder") is the registered owner of preferred securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the 9.04% Pre ferred 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 October 28, 1998, 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 Declara
tion 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.
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IN WITNESS WHEREOF, the Trust has executed this certificate this day
of October, 1998.
as Trustee
as Trustee
A-17
<PAGE>
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)
A-18
<PAGE>
Annex II
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
MEDIAONE FINANCE TRUST III
Common Securities.
(liquidation amount $25 per Common Security)
MEDIAONE FINANCE TRUST III, a business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that MediaOne Group,
Inc. (the "Holder") is the registered owner of common securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the 9.04% 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 October 28, 1998, 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.
A-19
<PAGE>
Upon receipt of this certificate, the Holder is bound by the Declara
tion 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.
A-20
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this day
of October, 1998.
as Trustee
as Trustee
A-21
<PAGE>
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)
A-22
-------------------------------------------
THIRD SUPPLEMENTAL INDENTURE
among
MEDIAONE GROUP FUNDING, INC.,
Issuer,
MEDIAONE GROUP, INC.
Guarantor
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee
Dated as of October 28, 1998
----------------------------------------------
<PAGE>
Table of Contents
ARTICLE I
DEFINITIONS
SECTION 1.1 Definition of Terms........................................2
ARTICLE II
GENERAL TERMS AND CONDITIONS OF
THE NOTES
SECTION 2.1 Designation and Principal Amount...........................4
SECTION 2.2 Maturity...................................................4
SECTION 2.3 Form and Payment...........................................4
SECTION 2.4 Global Note................................................5
SECTION 2.5 Interest...................................................5
ARTICLE III
REDEMPTION OF THE NOTES
SECTION 3.1 Special Event Redemption...................................7
SECTION 3.2 Optional Redemption by Company.............................7
SECTION 3.3 Redemption Procedures......................................7
SECTION 3.4 No Sinking Fund............................................8
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1 Extension of Interest Payment Period.......................8
SECTION 4.2 Notice of Extension........................................8
ARTICLE V
EXPENSES AND GUARANTEE
SECTION 5.1 Payment of Expenses........................................9
SECTION 5.2 Guarantee of Payment of Expenses..........................11
ARTICLE VI
SUBORDINATION
SECTION 6.1 Agreement to Subordinate..................................11
SECTION 6.2 Default on Senior Indebtedness............................11
SECTION 6.3 Liquidation: Dissolution; Bankruptcy......................12
SECTION 6.4 Subrogation...............................................14
SECTION 6.5 Trustee to Effectuate Subordination.......................15
SECTION 6.6 Notice by the Company and the Guarantor...................15
SECTION 6.7 Rights of the Trustee; Holders of Senior
Indebtedness..............................................16
SECTION 6.8 Subordination May Not Be Impaired.........................17
<PAGE>
ARTICLE VII
COVENANTS
SECTION 7.1 Listing on Exchanges......................................17
SECTION 7.2 Direct Action.............................................17
ARTICLE VIII
FORM OF NOTE
SECTION 8.1 Form of Note..............................................18
ARTICLE IX
ORIGINAL ISSUE OF NOTES AND GUARANTEES
SECTION 9.1 Original Issue of Notes and Guarantees....................27
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Ratification of Indenture.................................27
SECTION 10.2 Trustee Not Responsible for Recitals......................28
SECTION 10.3 Governing Law.............................................28
SECTION 10.4 Separability..............................................28
SECTION 10.5 Counterparts..............................................28
<PAGE>
THIRD SUPPLEMENTAL INDENTURE, dated as of October 28, 1998 (the
"Third Supplemental Indenture"), among MediaOne Group Funding, Inc., a Delaware
corporation (the "Company"), MediaOne Group, Inc., a Delaware corporation (the
"Guarantor") and Norwest Bank Minnesota, National Association, as trustee (the
"Trustee") under the Indenture dated as of June 12, 1998 among the Company, the
