<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 10, 1999
REGISTRATION NO. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
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<TABLE>
<S> <C>
U S WEST, INC. U S WEST
(formerly "USW-C, Inc.") CAPITAL FUNDING, INC.
</TABLE>
(Exact name of each registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 4811 COLORADO
(State or other jurisdiction of (Primary Standard Industrial (State or other jurisdiction of
incorporation or organization) Classification Code Number) incorporation or 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.
U S WEST, INC.
1801 CALIFORNIA STREET, SUITE 5100
DENVER, COLORADO 80202
(303) 672-2700
(Name, address, including zip code, and telephone number of agent for service
for both registrants)
COPIES TO:
DENNIS J. BLOCK, ESQ.
CADWALADER, WICKERSHAM & TAFT
100 MAIDEN LANE
NEW YORK, NEW YORK 10038
(212) 504-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
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If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instructions G, check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
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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>
6 7/8% Notes issued by
U S WEST Capital Funding,
Inc......................... $1,150,000,000 100% $1,150,000,000 $303,600
Guarantees constituting
guarantees of the 6 7/8%
Notes by U S WEST, Inc...... $1,150,000,000 ** ** 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>
THIS PROSPECTUS, DATED DECEMBER 10, 1999, IS
SUBJECT TO COMPLETION AND AMENDMENT
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PROSPECTUS
[LOGO]
U S WEST CAPITAL FUNDING, INC.
Offer to exchange all of our Outstanding
$1,150,000,000 6 7/8% Notes due August 15, 2001
for
$1,150,000,000 6 7/8% Notes due August 15, 2001
which have been registered under the Securities Act of 1933
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY,
AND INTEREST ON THE NEW 6 7/8% NOTES IS UNCONDITIONALLY GUARANTEED BY
U S WEST, INC.
Our offer to exchange old 6 7/8% Notes for new 6 7/8% Notes which have been
registered under the Securities Act of 1933, will be open until 5:00 p.m. New
York City Time, on , 2000, unless we extend the offer.
If the anticipated merger with Qwest Communications International Inc. is
consummated, U S WEST will be merged with and into Qwest, and Qwest will become
the guarantor of the old and new 6 7/8% Notes. See "RECENT DEVELOPMENTS--MERGER
WITH QWEST" on page 9.
Application will be made to list the new 6 7/8% Notes on the Luxembourg Stock
Exchange. There will be no active domestic public market for the new 6 7/8%
Notes.
YOU SHOULD CAREFULLY REVIEW THE RISK FACTORS BEGINNING ON PAGE 7 OF THIS
PROSPECTUS.
THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION ABOUT
US AND U S WEST WHICH IS NOT INCLUDED IN OR DELIVERED WITH THIS PROSPECTUS. YOU
CAN OBTAIN DOCUMENTS CONTAINING THIS INFORMATION THROUGH US OR THE SECURITIES
AND EXCHANGE COMMISSION. DOCUMENTS INCORPORATED BY REFERENCE ARE AVAILABLE FROM
US WITHOUT CHARGE, EXCLUDING ALL EXHIBITS, UNLESS WE HAVE SPECIFICALLY
INCORPORATED BY REFERENCE AN EXHIBIT IN THIS PROSPECTUS. YOU MAY OBTAIN
DOCUMENTS INCORPORATED BY REFERENCE IN THIS PROSPECTUS BY REQUESTING THEM IN
WRITING OR BY TELEPHONE FROM: INVESTOR RELATIONS, U S WEST, INC.,
1801 CALIFORNIA STREET, DENVER, COLORADO 80202, TELEPHONE NUMBER
(303) 896-1277. SEE "WHERE YOU CAN FIND MORE INFORMATION."
If you would like to request documents from us, please do so by ,
2000 to receive them before the exchange offer expires.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is , 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
Forward-Looking Information May Prove Inaccurate............ 1
Where You Can Find More Information......................... 2
Prospectus Summary.......................................... 3
Risk Factors................................................ 7
U S WEST Capital Funding, Inc............................... 9
U S WEST, Inc............................................... 9
Recent Developments......................................... 9
Management.................................................. 13
The Exchange Offer.......................................... 17
Use of Proceeds............................................. 24
Capitalization of U S WEST, Inc............................. 25
Ratio of Earnings to Fixed Charges.......................... 25
Capitalization of U S WEST Capital Funding, Inc............. 26
Description of New 6 7/8% Notes............................. 27
Registration Rights......................................... 37
Certain U.S. Federal Tax Considerations..................... 40
Plan of Distribution........................................ 43
Legal Matters............................................... 44
Experts..................................................... 44
General Information......................................... 44
</TABLE>
This prospectus was prepared by us and U S WEST and includes particulars given
in compliance with the rules governing the listing of securities on the
Luxembourg Stock Exchange for the purpose of giving information with regard to
us and U S WEST. We and U S WEST confirm, having made all reasonable inquiries,
that to the best of our and its knowledge and belief, there are no other
material facts the omission of which would make any statement in this prospectus
misleading in any material respect.
i
<PAGE>
FORWARD-LOOKING INFORMATION MAY PROVE INACCURATE
Some of the information presented in this prospectus or incorporated by
reference herein constitutes "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Although U S WEST believes
that its expectations are based on reasonable assumptions within the bounds of
its knowledge of its businesses and operations, there can be no assurance that
actual results will not differ materially from its expectations. Factors that
could cause actual results to differ from expectations include:
- greater than anticipated competition from new entrants into the local
exchange, intraLATA toll, wireless, data and directories markets, causing
loss of customers and increased price competition;
- changes in demand for U S WEST products and services, including optional
custom calling features;
- higher than anticipated employee levels, capital expenditures and
operating expenses (such as costs associated with interconnection and Year
2000 remediation);
- the loss of significant customers;
- pending and future state and federal regulatory changes affecting the
telecommunications industry, including changes that could have an impact
on the competitive environment and service pricing in the local exchange
market;
- acceleration of the deployment of additional services and/or advanced new
services to customers, such as broadband data, wireless and video
services, which would require substantial expenditure of financial and
other resources;
- changes in economic conditions in the various markets served by
U S WEST's operations;
- higher than anticipated start-up costs associated with new business
opportunities;
- delays in U S WEST's ability to begin offering interLATA long-distance
services;
- consumer acceptance of broadband services, including telephony, data and
wireless services;
- delays in the development of anticipated technologies or the failure of
such technologies to perform according to expectations; and
- timing and completion of the recently announced merger with Qwest and the
subsequent integration of the businesses of the two companies. See "RECENT
DEVELOPMENTS--MERGER WITH QWEST."
To the extent that this prospectus contains forward-looking information
regarding Qwest, please see the forward-looking information safe harbor
statements contained in documents Qwest has filed with the Securities and
Exchange Commission (the "SEC" or the "Commission").
To the extent that this prospectus contains forward-looking information
regarding the anticipated merger with Qwest, please see "RISK FACTORS--RISK
FACTORS RELATED TO THE MERGER WITH QWEST."
You should not construe these cautionary statements as an exhaustive list or as
any admission by U S WEST regarding the adequacy of its disclosures. U S WEST
cannot always predict or determine after the fact what factors would cause
actual results to differ materially from those indicated by its forward-looking
statements or other statements. In addition, you are urged to consider
statements that include the terms "believes," "belief," "expects," "plans,"
"objectives," "anticipates," "intends," or the like to be uncertain and
forward-looking. All cautionary statements should be read as being applicable to
all forward-looking statements wherever they appear.
U S WEST does not undertake any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this prospectus might not occur.
1
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
U S WEST files annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document it files at the
SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C., 20549,
and in New York, New York, and Chicago, Illinois. For further information on the
public reference rooms, please call the SEC at 1-800-SEC-0330. U S WEST's SEC
filings are also available to the public from the SEC's web site at
http://www.sec.gov. In addition, its SEC filings may be inspected at the offices
of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
The SEC allows us to "incorporate by reference" into this prospectus certain
information that U S WEST files with the SEC, which means that we can disclose
important information to you by referring to that information in this
prospectus. Information incorporated by reference is considered a part of this
prospectus, and later information filed with the SEC will automatically update
and supersede previous information. We incorporate by reference the documents
listed below and any future filings (including filings made after the date on
which the registration statement was initially filed with the SEC and before the
registration statement becomes effective) made by U S WEST with the SEC under
Sections 13(a), 13(c), 14, 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"):
- U S WEST's Annual Report on Form 10-K for the year ended December 31,
1998, as amended by Form 10-K/A filed March 24, 1999;
- U S WEST's Current Reports on Form 8-K filed January 13, 1999,
January 15, 1999, January 22, 1999, February 23, 1999, February 25, 1999,
February 26, 1999, April 7, 1999, April 22, 1999, May 12, 1999, May 18,
1999, May 21, 1999, May 26, 1999, June 18, 1999, June 22, 1999, July 7,
1999, July 21, 1999, July 26, 1999, as amended by Form 8-K/A filed
July 27, 1999, September 20, 1999, October 22, 1999 and November 2, 1999;
- U S WEST's Tender Offer Statement on Schedule 14D-1 and Schedule 13D filed
May 21, 1999, as amended May 24, 1999, June 7, 1999, June 11, 1999,
June 18, 1999, June 18, 1999, June 21, 1999, June 24, 1999, June 29, 1999
and August 16, 1999;
- U S WEST's Proxy Statement on Schedule 14A dated September 17, 1999; and
- U S WEST's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1999, June 30, 1999 and September 30, 1999.
You may obtain a copy of these filings, at no cost, by writing or telephoning
U S WEST, or by contacting Investor Relations through an e-mail link on
U S WEST's web page, at:
Investor Relations
U S WEST, Inc.
1801 California Street
Denver, Colorado 80202
(303) 896-1277
http://www.uswest.com
Copies of these documents, and any future annual and interim reports filed by
U S WEST with the SEC, will be available, free of charge, at the principal
office of Kredietbank S.A. Luxembourg, Corporate Trust Department, 43, Boulevard
Royal, L-2955, Luxembourg, telephone number 352 4797 3913. Separate financial
statements of Capital Funding are not publicly available.
You should rely only on the information in this prospectus or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making any offer of these debt securities in
any state where the offer is not permitted. You should not assume that the
information contained in this prospectus is accurate as of any date other than
the date on the front page of this prospectus.
2
<PAGE>
PROSPECTUS SUMMARY
WHO WE ARE
U S WEST Capital Funding, Inc. (the "Company" or "Capital Funding" which may be
referred to as "we," "us," or "our") is a wholly owned subsidiary of U S WEST,
Inc. ("U S WEST"). We provide financing to U S WEST and its affiliates by
issuing debt guaranteed by U S WEST. We are a Colorado corporation and our
principal executive offices are located at 1801 California Street, Denver,
Colorado 80202, telephone number (303) 672-2700.
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.
This region is comprised of Arizona, Colorado, Idaho, Iowa, Minnesota, Montana,
Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and
Wyoming. U S WEST's services include telecommunications and related services,
wireless services, high-speed data and Internet services, and directory
services. The major component of U S WEST is U S WEST Communications, Inc.,
which has more than 25 million residential and business customers for
communication services. U S WEST is a Delaware corporation and its principal
executive offices are located at 1801 California Street, Denver, Colorado 80202,
telephone number (303) 672-2700. U S WEST has one class of common stock, par
value $.01 per share. For additional information, please refer to the documents
we have incorporated by reference. See "WHERE YOU CAN FIND MORE INFORMATION."
THE EXCHANGE OFFER
On August 25, 1999, we issued $1,150,000,000 aggregate principal amount of
6 7/8% Notes (the "old 6 7/8% Notes") to certain initial purchasers in a
transaction exempt from the registration requirements of the Securities Act of
1933, as amended (the "Securities Act"). The terms of the new 6 7/8% Notes and
the old 6 7/8% Notes are substantially identical in all material respects,
except that the new 6 7/8% Notes will be freely transferable by the holders,
except as otherwise provided in this prospectus.
We are offering to exchange $1,000 principal amount of new 6 7/8% Notes
(together with the old 6 7/8% Notes, the "6 7/8% Notes") in exchange for each
$1,000 principal amount of old 6 7/8% Notes (the "exchange offer").
The new 6 7/8% Notes issued in the exchange offer may be offered for resale or
resold by holders without having to comply with the registration and prospectus
delivery requirements of the Securities Act, provided that:
- the new 6 7/8% Notes are acquired in the ordinary course of the holders'
business and the holders have no arrangement with any person to engage in
a distribution of new 6 7/8% Notes, and
- the holders are not "affiliates" of U S WEST or broker-dealers who
purchased old 6 7/8% Notes directly from us to resell under Rule 144A or
any other available exemption under the Securities Act.
Each holder, other than a broker-dealer, must acknowledge that it is not engaged
in and does not intend to engage in a distribution of the new 6 7/8% Notes and
has no arrangement to participate in a distribution of new 6 7/8% Notes. Each
broker-dealer that receives new 6 7/8% Notes for its own account in the exchange
offer must acknowledge that it will comply with the prospectus delivery
requirements of the Securities Act in connection with any resale of the new
6 7/8% Notes. Broker-dealers who acquired old 6 7/8% Notes directly from us and
not as a result of market-making activities or other
3
<PAGE>
trading activities may not participate in the exchange offer and must comply
with the prospectus delivery requirements of the Securities Act in order to
resell the old 6 7/8% Notes.
<TABLE>
<S> <C>
EXPIRATION DATE........................ The exchange offer will expire at 5:00 p.m., New York City
time, on , 2000, or a later date and time to
which we extend it (the "expiration date").
WITHDRAWAL............................. The tender of the old 6 7/8% Notes in the exchange offer
may be withdrawn at any time prior to 5:00 p.m., New York
City time, on 2000, or a later date and time
to which we extend the offer.
INTEREST ON THE NEW 6 7/8% NOTES AND
THE OLD 6 7/8% NOTES................. Interest on the new 6 7/8% Notes will accrue from the date
of the original issuance of the old 6 7/8% Notes or from
the date of the last periodic payment of interest on the
old 6 7/8% Notes, whichever is later. No additional
interest will be paid on the old 6 7/8% Notes tendered and
accepted for exchange.
PROCEDURES FOR TENDERING OLD 6 7/8%
NOTES................................ To accept the exchange offer, you must complete, sign and
date a copy of the letter of transmittal and mail or
otherwise deliver it, together with the old 6 7/8% Notes
and any other required documentation, to the exchange
agent at the address set forth in this prospectus. Persons
holding the old 6 7/8% Notes through the Depository Trust
Company and wishing to accept the exchange offer must do
so under the Depository Trust Company's automated tender
offer program. Under this program, each tendering
participant will agree to be bound by the letter of
transmittal.
EXCHANGE AGENT......................... Bank One Trust Company, National Association.
FEDERAL INCOME TAX CONSIDERATIONS...... In the opinion of our counsel, the exchange of old 6 7/8%
Notes for new 6 7/8% Notes in the exchange offer will not
be a taxable exchange for United States federal income tax
purposes.
EFFECT OF NOT TENDERING................ Old 6 7/8% Notes that are not tendered or that are
tendered but not accepted will continue to be subject to
the existing restrictions on transfer. We will have no
further obligation to register the old 6 7/8% Notes under
the Securities Act.
</TABLE>
4
<PAGE>
THE NEW 6 7/8% NOTES
Some of the terms and conditions described below are subject to important
limitations and exceptions. The "DESCRIPTION OF NEW 6 7/8% NOTES" section of
this prospectus beginning on page 27 contains a more detailed description of the
terms and conditions of the new 6 7/8% Notes.
<TABLE>
<S> <C>
ISSUER................................. U S WEST Capital Funding, Inc., a Colorado corporation.
GUARANTOR.............................. U S WEST, Inc., a Delaware corporation. If the anticipated
merger with Qwest Communications International Inc.
("Qwest") is consummated, U S WEST will be merged with and
into Qwest, and Qwest will become the guarantor of the
6 7/8% Notes. See "RECENT DEVELOPMENTS--MERGER WITH
QWEST."
SECURITIES OFFERED..................... $1,150,000,000 principal amount of new 6 7/8% Notes due
2001.
MATURITY............................... August 15, 2001.
INTEREST RATE.......................... 6 7/8% per annum, calculated using a 360-day year of
twelve 30 day months.
INTEREST PAYMENT DATES................. February 15, 2000, August 15, 2000, February 15, 2001, and
August 15, 2001.
RANKING................................ The new 6 7/8% Notes will rank equally with all of our
other unsecured and unsubordinated indebtedness. As of
September 30, 1999, we had approximately $6.8 billion of
debt outstanding, not counting debt of U S WEST's other
subsidiaries.
The 6 7/8% Notes are obligations guaranteed by U S WEST,
and if the merger with Qwest is consummated, Qwest will
become the guarantor of the 6 7/8% Notes. Each of
U S WEST and Qwest is a holding company with no material
assets other than the stock of its subsidiaries. Both
U S WEST's and Qwest's subsidiaries conduct substantially
all of their respective operations and own substantially
all of their respective assets at the subsidiary level. As
a result, the 6 7/8% Notes effectively rank junior to all
existing and future debt, trade payables and other
liabilities of U S WEST's subsidiaries other than Capital
Funding before the merger, and the subsidiaries of Qwest
after the merger.
OPTIONAL REDEMPTION.................... We can redeem the 6 7/8% Notes at any time at a redemption
price determined as described under "DESCRIPTION OF NEW
6 7/8% NOTES--OPTIONAL REDEMPTION" on page 28.
LISTING................................ Application will be made to list the new 6 7/8% Notes on
the Luxembourg Stock Exchange.
</TABLE>
RISK FACTORS
We urge you to carefully review the risk factors beginning on page 7 for a
discussion of factors you should consider before exchanging your old 6 7/8%
Notes for new 6 7/8% Notes.
5
<PAGE>
SELECTED FINANCIAL DATA FOR U S WEST, INC.
The table below shows selected historical financial information for U S WEST.
The information has been prepared using the consolidated financial statements of
U S WEST as of the dates indicated and for each of the fiscal periods presented.
Interim operating results are not necessarily indicative of results that may be
expected for the full year (in millions).
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------- -------------------
1994 1995 1996 1997 1998 1998 1999
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<S> <C> <C> <C> <C> <C> <C> <C>
Operating revenues.............................. $10,132 $10,508 $11,168 $11,479 $12,378 $ 9,174 $ 9,757
Operating expenses.............................. 7,616 7,931 8,356 8,703 9,329 6,876 7,232
Operating income................................ 2,516 2,577 2,812 2,776 3,049 2,298 2,525
Income before extraordinary item and cumulative
effect of change in accounting principle(1)... 1,403 1,431 1,501 1,527 1,508 1,140 957
Net income(2)................................... 1,403 1,423 1,535 1,524 1,508 1,140 957
Pro forma income(3)............................. * * * * 1,436 1,068 *
Total assets.................................... 16,317 16,960 17,279 17,667 18,407 18,061 20,960
Total debt(4)................................... 6,147 6,782 6,545 5,715 9,919 9,833 13,133
Debt to total capital ratio..................... 64.7% 65.0% 61.6% 56.7% 92.9% 94.0% 98.9%
EBITDA(5)....................................... $ 4,444 $ 4,644 $ 4,970 $ 4,939 $ 5,248 $ 3,923 $ 4,288
Interest expense................................ 381 429 448 405 543 378 519
Capital expenditures............................ 2,513 2,770 2,831 2,672 2,905 1,920 2,819
Telephone network access lines in service
(thousands)................................... 14,299 14,795 15,424 16,033 16,601 16,408 16,912
Billed access minutes of use (millions):
Interstate.................................... 43,768 47,801 52,039 55,362 58,927 43,868 46,207
Intrastate.................................... 8,507 9,504 10,451 11,729 12,366 9,206 9,625
Total employees................................. 55,246 54,552 51,477 51,110 54,483 53,758 56,634
Telephone company employees..................... 47,493 47,934 45,427 43,749 46,310 45,654 47,758
Telephone company employees per 10,000 access
lines......................................... 33.2 32.4 29.5 27.3 27.9 27.8 28.2
Dividends paid on common stock.................. * * $ 939 $ 992 $ 1,056 $ 787 $ 917
</TABLE>
- ------------------------------
(1) 1999 income includes terminated merger-related expenses of $282. 1998 income
includes separation expenses of $68 associated with the separation (the
"Separation") of U S WEST's former parent company ("Old U S WEST") into two
independent companies and an asset impairment charge of $21. 1997 income
includes a $152 regulatory charge related primarily to the 1997 Washington
State Supreme Court ruling that upheld a Washington rate order, a gain of
$32 on the sale of an interest in Bell Communications Research, Inc. and a
gain of $48 on the sales of local telephone exchanges. 1996 income includes
a gain of $36 on the sales of local telephone exchanges and the current
effect of $15 from adopting Statement of Financial Accounting Standards
("FAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of." 1995 income includes a gain of $85 on
the sales of local telephone exchanges and costs of $8 associated with a
1995 recapitalization. 1994 income includes a gain of $51 on the sales of
local telephone exchanges.
(2) 1997 net income was reduced by an extraordinary charge of $3 for the early
extinguishment of debt. 1996 net income includes a gain of $34 for the
cumulative effect of the adoption of FAS No. 121. 1995 net income was
reduced by an extraordinary item of $8 for the early extinguishment of debt.
(3) Pro forma income reflects the incremental interest expense associated with
the U S WEST Dex indebtedness assumed in the Separation ("Dex Indebtedness")
from the beginning of the period through the Separation date.
(4) 1998 and 1999 debt includes $3,900 of Dex Indebtedness.
(5) Earnings before interest, taxes, depreciation, amortization and other
("EBITDA"). U S WEST considers EBITDA an important indicator of the
operational strength and performance of its business. EBITDA, however,
should not be considered as an alternative to operating or net income as an
indicator of the performance of U S WEST's business or as an alternative to
cash flows from operating activities as a measure of liquidity, in each case
determined in accordance with generally accepted accounting principles.
* Information has not been presented.
6
<PAGE>
RISK FACTORS
You should carefully consider the following discussion of risks, and the other
information included or incorporated by reference in this prospectus in
evaluating us and U S WEST and our and their business before participating in
the exchange offer:
RISK FACTORS RELATED TO THE EXCHANGE
Holders of old 6 7/8% Notes who do not exchange their old 6 7/8% Notes for new
6 7/8% Notes will continue to be subject to the restrictions on transfer of the
old 6 7/8% Notes, as set forth in the legends on the old 6 7/8% Notes. The old
6 7/8% Notes may not be offered or sold unless they are registered under the
Securities Act or are exempt from registration. See "THE EXCHANGE OFFER."
RISK FACTORS RELATED TO THE MERGER WITH QWEST
U S WEST and Qwest entered into an Agreement and Plan of Merger, dated as of
July 18, 1999 and amended by Amendment No. 1, dated as of September 8, 1999 (the
"Qwest Merger Agreement"), a copy of which is attached to U S WEST's Schedule
14A dated September 17, 1999. U S WEST and Qwest are independent companies and
will continue to remain independent until the completion of the merger. Upon
completion of the merger, holders of U S WEST common stock will receive, for
each share of U S WEST common stock, subject to the collar and the cash option
described in the Qwest Merger Agreement, shares of Qwest common stock having a
value of $69. The merger is subject to the approval of the Federal
Communications Commission ("FCC") and other state regulatory reviews.
DIFFICULTIES IN COMBINING OPERATIONS AND REALIZING SYNERGIES.
U S WEST and Qwest have entered into the Qwest Merger Agreement with the
expectation that the merger will result in certain benefits, including operating
efficiencies, cost savings, synergies and other benefits. Achieving the benefits
of the merger will depend in part upon the integration of the businesses of
U S WEST and Qwest in an efficient manner, which both companies believe will
require considerable effort. In addition, the consolidation of operations will
require substantial attention from management. The diversion of management
attention and any difficulties encountered in the transition and integration
process could have a material adverse effect on the revenues, levels of expenses
and operating results of the combined company. No assurance can be given that
U S WEST and Qwest will succeed in integrating their operations in a timely
manner or without encountering significant difficulties or that the expected
operating efficiencies, cost savings, synergies and other benefits from such
integration will be realized.
REGULATORY APPROVALS MAY BE DELAYED OR CONDITIONED.
Completion of the merger is conditioned on receipt of all material regulatory
consents and approvals required under the applicable statutes, policies and
rules governing the FCC and state public utility commissions. There can be no
assurance that such approvals will be granted on a timely basis, or without
materially adverse conditions which could affect the combined company's ability
to service its debt, including the 6 7/8% Notes.
DIVESTITURE OF IN-REGION INTERLATA BUSINESS.
The Telecommunications Act of 1996 currently prohibits U S WEST from providing
long distance telecommunications services between Local Access and Transport
Areas (LATAs) within its 14 state region, and between these LATAs and locations
outside its region. Upon the completion of the merger, the interLATA service
prohibition also would apply to Qwest. Consequently, upon the completion of the
merger, it is anticipated that Qwest will discontinue providing such interLATA
services, and such services will be divested under separate agreements. There
can be no assurance that the terms and conditions under which the divestitures
will be made will permit Qwest to receive the full economic value of its
in-region interLATA business. Furthermore, completion of the merger could be
delayed if the necessary divestitures cannot be completed on a timely basis. The
combined company will continue to provide long distance services outside the
U S WEST region. The parties have anticipated some loss
7
<PAGE>
of out-of-region long distance business as a result of the discontinuance of
in-region business. However, there can be no assurance that these losses will
not be materially greater than expected or will not materially affect the
combined company's ability to service its debt, including the 6 7/8% Notes.
FUTURE PROVISION OF INTERLATA SERVICES.
U S WEST and, upon completion of the merger, the combined company will be
allowed to provide in-region interLATA services upon satisfaction of certain
regulatory conditions primarily related to local exchange telephone competition.
These restrictions will be lifted on a state by state basis following further
proceedings in certain states in which U S WEST conducts business and at the
FCC. U S WEST expects the combined company to work actively to meet the
applicable requirements so that interLATA services can be provided in particular
states beginning in 2000 or 2001, but there can be no assurance that they will
be successful in that regard. Even after elimination of the interLATA
restrictions the combined company's long distance operations will be subject to
various regulatory constraints, including the requirement that interLATA
services be offered through a subsidiary that is structurally separated from the
combined company's local exchange services. There can be no assurance that these
regulations will not have a material adverse effect on the combined company's
ability to compete or will not materially affect its ability to service its
debt, including the 6 7/8% Notes.
U S WEST IS DEPENDENT ON ITS SUBSIDIARIES FOR REPAYMENT OF DEBT.
The 6 7/8% Notes are obligations guaranteed by U S WEST, and, if the merger with
Qwest is consummated, Qwest will become the guarantor of the 6 7/8% Notes. Each
of U S WEST and Qwest is a holding company with no material assets other than
the stock of its subsidiaries. Both U S WEST and Qwest conduct substantially all
of their respective operations and own substantially all of their respective
assets at the subsidiary level. As a result, the 6 7/8% Notes effectively will
rank junior to all existing and future debt, trade payables and other
liabilities of U S WEST's subsidiaries other than Capital Funding before the
merger, and the subsidiaries of Qwest after the merger. The rights of U S WEST
before the merger, and the rights of Qwest after the merger, and hence the
rights of their respective creditors (including holders of the 6 7/8% Notes
through U S WEST's guarantee of payment of principal, premium, if any, and
interest (the "Guarantees")) to participate in any distribution of assets of any
subsidiary upon its liquidation or reorganization or otherwise would be subject
to the prior claims of the subsidiary's creditors, except to the extent that
claims of U S WEST or Qwest, as applicable, itself as a creditor of the
subsidiary may be recognized. After the payment of the subsidiary's liabilities,
the subsidiary may not have enough assets remaining to pay U S WEST before the
merger and Qwest after the merger, to permit their respective creditors,
including the holders of the 6 7/8% Notes through the Guarantees, to be paid.
OTHER RISKS
U S WEST may decide to accelerate the deployment of additional services and/or
advanced new services to customers, such as broadband data, wireless and video
services, which would require substantial expenditure of financial and other
resources. Such acceleration could have a material adverse effect on
U S WEST's financial condition or results of operations.
CREDIT RATINGS
After U S WEST announced on May 17, 1999 that it had entered into an agreement
and plan of merger with Global Crossing Ltd., a Bermuda company ("Global
Crossing") (as described under "RECENT DEVELOPMENTS" below), the ratings
assigned to the senior unsecured indebtedness of U S WEST and our company were
downgraded to Baa1 from A3 by Moody's Investors Services, Inc. ("Moody's").
Furthermore, due to uncertainty involving required approvals and other matters
relating to the initial Global Crossing merger announcement, each of Moody's,
Standard & Poor's Ratings Services ("Standard & Poor's"), and Duff & Phelps
Credit Rating Co. ("Duff & Phelps") have placed the ratings assigned to
U S WEST's and our senior unsecured indebtedness under review, in each case,
with implications for possible downgrade. Following the announcement of the
Qwest Merger
8
<PAGE>
Agreement, none of the ratings assigned to U S WEST's and our senior unsecured
indebtedness were changed by Moody's, Duff & Phelps and Standard & Poor's.
However, these ratings continue to be under review by the rating agencies.
Because the proposed Qwest merger is not expected to be consummated before
mid-2000, it is possible that U S WEST and our ratings will remain under review
throughout much of the term of the 6 7/8% Notes and could affect the market
value of the 6 7/8% Notes.
The current credit ratings for our and U S WEST's senior unsecured indebtedness
are as follows:
<TABLE>
<CAPTION>
MOODY'S STANDARD & POOR'S DUFF & PHELPS
------- ----------------- -------------
<S> <C> <C>
Baa1 A- A
</TABLE>
U S WEST CAPITAL FUNDING, INC.
We are a wholly-owned subsidiary of U S WEST. We provide financing to U S WEST
and its affiliates by issuing debt guaranteed by U S WEST. We are a Colorado
corporation. Our principal executive offices are located at 1801 California
Street, Denver, Colorado 80202, and our telephone number is (303) 672-2700.
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.
This region is comprised of Arizona, Colorado, Idaho, Iowa, Minnesota, Montana,
Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and
Wyoming. U S WEST's services include telecommunications and related services,
wireless services, high-speed data and Internet services, and directory
services. The major component of U S WEST is U S WEST Communications, Inc.,
which provides communications services to more than 25 million residential and
business customers. U S WEST is a Delaware corporation. Its principal executive
offices are located at 1801 California Street, Denver, Colorado 80202, and its
telephone number is (303) 672-2700. U S WEST has one class of common stock, par
value $.01 per share. For additional information about U S WEST, please refer to
the documents we have incorporated by reference. See "WHERE YOU CAN FIND MORE
INFORMATION."
RECENT DEVELOPMENTS
MERGER WITH QWEST
On July 18, 1999, U S WEST and Qwest entered into the Qwest Merger Agreement, a
copy of which is attached to U S WEST's Current Report on Form 8-K filed
July 21, 1999, which is incorporated by reference in this prospectus. U S WEST
and Qwest are independent companies and will continue to remain independent
until the completion of the merger. Upon completion of the merger, holders of
U S WEST common stock will receive, for each share of U S WEST common stock,
subject to the collar and the cash option described in the Qwest Merger
Agreement, shares of Qwest common stock having a value of $69. The merger is
subject to the approval of the FCC and other state regulatory reviews.
Prior to the execution of the Qwest Merger Agreement, U S WEST entered into a
Termination Agreement (the "Termination Agreement") with Global Crossing,
terminating the Agreement and Plan of Merger, dated as of May 16, 1999, between
U S WEST and Global Crossing (the "Global Crossing Merger Agreement"). In
connection with the Global Crossing Merger Agreement, U S WEST completed a cash
tender offer for approximately 39 million shares (or approximately 9.5%) of
Global Crossing common stock at a price of $62.75 per share (the "Tender
Offer"). As consideration for the termination of the Global Crossing Merger
Agreement, U S WEST paid Global Crossing $140 million in cash and 2,231,076
shares of Global Crossing common stock. Qwest lent $140 million in cash to
U S WEST, and Qwest entered into an agreement to buy $140 million in services
from Global Crossing. A copy of the Termination Agreement is attached to
U S WEST's Current Report on Form 8-K filed July 21, 1999, which is incorporated
by reference in this prospectus.
9
<PAGE>
QWEST
Qwest is a broadband, Internet communications services company with a
high-capacity fiber optic communications network. Qwest's communications
services business offers Internet and multimedia services as well as traditional
voice communications services. Its Internet and multimedia services include
services related to the transmission of image, data and voice information. Qwest
provides services to business customers, governmental agencies and consumers in
domestic and international markets. Qwest also provides wholesale services to
other communications providers, including Internet service providers and other
data service companies. Qwest's network uses both Internet communications
technology and traditional telephone communications technology. Communications
on the Internet are governed by Internet communications protocol, a standard
that allows communication across the Internet regardless of the hardware and
software used.
The Qwest Macro Capacity-Registered Trademark- Fiber Network, designed with the
newest optical networking, spans more than 18,500 miles in the United States,
with an additional 315-mile network to be completed by the end of the year. In
addition, KPNQwest, Qwest's European joint venture with KPN, the Dutch
telecommunications company, is building and will operate a high-capacity
European fiber optic, Internet-based network that will span 9,150 miles when it
is completed in 2001.
Qwest has a 1,400-route-mile extension of the U.S. network into Mexico and owns
capacity on three undersea systems linking the network to Europe. Qwest is also
part of a consortium of communications companies that is building a submarine
13,125-mile, four-fiber pair cable system connecting the U.S. to Japan that is
expected to be capable of transmitting information at the rate of 640 gigabits
per second.
Qwest is subject to the reporting requirements of the Exchange Act and, in
accordance therewith, is required to file reports and other information with the
SEC relating to its business, financial condition and other matters. Such
information may be examined and copies may be obtained from the SEC as described
under "WHERE YOU CAN FIND MORE INFORMATION." Such information should also be on
file at the office of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C.
20006. U S WEST encourages you to read such reports in their entirety and to
review other publicly available information about Qwest before making an
investment decision.
The information contained in this section of the prospectus regarding Qwest has
been derived from the publicly available documents described in the preceding
paragraph. Neither we nor U S WEST have independently verified the accuracy or
completeness of the Qwest information, and neither we nor U S WEST makes any
representation or warranty, express or implied, regarding the Qwest information
contained in this prospectus.
REASONS FOR THE MERGER
In the past several years, the communications industry has experienced a
significant increase in mergers, acquisitions and consolidations among local
service providers, long distance providers, broadband Internet providers, cable
television companies and other emerging technology companies. These industry
changes have resulted from significant competitive, regulatory and technological
changes over the last few years and are an indication that the most effective
competitors in the communications industry are expected to be those companies
that offer the most complete array of products and services without geographic
limitations. Strong national and international players, which have formed and
are forming through mergers, acquisitions and alliances, are looking to lead the
telecommunications industry by offering customers one-stop shopping for their
communications services, including broadband Internet services.
U S WEST's strategy is to provide customers with integrated advanced
communications products and services through its enhanced network capacity and
capability, custom calling features, integration of wireline and wireless
services, and its broadband Internet products and services. Through its
directories
10
<PAGE>
business, U S WEST also provides directory services throughout its 14-state
region, and is expanding that service onto the Internet through electronic
publishing. By combining, U S WEST expects to bring together U S WEST's
innovative local communications and broadband Internet access capability with
Qwest's advanced network and broadband Internet service capability. Through this
combination, U S WEST believes that the combined company will be able to offer
customers in the United States and worldwide more choices and greater access to
next generation telecommunications and broadband Internet based services,
including web hosting and value added web based applications. The combined
company will also be able to share resources and capitalize on synergies that
U S WEST anticipates will speed U S WEST's ability to compete effectively at the
top tier of the telecommunications industry. U S WEST also believes that the
merger will enable both companies to achieve their mutual goals more quickly
than either company could have achieved separately. See "FORWARD-LOOKING
INFORMATION MAY PROVE INACCURATE."
U S WEST believes that the merger will create a stronger competitor and will
provide significant value for its shareholders, employees and customers for the
following reasons, among others:
- U S WEST believes that the combination of U S WEST and Qwest will create a
benchmark large-capitalization growth company with increasing revenues and
profits.
- U S WEST expects the combination of U S WEST and Qwest will enable the
combined company to achieve gross revenue, net financial and operational
synergies. U S WEST also expects that these synergies will be comprised of
(1) incremental revenues as the combined company expands its local, data,
Internet Protocol and long-distance services; (2) operating cost savings
in areas such as network operations and maintenance, sales and marketing,
billing, and customer and back office support; and (3) capital savings
through elimination of duplication in the companies' planned network
buildouts and in other infrastructure and back-office areas.
- U S WEST believes the combination of U S WEST and Qwest will accelerate
the strategic development of both companies and will enable the combined
company to grow faster than each company could grow individually and will
increase total revenues and profits faster than each company would
accomplish individually. In particular, U S WEST expects that the
combination will accelerate the delivery of Internet-based broadband
communications services provided by Qwest to the large customer base of
U S WEST and will bring together complementary assets, resources and
expertise and the network infra-structure, applications, services and
customer distribution channels of both companies and that the combination
of customer bases, assets, resources and expertise in a timely manner will
permit the combined company to compete more effectively in rapidly
consolidating industries. U S WEST believes the combination will also
enable the combined company to rapidly increase its customer base for
their respective products by acquiring the other company's customer bases.
The combined company would have an expanding client base of more than
29 million customers, including many multinational corporations.
- U S WEST believes worldwide broadband end-to-end infrastructure, expanded
range of products and services, access to both companies' customers,
people and processes and combined use of both companies' distribution and
operating systems will create growth for the combined company and that, as
a large company with global scale and scope, multiple capabilities,
end-to-end broadband connectivity, and a full suite of data, voice and
video products and services, the combined company can successfully compete
in the telecommunications industry in the long-term.
- U S WEST believes the combined company will be able to redeploy capital
toward new investment in Internet applications and hosting, out-of-region
facilities based competitive local exchange service, out-of-region
broadband access and Internet services, wireless expansion and video
entertainment.
