US WEST CAPITAL FUNDING INC, S-3, 1998-05-06

US WEST CAPITAL FUNDING INC
S-3, 1998-05-06
ASSET-BACKED SECURITIES

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 6, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------

FORM S-3

REGISTRATION STATEMENT

UNDER THE

SECURITIES ACT OF 1933
--------------------------

<TABLE>
<S> <C>
USW-C, INC. U S WEST
(to be renamed "U S WEST, CAPITAL FUNDING, INC.
Inc.")
(Exact name of registrant as specified in its charter)
DELAWARE COLORADO
(State or other (State or other
jurisdiction of jurisdiction of
incorporation or incorporation or
organization) organization)

84-0953188 84-1028672
(I.R.S. Employer (I.R.S. Employer
Identification Number) Identification Number)
</TABLE>

1801 CALIFORNIA STREET
DENVER, COLORADO 80202
(303) 672-2700

(Address, including zip code, and telephone number, including
area code, of both registrants' principal executive offices)

THOMAS O. MCGIMPSEY, ESQ.
USW-C, INC.
7800 EAST ORCHARD ROAD
ENGLEWOOD, COLORADO 80111
(303) 793-6676

(Name, address, including zip code, and telephone number of agent for service
for both registrants)

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

From time to time after the effective date of the Registration Statement, as
determined by market conditions.
--------------------------

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. /X/

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT* OFFERING PRICE* REGISTRATION FEE
<S> <C> <C> <C> <C>
Debt Securities to be issued by U S WEST
Capital Funding, Inc...................... $3,500,000,000 100% $3,500,000,000 $1,032,500
Guarantees constituting guarantees of the
Debt Securities by USW-C, Inc............. $3,500,000,000 ** ** None
</TABLE>

* Estimated solely for the purpose of calculating the registration fee.

** No separate consideration will be received for the Guarantees.
--------------------------

THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAW OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 6, 1998

PROSPECTUS

[LOGO]

$3,500,000,000
U S WEST CAPITAL FUNDING, INC.

DEBT SECURITIES

UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF PRINCIPAL,
PREMIUM, IF ANY, AND INTEREST, BY

U S WEST, INC.

U S WEST Capital Funding, Inc. ("Capital Funding") from time to time offers
its notes, debentures, or other debt securities (the "Debt Securities"), in one
or more series, up to an aggregate principal amount of $3,500,000,000 (or its
equivalent, based on the applicable exchange rate at the time of offering, in
such foreign currencies, or units of two or more thereof as shall be designated
by Capital Funding). Debt Securities may be issued in registered form without
coupons, bearer form with coupons attached, or in the form of a Global Security.
All Debt Securities will be unconditionally guaranteed as to payment of
principal, premium, if any, and interest by U S WEST, Inc. ("U S WEST").

When a particular series of Debt Securities is offered, a supplement to this
Prospectus will be delivered (the "Prospectus Supplement") together with this
Prospectus setting forth the terms of such Debt Securities, including, where
applicable, the specific designation, aggregate principal amount, denominations,
form of currency or currencies in which the principal, and premium, if any, and
interest are payable, maturity, rate (which may be fixed or variable) and time
of payment of interest, any terms for redemption or repurchase at the option of
Capital Funding or the holder, any terms for sinking fund payments, the initial
public offering price, the names of, and the principal amounts to be purchased
by, underwriters and the compensation of such underwriters, any listing of the
Debt Securities on a securities exchange, and the other terms in connection with
the offering and sale of such Debt Securities.

If an agent of Capital Funding or a dealer or an underwriter is involved in
the sale of the Debt Securities in respect of which this Prospectus is being
delivered, the agent's commission or dealer's or underwriter's discount will be
set forth in, or may be calculated from, the Prospectus Supplement. The net
proceeds to Capital Funding from such sale will be the purchase price of such
Debt Securities less such commission in the case of an agent, the purchase price
of such Debt Securities in the case of a dealer or the public offering price
less such discount in the case of an underwriter, and less, in each case, the
other attributable issuance expenses. The aggregate net proceeds to Capital
Funding from all the Debt Securities will be the purchase price of the Debt
Securities sold, less the aggregate of agents' commissions and dealers' and
underwriters' discounts and other expenses of issuance and distribution. The net
proceeds to Capital Funding from the sale of the Debt Securities will be set
forth in the Prospectus Supplement. See "Plan of Distribution" for possible
indemnification arrangements for any agents, dealers or underwriters.
------------------------
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------

The date of this Prospectus is , 1998.
<PAGE>
DESCRIPTION OF SEPARATION

Prior to June , 1998, U S WEST was a wholly-owned subsidiary of U S WEST,
Inc. ("Old U S WEST") known as "USW-C, Inc." Before that date, Old U S WEST
conducted its business through two groups, U S WEST Communications Group (the
"Communications Group") and U S WEST Media Group (the "Media Group").

On June , 1998, Old U S WEST consummated a transaction in which Old U S
WEST was separated into two independent companies (the "Separation"). In
connection with the Separation, Old U S WEST contributed the businesses of the
Communications Group and the domestic directories business of Media Group
("Dex") (collectively, the "U S WEST Businesses") to U S WEST and distributed
all of the U S WEST common stock to the holders of Communications Group common
stock, other than $850 million in value of U S WEST common stock that was
distributed to holders of Media Group common stock in connection with the
alignment of Dex with the Communications Group (the "Dex Alignment"). As used
herein, references to U S WEST refer to the U S WEST Businesses prior to the
Separation and to U S WEST after the Separation.

AVAILABLE INFORMATION

U S WEST is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files
reports, proxy statements, and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements, and
other information concerning U S WEST can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices at Seven World
Trade Center, 13th Floor, New York, New York 10048; and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Room 1024, Washington D.C. 20549, at prescribed rates.
The Commission maintains a Web site at http: //www.sec.gov that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission, including U S WEST. U
S WEST's Common Stock is listed and traded on the New York Stock Exchange (the
"NYSE") and the Pacific Stock Exchange (the "PSE") and such material is
available for inspection at the offices of the NYSE, 20 Broad Street, New York,
New York 10005 and at the offices of PSE, 115 Sansome Street, 2nd Floor, San
Francisco, California 94104.

U S WEST and Capital Funding have filed with the Commission a registration
statement on Form S-3 (herein, together with all amendments and exhibits,
referred to as the "Registration Statement") under the Securities Act of 1933
(the "Securities Act"). This Prospectus does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents have been filed by U S WEST (and its predecessor)
with the Commission and are incorporated herein by reference: (i) Old U S WEST's
Annual Report on Form 10-K for the year ended December 31, 1997, as amended by
Form 10-K/A filed April 13, 1998, (ii) Old U S WEST's Current Reports on Form
8-K dated January 29, 1998, February 17, 1998, March 25, 1998 (as amended by
Form 8-K/A filed April 13, 1998), April 17, 1998 and May 5, 1998 and (iii) Old U
S WEST's Proxy Statement on Schedule 14A filed with the Commission on April 20,
1998.

All documents filed by U S WEST pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Debt

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Securities shall be deemed to be incorporated by reference into this Prospectus
and to be a part hereof from the date of filing of such documents.

Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies and supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.

U S WEST and Capital Funding will provide without charge to each person to
whom a Prospectus is delivered, upon written or oral request of such person, a
copy of any or all of the documents which are incorporated by reference herein,
other than exhibits to such documents which are not specifically incorporated by
reference therein. Requests should be directed to Investor Relations, U S WEST,
Inc., 1801 California Street, Denver, Colorado 80202 (telephone number (303)
896-1277).

FORWARD-LOOKING INFORMATION MAY PROVE INACCURATE

Some of the information presented herein or incorporated by reference
constitutes "forward-looking statements" within the meaning of Private
Securities Litigation Reform Act of 1995. Although U S WEST and Capital Funding
believe that their expectations are based on reasonable assumptions within the
bounds of their knowledge of their businesses and operations, there can be no
assurance that actual results will not differ materially from their
expectations. Factors that could cause actual results to differ from
expectations include: (i) greater than anticipated competition from new entrants
into the local exchange, intraLATA toll, wireless, data and directories markets;
(ii) changes in demand for U S WEST's products and services, including optional
custom calling features; (iii) higher than anticipated employee levels, capital
expenditures and operating expenses (such as costs associated with year 2000
remediation); (iv) the loss of significant customers; (v) pending regulatory
actions in state jurisdictions; (vi) regulatory changes affecting the
telecommunications industry, including changes that could have an impact on the
competitive environment in the local exchange market; (vii) a change in economic
conditions in the various markets served by U S WEST's operations; (viii)
greater than anticipated competitive activity requiring new pricing for
services; (ix) higher than anticipated start-up costs associated with new
business opportunities; (x) delays in U S WEST's ability to begin offering
interLATA long-distance services; or (xi) delays in the development of
anticipated technologies, or the failure of such technologies to perform
according to expectations.

U S WEST, INC.

U S WEST is a diversified communications company providing services
principally to customers in a 14-state mountain and western region of the United
States, which is comprised of the states of Arizona, Colorado, Idaho, Iowa,
Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota,
Utah, Washington and Wyoming. U S WEST has operations in four principal areas:
(i) telecommunications and related services, (ii) wireless services, (iii)
high-speed data and Internet Services; and (iv) directory services. The major
component of U S WEST is U S WEST Communications, Inc. which provides
communications service to more than 25 million residential and business
customers in the region. U S WEST has one class of common stock, par value $.01
per share.

U S WEST CAPITAL FUNDING, INC.

Capital Funding is a wholly-owned subsidiary of U S WEST and was
incorporated under the laws of the State of Colorado in June 1986. Capital
Funding was incorporated to provide financing to U S WEST and its affiliates
through the issuance of indebtedness guaranteed by U S WEST. The

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principal executive offices of Capital Funding are located at 1801 California
Street, Denver, Colorado 80202 (telephone number (303) 672-2700).

USE OF PROCEEDS

Capital Funding will apply the net proceeds from the sale of the Debt
Securities to its general funds to be used for the reduction of short-term and
long-term borrowings and/or loans to U S WEST and affiliates of U S WEST, which
will in turn use the funds for general corporate purposes, including
acquisitions, the refinancing of short-term and long-term borrowings, and for
other business opportunities. The amount and timing of these loans will depend
upon the future growth and financing requirements of U S WEST and its
affiliates.

RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth the ratio of earnings to fixed charges for U
S WEST for the periods indicated. For the purpose of calculating this ratio,
earnings consist of income before income taxes, extraordinary items and
cumulative effect of change in accounting principle and fixed charges. Fixed
charges include interest on indebtedness and the portion of rentals
representative of the interest factor.

<TABLE>
<CAPTION>
PRO
FORMA
YEAR
ENDED
DECEMBER
HISTORICAL YEAR ENDED DECEMBER 31, 31,
- ------------------------------------ ----
1993(1)(2) 1994(1) 1995(1) 1996(1) 1997(1) 1997(3)
- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
2.91 5.38 5.01 5.20 5.67 3.87
</TABLE>

- ------------------------------

(1) Historical ratios are based on the combined historical results of U S WEST
and exclude the effects of $3.9 billion of indebtedness (the "Dex
Indebtedness") which was refinanced by U S WEST in connection with the Dex
Alignment.

(2) 1993 ratio includes a one-time restructuring charge of $930 million.
Excluding the restructuring charge, the ratio would have been 4.76.

(3) Based on the unaudited Pro Forma combined results of U S WEST which gives
effect to the refinancing by U S WEST of $3.9 billion of Dex Indebtedness in
connection with the Dex Alignment. For further information please see U S
WEST's Pro Forma financial statements included in Old U S WEST's Proxy
Statement (as defined below) incorporated herein by reference.

DESCRIPTION OF DEBT SECURITIES AND GUARANTEES

The following description sets forth certain general terms and provisions of
the Debt Securities and Guarantees to which any Prospectus Supplement may
relate. The particular terms and provisions of the series of Debt Securities
offered by a Prospectus Supplement and the extent to which such general terms
and provisions described below may apply thereto, will be described in the
Prospectus Supplement relating to such series of Debt Securities.

The Debt Securities are to be issued under an Indenture ("Indenture"), to be
entered into among U S WEST, Capital Funding, and First National Bank of Chicago
("Trustee"). As of the date of this Prospectus, no Debt Securities had been
issued under the Indenture. The following summaries of certain provisions of the
Debt Securities, the Guarantees, and the Indenture do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all
provisions of the Debt Securities, the Guarantees, and the Indenture, including
the definitions therein of certain terms. Wherever particular sections or
defined terms of the Indenture are referred to, it is intended that such
sections or defined terms shall be incorporated herein by reference.

3
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GENERAL

The Indenture does not limit the amount of Debt Securities which can be
issued thereunder and additional debt securities may be issued thereunder up to
the aggregate principal amount which may be authorized from time to time by, or
pursuant to a resolution of, Capital Funding's Board of Directors or by
supplemental indenture. Reference is made to the Prospectus Supplement for the
following terms of the particular series of Debt Securities being offered
hereby; (i) the title of the Debt Securities of the series; (ii) any limit upon
the aggregate principal amount of the Debt Securities of the series; (iii) the
date or dates on which the principal of the Debt Securities of the series will
mature; (iv) the rate or rates (or manner of calculations thereof), if any, at
which the Debt Securities of the series will bear interest, the date or dates
from which any such interest will accrue and on which such interest will be
payable, and, with respect to Debt Securities of the series in registered form,
the record date for the interest payable on any interest payment date; (v) the
place or places where the principal of and interest, if any, on the Debt
Securities of the series will be payable; (vi) any redemption or sinking fund
provisions; (vii) if other than the principal amount thereof, the portion of the
principal amount of Debt Securities of the series which will be payable upon
declaration of acceleration of the maturity thereof; (viii) whether the Debt
Securities of the series will be issuable in registered or bearer form or both,
any restrictions applicable to the offer, sale, or delivery of Debt Securities
in bearer form ("bearer Debt Securities"), and whether the terms upon which
bearer Debt Securities will be exchangeable for Debt Securities in registered
form ("registered Debt Securities") and vice versa; (ix) whether and under what
circumstances Capital Funding will pay additional amounts on the Debt Securities
of the series held by a person who is not a U.S. person (as defined below) in
respect of taxes or similar charges withheld or deducted and, if so, whether
Capital Funding will have the option to redeem such Debt Securities rather than
pay such additional amounts; (x) whether the Debt Securities will be denominated
or provide for payment in United States dollars or a foreign currency or units
of two or more such foreign currencies; and (xi) any additional provisions or
other special terms not inconsistent with the provisions of the Indenture,
including any terms which may be required by or advisable under United States
laws or regulations or advisable in connection with the marketing of Debt
Securities of such series. (Section 2.01 and 2.02.) To the extent not described
herein, principal, premium, if any, and interest will be payable, and the Debt
Securities of a particular series will be transferable, in the manner described
in the Prospectus Supplement relating to such series.

Each series of Debt Securities will constitute unsecured and unsubordinated
indebtedness of Capital Funding, and will rank on a parity with Capital
Funding's other indebtedness, and will have the benefit of the Guarantees
described herein. However, since U S WEST is a holding company, the right of U S
WEST and, hence, the right of creditors of U S WEST (including the holders of
the Debt Securities) to participate in any distribution of the assets of any
subsidiaries of U S WEST, whether upon liquidation, reorganization, or
otherwise, is subject to prior claims of creditors of the subsidiary, except to
the extent that claims of U S WEST itself as a creditor of a subsidiary may be
recognized.

Debt Securities of any series may be issued as registered Debt Securities or
bearer Debt Securities or both as specified in the term of the series. Unless
otherwise indicated in the Prospectus Supple-
ment, Debt Securities will be issued in denominations of $1,000 and integral
multiples thereof, and bearer Debt Securities will not be offered, sold, resold,
or delivered to U.S. persons in connection with their original issuance. For
purposes of this Prospectus, "U.S. person" means a citizen, national, or
resident of the United States, a corporation, partnership, or other entity
created or organized in or under the laws of the United States, or any political
subdivision thereof, or an estate or trust which is subject to United States
federal income taxation regardless of its source of income.

To the extent set forth in the Prospectus Supplement, except in special
circumstances set forth in the Indenture, interest on bearer Debt Securities
will be payable only against presentation and surrender of the coupons for the
interest installments evidenced thereby as they mature at a paying

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agency of Capital Funding located outside of the United States and its
possessions. (Section 2.05(c).) Capital Funding will maintain such an agency for
a period of two years after the principal of such bearer Debt Securities has
become due and payable. During any period thereafter for which it is necessary
in order to conform to United States tax law or regulations, Capital Funding
will maintain a paying agent outside the United States and its possessions to
which the bearer Debt Securities may be presented for payment and will provide
the necessary funds therefor to such paying agent upon reasonable notice.
(Section 2.04)

Bearer Debt Securities and the coupons related thereto will be transferable
by delivery. (Section 2.08(e).)

If appropriate, federal income tax consequences applicable to a series of
Debt Securities will be described in the Prospectus Supplement relating thereto.

GLOBAL SECURITIES

The Debt Securities of a series may be issued in the form of one or more
fully registered global securities (each a "Global Security") that will be
deposited with, or on behalf of, a depositary (the "Depositary") identified in
the Prospectus Supplement relating to such series. Unless and until it is
exchanged for Debt Securities in definitive registered form, a Global Security
may not be transferred except as a whole by the Depositary for such Global
Security to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by such Depositary or
any such nominee to a successor of such Depositary or a nominee of such
successor.

The specific terms of the depositary arrangements with respect to a series
of Debt Securities will be described in the Prospectus Supplement relating to
such series. Capital Funding anticipates that the following provisions will
apply to all depositary arrangements.

Upon the issuance of a Global Security, the Depositary for such Global
Security will credit the accounts held with it with the respective principal
amounts of the Debt Securities represented by such Global Security. Such
accounts shall be designated by the underwriters or agents with respect to such
Debt Securities or by Capital Funding if such Debt Securities are offered and
sold directly by Capital Funding. Ownership of beneficial interests in a Global
Security will be limited to persons that have accounts with the Depositary for
such Global Security ("participants") or persons that may hold interests through
participants. Ownership of beneficial interests in such Global Security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the Depositary for such Global Security or on the records
of participants. The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Security.

So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture governing such Debt Securities. Except as provided below, owners of
beneficial interests in a Global Security will not be entitled to have Debt
Securities of the series represented by such Global Security registered in their
names, will not receive or be entitled to receive physical delivery of Debt
Securities of such series in definitive form and will not be considered the
owners or holders thereof under the Indenture governing such Debt Securities.

Principal, premium, if any, and interest payments on Debt Securities
registered in the name of a Depositary or its nominee will be made to the
Depositary or its nominee, as the case may be, as the registered owner of the
Global Security representing such Debt Securities. Neither Capital Funding, the
Trustee for such Debt Securities, any Paying Agent nor the Security Registrar
for such Debt Securities will have any responsibility or liability for any
aspect of the records relating to or payments

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made on account of beneficial ownership interests in the Global Security for
such Debt Securities or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.

Capital Funding expects that the Depositary for a series of Debt Securities
issued in the form of a Global Security, upon receipt of any payment of
principal, premium or interest, will credit immediately participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in the principal amount of the Global Security for such Debt Securities as shown
on the records of such Depositary. Capital Funding also expects that payments by
participants to owners of beneficial interests in such Global Security held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name", and will be the
responsibility of such participants.

If a Depositary for a series of Debt Securities is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
Capital Funding within 90 days, Capital Funding will issue Debt Securities of
such series in definitive form in exchange for the Global Security representing
such series of Debt Securities. In addition, Capital Funding may at any time and
in its sole discretion determine not to have the Debt Securities of a series
represented by a Global Security and, in such event, will issue Debt Securities
of such series in definitive form in exchange for the Global Security
representing such series of Debt Securities. In either instance, an owner of a
beneficial interest in a Global Security will be entitled to have Debt
Securities of the series represented by such Global Security equal in principal
amount to such beneficial interest registered in its name and will be entitled
to physical delivery of such Debt Securities in definitive form. Debt Securities
of such series so issued in definitive form will be issued in denominations of
$1,000 and integral multiples thereof and will be issued in registered form
only, without coupons.

GUARANTEES

U S WEST will unconditionally guarantee the due and punctual payment of the
principal, premium, if any, and interest on the Debt Securities when and as the
same shall become due and payable, whether at maturity, upon redemption, or
otherwise. (Section 2.16.) The Guarantees will rank equally with all other
unsecured and unsubordinated obligations of U S WEST.

EXCHANGE OF SECURITIES

To the extent permitted by the terms of a series of Debt Securities
authorized to be issued in registered form and bearer form, bearer Debt
Securities may be exchanged for an equal aggregate principal amount of
registered or bearer form Debt Securities of the same series and date of
maturity in such authorized denominations as may be requested upon surrender of
the bearer Debt Securities with all unpaid coupons relating thereto, at an
agency of Capital Funding maintained for such purpose and upon fulfillment of
all other requirements of such agent. (Section 2.08(b)). As of the date of this
Prospectus, United States Treasury regulations do not permit exchanges of
registered Debt Securities for bearer Debt Securities and, unless such
regulations are modified, the terms of a series of Debt Securities will not
permit registered Debt Securities to be exchanged for bearer Debt Securities.

LIENS ON ASSETS

If at any time, Capital Funding mortgages, pledges, or otherwise subjects to
any lien the whole or any part of any property or assets now owned or hereafter
acquired by it, except as hereinafter provided, Capital Funding will secure the
outstanding Debt Securities, and any other obligations of Capital Funding which
may then be outstanding and entitled to the benefit of a covenant similar in
effect to this covenant, equally and ratably with the indebtedness or
obligations secured by such mortgage, pledge, or lien, for as long as any such
indebtedness or obligation is so secured. The

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foregoing covenant does not apply to the creation, extension, renewal, or
refunding of mortgages or liens created or existing at the time property is
acquired, created within 180 days thereafter, or created for the purpose of
securing the cost of construction and improvement of property, or to the making
of any deposit or pledge to secure public or statutory obligations or with any
governmental agency at any time required by law in order to qualify Capital
Funding to conduct its business or any part thereof or in order to entitle it to
maintain self-insurance or to obtain the benefits of any law relating to
workers' compensation, unemployment insurance, old age pensions, or other social
security, or with any court, board, commission, or governmental agency as
security incident to the proper conduct of any proceeding before it. Nothing
contained in the Indenture prevents any entity other than Capital Funding from
mortgaging, pledging, or subjecting to any lien any of its property or assets,
whether or not acquired from Capital Funding or U S WEST. (Section 4.03.)

AMENDMENT AND WAIVER

Subject to certain exceptions, the Indenture may be amended or supplemented
by Capital Funding, U S WEST, and the Trustee with the consent of the holders of
a majority in principal amount of the outstanding Debt Securities of each series
affected by the amendment or supplement (with each series voting as a class), or
compliance with any provision may be waived with the consent of holders of a
majority in principal amount of the outstanding Debt Securities of each series
affected by such waiver (with each series voting as a class). However, without
the consent of each Debt Securityholder affected, an amendment or waiver may not
(i) reduce the amount of Debt Securities whose holders must consent to an
amendment or waiver; (ii) change the rate of or change the time for payment of
interest on any Debt Security; (iii) change the principal of or change the fixed
maturity of any Debt Security; (iv) waive a default in the payment of the
principal of or interest on any Debt Security; (v) make any Debt Security
payable in money other than that stated in the Debt Security; or (vi) impair the
right to institute suit for the enforcement of any payment on or with respect to
any Debt Security. (Section 9.02.) The Indenture may be amended or supplemented
without the consent of any Debt Securityholder (i) to cure any ambiguity,
defect, or inconsistency in the Indenture, the Debt Securities of any series or
the Guarantees; (ii) to provide for the assumption of all the obligations of
Capital Funding or U S WEST under the Debt Securities, any coupons related
thereto, the Guarantees, and the Indenture by any corporation in connection with
a merger, consolidation, transfer, or lease of Capital Funding's or U S WEST's
property and assets substantially as an entirety, as provided for in the
Indenture; (iii) to provide for uncertificated Debt Securities in addition to or
in place of certificated Debt Securities; (iv) to make any change that does not
adversely affect the rights of any Debt Securityholder; (v) to provide for the
issuance of and establish the form and terms and conditions of a series of Debt
Securities or the Guarantees endorsed thereon or to establish the form of any
certifications required to be furnished pursuant to the terms of the Indenture
or any series of Debt Securities; or (vi) to add to the rights of Debt
Securityholders. (Section 9.01.)

MERGER

Capital Funding or U S WEST may consolidate with or merge into, or transfer
or lease its property and assets substantially as an entirety, to another person
if that person is a corporation and assumes all the obligations, as the case may
be, of Capital Funding, under the Debt Securities, and any coupons related
thereto and the Indenture, or of U S WEST, under the Guarantees and the
Indenture, and if, after giving effect to such transaction, a Default or Event
of Default would not occur or be continuing. Thereafter, all such obligations of
Capital Funding or U S WEST, as the case may be, shall terminate. (Section 5.01
and 5.02.)

The general provisions of the Indenture do not afford holders of the Debt
Securities protection in the event of a highly-leveraged transaction,
reorganization, merger or similar transaction involving U S WEST or Capital
Funding that may adversely affect holders of the Debt Securities.

7
<PAGE>
EVENTS OF DEFAULT

The following events are defined in the Indenture as "Events of Default"
with respect to a series of Debt Securities: (i) default in the payment of
interest on any Debt Security of each series for 90 days; (ii) default in the
payment of the principal of any Debt Security of such series; (iii) failure by
Capital Funding or U S WEST for 90 days after notice to it to comply with any of
its other agreements in the Debt Securities of such series, in the Indenture, in
the Guarantees, or in any supplemental indenture; and (iv) certain events of
bankruptcy or insolvency of Capital Funding or the Guarantor. (Section 6.01.) If
an Event of Default occurs with respect to the Debt Securities of any series and
is continuing, the Trustee or the holders of at least 25% in principal amount of
all of the outstanding Debt Securities of that series may declare the principal
(or, if the Debt Securities of that series are original issue discount Debt
Securities, such portion of the principal amount as may be specified in the
terms of that series) of all the Debt Securities of that series to be due and
payable. Upon such declaration, such principal (or, in the case of original
issue discount Debt Securities, such specified amount) shall be due and payable
immediately. (Section 6.02.)

Securityholders may not enforce the Indenture, the Debt Securities, or the
Guarantees, except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Debt
Securities. (Section 7.01.) Subject to certain limitations, holders of a
majority in principal amount of the Debt Securities of each series affected
(with each series voting as a class) may direct the Trustee in its exercise of
any trust power. (Section 6.05.) The Trustee may withhold from Debt
Securityholders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests. (Section 7.05.)

CONCERNING THE TRUSTEE

U S WEST and certain of its affiliates, including Capital Funding, maintain
banking relationships in the ordinary course of business with the Trustee. In
addition, the Trustee and certain of its affiliates serve as trustee,
authenticating agent, or paying agent with respect to certain debt securities of
U S WEST and its affiliates.

PLAN OF DISTRIBUTION

GENERAL

Capital Funding may sell the Debt Securities being offered hereby: (i)
directly to purchasers, (ii) through agents, (iii) through underwriters, (iv)
through dealers, or (v) through a combination of any such methods of sale.

The distribution of the Debt Securities may be effected from time to time in
one or more transactions either (i) at a fixed price or prices, which may be
changed; (ii) at market prices prevailing at the time of sale; (iii) at prices
related to such prevailing market prices; or (iv) at negotiated prices.

Offers to purchase Debt Securities may be solicited directly by Capital
Funding or by agents designated by Capital Funding from time to time. Any such
agent, which may be deemed to be an underwriter, as that term is defined in the
Securities Act, involved in the offer or sale of the Debt Securities in respect
of which this Prospectus is delivered will be named, and any commissions payable
by Capital Funding to such agent will be set forth, in the Prospectus Supplement
or the Pricing Supplement. Unless otherwise indicated in the Prospectus
Supplement or the Pricing Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment. Agents may be customers of,
engage in transactions with, or perform services for, Capital Funding in the
ordinary course of business.

If an underwriter or underwriters are utilized in the sale, Capital Funding
and U S WEST will execute an underwriting agreement with such underwriters at
the time of sale to them and the names

8
<PAGE>
of the underwriters and the terms of the transactions will be set forth in the
Prospectus Supplement, which will be used by the underwriters to make resales of
the Debt Securities.

If a dealer is utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, Capital Funding will sell such Debt
Securities to the dealer, as principal. The dealer may then resell such Debt
Securities to the public at varying prices to be determined by each dealer at
the time of resale.

Underwriters, dealers, agents, and other persons may be entitled, under
agreements which may be entered into with Capital Funding and U S WEST, to
indemnification against, or contribution with respect to, certain civil
liabilities, including liabilities under the Securities Act.

DELAYED DELIVERY ARRANGEMENTS

If so indicated in the Prospectus Supplement, Capital Funding will authorize
dealers or other persons acting as Capital Funding's agents to solicit offers by
certain institutions to purchase Debt Securities from Capital Funding pursuant
to contracts providing for payment and delivery on a future date. Institutions
with which such contracts may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions, and others, but in all cases, such institutions must be
approved by Capital Funding. The obligations of any purchaser under any such
contract will not be subject to any conditions except that (a) the purchaser of
the Debt Securities shall not at the time of delivery be prohibited under the
laws of the jurisdiction to which such purchaser is subject, and (b) if the Debt
Securities are also being sold to underwriters, Capital Funding shall have sold
to such underwriters the Debt Securities not sold for delayed delivery. The
dealers and such other persons will not have any responsibility in respect of
the validity or performance of such contracts.

EXPERTS

The audited combined financial statements and combined financial statement
schedule of U S WEST and the audited consolidated financial statements and the
Supplementary Selected Proportionate Results of Operations of Old U S WEST for
the years ended December 31, 1997 and 1996 included in Old U S WEST's proxy
statement on Schedule 14A (the "Proxy Statement"), filed April 20, 1998, and the
audited consolidated financial statements, Supplementary Selected Proportionate
Results of Operations and financial statement schedule of Old U S WEST included
in Old U S WEST's Annual Report on Form 10-K, as amended by Form 10-K/A filed
April 13, 1998, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
incorporated herein by reference in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.

The consolidated financial statements of Old U S WEST for the year ended
December 31, 1995 included in the Proxy Statement filed April 20, 1998, and the
consolidated financial statements and consolidated financial statement schedule
of Old U S WEST included in Old U S WEST's Annual Report on Form 10-K for the
year ended December 31, 1997, as amended by Form 10-K/A filed April 13, 1998,
have been incorporated herein by reference in reliance on the reports of Coopers
& Lybrand L.L.P., independent accountants, given on the authority of that firm
as experts in accounting and auditing. The combined financial statements and
combined financial statement schedule of U S WEST for the year ended December
31, 1995 included in the Proxy Statement filed April 20, 1998 have been
incorporated herein by reference in reliance on the report of Coopers & Lybrand
L.L.P., independent accountants, given on the authority of that firm as experts
in accounting and auditing.

9
<PAGE>
LEGAL OPINIONS

Certain legal matters relating to the Debt Securities and the Guarantees to
be offered hereby will be passed upon for Capital Funding and U S WEST by Thomas
O. McGimpsey, Corporate Counsel and Assistant Secretary of U S WEST.

10
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee.................. $1,032,500
Rating Agency Fees............................................. 75,000*
Fees and Expenses of Trustee................................... 50,000*
Blue Sky Fees and Expenses..................................... 12,000*
Printing and Distributing Registration Statement, Prospectus,
Distribution Agreement, Underwriting Agreement, Indenture and
Miscellaneous Material....................................... 50,000*
Accountants' Fees.............................................. 12,500*
Legal Fees and Expenses........................................ 25,000*
Miscellaneous.................................................. 13,000*
----------
Total...................................................... $1,270,000*
----------
----------
</TABLE>

- ------------------------

* Estimated

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law (the "DGCL") permits the
board of directors of USW-C, Inc. (to be renamed "U S WEST, Inc." prior to any
offering hereunder) (the "Company") to indemnify any person against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlements
actually and reasonably incurred by him or her in connection with any
threatened, pending or completed action, suit or proceeding in which such person
is made a party by reason of his or her being or having been a director,
officer, employee or agent of the Company, in terms sufficiently broad to permit
such indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act. The
statute provides that indemnification pursuant to its provisions is not
exclusive of other rights of indemnification to which a person may be entitled
under any bylaw, agreement, vote of stockholders or disinterested directors, or
otherwise.