Guarantor and the Trustee (as so supplemented, 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 9.04% Subordinated Deferrable Interest Notes due 2038, and the
Guarantor desires to provide for the issuance of a Guarantee of such Debt
Securities (the "Note Guarantee" and, together with the Debt Securities, the
"Notes"), 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 Third Supplemental Indenture;
WHEREAS, MediaOne Finance Trust III, a Delaware statutory business
trust (the "Trust"), has offered to the public $500,000,000 (including
$50,000,000 aggregate liquidation amount sold pursuant to an over-allotment
option provided for in the Purchase Agreement) aggregate liquidation amount of
its 9.04% Preferred Securities (the "Preferred Securities") (or up to
$517,500,000 aggregate liquidation amount of Preferred Securities if the
remaining over-allotment option is exercised), representing undivided beneficial
interests in the assets of the Trust and proposes to invest the proceeds from
such offering, together with the proceeds of the issuance and sale by the Trust
to the Guarantor of $15,463,925 (including $1,546,375 aggregate liquidation
amount sold pursuant to an over-allotment option) aggregate liquidation amount
of its Common Securities (or up to $16,005,175 aggregate liquidation amount of
Common Securities if the remaining over-allotment option is exercised), in
$515,463,925 (or up to $533,505,175 aggregate principal amount if the remaining
over-allotment option is exercised) aggregate principal amount of the Notes; and
WHEREAS, the Company and the Guarantor have requested that the
Trustee execute and deliver this Third Supplemental Indenture, and all
requirements necessary to make this Third Supplemental Indenture a valid
instrument, in accordance with its
<PAGE>
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 delivery of this Third
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 Third Supplemental Indenture;
(b) a term defined anywhere in this Third 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 Third 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) Property Trustee;
(iv) Preferred Security Certificate; (v) Purchase Agreement; (vi) Regular
Trustees; and (vii) Special Event; and
(g) the following terms have the meanings given to them in this
Section 1.1(g):
"Additional Interest" shall have the meaning set forth
in Section 2.5.
"Declaration" means the Amended and Restated Declaration of Trust of
MediaOne Finance Trust III, a Delaware business trust, dated as of October 28,
1998.
<PAGE>
"Dissolution Event" means that as a result of an election by the
Guarantor, 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.
"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 Additional Interest, if any.
"Optional Redemption Price" shall have the meaning set forth in
Section 3.2.
"Redemption Price" means either the Special Event Redemption Price
or the Optional Redemption Price, as the case may be.
"Senior Indebtedness" 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; (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) 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, including all other debt securities and guarantees in respect of
those debt securities, initially issued to (y) any other MediaOne 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 are similar to the Preferred Securities, including, without
limitation, (i) the 9.30% Subordinated Deferrable Interest Notes due 2025 issued
by the Company to MediaOne Finance Trust I (the "9.30% Notes") and the guarantee
by the Guarantor of the 9.30% Notes (the "9.30% Notes Guarantee"), (ii) the
9.50% Subordinated
<PAGE>
Deferrable Interest Notes due 2036 issued by the Company to MediaOne Finance
Trust II (the "9.50% Notes") and the guarantee by the Guarantor of the 9.50%
Notes (the "9.50% Notes Guarantee"), (iii) the 7.96% Subordinated Deferrable
Interest Notes due 2025 issued by the Company to MediaOne Financing A (the
"7.96% Notes") and the guarantee by the Guarantor of the 7.96% Notes (the "7.96%
Notes Guarantee") and (iv) the 8.25% Subordinated Deferrable Interest Notes due
2036 issued by the Company to MediaOne Financing B (the "8.25% Notes") and the
guarantee by the Guarantor of the 8.25% Notes (the "8.25% Note Guarantee").
"Special Event Redemption Price" shall have the meaning set forth in
Section 3.1.
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 "9.04% Subordinated
Deferrable Interest Notes due 2038", limited in aggregate principal amount to
(a) $515,463,925 and (b) such remaining aggregate principal amount (which may
not exceed $18,041,250), if any, as shall be purchased by the Trust pursuant to
an over-allotment option in accordance with the terms and provisions of the
Purchase Agreement, 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
The Maturity Date will be December 31, 2038.
