-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LHIKvEfagOUK6fUfcidgLJhxpnd/OcY7COc4izDwy5SwGNyMXuWCUjzNMSSOu4Ch 06cpzIwthJ9pzV+U+IjIeA== 0001047469-98-018341.txt : 19980507 0001047469-98-018341.hdr.sgml : 19980507 ACCESSION NUMBER: 0001047469-98-018341 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19980506 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: USW-C INC CENTRAL INDEX KEY: 0001054522 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 840953188 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-51907 FILM NUMBER: 98611153 BUSINESS ADDRESS: STREET 1: 7800 EAST ORCHARD ROAD STREET 2: SUITE 390 CITY: ENGLEWOOD STATE: CO ZIP: 80111 BUSINESS PHONE: 3037936531 MAIL ADDRESS: STREET 1: 7800 EAST ORCHARD ROAD STREET 2: SUITE 390 CITY: ENGLEWOOD STATE: CO ZIP: 80111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: US WEST CAPITAL FUNDING INC CENTRAL INDEX KEY: 0000794987 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 841028672 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-51907-01 FILM NUMBER: 98611154 BUSINESS ADDRESS: STREET 1: 7800 E ORCHARD RD STE 480 CITY: ENGLEWOOD STATE: CO ZIP: 80111 BUSINESS PHONE: 3037936629 MAIL ADDRESS: STREET 1: 7800 EAST ORCHARD ROAD SUITE 480 CITY: ENGLEWOOD STATE: CO ZIP: 80111 S-3 1 S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 6, 1998 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------------------- USW-C, INC. U S WEST (to be renamed "U S WEST, CAPITAL FUNDING, INC. Inc.") (Exact name of registrant as specified in its charter) DELAWARE COLORADO (State or other (State or other jurisdiction of jurisdiction of incorporation or incorporation or organization) organization) 84-0953188 84-1028672 (I.R.S. Employer (I.R.S. Employer Identification Number) Identification Number)
1801 CALIFORNIA STREET DENVER, COLORADO 80202 (303) 672-2700 (Address, including zip code, and telephone number, including area code, of both registrants' principal executive offices) THOMAS O. MCGIMPSEY, ESQ. USW-C, INC. 7800 EAST ORCHARD ROAD ENGLEWOOD, COLORADO 80111 (303) 793-6676 (Name, address, including zip code, and telephone number of agent for service for both registrants) APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of the Registration Statement, as determined by market conditions. -------------------------- If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, please check the following box. /X/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / -------------------------- CALCULATION OF REGISTRATION FEE
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 Debt Securities to be issued by U S WEST Capital Funding, Inc...................... $3,500,000,000 100% $3,500,000,000 $1,032,500 Guarantees constituting guarantees of the Debt Securities by USW-C, Inc............. $3,500,000,000 ** ** None
* 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. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAW OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED MAY 6, 1998 PROSPECTUS [LOGO] $3,500,000,000 U S WEST CAPITAL FUNDING, INC. DEBT SECURITIES UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST, BY U S WEST, INC. U S WEST Capital Funding, Inc. ("Capital Funding") from time to time offers its notes, debentures, or other debt securities (the "Debt Securities"), in one or more series, up to an aggregate principal amount of $3,500,000,000 (or its equivalent, based on the applicable exchange rate at the time of offering, in such foreign currencies, or units of two or more thereof as shall be designated by Capital Funding). Debt Securities may be issued in registered form without coupons, bearer form with coupons attached, or in the form of a Global Security. All Debt Securities will be unconditionally guaranteed as to payment of principal, premium, if any, and interest by U S WEST, Inc. ("U S WEST"). When a particular series of Debt Securities is offered, a supplement to this Prospectus will be delivered (the "Prospectus Supplement") together with this Prospectus setting forth the terms of such Debt Securities, including, where applicable, the specific designation, aggregate principal amount, denominations, form of currency or currencies in which the principal, and premium, if any, and interest are payable, maturity, rate (which may be fixed or variable) and time of payment of interest, any terms for redemption or repurchase at the option of Capital Funding or the holder, any terms for sinking fund payments, the initial public offering price, the names of, and the principal amounts to be purchased by, underwriters and the compensation of such underwriters, any listing of the Debt Securities on a securities exchange, and the other terms in connection with the offering and sale of such Debt Securities. If an agent of Capital Funding or a dealer or an underwriter is involved in the sale of the Debt Securities in respect of which this Prospectus is being delivered, the agent's commission or dealer's or underwriter's discount will be set forth in, or may be calculated from, the Prospectus Supplement. The net proceeds to Capital Funding from such sale will be the purchase price of such Debt Securities less such commission in the case of an agent, the purchase price of such Debt Securities in the case of a dealer or the public offering price less such discount in the case of an underwriter, and less, in each case, the other attributable issuance expenses. The aggregate net proceeds to Capital Funding from all the Debt Securities will be the purchase price of the Debt Securities sold, less the aggregate of agents' commissions and dealers' and underwriters' discounts and other expenses of issuance and distribution. The net proceeds to Capital Funding from the sale of the Debt Securities will be set forth in the Prospectus Supplement. See "Plan of Distribution" for possible indemnification arrangements for any agents, dealers or underwriters. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------ The date of this Prospectus is , 1998. DESCRIPTION OF SEPARATION Prior to June , 1998, U S WEST was a wholly-owned subsidiary of U S WEST, Inc. ("Old U S WEST") known as "USW-C, Inc." Before that date, Old U S WEST conducted its business through two groups, U S WEST Communications Group (the "Communications Group") and U S WEST Media Group (the "Media Group"). On June , 1998, Old U S WEST consummated a transaction in which Old U S WEST was separated into two independent companies (the "Separation"). In connection with the Separation, Old U S WEST contributed the businesses of the Communications Group and the domestic directories business of Media Group ("Dex") (collectively, the "U S WEST Businesses") to U S WEST and distributed all of the U S WEST common stock to the holders of Communications Group common stock, other than $850 million in value of U S WEST common stock that was distributed to holders of Media Group common stock in connection with the alignment of Dex with the Communications Group (the "Dex Alignment"). As used herein, references to U S WEST refer to the U S WEST Businesses prior to the Separation and to U S WEST after the Separation. AVAILABLE INFORMATION U S WEST is subject to the informational requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files reports, proxy statements, and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements, and other information concerning U S WEST can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices at Seven World Trade Center, 13th Floor, New York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024, Washington D.C. 20549, at prescribed rates. The Commission maintains a Web site at http: //www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission, including U S WEST. U S WEST's Common Stock is listed and traded on the New York Stock Exchange (the "NYSE") and the Pacific Stock Exchange (the "PSE") and such material is available for inspection at the offices of the NYSE, 20 Broad Street, New York, New York 10005 and at the offices of PSE, 115 Sansome Street, 2nd Floor, San Francisco, California 94104. U S WEST and Capital Funding have filed with the Commission a registration statement on Form S-3 (herein, together with all amendments and exhibits, referred to as the "Registration Statement") under the Securities Act of 1933 (the "Securities Act"). This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. For further information, reference is hereby made to the Registration Statement. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents have been filed by U S WEST (and its predecessor) with the Commission and are incorporated herein by reference: (i) Old U S WEST's Annual Report on Form 10-K for the year ended December 31, 1997, as amended by Form 10-K/A filed April 13, 1998, (ii) Old U S WEST's Current Reports on Form 8-K dated January 29, 1998, February 17, 1998, March 25, 1998 (as amended by Form 8-K/A filed April 13, 1998), April 17, 1998 and May 5, 1998 and (iii) Old U S WEST's Proxy Statement on Schedule 14A filed with the Commission on April 20, 1998. All documents filed by U S WEST pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Debt 1 Securities shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies and supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. U S WEST and Capital Funding will provide without charge to each person to whom a Prospectus is delivered, upon written or oral request of such person, a copy of any or all of the documents which are incorporated by reference herein, other than exhibits to such documents which are not specifically incorporated by reference therein. Requests should be directed to Investor Relations, U S WEST, Inc., 1801 California Street, Denver, Colorado 80202 (telephone number (303) 896-1277). FORWARD-LOOKING INFORMATION MAY PROVE INACCURATE Some of the information presented herein or incorporated by reference constitutes "forward-looking statements" within the meaning of Private Securities Litigation Reform Act of 1995. Although U S WEST and Capital Funding believe that their expectations are based on reasonable assumptions within the bounds of their knowledge of their businesses and operations, there can be no assurance that actual results will not differ materially from their expectations. Factors that could cause actual results to differ from expectations include: (i) greater than anticipated competition from new entrants into the local exchange, intraLATA toll, wireless, data and directories markets; (ii) changes in demand for U S WEST's products and services, including optional custom calling features; (iii) higher than anticipated employee levels, capital expenditures and operating expenses (such as costs associated with year 2000 remediation); (iv) the loss of significant customers; (v) pending regulatory actions in state jurisdictions; (vi) regulatory changes affecting the telecommunications industry, including changes that could have an impact on the competitive environment in the local exchange market; (vii) a change in economic conditions in the various markets served by U S WEST's operations; (viii) greater than anticipated competitive activity requiring new pricing for services; (ix) higher than anticipated start-up costs associated with new business opportunities; (x) delays in U S WEST's ability to begin offering interLATA long-distance services; or (xi) delays in the development of anticipated technologies, or the failure of such technologies to perform according to expectations. U S WEST, INC. U S WEST is a diversified communications company providing services principally to customers in a 14-state mountain and western region of the United States, which is comprised of the states of Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming. U S WEST has operations in four principal areas: (i) telecommunications and related services, (ii) wireless services, (iii) high-speed data and Internet Services; and (iv) directory services. The major component of U S WEST is U S WEST Communications, Inc. which provides communications service to more than 25 million residential and business customers in the region. U S WEST has one class of common stock, par value $.01 per share. U S WEST CAPITAL FUNDING, INC. Capital Funding is a wholly-owned subsidiary of U S WEST and was incorporated under the laws of the State of Colorado in June 1986. Capital Funding was incorporated to provide financing to U S WEST and its affiliates through the issuance of indebtedness guaranteed by U S WEST. The 2 principal executive offices of Capital Funding are located at 1801 California Street, Denver, Colorado 80202 (telephone number (303) 672-2700). USE OF PROCEEDS Capital Funding will apply the net proceeds from the sale of the Debt Securities to its general funds to be used for the reduction of short-term and long-term borrowings and/or loans to U S WEST and affiliates of U S WEST, which will in turn use the funds for general corporate purposes, including acquisitions, the refinancing of short-term and long-term borrowings, and for other business opportunities. The amount and timing of these loans will depend upon the future growth and financing requirements of U S WEST and its affiliates. RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the ratio of earnings to fixed charges for U S WEST for the periods indicated. For the purpose of calculating this ratio, earnings consist of income before income taxes, extraordinary items and cumulative effect of change in accounting principle and fixed charges. Fixed charges include interest on indebtedness and the portion of rentals representative of the interest factor.