The Company's Restated Certificate of Incorporation and Bylaws provide for
indemnification of its directors and officers to the fullest extent permitted by
law.

As permitted by section 102 of the DGCL, the Company's Restated Certificate
of Incorporation eliminates a director's personal liability for monetary damages
to the Company and its stockholders arising from a breach or alleged breach of a
director's fiduciary duty except for liability under section 174 of the DGCL,
for liability for any breach of the director's duty of loyalty to the Company or
its stockholders, for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law or for any transaction from
which the director derived an improper personal benefit.

The Bylaws of Capital Funding provide for the indemnification of directors
and officers to the extent permissible under applicable law. Section 7-109-102
of the Colorado Business Corporation Act (the "CBCA") specifies the
circumstances under which a corporation may indemnify its directors, officers,
employees or agents. For acts done in a person's "official capacity," the CBCA
generally requires that an act be done in good faith and in a manner reasonably
believed to be in the best interests of the corporation. In all other civil
cases, the person must have acted in good faith and in a way that was not
opposed to the corporation's best interests. In criminal actions or proceedings,
the CBCA imposes an additional requirement that the actor had no reasonable
cause to believe his

II-1
<PAGE>
conduct was unlawful. In any proceeding by or in the right of the corporation,
or charging a person with the improper receipt of a personal benefit, no
indemnification, except for court-ordered indemnification for reasonable
expenses occurred, can be made. Indemnification is mandatory when any director
or officer is wholly successful, on the merits or otherwise, in defending any
civil or criminal proceeding.

The directors and officers of the Company and Capital Funding are covered by
insurance policies indemnifying against certain liabilities, including certain
liabilities arising under the Securities Act which might be incurred by them in
such capacities and against which they cannot be indemnified by the Company and
Capital Funding.

Any agents, dealers or underwriters who execute any of the agreements filed
as Exhibit 1 to this registration statement will agree to indemnify the Company
and Capital Funding directors and their officers who signed the registration
statement against certain liabilities which might arise under the Securities Act
with respect to information furnished to the Company and Capital Funding by or
on behalf of any such indemnifying party.

ITEM 16. EXHIBITS.

Exhibits identified in parentheses below are on file with the Commission and
are incorporated herein by reference to such previous filings. All other
exhibits are provided as part of this electronic transmission.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------------------------------
<S> <C>
1-A. Form of Underwriting Agreement.

1-B. Form of Distribution Agreement

4-A. Form of Indenture among U S WEST Capital Funding, Inc., USW-C, Inc. and
First National Bank of Chicago, as Trustee. The form or forms of Debt
Securities with respect to each particular series of Debt Securities
registered hereunder will be filed as an exhibit to a Current Report on
Form 8-K of U S WEST and incorporated herein by reference.

5. Opinion of Thomas O. McGimpsey.

12. Computation of Ratio of Earnings to Fixed Charges.

23-A. Consent of Arthur Andersen LLP.

23-B. Consent of Coopers & Lybrand L.L.P.

23-C. Consent of counsel is contained in opinion of counsel filed as Exhibit 5.

24. Powers of Attorney.

25. Statement of Eligibility of Trustee.
</TABLE>

ITEM 17. UNDERTAKINGS.

The Company and Capital Funding hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Company's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, (and where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act of 1934) that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-2
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company and Capital Funding pursuant to the provisions referred to in Item 15
(other than the insurance policies referred to therein), or otherwise, the
Company and Capital Funding have been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company or Capital Funding of expenses incurred or paid by a
director, officer or controlling person of the Company or Capital Funding in the
successful defense of any action, suit or proceeding) is asserted against the
Company or Capital Funding by such director, officer or controlling person in
connection with the securities being registered, the Company and Capital Funding
will, unless in the opinion of their counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

The Company and Capital Funding hereby undertake:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement;

(iii) To include any material information with respect to the Plan of
Distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;

provided, however, that the undertakings set forth in paragraphs (i) and
(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by the Company pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
Registration Statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

The Company and Capital Funding hereby undertake that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of a registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.

(2) For the purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-3
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, USW-C, Inc.
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Denver, State of Colorado, on the 6th day, of May,
1998.

<TABLE>
<S> <C> <C>
USW-C, INC.

By /s/ THOMAS O. MCGIMPSEY
------------------------------------------
Thomas O. McGimpsey
ASSISTANT SECRETARY
</TABLE>

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.

PRINCIPAL EXECUTIVE OFFICER:

/s/ SOLOMON D. TRUJILLO*
- ------------------------------ President and Chief
Solomon D. Trujillo Executive Officer

PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:

/s/ ALLAN R. SPIES* Executive Vice President
- ------------------------------ and Chief Financial
Allan R. Spies Officer

DIRECTOR:

/s/ SOLOMON D. TRUJILLO*
- ------------------------------
Solomon D. Trujillo

*By: /s/ THOMAS O. MCGIMPSEY
-------------------------
Thomas O. McGimpsey
ASSISTANT SECRETARY
ATTORNEY-IN-FACT

Dated: May 6, 1998

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, U S WEST Capital
Funding, Inc. certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Denver, State of Colorado, on the 6th day of
May, 1998.

<TABLE>
<S> <C> <C>
U S WEST CAPITAL FUNDING, INC.

By /s/ THOMAS O. MCGIMPSEY
------------------------------------------
Thomas O. McGimpsey
ASSISTANT SECRETARY
</TABLE>

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.

PRINCIPAL EXECUTIVE OFFICER:

/s/ ALLAN R. SPIES*
- ------------------------------ President
Allan R. Spies

PRINCIPAL FINANCIAL OFFICER:

/s/ SEAN P. FOLEY*
- ------------------------------ Vice President and
Sean P. Foley Treasurer

PRINCIPAL ACCOUNTING OFFICER:

/s/ OSCAR X. MUNOZ*
- ------------------------------ Vice President and
Oscar X. Munoz Controller

DIRECTORS:

/s/ MICHAEL P. GLINSKY*
- ------------------------------
Michael P. Glinsky

/s/ SEAN P. FOLEY*
- ------------------------------
Sean P. Foley

/s/ ALLAN R. SPIES*
- ------------------------------
Allan R. Spies

*By: /s/ THOMAS O. MCGIMPSEY
-------------------------
Thomas O. McGimpsey
ATTORNEY-IN-FACT

Dated: May 6, 1998

II-5
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<S> <C>
1-A. Form of Underwriting Agreement

1-B. Form of Distribution Agreement

4-A. Form of Indenture among U S WEST Capital Funding, Inc., USW-C, Inc. and First National Bank of Chicago,
as Trustee. The form or forms of Debt Securities with respect to each particular series of Debt
Securities registered hereunder will be filed as an exhibit to a Current Report on Form 8-K of U S
WEST and incorporated herein by reference.

5. Opinion of Thomas O. McGimpsey.

12. Computation of Ratio of Earnings to Fixed Charges.

23-A. Consent of Arthur Andersen LLP.

23-B. Consent of Coopers & Lybrand L.L.P.

23-C. Consent of counsel is contained in opinion of counsel filed as Exhibit 5.

24. Powers of Attorney.

25. Statement of Eligibility of Trustee.
</TABLE>

<PAGE>

EXHIBIT 1-A

U S WEST CAPITAL FUNDING, INC.

DEBT SECURITIES
UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF PRINCIPAL, PREMIUM, IF ANY,
AND INTEREST, BY
U S WEST, INC.

UNDERWRITING AGREEMENT

_________, ____

To the Underwriters Named in Schedule II hereto
c/o the Representatives Named in Schedule I hereto
of the Underwriters Named in Schedule II hereto

Dear Sirs:

1. INTRODUCTORY. U S WEST Capital Funding, Inc., a Colorado corporation
(the "Company"), proposes to issue and sell from time to time certain of its
debt securities registered under the registration statements referred to in
Section 2(a) (the "Debt Securities"). The Debt Securities will be
unconditionally guaranteed as to payment of principal, premium, if any, and
interest by U S WEST, Inc., a Delaware corporation (the "Guarantor"), and will
be issued under an Indenture, dated as of ________________ ___, 1998 (the
"Indenture"), among the Company, the Guarantor and The First National Bank of
Chicago, as Trustee (the "Trustee"), in one or more series which series may vary
as to interest rates, maturities, redemption provisions and selling prices and
any other variable terms permitted by the Indenture, with all such terms for any
particular series being determined at the time of sale. The Company proposes to
sell to the Underwriters (as hereinafter defined) one or more series of Debt
Securities, each of the designation, with the terms and in the aggregate
principal amount specified in Schedule I hereto (the "Securities"). Subject to
the terms and conditions and in reliance upon the representations and warranties
herein set forth, the Company agrees to sell to each Underwriter, severally and
not jointly, and each Underwriter agrees, severally and not jointly, to purchase
from the Company, at the purchase price and on the other terms set forth in
Schedule I hereto, the principal amount of the Securities set forth opposite its
name in Schedule II hereto.

If there shall be two or more persons, firms or corporations named as
underwriters in Schedule II hereto, the term "Underwriters" as used herein shall
be deemed to mean the several persons, firms or corporations so named (including
the Representatives hereinafter mentioned, if so named, and any Underwriters
substituted pursuant to Section 12), and the term "Representatives" as so used
herein shall be deemed to mean the representative or representatives named in
Schedule I hereto. If there shall only be one person, firm or corporation named
in Schedule II hereto, the term "Underwriters" and the term "Representatives" as
used herein shall mean such person, firm or corporation.

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE GUARANTOR. The
Company and the Guarantor represent and warrant to, and agree with, the several
Underwriters that as of the date hereof and as of the applicable Delivery Date
(each referred to as a "Representation Date"):

(a) The Company and the Guarantor have filed with the Securities and
Exchange Commission (the "Commission") joint registration statements (Nos.
33-_____ and 33-_____) relating to the Debt Securities and the guarantees
thereof of the Guarantor (the "Guarantees") and the offering thereof from
time to time in accordance with Rule 415 under the Securities Act of 1933,
as amended (the "Act"), and has filed such amendments thereto as may have
been required to the date hereof. Such registration statements have been
declared effective by the Commission. Such registration statements, as
amended or supplemented to the date

<PAGE>

hereof (including the documents incorporated by reference therein), are
hereinafter collectively referred to as the "Registration Statement", and
the prospectus constituting a part of such Registration Statement, as
amended and as supplemented as contemplated by Section 4 to reflect the
terms of the Securities and the terms of the offering thereof, including
all material incorporated by reference therein, is hereinafter referred to
as the "Prospectus".

(b) On the effective date of the Registration Statement, such
Registration Statement (including the documents incorporated by reference
therein) conformed in all respects to the requirements of the Act, the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") and the
rules and regulations (the "Rules and Regulations") of the Commission and
did not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and on each Representation Date, the
Registration Statement and the Prospectus conforms or will conform in all
respects to the requirements of the Act, the Trust Indenture Act and the
Rules and Regulations and (i) the Registration Statement, as amended as of
any such time, does not or will not include any 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 and (ii)
the Prospectus, as supplemented as of any such time, does not or will not
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
except that the foregoing does not apply to statements in or omissions from
any such documents based upon written information furnished to the Company
or the Guarantor by any Underwriter, or on behalf of any Underwriter by the
Representatives, specifically for use therein or based upon the Statement
of Eligibility of the Trustee under the Indenture or to statements in or
omissions from such Statement of Eligibility.

3. PURCHASE AND OFFERING. Delivery of and payment for the Securities
shall be made at such address, date and time as may be specified in Schedule I
hereto. Such date and time are sometimes referred to herein as the "Delivery
Date". On the Delivery Date, the Company shall deliver the Securities to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price either by certified or official
bank check or checks payable in New York Clearing House or similar next-day
funds or by wire transfer of immediately available funds, as specified in
Schedule I. Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligation of
each Underwriter hereunder. Upon delivery, the Securities shall be in
registered form and in such authorized denominations and registered in such
names as the Representatives shall request in writing not less than one full
business day prior to the Delivery Date. For the purpose of expediting the
checking and packaging of the Securities, the Company shall make the Securities
available for inspection by the Representatives in New York, New York, not later
than 2:00 P.M., local time, on the business day prior to the Delivery Date.

Schedule I may set forth additional conditions concerning the purchase or
offering of the Securities, if any.

4. COVENANTS OF THE COMPANY AND THE GUARANTOR. The Company and the
Guarantor covenant and agree with the several Underwriters that they will
furnish such firm which shall be acting as counsel for the Underwriters
("Underwriters' Counsel"), one signed copy of the Registration Statement,
including all exhibits, relating to the Debt Securities in the form in which it
became effective and of all amendments thereto and will furnish to the
Representatives copies of the Registration Statement, including all exhibits and
amendments thereto, and that, in connection with each offering of Securities:

<PAGE>

(a) The Company and the Guarantor will promptly prepare a supplement
to the Prospectus to reflect the terms of the Securities and the terms of
the offering thereof and will advise the Representatives promptly of any
other amendment or supplementation of the Registration Statement or the
Prospectus and will not effect any amendment or supplementation without the
consent of the Representatives, which consent shall not be unreasonably
withheld; the Company and the Guarantor will also advise the
Representatives of any request made by the Commission for any amendment to
the Registration Statement or Prospectus or for additional information with
respect thereto and of the institution by the Commission of any stop order
proceedings in respect of the Registration Statement, and will use their
best efforts to prevent the issuance of any such stop order and to obtain
as soon as possible its lifting, if issued. The Company will not file any
document pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which is deemed to be incorporated by reference in the
Prospectus unless Underwriters' Counsel shall have been previously advised
thereof.

(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact, or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any
time to amend or supplement the Registration Statement or the Prospectus to
comply with the Act, the Company and the Guarantor promptly will prepare
and file with the Commission an amendment or supplement which will correct
such statement or omission or an amendment which will effect such
compliance.

(c) The Guarantor and, to the extent separately required pursuant to
Rule 158 under the Act, the Company will make generally available to its
security holders as soon as practicable, but not later than 90 days after
the close of the period covered thereby, earnings statements (in form
complying with the provisions of Rule 158) covering a twelve-month period
beginning not later than the first day of the fiscal quarter of the
Guarantor and the Company next following the effective date of the
Registration Statement (as defined in Rule 158) with respect to each sale
of Securities.

(d) The Company and the Guarantor will furnish to the Representatives
copies of each preliminary prospectus supplement, 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.

(e) The Company and the Guarantor will use their best efforts to
arrange for the qualification of the Securities for sale and the
determination of their eligibility for investment under the laws of such
jurisdictions as the Representatives designate and will continue such
qualifications in effect so long as required for the distribution.

(f) During the period of five years after the effective date of the
Registration Statement, the Guarantor will furnish to the Representatives
and, upon request, to each of the other Underwriters, as soon as
practicable after the end of each fiscal year, a copy of its annual report
to shareholders for such year, and the Guarantor will furnish to the
Representatives and to Underwriters' Counsel, (i) as soon as available, a
copy of each report of the Guarantor filed with the Commission under the
Exchange Act or mailed to stockholders, and (ii) from time to time, such
other information concerning the Guarantor or the Company as the
Representatives may reasonably request.

(g) The Company and the Guarantor will pay all expenses incident to
the performance of their obligations under this Agreement, any expenses
(including fees and disbursements of counsel) incurred in connection with
qualifications of the Securities for sale and determination of their
eligibility for investment under the laws of such jurisdictions as the
Representatives designate and the printing of memoranda relating thereto,
any fees charged by investment rating agencies for the rating of the
Securities, all expenses incurred in delivering copies of the Registration
Statement and any amendments thereto, and of the Prospectus and any
amendments or supplements thereto, to the Underwriters, and the fees and
expenses, if any, incurred in

<PAGE>

connection with the listing of the Securities on the New York Stock
Exchange or any other national securities exchange.

(h) Neither the Company nor the Guarantor will, without the prior
consent of the Representatives, offer or sell any of its debt securities
having a maturity of more than one year between the commencement of an
offering of Securities and the related Delivery Date.

5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of
the several Underwriters to purchase and pay for the Securities will be subject
to the accuracy of the representations and warranties on the part of the Company
and the Guarantor contained herein, to the accuracy of the statements of the
officers of the Company and the Guarantor made pursuant to the provisions
hereof, to the performance by the Company and the Guarantor of their obligations
hereunder and to the following additional conditions precedent:

(a) On the date of this Agreement and on the Delivery Date, the
Representatives shall have received executed copies of letters of Arthur
Andersen LLP, and addressed to the Company, the Guarantor and the
Representatives, substantially in the forms previously approved by the
Representatives.

(b) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or, to the knowledge of the Company, the Guarantor or
any Underwriter, shall be contemplated by the Commission.

(c) The Representatives shall have received an opinion or opinions,
dated the Delivery Date, of Weil, Gotshal & Manges, counsel for the Company
and the Guarantor, to the effect that:

(i) The Company is a corporation in good standing, duly
incorporated and validly existing under the laws of the State of Colorado
and is authorized by its Articles of Incorporation to transact the business
in which it is engaged, as set forth in the Prospectus.

(ii) The Guarantor is a corporation in good standing, duly
incorporated and validly existing under the laws of the state of its
incorporation and is authorized by its Certificate of Incorporation to
transact the business in which it is engaged, as set forth in the
Prospectus.

(iii) The execution, delivery and performance of the Indenture by
the Company and the Guarantor have been duly authorized by all necessary
corporate action on the part of the Company and the Guarantor; the
Indenture has been duly and validly executed and delivered by the Company
and the Guarantor and (assuming the due authorization, execution and
delivery by the Trustee), constitutes the legal, valid and binding
agreement of the Company and the Guarantor enforceable against each of them
in accordance with its terms; and the Indenture has been duly qualified
under the Trust Indenture Act.

(iv) The Securities, when duly executed and authenticated
pursuant to the Indenture and delivered to the Underwriters against payment
therefor in accordance with the provisions hereof, will constitute legal,
valid and binding obligations of the Company, entitled to the benefits of
the Indenture and enforceable against the Company in accordance with their
terms.

(v) The Guarantees, when duly executed pursuant to the Indenture
and delivered to the Underwriters in accordance with the provisions hereof,
will constitute legal, valid and binding obligations of the Guarantor
enforceable against the Guarantor in accordance with their terms.

(vi) The execution, delivery and performance of this Agreement by
the Company and the Guarantor have been duly authorized by all necessary
corporate action on the part of the Company and the Guarantor; and this
Agreement has been duly and validly executed and delivered by each of the
Company and the Guarantor.

<PAGE>

(vii) No consent, approval, authorization or other action by, or
filing or registration with, any federal governmental authority is required
in connection with the execution and delivery by the Company or the
Guarantor of the Indenture or the issuance and sale of the Securities and
the Guarantees to the Underwriters pursuant to the terms of this Agreement,
except such as have been obtained or made under the Act and the rules and
regulations thereunder and such as may be required under the Exchange Act
and the rules and regulations thereunder.

(viii) The Registration Statement was declared effective under the
Act and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued under the Act
and no proceeding for that purpose has been initiated or threatened by the
Commission.

(ix) The statements in the Prospectus under the headings
"Description of Debt Securities and Guarantees" and "Description of the
[Debentures][Notes]", insofar as such statements constitute a summary of
certain provisions of the documents referred to therein, are accurate in
all material respects.

In rendering such opinion, such counsel may rely as to matters of
fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and the Guarantor and of public
officials. Such counsel may also rely as to matters of Colorado law upon
the opinion referred to in Section 5(e) without independent verification.

In addition, such counsel shall state that it has participated in
conferences with representatives of the Company, the Guarantor and with the
Representatives and their 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 unable to
assume, and does not assume, any responsibility for the accuracy,
completeness or fairness of such statements; however, based upon such
counsel's participation in the aforesaid conferences, nothing has come to
its attention which lead it to believe that the Registration Statement, at
the time it became effective, and the Prospectus and any further amendments
and supplements thereto made by the Company and the Guarantor prior to such
Delivery Date (other than the financial statements and other financial and
statistical information contained therein as to which such counsel need
express no belief) did not comply as to form in all material respects with
the applicable requirements of the Act and the rules and regulations
thereunder or that the Registration Statement (except as to the financial
statements and the notes thereto, and the other financial and statistical
data included therein, as to which such counsel need express no belief),
and each amendment thereto, as of its effective date or if an annual report
on Form 10-K has been filed by the Guarantor with the Commission subsequent
to the effectiveness of the Registration Statement, then at the time of the
most recent such filing, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that, as of its
issue dat or at the Delivery Date, the Prospectus (except as to the
financial statements and the notes thereto, and the other financial and
statistical data included therein, as to which such counsel need express no
belief), and each amendment or supplement thereto contained or contains any
untrue statement of a material fact or omitted 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.

Such opinion may state that it does not address the impact on the
opinions contained therein of any litigation or ruling relating to the
divestiture by American Telephone and Telegraph Company of ownership of its
operating telephone companies (the "Divestiture").

(d) The Representatives shall have received from Underwriters'
Counsel an opinion, dated the Delivery Date, to the effect specified in
clauses (i), (ii), (iii), (iv), (v), (vi), (viii) and (ix) and the
penultimate paragraph of subsection (c) above, subject to the final
paragraph of subsection (c) above, and with respect to such other matters
as the Representatives may reasonable request. In rendering such

<PAGE>

opinion, such counsel may rely as to matters of Colorado law upon the
opinion referred to in Section 5(e) without independent verification.

(e) The Representatives shall have received an opinion or opinions,
dated the Delivery Date, of the General Counsel of the Company or a Senior
Attorney of the Guarantor, to the effect that:

(i) The Company is a corporation in good standing, duly incorporated
and validly existing under the laws of the State of Colorado and is
authorized by its Articles of Incorporation to transact the business in
which it is engaged, as set forth in the Prospectus.

(iii) The execution, delivery and performance of the Indenture by the
Company and the Guarantor have been duly authorized by all necessary
corporate action on the part of the Company and the Guarantor; the
Indenture has been duly and validly executed and delivered by the Company
and the Guarantor and (assuming the due authorization, execution and
delivery by the Trustee), constitutes the legal, valid and binding
agreement of the Company and the Guarantor enforceable against each of them
in accordance with its terms; and the Indenture has been duly qualified
under the Trust Indenture Act.

(iv) The Securities, when duly executed and authenticated pursuant to
the Indenture and delivered to the Underwriters against payment therefor in
accordance with the provisions hereof, will constitute legal, valid and
binding obligations of the Company, entitled to the benefits of the
Indenture and enforceable against the Company in accordance with their
terms.

(v) The Guarantees, when duly executed pursuant to the Indenture and
delivered to the Underwriters in accordance with the provisions hereof,
will constitute legal, valid and binding obligations of the Guarantor
enforceable against the Guarantor in accordance with their terms.

(vi) The execution, delivery and performance of this Agreement by the
Company and the Guarantor have been duly authorized by all necessary
corporate action on the part of the Company and the Guarantor; and this
Agreement has been duly and validly executed and delivered by each of the
Company and the Guarantor.

(vii) All state regulatory consents, approvals, authorizations or
other orders (except as to the state securities or Blue Sky laws, as to
which such counsel need express no opinion) legally required for the
execution of the Indenture and the issuance and sale of the Securities and
the Guarantees to the Underwriters pursuant to the terms of this Agreement
have been obtained; provided that such counsel may rely on opinions of
local counsel satisfactory to said counsel.

(viii) The enforceability and the legal, valid and binding nature of
the respective agreements and obligations of the Company and the Guarantor
set forth in the Indenture, the Securities and the Guarantees (the
"Agreements") are not affected by, and the performance of the obligations
set forth in such Agreements, the issuance and sale of the Securities and
the Guarantees and the consummation of the transactions contemplated in
such Agreements are not prevented or restricted by, any action, suit,
proceeding, order or ruling relating to or issued or arising as a result
of, the Divestiture.

In rendering such opinion, such counsel may rely as to matters of New York
law upon the opinion referred to in Section 5(c) without independent
verification.

(f) The Representatives shall have received a certificate, dated the
Delivery Date, of the President or any Vice President of the Company in
which such officers shall state that, to the best of their knowledge after
reasonable investigation, the representations and warranties of the Company
in this Agreement are true

<PAGE>

and correct as if made at and as of the Delivery Date, that the Company has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Delivery Date, 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 Prospectus, there
has been no material adverse change in the financial position or results of
operations of the Company, except as set forth in or contemplated by the
Prospectus.

(g) The Representatives shall have received a certificate, dated the
Delivery Date, of the President or any Vice President of the Guarantor in
which such officers shall state that, to the best of their knowledge after
reasonable investigation, the representations and warranties of the
Guarantor in this Agreement are true and correct as if made at and as of
the Delivery Date, that the Guarantor has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Delivery Date, 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
included or incorporated by reference in the Prospectus, there has been no
material adverse change in the financial position or results of operations
of the Guarantor and its subsidiaries, taken as a whole, except as set
forth in or contemplated by the Prospectus.

(h) If the Prospectus contains a discussion of United States federal
income tax considerations with respect to the Securities, the Company shall
have furnished to the Representatives a letter of its United States tax
counsel, dated the Delivery Date, to the effect that (i) the Underwriters
may rely on the opinion of such counsel, filed as an exhibit to the
Registration Statement to the same extent as though it were dated the date
of such letter authorizing reliance, and (ii) such counsel has reviewed the
statements in the Prospectus under the caption "Certain United States
Federal Income Tax Considerations" and, insofar as they are, or refer to,
statements of United States law or legal conclusions, such statements are
accurate in all material respects

The Company and the Guarantor will furnish the Underwriters with such conformed
copies of such opinions, certificates, letters and documents as they reasonably
request.

In case any of the conditions specified above in this Section 5 shall not
have been fulfilled, this Agreement may be terminated by the Representatives by
delivering written notice of termination to the Company and the Guarantor. Any
such termination shall be without liability of any party to any other party
except to the extent provided in Sections 4(g), 7 and 8 hereof.

6. CONDITION OF THE OBLIGATIONS OF THE COMPANY AND THE GUARANTOR. The
obligations of the Company and the Guarantor to sell and deliver the Securities
and the Guarantees are subject to the following conditions precedent:

(a) No stop order suspending the effectiveness of the Registration
Statement or the Indenture shall have been issued and no proceedings for
those purposes shall have been instituted or, to the knowledge of the
Company, the Guarantor or any Underwriter, shall be contemplated by the
Commission.

(b) Concurrently with or prior to the delivery of the Securities and
the Guarantees to each Underwriter, the Company shall receive the full
purchase price specified in Schedule I hereto to be paid for the
Securities.

(c) The written information furnished to the Company and the
Guarantor by any Underwriter, or on behalf of any Underwriter by the
Representatives, specifically for use in the Prospectus as contemplated by
Section 2 and Section 7(b) shall be true and accurate in all material
respects.

In case any of the conditions specified above in this Section 6 shall not
have been fulfilled, this Agreement may be terminated by the Company or the
Guarantor by delivering written notice of termination to the Representatives.
Any such termination shall be without liability of any party to any other party
except to the extent provided in Sections 4(g), 7 and 8 hereof.

<PAGE>

7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company and the Guarantor
jointly and severally will indemnify and hold harmless each Underwriter against
any losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, as incurred, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement thereto, or any related preliminary prospectus
supplement, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, and will reimburse each Underwriter, as incurred, for
any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action or amounts paid in settlement of any litigation or
investigation or proceeding related thereto if such settlement is effected with
the written consent of the Company and the Guarantor; provided, however, that
the Company and the Guarantor will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any untrue statement or alleged untrue statement or omission or alleged omission
made in any of such documents in reliance upon and in conformity with written
information furnished to the Company or the Guarantor by any Underwriter, or on
behalf of any Underwriter by the Representatives, specifically for use therein
or in reliance upon and in conformity with the Statement of Eligibility of the
Trustee under the Indenture; and provided, further, that with respect to any
untrue statement or omission or alleged untrue statement or omission made in any
preliminary prospectus or preliminary prospectus suppleent, the indemnity
agreement contained in this paragraph (a) shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased the Securities concerned, to the extent that any such
loss, claim, damage or liability of such Underwriter results from the fact that
a copy of the Prospectus (excluding material incorporated therein by reference)
was not sent or given to such person and such Prospectus corrected any such
untrue statement or omission or alleged untrue statement or omission.

(a) Each Underwriter will indemnify and hold harmless the Company and the
Guarantor against any losses, claims, damages or liabilities to which the
Company or the Guarantor may become subject, as incurred, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
the Prospectus or any amendment or supplement thereto, or any related
preliminary prospectus supplement, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company or the Guarantor by
such Underwriter, or on behalf of such Underwriter by the Representatives,
specifically for use therein, and will reimburse the Company and the Guarantor,
as incurred, for any legal or other expenses reasonably incurred by the Company
and the Guarantor in connection with investigating or defending any such loss,
claim, damage, liability or action.

(b) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. 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.

<PAGE>

(c) If the indemnification provided for in this Section 7 is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above, (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Guarantor on the one hand and the Underwriters on the other from the
offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and the Guarantor on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Guarantor on the one hand and the Underwriters on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company and the Guarantor or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred b such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), 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 (with the meaning of Section 11
(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.

(d) The obligations of the Company and the Guarantor under this Section 7
shall be in addition to any liability which the Company or the Guarantor may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the Act or
the Exchange Act; and the obligations of the Underwriters under this Section 7
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
director of the Company and the Guarantor, to each officer of the Company or the
Guarantor who has signed the Registration Statement and to each person, if any,
who controls the Company or the Guarantor within the meaning of the Act or the
Exchange Act.

8. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Company, the Guarantor or their officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the results thereof,
made by or on behalf of any Underwriter, the Company or the Guarantor or of any
of their officers or directors or any controlling person, and will survive
delivery of and payment for the Securities. If the purchase of the Securities
by the Underwriters is not consummated for any reason other than a default by
one or more of the Underwriters, the Company and the Guarantor shall remain
responsible for the expenses to be paid or reimbursed by them pursuant to
Section 4(g), the respective obligations of the Company, the Guarantor and the
Underwriters pursuant to Section 7 shall remain in effect, and the Company and
the Guarantor will reimburse the Representatives for the reasonable
out-of-pocket expenses of the Underwriters, not exceeding $75,000, and for the
fees and disbursements of Underwriters' Counsel, the Underwriters agreeing to
pay such expenses, fees and disbursements in any other event. In no event will
the Company or the Guarantor be liable to any of the Underwriters for damages on
account of loss of anticipated profits.

9. NOTICES. All communications hereunder will be in writing and, if sent
to the Underwriters will be mailed, delivered or telecopied and confirmed to the
Representatives at their addresses specified in Schedule I hereto for the
purpose of communications hereunder or, if sent to the Company or the Guarantor,
will be mailed, delivered

<PAGE>

or telecopied and confirmed to each of them at 7800 East Orchard Road,
Englewood, Colorado 80111, Attention: Treasurer.

10. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder.

11. CONCERNING LAW. The validity and interpretation of this Agreement
shall be governed by the laws of the State of New York.

12. DEFAULT BY UNDERWRITERS. If any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Securities which
the defaulting Underwriter agreed but failed to purchase in the respective
proportions which the principal amount of Securities set forth in Schedule II
hereto to be purchased by each remaining non-defaulting Underwriter set forth
therein bears to the aggregate principal amount of Securities set forth therein
to be purchased by all the remaining non-defaulting Underwriters; provided that
the remaining non-defaulting Underwriters shall not be obligated to purchase any
amount of Securities if the aggregate principal amount of Securities which the
defaulting Underwriter or Underwriters agreed but failed to purchase exceeds
one-tenth of the total principal amount of Securities, and any remaining
non-defaulting Underwriter shall not be obligated to purchase additional
Securities in an amount of more than one-ninth of the principal amount of
Securities set forth in Schedule II hereto to be purchased by it. If the
foregoing maximums are exceeded, the remaining non-defaulting Underwriters, or
those other underwriters satisfactory to the Representatives who so agree, shall
have the right, but shall not be obligated, to purchase, in such proportion as
may be agreed upon among them, all the Securities. If the remaining
Underwriters or other underwriters satisfactory to the Representatives do not
elect to purchase the Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter, the Company or
the Guarantor, except that the Company and the Guarantor will continue to be
liable for the payment of expenses as set forth in Sections 4(g) and 8 hereof.

Nothing contained in this Section 12 shall relieve a defaulting Underwriter
of any liability it may have to the Company or the Guarantor for damages caused
by its default. If other underwriters are obligated or agree to purchase the
Securities of a defaulting or withdrawing Underwriter, either the
Representatives or the Company may postpone the Delivery Date for up to seven
full business days in order to effect any changes that in the opinion of counsel
for the Company or Underwriters' Counsel may be necessary in the Registration
Statement, any prospectus or in any other document or arrangement.