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<PAGE>
- U S WEST believes the combined company will be able to obtain the required
regulatory approvals to permit the merger to close in a timely manner
without the imposition by regulators of conditions that would prevent it
from obtaining substantially all of the expected benefits of the merger.
THE SEPARATION
On October 25, 1997, the Board of Directors of U S WEST's former parent company
("Old U S WEST") adopted a proposal to separate Old U S WEST into two
independent companies (the "Separation"). Old U S WEST conducted its businesses
through two groups: (i) the U S WEST Communications Group (the "Communications
Group"), which included the communications businesses of Old U S WEST, and
(ii) the U S WEST Media Group (the "Media Group"), which included the multimedia
and directory businesses of Old U S WEST. On June 4, 1998, stockholders of Old
U S WEST voted in favor of the Separation, which became effective June 12, 1998.
As part of the Separation, Old U S WEST contributed to U S WEST the businesses
of the Communications Group and the domestic directories business of the Media
Group known as Dex. The alignment of Dex with U S WEST is referred to in this
prospectus as the "Dex Alignment." Old U S WEST has continued as an independent
public company comprised of the businesses of the Media Group, other than Dex,
and has been renamed MediaOne Group, Inc.
In connection with the Dex Alignment: (i) Old U S WEST distributed, as a
dividend to holders of Media Group common stock, approximately 16,341,000 shares
of U S WEST's common stock (net of the redemption of approximately 305,000
fractional shares) with an aggregate value of $850 million and (ii) U S WEST
refinanced $3.9 billion of Old U S WEST debt, formerly allocated to the Media
Group.
12
<PAGE>
MANAGEMENT
DIRECTORS OF CAPITAL FUNDING
Our directors and their principal occupations as of the date of this
prospectus are set forth in the following table.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
- ---- --------------------
<S> <C>
Allan R. Spies............................... Executive Vice President and Chief Financial
Officer, U S WEST
Janet K. Cooper.............................. Vice President--Finance and Controller,
U S WEST
Sean P. Foley................................ Vice President--Treasurer, U S WEST
</TABLE>
The business address of our directors is 1801 California Street, Denver,
Colorado 80202, U.S.A.
DIRECTORS OF U S WEST
The directors of U S WEST and their principal occupations, business experience
and other directorships as of the date of this prospectus are set forth in the
following table.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
- ---- --------------------
<S> <C>
LINDA G. ALVARADO
PRINCIPAL OCCUPATION AND BUSINESS President and Chief Executive Officer of Alvarado
EXPERIENCE: Construction, Inc. since 1978
OTHER DIRECTORSHIPS: Cyprus Amax Minerals Company; Engelhard Corporation;
Pitney Bowes, Inc.
CRAIG R. BARRETT
PRINCIPAL OCCUPATION: President and Chief Executive Officer of Intel Corporation
since 1998.
BUSINESS EXPERIENCE: President and Chief Operating Officer of Intel Corporation
from 1997 to 1998, Executive Vice President and Chief
Operating Officer from 1993-1997 and Executive
Vice-President from 1990-1993. Senior Vice-President and
General Manager of the Microcomputer Components Group of
Intel Corporation from 1989 to 1990. Vice President/Senior
Vice-President and General Manager of the Components
Technology and Manufacturing Group of Intel Corporation
from 1985 to 1989, and Vice President from 1984 to 1985.
Various technology, engineering and manufacturing
management positions with Intel Corporation from 1974 to
1984. Professor of Engineering at Stanford University from
1965 to 1974.
OTHER DIRECTORSHIPS: Intel Corporation; SEMATECH
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
HANK BROWN
PRINCIPAL OCCUPATION: President of the University of Northern Colorado since
1998.
BUSINESS EXPERIENCE: Director of the Center for Public Policy for the
University of Denver from 1997 to 1998. United States
Senator for the State of Colorado from 1991 to 1997.
United States Congressman for the State of Colorado from
1981 to 1991. Various positions with Monfort of Colorado
Incorporated from 1969 to 1981. United States Navy from
1962 to 1966. Attorney and Certified Public Accountant.
OTHER DIRECTORSHIPS: Sealed Air Corporation
JERRY J. COLANGELO
PRINCIPAL OCCUPATION: Owner, Chairman and Chief Executive Officer of the Arizona
Diamondbacks since 1995. President and Chief Executive
Officer of the Phoenix Suns, NBA since 1987.
BUSINESS EXPERIENCE: General Manager of the Phoenix Suns, NBA from 1968 to
1987. Head Scout and Director of Merchandising for the
Chicago Bulls, NBA from 1966 to 1968. Associate of D.O.
Klein & Associates from 1964 to 1965. Partner at the
House of Charles, Inc. from 1962 to 1964.
OTHER DIRECTORSHIPS: Phoenix Art Museum; Phoenix Community Alliance; Arizona
Diamondbacks; Phoenix Suns Charities
MANUEL A. FERNANDEZ
PRINCIPAL OCCUPATION: Chairman of the Gartner Group since 1995.
BUSINESS EXPERIENCE: Chief Executive Officer of the Gartner Group from 1995 to
1998; President from 1991 to 1995. President and Chief
Executive Officer of Dataquest, Inc. from 1984 to 1991.
President and Chief Executive Officer of Gavilan Computer
Corporation from 1982 to 1984. President of Zilog
Incorporated from 1977 to 1982.
OTHER DIRECTORSHIPS: Black & Decker; Brunswick Corporation
GEORGE J. HARAD
PRINCIPAL OCCUPATION: Chairman of the Board of Boise Cascade Corporation since
1995. President and Chief Executive Officer of Boise
Cascade Corporation since 1994.
BUSINESS EXPERIENCE: President and Chief Operating Officer of Boise Cascade
Corporation from 1991 to 1994. Chairman of the Board of
Boise Cascade Office Products Corporation since 1995.
OTHER DIRECTORSHIPS: Allendale Insurance Company
</TABLE>
14
<PAGE>
<TABLE>
<S> <C>
PETER S. HELLMAN
PRINCIPAL OCCUPATION: Former President and Chief Operating Officer of TRW Inc.
(1995-1999).
BUSINESS EXPERIENCE: Assistant President of TRW Inc. from 1994 to 1995. Chief
Financial Officer from 1992 to 1994. Vice President and
Chief Financial Officer from 1991 to 1992. Vice President
and Treasurer from 1989 to 1991. Various positions with BP
America from 1979 to 1989 and the Irving Trust Company
from 1972 to 1979.
OTHER DIRECTORSHIPS: Arkwright Mutual Insurance Company
MARILYN CARLSON NELSON
PRINCIPAL OCCUPATION: President, Chief Executive Officer and Vice Chair of
Carlson Companies, Inc., Co-Chair Carlson Wagonlit Travel.
BUSINESS EXPERIENCE: Since joining Carlson Companies in 1989, Ms. Nelson has
held various positions with Carlson Companies including
Director, Chief Operating Officer and Senior Vice
President of Carlson Holdings, Inc. Ms. Nelson is also
President elect of Travel Industry of America, and a
member of the United States National Tourism Organization,
World Travel and Tourism Council, International Advisory
Council, Center for International Leadership and Committee
of 200.
OTHER DIRECTORSHIPS: Exxon Corporation; Carlson Companies, Inc.
FRANK POPOFF
PRINCIPAL OCCUPATION: Chairman of The Dow Chemical Company since 1992.
BUSINESS EXPERIENCE: Chief Executive Officer of The Dow Chemical Company from
1987 to 1995.
OTHER DIRECTORSHIPS: American Express Company; Chemical Financial Corporation;
United Technologies Corporation
SOLOMON D. TRUJILLO
PRINCIPAL OCCUPATION: President and Chief Executive Officer of U S WEST since
1998. Chairman since 1999.
BUSINESS EXPERIENCE: President and Chief Executive Officer of the
Communications Group of Old U S WEST from 1995 to 1998.
President and Chief Executive Officer of U S WEST Dex,
Inc. from 1992 to 1995. Mr. Trujillo joined The Mountain
States Telephone and Telegraph Company in 1974 and has
been affiliated with U S WEST and its predecessors since
that time, serving in various marketing, sales, finance
and public policy positions.
OTHER DIRECTORSHIPS: BankAmerica Corporation; Dayton Hudson Corporation
</TABLE>
The business address of the directors of U S WEST is 1801 California Street,
Denver, Colorado 80202, U.S.A.
15
<PAGE>
OFFICERS OF U S WEST
In addition to the directors named above, the following persons, all of whom are
full-time employees of U S WEST, hold the offices indicated in the following
table as of the date of this prospectus.
<TABLE>
<S> <C>
NAME OFFICE
- --------------------------------------- ----------------------------------------------------------
Solomon D. Trujillo.................... Chairman, President and Chief Executive Officer
Betsy J. Bernard....................... Executive Vice President--Retail Markets
Janet K Cooper......................... Vice President--Finance and Controller
Sean P. Foley.......................... Vice President--Treasurer
John A. Kelley, Jr..................... President of Wholesale--U S WEST Communications, Inc.
Mark D. Roellig........................ Executive Vice President--Public Policy, Human
Resources & Law, General Counsel and Secretary
James A. Smith......................... Executive Vice President and President of U S WEST Dex,
Inc.
Allan R. Spies......................... Executive Vice President and Chief Financial Officer
Gregory M. Winn........................ Executive Vice President--Operations and Technology
</TABLE>
The business address of the officers of U S WEST is 1801 California Street,
Denver, Colorado 80202, U.S.A.
16
<PAGE>
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
We originally issued and sold the old 6 7/8% Notes on August 25, 1999 in an
offering exempt from registration under the Securities Act in reliance upon the
exemptions provided by Section 4(2), Rule 144A and Regulation S of the
Securities Act. Accordingly, the old 6 7/8% Notes may not be transferred in the
United States unless registered or unless an exemption from the registration
requirements of the Securities Act and applicable state securities laws is
available.
As a condition to the sale of the old 6 7/8% Notes, we, U S WEST and the initial
purchasers of the old 6 7/8% Notes (the "initial purchasers") entered into a
registration rights agreement dated as of August 20, 1999 (the "Registration
Rights Agreement"). In the Registration Rights Agreement, we agreed that we
would use our reasonable best efforts to:
- file with the SEC a registration statement under the Securities Act with
respect to the new 6 7/8% Notes within 150 calendar days of August 25,
1999 (or by January 21, 2000),
- cause a registration statement to be declared effective under the
Securities Act within 180 calendar days after August 25, 1999 (or by
February 21, 2000),
- keep the exchange offer open for not less than 30 calendar days (or longer
if required by applicable law) after the date that notice of the exchange
offer is mailed to the holders of the old 6 7/8% Notes, and
- consummate the exchange offer within 225 calendar days of August 25, 1999
(or by April 6, 2000).
We have filed a copy of the Registration Rights Agreement as an exhibit to the
registration statement of which this prospectus is a part. The registration
statement satisfies certain of our obligations under the Registration Rights
Agreement.
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD 6 7/8% NOTES
This prospectus and the accompanying letter of transmittal together make up the
exchange offer. On the terms and subject to the conditions set forth in this
prospectus and the letter of transmittal, we will accept for exchange any old
6 7/8% Notes that are properly tendered on or before the expiration date unless
they are withdrawn as permitted below. We will issue $1,000 principal amount at
maturity of new 6 7/8% Notes in exchange for each $1,000 principal amount at
maturity of outstanding old 6 7/8% Notes surrendered in the exchange offer.
Holders of the old 6 7/8% Notes may tender some or all of their old 6 7/8%
Notes, however, old 6 7/8% Notes may be exchanged only in integral multiples of
$1,000. The form and terms of the new 6 7/8% Notes are the same as the form and
terms of the old 6 7/8% Notes except that the exchange will be registered under
the Securities Act and the new 6 7/8% Notes will not bear legends restricting
their transfer.
The new 6 7/8% Notes will evidence the same debt as the old 6 7/8% Notes and
will be issued under the same indenture.
The exchange offer is not conditioned upon any minimum principal amount of old
6 7/8% Notes being tendered. As of the date of this prospectus, an aggregate of
$1,150,000,000 in principal amount at maturity of the old 6 7/8% Notes is
outstanding. This prospectus is first being sent on or about , 2000,
to all holders of old 6 7/8% Notes known to us.
Holders of the old 6 7/8% Notes do not have any appraisal or dissenters' rights
under the indenture in connection with the exchange offer.
17
<PAGE>
We may, at any time or from time to time, extend the period of time during which
the exchange offer is open and delay acceptance for exchange of any old 6 7/8%
Notes, by giving written notice of the extension to the holders as described
below. During the extension, all old 6 7/8% Notes previously tendered will
remain subject to the exchange offer and may be accepted for exchange by us. Any
old 6 7/8% Notes not accepted for exchange for any reason will be returned
without expense to the tendering holder as promptly as practicable after the
expiration of the exchange offer.
We reserve the right to amend or terminate the exchange offer if any of the
conditions of the exchange offer are not met. The conditions of the exchange
offer are specified below under "--CONDITIONS OF THE EXCHANGE OFFER." We will
give written notice of any extension, amendment, nonacceptance or termination to
the holders of the old 6 7/8% Notes as promptly as practicable. Any extension to
be issued by means of a press release or other public announcement will be
issued no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date.
PROCEDURES FOR TENDERING OLD 6 7/8% NOTES
The tender of old 6 7/8% Notes by a holder as set forth below and the acceptance
by us will create a binding agreement between the tendering holder and us upon
the terms and subject to the conditions set forth in this prospectus and in the
accompanying letter of transmittal. Except as set forth below, a holder who
wishes to tender old 6 7/8% Notes for exchange must send a completed and signed
letter of transmittal, including all other documents required by the letter of
transmittal, to the exchange agent at one of the addresses set forth below under
"--EXCHANGE AGENT" on or before the expiration date. In addition, either:
- the exchange agent must receive before the expiration date certificates
for the old 6 7/8% Notes along with the letter of transmittal,
- the exchange agent must receive confirmation before the expiration date of
a book-entry transfer of the old 6 7/8% Notes into the exchange agent's
account at The Depository Trust Company ("DTC") as described below, or
- the holder must comply with the guaranteed delivery procedures described
below.
The method of delivery of old 6 7/8% Notes, letters of transmittal and all other
required documents, including delivery through DTC, is at the election and risk
of the holders. If the delivery is by mail, we recommend that holders use
registered mail, properly insured, with return receipt requested. In all cases,
holders should allow sufficient time to assure timely delivery. Holders should
not send letters of transmittal or old 6 7/8% Notes to us.
Some beneficial owners' of old 6 7/8% Notes are registered in the name of a
broker, dealer, commercial bank, trustee or other nominee. If one of those
beneficial owners wishes to tender, the beneficial owner should contact the
registered holder of the old 6 7/8% Notes promptly and instruct the registered
holder to tender on the beneficial owner's behalf. If one of those beneficial
owners wishes to tender on its own behalf, then before completing and signing
the letter of transmittal and delivering its old 6 7/8% Notes, the beneficial
owner must either register ownership of the old 6 7/8% Notes in the beneficial
owner's name or obtain a properly completed power of attorney from the
registered holder of old 6 7/8% Notes. The transfer of record ownership may take
considerable time. If the letter of transmittal is signed by a person other than
the registered holder of the old 6 7/8% Notes, the old 6 7/8% Notes must be
endorsed or accompanied by appropriate powers of attorney. In either case, the
letter of transmittal must be signed exactly as the name of the registered
holder that appears on the old 6 7/8% Notes.
18
<PAGE>
Signatures on a letter of transmittal or a notice of withdrawal must be
guaranteed unless the old 6 7/8% Notes surrendered for exchange are tendered:
- by a registered holder of the old 6 7/8% Notes who has not completed the
box entitled "SPECIAL ISSUANCE INSTRUCTIONS" or "SPECIAL DELIVERY
INSTRUCTIONS" on the letter of transmittal, or
- for the account of a firm or other entity identified in Rule 17Ad-15 under
the Exchange Act as an eligible guarantor institution. Eligible guarantor
institutions include:
- a member of a registered national securities exchange, or
- a member of the National Association of Securities Dealers, Inc., or
- a commercial bank or trustee having an office or correspondent in the
United States.
If signatures on a letter of transmittal or a notice of withdrawal are required
to be guaranteed, the guarantees must be by an eligible guarantor institution.
If old 6 7/8% Notes are registered in the name of a person other than a signer
of the letter of transmittal, the old 6 7/8% Notes surrendered for exchange must
be endorsed by the registered holder with the signature guaranteed by an
eligible guarantor institution. Alternatively, the old 6 7/8% Notes may be
accompanied by a written assignment, signed by the registered holder with the
signature guaranteed by an eligible guarantor institution.
All questions as to the validity, form, eligibility, time of receipt and
acceptance of old 6 7/8% Notes tendered for exchange will be determined by us in
our sole discretion, and our determination shall be final and binding. We
reserve the absolute right to reject any tenders of any old 6 7/8% Notes not
properly tendered or any old 6 7/8% Notes whose acceptance might, in our
judgment or the judgment of our counsel, be unlawful. We also reserve the
absolute right to waive any defects or irregularities or conditions of the
exchange offer as to any old 6 7/8% Notes either before or after the expiration
date. The interpretation of the terms and conditions of the exchange offer as to
any old 6 7/8% Notes either before or after the expiration date by us will be
final and binding on all parties. Unless waived, any defects or irregularities
in connection with tenders of old 6 7/8% Notes for exchange must be cured within
a reasonable period of time as we shall determine. Neither we, U S WEST, the
exchange agent nor any other person shall be under any duty to give notification
of any defect or irregularity with respect to any tender of old 6 7/8% Notes for
exchange. Any old 6 7/8% Notes received by the exchange agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the exchange agent to the tendering holders,
unless otherwise provided in the letter of transmittal, as soon as practicable.
If the letter of transmittal or any old 6 7/8% Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, those persons should so indicate when signing. Unless waived by us,
those persons must submit proper evidence satisfactory to us of their authority
to act.
By tendering, each holder will represent to us:
- that it is not an "affiliate," as defined in Rule 405 of the Securities
Act, of us or U S WEST, or if it is an affiliate, it will comply with the
registration and prospectus delivery requirements of the Securities Act to
the extent applicable,
- that it is not a broker-dealer tendering Registrable Securities (as
defined in the Registration Rights Agreement described herein) acquired
directly from us,
- that it is acquiring the new 6 7/8% Notes in the ordinary course of its
business, and
- at the time of the closing of the exchange offer it has no arrangement or
understanding to participate in the distribution, within the meaning of
the Securities Act, of the new 6 7/8% Notes.
19
<PAGE>
If the holder is a broker-dealer that will receive new 6 7/8% Notes for its own
account in exchange for old 6 7/8% Notes that were acquired as a result of
market-making activities or other trading activities, the holder may be deemed
to be an "underwriter" within the meaning of the Securities Act. Such holder
will be required to acknowledge in the letter of transmittal that it will
deliver a prospectus in connection with any resale of the new 6 7/8% Notes.
However, by so acknowledging and by delivering a prospectus, the holder will not
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
ACCEPTANCE OF OLD 6 7/8% NOTES FOR EXCHANGE; DELIVERY OF NEW 6 7/8% NOTES
Upon satisfaction or waiver of all of the conditions to the exchange offer, we
will accept, promptly after the expiration date, all old 6 7/8% Notes properly
tendered and will issue the new 6 7/8% Notes promptly after acceptance of the
old 6 7/8% Notes. See "--CONDITIONS OF THE EXCHANGE OFFER" below. We will be
deemed to have accepted properly tendered old 6 7/8% Notes for exchange when we
have given oral or written notice to the exchange agent.
For each old 6 7/8% Note validly tendered to us, the holder of the old 6 7/8%
Note will receive a new 6 7/8% Note having a principal amount equal to the
principal amount of the tendered old 6 7/8% Note. The new 6 7/8% Notes will bear
interest at the same rate and on the same terms as the old 6 7/8% Notes.
Consequently, interest on the new 6 7/8% Notes will accrue at a rate of 6 7/8%
per annum and will be payable semiannually in arrears on February 15, 2000,
August 15, 2000, February 15, 2001 and August 15, 2001. Interest on each new
6 7/8% Note will accrue from the last interest payment date on which interest
was paid on the surrendered old 6 7/8% Note or, if no interest has been paid on
such old 6 7/8% Note, from the date of the original issuance thereof.
The issuance of new 6 7/8% Notes for old 6 7/8% Notes that are accepted for
exchange in the exchange offer will be made only after timely receipt by the
exchange agent of certificates for the old 6 7/8% Notes or a timely book-entry
confirmation of the old 6 7/8% Notes into the exchange agent's account at the
book-entry transfer facility, a completed and signed letter of transmittal and
all other required documents. If any tendered old 6 7/8% Notes are not accepted
for any reason set forth in the terms and conditions of the exchange offer, or
if old 6 7/8% Notes are submitted for a greater amount than the holder desires
to exchange, the unaccepted or non-exchanged old 6 7/8% Notes will be returned
without expense to the tendering holder as promptly as practicable after the
exchange offer expires or terminates. In the case of old 6 7/8% Notes tendered
by book-entry procedures described below, the non-exchanged old 6 7/8% Notes
will be credited to an account maintained with the book-entry transfer facility.
CONDITIONS OF THE EXCHANGE OFFER
We will not be required to accept for exchange any old 6 7/8% Notes and may
terminate or amend the exchange offer prior to the expiration date, if we
determine that we are not permitted to effect the exchange offer because of:
- any changes in law, or applicable interpretations by the SEC, or
- any action or proceeding is instituted or threatened in any court or
governmental agency with respect to the exchange offer.
If we determine that any of the conditions are not satisfied, we may refuse to
accept any old 6 7/8% Notes and return all tendered old 6 7/8% Notes to the
tendering holders or extend the exchange offer and retain all old 6 7/8% Notes
tendered prior to the expiration date, subject to the rights of holders to
20
<PAGE>
withdraw such old 6 7/8% Notes or waive such unsatisfied conditions with respect
to the exchange offer and accept all properly tendered old 6 7/8% Notes which
have not been withdrawn. If such waiver or amendment constitutes a material
change to the exchange offer, we will promptly disclose such waiver or amendment
by means of a prospectus supplement that will be distributed to the registered
holders of the old 6 7/8% Notes and we will extend the exchange offer to the
extent required by Rule 14e-1 under the Exchange Act.
Holders may have certain rights and remedies against us under the Registration
Rights Agreement if we fail to close the exchange offer, whether or not the
conditions stated above occur. These conditions are not intended to modify those
rights or remedies. See "REGISTRATION RIGHTS."
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account for the old
6 7/8% Notes at the book-entry transfer facility for the exchange offer within
two business days after the date of this prospectus, and any financial
institution that is a participant in the book-entry transfer facility's systems
may make book-entry delivery of old 6 7/8% Notes by causing the book-entry
transfer facility to transfer the old 6 7/8% Notes into the exchange agent's
account at the book-entry transfer facility in accordance with the book-entry
transfer facility's procedures for transfer. However, although delivery of old
6 7/8% Notes may be effected through book-entry transfer at the book-entry
transfer facility, the letter of transmittal or facsimile, or an agent's
message, with any required signature guarantees and any other required
documents, must be received by the exchange agent at one of the addresses set
forth below under
"--EXCHANGE AGENT" on or before the expiration date or the guaranteed delivery
procedures described below must be complied with.
The term "agent's message" means a message, transmitted by DTC to the exchange
agent and forming a part of a book-entry confirmation, which states that DTC has
received an express acknowledgment from the tendering participant stating that
the participant has received and agrees to be bound by the terms of the letter
of transmittal, and that we may enforce the letter of transmittal against the
participant.
GUARANTEED DELIVERY PROCEDURES
If a registered holder wishes to tender his old 6 7/8% Notes and the old 6 7/8%
Notes are not immediately available, or time will not permit the holder's old
6 7/8% Notes or other required documents to reach the exchange agent before the
expiration date, or the procedure for book-entry transfer cannot be completed on
time, the old 6 7/8% Notes may nevertheless be exchanged if:
- the tender is made through an eligible guarantor institution,
- before the expiration date, the exchange agent has received from the
eligible guarantor institution an agent's message with respect to
guaranteed delivery or a completed and signed letter of transmittal, or a
facsimile, and a notice of guaranteed delivery, substantially in the form
provided by us. Delivery may be made by telegram, telex, facsimile
transmission, mail or hand delivery. The letter of transmittal and notice
of guaranteed delivery must set forth the name and address of the holder
of the old 6 7/8% Notes and the amount of the old 6 7/8% Notes being
tendered, state that the tender is being made and guarantee that within
five trading days on the New York Stock Exchange ("NYSE") after the date
of signing of the notice of guaranteed delivery, the certificates for all
physically tendered old 6 7/8% Notes, in proper form for transfer, or a
book-entry confirmation, and any other documents required by the letter of
transmittal, will be deposited by the eligible guarantor institution with
the exchange agent, and
- the certificates for all physically tendered old 6 7/8% Notes, in proper
form for transfer, or a book-entry confirmation and all other documents
required by the letter of transmittal, are received by the exchange agent
within five NYSE trading days after the date of signing the notice of
guaranteed delivery.
21
<PAGE>
WITHDRAWAL RIGHTS
Tenders of old 6 7/8% Notes may be withdrawn at any time prior to the close of
business on the expiration date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the exchange agent at one of the addresses set forth below under
"--EXCHANGE AGENT." Notice may be sent by telegram, telefax, facsimile
transmission, mail or hand delivery. Any notice of withdrawal must:
- specify the name of the person who tendered the old 6 7/8% Notes to be
withdrawn,
- identify the old 6 7/8% Notes to be withdrawn, including the amount of the
old 6 7/8% Notes,
- where certificates for old 6 7/8% Notes have been transmitted, specify the
name in which the old 6 7/8% Notes are registered, if different from that
of the withdrawing holder, and
- state that such holder of the old 6 7/8% Notes is withdrawing his election
to have such old 6 7/8% Notes tendered.
If certificates for old 6 7/8% Notes have been delivered or otherwise identified
to the exchange agent, then, prior to the release of the certificates the
withdrawing holder must also submit the serial numbers of the particular
certificates to be withdrawn and a signed notice of withdrawal with signatures
guaranteed by an eligible guarantor institution unless the holder is an eligible
guarantor institution. If old 6 7/8% Notes have been tendered under the
procedure for book-entry transfer described above, any notice of withdrawal must
specify the name and number of the account at the book-entry transfer facility
to be credited with the withdrawn old 6 7/8% Notes and otherwise comply with the
procedures of the facility. We will determine all questions as to the validity,
form, eligibility and time of receipt of the notices, and our determination
shall be final and binding on all parties. Any old 6 7/8% Notes so withdrawn
will be deemed not to have been validly tendered for exchange for purposes of
the exchange offer. Any old 6 7/8% Notes that have been tendered for exchange
but that are not exchanged for any reason will be returned to the holder without
cost to the holder as soon as practicable after withdrawal, rejection of tender
or termination of the exchange offer. In the case of old 6 7/8% Notes tendered
by book-entry transfer into the exchange agent's account at the book-entry
transfer facility under the book-entry transfer procedures described above, the
old 6 7/8% Notes will be credited to an account with the book-entry transfer
facility specified by the holder. Properly withdrawn old 6 7/8% Notes may be re-
tendered by following one of the procedures described under "--PROCEDURES FOR
TENDERING OLD 6 7/8% NOTES" above at any time on or before the expiration date.
EXCHANGE AGENT
Bank One Trust Company, National Association has been appointed as the exchange
agent for the exchange offer. All signed letters of transmittal should be
directed to the exchange agent at the addresses set forth below. Questions and
requests for assistance, requests for additional copies of this
22
<PAGE>
prospectus or of the letter of transmittal and requests for notices of
guaranteed delivery should be directed to the exchange agent addressed as
follows:
<TABLE>
<S> <C>
By Mail: By Hand:
Bank One Trust Company, National Association Bank One Trust Company, National Association
Attention: Exchanges Attention: Exchanges
Global Corporate Trust Services Global Corporate Trust Services
1 Bank One Plaza, Mail Suite IL 1-0122 One North State Street, 9th Floor
Chicago, IL 60670-0122 Chicago, IL 60602
or or
Bank One Trust Company, National Association Bank One Trust Company, National Association
Attention: Exchanges Attention: Exchanges
Global Corporate Trust Services Global Corporate Trust Services
14 Wall Street, 8th Floor 14 Wall Street, 8th Floor
New York, NY 10005 New York, NY 10005
</TABLE>
For information call:
(800) 524-9472
Fax: 312-407-8853
E-mail: [email protected]
By Overnight Mail or Courier:
Bank One Trust Company, National Association
Attention: Exchanges
Global Corporate Trust Services
One North State Street, 9th Floor
Chicago, IL 60602
or
Bank One Trust Company, National Association
Attention: Exchanges
Global Corporate Trust Services
14 Wall Street, 8th Floor
New York, NY 10005
Delivery of a letter of transmittal to an address other than as set forth above
or transmission of instructions via facsimile other than as set forth above does
not constitute a valid delivery of the letter of transmittal.
FEES AND EXPENSES
We will not make any payment to brokers, dealers or others soliciting
acceptances of the exchange offer and holders who tender old 6 7/8% Notes will
not be required to pay brokerage commissions or fees.
We will pay the expenses that will be incurred in connection with the exchange
offer. We estimate the expenses will be approximately $ .
ACCOUNTING TREATMENT
For accounting purposes, we will recognize no gain or loss as a result of the
exchange offer. The expenses of the exchange offer will be amortized over the
term of the new 6 7/8% Notes.
23
<PAGE>
TRANSFER TAXES
Holders who instruct us to register new 6 7/8% Notes in the name of a person
other than the registered tendering holder will be responsible for paying any
applicable transfer tax, as will holders who request that old 6 7/8% Notes not
tendered or not accepted in the exchange offer be returned to a person other
than the registered tendering holder. In all other cases, no transfer taxes will
be due.
REGULATORY MATTERS
We are not aware of any governmental or regulatory approvals that are required
in order to complete the exchange offer.
CONSEQUENCES OF FAILURE TO EXCHANGE
Participation in the exchange offer is voluntary. Old 6 7/8% Notes that are not
exchanged for new 6 7/8% Notes will remain restricted securities. Accordingly,
those old 6 7/8% Notes may only be transferred:
- to a person who the seller reasonably believes is a qualified
institutional buyer under Rule 144A under the Securities Act,
- in an offshore transaction under Rule 903 or Rule 904 of Regulation S
under the Securities Act, or
- under Rule 144 under the Securities Act (if available);
and in accordance with all applicable securities laws of the states of the
United States. Following the consummation of the exchange offer, neither we nor
U S WEST will have any further obligation to such holders to provide for
registration under the Securities Act, except that under certain circumstances,
we are required to file a shelf registration statement under the Securities Act.
See "REGISTRATION RIGHTS."
PAYMENT OF ADDITIONAL INTEREST UPON REGISTRATION DEFAULTS
If we fail to meet our obligations to complete the exchange offer or file a
shelf registration statement, additional interest will accrue on the 6 7/8%
Notes. For additional information regarding payments of additional interest,
please see "REGISTRATION RIGHTS."
USE OF PROCEEDS
We will not receive any proceeds from the issuance of the new 6 7/8% Notes or
the closing of the exchange offer.
24
<PAGE>
CAPITALIZATION OF U S WEST, INC.
The following table sets forth, at September 30, 1999, the unaudited
consolidated historical capitalization of U S WEST. The table should be read in
conjunction with the historical financial statements and Notes thereto of
U S WEST included in the documents incorporated by reference in this prospectus.
See "WHERE YOU CAN FIND MORE INFORMATION."
<TABLE>
<CAPTION>
HISTORICAL
UNAUDITED
AT SEPTEMBER 30, 1999
----------------------
(DOLLARS IN MILLIONS)
<S> <C>
Short-term debt.......................................... $3,379
======
Long-term debt........................................... $9,754
Total shareowners' equity(1)(2)(3)....................... 152
------
Total capitalization..................................... $9,906
======
</TABLE>
- ------------------------------
(1) U S WEST has 2,000,000,000 shares of common stock authorized. On
September 30, 1999, 505,305,886 shares of U S WEST common stock were issued
and outstanding.
(2) U S WEST has 200,000,000 shares of preferred stock authorized. As of
September 30, 1999, no shares of U S WEST preferred stock were issued and
outstanding.
(3) As a result of the Termination Agreement, the remaining shares of Global
Crossing common stock held by U S WEST from the Tender Offer (approximately
37 million shares) will be carried at their current market value, with
differences between original cost and market value reflected as an
adjustment to shareowners' equity. As of September 30, 1999, U S WEST's
remaining investment in shares of Global Crossing had a market value of
approximately $981 million. See "RECENT DEVELOPMENTS--MERGER WITH QWEST."
Except as set forth above and in publicly available documents filed with the
SEC, there has been no material change in the capitalization of U S WEST since
September 30, 1999.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth U S WEST's ratio of earnings to fixed charges for
each of the periods indicated.
<TABLE>
<CAPTION>
HISTORICAL(1) PRO FORMA(2)
- --------------------------------------------------------------------------------------- -------------
UNAUDITED UNAUDITED
NINE MONTHS ENDED YEAR ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
- ----------------------------------------------------------------- ------------------- -------------
1994 1995 1996 1997 1998 1998 1999 1998
- --------------------- -------- -------- -------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
5.38 5.01 5.20 5.67 4.75 4.98 3.76 4.02
</TABLE>
- ------------------------------
(1) Historical ratios are based on the historical results of the Communications
Group and Dex, as if each such business operated as a separate entity for
all periods presented but exclude the effects of $3.9 billion of the Dex
Indebtedness which was refinanced by U S WEST in connection with the Dex
Alignment. See "RECENT DEVELOPMENTS--THE SEPARATION."
(2) Based on the unaudited pro forma combined results of U S WEST which give
effect to the refinancing of the Dex Indebtedness in connection with the Dex
Alignment. These pro forma results do not give effect to the anticipated
merger with Qwest.
In determining these ratios, U S WEST has computed "earnings" by adding income
before income taxes, extraordinary items and cumulative effect of change in
accounting principle and fixed charges. "Fixed charges" consist of interest on
indebtedness and the portion of rentals representative of the interest factor.
25
<PAGE>
CAPITALIZATION OF U S WEST CAPITAL FUNDING, INC.
The following table sets forth, at September 30, 1999, our unaudited historical
capitalization. The table should be read in conjunction with the historical
financial statements and Notes thereto of U S WEST included in the documents
incorporated by reference herein See "WHERE YOU CAN FIND MORE INFORMATION."
<TABLE>
<CAPTION>
HISTORICAL
UNAUDITED
AT SEPTEMBER 30, 1999
----------------------
(DOLLARS IN MILLIONS)
<S> <C>
Short-term debt.......................................... $2,288
======
Long-term debt........................................... $4,636
Total shareowners' equity(1)............................. 44
------
Total capitalization..................................... $4,680
======
</TABLE>
- ------------------------------
(1) We have one (1) share of stock authorized, and have issued one (1) share of
stock to U S WEST.
Except as set forth above and in publicly available documents filed with the
SEC, there has been no material change in our capitalization since September 30,
1999.
26
<PAGE>
DESCRIPTION OF NEW 6 7/8% NOTES
GENERAL
The new 6 7/8% Notes will be issued as a separate series of debt securities
("Debt Securities") under an indenture dated as of June 29, 1998, as
supplemented and amended from time to time (the "Indenture"), among us,
U S WEST and Bank One Trust Company, National Association, as successor to The
First National Bank of Chicago, as trustee (the "Trustee"). The new 6 7/8% Notes
and the old 6 7/8% Notes are considered together to be a single series for all
purposes under the Indenture. The following summaries of the material provisions
of the Indenture do not purport to be complete and are subject to and are
qualified in their entirety by reference to all of the provisions of the
Indenture, which provisions of the Indenture are incorporated herein by
reference. Capitalized and other terms not otherwise defined herein shall have
the meanings given to them in the Indenture. You may obtain a copy of the
Indenture from us upon request. See "WHERE YOU CAN FIND MORE INFORMATION."
The Indenture does not limit the aggregate principal amount of Debt Securities
which may be issued under it and provides that Debt Securities may be issued
from time to time in one or more series. All Debt Securities, including the new
6 7/8% Notes are, and will be, unconditionally guaranteed as to payment of
principal, premium, if any, and interest by U S WEST. As of the date of this
prospectus, the principal amount of Debt Securities outstanding under the
Indenture is $5.65 billion.
Since the new 6 7/8% Notes will constitute a separate series of Debt Securities
under the Indenture, holders of old 6 7/8% Notes who do not exchange such old
6 7/8% Notes for new 6 7/8% Notes will vote together as a separate series of
Debt Securities with holders of such new 6 7/8% Notes of that series for all
relevant purposes under the Indenture. In that regard, the Indenture requires
that certain actions by the holders under such old 6 7/8% Notes (including
acceleration following an Event of Default) must be taken, and certain rights
must be exercised, by specified minimum percentages of the aggregate principal
amount of the outstanding Notes of that series. In determining whether holders
of the requisite percentage in principal amount of the Notes of that series have
given any notice, consent or waiver or taken any other action permitted under
the Indenture, any old 6 7/8% Notes which remain outstanding after the exchange
offer will be aggregated with the new 6 7/8% Notes and the holders of the old
6 7/8% Notes and the new 6 7/8% Notes will each vote together as a single series
for all purposes. Accordingly, all references in this section will be deemed to
mean, at any time after the exchange offer is consummated, the requisite
percentage in aggregate principal amount of the old 6 7/8% Notes and the new
6 7/8% Notes.