PRO FORMA YEAR ENDED DECEMBER HISTORICAL YEAR ENDED DECEMBER 31, 31, - ------------------------------------ ---- 1993(1)(2) 1994(1) 1995(1) 1996(1) 1997(1) 1997(3) - ---- ---- ---- ---- ---- ---- 2.91 5.38 5.01 5.20 5.67 3.87
- ------------------------------ (1) Historical ratios are based on the combined historical results of U S WEST and exclude the effects of $3.9 billion of indebtedness (the "Dex Indebtedness") which was refinanced by U S WEST in connection with the Dex Alignment. (2) 1993 ratio includes a one-time restructuring charge of $930 million. Excluding the restructuring charge, the ratio would have been 4.76. (3) Based on the unaudited Pro Forma combined results of U S WEST which gives effect to the refinancing by U S WEST of $3.9 billion of Dex Indebtedness in connection with the Dex Alignment. For further information please see U S WEST's Pro Forma financial statements included in Old U S WEST's Proxy Statement (as defined below) incorporated herein by reference. DESCRIPTION OF DEBT SECURITIES AND GUARANTEES The following description sets forth certain general terms and provisions of the Debt Securities and Guarantees to which any Prospectus Supplement may relate. The particular terms and provisions of the series of Debt Securities offered by a Prospectus Supplement and the extent to which such general terms and provisions described below may apply thereto, will be described in the Prospectus Supplement relating to such series of Debt Securities. The Debt Securities are to be issued under an Indenture ("Indenture"), to be entered into among U S WEST, Capital Funding, and First National Bank of Chicago ("Trustee"). As of the date of this Prospectus, no Debt Securities had been issued under the Indenture. The following summaries of certain provisions of the Debt Securities, the Guarantees, and the Indenture do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all provisions of the Debt Securities, the Guarantees, and the Indenture, including the definitions therein of certain terms. Wherever particular sections or defined terms of the Indenture are referred to, it is intended that such sections or defined terms shall be incorporated herein by reference. 3 GENERAL The Indenture does not limit the amount of Debt Securities which can be issued thereunder and additional debt securities may be issued thereunder up to the aggregate principal amount which may be authorized from time to time by, or pursuant to a resolution of, Capital Funding's Board of Directors or by supplemental indenture. Reference is made to the Prospectus Supplement for the following terms of the particular series of Debt Securities being offered hereby; (i) the title of the Debt Securities of the series; (ii) any limit upon the aggregate principal amount of the Debt Securities of the series; (iii) the date or dates on which the principal of the Debt Securities of the series will mature; (iv) the rate or rates (or manner of calculations thereof), if any, at which the Debt Securities of the series will bear interest, the date or dates from which any such interest will accrue and on which such interest will be payable, and, with respect to Debt Securities of the series in registered form, the record date for the interest payable on any interest payment date; (v) the place or places where the principal of and interest, if any, on the Debt Securities of the series will be payable; (vi) any redemption or sinking fund provisions; (vii) if other than the principal amount thereof, the portion of the principal amount of Debt Securities of the series which will be payable upon declaration of acceleration of the maturity thereof; (viii) whether the Debt Securities of the series will be issuable in registered or bearer form or both, any restrictions applicable to the offer, sale, or delivery of Debt Securities in bearer form ("bearer Debt Securities"), and whether the terms upon which bearer Debt Securities will be exchangeable for Debt Securities in registered form ("registered Debt Securities") and vice versa; (ix) whether and under what circumstances Capital Funding will pay additional amounts on the Debt Securities of the series held by a person who is not a U.S. person (as defined below) in respect of taxes or similar charges withheld or deducted and, if so, whether Capital Funding will have the option to redeem such Debt Securities rather than pay such additional amounts; (x) whether the Debt Securities will be denominated or provide for payment in United States dollars or a foreign currency or units of two or more such foreign currencies; and (xi) any additional provisions or other special terms not inconsistent with the provisions of the Indenture, including any terms which may be required by or advisable under United States laws or regulations or advisable in connection with the marketing of Debt Securities of such series. (Section 2.01 and 2.02.) To the extent not described herein, principal, premium, if any, and interest will be payable, and the Debt Securities of a particular series will be transferable, in the manner described in the Prospectus Supplement relating to such series. Each series of Debt Securities will constitute unsecured and unsubordinated indebtedness of Capital Funding, and will rank on a parity with Capital Funding's other indebtedness, and will have the benefit of the Guarantees described herein. However, since U S WEST is a holding company, the right of U S WEST and, hence, the right of creditors of U S WEST (including the holders of the Debt Securities) to participate in any distribution of the assets of any subsidiaries of U S WEST, whether upon liquidation, reorganization, or otherwise, is subject to prior claims of creditors of the subsidiary, except to the extent that claims of U S WEST itself as a creditor of a subsidiary may be recognized. Debt Securities of any series may be issued as registered Debt Securities or bearer Debt Securities or both as specified in the term of the series. Unless otherwise indicated in the Prospectus Supple- ment, Debt Securities will be issued in denominations of $1,000 and integral multiples thereof, and bearer Debt Securities will not be offered, sold, resold, or delivered to U.S. persons in connection with their original issuance. For purposes of this Prospectus, "U.S. person" means a citizen, national, or resident of the United States, a corporation, partnership, or other entity created or organized in or under the laws of the United States, or any political subdivision thereof, or an estate or trust which is subject to United States federal income taxation regardless of its source of income. To the extent set forth in the Prospectus Supplement, except in special circumstances set forth in the Indenture, interest on bearer Debt Securities will be payable only against presentation and surrender of the coupons for the interest installments evidenced thereby as they mature at a paying 4 agency of Capital Funding located outside of the United States and its possessions. (Section 2.05(c).) Capital Funding will maintain such an agency for a period of two years after the principal of such bearer Debt Securities has become due and payable. During any period thereafter for which it is necessary in order to conform to United States tax law or regulations, Capital Funding will maintain a paying agent outside the United States and its possessions to which the bearer Debt Securities may be presented for payment and will provide the necessary funds therefor to such paying agent upon reasonable notice. (Section 2.04) Bearer Debt Securities and the coupons related thereto will be transferable by delivery. (Section 2.08(e).) If appropriate, federal income tax consequences applicable to a series of Debt Securities will be described in the Prospectus Supplement relating thereto. GLOBAL SECURITIES The Debt Securities of a series may be issued in the form of one or more fully registered global securities (each a "Global Security") that will be deposited with, or on behalf of, a depositary (the "Depositary") identified in the Prospectus Supplement relating to such series. Unless and until it is exchanged for Debt Securities in definitive registered form, a Global Security may not be transferred except as a whole by the Depositary for such Global Security to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor of such Depositary or a nominee of such successor. The specific terms of the depositary arrangements with respect to a series of Debt Securities will be described in the Prospectus Supplement relating to such series. Capital Funding anticipates that the following provisions will apply to all depositary arrangements. Upon the issuance of a Global Security, the Depositary for such Global Security will credit the accounts held with it with the respective principal amounts of the Debt Securities represented by such Global Security. Such accounts shall be designated by the underwriters or agents with respect to such Debt Securities or by Capital Funding if such Debt Securities are offered and sold directly by Capital Funding. Ownership of beneficial interests in a Global Security will be limited to persons that have accounts with the Depositary for such Global Security ("participants") or persons that may hold interests through participants. Ownership of beneficial interests in such Global Security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the Depositary for such Global Security or on the records of participants. The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and such laws may impair the ability to transfer beneficial interests in a Global Security. So long as the Depositary for a Global Security, or its nominee, is the registered owner of such Global Security, such Depositary or such nominee, as the case may be, will be considered the sole owner or holder of the Debt Securities represented by such Global Security for all purposes under the Indenture governing such Debt Securities. Except as provided below, owners of beneficial interests in a Global Security will not be entitled to have Debt Securities of the series represented by such Global Security registered in their names, will not receive or be entitled to receive physical delivery of Debt Securities of such series in definitive form and will not be considered the owners or holders thereof under the Indenture governing such Debt Securities. Principal, premium, if any, and interest payments on Debt Securities registered in the name of a Depositary or its nominee will be made to the Depositary or its nominee, as the case may be, as the registered owner of the Global Security representing such Debt Securities. Neither Capital Funding, the Trustee for such Debt Securities, any Paying Agent nor the Security Registrar for such Debt Securities will have any responsibility or liability for any aspect of the records relating to or payments 5 made on account of beneficial ownership interests in the Global Security for such Debt Securities or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Capital Funding expects that the Depositary for a series of Debt Securities issued in the form of a Global Security, upon receipt of any payment of principal, premium or interest, will credit immediately participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of the Global Security for such Debt Securities as shown on the records of such Depositary. Capital Funding also expects that payments by participants to owners of beneficial interests in such Global Security held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street name", and will be the responsibility of such participants. If a Depositary for a series of Debt Securities is at any time unwilling or unable to continue as depositary and a successor depositary is not appointed by Capital Funding within 90 days, Capital Funding will issue Debt Securities of such series in definitive form in exchange for the Global Security representing such series of Debt Securities. In addition, Capital Funding may at any time and in its sole discretion determine not to have the Debt Securities of a series represented by a Global Security and, in such event, will issue Debt Securities of such series in definitive form in exchange for the Global Security representing such series of Debt