13. TERMINATION. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company and
the Guarantor prior to delivery of and payment for the Securities, if prior to
such time (i) there has been, since the respective dates as of which information
is given in the Registration Statement, any change in the financial condition of
the Company or of the Guarantor and its subsidiaries, taken as a whole, or in
the earnings, affairs or business prospects of the Company 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 Securities or enforce contracts for the sale thereof, (ii) trading in the
Company's or the Guarantor's securities shall have 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 minimum
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 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 the Company 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
shall have publicly announced that it has any such debt securities under
consideration for possible downgrade.

<PAGE>

14. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.

If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicate hereof, whereupon it will
become a binding agreement among the Company, the Guarantor and the Underwriters
in accordance with its terms.

Very truly yours,

U S WEST CAPITAL FUNDING, INC.

BY
--------------------------------
Name:
Title:

U S WEST, INC.

BY
--------------------------------
Name:
Title:

The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the
date first above written.

[Names of Representatives]

as Representatives of the other several
Underwriters named in Schedule II hereto.

By: [Name]

- ----------------------------------
Name:
Title:

<PAGE>

SCHEDULE I

Underwriting Agreement dated _________, ____

Registration Statement Nos. 33-_____ and 33-_____

Representatives and Addresses:

[Names and Addresses]

Securities:

Designation: __% [Debentures][Notes] Due _________, ____.

Principal Amount: $___________

Indenture dated as of ______________ ___, 1998, as amended, among U S WEST
Capital Funding, Inc., U S WEST, Inc. and The First National Bank of
Chicago, as Trustee.

Date of Maturity: _________, ____

Interest Rate: __% per annum, payable _______ and _________
of each year, commencing _______, ____.

Price to Public: ______% of the principal amount thereof ($___________),
plus accrued interest, if any, from _________, ____ to
the date of delivery.

Purchase Price: ______% of the principal amount thereof ($___________),
plus accrued interest, if any, from _________, ____ to
the date of delivery.

Form of Payment:

Redemption Provisions:

Form and Authorized
Denominations: Registered--$1,000 and multiples thereof.

Stock Exchange Listing:

Delivery Date, Time _________, ____ at 10:00 A.M., New York time,
and Location: at the office of Brown & Wood, New York, New York.

<PAGE>

SCHEDULE II

PRINCIPAL
AMOUNT OF
SECURITIES TO
NAME OF UNDERWRITER BE PURCHASED
------------------- -------------
<S> <C>
[ ]......................................................$__,000,000
[ ]...................................................... __,000,000
[ ]...................................................... __,000,000
[ ]...................................................... __,000,000
[ ]...................................................... __,000,000
----------
Total..................................................$__,000,000
----------
----------

</TABLE>

<PAGE>

Exhibit 1-B

U S WEST CAPITAL FUNDING, INC.
[________NOTES]
DUE [ ] FROM DATE OF ISSUE

DISTRIBUTION AGREEMENT

_______ __, 1998

[AGENTS]

Dear Sirs:

U S WEST Capital Funding, Inc., a Colorado corporation (the "Company"),
confirms its agreement with [AGENTS] (each, an "Agent", and collectively, the
"Agents") with respect to the issue and sale by the Company of its [_____Notes
Due ____ from Date of Issue] (the "Notes"). The Notes are to be issued pursuant
to an indenture, dated as of ______ __1998, as amended, supplemented or modified
from time to time (the "Indenture"), among the Company, U S WEST, Inc., a
Delaware corporation ("U S WEST"), and First National Bank of Chicago, as
trustee (the "Trustee"). The Notes will be unconditionally guaranteed as to
payment of principal, premium, if any, and interest by U S WEST. As of the date
hereof, the Company has authorized the issuance and sale of up to U.S.
$3,500,000,000 aggregate initial offering price (or its equivalent, based upon
the applicable exchange rate at the time of issuance, in such foreign or
composite currencies as the Company shall designate at the time of issuance) of
Notes to or through the Agents pursuant to the terms of this Agreement. It is
understood, however, that the Company may from time to time authorize the
issuance of additional Notes and that such additional Notes may be sold to or
through the Agents pursuant to the terms of this Agreement, all as though the
issuance of such Notes were authorized as of the date hereof. The Notes will
have the benefit of a Guarantee (the "Guarantees") between the Company and U S
WEST.

This Agreement provides both for the sale of Notes by the Company to one or
more Agents as principal for resale to investors and other purchasers and for
the sale of Notes by the Company directly to investors (as may from time to time
be agreed to by the Company and the applicable Agent), in which case such Agent
will act as an agent of the Company in soliciting purchases of the Notes.

The Company and U S WEST have filed with the Securities and Exchange
Commission (the "SEC") a joint registration statement on Form S-3 (Registration
Nos. 33-_____, 33-____) for the registration of debt securities, including the
Notes, under the Securities Act of 1933, as amended (the "1933 Act"), and the
offering thereof from time to time in accordance with Rule

<PAGE>

415 of the rules and regulations of the SEC under the 1933 Act (the "1933 Act
Regulations"). Such registration statement has been declared effective by the
SEC and the Indenture has been qualified under the Trust Indenture Act of 1939,
as amended (the "1939 Act"). Such registration statement (and any further
registration statements which may be filed by the Company and U S WEST for the
purpose of registering additional Notes and in connection with which this
Agreement is included or incorporated by reference as an exhibit) and the
prospectus constituting a part thereof, and any prospectus supplement and
pricing supplement relating to the Notes, including all documents incorporated
therein by reference, as from time to time amended or supplemented by the filing
of documents pursuant to the Securities Exchange Act of 1934, as amended (the
"1934 Act"), or the 1933 Act or otherwise, are referred to herein as the
"Registration Statement" and the "Prospectus," respectively, except that if any
revised prospectus shall be provided to the Agents by the Company for use in
connection with the offering of the Notes, whether or not such revised
prospectus is required to be filed by the Company pursuant to Rule 424(b) of the
1933 Act Regulations, the term "Prospectus" shall refer to such revised
prospectus from and after the time it is first provided to the Agents for such
use.

1. APPOINTMENT AS AGENT.

(a) APPOINTMENT. Subject to the terms and conditions stated herein and
subject to the reservation by the Company of the right to sell Notes directly on
its own behalf, the Company hereby agrees that Notes will be sold exclusively to
or through the Agents. The Company agrees that it will not, without the consent
of all such Agents, solicit any other agents to purchase Notes or appoint any
other agents to act on its behalf, or to assist it, in the placement of the
Notes; provided, however, the Company expressly reserves the right to enter into
an agreement or agreements substantially identical hereto, upon notice to the
Agents, with such other agent or agents as may approach the Company from time to
time for purposes of selling Notes with specific terms to or through such agent
or agents.

(b) SALE OF NOTES. The Company shall not sell or approve the solicitation
of purchases of Notes in excess of the amount which shall be authorized by the
Company from time to time or in excess of the aggregate initial offering price
of Notes registered pursuant to the Registration Statement. The Agents shall
have no responsibility for maintaining records with respect to the aggregate
initial offering price of Notes sold, or of otherwise monitoring the
availability of Notes for sale, under the Registration Statement.

(c) PURCHASES AS PRINCIPAL. The Agents shall not have any obligation to
purchase Notes from the Company as principal, but one or more Agents may agree
from time to time to purchase Notes as principal for resale to investors and
other purchasers determined by such Agent or Agents. Any such purchase of Notes
by an Agent as principal shall be made in accordance with Section 3(a) hereof.

(d) SOLICITATIONS AS AGENT. If agreed upon by an Agent and the Company,
such Agent, acting solely as agent for the Company and not as principal, will
solicit purchases of the Notes.

2
<PAGE>

Such Agent will communicate to the Company, orally, each offer to purchase Notes
solicited by it on an agency basis, other than those offers rejected by such
Agent. Such Agent shall have the right, in its discretion reasonably exercised,
to reject any proposed purchase of Notes, as a whole or in part, and any such
rejection shall not be deemed a breach of its agreement contained herein. The
Company may accept or reject any proposed purchase of Notes, in whole or in
part. Such Agent shall make reasonable efforts to assist the Company in
obtaining performance by each purchaser whose offer to purchase Notes has been
solicited by it and accepted by the Company. Such Agent shall not have any
liability to the Company in the event that any such purchase is not consummated
for any reason. If the Company shall default on its obligation to deliver Notes
to a purchaser whose offer it has accepted, the Company shall (i) hold such
Agent harmless against any loss, claim or damage arising from or as a result of
such default by the Company and (ii) notwithstanding such default, pay to such
Agent any commission to which it would otherwise be entitled.

(e) RELIANCE. The Company and the Agents agree that any Notes purchased
by one or more Agents as principal shall be purchased, and any Notes the
placement of which an Agent arranges as agent shall be placed by such Agent, in
reliance on the representations, warranties, covenants and agreements of the
Company and U S WEST contained herein and on the terms and conditions and in the
manner provided herein.

2. REPRESENTATIONS AND WARRANTIES.

(a) The Company and U S WEST, jointly and severally, represent and warrant
to the Agents as of the date hereof, as of the date of each acceptance by the
Company of an offer for the purchase of Notes (whether to one or more Agents as
principal or through an Agent as agent), and as of the date of each delivery of
Notes (whether to one or more Agents as principal or through an Agent as agent)
(the date of each such delivery to one or more Agents as principal being
hereafter referred to as a "Settlement Date") (each of the times referenced
above being referred to herein as a "Representation Date"), as follows:

(i) The Registration Statement, including a prospectus
relating to the debt securities of the Company, has been filed with the SEC
and has become effective.

(ii) On the effective date of the Registration Statement, the
Registration Statement and the Prospectus (including the documents
incorporated by reference therein) conformed in all respects to the
requirements of the 1933 Act, the 1939 Act, and the 1933 Act Regulations
and did not include any untrue statements of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and as of each applicable
Representation Date, the Registration Statement and the Prospectus will
conform in all respects to the requirements of the 1933 Act, the 1939 Act
and the 1933 Act Regulations and neither of such documents will include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the light of the

3
<PAGE>

circumstances under which they were made, not misleading, except that the
foregoing does not apply to statements in or omissions from any such
documents based upon written information furnished to the Company by the
Agents specifically for use therein or based upon the Statement of
Eligibility of the Trustee under the Indenture or to statements in or
omissions from such Statement of Eligibility.

(b) ADDITIONAL CERTIFICATIONS. Any certificate signed by any director or
officer of the Company or U S WEST and delivered to one or more Agents or to
counsel for the Agents in connection with an offering of Notes to one or more
Agents as principal or through an Agent as agent shall be deemed a
representation and warranty by the Company or U S WEST, as the case may be, to
such Agent or Agents as to the matters covered thereby on the date of such
certificate and at each Representation Date subsequent thereto.

4
<PAGE>

3. PURCHASES AS PRINCIPAL; SOLICITATIONS AS AGENT.

(a) PURCHASES AS PRINCIPAL. Unless otherwise agreed by an Agent and the
Company, Notes shall be purchased by such Agent as principal. Such purchases
shall be made in accordance with terms agreed upon by one or more Agents and the
Company (which terms, unless otherwise agreed, shall, to the extent applicable,
include those terms specified in Exhibit A hereto and be agreed upon orally,
with written confirmation prepared by such Agent or Agents and mailed to the
Company). An Agent's commitment to purchase Notes as principal shall be deemed
to have been made on the basis of the representations and warranties of the
Company and U S WEST herein contained and shall be subject to the terms and
conditions herein set forth. Unless the context otherwise requires, references
herein to "this Agreement" shall include the agreement of one or more Agents to
purchase Notes from the Company as principal. Each purchase of Notes, unless
otherwise agreed, shall be at a discount from the principal amount of each such
Note equivalent to the applicable commission set forth in Schedule A hereto for
a Note of identical maturity. The Agents may engage the services of any other
broker or dealer in connection with the resale of the Notes purchased by them as
principal and may allow any portion of the discount received in connection with
such purchases from the Company to such brokers and dealers. At the time of
each purchase of Notes by one or more Agents as principal, such Agent or Agents
shall specify the requirements for the stand-off agreement, officers'
certificates, opinions of counsel and comfort letter pursuant to Sections 4(h),
8(b), 8(c) and 8(d) hereof.

(b) SOLICITATIONS AS AGENT. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, when agreed by the Company and an Agent, such Agent, as an agent of the
Company, will use its reasonable efforts to solicit offers to purchase the Notes
upon the terms and conditions set forth herein and in the Prospectus. The Agents
are not authorized to appoint sub-agents with respect to Notes sold through them
as agent. All Notes sold through an Agent as agent will be sold at 100% of
their principal amount unless otherwise agreed to by the Company and such Agent.

The Company reserves the right, in its sole discretion, to suspend
solicitation of purchases of the Notes through an Agent, as agent, commencing at
any time for any period of time or permanently. As soon as practicable after
receipt of instructions from the Company, such Agent will suspend solicitation
of purchases from the Company until such time as the Company has advised such
Agent that such solicitation may be resumed.

The Company agrees to pay each Agent a commission, in the form of a
discount, equal to the applicable percentage of the principal amount of each
Note sold by the Company as a result of a solicitation made by such Agent as set
forth in Schedule A hereto.

(c) ADMINISTRATIVE PROCEDURES. The purchase price, interest rate or
formula, maturity date and other terms of the Notes (as applicable) specified in
Exhibit A hereto shall be agreed upon by the Company and the applicable Agent or
Agents and specified in a pricing supplement to the Prospectus (each, a "Pricing
Supplement") to be prepared in connection with each sale of

5
<PAGE>

Notes. Except as may be otherwise specified in the applicable Pricing
Supplement, the Notes will be issued in denominations of U.S. $1,000 or any
larger amount that is an integral multiple of U.S. $1,000. Administrative
procedures with respect to the sale of Notes shall be agreed upon from time to
time by the Company, U S WEST, the Agents and _________, as authenticating and
paying agent (the "Procedures"). The Agents, the Company and U S WEST agree to
perform, and the Company agrees to cause ________ to agree to perform, their
respective duties and obligations specifically provided to be performed by them
in the Procedures.

4. COVENANTS OF THE COMPANY AND U S WEST.

The Company and U S WEST covenant with the Agents as follows:

(a) COPIES OF THE REGISTRATION STATEMENT. The Company and U S WEST will
furnish to counsel for the Agents one signed copy of the Registration Statement,
including all exhibits, relating to the Notes in the form it became effective
and of all amendments thereto and will furnish to the Agents copies of the
Registration Statement, including all exhibits, in the form it became effective
and of all amendments thereto.

(b) NOTICE OF CERTAIN PROPOSED FILINGS AND CERTAIN EVENTS. The Company
and U S WEST will advise the Agents promptly of any amendment or supplementation
of the Registration Statement or the Prospectus and will not effect such
amendment or supplementation without the consent of counsel for the Agents; the
Company and U S WEST will also advise the Agents of any official request made by
the SEC for an amendment to the Registration Statement or Prospectus or for
additional information with respect thereto and of the institution by the SEC of
any stop order proceedings in respect of the Registration Statement, and will
use their best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible its lifting, if issued. The Company and U S WEST
will not file any document pursuant to the 1934 Act which is deemed to be
incorporated by reference in the Prospectus unless counsel to the Agents shall
have been previously advised thereof.

(c) REVISIONS OF PROSPECTUS -- MATERIAL CHANGES. If, at any time when a
prospectus relating to the Notes is required to be delivered under the 1933 Act,
any event occurs as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact, or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend or supplement the Registration Statement or the
Prospectus to comply with the 1933 Act, the Company and U S WEST will
immediately notify the Agents to cease the solicitation of offers to purchase
the Notes in their capacity as Agent and to cease sales of any Notes the Agents
may then own as principal, and the Company and U S WEST promptly will prepare
and file with the SEC an amendment or supplement which will correct such untrue
statement or omission or effect such compliance.

6
<PAGE>

(d) EARNINGS STATEMENTS. U S WEST and, to the extent separately required
pursuant to Rule 158 under the Act, the Company will make generally available to
their security holders as soon as practicable, but not later than ninety days
after the close of the period covered thereby, earning statements (in form
complying with the provisions of Rule 158) covering a twelve month period
beginning not later than the first day of the fiscal quarter of U S WEST and the
Company next following the effective date of the Registration Statement (as
defined in Rule 158) with respect to each sale of Notes.

(e) COPIES OF THE PROSPECTUS. The Company and U S WEST will furnish to
the Agents copies of the Prospectus and all amendments and supplements thereto,
in each case as soon as available and in such quantities as are reasonably
requested.

(f) BLUE SKY QUALIFICATIONS. The Company and U S WEST will use their
respective best efforts to arrange for the qualification of the Notes for sale
and the determination of their eligibility for investment under the laws of such
jurisdictions as the Agents designate and will continue such qualifications in
effect so long as required for their distribution.

(g) COPIES OF PUBLIC REPORTS. The Company and U S WEST will furnish to
the Agents, at the earliest time the Company and U S WEST make the same
available to others, a copy of their annual reports and other financial reports
furnished or made available to the public generally.

(h) STAND-OFF AGREEMENT. If specified by the applicable Agent or Agents
in connection with a purchase of Notes as principal, neither the Company nor U S
WEST will, without such Agents prior consent, between the date of any agreement
to purchase such Notes and the Settlement Date with respect to such purchase,
offer to sell any debt securities of the Company or U S WEST having a maturity
of more than one year, except as may otherwise be provided in any such
agreement.

(i) PROSPECTUS REVISIONS -- PERIODIC FINANCIAL INFORMATION. Except as
otherwise provided in subsection (k) of this Section, on or prior to the date on
which there shall be released to the general public interim financial statement
information related to the Company or U S WEST with respect to any of the first
three quarters of any fiscal year or preliminary financial statement information
with respect to any fiscal year, the Company and U S WEST shall furnish such
information to the Agents, confirmed in writing, and shall cause the Prospectus
to be amended or supplemented to include or incorporate by reference capsule
financial information with respect to the results of operations of the Company
or U S WEST, as the case may be, for the period between the end of the preceding
fiscal year and the end of such quarter or for such fiscal year, as the case may
be, and corresponding information for the comparable period of the preceding
fiscal year, as well as such other information and explanations as shall be
necessary for an understanding of such amounts, or as shall be required by the
1933 Act or the 1933 Act Regulations.

7
<PAGE>

(j) PROSPECTUS REVISIONS -- AUDITED FINANCIAL INFORMATION. Except as
otherwise provided in subsection (k) of this Section, on or prior to the date on
which there shall be released to the general public financial information
included in or derived from the audited financial statements of the Company or U
S WEST for the preceding fiscal year, the Company and U S WEST shall cause the
Registration Statement and the Prospectus to be amended, whether by the filing
of documents or otherwise, to include or incorporate by reference such audited
financial statements and the report or reports, and consent or consents to such
inclusion or incorporation by reference, of the independent accountants with
respect thereto, as well as such other information and explanations as shall be
necessary for an understanding of such financial statements, or as shall be
required by the 1933 Act or the 1933 Act Regulations.

(k) SUSPENSION OF CERTAIN OBLIGATIONS. The Company and U S WEST shall not
be required to comply with the provisions of subsections (i) or (j) of this
Section during any period from the time (i) the Agents shall have suspended
solicitation of purchases of the Notes in their capacities as agents pursuant to
a request from the Company and (ii) no Agent shall then hold any Notes purchased
as principal pursuant hereto, until the time the Company shall determine that
solicitation of purchases of the Notes should be resumed or an Agent shall
subsequently purchase Notes from the Company as principal.

5. CONDITIONS OF AGENTS' OBLIGATIONS.

The obligations of the Agents to purchase Notes as principal and to solicit
offers to purchase the Notes as agent of the Company, and the obligations of any
purchasers of the Notes sold through an Agent as agent, will be subject to the
accuracy of the representations and warranties on the part of the Company and U
S WEST herein and to the accuracy of the statements of the officers of the
Company and U S WEST made in any certificate furnished pursuant to the
provisions hereof, to the performance and observance by the Company and
U S WEST of all covenants and agreements herein contained on their respective
parts to be performed and observed and to the following additional conditions
precedent:

(a) COMPLIANCE WITH THE 1933 ACT AND THE 1939 ACT. On the date hereof,
the Indenture shall be qualified under the 1939 Act and no stop order suspending
the effectiveness of the Registration Statement, as amended from time to time,
shall be in effect, no proceedings for that purpose shall have been instituted
or, to the knowledge of the Company, U S WEST, or the Agents, shall be
contemplated by the SEC.

(b) LEGAL OPINIONS. On the date hereof, the Agents shall have received
the following legal opinions, dated as of the date hereof and in form and
substance satisfactory to the Agents:

(1) OPINION OF COUNSEL TO THE COMPANY AND U S WEST. The favorable
opinion of Thomas O. McGimpsey, counsel to the Company and U S WEST, or
other counsel satisfactory to the Agents, to the effect that:

8
<PAGE>

(i) The Company is a corporation in good standing, duly
incorporated and validly existing under the laws of the State of
Colorado, and is authorized by its Articles of Incorporation to
transact the business in which it is engaged, as set forth in the
Prospectus;

(ii) U S WEST is a corporation in good standing, duly
incorporated and validly existing under the laws of the state of its
incorporation, and is authorized by its Articles or Certificate of
Incorporation to transact the business in which it is engaged, as set
forth in the Prospectus;

(iii) The execution, delivery and performance of the Indenture
by the Company and U S WEST have been duly authorized by all necessary
corporate action on the part of the Company and U S WEST; the
Indenture has been duly and validly executed and delivered by the
Company and U S WEST and (assuming due authorization, execution and
delivery by the Trustee) constitutes the legal, valid, and binding
agreement of the Company and U S WEST enforceable against each of them
in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting enforcement of creditors' rights
or by general equitable principles; and the Indenture has been duly
qualified under the 1939 Act;

(iv) The Notes, when duly executed and authenticated pursuant
to the Indenture and delivered in accordance with the provisions of
this Agreement, will constitute legal, valid, and binding obligations
of the Company enforceable against the Company in accordance with
their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting enforcement of creditors' rights or by
general equitable principles;

(v) The execution, delivery and performance of this Agreement
by the Company and U S WEST have been duly authorized by all necessary
corporate action on the part of the Company and U S WEST, and this
Agreement has been duly and validly executed and delivered by each of
the Company and U S WEST;

(vi) All federal and state regulatory consents, approvals,
authorizations, or other orders (except as to state securities or
"blue sky" laws, as to which such counsel need express no opinion)
legally required for the execution by the Company and U S WEST of the
Indenture, and the issuance and sale of the Notes and the Guarantees
pursuant to the terms of this Agreement, have been obtained;

(vii) Except as to financial statements and schedules contained
therein, which such opinion need not pass upon, the Registration
Statement (including the Prospectus) complies, and at the time it
became effective complied, as to form in

9
<PAGE>

all material respects with the requirements of the 1933 Act and the
applicable instructions, rules and regulations of the SEC thereunder;

(viii) The Guarantees, when duly executed pursuant to the
Indenture and delivered in accordance with the provisions of this
Agreement, will constitute legal, valid, and binding obligations of U
S WEST, as guarantor, enforceable against U S WEST in accordance with
their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting enforcement of creditors' rights or by
general equitable principles;

(ix) The Registration Statement is effective under the 1933 Act
and, to the best of such counsel's 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 SEC; and

(x) The enforceability and legal, valid, and binding nature of
the agreements and obligations of the Company and U S WEST set forth
in the Indenture, the Guarantees, the Notes and this Agreement (the
"Agreements") are not affected by, and the performance of the
obligations set forth in such Agreements, the issuance and sale of the
Notes and the Guarantees and the consummation of the transactions
contemplated in such Agreements are not prevented or restricted by,
any action, suit, proceeding, order, or ruling relating to, or issued
or arising as a result of, the Divestiture (as hereinafter defined).

In rendering such opinion, such counsel may rely (i) as to matters of
New York law upon the opinion referred to in Section 5(b)(2) hereof without
independent verification; and (ii) as to matters of fact, to the extent
such counsel deems proper, on certificates of responsible officers of the
Company, U S WEST, and public officials.

In addition, such counsel shall state that it has not independently
verified the accuracy, completeness or fairness of the statements contained
in the Registration Statement or the Prospectus and does not assume any
responsibility for the accuracy, completeness or fairness of such
statements; however, nothing has come to such counsel's attention which
leads such counsel to believe that the Registration Statement and the
Prospectus (except as to the financial statements and the notes thereto,
and the other financial and statistical data included therein, as to which
such counsel need express no opinion), and each amendment or supplement
thereto, as of their respective effective or issue dates or, if an Annual
Report on Form 10-K has been filed by the Company or U S WEST with the SEC
subsequent to the effectiveness of the Registration Statement, then at the
time of the most recent such filing, and at the date of such opinion,
contained or contains any untrue statements of a material fact or omitted
or omits to state a material fact required to be stated therein or
necessary to make the statements therein not

10
<PAGE>

misleading or that the Prospectus, as amended or supplemented as of the
date of such opinion (or, if such opinion is being delivered in connection
with the purchase of Notes by an Agent as principal pursuant to Section
8(c) hereof, at the date of any agreement by the Agent to purchase Notes as
principal and at the Settlement Date with respect thereto), contains an
untrue statement of a material fact or omits 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.

Except as specifically provided in clause (ix) above, such opinion may
state that it does not address the impact on the opinions contained therein
of any litigation or ruling relating to the divestiture by American
Telephone and Telegraph Company of ownership of its operating telephone
companies (the "Divestiture").

(2) OPINION OF COUNSEL TO THE AGENTS. The favorable opinion of Brown
& Wood, counsel to the Agents, covering the matters referred to in
subsection (b)(1) under the subheadings (i), (ii), (iii), (iv), (v), (vii),
(viii) and (ix) and the penultimate paragraph of subsection (b)(1) above,
subject to the final paragraph of subsection (b)(1) above, and with respect
to such other matters as the Agents may reasonably request. In rendering
such opinion, Brown & Wood may rely as to matters of Colorado law, upon the
opinion referred to in Section 5(b)(1) without independent verification.

(c) COMPANY OFFICERS' CERTIFICATE. On the date hereof, the Agents shall
have received a certificate of the President, any Vice President, an assistant
secretary or an assistant treasurer, and the chief financial officer, chief
accounting officer, treasurer, controller, or an assistant treasurer or
assistant controller of the Company in which such officers shall state that the
representations and warranties of the Company in this Agreement are true and
correct as if made at and as of such date, that the Company has complied with
all agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to such date, 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 SEC, 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 Company and its subsidiaries, taken as a whole, except as set
forth in or contemplated by the Prospectus.

(d) US WEST OFFICERS' CERTIFICATE. On the date hereof, the Agents shall
have received a certificate of the President, any Vice President, an assistant
secretary or an assistant treasurer, and the chief financial officer, chief
accounting officer, treasurer, controller, or an assistant treasurer or
controller of U S WEST in which such officers shall state that the
representations and warranties of U S WEST in this Agreement are true and
correct as if made at and as of such date, that U S WEST has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to such date, 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 SEC, and that, subsequent to
the date of the most recent

11
<PAGE>

financial statements in the Prospectus, there has been no material adverse
change in the financial position or results of operations of U S WEST and its
subsidiaries, taken as a whole, except as set forth in or contemplated by the
Prospectus.

(e) COMFORT LETTER OF ARTHUR ANDERSEN LLP.. On the date hereof, the
Agents shall have received a letter from Arthur Andersen LLP. addressed to the
Company, U S WEST and the Agents, dated as of the date hereof and in form and
substance satisfactory to the Agents.

(f) OTHER DOCUMENTS. On the date hereof and on each Settlement Date,
counsel to the Agents shall have been furnished with such documents and opinions
as such counsel may reasonably require for the purpose of enabling such counsel
to pass upon the issuance and sale of Notes as herein contemplated and related
proceedings, or in order to evidence the accuracy and completeness of any of the
representations and warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company and U S WEST in
connection with the issuance and sale of Notes as herein contemplated shall be
satisfactory in form and substance to the Agents and to counsel to the Agents.

If any condition specified in this Section 5 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
applicable Agent or Agents by written notice to the Company and U S WEST at any
time and any such termination shall be without liability of any party to any
other party, except that the covenant regarding provision of an earnings
statement set forth in Section 4(d) hereof, the indemnity and contribution
agreement set forth in Section 9 hereof, the provisions concerning payment of
expenses under Section 10 hereof, the provisions concerning the representations,
warranties, indemnities and agreements to survive delivery of Section 11 hereof,
the provisions relating to notices set forth in Section 13 hereof, the
provisions relating to governing law and forum set forth in Section 14 hereof,
and the provisions relating to parties set forth in Section 15 hereof shall
remain in effect.

6. CONDITIONS OF COMPANY'S OBLIGATIONS.

The obligation of the Company to deliver the Notes upon payment therefor
will be subject to the conditions that (i) the Indenture will be qualified under
the 1939 Act, (ii) no stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall be in effect, and
(iii) no proceedings for that purpose shall be pending before, or threatened by,
the SEC.

If any condition specified in this Section 6 shall not have been fulfilled
when required to be fulfilled, this Agreement may be terminated by the Company
by written notice to the Agents at any time and such termination shall be
without liability of any party to any other party, except that the covenant
regarding provision of an earnings statement set forth in Section 4(d) hereof,
the indemnity and contribution agreement set forth in Section 9 hereof, the
provisions regarding payment of expenses under Section 10 hereof, the provisions
concerning the representations, warranties, indemnities and agreements to
survive delivery of Section 11 hereof, the provisions

12
<PAGE>

relating the notices set forth in Section 13 hereof, the provisions relating to
governing law and forum set forth in Section 14 hereof, and the provisions
relating to parties set forth in Section 15 hereof shall remain in effect.

7. DELIVERY OF AND PAYMENT FOR NOTES SOLD THROUGH AN AGENT.

Delivery of Notes sold through an Agent as agent shall be made by the
Company to such Agent for the account of any purchaser only against payment
therefor in immediately available funds. In the event that a purchaser shall
fail either to accept delivery of or to make payment for a Note on the date
fixed for settlement, such Agent shall promptly notify the Company and deliver
such Note to the Company and, if such Agent has theretofore paid the Company for
such Note, the Company will promptly return such funds to such Agent. If such
failure occurred for any reason other than default by such Agent in the
performance of its obligations hereunder, the Company will reimburse such Agent
on an equitable basis for its loss of the use of the funds for the period such
funds were credited to the Company's account.

8. ADDITIONAL COVENANTS OF THE COMPANY AND U S WEST.

The Company and U S WEST covenant and agree with the Agents that:

(a) REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. Each acceptance by
the Company of an offer for the purchase of Notes (whether to one or more Agents
as principal or through an Agent as agent), and each delivery of Notes (whether
to one or more Agents as principal or through an Agent as agent), shall be
deemed to be an affirmation that the representations and warranties of the
Company and U S WEST contained in this Agreement and in any certificate
theretofore delivered to the Agents pursuant hereto are true and correct at the
time of such acceptance or sale, as the case may be, and an undertaking that
such representations and warranties will be true and correct at the time of
delivery to such Agent or Agents or to the purchaser or its agent, as the case
may be, of the Note or Notes relating to such acceptance or sale, as the case
may be, as though made at and as of each such time (and it is understood that
such representations and warranties shall relate to the Registration Statement
and Prospectus as amended and supplemented to each such time).

(b) SUBSEQUENT DELIVERY OF CERTIFICATES. Each time that the Registration
Statement or the Prospectus shall be amended or supplemented (other than by an
amendment or supplement providing solely for a change in the interest rate or
formula applicable to the Notes or a change in the principal amount of Notes
remaining to be sold or similar changes), or there is filed with the SEC any
document incorporated by reference into the Prospectus or (if required in
connection with the purchase of Notes by one or more Agents as principal) the
Company sells Notes to such Agent or Agents as principal, each of the Company
and U S WEST shall furnish or cause to be furnished to the Agent(s) forthwith a
certificate in form satisfactory to the Agent(s) to the effect that the
statements contained in the certificates referred to in Sections 5(c) and 5(d)
hereof which were last furnished to the Agents are true and correct at the time
of such amendment or

13
<PAGE>

supplement or filing or sale, as the case may be, as though made at and as of
such time (except that such statements shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to such
time) or, in lieu of such certificates, certificates of the same tenor as the
certificates referred to in Sections 5(c) and 5(d) hereof, modified as necessary
to relate to the Registration Statement and the Prospectus as amended and
supplemented to the time of delivery of such certificates.