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
<PAGE>
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 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 Third 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 presented 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 Third 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.
<PAGE>
SECTION 2.5 Interest
(a) Each Note will bear interest at the rate of 9.04% 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
December 31, 1998, to the person in whose name such Note or any predecessor Note
is registered, at the close of 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 (i) the Preferred Securities are no
longer in book-entry only form or (ii) a Dissolution Event has occurred and
subsequent thereto the Notes are not represented by a Global Note pursuant to
the provisions of Section 2.11(c) of the Indenture, 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 charges 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
charges will be equal to the amounts the Trust and the Property
<PAGE>
Trustee would have received had no such taxes, duties, assessments or other
government charges been imposed.
ARTICLE III
REDEMPTION OF THE NOTES
SECTION 3.1 Special Event Redemption
If a Special Event has occurred and is continuing then,
notwithstanding Section 3.2 but subject to Section 3.3(c), 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 Special Event at a redemption
price (the "Special Event Redemption Price") equal to 100% of the principal
amount of such Notes to be redeemed plus any accrued and unpaid interest thereon
to the date of such redemption.
SECTION 3.2 Optional Redemption by Company.
(a) Subject to the provisions of Section 3.3(c) and to the
provisions of Article Three of the Indenture, the Company shall have the right
to redeem the Notes, in whole or in part, from time to time, on or after October
28, 2003, at a redemption price (the "Optional Redemption Price") equal to 100%
of the principal amount per Note, plus, in each case, accrued and unpaid
interest thereon to the date of the redemption for the Notes. Any redemption
pursuant to this paragraph will be made upon not less than 30 days, nor more
than 60 days, notice before the redemption date to each Holder of the Notes, at
the Optional Redemption Price.
SECTION 3.3 Redemption Procedures
(a) If the Notes are only partially redeemed pursuant to
Section 3.1 or 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 Global Notes, the Depositary shall deter
mine, in accordance with its procedures, the principal amount of such Notes held
by each Holder of Notes to be redeemed.
(b) 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 and specifies in the notice of redemption, provided that the
Company shall deposit with the Trustee an amount sufficient to pay the
Redemption Price by 11:00 a.m., New York time, on the date such Redemption Price
is to be paid.
<PAGE>
(c) 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 3.4 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 quarterly periods (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
quarterly period 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 ("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 quarterly periods. 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
<PAGE>
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 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 quarterly period 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
quarterly periods 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, 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
<PAGE>
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 junior in right of payment to the
prior payment in full of all Senior Indebtedness 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 Note Guarantee issued hereunder
shall, to the extent and in the manner hereinafter set forth, be subordinated
and junior 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,
<PAGE>
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
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
<PAGE>
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 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
<PAGE>
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 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 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
<PAGE>
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
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 Third 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
<PAGE>
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
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
<PAGE>
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, 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 of 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
COVENANTS
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
<PAGE>
on the New York Stock Exchange or on such other exchange as the Preferred
Securities are then listed.
SECTION 7.2 Direct Action
The Company, the Guarantor and the Trustee acknowledge that pursuant
to the Declaration, the holders of Preferred Securities are entitled, in the
circumstances and subject to the limitations set forth therein, to commence a
Direct Action (as defined therein) with respect to any Event of Default under
the Indenture, the Notes and the Note Guarantee.
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 WRONGFUL since the registered owner hereof, Cede & Co.,
has an interest herein.]
No. $
MediaOne Group Funding, Inc.
<PAGE>
9.04% SUBORDINATED DEFERRABLE INTEREST NOTE
DUE 2038
MEDIAONE GROUP FUNDING, INC., a Delaware corporation (the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to the Property
Trustee, as property trustee of MediaOne Finance Trust III (the "Trust") or
registered assigns, the principal sum of Dollars on December 31, 2038 and to pay
interest on said principal sum from October 28, 1998 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 30 and December 31
of each year commencing December 31, 1998 at the rate of 9.04% 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 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 Securities, 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 unless otherwise provided for in the
Indenture, except that if this Note is held by the Property Trustee and the
Preferred Securities of the trustee are no longer in book-entry-only form, such
regular record date shall be the close of business on the 15th 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 15th 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 Securities) 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
<PAGE>
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 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.