The 6 7/8% Notes initially will be limited to $1,150,000,000 aggregate principal
amount. We and U S WEST may "reopen" any series of debt securities and issue
additional securities of that series. The 6 7/8% Notes will be issued only in
registered form, without coupons, in denominations of $1,000 and integral
multiples thereof. The 6 7/8% Notes are our unsecured obligations and rank
equally with all of our other unsecured and unsubordinated indebtedness. The
Guarantees are unsecured obligations of U S WEST and rank equally with all other
unsecured and unsubordinated indebtedness of U S WEST. However, because
U S WEST is a holding company which conducts substantially all of its operations
through subsidiaries, the right of U S WEST, and hence the right of creditors of
U S WEST (including holders of the 6 7/8% Notes through the Guarantees), to
participate in any distribution of assets of any subsidiary upon its liquidation
or reorganization or otherwise is necessarily subject to the prior claims of
creditors of such subsidiary, except to the extent that claims of U S WEST
itself as a creditor of the subsidiary may be recognized.
The 6 7/8% Notes will bear interest at the rate of 6 7/8% per annum from
August 25, 1999, or from the most recent interest payment date to which interest
has been paid or duly provided for, payable semiannually in arrears on
February 15, 2000, August 15, 2000, February 15, 2001 and August 15, 2001 (each,
an "Interest Payment Date"), to the persons in whose names the 6 7/8% Notes are
registered at the close of business on the February 1 or August 1, as the case
may be, immediately preceding such
27
<PAGE>
Interest Payment Date. Interest will be calculated on the basis of a 360-day
year of twelve 30-day months. If any Interest Payment Date, maturity date or
redemption date is a Legal Holiday in New York, New York, the required payment
shall be made on the next succeeding day that is not a Legal Holiday as if it
were made on the date such payment was due and no interest shall accrue on the
amount so payable for the period from and after such Interest Payment Date,
maturity date or redemption date, as the case may be, to such next succeeding
day. "Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in The City of New York are not required to be open.
The 6 7/8% Notes will mature and the principal amount will be payable on
August 15, 2001. The 6 7/8% Notes will not have the benefit of any sinking fund.
The Trustee, through its corporate trust office in the Borough of Manhattan in
The City of New York (in such capacity, the "Paying Agent") will act as our
paying agent with respect to the 6 7/8% Notes. Payments of principal, premium,
if any, and interest on the 6 7/8% Notes will be made by us through the Paying
Agent to DTC. See "--BOOK-ENTRY ONLY; DELIVERY AND FORM."
The principal of, premium, if any, and interest on the 6 7/8% Notes will be
payable in U.S. dollars or in such other coin or currency of the United States
of America as at the time of payment is legal tender for the payment of public
and private debts. No service charge will be made for any registration of,
transfer or exchange of 6 7/8% Notes, but we may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The 6 7/8% Notes may be presented for registration of transfer or
exchange at the office of the Paying Agent in the Borough of Manhattan in the
City of New York, or at any other office or agency maintained by us or the
Paying Agent for such purpose.
OPTIONAL REDEMPTION
The 6 7/8% Notes will be redeemable at our option, in whole at any time or in
part from time to time, on at least 15 days but not more than 60 days prior
written notice mailed to the registered holders thereof, at a redemption price
equal to the greater of (i) 100% of the principal amount of the 6 7/8% Notes to
be redeemed or (ii) the sum, as determined by the Quotation Agent (as defined
below), of the present values of the principal amount of the 6 7/8% Notes to be
redeemed and the remaining scheduled payments of interest thereon from the
redemption date to August 15, 2001 (the "Remaining Life") discounted from their
respective scheduled payment dates to the redemption date on a semiannual basis
(assuming a 360-day year consisting of 30-day months) at the Treasury Rate (as
defined below) plus 10 basis points, plus, in either case, accrued interest
thereon to the date of redemption.
If money sufficient to pay the redemption price of and accrued interest on all
of the 6 7/8% Notes (or portions thereof) to be redeemed on the redemption date
is deposited with the Trustee or Paying Agent on or before the redemption date
and certain other conditions are satisfied, then on and after such redemption
date, interest will cease to accrue on such 6 7/8% Notes (or such portion
thereof) called for redemption.
"Comparable Treasury Issue" means the United States Treasury security selected
by the Quotation Agent as having a maturity comparable to the Remaining Life
that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity with the Remaining Life.
"Comparable Treasury Price" means, with respect to any redemption date, the
average of two Reference Treasury Dealer Quotations for such redemption date.
"Quotation Agent" means the Reference Treasury Dealer appointed by us.
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"Reference Treasury Dealer" means each of Merrill Lynch Government Securities
Inc. and J.P. Morgan Securities Inc., and their successors; provided, however,
that if any of the foregoing shall cease to be a primary U.S. Government
securities dealer in New York City (a "Primary Treasury Dealer"), Capital
Funding shall substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third business day preceding such redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate per annum
equal to the semiannual yield to maturity of the Comparable Treasury Issue,
calculated on the third business day preceding such redemption date using a
price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such redemption
date.
We or U S WEST may at any time, and from time to time, purchase the 6 7/8% Notes
at any price or prices in the open market or otherwise.
BOOK-ENTRY ONLY; DELIVERY AND FORM
The new 6 7/8% Notes will initially be issued in the form of global securities
held in book-entry form. The new 6 7/8% Notes will be deposited with the Trustee
as custodian for DTC and DTC or its nominee will initially be the sole
registered holder of the new 6 7/8% Notes. Except as set forth below, a global
security may not be transferred except as a whole by DTC to a nominee of DTC or
by a nominee of DTC to DTC. Investors may elect to hold interests in the global
securities directly through DTC (in the United States), Cedelbank or Morgan
Guaranty Trust Company of New York, Brussels Office, as operator of the
Euroclear System ("Euroclear"), as the case may be, if they are participants in
such systems, or indirectly through organizations that are participants in such
systems. Cedelbank and Euroclear will hold interests on behalf of their
participants through customers' securities accounts in Cedelbank's and
Euroclear's names on the books of their respective depositaries, which are
participants in DTC. will act as depository for
Cedelbank and will act as depositary for Euroclear (in
such capacities, the "U.S. Depositaries").
When a global security is issued, DTC or its nominee will credit, on its
internal system, the accounts of persons holding through it with the principal
amounts of the individual beneficial interest represented by the global security
purchased by those persons in the offering of the new 6 7/8% Notes. The accounts
were initially designated by the initial purchasers of the old 6 7/8% Notes with
respect to old 6 7/8% Notes sold by the initial purchasers.
Only participants that have accounts with DTC or persons that hold interests
through participants can own beneficial interests in a global security.
Ownership of beneficial interests by participants in a global security will be
shown on records maintained by DTC or its nominee for the global security, and
that ownership interest will be transferred only through those records.
Ownership of beneficial interests in the global security by persons that hold
through participants will be shown on records maintained by the participant, and
the transfer of that ownership interest within the participant will occur only
through the participant's records.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of the securities in definitive form. Those limits and
laws may make it more difficult to transfer beneficial interests in a global
security. We will make payments on the new 6 7/8% Notes represented by any
global security to DTC or its nominee as the sole registered owner and the sole
holder of the new 6 7/8% Notes represented by the global security. Neither we,
U S WEST nor the Trustee, any agent of ours or the
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initial purchasers will have any responsibility for any aspect of DTC's reports
relating to beneficial ownership interests in a global security representing any
new 6 7/8% Notes or for reviewing any of DTC's records relating to the
beneficial ownership interests. DTC has advised us that upon receipt of any
payment on any global security, DTC will immediately credit, on its book-entry
registration and transfer system, the accounts of participants with payments in
amounts proportionate to their beneficial interests in the principal or face
amount of the global security. Payments of interest and principal of global
securities held through Cedelbank or Euroclear will be credited to the cash
accounts of Cedelbank participants or Euroclear participants, as the case may
be, in accordance with the relevant system's rules and procedures. We expect
that payments by participants to owners of beneficial interests in a global
security held through those participants will be governed by standing
instructions and customary practices as is now the case with securities held for
customer accounts registered in "street name" and will be the sole
responsibility of the participants subject to any statutory or regulatory
requirements as may be in effect from time to time.
So long as DTC or its nominee is the registered owner of the global security,
DTC or its nominee will be considered the sole owner or holder of the new 6 7/8%
Notes represented by the global security for the purposes of receiving payment
on the new 6 7/8% Notes, receiving notices and for all other purposes under the
Indenture and the new 6 7/8% Notes. Except as provided above, owners of
beneficial interests in a global security will not be entitled to receive
physical delivery of certificated new 6 7/8% Notes and will not be considered
the holders of the global security for any purposes under the Indenture.
Accordingly, each person owning a beneficial interest in a global security must
rely on the procedures of DTC and, if the person is not a participant, on the
procedures of the participant through which the person owns its interest, to
exercise any rights of a holder under the global security or the Indenture. We
understand that under existing industry practices, if we request any action of
holders or an owner of a beneficial interest in a global security wants to take
any action that a holder is entitled to take under the Indenture, DTC would
authorize the participants holding the beneficial interest to take that action,
and the participants would authorize beneficial owners owning through the
participants to take the action on the instructions of beneficial owners owning
through them.
DTC has advised us that it will take any action permitted to be taken by a
holder of new 6 7/8% Notes only at the direction of a participant to whose
account with DTC interests in the global security are credited and only as to
the portion of the aggregate principal amount of the new 6 7/8% Notes as to
which the participant has given that direction. DTC has advised us that DTC is a
limited-purpose trust company organized under the Banking Law of the State of
New York, a "banking organization" within the meaning of New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered under the Exchange Act. DTC was created to hold the securities of its
participants and to facilitate the clearance and settlement of securities
transactions among its participants in the securities through electronic
book-entry changes in accounts of the participants. This eliminates the need for
physical movement of securities certificates. DTC's participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations, some of whom own DTC. Access to DTC's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant.
CERTIFICATED NEW 6 7/8% NOTES
New 6 7/8% Notes represented by a global security are exchangeable for
certificated new 6 7/8% Notes only if:
- DTC notifies us that it is unwilling or unable to continue as a depository
for the global security or if at any time DTC ceases to be a registered
clearing agency, and a successor depository is not appointed by us within
90 days,
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- we notify the Trustee that the global security will be so transferable,
registrable and exchangeable, or
- an event of default with respect to the new 6 7/8% Notes has occurred and
is continuing.
Any global security that is exchangeable for certificated new 6 7/8% Notes under
the preceding sentence will be transferred to, and registered and exchanged for,
certificated new 6 7/8% Notes in authorized denominations and registered in
names that DTC or its nominee holding the global security may direct. Subject to
the foregoing, a global security is not exchangeable, except for a global
security of the same denomination to be registered in the name of DTC or its
nominee. If a global security becomes exchangeable for certificated new 6 7/8%
Notes:
- certificated new 6 7/8% Notes will be issued only in fully registered form
in denominations of $1,000 or integral multiples,
- payments will be made and transfers will be registered at the office or
agency of us maintained for that purposes, and
- no service charge will be made for any issuance of the certificated new
6 7/8% Notes, although we may require payment to cover any tax or
governmental charge imposed.
DTC management is aware that some computer applications, systems, and the like
for processing data ("Systems") that are dependent upon calendar dates,
including dates before, on, and after January 1, 2000, may encounter "Year 2000
problems." DTC has informed its participants and other members of the financial
community (the "Industry") that it has developed and is implementing a program
so that its Systems, as the same relate to the timely payment of distributions
(including principal and income payments) to security holders, book-entry
deliveries, and settlement of trades within DTC ("DTC Services"), continue to
function appropriately. This program includes a technical assessment and a
remediation plan, each of which is complete. Additionally, DTC's plan includes a
testing phase, which is expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent upon
other parties, including but not limited to issuers and their agents, as well as
DTC's direct and indirect participants and third party vendors from whom DTC
licenses software and hardware, and third party vendors on whom DTC relies for
information or the provision of services, including telecommunication and
electrical utility service providers, among others. DTC has informed the
Industry that it is contacting (and will continue to contact) third party
vendors from whom DTC acquires services to: (i) impress upon them the importance
of such services being Year 2000 compliant; and (ii) determine the extent of
their efforts for Year 2000 remediation (and, as appropriate, testing) of their
services. In addition, DTC is in the process of developing such contingency
plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the Industry for informational purposes only and is not intended to
serve as a representation, warranty, or contract modification of any kind.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
Settlement for the new 6 7/8% Notes represented by the global securities will be
made in immediately available funds. We will make all payments of principal and
interest on the 6 7/8% Notes in immediately available funds.
The new 6 7/8% Notes will trade in DTC's Same-Day Funds Settlement System until
maturity, and secondary market trading activity in the new 6 7/8% Notes will
therefore be required by DTC to settle in immediately available funds.
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Secondary market trading between Cedelbank participants and/or Euroclear
participants will occur in the ordinary way in accordance with the applicable
rules and operating procedures of Cedelbank and Euroclear and will be settled
using the procedures applicable to conventional eurobonds in immediately
available funds.
Cross-market transfers between persons holding directly or indirectly through
DTC and persons holding directly or indirectly through Cedelbank or Euroclear
participants will be effected in accordance with DTC's rules on behalf of the
relevant European international clearing system by its U.S Depositary. Such
cross-market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to its
U.S. Depositary to take action to effect final settlement on its behalf by
delivering or receiving the 6 7/8% Notes in DTC, and making or receiving payment
in accordance with normal procedures for same-day funds settlement applicable to
DTC. Cedelbank participants and Euroclear participants may not deliver
instructions directly to DTC.
Because of time-zone differences, credits of the 6 7/8% Notes received in
Cedelbank or Euroclear as a result of a transaction with a DTC participant will
be made during subsequent securities settlement processing and will be credited
the business day following the DTC settlement date. Such credits or any
transactions in such 6 7/8% Notes settled during such processing will be
reported to the relevant Euroclear or Cedelbank participants on such business
day. Cash received in Cedelbank or Euroclear as a result of sales of 6 7/8%
Notes by or through a Cedelbank participant or a Euroclear participant to a DTC
participant will be received with value on the DTC settlement date but will be
available in the relevant Cedelbank or Euroclear cash account only as of the
business day following settlement in DTC.
Although DTC, Cedelbank and Euroclear have agreed to the foregoing procedures in
order to facilitate transfers of interests in the global securities among
participants of DTC, Cedelbank and Euroclear, they are under no obligation to
perform or continue to perform such procedures, and such procedures may be
discontinued at any time. None of Capital Funding, U S WEST or the Trustee will
have any responsibility for the performance by DTC, Cedelbank and Euroclear, or
their respective participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
CERTAIN COVENANTS
Other than as described below under "--LIMITATION ON LIENS," the Indenture does
not contain any provisions that would limit our or U S WEST's ability to incur
indebtedness or that would afford holders of 6 7/8% Notes protection in the
event of a sudden and significant decline in our or U S WEST's credit quality or
a takeover, recapitalization or highly leveraged or similar transaction
involving us or U S WEST. Accordingly, we or U S WEST could in the future enter
into transactions that could increase the amount of indebtedness outstanding at
that time or otherwise adversely affect our or U S WEST's capital structure or
credit rating. See "RECENT DEVELOPMENTS."
Qwest's indentures contain restrictive covenants limiting its ability to pay
dividends, make investments, create liens, sell assets, enter into transactions
with affiliates, borrow money and engage in mergers and consolidations. These
restrictions could limit financing by the combined company following the merger.
See "RECENT DEVELOPMENTS." Qwest's indentures are attached as exhibits to
various documents Qwest has filed with the SEC.
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LIMITATION ON LIENS
The Indenture contains a covenant that if we mortgage, pledge or otherwise
subject to any lien all or some of our property or assets, we will secure the
6 7/8% Notes, any other outstanding Debt Securities and any of our other
obligations which may then be outstanding and entitled to the benefit of a
covenant similar in effect to such covenant, equally and proportionally with the
indebtedness or obligations secured by such mortgage, pledge or lien, for as
long as any such indebtedness or obligation is so secured. This covenant does
not apply 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 after property is acquired, or
(c) mortgages or liens securing the cost of construction or improvement of
property, or
- 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 us to conduct all or some part of our business or in
order to entitle us 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.
The Indenture does not prevent any other entity from mortgaging, pledging or
subjecting to any lien any of its property or assets, whether or not acquired
from us or U S WEST (Section 4.03).
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may, without the consent of the holders of the 6 7/8% Notes or any other
outstanding Debt Securities, consolidate with, merge into or be merged into, or
transfer or lease our property and assets substantially as an entirety to
another entity. However, we may only do this if:
- the successor entity is a corporation and assumes by supplemental
indenture all of our obligations under the 6 7/8% Notes, any other
outstanding Debt Securities and the Indenture, and
- after giving effect to the transaction, no Default or Event of Default has
occurred and is continuing.
After that time, all of our obligations under the 6 7/8% Notes, any other
outstanding Debt Securities and the Indenture terminate (Section 5.01).
U S WEST may, without the consent of the holders of any of the 6 7/8% Notes, or
any other outstanding Debt Securities, consolidate with, merge into or be merged
into, or transfer or lease its property and assets substantially as an entirety
to another entity. However, U S WEST may only do this if:
- the successor entity is a corporation and assumes by supplemental
indenture all of its obligations under the Guarantees and the Indenture,
and
- after giving effect to the transaction, no Default or Event of Default has
occurred and is continuing.
After that time, all of U S WEST's obligations under the Guarantees and the
Indenture terminate (Section 5.02).
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EVENTS OF DEFAULT
Any one of the following is an Event of Default with respect to any series of
Debt Securities, including the 6 7/8% Notes (Section 6.01):
- if we or U S WEST default in the payment of interest on the Debt
Securities of such series, and such default continues for 90 days,
- if we or U S WEST default in the payment of the principal of any Debt
Security of such series when the same becomes due and payable at maturity,
upon redemption, or otherwise,
- if we or U S WEST fail to comply with any of our or their other agreements
in the Debt Securities of such series, in the Indenture or in any
supplemental indenture under which the Debt Securities of such series were
issued, which failure continues for 90 days after we or U S WEST receives
notice from the Trustee or the holders of at least 25% in principal amount
of all of the outstanding Debt Securities of that series, and
- if certain events of bankruptcy or insolvency occur with respect to us or
U S WEST.
If an Event of Default with respect to the Debt Securities of any series occurs
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
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. When such declaration is made, such principal (or, in the case of
original issue discount securities, such specified amount) will be immediately
due and payable (Section 6.02). The holders of a majority in principal amount of
Debt Securities of that series may rescind such 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 (other than nonpayment of
principal or interest that has become due solely as a result of acceleration).
Holders of Debt Securities may not enforce the Indenture, the Debt Securities or
the Guarantees, except as provided in the Indenture (Section 6.06). The Trustee
may require indemnity satisfactory to it before it enforces the Indenture or the
Debt Securities (Section 7.01(e)). Subject to certain limitations, the holders
of more than 50% in principal amount of the Debt Securities of each series
affected (with each 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 of the Trustee (Section 6.05). The Trustee may
withhold from holders of Debt Securities notice of any continuing default
(except a default in the payment of principal or interest) if it determines in
good faith that withholding notice is in their interests (Section 7.05).
AMENDMENT AND WAIVER
With the written consent of the holders of more than 50% of the principal amount
of the outstanding Debt Securities of each series that will be affected (with
each series voting as a class), we, U S WEST and the Trustee may amend or
supplement the Indenture or modify the rights of the holders of Debt Securities
of that series. Such majority of holders may also waive compliance by us or
U S WEST with any provision of the Indenture, any supplemental indenture or the
Debt Securities of any such series except a default in the payment of principal
or interest. However, without the consent of the holder of each Debt Security
affected, an amendment or waiver may not (Section 9.02):
- reduce the amount of Debt Securities whose holders must consent to an
amendment or waiver,
- change the rate or the time for payment of interest,
- change the principal or the fixed maturity,
- waive a default in the payment of principal, premium, if any, or interest,
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- make any Debt Security payable in a different currency, or
- make any change in the provisions of the Indenture concerning (a) waiver
of existing defaults (Section 6.04), (b) rights of holders of Debt
Securities to receive payment (Section 6.07), or (c) amendments and
waivers with consent of holders of Debt Securities (Section 9.02(a), third
sentence).
We, U S WEST and the Trustee may amend or supplement the Indenture without the
consent of any holder of any of the Debt Securities (Section 9.01):
- to cure any ambiguity, defect or inconsistency in the Indenture, the Debt
Securities or the Guarantees,
- to provide for the assumption of all of our obligations under the Debt
Securities and the Indenture or of U S WEST's obligations under the
Guarantees and the Indenture by any corporation in connection with a
merger, consolidation or transfer or lease of our or U S WEST's property
and assets substantially as an entirety,
- to provide for uncertificated Debt Securities in addition to or instead of
certificated Debt Securities,
- to add to the covenants made by us or U S WEST for the benefit of the
holders of any series of Debt Securities or to surrender any right or
power conferred upon us in the Indenture,
- to add to, delete from, or revise the conditions, limitations, and
restrictions on the authorized amount, terms, or purposes of issue,
authentication and delivery of the Debt Securities,
- to make any change that does not adversely affect the rights of any holder
of Debt Securities,
- to provide for the issuance of and establish the form and terms and
conditions of a series of Debt Securities or the Guarantees, 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,
- to add to the rights of holders of any of the Debt Securities, or
- to secure any Debt Securities as provided under the heading "--LIMITATION
ON LIENS."
SATISFACTION AND DISCHARGE
We and U S WEST may terminate all of our or their obligations under the 6 7/8%
Notes and the Indenture with respect to the 6 7/8% Notes or any installment of
interest on the 6 7/8% Notes if we or U S WEST irrevocably deposits in trust
with the Trustee money or U.S. Government Obligations sufficient to pay, when
due, principal and interest on the 6 7/8% Notes to maturity or redemption or
such installment of interest, as the case may be, and if all other conditions
set forth in the 6 7/8% Notes are met (Section 8.01).
GUARANTEES
As described in more detail above under "--GENERAL", U S WEST has
unconditionally guaranteed the payment of principal and interest on the Notes
when and as such payments become due and payable. The Guarantees rank equally
with all other unsecured and unsubordinated obligations of U S WEST. The 6 7/8%
Notes and the guarantees are unsecured obligations of Capital Funding and
U S WEST, respectively, and rank pari passu among them
LUXEMBOURG PAYING AND TRANSFER AGENT
In the event that definitive 6 7/8% Notes are issued, holders of the 6 7/8%
Notes will be able to receive payments thereon and effect transfers thereof at
the offices of our paying and transfer agent in
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Luxembourg. We have initially appointed Kredietbank S.A. Luxembourg as paying
agent and transfer agent in Luxembourg with respect to the 6 7/8% Notes issued
in definitive form, and as long as the 6 7/8% Notes are listed on the Luxembourg
Stock Exchange, we will maintain a paying and transfer agent in Luxembourg. Any
change in the Luxembourg paying agent and transfer agent will be published in
Luxembourg. See "--NOTICES."
NOTICES
Notices to holders of the 6 7/8% Notes will be sent by mail to the registered
holders and will be published, whether the 6 7/8% Notes are in global or
definitive form, and so long as the 6 7/8% Notes are listed on the Luxembourg
Stock Exchange, in a daily newspaper of general circulation in Luxembourg. It is
expected that publication will be made in Luxembourg in the LUXEMBURGER WORT.
Any such notice shall be deemed to have been given on the date of such
publication or, if published more than once, on the date of the first such
publication. So long as the 6 7/8% Notes are listed on the Luxembourg Stock
Exchange, any change in the Luxembourg paying agent and transfer agent will be
published in Luxembourg in the manner set forth above.
GOVERNING LAW
The Indenture and the 6 7/8% Notes will be governed by, and construed in
accordance with, the laws of the State of New York, applicable to agreements
made and to be performed wholly within such jurisdiction.
CONCERNING THE TRUSTEE AND THE PAYING AGENT
We and certain of our affiliates maintain banking and other business
relationships in the ordinary course of business with Bank One Trust Company,
National Association. In addition, Bank One Trust Company, National Association
and certain of its affiliates serve as trustee, authenticating agent, or paying
agent with respect to certain Debt Securities previously issued by us and our
affiliates.
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REGISTRATION RIGHTS
Based on existing interpretations of the Securities Act by the staff of the SEC
("the Staff") set forth in several no-action letters to third parties, and
subject to the immediately following sentence, we and U S WEST believe that the
new 6 7/8% Notes to be issued pursuant to the exchange offer may be offered for
resale, resold and otherwise transferred by the holders thereof (other than
holders who are broker-dealers) without further compliance with the registration
and prospectus delivery provisions of the Securities Act. However, any purchaser
of old 6 7/8% Notes who is an affiliate of us or U S WEST or who intends to
participate in the exchange offer for the purpose of distributing the new 6 7/8%
Notes, or any broker-dealer who purchased the old 6 7/8% Notes from us for
resale pursuant to Rule 144A or any other available exemption under the
Securities Act:
- will not be able to rely on the interpretations of the Staff set forth in
the above-mentioned no-action letters,
- will not be entitled to tender such old 6 7/8% Notes in the exchange
offer, and
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any sale or transfer of the old
6 7/8% Notes unless such sale or transfer is made pursuant to an exemption
from such requirements.
Neither we nor U S WEST intend to seek our own no-action letter, and there can
be no assurance that the Staff would make a similar determination with respect
to the new 6 7/8% Notes as it has in such no-action letters to third parties.
Each holder of the old 6 7/8% Notes (other than certain specified holders) who
wishes to exchange the old 6 7/8% Notes for new 6 7/8% Notes in the exchange
offer will be required to represent that:
- it is not an affiliate of us or U S WEST,
- it is not a broker-dealer tendering Registrable Securities (as defined in
the Registration Rights Agreement) acquired directly from us,
- the Notes to be exchanged for new 6 7/8% Notes in the exchange offer were
acquired in the ordinary course of its business, and
- at the time of the exchange offer, it has no arrangement or understanding
with any person to participate in the distribution (within the meaning of
the Securities Act) of the new 6 7/8% Notes.
In addition, in connection with any resale of new 6 7/8% Notes, any
broker-dealer who acquired the new 6 7/8% Notes for its own account as a result
of market-making or other trading activities (a "Participating Broker-Dealer")
must deliver a prospectus meeting the requirements of the Securities Act. The
SEC has taken the position that Participating Broker-Dealers may fulfill their
prospectus delivery requirements with respect to the new 6 7/8% Notes other than
a resale of an unsold allotment from the original sale thereof, with the
prospectus contained in the registration statement filed in connection with the
exchange offer (the "Exchange Offer Registration Statement"). Under the
Registration Rights Agreement, we and U S WEST are required to allow
Participating Broker-Dealers and other persons, if any, subject to similar
prospectus delivery requirements to use the prospectus contained in the Exchange
Offer Registration Statement in connection with the resale of such new 6 7/8%
Notes for a period of 225 calendar days from the issuance of the new 6 7/8%
Notes.
If:
- because of any change in law or in currently prevailing interpretations of
the Staff, we or U S WEST are not permitted to effect the exchange offer,
- the exchange offer is not consummated within 225 calendar days of the
closing date, or
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- in the case of any holder that participates in the exchange offer, such
holder does not receive new 6 7/8% Notes on the date of the exchange that
may be sold without restriction under state and federal securities laws
(other than due solely to the status of such holder as an affiliate of
ours or U S WEST within the meaning of the Securities Act or as a
broker-dealer),
then in each case, we or U S WEST will promptly deliver to the holders written
notice thereof; and at our or U S WEST's sole expense:
- as promptly as practicable (but in no event more than 90 days after so
required or requested pursuant to the Registration Rights Agreement), file
a shelf registration statement covering resales of the old 6 7/8% Notes
(the "Shelf Registration Statement"),
- use our reasonable best efforts to cause the Shelf Registration Statement
to be declared effective under the Securities Act as soon as practicable,
and
- use our reasonable best efforts to keep effective the Shelf Registration
Statement until the earlier of two years (or, if Rule 144(k) is amended to
provide a shorter restrictive period, such shorter period) after the
closing date or such time as all of the applicable old 6 7/8% Notes have
been sold thereunder.
We or U S WEST will, if a Shelf Registration Statement is filed, provide to each
holder copies of the prospectus that is a part of the Shelf Registration
Statement, notify each such holder when the Shelf Registration Statement for the
Notes has become effective and take certain other actions as are required to
permit unrestricted resales of the old 6 7/8% Notes. A holder that sells old
6 7/8% Notes pursuant to the Shelf Registration Statement will be required to be
named as a selling security holder in the related prospectus, to provide
information related thereto and to deliver such prospectus to purchasers, will
be subject to certain of the civil liability provisions under the Securities Act
in connection with such sales and will be bound by the provisions of the
Registration Rights Agreement that are applicable to such a holder (including
certain indemnification rights and obligations). Neither we nor U S WEST shall
have any obligation to include in the Shelf Registration Statement holders who
do not deliver such information to us or U S WEST.
If we or U S WEST fail to comply with certain provisions of the Registration
Rights Agreement, in each case as described below, then a special interest
premium (the "Special Interest Premium") shall become payable in respect of the
old 6 7/8% Notes.
If:
- the Exchange Offer Registration Statement is not filed with the SEC on or
prior to the 150th calendar day following August 25, 1999 (or by
January 22, 2000),
- the Exchange Offer Registration Statement is not declared effective on or
prior to the 180th calendar day following August 25, 1999 (or by
February 21, 2000), or
- the exchange offer is not consummated or the Shelf Registration Statement
is not declared effective on or prior to the 225th calendar day following
August 25, 1999 (or by April 6, 2000);
the Special Interest Premium shall accrue in respect of the old 6 7/8% Notes,
from and including the next calendar day following each of (a) such 150-day
period in the case of the first bullet listed above, (b) such 180-day period in
the second bullet listed above and (c) such 225-day period in the case of the
third bullet listed above, in each case at a rate equal to 0.25% per annum.
The aggregate amount of the Special Interest Premium in respect of each of the
old 6 7/8% Notes, payable pursuant to the above provisions, will in no event
exceed 0.25% per annum. If the Exchange Offer Registration Statement is not
declared effective on or prior to the 225th calendar day following August 25,
1999 and we and U S WEST shall request holders of old 6 7/8% Notes to provide
the information called for by the Registration Rights Agreement for inclusion in
the Shelf Registration
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Statement, the old 6 7/8% Notes owned by holders who do not deliver such
information to us and U S WEST when required pursuant to the Registration Rights
Agreement will not be entitled to any Special Interest Premium for any day after
the 225th day following August 25, 1999.
Upon:
- filing of the Exchange Offer Registration Statement after the 150-day
period described above,
- effectiveness of the Exchange Offer Registration Statement after the
180-day period described above, or
- consummation of the exchange offer or the effectiveness of a Shelf
Registration Statement, as the case may be, after the 225-day period
described above,
the interest rate on the old 6 7/8% Notes from the day of such filing,
effectiveness or consummation, as the case may be, will be reduced to the
original interest rate set forth on the cover page of this prospectus for the
old 6 7/8% Notes.
If a Shelf Registration Statement is declared effective pursuant to the
foregoing paragraphs, and if we and U S WEST fail to keep such Shelf
Registration Statement continuously (a) effective or (b) useable for resales for
the period required by the Registration Rights Agreement due to certain
circumstances relating to pending corporate developments, public filings with
the SEC and similar events, or because the prospectus contains an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, and such failure continues for more than 60 days (whether or not
consecutive) in any twelve-month period (the 61st day being referred to as the
"Default Day"), then from the Default Day until the earlier of:
- the date that the Shelf Registration Statement is again deemed effective
or is usable,
- the date that is the second anniversary of the closing date (or, if
Rule 144(k) is amended to provide a shorter restrictive period, such
shorter period), or
- the date as of which all of the new 6 7/8% Notes are sold pursuant to the
Shelf Registration Statement,
the Special Interest Premium in respect of the old 6 7/8% Notes shall accrue at
a rate equal to 0.25% per annum.
If we or U S WEST fail to keep the Shelf Registration Statement continuously
effective or useable for resales pursuant to the preceding paragraph, we or
U S WEST shall give the holders notice to suspend the sale of the old 6 7/8%
Notes and shall extend the relevant period referred to above during which we or
U S WEST are required to keep effective the Shelf Registration Statement (or the
period during which Participating Broker-Dealers are entitled to use the
prospectus included in the Exchange Offer Registration Statement in connection
with the resale of new 6 7/8% Notes) by the number of days during the period
from and including the date of the giving of such notice to and including the
date when holders shall have received copies of the supplemented or amended
prospectus necessary to permit resales of the old 6 7/8% Notes or to and
including the date on which we or U S WEST have given notice that the sale of
the old 6 7/8% Notes may be resumed, as the case may be.
Each old 6 7/8% Note contains a legend to the effect that the holder thereof, by
its acceptance thereof, will be deemed to have agreed to be bound by the
provisions of the Registration Rights Agreement.
The Registration Rights Agreement is governed by, and construed in accordance
with, the laws of the State of New York. This summary of certain provisions of
the Registration Rights Agreement does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, all the provisions of the
Registration Rights Agreement, a form of which is available upon request to us
or U S WEST. In addition, the information set forth above concerning certain
interpretations and positions taken by the Staff is not intended to constitute
legal advice, and prospective investors should consult their own legal advisors
with respect to such matters.
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CERTAIN U.S. FEDERAL TAX CONSIDERATIONS
The following discussion summarizes certain U.S. federal tax consequences of an
exchange of old 6 7/8% Notes for new 6 7/8% Notes in the exchange offer and the
purchase, beneficial ownership and disposition of new 6 7/8% Notes. For purposes
of this summary, a "U.S. Holder" means a beneficial owner of an old 6 7/8% or a
new 6 7/8% Note that is for U.S. federal income tax purposes:
- an individual who is a citizen or resident of the United States;
- a corporation, partnership or other business entity created or organized
under the laws of the United States or any state thereof (including the
District of Columbia);
- an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or
- a trust with respect to which a court within the United States is able to
exercise primary supervision over its administration, and one or more
United States persons have the authority to control all of its substantial
decisions.
An individual may, subject to certain exceptions, be deemed to be a resident of
the United States by reason of being present in the United States for at least
31 days in the calendar year and for an aggregate of at least 183 days during a
three-year period ending in the current calendar year (counting for such
purposes all the days present in the current year, one-third of the days present
in the immediately preceding year, and one-sixth of the days present in the
second preceding year). A "Non-U.S. Holder" is a beneficial owner of an old
6 7/8% Note or a new 6 7/8% Note that is not a U.S. Holder.
This summary is based on interpretations of the Internal Revenue Code of 1986,
as amended (the "Code"), regulations issued thereunder, and rulings and
decisions currently in effect (or in some cases proposed), all of which are
subject to change. Any such change may be applied retroactively and may
adversely affect the federal tax consequences described herein. This summary
addresses only holders that own old 6 7/8% Notes or will own new 6 7/8% Notes as
capital assets and not as part of a "straddle" or a "conversion transaction" for
U.S. federal income tax purposes or as part of some other integrated investment.
This summary does not discuss all of the tax consequences that may be relevant
to particular investors or to investors subject to special treatment under the
U.S. federal income tax laws (such as life insurance companies, tax-exempt
entities, regulated investment companies, securities dealers, and investors
whose functional currency is not the U.S. dollar). Persons considering the
exchange of their old 6 7/8% Notes for new 6 7/8% Notes and persons considering
the purchase of new 6 7/8% Notes should consult their tax advisors concerning
the application of U.S. federal tax laws to their particular situations as well
as any consequences of the exchange of the old 6 7/8% Notes for new 6 7/8% Notes
and of the purchase, beneficial ownership and disposition of new 6 7/8% Notes
arising under the laws of any state or other taxing jurisdiction.
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER TO U.S. HOLDERS AND
NON-U.S. HOLDERS
The exchange of old 6 7/8% Notes for new 6 7/8% Notes pursuant to the exchange
offer will not be a taxable event for U.S. federal income tax purposes. U.S.
Holders and Non-U.S. Holders will not recognize any taxable gain or loss as a
result of such exchange and will have the same tax basis and holding period in
the new 6 7/8% Notes as they had in the old 6 7/8% Notes immediately before the
exchange.
U.S. FEDERAL INCOME TAX CONSEQUENCES TO U.S. HOLDERS
TREATMENT OF INTEREST. Stated interest on the new 6 7/8% Notes will be taxable
to U.S. Holders as ordinary interest income as the interest accrues or is paid
in accordance with the holder's regular method of accounting.
MARKET DISCOUNT. If a U.S. Holder acquires a new 6 7/8% Note for an amount that
is less than its principal amount by more than a DE MINIMIS amount (generally
0.25% of the principal amount
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multiplied by the number of remaining whole years to maturity), the amount of
the difference will be treated as "market discount." In the event a U.S. Holder
acquires a new 6 7/8% Note with market discount, unless the U.S. Holder elects
to include such market discount in income as it accrues, a U.S. Holder will be
required to treat any principal payment on, and any gain on the sale, exchange,
retirement or other disposition (including a gift) of, a new 6 7/8% Note as
ordinary income to the extent of any accrued market discount that has not
previously been included in income. In general, market discount on the new
6 7/8% Notes will accrue ratably over the remaining term of the new 6 7/8% Notes
or, at the election of the U.S. Holder, under a constant yield method. In
addition, a U.S. Holder could be required to defer the deduction of all or a
portion of the interest paid on any indebtedness incurred or continued to
purchase or carry a new 6 7/8% Note unless the U.S. Holder elects to include
market discount in income currently. Such an election applies to all debt
instruments held by a taxpayer and may not be revoked without the consent of the
Internal Revenue Service (the "IRS").
AMORTIZATION OF BOND PREMIUM. A U.S. Holder that purchases a new 6 7/8% Note
for an amount in excess of its stated principal amount will be considered to
have purchased the Note at a premium. The U.S. Holder may elect to amortize such
premium (as an offset to interest income), using a constant yield method, over
the remaining term of the new 6 7/8% Note (or to an earlier call date if it
results in a smaller amount of amortizable bond premium). Such election, once
made, generally applies to all debt instruments held or subsequently acquired by
the U.S. Holder on or after the first day of the first taxable year to which
such election applies and may be revoked only with the consent of the IRS. A
U.S. Holder that elects to amortize such premium must reduce its tax basis in
the related 6 7/8% Note by the amount of the premium amortized during its
holding period. If a U.S. Holder does not elect to amortize the premium, the
amount of such premium will be included in the U.S. Holder's tax basis for
purposes of computing gain or loss in connection with a taxable disposition of
the new 6 7/8% Note.