Securities. In either instance, an owner of a beneficial interest in a Global Security will be entitled to have Debt Securities of the series represented by such Global Security equal in principal amount to such beneficial interest registered in its name and will be entitled to physical delivery of such Debt Securities in definitive form. Debt Securities of such series so issued in definitive form will be issued in denominations of $1,000 and integral multiples thereof and will be issued in registered form only, without coupons. GUARANTEES U S WEST will unconditionally guarantee the due and punctual payment of the principal, premium, if any, and interest on the Debt Securities when and as the same shall become due and payable, whether at maturity, upon redemption, or otherwise. (Section 2.16.) The Guarantees will rank equally with all other unsecured and unsubordinated obligations of U S WEST. EXCHANGE OF SECURITIES To the extent permitted by the terms of a series of Debt Securities authorized to be issued in registered form and bearer form, bearer Debt Securities may be exchanged for an equal aggregate principal amount of registered or bearer form Debt Securities of the same series and date of maturity in such authorized denominations as may be requested upon surrender of the bearer Debt Securities with all unpaid coupons relating thereto, at an agency of Capital Funding maintained for such purpose and upon fulfillment of all other requirements of such agent. (Section 2.08(b)). As of the date of this Prospectus, United States Treasury regulations do not permit exchanges of registered Debt Securities for bearer Debt Securities and, unless such regulations are modified, the terms of a series of Debt Securities will not permit registered Debt Securities to be exchanged for bearer Debt Securities. LIENS ON ASSETS If at any time, Capital Funding mortgages, pledges, or otherwise subjects to any lien the whole or any part of any property or assets now owned or hereafter acquired by it, except as hereinafter provided, Capital Funding will secure the outstanding Debt Securities, and any other obligations of Capital Funding which may then be outstanding and entitled to the benefit of a covenant similar in effect to this covenant, equally and ratably with the indebtedness or obligations secured by such mortgage, pledge, or lien, for as long as any such indebtedness or obligation is so secured. The 6 foregoing covenant does not apply to the creation, extension, renewal, or refunding of mortgages or liens created or existing at the time property is acquired, created within 180 days thereafter, or created for the purpose of securing the cost of construction and improvement of property, or to the making of any deposit or pledge to secure public or statutory obligations or with any governmental agency at any time required by law in order to qualify Capital Funding to conduct its business or any part thereof or in order to entitle it to maintain self-insurance or to obtain the benefits of any law relating to workers' compensation, unemployment insurance, old age pensions, or other social security, or with any court, board, commission, or governmental agency as security incident to the proper conduct of any proceeding before it. Nothing contained in the Indenture prevents any entity other than Capital Funding from mortgaging, pledging, or subjecting to any lien any of its property or assets, whether or not acquired from Capital Funding or U S WEST. (Section 4.03.) AMENDMENT AND WAIVER Subject to certain exceptions, the Indenture may be amended or supplemented by Capital Funding, U S WEST, and the Trustee with the consent of the holders of a majority in principal amount of the outstanding Debt Securities of each series affected by the amendment or supplement (with each series voting as a class), or compliance with any provision may be waived with the consent of holders of a majority in principal amount of the outstanding Debt Securities of each series affected by such waiver (with each series voting as a class). However, without the consent of each Debt Securityholder affected, an amendment or waiver may not (i) reduce the amount of Debt Securities whose holders must consent to an amendment or waiver; (ii) change the rate of or change the time for payment of interest on any Debt Security; (iii) change the principal of or change the fixed maturity of any Debt Security; (iv) waive a default in the payment of the principal of or interest on any Debt Security; (v) make any Debt Security payable in money other than that stated in the Debt Security; or (vi) impair the right to institute suit for the enforcement of any payment on or with respect to any Debt Security. (Section 9.02.) The Indenture may be amended or supplemented without the consent of any Debt Securityholder (i) to cure any ambiguity, defect, or inconsistency in the Indenture, the Debt Securities of any series or the Guarantees; (ii) to provide for the assumption of all the obligations of Capital Funding or U S WEST under the Debt Securities, any coupons related thereto, the Guarantees, and the Indenture by any corporation in connection with a merger, consolidation, transfer, or lease of Capital Funding's or U S WEST's property and assets substantially as an entirety, as provided for in the Indenture; (iii) to provide for uncertificated Debt Securities in addition to or in place of certificated Debt Securities; (iv) to make any change that does not adversely affect the rights of any Debt Securityholder; (v) to provide for the issuance of and establish the form and terms and conditions of a series of Debt Securities or the Guarantees endorsed thereon or to establish the form of any certifications required to be furnished pursuant to the terms of the Indenture or any series of Debt Securities; or (vi) to add to the rights of Debt Securityholders. (Section 9.01.) MERGER Capital Funding or U S WEST may consolidate with or merge into, or transfer or lease its property and assets substantially as an entirety, to another person if that person is a corporation and assumes all the obligations, as the case may be, of Capital Funding, under the Debt Securities, and any coupons related thereto and the Indenture, or of U S WEST, under the Guarantees and the Indenture, and if, after giving effect to such transaction, a Default or Event of Default would not occur or be continuing. Thereafter, all such obligations of Capital Funding or U S WEST, as the case may be, shall terminate. (Section 5.01 and 5.02.) The general provisions of the Indenture do not afford holders of the Debt Securities protection in the event of a highly-leveraged transaction, reorganization, merger or similar transaction involving U S WEST or Capital Funding that may adversely affect holders of the Debt Securities. 7 EVENTS OF DEFAULT The following events are defined in the Indenture as "Events of Default" with respect to a series of Debt Securities: (i) default in the payment of interest on any Debt Security of each series for 90 days; (ii) default in the payment of the principal of any Debt Security of such series; (iii) failure by Capital Funding or U S WEST for 90 days after notice to it to comply with any of its other agreements in the Debt Securities of such series, in the Indenture, in the Guarantees, or in any supplemental indenture; and (iv) certain events of bankruptcy or insolvency of Capital Funding or the Guarantor. (Section 6.01.) If an Event of Default occurs with respect to the Debt Securities of any series and is continuing, the Trustee or the holders of at least 25% in principal amount of all of the outstanding Debt Securities of that series may declare the principal (or, if the Debt Securities of that series are original issue discount Debt Securities, such portion of the principal amount as may be specified in the terms of that series) of all the Debt Securities of that series to be due and payable. Upon such declaration, such principal (or, in the case of original issue discount Debt Securities, such specified amount) shall be due and payable immediately. (Section 6.02.) Securityholders may not enforce the Indenture, the Debt Securities, or the Guarantees, except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Debt Securities. (Section 7.01.) Subject to certain limitations, holders of a majority in principal amount of the Debt Securities of each series affected (with each series voting as a class) may direct the Trustee in its exercise of any trust power. (Section 6.05.) The Trustee may withhold from Debt Securityholders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interests. (Section 7.05.) CONCERNING THE TRUSTEE U S WEST and certain of its affiliates, including Capital Funding, maintain banking relationships in the ordinary course of business with the Trustee. In addition, the Trustee and certain of its affiliates serve as trustee, authenticating agent, or paying agent with respect to certain debt securities of U S WEST and its affiliates. PLAN OF DISTRIBUTION GENERAL Capital Funding may sell the Debt Securities being offered hereby: (i) directly to purchasers, (ii) through agents, (iii) through underwriters, (iv) through dealers, or (v) through a combination of any such methods of sale. The distribution of the Debt Securities may be effected from time to time in one or more transactions either (i) at a fixed price or prices, which may be changed; (ii) at market prices prevailing at the time of sale; (iii) at prices related to such prevailing market prices; or (iv) at negotiated prices. Offers to purchase Debt Securities may be solicited directly by Capital Funding or by agents designated by Capital Funding from time to time. Any such agent, which may be deemed to be an underwriter, as that term is defined in the Securities Act, involved in the offer or sale of the Debt Securities in respect of which this Prospectus is delivered will be named, and any commissions payable by Capital Funding to such agent will be set forth, in the Prospectus Supplement or the Pricing Supplement. Unless otherwise indicated in the Prospectus Supplement or the Pricing Supplement, any such agent will be acting on a best efforts basis for the period of its appointment. Agents may be customers of, engage in transactions with, or perform services for, Capital Funding in the ordinary course of business. If an underwriter or underwriters are utilized in the sale, Capital Funding and U S WEST will execute an underwriting agreement with such underwriters at the time of sale to them and the names 8 of the underwriters and the terms of the transactions will be set forth in the Prospectus Supplement, which will be used by the underwriters to make resales of the Debt Securities. If a dealer is utilized in the sale of the Debt Securities in respect of which this Prospectus is delivered, Capital Funding will sell such Debt Securities to the dealer, as principal. The dealer may then resell such Debt Securities to the public at varying prices to be determined by each dealer at the time of resale. Underwriters, dealers, agents, and other persons may be entitled, under agreements which may be entered into with Capital Funding and U S WEST, to indemnification against, or contribution with respect to, certain civil liabilities, including liabilities under the Securities Act. DELAYED DELIVERY ARRANGEMENTS If so indicated in the Prospectus Supplement, Capital Funding will authorize dealers or other persons acting as Capital Funding's agents to solicit offers by certain institutions to purchase Debt Securities from Capital Funding pursuant to contracts providing for payment and delivery on a future date. Institutions with which such contracts may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions, and others, but in all cases, such institutions must be approved by Capital Funding. The obligations of any purchaser under any such contract will not be subject to any conditions except that (a) the purchaser of the Debt Securities shall not at the time of delivery be prohibited under the laws of the jurisdiction to which such purchaser is subject, and (b) if the Debt Securities are also being sold to underwriters, Capital Funding shall have sold to such underwriters the Debt Securities not sold for delayed delivery. The