(c) SUBSEQUENT DELIVERY OF LEGAL OPINIONS. Each time that the
Registration Statement or the Prospectus shall be amended or supplemented (other
than by an amendment or supplement providing solely for a change in the interest
rate or formula applicable to the Notes or a change in the principal amount of
Notes remaining to be sold or similar changes), or there is filed with the SEC
any document incorporated by reference into the Prospectus (other than a
document setting forth or incorporating by reference financial statements or
other information as of and for a fiscal quarter, unless specifically requested
by all of the Agents) or (if required in connection with the purchase of Notes
by one or more Agents as principal) the Company sells Notes to such Agent or
Agents as principal, the Company and U S WEST shall furnish or cause to be
furnished to the Agent(s) and to counsel to the Agents a written opinion of
counsel to the Company and U S WEST, satisfactory to the Agent(s), dated the
date of delivery of such opinion, in form satisfactory to the Agent(s), of the
same tenor as the opinion referred to in Section 5(b)(1) hereof but modified, as
necessary, to relate to the Registration Statement and the Prospectus as amended
and supplemented to the time of delivery of such opinion or, in lieu of such
opinion, counsel last furnishing such opinion to the Agents shall furnish the
Agent(s) with a letter to the effect that the Agent(s) may rely on such last
opinion to the same extent as though it was dated the date of such letter
authorizing reliance (except that statements in such last opinion shall be
deemed to relate to the Registration Statement and the Prospectus as amended and
supplemented to the time of delivery of such letter authorizing reliance).

(d) SUBSEQUENT DELIVERY OF COMFORT LETTERS. Each time that the
Registration Statement or the Prospectus shall be amended or supplemented to
include additional financial information or there is filed with the SEC any
document incorporated by reference into the Prospectus which contains additional
financial information, or (if required in connection with the purchase of Notes
by one or more Agents as principal) the Company sells Notes to such Agent or
Agents as principal, the Company and U S WEST shall cause Arthur Andersen LLP.
forthwith to furnish to the Agent(s) a letter, dated the date of filing of such
amendment, supplement or document with the SEC, or the date of such sale, as the
case may be, in form satisfactory to the Agent(s), of the same tenor as the
portions of the letter referred to in Section 5(g) hereof, but modified to
relate to the Registration Statement and Prospectus, as amended and supplemented
to the date of such letter, and with such other changes as may be necessary to
reflect changes in the financial statements and other information derived from
the accounting records of the Company and U S WEST; provided, however, that if
the Registration Statement or the Prospectus is amended or supplemented solely
to include financial information as of and for a fiscal quarter, Arthur Andersen
LLP. may limit the scope of such letter to the unaudited financial statements
included in such amendment or supplement, unless any other information included
therein of an

14
<PAGE>

accounting, financial, or statistical nature is of such a nature that, in the
reasonable judgment of the Agent(s), such letter should cover such other
information.

9. INDEMNIFICATION AND CONTRIBUTION.

(a) The Company and U S WEST, jointly and severally, will indemnify and
hold each Agent harmless against any losses, claims, damages, or liabilities,
joint or several, to which such Agent may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus supplement, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and will reimburse
each Agent for any legal or other expenses reasonably incurred by such Agent, as
such expenses are incurred in connection with investigating or defending any
such loss, claim, damage, liability or action or amounts paid in settlement of
any litigation or investigation or proceeding related thereto if such settlement
is effected with the written consent of the Company and U S WEST; provided,
however, that the Company and U S WEST will not be liable in any such case to
the extent that any such loss, claim, damage, or liability arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in any of such documents in reliance upon and in
conformity with written information furnished to the Company or U S WEST by the
Agents specifically for use therein or in reliance upon and in conformity with
the Statement of Eligibility of the Trustee under the Indenture.

(b) The Agents will indemnify and hold harmless the Company and U S WEST
against any losses, claims, damages, or liabilities to which they may become
subject, under the 1933 Act or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus supplement, or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company or U S WEST by the Agents specifically for use therein,
and will reimburse any legal or other expenses reasonably incurred by the
Company or U S WEST, as such expenses are incurred in connection with
investigating or defending any such loss, claim, damage, liability, or action or
amounts paid in settlement of any litigation or investigation or proceeding
related thereto if such settlement is effected with the consent of the Agents.

(c) Promptly after receipt by an indemnified party under this Section 9 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be

15
<PAGE>

made against the indemnifying party under this Section, notify the indemnifying
party of the commencement thereof, but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under this Section. In case any such action
is brought against any indemnified party and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 9 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. 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.

(d) If the indemnification provided for in this Section 9 is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages, or
liabilities referred to in subsection (a) or (b) above in such proportion as is
appropriate to reflect the relative benefits received by the Company and U S
WEST on the one hand and the Agents on the other from the offering of the Notes
and also to reflect the relative fault of the Company and U S WEST on the one
hand and the Agents on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, or liabilities as well as any
other relevant equitable considerations. The relative benefits received by the
Company and U S WEST on the one hand and the Agents on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering of
Notes by the Agents (before deducting expenses) received by the Company and U S
WEST bear to the total underwriting discounts and commissions received by the
Agents. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, U S WEST, or the Agents and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages, or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), the
Agents shall notbe required to contribute any amount in excess of the amount by
which the total price at which the Notes sold by such Agents and distributed to
the public were offered to the public exceeds the amount of any damages which
such Agents have 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

16
<PAGE>

(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.

(e) The obligations of the Company and U S WEST under this Section 9 shall
be in addition to any liability which the Company or U S WEST may otherwise have
and shall extend, upon the same terms and conditions, to each person, if any,
who controls each Agent within the meaning of the Act or the 1934 Act; the
Agents' obligations under this Section 9 shall be in addition to any liability
which the Agents may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company or U S WEST, to each officer of the
Company or U S WEST who has signed the Registration Statement, and to each
person, if any, who controls the Company or U S WEST within the meaning of the
1933 Act or the 1934 Act.

10. PAYMENT OF EXPENSES.

The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including:

(a) The preparation and filing of the Registration Statement and all
amendments thereto and the Prospectus and any amendments or supplements thereto;

(b) The preparation, filing and reproduction of this Agreement;

(c) The preparation, printing, issuance and delivery of the Notes,
including any fees and expenses relating to the use of Notes in book-entry form;

(d) The fees and disbursements of the Company's accountants and counsel,
of the Trustee and its counsel, and of any calculation agent or exchange rate
agent;

(e) The reasonable fees and disbursements of counsel to the Agents
incurred in connection with the establishment of the program relating to the
Notes and incurred from time to time in connection with the transactions
contemplated hereby;

(f) The qualification of the Notes under state securities laws in
accordance with the provisions of Section 4(f) hereof, including filing fees and
the reasonable fees and disbursements of counsel for the Agents in connection
therewith and in connection with the preparation of any Blue Sky or Legal
Investment Survey;

(g) The printing and delivery to the Agents in such quantities as are
reasonably requested of copies of the Registration Statement and any amendments
thereto, and of the Prospectus and any amendments or supplements thereto, and
the delivery by the Agents of the Prospectus and any amendments or supplements
thereto in connection with solicitations or confirmations of sales of the Notes;

17
<PAGE>

(h) The preparation, reproducing and delivery to the Agents of copies of
the Indenture and all supplements and amendments thereto;

(i) Any fees charged by rating agencies for the rating of the Notes;

(j) The fees and expenses incurred in connection with any listing of Notes
on a securities exchange;

(k) The fees and expenses incurred with respect to any filing with the
National Association of Securities Dealers, Inc.;

(l) Any advertising and other out-of-pocket expenses of the Agents
incurred with the approval of the Company; and

(m) The cost of providing any CUSIP or other identification numbers for
the Notes.

11. REPRESENTATIONS, WARRANTIES, INDEMNITIES AND AGREEMENTS TO SURVIVE
DELIVERY.

All representations, warranties, indemnities and agreements contained in
this Agreement or in certificates of officers of the Company or U S WEST
submitted pursuant hereto or thereto shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of the Agents
of the Company, or U S WEST, or any of their officers, directors or any
controlling person, and shall survive each delivery of and payment for any of
the Notes. In no event shall the Company or U S WEST be liable to the Agents
for damages on account of loss of anticipated profits.

12. TERMINATION.

(a) TERMINATION OF THIS AGREEMENT. This Agreement (excluding any
agreement hereunder by one or more Agents to purchase Notes as principal) may be
terminated, for any reason at any time, by any Agent as to itself or by the
Company as to all or any of the Agents upon the giving of 7 days written notice
of such termination to the other parties hereto.

(b) TERMINATION OF AGREEMENT TO PURCHASE NOTES AS PRINCIPAL. The
applicable Agent or Agents may terminate any agreement hereunder by such Agent
or Agents to purchase Notes as principal, immediately upon notice to the Company
and U S WEST, at any time prior to the Settlement Date relating thereto if (i)
there has been, since the respective dates as of which information is given in
the Registration Statement, any change in the financial condition of the Company
or of U S WEST and its subsidiaries considered as one enterprise, or in the
earnings, affairs, or business prospects of the Company or of U S WEST and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, the effect of which is, in the judgment of such
Agent or Agents, so material and adverse as to make it impracticable to

18
<PAGE>

market the Notes or enforce contracts for the sale thereof; or (ii) trading in
any securities of the Company or U S WEST shall have been suspended by the SEC
or the New York Stock Exchange, or trading in securities generally on the New
York Stock Exchange shall have been suspended or limited or minimum prices shall
have been established on such exchange; or (iii) a banking moratorium shall have
been declared either by Federal or New York State authorities or a banking
moratorium shall have been declared by the relevant authorities in the country
or countries of origin of any foreign currency or currencies in which the Notes
are denominated or payable, or (iv) there shall have occurred any outbreak or
material escalation of hostilities or other calamity or crisis the effect of
which in the financial markets in the United States is such as to make it, in
the judgment of such Agent or Agents, impracticable to market the Notes or
enforce contracts for the sale thereof; or (v) the rating assigned by any
nationally recognized securities rating agency to any debt securities of the
Company or U S WEST as of the date of the agreement to purchase the Notes shall
have been lowered since that date or any such rating agency shall have publicly
announced thatit has any of such debt securities under consideration for
possible downgrade.

(c) GENERAL. In the event of any such termination, no party will have any
liability to any other party hereto, except that (i) the Agents shall be
entitled to any commissions earned in accordance with the third paragraph of
Section 3(b) hereof, (ii) if at the time of termination (a) any Agent shall own
any Notes purchased by it as principal with the intention of reselling them or
(b) an offer to purchase any of the Notes has been accepted by the Company but
the time of delivery to the purchaser or his agent of the Notes relating thereto
has not occurred, the conditions set forth in Sections 5 and 6 hereof shall
remain in effect until such Notes are so resold or delivered, as the case may
be, and (iii) the covenant set forth in Section 4(d) hereof, the indemnity and
contribution agreements set forth in Section 9 hereof, and the provisions of
Sections 10, 11, 13, 14 and 15 hereof shall remain in effect.

13. NOTICES.

Unless otherwise provided herein, all notices required under the terms and
provisions hereof shall be in writing, either delivered by hand, by mail or by
telecopier or telegram, and any such notice shall be effective when received at
the address specified below.

If to the Company:

U S WEST Capital Funding, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
Attention: Treasurer
Telecopy No.: (303) 793-6657

If to U S WEST:

19
<PAGE>

U S WEST, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
Attention: Treasurer
Telecopy No.: (303) 793-6657

If to the Agents:

[NOTICE INFORMATION]

or at such other address as such party may designate from time to time by notice
duly given in accordance with the terms of this Section 13.

14. GOVERNING LAW; FORUM.

This Agreement and all the rights and obligations of the parties shall be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed in such State. Any suit,
action or proceeding brought by the Company or U S WEST against any Agent in
connection with or arising under this Agreement shall be brought solely in the
state or federal court of appropriate jurisdiction located in the Borough of
Manhattan, The City of New York.

15. PARTIES.

This Agreement shall inure to the benefit of and be binding upon the
Agents, the Company, U S WEST 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 parties hereto and their
respective successors and the controlling persons and officers and directors
referred to in Section 9 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 parties
hereto and 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 Notes shall be deemed to be
a successor by reason merely of such purchase.

16. COUNTERPARTS.

This Agreement may be executed in one or more counterparts and, if executed
in more than one counterpart, the executed counterparts hereof shall constitute
a single instrument.

20
<PAGE>

If the foregoing is in accordance with the Agents' understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement
among the Agents, U S WEST and the Company in accordance with its terms.

Very truly yours,

U S WEST CAPITAL FUNDING, INC.

By:
-------------------------------------
Name:
Title:

U S WEST, INC.

By:
-------------------------------------
Name:
Title:

Confirmed and Accepted, as of the date
first above written:

[AGENTS]

By:
-------------------------------------
Name:
Title:

<PAGE>

EXHIBIT A

The following terms, if applicable, shall be agreed to by one or more
Agents and the Company in connection with each sale of Notes:

Principal Amount: $_______
(or principal amount of foreign currency or composite currency)

Interest Rate:
If Fixed Rate Note, Interest Rate:

If Floating Rate Note:
Interest Rate Basis:
Initial Interest Rate, if any:
Spread and/or Spread Multiplier, if any:
Interest Reset Date(s):
Interest Payment Date(s):
Index Maturity:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Fixed Rate Commencement Date:
Fixed Interest Rate:
Calculation Agent:

If Redeemable:
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction, if any:

If Repayable:
Optional Repayment Date(s):

Stated Maturity Date:
Purchase Price: ___%, plus accrued interest, if any, from
______________________
Settlement Date and Time:
Specified Currency:
Authorized Denominations:
Additional/Other Terms:

<PAGE>

Also, in connection with the purchase of Notes by one or more Agents as
principal, agreement as to whether the following will be required:

Officers' Certificates pursuant to Section 8(b) of the Distribution
Agreement.
Legal Opinions pursuant to Section 8(c) of the Distribution Agreement.
Comfort Letter pursuant to Section 8(d) of the Distribution Agreement.
Stand-off Agreement pursuant to Section 4(h) of the Distribution Agreement.

<PAGE>

SCHEDULE A

As compensation for the services of the Agents hereunder, the Company shall
pay the applicable Agent, on a discount basis, a commission for the sale of each
Note equal to the principal amount of such Note multiplied by the appropriate
percentage set forth below:

PERCENT OF
MATURITY RANGES PRINCIPAL AMOUNT
--------------- ----------------
<S> <C>
From 9 months to less than 1 year ___%

From 1 year to less than 18 months ___

From 18 months to less than 2 years ___

From 2 years to less than 3 years ___

From 3 years to less than 4 years ___

From 4 years to less than 5 years ___

From 5 years to less than 6 years ___

From 6 years to less than 7 years ___

From 7 years to less than 10 years ___

From 10 years to less than 15 years ___

From 15 years to less than 20 years ___

From 20 years to 40 years ___

Greater than 40 years *

</TABLE>
- -----------------
* As agreed to by the Company and the applicable Agent at the time of sale.

<PAGE>

Exhibit 4-A

- ------------------------------------------------------------------------------

U S WEST CAPITAL FUNDING, Inc.,
Issuer,

U S WEST, Inc.,
Guarantor

and

The First National Bank of Chicago,
Trustee

------------------

INDENTURE
DATED AS OF _________ __, 1998

--------------------

Providing for the Issuance of Debt
Securities in Series
of Guaranteed Debt

<PAGE>

TIE-SHEET

Reconciliation and tie between Indenture dated as of __________ ___,
1998 and the Trust Indenture Act of 1939. This reconciliation section does not
constitute part of the Indenture.
<TABLE>
<CAPTION>

TRUST INDENTURE ACT INDENTURE
OF 1939 Section SECTION
----------------- -------
<S> <C>
301(a)(1) . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
(a). . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
(b). . . . . . . . . . . . . . . . . . . . . . . . 7.08, 7.10
(c). . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a). . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b). . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c). . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a). . . . . . . . . . . . . . . . . . . . . . . . . 2.07
(b). . . . . . . . . . . . . . . . . . . . . . . . 10.03
(c). . . . . . . . . . . . . . . . . . . . . . . . 10.03
313(a). . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
(b)(2) . . . . . . . . . . . . . . . . . . . . . . 7.06
(c). . . . . . . . . . . . . . . . . . . . . . . . 4.02, 11.02
(d). . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a). . . . . . . . . . . . . . . . . . . . . . . . . 4.02, 11.02
(b). . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
(d). . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
(e). . . . . . . . . . . . . . . . . . . . . . . . 11.05
(f). . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a). . . . . . . . . . . . . . . . . . . . . . . . . 7.01(b)
(b). . . . . . . . . . . . . . . . . . . . . . . . 7.05, 11.02
(c). . . . . . . . . . . . . . . . . . . . . . . . 7.01(a)
(d). . . . . . . . . . . . . . . . . . . . . . . . 6.05,
7.01(c)
(e). . . . . . . . . . . . . . . . . . . . . . . . 6.07, 6.11
316(a) (last sentence). . . . . . . . . . . . . . . . . 2.11
(a)(1)(A). . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B). . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
(b). . . . . . . . . . . . . . . . . . . . . . . . 6.07
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . 6.01, 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . 6.09
(b). . . . . . . . . . . . . . . . . . . . . . . . 2.06
318(a). . . . . . . . . . . . . . . . . . . . . . . . . 11.01
</TABLE>
<PAGE>

TABLE OF CONTENTS*
<TABLE>
<CAPTION>
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C>
Section 1.01 Definitions. . . . . . . . . . . . . . . . . . . . . . 1
Depositary . . . . . . . . . . . . . . . . . . . . . . 2
Global Security . . . . . . . . . . . . . . . . . . . 2
Section 1.02 Other Definitions. . . . . . . . . . . . . . . . . . . 4
Section 1.03 Incorporation by Reference of
Trust Indenture Act. . . . . . . . . . . . . . . . . 4
Section 1.04 Rules of Construction. . . . . . . . . . . . . . . . . 5

ARTICLE 2.
THE SECURITIES

Section 2.01 Issuable in Series.. . . . . . . . . . . . . . . . . . 5
Section 2.02 Establishment of Terms and
Form of Series of Securities and Guarantees . . . . 5
Section 2.03 Execution, Authentication,
and Delivery. . . . . . . . . . . . . . . . . . . . . 8
Section 2.04 Registrar and Paying Agent. . . . . . . . . . . . . . 9
Section 2.05 Payment on Securities. . . . . . . . . . . . . . . . . 10
Section 2.06 Paying Agent to Hold Money in Trust. . . . . . . . . . 11
Section 2.07 Securityholder lists; Ownership of Securities . . . . 11
Section 2.08 Transfer and Exchange. . . . . . . . . . . . . . . . . 12
Section 2.09 Replacement Securities.. . . . . . . . . . . . . . . . 13
Section 2.10 Outstanding Securities.. . . . . . . . . . . . . . . . 13
Section 2.11 Treasury Securities. . . . . . . . . . . . . . . . . . 14
Section 2.12 Temporary Securities.. . . . . . . . . . . . . . . . . 14
Section 2.13 Cancellation.. . . . . . . . . . . . . . . . . . . . . 15
Section 2.14 Defaulted Interest.. . . . . . . . . . . . . . . . . . 16
Section 2.15 Global Securities. . . . . . . . . . . . . . . . . . . 16
Section 2.16 Unconditional Guarantee. . . . . . . . . . . . . . . . 17
Section 2.17 Execution of Guarantees. . . . . . . . . . . . . . . . 18
Section 2.18 Assumption by Guarantor . . . . . . . . . . . . . . . 18

ARTICLE 3.
REDEMPTION

Section 3.01 Notice to Trustee.. . . . . . . . . . . . . . . . . . 19
Section 3.02 Selection of Securities to be Redeemed.. . . . . . . . 19
Section 3.03 Notice of Redemption.. . . . . . . . . . . . . . . . . 19
Section 3.04 Effect of Notice of Redemption.. . . . . . . . . . . . 20
Section 3.05 Deposit of Redemption Price. . . . . . . . . . . . . . 21
Section 3.06 Securities Redeemed in Part. . . . . . . . . . . . . . 21

</TABLE>

i
<PAGE>

ARTICLE 4.
COVENANTS
<TABLE>
<CAPTION>

<S> <C>
Section 4.01 Payment of Securities. . . . . . . . . . . . . . . . . . 22
Section 4.02 Reports by the Guarantor . . . . . . . . . . . . . . . . 21
Section 4.03 Lien on Assets . . . . . . . . . . . . . . . . . . . . . 22

ARTICLE 5.
SUCCESSOR CORPORATION

Section 5.01 When the Company May Merge, etc. . . . . . . . . . . . . 22
Section 5.02 When the Guarantor May Merge, etc. . . . . . . . . . . . 23

ARTICLE 6.
DEFAULTS AND REMEDIES

Section 6.01 Events of Default. . . . . . . . . . . . . . . . . . . . 23
Section 6.02 Acceleration.. . . . . . . . . . . . . . . . . . . . . . 24
Section 6.03 Other Remedies Available to Trustee. . . . . . . . . . . 24
Section 6.04 Waiver of Existing Defaults. . . . . . . . . . . . . . . 25
Section 6.05 Control by Majority. . . . . . . . . . . . . . . . . . . 25
Section 6.06 Limitation on Suits by Securityholders.. . . . . . . . . 25
Section 6.07 Rights of Holders to Receive Payment. . . . . . . . . . .26
Section 6.08 Collection Suits by Trustee. . . . . . . . . . . . . . . 26
Section 6.09 Trustee May File Proofs of Claim.. . . . . . . . . . . . 26
Section 6.10 Priorities . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.11 Undertaking for Costs. . . . . . . . . . . . . . . . . . 27
.

ARTICLE 7.
TRUSTEE

Section 7.01 Duties of Trustee.. . . . . . . . . . . . . . . . . . . 27
Section 7.02 Rights of Trustee . . . . . . . . . . . . . . . . . . . 28
Section 7.03 Individual Rights of Trustee. . . . . . . . . . . . . . 28
Section 7.04 Trustee's Disclaimer. . . . . . . . . . . . . . . . . . 29
Section 7.05 Notice of Defaults. . . . . . . . . . . . . . . . . . . 29
Section 7.06 Reports by Trustee to Holders . . . . . . . . . . . . . 29
Section 7.07 Compensation and Indemnity. . . . . . . . . . . . . . . 29
Section 7.08 Replacement of Trustee. . . . . . . . . . . . . . . . . 30
Section 7.09 Successor Trustee, Agents
by Merger, etc. . . . . . . . . . . . . . . . . . . . 32
Section 7.10 Eligibility; Disqualification . . . . . . . . . . . . . 32
Section 7.11 Preferential Collection
of Claims Against the Company . . . . . . . . . . . . 32

</TABLE>

<PAGE>

ARTICLE 8.
DISCHARGE OF INDENTURE
<TABLE>
<CAPTION>

<S> <C>
Section 8.01 Termination of the Company's
and the Guarantor's Obligations . . . . . . . . . . . 32
Section 8.02 Application of Trust Money. . . . . . . . . . . . . . . 33
Section 8.03 Repayment to the Company or the Guarantor . . . . . . . 34
Section 8.04 Indemnity for Government Obligations. . . . . . . . . . 34

ARTICLE 9.
AMENDMENTS AND WAIVERS

Section 9.01 Without Consent of Holders. . . . . . . . . . . . . . . 34
Section 9.02 With Consent of Holders.. . . . . . . . . . . . . . . . 35
Section 9.03 Compliance with Trust Indenture Act . . . . . . . . . . 36
Section 9.04 Revocation and Effect of Consents . . . . . . . . . . . 36
Section 9.05 Notation on or Exchange of Securities.. . . . . . . . . 36
Section 9.06 Trustee Protected.. . . . . . . . . . . . . . . . . . . 36

ARTICLE 10.
SINKING FUNDS

Section 10.01 Applicability of Article . . . . . . . . . . . . . . . 37
Section 10.02 Satisfaction of Sinking
Fund Payments with Securities . . . . . . . . . . . 37
Section 10.03 Redemption of Securities
for Sinking Fund . . . . . . . . . . . . . . . . . . 37

ARTICLE 11.
MISCELLANEOUS

Section 11.01 Trust Indenture Act Controls.. . . . . . . . . . . . . 38
Section 11.02 Notices. . . . . . . . . . . . . . . . . . . . . . . . 38
Section 11.03 Communication by Holders
with Other Holders. . . . . . . . . . . . . . . . . . 39
Section 11.04 Certificate and Opinion as
to Conditions Precedent.. . . . . . . . . . . . . . . 39
Section 11.05 Statements Required in
Certificate or Opinion. . . . . . . . . . . . . . . . 40
Section 11.06 Rules by Trustee and Agents. . . . . . . . . . . . . . 40
Section 11.07 Legal Holidays.. . . . . . . . . . . . . . . . . . . . 40
Section 11.08 Governing Law. . . . . . . . . . . . . . . . . . . . . 40
Section 11.09 No Adverse Interpretation
of Other Agreements.. . . . . . . . . . . . . . . . . 41
Section 11.10 No Recourse Against Others.. . . . . . . . . . . . . . 41
Section 11.11 Execution in Counterparts. . . . . . . . . . . . . . . 41
</TABLE>

iii

<PAGE>

ARTICLE 12.
REPAYMENT AT THE OPTION OF THE HOLDER

<TABLE>
<S> <C>
Section 12.01 Applicability of Article 10 . . . . . . . . . . . . . . . . . 41
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>

_________________
*This Table of Contents does not constitute part of this Indenture.

<PAGE>

INDENTURE dated as of _____ __, 1998 among U S WEST CAPITAL
FUNDING, Inc., a Colorado corporation (the "Company"), U S WEST, Inc., a
Delaware corporation (the "Guarantor"), and The First National Bank of
Chicago, a national banking association (the "Trustee").

RECITALS OF THE COMPANY
AND THE GUARANTOR

The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured and
unsubordinated debentures, notes, or other evidences of indebtedness
("Securities") as herein provided.

The Guarantor has duly authorized the execution and delivery of
this Indenture and deems it appropriate from time to time to issue its
guarantees of the Securities on the terms herein provided (the "Guarantees").

All things necessary to make this Indenture a valid agreement of
the Company and the Guarantor, in accordance with its terms, have been done.

For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed as
follows for the equal and ratable benefit of the Holders of the Securities:

ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01 DEFINITIONS.

"Affiliate" means any person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, the Company,
or the Guarantor, as the case may be.

"Agent" means any Paying Agent, Registrar or transfer agent as may
be appointed by the Company from time to time.

"Authorized Newspaper" means a newspaper of general circulation, in
the official language of the country of publication or in the English
language, customarily published on each business day. Whenever successive
weekly publications in an Authorized Newspaper are required hereunder, they
may be made (unless otherwise expressly provided herein) on the same or
different days of the week and in the same or different Authorized Newspapers.

"Board of Directors" mean the Board of Directors of the Company or
the Guarantor, as the case may be, or any duly authorized committee thereof.

1
<PAGE>

"Board Resolution" means a copy of a resolution of the Board of
Directors, certified by the Secretary or an Assistant Secretary of the
Company or the Guarantor, as the case may be, to have been adopted by the
Board of Directors and to be in full force and effect on the date of the
certificate.

"Company" means the party named as such in this Indenture until a
successor replaces it and thereafter means the successor.

"Company Order" means an order signed by two Officers of the
Company.

"Depositary" means, with respect to Securities of any Series, for
which the Company shall determine that such Securities will be issued as a
Global Security, The Depository Trust Company, New York, New York, another
clearing agency, or any successor registered as a clearing agency under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or
other applicable statute or regulation, which, in each case, shall be
designated by the Company pursuant to either Section 2.01 or 2.15.

"Default" means any event which is, or after notice or passage of
time would be, an Event of Default.

"Guarantee" means the agreement of the Guarantor in the form, set
forth in Section 2.16 hereof, to be endorsed on the Securities authenticated
and delivered hereunder.

"Guarantor" means the party named as such in this Indenture until a
successor replaces it and thereafter means the successor.

"Global Security" means, with respect to any Series of Securities,
a Security executed by the Company and delivered by the Trustee to the
Depositary or pursuant to the Depositary's instruction, all in accordance
with the Indenture, which shall be registered in the name of the Depositary
or its nominee.

"Holder" or "Securityholder" means a bearer of an Unregistered
Security or of a coupon appertaining thereto or a person in whose name a
Registered Security is registered on the Registrar's books.

"Indenture" means this Indenture as amended or supplemented from
time to time and shall include the forms and terms of particular Series of
Securities established as contemplated hereunder.

"Interest" when used with respect to an Original Issue Discount
Security which by its terms bears interest only after maturity, means
interest payable after maturity.

"Officer" means the President, any Executive Vice-President, Vice
President, the Treasurer, any Assistant Treasurer, the Secretary, any
Assistant Secretary or the Comptroller or any Assistant Comptroller of the
Company or the Guarantor, as the

2
<PAGE>

case may be.

"Officers' Certificate" means a certificate signed by two Officers
of the Company or the Guarantor, as the case may be.

"Opinion of Counsel" means a written opinion of legal counsel who
is acceptable to the Company, the Guarantor and the Trustee. The counsel may
be an employee of or counsel to the Company or the Trustee.

"Original Issue Discount Security" means any Security which
provides for an amount less than the stated principal amount thereof to be
due and payable upon declaration of acceleration of the maturity thereof
pursuant to Section 6.02.

"Principal" of a Security means the principal of the Security plus,
when appropriate, the premium, if any, on the Security.

"Registered Security" means any Security issued hereunder and
registered as to principal and interest by the Registrar.

"Responsible Officer" when used with respect to the Trustee, means
the chairman or any vice-chairman of the board of directors or trustees, the
chairman or any vice-chairman of the executive committee of the board of
directors or trustees, the president, any executive vice-president, any
senior vice-president, any vice-president, any assistant vice-president, the
treasurer, the secretary, any trust officer, any second or assistant
vice-president, or any other officer or assistant officer of the Trustee
customarily performing functions similar to those performed by the persons
who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his knowledge of and
familiarity with a particular subject.

"SEC" means the Securities and Exchange Commission.

"Series" or Series of Securities" means a series of Securities.

"Securities" means the debentures, notes, or other obligations of
the Company issued, authenticated, and delivered under this Indenture.

"Subsidiary" means any corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company and/or
by one or more other Subsidiaries. For purposes of such definition, "voting
stock" means stock ordinarily having voting power for the election of
directors, whether at all times or only so long as no senior class of stock
has such voting power by reason of any contingency.

"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
777aaa-777bbb) as in effect on the date of this Indenture, except as provided
in Section 9.03.

"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and if, at any
time, there is more

3
<PAGE>

than one Trustee, "Trustee" as used with respect to the Securities of any
Series shall mean the Trustee with respect to that Series.

"U.S. Person" means a citizen, national, or resident of the United
States, a corporation, partnership, or other entity created or organized in
or under the laws of the United States or any political subdivision thereof,
or an estate or trust which is subject to United States federal income
taxation regardless of its source of income.

"Unregistered Security" means any Security issued hereunder which
is not a Registered Security.

"Yield to Maturity" means the yield to maturity, calculated by the
Company at the time of issuance of a Series of Securities or, if applicable,
at the most recent determination of interest on such Series in accordance
with accepted financial practice.

Section 1.02 OTHER DEFINITIONS.
<TABLE>
<CAPTION>
INDENTURE
TERM SECTION
<S> <C>
"Bankruptcy Law". . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Custodian" . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Event of Default". . . . . . . . . . . . . . . . . . . . . . . 6.01
"Legal Holiday" . . . . . . . . . . . . . . . . . . . . . . . . 11.07
"Paying Agent". . . . . . . . . . . . . . . . . . . . . . . . . 2.04
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
"U.S. Government Obligations" . . . . . . . . . . . . . . . . . 8.01
</TABLE>

Section 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.

Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:

"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and the
Guarantor, if and as long as the Guarantor is liable with respect to
any payment of principal of, premium, if any, and interest on any
Security as a result of the Company's default in the timely payment of
any amount due with respect to any Security.

All other terms used in this Indenture that are defined by the TIA,
defined

4
<PAGE>

by TIA reference to another statute, or defined by SEC rule under the TIA
have the meanings assigned to them therein.

Section 1.04 RULES OF CONSTRUCTION.

Unless the context otherwise requires:

(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles;
(3) "or" is not exclusive; and
(4) words in the singular include the plural, and words in the
plural include the singular.

ARTICLE 2.
THE SECURITIES

Section 2.01 ISSUABLE IN SERIES.