SALE OR OTHER DISPOSITION OF NEW 6 7/8% NOTES
In general, upon the sale, retirement or other taxable disposition of a new
6 7/8% Note, a U.S. Holder will recognize taxable gain or loss equal to the
difference between (i) the amount of the cash and the fair market value of any
property received on the sale, retirement or other taxable disposition (not
including any amount attributable to accrued but unpaid interest or accrued
market discount not previously included in income) and (ii) the U.S. Holder's
adjusted tax basis in the new 6 7/8% Note. A U.S. Holder's adjusted tax basis in
a new 6 7/8% Note generally will be equal to the cost of the Note to such U.S.
Holder, increased by the amount of any market discount previously included in
income by the U.S. Holder and reduced by the amount of any payments received by
the U.S. Holder, other than payments of qualified stated interest, and by the
amount of amortizable bond premium taken into account. Subject to the discussion
of market discount above, gain or loss realized on the sale, retirement or other
taxable disposition of a new 6 7/8% Note will be capital gain or loss.
U.S. FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO NON-U.S. HOLDERS OF OWNERSHIP
OF NEW 6 7/8% NOTES
For purposes of the following summary, interest and gain on the sale, exchange
or other disposition of a new 6 7/8% Note will be considered "U.S. trade or
business income" if such income or gain is:
- effectively connected with the conduct of a trade or business in the
United States; or
- in the case of a treaty resident, attributable to a permanent
establishment (or, in the case of an individual, to a fixed base) in the
United States.
TREATMENT OF INTEREST. A Non-U.S. Holder that is not subject to U.S. federal
income tax as a result of any direct or indirect connection to the United States
other than its ownership of a new 6 7/8% Note will not be subject to U.S.
federal income or withholding tax in respect of interest income on the new
6 7/8% Note if:
- the interest is not U.S. trade or business income;
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- the Non-U.S. Holder provides an appropriate statement on IRS Form W-8 or
Form W-8BEN, together with all appropriate attachments, signed under
penalties of perjury, identifying the Non-U.S. Holder and stating, among
other things, that the Non-U.S. Holder is not a United States person for
U.S. federal income tax purposes; and
- the Non-U.S. Holder is not a "10-percent shareholder" or a "related
controlled foreign corporation" with respect to the Company as specially
defined for U.S. federal income tax purposes.
If a new 6 7/8% Note is held through a securities clearing organization or
certain other financial institutions, the organization or institution may
provide a signed statement to eliminate withholding tax. However, in such case,
the signed statement must be accompanied by a copy of the IRS Form W-8 or Form
W-8BEN or the substitute form provided by the beneficial owner to the
organization or institution. For interest paid with respect to a new 6 7/8% Note
after December 31, 2000, a Non-U.S. Holder that is treated as a partnership for
U.S. federal tax purposes generally will be required to provide an IRS Form
W-8IMY and to attach an appropriate certification by each beneficial owner of
the Non-U.S. Holder (including in certain cases, such beneficial owner's
beneficial owners). Prospective investors, including foreign partnerships and
their partners, should consult their tax advisors regarding these possible
additional reporting requirements.
To the extent these conditions are not met, a 30% withholding tax will apply to
interest income on the new 6 7/8% Note, unless an income tax treaty reduces or
eliminates such tax or unless the interest is U.S. trade or business income with
respect to such Non-U.S. Holder and the Non-U.S. Holder provides an appropriate
statement to that effect. In the latter case, such Non-U.S. Holder generally
will be subject to U.S. federal income tax with respect to all income from the
new 6 7/8% Notes at regular rates applicable to U.S. taxpayers. Additionally, in
such event, Non-U.S. Holders that are corporations could be subject to a branch
profits tax on such income.
TREATMENT OF DISPOSITIONS OF NEW 6 7/8% NOTES. In general, a Non-U.S. Holder
will not be subject to U.S. federal income tax on any amount received (other
than amounts in respect of accrued but unpaid interest) upon retirement or
disposition of a new 6 7/8% Note unless such Non-U.S. Holder is an individual
present in the United States for 183 days or more in the taxable year of the
sale, exchange or other disposition and certain other requirements are met, or
unless the gain is U.S. trade or business income. In the latter event, Non-U.S.
Holders generally will be subject to U.S. federal income tax with respect to
such gain at regular rates applicable to U.S. taxpayers. Additionally, in such
event, Non-U.S. Holders that are corporations could be subject to a branch
profits tax on such gain.
TREATMENT OF NEW 6 7/8% NOTES FOR U.S. FEDERAL ESTATE TAX PURPOSES. An
individual Non-U.S. Holder (who is not domiciled in the United States for U.S.
federal estate tax purposes at the time of death) will not be subject to U.S.
federal estate tax in respect of a new 6 7/8% Note, so long as the Non-U.S.
Holder is not a "10-percent shareholder" with respect to the Company as
specially defined for U.S. federal income tax purposes and payments of interest
on such new 6 7/8% Note would not have been considered U.S. trade or business
income at the time of such Non-U.S. Holder's death.
U.S. INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING TAX FOR NON-U.S.
HOLDERS
Under certain circumstances, the Code requires "information reporting" annually
to the IRS and to each holder of new 6 7/8% Notes, and "backup withholding" at a
rate of 31% with respect to certain payments made on or with respect to the new
6 7/8% Notes. Backup withholding generally does not apply with respect to
certain holders of new 6 7/8% Notes, including corporations, tax-exempt
organizations, qualified pension and profit sharing trusts and individual
retirement accounts.
A Non-U.S. Holder that provides an IRS Form W-8 or Form W-8BEN, together with
all appropriate attachments, signed under penalties of perjury, identifying the
Non-U.S. Holder and stating that the Non-U.S. Holder is not a United States
person, will not be subject to IRS reporting requirements and
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U.S. backup withholding. With respect to interest paid after December 31, 2000,
IRS Forms W-8BEN will generally be required from the beneficial owners of
interests in a Non-U.S. Holder that is treated as a partnership for U.S. federal
income tax purposes.
The payment of the proceeds on the disposition of a new 6 7/8% Note to or
through the U.S. office of a broker generally will be subject to information
reporting and backup withholding at a rate of 31% unless the Non-U.S. Holder
either certifies its status as a Non-U.S. Holder under penalties of perjury on
IRS Form W-8 or Form W-8BEN (as described above) or otherwise establishes an
exemption. The payment of the proceeds on the disposition of a new 6 7/8% Note
by a Non-U.S. Holder to or through a non-U.S. office of a non-U.S. broker will
not be subject to backup withholding or information reporting unless the
non-U.S. broker is a "U.S. related person" (as defined below). The payment of
proceeds on the disposition of a new 6 7/8% Note by a Non-U.S. Holder to or
through a non-U.S. office of a U.S. broker or a U.S. related person generally
will not be subject to backup withholding but will be subject to information
reporting unless the Non-U.S. Holder certifies its status as a Non-U.S. Holder
under penalties of perjury or the broker has certain documentary evidence in its
files as to the Non-U.S. Holder's foreign status and the broker has no actual
knowledge to the contrary.
For this purpose, a "U.S. related person" is:
- a "controlled foreign corporation" as specially defined for U.S. federal
income tax purposes;
- a foreign person 50% or more of whose gross income from all sources for
the three-year period ending with the close of its taxable year preceding
the payment (or for such part of the period that the broker has been in
existence) is derived from activities that are effectively connected with
the conduct of a U.S. trade or business; or
- for payments made after December 31, 2000, a foreign partnership if at any
time during its tax year one or more of its partners are United States
persons who, in the aggregate, hold more than 50% of the income or capital
interest of the partnership or if, at any time during its taxable year,
the partnership is engaged in the conduct of a U.S. trade or business.
Backup withholding is not an additional tax and may be refunded (or credited
against the Non-U.S. Holder's U.S. federal income tax liability, if any),
provided that certain required information is furnished. The information
reporting requirements may apply regardless of whether withholding is required.
Copies of the information returns reporting such interest and withholding also
may be made available to the tax authorities in the country in which a Non-U.S.
Holder is a resident under the provisions of an applicable income tax treaty or
agreement.
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives new 6 7/8% Notes for its own
account in the exchange offer must acknowledge that it acquired the old 6 7/8%
Notes for its own account as a result of market-making or other trading
activities and must agree that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of the new
6 7/8% Notes. The letter of transmittal states that by so acknowledging and by
delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act. A
Participating Broker-Dealer may use this prospectus, as it may be amended or
supplemented from time to time, in connection with resales of new 6 7/8% Notes
received in exchange for old 6 7/8% Notes where the old 6 7/8% Notes were
acquired as a result of market-making activities or other trading activities.
Under the Registration Rights Agreement, we and U S WEST have agreed that for a
period of 225 calendar days after the expiration date, we will make this
prospectus, as amended or supplemented, available to any Participating
Broker-Dealer for use in connection with any resale of new 6 7/8% Notes.
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We will not receive any proceeds from any sale of the new 6 7/8% Notes by any
Participating Broker-Dealer. New 6 7/8% Notes received by Participating
Broker-Dealers for their own account in the exchange offer may be sold from time
to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the new 6 7/8% Notes
or a combination of the methods of resale, at market prices prevailing at the
time of resale, at prices related to the prevailing market prices or negotiated
prices. Any resale may be made directly to purchasers or to or through brokers
or dealers who may receive compensation in the form of commissions or
concessions from any such Participating Broker-Dealer and/or the purchasers of
the new 6 7/8% Notes. Any Participating Broker-Dealer that resells new 6 7/8%
Notes that were received by it for its own account in the exchange offer and any
broker or dealer that participates in a distribution of the new 6 7/8% Notes may
be deemed to be an "underwriter" within the meaning of the Securities Act and
any profit on any resale of new 6 7/8% Notes and any commissions or concessions
received by those persons may be deemed to be underwriting compensation under
the Securities Act. The letter of transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
For a period of 225 calendar days after closing of the exchange offer, we will
promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any Participating Broker-Dealer that requests
the documents in the letter of transmittal. We have agreed to pay all expenses
incident to our or U S WEST's performance of, or compliance with, the
Registration Rights Agreement and all expenses incident to the exchange offer,
including the expenses of one counsel for the holders of the old 6 7/8% Notes
but excluding commissions or concessions of any brokers or dealers, and will
indemnify the holders, including any broker-dealers, and certain parties related
to the holders against certain liabilities, including liabilities under the
Securities Act.
We have not entered into any arrangements or understandings with any person to
distribute the new 6 7/8% Notes to be received in the exchange offer.
LEGAL MATTERS
Certain legal matters with respect to the 6 7/8% Notes will be passed upon for
us and U S WEST by Cadwalader, Wickersham & Taft, New York, New York, and by
Thomas O. McGimpsey, Senior Attorney and Assistant Secretary of U S WEST.
Cadwalader, Wickersham & Taft, New York, New York is also passing on certain
federal income tax matters in connection with the 6 7/8% Notes.
EXPERTS
The audited financial statements and schedule of U S WEST for the year ended
December 31, 1998 included in U S WEST's Annual Report on Form 10-K, as amended
by Form 10-K/A filed March 24, 1999, and in U S WEST's Proxy Statement on
Schedule 14A dated March 24, 1999, and the selected condensed consolidated
financial statements in U S WEST's Current Report on Form 8-K dated
February 24, 1999, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, which are
incorporated by reference in this prospectus and in the registration statement
in reliance upon the authority of said firm as experts in giving said reports.
GENERAL INFORMATION
INCORPORATION, REGISTERED AND PRINCIPAL EXECUTIVE OFFICES, AUTHORIZED SHARES
Old U S WEST was one of seven regional holding companies formed in connection
with the court ordered divestiture of American Telephone and Telegraph Company
("AT&T") which occurred on January 1, 1984. U S WEST was incorporated as a
wholly-owned subsidiary of Old U S WEST on
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December 23, 1997. As a result of the Separation, U S WEST became a separate
publicly-traded company. U S WEST is incorporated under the laws of the State of
Delaware. The address of the registered office of U S WEST in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware
19801. The name of U S WEST's registered agent at that address is The
Corporation Trust Company. The principal executive offices of U S WEST are
located at 1801 California Street, Denver, Colorado 80202.
U S WEST is authorized to issue 2 billion shares of common stock and
200 million shares of preferred stock. As of September 30, 1999, 505,001,883
shares of U S WEST common stock were issued and outstanding, and no shares of
U S WEST preferred stock were issued or outstanding. The share capital of
U S WEST is fully paid. U S WEST does not have any convertible debt securities.
A description of U S WEST's principal activities is set forth in this prospectus
and in documents incorporated by reference herein.
We are a wholly-owned subsidiary of U S WEST which provides financing to
U S WEST and its affiliates. We were incorporated under the laws of the State of
Colorado on June 10, 1986. The address of our registered office is 1675
Broadway, Denver, Colorado 80202. The name of the registered agent at that
address is The Corporation Trust Company. Our principal executive offices are
located at 1801 California Street, Denver, Colorado 80202.
We are authorized to issue one share of stock without par value. As of the date
of this prospectus, we have issued one share of stock to U S WEST. Our issued
share capital is fully paid. We do not have any convertible debt securities.
LISTING
The old 6 7/8% Notes are listed on the Luxembourg Stock Exchange. Application
will be made to list the new 6 7/8% Notes on the Luxembourg Stock Exchange. In
connection with the listing of the 6 7/8% Notes, our Articles of Incorporation,
Bylaws and Restated Certificate of Incorporation and a legal notice relating to
the issuance of the 6 7/8% Notes were deposited with "Greffier en Chef du
Tribunal d'Arrondissement de et a Luxembourg," where copies thereof may be
obtained upon request. We will also inform the Luxembourg Stock Exchange of the
Interest Payment Dates, the interest rate for each interest period, and the
amount paid on each Interest Payment Date. Copies of the above documents and
interest rate information, together with this prospectus, the Indenture and
U S WEST's Annual Report on Form 10-K for the year ended December 31, 1998, as
amended by Form 10-K/A filed March 24, 1999 ("1998 10-K"), as well as all future
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K, so long as any of the 6 7/8% Notes are outstanding and listed on
the Luxembourg Stock Exchange, will be made available, free of charge, at the
main office of Kredietbank S.A. Luxembourg. The purchase agreement pursuant to
which the 6 7/8% Notes were originally issued and agreements relating to the
Guarantees will also be available for inspection at Kredietbank S.A. Luxembourg,
which will act as intermediary between the Luxembourg Stock Exchange, us and the
holders of the 6 7/8% Notes so long as the 6 7/8% Notes are in global form.
The consolidated financial statements contained in U S WEST's 1998 Form 10-K
have been audited by Arthur Andersen LLP.
AUTHORIZATION
The 6 7/8% Notes were originally issued pursuant to authority granted by our
Board of Directors on May 16, 1999, as such authority may be supplemented from
time to time.
The Guarantees were originally entered into pursuant to authority granted by our
Board of Directors of U S WEST on May 16, 1999, as such authority may be
supplemented from time to time.
45
<PAGE>
MATERIAL CHANGE
There has been no material adverse change in the financial position or
operations of U S WEST and its subsidiaries (including Capital Funding) on a
consolidated basis since December 31, 1998, except as disclosed in this
prospectus or in the documents incorporated by reference in this prospectus.
LITIGATION
Except as disclosed in this prospectus or in documents incorporated by reference
in this prospectus, neither U S WEST, nor any of its subsidiaries (including
Capital Funding), is involved in any legal or arbitration proceedings, nor, to
U S WEST's knowledge, are any legal or arbitration proceedings pending or
threatened involving U S WEST or any of its subsidiaries (including Capital
Funding), which have had during the 12 months prior to the date of this
prospectus a material adverse effect on the financial position of U S WEST and
its subsidiaries (including Capital Funding) on a consolidated basis.
U S WEST and certain subsidiaries (including Capital Funding) are defendants in
various legal proceedings involving matters generally incidental to their
business. Although it is difficult to predict the ultimate outcome of these
proceedings, management of U S WEST believes, based on discussions with counsel,
that any ultimate liability will not have a material adverse effect on the
consolidated financial position or results of operations of U S WEST and its
subsidiaries (including Capital Funding).
IDENTIFICATION NUMBERS
The new 6 7/8% Notes have been accepted for clearance through DTC, Euroclear and
Cedelbank CUSIP: 912912AU6; ISIN: US912912AU64; Common Code: .
46
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") permits the
board of directors of U S WEST, Inc. ("U S WEST") 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 U S WEST, in terms sufficiently broad to permit
such indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933
(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.
U S WEST'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, U S WEST's Restated Certificate of
Incorporation eliminates a director's personal liability for monetary damages to
U S WEST 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 U S WEST 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 U S WEST Capital Funding, Inc. ("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 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 U S WEST 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 U S WEST and
Capital Funding.
The agents, dealers or underwriters who executed the agreements filed as
Exhibit 1 to this registration statement agreed to indemnify U S WEST 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 U S WEST and Capital Funding by or on
behalf of any such indemnifying party.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
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 Purchase Agreement, dated August 20, 1999, among U S WEST
Capital Funding, Inc., U S WEST, Inc., J.P. Morgan
Securities, Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as representatives of the initial purchasers
named therein.
(2-A) Separation Agreement between U S WEST, Inc. (renamed
"MediaOne Group, Inc.") and U S WEST, Inc. (formerly
USW-C, Inc.), dated June 5, 1998 (Exhibit 99.1 to
Form 8-K/A dated June 26, 1998, File No. 1-14087).
(2-A.1) Amendment to the Separation Agreement between MediaOne
Group, Inc. (formerly U S WEST, Inc.) and U S WEST, Inc.
(formerly USW-C, Inc.), dated June 12, 1998 (Exhibit 10(p)
to Form 10-K/A for the year ended December 31, 1998, File
No. 1-14087).
(2-A.2) Offer to Purchase; Letter of Transmittal relating to the
Common Stock; Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees; Letter from Brokers,
Dealers, Commercial Banks, Trust Companies and Other
Nominees to Clients; Notices of Guaranteed Delivery relating
to the Common Stock; Press Release issued by the Offeror and
the Company on May 17, 1999; and Guidelines for Certificate
of Taxpayer Identification Number on Substitute Form W-9,
each dated May 21, 1999 (Exhibits (a)(1) through (a)(7) to
Schedule 14D-1, dated May 21, 1999, as amended).
(2-A.3) Agreement and Plan of Merger, dated as of May 16, 1999,
between Global Crossing Ltd. and U S WEST, Inc. (Exhibit 2
to Form 8-K, dated May 21, 1999, File No. 1-14087).
(2-A.4) Tender Offer and Purchase Agreement, dated as of May 16,
1999, between Global Crossing Ltd. and U S WEST, Inc.
(Exhibit (c)(2) to Schedule 14D-1 and Schedule 13D, dated
May 21, 1999, as amended).
(2-A.5) Voting Agreement, dated as of May 16, 1999, between Global
Crossing Ltd. and U S WEST, Inc. (Exhibit (c)(3) to Schedule
14D-1 and Schedule 13D, dated May 21, 1999, as amended).
(2-A.6) Standstill Agreement, dated as of May 16, 1999, between
Global Crossing Ltd. and U S WEST, Inc. (Exhibit (c)(4) to
Schedule 14D-1 and Schedule 13D, dated May 21, 1999, as
amended).
(2-A.7) Tender and Voting Agreement, dated as of May 16, 1999,
between U S WEST, Inc., Global Crossing Ltd. and each of the
parties listed on the signature page thereto
(Exhibit (c)(5) to Schedule 14D-1 and Schedule 13D, dated
May 21, 1999, as amended).
(2-A.8) Agreement, dated as of May 16, 1999, between Global Crossing
Ltd. and each person whose name appears on the signature
page thereto (Exhibit (c)(6) to Schedule 14D-1 and Schedule
13D, dated May 21, 1999, as amended).
(2-A.9) Letter Agreement, dated as of May 16, 1999, between
U S WEST, Inc. and Global Crossing Ltd. (Exhibit 99 to
Form 8-K, dated May 21, 1999, File No. 1-14087).
(2-A.10) Transfer Agreement, dated as of May 16, 1999, between Global
Crossing Ltd. and each person whose name appears on the
signature page thereto (Exhibit (c)(8) to Schedule 14D-1 and
Schedule 13D, dated May 21, 1999, as amended).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- -----------
<S> <C>
(2-A.11) Agreement and Plan of Merger between U S WEST, Inc. and
Qwest Communications International Inc., dated as of
July 18, 1999 and amended by Amendment No. 1, dated as of
September 8, 1999 (Annex A to Schedule 14A dated
September 17, 1999).
(2-A.12) Voting Agreement among each of the stockholders listed on
the signature page thereto and U S WEST, Inc., dated as of
July 18, 1999 (Exhibit 10.1 to Form 8-K, dated July 20,
1999, File No. 1-14087).
(2-A.13) Termination Agreement between U S WEST, Inc. and Global
Crossing Ltd., dated as of July 18, 199 (Exhibit 10.2 to
Form 8-K, dated July 20, 1999, File No. 1-14087).
(2-A.14) Amendment No. 1, dated as of July 18, 1999, to Tender Offer
and Purchase Agreement, dated as of May 16, 1999, between
U S WEST, Inc. and Global Crossing Ltd. (Exhibit 2-A.14 to
Form 10-Q for the quarter ended June 30, 1999, File
No. 1-14087).
(3-A.1). Restated Certificate of Incorporation for U S WEST, Inc.
(Exhibit 3A to Form S-4/A Registration Statement
No. 333-45765, filed March 18, 1998.
3-A.2 Articles of Incorporation for U S WEST Capital
Funding, Inc.
(3-B.1) Bylaws of U S WEST, Inc. (formerly "USW-C, Inc."), effective
as of June 12, 1998 (Exhibit 3(ii) to Form 8-K/A dated
June 26, 1998, File No. 1-14087).
3-B.2 Bylaws of U S WEST Capital Funding, Inc.
(4-A) Form of Rights Agreement between U S WEST, Inc. (formerly
"USW-C, Inc.") and State Street Bank and Trust Company, as
Rights Agent, dated as of June 1, 1998 (Exhibit 4-A to the
Form S-4/A Registration Statement No. 333-45765, filed
April 2, 1998).
(4-A.1) Amendment No. 1 to Rights Agreement between
U S WEST, Inc. and State Street Bank and Trust Company,
dated as of May 16, 1999 (Exhibit 4 to Form 8-K, dated
May 21, 1999, File No. 1-14087).
(4-A.2) Amendment No. 2 to Rights Agreement between
U S WEST, Inc. and State Street Bank and Trust Company,
dated as of July 18, 1999 (Exhibit 4-A.2 to Form 10-Q for
the quarter ended June 30, 1999, File No. 1-14087).
4-A.3 Registration Rights Agreement, dated August 20, 1999,
between U S WEST Capital Funding, Inc., U S WEST, Inc., J.P.
Morgan Securities, Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated.
4-B Form of Letter of Transmittal.*
(4-C) Indenture dated as of June 29, 1998 by and among U S WEST
Capital Funding, Inc., U S WEST, Inc. and The First
National Bank of Chicago (now known as Bank One Trust
Company, National Association) as Trustee filed as
Exhibit 4(a) to Form 8-K dated November 18, 1998, File
No. 1-14087. 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, Inc. and
incorporated herein by reference.
5-A.1 Opinion of Cadwalader, Wickersham & Taft with respect to
legality of the securities being registered.
5-A.2 Opinion of Thomas O. McGimpsey, Senior Attorney and
Assistant Secretary of U S WEST, Inc., with respect to
legality of the securities being registered.
8 Opinion of Cadwalader, Wickersham & Taft with respect to
certain tax matters (included in Exhibit 5-A.1).
(10-A) Employee Matters Agreement between U S WEST, Inc. (renamed
"MediaOne Group, Inc.") and USW-C, Inc. (renamed
"U S WEST, Inc."), dated June 5, 1998 (Exhibit 99.2 to
Form 8-K/A dated June 26, 1998, File No. 1-14087).
</TABLE>
- ------------------------
* To be filed by amendment.
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- -----------
<S> <C>
(10-B) Tax Sharing Agreement between U S WEST, Inc. (renamed
"MediaOne Group, Inc.") and USW-C, Inc. (renamed
"U S WEST, Inc."), dated June 5, 1998 (Exhibit 99.3 to
Form 8-K/A dated June 26, 1998, File No. 1-14087).
(10-C) 364-Day Credit Agreement, dated May 8, 1998, with Morgan
Guaranty Trust Company of New York, as administrate agent
(Exhibit 10A to Form 10-Q for the quarter ended March 31,
1998, File No. 1-14087).
(10-D) Five year Credit Agreement, dated May 8, 1998, with Morgan
Guaranty Trust Company of New York, as administrative agent
(Exhibit 10B to Form 10-Q for the quarter ended March 31,
1998, File No. 1-14087).
(10-D.1) Amendment No. 1 to Credit Agreements dated as of June 30,
1998 to the 364-Day Credit Agreement and the Five-year
Credit Agreement, each dated as of May 8, 1998, among
U S WEST Capital Funding, Inc., U S WEST, Inc., the banks
listed on the signature pages thereto and Morgan Guaranty
Trust Company of New York (Exhibit 10(e)(1) to Form 10-Q
for the quarter ended September 30, 1998, File
No. 1-14087).
(10-D.2) Amended and Restated Credit Agreement, dated as of May 7,
1999, among U S WEST Capital Funding, Inc.,
U S WEST, Inc. and the banks listed on the signature
pages thereof (Exhibit (b)(4) to Schedule 14D-1 and
Schedule 13D, dated May 21, 1999, as amended).
(10-D.3) Amendment to Credit Agreements, dated as of June 11, 1999,
which further amends (i) the 364-Day Credit Agreement dated
as of May 8, 1999, as amended and (ii) the Five-Year Credit
Agreement dated as of May 8, 1998, as amended, among
U S WEST Capital Funding, Inc., U S WEST, Inc., the banks
listed on the signature pages thereto, and Morgan Guaranty
Trust Company of New York (Exhibit 10-D.3 to Form 10-Q for
the quarter ended June 30, 1999, File No. 1-14087).
(10-D.4) 364-Day $1.5 billion Credit Agreement dated as of June 11,
1999, among U S WEST Capital Funding, inc., and
U S WEST, Inc., the banks listed therein and Morgan Guaranty
Trust Company of New York, as administrative agent
(Exhibit (b)(6) to Amendment No. 3 to Schedule 14D-1 and
Schedule 13D, dated June 11, 1999, filed on behalf of Global
Crossing Ltd. and U S WEST, Inc.).
(10-D.5) Assignment and Assumption Agreement among each institution
listed on Schedule 1 thereto, U S WEST, Inc. and Morgan
Guaranty Trust Company of New York, dated as of July 6, 1999
(Exhibit 10-D.5 to Form 10-Q for the quarter ended June 30,
1999, File No. 1-14087).
(10-E) 364-Day Credit Agreement, among the banks listed therein,
U S WEST Communications, Inc. and Morgan Guaranty Trust
Company of New York, as administrative agent, dated as of
May 19, 1999 (Exhibit 10-E to Form 10-Q for the quarter
ended June 30, 1999, File No. 1-14087).
(10-F) Amendment No. 1 to Credit Agreement to the 364-Day Credit
Agreement, dated as of May 19, 1998, among U S WEST
Communications, Inc., U S WEST, Inc., the banks listed on
the signature pages thereto and Morgan Guaranty Trust
Company of New York, as administrative agent, dated as of
June 11, 1999 (Exhibit 10-F to Form 10-Q for the quarter
ended June 30, 1999, File No. 1-14087).
(10-G) Change of Control Agreement for the President and Chief
Executive Officer (Exhibit 10(f) to Form 10-Q for the
quarter ended June 30, 1998, File No. 1-14087).
(10-G.1) Retention Agreement for the Chairman, Chief Executive
Officer and President of U S WEST, Inc., dated as of
September 7, 1999 (Exhibit 10-G.1 to Form 8-K dated
September 20, 1999, File No. 1-14087).
(10-H) Form of Change of Control Agreement for Tier II Executive
(Exhibit 10(g) to Form 10-Q for the quarter ended June 30,
1998, File No. 1-14087.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- -----------
<S> <C>
(10-H.1) Form of Retention Agreement for Executive Officers of
U S WEST, Inc. (Exhibit 10-H.1 to Form 8-K dated
September 20, 1999, File No. 1-14087).
(10-I) Form of Executive Severance Agreement (Exhibit 10(h) to
Form 10-Q for the quarter ended June 30, 1998, File
No. 1-14087).
(10-J) 1998 U S WEST Stock Plan (Exhibit 10-A to the Form S-4
Registration Statement No. 333-45765, filed February 6,
1998, as amended).
(10-K) U S WEST Long-Term Incentive Plan (Exhibit 10-D to the
Form S-4 Registration Statement No. 333-45765, filed
February 6, 1998, as amended).
(10-L) U S WEST Executive Short-Term Incentive Plan (Exhibit 10-E
to the Form S-4 Registration Statement No. 333-45765, filed
February 6, 1998, as amended).
(10-M) U S WEST 1998 Broad Based Stock Option Plan dated June 12,
1998 (Exhibit 10(l) to Form 10-Q for the quarter ended
September 30, 1998, File No. 1-14087).
(10-N) U S WEST Deferred Compensation Plan, amended and restated
effective as of June 12, 1998 (Exhibit 10(m) to Form 10-Q
for the quarter ended September 30, 1998, File
No. 1-14087).
(10-O) U S WEST 1998 Stock Plan, as amended June 22, 1998
(Exhibit 10(n) to Form 10-Q for the quarter ended
September 30, 1998, File No. 1-14087).
(10-O.1) 1998 U S WEST Stock Plan, as amended August 6, 1999
(Exhibit 10-O.1 to Form 10-Q for the quarter ended
September 30, 1999, File No. 1-14087).
(10-O.2) 1999 U S WEST Stock Plan, as amended August 6, 1999
(Exhibit 10-O.2 to Form 10-Q for the quarter ended
September 30, 1999, File No. 1-14087).
(10-P) Shareowner Investment Plan dated June 12, 1998 (Form S-3
Registration Statement No. 333-52781, filed May 15, 1998).
(10-Q) Form of Non-Qualified Stock Option Agreement (Exhibit 10-Q
to Form 10-Q for the quarter ended March 31, 1999, File
No. 1-14087).
(10-R) Form of Agreement for Purchase and Sale of Telephone
Exchanges, dated as of June 16, 1999, between Citizens
Utilities Company and U S WEST Communications, Inc.
(Exhibit 99 to Form 8-K, dated June 17, 1999, File
No. 1-14087).
12 Computation of Ratio of Earnings to Fixed Charges.
(13) U S WEST 1998 Summary Annual Report to Stockholders
(Exhibit 13 to Form 8-K dated February 24, 1999, File
No. 1-14087).
(21) Subsidiaries of the Registrant (Exhibit 21 to Form 10-K/A
for the year ended December 31, 1998).
23-A Consent of Arthur Andersen LLP.
23-B Consent of Cadwalader, Wickersham & Taft (included in
Exhibit 5-A.1).
24 Powers of Attorney.
(25) Statement of Eligibility of Trustee (Exhibit 25 to Form S-3
dated May 6, 1998, File No. 333-51907).
(99) Annual Report on Form 11-K for the U S WEST Savings
Plan/ESOP for the year ended December 31, 1998 (Exhibit 99
to Form 10-K/A filed by amendment on Form SE, File
No. 1-14087), Paper Copy (P).
</TABLE>
II-5
<PAGE>
ITEM 22. UNDERTAKINGS.
(a) The undersigned hereby undertakes:
(1) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) under the Securities Act, the issuer undertakes that such
reoffering prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of section
10(a)(3) of the Securities Act and is used in connection with an offering of
securities subject to Rule 415 under the Securities Act, will be filed as a part
of an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
(the "Commission") such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceedings) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(c) The undersigned hereby undertakes to respond to requests for information
that is incorporated by reference into the prospectus pursuant to Items 4,
10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(d) The undersigned hereby undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
(e) The undersigned hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or 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 Securities 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-6
<PAGE>
(f) The undersigned hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(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.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(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.
(4) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form
of prospectus filed by us pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed part of the registration statement as of
the time it was declared effective.
(5) For purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, U S WEST, Inc.
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 10th day of December, 1999.
<TABLE>
<S> <C> <C>
U S WEST, INC.
By: /s/ THOMAS O. MCGIMPSEY
-----------------------------------------
Thomas O. McGimpsey
ASSISTANT SECRETARY
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
PRINCIPAL EXECUTIVE OFFICER:
<TABLE>
<C> <S>
/s/ SOLOMON D. TRUJILLO
------------------------------------------- President and Chief Executive Officer
Solomon D. Trujillo
PRINCIPAL FINANCIAL OFFICER:
/s/ ALLAN R. SPIES
------------------------------------------- Executive Vice President and Chief Financial
Allan R. Spies Officer
PRINCIPAL ACCOUNTING OFFICER:
/s/ JANET K. COOPER
------------------------------------------- Vice President--Finance and Controller
Janet K. Cooper
DIRECTORS:
/s/ LINDA G. ALVARADO
-------------------------------------------
Linda G. Alvarado
/s/ CRAIG R. BARRETT
-------------------------------------------
Craig R. Barrett
/s/ THE HONORABLE HANK BROWN
-------------------------------------------
The Honorable Hank Brown
/s/ JERRY J. COLANGELO
-------------------------------------------
Jerry J. Colangelo
/s/ MANUEL A. FERNANDEZ
-------------------------------------------
Manuel A. Fernandez
/s/ GEORGE J. HARAD
-------------------------------------------
George J. Harad
/s/ PETER S. HELLMAN
-------------------------------------------
Peter S. Hellman
</TABLE>
II-8
<PAGE>
<TABLE>
<C> <S>
/s/ MARILYN CARLSON NELSON
-------------------------------------------
Marilyn Carlson Nelson
/s/ FRANK P. POPOFF
-------------------------------------------
Frank P. Popoff
/s/ SOLOMON D. TRUJILLO
-------------------------------------------
Solomon D. Trujillo
</TABLE>
Dated: December 10, 1999
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, U S WEST Capital
Funding, Inc. 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 10th day of December, 1999.
<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, as amended, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
PRINCIPAL EXECUTIVE OFFICER:
<TABLE>
<C> <S>
/s/ ALLAN R. SPIES
------------------------------------------- President
Allan R. Spies
PRINCIPAL FINANCIAL OFFICER:
/s/ SEAN P. FOLEY
------------------------------------------- Vice President--Treasurer
Sean P. Foley
PRINCIPAL ACCOUNTING OFFICER:
/s/ JANET K. COOPER
------------------------------------------- Vice President--Finance and Controller
Janet K. Cooper
DIRECTORS:
/s/ ALLAN R. SPIES
-------------------------------------------
Allan R. Spies
/s/ JANET K. COOPER
-------------------------------------------
Janet K. Cooper
/s/ SEAN P. FOLEY
-------------------------------------------
Sean P. Foley
</TABLE>
Dated: December 10, 1999
II-10
<PAGE>
EXHIBIT INDEX(1)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- -----------
<S> <C>
1-A Purchase Agreement, dated August 20, 1999, among U S WEST
Capital Funding, Inc., U S WEST, Inc., J.P. Morgan
Securities, Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as representatives of the initial purchasers
named therein.
(2-A) Separation Agreement between U S WEST, Inc. (renamed
"MediaOne Group, Inc.") and U S WEST, Inc. (formerly
USW-C, Inc.), dated June 5, 1998 (Exhibit 99.1 to
Form 8-K/A dated June 26, 1998, File No. 1-14087).
(2-A.1) Amendment to the Separation Agreement between MediaOne
Group, Inc. (formerly U S WEST, Inc.) and U S WEST, Inc.
(formerly USW-C, Inc.), dated June 12, 1998 (Exhibit 10(p)
to Form 10-K/A for the year ended December 31, 1998, File
No. 1-14087).
(2-A.2) Offer to Purchase; Letter of Transmittal relating to the
Common Stock; Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees; Letter from Brokers,
Dealers, Commercial Banks, Trust Companies and Other
Nominees to Clients; Notices of Guaranteed Delivery relating
to the Common Stock; Press Release issued by the Offeror and
the Company on May 17, 1999; and Guidelines for Certificate
of Taxpayer Identification Number on Substitute Form W-9,
each dated May 21, 1999 (Exhibits (a)(1) through (a)(7) to
Schedule 14D-1, dated May 21, 1999, as amended).
(2-A.3) Agreement and Plan of Merger, dated as of May 16, 1999,
between Global Crossing Ltd. and U S WEST, Inc. (Exhibit 2
to Form 8-K, dated May 21, 1999, File No. 1-14087).
(2-A.4) Tender Offer and Purchase Agreement, dated as of May 16,
1999, between Global Crossing Ltd. and U S WEST, Inc.
(Exhibit (c)(2) to Schedule 14D-1 and Schedule 13D, dated
May 21, 1999, as amended).
(2-A.5) Voting Agreement, dated as of May 16, 1999, between Global
Crossing Ltd. and U S WEST, Inc. (Exhibit (c)(3) to Schedule
14D-1 and Schedule 13D, dated May 21, 1999, as amended).
(2-A.6) Standstill Agreement, dated as of May 16, 1999, between
Global Crossing Ltd. and U S WEST, Inc. (Exhibit (c)(4) to
Schedule 14D-1 and Schedule 13D, dated May 21, 1999, as
amended).
(2-A.7) Tender and Voting Agreement, dated as of May 16, 1999,
between U S WEST, Inc., Global Crossing Ltd. and each of the
parties listed on the signature page thereto
(Exhibit (c)(5) to Schedule 14D-1 and Schedule 13D, dated
May 21, 1999, as amended).