dealers and such other persons will not have any responsibility in respect of the validity or performance of such contracts. EXPERTS The audited combined financial statements and combined financial statement schedule of U S WEST and the audited consolidated financial statements and the Supplementary Selected Proportionate Results of Operations of Old U S WEST for the years ended December 31, 1997 and 1996 included in Old U S WEST's proxy statement on Schedule 14A (the "Proxy Statement"), filed April 20, 1998, and the audited consolidated financial statements, Supplementary Selected Proportionate Results of Operations and financial statement schedule of Old U S WEST included in Old U S WEST's Annual Report on Form 10-K, as amended by Form 10-K/A filed April 13, 1998, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are incorporated herein by reference in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. The consolidated financial statements of Old U S WEST for the year ended December 31, 1995 included in the Proxy Statement filed April 20, 1998, and the consolidated financial statements and consolidated financial statement schedule of Old U S WEST included in Old U S WEST's Annual Report on Form 10-K for the year ended December 31, 1997, as amended by Form 10-K/A filed April 13, 1998, have been incorporated herein by reference in reliance on the reports of Coopers & Lybrand L.L.P., independent accountants, given on the authority of that firm as experts in accounting and auditing. The combined financial statements and combined financial statement schedule of U S WEST for the year ended December 31, 1995 included in the Proxy Statement filed April 20, 1998 have been incorporated herein by reference in reliance on the report of Coopers & Lybrand L.L.P., independent accountants, given on the authority of that firm as experts in accounting and auditing. 9 LEGAL OPINIONS Certain legal matters relating to the Debt Securities and the Guarantees to be offered hereby will be passed upon for Capital Funding and U S WEST by Thomas O. McGimpsey, Corporate Counsel and Assistant Secretary of U S WEST. 10 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. Securities and Exchange Commission Filing Fee.................. $1,032,500 Rating Agency Fees............................................. 75,000* Fees and Expenses of Trustee................................... 50,000* Blue Sky Fees and Expenses..................................... 12,000* Printing and Distributing Registration Statement, Prospectus, Distribution Agreement, Underwriting Agreement, Indenture and Miscellaneous Material....................................... 50,000* Accountants' Fees.............................................. 12,500* Legal Fees and Expenses........................................ 25,000* Miscellaneous.................................................. 13,000* ---------- Total...................................................... $1,270,000* ---------- ----------
- ------------------------ * Estimated ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law (the "DGCL") permits the board of directors of USW-C, Inc. (to be renamed "U S WEST, Inc." prior to any offering hereunder) (the "Company") to indemnify any person against expenses (including attorneys' fees), judgments, fines and amounts paid in settlements actually and reasonably incurred by him or her in connection with any threatened, pending or completed action, suit or proceeding in which such person is made a party by reason of his or her being or having been a director, officer, employee or agent of the Company, in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities (including reimbursement for expenses incurred) arising under the Securities Act. The statute provides that indemnification pursuant to its provisions is not exclusive of other rights of indemnification to which a person may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Company's Restated Certificate of Incorporation and Bylaws provide for indemnification of its directors and officers to the fullest extent permitted by law. As permitted by section 102 of the DGCL, the Company's Restated Certificate of Incorporation eliminates a director's personal liability for monetary damages to the Company and its stockholders arising from a breach or alleged breach of a director's fiduciary duty except for liability under section 174 of the DGCL, for liability for any breach of the director's duty of loyalty to the Company or its stockholders, for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law or for any transaction from which the director derived an improper personal benefit. The Bylaws of Capital Funding provide for the indemnification of directors and officers to the extent permissible under applicable law. Section 7-109-102 of the Colorado Business Corporation Act (the "CBCA") specifies the circumstances under which a corporation may indemnify its directors, officers, employees or agents. For acts done in a person's "official capacity," the CBCA generally requires that an act be done in good faith and in a manner reasonably believed to be in the best interests of the corporation. In all other civil cases, the person must have acted in good faith and in a way that was not opposed to the corporation's best interests. In criminal actions or proceedings, the CBCA imposes an additional requirement that the actor had no reasonable cause to believe his II-1 conduct was unlawful. In any proceeding by or in the right of the corporation, or charging a person with the improper receipt of a personal benefit, no indemnification, except for court-ordered indemnification for reasonable expenses occurred, can be made. Indemnification is mandatory when any director or officer is wholly successful, on the merits or otherwise, in defending any civil or criminal proceeding. The directors and officers of the Company and Capital Funding are covered by insurance policies indemnifying against certain liabilities, including certain liabilities arising under the Securities Act which might be incurred by them in such capacities and against which they cannot be indemnified by the Company and Capital Funding. Any agents, dealers or underwriters who execute any of the agreements filed as Exhibit 1 to this registration statement will agree to indemnify the Company and Capital Funding directors and their officers who signed the registration statement against certain liabilities which might arise under the Securities Act with respect to information furnished to the Company and Capital Funding by or on behalf of any such indemnifying party. ITEM 16. EXHIBITS. Exhibits identified in parentheses below are on file with the Commission and are incorporated herein by reference to such previous filings. All other exhibits are provided as part of this electronic transmission.
EXHIBIT NUMBER DESCRIPTION - ------ -------------------------------------------------------------------------- 1-A. Form of Underwriting Agreement. 1-B. Form of Distribution Agreement 4-A. Form of Indenture among U S WEST Capital Funding, Inc., USW-C, Inc. and First National Bank of Chicago, as Trustee. The form or forms of Debt Securities with respect to each particular series of Debt Securities registered hereunder will be filed as an exhibit to a Current Report on Form 8-K of U S WEST and incorporated herein by reference. 5. Opinion of Thomas O. McGimpsey. 12. Computation of Ratio of Earnings to Fixed Charges. 23-A. Consent of Arthur Andersen LLP. 23-B. Consent of Coopers & Lybrand L.L.P. 23-C. Consent of counsel is contained in opinion of counsel filed as Exhibit 5. 24. Powers of Attorney. 25. Statement of Eligibility of Trustee.
ITEM 17. UNDERTAKINGS. The Company and Capital Funding hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Company's Annual Report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, (and where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-2 Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Company and Capital Funding pursuant to the provisions referred to in Item 15 (other than the insurance policies referred to therein), or otherwise, the Company and Capital Funding have been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company or Capital Funding of expenses incurred or paid by a director, officer or controlling person of the Company or Capital Funding in the successful defense of any action, suit or proceeding) is asserted against the Company or Capital Funding by such director, officer or controlling person in connection with the securities being registered, the Company and Capital Funding will, unless in the opinion of their counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The Company and Capital Funding hereby undertake: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; (iii) To include any material information with respect to the Plan of Distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that the undertakings set forth in paragraphs (i) and (ii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Company pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The Company and Capital Funding hereby undertake that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of a registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of the registration statement as of the time it was declared effective. (2) For the purposes of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, USW-C, Inc. certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver, State of Colorado, on the 6th day, of May, 1998. USW-C, INC. By /s/ THOMAS O. MCGIMPSEY ------------------------------------------ Thomas O. McGimpsey ASSISTANT SECRETARY
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the date indicated. PRINCIPAL EXECUTIVE OFFICER: /s/ SOLOMON D. TRUJILLO* - ------------------------------ President and Chief Solomon D. Trujillo Executive Officer PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER: /s/ ALLAN R. SPIES* Executive Vice President - ------------------------------ and Chief Financial Allan R. Spies Officer DIRECTOR: /s/ SOLOMON D. TRUJILLO* - ------------------------------ Solomon D. Trujillo *By: /s/ THOMAS O. MCGIMPSEY ------------------------- Thomas O. McGimpsey ASSISTANT SECRETARY ATTORNEY-IN-FACT Dated: May 6, 1998 II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, U S WEST Capital Funding, Inc. certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver, State of Colorado, on the 6th day of May, 1998. U S WEST CAPITAL FUNDING, INC. By /s/ THOMAS O. MCGIMPSEY ------------------------------------------ Thomas O. McGimpsey ASSISTANT SECRETARY
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the date indicated. PRINCIPAL EXECUTIVE OFFICER: /s/ ALLAN R. SPIES* - ------------------------------ President Allan R. Spies PRINCIPAL FINANCIAL OFFICER: /s/ SEAN P. FOLEY* - ------------------------------ Vice President and Sean P. Foley Treasurer PRINCIPAL ACCOUNTING OFFICER: /s/ OSCAR X. MUNOZ* - ------------------------------ Vice President and Oscar X. Munoz Controller DIRECTORS: /s/ MICHAEL P. GLINSKY* - ------------------------------ Michael P. Glinsky /s/ SEAN P. FOLEY* - ------------------------------ Sean P. Foley /s/ ALLAN R. SPIES* - ------------------------------ Allan R. Spies *By: /s/ THOMAS O. MCGIMPSEY ------------------------- Thomas O. McGimpsey ATTORNEY-IN-FACT Dated: May 6, 1998 II-5 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - ----------- -------------------------------------------------------------------------------------------------------- 1-A. Form of Underwriting Agreement 1-B. Form of Distribution Agreement 4-A. Form of Indenture among U S WEST Capital Funding, Inc., USW-C, Inc. and First National Bank of Chicago, as Trustee. The form or forms of Debt Securities with respect to each particular series of Debt Securities registered hereunder will be filed as an exhibit to a Current Report on Form 8-K of U S WEST and incorporated herein by reference. 5. Opinion of Thomas O. McGimpsey. 12. Computation of Ratio of Earnings to Fixed Charges. 23-A. Consent of Arthur Andersen LLP. 23-B. Consent of Coopers & Lybrand L.L.P. 23-C. Consent of counsel is contained in opinion of counsel filed as Exhibit 5. 24. Powers of Attorney. 25. Statement of Eligibility of Trustee.