The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited. The
Securities may be issued in one or more Series. There may be Registered
Securities and Unregistered Securities within a Series and the Unregistered
Securities may be subject to such restrictions, and contain such legends, as
may be required by United States laws and regulations. All Series of
Securities shall be equally and ratably entitled to the benefits of this
Indenture.

Section 2.02 ESTABLISHMENT OF TERMS AND FORM OF SERIES OF
SECURITIES AND GUARANTEES.

(a) At or prior to the issuance of any Series of Securities, the
following shall be established by a Company Board Resolution, by one or more
Officers of the Company pursuant to a Company Board Resolution, or by an
indenture supplemental hereto:

(1) the title of the Securities of the Series (which title shall
distinguish the Securities of the Series from the Securities of any other
Series and from any other securities issued by the Company);

(2) any limit upon the aggregate principal amount of the Securities of
the Series which may be authenticated and delivered under this Indenture
(which limit shall not pertain to Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the Series pursuant to Section 2.08, 2.09, 2.12, 3.06 or 9.05);

(3) the date or dates on which the principal of the Securities of the
Series is payable;

5
<PAGE>

(4) the rate or rates at which the Securities of the Series shall bear
interest, if any, or the manner of determining such rate or rates of
interest, the date or dates from which such interest shall accrue, the dates
on which such interest shall be payable, and, with respect to Registered
Securities, the record date for the interest payable on any interest payment
date, and the basis upon which interest shall be calculated if other than
that of a 360-day year of twelve 30-day months;

(5) the place or places where the principal of and interest on
Registered and Unregistered, if any, Securities of the Series shall be
payable;

(6) the period or periods within which, the price or prices at which,
and the terms and conditions upon which, Securities of the Series may be
redeemed, in whole or in part, at the option of the Company;

(7) the obligation, if any, of the Company to redeem or purchase
Securities of the Series pursuant to any sinking fund or analogous provisions
or upon the happening of a specified event or at the option of a Holder
thereof and the period or periods within which, the price or prices at which,
and the terms and conditions upon which, Securities of the Series shall be
redeemed or purchased, in whole or in part, pursuant to such obligation;

(8) if in other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the Series shall be
issuable;

(9) if other than the principal amount thereof, the portion of the
principal amount of Securities of the Series which shall be payable upon
declaration of acceleration of the maturity thereof pursuant to Section 6.02;

(10) whether Securities of the Series shall be issuable as Registered
Securities or Unregistered Securities (with or without interest coupons), or
both, and any restrictions applicable to the offering, sale or delivery of
Unregistered Securities and whether, and the terms upon which, Unregistered
Securities of a Series may be exchanged for Registered Securities of the same
Series and vice versa;

(11) whether and under what circumstances the Company will pay
additional amounts on the Securities of that Series held by a person who is
not a U.S. person in respect of taxes or similar charges withheld or deducted
and, if so, whether the Company will have the option to redeem such
Securities rather than pay such additional amounts;

(12) the form or forms of the Securities (or forms thereof if
Unregistered and Registered Securities shall be issuable in such Series),
including such legends as may be required by United States laws or
regulations, the form of any coupons or temporary global Security which may
be issued and the forms of any certificates, opinions or other documents
which may be required hereunder or under United States laws or regulations in
connection with the offering, sale, delivery or exchange of Unregistered
Securities;

6
<PAGE>

(13) whether the Securities of the Series are issuable as a Global
Security and, in such case, the identity of the Depositary for such Series;

(14) if other than such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public or
private debts, the coin or currency, including composite currency, in which
payment of the principal of and premium, if any, or interest on the
Securities of the Series shall be payable;

(15) if the principal of or interest on the Securities of the Series
are to be payable, at the election of the Company or a Holder thereof, in a
coin or currency other than that in which the Securities are stated to be
payable, the coin or currency, including composite currency, in which payment
of the principal of and premium, if any, or interest on Securities of such
Series as to which such election is made shall be payable, the period or
periods within which, and the terms and conditions upon which, such election
may be made;

(16) if the amount of payments of principal of or interest on the
Securities of the Series may be determined with reference to an index based
on coin or currency other than that in which the Securities are stated to be
payable, the manner in which such amounts shall be determined; and

(17) any other terms of the Series (which terms shall not be
inconsistent with the provisions of this Indenture), including any terms
which may be required by or advisable under United States laws or regulations
or advisable in connection with the marketing of Securities of that Series.

(b) All Securities of any one Series shall be substantially
identical except as to denomination and the rate or rates of interest, if
any, and maturity and currency and, except as may otherwise be provided in or
pursuant to a Company Board Resolution or a certificate delivered pursuant to
Section 2.02(c) or in an indenture supplemental hereto. All Securities of
any one Series need not be issued at the same time, and, unless otherwise
provided, a Series may be reopened for issuances of additional Securities of
such Series.

(c) If the terms and form or forms of any Series of Securities are
established by or pursuant to a Company Board Resolution, the Company shall
deliver a copy of such Board Resolution to the Trustee at or prior to the
issuance of such Series with (1) the form or forms of the Securities which
have been approved attached thereto; or (2) if such Board Resolution
authorizes a specific Officer or Officers to establish the terms and form or
forms of the Securities, a certificate of such Officer or Officers
establishing or providing for the establishment of the terms and form or
forms of the Securities, with such form or forms of the Securities attached
to the certificate establishing such form or forms.

(d) Unregistered Securities and their coupons must have the
following statement on their face: "Any United States person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations

7
<PAGE>

provided in Section 165(j) and 1287 of the Internal Revenue Code of 1986, as
amended."

(e) At or prior to the issuance of any of the Guarantees, the
exact form and terms of such Guarantees, which shall comply with the terms of
Section 2.16 hereof, shall be established by an Officers' Certificate of the
Guarantor.

Section 2.03 EXECUTION, AUTHENTICATION, AND DELIVERY.

(a) The Securities shall be executed on behalf of the Company by,
and the Guarantees endorsed thereon shall be executed on behalf of the
Guarantor by, its President, an Executive Vice President or a Vice President,
and by its Treasurer or an Assistant Treasurer, or its Secretary or an
Assistant Secretary. Signatures shall be manual or facsimile. The Company's
seal shall be reproduced on the Securities and may, but need not, be
attested. The Guarantor's seal shall be reproduced on the Guarantees and may,
but need not, be attested. The coupons of Unregistered Securities shall bear
the facsimile signature of the Treasurer or an Assistant Treasurer of the
Company.

(b) If an Officer whose signature is on a Security, a Guarantee or
coupon no longer holds that office at the time the Security or the Guarantee
is authenticated, the Security, Guarantee or coupon shall be valid
nevertheless.

(c) A Security or Guarantee thereon shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent, and no coupon shall be valid until the Security to which it appertains
has been so authenticated. Such signature shall be conclusive evidence that
the Security has been authenticated under this Indenture. Each Unregistered
Security shall be dated the date of its authentication.

(d) The Trustee (or an authenticating agent appointed pursuant to
Section 2.03(f)) shall at any time, and from time to time, authenticate and
deliver Securities of any Series executed and delivered by the Company with
Guarantees endorsed thereon for original issue in an unlimited aggregate
principal amount, upon receipt by the Trustee (or an authentication agent) of
(i) a Company Order or directions pursuant to such a Company Order for the
authentication and delivery of such Securities; (ii) if the terms and form or
forms of the Securities of such Series have been established by or pursuant
to a Board Resolution as permitted pursuant to Section 2.02, a copy of such
Board Resolution and any certificate that may be required pursuant to Section
2.02(c); (iii) an Officers' Certificate of the Guarantor establishing the
terms of the Guarantees; and (iv) an Opinion of Counsel stating:

(1) if the form of such Securities has been established by or pursuant
to a Board Resolution as permitted by Section 2.02, that such form has been
established in conformity with provisions of this Indenture;

(2) if the terms of such Securities have been established by or
pursuant to a Board Resolution as permitted by Section 2.02, that such terms
have been established, or provision has been made for their establishment, in
conformity with the provisions of this indenture; and

8
<PAGE>

(3) that such Securities and Guarantees, when authenticated and
delivered by the Trustee (or an authenticating agent) and issued by the
Company or the Guarantor, as applicable, in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company or the Guarantor, as applicable,
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, reorganization, and other laws of general applicability relating
to or affecting the enforcement of creditors' rights and to general equity
principles.

If the terms and form or forms of such Securities have been established
by or pursuant to a Board Resolution as permitted by Section 2.02, the
Trustee shall not be required to authenticate such Securities if the issue of
such Securities pursuant to this Indenture will materially and adversely
affect the Trustee's own rights, duties or immunities under the Securities
and this Indenture or otherwise in a manner which is not reasonably
acceptable to the Trustee.

Notwithstanding the foregoing, until the Company has notified the
Trustee and the Registrar that, as a result of the action described, the
Company would not suffer adverse consequences under the provisions of United
States law or regulations in effect at the time of the delivery of
Unregistered Securities, (i) delivery of Unregistered Securities will be made
only outside the United States and its possessions, and (ii) Unregistered
Securities will be released in definitive form to the person entitled to
physical delivery thereof only upon presentation of a certificate in the form
prescribed by the Company.

(e) The aggregate principal amount of Securities of any Series
outstanding at any time may not exceed any limit upon the maximum principal
amount for such Series set forth in the Board Resolution (or certificate of
an Officer or Officers) or supplemental indenture pursuant to Section 2.02 or
in any additional Board Resolution or supplemental indenture which shall
reopen a Series of Securities pursuant to Section 2.02.

(f) The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Securities. An authenticating agent may
authenticate Securities whenever the Trustee may do so. Each reference in
this Indenture to authentication by the Trustee includes authentication by
such agent. An authenticating agent has the same rights as an Agent to deal
with the Company or an Affiliate.

Section 2.04 REGISTRAR AND PAYING AGENT.

The Company shall maintain for each Series of Securities an office
or agency where Registered Securities may be presented for registration of
transfer or for exchange ("Registrar") and an office or agency where (subject
to Sections 2.05 and 2.08) Securities may be presented for payment ("Paying
Agent"). With respect to any Series of Securities issued in whole or in part
as Unregistered Securities, the Company shall maintain one or more Paying
Agents located outside the United States and its possessions and shall
maintain such Paying Agents for a period of two years after the principal of
such Unregistered Securities has become due and payable. During any period
thereafter for which it is necessary in order to conform to United States tax
law or regulations, the

9
<PAGE>

Company will maintain a Paying Agent outside the United States and its
possessions to which the Unregistered Securities or coupons appertaining
thereto may be presented for payment and will provide the necessary funds
therefor to such Paying Agent upon reasonable notice. The Registrar shall
keep a register with respect to each Series of Securities issued in whole or
in part as Registered Securities and as to their transfer and exchange. The
Company may appoint one or more co-Registrars and one or more additional
Paying Agents for each Series of Securities and the Company may terminate the
appointment of any co-Registrar. The term "Paying Agent" includes any
additional Paying Agent. The Company shall notify the Trustee of the name
and address of any Agent not a party to this Indenture. If the Company fails
to maintain a Registrar or Paying Agent, the Trustee shall act as such.

Section 2.05 PAYMENT ON SECURITIES.

(a) Subject to the following provisions, the Company will pay to the
Trustee or the Paying Agent the amounts, in such coin or currency as is at
the time legal tender for the payment of public or private debt, at the times
and for the purposes set forth herein and in the text of the Securities
Series, and the Company hereby authorizes and directs the Trustee or the
Paying Agent, from funds so paid to it, to make or cause to be made payment
of the principal of, interest, and premium if any, on the Securities and
coupons of each Series as set forth herein and in the text of such Securities
and coupons. The Trustee will arrange directly with any Paying Agent for the
payment, or the Trustee will make payment, from funds furnished by the
Company, of the principal of, interest, and premium if any, on the Securities
and coupons of each Series by check drawn upon a bank specified by the
Company and acceptable to the Trustee.

(b) Interest, if any, on Registered Securities of a Series shall be
paid on each interest payment date for such Series to the Holder thereof at
the close of business on the relevant record dates specified in the
Securities of such Series. The Company may pay such interest by check mailed
to such Holder's address as it appears on the register for Securities of such
Series. Principal of Registered Securities shall be payable only against
presentation and surrender thereof at the office of the Paying Agent in The
City of New York, unless the Company shall have otherwise instructed the
Trustee in writing.

(c) To the extent provided in the Securities of a Series, (i) interest,
if any, on Unregistered Securities shall be paid only against presentation
and surrender of the coupons for such interest installments as are evidenced
thereby as they mature; and (ii) original issue discount (as defined in
Section 1273 of the Internal Revenue Code of 1986, as amended), if any, on
Unregistered Securities shall be paid only against presentation and surrender
of such Securities; in either case at the office of a Paying Agent located
outside of the United States and its possessions, unless the Company shall
have otherwise instructed the Trustee in writing. Principal of Unregistered
Securities shall be paid only against presentation and surrender thereof as
provided in the Securities of a Series. If at the time a payment of
principal of or interest, if any, or original issue discount, if any, on an
Unregistered Security or coupon shall become due, the payment of the full
amount so payable at the office or offices of all the Paying Agents outside
the United States and its possessions is illegal or effectively precluded
because of the imposition of exchange

<PAGE>

controls or other similar restrictions on the payment of such amount in
United States currency, then the Company will instruct the Trustee in writing
as to how and when such payment will be made and may instruct the Trustee to
make such payments at the office of a Paying Agent located in the United
States, provided that the Company has determined that provision for such
payment in the United States would not cause such Unregistered Security to be
treated as a "registration-required obligation" under United States law and
regulations. Unless otherwise instructed in writing by the Company, no
payments of interest, original issue discounts, or principal with respect to
Unregistered Securities shall be made by a Paying Agent (i) by transfer of
funds into an account maintained by the payee in the United States, (ii)
mailed to an address in the United States, or (iii) paid to a United States
address by electronic funds transfer.

Section 2.06 PAYING AGENT TO HOLD MONEY IN TRUST.

The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust, for the benefit of
Securityholders of any or all Series of Securities, or the Trustee, all money
held by the Paying Agent for the payment of principal or interest on such
Series of Securities, and that the Paying Agent will notify the Trustee of
any default by the Company (or any other obligor on the Securities) in making
any such payment. While any such default continues, the Trustee may require
a Paying Agent to pay all money held by it to the Trustee. If the Company or
a Subsidiary acts as Paying Agent, it shall segregate the money held by it
for the payment of principal or interest on any Series of Securities and hold
such money as a separate trust fund. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee. Upon so doing, the
Paying Agent shall have no further liability for the money so paid. The
Trustee or the Paying Agent may allow and credit to the Company (or any other
obligor on the Securities) interest on any monies received by it hereunder at
such rate as may be agreed upon with the Company (or any other obligor on the
Securities) from time to time and as may be permitted by law.

Section 2.07 SECURITYHOLDER LISTS; OWNERSHIP OF SECURITIES.

(a) The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses
of Holders of each Series of Securities. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee semiannually on or before
the last day of June and December in each year, and at such other times as
the Trustee may request in writing, a list in such form and as of such date
as the Trustee may reasonably require, containing all the information in the
possession or control of the Registrar, the Company, the Guarantor, or any of
the Paying Agents other than the Trustee as to the names and addresses of
Holders of each such Series of Securities.

(b) Ownership of Registered Security of a Series shall be proved by the
register for such Series kept by the Registrar. Ownership of Unregistered
Securities may be proved by the production of such Unregistered Securities,
or by a certificate or affidavit executed by the person holding such
Unregistered Securities, or by a depository with whom such Unregistered
Securities were deposited if the certificate or affidavit is

<PAGE>

satisfactory to the Trustee. The Company, the Trustee, the Guarantor, and
any agent of the Company may treat the bearer or any Unregistered Security or
coupon and the person in whose name a Registered Security is registered as
the absolute owner thereof for all purposes.

Section 2.08 TRANSFER AND EXCHANGE.

(a) Where Registered Securities of a Series are presented to the
Registrar with a request to register their transfer or to exchange them for
an equal principal amount of Registered Securities of the same Series
containing identical terms and provisions and date of maturity of other
authorized denominations, the Registrar shall register the transfer or make
the exchange if its requirements for such transactions are met.

(b) If both Registered and Unregistered Securities are authorized for a
Series of Securities and the terms of such Securities permit, (i)
Unregistered Securities may be exchanged for an equal principal amount of
Registered or Unregistered Securities containing identical terms and
provisions of the same Series and date of maturity in any authorized
denominations upon delivery to the Registrar (or a Paying Agent, if the
exchange is for Unregistered Securities) of the Unregistered Security with
all unmatured coupons and all matured coupons in default appertaining thereto
and if all other requirements of the Registrar (or such Paying Agent) and
such Securities for such exchange are met, and (ii) Registered Securities may
be exchanged for an equal principal amount of Unregistered Securities of the
same Series and date of maturity in any authorized denominations (except that
any coupons appertaining to such Unregistered Securities which have matured
and have been paid shall be detached) upon delivery to the Registrar of the
Registered Securities and if all other requirements of the Registrar (or such
Paying Agent) and such Securities for such exchange are met.

Notwithstanding the foregoing, the exchange of Unregistered Securities
for Registered Securities or Registered Securities for Unregistered
Securities will be subject to the satisfaction of the provisions of United
States law and regulations in effect at the time of such exchange, and no
exchange of Registered Securities for Unregistered Securities will be made
until the Company has notified the Trustee and the Registrar that, as a
result of such exchange, neither the Company nor the Guarantor would suffer
adverse consequences under the provisions of United States law or regulations.

(c) To permit registrations of transfers and exchanges the Trustee (or
an authenticating agent) shall authenticate Securities upon instructions of
the Registrar or, if applicable, a Paying Agent upon surrender of Securities
for registration of transfer or for exchange as provided in this Section.
The Company will not make any charge for any registration of transfer or
exchange but may require the payment by the party requesting such
registration of transfer or exchange of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.

(d) Neither the Company nor the Registrar shall be required (i) to
issue, register the transfer of or exchange Securities of any Series for the
period of 15 days immediately preceding the selection of any such Securities
to be redeemed, or (ii) to

<PAGE>

register the transfer of or exchange Securities of any Series selected,
called, or being called for redemption as a whole or the portion being
redeemed of any such Securities selected, called, or being called for
redemption in part.

(e) Unregistered Securities or any coupons appertaining thereto shall
be transferable by delivery.

Section 2.09 REPLACEMENT SECURITIES.

(a) If a mutilated Security or a Security with a mutilated coupon
appertaining to it is surrendered to the Trustee (or an authenticating
agent), the Company shall issue (with the Guarantee thereon executed by the
Guarantor) and the Trustee (or an authenticating agent) shall authenticate a
replacement Registered Security, if such surrendered security was a
Registered Security, or a replacement Unregistered Security with coupons
corresponding to the coupons appertaining to the surrendered Security, if
such surrendered Security was an Unregistered Security of the same Series and
containing identical terms and provisions, if the Trustee's (or
authenticating agent's) requirements are met.

(b) If the Holder of a Security claims that the Security or any coupon
appertaining thereto has been lost, destroyed, or wrongfully taken, the
Company shall issue (with the Guarantee thereon executed by the Guarantor)
and the Trustee (or an authenticating agent), shall authenticate a
replacement Registered Security, if such Holder's claim pertains to a
Registered Security, or a replacement Unregistered Security with coupons
corresponding to the coupons appertaining to the lost, destroyed, or
wrongfully taken Unregistered Security or the Unregistered Security to which
such lost, destroyed, or wrongfully taken coupon appertains, if such Holder's
claim pertains to an Unregistered Security, of the same Series and containing
identical terms and provisions, if the Trustee's requirements are met;
provided, however, that the Trustee (or an authenticating agent), the
Guarantor, or the Company may require any such Holder to provide to the
Trustee and the Company security or indemnity sufficient in the judgment of
the Guarantor or the Company and the Trustee (or an authenticating agent) to
protect the, the Guarantor, Company, the Trustee (or an authenticating agent)
and any Agent from any loss which any of them may suffer if a Security is
replaced. The Company and the Trustee (or an authenticating agent) may
charge the party requesting a replacement Security for its expenses in
replacing a Security.

(c) Every replacement Security is an additional obligation of the
Company. Every replacement Guarantee is an additional obligation of the
Guarantor.

(d) Notwithstanding anything to the contrary contained herein,
replacement Securities need not be issued in any of the circumstances
described in Section 2.09 if the Company, the Guarantor, or the Trustee (or
an authenticating agent) have notice that the mutilated, lost, destroyed, or
wrongfully taken Security has been acquired by a bona fide purchaser.

<PAGE>

Section 2.10 OUTSTANDING SECURITIES.

(a) Securities outstanding at any time are all Securities authenticated
by the Trustee (or an authenticating agent), except for those canceled by it,
those delivered to it for cancellation, and those described in this Section
as not outstanding.

(b) If a Security is replaced pursuant to Section 2.09, it ceases to be
outstanding until the Trustee (or an authenticating agent), receives proof
satisfactory to it that the replaced Security is held by a bona fide
purchaser.

(c) If the Paying Agent holds on a redemption date or maturity date
money or U.S. Government Obligations sufficient to pay all amounts due on
Securities of any Series on that date, then on and after that date, all
Securities of such Series cease to be outstanding and interest on them ceases
to accrue.

(d) A Security does not cease to be outstanding because the Company,
the Guarantor, or an Affiliate of either of them holds the Security.

(e) In determining whether the Holders of the requisite principal
amount of outstanding Securities of any Series have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, or
whether sufficient funds are available for redemption or for any other
purpose, (i) the principal amount of an Original Issue Discount Security that
shall be deemed to be outstanding for such purposes shall be the amount of
the principal thereof that would be due and payable as of the date of such
determination upon a declaration of acceleration of the maturity thereof
pursuant to Section 6.02; and (ii) the principal amount of any security
denominated in a currency other than United States dollars that shall be
deemed to be outstanding for such purposes shall be that amount of United
States dollars that could be obtained for such amount on such reasonable
basis of exchange and as of the record date for such determination or action
(or, if there shall be no applicable record date, such other date reasonably
proximate to the date of such determination or action), in each case, as the
Company shall specify in a written notice to the Trustee.

Section 2.11 TREASURY SECURITIES.

In determining whether the Holders of the requisite principal amount of
Securities of any Series have concurred in any direction, waiver, or consent,
Securities of such Series owned by the Company, the Guarantor, or an
Affiliate of either of them shall be disregarded, except that for the
purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver, or consent, only Securities of such Series which
the Trustee knows are so owned shall be so disregarded.

Section 2.12 TEMPORARY SECURITIES.

(a) Until definitive Registered Securities of any Series are ready for
delivery, the Company may prepare and execute and the Trustee shall
authenticate temporary Registered Securities of such Series having duly
executed Guarantees endorsed

<PAGE>

thereon. Temporary Registered Securities of any Series shall be
substantially in the form of definitive Registered Securities of such Series
but may have variations that the Company and the Guarantor considers
appropriate for temporary Securities. Every temporary Registered Security
shall be executed by the Company, authenticated by the Trustee, and
registered by the Registrar, upon the same conditions, and with like effect,
as a definitive Registered Security. Without unreasonable delay, the Company
and the Guarantor shall prepare and the Trustee shall authenticate definitive
Registered Securities of the same Series and containing identical terms and
provisions in exchange for temporary Registered Securities.

(b) Until definitive Unregistered Securities of any Series are
ready for delivery, the Company may prepare and execute and the Trustee shall
authenticate one or more temporary Unregistered Securities, which may have
coupons attached or which may be in the form of a single temporary global
Unregistered Security of that Series. The temporary Unregistered Security or
Securities of any Series shall be substantially in the form approved by or
pursuant to a Board Resolution and shall be delivered to one of the Paying
Agents located outside the United States and its possessions or to such other
person or persons as the Company shall direct against such certification as
the Company may from time to time prescribe by or pursuant to a Board
Resolution. The temporary Unregistered Security or Securities of a Series
shall be executed by the Company and the Guarantor and authenticated by the
Trustee, upon the same conditions, and with like effect, as a definitive
Unregistered Security of such Series, except as provided herein or therein.
A temporary Unregistered Security or Securities shall be exchangeable for
definitive Unregistered Securities containing identical terms and provisions
at the time and on the conditions, if any, specified in the temporary
Security.

Upon any exchange of a part of a temporary Unregistered Security of
a Series for definitive Unregistered Securities of such Series, the temporary
Unregistered Security shall be endorsed by the Trustee or Paying Agent to
reflect the reduction of its principal amount by an amount equal to the
aggregate principal amount of definitive Unregistered Securities of such
Series so exchanged and endorsed.

Section 2.13 CANCELLATION.

The Company or the Guarantor at any time may deliver Securities and
coupons to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities and coupons surrendered to them
for registration of transfer, or for exchange, or for payment. Except as
otherwise required by this Indenture, the Trustee shall cancel all Securities
and coupons surrendered for registration of transfer, or for exchange,
payment, or cancellation and will dispose of canceled Securities and coupons
as the Company directs; provided, however, that any Unregistered Securities
of a Series delivered to the Trustee for exchange prior to maturity shall be
retained by the Trustee for reissue as provided herein or in the Securities
of such Series. The Company may not issue new Securities to replace
Securities that it has paid or delivered to the Trustee for cancellation.

15
<PAGE>

Section 2.14 DEFAULTED INTEREST.

If the Company or the Guarantor defaults on a payment of interest
on a Series of Securities, either of them shall pay the defaulted interest as
provided in such Securities or in any lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be
listed.

Section 2.15 GLOBAL SECURITIES.

(a) If the Company shall establish pursuant to Section 2.01 that
the Securities of a particular Series are to be issued as a Global Security,
then the Company shall execute and the Trustee shall, in accordance with
Section 2.03, authenticate and deliver, a Global Security that (i) shall
represent, and shall be denominated in an amount equal to the aggregate
principal amount of, all of the outstanding Securities of such Series, (ii)
shall be registered in the name of the Depositary or its nominee, (iii) shall
be delivered by the Trustee to the Depositary or pursuant to the Depositary's
instruction and (iv) shall bear a legend substantially to the following
effect: "Except as otherwise provided in Section 2.15 of the Indenture, this
Security may be transferred, in whole but not in part, only to another
nominee of the Depositary or to a successor Depositary or to a nominee of
such successor Depositary."

(b) Notwithstanding the provisions of Section 2.08, the Global
Security of a Series may be transferred, in whole but not in part and in the
manner provided in Section 2.08, only to another nominee of the Depositary
for such Series, or to a successor Depositary for such Series selected or
approved by the Company or to a nominee of such successor Depositary.

(c) If at any time the Depositary for a Series of the Securities
notifies the Company that it is unwilling or unable to continue as Depositary
for such Series or if at any time the Depositary for such Series shall no
longer be registered or in good standing under the Exchange Act, or other
applicable statute or regulation, and a successor Depositary for such Series
is not appointed by the Company within 90 days after the Company receives
such notice or becomes aware of such condition, as the case may be, this
Section 2.15 shall no longer be applicable to the Securities of such Series
and the Company will execute, and subject to Section 2.08, the Trustee will
authenticate and deliver the Securities of such Series, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Security of such Series in exchange for such Global
Security. In addition, the Company may at any time determine that the
Securities of any Series shall no longer be represented by a Global Security
and that the provisions of this Section 2.15 shall no longer apply to the
Securities of such Series. In such event the Company will execute and
subject to Section 2.08, the Trustee, upon receipt of an Officers'
Certificate evidencing such determination by the Company, will authenticate
and deliver the Securities of such Series, in authorized denominations, and
in an aggregate principal amount equal to the principal amount of the Global
Security of such Series in exchange for such Global Security. Upon the
exchange of the Global Security for such Securities in authorized
denominations, the Global Security shall be

16
<PAGE>

canceled by the Trustee. Such Securities issued in exchange for the Global
Security pursuant to this Section 2.15(c) shall be registered in such names
and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall deliver such Securities to the
Depositary for delivery to he Persons in whose names such Securities are so
registered.

Section 2.16 UNCONDITIONAL GUARANTEE.
(Form of Guarantee)

FOR VALUE RECEIVED, the Guarantor, hereby unconditionally
guarantees to the Holder of the Security upon which this Guarantee is
endorsed the due and punctual payment of the principal of, sinking funds
payment, if any, premium, if any, or interest on said Security, when and as
the same shall be become due and payable, whether at maturity, upon
redemption or otherwise, according to the terms thereof and of the Indenture
referred to therein.

The Guarantor agrees to determine, at least one business day prior
to the date upon which a payment of principal of, sinking fund payment, if
any, premium, if any, or interest on said Security is due and payable,
whether the Company has available the funds to make such payment as the same
shall become due and payable. In case of the failure of the Company
punctually to pay any such principal, sinking fund payment, if any, premium,
if any, or interest, the Guarantor hereby agrees to cause any such payment to
be made punctually when and as the same shall become due and payable, whether
at maturity, upon redemption, or otherwise, and as if such payment were made
by the Company.

The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrevocable, and absolute, irrespective of the validity,
regularity, or enforceability of said Security or said Indenture, the absence
of any action to enforce the same, any waiver or consent by the Holder of
said Security with respect to any provisions thereof, the recovery of any
judgment against the Company or any action to enforce the same, or any other
circumstance which might otherwise constitute a legal or equitable discharge
or defense of a guarantor. The Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
merger or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest or notice with respect to said Security or
indebtedness evidenced thereby, and all demands whatsoever and covenants that
this Guarantee will not be 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 to 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

17
<PAGE>

Indenture.

Notwithstanding anything to the contrary contained herein, if
following any payment of principal or interest by the Company on the
Securities to the Holders of the Securities it is determined by a final
decision of a court of competent jurisdiction that such payment shall be
avoided by a trustee in bankruptcy (including any debtor-in-possession) as a
preference under 11 U.S.C. Section 547 and such payment is paid by such
Holder to such trustee in bankruptcy, then and to the extent of such
repayment the obligations of the Guarantor hereunder shall remain in full
force and effect.

This Guarantee shall not be valid or become obligatory for any
purpose with respect to a Security until a certificate of authentication on
such Security shall have been signed by the Trustee (or the authenticating
agent).

This Guarantee shall be governed by the laws of the State of New York.

IN WITNESS WHEREOF, U S WEST, Inc. has caused this Guarantee to be
signed in its corporate name by the facsimile signature of two of its
officers thereunto duly authorized and has caused a facsimile of its
corporate seal to be affixed hereto or imprinted or otherwise reproduced
hereon.

Section 2.17 EXECUTION OF GUARANTEES.

To evidence the Guarantee to the Securityholders specified in
Section 2.16, the Guarantor hereby agrees to execute the Guarantees, in
substantially the form above recited, to be endorsed on each Security
authenticated and delivered by the Trustee (or the authentication agent).
Each such Guarantee shall be signed on behalf of the Guarantor as set forth
in Section 2.03 prior to the authentication of the Security on which it is
endorsed, and the delivery of such Security by the Trustee (or the
authenticating agent), after the authentication thereof hereunder, shall
constitute due delivery of such Guarantee on behalf of the Guarantor.

Section 2.18 ASSUMPTION BY GUARANTOR.

(a) The Guarantor may, without the consent of the Securityholders,
assume all of the rights and obligations of the Company hereunder with
respect to a Series of Securities and under the Securities of such Series if,
after giving effect to such assumption, no Default or Event of Default shall
have occurred and be continuing. Upon such an assumption, the Guarantor
shall execute a supplemental indenture evidencing its assumption of all such
rights and obligations of the Company and the Company shall be released from
its liabilities hereunder and under such Securities as obligor on the
Securities of such Series.

(b) The Guarantor shall assume all of the rights and obligations
of the Company hereunder with respect to a Series of Securities and under the
Securities of such Series if, upon a default by the Company in the due and
punctual payment of the principal, sinking fund payment, if any, premium, if
any, or interest on such Securities,

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<PAGE>

the Guarantor is prevented by any court order or judicial proceeding from
fulfilling its obligations under Section 2.15 with respect to such Series of
Securities. Such assumption shall result in the Securities of such Series
becoming the direct obligations of the Guarantor and shall be effected
without the consent of the Holders of the Securities of any Series. Upon
such an assumption, the Guarantor shall execute a supplemental indenture
evidencing its assumption of all such rights and obligations of the Company,
and the Company shall be released from its liabilities hereunder and under
such Securities as obligor on the Securities of such Series.

ARTICLE 3.
REDEMPTION

Section 3.01 NOTICE TO THE TRUSTEE.