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.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
Dated October 28, 1998
MEDIAONE GROUP FUNDING, INC.
By____________________________
Name:
Title:
SEAL
Attest:
By_________________________
Name:
Title: Secretary
(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
By________________________
Authorized Signatory
<PAGE>
[FORM OF GUARANTEE]
FOR VALUE RECEIVED, MediaOne Group, Inc., a Delaware 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.
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.
<PAGE>
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).
This Guarantee shall be governed by the laws of the State of New
York.
IN WITNESS WHEREOF, MediaOne Group, Inc. has caused
this Guarantee to be executed.
MediaOne Group, Inc.
[SEAL]
By:_____________________ By:________________________
Name: Name:
Title: Secretary Title:
<PAGE>
(FORM OF REVERSE OF NOTE)
This Note is one of a duly authorized series of Securities 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 (the "Base Indenture") dated as of June 12, 1998 among the
Company, MediaOne Group, Inc., a Delaware corporation, as Guarantor (the
"Guarantor") and Norwest Bank Minnesota, National Association, as Trustee (the
"Trustee"), as supplemented by the Third Supplemental Indenture dated as of
October 28, 1998 among the Company, the Guarantor and the Trustee (the Base
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 Third Supplemental Indenture.
Because of the occurrence and continuation of a Special Event, the
Company shall have the right to redeem this Note at the option of the Company,
without premium or penalty, in whole or in part within 90 days of the occurrence
of such Special Event, at a redemption price (the "Special Event Redemption
Price") equal to 100% of the principal amount of this Note plus any accrued and
unpaid interest thereon to the date of such redemption.
The Company shall have the right to redeem this Note at the option
of the Company, without premium or penalty, in whole or in part, on or after
October 28, 2003 (an "Optional Redemp tion"), at a redemption price (the
"Optional Redemption Price") equal to 100% of the principal amount per Note,
plus, in each case, accrued and unpaid interest thereon to the date of
redemption for the Notes.
Any redemption will be made upon not less than 30 days nor more than
60 days notice before the redemption date, at the redemption price. If the Notes
are only partially redeemed by the Company, 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
Depositary shall determine the principal amount of such Notes held by each
Noteholder to be redeemed in accordance with its procedures.
In the event of redemption of this Note in part only, a new Note or
Notes of this series for the unredeemed portion
<PAGE>
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 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 and except as provided in Section 4.06 of the Base Indenture. 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.
<PAGE>
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 quarterly periods (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 quarterly periods. 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 borough
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
<PAGE>
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 aggregate 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 AND GUARANTEES
SECTION 9.1 Original Issue of Notes and Guarantees
Upon execution of this Third Supplemental Indenture, Notes in
the aggregate principal amount of $515,463,925 (or up to $533,505,175 aggregate
principal amount if the remaining portion of the over-allotment option provided
for in the Purchase Agreement is exercised) may be executed by the Company and
Note Guarantees endorsed thereon executed by the Guarantor. Such Notes and Note
Guarantees endorsed thereon may be 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 President or any Vice President
and its Secretary or an Assistant Secretary, without any further action by the
Company.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Ratification of Indenture
The Indenture, as supplemented by this Third Supplemental
Indenture, is in all respects ratified and confirmed, and this Third
Supplemental Indenture shall be deemed part of the Indenture in the manner and
to the extent herein and therein provided. The provisions of this Third
Supplemental
<PAGE>
Indenture shall supersede the provisions of the Indenture to the extent the
Indenture is inconsistent herewith.
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 Third Supplemental Indenture.
SECTION 10.3 Governing Law
This Third 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
Third 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 Third
Supplemental Indenture or of the Notes, but this Third 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 Third 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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Third
Supplemental Indenture to be duly executed as of the day and year first above
written.
MEDIAONE GROUP FUNDING, INC.