(2-A.8) Agreement, dated as of May 16, 1999, between Global Crossing
Ltd. and each person whose name appears on the signature
page thereto (Exhibit (c)(6) to Schedule 14D-1 and Schedule
13D, dated May 21, 1999, as amended).
(2-A.9) Letter Agreement, dated as of May 16, 1999, between
U S WEST, Inc. and Global Crossing Ltd. (Exhibit 99 to
Form 8-K, dated May 21, 1999, File No. 1-14087).
(2-A.10) Transfer Agreement, dated as of May 16, 1999, between Global
Crossing Ltd. and each person whose name appears on the
signature page thereto (Exhibit (c)(8) to Schedule 14D-1 and
Schedule 13D, dated May 21, 1999, as amended).
(2-A.11) Agreement and Plan of Merger between U S WEST, Inc. and
Qwest Communications International Inc., dated as of
July 18, 1999 and amended by Amendment No. 1, dated as of
September 8, 1999 (Annex A to Schedule 14A dated
September 17, 1999).
(2-A.12) Voting Agreement among each of the stockholders listed on
the signature page thereto and U S WEST, Inc., dated as of
July 18, 1999 (Exhibit 10.1 to Form 8-K, dated July 20,
1999, File No. 1-14087).
</TABLE>
- ------------------------
(1) Exhibits identified in parentheses 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.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- -----------
<S> <C>
(2-A.13) Termination Agreement between U S WEST, Inc. and Global
Crossing Ltd., dated as of July 18, 199 (Exhibit 10.2 to
Form 8-K, dated July 20, 1999, File No. 1-14087).
(2-A.14) Amendment No. 1, dated as of July 18, 1999, to Tender Offer
and Purchase Agreement, dated as of May 16, 1999, between
U S WEST, Inc. and Global Crossing Ltd. (Exhibit 2-A.14 to
Form 10-Q for the quarter ended June 30, 1999, File
No. 1-14087).
(3-A.1). Restated Certificate of Incorporation for U S WEST, Inc.
(Exhibit 3A to Form S-4/A Registration Statement
No. 333-45765, filed March 18, 1998).
3-A.2 Articles of Incorporation for U S WEST Capital
Funding, Inc.
(3-B.1) Bylaws of U S WEST, Inc. (formerly "USW-C, Inc."), effective
as of June 12, 1998 (Exhibit 3(ii) to Form 8-K/A dated
June 26, 1998, File No. 1-14087).
3-B.2 Bylaws of U S WEST Capital Funding, Inc.
(4-A) Form of Rights Agreement between U S WEST, Inc. (formerly
"USW-C, Inc.") and State Street Bank and Trust Company, as
Rights Agent, dated as of June 1, 1998 (Exhibit 4-A to the
Form S-4/A Registration Statement No. 333-45765, filed
April 2, 1998).
(4-A.1) Amendment No. 1 to Rights Agreement between
U S WEST, Inc. and State Street Bank and Trust Company,
dated as of May 16, 1999 (Exhibit 4 to Form 8-K, dated
May 21, 1999, File No. 1-14087).
(4-A.2) Amendment No. 2 to Rights Agreement between
U S WEST, Inc. and State Street Bank and Trust Company,
dated as of July 18, 1999 (Exhibit 4-A.2 to Form 10-Q for
the quarter ended June 30, 1999, File No. 1-14087).
4-A.3 Registration Rights Agreement, dated August 20, 1999,
between U S WEST Capital Funding, Inc., U S WEST, Inc., J.P.
Morgan Securities, Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated.
4-B Form of Letter of Transmittal*
(4-C) Indenture dated as of June 29, 1998 by and among U S WEST
Capital Funding, Inc., U S WEST, Inc. and The First
National Bank of Chicago (now known as Bank One Trust
Company, National Association) as Trustee filed as
Exhibit 4(a) to Form 8-K dated November 18, 1998, File
No. 1-14087. 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, Inc. and
incorporated herein by reference.
5-A.1 Opinion of Cadwalader, Wickersham & Taft with respect to
legality of the securities being registered.
5-A.2 Opinion of Thomas O. McGimpsey, Senior Attorney and
Assistant Secretary of U S WEST, Inc., with respect to
legality of the securities being registered.
8 Opinion of Cadwalader, Wickersham & Taft with respect to
certain tax matters (included in Exhibit 5-A.1).
(10-A) Employee Matters Agreement between U S WEST, Inc. (renamed
"MediaOne Group, Inc.") and USW-C, Inc. (renamed
"U S WEST, Inc."), dated June 5, 1998 (Exhibit 99.2 to
Form 8-K/A dated June 26, 1998, File No. 1-14087).
(10-B) Tax Sharing Agreement between U S WEST, Inc. (renamed
"MediaOne Group, Inc.") and USW-C, Inc. (renamed
"U S WEST, Inc."), dated June 5, 1998 (Exhibit 99.3 to
Form 8-K/A dated June 26, 1998, File No. 1-14087).
- ------------------------------------------------------------------------------------
* To be filed by amendment.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- -----------
<S> <C>
(10-C) 364-Day Credit Agreement, dated May 8, 1998, with Morgan
Guaranty Trust Company of New York, as administrate agent
(Exhibit 10A to Form 10-Q for the quarter ended March 31,
1998, File No. 1-14087).
(10-D) Five year Credit Agreement, dated May 8, 1998, with Morgan
Guaranty Trust Company of New York, as administrative agent
(Exhibit 10B to Form 10-Q for the quarter ended March 31,
1998, File No. 1-14087).
(10-D.1) Amendment No. 1 to Credit Agreements dated as of June 30,
1998 to the 364-Day Credit Agreement and the Five-year
Credit Agreement, each dated as of May 8, 1998, among
U S WEST Capital Funding, Inc., U S WEST, Inc., the banks
listed on the signature pages thereto and Morgan Guaranty
Trust Company of New York (Exhibit 10(e)(1) to Form 10-Q
for the quarter ended September 30, 1998, File
No. 1-14087).
(10-D.2) Amended and Restated Credit Agreement, dated as of May 7,
1999, among U S WEST Capital Funding, Inc.,
U S WEST, Inc. and the banks listed on the signature
pages thereof (Exhibit (b)(4) to Schedule 14D-1 and
Schedule 13D, dated May 21, 1999, as amended).
(10-D.3) Amendment to Credit Agreements, dated as of June 11, 1999,
which further amends (i) the 364-Day Credit Agreement dated
as of May 8, 1999, as amended and (ii) the Five-Year Credit
Agreement dated as of May 8, 1998, as amended, among
U S WEST Capital Funding, Inc., U S WEST, Inc., the banks
listed on the signature pages thereto, and Morgan Guaranty
Trust Company of New York (Exhibit 10-D.3 to Form 10-Q for
the quarter ended June 30, 1999, File No. 1-14087).
(10-D.4) 364-Day $1.5 billion Credit Agreement dated as of June 11,
1999, among U S WEST Capital Funding, inc., and
U S WEST, Inc., the banks listed therein and Morgan Guaranty
Trust Company of New York, as administrative agent
(Exhibit (b)(6) to Amendment No. 3 to Schedule 14D-1 and
Schedule 13D, dated June 11, 1999, filed on behalf of Global
Crossing Ltd. and U S WEST, Inc.).
(10-D.5) Assignment and Assumption Agreement among each institution
listed on Schedule 1 thereto, U S WEST, Inc. and Morgan
Guaranty Trust Company of New York, dated as of July 6, 1999
(Exhibit 10-D.5 to Form 10-Q for the quarter ended June 30,
1999, File No. 1-14087).
(10-E) 364-Day Credit Agreement, among the banks listed therein,
U S WEST Communications, Inc. and Morgan Guaranty Trust
Company of New York, as administrative agent, dated as of
May 19, 1999 (Exhibit 10-E to Form 10-Q for the quarter
ended June 30, 1999, File No. 1-14087).
(10-F) Amendment No. 1 to Credit Agreement to the 364-Day Credit
Agreement, dated as of May 19, 1998, among U S WEST
Communications, Inc., U S WEST, Inc., the banks listed on
the signature pages thereto and Morgan Guaranty Trust
Company of New York, as administrative agent, dated as of
June 11, 1999 (Exhibit 10-F to Form 10-Q for the quarter
ended June 30, 1999, File No. 1-14087).
(10-G) Change of Control Agreement for the President and Chief
Executive Officer (Exhibit 10(f) to Form 10-Q for the
quarter ended June 30, 1998, File No. 1-14087).
(10-G.1) Retention Agreement for the Chairman, Chief Executive
Officer and President of U S WEST, Inc., dated as of
September 7, 1999 (Exhibit 10-G.1 to Form 8-K dated
September 20, 1999, File No. 1-14087).
(10-H) Form of Change of Control Agreement for Tier II Executive
(Exhibit 10(g) to Form 10-Q for the quarter ended June 30,
1998, File No. 1-14087.
(10-H.1) Form of Retention Agreement for Executive Officers of
U S WEST, Inc. (Exhibit 10-H.1 to Form 8-K dated
September 20, 1999, File No. 1-14087).
(10-I) Form of Executive Severance Agreement (Exhibit 10(h) to
Form 10-Q for the quarter ended June 30, 1998, File
No. 1-14087).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- -----------
<S> <C>
(10-J) 1998 U S WEST Stock Plan (Exhibit 10-A to the Form S-4
Registration Statement No. 333-45765, filed February 6,
1998, as amended).
(10-K) U S WEST Long-Term Incentive Plan (Exhibit 10-D to the
Form S-4 Registration Statement No. 333-45765, filed
February 6, 1998, as amended).
(10-L) U S WEST Executive Short-Term Incentive Plan (Exhibit 10-E
to the Form S-4 Registration Statement No. 333-45765, filed
February 6, 1998, as amended).
(10-M) U S WEST 1998 Broad Based Stock Option Plan dated June 12,
1998 (Exhibit 10(l) to Form 10-Q for the quarter ended
September 30, 1998, File No. 1-14087).
(10-N) U S WEST Deferred Compensation Plan, amended and restated
effective as of June 12, 1998 (Exhibit 10(m) to Form 10-Q
for the quarter ended September 30, 1998, File
No. 1-14087).
(10-O) U S WEST 1998 Stock Plan, as amended June 22, 1998
(Exhibit 10(n) to Form 10-Q for the quarter ended
September 30, 1998, File No. 1-14087).
(10-O.1) 1998 U S WEST Stock Plan, as amended August 6, 1999
(Exhibit 10-O.1 to Form 10-Q for the quarter ended
September 30, 1999, File No. 1-14087).
(10-O.2) 1999 U S WEST Stock Plan, as amended August 6, 1999
(Exhibit 10-O.2 to Form 10-Q for the quarter ended
September 30, 1999, File No. 1-14087).
(10-P) Shareowner Investment Plan dated June 12, 1998 (Form S-3
Registration Statement No. 333-52781, filed May 15, 1998).
(10-Q) Form of Non-Qualified Stock Option Agreement (Exhibit 10-Q
to Form 10-Q for the quarter ended March 31, 1999, File
No. 1-14087).
(10-R) Form of Agreement for Purchase and Sale of Telephone
Exchanges, dated as of June 16, 1999, between Citizens
Utilities Company and U S WEST Communications, Inc.
(Exhibit 99 to Form 8-K, dated June 17, 1999, File
No. 1-14087).
12 Computation of Ratio of Earnings to Fixed Charges.
(13) U S WEST 1998 Summary Annual Report to Stockholders
(Exhibit 13 to Form 8-K dated February 24, 1999, File
No. 1-14087).
(21) Subsidiaries of the Registrant (Exhibit 21 to Form 10-K/A
for the year ended December 31, 1998).
23-A Consent of Arthur Andersen LLP.
23-B Consent of Cadwalader, Wickersham & Taft (included in
Exhibit 5-A.1).
24 Powers of Attorney.
(25) Statement of Eligibility of Trustee (Exhibit 25 to Form S-3
dated May 6, 1998, File No. 333-51907).
(99) Annual Report on Form 11-K for the U S WEST Savings
Plan/ESOP for the year ended December 31, 1998 (Exhibit 99
to Form 10-K/A filed by amendment on Form SE, File
No. 1-14087), Paper Copy (P).
</TABLE>
<PAGE>
Exhibit 1-A
PURCHASE AGREEMENT
U S WEST CAPITAL FUNDING, INC.
$1,150,000,000
6 7/8% NOTES DUE AUGUST 15, 2001
UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF
PRINCIPAL, PREMIUM, IF ANY, AND INTEREST BY
U S WEST, INC.
August 20, 1999
J.P. Morgan Securities Inc.
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
As Representatives of the several Initial Purchasers
named in Schedule I hereto
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260-0060
Ladies and Gentlemen:
U S WEST Capital Funding, Inc., a Colorado corporation (the "COMPANY"),
proposes to issue and sell to the several Initial Purchasers listed in
Schedule I hereto (the "INITIAL PURCHASERS") for whom J.P. Morgan Securities
Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated are acting as
representatives (the "REPRESENTATIVES"), $1,150,000,000 principal amount of
its 6 7/8% Notes due August 15, 2001 (the "SECURITIES"). The Securities will
be unconditionally guaranteed as to payment of principal, premium, if any,
and interest (the "GUARANTEES") by U S WEST, Inc., a Delaware corporation
(the "GUARANTOR"), and will be issued pursuant to the provisions of an
Indenture, dated as of June 29, 1998 (the "INDENTURE"), among the Company,
the Guarantor and The First National Bank of Chicago, as trustee (the
"TRUSTEE").
The Securities will have the benefit of a Registration Rights Agreement,
dated as of August 20, 1999 (the "Registration Rights Agreement"), among the
Company, the Guarantor and the Initial Purchasers, pursuant to which the
Company and the Guarantor have agreed, for the benefit of the Initial
Purchasers and their respective direct and indirect transferees and assigns,
to register the Securities and the Guarantees under the Securities Act of
1933, as amended (the "SECURITIES ACT") subject to the terms and conditions
therein specified.
<PAGE>
The sale of the Securities to the Initial Purchasers will be made
without registration of the Securities and the Guarantees under the
Securities Act, in reliance upon exemptions therefrom.
In connection with the sale of the Securities, the Company and the
Guarantor have prepared an offering memorandum dated the date hereof (the
"OFFERING MEMORANDUM"), for the information of the Initial Purchasers and for
delivery to prospective purchasers of the Securities. All references in this
Agreement to financial statements and schedules and other information which
is "contained," "included," "stated" or "given" in the Offering Memorandum
(or other references of like import) shall be deemed to mean and include all
such financial statements and schedules and other information which is
incorporated by reference in the Offering Memorandum.
The Guarantor has entered into an Agreement and Plan of Merger, dated as
of July 18, 1999 (as the same may have been or may hereafter be amended or
supplemented from time to time, the "MERGER AGREEMENT"), with Qwest
Communications International Inc. ("QWEST"), a Delaware corporation, pursuant
to which the Guarantor will merge with and into Qwest (the "MERGER") with
Qwest being the surviving corporation in the Merger.
The Company and the Guarantor hereby agree with the Initial Purchasers
as follows:
1. The Company agrees to issue and sell the Securities to the several Initial
Purchasers as hereinafter provided, and each Initial Purchaser, upon the
basis of the representations and warranties herein contained, but subject
to the conditions hereinafter stated, agrees to purchase, severally and not
jointly, from the Company the respective principal amount of Securities set
forth opposite such Initial Purchaser's name in Schedule I hereto at a
price (the "PURCHASE PRICE") equal to 99.524% of their principal amount,
plus accrued interest, if any, from August 25, 1999 to the date of payment
and delivery.
2. The Company and the Guarantor understand that the Initial Purchasers intend
(i) to offer privately pursuant to Rule 144A and pursuant to Regulation S
under the Securities Act their respective portions of the Securities as
soon after this Agreement has become effective as in the judgment of the
Initial Purchasers is advisable and (ii) initially to offer the Securities
upon the terms set forth in the Offering Memorandum.
Each of the Company and the Guarantor confirms that it has authorized
the Initial Purchasers, subject to the restrictions set forth below, to
distribute copies of the Offering Memorandum in connection with the offering
of the Securities. Each Initial Purchaser hereby severally makes to the
Company and the Guarantor the following representations and agreements:
(i) it is a "qualified institutional buyer" within the meaning of
Rule 144A under the Securities Act; and
(ii) (A) it will not solicit offers for, or offer to sell, the
Securities by any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act ("REGULATION
D")) and (B) it will solicit
2
<PAGE>
offers for the Securities only from, and will offer the Securities only
to, persons who it reasonably believes to be (x) in the case of offers
inside the United States, "qualified institutional buyers" within the
meaning of Rule 144A under the Securities Act and (y) in the case of
offers outside the United States, to persons other than U.S. persons
("FOREIGN PURCHASERS", which term shall include dealers or other
professional fiduciaries in the United States acting on a discretionary
basis for foreign beneficial owners (other than an estate or trust)) that,
in each case, in purchasing the Securities are deemed to have represented
and agreed as provided in the Offering Memorandum;
With respect to offers and sales outside the United States, as described in
clause (ii)(B)(y) above, each Initial Purchaser hereby severally represents
and agrees with the Company and the Guarantor that:
(i) it understands that no action has been or will be taken by the
Company or the Guarantor that would permit a public offering of the
Securities, or possession or distribution of the Offering Memorandum or any
other offering or publicity material relating to the Securities, in any
country or jurisdiction where action for that purpose is required;
(ii) it will comply with all applicable laws and regulations in each
jurisdiction in which it acquires, offers, sells or delivers Securities or
has in its possession or distributes the Offering Memorandum or any such
other material, in all cases at its own expense;
(iii) it understands that the Securities have not been and will not
be registered under the Securities Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S.
persons except in accordance with Rule 144A under the Securities Act or
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act;
(iv) it has offered the Securities and will offer and sell the
Securities (x) as part of its distribution at any time and (y) otherwise
until 40 days after the later of the commencement of the Offering and the
Closing Date, only in accordance with Rule 903 of Regulation S.
Accordingly, neither such Initial Purchaser, nor any of its Affiliates, nor
any persons acting on its behalf has engaged or will engage in any directed
selling efforts (within the meaning of Regulation S) with respect to the
Securities, and such Initial Purchaser, its Affiliates and any such persons
have complied and will comply with the offering restrictions requirement of
Regulation S;
(v) it agrees that, at or prior to confirmation of sales of the
Securities, it will have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that purchases
Securities from it during the restricted period a confirmation or notice to
substantially the following effect:
3
<PAGE>
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered
and sold within the United States or to, or for the account or benefit
of, U.S. persons (i) as part of their distribution at any time or (ii)
otherwise prior to 40 days after the closing of the offering, except
in either case in accordance with Regulation S (or Rule 144A, if
available) under the Securities Act. Terms used above have the meaning
given to them by Regulation S"; and
(vi) it agrees that (i) it has not offered or sold Securities and,
prior to six months after the issue date of such Securities, will not offer
or sell any such Securities to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations
1995, (ii) it has complied and will comply with all applicable provisions
of the Financial Services Act 1986 with respect to anything done by it in
relation to the Securities in, from or otherwise involving the United
Kingdom, and (iii) it has only issued or passed on and will only issue or
pass on in the United Kingdom any document received by it in connection
with an issue of Securities to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements)(Exemptions) Order 1996 (as amended) or is a person to whom
such document may otherwise lawfully be issued or passed on.
Terms used in this Section 2 and not otherwise defined in this Agreement have
the meanings given to them by Regulation S.
3. Payment for the Securities shall be made by wire transfer in immediately
available funds to the account specified by the Company to the
Representatives at 9:00 A.M., New York City time, on August 25, 1999, or at
such other time on the same or such other date, not later than the fifth
Business Day thereafter, as the Representatives and the Company may agree
upon in writing. The time and date of such payment are referred to herein
as the "CLOSING DATE". As used herein, the term "BUSINESS DAY" means any
day other than a day on which banks are permitted or required to be closed
in New York City.
Payment for the Securities shall be made against delivery (x) with
respect to Securities to be resold to "qualified institutional buyers" by the
Initial Purchasers, to the nominee of The Depository Trust Company for the
respective accounts of the several Initial Purchasers of the Securities of
one or more global notes (collectively, the "RESTRICTED GLOBAL NOTES")
representing such Securities and (y) with respect to Securities to be resold
to foreign purchasers by the Initial Purchasers, to the nominee of The
Depository Trust Company for the respective accounts of the several Initial
Purchasers of the Securities of one or more Regulation S global notes
(collectively, the "REGULATION S GLOBAL NOTES" and, together with the
Restricted Global Notes, the "GLOBAL NOTES") representing such Securities,
with any transfer taxes payable in connection with the transfer to the
Initial Purchasers of the Securities duly paid by the Company. The Global
4
<PAGE>
Notes will be made available for inspection by the Initial Purchasers at the
office of Brown & Wood LLP, One World Trade Center, New York, New York 10048
not later than 1:00 P.M., New York City time, on the Business Day prior to
the Closing Date.
4. The Company and the Guarantor represent and warrant to each Initial
Purchaser that:
(a) the Offering Memorandum (other than the information
concerning Qwest contained under the captions "Recent Developments - Merger
with Qwest - Qwest" and "Selected Financial Data for Qwest Communications
International Inc." and the historical financial information of Qwest in
the section entitled "Unaudited Pro Forma Financial Information", as to
which no representation is made) will not, in the form used by the Initial
Purchasers to confirm sales of the Securities and as of the Closing Date,
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances existing at such dates, not misleading; PROVIDED, HOWEVER,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with written information
furnished to the Company or the Guarantor by any Initial Purchaser, or on
behalf of any Initial Purchaser by the Representatives, specifically for
use therein;
(b) the documents incorporated by reference in the Offering
Memorandum (the "INCORPORATED DOCUMENTS"), when they were filed with the
Securities and Exchange Commission (the "COMMISSION"), conformed in all
material respects to the requirements of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading; and any further documents so filed and
incorporated by reference in the Offering Memorandum, when such documents
are filed with the Commission, will conform in all material respects to the
requirements of the Exchange Act, and will not contain an untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading;
(c) the financial statements of the Guarantor, together
with the related schedules and notes thereto, included and incorporated by
reference in the Offering Memorandum present fairly the consolidated
financial position of the Guarantor and its consolidated subsidiaries as of
the dates indicated and the statement of operations, shareowners' equity
and cash flows of the Guarantor and its consolidated subsidiaries for the
periods specified; and said financial statements have been prepared in
conformity with generally accepted accounting principles and practices
applied on a consistent basis throughout the periods involved;
(d) the pro forma financial statements of the Guarantor and
Qwest and the related notes thereto included in the Offering Memorandum, to
the best
5
<PAGE>
knowledge of the Company and the Guarantor, present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to the pro forma financial
statements and have been properly complied on the bases described therein,
and the assumptions used therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred
to therein;
(e) since the respective dates as of which information is
given in the Offering Memorandum, except as otherwise stated therein, (A)
there has been no material adverse change in the financial condition or
results of operations of the Company or of the Guarantor and its
subsidiaries, taken as a whole (a "MATERIAL ADVERSE EFFECT"), (B) there
have been no transactions entered into by the Company or by the Guarantor
or any of its subsidiaries, other than those in the ordinary course of
business, which are material with respect to the Company or the Guarantor
and its subsidiaries, taken as a whole, and (C) there has been no dividend
or distribution of any kind declared, paid or made by the Company or the
Guarantor on any class of its capital stock, except for regular quarterly
dividends on the Guarantor's common stock, par value $.01 per share, in
amounts that are consistent with past practice; provided, however, that the
Guarantor's quarterly dividend paid in August 1999 was $.75 per share;
(f) this Agreement has been duly authorized, executed and
delivered by each of the Company and the Guarantor;
(g) the Indenture has been duly authorized, executed and
delivered by each of 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, except as
the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law);
(h) the Registration Rights Agreement has been duly
authorized by the Company and the Guarantor and, when executed and
delivered by the Company and the Guarantor, will constitute a valid and
binding agreement of each of the Company and the Guarantor, enforceable
against the Company and the Guarantor in accordance with its terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), and except that
enforcement of
6
<PAGE>
rights to indemnification and contribution contained therein may be
limited by applicable Federal or state laws or the public policy underlying
such laws;
(i) the Securities have been duly authorized and, at the
Closing Date, will have been duly executed by the Company and, when
authenticated, issued and delivered in the manner provided for in the
Indenture and delivered against payment of the purchase price therefor as
provided in this Agreement, will constitute legal, valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law), and will be
in the form contemplated by, and entitled to the benefits of, the
Indenture;
(j) the Guarantees have been duly authorized and, at the
Closing Date, will have been duly executed by the Guarantor and, when
issued and delivered in the manner provided for in the Indenture, will
constitute legal, valid and binding obligations of the Guarantor,
enforceable against the Guarantor in accordance with their terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), and will be in the form
contemplated by, and entitled to the benefits of, the Indenture;
(k) the Exchange Notes (as defined in the Registration
Rights Agreement) have been duly authorized and, when authenticated, issued
and delivered in the manner provided for in the Indenture and issued and
delivered in exchange for the Securities in the manner contemplated in the
Registration Rights Agreement, will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law), and will be
in the form contemplated by, and entitled to the benefits of, the
Indenture;
(l) the Exchange Guarantees (as defined in the Registration
Rights Agreement) have been duly authorized and, when authenticated, issued
and delivered in the manner provided for in the Indenture and issued and
delivered in the manner contemplated in the Registration Rights Agreement,
will constitute valid and binding obligations of the Guarantor, enforceable
against the Guarantor in accordance with their terms, except as the
enforcement thereof may be limited by
7
<PAGE>
bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law);
(m) the Securities, the Guarantees, the Exchange Notes, the
Exchange Guarantees, the Indenture and the Registration Rights Agreement
will conform in all material respects to the respective statements relating
thereto contained in the Offering Memorandum;
(n) the execution, delivery and performance of this
Agreement and the Registration Rights Agreement and the consummation of the
transactions contemplated herein and therein (including, without
limitation, the issuance and sale of the Securities and the Guarantees) and
compliance by the Company and the Guarantor with their respective
obligations hereunder and thereunder have been duly authorized by all
necessary corporate action and do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company, the Guarantor or
any subsidiary of the Guarantor pursuant to, any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
agreement or instrument to which the Company, the Guarantor or any
subsidiary of the Guarantor is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Company, the
Guarantor or any subsidiary of the Guarantor is subject (collectively,
"AGREEMENTS AND INSTRUMENTS") (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation of
the provisions of the charter or bylaws of the Company, the Guarantor or
any subsidiary of the Guarantor or, to the best knowledge of the Company
and the Guarantor, any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company, the
Guarantor or any subsidiary of the Guarantor or any of their assets,
properties or operations. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness of the Company, the Guarantor or any subsidiary of
the Guarantor (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company, the Guarantor or any subsidiary of the
Guarantor;
(o) the Merger Agreement has been duly authorized, executed
and delivered by, and is a valid and binding agreement of, the Guarantor,
enforceable against the Guarantor in accordance with its terms;
(p) other than as set forth in the Offering Memorandum,
there is not pending or, to the knowledge of the Company or the Guarantor,
threatened any
8
<PAGE>
action, suit, proceeding, inquiry or investigation to which the Company,
the Guarantor or any subsidiary of the Guarantor is a party or to which
the assets, properties or operations of the Company, the Guarantor or any
subsidiary of the Guarantor is subject, before or by any court or
governmental agency or body, domestic or foreign, which might reasonably be
expected to result in a Material Adverse Effect or which might reasonably
be expected to materially and adversely affect the assets, properties or
operations of the Company, the Guarantor and any subsidiary of the
Guarantor, taken as a whole, or the consummation of the transactions
contemplated by this Agreement or the Indenture or the performance by the
Company or the Guarantor of their respective obligations thereunder;
(q) the Guarantor and its subsidiaries possess such
permits, licenses, approvals, consents and other authorizations
(collectively, "GOVERNMENTAL LICENSES") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct
the business now operated by them; the Guarantor and its subsidiaries are
in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or in the
aggregate, have a Material Adverse Effect; all of the Governmental Licenses
are valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect would not have a Material Adverse Effect; and neither
the Guarantor nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect;
(r) none of the Company, the Guarantor or any of their
respective affiliates (as defined in Rule 501(b) of Regulation D) has
directly, or through any agent, sold, offered for sale, solicited offers to
buy or otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or will be integrated with the sale of the
Securities in a manner that would require the registration under the
Securities Act of the offering contemplated by the Offering Memorandum;
(s) none of the Company, the Guarantor, any affiliate of
the Company or the Guarantor or any person acting on its or their behalf
has offered or sold the Securities by means of any general solicitation or
general advertising within the meaning of Rule 502(c) under the Securities
Act, or by means of any directed selling efforts within the meaning of Rule
902 under the Securities Act, and the Company, the Guarantor, any affiliate
of the Company and the Guarantor and any person acting on its or their
behalf has complied with and will implement the "offering restrictions"
requirements of Regulation S;
(t) the Securities satisfy the requirements set forth in
Rule 144A(d)(3) under the Securities Act;
9
<PAGE>
(u) assuming the accuracy of the representations of the
Initial Purchasers contained in Section 2 hereof, it is not necessary in
connection with the offer, sale and delivery of the Securities in the
manner contemplated by this Agreement to register the Securities under the
Securities Act or to qualify an indenture under the Trust Indenture Act of
1939 (the "TRUST INDENTURE ACT"); and
(v) none of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale of
the Securities) will violate or result in a violation of Section 7 of the
Exchange Act, or any regulation promulgated thereunder, including, without
limitation, Regulations T, U, and X of the Board of Governors of the
Federal Reserve System.
5. The Company and the Guarantor covenant and agree with each of the several
Initial Purchasers as follows:
(a) to deliver to the Initial Purchasers as many copies of
the Offering Memorandum (including all amendments and supplements thereto)
as the Initial Purchasers may reasonably request;
(b) before distributing any amendment or supplement to the
Offering Memorandum, to furnish to the Representatives a copy of the
proposed amendment or supplement for review and not to distribute any such
proposed amendment or supplement to which the Representatives reasonably
object;
(c) if, at any time prior to the earlier of (i) three
months from the date of the Offering Memorandum and (ii) notice by the
Representatives to the Company and the Guarantor of the completion of the
initial placement of the Securities, any event shall occur as a result of
which the Offering Memorandum 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 to amend
or supplement the Offering Memorandum to comply with law, forthwith to
prepare and furnish, at the expense of the Company, to the Initial
Purchasers and to the dealers (whose names and addresses the
Representatives will furnish to the Company) to which Securities may have
been sold by the Initial Purchasers on behalf of the Initial Purchasers and
to any other dealers upon request, such amendments or supplements to the
Offering Memorandum as may be necessary to correct such statement or
omission or to effect compliance with law;
(d) to endeavor to qualify the Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the
Representatives shall reasonably request and to continue such qualification
in effect so long as reasonably required for distribution of the
Securities; PROVIDED that the Company shall not be required to file a
general consent to service of process in any jurisdiction;
10
<PAGE>
(e) during the period of two years after the date hereof,
to furnish to the Initial Purchasers, as soon as practicable after the end
of each fiscal year, a copy of the Guarantor's annual report to
shareholders, if any, for such year, and to furnish to the Initial
Purchasers and to counsel to the Initial Purchasers, (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 non-confidential information concerning the Guarantor or
the Company as the Initial Purchasers may reasonably request;
(f) during the period beginning on the date hereof and
continuing to and including the Business Day following the Closing Date,
not to, directly or indirectly, sell, offer to sell, grant any option for
the sale of, or otherwise dispose of, any of its senior debt securities
having a maturity of one year or more without the prior written consent of
the Representatives;
(g) to use the net proceeds received by the Company from
the sale of the Securities pursuant to this Agreement in the manner
specified in the Offering Memorandum under the caption "Use of Proceeds";
(h) if requested by the Representatives, to use its best
efforts to cause the Securities to be eligible for the PORTAL trading
system of the National Association of Securities Dealers, Inc.;
(i) to furnish to the holders of the Securities no later
than 90 days after the end of each fiscal year an annual report (including
a balance sheet and statements of income, stockholders' equity and cash
flows of the Guarantor and its consolidated subsidiaries certified by
independent public accountants) and, no later than 45 days after the end of
each of the first three quarters of each fiscal year (beginning with the
fiscal quarter ending after the date of the Offering Memorandum),
consolidated summary financial information of the Guarantor and its
subsidiaries of such quarter in reasonable detail;
(j) during the period of two years after the Closing Date,
the Company and the Guarantor will not, and will not permit any of their
respective controlled "affiliates" (as defined in Rule 144 under the
Securities Act) to, resell any of the Securities which constitute
"restricted securities" under Rule 144 that have been reacquired by any of
them;
(k) whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, to pay or cause
to be paid all costs and expenses incident to the performance of its
obligations hereunder and under the Registration Rights Agreement,
including without limiting the generality of the foregoing, all fees, costs
and expenses (i) incident to the preparation, issuance, execution,
authentication and delivery of the Securities, including any expenses of
the Trustee, (ii) incident to the preparation, printing and distribution of
the Offering Memorandum (including all exhibits, amendments and supplements
thereto), (iii) incurred in connection with the registration or
qualification and determination of
11
<PAGE>
eligibility for investment of the Securities under the laws of such
jurisdictions as the Representatives may designate (including reasonable
fees of counsel for the Initial Purchasers and their disbursements) and
the printing of memoranda relating thereto, (iv) in connection with the
approval for trading of the Securities on any securities exchange or
inter-dealer quotation system (as well as in connection with the
designation of the Securities as PORTAL securities, if so requested),
(v) in connection with the printing (including word processing and
duplication costs) and delivery of this Agreement, the Indenture, any
Preliminary and Supplemental Blue Sky Memoranda and any Legal Investment
Survey and the furnishing to Initial Purchasers and dealers of copies of
the Offering Memorandum, including mailing and shipping, as herein
provided, (vi) payable to rating agencies in connection with the rating
of the Securities, if applicable, and (vii) any expenses incurred by the
Company in connection with a "road show" presentation to potential
investors;
(l) while the Securities remain outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) and cannot be
sold without restriction under Rule 144(k) under the Securities Act, the
Company and the Guarantor will, during any period in which the Guarantor is
not subject to Section 13 or 15(d) under the Exchange Act or is not
complying with the reporting requirements thereof, make available to the
purchasers and any holder of Securities in connection with any sale thereof
and any prospective purchaser of Securities and securities analysts, in
each case upon request, the information specified in, and meeting the
requirements of, Rule 144A(d)(4) under the Securities Act (or any successor
thereto);
(m) neither the Company nor the Guarantor will take any
action prohibited by Regulation M under the Exchange Act, in connection
with the distribution of the Securities contemplated hereby;
(n) none of the Company, the Guarantor, any of their
respective affiliates (as defined in Rule 501(b) under the Securities Act)
or any person acting on behalf of the Company, the Guarantor or such
affiliate will solicit any offer to buy or offer or sell the Securities by
means of any form of general solicitation or general advertising,
including: (i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar medium or broadcast over
television or radio; and (ii) any seminar or meeting whose attendees have
been invited by any general solicitation or general advertising;
(o) none of the Company, the Guarantor, any of their
respective affiliates (as defined in Rule 144(a)(1) under the Securities
Act) or any person acting on behalf of any of the foregoing will engage in
any directed selling efforts with respect to the Securities within the
meaning of Regulation S under the Securities Act; and
(p) none of the Company, the Guarantor, any of their
respective affiliates (as defined in Regulation 501(b) of Regulation D
under the Securities Act) or any person acting on behalf of the Company,
the Guarantor or such affiliate
12
<PAGE>
will sell, offer for sale or solicit offers to buy or otherwise negotiate
in respect of any security (as defined in the Securities Act) which will
be integrated with the sale of the Securities in a manner which would
require the registration under the Securities Act of the Securities and
the Company and the Guarantor will take all action that is appropriate or
necessary to assure that its offerings of other securities will not be
integrated for purposes of the Securities Act with the offering
contemplated hereby.
6. The several obligations of the Initial Purchasers hereunder to purchase the
Securities on the Closing Date are subject to the performance by the
Company and the Guarantor of their respective obligations hereunder and to
the following additional conditions:
(a) the representations and warranties of the Company and
the Guarantor contained herein are true and correct on and as of the
Closing Date as if made on and as of the Closing Date, the statements of
the officers of the Company and the Guarantor made pursuant to the
provisions hereof are true and correct and the Company and the Guarantor
shall have complied with all agreements and all conditions on their part to
be performed or satisfied hereunder at or prior to the Closing Date;
(b) except as previously disclosed to the Initial
Purchasers by the Company, the Guarantor or Qwest, as applicable, prior to
the execution of this Agreement, on or after the date of this Agreement and
prior to the Closing Date, there shall not have occurred any downgrading,
nor shall any notice have been given of (i) any downgrading, (ii) any
intended or potential downgrading or (iii) any review or possible change
that does not indicate an improvement, in the rating accorded any debt
securities of or guaranteed by the Company, the Guarantor or Qwest by any
"nationally recognized statistical rating organization", as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act;
(c) since the respective dates as of which information is
given in the Offering Memorandum, there shall not have been any change in
the financial condition of the Company or of the Guarantor and its
subsidiaries, taken as a whole, or of Qwest 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, or of Qwest and
its subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Offering Memorandum, the effect of which is, in the
judgment of the Representatives, so material and adverse as to make it
impracticable or inadvisable to proceed with the offering or the delivery
of the Securities on the Closing Date on the terms and in the manner
contemplated in the Offering Memorandum;
(d) the Representatives shall have received on and as of
the Closing Date a certificate of the President, any Vice President, the
Treasurer or any Assistant Treasurer 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 and correct as if made at and
13
<PAGE>
as of the Closing 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 Closing Date and that, since the respective
dates as of which information is given in the Offering Memorandum, there
has been no material adverse change in the financial condition or results
of operations of the Company, or, to the best knowledge of the Company, of
Qwest, and its subsidiaries, taken as a whole, except as set forth in or
contemplated by the Offering Memorandum;
(e) the Representatives shall have received on and as of
the Closing Date a certificate of the President, any Vice President, the
Treasurer or any Assistant Treasurer 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 Closing 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 Closing Date and that, since the respective dates as of which
information is given in the Offering Memorandum, there has been no material
adverse change in the financial condition or results of operations of the
Guarantor and its subsidiaries, taken as a whole, or, to the best knowledge
of the Guarantor, of Qwest, and its subsidiaries, taken as a whole, except
as set forth in or contemplated by the Offering Memorandum;
(f) Cadwalader, Wickersham & Taft, counsel for the Company
and the Guarantor, shall have furnished to the Representatives their
written opinion, dated the Closing Date, in form and substance satisfactory
to the Representatives, to the effect that:
(i) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Colorado and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now
being conducted.