EX-1.A 2 EXHIBIT 1.A EXHIBIT 1-A U S WEST CAPITAL FUNDING, INC. DEBT SECURITIES UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST, BY U S WEST, INC. UNDERWRITING AGREEMENT _________, ____ To the Underwriters Named in Schedule II hereto c/o the Representatives Named in Schedule I hereto of the Underwriters Named in Schedule II hereto Dear Sirs: 1. INTRODUCTORY. U S WEST Capital Funding, Inc., a Colorado corporation (the "Company"), proposes to issue and sell from time to time certain of its debt securities registered under the registration statements referred to in Section 2(a) (the "Debt Securities"). The Debt Securities will be unconditionally guaranteed as to payment of principal, premium, if any, and interest by U S WEST, Inc., a Delaware corporation (the "Guarantor"), and will be issued under an Indenture, dated as of ________________ ___, 1998 (the "Indenture"), among the Company, the Guarantor and The First National Bank of Chicago, as Trustee (the "Trustee"), in one or more series which series may vary as to interest rates, maturities, redemption provisions and selling prices and any other variable terms permitted by the Indenture, with all such terms for any particular series being determined at the time of sale. The Company proposes to sell to the Underwriters (as hereinafter defined) one or more series of Debt Securities, each of the designation, with the terms and in the aggregate principal amount specified in Schedule I hereto (the "Securities"). Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Company agrees to sell to each Underwriter, severally and not jointly, and each Underwriter agrees, severally and not jointly, to purchase from the Company, at the purchase price and on the other terms set forth in Schedule I hereto, the principal amount of the Securities set forth opposite its name in Schedule II hereto. If there shall be two or more persons, firms or corporations named as underwriters in Schedule II hereto, the term "Underwriters" as used herein shall be deemed to mean the several persons, firms or corporations so named (including the Representatives hereinafter mentioned, if so named, and any Underwriters substituted pursuant to Section 12), and the term "Representatives" as so used herein shall be deemed to mean the representative or representatives named in Schedule I hereto. If there shall only be one person, firm or corporation named in Schedule II hereto, the term "Underwriters" and the term "Representatives" as used herein shall mean such person, firm or corporation. 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE GUARANTOR. The Company and the Guarantor represent and warrant to, and agree with, the several Underwriters that as of the date hereof and as of the applicable Delivery Date (each referred to as a "Representation Date"): (a) The Company and the Guarantor have filed with the Securities and Exchange Commission (the "Commission") joint registration statements (Nos. 33-_____ and 33-_____) relating to the Debt Securities and the guarantees thereof of the Guarantor (the "Guarantees") and the offering thereof from time to time in accordance with Rule 415 under the Securities Act of 1933, as amended (the "Act"), and has filed such amendments thereto as may have been required to the date hereof. Such registration statements have been declared effective by the Commission. Such registration statements, as amended or supplemented to the date hereof (including the documents incorporated by reference therein), are hereinafter collectively referred to as the "Registration Statement", and the prospectus constituting a part of such Registration Statement, as amended and as supplemented as contemplated by Section 4 to reflect the terms of the Securities and the terms of the offering thereof, including all material incorporated by reference therein, is hereinafter referred to as the "Prospectus". (b) On the effective date of the Registration Statement, such Registration Statement (including the documents incorporated by reference therein) conformed in all respects to the requirements of the Act, the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") and the rules and regulations (the "Rules and Regulations") of the Commission and did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and on each Representation Date, the Registration Statement and the Prospectus conforms or will conform in all respects to the requirements of the Act, the Trust Indenture Act and the Rules and Regulations and (i) the Registration Statement, as amended as of any such time, does not or will not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (ii) the Prospectus, as supplemented as of any such time, does not or will not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the foregoing does not apply to statements in or omissions from any such documents based upon written information furnished to the Company or the Guarantor by any Underwriter, or on behalf of any Underwriter by the Representatives, specifically for use therein or based upon the Statement of Eligibility of the Trustee under the Indenture or to statements in or omissions from such Statement of Eligibility. 3. PURCHASE AND OFFERING. Delivery of and payment for the Securities shall be made at such address, date and time as may be specified in Schedule I hereto. Such date and time are sometimes referred to herein as the "Delivery Date". On the Delivery Date, the Company shall deliver the Securities to the Representatives for the account of each Underwriter against payment to or upon the order of the Company of the purchase price either by certified or official bank check or checks payable in New York Clearing House or similar next-day funds or by wire transfer of immediately available funds, as specified in Schedule I. Time shall be of the essence, and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligation of each Underwriter hereunder. Upon delivery, the Securities shall be in registered form and in such authorized denominations and registered in such names as the Representatives shall request in writing not less than one full business day prior to the Delivery Date. For the purpose of expediting the checking and packaging of the Securities, the Company shall make the Securities available for inspection by the Representatives in New York, New York, not later than 2:00 P.M., local time, on the business day prior to the Delivery Date. Schedule I may set forth additional conditions concerning the purchase or offering of the Securities, if any. 4. COVENANTS OF THE COMPANY AND THE GUARANTOR. The Company and the Guarantor covenant and agree with the several Underwriters that they will furnish such firm which shall be acting as counsel for the Underwriters ("Underwriters' Counsel"), one signed copy of the Registration Statement, including all exhibits, relating to the Debt Securities in the form in which it became effective and of all amendments thereto and will furnish to the Representatives copies of the Registration Statement, including all exhibits and amendments thereto, and that, in connection with each offering of Securities: (a) The Company and the Guarantor will promptly prepare a supplement to the Prospectus to reflect the terms of the Securities and the terms of the offering thereof and will advise the Representatives promptly of any other amendment or supplementation of the Registration Statement or the Prospectus and will not effect any amendment or supplementation without the consent of the Representatives, which consent shall not be unreasonably withheld; the Company and the Guarantor will also advise the Representatives of any request made by the Commission for any amendment to the Registration Statement or Prospectus or for additional information with respect thereto and of the institution by the Commission of any stop order proceedings in respect of the Registration Statement, and will use their best efforts to prevent the issuance of any such stop order and to obtain as soon as possible its lifting, if issued. The Company will not file any document pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which is deemed to be incorporated by reference in the Prospectus unless Underwriters' Counsel shall have been previously advised thereof. (b) If, at any time when a prospectus relating to the Securities is required to be delivered under the Act, any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend or supplement the Registration Statement or the Prospectus to comply with the Act, the Company and the Guarantor promptly will prepare and file with the Commission an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance. (c) The Guarantor and, to the extent separately required pursuant to Rule 158 under the Act, the Company will make generally available to its security holders as soon as practicable, but not later than 90 days after the close of the period covered thereby, earnings statements (in form complying with the provisions of Rule 158) covering a twelve-month period beginning not later than the first day of the fiscal quarter of the Guarantor and the Company next following the effective date of the Registration Statement (as defined in Rule 158) with respect to each sale of Securities. (d) The Company and the Guarantor will furnish to the Representatives copies of each preliminary prospectus supplement, the Prospectus and all amendments and supplements to such documents, in each case as soon as available and in such quantities as are reasonably requested. (e) The Company and the Guarantor will use their best efforts to arrange for the qualification of the Securities for sale and the determination of their eligibility for investment under the laws of such jurisdictions as the Representatives designate and will continue such qualifications in effect so long as required for the distribution. (f) During the period of five years after the effective date of the Registration Statement, the Guarantor will furnish to the Representatives and, upon request, to each of the other Underwriters, as soon as practicable after the end of each fiscal year, a copy of its annual report to shareholders for such year, and the Guarantor will furnish to the Representatives and to Underwriters' Counsel, (i) as soon as available, a copy of each report of the Guarantor filed with the Commission under the Exchange Act or mailed to stockholders, and (ii) from time to time, such other information concerning the Guarantor or the Company as the Representatives may reasonably request. (g) The Company and the Guarantor will pay all expenses incident to the performance of their obligations under this Agreement, any expenses (including fees and disbursements of counsel) incurred in connection with qualifications of the Securities for sale and determination of their eligibility for investment under the laws of such jurisdictions as the Representatives designate and the printing of memoranda relating thereto, any fees charged by investment rating agencies for the rating of the Securities, all expenses incurred in delivering copies of the Registration Statement and any amendments thereto, and of the Prospectus and any amendments or supplements thereto, to the Underwriters, and the fees and expenses, if any, incurred in connection with the listing of the Securities on the New York Stock Exchange or any other national securities exchange. (h) Neither the Company nor the Guarantor will, without the prior consent of the Representatives, offer or sell any of its debt securities having a maturity of more than one year between the commencement of an offering of Securities and the related Delivery Date. 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of the several Underwriters to purchase and pay for the Securities will be subject to the accuracy of the representations and warranties on the part of the Company and the Guarantor contained herein, to the accuracy of the statements of the officers of the Company and the Guarantor made pursuant to the provisions hereof, to the performance by the Company and the Guarantor of their obligations hereunder and to the following additional conditions precedent: (a) On the date of this Agreement and on the Delivery Date, the Representatives shall have received executed copies of letters of Arthur Andersen LLP, and addressed to the Company, the Guarantor and the Representatives, substantially in the forms previously approved by the Representatives. (b) No stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or, to the knowledge of the Company, the Guarantor or any Underwriter, shall be contemplated by the Commission. (c) The Representatives shall have received an opinion or opinions, dated the Delivery Date, of Weil, Gotshal & Manges, counsel for the Company and the Guarantor, to the effect that: (i) The Company is a corporation in good standing, duly incorporated and validly existing under the laws of the State of Colorado and is authorized by its Articles of Incorporation to transact the business in which it is engaged, as set forth in the Prospectus. (ii) The Guarantor is a corporation in good standing, duly incorporated and validly existing under the laws of the state of its incorporation and is authorized by its Certificate of Incorporation to transact the business in which it is engaged, as set forth in the Prospectus. (iii) The execution, delivery and performance of the Indenture by the Company and the Guarantor have been duly authorized by all necessary corporate action on the part of the Company and the Guarantor; the Indenture has been duly and validly executed and delivered by the Company and the Guarantor and (assuming the due authorization, execution and delivery by the Trustee), constitutes the legal, valid and binding agreement of the Company and the Guarantor enforceable against each of them in accordance with its terms; and the Indenture has been duly qualified under the Trust Indenture Act. (iv) The Securities, when duly executed and authenticated pursuant to the Indenture and delivered to the Underwriters against payment therefor in accordance with the provisions hereof, will constitute legal, valid and binding obligations of the Company, entitled to the benefits of the Indenture and enforceable against the Company in accordance with their terms. (v) The Guarantees, when duly executed pursuant to the Indenture and delivered to the Underwriters in accordance with the provisions hereof, will constitute legal, valid and binding obligations of the Guarantor enforceable against the