By: /s/ Rahn K. Porter
--------------------------------------
Name: Rahn K. Porter
Title: Vice President and
Chief Financial Officer
MEDIAONE GROUP, INC.
By: /s/ Constance P. Campbell
--------------------------------------
Name: Constance P. Campbell
Title: Vice President and Treasurer
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By: /s/ Jane Y. Schweiger
--------------------------------------
Name: Jane Y. Schweiger
Title: Corporate Trust Officer
------------------------------------
MEDIAONE GROUP, INC.
AND
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
PREFERRED SECURITIES GUARANTEE AGREEMENT
Dated as of October 28, 1998
------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation............................2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application..........................5
SECTION 2.2 Lists of Holders of Securities............................6
SECTION 2.3 Reports by the Preferred Guarantee Trustee................6
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee...........7
SECTION 2.5 Evidence of Compliance with Conditions Precedent..........7
SECTION 2.6 Events of Default; Waiver.................................7
SECTION 2.7 Event of Default; Notice .................................7
SECTION 2.8 Conflicting Interests.....................................8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee......8
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee............11
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee....14
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility.................14
SECTION 4.2 Appointment, Removal and Resignation
of Preferred Guarantee Trustee...........................15
<PAGE>
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee................................................16
SECTION 5.2 Waiver of Notice and Demand..............................16
SECTION 5.3 Obligations Not Affected.................................16
SECTION 5.4 Rights of Holders........................................17
SECTION 5.5 Guarantee of Payment.....................................18
SECTION 5.6 Subrogation..............................................18
SECTION 5.7 Independent Obligations..................................18
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions...............................19
SECTION 6.2 Ranking..................................................19
ARTICLE VII
TERMINATION
SECTION 7.1 Termination..............................................20
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation..............................................20
SECTION 8.2 Indemnification..........................................21
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns...................................21
SECTION 9.2 Amendments...............................................21
SECTION 9.3 Notices..................................................22
SECTION 9.4 Benefit..................................................23
SECTION 9.5 Governing Law............................................23
<PAGE>
CROSS-REFERENCE TABLE*
Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
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
- ---------------
* This Cross-Reference Table does not constitute part of the Preferred
Securities Guarantee Agreement and shall not affect the interpretation of any
of its terms or provisions.
<PAGE>
PREFERRED SECURITIES GUARANTEE AGREEMENT
This PREFERRED SECURITIES GUARANTEE AGREEMENT
("Guarantee Agreement"), dated as of October 28, 1998, is executed and delivered
by MediaOne Group, Inc., a Delaware corporation (the "Guarantor"), and The First
National Bank of Chicago, as trustee (the "Preferred Guarantee Trustee"), for
the benefit of the Holders (as defined herein) from time to time of the
Preferred Securi ties (as defined herein) of MediaOne Finance Trust III, a
Delaware statutory business trust (the "Issuer");
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of October 28, 1998, 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 $500,000,000 (including $50,000,000 issued pursuant
to an over-allot ment option provided for in the Purchase Agreement) (or up to
$517,500,000 if the remaining over-allotment is exercised) aggregate stated
liquidation amount of Preferred Securities designated the 9.04% 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 guaran tee
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 Com mon 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
1
<PAGE>
benefit the 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.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
<PAGE>
"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 avail able therefore, (ii) the redemption price, including all
accrued and unpaid Distribu tions 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 redemp tion 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 Deben tures to the Holders in
exchange for Preferred Securities as provided in the Declara tion), 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
the Issuer shall have funds available therefor 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 the
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.
"Guarantor" shall mean MediaOne Group, Inc., a Delaware corpora tion
or any permitted successor thereof under the Indenture, in its capacity as
guarantor under this Guarantee Agreement.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities; provided, however, that in
deter mining 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 Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives or agents of the
Preferred Guarantee Trustee.