(ii) The Guarantor is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now
being conducted.
(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 thereof 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, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditor's rights and remedies generally, and subject, as to
14
<PAGE>
enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
(iv) The Securities, when duly executed and authenticated
in the manner contemplated in the Indenture and issued and delivered
to the Initial Purchasers 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,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditor's
rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(v) The Guarantees, when duly executed in the manner
contemplated in the Indenture and issued and delivered to the Initial
Purchasers in accordance with the provisions of this Agreement, will
constitute legal, valid and binding obligations of the Guarantor
enforceable against the Guarantor in accordance with their terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditor's
rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(vi) The Exchange Notes (as defined in the Registration
Rights Agreement) have been duly authorized and, when duly executed in
the manner contemplated in the Indenture and issued and delivered in
exchange for the Securities in the manner contemplated in the
Registration Rights Agreement, will constitute legal, valid and
binding obligations of the Company enforceable against the Company in
accordance with their terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditor's rights and remedies generally, and
subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding
at law or in equity), and will be in the form contemplated by, and
entitled to the benefits of, the Indenture.
(vii) The Exchange Guarantees (as defined in the
Registration Rights Agreement) have been duly authorized and, when
duly executed in the manner contemplated in the Indenture and issued
and delivered in the manner contemplated in the Registration Rights
Agreement, will constitute legal, valid and binding obligations of the
Guarantor enforceable against the Guarantor in accordance with their
terms, subject to applicable bankruptcy,
15
<PAGE>
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditor's rights and remedies generally, and
subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(viii) The 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.
(ix) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and the Guarantor,
and is a valid and binding agreement of the Company and the Guarantor,
enforceable against the Company and the Guarantor in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditor's rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity),
and except that enforcement of rights to indemnification and
contribution contained therein may be limited by applicable federal or
state laws or the public policy underlying such laws.
(x) The Merger Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of,
the Guarantor, enforceable against the Guarantor in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditor's rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
(xi) 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 Initial Purchasers pursuant
to the terms of this Agreement, except such consents, approvals,
authorizations or registrations as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the Initial Purchasers.
(xii) The statements in the Offering Memorandum under the
headings "Description of Notes", "Exchange Offer; Registration Rights"
and "Notice to Investors" insofar as such statements constitute a
summary of certain
16
<PAGE>
provisions of the documents referred to therein, are accurate in all
material respects.
(xiii) The Securities satisfy the requirements set forth in
Rule 144A(d)(3) under the Securities Act.
(xiv) Based upon the representations, warranties and
agreements of the Company and the Guarantor in Sections 4(r), 4(s),
5(n), 5(o), 5(p) and 6(a) of this Agreement and of the Initial
Purchasers in Section 2 of this Agreement and on the truth and
accuracy of the representations and agreements deemed to be made by
the purchasers of the Securities contained in the Offering Memorandum,
it is not necessary in connection with the offer, sale and delivery of
the Securities to the Initial Purchasers under this Agreement or in
connection with the initial resale of such Securities by the Initial
Purchasers in accordance with Section 2 of this Agreement to register
the Securities under the Securities Act or to qualify the Indenture
under the Trust Indenture Act; PROVIDED, HOWEVER, that such counsel
need not express any opinion with respect to the conditions under
which the Securities may be further resold.
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 6(g) 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
Offering Memorandum and related matters were discussed; such counsel has
not independently verified and are not passing upon and assume no
responsibility for the accuracy, completeness or fairness of the statements
contained in the Offering Memorandum 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, no facts have come to
its attention which lead it to believe that the Incorporated Documents
(except as to the financial statements and the notes thereto, and the other
financial, statistical and accounting data included or incorporated by
reference therein or omitted therefrom, as to which such counsel need
express no belief), when they were filed with the Commission, complied as
to form in all material respects with the requirements of the Exchange Act
and the rules and regulations of the Commission thereunder or that the
Offering Memorandum (except as to the financial statements and the notes
thereto, and the other financial, statistical and accounting data included
or incorporated by reference therein or omitted therefrom), as of its issue
date or at the Closing Date, contained or contains any untrue statement of
a material fact or
17
<PAGE>
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").
The opinion of Cadwalader, Wickersham & Taft described above shall be
rendered to the Initial Purchasers and the Company at the request of the
Company and shall so state therein.
(g) Thomas O. McGimpsey, a Senior Attorney and Secretary for the
Company and a Senior Attorney and Assistant Secretary for the Guarantor,
shall have furnished to the Initial Purchasers his written opinion, dated
the Closing Date, in form and substance satisfactory to the Initial
Purchasers, to the effect that:
(i) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Colorado and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now
being conducted.
(ii) The Guarantor is a corporation duly incorporated,
validly existing and in good standing under the laws of the state of
its incorporation and has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business
as now being conducted.
(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 thereof 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, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditor's rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
(iv) The Securities, when duly executed and authenticated
in the manner contemplated in the Indenture and issued and delivered
to the Initial Purchasers 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,
subject to applicable bankruptcy,
18
<PAGE>
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditor's rights and remedies generally, and
subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(v) The Guarantees, when duly executed in the manner
contemplated in the Indenture and issued and delivered to the Initial
Purchasers 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, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditor's
rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(vi) The Exchange Notes (as defined in the Registration
Rights Agreement) have been duly authorized and, when duly executed in
the manner contemplated in the Indenture and issued and delivered in
exchange for the Securities in the manner contemplated in the
Registration Rights Agreement, will constitute legal, valid and
binding obligations of the Company enforceable against the Company in
accordance with their terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditor's rights and remedies generally, and
subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding
at law or in equity).
(vii) The Exchange Guarantees (as defined in the
Registration Rights Agreement) have been duly authorized and, when
duly executed in the manner contemplated in the Indenture and issued
and delivered in the manner contemplated in the Registration Rights
Agreement, will constitute legal, valid and binding obligations of the
Guarantor enforceable against the Guarantor in accordance with their
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditor's rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
(viii) The 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.
19
<PAGE>
(ix) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and the Guarantor,
and is a valid and binding agreement of the Company and the Guarantor,
enforceable against the Company and the Guarantor in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditor's rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity),
and except that enforcement of rights to indemnification and
contribution contained therein may be limited by applicable federal or
state laws or the public policy underlying such laws.
(x) The execution, delivery and performance of the Merger
Agreement by the Guarantor has been duly authorized by all necessary
corporate action on the part of the Guarantor. The Merger Agreement
has been duly and validly executed and delivered by the Guarantor,
enforceable against the Guarantor in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditor's
rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(xi) To the best of his knowledge, neither the Company,
the Guarantor nor any of its subsidiaries is in violation of its
charter or by-laws and no default by the Company, the Guarantor or any
of its subsidiaries exists in the due performance or observance of any
material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument that is described or referred to in the
Offering Memorandum.
(xii) 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 Initial
Purchasers 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.
(xiii) 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 Registration Rights
Agreement, the Securities, the Guarantees, the Exchange Notes and the
Exchange Guarantees (collectively, the "AGREEMENTS") are not affected
by, and the performance of the obligations set forth in such
Agreements, the issuance and sale of the
20
<PAGE>
Securities and the Guarantees and the consummation of the
transactions contemplated by 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.
(xiv) To the best of such counsel's knowledge, there is not
pending or threatened any action, suit, proceeding, inquiry or
investigation to which the Company, the Guarantor or any subsidiary of
the Guarantor is a party or to which the assets, properties or
operations of the Company, the Guarantor or any subsidiary of the
Guarantor is subject, before or by any court or governmental agency or
body, domestic or foreign, which might reasonably be expected to
result in a Material Adverse Effect or which might reasonably be
expected to materially and adversely affect the assets, properties or
operations thereof or the consummation of the transactions
contemplated by this Agreement, the Registration Rights Agreement or
the Indenture or the performance by the Company or the Guarantor of
their respective obligations hereunder or thereunder.
In rendering such opinion, such counsel may rely as to matters of New
York law upon the opinion referred to in Section 6(f) without independent
verification.
(h) on the date of the issuance of the Offering Memorandum and also
on the Closing Date, Arthur Andersen LLP shall have furnished to the
Initial Purchasers letters, dated the respective dates of delivery thereof,
in form and substance satisfactory to the Representatives, containing
statements and information of the type customarily included in accountants
"comfort letters" to underwriters with respect to the financial statements
and certain financial information of the Company, the Guarantor and Qwest
contained in the Offering Memorandum;
(i) the Initial Purchasers shall have received on and as of the
Closing Date an opinion of Brown & Wood LLP, counsel to the Initial
Purchasers, with respect to the validity of the Indenture and the
Securities, and such other related matters as the Initial Purchasers may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(j) the Initial Purchasers shall have received prior to the Closing
Date a copy of the Registration Rights Agreement, in the form and substance
satisfactory to the Initial Purchasers, duly executed by the Company and
the Guarantor, and the Registration Rights Agreement shall be in full force
and effect at the Closing Date; and
(k) on or prior to the Closing Date the Company shall have
furnished to the Initial Purchasers such further certificates and documents
as the Initial Purchasers shall reasonably request.
21
<PAGE>
7. (a) The Company and the Guarantor jointly and severally agree to indemnify
and hold harmless each Initial Purchaser against any losses, claims,
damages or liabilities, joint or several, to which such Initial Purchaser
may become subject, as incurred, under the Securities Act, the Exchange 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
Offering Memorandum or any amendment or supplement thereto, 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 Initial Purchaser, as
incurred, for any legal or other expenses reasonably incurred by such
Initial Purchaser 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 Initial Purchaser, or on
behalf of any Initial Purchaser by the Representatives, specifically for
use therein.
(b) Each Initial Purchaser 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
Securities 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 Offering Memorandum or any amendment or supplement thereto,
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 Initial
Purchaser, or on behalf of such Initial Purchaser 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.
(c) Promptly after receipt by an indemnified party under this Section 7
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 7, 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 7. 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
22
<PAGE>
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 7 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 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
Initial Purchasers 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 Initial Purchasers 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 Initial Purchasers 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 discounts and commissions received by the Initial Purchasers. 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 Initial Purchasers 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), no Initial Purchaser shall be required to contribute any
amount in excess of the amount by which the total price at which the
Securities purchased by it were offered exceeds the amount of any damages
which such Initial Purchaser has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations in this subsection (d) to contribute are several in
proportion to the respective principal amount of the Securities set forth
opposite their names in Schedule I hereto, and not joint.
23
<PAGE>
(e) 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 Initial Purchaser within the meaning of
the Securities Act or the Exchange Act; and the obligations of the Initial
Purchasers under this Section 7 shall be in addition to any liability which
the respective Initial Purchasers may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who controls the
Company or the Guarantor within the meaning of the Securities Act or the
Exchange Act.
The indemnity and contribution agreements contained in this Section 7
and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Initial Purchaser or any person controlling any Initial
Purchaser or by or on behalf of the Company or the Guarantor or any person
controlling the Company or the Guarantor and (iii) acceptance of and payment
for any of the Securities.
8. Notwithstanding anything herein contained, this Agreement may be terminated
in the absolute discretion of the Initial Purchasers, by notice given to
the Company and the Guarantor, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of
the New York Stock Exchange, the American Stock Exchange, the Nasdaq
National Market, the Chicago Board Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade, (ii) trading of any securities of
or guaranteed by the Company, the Guarantor or Qwest shall have been
suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York shall have
been declared by either Federal or New York State authorities, or (iv)
there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in the judgment
of the Initial Purchasers, is material and adverse and which, in the
judgment of the Initial Purchasers, makes it impracticable to market the
Securities on the terms and in the manner contemplated in the Offering
Memorandum.
9. This Agreement shall become effective upon the execution and delivery
hereof by the parties hereto.
If, on the Closing Date any one or more of the Initial Purchasers shall
fail or refuse to purchase Securities which it or they have agreed to
purchase hereunder on such date, and the aggregate principal amount of
Securities which such defaulting Initial Purchaser or Initial Purchasers
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate principal amount of the Securities to be purchased on such date,
the other Initial Purchasers shall be obligated severally in the proportions
that the principal amount of Securities set forth opposite their respective
names in Schedule I bears to the aggregate principal amount of Securities set
forth opposite the names of all such non-defaulting Initial Purchasers, or in
such other proportions as the Initial Purchasers may specify, to purchase the
Securities which such defaulting Initial Purchaser or Initial Purchasers
agreed but failed or refused to purchase on such date; PROVIDED that in no
event shall the principal
24
<PAGE>
amount of Securities that any Initial Purchaser has agreed to purchase
pursuant to Section 1 be increased pursuant to this Section 9 by an amount in
excess of one-tenth of such principal amount of Securities without the
written consent of such Initial Purchaser. If, on the Closing Date any
Initial Purchaser or Initial Purchasers shall fail or refuse to purchase
Securities which it or they have agreed to purchase hereunder on such date,
and the aggregate principal amount of Securities with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of
Securities to be purchased on such date, and arrangements satisfactory to the
Initial Purchasers, the Company and the Guarantor for the purchase of such
Securities are not made within 36 hours after such default, this Agreement
shall terminate without liability on the part of any non-defaulting Initial
Purchaser, the Company or the Guarantor. In any such case either the Initial
Purchasers, the Company or the Guarantor shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Offering Memorandum or in any other
documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Initial Purchaser from liability
in respect of any default of such Initial Purchaser under this Agreement.
10. If this Agreement shall be terminated by the Initial Purchasers, or any of
them, because of any failure or refusal on the part of the Company or the
Guarantor to comply with the terms or to fulfill any of the conditions of
this Agreement, or if for any reason the Company or the Guarantor shall be
unable to perform its obligations under this Agreement or any condition of
the Initial Purchasers' obligations cannot be fulfilled, (i) the Company
and the Guarantor shall remain responsible for the expenses to be paid or
reimbursed by them pursuant to Section 5(k) and (ii) the Company and the
Guarantor agree to reimburse the Initial Purchasers or such Initial
Purchasers as have so terminated this Agreement with respect to themselves,
severally, for the out-of-pocket expenses reasonably incurred by such
Initial Purchasers in connection with this Agreement or the offering
contemplated hereunder, not exceeding $75,000, and for the fees and
disbursements of their counsel.
11. This Agreement shall inure to the benefit of and be binding upon the
Company, the Guarantor, the Initial Purchasers, any controlling persons
referred to herein and their respective successors and assigns. Nothing
expressed or mentioned in this Agreement is intended or shall be construed
to give any other person, firm or corporation any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision
herein contained. No Initial Purchaser of Securities from any Initial
Purchaser shall be deemed to be a successor by reason merely of such
purchase.
12. All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any
standard form of telecommunication. Notices to the Initial Purchasers
shall be given to the Initial Purchasers c/o J.P. Morgan Securities Inc.,
60 Wall Street, New York, New York 10260 (telefax: 648-5909); Attention:
Syndicate Department. Notices to the Company and the Guarantor shall be
given to each of them at 1801 California Street, Denver, Colorado 80202
(telefax: (303) 896-6468); Attention: Sean P. Foley.
25
<PAGE>
13. This Agreement may be signed in counterparts, each of which shall be an
original and all of which together shall constitute one and the same
instrument.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF
LAWS PROVISIONS THEREOF.
26
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
U S WEST CAPITAL FUNDING,
INC.
By: /s/ Sean P. Foley
--------------------------
Name: Sean P. Foley
Title: Treasurer
U S WEST, INC.
By: /s/ Sean P. Foley
--------------------------
Name: Sean P. Foley
Title: Treasurer
Accepted: August 20, 1999
J.P. MORGAN SECURITIES INC.
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: J.P. MORGAN SECURITIES INC.
By: /s/ John E. Simmons
--------------------------
Name: John E. Simmons
Title: Vice President
For themselves and as Representatives of the
other Initial Purchasers named in Schedule I hereto.
27
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount
of Securities
Initial Purchaser To Be Purchased
----------------- ---------------
<S> <C>
J.P. Morgan Securities Inc............................... $431,250,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated....... 431,250,000
Banc of America Securities LLC........................... 57,500,000
Lehman Brothers Inc...................................... 57,500,000
Salomon Smith Barney Inc................................. 57,500,000
ABN AMRO Incorporated.................................... 11,500,000
Banc One Capital Markets, Inc............................ 11,500,000
BNY Capital Markets, Inc................................. 11,500,000
Commerzbank Capital Markets Corporation.................. 11,500,000
Fleet Securities, Inc.................................... 11,500,000
Mellon Financial Markets, Inc............................ 11,500,000
Norwest Investments Services Inc......................... 11,500,000
Muriel Siebert & Co., Inc................................ 11,500,000
Utendahl Capital Partners, L.P........................... 11,500,000
The Williams Capital Group, L.P.......................... 11,500,000
--------------
Total: $1,150,000,000
</TABLE>
<PAGE>
Exhibit 3-A.2
ARTICLES OF INCORPORTION
of
U S WEST Capital Funding, Inc.
I, the undersigned natural person of the age of eighteen years or
more, acting as incorporator of a corporation under the Colorado Corporation
Code, adopt the following Articles of Incorporation for such corporation:
ARTICLE ONE. The name of the corporation is U S WEST Capital
Funding, Inc.
ARTICLE TWO. The aggregate number of shares of stock which the
corporation shall have authority to issue is one (1) share without par value.
ARTICLE THREE. Cumulative voting shall not be allowed in the
election of directors of the corporation.
ARTICLE FOUR. Shareholders shall have no preemptive right to
acquire additional unissued or treasury shares of the corporation or
securities convertible into shares or carrying stock purchase warrants or
privileges.
ARTICLE FIVE. The address of the corporation's initial
registered office in the State of Colorado is 7800 East Orchard Road, Suite
480, Englewood, Colorado 80111. The name of the corporation's initial
registered agent at such address is Brian M. Bell.
ARTICLE SIX. The number of directors constituting the initial
board of directors of the corporation is three (3).
The names and addresses of the persons who are to serve as directors until
the first annual meeting of the shareholders or until their successors are
elected and qualified are:
<TABLE>
<CAPTION>
NAME ADDRESS
<S> <C>
Laurence W. DeMuth, Jr. 7800 East Orchard Road, Suite 200
Englewood, CO 80111
Howard P. Doerr 7800 East Orchard Road, Suite 200
Englewood, CO 80111
John C. Willemssen 7800 East Orchard Road, Suite 200
Englewood, CO 80111
</TABLE>
<PAGE>
Exhibit 3-A.2
ARTICLE SEVEN. The name and address of the incorporator is Brian
M. Bell, 7800 East Orchard Road, Suite 480, Englewood, Colorado 80111.
IN WITNESS WHEREOF, I HAVE EXECUTED THESE Articles of Incorporation
in duplicate this 9th day of June, 1986.
/s/ BRIAN M. BELL
------------------------------
BRIAN M. BELL
STATE OF COLORADO )
) ss.
COUNTY OF ARAPAHOE )
Before me, Marsha A. Berger, a Notary Public in and for said County
and State, personally appeared Brian M. Bell, who acknowledged before me that
he signed the foregoing Articles of Incorporation as the incorporator and
that the facts contained therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 9th
day of June, 1986.
/s/ MARSHA A. BERGER
------------------------------
NOTARY PUBLIC
Marsha A. Berger
7800 East Orchard Road
Englewood, CO 80111
My Commission Expires: January 25, 1990
<PAGE>
Exhibit 3-B.2
RESTATED BYLAWS
OF
U S WEST CAPITAL FUNDING, INC.
Adopted May 15, 1995
As Amended on August 31, 1995 and August 9, 1996
<PAGE>
Exhibit 3-B.2
RESTATED BYLAWS
of
U S WEST CAPITAL FUNDING, INC.
ARTICLE ONE
OFFICES
The principal office of the corporation shall be designated from
time to time by the corporation and may be within or outside of Colorado.
The corporation may have such other offices, either within or
outside of Colorado, as the Board of Directors may designate or as the
business of the corporation may require from time to time.
The registered office of the corporation required by the Colorado
Business Corporation Act to be maintained in Colorado may be, but need not
be, identical with the principal office, and the address of the registered
office may be changed from time to time by the Board of Directors.
ARTICLE TWO
SHAREHOLDERS
Section 1. ANNUAL MEETING. The annual meeting of the shareholders
shall be held on the first Friday in March in each year, at an hour to be
named in the notice of the meeting, or at such other date and time as the
Board of Directors shall determine, for the purpose of electing Directors of
the corporation and for the transaction of such other business as may come
before the meeting. If the annual meeting is not held on the day designated,
or at any adjournment thereof, the Board of Directors shall cause a meeting
in lieu thereof to be held as soon thereafter as is convenient.
Section 2. SPECIAL MEETINGS. Special meetings of the shareholders
may be called for any purpose. Such meetings may be called by the President
or by the Board of Directors, and shall be called by the President at the
request of holders of shares representing at least ten percent (10%) of all
of the votes entitled to be cast on any issue proposed to be considered at
the meeting.
Section 3. PLACE OF MEETING. The Board of Directors may designate
any place either within or outside Colorado as the place of meeting for any
annual meeting or for any special meeting. If no designation is made, or if a
special meeting is called other than by the Board of Directors, the place of
the meeting shall be the principal office of the corporation.
Section 4. NOTICE OF MEETING. Written notice stating the place,
date, and hour of the meeting shall be given delivered not less than ten (10)
days nor more than sixty (60) days before the date of the meeting, except
that, (i) if the authorized shares are to be increased, at least thirty (30)
days' notice shall be given, or (ii) any other longer notice period is
required by the Colorado Business Corporation Act. Notice of a special
meeting shall include a description of the purpose or purposes of the
meeting. Notice shall be given personally or by U.S. mail (postage prepaid),
private carrier, telegraph, teletype, electronically transmitted facsimile or
other
1
<PAGE>
Exhibit 3-B.2
form of wire or wireless communication by or at the direction of the
President, the Secretary, or the officer or persons calling the meeting, to
each shareholder of record entitled to vote at such meeting.
Section 5. RECORD DATE. For the purpose of determining shareholders
entitled to (i) notice of or to vote at any meeting of shareholders or any
adjournment thereof, (ii) receive distributions or share dividends, or (iii)
demand a special meeting, or to make a determination of shareholders for any
other proper purpose, the Board of Directors shall fix, in advance, a date as
the record date for the determination of shareholders. Such date shall be not
more than seventy (70) days, and for a meeting of shareholders, not less than
ten (10) days prior to the date on which the particular action requiring such
determination of shareholders is to be taken. When a determination of
shareholders entitled to vote at any meeting of shareholders is made as
provided in this Section, such determination shall apply to any adjournment
thereof unless the Board of Directors fixes a new record date, which it must
do if the meeting is adjourned to a date more than one hundred twenty (120)
days after the date fixed for the original meeting.
Notwithstanding the above, the record date for determining the
shareholders entitled to take action without a meeting or entitled to be
given notice of action so taken shall be the date a writing upon which the
action is taken is first received by the corporation.
Section 6. QUORUM. One-third of the votes entitled to be cast on a
matter by a voting group shall constitute a quorum of that voting group for
action on that matter. If a quorum is present, the affirmative vote of the
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders, unless the vote of a
greater proportion or number is required by law or the Articles of
Incorporation. If a quorum is not represented at any meeting of the
shareholders, such meeting may be adjourned for a period not to exceed one
hundred twenty (120) days for any one adjournment.
Section 7. PROXIES. At all meetings of shareholders, a shareholder
may vote by proxy by signing an appointment form or similar writing, either
personally or by his duly authorized attorney-in-fact. The proxy appointment
form or similar writing shall be filed with the Secretary of the corporation
before or at the time of the meeting. The appointment of a proxy is effective
when received by the corporation and is valid for eleven (11) months unless a
different period is expressly provided in the appointment form or similar
writing.
Section 8. INFORMAL ACTION BY SHAREHOLDERS. Any action required or
permitted to be taken at a meeting of the shareholders may be taken without a
meeting if a written consent (or counterparts thereof) that sets forth the
action so taken is signed by all of the shareholders entitled to vote with
respect to the subject matter thereof and received by the corporation. Such
consent shall have the same force and effect as a unanimous vote of the
shareholders and may be stated as such in any document. Action taken under
this Section 8 is effective as of the date the last writing necessary to
effect the action is received by the corporation, unless a different
effective date is specified, in which case such specified date shall be the
effective date for such action.
2
<PAGE>
Exhibit 3-B.2
ARTICLE THREE
BOARD OF DIRECTORS
Section 1. GENERAL POWERS. All corporate powers shall be exercised
by or under the authority of, and the business and affairs of the corporation
shall be managed under the direction of its Board of Directors, except as
otherwise provided in the Colorado Business Corporation Act or the Articles
of Incorporation.
Section 2. NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors
shall consist of three (3) persons of the age of eighteen years or older who
need not be a shareholder of the corporation or a resident of Colorado. A
Director of the corporation shall be elected at the annual meeting of the
shareholders and shall serve until the next succeeding annual meeting and
thereafter until his successor shall have been elected and qualified. (As
amended August 31, 1995 and August 9, 1996)
Section 3. VACANCIES. A vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the shareholders or
the Board of Directors. If the Directors remaining in office constitute fewer
than a quorum of the Board, the Directors may fill the vacancy by the
affirmative vote of a majority of all the Directors remaining in office.
Whether elected by the Directors or the shareholders, a Director shall hold
office until the next annual shareholders' meeting at which Directors are
elected.
Section 4. REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held without notice immediately after and at the same
place as the annual meeting of shareholders and at such other times as shall
be fixed by the Board. The Board of Directors may designate any place, either
within or outside Colorado, as the place of meeting for any regular meeting.
Section 5. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called at any time by or at the request of the President or
any of the Directors. The person or persons authorized to call special
meetings of the Board may fix any place, either within or outside Colorado,
as the place for holding any special meeting.
Section 6. NOTICE. Notice need not be given of regular meetings of
the Board of Directors, nor need notice be given of adjourned meetings.
Notice of special meetings shall be given at least two (2) days prior to the
meeting by written notice either personally delivered or mailed to each
Director at his business address, or by notice transmitted by telegraph,
telex, electronically transmitted facsimile or other form of wire or wireless
communication. If mailed, such notice shall be deemed to be given and to be
effective on the earlier of (i) three (3) days after such notice is deposited
in the U.S. mail (postage prepaid), or (ii) the date shown on the return
receipt, if mailed by registered or certified mail return receipt requested.
If notice is given by telex, electronically transmitted facsimile or other
similar form of wire or wireless communication, such notice shall be deemed
to be given and to be effective when sent.
A Director may waive notice of a meeting before or after the time
and date of the meeting by a writing signed by such Director. Such waiver
shall be delivered to the corporation for filing with the corporate records.
Further, attendance of the Director at a meeting shall constitute a waiver of
notice of that meeting, except when the Director attends for the express
purpose of objecting to the transaction of any business at that the meeting
because the meeting was not lawfully called or convened. Neither the business
to be transacted at, nor the purpose of, any regular or special meeting of
the Board of Directors need be specified in the notice of such meeting.
3
<PAGE>
Exhibit 3-B.2
Section 7. QUORUM AND VOTING. A majority of the number of Directors
fixed by these Bylaws shall constitute a quorum for the transaction of
business, and the acts of a majority of Directors present at a meeting at
which a quorum is present shall constitute the acts of the Board of
Directors. If, at any meeting of the Board of Directors, less than a quorum
is present, a majority of those present may adjourn the meeting from time to
time without further notice, for a period not to exceed sixty (60) days at
any one adjournment.
Section 8. COMPENSATION. Directors shall be entitled to receive from
the corporation such compensation and reimbursement for expenses as the Board
of Directors may determine from time to time.
Section 9. COMMITTEES. The Board of Directors may, by resolution
adopted by a majority of the Board in office when the action is taken,
designate from among its members an executive committee and one or more other
committees, each of which, to the extent provided in the resolution, shall
have all the authority of the Board of Directors; except that no such
committee shall have the authority to (i) declare dividends or distributions,
(ii) approve or propose to shareholders actions or proposals required by the
Colorado Business Corporation Act to be approved by shareholders, (iii) fill
vacancies on the Board of Directors or any committee thereof, (iv) amend the
Articles of Incorporation, (v) adopt, amend or repeal the Bylaws, (vi)
approve a plan of merger not requiring shareholder approval, (vii) reduce
earned or capital surplus, (viii) authorize or approve the reacquisition of
shares unless pursuant to a general formula or method specified by the Board
of Directors, or (ix) authorize or approve the issuance or sale of, or any
contract to issue or sell, shares or designate the terms of a series of a
class of shares. The Board of Directors shall have the power at any time to
fill vacancies in, to change the size or membership of, and to discharge any
such committee.
Neither the designation of any such committee, the delegation of
authority to such committee, nor any action by such committee pursuant to its
authority shall alone constitute compliance by any member of the Board of
Directors or a member of the committee in question with his responsibility to
conform to the standard of care set forth in Article Three, Section 12 of
these Bylaws.
Section 10. INFORMAL ACTION BY DIRECTORS. Any action required or
permitted to be taken at a meeting of the Directors or any committee
designated by the Board of Directors may be taken without a meeting if a
written consent (or counterparts there) that sets forth the action so taken
is signed by all of the Directors entitled to vote with respect to the action
taken. Such consent shall have the same force and effect as a unanimous vote
of the Directors or committee members and may be stated as such in any
document. Unless the consent specifies a different effective date, action
taken under this Section 10 is effective at the time the last Director signs
a writing describing the action taken, unless, before such time, any Director
has revoked his consent by a writing signed by the Director and received by
the President or the Secretary of the corporation.
Section 11. TELEPHONIC MEETINGS. Members of the Board of Directors
or any committee designated by such Board may participate in a meeting of the
Board or committee by means of communication by which all persons
participating in the meeting can hear each other during the meeting. Such
participation shall constitute presence at the meeting.
Section 12. STANDARD OF CARE. A Director shall perform his duties as
a Director, including, without limitation, his duties as a member of any
committee of the Board, in good faith, in a manner he reasonably believes to
be in the best interests of the corporation, and with
4
<PAGE>
Exhibit 3-B.2
the care an ordinarily prudent person in a like position would exercise under
similar circumstances. In performing his duties, a Director shall be entitled
to rely on information, opinions, reports or statements, including financial
statements and other financial data, in each case prepared or presented by
the persons herein designated. However, he shall not be considered to be
acting in good faith if he has knowledge concerning the matter in question
that would cause such reliance to be unwarranted. A Director shall not be
liable to the corporation or its shareholders for any action he takes or
omits to take as a Director, if, in connection with such action or omission,
he performs his duties in compliance with this Section 12.
The designated persons on whom a Director is entitled to rely are
(i) one or more officers or employees of the corporation whom the Director
reasonably believes to be reliable and competent in the matters presented,
(ii) legal counsel, public accountant, or other person as to matters which
the Director reasonably believes to be within such person's professional or
expert competence, or (iii) a committee of the Board of Directors on which
the Director does not serve if the Director reasonably believes the committee
merits confidence.
ARTICLE FOUR
OFFICERS
Section 1. ENUMERATION OF OFFICES. The corporation shall have as
officers a President, one or more Vice Presidents, a Secretary, and a
Treasurer, each of whom shall be elected by the Board of Directors. The
corporation may also have a Chief Financial Officer, a General Counsel, and a
Controller as the Board may elect. Such other officers as may be deemed
necessary may also be elected by the Board of Directors. One person may hold
more than one office. In all cases where the duties of any officer is not
prescribed by the Bylaws or by the Board of Directors, such officer shall
follow the orders and instruction of the President of the corporation.
Section 2. TERM OF OFFICE. The officers of the corporation shall be
elected by the Board of Directors at each annual meeting of the Board held
after each annual meeting of the shareholders or as soon thereafter as
conveniently may be. Each officer shall hold office until a successor is
elected and qualified or until such officer's resignation, death or removal.
Section 3. REMOVAL. Any officer may be removed at any time with or
without cause by action of the shareholders, the Board of Directors or an
officer(s) authorized by the Board.
Section 4. VACANCIES. A vacancy in any office because of death,
resignation, removal or otherwise may be filled by the Board of Directors, or
by an officer(s) authorized by the Board, for the unexpired portion of the
officer's term.
Section 5. PRESIDENT; POWERS AND DUTIES. Subject to the direction
and supervision of the Board of Directors, the President shall be the chief
executive officer of the corporation, and shall have general and active
control of its affairs and business and general supervision of its officers,
agents and employees. The President shall preside at all meetings of the
shareholders and the Board of Directors. Any document may be signed by the
President or any other person who may be thereunto authorized by the
President or the Board of Directors (said authorization to be in writing and
filed with the Secretary of the corporation).
5
<PAGE>
Exhibit 3-B.2
Section 6. VICE PRESIDENTS; POWERS AND DUTIES. Each Vice President
shall have such powers and perform such duties as may be assigned by the
Board of Directors or the President. In case of the absence or disability of
the President, or a vacancy in the office, a Vice President designated by the
President or the Board of Directors shall exercise all the powers and perform
all the duties of the President.
Section 7. SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall
attend all meetings of the shareholders and the Board of Directors and shall
keep the minutes for such meetings in one or more books provided for that
purpose. The Secretary shall be custodian of the corporate records, except
those required to be in the custody of the Treasurer or the Controller, shall
keep the seal of the corporation and shall execute and affix the seal of the
corporation to all documents duly authorized for execution under seal on
behalf of the corporation, and shall perform all of the duties incidental to
the office of Secretary, as well as such other duties as may be assigned by
the President or the Board of Directors.
The Assistant Secretaries shall perform such of the Secretary's
duties as the Secretary shall from time to time direct. In case of the
absence or disability of the Secretary, or a vacancy in the office, an
Assistant Secretary designated by the President or the Board of Directors, if
the office is not vacant, shall perform the duties of the Secretary.
Section 8. TREASURER AND ASSISTANT TREASURERS; POWERS AND DUTIES.
The Treasurer shall have care and custody of the funds and securities of the
corporation, shall deposit such funds in the name and to the credit of the
corporation with such depositories as the Treasurer shall approve, shall
disburse the funds of the corporation for proper expenses and dividends, and
as may be ordered by the Board of Directors, taking proper vouchers for such
disbursements. The Treasurer shall perform all of the duties incident to the
office of Treasurer, as well as such other duties as may be assigned by the
President or the Board of Directors. In the event there is no Chief Financial
Officer, the Treasurer shall perform the duties of Chief Financial Officer.
In the event there is no Controller, the Treasurer shall also be the
principal accounting officer of the corporation and shall perform the duties
incident to the office of Controller
The Assistant Treasurers shall perform such of the Treasurer's
duties as the Treasurer shall from time to time direct. In case of the
absence or disability of the Treasurer, or a vacancy in the office, an
Assistant Treasurer designated by the President or the Board of Directors, if
the office is not vacant, shall perform the duties of the Treasurer.
Section 9. CHIEF FINANCIAL OFFICER; POWERS AND DUTIES. The Chief
Financial Officer shall be responsible for maintaining the financial
integrity of the corporation, shall prepare the financial plans for the
corporation and shall monitor the financial performance of the corporation
and its subsidiaries, as well as performing such other duties as may be
assigned by the President or the Board of Directors.
Section 10. GENERAL COUNSEL; POWERS AND DUTIES. The General Counsel
shall be a licensed attorney at law and shall be the chief legal officer of
the corporation. The General Counsel shall have such power and exercise such
authority and provide such counsel to the corporation as deemed necessary or
desirable to enforce the rights and protect the property and integrity of the
corporation, shall also have the power, authority, and responsibility for
securing for the corporation all legal advice, service and counseling, and
shall perform all of the duties incident to the office of General Counsel, as
well as such other duties as may be assigned by the President or the Board of
Directors.
6
<PAGE>
Exhibit 3-B.2
Section 11. CONTROLLER AND ASSISTANT CONTROLLERS; POWERS AND DUTIES.
The Controller shall be the chief accounting officer of the corporation and
shall keep and maintain in good and lawful order all accounts required by law
and shall have sole control over, and ultimate responsibility for, the
accounts and accounting methods of the corporation and the compliance of the
corporation with all systems of accounts and accounting regulations
prescribed by law. The Controller shall audit, to such extent and at such
times as may be required by law or as the Controller may think necessary, all
accounts and records of corporate funds or property, by whomsoever kept, and
for such purposes shall have access to all such accounts and records. The
Controller shall make and sign all necessary and proper accounting statements
and financial reports of the corporation, and shall perform all of the duties
incident to the office of Controller, as well as such other duties as may be
assigned by the President or the Board of Directors.
The Assistant Controllers shall perform such of the Controller's
duties as the Controller shall from time to time direct. In case of the
absence or disability of the Controller, or a vacancy in the office, an
Assistant Controller designated by the President or the Board of Directors,
if the office is not vacant, shall perform the duties of the Controller.
Section 12. SALARIES. The salaries of all officers of the
corporation shall be fixed by or in the manner provided by the Board of
Directors. If authorized by a resolution of the Board, the salary of any
officer other than the President may be fixed by the President or a committee
of the Board. No officer shall be disqualified from receiving a salary by
reason of also being a Director of the corporation.
ARTICLE FIVE
STOCK CERTIFICATES
The shares of the corporation shall be represented by certificates
in such form and shall contain such information consistent with law as shall
be approved by the Board of Directors. Such certificates shall be signed by
the President or a Vice President and by the Treasurer or an Assistant
Treasurer or by the Secretary or an Assistant Secretary of the corporation
and may be sealed with the seal of the corporation or a facsimile thereof.