The Company may, with respect to any Series of Securities, reserve
the right to redeem and pay the Series of Securities or any part thereof, or
may covenant to redeem and pay the Series of Securities or any part thereof,
before maturity at such time and on such terms as provided for in such
Securities. The election of the Company to redeem any Securities shall be
evidenced by a Company Order. In case of any redemption at the election of
the Company of all or less than all of the Securities of any Series with the
same issue date, interest rate, and stated maturity, the Company shall, at
least 60 days prior to the redemption date fixed by the Company (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of
such redemption date and of the principal amount and redemption price of
Securities of such Series to be redeemed.

Section 3.02 SELECTION OF SECURITIES TO BE REDEEMED.

If less than all the Securities of any Series with the same issue
date, interest rate, and stated maturity are to be redeemed, the particular
Securities to be redeemed shall be selected, not more than 60 days prior to
the redemption date, by the Trustee from the outstanding Securities of such
Series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions of the principal amount of Securities of such Series;
provided, however, that no such partial redemption shall reduce the portion
of the principal amount of a Security of such Series not redeemed to less
than the minimum denomination for a Security of that Series established
pursuant to Section 2.02. The Trustee shall promptly notify the Company in
writing of the Securities selected for redemption by it and, in the case of
any Securities selected for partial redemption, the amount thereof to be
redeemed.

Section 3.03 NOTICE OF REDEMPTION.

(a) At least 30 days, but not more than 90 days before a
redemption date, unless a shorter period is specified in the Securities to be
redeemed, the Company shall mail a notice of redemption by first-class mail
to each Holder of Registered Securities that are to be redeemed.

19
<PAGE>

(b) If Unregistered Securities are to be redeemed, notice of
redemption shall be published in an Authorized Newspaper in each of The City
of New York, London, and, if such Securities to be redeemed are listed on the
Luxembourg Stock Exchange, Luxembourg once in each of four successive
calendar weeks, the first publication to be not less than 30 nor more than 90
days before the redemption date.

(1) the redemption date;

(2) the redemption price;

(3) if less than all the outstanding Securities of a Series
are to be redeemed, the identification (and, in the case of partial
redemption, the principal amounts) of the particular Securities to be
redeemed;

(4) the name and address of the Paying Agent;

(5) that Securities of the Series called for redemption and
all unmatured coupons, if any, appertaining thereto must be surrendered to
the Paying Agent to collect the redemption price; and

(6) that interest on Securities of the Series called for
redemption ceases to accrue on and after the redemption date.

At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense.

If the Company gives the notice of redemption, the Company shall
promptly provide the Trustee with evidence satisfactory to the Trustee of its
compliance with the notice requirements of this section.

Section 3.04 EFFECT OF NOTICE OF REDEMPTION.

Once notice of redemption is mailed or published, Securities of a
Series called for redemption become due and payable on the redemption date
and from and after such date (unless the Company shall default in the payment
of the redemption price) such Securities shall cease to bear interest. Upon
surrender to the Paying Agent of such Securities together with all unmatured
coupons, if any, appertaining thereto, such Securities shall be paid at the
redemption price plus accrued interest to the redemption date, but
installments of interest due on or prior to the redemption date will be
payable, in the case of Unregistered Securities, to the bearers of the
coupons for such interest upon surrender thereof, and, in the case of
Registered Securities, to the Holders of such Securities of record at the
close of business on the relevant record dates.

20
<PAGE>

Section 3.05 DEPOSIT OF REDEMPTION PRICE.

On or before the redemption date, the Company shall deposit with
the Trustee or the Paying Agent money sufficient to pay the redemption price
of and (unless the redemption date shall be an interest payment date)
interest accrued to the redemption date on all Securities to be redeemed on
that date.

Section 3.06 SECURITIES REDEEMED IN PART.

Upon surrender of a Security that is redeemed in part, the Company
shall issue and the Trustee or the authenticating agent shall authenticate
for the Holder of that Security a new Security or Securities of the same
Series, the same form, and the same maturity in authorized denominations
equal in aggregate principal amount to the unredeemed portion of the Security
surrendered and having endorsed thereon a duly executed Guarantee.

ARTICLE 4.
COVENANTS

Section 4.01 PAYMENT OF SECURITIES.

(a) The Company shall pay the principal of and interest on the
Securities on the dates and in the manner provided herein and in the
Securities. An installment of principal or interest shall be considered paid
on the date it is due if the Trustee or Paying Agent holds on that date money
designated for and sufficient to pay the installment.

(b) The Company shall pay interest on overdue principal of a
Security of any Series at the rate of interest (or Yield to Maturity in the
case of Original Issue Discount Securities) borne by such Security of that
Series; to the extent lawful, it shall pay interest on overdue installments
of interest at the same rate.

Section 4.02 REPORTS BY THE GUARANTOR.

The Guarantor covenants:

(a) To file with the Trustee, within 15 days after the Guarantor
is required to file the same with the SEC, copies of the annual reports and
of the information, documents and other reports (or copies of such portions
of any of the foregoing as the SEC may from time to time by rules and
regulations prescribe) which the Guarantor may be required to file with the
SEC pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934, as amended, or, if the Guarantor is not required to file information,
documents or reports pursuant to either of such sections, to file with the
Trustee and the SEC, in accordance with rules and regulations prescribed from
time to time by the SEC, such of the supplementary and periodic information,
documents, and reports which may be required pursuant to Section 13 of the
Securities Exchange Act of 1934, as amended, in respect of a security listed
and registered on a national securities

21
<PAGE>

exchange as may be prescribed from time to time in such rules and regulations;

(b) to file with the Trustee and the SEC, in accordance with the
TIA or the rules and regulations prescribed from time to time by the SEC,
such additional information, documents, and reports with respect to
compliance by the Guarantor with the conditions and covenants provided for in
this Indenture as may be required from time to time by the TIA or such rules
and regulations; and

(c) to transmit by mail to all Holders of Registered Securities,
as the names and addresses of such Holders appear on the register for each
Series of Securities, and to such Holders of Unregistered Securities as have,
within the two years preceding such transmission, filed their names and
addresses with the Trustee for that purpose, within 30 days after the filing
thereof with the Trustee, such summaries of any information, documents and
reports required to be filed by the Guarantor pursuant to subsections (a) and
(b) of this Section 4.02 as may be required by rules and regulations
prescribed from time to time by the SEC.

Section 4.03 LIEN ON ASSETS.

If at any time the Company mortgages, pledges or otherwise subjects
to any lien the whole or any part of any property or assets now owned or
hereafter acquired by it, except as hereinafter provided in this Section
4.03, the Company will secure the outstanding Securities, and any other
obligations of the Company which may then be outstanding and entitled to the
benefit of a covenant similar in effect to this covenant, equally and ratably
with the indebtedness or obligations secured by such mortgage, pledge, or
lien, for as long as any such indebtedness or obligation is so secured. The
foregoing covenant does not apply (i) to the creation, extension, renewal or
refunding of (a) mortgages or liens created or existing at the time property
is acquired, (b) mortgages or liens created within 180 days thereafter, or
(c) mortgages or liens for the purpose of securing the cost of construction
or improvement of property; or (ii) to the making of any deposit or pledge to
secure public or statutory obligations or with any governmental agency at any
time required by law in order to qualify the Company to conduct its business
or any part thereof in order to entitle it to maintain self-insurance or to
obtain the benefits of any law relating to workmen's compensation,
unemployment insurance, old age pensions or other social security, or with
any court, board, commission, or governmental agency as security incident to
the proper conduct of any proceeding before it. Nothing contained in this
Indenture prevents any entity other than the Company from mortgaging,
pledging, or subjecting to any lien any of its property or assets, whether or
not acquired from the Company or the Guarantor.

ARTICLE 5.
SUCCESSOR CORPORATION

Section 5.01 WHEN THE COMPANY MAY MERGE, ETC.

The Company may consolidate with, or merge into, or be merged into,
or transfer or lease its properties and assets substantially as an entirety
to, any person

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<PAGE>

provided (i) that the person is a corporation which assumes by supplemental
indenture all the obligations of the Company under the Securities and any
coupons appertaining thereto and under this Indenture; and (ii) that after
giving effect thereto, no Default or Event of Default shall have occurred and
be continuing. Thereafter, all such obligations of the Company shall
terminate.

Section 5.02 WHEN THE GUARANTOR MAY MERGE, ETC.

The Guarantor may consolidate with, or merge into, or be merged
into, or transfer or lease its properties and assets substantially as an
entirety to, any person provided (i) that the person is a corporation which
assumes by supplemental indenture all the obligations of the Guarantor under
the Guarantees and under this Indenture; and (ii) that after giving effect
thereto, no Default or Event of Default shall have occurred and be
continuing. Thereafter, all such obligations of the Guarantor shall
terminate.

ARTICLE 6.
DEFAULTS AND REMEDIES

Section 6.01 EVENTS OF DEFAULT.

An "Event of Default" occurs with respect to the Securities of any
Series if:

(1) the Company or the Guarantor default in the payment of
interest on any Security of that Series when the same becomes due and payable
and the Default continues for a period of 90 days;

(2) the Company or the Guarantor default in the payment of the
principal of any Security of that Series when the same becomes due and
payable at maturity, upon redemption, or otherwise;

(3) the Company or the Guarantor fail to comply with any of its
other agreements in the Securities of that Series, in this Indenture, or in
any supplemental indenture under which the Securities of that Series may have
been issued, and the Default continues for the period and after the notice
specified below;

(4) the Company or the Guarantor, pursuant to or within the
meaning of any Bankruptcy Law:

(a) commence a voluntary case,

(b) consent to the entry of an order for relief
against it in an involuntary case,

23
<PAGE>

(d) make a general assignment for the benefit of
its creditors; or

(5) a court of competent jurisdiction enters an order under any
Bankruptcy Law that:

(a) is for relief against the Company or the Guarantor in an
involuntary case,

(b) appoints a Custodian of the Company or the Guarantor, or
for all or substantially all of its property, or

(c) orders the liquidation of the Company or the Guarantor,
and the order or decree remains unstayed and in effect for 90 days.

The term "Bankruptcy Law" means Title 11, U.S. Code, or any similar
federal or state law for the relief of debtors. The term "Custodian" means
any receiver, trustee, assignee, liquidator, or similar official under any
Bankruptcy Law.

A Default under clause (3) is not an Event of Default until the
Trustee or the Holders of at least 25% in principal amount of all the
outstanding Securities of that Series notify the Company or the Guarantor
(and the Trustee in the case of notification by such Holders) of the Default
and the Company or the Guarantor, as the case may be, does not cure the
Default within 90 days after receipt of the notice. The notice must specify
the Default, demand that it be remedied, and state that the notice is a
"Notice of Default."

Section 6.02 ACCELERATION.

If an Event of Default occurs with respect to the Securities of any
Series and is continuing, the Trustee, by notice to the Company and the
Guarantor, or the Holders of at least 25% in principal amount of all of the
outstanding Securities of that Series, by notice to the Company, the
Guarantor, and the Trustee, may declare the principal (or, if the Securities
of that Series are Original Issue Discount Securities, such portion of the
principal amount as may be specified in the terms of that Series) of all the
Securities of that Series to be due and payable. Upon such declaration, such
principal (or, in the case of Original Issue Discount Securities, such
specified amount) shall be due and payable immediately. The Holders of a
majority in principal amount of all of the Securities of that Series, by
notice to the Trustee, may rescind such a declaration and its consequences if
the rescission would not conflict with any judgment or decree and if all
existing Events of Default have been cured or waived except nonpayment of
principal or interest that has become due solely because of the acceleration.

Section 6.03 OTHER REMEDIES AVAILABLE TO TRUSTEE.

(a) If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal of or
interest on the Securities of the Series that is in default or to enforce the
performance of any provision of

24
<PAGE>

the Securities of that Series or this Indenture.

(b) The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Securityholder in exercising any
right or remedy accruing upon an Event of Default shall not impair the right
or remedy or constitute a waiver of or acquiescence in the Event of Default.
No remedy is exclusive of any other remedy. All available remedies are
cumulative.

Section 6.04 WAIVER OF EXISTING DEFAULTS.

The Holders of a majority in principal amount of any Series of
Securities by notice to the Trustee may waive an existing Default with
respect to that Series and its consequences, except a Default in the payment
of the principal of or interest on any Security.

Section 6.05 CONTROL BY MAJORITY.

The Holders of a majority in principal amount of the Securities of each
Series affected (with each such Series voting as a class) may direct the
time, method, and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on it. However,
the Trustee may refuse to follow any direction that conflicts with law or
this Indenture or that would involve the Trustee in personal liability.

Section 6.06 LIMITATION ON SUITS BY SECURITYHOLDERS.

A Securityholder may pursue a remedy with respect to this Indenture or
the Securities of any Series only if:

(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;

(2) the Holders of at least 25% in principal amount of the Securities
of that Series make a written request to the Trustee to pursue the remedy;

(3) such Holder or Holders offer to the Trustee indemnity satisfactory
to the Trustee against any loss, liability, or expense to be, or which may
be, incurred by the Trustee in pursuing the remedy;

(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and

(5) during such 60 day period, the Holders of a majority in principal
amount of the Securities of that Series do not give the Trustee a direction
inconsistent with the request.

<PAGE>

A Securityholder of any Series may not use this Indenture to prejudice
the rights of another Securityholder of that Series or any other Series or to
obtain a preference or priority over another Securityholder of that Series or
any other Series.

Section 6.07 RIGHTS OF HOLDERS TO RECEIVE PAYMENT.

Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment or principal of and interest on the
Security, on or after the respective due dates expressed in the Security, and
the right of any Holder of a coupon to receive payment of interest due as
provided in such coupon, or to bring suit for the enforcement of any such
payment, on or after such respective dates, shall not be impaired or affected
without the consent of such Holder.

Section 6.08 COLLECTION SUITS BY TRUSTEE.

If a Default specified in Section 6.01(1) or (2) occurs and continues
for the period specified therein, if any, the Trustee may recover judgment in
its own name and as trustee of an express trust against the Company or the
Guarantor for the whole amount of such principal and interest then in default.

Section 6.09 TRUSTEE MAY FILE PROOFS OF CLAIM.

The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
and the Securityholders allowed in any judicial proceedings relating to the
Company, the Guarantor or their creditors or property.

Section 6.10. PRIORITIES.

If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:

FIRST: to the Trustee for amounts due under Section 7.07;

SECOND: to Holders of Securities in respect of which or for the benefit
of which such money has been collected for amounts due and unpaid on such
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on such
Securities for principal and interest, respectively; and

THIRD: to the person or persons lawfully entitled thereto, or as a
court of competent jurisdiction may direct.

The Trustee may fix a record date (with respect to Registered
Securities) and payment date for any such payment to Holders of Securities.

Any such record date shall not be less than 10 days nor more than 60
days

<PAGE>

prior to the applicable payment date.

Section 6.11. UNDERTAKING FOR COSTS.

If any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted
by it as Trustee, a court in its discretion may require the filing by any
party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable attorneys' fees against
any party litigant in this suit having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section
does not apply to a suit by the Trustee, a suit by a Holder pursuant to
Section 6.07, or a suit by Holders of more than 10% in principal amount of
the Securities of any Series.

ARTICLE 7.
TRUSTEE

Section 7.01 DUTIES OF TRUSTEE.

(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise its rights, duties and powers under this Indenture and use the
same degree of care and skill in their exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.

(b) Except during the continuance of an Event of Default:

(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and

(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon notices, certificates, opinions
or other documents furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall examine the
notices, certificates, opinions or other documents to determine whether
or not they conform to the requirements of this Indenture.

(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct,
except that:

(1) This paragraph does not limit the effect of paragraph (b) of
this Section;

(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and

<PAGE>

(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Sections 6.04 and 6.05.

(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraph (a), (b), and (c) of this Section.

(e) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to it against any loss,
liability, or expense.

(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree with the Company or the Guarantor.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.

Section 7.02 RIGHTS OF TRUSTEE.

(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper person. The Trustee need
not investigate any fact or matter stated in the document.

(b) Before the Trustee acts or refrains from acting, it may consult
with counsel or require an Officers' Certificate or an Opinion of Counsel.
The Trustee shall not be liable for any action it takes or omits to take in
good faith in reliance on a Board Resolution, the written advice of counsel
acceptable to the Company, the Guarantor, and the Trustee, a certificate of
an Officer or Officers delivered pursuant to Section 2.02(b), an Officers'
Certificate, or an Opinion of Counsel.

(c) The Trustee may act through agents and shall not be responsible for
the misconduct or negligence of any agent appointed with due care.

(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers.

(e) Except as otherwise provided in Section 7.01, the Trustee shall not
be liable for any action or omission of any Agent which is not the Trustee.

Section 7.03 INDIVIDUAL RIGHTS OF TRUSTEE.

The Trustee in its individual or any other capacity may become the owner
or pledgee of Securities and may otherwise deal with the Company, or one of
its Affiliates with the same rights it would have if it were not Trustee,
subject to Sections 7.10 and 7.11. Any Agent may do the same with like
rights.

Section 7.04 TRUSTEE'S DISCLAIMER.

<PAGE>

The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities or the Guarantees. It shall not be
accountable for the Company's use of the proceeds from the Securities or for
monies paid over to the Company or by the Company to any Holders or to any
Paying Agent pursuant to the Indenture, and it shall not be responsible for
any statement in the Securities other than its certificate of authentication.

Section 7.05 NOTICE OF DEFAULTS.

If a Default occurs and is continuing with respect to the Securities of
any Series and if it is known to the Trustee, the Trustee shall mail to each
Holder of a Security of that Series entitled to receive reports pursuant to
Section 4.02(c) (and, if Unregistered Securities of that Series are
outstanding, shall cause to be published at least once in an Authorized
Newspaper in each of The City of New York, London, and, if Securities of that
Series are listed on The Luxembourg Stock Exchange, Luxembourg) notice of the
Default within 90 days after it occurs. Except in the case of a Default in
payment on the Securities of any Series, the Trustee may withhold the notice
if and so long as its Corporate Trust Committee or a committee of its
Responsible Officers in good faith determines that withholding such notice is
in the interests of Securityholders of that Series.

Section 7.06 REPORTS BY TRUSTEE TO HOLDERS.

(a) Within 60 days after each anniversary date of the first issue of a
Series of Securities, the Trustee shall mail to each Securityholder of that
Series entitled to receive reports pursuant to Section 4.02(c) a brief report
dated as of such date that complies with TIA Section 313(a). The Trustee
also shall comply with TIA Section 313(b).

(b) At the time that it mails such a report to Securityholders of any
Series, the Trustee shall file a copy of that report with the SEC and with
each stock exchange on which the Securities of that Series are listed. The
Company shall provide written notice to the Trustee when the Securities of
any Series are listed on any stock exchange.

Section 7.07 COMPENSATION AND INDEMNITY.

(a) The Company and the Guarantor shall pay to the Trustee from time to
time reasonable compensation for its services. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company and the Guarantor shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred by it in
connection with the performance of its duties under this Indenture. Such
expenses shall include the reasonable compensation and expenses of the
Trustee's agents and counsel.

(b) The Company and the Guarantor shall indemnify the Trustee against
any loss or liability incurred by it arising out of or in connection with its
acceptance or administration of the trust or trusts hereunder. The Trustee
shall notify the Company and

<PAGE>

the Guarantor promptly of any claim for which it may seek indemnity. The
Company and the Guarantor shall defend the claim, and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the
Company and the Guarantor shall pay the reasonable fees and expenses of such
counsel. Neither the Company nor the Guarantor need pay for any settlement
made without its consent.

(c) Neither the Company nor the Guarantor need reimburse any
expense or indemnify against any loss of liability incurred by the Trustee
through negligence or bad faith.

(d) To secure the payment obligations of the Company and the
Guarantor pursuant to this Section, the Trustee shall have a lien prior to
the Securities of any Series on all money or property held or collected by
the Trustee, except that held in trust to pay principal and interest on
particular Securities of a Series.

(e) If the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(4) or (5) occurs, such expenses
and the compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.

Section 7.08 REPLACEMENT OF TRUSTEE.

(a) The resignation or removal of the Trustee and the appointment
of a successor Trustee shall become effective only upon the successor
Trustee's acceptance of appointment as provided in this Section.

(b) The Trustee may resign with respect to the Securities of any
Series by so notifying the Company and the Guarantor. The Holders of a
majority in principal amount of the Securities of any Series may remove the
Trustee with respect to that Series by so notifying the Trustee, the Company,
and the Guarantor and may appoint a successor Trustee for such Series with
the Company's and the consent of the Guarantor.

(1) the Trustee fails to comply with Section 7.10;

(2) the Trustee is adjudged a bankrupt or an
insolvent;

(3) a receiver or public officer takes charge of
the Trustee or its property; or

(4) the Trustee becomes incapable of acting.

In addition, the Company and the Guarantor may remove the Trustee
with respect to Securities of any Series without cause if the Company and the
Guarantor give written notice to the Trustee of such proposed removal at
least six months in advance of

<PAGE>

the proposed effective date of such removal; provided, however, that such
removal shall not become effective if a Default exists on the date of the
giving of such notice or occurs prior to the date such removal is scheduled
to become effective.

(d) If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, with respect to Securities of any
Series, the Company and the Guarantor shall promptly appoint a successor
Trustee for such Series.

(e) If a successor Trustee with respect to the Securities of any
Series does not take office within 30 days after the retiring Trustee resigns
or is removed, the retiring Trustee, the Company, the Guarantor, or the
Holders of a majority in principal amount of the Securities of the applicable
Series may petition any court of competent jurisdiction for the appointment
of a successor Trustee.

(f) If the Trustee with respect to the Securities of any Series
fails to comply with Section 7.10, any Securityholder of the applicable
Series may petition any court of competent jurisdiction for the removal of
such Trustee and the appointment of a successor Trustee.

(g) A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee, the Guarantor, and the Company.
Thereupon, the resignation or removal of the retiring Trustee for any Series
of Securities shall become effective, and the successor Trustee shall have
all the rights, powers, and duties of the retiring Trustee with respect to
all Series of Securities for which the successor Trustee is to be acting as
Trustee under this Indenture. The retiring Trustee shall promptly transfer
all property held by it as Trustee with respect to such Series of Securities
to the successor Trustee subject to the lien provided for in Section 7.07.
The Company shall give notice of each appointment of a successor Trustee for
any Series of Securities by publishing notice of such event once in an
Authorized Newspaper in each of The City of New York, London, and, if
Securities of that Series are listed on The Luxembourg Stock Exchange,
Luxembourg, and by mailing written notice of such event by first-class mail
to the Holders of Securities of such Series entitled to receive reports
pursuant to Section 4.02(c).

(h) All provisions of this Section 7.08 except subparagraphs (c)(1)
and (d) and the words "subject to the lien provided for in Section 7.07" in
subparagraph (g) shall apply also to any Paying Agent located outside the
U.S. and its possessions and required by Section 2.04.

(i) In case of the appointment hereunder of a successor Trustee
with respect to the Securities of one or more (but not all) Series, the
Company, the Guarantor, the retiring Trustee, and such successor Trustee
shall execute and deliver a supplemental indenture wherein such successor
Trustee shall accept such appointment, and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and
to vest in, such successor Trustee all the rights, powers, trusts, and duties
of the retiring Trustee with respect to the Securities of that or those
Series to which the appointment of such successor Trustee relates; (2) if the
retiring Trustee is not retiring

<PAGE>

with respect to all Securities, shall contain such provisions as shall be
deemed necessary or desirable to confirm that all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Securities of that or
those Series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee; and (3) shall add to or change any of
the provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such Trustees co-trustees of the same trust and
that each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any
other such Trustee.

Section 7.09 SUCCESSOR TRUSTEE, AGENTS BY MERGER, ETC.

If the Trustee or any Agent consolidates with, merges or converts
into, or transfers all or substantially all of its corporate trust business
assets to, another corporation, the successor corporation, without any
further act, shall be the successor Trustee or Agent, as the case may be.

Section 7.10. ELIGIBILITY; DISQUALIFICATION.

This Indenture shall always have a Trustee with respect to each
Series of Securities who satisfies the requirements of TIA Section 310(a)(1).
The Trustee shall always have a combined capital and surplus of at least
$10,000,000 as set forth in its most recent published annual report of
condition. The Trustee is subject to TIA Section 310(b), including the
optional provision permitted by the second sentence of TIA Section 310(b)(9),
except that there shall be excluded from the operation of TIA Section
310(b)(1) each Series of Securities and all indentures of the Company, the
Guarantor, or any of their Affiliates now or hereafter existing which may be
excluded under the proviso of TIA Section 310(b)(1).

Section 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.

The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.

ARTICLE 8.
DISCHARGE OF INDENTURE

Section 8.01 TERMINATION OF THE COMPANY'S AND THE GUARANTOR'S
OBLIGATIONS.

(a) The Company and the Guarantor reserve the right to terminate
all of their obligations under the Securities and this Indenture with respect
to the Securities of any Series or any installment of principal and premium,
if any, or interest on that Series if the Company and the Guarantor
irrevocably deposits in trust with the Trustee money or U.S. Government
Obligations sufficient to pay, when due, principal, premium, if any, and

<PAGE>

interest on the Securities of that Series to maturity or redemption or such
installment of principal and premium, if any, or interest, as the case may
be, and if all other conditions set forth in the Securities of that Series
are met. The Company or the Guarantor shall designate the installment or
installments of principal or interest to be so satisfied.

(b) However, the Company's and the Guarantor's obligations in
Sections 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 4.01, 7.07, 7.08, 8.03 and 8.04
shall survive until the Securities are no longer outstanding. Thereafter,
the Company's obligations in Sections 7.07, 8.03 and 8.04 shall survive.

(c) Before or after a deposit, the Company or the Guarantor may
make arrangements satisfactory to the Trustee for the redemption of
Securities at a future date in accordance with Article 3.

(d) After a deposit by the Company or the Guarantor in accordance
with this Section in respect of the Securities of a Series, the Trustee upon
request shall acknowledge in writing the discharge of the Company's and the
Guarantor's obligations under the Securities of the Series in respect of
which the deposit has been made and under this Indenture with respect to the
Securities of that Series except for those surviving obligations specified
above.

(e) In order to have money available on a payment date to pay
principal of and premium, if any, or interest on the Securities of any
Series, the U.S. Government Obligations shall be payable as to principal of
or interest on or before such payment date in such amounts as will provide
the necessary money. U.S. Government Obligations shall not be callable at
the issuer's option.

(f) "U.S. Government Obligations" means:

(i) direct obligations of the United States of America for
the payment of which the full faith and credit of the United States of
America is pledged; or

(ii) obligations of a person controlled or supervised by and
acting as an agency or instrumentality of the United States of America, the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America.

Section 8.02 APPLICATION OF TRUST MONEY.

The Trustee shall hold money or U.S. Government Obligations
deposited with it pursuant to Section 8.01. It shall apply the deposited
money and the money from U.S. Governmental Obligations through the Paying
Agent and in accordance with this Indenture to the payment of principal of
and interest on the Securities of each Series in respect of which the deposit
shall have been made.

<PAGE>

Section 8.03 REPAYMENT TO THE COMPANY OR THE GUARANTOR.

(a) Subject to the provisions of Section 7.07(d), the Trustee and
the Paying Agent shall promptly pay to the Company or the Guarantor, as the
case may be, upon request, any money or securities held by them at any time
in excess of that required for the payment of principal, premium, if any, or
interest on the Securities.

(b) The Trustee and the Paying Agent shall promptly pay to the
Company or the Guarantor, as the case may be, upon request, any money held by
them for the payment of principal or interest that remains unclaimed for two
years. After that, Securityholders entitled to the money must look to the
Company and the Guarantor for payment as general creditors unless an
abandoned property law designates another person. Upon payment to the
Company, or the Guarantor, the Trustee and Paying Agent are released of any
further obligation or liability with respect to the utilization of such
moneys.

Section 8.04 INDEMNITY FOR GOVERNMENT OBLIGATIONS.

The Company and the Guarantor shall pay and shall indemnify the
Trustee and each Securityholder of each Series in respect of which the
deposit shall have been made against any tax, fee, or other charge imposed on
or assessed against deposited U.S. Government Obligations or the principal
and interest received on such obligations.

ARTICLE 9.
AMENDMENTS AND WAIVERS

Section 9.01 WITHOUT CONSENT OF HOLDERS.

The Company, the Guarantor, and the Trustee may enter into one or
more supplemental indentures without consent of any Securityholder for any of
the following purposes:

(1) to cure any ambiguity, defect, or inconsistency herein, in the
Securities of any Series or in the Guarantees;

(2) to comply with Article 5;

(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities;

(4) to add to the covenants of the Company and the Guarantor for
the benefit of the Holders of all or any Series of Securities (and if such
covenants are to be for the benefit of less than all Series of Securities,
stating that such covenants are expressly being included solely for the
benefit of such Series) or to surrender any right or power herein conferred
upon the Company;

(5) to add to, delete from, or revise the conditions, limitations,
and

<PAGE>

restrictions on the authorized amount, terms, or purposes of issue,
authentication, and delivery of Securities, as herein set forth;

(6) to secure the Securities pursuant to Section 4.03.

(7) to make any change that does not adversely affect the rights of
any Securityholder in any material respect; or

(8) to provide for the issuance of and establish the form and terms
and conditions of Securities of any Series and the Guarantees as provided in
Section 2.02, to establish the form of any certifications required to be
furnished pursuant to the terms of this Indenture or any Series of Securities,
or to add to the rights of the Holders of any Series of Securities.

Section 9.02 WITH CONSENT OF HOLDERS.

(a) With the written consent of the Holders of a majority in
principal amount of the outstanding Securities of each Series affected by such
supplemental indenture (with each Series voting as a class), the Company, the
Guarantor, and the Trustee may enter into a supplemental indenture to add any
provisions to or to change or eliminate any provisions of this Indenture or of
any supplemental indenture or to modify, in each case in any manner not covered
by Section 9.01, the rights of the Securityholders of each such Series. The
Holders of a majority in principal amount of the outstanding Securities of each
Series affected by such waiver (with each Series voting as a class), by notice
to the Trustee, may waive compliance by the Company or the Guarantor with any
provision of this Indenture, any supplemental indenture, or the Securities of
any such Series, except a Default in the payment of the principal of or interest
on any Security. However, without the consent of each Securityholder affected,
an amendment or waiver may not:

(1) reduce the amount of Securities whose Holders must consent
to an amendment or waiver;

(2) change the rate of or change the time for payment of
interest on any Security;

(3) change the principal of or change the fixed maturity of any
Security;

(4) waive a Default in the payment of the principal of or
interest on any Security;

(5) make any Security payable in money other than that stated in
the Security; or

(6) make any change in Section 6.04, 6.07, or 9.02(a) (third
sentence).

35
<PAGE>

(b) It is not necessary under this Section 9.02 for the
Securityholders to consent to the particular form of any proposed supplemental
indenture, but it is sufficient if they consent to the substance thereof.

(c) Promptly after the execution by the Company, the Guarantor, and
the Trustee of any supplemental indenture pursuant to the provisions of this
Section 9.02, the Company shall transmit by mail a notice, setting forth in
general terms the substance of such supplemental indenture, to all Holders of
Registered Securities, as the names and addresses of such Holders appear on the
register for each Series of Securities, and to such Holders of Unregistered
Securities as are entitled to receive reports pursuant to Section 4.02(c). Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture.

Section 9.03 COMPLIANCE WITH TRUST INDENTURE ACT.

Every amendment to this Indenture or the Securities of one or more
Series shall be set forth in a supplemental indenture that complies with the TIA
as then in effect.

Section 9.04 REVOCATION AND EFFECT OF CONSENTS.

Until an amendment or waiver becomes effective, a consent to it by a
Holder of a Security is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security even if a notation of the consent is not made
on any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of his Security if the Trustee receives a
written notice of revocation before the date the amendment or waiver becomes
effective. After an amendment or waiver becomes effective, it shall bind every
Securityholder of each Series affected by such amendment or wavier.

Section 9.05 NOTATION ON OR EXCHANGE OF SECURITIES.

The Trustee shall place an appropriate notation about an amendment or
waiver on any Security of any Series thereafter authenticated. The Company, in
exchange for Securities of that Series may issue and the Trustee shall
authenticate new Securities of that Series that reflect the amendment or waiver.

Section 9.06 TRUSTEE PROTECTED.

The Trustee need not sign any supplemental indenture that adversely
affects its rights or obligations.

<PAGE>

ARTICLE 10.
SINKING FUNDS

Section 10.01 APPLICABILITY OF ARTICLE.

The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of a Series, except as otherwise permitted or
required by any form of Security of such Series issued pursuant to this
Indenture.