Guarantor in accordance with their terms. (vi) The execution, delivery and performance of this Agreement by the Company and the Guarantor have been duly authorized by all necessary corporate action on the part of the Company and the Guarantor; and this Agreement has been duly and validly executed and delivered by each of the Company and the Guarantor. (vii) No consent, approval, authorization or other action by, or filing or registration with, any federal governmental authority is required in connection with the execution and delivery by the Company or the Guarantor of the Indenture or the issuance and sale of the Securities and the Guarantees to the Underwriters pursuant to the terms of this Agreement, except such as have been obtained or made under the Act and the rules and regulations thereunder and such as may be required under the Exchange Act and the rules and regulations thereunder. (viii) The Registration Statement was declared effective under the Act and, to such counsel's knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued under the Act and no proceeding for that purpose has been initiated or threatened by the Commission. (ix) The statements in the Prospectus under the headings "Description of Debt Securities and Guarantees" and "Description of the [Debentures][Notes]", insofar as such statements constitute a summary of certain provisions of the documents referred to therein, are accurate in all material respects. In rendering such opinion, such counsel may rely as to matters of fact, to the extent such counsel deems proper, on certificates of responsible officers of the Company and the Guarantor and of public officials. Such counsel may also rely as to matters of Colorado law upon the opinion referred to in Section 5(e) without independent verification. In addition, such counsel shall state that it has participated in conferences with representatives of the Company, the Guarantor and with the Representatives and their counsel, at which conferences the contents of the Registration Statement and the Prospectus and related matters were discussed; such counsel has not independently verified the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus and the limitations inherent in the examination made by such counsel and the nature and extent of such counsel's participation in such conferences are such that such counsel is unable to assume, and does not assume, any responsibility for the accuracy, completeness or fairness of such statements; however, based upon such counsel's participation in the aforesaid conferences, nothing has come to its attention which lead it to believe that the Registration Statement, at the time it became effective, and the Prospectus and any further amendments and supplements thereto made by the Company and the Guarantor prior to such Delivery Date (other than the financial statements and other financial and statistical information contained therein as to which such counsel need express no belief) did not comply as to form in all material respects with the applicable requirements of the Act and the rules and regulations thereunder or that the Registration Statement (except as to the financial statements and the notes thereto, and the other financial and statistical data included therein, as to which such counsel need express no belief), and each amendment thereto, as of its effective date or if an annual report on Form 10-K has been filed by the Guarantor with the Commission subsequent to the effectiveness of the Registration Statement, then at the time of the most recent such filing, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that, as of its issue dat or at the Delivery Date, the Prospectus (except as to the financial statements and the notes thereto, and the other financial and statistical data included therein, as to which such counsel need express no belief), and each amendment or supplement thereto contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Such opinion may state that it does not address the impact on the opinions contained therein of any litigation or ruling relating to the divestiture by American Telephone and Telegraph Company of ownership of its operating telephone companies (the "Divestiture"). (d) The Representatives shall have received from Underwriters' Counsel an opinion, dated the Delivery Date, to the effect specified in clauses (i), (ii), (iii), (iv), (v), (vi), (viii) and (ix) and the penultimate paragraph of subsection (c) above, subject to the final paragraph of subsection (c) above, and with respect to such other matters as the Representatives may reasonable request. In rendering such opinion, such counsel may rely as to matters of Colorado law upon the opinion referred to in Section 5(e) without independent verification. (e) The Representatives shall have received an opinion or opinions, dated the Delivery Date, of the General Counsel of the Company or a Senior Attorney of the Guarantor, to the effect that: (i) The Company is a corporation in good standing, duly incorporated and validly existing under the laws of the State of Colorado and is authorized by its Articles of Incorporation to transact the business in which it is engaged, as set forth in the Prospectus. (ii) The Guarantor is a corporation in good standing, duly incorporated and validly existing under the laws of the state of its incorporation and is authorized by its Certificate of Incorporation to transact the business in which it is engaged, as set forth in the Prospectus. (iii) The execution, delivery and performance of the Indenture by the Company and the Guarantor have been duly authorized by all necessary corporate action on the part of the Company and the Guarantor; the Indenture has been duly and validly executed and delivered by the Company and the Guarantor and (assuming the due authorization, execution and delivery by the Trustee), constitutes the legal, valid and binding agreement of the Company and the Guarantor enforceable against each of them in accordance with its terms; and the Indenture has been duly qualified under the Trust Indenture Act. (iv) The Securities, when duly executed and authenticated pursuant to the Indenture and delivered to the Underwriters against payment therefor in accordance with the provisions hereof, will constitute legal, valid and binding obligations of the Company, entitled to the benefits of the Indenture and enforceable against the Company in accordance with their terms. (v) The Guarantees, when duly executed pursuant to the Indenture and delivered to the Underwriters in accordance with the provisions hereof, will constitute legal, valid and binding obligations of the Guarantor enforceable against the Guarantor in accordance with their terms. (vi) The execution, delivery and performance of this Agreement by the Company and the Guarantor have been duly authorized by all necessary corporate action on the part of the Company and the Guarantor; and this Agreement has been duly and validly executed and delivered by each of the Company and the Guarantor. (vii) All state regulatory consents, approvals, authorizations or other orders (except as to the state securities or Blue Sky laws, as to which such counsel need express no opinion) legally required for the execution of the Indenture and the issuance and sale of the Securities and the Guarantees to the Underwriters pursuant to the terms of this Agreement have been obtained; provided that such counsel may rely on opinions of local counsel satisfactory to said counsel. (viii) The enforceability and the legal, valid and binding nature of the respective agreements and obligations of the Company and the Guarantor set forth in the Indenture, the Securities and the Guarantees (the "Agreements") are not affected by, and the performance of the obligations set forth in such Agreements, the issuance and sale of the Securities and the Guarantees and the consummation of the transactions contemplated in such Agreements are not prevented or restricted by, any action, suit, proceeding, order or ruling relating to or issued or arising as a result of, the Divestiture. In rendering such opinion, such counsel may rely as to matters of New York law upon the opinion referred to in Section 5(c) without independent verification. (f) The Representatives shall have received a certificate, dated the Delivery Date, of the President or any Vice President of the Company in which such officers shall state that, to the best of their knowledge after reasonable investigation, the representations and warranties of the Company in this Agreement are true and correct as if made at and as of the Delivery Date, that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Delivery Date, that no stop order suspending the effectiveness of the Registration Statement is in effect and no proceedings for that purpose are pending or are contemplated by the Commission and that, subsequent to the date of the Prospectus, there has been no material adverse change in the financial position or results of operations of the Company, except as set forth in or contemplated by the Prospectus. (g) The Representatives shall have received a certificate, dated the Delivery Date, of the President or any Vice President of the Guarantor in which such officers shall state that, to the best of their knowledge after reasonable investigation, the representations and warranties of the Guarantor in this Agreement are true and correct as if made at and as of the Delivery Date, that the Guarantor has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Delivery Date, that no stop order suspending the effectiveness of the Registration Statement is in effect and no proceedings for that purpose are pending or are contemplated by the Commission and that, subsequent to the date of the most recent financial statements included or incorporated by reference in the Prospectus, there has been no material adverse change in the financial position or results of operations of the Guarantor and its subsidiaries, taken as a whole, except as set forth in or contemplated by the Prospectus. (h) If the Prospectus contains a discussion of United States federal income tax considerations with respect to the Securities, the Company shall have furnished to the Representatives a letter of its United States tax counsel, dated the Delivery Date, to the effect that (i) the Underwriters may rely on the opinion of such counsel, filed as an exhibit to the Registration Statement to the same extent as though it were dated the date of such letter authorizing reliance, and (ii) such counsel has reviewed the statements in the Prospectus under the caption "Certain United States Federal Income Tax Considerations" and, insofar as they are, or refer to, statements of United States law or legal conclusions, such statements are accurate in all material respects The Company and the Guarantor will furnish the Underwriters with such conformed copies of such opinions, certificates, letters and documents as they reasonably request. In case any of the conditions specified above in this Section 5 shall not have been fulfilled, this Agreement may be terminated by the Representatives by delivering written notice of termination to the Company and the Guarantor. Any such termination shall be without liability of any party to any other party except to the extent provided in Sections 4(g), 7 and 8 hereof. 6. CONDITION OF THE OBLIGATIONS OF THE COMPANY AND THE GUARANTOR. The obligations of the Company and the Guarantor to sell and deliver the Securities and the Guarantees are subject to the following conditions precedent: (a) No stop order suspending the effectiveness of the Registration Statement or the Indenture shall have been issued and no proceedings for those purposes shall have been instituted or, to the knowledge of the Company, the Guarantor or any Underwriter, shall be contemplated by the Commission. (b) Concurrently with or prior to the delivery of the Securities and the Guarantees to each Underwriter, the Company shall receive the full purchase price specified in Schedule I hereto to be paid for the Securities. (c) The written information furnished to the Company and the Guarantor by any Underwriter, or on behalf of any Underwriter by the Representatives, specifically for use in the Prospectus as contemplated by Section 2 and Section 7(b) shall be true and accurate in all material respects. In case any of the conditions specified above in this Section 6 shall not have been fulfilled, this Agreement may be terminated by the Company or the Guarantor by delivering written notice of termination to the Representatives. Any such termination shall be without liability of any party to any other party except to the extent provided in Sections 4(g), 7 and 8 hereof. 7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company and the Guarantor jointly and severally will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, as incurred, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or any related preliminary prospectus supplement, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and will reimburse each Underwriter, as incurred, for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such loss, claim, damage, liability or action or amounts paid in settlement of any litigation or investigation or proceeding related thereto if such settlement is effected with the written consent of the Company and the Guarantor; provided, however, that the Company and the Guarantor will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in any of such documents in reliance upon and in conformity with written information furnished to the Company or the Guarantor by any Underwriter, or on behalf of any Underwriter by the Representatives, specifically for use therein or in reliance upon and in conformity with the Statement of Eligibility of the Trustee under the Indenture; and provided, further, that with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus or preliminary prospectus suppleent, the indemnity agreement contained in this paragraph (a) shall not inure to the benefit of any Underwriter from whom the person asserting any such losses, claims, damages or liabilities purchased the Securities concerned, to the extent that any such loss, claim, damage or liability of such Underwriter results from the fact that a copy of the Prospectus (excluding material incorporated therein by reference) was not sent or given to such person and such Prospectus corrected any such untrue statement or omission or alleged untrue statement or omission. (a) Each Underwriter will indemnify and hold harmless the Company and the Guarantor against any losses, claims, damages or liabilities to which the Company or the Guarantor may become subject, as incurred, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus or any amendment or supplement thereto, or any related preliminary prospectus supplement, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company or the Guarantor by such Underwriter, or on behalf of such Underwriter by the Representatives, specifically for use therein, and will reimburse the Company and the Guarantor, as incurred, for any legal or other expenses reasonably incurred by the Company and the Guarantor in connection with investigating or defending any such loss, claim, damage, liability or action. (b) Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under this Section. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. The indemnifying party or parties shall not be liable under this Agreement with respect to any settlement made by any indemnified party or parties without prior written consent by the indemnifying party or parties to such settlement. (c) If the indemnification provided for in this Section 7 is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantor on the one hand and the Underwriters on the other from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Guarantor on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Company and the Guarantor on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Underwriters. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Guarantor or the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred b such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (with the meaning of Section 11 (f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this subsection (d) to contribute are several in proportion to their respective underwriting obligations and not joint. (d) The obligations of the Company and the Guarantor under this Section 7 shall be in addition to any liability which the Company or the Guarantor may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act or the Exchange Act; and the obligations of the Underwriters under this Section 7 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each director of the Company and the Guarantor, to each officer of the Company or the Guarantor who has signed the Registration Statement and to each person, if any, who controls the Company or the Guarantor within the meaning of the Act or the Exchange Act. 8. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective indemnities, agreements, representations, warranties and other statements of the Company, the Guarantor or their officers and of the several Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of any Underwriter, the Company or the Guarantor or of any of their officers or directors or any controlling person, and will survive delivery of and payment for the Securities. If the purchase of the Securities by the Underwriters is not consummated for any reason other than a default by one or more of the Underwriters, the Company and the Guarantor shall remain responsible for the expenses to be paid or reimbursed by them pursuant to Section 4(g), the respective obligations of the Company, the Guarantor and the Underwriters pursuant to Section 7 shall remain in effect, and the Company and the Guarantor will reimburse the Representatives for the reasonable out-of-pocket expenses of the Underwriters, not exceeding $75,000, and for the fees and disbursements of Underwriters' Counsel, the Underwriters agreeing to pay such expenses, fees and disbursements in any other event. In no event will the Company or the Guarantor be liable to any of the Underwriters for damages on account of loss of anticipated profits. 9. NOTICES. All communications hereunder will be in writing and, if sent to the Underwriters will be mailed, delivered or telecopied and confirmed to the Representatives at their addresses specified in Schedule I hereto for the purpose of communications hereunder or, if sent to the Company or the Guarantor, will be mailed, delivered or telecopied and confirmed to each of them at 7800 East Orchard Road, Englewood, Colorado 80111, Attention: Treasurer. 10. SUCCESSORS. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 7, and no other person will have any right or obligation hereunder. 11. CONCERNING LAW. The validity and interpretation of this Agreement shall be governed by the laws of the State of New York. 12. DEFAULT BY UNDERWRITERS. If any Underwriter defaults in the performance of its obligations under this Agreement, the remaining non-defaulting Underwriters shall be obligated to purchase the Securities which the defaulting Underwriter agreed but failed to purchase in the respective proportions which the principal amount of Securities set forth in Schedule II hereto to be purchased by each remaining non-defaulting Underwriter set forth therein bears to the aggregate principal amount of Securities set forth therein to be purchased by all the remaining non-defaulting Underwriters; provided that the remaining non-defaulting Underwriters shall not be obligated to purchase any amount of Securities if the aggregate principal amount of Securities which the defaulting Underwriter or Underwriters agreed but failed to purchase exceeds one-tenth of the total principal amount of Securities, and any remaining non-defaulting Underwriter shall not be obligated to purchase additional Securities in an amount of more than one-ninth of the principal amount of Securities set forth in Schedule II hereto to be purchased by it. If the foregoing maximums are exceeded, the remaining non-defaulting Underwriters, or those other underwriters satisfactory to the Representatives who so agree, shall have the right, but shall not be obligated, to purchase, in such proportion as may be agreed upon among them, all the Securities. If the remaining Underwriters or other underwriters satisfactory to the Representatives do not elect to purchase the Securities which the defaulting Underwriter or Underwriters agreed but failed to purchase, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter, the Company or the Guarantor, except that the Company and the Guarantor will continue to be liable for the payment of expenses as set forth in Sections 4(g) and 8 hereof. Nothing contained in this Section 12 shall relieve a defaulting Underwriter of any liability it may have to the Company or the Guarantor for damages caused by its default. If other underwriters are obligated or agree to purchase the Securities of a defaulting or withdrawing Underwriter, either the Representatives or the Company may postpone the Delivery Date for up to seven full business days in order to effect any changes that in the opinion of counsel for the Company or Underwriters' Counsel may be necessary in the Registration Statement, any prospectus or in any other document or arrangement. 13. TERMINATION. This Agreement shall be subject to termination in the absolute discretion of the Representatives, by notice given to the Company and the Guarantor prior to delivery of and payment for the Securities, if prior to such time (i) there has been, since the respective dates as of which information is given in the Registration Statement, any change in the financial condition of the Company or of the Guarantor and its subsidiaries, taken as a whole, or in the earnings, affairs or business prospects of the Company or of the Guarantor and its subsidiaries, taken as a whole, whether or not arising in the ordinary course of business, the effect of which is, in the judgment of the Representatives, so material and adverse as to make it impracticable to market the Securities or enforce contracts for the sale thereof, (ii) trading in the Company's or the Guarantor's securities shall have been suspended by the Commission or the New York Stock Exchange or trading in securities generally on the New York Stock Exchange shall have been suspended or limited or minimum prices shall have been established on such Exchange, (iii) a banking moratorium shall have been declared either by federal or New York State authorities, (iv) there shall have occurred any outbreak or material escalation of hostilities or other calamity or crisis the effect of which on the financial markets of the United States is such as to make it, in the judgment of the Representatives, impracticable to market the Securities or enforce contracts for the sale thereof, or (v) any rating of any debt securities of the Company or of the Guarantor shall have been lowered by Moody's Investors Services, Inc. ("Moody's") or Standard & Poor's Ratings Group ("S&P") or either Moody's or S&P shall have publicly announced that it has any such debt securities under consideration for possible downgrade. 14. EXECUTION IN COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to us the enclosed duplicate hereof, whereupon it will become a binding agreement among the Company, the Guarantor and the Underwriters in accordance with its terms. Very truly yours, U S WEST CAPITAL FUNDING, INC. BY -------------------------------- Name: Title: U S WEST, INC. BY -------------------------------- Name: Title: The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first above written. [Names of Representatives] as Representatives of the other several Underwriters named in Schedule II hereto. By: [Name] - ---------------------------------- Name: Title: SCHEDULE I Underwriting Agreement dated _________, ____ Registration Statement Nos. 33-_____ and 33-_____ Representatives and Addresses: [Names and Addresses] Securities: Designation: __% [Debentures][Notes] Due _________, ____. Principal Amount: $___________ Indenture dated as of ______________ ___, 1998, as amended, among U S WEST Capital Funding, Inc., U S WEST, Inc. and The First National Bank of Chicago, as Trustee. Date of Maturity: _________, ____ Interest Rate: __% per annum, payable _______ and _________ of each year, commencing _______, ____. Price to Public: ______% of the principal amount thereof ($___________), plus accrued interest, if any, from _________, ____ to the date of delivery. Purchase Price: ______% of the principal amount thereof ($___________), plus accrued interest, if any, from _________, ____ to the date of delivery. Form of Payment: Redemption Provisions: Form and Authorized Denominations: Registered--$1,000 and multiples thereof. Stock Exchange Listing: Delivery Date, Time _________, ____ at 10:00 A.M., New York time, and Location: at the office of Brown & Wood, New York, New York. SCHEDULE II
PRINCIPAL AMOUNT OF SECURITIES TO NAME OF UNDERWRITER BE PURCHASED ------------------- ------------- [ ]......................................................$__,000,000 [ ]...................................................... __,000,000 [ ]...................................................... __,000,000 [ ]...................................................... __,000,000 [ ]...................................................... __,000,000 ---------- Total..................................................$__,000,000 ---------- ----------
EX-1.B 3 EXHIBIT 1.B Exhibit 1-B U S WEST CAPITAL FUNDING, INC. [________NOTES] DUE [ ] FROM DATE OF ISSUE DISTRIBUTION AGREEMENT _______ __, 1998 [AGENTS] Dear Sirs: U S WEST Capital Funding, Inc., a Colorado corporation (the "Company"), confirms its agreement with [AGENTS] (each, an "Agent", and collectively, the "Agents") with respect to the issue and sale by the Company of its [_____Notes Due ____ from Date of Issue] (the "Notes"). The Notes are to be issued pursuant to an indenture, dated as of ______ __1998, as amended, supplemented or modified from time to time (the "Indenture"), among the Company, U S WEST, Inc., a Delaware corporation ("U S WEST"), and First National Bank of Chicago, as trustee (the "Trustee"). The Notes will be unconditionally guaranteed as to payment of principal, premium, if any, and interest by U S WEST. As of the date hereof, the Company has authorized the issuance and sale of up to U.S. $3,500,000,000 aggregate initial offering price (or its equivalent, based upon the applicable exchange rate at the time of issuance, in such foreign or composite currencies as the Company shall designate at the time of issuance) of Notes to or through the Agents pursuant to the terms of this Agreement. It is understood, however, that the Company may from time to time authorize the issuance of additional Notes and that such additional Notes may be sold to or through the Agents pursuant to the terms of this Agreement, all as though the issuance of such Notes were authorized as of the date hereof. The Notes will have the benefit of a Guarantee (the "Guarantees") between the Company and U S WEST. This Agreement provides both for the sale of Notes by the Company to one or more Agents as principal for resale to investors and other purchasers and for the sale of Notes by the Company directly to investors (as may from time to time be agreed to by the Company and the applicable Agent), in which case such Agent will act as an agent of the Company in soliciting purchases of the Notes. The Company and U S WEST have filed with the Securities and Exchange Commission (the "SEC") a joint registration statement on Form S-3 (Registration Nos. 33-_____, 33-____) for the registration of debt securities, including the Notes, under the Securities Act of 1933, as amended (the "1933 Act"), and the offering thereof from time to time in accordance with Rule 415 of the rules and regulations of the SEC under the 1933 Act (the "1933 Act Regulations"). Such registration statement has been declared effective by the SEC and the Indenture has been qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act"). Such registration statement (and any further registration statements which may be filed by the Company and U S WEST for the purpose of registering additional Notes and in connection with which this Agreement is included or incorporated by reference as an exhibit) and the prospectus constituting a part thereof, and any prospectus supplement and pricing supplement relating to the Notes, including all documents incorporated therein by reference, as from time to time amended or supplemented by the filing of documents pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), or the 1933 Act or otherwise, are referred to herein as the "Registration Statement" and the "Prospectus," respectively, except that if any revised prospectus shall