Any or all of the signatures upon a certificate may be facsimiles if the
certificate is countersigned by a transfer agent or registered by a registrar
other than the corporation itself or an employee of the corporation. If any
officer who has signed or whose facsimile signature has been placed upon such
certificate has ceased to be such officer before the certificate is issued,
it may be issued by the corporation with the same effect as if such person
were such officer at the date of its issue.
ARTICLE SIX
Indemnification of Directors, Officers, and Employees
Section 1. SCOPE OF INDEMNIFICATION.
(a) The corporation shall indemnify an indemnified
representative against any liability incurred in connection with any
proceeding in which the indemnified representative may be involved as a party
or otherwise, by reason of the fact that such person is or was serving in an
indemnified capacity, except to the extent that any such indemnification
against a particular liability is expressly prohibited by applicable law or
where a judgment or other final adjudication adverse to the indemnified
representative establishes, or where the corporation determines, that
7
<PAGE>
Exhibit 3-B.2
his or her acts or omissions (i) were in breach of such person's duty of
loyalty to the corporation or its shareholders, (ii) were not in good faith
or involved intentional misconduct or a knowing violation of law, or (iii)
resulted in receipt by such person of an improper personal benefit. The
rights granted by this Article shall not be deemed exclusive of any other
rights to which those seeking indemnification, contribution, or advancement
of expenses may be entitled under any statute, certificate or articles of
incorporation, agreement, contract of insurance, vote of shareholders or
disinterested directors, or otherwise. The rights of indemnification and
advancement of expenses provided by or granted pursuant to this Article shall
continue as to a person who has ceased to be an indemnified representative in
respect of matters arising prior to such time and shall inure to the benefit
of the heirs, executors, administrators, and personal representatives of such
a person.
(b) If an indemnified representative is not entitled to
indemnification with respect to a portion of any liabilities to which such
person may be subject, the corporation shall nonetheless indemnify such
indemnified representative to the maximum extent for the remaining portion of
the liabilities.
(c) The termination of a proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that the indemnified
representative is not entitled to indemnification.
(d) To the extent permitted by law, the payment of
indemnification provided for by this Article, including the advancement of
expenses pursuant to Section 2, with respect to proceedings other than those
brought by or in the right of the corporation, shall be subject to the
conditions that the indemnified representative shall give the corporation
prompt notice of any proceeding, that the corporation shall have complete
charge of the defense of such proceeding and the right to select counsel for
the indemnified representative, and that the indemnified representative shall
assist and cooperate fully in all matters respecting the proceeding and its
defense or settlement. The corporation may waive any or all of the conditions
set forth in the preceding sentence. Any such waiver shall be applicable only
to the specific payment for which the waiver is made and shall not in any way
obligate the corporation to grant such waiver at any future time. In the
event of a conflict of interest between the indemnified representative and
the corporation that would disqualify the corporation's counsel from
representing the indemnified representative under the rules of professional
conduct applicable to attorneys, it shall be the policy of the corporation to
waive any or all of the foregoing conditions subject to such limitations or
conditions as the corporation shall deem to be reasonable in the
circumstances.
(e) For purposes of this Article:
(1) "indemnified capacity" means any and all
past, present, or future services by an indemnified representative in one or
more capacities as a director, officer, employee, or agent of the corporation
or, at the request of the corporation, as a director, officer, employee,
agent, fiduciary, or trustee of another corporation, partnership, joint
venture, trust, employee benefit plan, or other entity or enterprise; any
indemnified representative serving an
8
<PAGE>
Exhibit 3-B.2
affiliate of the corporation in any capacity shall be deemed to be doing so
at the request of the corporation; an "affiliate of the corporation" means an
entity that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the
corporation;
(2) "indemnified representative" means any and all
directors, officers, and employees of the corporation and any other person
designated as an indemnified representative by the Board of Directors of the
corporation;
(3) "liability" means any damage, judgment, amount
paid in settlement, fine, penalty, punitive damage, excise tax assessed with
respect to an employee benefit plan, or cost or expense of any nature
(including, without limitation, expert witness fees, costs of investigation,
litigation and appeal costs, attorneys' fees, and disbursements); and
(4) "proceeding" means any threatened, pending, or
completed action, suit, appeal, or other proceeding of any nature, whether
civil, criminal, administrative, or investigative, whether formal or
informal, whether external or internal to the corporation, and whether
brought by or in the right of the corporation, a class of its security
holders or otherwise.
Section 2. ADVANCING EXPENSES. As provided by the Colorado
Business Corporation Act and to the maximum extent permitted by such law, the
corporation shall pay the reasonable expenses incurred in good faith by an
indemnified representative in advance of the final disposition of a
proceeding described in Section 1. Before making any such advance payment of
expenses, the corporation shall receive an undertaking by or on behalf of the
indemnified representative to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by the
corporation pursuant to this Article. Such undertaking shall be an unlimited,
unsecured general obligation of the indemnified representative and shall be
accepted without reference to the ability of such person to make repayment.
No advance shall be made by the corporation if a determination is reasonably
and promptly made by the Board of Directors by majority vote of a quorum of
disinterested directors, or (if such a quorum is not obtainable or, even if
obtainable, a quorum of disinterest directors so directs) by independent
legal counsel in a written opinion, that, based upon the facts known to the
Board or counsel at the time such determination is made, the indemnified
representative has acted in such a manner as to permit or require the denial
of indemnification pursuant to the provisions of Section 1.
ARTICLE SEVEN
MISCELLANEOUS
Section 1. CORPORATE SEAL. The official seal for the corporation
shall be circular in form and shall contain the name of the corporation and
the words, "Corporate Seal" and "Colorado."
Section 2. FISCAL YEAR. The fiscal year of the corporation shall be
as established by the Board of Directors.
Section 3. WAIVER OF NOTICE. When any notice is required to be given
to any shareholder or Director of the corporation under the provisions of
these Bylaws or under the provisions of the Articles of Incorporation or
under the provisions of the Colorado Business Corporation Act, a waiver
thereof, in writing, signed by the person entitled to such notice whether
before, at, or after the time stated therein, shall be equivalent to the
giving of such notice.
9
<PAGE>
Exhibit 3-B.2
Section 4. ADOPTION OR AMENDMENT OF BYLAWS. The Board of Directors
shall have power, to the maximum extent permitted by the Colorado Business
Corporation Act, to make, amend and repeal the Bylaws of the corporation at
any regular or special meeting of the Board unless the shareholders, in
making, amending or repealing a particular bylaw, expressly provide that the
Directors may not amend or repeal such bylaw. The shareholders also shall
have the power to make, amend or repeal the Bylaws of the corporation at any
annual meeting or at any special meeting called for that purpose.
Section 5. GENDER. The masculine gender is used in these Bylaws as a
matter of convenience only and shall be interpreted to include the feminine
and neuter genders as the circumstances indicate.
Section 6. CONFLICTS. In the event of any irreconcilable conflict
between these Bylaws and either the corporation's Articles of Incorporation
or applicable law, the latter shall control.
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Exhibit 4-A.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is
made and entered into as of August 20, 1999 among U S WEST, Inc., a Delaware
corporation (the "Guarantor"), U S WEST Capital Funding, Inc., a Colorado
corporation (the "COMPANY"), and the Initial Purchasers (as hereinafter
defined).
This Agreement is made pursuant to the Purchase Agreement
dated August 20, 1999 (the "PURCHASE AGREEMENT"), among the Guarantor, the
Company, as issuer of the 6 7/8% Notes due August 15, 2001 (the "Notes"), and
the Initial Purchasers, which provides for, among other things, the sale by
the Company to the Initial Purchasers of the aggregate principal amount of
Notes specified therein. The Notes will be unconditionally guaranteed as to
payment of principal, premium, if any, and interest by the Guarantor (the
"Guarantees", and together with the Notes, the "Securities"). In order to
induce the Initial Purchasers to enter into the Purchase Agreement, the
Guarantor and the Company have agreed to provide to the Initial Purchasers
and their direct and indirect transferees the registration rights set forth
in this Agreement. The execution and delivery of this Agreement is a
condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree
as follows:
1. DEFINITIONS. As used in this Agreement, the
following capitalized defined terms shall have the following meanings:
"ADVICE" shall have the meaning set forth in the last paragraph of
Section 3 hereof.
"AFFILIATE" has the same meaning as given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
"APPLICABLE PERIOD" shall have the meaning set forth in Section 3(t)
hereof.
"BUSINESS DAY" means any day other than a Saturday, a Sunday, or a
day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed.
"CLOSING TIME" shall mean the Closing Time as defined in the
Purchase Agreement.
"COMPANY" shall have the meaning set forth in the preamble to this
Agreement and also includes the Company's successors and permitted assigns.
"DEPOSITARY" shall mean The Depository Trust Company, or any other
depositary appointed by the Company; PROVIDED, HOWEVER, that such depositary
must have an address in the Borough of Manhattan, The City of New York.
"EFFECTIVENESS PERIOD" shall have the meaning set forth in Section
2(b) hereof.
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"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"EXCHANGE GUARANTEES" shall mean the Guarantor's unconditional
guarantee of principal, premium, if any, and interest of the Exchange Notes
containing terms identical in all material respects to the Guarantees.
"EXCHANGE NOTES" shall mean the 6 7/8% Notes due August 15, 2001
issued by the Company under the Indenture containing terms identical in all
material respects to the Notes (except that (i) interest thereon shall accrue
from the last date on which interest was paid or duly provided for on the
Notes or, if no such interest has been paid, from the date of their original
issue, (ii) they will not contain terms with respect to transfer restrictions
under the Securities Act, (iii) they will not provide for any Special
Interest Premium thereon and (iv) they will be entitled to the benefit of the
Exchange Guarantees) to be offered to Holders of Notes in exchange for Notes
pursuant to the Exchange Offer.
"EXCHANGE OFFER" shall mean the offer by the Company to the Holders
to exchange all of the Registrable Securities for a like amount of Exchange
Notes pursuant to Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION" shall mean a registration under the
Securities Act effected pursuant to Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION STATEMENT" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another appropriate
form), and all amendments and supplements to such registration statement, in
each case including the Prospectus contained therein, all exhibits thereto
and all documents incorporated by reference therein.
"EXCHANGE PERIOD" shall have the meaning set forth in Section 2(a)
hereof.
"GUARANTEES" shall have the meaning set forth in the preamble to
this Agreement.
"HOLDER" shall mean any Initial Purchaser, for so long as it owns
any Registrable Securities, and each of its successors, assigns and direct
and indirect transferees who become registered owners of Registrable
Securities under the Indenture.
"INDENTURE" shall mean the Indenture, dated as of June 29, 1998,
between the Company, as issuer, and The First National Bank of Chicago, as
trustee, as the same may be amended or supplemented from time to time in
accordance with the terms thereof.
"INITIAL PURCHASERS" shall mean J.P. Morgan Securities Inc., Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Banc of
America Securities LLC, Lehman Brothers Inc., Salomon Smith Barney Inc., ABN
AMRO Incorporated, Banc One Capital Markets, Inc., BNY Capital Markets, Inc.,
Commerzbank Capital Markets Corporation, Fleet Securities, Inc., Mellon
Financial Markets, Inc., Norwest Investments Services Inc., Muriel Siebert &
Co., Inc., Utendahl Capital Partners, L.P. and The Williams Capital Group,
L.P.
"INSPECTORS" shall have the meaning set forth in Section 3(n) hereof.
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"ISSUE DATE" shall mean August 25, 1999, the initial date of
delivery of the Notes from the Company to the Initial Purchasers.
"ISSUER" shall mean the Company as defined in the preamble hereto.
"MAJORITY HOLDERS" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Notes and Exchange Notes.
"NOTES" shall have the meaning set forth in the preamble to this
Agreement.
"PARTICIPATING BROKER-DEALER" shall have the meaning set forth in
Section 3(t) hereof.
"PERSON" shall mean an individual, partnership, corporation, trust
or unincorporated organization, limited liability corporation, or a
government or agency or political subdivision thereof.
"PROSPECTUS" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all documents incorporated by
reference therein.
"PURCHASE AGREEMENT" shall have the meaning set forth in the
preamble to this Agreement.
"RECORDS" shall have the meaning set forth in Section 3(n) hereof.
"REGISTRABLE SECURITIES" shall mean the Securities; PROVIDED,
HOWEVER, that any Securities shall cease to be Registrable Securities when
any of the following occurs: (i) a Registration Statement with respect to
such Securities for the exchange or resale thereof shall have been declared
effective under the Securities Act and such Securities shall have been
disposed of pursuant to such Registration Statement, (ii) such Securities
shall have been sold to the public pursuant to Rule 144(k) (or any similar
provision then in force, but not Rule 144A) under the Securities Act or are
eligible to be sold without restriction as contemplated by Rule 144(k), (iii)
such Securities shall have ceased to be outstanding or (iv) such Securities
shall have been exchanged for Exchange Notes together with the Exchange
Guarantees upon consummation of the Exchange Offer and are thereafter freely
tradable by the Holder thereof (other than an Affiliate of the Company or the
Guarantor).
"REGISTRATION EXPENSES" shall mean any and all expenses incident to
performance of or compliance by the Company and the Guarantor with this
Agreement, including without limitation: (i) all SEC or National Association
of Securities Dealers, Inc. (the "NASD") registration and filing fees,
including, if applicable, the fees and expenses of any "qualified independent
underwriter" (and its counsel) that is required to be retained by any Holder
of Registrable Securities in accordance with the rules and regulations of the
NASD, (ii) all fees and expenses incurred in connection with compliance with
state securities or blue sky laws (including reasonable fees and
disbursements of one counsel for all underwriters and Holders as
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a group in connection with blue sky qualification of any of the Exchange
Securities or Registrable Securities) and compliance with the rules of the
NASD, (iii) all expenses of any Persons in preparing or assisting in
preparing, word processing, printing and distributing any Registration
Statement, any Prospectus and any amendments or supplements thereto, and in
preparing or assisting in preparing, printing and distributing any
underwriting agreements, securities sales agreements and other documents
relating to the performance of and compliance with this Agreement, (iv) all
rating agency fees, (v) the fees and disbursements of counsel for the Company
and the Guarantor and of the independent certified public accountants of the
Company and the Guarantor and its subsidiaries, including the expenses of any
"cold comfort" letters required by or incident to the performance of and
compliance with this Agreement, (vi) the reasonable fees and expenses of the
Trustee and its counsel and any exchange agent or custodian, and (vii) the
reasonable fees and expenses of any special experts retained by the Company
and the Guarantor in connection with any Registration Statement.
"REGISTRATION STATEMENT" shall mean any registration statement of
the Company and the Guarantor which covers any of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement, and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all documents incorporated by reference
therein.
"RULE 144(k) PERIOD" shall mean the period of two years (or such
shorter period as may hereafter be referred to in Rule 144(k) under the
Securities Act (or similar successor rule)) commencing on the Issue Date.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES" shall have the meaning set forth in the preamble to
this Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended
from time to time.
"SHELF REGISTRATION" shall mean a registration effected pursuant to
Section 2(b) hereof.
"SHELF REGISTRATION EVENT" shall have the meaning set forth in
Section 2(b) hereof.
"SHELF REGISTRATION EVENT DATE" shall have the meaning set forth in
Section 2(b) hereof.
"SHELF REGISTRATION STATEMENT" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(b) hereof
which covers all of the Registrable Securities (except Registrable Securities
which the Holders have elected not to include in such Shelf Registration
Statement or the Holders of which have not complied with their obligations
under the penultimate paragraph of Section 3 hereof or under the penultimate
sentence of Section 2(b) hereof) on an appropriate form under Rule 415 under
the Securities Act, or any similar rule that may be adopted by the SEC, and
all amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all documents incorporated by reference
therein.
"SPECIAL INTEREST PREMIUM" shall have the meaning set forth in
Section 2(e) hereof.
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"TIA" shall have the meaning set forth in Section 3(k) hereof.
"TRUSTEE" shall mean the trustee under the Indenture.
2. REGISTRATION UNDER THE SECURITIES ACT.
(a) EXCHANGE OFFER. Except as set forth in Section 2(b)
below, the Company and the Guarantor shall, for the benefit of the Holders,
at the Company's cost, use its reasonable best efforts to (i) file with the
SEC within 150 calendar days after the Issue Date an Exchange Offer
Registration Statement on an appropriate form under the Securities Act
relating to the Exchange Offer, (ii) cause such Exchange Offer Registration
Statement to be declared effective under the Securities Act by the SEC not
later than the date which is 180 calendar days after the Issue Date, (iii)
keep such Exchange Offer Registration Statement effective for not less than
30 calendar days (or longer if required by applicable law) after the date
notice of the Exchange Offer is mailed to the Holders and (iv) cause the
Exchange Offer to be consummated within 225 calendar days after the Issue
Date. Promptly after the effectiveness of the Exchange Offer Registration
Statement, the Company shall commence the Exchange Offer, it being the
objective of such Exchange Offer to enable each Holder eligible and electing
to exchange Registrable Securities for a like principal amount of Exchange
Notes together with the Exchange Guarantees (provided that such Holder (i) is
not an Affiliate of the Company or the Guarantor, (ii) is not a broker-dealer
tendering Registrable Securities acquired directly from the Company, (iii)
acquires the Exchange Securities in the ordinary course of such Holder's
business and (iv) has no arrangements or understandings with any Person to
participate in the Exchange Offer for the purpose of distributing the
Exchange Securities) to transfer such Exchange Securities from and after
their receipt without any limitations or restrictions under the Securities
Act and under state securities or blue sky laws.
In connection with the Exchange Offer, the Company and the
Guarantor shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter of
transmittal and related documents;
(ii) keep the Exchange Offer open for acceptance for a period of not
less than 30 days after the date notice thereof is mailed to the Holders (or
longer if required by applicable law) (such period referred to herein as the
"EXCHANGE PERIOD");
(iii) utilize the services of the Depositary for the Exchange Offer
with respect to Notes represented by a global certificate;
(iv) permit Holders to withdraw tendered Registrable Securities at
any time prior to the close of business, New York City time, on the last
Business Day of the Exchange Period, by sending to the institution specified
in the notice to Holders, a telegram, telex, facsimile transmission or letter
setting forth the name of such Holder, the principal amount of Registrable
Securities delivered for exchange, and a statement that such Holder is
withdrawing his election to have such Registrable Securities exchanged;
(v) notify each Holder that any Registrable Security not tendered by
such Holder in the Exchange Offer will remain outstanding and continue to
accrue interest but will not retain any
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rights under this Agreement (except in the case of the Initial Purchasers and
Participating Broker-Dealers as provided herein); and
(vi) otherwise comply in all respects with all applicable laws
relating to the Exchange Offer.
As soon as practicable after the close of the Exchange
Offer, the Company and the Guarantor shall:
(i) accept for exchange all Registrable Securities or portions
thereof duly tendered and not validly withdrawn pursuant to the Exchange
Offer in accordance with the terms of the Exchange Offer Registration
Statement and letter of transmittal which is an exhibit thereto;
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities or portions thereof so accepted for
exchange by the Company and the Guarantor; and
(iii) issue, and cause the Trustee under the Indenture to promptly
authenticate and deliver to each Holder, Exchange Securities equal in
principal amount to the principal amount of the Notes as are surrendered by
such Holder, and the Guarantor will execute the Exchange Guarantees.
Interest on each Exchange Note issued pursuant to the
Exchange Offer will accrue from the last date on which interest was paid or
duly provided for on the Note surrendered in exchange therefor or, if no
interest has been paid on such Note, from the Issue Date. To the extent not
prohibited by any law or applicable interpretation of the staff of the SEC,
the Company and the Guarantor shall use reasonable best efforts to complete
the Exchange Offer as provided above, and shall comply with the applicable
requirements of the Securities Act, the Exchange Act and other applicable
laws in connection with the Exchange Offer. The Exchange Offer shall not be
subject to any conditions other than the conditions referred to in Section
2(b)(i) and (ii) below and those conditions that are customary in similar
exchange offers. Each Holder of Registrable Securities who wishes to exchange
such Registrable Securities for Exchange Securities in the Exchange Offer
will be required to make certain customary representations in connection
therewith, including, in the case of any Holder, representations that (i) it
is not an Affiliate of the Company or the Guarantor, (ii) it is not a
broker-dealer tendering Registrable Securities acquired directly from the
Company, (iii) the Exchange Securities to be received by it are being
acquired in the ordinary course of its business and (iv) at the time of the
Exchange Offer, it has no arrangements or understandings with any Person to
participate in the distribution (within the meaning of the Securities Act) of
the Exchange Securities. The Company and the Guarantor shall inform the
Initial Purchasers, after consultation with the Trustee, of the names and
addresses of the Holders to whom the Exchange Offer is made, and the Initial
Purchasers shall have the right to contact such Holders in order to
facilitate the tender of Registrable Securities in the Exchange Offer.
Upon consummation of the Exchange Offer in accordance with
this Section 2(a), the provisions of this Agreement shall continue to apply,
MUTATIS MUTANDIS, solely with respect to Exchange Securities held by
Participating Broker-Dealers, and the Company and the Guarantor
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shall have no further obligation to register the Registrable Securities held
by any Holder pursuant to Section 2(b) of this Agreement.
(b) SHELF REGISTRATION. If (i) because of any change in law
or in currently prevailing interpretations thereof by the staff of the SEC,
the Company or the Guarantor is not permitted to effect the Exchange Offer as
contemplated by Section 2(a) hereof, (ii) the Exchange Offer is not
consummated within 225 days after the Issue Date or (iii) upon the request of
any Initial Purchaser with respect to any Registrable Securities held by it,
if such Initial Purchaser is not permitted, in the reasonable opinion of
Brown & Wood LLP, pursuant to applicable law or applicable interpretations of
the staff of the SEC, to participate in the Exchange Offer and thereby
receive securities that are freely tradeable without restriction under the
Securities Act and applicable blue sky or state securities laws (other than
due solely to the status of such Initial Purchaser as an Affiliate of the
Company or the Guarantor or as a Participating Broker-Dealer)(any of the
events specified in (i), (ii) or (iii) being a "SHELF REGISTRATION EVENT",
and the date of occurrence thereof, the "SHELF REGISTRATION EVENT DATE"),
then in addition to or in lieu of conducting the Exchange Offer contemplated
by Section 2(a), as the case may be, the Company and the Guarantor shall
promptly notify the Holders in writing thereof and shall, at its cost, file
as promptly as practicable after such Shelf Registration Event Date and, in
any event, within 90 days after such Shelf Registration Event Date, a Shelf
Registration Statement providing for the sale by the Holders of all of the
Registrable Securities (other than Registrable Securities owned by Holders
who have elected not to include such Registrable Securities in such Shelf
Registration Statement or who have not complied with their obligations under
the penultimate paragraph of Section 3 hereof or under the penultimate
sentence of this Section 2(b), and shall use its reasonable best efforts to
cause such Shelf Registration Statement to be declared effective by the SEC
as soon as practicable. No Holder of Registrable Securities shall be entitled
to include any of its Registrable Securities in any Shelf Registration
pursuant to this Agreement unless and until such Holder agrees in writing to
be bound by all of the provisions of this Agreement applicable to such Holder
and furnishes to the Company and the Guarantor in writing, within 15 days
after receipt of a request therefor, such information as the Company and the
Guarantor may, after conferring with counsel with regard to information
relating to Holders that would be required by the SEC to be included in such
Shelf Registration Statement or Prospectus included therein, reasonably
request for inclusion in any Shelf Registration Statement or Prospectus
included therein. Each Holder as to which any Shelf Registration is being
effected agrees to furnish to the Company and the Guarantor all information
with respect to such Holder necessary to make the information previously
furnished to the Company and the Guarantor by such Holder not materially
misleading.
The Company and the Guarantor agree to use their reasonable
best efforts to keep the Shelf Registration Statement continuously effective
and the Prospectus usable for resales for the earlier of: (a) the Rule 144(k)
Period or (b) such time as all of the securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement or cease to be Registrable Securities (the "EFFECTIVENESS PERIOD").
The Company and the Guarantor shall not permit any securities other than (i)
the Company's and the Guarantor 's issued and outstanding securities
currently possessing incidental registration rights and (ii) Registrable
Securities, to be included in the Shelf Registration. The Company and the
Guarantor will, in the event a Shelf Registration Statement is declared
effective, provide to each Holder of Registrable Securities covered thereby a
reasonable number of copies of the Prospectus which is a part of the
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Shelf Registration Statement, notify each such Holder when the Shelf
Registration has become effective and take any other action required to
permit unrestricted resales of the Registrable Securities. The Company and
the Guarantor further agree, if necessary, to supplement or amend the Shelf
Registration Statement, if required by the rules, regulations or instructions
applicable to the registration form used by the Company and the Guarantor for
such Shelf Registration Statement or by the Securities Act or by any other
rules and regulations thereunder for shelf registrations, and the Company and
the Guarantor agree to furnish to the Holders of Registrable Securities
covered by such Shelf Registration Statement copies of any such supplement or
amendment promptly after its being used or filed with the SEC.
(c) EXPENSES. The Company and the Guarantor shall pay all
Registration Expenses in connection with any Registration Statement filed
pursuant to Section 2(a) and/or 2(b) hereof and will reimburse the Initial
Purchasers for the reasonable fees and disbursements of Brown & Wood LLP
incurred in connection with the Exchange Offer. Except as provided herein,
each Holder shall pay all expenses of its counsel, underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition
of such Holder's Registrable Securities pursuant to the Shelf Registration
Statement.
(d) EFFECTIVE REGISTRATION STATEMENT. An Exchange Offer
Registration Statement pursuant to Section 2(a) hereof or a Shelf
Registration Statement pursuant to Section 2(b) hereof will not be deemed to
have become effective unless it has been declared effective by the SEC;
PROVIDED, HOWEVER, that if, after it has been declared effective, the
offering of Registrable Securities pursuant to such Exchange Offer
Registration Statement or Shelf Registration Statement is interfered with by
any stop order, injunction or other order or requirement of the SEC or any
other governmental agency or court, such Exchange Offer Registration
Statement or Shelf Registration Statement will be deemed not to have been
effective during the period of such interference, until the offering of
Registrable Securities pursuant to such Registration Statement may legally
resume. The Company and the Guarantor will be deemed not to have used their
reasonable best efforts to cause the Exchange Offer Registration Statement or
the Shelf Registration Statement, as the case may be, to become, or to
remain, effective during the requisite period if they voluntarily take any
action that would result in any such Registration Statement not being
declared effective or that would result in the Holders of Registrable
Securities covered thereby not being able to exchange or offer and sell such
Registrable Securities during that period, unless such action is required by
applicable law.
(e) SPECIAL INTEREST PREMIUM. In the event that:
(i) the Exchange Offer Registration Statement is
not filed with the SEC on or prior to the 150th day after the Issue Date,
then, commencing on the 151st day after the Issue Date, a special interest
premium (the "Special Interest Premium") shall accrue on the principal amount
of the Notes at a rate of 0.25% per annum;
(ii) the Exchange Offer Registration Statement is
not declared effective by the SEC on or prior to the 180th day after the
Issue Date, then, commencing on the 181st day after the Issue Date, a Special
Interest Premium shall accrue on the principal amount of the Notes at a rate
of 0.25% per annum;
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(iii) (A) the Company has not exchanged Exchange
Notes for all Notes validly tendered,or the Guarantor has not executed the
Exchange Guarantees in respect of the Exchange Notes, in accordance with the
terms of the Exchange Offer on or prior to the 225th day after the Issue Date
or (B) if the Shelf Registration Statement is required to be filed pursuant
to Section 2(b) but is not declared effective by the SEC on or prior to the
225th day after the Issue Date, then, commencing on the 226th day after the
Issue Date, a Special Interest Premium shall accrue on the principal amount
of the Notes at the rate of 0.25% per annum; or
(iv) the Shelf Registration Statement has been
declared effective and such ShelfRegistration Statement ceases to be
effective or the Prospectus ceases to be usable for resales (A) at any time
prior to the expiration of the Effectiveness Period or (B) if related to
corporate developments, public filings or similar events or to correct a
material misstatement or omission in the Prospectus, for more than 60 days
(whether or not consecutive) in any twelve-month period, then a Special
Interest Premium shall accrue on the principal amount of the Notes at a rate
of 0.25% per annum commencing on the day (in the case of (A) above), or the
61st day after (in the case of (B) above), such Shelf Registration Statement
ceases to be effective or the Prospectus ceases to be usable for resales;
PROVIDED, HOWEVER, that the aggregate amount of the Special Interest Premium
in respect of the Notes may not exceed 0.25% per annum; PROVIDED, FURTHER,
HOWEVER, that (1) upon the filing of the Exchange Offer Registration
Statement (in the case of clause (i) above), (2) upon the effectiveness of
the Exchange Offer Registration Statement (in the case of clause (ii) above),
(3) upon the exchange of Exchange Notes for all Notes validly tendered and
execution of the Exchange Guarantees (in the case of clause (iii)(A) above)
or upon the effectiveness of the Shelf Registration Statement (in the case of
clause (iii) (B) above) or (4) the earlier of (y) such time as the Shelf
Registration Statement which had ceased to remain effective or the Prospectus
which had ceased to be usable for resales again becomes effective and usable
for resales and (z) the expiration of the Effectiveness Period (in the case
of clause (iv) above), the Special Interest Premium on the principal amount
of the Notes as a result of such clause (or the relevant subclause thereof)
shall cease to accrue;
PROVIDED, FURTHER, HOWEVER, that if the Exchange Offer Registration Statement
is not declared effective by the SEC on or prior to the 225th day after the
Issue Date and the Company and the Guarantor shall request Holders to provide
the information required by the SEC for inclusion in the Shelf Registration
Statement, the Notes owned by Holders who do not provide such information
when required pursuant to Section 2(b) will not be entitled to any Special
Interest Premium for any day after the 225th day after the Issue Date.
Any Special Interest Premium due pursuant to Section 2(e)(i), (ii),
(iii) or (iv) above will be payable in cash on the next succeeding February
15 or August 15, as the case may be, to Holders on the relevant record dates
for the payment of interest pursuant to the Indenture.
(f) SPECIFIC ENFORCEMENT. Without limiting the remedies
available to the Holders, the Company and the Guarantor acknowledge that any
failure by the Company and the Guarantor to comply with its respective
obligations under Section 2(a) and Section 2(b) hereof may result in material
irreparable injury to the Holders for which there is no adequate remedy at
law, that it would not be possible to measure damages for such injuries
precisely and that, in the event of
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any such failure, any Holder may obtain such relief as may be required to
specifically enforce the Company's and the Guarantor's obligations under
Section 2(a) and Section 2(b) hereof.