<PAGE>
"Indenture" means the Indenture dated as of June 12, 1998 among
MediaOne Group Funding, Inc., a Delaware corporation (the "Debenture Issuer"),
MediaOne Group, Inc., a Delaware corporation, as guarantor and The First
National Bank of Chicago, as trustee, as supplemented by a Third Supplemental
Indenture dated as of October 28, 1998 among the Debenture Issuer, the
Guarantor, as guaran tor and The First National Bank of Chicago, as trustee, and
any indenture supplemen tal thereto pursuant to which certain subordinated debt
securities of the Debenture Issuer (the "Debentures") and the guarantee of the
Guarantor endorsed thereon (the "Debenture Guarantee") are to be issued to the
Property Trustee of the Issuer.
"Majority in liquidation amount of the Preferred 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
liquida tion amount (including the stated amount that would be paid on
redemption, liquida tion 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
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
<PAGE>
"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.
(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 ss.ss. 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
<PAGE>
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 obliga
tions under ss.ss. 311(a), 311(b) and ss. 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 commencing May 1999, the
Preferred Guarantee Trustee shall provide to the Holders of the Preferred
Securities such reports as are required by ss. 313 of the Trust Indenture Act,
if any, in the form and in the manner provided by ss. 313 of the Trust Indenture
Act. The Preferred Guarantee Trustee shall also comply with the requirements of
ss. 313(d) of the Trust Indenture Act.
<PAGE>
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 ss. 314 (if any) and the
compliance certificate required by ss. 314 of the Trust Indenture Act in the
form, in the manner and at the times required by ss. 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 ss.
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to ss. 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 Securi
ties 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 known to the Preferred Guarantee Trustee,
transmit by mail, first class postage prepaid, to the Holders of the Preferred
Securi ties, notices of all such Events of Default, 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 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
<PAGE>
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.
(a) The Declaration, (b) the Preferred Securities Guarantee
Agreement dated June 12, 1998 relating to MediaOne Finance Trust I, (c) the
Preferred Securities Guarantee Agreement dated June 12, 1998 relating to
MediaOne Finance Trust II, (d) the Preferred Securities Guarantee Agreement
dated September 11, 1995 relating to MediaOne Financing A, (e) the Preferred
Securities Guarantee Agreement dated October 29, 1996 relating to MediaOne
Financing B, (f) the Amended and Restated Declaration of Trust dated June 12,
1998 of MediaOne Finance Trust I, (g) the Amended and Restated Declaration of
Trust dated June 12, 1998 of MediaOne Finance Trust II, (h) the Amended and
Restated Declaration of Trust dated September 11, 1995 of MediaOne Financing A
and (i) the Amended and Restated Declaration of Trust dated October 29, 1996 of
MediaOne Financing B 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 Guaran tee 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.
<PAGE>
(b) If an Event of Default has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce 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 De
fault 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 perfor
mance of such duties and obligations as are
specifically set forth in this Guarantee Agree
ment, 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 the
truth of the statements and the correctness of the
opinions expressed therein, upon any
<PAGE>
certificates or opinions furnished to the Pre
ferred 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 Guar antee
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 Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Respon
sible 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 outstand
ing relating to the time, method and place of conduct
ing 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 liabil
ity 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 Guarantee Agreement or ade
quate indemnity against such risk or liability is not
reasonably assured to it.
<PAGE>
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, opin
ion, 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 evi
denced by 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 hereun der, 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 Guar antor;
(iv) the Preferred Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any in
strument (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 opin
ion. Such counsel may be counsel to the Guarantor or
any of its Affiliates, and may include any of its em-
ployees. The Preferred Guarantee Trustee shall have
the right atany 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 ade
quate security and indemnity which would satisfy a
reasonable person in the position of the Preferred
Guarantee Trustee, against the costs, expenses (includ
ing 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 Guar
antee 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;
(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 indebt
edness or other paper or document, but the Preferred
Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or mat
ters 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
<PAGE>
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 Pre
ferred 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 en
forcing any remedy or right or taking any other action
hereunder the Preferred Guarantee Trustee (i) may
request instructions from the Holders of a Majority in
liquidation amount 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.