The minimum amount of any sinking fund payment provided for by the
terms of Securities of any Series is herein referred to as "mandatory sinking
fund payment," and any payment in excess of such minimum amount provided for by
the terms of Securities of such Series is herein referred to as an "optional
sinking fund payment." If provided for by the terms of Securities of any
Series, the cash amount of any sinking fund payment may be subject to reduction
as provided in Section 10.02. Each sinking fund payment shall be applied to the
redemption of Securities of any Series as provided for by the terms of
Securities of such Series.

Section 10.02 SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.

The Company may, in satisfaction of all or any part of any sinking
fund payment with respect to the Securities of such Series to be made pursuant
to the terms of such Securities as provided for by the terms of such Series (1)
deliver outstanding Securities of such Series (other than any of such Securities
previously called for redemption or any of such Securities in respect of which
cash shall have been released to the Company), and (2) apply as a credit
Securities of such Series which have been redeemed either at the election of the
Company pursuant to the terms of such Series of Securities or through the
application of permitted optional sinking fund payments pursuant to the terms of
such Securities, provided that such Series of Securities have not been
previously so credited. Such Securities shall be received and credited for such
purpose by the Trustee at the redemption price specified in such Securities for
redemption through operation of the sinking fund and the amount of such sinking
fund payment shall be reduced accordingly. If as a result of the delivery or
credit of Securities of any Series in lieu of cash payments pursuant to this
Section 10.02, the principal amount of Securities of such Series to be redeemed
in order to exhaust the aforesaid cash payment shall be less than $500,000, the
Trustee shall not call Securities of such Series for redemption, except upon
Company Order, and such cash payment shall be held by the Trustee or a Paying
Agent and applied to the next succeeding sinking fund payment, provided,
however, that the Trustee or such Paying Agent shall at the request of the
Company from time to time pay over and deliver to the Company any cash payment
so being held by the Trustee or such Paying Agent upon delivery by the Company
to the Trustee of Securities of that Series purchased by the Company having an
unpaid principal amount equal to the cash payment required to be released to the
Company.

Section 10.03 REDEMPTION OF SECURITIES FOR SINKING FUND.

<PAGE>

Not less than 60 days prior to each sinking fund payment date for any
Series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuring mandatory sinking fund
payment for that Series pursuant to the terms of that Series, the portion
thereof, if any, which is to be satisfied by payment of cash, and the portion
thereof, if any, which is to be satisfied by delivering and crediting of
Securities of that Series pursuant to Section 10.02, and the optional amount, if
any, to be added in cash to the next ensuing mandatory sinking fund payment, and
will also deliver to the Trustee any Securities to be so credited and not
theretofore delivered. If such Officers' Certificate shall specify an optional
amount to be added in cash to the next ensuing mandatory sinking fund payment,
the Company shall thereupon be obligated to pay the amount therein specified.
Not less than 30 days before each such sinking fund payment date, the Trustee
shall select the Securities to be redeemed upon such sinking fund payment date
in the manner specified in Section 3.02 and cause notice of the redemption
thereof to be given in the name of and at the expense of the Company in the
manner provided in Section 3.03. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 3.04, 3.05 and 3.06.

ARTICLE 11.
MISCELLANEOUS

Section 11.01 TRUST INDENTURE ACT CONTROLS.

If any provision of this Indenture limits, qualifies or conflicts with
a provision which is required to be included in this Indenture by the TIA, the
required provision shall control.

Section 11.02 NOTICES.

(a) Any notice or communication by the Company, the Guarantor, or the
Trustee is duly given if in writing and delivered in person or mailed by
certified mail:

if to the Company to:

U S WEST Capital Funding, Inc.
1801 California Street
Denver, Colorado 80202
Attention: Treasurer

if to the Guarantor to:

U S WEST, Inc.
1801 California Street
Denver, Colorado 80202
Attention: Treasurer

<PAGE>

if to the Trustee to:

The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust Services Division

(b) The Company, the Guarantor, or the Trustee by notice to the
others may designate additional or different addresses for subsequent notices or
communications.

(c) Any notice or communication to Holders of Securities entitled to
receive reports pursuant to Section 4.02(c) shall be mailed by first-class mail
to the addresses for Holders of Registered Securities shown on the register kept
by the Registrar and to addresses filed with the Trustee for other Holders.
Failure to so mail a notice or communication or any defect in such notice or
communication shall not affect its sufficiency with respect to other Holders of
Securities of that or any other Series entitled to receive notice.

(d) If a notice of communication is mailed in the manner provided
above within the time prescribed, it is conclusively presumed to have been duly
given, whether or not the addressee receives it.

(e) If the Company or the Guarantor mails a notice or communication
to Securityholders, it shall mail a copy to the Trustee and to each Agent at the
same time.

(f) If it shall be impractical in the opinion of the Trustee, the
Guarantor, or the Company to make any publication of any notice required hereby
in an Authorized Newspaper, any publication or other notice in lieu thereof
which is made or given with the approval of the Trustee shall constitute a
sufficient publication of such notice.

Section 11.03 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.

Securityholders of any Series may communicate pursuant to TIA Section
312(b) with other Securityholders of that Series or of all Series with respect
to their rights under this Indenture or under the Securities of that Series or
of all Series. The Company, the Guarantor, the Trustee, the Registrar, and
anyone else shall have the protection of TIA Section 312(c).

Section 11.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.

Upon any request or application by the Company or the Guarantor to the
Trustee to take any action under this Indenture, the Company or the Guarantor
shall furnish to the Trustee:

(1) an Officers' Certificate stating that, in the opinion of the
signers, all

39
<PAGE>

conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and

(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.

Section 11.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.

Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

(1) a statement that the person making such certificate or opinion
has read such covenant or condition;

(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based;

(3) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and

(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.

Section 11.06 RULES BY TRUSTEE AND AGENTS.

The Trustee may make reasonable rules for action by or a meeting of
Securityholders of one or more Series. The Paying Agent or Registrar may
make reasonable rules and set reasonable requirements for its functions.

Section 11.07 LEGAL HOLIDAYS.

Except as may otherwise be provided in the form of Securities of
any particular Series pursuant to the provisions of this Indenture, a "Legal
Holiday" is a Saturday, Sunday, or a day on which banking institutions are
not required to be open. If a payment date is a Legal Holiday at a place of
payment, payment may be made at such place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.

Section 11.08 GOVERNING LAW.

The laws of the State of New York shall govern this Indenture, the
Securities, and any coupons appertaining thereto.

Section 11.09 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.

<PAGE>

This Indenture may not be used to interpret another indenture,
loan, or debt agreement of the Company or an Affiliate. No such indenture,
loan, or debt agreement may be used to interpret this Indenture.

Section 11.10. NO RECOURSE AGAINST OTHERS.

No director, officer, employee, or stockholder, as such, of the
Company or the Guarantor shall have any liability for any obligations of the
Company or the Guarantor under the Securities or the Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Securityholder by accepting a Security waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.

Section 11.11. EXECUTION IN COUNTERPARTS.

This Indenture may be executed in any number of counterparts, each
of which shall be an original, but such counterparts shall together
constitute but one instrument.

Section 11.12. CURRENCIES.

Except as may otherwise be provided in the form of Securities of
any particular Series pursuant to the provisions of this Indenture, all
references in this Indenture or in the Securities to "dollars," "$," or any
similar reference shall be to the currency of the United States of America.

ARTICLE 12.
REPAYMENT AT THE OPTION OF HOLDERS

Section 12.01 APPLICABILITY OF ARTICLE.

Securities of any Series which are repayable at the option of the
Holders thereof before their stated maturity shall be repaid in accordance
with the terms of the Securities of such Series.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.

U S WEST CAPITAL FUNDING, INC.

By:__________________________________
Name:________________________________
Title: ______________________________

(SEAL)
Attest:__________________________________
Name:_____________________________
Title:____________________________

U S WEST, INC.

By:__________________________________
Name:________________________________
Title: ______________________________

(SEAL)
Attest:__________________________________
Name:_____________________________
Title:____________________________

THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee

By:__________________________________
Name:________________________________
Title: ______________________________

(SEAL)
Attest:__________________________________
Name:_____________________________
Title:____________________________

<PAGE>

EXHIBIT 5

May 6, 1998

U S WEST, Inc.
U S WEST Capital Funding, Inc.
7800 East Orchard Road
Englewood, Colorado 80111

Re: Public Offering of Debt Securities

Gentlemen and Ladies:

I have examined the Registration Statement on Form S-3 filed
contemporaneously herewith (the "Registration Statement") by USW-C, Inc. (to be
renamed "US WEST, Inc.") (the "Company") and U S WEST Capital Funding, Inc.
(collectively, the "Registrants"), with the Securities and Exchange Commission
(the "Commission") in connection with the registration under the Securities Act
of 1933, as amended, of up to $3,500,000,000 of debt securities ("Debt
Securities"). I have examined the form of Indenture to be entered into, by and
among the Company, U S WEST Capital Funding, Inc., and First National Bank of
Chicago, as Trustee, under which the Debt Securities are to be issued (the
"Indenture"), and such other documents, certificates and matters of fact as I
have deemed necessary for purposes of this opinion. I am familiar with the
proceedings taken and proposed to be taken by the Registrants in connection with
the proposed authorization, issue and sale of the Debt Securities.

I am also familiar with the proposed opinion of legal counsel qualified to
practice in New York concerning the validity, legality, and binding effect of
the Debt Securities under New York law, upon which opinion I will rely in
delivering my opinion pursuant to Section 6(b)(2) of the Distribution Agreement
and Section 5(c) of the Underwriting Agreement, each of which has been filed as
an exhibit to the Registration Statement.

Based upon the foregoing, and in reliance thereon, it is my opinion that,
subject to the receipt of payment for the Debt Securities and subject to the
terms of the Debt Securities being otherwise in compliance with then applicable
law, when the Debt Securities have been duly authorized, executed, authenticated
and delivered in accordance with the terms of the applicable resolutions of the
respective Boards of Directors of the Registrants, and any legally required
consents, approvals, authorizations, and other orders of the Commission or any
other judicial or regulatory authorities to be obtained, and, to the extent
applicable, the articles or certificate of incorporation and bylaws of the
registrants and the Indenture, the Debt Securities will constitute legally
issued and binding obligations of the Company and/or U S WEST Capital Funding,
Inc., except as may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditors' rights generally, and except
that the remedies of specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought. I hereby
consent to the filing of this opinion as an exhibit to the Registration
Statement, and I further consent to the use of my name under the caption "Legal
Opinions" in the Prospectus forming a part of the Registration Statement.

Very truly yours,

/s/ Thomas O. McGimpsey
-----------------------

Thomas O. McGimpsey

<PAGE>
EXHIBIT 12

USW-C, INC.
RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
Year Ended
-----------------------------------------------------------------------------------------
Pro forma
12/31/97(3) 12/31/97(1) 12/31/96(1) 12/31/95(1) 12/31/94(1) 12/31/93(1)(2)
----------- ----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Income before income taxes, extra-
ordinary items and cumulative effect
of change in accounting principle $ 2,190 $ 2,429 $ 2,377 $ 2,248 $ 2,214 $ 962
Interest expense (net of amounts
capitalized) 644 405 448 429 381 415
Interest factor on rentals (1/3) 91 91 79 83 80 88
----------- ----------- ----------- ----------- ----------- --------------
Earnings $ 2,925 $ 2,925 $ 2,904 $ 2,760 $ 2,675 $ 1,465
----------- ----------- ----------- ----------- ----------- --------------
----------- ----------- ----------- ----------- ----------- --------------
Interest expense $ 664 $ 425 $ 479 $ 468 $ 417 $ 415
Interest factor on rentals (1/3) 91 91 79 83 80 88
----------- ----------- ----------- ----------- ----------- --------------
Fixed charges $ 755 $ 516 $ 558 $ 551 $ 497 $ 503
----------- ----------- ----------- ----------- ----------- --------------
----------- ----------- ----------- ----------- ----------- --------------
Ratio of earnings to fixed charges 3.87 5.67 5.20 5.01 5.38 2.91
----------- ----------- ----------- ----------- ----------- --------------
----------- ----------- ----------- ----------- ----------- --------------
</TABLE>

- ----------------------------------------
(1) Historical ratios are based on the combined historical results of U S WEST
and exclude the effects of $3.9 billion of indebtedness (the "Dex
Indebtedness") which was refinanced by U S WEST in connection with the Dex
Alignment (as previously defined in the Registration Statement).

(2) 1993 ratio includes a one-time restructuring charge of $930 million.
Excluding the restructuring charge, the ratio would have been 4.76.

<PAGE>

Exhibit 23-A

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 12,
1998 (except with respect to the matter discussed in Note 21 of the U S WEST,
Inc. consolidated financial statements, as to which the date is April 6, 1998)
on the consolidated financial statements, the consolidated financial statement
schedule, and the Supplementary Selected Proportionate Results of Operations
of U S WEST, Inc., included in U S WEST, Inc.'s Form 10-K, as amended on Form
10-K/A filed April 13, 1998, and the combined financial statements and
combined financial statement schedule of USW-C, Inc. and the consolidated
financial statements and the Supplementary Selected Proportionate Results of
Operations of U S WEST, Inc. included in U S WEST, Inc.'s proxy statement on
Schedule 14A filed April 20, 1998, respectively, all for the years ended
December 31, 1997 and 1996, and to all references to our Firm included in this
registration statement.

/s/ Arthur Andersen LLP

Denver, Colorado,
May 6, 1998.

<PAGE>

Exhibit 23-B

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

We consent to the incorporation by reference in this joint Registration
Statement on Form S-3 of USW-C, Inc. and U S WEST Capital Funding, Inc. of
our reports dated February 12, 1996 on our audits of the consolidated
financial statements and financial statement schedule of U S WEST, Inc. for the
year ended December 31, 1995, which reports are included in U S WEST, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1997, as amended
by Form 10-K/A filed April 13, 1998 and of our report dated February 12, 1996
on our audit of the consolidated financial statements of U S WEST, Inc. for
the year ended December 31, 1995, included in U S WEST Inc.'s Proxy Statement
dated April 20, 1998.

We consent to the incorporation by reference in this joint Registration
Statement on Form S-3 of USW-C, Inc. and U S WEST Capital Funding, Inc. of
our reports dated February 6, 1998, on our audit of the combined financial
statements and combined financial statement schedule of New U S WEST for the
year ended December 31, 1995, which report is included in U S WEST Inc.'s
Proxy Statement dated April 20, 1998.

We also consent to the reference to our firm under the caption "Experts".

/s/ Coopers & Lybrand L.L.P.

Denver, Colorado
May 6, 1998

<PAGE>

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, USW-C, Inc., a Delaware corporation (hereinafter referred to as
the "Company"), proposes to file with the Securities and Exchange Commission,
under the provisions of the Securities Act of 1933, as amended, a Registration
Statement on Form S-3, (the "Registration Statement") for the registration of
Guarantees of $3,500,000,000 of debt securities to be issued by U S WEST Capital
Funding, Inc.; and

WHEREAS, each of the undersigned is a Director and/or an Officer of the
Company;

NOW, THEREFORE, each of the undersigned constitutes and appoints STEPHEN E.
BRILZ and THOMAS O. MCGIMPSEY, and each of them, as attorneys for him or her and
in his or her name, place, and stead, and in his or her capacity as a Director
or officer, or both, of the Company, to execute and file such Registration
Statement, and thereafter to execute and file any amended registration statement
or statements or supplements thereto, hereby giving and granting to said
attorneys full power and authority to do and perform all and every act and thing
whatsoever requisite and necessary to be done in and about the premises as
fully, to all intents and purposes, as he or she might or could do if personally
present at the doing thereof, hereby ratifying and confirming all that said
attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney this 6th day of May, 1998.

/s/ SOLOMON D. TRUJILLO Director and Officer
- -----------------------
Solomon D. Trujillo

/s/ ALLAN R. SPIES Officer
- ------------------
Allan R. Spies

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, U S WEST Capital Funding, Inc., a Colorado corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a Registration Statement on Form S-3, (the "Registration Statement")
for the registration of $3,500,000,000 of debt securities to be issued by the
Company; and

WHEREAS, each of the undersigned is an Officer or Director, or both, of the
Company as indicated below each signature;

NOW, THEREFORE, each of the undersigned constitutes and appoints STEPHEN E.
BRILZ and THOMAS 0. MCGIMPSEY as attorney for him and in his name, place, and
stead, and in his capacity as an Officer or Director of the Company, to execute
and file such Registration Statement, and thereafter to execute and file any
amended registration statement or statements or supplements thereto, hereby
giving and granting to said attorney full power and authority to do and perform
all and every act and thing whatsoever requisite and necessary to be done in and
about the premises as fully, to all intents and purposes, as he might or could
do if personally present at the doing thereof, hereby ratifying and confirming
all that said attorney may or shall lawfully do, or cause to be done, by virtue
hereof.

IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney
this 6th day of May, 1998.

/s/ ALLAN R. SPIES President and Director
- ----------------------
Allan R. Spies

/s/ SEAN P. FOLEY Vice-President, Treasurer and Director
- ----------------------
Sean P. Foley

/s/ OSCAR X. MUNOZ Vice President and Controller
- ----------------------
Oscar X. Munoz

/s/ MICHAEL P. GLINSKY Director
- ----------------------
Michael P. Glinsky

<PAGE>

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ___

---------------------------------

THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)

A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)

ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

---------------------------------
U S WEST CAPITAL FUNDING, INC.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARACTER)

COLORADO 84-1028672
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)

7800 EAST ORCHARD ROAD
ENGLEWOOD, COLORAD 80111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

<PAGE>

---------------------------------
USW-C, INC.
(TO BE RENAMED "U S WEST, INC.")
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARACTER)

DELAWARE 0953188
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)

7800 EAST ORCHARD ROAD
ENGLEWOOD, COLORADO 80111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

DEBT SECURITIES
GUARANTEE OF DEBT SECURITIES OF U S WEST CAPITAL FUNDING, INC.,
BY U S WEST, INC.
(TITLE OF INDENTURE SECURITIES)

<PAGE>

ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
INFORMATION AS TO THE TRUSTEE:

(a) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.

Comptroller of the Currency, Washington, D.C.;
Federal Deposit Insurance Corporation,
Washington, D.C.; and The Board of Governors of
the Federal Reserve System, Washington D.C..

(b) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.

The trustee is authorized to exercise corporate
trust powers.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR
IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH
SUCH AFFILIATION.

No such affiliation exists with the trustee.

ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A
PART OF THIS STATEMENT OF ELIGIBILITY.

1. A copy of the articles of association of the
trustee now in effect.

2. A copy of the certificates of authority of the
trustee to commence business.

3. A copy of the authorization of the trustee to
exercise corporate trust powers.

4. A copy of the existing by-laws of the trustee.

5. Not Applicable.

6. The consent of the trustee required by
Section 321(b) of the Act.

<PAGE>

7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.

8. Not Applicable.

9. Not Applicable.

Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the
United States of America, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto
duly authorized, all in the City of Chicago and State of Illinois, on
the 24th day of April, 1998.

THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE

BY /s/ STEVEN M. WAGNER
-------------------------------------------
STEVEN M. WAGNER
FIRST VICE PRESIDENT

<PAGE>

EXHIBIT 1

A COPY OF THE ARTICLES OF ASSOCIATION OF THE
TRUSTEE NOW IN EFFECT

ARTICLES OF ASSOCIATION
OF
THE FIRST NATIONAL BANK OF CHICAGO
(Corrected To July 12, 1996)

FIRST. The title of this Association, organized for the purpose of
carrying on the business of banking under the laws of the United States, shall
be "The First National Bank of Chicago".

SECOND. The main office of this Association shall be in Chicago, County of
Cook, State of Illinois. The business of the Association shall be conducted at
its main office and its branches.

THIRD. The Board of Directors of this Association shall consist of not
less than five nor more than twenty-five persons, the exact number of directors
within such minimum and maximum limits to be fixed and determined from time to
time by resolution of a majority of the full Board of Directors or by resolution
of the shareholders at any annual or special meeting thereof. Any vacancy in
the Board of Directors may be filled by action of a majority of the remaining
directors between meetings of shareholders. The Board of Directors, by the vote
of a majority of the full Board, may, between meetings of shareholders, increase
the membership of the Board within such maximum limit by not more than four
members if the number of directors last elected by shareholders was 16 or more
and by not more than two members if the number of directors last elected by
shareholders was 15 or less.

FOURTH. The regular annual meeting of the shareholders of this Association
shall be held at its main banking house, or other convenient place duly
authorized by the Board of Directors, on such day of each year as is specified
therefor in the by-laws.

FIFTH. The amount of authorized capital stock of this Association shall be
Five Hundred Twenty-Five Million Eight Hundred Fifty-Eight Thousand Two Hundred
Dollars ($525,858,200) divided into 26,292,910 shares of common stock of the par
value per share of Twenty Dollars ($20); but said capital stock may be increased
or decreased from time to time, in accordance with the provisions of the laws of
the United States.

In the event of any such increase in the capital stock of this Association
by the sale of additional shares or the distribution of additional shares as a
stock dividend, each shareholder of this Association (unless otherwise provided
by the shareholders' vote or votes authorizing the increase) shall be entitled,
in proportion to the number of shares of said capital stock owned by him before
such increase, to proportionate rights in respect of such additional shares as
follows: (1) to the extent that such shareholder's proportionate right in
respect of such additional shares shall embrace one or more whole shares of such
additional shares, to receive (a) in the case of a sale, a transferable warrant
entitling the holder to subscribe, within the specified subscription period, for
such one or more whole shares of such additional shares

Page 5

<PAGE>

or (b) in the case of a stock dividend, a certificate evidencing such one or
more whole shares of such additional shares; and (2) to the extent that such
shareholder's proportionate right in respect of such additional shares shall
embrace a fraction of a share, to receive (a) in the case of a sale, a
fractional subscription warrant, conditioned that it shall be void unless,
within the specified subscription period, it is combined with other such
fractional subscription warrants in the aggregate entitling the holder thereof
to subscribe for a whole share or whole shares of such additional shares and
such subscription is completed by such holder of such combined fractional
warrants or (b) in the case of a stock dividend, a fractional warrant which
shall not represent or entitle the holder thereof to any of the privileges of a
shareholder of this Association but may be combined with other such fractional
warrants in the aggregate entitling the holder thereof to exchange them for a
whole share or whole shares of such additional shares and conditioned that the
holder exchanging such combined fractional warrants for such whole share or
whole shares of such additional shares shall receive any dividends applicable to
such whole share or whole shares declared after the date of such fractional
warrants and payable in respect of such whole share or whole shares at the time
of such exchange.

In the event of an increase in the capital stock of this Association in
pursuance of a statutory consolidation to which this Association may be a party,
the additional shares shall be issued in such a manner as the contract or plan
of consolidation may provide, pursuant to and in contemplation of the statute
under which said consolidation is effected.

In the event of an increase in the capital stock of this Association in
pursuance of a plan or contract (other than in the case of a statutory
consolidation) for the acquisition by this Association of the assets, in whole
or in part, and the good will of another banking institution or banker, the
additional shares shall be subscribed for by or issued to any persons, firms,
trustees or corporations, whether or not shareholders of this Association, as,
in its discretion in the execution of such plan or contract, the Board of
Directors may approve.

The Association, at any time and from time to time, may authorize and issue
debt obligations, whether or not subordinated, without the approval of the
shareholders.

SIXTH. The Board of Directors shall appoint one of its members President
of this Association, who shall be Chairman of the Board; but the Board of
Directors may appoint a director, in lieu of the President, to be Chairman of
the Board, who shall perform such duties as may be designated by the Board of
Directors. The Board of Directors shall have the power to appoint one or more
Vice Presidents; to appoint a Cashier and such other officers as may be required
to transact the business of this Association; to fix the salaries to be paid to
all officers of this Association; and to dismiss such officers, or any of them;
but the Board of Directors may delegate to the Chairman of the Board the
authority to exercise such powers of appointment, salary determination and
dismissal.

The Board of Directors shall have the power to define the duties of
officers and employees of this Association, to require bonds from them, and to
fix the penalty thereof; to regulate the manner in which directors shall be
elected or appointed, and to appoint judges of election; in the event of an
increase of the capital stock of this Association to regulate the manner in
which such increase shall be made; to make all by-laws that it may be lawful for
them to make for the general regulation of the business of this Association and
the management of its affairs; and generally to do and perform all acts that it
may be lawful for a Board of Directors to do and perform.

Page 6
<PAGE>

The Board of Directors, without the approval of the shareholders, shall
have the power to change the location of the main office of this Association,
subject to such limitations as from time to time may be provided by law.

SEVENTH. This Association shall have succession from the date of its
organization certificate until such time as it be dissolved by the act of its
shareholders in accordance with the provisions of the banking laws of the United
States, or until its franchise becomes forfeited by reason of violation of law,
or until terminated by either a general or a special act of Congress, or until
its affairs be placed in the hands of a receiver and finally wound up by him.

EIGHTH. The Board of Directors of this Association, the Chairman of the
Board, or the President, may call a special meeting of the shareholders at any
time: Provided, however, that, unless otherwise provided by the by-laws or the
laws of the United States, or waived by the shareholders, notice of the time,
place and purpose of the meeting shall be given to each shareholder of record of
this Association entitled to act and vote at such meeting, by a notice in
writing either mailed (prepaid first class postage) to such shareholder at his
address as shown upon the books of this Association or delivered manually to
such shareholder, not less than ten days prior to the date fixed for any such
meeting.

NINTH. (a) This Association shall indemnify and hold harmless each person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he, or a person of
whom he is the legal representative, is or was a director, officer or employee
of this Association, or is or was serving at the request of this Association as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, to the fullest extent permitted by the
General Corporation Law of Delaware, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits this Association to provide broader indemnification rights
than said law permitted this Association to provide prior to such amendment)
against all expenses (including attorneys' fees, judgments, fines, penalties and
amounts paid in settlement) actually and reasonably incurred by him in
connection therewith. This Association may, by action of the Board of
Directors, provide indemnification to agents of this Association with a lesser
or the same scope and effect as the foregoing indemnification of directors,
officers and employees of this Association.

(b) Expenses incurred by a director, officer or employee in defending a
civil or criminal action, suit or proceeding shall be paid by this Association
in advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director, officer or employee
to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by this Association. Such expenses incurred by
agents may be so paid upon such terms and conditions, if any, as the Board of
Directors deems appropriate.

(c) The indemnification provided by this Article does not authorize this
Association to indemnify any director, officer or employee against expenses,
penalties, or other payments incurred in an administrative proceeding or action
instituted by an appropriate bank regulatory agency which proceeding or action
results in a final order against such director, officer or employee assessing
civil money penalties or requiring affirmative action in the form of payments to
this Association.

(d) The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article Ninth shall not be deemed exclusive of any other
rights to which a person

Page 7
<PAGE>

seeking indemnification or advancement of expenses may be entitled under any
statute, by-law, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office. Notwithstanding the provisions of
this Article, this Association may indemnify any person referred to in paragraph
(a) of this Article to the fullest extent permitted under the statutes
applicable to national banking associations and the rules, regulations and
interpretations promulgated thereunder by the primary regulator of national
banking associations, in each case now or hereafter in effect.

(e) This Association shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
this Association, or is or was serving at the request of this Association as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not this Association would have the power to indemnify him against
such liability under the provisions of this Article. This provision does not,
however, authorize this Association to purchase insurance covering civil money
penalties assessed against a director or employee of this Association pursuant
to a formal order by an appropriate bank regulatory agency.

(f) Neither the amendment nor repeal of this Article Ninth, nor the
adoption of any provision of these Articles of Association inconsistent with
this Article Ninth, shall eliminate or reduce the effect of this Article Ninth
in respect of any matter occurring, or any cause of action, suit or claim that,
but for this Article Ninth, would accrue or arise, prior to such amendment,
repeal or adoption of an inconsistent provision.

TENTH. These Articles of Association may, subject to the provisions of the
banking laws of the United States, be amended at any regular or special meeting
of the shareholders by the affirmative vote of the shareholders owning at least
a majority of the stock of this Association.

Page 8
<PAGE>

EXHIBIT 2

A COPY OF THE CERTIFICATES OF AUTHORITY OF THE
TRUSTEE TO COMMENCE BUSINESS

CERTIFICATE

I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify that:

1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq.,
as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and
control of all records pertaining to the chartering of all National Banking
Associations.

2. "The First National Bank of Chicago," Chicago, Illinois, (Charter No. 8) is
a National Banking Association formed under the laws of the United States and is
authorized thereunder to transact the business of banking on the date of this
Certificate.

IN TESTIMONY WHEREOF, I have hereunto

subscribed my name and caused my seal of

office to be affixed to these presents at the

Treasury Department in the City of

Washington and District of Columbia, this

17th day of December, 1997.

/s/ Eugene A. Ludwig
--------------------
Comptroller of the Currency

Page 9
<PAGE>

EXHIBIT 3

A COPY OF THE AUTHORIZATION OF THE TRUSTEE
TO EXERCISE CORPORATE TRUST POWERS

CERTIFICATE

I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify that:

2. "The First National Bank of Chicago," Chicago, Illinois, (Charter No. 8)
was granted, under the hand and seal of the Comptroller, the right to act in all
fiduciary capacities authorized under the provisions of the Act of Congress
approved September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a, and that the authority
so granted remains in full force and effect on the date of this Certificate.

IN TESTIMONY WHEREOF, I have hereunto

subscribed my name and caused my seal of

office to be affixed to these presents at the

Treasury Department in the City of

Washington and District of Columbia, this

17th day of December, 1997.

/s/ Eugene A. Ludwig
--------------------
Comptroller of the Currency

Page 10
<PAGE>

EXHIBIT 4

A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE

BY-LAWS
OF
THE FIRST NATIONAL BANK OF CHICAGO

AS AMENDED AND RESTATED JULY 12, 1996

ARTICLE I

CORPORATE GOVERNANCE

To the extent not inconsistent with applicable Federal banking statutes or
regulations, or safe and sound banking practices, the Bank shall follow the
corporate governance procedures of the Delaware General Corporation Law, as
amended.

ARTICLE II

SHAREHOLDERS

SECTION 1. ANNUAL MEETING. The regular annual meeting of shareholders of
the Bank to elect directors and to transact whatever other business may properly
come before the meeting shall be held in its main office on the second Friday in
May if not a legal holiday under the Laws of Illinois, and if a legal holiday,
then on the next business day following, at 11:30 A.M., or on such other date
and time as shall be designated by the Board of Directors. If, for any cause,
the annual election of directors should not be held on that date, the Board
shall order the election to be held on some subsequent day, of which special
notice shall be given.

SECTION 2. JUDGES OF ELECTION. To the extent required by law, the Board
of Directors shall, prior to the time of the election of directors, appoint
three persons to be Judges of Election, who shall hold and conduct the same, and
who shall, after the election has been held, certify under their hands to the
Cashier of the Bank the result thereof and the names of the directors-elect.

SECTION 3. NOTICE TO DIRECTORS-ELECT. The Cashier upon receiving the
Certificate of the Judges of Election as aforesaid, shall cause the same to be
recorded upon the minute book of the Bank, and shall notify the directors-elect
of their election and of the time at which they are required to meet at the main
office of the Bank for the purpose of organizing the new Board. If at the time
fixed for the meeting of the directors-elect there should not be a quorum
present, the members present may adjourn from time to time until a quorum is
obtained.

SECTION 4. SPECIAL MEETINGS. Special meetings of the shareholders may be
called in accordance with Article EIGHTH of the Bank's Articles of Association.

Page 11
<PAGE>

SECTION 5. RECORD DATE. The Board of Directors may fix in advance a day
not more than sixty (60) or less than ten (10) days prior to the date of holding
any regular or special meeting of shareholders as the day as of which
shareholders entitled to notice of and to vote at such meeting shall be
determined.

SECTION 6. NOTICE. The Bank shall mail notice of any meeting of
shareholders at least 10 days prior to the meeting by first class mail, unless
the Office of the Comptroller of the Currency determines that an emergency
circumstance exists. If the Bank is a wholly-owned subsidiary of a company, the
sole shareholder may waive notice of the shareholder's meeting.

SECTION 7. CONSENT OF SHAREHOLDERS IN LIEU OF ANNUAL OR SPECIAL MEETING.
Unless otherwise restricted by law or the Articles of Association, any action
which may be taken at any annual or special shareholder meeting may be taken
without a meeting, without prior notice and without a vote, if written consent
setting forth the action so taken shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those shareholders who did not give written consent.