3. REGISTRATION PROCEDURES. In connection with the
obligations of the Company and the Guarantor with respect to the Registration
Statements pursuant to Sections 2(a) and 2(b) hereof, the Company and the
Guarantor shall use their reasonable best efforts to:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements as prescribed by Sections 2(a) and
2(b) hereof within the relevant time period specified in
Section 2 hereof on the appropriate form under the Securities
Act, which form shall (i) be selected by the Company and the
Guarantor, (ii) in the case of a Shelf Registration, be
available for the sale of the Registrable Securities by the
selling Holders thereof and, in the case of an Exchange Offer,
be available for the exchange of Registrable Securities, and
(iii) comply as to form in all material respects with the
requirements of the applicable form and include all financial
statements required by the SEC to be filed therewith; the
Company and the Guarantor shall use their reasonable best
efforts to cause such Registration Statement to become
effective and remain effective (and, in the case of a Shelf
Registration Statement, the Prospectus to be usable for
resales) in accordance with Section 2 hereof; PROVIDED,
HOWEVER, that if (1) such filing is pursuant to Section 2(b),
or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2(a) is
required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange
Securities, before filing any Registration Statement or
Prospectus or any amendments or supplements thereto, the
Company shall furnish to and afford the Holders of the
Registrable Securities and each such Participating
Broker-Dealer, as the case may be, covered by such
Registration Statement, their counsel and the managing
underwriters, if any, a reasonable opportunity to review
copies of all such documents (including copies of any
documents to be incorporated by reference therein and all
exhibits thereto) proposed to be filed; and the Company and
the Guarantor shall not file any Registration Statement or
Prospectus or any amendments or supplements thereto in respect
of which the Holders must be afforded an opportunity to review
prior to the filing of such document if the Majority Holders
of the Registrable Securities, depending solely upon which
Holders must be afforded the opportunity of such review, or
such Participating Broker-Dealer, as the case may be, their
counsel or the managing underwriters, if any, shall reasonably
object in a timely manner;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as
may be necessary to keep such Registration Statement effective
for the Effectiveness Period or the Applicable Period, as the
case may be, and cause each Prospectus to be supplemented, if
so determined by the Company and the Guarantor or requested by
the SEC, by any required prospectus supplement and as so
supplemented to be filed pursuant to Rule 424 (or any similar
provision then in force) under the Securities Act, and comply
with the provisions of the Securities Act, the Exchange Act
and the rules and regulations promulgated thereunder
applicable to it with respect to the
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disposition of all securities covered by each Registration
Statement during the Effectiveness Period or the Applicable
Period, as the case may be, in accordance with the intended
method or methods of distribution by the selling Holders
thereof described in this Agreement (including sales by any
Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each
Holder of Registrable Securities included in the Shelf
Registration Statement, at least three Business Days prior to
filing, that a Shelf Registration Statement with respect to
the Registrable Securities is being filed and advising such
Holder that the distribution of Registrable Securities will be
made in accordance with the method selected by the Majority
Holders of the Registrable Securities, (ii) furnish to each
Holder of Registrable Securities included in the Shelf
Registration Statement and to each underwriter of an
underwritten offering of Registrable Securities, if any,
without charge, as many copies of each Prospectus, including
each preliminary prospectus, and any amendment or supplement
thereto, and such other documents as such Holder or
underwriter may reasonably request, in order to facilitate the
public sale or other disposition of the Registrable Securities
and (iii) consent to the use of the Prospectus or any
amendment or supplement thereto by each of the selling Holders
of Registrable Securities included in the Shelf Registration
Statement in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any
amendment or supplement thereto;
(d) in the case of a Shelf Registration, register or qualify
the Registrable Securities under all applicable state
securities or "blue sky" laws of such jurisdictions by the
time the applicable Registration Statement is declared
effective by the SEC as any Holder of Registrable Securities
covered by a Registration Statement and each underwriter of an
underwritten offering of Registrable Securities shall
reasonably request in writing in advance of such date of
effectiveness, and do any and all other acts and things which
may be reasonably necessary or advisable to enable such Holder
and underwriter to consummate the disposition in each such
jurisdiction of such Registrable Securities owned by such
Holder; PROVIDED, HOWEVER, that the Company and the Guarantor
shall not be required to (i) qualify as a foreign corporation
or as a dealer in securities in any jurisdiction where it
would not otherwise be required to qualify but for this
Section 3(d), (ii) file any general consent to service of
process in any jurisdiction where it would not otherwise be
subject to such service of process or (iii) subject itself to
taxation in any such jurisdiction if it is not then so
subject;
(e) (1) in the case of a Shelf Registration or (2) if
Participating Broker-Dealers from whom the Company and the
Guarantor have received prior written notice that they will be
utilizing the Prospectus contained in the Exchange Offer
Registration Statement as provided in Section 3(t) hereof, are
seeking to sell Exchange Securities and are required to
deliver Prospectuses, promptly notify each Holder of
Registrable Securities, or such Participating Broker-Dealers,
as the case may be, their counsel and the managing
underwriters, if any, and promptly confirm such notice in
writing (i) when a Registration Statement has become
11
<PAGE>
effective and when any post-effective amendments thereto
become effective, (ii) of any request by the SEC or any state
securities authority for amendments and supplements to a
Registration Statement or Prospectus or for additional
information after the Registration Statement has become
effective, (iii) of the issuance by the SEC or any state
securities authority of any stop order suspending the
effectiveness of a Registration Statement or the qualification
of the Registrable Securities or the Exchange Securities to be
offered or sold by any Participating Broker-Dealer in any
jurisdiction described in Section 3(d) hereof or the
initiation of any proceedings for that purpose, (iv) in the
case of a Shelf Registration, if, between the effective date
of a Registration Statement and the closing of any sale of
Registrable Securities covered thereby, the representations
and warranties of the Company contained in any purchase
agreement, securities sales agreement or other similar
agreement cease to be true and correct in all material
respects, (v) of the happening of any event or the failure of
any event to occur or the discovery of any facts, during the
Effectiveness Period, which makes any statement made in such
Registration Statement or the related Prospectus untrue in any
material respect or which causes such Registration Statement
or Prospectus to omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, as
well as any other corporate developments, public filings with
the SEC or similar events causing such Registration Statement
not to be effective or the Prospectus not to be useable for
resales and (vi) of the reasonable determination of the
Company and the Guarantor that a post-effective amendment to
the Registration Statement would be appropriate;
(f) obtain the withdrawal of any order suspending the
effectiveness of a Registration Statement at the earliest
possible moment;
(g) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities included within the coverage
of such Shelf Registration Statement, without charge, at least
one conformed copy of each Registration Statement relating to
such Shelf Registration and any post-effective amendment
thereto (without documents incorporated therein by reference
or exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Securities to facilitate the
timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any
restrictive legends (except any customary legend borne by
securities held through The Depository Trust Company or any
similar depository) and in such denominations (consistent with
the provisions of the Indenture and the officers' certificate
establishing the forms and the terms of the Notes pursuant to
the Indenture) and registered in such names as the selling
Holders or the underwriters may reasonably request at least
two Business Days prior to the closing of any sale of
Registrable Securities pursuant to such Shelf Registration
Statement;
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<PAGE>
(i) in the case of a Shelf Registration or an Exchange Offer
Registration, promptly after the occurrence of any event
specified in Section 3(e)(ii), 3(e)(iii), 3(e)(v) (subject to
a 60-day grace period within any twelve-month period) or
3(e)(vi) hereof, prepare a supplement or post-effective
amendment to such Registration Statement or the related
Prospectus or any document incorporated therein by reference
or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities,
such Prospectus will not include any untrue statement of a
material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; and the Company
shall notify each Holder to suspend use of the Prospectus as
promptly as practicable after the occurrence of such an event,
and each Holder hereby agrees to suspend use of the Prospectus
until the Company and the Guarantor have amended or
supplemented the Prospectus to correct such misstatement or
omission;
(j) obtain a CUSIP number for the Exchange Securities or the
Registrable Securities, as the case may be, not later than the
effective date of a Registration Statement, and provide the
Trustee with certificates for the Exchange Securities or the
Registrable Securities, as the case may be, in a form eligible
for deposit with the Depositary;
(k) cause the Indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection
with the registration of the Exchange Securities or
Registrable Securities, as the case may be, and effect such
changes to such documents as may be required for them to be so
qualified in accordance with the terms of the TIA and execute,
and cause the Trustee to execute, all documents as may be
required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable such
documents to be so qualified in a timely manner;
(l) in the case of a Shelf Registration, enter into such
agreements (including underwriting agreements) as are
customary in underwritten offerings and take all such other
appropriate actions in connection therewith as are reasonably
requested by the Holders of at least 25% in aggregate
principal amount of the Registrable Securities in order to
expedite or facilitate the registration or the disposition of
the Registrable Securities;
(m) in the case of a Shelf Registration, whether or not an
underwriting agreement is entered into and whether or not the
registration is an underwritten registration, if requested by
(x) an Initial Purchaser, in the case where such Initial
Purchaser holds Notes acquired by it as part of its initial
placement and Holders of at least 25% in aggregate principal
amount of the Registrable Securities covered thereby: (i) make
such representations and warranties to Holders of such
Registrable Securities and the underwriters (if any), with
respect to the business of the Company, the Guarantor, the
subsidiaries of the Guarantor, and if applicable, Quest
Communications International Inc. as then conducted and the
Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be
13
<PAGE>
incorporated by reference therein, in each case, as are
customarily made by issuers to underwriters in underwritten
offerings, and confirm the same if and when requested;
(ii) obtain opinions of counsel to the Company and the
Guarantor and updates thereof (which may be in the form of
a reliance letter) in form and substance reasonably
satisfactory to the managing underwriters (if any) and the
Holders of a majority in amount of the Registrable Securities
being sold, addressed to each selling Holder and the
underwriters (if any) covering the matters customarily
covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such
underwriters (it being agreed that the matters to be covered
by such opinion may be subject to customary qualifications and
exceptions); (iii) obtain "cold comfort" letters and updates
thereof in form and substance reasonably satisfactory to the
managing underwriters from the independent certified public
accountants of the Company, the Guarantor, and the
subsidiaries of the Guarantor (and, if necessary, any other
independent certified public accountants of any business
acquired or to be acquired by the Guarantor for which
financial statements and financial data are, or are required
to be, included in the Registration Statement), addressed to
each of the underwriters, such letters to be in customary form
and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings and
such other matters as reasonably requested by such
underwriters in accordance with Statement on Auditing
Standards No. 72; and (iv) if an underwriting agreement is
entered into, the same shall contain indemnification
provisions and procedures no less favorable than those set
forth in Section 4 hereof (or such other provisions and
procedures acceptable to Holders of a majority in aggregate
principal amount of Registrable Securities covered by such
Registration Statement and the managing underwriters)
customary for such agreements with respect to all parties to
be indemnified pursuant to said Section (including, without
limitation, such underwriters and selling Holders); and in the
case of an underwritten registration, the above requirements
shall be satisfied at each closing under the related
underwriting agreement or as and to the extent required
thereunder;
(n) if (1) a Shelf Registration is filed pursuant to Section
2(b) or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2(a) is
required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, make reasonably
available for inspection by any selling Holder of Registrable
Securities or Participating Broker-Dealer, as applicable, who
certifies to the Company and the Guarantor that it has a
current intention to sell Registrable Securities pursuant to
the Shelf Registration, any underwriter participating in any
such disposition of Registrable Securities, if any, and any
attorney, accountant or other agent retained by any such
selling Holder, Participating Broker-Dealer, as the case may
be, or underwriter (collectively, the "INSPECTORS"), at the
offices where normally kept, during the Company's and the
Guarantor's normal business hours, all financial and other
records, pertinent organizational and operational documents
and properties of the Company, the Guarantor and the
Guarantor's subsidiaries (collectively, the "RECORDS") as
shall
14
<PAGE>
be reasonably necessary to enable them to conduct due
diligence activities, and cause the officers, trustees and
employees of the Company, the Guarantor and the Guarantor's
subsidiaries to supply all relevant information in each case
reasonably requested by any such Inspector in connection with
such Registration Statement; records and information which the
Company and the Guarantor determine, in good faith, to be
confidential and any Records and information which it notifies
the Inspectors are confidential shall not be disclosed to any
Inspector except where (i) the disclosure of such Records or
information is necessary to avoid or correct a material
misstatement or omission in such Registration Statement, (ii)
the release of such Records or information is ordered pursuant
to a subpoena or other order from a court of competent
jurisdiction or is necessary in connection with any action,
suit or proceeding or (iii) such Records or information
previously has been made generally available to the public;
each selling Holder of such Registrable Securities and each
such Participating Broker-Dealer will be required to agree in
writing that Records and information obtained by it as a
result of such inspections shall be deemed confidential and
shall not be used by it as the basis for any market
transactions in the securities of the Company and the
Guarantor unless and until such is made generally available to
the public through no fault of an Inspector or a selling
Holder; and each selling Holder of such Registrable Securities
and each such Participating Broker-Dealer will be required to
further agree in writing that it will, upon learning that
disclosure of such Records or information is sought in a court
of competent jurisdiction, or in connection with any action,
suit or proceeding, give notice to the Company and the
Guarantor and allow the Company and the Guarantor at their
expense to undertake appropriate action to prevent disclosure
of the Records and information deemed confidential;
(o) comply with all applicable rules and regulations of the
SEC so long as any provision of this Agreement shall be
applicable and make generally available to its securityholders
earning statements satisfying the provisions of Section 11(a)
of the Securities Act and Rule 158 thereunder (or any similar
rule promulgated under the Securities Act) no later than 45
days after the end of any 12-month period (or 60 days after
the end of any 12-month period if such period is a fiscal
year) (i) commencing at the end of any fiscal quarter in which
Registrable Securities are sold to underwriters in a firm
commitment or best efforts underwritten offering and (ii) if
not sold to underwriters in such an offering, commencing on
the first day of the first fiscal quarter of the Company and
the Guarantor after the effective date of a Registration
Statement, which statements shall cover said 12-month periods,
provided that the obligations under this paragraph (o) shall
be satisfied by the timely filing of quarterly and annual
reports on Forms 10-Q and 10-K under the Exchange Act;
(p) upon consummation of an Exchange Offer, if requested by
the Trustee, obtain an opinion of counsel to the Company and
the Guarantor addressed to the Trustee for the benefit of all
Holders of Registrable Securities participating in the
Exchange Offer, substantially to the effect that (i) the
Company has duly authorized, executed and delivered the
Exchange Notes and the Exchange Notes constitutes a legal,
valid and binding obligation of the Company, enforceable
15
<PAGE>
against the Company, in accordance with its terms (with
customary exceptions) and (ii) the Guarantor has duly
authorized, executed and delivered the Exchange Guarantees and
the Exchange Guarantees constitute a legal, valid and binding
obligation of the Guarantor, enforceable against the
Guarantor, in accordance with its terms (with customary
exceptions);
(q) if an Exchange Offer is to be consummated, upon delivery
of the Registrable Securities by Holders to the Company and
the Guarantor (or to such other Person as directed by the
Company and the Guarantor), in exchange for the Exchange
Securities, the Company shall mark, or cause to be marked, on
such Notes delivered by such Holders that such Notes are being
cancelled in exchange for the Exchange Securities; it being
understood that in no event shall such Notes be marked as paid
or otherwise satisfied;
(r) cooperate with each seller of Registrable Securities
covered by any Registration Statement and each underwriter, if
any, participating in the disposition of such Registrable
Securities and their respective counsel in connection with any
filings required to be made with the NASD;
(s) take all other steps necessary to effect the registration
of the Registrable Securities covered by a Registration
Statement contemplated hereby;
(t) (A) in the case of the Exchange Offer Registration
Statement (i) include in the Exchange Offer Registration
Statement a section entitled "Plan of Distribution," which
section shall be reasonably acceptable to the Initial
Purchasers or another representative of the Participating
Broker-Dealers, and which shall contain a summary statement of
the positions taken or policies made by the staff of the SEC
with respect to the potential "underwriter" status of any
broker-dealer that holds Registrable Securities acquired for
its own account as a result of market-making activities or
other trading activities (a "PARTICIPATING BROKER-DEALER") and
that will be the beneficial owner (as defined in Rule 13d-3
under the Exchange Act) of Exchange Securities to be received
by such broker-dealer in the Exchange Offer, whether such
positions or policies have been publicly disseminated by the
staff of the SEC or such positions or policies, in the
reasonable judgment of the Initial Purchasers or such other
representative, represent the prevailing views of the staff of
the SEC, including a statement that any such broker-dealer who
receives Exchange Securities for Registrable Securities
pursuant to the Exchange Offer may be deemed a statutory
underwriter and must deliver a prospectus meeting the
requirements of the Securities Act in connection with any
resale of such Exchange Securities, (ii) furnish to each
Participating Broker-Dealer who has delivered to the Company
and the Guarantor the notice referred to in Section 3(e),
without charge, as many copies of each Prospectus included in
the Exchange Offer Registration Statement, including any
preliminary Prospectus, and any amendment or supplement
thereto, as such Participating Broker-Dealer may reasonably
request (the Company and the Guarantor hereby consent to the
use of the Prospectus forming part of the Exchange Offer
Registration Statement or any amendment or supplement thereto
by any Person subject to the prospectus
16
<PAGE>
delivery requirements of the Securities Act, including all
Participating Broker-Dealers, in connection with the sale or
transfer of the Exchange Securities covered by the Prospectus
or any amendment or supplement thereto), (iii) use its
reasonable best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement
the Prospectus contained therein in order to permit such
Prospectus to be lawfully delivered by all Persons subject to
the prospectus delivery requirements of the Securities Act
for such period of time as such Persons must comply with such
requirements under the Securities Act and applicable rules and
regulations in order to resell the Exchange Securities;
PROVIDED, HOWEVER, that such period shall not be required to
exceed 225 days (or such longer period if extended pursuant to
the last sentence of Section 3 hereof) (the "APPLICABLE
PERIOD"), and (iv) include in the transmittal letter or
similar documentation to be executed by an exchange offeree
in order to participate in the Exchange Offer (x) the
following provision:
"If the exchange offeree is a broker-dealer holding
Registrable Securities acquired for its own account as a
result of market-making activities or other trading
activities, it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any
resale of Exchange Securities received in respect of such
Registrable Securities pursuant to the Exchange Offer";
and (y) a statement to the effect that by a broker-dealer
making the acknowledgment described in clause (x) and by
delivering a Prospectus in connection with the exchange of
Registrable Securities, the broker-dealer will not be deemed
to admit that it is an underwriter within the meaning of the
Securities Act; and
(B) in the case of any Exchange Offer Registration Statement,
the Company and the Guarantor agree to deliver to the Initial
Purchasers or to another representative of the Participating
Broker-Dealers, if reasonably requested by an Initial
Purchaser or such other representative of Participating
Broker-Dealers, on behalf of the Participating Broker-Dealers
upon consummation of the Exchange Offer (i) an opinion of
counsel in form and substance reasonably satisfactory to such
Initial Purchaser or such other representative of the
Participating Broker-Dealers, covering the matters customarily
covered in opinions requested in connection with Exchange
Offer Registration Statements and such other matters as may be
reasonably requested (it being agreed that the matters to be
covered by such opinion may be subject to customary
qualifications and exceptions), (ii) an officers' certificate
substantially similar to that specified in Section 6(d) and
(e) of the Purchase Agreement and such additional
certifications as are customarily delivered in a public
offering of debt securities and (iii) upon the effectiveness
of the Exchange Offer Registration Statement, comfort letters,
in each case, in customary form if permitted by Statement on
Auditing Standards No. 72.
17
<PAGE>
The Company and the Guarantor may require each seller of
Registrable Securities as to which any registration is being effected to
furnish to the Company and the Guarantor such information regarding such
seller as may be required by the staff of the SEC to be included in a
Registration Statement. The Company and the Guarantor may exclude from such
registration the Registrable Securities of any seller who unreasonably fails
to furnish such information within a reasonable time after receiving such
request. The Company and the Guarantor shall have no obligation to register
under the Securities Act the Registrable Securities of a seller who so fails
to furnish such information.
In the case of a Shelf Registration Statement, or if
Participating Broker-Dealers who have notified the Company and the Guarantor
that they will be utilizing the Prospectus contained in the Exchange Offer
Registration Statement as provided in this Section 3(t) hereof are seeking to
sell Exchange Securities and are required to deliver Prospectuses, each
Holder agrees that, upon receipt of any notice from the Company and the
Guarantor of the occurrence of any event specified in Section 3(e)(ii),
3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to a Registration Statement
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 3(i) hereof or until it is advised in
writing (the "ADVICE") by the Company and the Guarantor that the use of the
applicable Prospectus may be resumed, and, if so directed by the Company and
the Guarantor, such Holder will deliver to the Company and the Guarantor (at
the Company's and the Guarantor's expense) all copies in such Holder's
possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Securities or
Exchange Securities, as the case may be, current at the time of receipt of
such notice. If the Company and the Guarantor shall give any such notice to
suspend the disposition of Registrable Securities or Exchangeable Securities,
as the case may be, pursuant to a Registration Statement, the Company and the
Guarantor shall use its reasonable best efforts to file and have declared
effective (if an amendment) as soon as practicable after the resolution of
the related matters an amendment or supplement to the Registration Statement
and shall extend the period during which such Registration Statement is
required to be maintained effective and the Prospectus usable for resales
pursuant to this Agreement by the number of days in the period from and
including the date of the giving of such notice to and including the date
when the Company and the Guarantor shall have made available to the Holders
(x) copies of the supplemented or amended Prospectus necessary to resume such
dispositions or (y) the Advice.
4. INDEMNIFICATION AND CONTRIBUTION. (a) In connection with
any Registration Statement, the Company and the Guarantor shall indemnify and
hold harmless the Initial Purchasers, each Holder, each underwriter who
participates in an offering of the Registrable Securities, each Participating
Broker-Dealer, each Person, if any, who controls any of such parties within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act and each of their respective directors, officers, employees and agents,
as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment or
supplement thereto), covering Registrable Securities or
Exchange Securities, as applicable, or the omission or alleged
omission therefrom of a material fact
18
<PAGE>
required to be stated therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject
to Section 4(d) hereof) any such settlement is effected with
the prior written consent of the Company and the Guarantor;
and
(iii) against any and all expenses whatsoever, as incurred
(including the reasonable fees and disbursements of counsel
chosen by such Holder, such Participating Broker-Dealer, or
any underwriter (except to the extent otherwise expressly
provided in Section 4(c) hereof)), reasonably incurred in
investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever
based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any
such expense is not paid under subparagraph (i) or (ii) of
this Section 4(a);
PROVIDED, HOWEVER, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished in writing to the Company and the
Guarantor by the Initial Purchasers or such Holder, underwriter or Participating
Broker-Dealer for use in a Registration Statement (or any amendment thereto) or
any Prospectus (or any amendment or supplement thereto).
(b) Each of the Initial Purchasers and each Holder,
underwriter or Participating Broken-Dealer agrees, severally and not jointly,
to indemnify and hold harmless the Company and each Person, if any, who
controls the Company and the Guarantor within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act against any and all
loss, liability, claim, damage and expense whatsoever described in the
indemnity contained in Section 4(a) hereof, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in a Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company and the
Guarantor by such Holder expressly for use in such Registration Statement (or
any amendment thereto), or any such Prospectus (or any amendment or
supplement thereto); PROVIDED, HOWEVER, that in the case of a Shelf
Registration Statement, no such Holder shall be liable for any claims
hereunder in excess of the amount of net proceeds received by such Holder
from the sale of Registrable Securities pursuant to such Shelf Registration
Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure
to so notify an indemnifying party shall not relieve such indemnifying party
from any liability which it may have under this Section 4 to the
19
<PAGE>
extent that it is not materially prejudiced by such failure as a result
thereof, and in any event shall not relieve it from liability which it may
have otherwise on account of this indemnity agreement. In the case of parties
indemnified pursuant to Section 4(a) or (b) above, counsel to the indemnified
parties shall be selected by such parties. An indemnifying party may
participate at its own expense in the defense of such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying parties be liable for the fees and
expenses of more than one counsel (in addition to local counsel), separate
from their own counsel, for all indemnified parties in connection with any
one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be
sought under this Section 4 (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional written release of each indemnified
party from all liability arising out of such litigation, investigation,
proceeding or claim and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) If at any time an indemnified party shall have validly
requested an indemnifying party to reimburse the indemnified party for fees
and expenses of counsel, such indemnifying party agrees that it shall be
liable for any settlement of the nature contemplated by Section 4(a)(ii)
effected without its written consent if (i) such settlement is entered into
more than 45 days after receipt by such indemnifying party of the aforesaid
request, (ii) such indemnifying party shall have received notice of the terms
of such settlement at least 30 days prior to such settlement being entered
into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(e) In order to provide for just and equitable contribution
in circumstances under which any of the indemnity provisions set forth in
this Section 4 is for any reason held to be unenforceable by an indemnified
party although applicable in accordance with its terms, the Company, the
Guarantor and the Holders shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement incurred by the Company, the Guarantor and the Holders,
as incurred; PROVIDED, HOWEVER, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person that was not guilty of such
fraudulent misrepresentation. As between the Company and the Guarantor and
the Holders, such parties shall contribute to such aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement in such proportion as shall be appropriate to reflect the
relative fault of the Company and the Guarantor, on the one hand, and the
Holders, on the other hand, with respect to the statements or omissions which
resulted in such loss, liability, claim, damage or expense, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative fault of the Company and the Guarantor, on the one hand, and of the
Holders, on the other hand, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state
20
<PAGE>
a material fact relates to information supplied by the Company and the
Guarantor, on the one hand, or by or on behalf of the Holders, on the other,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company,
the Guarantor and the Holders agree that it would not be just and equitable
if contribution pursuant to this Section 4 were to be determined by pro rata
allocation or by any other method of allocation that does not take into
account the relevant equitable considerations. For purposes of this Section
4, each Affiliate of a Holder, and each director, officer and employee and
Person, if any, who controls a Holder or such Affiliate within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such Holder and each Person, if any, who
controls the Company and the Guarantor within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Company and the Guarantor.
5. PARTICIPATION IN AN UNDERWRITTEN REGISTRATION. No Holder
may participate in an underwritten registration hereunder unless such Holder
(a) agrees to sell such Holder's Registrable Securities on the basis provided
in the underwriting arrangement approved by the Persons entitled hereunder to
approve such arrangements and (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents reasonably required under the terms of
such underwriting arrangements.
6. SELECTION OF UNDERWRITERS. The Holders of Registrable
Securities covered by the Shelf Registration Statement who desire to do so
may sell the Securities covered by such Shelf Registration in an underwritten
offering, subject to the provisions of Section 3(l) hereof. In any such
underwritten offering, the underwriter or underwriters and manager or
managers that will administer the offering will be selected by the Holders of
a majority in aggregate principal amount of the Registrable Securities
included in such offering; PROVIDED, HOWEVER, that such underwriters and
managers must be reasonably satisfactory to the Company and the Guarantor.
7. MISCELLANEOUS.
(a) RULE 144 AND RULE 144A. For so long as the Company and
the Guarantor are subject to the reporting requirements of Section 13 or 15
of the Exchange Act and any Registrable Securities remain outstanding, the
Company and the Guarantor will file the reports required to be filed by it
under the Securities Act and Section 13(a) or 15(d) of the Exchange Act and
the rules and regulations adopted by the SEC thereunder; PROVIDED, HOWEVER,
that if the Company and the Guarantor ceases to be so required to file such
reports, it will, upon the request of any Holder of Registrable Securities,
(a) make publicly available such information as is necessary to permit sales
of its securities pursuant to Rule 144 under the Securities Act, (b) deliver
such information to a prospective purchaser as is necessary to permit sales
of its securities pursuant to Rule 144A under the Securities Act, and (c)
take such further action that is reasonable in the circumstances, in each
case, to the extent required from time to time to enable such Holder to sell
its Registrable Securities without registration under the Securities Act
within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such rule may be amended from time to time, (ii) Rule 144A
under the Securities Act, as such rule may be amended from time to time, or
(iii) any similar rules or regulations hereafter adopted by the SEC.
21
<PAGE>
Upon the request of any Holder of Registrable Securities, the Company and the
Guarantor will deliver to such Holder a written statement as to whether it
has complied with such requirements.
(b) NO INCONSISTENT AGREEMENTS. The Company and the
Guarantor have not entered into, nor will the Company or the Guarantor on or
after the date of this Agreement enter into, any agreement which is
inconsistent with the rights granted to the Holders of Registrable Securities
in this Agreement or otherwise conflicts with the provisions hereof. The
rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the Company's
and the Guarantor's other issued and outstanding securities under any such
agreements.
(c) AMENDMENTS AND WAIVERS. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company and the Guarantor has
obtained the written consent of Holders of a majority in aggregate principal
amount of the outstanding Registrable Notes or a majority in aggregate
principal amount of the outstanding Registrable Debentures affected by such
amendment, modification, supplement, waiver or departure; PROVIDED that no
amendment, modification or supplement or waiver or consent to the departure
with respect to the provisions of Section 4 hereof shall be effective as
against any Holder of Registrable Securities unless consented to in writing
by such Holder of Registrable Securities. Notwithstanding the foregoing
sentence, (i) this Agreement may be amended, without the consent of any
Holder of Registrable Securities, by written agreement signed by the Company,
the Guarantor and the Initial Purchasers, to cure any ambiguity, correct or
supplement any provision of this Agreement that may be inconsistent with any
other provision of this Agreement or to make any other provisions with
respect to matters or questions arising under this Agreement which shall not
be inconsistent with other provisions of this Agreement, (ii) this Agreement
may be amended, modified or supplemented, and waivers and consents to
departures from the provisions hereof may be given, by written agreement
signed by the Company, the Guarantor and the Initial Purchasers to the extent
that any such amendment, modification, supplement, waiver or consent is, in
their reasonable judgment, necessary or appropriate to comply with applicable
law (including any interpretation of the Staff of the SEC) or any change
therein and (iii) to the extent any provision of this Agreement relates to an
Initial Purchaser, such provision may be amended, modified or supplemented,
and waivers or consents to departures from such provisions may be given, by
written agreement signed by such Initial Purchaser, the Guarantor and the
Company.
(d) NOTICES. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, telex, telecopier, or any courier guaranteeing
overnight delivery (i) if to a Holder, at the most current address given by
such Holder to the Company and the Guarantor by means of a notice given in
accordance with the provisions of this Section 7(d), which address initially
is, with respect to each Initial Purchaser, the address set forth in the
Purchase Agreement; and (ii) if to the Company or the Guarantor, initially at
the Company's and Guarantor's address set forth in the Purchase Agreement and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 7(d).
22
<PAGE>
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied;
and on the next Business Day, if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands, or other
communications shall be concurrently delivered by the Person giving the same
to the Trustee, at the address specified in the Indenture.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon the successors, assigns and transferees of
the Initial Purchasers, including, without limitation and without the need
for an express assignment, subsequent Holders; PROVIDED, HOWEVER, that
nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Registrable Securities in violation of the terms of the
Purchase Agreement or the Indenture. If any transferee of any Holder shall
acquire Registrable Securities in any manner, whether by operation of law or
otherwise, such Registrable Securities shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable
Securities, such Person shall be conclusively deemed to have agreed to be
bound by and to perform all of the terms and provisions of this Agreement and
such Person shall be entitled to receive the benefits hereof.
(f) THIRD PARTY BENEFICIARIES. Each Holder and any
Participating Broker-Dealer shall be third party beneficiaries of the
agreements made hereunder among the Initial Purchasers, the Guarantor and the
Company, and the Initial Purchasers shall have the right to enforce such
agreements directly to the extent it deems such enforcement necessary or
advisable to protect its rights or the rights of Holders hereunder.
(g) COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE
BEEN MADE IN THE STATE OF NEW YORK. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
(j) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
23
<PAGE>
(k) SECURITIES HELD BY THE COMPANY OR ITS AFFILIATES.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by
the Company, the Guarantor or their Affiliates shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
24
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
U S WEST, INC.
By: /s/ Sean P. Foley
--------------------------
Name: Sean P. Foley
Title: Treasurer
U S WEST CAPITAL FUNDING, INC.
By: /s/ Sean P. Foley
--------------------------
Name: Sean P. Foley
Title: Treasurer
Confirmed and accepted as of
the date first above written:
J.P. MORGAN SECURITIES INC.
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: J.P. MORGAN SECURITIES INC.
For itself and as Representative of the
several Initial Purchasers
By: /s/ John E. Simmons
-----------------------------------
Authorized Signatory
25
<PAGE>
CADWALADER
----------
Cadwalader, Wickersham & Taft
100 Maiden Lane New York
New York, NY 10038 Washington
Tel: 212 504-6000 Charlotte
Fax: 212 504-6666 London
December 10, 1999
U S WEST Capital Funding, Inc.
U S West, Inc.
1801 California Street
Denver, Colorado 80202
Re: Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
We have acted as special counsel to U S WEST Capital Funding, Inc., a
Colorado corporation ("Capital Funding"), and U S WEST, Inc., a Delaware
corporation ("U S WEST"), in connection with the preparation and filing by
Capital Funding and U S WEST with the Securities and Exchange Commission (the
"Commission") of a Preliminary Prospectus, dated December 10, 1999 (the
"Prospectus") included in a Registration Statement on Form S-4 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the registration by Capital Funding of
$1,150,000,000 aggregate principal amount of its 6-7/8% Notes due August 15,
2001 (the "Securities"), unconditionally guaranteed (the "Guarantees") as to
payment of principal and interest by U S WEST. The Registration Statement
also relates to the offer by Capital Funding to exchange the Securities and
Guarantees for all of its outstanding $1,150,000,000 aggregate principal
amount of 6-7/8% Notes due August 15, 2001 (the "Old Notes") and the related
guarantees (the "Old Guarantees"), previously issued pursuant to the Purchase
Agreement, dated August 20, 1999 and filed as an exhibit to the Registration
Statement. The Securities and the Guarantees will be issued pursuant to the
terms of the Registration Rights Agreement, dated as of August 20, 1999 among
Capital Funding, U S WEST and the initial purchasers party thereto (the
"Registration Rights Agreement") and filed as an exhibit to the Registration
Statement.
<PAGE>
U S WEST Capital Funding Inc. -2- December 10, 1999
In rendering the opinions set forth below, we have examined and relied upon,
among other things, (a) the Registration Statement, including the Prospectus
constituting a part thereof, (b) the Indenture, dated as of June 29, 1998 (the
"Indenture"), among U S WEST, Capital Funding and The First National Bank of
Chicago, as trustee (the "Trustee"), filed as an exhibit to the Registration
Statement, (c) the Registration Rights Agreement, (d) the Old Notes, (e) the Old
Guarantees, (f) the forms of Securities and Guarantees and (g) originals, copies
or specimens, certified or otherwise identified to our satisfaction, of such
certificates, corporate and public records, agreements and instruments and other
documents as we have deemed appropriate as a basis for the opinions expressed
below. In such examination we have assumed the genuineness of all signatures,
the authenticity of all documents, agreements and instruments submitted to us as
originals, the conformity to original documents, agreements and instruments of
all documents, agreements and instruments submitted to us as copies or
specimens, the authenticity of the originals of such documents, agreements and
instruments submitted to us as copies or specimens, and the accuracy of the
matters set forth in the documents, agreements and instruments we reviewed. As
to any facts material to such opinions that were not known to us, we have relied
upon statements and representations of officers and other representatives of
Capital Funding and U S WEST. Except as expressly set forth herein, we have not
undertaken any independent investigation (including, without limitation,
conducting any review, search or investigation of any public files, records or
dockets) to determine the existence or absence of the facts that are material to
our opinions, and no inference as to our knowledge concerning such facts should
be drawn from our reliance on the representations of Capital Funding and U S
WEST in connection with the preparation and delivery of this letter. In
addition, we have assumed that the Guarantees and the Securities will be
executed and delivered in substantially the form in which they are filed as
exhibits to the Registration Statement.
We express no opinion concerning the laws of any jurisdiction other than the
laws of the State of New York, the General Corporation Law of the State of
Delaware with respect to the opinion set forth in paragraph 2 below and the
federal tax laws of the United States with respect to the opinion set forth
in paragraph 3 below. With respect to the matters set forth in paragraph 1
below covered by the laws of the State of Colorado, we have relied on the
opinion of Thomas O. McGimpsey, Senior Attorney and Secretary of Capital
Funding and Senior Attorney and Assistant Secretary of U S WEST. While we
are not licensed to practice law in the State of Delaware, we have reviewed
applicable provisions of the Delaware General Corporation Law as we have
deemed appropriate in connection with the opinions expressed herein.
Based upon and subject to the qualifications set forth herein, we are of the
opinion that:
1. The Securities, when duly executed and authenticated in the manner
contemplated in the Indenture and issued and delivered in exchange for
the Old
<PAGE>
U S WEST Capital Funding Inc. -3- December 10, 1999
Notes as contemplated in the Prospectus, will be legally issued and will
constitute binding agreements of Capital Funding, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium,
receivership or other laws relating to or affecting creditors' rights
generally, and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
2. The Guarantees, when duly executed in the manner contemplated in the
Indenture and issued and delivered in exchange for the Old Guarantees as
contemplated in the Prospectus, will be legally issued and will constitute
binding agreements of U S WEST, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium, receivership
or other laws relating to or affecting creditors' rights generally, and to
general principles of equity (regardless of whether enforcement is sought in
a proceeding at law or in equity).
3. The statements made in the Prospectus under the caption "Certain U.S.
Federal Tax Considerations," insofar as such statements purport to
summarize certain federal income tax laws of the United States or legal
conclusions with respect thereto, have been reviewed by us and constitute a
fair summary of the principal U.S. federal tax consequences of the purchase,
ownership and disposition of the Securities. All such statements are based
upon current law, which is subject to change, possibly with retroactive
effect. Further, there can be no assurance that the Internal Revenue
Service will not take a contrary position.
We assume no obligation to update or supplement this letter to reflect any
facts, circumstances, laws, rules or regulations, or any changes thereto, or
any court or other authority or body decisions or governmental or regulatory
authority determinations which may hereafter occur or come to our attention.
We hereby consent to the filing of this opinion letter as an exhibit to the
Registration Statement and to the reference to this Firm in the Prospectus
constituting a part of the Registration Statement under the caption "Legal
Matters," without admitting that we are "experts" within the meaning of the
Securities Act or the rules and regulations of the Commission issued
thereunder with respect to any part of the Registration Statement, including
this exhibit.
Very truly yours,
/s/ Cadwalader, Wickersham & Taft
<PAGE>
Exhibit 5-A.2
December 10, 1999
U S WEST, Inc.
U S WEST Capital Funding, Inc.
1801 California Street
Denver, CO 80202
Re: U S WEST, Inc. and U S WEST Capital Funding, Inc.
Form S-4 Registration Statement for Exchange Offer
Gentlemen and Ladies:
As counsel to U S WEST, Inc. ("U S WEST") and U S WEST Capital
Funding, Inc. ("Capital Funding") (collectively, the "Registrants"), I have
examined the Registration Statement on Form S-4 filed contemporaneously
herewith (the "Registration Statement") with the Securities and Exchange
Commission (the "Commission"), in connection with the registration under the
Securities Act of 1933, as amended, of $1,150,000,000 of (a) Capital
Funding's 6 7/8% Notes due August 15, 2001 (the "New Notes") to be exchanged
for its outstanding 6 7/8% Notes due August 15, 2001 (the "Old Notes") and
(b) U S WEST's guarantees (the "New Guarantees") relating to the New Notes to
be exchanged for its outstanding guarantees (the "Old Guarantees") on the Old
Notes. I have examined the Indenture, dated June 29, 1998, by and among U S
WEST, Capital Funding and First National Bank of Chicago, as trustee, under
which the New Notes and New Guarantees 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, issuance and exchange of New Notes and New Guarantees
for Old Notes and Old Guarantees.
I am also familiar with the opinion of Cadwalader, Wickersham &
Taft, qualified to practice in New York, concerning the validity, legality,
and binding effect of the Old Notes and Old Guarantees and New Notes and New
Guarantees under New York law, upon which opinion I relied in delivering my
opinion pursuant to Section 6(g) of the Purchase Agreement, 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 terms of the New Notes and New Guarantees being
otherwise in compliance with then applicable law, when the New Notes and New
Guarantees have been duly authorized, executed, authenticated and delivered
in accordance with the terms of the Registration Rights Agreement, which has
been filed as an exhibit to the Registration Statement, and the applicable
resolutions of the respective Board 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 New Notes and New
Guarantees will constitute legally
<PAGE>
Exhibit 5-A.2
issued and binding obligations of Capital Funding and U S WEST, respectively,
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
U S WEST, INC.
EARNINGS TO FIXED CHARGES
(Dollars in Millions)
<TABLE>
<CAPTION>
Year Ended
9/30/99 9/30/98
------- -------
<S> <C> <C>
Pro forma income before income taxes
and extraordinary item $ 1,714 $ 1,843
Interest expense (net of amounts
capitalized) 519 378
Interest factor on rentals (1/3) 68 64
------- -------
Earnings $ 2,301 $ 2,285
Interest expense $ 544 $ 395
Interest factor on rentals (1/3) 68 64
------- -------
Fixed charges $ 612 $ 459
Ratio of earnings to fixed charges 3.76 4.98
------- -------
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
9/30/99 9/30/98
------- -------
<S> <C> <C>
Income before income taxes
and extraordinary item $ 396 $ 608
Interest expense (net of amounts
capitalized) 203 172
Interest factor on rentals (1/3) 24 20
------- -------
Earnings $ 623 $ 800
Interest expense $ 213 $ 178
Interest factor on rentals (1/3) 24 20
------- -------
Fixed charges $ 237 $ 198
Ratio of earnings to fixed charges 2.63 4.04
------- -------
</TABLE>
<PAGE>
[LETTERHEAD]
Exhibit 23-A
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Form S-4 registration statement of our
report dated January 22, 1999 (except with respect to Note 12 and Note 14, as
to which the date is March 22, 1999), on the consolidated balance sheets of
U S WEST, Inc. (formerly known as USW-C, Inc., the "Company") as of December
31, 1998 and 1997, and the related consolidated statements of income and cash
flows for each of the three years in the period ended December 31, 1998,
included in the Company's Form 10-K/A dated March 24, 1999 and the selected
consolidated financial statements in U S WEST, Inc.'s Current Report on Form
8-K dated February 25, 1999, and to all references to our Firm included in
this registration statement.
/s/ Arthur Andersen LLP
Denver, Colorado,
December 10, 1999.
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, U S WEST, 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-4, (the "Registration Statement")
for the registration of Guarantees of $1,150,000,000 of debt securities to be
issued by U S WEST Capital Funding, Inc.; and
WHEREAS, each of the undersigned is a Director of the Company;
NOW, THEREFORE, each of the undersigned constitutes and appoints
THOMAS O. MCGIMPSEY, as attorney for him or her and in his or her name,
place, and stead, and in his or her capacity as a 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 or she 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 3rd day of December 1999.
<TABLE>
<S> <C>
/s/ LINDA G. ALVARADO /s/ MANUEL A. FERNANDEZ
- ----------------------------- ------------------------------
Linda G. Alvarado Manuel A. Fernandez
/s/ CRAIG R. BARRETT /s/ PETER S. HELLMAN
- ----------------------------- ------------------------------
Craig R. Barrett Peter S. Hellman
/s/ THE HONORABLE HANK BROWN /s/ MARILYN CARLSON NELSON
- ----------------------------- ------------------------------
The Honorable Hank Brown Marilyn Carlson Nelson
/s/ JERRY J. COLANGELO /s/ FRANK P. POPOFF
- ----------------------------- ------------------------------
Jerry J. Colangelo Frank P. Popoff
/s/ GEORGE J. HARAD /s/ SOLOMON D. TRUJILLO
- ----------------------------- ------------------------------
George J. Harad Solomon D. Trujillo
</TABLE>
<PAGE>
Exhibit 24
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-4, (the "Registration Statement")
for the registration of $1,150,000,000 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 THOMAS
O. MCGIMPSEY, as attorney for him or her and in his or her name, place, and
stead, and in his or her 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
each 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 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 3rd day of December 1999.
/s/ ALLAN R. SPIES
-----------------------------------
Allan R. Spies
President and Director
/s/ JANET K. COOPER
-----------------------------------
Janet K. Cooper
Vice President - Finance and Controller
and Director
/s/ SEAN P. FOLEY
-----------------------------------
Sean P. Foley
Vice President and Treasurer and Director
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, U S WEST, 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-4, (the "Registration Statement") for the
registration of Guarantees of $1,150,000,000 of debt securities to be issued by
U S WEST Capital Funding, Inc.; 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 THOMAS
O. MCGIMPSEY, as attorney for him and in his name, place, and stead, and in his
capacity as an Officer or Director, 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 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 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 3rd day of December 1999.
/s/ SOLOMON D. TRUJILLO
-----------------------------------
Solomon D. Trujillo
President and Chief Executive Officer
and Director
/s/ ALLAN R. SPIES
-----------------------------------
Allan R. Spies
Executive Vice President and Chief
Financial Officer
/s/ JANET K. COOPER
-----------------------------------
Janet K. Cooper
Vice President - Finance and Controller