(c) No provision of this Guarantee Agreement shall be deemed to
empower the Preferred Guarantee Trustee to vary the investment of any Holder of
<PAGE>
the Preferred Securities or to act in a manner inconsistent with the status of
the Issuer as a grantor trust for federal income tax purposes.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee.
The recitals contained in this Guarantee shall be taken as the state
ments 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 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 com
bined 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;
<PAGE>
(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
immedi ately 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 ss. 310(b) of the Trust Indenture
Act, the Preferred Guarantee Trustee and Guarantor shall in all respects comply
with the provisions of ss. 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;
(b) the Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) 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 Pre ferred 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.
<PAGE>
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.
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 connec tion with, the Preferred Securities (other than an extension of
time for payment of Distributions, Redemption Price, Liquidation Distribution or
other sum payable that
<PAGE>
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;
(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 5.3 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 the Preferred Guarantee Trustee under this Guarantee Agreement; and
(b) notwithstanding the rights of the Preferred Guarantee Trustee to
enforce this Guarantee Agreement under Article III, any Holder of Preferred
Securities may institute a legal proceeding directly against the Guarantor to
enforce the Preferred Guarantee Trustee's rights under this Guarantee Agreement,
without
<PAGE>
first instituting a legal proceeding against the Issuer, the Preferred Guarantee
Trustee or any other Person. The Guarantor waives any right or remedy to require
that any action be brought first against the Issuer or any other person or
entity before proceed ing directly against the Guarantor.
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 notwith standing the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
<PAGE>
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions.
So long as any Preferred Securities remain outstanding, (a) the
Guarantor will not (and the Guarantor will cause the Debenture Issuer not to)
declare or pay any dividend on, 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 will not (and the Guarantor will 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 (including
guarantees) which rank pari passu with or junior to the Debentures, if at such
time (i) there shall have occurred any Event of Default or (ii) there shall have
occurred any Event of Default under the Declaration; provided, that, clause (a)
above does not apply to any stock dividends paid by the Guarantor where the
dividend stock is the same as that on which the dividend is being paid.
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 Guaran tor 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; provided,
that, this Guarantee Agreement shall be pari passu with the guarantee issued by
the Guarantor in connection with (w) the 9.30% Trust Originated Preferred
Securities of MediaOne Finance Trust I, (x) the 9.50% Trust Originated Preferred
Securities of MediaOne Finance Trust II, (y) the 7.96% Trust Originated
Preferred Securities of MediaOne Financing A and (z) the 8.25% Trust Originated
Preferred Securities of MediaOne Financing B.
<PAGE>
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.
This Guarantee Agreement shall terminate upon full payment of the
Redemption Price of all Preferred 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. Notwith standing 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 Securi ties must restore payment of
any sums paid under the Preferred Securities or under this Preferred Securities
Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or account
able 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.
<PAGE>
SECTION 8.2 Indemnification.
(a) To the fullest extent permitted by applicable law, the Guaran
tor 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
accor dance with this Guarantee Agreement and in a manner such Indemnified
Person reasonably believed to be within the scope of authority conferred on such
Indemni fied Person by this in accordance with this Guarantee Agreement, 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
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
Indemni fied Person is not entitled to be indemnified as authorized in Section
8.2(a).
The provisions of this Section 8.2 shall survive termination of this
Guarantee or the resignation or removal of the Preferred Guarantee Trustee.
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
<PAGE>
Guarantee Agreement may only be amended with the prior approval of the Holders
of at least a Majority in liquidation amount of the Preferred Securities. The
provi sions 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:
(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, Illinois 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):
MediaOne Group, Inc.
188 Inverness Drive West
Englewood, Colorado 80112
(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.
<PAGE>
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.
<PAGE>
THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
MEDIAONE GROUP, INC.
By: /s/ Constance P. Campbell
--------------------------------------
Name: Constance P. Campbell
Title: Vice President and Treasurer
THE FIRST NATIONAL BANK OF CHICAGO
as Preferred Guarantee Trustee
By: /s/ Steven M. Wagner
--------------------------------------
Name: Steven M. Wagner
Title: Vice President