SECTION 8. MINUTES. The proceedings of shareholders at all regular and
special meetings or by written consent in lieu of a meeting shall be recorded in
the minute book, together with the Articles of Association of the Bank and the
returns of the Judges of Election. The minutes of each meeting shall be signed
by the Presiding Officer, and attested by the Cashier, or other officer of the
Bank acting in place of the Cashier.

ARTICLE III

DIRECTORS

SECTION 1. AUTHORITY. The Board of Directors shall have the power to
manage and administer the business and affairs of the Bank. Except as expressly
limited by law, all corporate powers of the Bank shall be vested in and may be
exercised by the Board of Directors.

SECTION 2. NUMBER. The Board of Directors shall at all times consist of
not less than five nor more than twenty-five individuals. The exact number
within such minimum and maximum limits shall be fixed and determined from time
to time by resolution of a majority of the full Board of Directors or by
resolution of the shareholders at any meeting thereof; provided, however, that
the Board of Directors may not increase the number of directors to a number
which: (1) exceeds by more than two the number of directors last elected by
shareholders where such number was fifteen or less; or (ii) exceeds by more than
four the number of directors last elected by shareholders where such number was
sixteen or more, but in no event shall the number of directors exceed
twenty-five.

SECTION 3. TERM OF OFFICE. Each director shall hold office from the date
of his election or appointment until the next annual shareholder meeting. Any
director ceasing to

Page 12
<PAGE>

be the owner of the amount of stock required by law or in any other manner
becoming disqualified shall thereupon vacate his office as director.

SECTION 4. COMPENSATION. The Board of Directors may provide that a
reasonable fee be paid to any of its members or to the members of any duly
authorized committee for services rendered. No such payment shall preclude any
director from serving the Bank in any other capacity and receiving compensation
therefor.

SECTION 5. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held on such dates, times and locations as determined by the Chairman
of the Board and communicated in writing to the directors.

SECTION 6. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board or the President. Such meetings
shall be held at such times and at such places as shall be determined by the
officer calling the meeting. Notice of any special meeting of directors shall
be given to each director at the director's business or residence in writing by
hand delivery, first-class or overnight mail or courier service, telegram or
facsimile transmission, or orally by telephone. If mailed by first-class mail,
such notice shall be deemed adequately delivered when deposited in the United
States mail so addressed, with postage thereon prepaid, at least two (2) days
before such meeting. If by telegram, overnight mail or courier service, such
notice shall be deemed adequately delivered when the telegram is delivered to
the telegraph company or the notice is delivered to the overnight mail or
courier service company at least twenty-four (24) hours before such meeting. If
by facsimile transmission, such notice shall be deemed adequately delivered when
the notice is transmitted at least twelve (12) hours before such meeting. Such
notice need not state the purposes of the meeting. Any or all directors may
waive notice of any meeting, either before or after the meeting. Attendance of
a director at a meeting shall constitute a waiver of notice of such meeting,
except when the director attends for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened.

SECTION 7. QUORUM; MAJORITY VOTE. A quorum of directors shall be required
to transact business at any regular or special meeting of the Board of
Directors. A majority of the directors shall constitute a quorum. Each
director shall be entitled to one vote. A vote by a majority of the directors
present at any regular or special meeting of the Board of Directors at which a
quorum is present shall be required to approve any matter or proposal at any
such meeting.

SECTION 8. VACANCIES. When any vacancy occurs in the Board of Directors,
a majority of the remaining members of the Board, according to the laws of the
United States, may appoint a director to fill such vacancy at any regular
meeting of the Board of Directors, or at a special meeting called for that
purpose at which a quorum is present, or if the directors remaining in office
constitute fewer than a quorum of the Board of Directors, by the affirmative
vote of a majority of all the directors remaining in office, or by shareholders
at a special meeting called for that purpose. At any such shareholder meeting,
each shareholder entitled to vote shall have the right to multiply the number of
votes he or she is entitled to cast by the number of vacancies being filled and
cast the

Page 13
<PAGE>

product for a single candidate or distribute the product among two or more
candidates. A vacancy that will occur at a specific later date (by reason of a
resignation effective at a later date) may be filled before the vacancy occurs
but the new director may not take office until the vacancy occurs.

SECTION 9. PRESIDING OFFICER. The Chairman of the Board shall preside
at all meetings of the Board of Directors at which he is present. In the
absence of the Chairman of the Board, the President shall perform the duties of
the Chairman of the Board and shall preside at the meetings of the Board of
Directors. In the absence of the Chairman of the Board and the resident, the
Vice Chairman of the Board (or in the event there be more than one Vice Chairman
of the Board, the Vice Chairmen of the Board in the order designated, or in the
absence of any designation, then in the order of their election) shall perform
their duties and shall preside at the meetings of the Board of Directors.

SECTION 10. MINUTES OF MEETING. The Cashier shall act as secretary to the
Board of Directors to take minutes at any regular or special meeting of the
Board of Directors. If the Cashier is not present at any such meeting, the
Chairman of the Board may designate a secretary pro tem to take minutes at the
meeting. The Cashier or secretary pro tem shall record the actions and
proceedings at each regular or special meeting of the Board of Directors as
minutes of the meeting and shall maintain such minutes in a minute book of
proceedings of such meetings of the Board of Directors. Minutes of each such
meeting shall be signed by the presiding officer and secretary of each meeting.

SECTION 11. PARTICIPATION IN MEETINGS BY TELEPHONE Unless otherwise
restricted by law or the Articles of Association, members of the Board of
Directors, or of any committee thereof, may participate in a meeting of the
Board of Directors or committee by means of conference telephone or similar
communications equipment which allows each person participating in the meeting
to hear each other. Participation in such a meeting shall constitute presence
in person at such meeting.

SECTION 12. CONSENT OF DIRECTORS IN LIEU OF MEETING. Unless otherwise
restricted by law or the Articles of Association, any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.

SECTION 13. COMMITTEES. The Board of Directors may, by resolution passed
by a majority of the entire Board, designate one or more committees, each
committee to consist of two or more of the Directors of the Bank. The Board of
Directors may designate one or more Directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. Any such committee, to the extent provided in the resolution,
shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Bank, and may authorize the seal
of the Bank to be affixed to all papers which may require it; provided, however,
that in the absence or disqualification of any member of such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Such committee
or committees shall have such name or names as

Page 14
<PAGE>

may be determined from time to time by resolution adopted by the Board of
Directors. As used in these By-Laws, "entire Board" means the total number of
Directors the Bank would have if there were no vacancies.

There shall be an Executive Committee composed and created as the Board of
Directors may designate by resolution passed by a majority of the entire Board.
During intervals between the regular meetings of the Board of Directors, the
Executive Committee, to the extent permitted by law, the Articles of Association
of the Bank and the By-Laws, shall have and may exercise the powers of the Board
of Directors in the management of the business and affairs of the Bank.

Unless otherwise provided by the Board of Directors, a majority of the
members of any committee appointed by the Board of Directors pursuant to this
Section shall constitute a quorum at any meeting thereof and the act of a
majority of the members present at a meeting at which a quorum is present shall
be the act of such committee. Any such committee shall, subject to any rules
prescribed by the Board of Directors, prescribe its own rules for calling,
giving notice of and holding meetings and its method of procedure at such
meetings and shall keep a written record of all action taken by it. Each
committee shall keep regular minutes of its meetings and report the same to the
Board of Directors when required.

SECTION 14. HONORARY DIRECTORS. Any person who has at any time been
Chairman of the Board, President or Vice Chairman of the Board of the Bank may,
after retirement from the Board of Directors, be appointed by the Board of
Directors as an Honorary Director on a year-to-year basis. In no case shall an
Honorary Director serve as such for more than five years. Honorary Directors
shall serve in an advisory capacity to the Board of Directors, shall have no
vote and shall not be considered directors for the purpose of determining a
quorum. Honorary Directors shall be reimbursed for their expenses in attending
meetings of the Board of Directors and shall receive such fees, if any, for
attendance at each meeting of the Board of Directors as may be fixed from time
to time by the Board of Directors but shall not receive any other directors'
fees or any other compensation for their services.

ARTICLE IV

OFFICERS

SECTION 1. OFFICER TITLES. The officers of the Bank shall include a
Chairman of the Board and a President and may include one or more Vice Chairmen
of the Board, Executive Vice Presidents, Senior Vice Presidents, First Vice
Presidents, Vice Presidents and Assistant Vice Presidents, a General Auditor, a
General Counsel, a Cashier, and such other officers as may be appropriate for
the prompt and orderly transaction of the business of the Bank. Individuals
appointed as Chairman of the Board, President and Vice Chairman of the Board
must be members of the Board. The same person may hold any two or more offices.
The Chairman of the Board shall have such authority to establish officer titles
as from time to time delegated by the Board of Directors and to delegate such
authority further to other officers of the Bank.

Page 15
<PAGE>

SECTION 2. CHIEF EXECUTIVE OFFICER. The Chairman of the Board shall be
the chief executive officer of the Bank. In case of the death or disability of
the Chairman of the Board, his powers shall be exercised and his duties
discharged by the President. In the event of the death or disability of the
Chairman of the Board and the President, the Vice Chairman of the Board (or in
the event there be more than one Vice Chairman of the Board, the Vice Chairmen
of the Board in the order designated, or in the absence of any designation, then
in the order of their election) shall exercise the powers and discharge the
duties of the Chairman of the Board.

SECTION 3. ELECTION OF OFFICERS. The Board of Directors of the Bank shall
have authority to appoint the officers of the Bank. The Chairman of the Board
shall have such authority to appoint officers as from time to time delegated by
the Board of Directors, and to delegate such authority further to other officers
of the Bank.

SECTION 4. AUTHORITY AND RESPONSIBILITY. The authorities and
responsibilities of all officers, in addition to those specifically prescribed
herein, shall be those usually pertaining to their respective offices, or as may
be designated by the Board of Directors or by the Chairman of the Board or by
the President, or by any officer of the Bank designated by one of the foregoing.

SECTION 5. TERM OF OFFICE. Officers shall be appointed for an indefinite
term, and their employment may be terminated or they may be removed from office
at any time. The Board of Directors shall have authority to terminate or remove
officers of the Bank. The Chairman of the Board shall have such authority to
terminate or remove officers as from time to time delegated by the Board of
Directors, and to delegate such authority further to other officers of the Bank.

SECTION 6. SURETY. All officers and employees of the Bank who shall be
responsible for any moneys, funds or valuables of the Bank shall give bond, or
be covered by a blanket bond, in such penal sum and with such security as shall
be approved by the Board, conditioned for the faithful and honest discharge of
their duties as such officers or employees and that they will faithfully apply
and account for all such moneys, funds and valuables and deliver the same on
proper demand to the order of the Board of the Bank, or to the person or persons
authorized to receive the same.

ARTICLE V

SEAL

SECTION 1. DESCRIPTION. The following is a description of the Seal
adopted by the Board of the Bank:

Female with left arm resting on shield, bale of goods and sheaf of grain at
her side, ship and sea in the distance; the whole surrounded with the words,
"The First National Bank of Chicago".

SECTION 2. ATTESTATION. Any instrument which is executed for and on
behalf of the Bank by its duly authorized officers may, when necessary, be
attested and sealed with

Page 16
<PAGE>

the corporate seal by any officer of the Bank other than the officer who
executes such instrument on behalf of the Bank.

ARTICLE VI

TRANSFERS OF REAL ESTATE

Any Vice President or higher ranking officer shall have authority on behalf
of and in the name of the Bank, to execute any document or instrument and to
take action which may be necessary or appropriate to purchase, convey, lease, or
otherwise affect any real estate or interest in real estate owned or to be owned
by the Bank; provided, however, any document or instrument purchasing, conveying
or leasing real estate used or to be used by the Bank as banking facilities must
be executed by a Senior Vice President or higher ranking officer, or any other
officer designated by any of the foregoing. Any Assistant Vice President or
higher ranking officer shall have authority to execute and deliver on behalf of
and in the name of the Bank, releases of mortgages or trust deeds.

ARTICLE VII

STOCK AND STOCK CERTIFICATES

SECTION 1. INCREASE OF STOCK. In the event of any increase in the capital
stock of the Bank the preemptive rights of the shareholders in respect of any
such increased stock shall be as set forth in Article FIFTH of the Articles of
Association.

Any warrants or certificates issuable to shareholders in connection with
any increase of the capital stock of the Bank, shall be delivered to the
respective shareholders entitled thereto, either by hand or by mail, first-class
postage prepaid, addressed to their respective addresses as shown on the books
of the Bank.

If, in the event of a sale of additional shares, any subscription rights
shall not have been exercised at the expiration of the specified subscription
period, such unsubscribed new shares may be issued and sold at such price, not
less than the par value thereof, to such persons and on such terms as the Board
of Directors may determine.

SECTION 2. TRANSFERS OF STOCK. The stock of the Bank shall be assignable
only upon the books of the Bank, subject to the restrictions of the Act, and a
transfer book shall be kept in which all assignments and transfers of stock
shall be made. Transfers of stock may be suspended preparatory to any election
or payment of any dividends.

SECTION 3. CERTIFICATES OF STOCK. Certificates of stock signed by any
Vice President or higher ranking officer and the Cashier or any Assistant
Cashier may be issued to shareholders, and the Certificates shall state upon the
face thereof that the stock is transferable only upon the books of the Bank. If
such Certificates are manually countersigned by two other officers of the Bank,
the signatures of the officers designated in the preceding sentence may be
facsimiles, engraved or printed. In case any officer who has signed or whose
facsimile signature has been placed upon such Certificates shall have

Page 17
<PAGE>

ceased to be such officer before such Certificates are issued, they may be
issued by the Bank with the same effect as if such officer had not ceased to be
such at the date of issue.

In case of transfer of stock, new Certificates of stock shall not be issued
until other Certificate or Certificates of stock of an equal amount shall first
have been surrendered and cancelled.

Any one of the following officers of the Bank: the Chairman of the Board,
the President, or any Vice Chairman of the Board is each hereby authorized to
cause new Certificates of stock of the Bank to be issued to replace Certificates
reported to have been lost, stolen or destroyed, upon receipt of: (a)
appropriate affidavit or affidavits setting forth whether the Certificates were
lost, stolen or destroyed and the circumstances thereof, and (b) a bond or bonds
(blanket or otherwise) or an agreement or agreements of indemnity, sufficient in
the opinion of any of such officers to protect the interests of the Bank issuing
such new Certificates.

ARTICLE VIII

BANKING HOURS

The Bank shall be open for business during such days of the year and for
such hours as the Board of Directors or any officer of the Bank designated by
the Board of Directors may from time to time determine.

ARTICLE IX

CONTRACTS, CERTIFICATES OF DEPOSIT AND NOTES

SECTION 1. EXECUTION OF CONTRACTS. Any officer of the bank and such
other persons as may be authorized by the Board of Directors are severally and
respectively authorized to execute documents and to take action in the Bank's
name in connection with any and all transactions conducted in the ordinary
course of business of the Bank.

SECTION 2. CERTIFICATES OF DEPOSIT AND NOTES. Notwithstanding the
foregoing, all certificates of deposits and notes evidencing obligations of the
Bank shall be signed either manually or by facsimile signature by any officer of
the Bank, and, if such signature is not a manual signature, shall be validated
by the manual signature of another officer of the Bank whose signature does not
already appear on said certificate of deposit or note or by the authorized
officers of corporate fiduciaries or agents with whom the Board of Directors may
from time to time by resolution authorize the officers of the Bank to contract
for services in connection with the validation and delivery of certificates of
deposit or notes issued by the Bank.

Page 18
<PAGE>

ARTICLE X

VOTING RIGHTS

The vote of the Bank as stockholder in any corporation in which it may hold
stock or upon any securities carrying voting rights which it shall have the
right to vote in its individual capacity as a Bank, shall be cast at any
stockholders' or shareholders' meeting by any Vice President or higher ranking
officer, or the Cashier, in person, or by some person or persons authorized by
written proxy signed by one of said officers.

In all cases where shares of stock or other securities carrying voting
rights and owned by the Bank shall be held in the name of a nominee of the Bank,
any Vice President or higher ranking officer, or the Cashier, may authorize such
nominee to vote such stock or other securities in person, either unconditionally
or upon such terms, limitations, or conditions as such officer may direct, or
any such officer may authorize such nominee to execute a proxy to vote such
shares of stock or other securities carrying voting rights, either
unconditionally or upon such terms, conditions and/or limitations as such
officer shall approve.

ARTICLE XI

EXAMINATIONS

It shall be the duty of the General Auditor to examine, from time to time,
the various operations of the Bank, verify its assets and liabilities, and
perform such other procedures as are required to determine that the accounting
records are accurate and to ascertain whether the Bank is in a sound and solvent
condition. Major discrepancies and defalcations shall be reported to the Board
promptly and other reports shall be made directly to the Board when deemed
appropriate either by the General Auditor or the Board. In the event of the
death, resignation, absence or inability of the General Auditor, the Board of
Directors shall appoint a competent person who shall make such examinations and
reports, pending the election of a successor to the General Auditor or the
return of the General Auditor to his duties.

ARTICLE XII

BONDS OF INDEMNITY

Bonds of indemnity given to secure the issuance of duplicate or substitute
notes, bonds, stock certificates, checks, debentures or other securities which
may have been lost, destroyed or stolen or to secure the payment of any such
lost, destroyed or stolen securities or to secure the payment by the Bank of
funds deposited by any public authorities, shall be executed by any Assistant
Vice President or higher ranking officer, and, if required, sealed with the
corporate seal and attested by some other officer of the Bank.

Page 19
<PAGE>

ARTICLE XIII

AUTHORITY TO SELL STOCKS, BONDS, ETC.

SECTION 1. U.S. OBLIGATIONS. Any Assistant Vice President or higher
ranking officer may at any time, in his discretion, sell, assign and transfer
any and all United States bonds now standing, or which may hereafter stand, in
the name of the Bank, and to appoint one or more attorneys for that purpose.

SECTION 2. OTHER OBLIGATIONS. Any Assistant Vice President or higher
ranking officer may at any time, in his discretion, sell, assign and transfer
any and all notes, bonds, certificates of indebtedness or obligations of any
corporation, firm or individual, which said notes, bonds, certificates of
indebtedness or obligations are now registered, or may hereafter be registered,
in the name of, or for the benefit of, the Bank, or are payable or indorsed to
the Bank.

SECTION 3. STOCK. Any Assistant Vice President or higher ranking officer
may at any time in his discretion, sell, assign and transfer to any assignee or
transferee, for and on behalf of the Bank and in its name, any and all shares of
capital stock of any corporation or corporations held by the Bank.

ARTICLE XIV

FIDUCIARY ACTIVITIES

1. AUTHORITY TO SIGN AS REGISTRAR, TRANSFER AGENT, ETC. Any officer of
the Bank shall have the right to sign, countersign, certify, register,
authenticate and identify all bonds, notes, interim certificates, and depositary
receipts, warrants, participation certificates, certificates of stock and
similar instruments for or in respect of which the Bank may be acting as
Trustee, Registrar, Transfer Agent or otherwise.

2. AUTHORITY TO VOTE STOCK. The vote of the Bank as stockholder in any
corporation or mutual fund in which it may hold capital stock in any fiduciary
capacity, unless the governing instrument directs otherwise, may be voted by any
officer of the Bank in person, electronically or by written proxy signed by one
of said officers.

3. AUTHORITY TO SELL, ASSIGN AND TRANSFER STOCKS, ETC. Any officer of the
Bank may sell, assign and transfer to any assignee or transferee for the Bank
and in its name, any and all shares of the capital stock or other securities and
obligations of any individual or entity held by the Bank in any fiduciary
capacity, and sign and deliver any instruments with respect to any such items.

4. AUTHORITY TO SIGN CHECKS AND OTHER INSTRUMENTS. Any officer of the
Bank is authorized to sign for and on behalf of the Bank: checks against any
account or accounts of any organizational unit of the Bank exercising fiduciary
powers; petitions; schedules; accounts; reports; receipts for funds or
securities deposited with the Bank as fiduciary and all instruments or documents
that may be necessary or desirable in connection with the execution of any
fiduciary powers of the Bank.

Page 20
<PAGE>

5. DELEGATION OF AUTHORITY. Anything in this Article XIV to the contrary
notwithstanding, the Chairman of the Board is authorized to designate in writing
such persons as shall be authorized in the name of the Bank to sign or
countersign any or all of the documents and instruments enumerated in this
Article XIV relating to transactions conducted in connection with the execution
of any fiduciary powers of the Bank.

ARTICLE XV

AMENDMENT OF BY-LAWS

These By-Laws may be changed or amended by the vote of a majority of the
directors present at any regularly constituted meeting of the Board of
Directors.

ARTICLE XVI

EMERGENCY OPERATION OF BANK

In the event of an emergency declared by the President of the United States
or the person performing his functions, due to threatened or actual enemy attack
or disaster, the officers and employees of the Bank will continue to conduct the
affairs of the Bank under such guidance from the directors as may be available,
except as to matters which by statute require specific approval of the Board of
Directors, and subject to conformance with any governmental directives during
the emergency.

ARTICLE XVII

DELEGATION OF AUTHORITY

Each of the Chairman of the Board, the President, any Vice Chairman of the
Board and the Cashier of the Bank are severally and respectively authorized to
designate in writing such persons who shall be authorized in the name and on
behalf of the Bank to sign any document or instrument, including certificates of
deposit and notes, and to take action which may be necessary or appropriate to
the conduct of the Bank's business, in its individual capacity or any other
capacity. Any such authorization to sign such document or instrument and to
take any action may be general or limited as is determined in the discretion of
the Chairman of the Board, the President, any Vice Chairman of the Board or the
Cashier.

Page 21
<PAGE>

EXHIBIT 6

THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT

April 24, 1998

Securities and Exchange Commission
Washington, D.C. 20549

Gentlemen:

In connection with the qualification of the indenture among U S WEST Capital
Funding, Inc., U S WEST, Inc., and The First National Bank of Chicago, as
Trustee, the undersigned, in accordance with Section 321(b) of the Trust
Indenture Act of 1939, as amended, hereby consents that the reports of
examinations of the undersigned, made by Federal or State authorities authorized
to make such examinations, may be furnished by such authorities to the
Securities and Exchange Commission upon its request therefor.

Very truly yours,

THE FIRST NATIONAL BANK OF CHICAGO

BY: /s/ STEVEN M. WAGNER
--------------------------------------
STEVEN M. WAGNER
FIRST VICE PRESIDENT

Page 22
<PAGE>

EXHIBIT 7

<S> <C> <C>
LEGAL TITLE OF BANK: THE FIRST NATIONAL BANK OF CHICAGO CALL DATE: 12/31/97 ST-BK: 17-1630 FFIEC 031
ADDRESS: ONE FIRST NATIONAL PLAZA, STE 0303 PAGE RC-1
CITY, STATE ZIP: CHICAGO, IL 60670
FDIC CERTIFICATE NO.: 0/3/6/1/8
</TABLE>

CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31,1997

ALL SCHEDULES ARE TO BE REPORTED IN THOUSANDS OF DOLLARS. UNLESS OTHERWISE
INDICATED, REPORT THE AMOUNT OUTSTANDING AS OF THE LAST BUSINESS DAY OF THE
QUARTER.

SCHEDULE RC--BALANCE SHEET

C400
DOLLAR AMOUNTS IN ------------
THOUSANDS RCFD BIL MIL THOU
----------------- ---- ------------

<S> <C> <C> <C> <C>
ASSETS
1. CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS (FROM SCHEDULE
RC-A):
a. NONINTEREST-BEARING BALANCES AND CURRENCY AND COIN(1). . . . . 0081 4,267,336 1.a.
b. INTEREST-BEARING BALANCES(2) . . . . . . . . . . . . . . . . . 0071 6,893,837 1.b.
2. SECURITIES
a. HELD-TO-MATURITY SECURITIES(FROM SCHEDULE RC-B, COLUMN A). . . 1754 0 2.a.
b. AVAILABLE-FOR-SALE SECURITIES (FROM SCHEDULE RC-B, COLUMN D) . 1773 5,691,722 2.b.
3. FEDERAL FUNDS SOLD AND SECURITIES PURCHASED UNDER AGREEMENTS TO
RESELL 1350 6,339,940 3.
4. LOANS AND LEASE FINANCING RECEIVABLES:
a. LOANS AND LEASES, NET OF UNEARNED INCOME (FROM SCHEDULE
RC-C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2122 25,202,984 4.a.
b. LESS: ALLOWANCE FOR LOAN AND LEASE LOSSES. . . . . . . . . . . RCFD 3123 419,121 4.b.
c. LESS: ALLOCATED TRANSFER RISK RESERVE. . . . . . . . . . . . . RCFD 3128 0 4.c.
d. LOANS AND LEASES, NET OF UNEARNED INCOME, ALLOWANCE, AND
RESERVE (ITEM 4.a MINUS 4.b AND 4.c) . . . . . . . . . . . . . 2125 24,783,863 4.d.
5. TRADING ASSETS (FROM SCHEDULE RD-D) . . . . . . . . . . . . . . . 3545 6,703,332 5.
6. PREMISES AND FIXED ASSETS (INCLUDING CAPITALIZED LEASES). . . . . 2145 743,426 6.
7. OTHER REAL ESTATE OWNED (FROM SCHEDULE RC-M). . . . . . . . . . . 2150 7,727 7.
8. INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATED
COMPANIES (FROM SCHEDULE RC-M). . . . . . . . . . . . . . . . . . 2130 134,959 8.
9. CUSTOMERS' LIABILITY TO THIS BANK ON ACCEPTANCES OUTSTANDING. . . 2155 644,340 9.
10. INTANGIBLE ASSETS (FROM SCHEDULE RC-M). . . . . . . . . . . . . . 2143 268,501 10.
11. OTHER ASSETS (FROM SCHEDULE RC-F) . . . . . . . . . . . . . . . . 2160 2,004,432 11.
12. TOTAL ASSETS (SUM OF ITEMS 1 THROUGH 11). . . . . . . . . . . . . 2170 58,483,415 12.
</TABLE>

- ---------------

(1) INCLUDES CASH ITEMS IN PROCESS OF COLLECTION AND UNPOSTED DEBITS.
(2) INCLUDES TIME CERTIFICATES OF DEPOSIT NOT HELD FOR TRADING.

<PAGE>

<S> <C> <C>
LEGAL TITLE OF BANK: THE FIRST NATIONAL BANK OF CHICAGO CALL DATE: 09/30/97 ST-BK: 17-1630 FFIEC 031
ADDRESS: ONE FIRST NATIONAL PLAZA, STE 0303 PAGE RC-2
CITY, STATE ZIP: CHICAGO, IL 60670
FDIC CERTIFICATE NO.: 0/3/6/1/8
</TABLE>

SCHEDULE RC-CONTINUED

DOLLAR AMOUNTS IN
THOUSANDS BIL MIL THOU
----------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
13. DEPOSITS:
a. IN DOMESTIC OFFICES (SUM OF TOTALS OF COLUMNS A AND C
FROM SCHEDULE RC-E, PART 1). . . . . . . . . . . . . . . . . . RCON 2200 21,756,846 13.a
(1) NONINTEREST-BEARING(1) . . . . . . . . . . . . . . . . . . RCON 6631 9,197,227 13.a.1
(2) INTEREST-BEARING . . . . . . . . . . . . . . . . . . . . . RCON 6636 559,619 13.a.2
b. IN FOREIGN OFFICES, EDGE AND AGREEMENT SUBSIDIARIES, AND
IBFS (FROM SCHEDULE RC-E, PART II) . . . . . . . . . . . . . . RCFN 2200 14,811,410 13.b.
(1) NONINTEREST BEARING. . . . . . . . . . . . . . . . . . . . RCFN 6631 332,801 13.b.1
(2) INTEREST-BEARING . . . . . . . . . . . . . . . . . . . . . RCFN 6636 14,478,609 13.b.2
14. FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER AGREEMENTS
TO REPURCHASE: RCFD 2800 4,535,422 14
15. a. DEMAND NOTES ISSUED TO THE U.S. TREASURY RCON 2840 43,763 15.a
b. TRADING LIABILITIES(FROM SCHEDULE RC-D).................................... RCFD 3548 6,523,239 15.b
16. OTHER BORROWED MONEY:
A. WITH A REMAINING MATURITY OF ONE YEAR OR LESS . . . . . . . . RCFD 2332 1,360,165 16.a
B. WITH A REMAINING MATURITY OF THAN ONE YEAR THROUGH THREE YEARS . . . . . . A547 576,492 16.b
. C. WITH A REMAINING MATURITY OF MORE THAN THREE YEARS ....................... A548 703,981 16.c
17. NOT APPLICABLE
18. BANK'S LIABILITY ON ACCEPTANCE EXECUTED AND OUTSTANDING RCFD 2920 644,341 18
19. SUBORDINATED NOTES AND DEBENTURES (2) . . . . . . . . . . . . . . RCFD 3200 1,700,000 19
20. OTHER LIABILITIES (FROM SCHEDULE RC-G). . . . . . . . . . . . . . RCFD 2930 1,322,077 20
21. TOTAL LIABILITIES (SUM OF ITEMS 13 THROUGH 20). . . . . . . . . . RCFD 2948 53,987,736 21
22. NOT APPLICABLE
EQUITY CAPITAL
23. PERPETUAL PREFERRED STOCK AND RELATED SURPLUS . . . . . . . . . . RCFD 3838 0 23
24. COMMON STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3230 200,858 24
25. SURPLUS (EXCLUDE ALL SURPLUS RELATED TO PREFERRED STOCK). . . . . RCFD 3839 2,999,001 25
26. a. UNDIVIDED PROFITS AND CAPITAL RESERVES . . . . . . . . . . . . RCFD 3632 1,273,239 26.a.
b. NET UNREALIZED HOLDING GAINS (LOSSES) ON AVAILABLE-FOR-SALE
SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 8434 24,096 26.b.
27. CUMULATIVE FOREIGN CURRENCY TRANSLATION ADJUSTMENTS . . . . . . . RCFD 3284 (1,515) 27
28. TOTAL EQUITY CAPITAL (SUM OF ITEMS 23 THROUGH 27) . . . . . . . . RCFD 3210 4,495,679 28
29. TOTAL LIABILITIES AND EQUITY CAPITAL (SUM OF ITEMS 21 AND 28) . . RCFD 3300 58,483,415 29
</TABLE>

MEMORANDUM
TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION
1. INDICATE IN THE BOX AT THE RIGHT THE NUMBER OF THE STATEMENT BELOW THAT
BEST DESCRIBES THE MOST COMPREHENSIVE LEVEL OF AUDITING WORK PERFORMED FOR
THE BANK BY INDEPENDENT EXTERNAL NUMBER
------
AUDITORS AS OF ANY DATE DURING 1996.........RCFD 6724....N/A. M.1
------

1 = INDEPENDENT AUDIT OF THE BANK CONDUCTED IN ACCORDANCE WITH GENERALLY
ACCEPTED AUDITING STANDARDS BY A CERTIFIED PUBLIC ACCOUNTING FIRM WHICH
SUBMITS A REPORT ON THE BANK
2 = INDEPENDENT AUDIT OF THE BANK'S PARENT HOLDING COMPANY CONDUCTED IN
ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS BY A CERTIFIED PUBLIC
ACCOUNTING FIRM WHICH SUBMITS A REPORT ON THE CONSOLIDATED HOLDING COMPANY
(BUT NOT ON THE BANK SEPARATELY)
3 = DIRECTORS' EXAMINATION OF THE BANK CONDUCTED IN ACCORDANCE WITH GENERALLY
ACCEPTED AUDITING STANDARDS BY A CERTIFIED PUBLIC ACCOUNTING FIRM (MAY BE
REQUIRED BY STATE CHARTERING AUTHORITY)
4 = DIRECTORS' EXAMINATION OF THE BANK PERFORMED BY OTHER EXTERNAL AUDITORS
(MAY BE REQUIRED BY STATE CHARTERING AUTHORITY)
5 = REVIEW OF THE BANK'S FINANCIAL STATEMENTS BY EXTERNAL AUDITORS
6 = COMPILATION OF THE BANK'S FINANCIAL STATEMENTS BY EXTERNAL AUDITORS
7 = OTHER AUDIT PROCEDURES (EXCLUDING TAX PREPARATION WORK)
8 = NO EXTERNAL AUDIT WORK

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(1) INCLUDES TOTAL DEMAND DEPOSITS AND NONINTEREST-BEARING TIME AND SAVINGS
DEPOSITS.
(2) INCLUDES LIMITED-LIFE PREFERRED STOCK AND RELATED SURPLUS.