be provided to the Agents by the Company for use in connection with the offering of the Notes, whether or not such revised prospectus is required to be filed by the Company pursuant to Rule 424(b) of the 1933 Act Regulations, the term "Prospectus" shall refer to such revised prospectus from and after the time it is first provided to the Agents for such use. 1. APPOINTMENT AS AGENT. (a) APPOINTMENT. Subject to the terms and conditions stated herein and subject to the reservation by the Company of the right to sell Notes directly on its own behalf, the Company hereby agrees that Notes will be sold exclusively to or through the Agents. The Company agrees that it will not, without the consent of all such Agents, solicit any other agents to purchase Notes or appoint any other agents to act on its behalf, or to assist it, in the placement of the Notes; provided, however, the Company expressly reserves the right to enter into an agreement or agreements substantially identical hereto, upon notice to the Agents, with such other agent or agents as may approach the Company from time to time for purposes of selling Notes with specific terms to or through such agent or agents. (b) SALE OF NOTES. The Company shall not sell or approve the solicitation of purchases of Notes in excess of the amount which shall be authorized by the Company from time to time or in excess of the aggregate initial offering price of Notes registered pursuant to the Registration Statement. The Agents shall have no responsibility for maintaining records with respect to the aggregate initial offering price of Notes sold, or of otherwise monitoring the availability of Notes for sale, under the Registration Statement. (c) PURCHASES AS PRINCIPAL. The Agents shall not have any obligation to purchase Notes from the Company as principal, but one or more Agents may agree from time to time to purchase Notes as principal for resale to investors and other purchasers determined by such Agent or Agents. Any such purchase of Notes by an Agent as principal shall be made in accordance with Section 3(a) hereof. (d) SOLICITATIONS AS AGENT. If agreed upon by an Agent and the Company, such Agent, acting solely as agent for the Company and not as principal, will solicit purchases of the Notes. 2 Such Agent will communicate to the Company, orally, each offer to purchase Notes solicited by it on an agency basis, other than those offers rejected by such Agent. Such Agent shall have the right, in its discretion reasonably exercised, to reject any proposed purchase of Notes, as a whole or in part, and any such rejection shall not be deemed a breach of its agreement contained herein. The Company may accept or reject any proposed purchase of Notes, in whole or in part. Such Agent shall make reasonable efforts to assist the Company in obtaining performance by each purchaser whose offer to purchase Notes has been solicited by it and accepted by the Company. Such Agent shall not have any liability to the Company in the event that any such purchase is not consummated for any reason. If the Company shall default on its obligation to deliver Notes to a purchaser whose offer it has accepted, the Company shall (i) hold such Agent harmless against any loss, claim or damage arising from or as a result of such default by the Company and (ii) notwithstanding such default, pay to such Agent any commission to which it would otherwise be entitled. (e) RELIANCE. The Company and the Agents agree that any Notes purchased by one or more Agents as principal shall be purchased, and any Notes the placement of which an Agent arranges as agent shall be placed by such Agent, in reliance on the representations, warranties, covenants and agreements of the Company and U S WEST contained herein and on the terms and conditions and in the manner provided herein. 2. REPRESENTATIONS AND WARRANTIES. (a) The Company and U S WEST, jointly and severally, represent and warrant to the Agents as of the date hereof, as of the date of each acceptance by the Company of an offer for the purchase of Notes (whether to one or more Agents as principal or through an Agent as agent), and as of the date of each delivery of Notes (whether to one or more Agents as principal or through an Agent as agent) (the date of each such delivery to one or more Agents as principal being hereafter referred to as a "Settlement Date") (each of the times referenced above being referred to herein as a "Representation Date"), as follows: (i) The Registration Statement, including a prospectus relating to the debt securities of the Company, has been filed with the SEC and has become effective. (ii) On the effective date of the Registration Statement, the Registration Statement and the Prospectus (including the documents incorporated by reference therein) conformed in all respects to the requirements of the 1933 Act, the 1939 Act, and the 1933 Act Regulations and did not include any untrue statements of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and as of each applicable Representation Date, the Registration Statement and the Prospectus will conform in all respects to the requirements of the 1933 Act, the 1939 Act and the 1933 Act Regulations and neither of such documents will include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the 3 circumstances under which they were made, not misleading, except that the foregoing does not apply to statements in or omissions from any such documents based upon written information furnished to the Company by the Agents specifically for use therein or based upon the Statement of Eligibility of the Trustee under the Indenture or to statements in or omissions from such Statement of Eligibility. (b) ADDITIONAL CERTIFICATIONS. Any certificate signed by any director or officer of the Company or U S WEST and delivered to one or more Agents or to counsel for the Agents in connection with an offering of Notes to one or more Agents as principal or through an Agent as agent shall be deemed a representation and warranty by the Company or U S WEST, as the case may be, to such Agent or Agents as to the matters covered thereby on the date of such certificate and at each Representation Date subsequent thereto. 4 3. PURCHASES AS PRINCIPAL; SOLICITATIONS AS AGENT. (a) PURCHASES AS PRINCIPAL. Unless otherwise agreed by an Agent and the Company, Notes shall be purchased by such Agent as principal. Such purchases shall be made in accordance with terms agreed upon by one or more Agents and the Company (which terms, unless otherwise agreed, shall, to the extent applicable, include those terms specified in Exhibit A hereto and be agreed upon orally, with written confirmation prepared by such Agent or Agents and mailed to the Company). An Agent's commitment to purchase Notes as principal shall be deemed to have been made on the basis of the representations and warranties of the Company and U S WEST herein contained and shall be subject to the terms and conditions herein set forth. Unless the context otherwise requires, references herein to "this Agreement" shall include the agreement of one or more Agents to purchase Notes from the Company as principal. Each purchase of Notes, unless otherwise agreed, shall be at a discount from the principal amount of each such Note equivalent to the applicable commission set forth in Schedule A hereto for a Note of identical maturity. The Agents may engage the services of any other broker or dealer in connection with the resale of the Notes purchased by them as principal and may allow any portion of the discount received in connection with such purchases from the Company to such brokers and dealers. At the time of each purchase of Notes by one or more Agents as principal, such Agent or Agents shall specify the requirements for the stand-off agreement, officers' certificates, opinions of counsel and comfort letter pursuant to Sections 4(h), 8(b), 8(c) and 8(d) hereof. (b) SOLICITATIONS AS AGENT. On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, when agreed by the Company and an Agent, such Agent, as an agent of the Company, will use its reasonable efforts to solicit offers to purchase the Notes upon the terms and conditions set forth herein and in the Prospectus. The Agents are not authorized to appoint sub-agents with respect to Notes sold through them as agent. All Notes sold through an Agent as agent will be sold at 100% of their principal amount unless otherwise agreed to by the Company and such Agent. The Company reserves the right, in its sole discretion, to suspend solicitation of purchases of the Notes through an Agent, as agent, commencing at any time for any period of time or permanently. As soon as practicable after receipt of instructions from the Company, such Agent will suspend solicitation of purchases from the Company until such time as the Company has advised such Agent that such solicitation may be resumed. The Company agrees to pay each Agent a commission, in the form of a discount, equal to the applicable percentage of the principal amount of each Note sold by the Company as a result of a solicitation made by such Agent as set forth in Schedule A hereto. (c) ADMINISTRATIVE PROCEDURES. The purchase price, interest rate or formula, maturity date and other terms of the Notes (as applicable) specified in Exhibit A hereto shall be agreed upon by the Company and the applicable Agent or Agents and specified in a pricing supplement to the Prospectus (each, a "Pricing Supplement") to be prepared in connection with each sale of 5 Notes. Except as may be otherwise specified in the applicable Pricing Supplement, the Notes will be issued in denominations of U.S. $1,000 or any larger amount that is an integral multiple of U.S. $1,000. Administrative procedures with respect to the sale of Notes shall be agreed upon from time to time by the Company, U S WEST, the Agents and _________, as authenticating and paying agent (the "Procedures"). The Agents, the Company and U S WEST agree to perform, and the Company agrees to cause ________ to agree to perform, their respective duties and obligations specifically provided to be performed by them in the Procedures. 4. COVENANTS OF THE COMPANY AND U S WEST. The Company and U S WEST covenant with the Agents as follows: (a) COPIES OF THE REGISTRATION STATEMENT. The Company and U S WEST will furnish to counsel for the Agents one signed copy of the Registration Statement, including all exhibits, relating to the Notes in the form it became effective and of all amendments thereto and will furnish to the Agents copies of the Registration Statement, including all exhibits, in the form it became effective and of all amendments thereto. (b) NOTICE OF CERTAIN PROPOSED FILINGS AND CERTAIN EVENTS. The Company and U S WEST will advise the Agents promptly of any amendment or supplementation of the Registration Statement or the Prospectus and will not effect such amendment or supplementation without the consent of counsel for the Agents; the Company and U S WEST will also advise the Agents of any official request made by the SEC for an amendment to the Registration Statement or Prospectus or for additional information with respect thereto and of the institution by the SEC of any stop order proceedings in respect of the Registration Statement, and will use their best efforts to prevent the issuance of any such stop order and to obtain as soon as possible its lifting, if issued. The Company and U S WEST will not file any document pursuant to the 1934 Act which is deemed to be incorporated by reference in the Prospectus unless counsel to the Agents shall have been previously advised thereof. (c) REVISIONS OF PROSPECTUS -- MATERIAL CHANGES. If, at any time when a prospectus relating to the Notes is required to be delivered under the 1933 Act, any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend or supplement the Registration Statement or the Prospectus to comply with the 1933 Act, the Company and U S WEST will immediately notify the Agents to cease the solicitation of offers to purchase the Notes in their capacity as Agent and to cease sales of any Notes the Agents may then own as principal, and the Company and U S WEST promptly will prepare and file with the SEC an amendment or supplement which will correct such untrue statement or omission or effect such compliance. 6 (d) EARNINGS STATEMENTS. U S WEST and, to the extent separately required pursuant to Rule 158 under the Act, the Company will make generally available to their security holders as soon as practicable, but not later than ninety days after the close of the period covered thereby, earning statements (in form complying with the provisions of Rule 158) covering a twelve month period beginning not later than the first day of the fiscal quarter of U S WEST and the Company next following the effective date of the Registration Statement (as defined in Rule 158) with respect to each sale of Notes. (e) COPIES OF THE PROSPECTUS. The Company and U S WEST will furnish to the Agents copies of the Prospectus and all amendments and supplements thereto, in each case as soon as available and in such quantities as are reasonably requested. (f) BLUE SKY QUALIFICATIONS. The Company and U S WEST will use their respective best efforts to arrange for the qualification of the Notes for sale and the determination of their eligibility for investment under the laws of such jurisdictions as the Agents designate and will continue such qualifications in effect so long as required for their distribution. (g) COPIES OF PUBLIC REPORTS. The Company and U S WEST will furnish to the Agents, at the earliest time the Company and U S WEST make the same available to others, a copy of their annual reports and other financial reports furnished or made available to the public generally. (h) STAND-OFF AGREEMENT. If specified by the applicable Agent or Agents in connection with a purchase of Notes as principal, neither the Company nor U S WEST will, without such Agents prior consent, between the date of any agreement to purchase such Notes and the Settlement Date with respect to such purchase, offer to sell any debt securities of the Company or U S WEST having a maturity of more than one year, except as may otherwise be provided in any such agreement. (i) PROSPECTUS REVISIONS -- PERIODIC FINANCIAL INFORMATION. Except as otherwise provided in subsection (k) of this Section, on or prior to the date on which there shall be released to the general public interim financial statement information related to the Company or U S WEST with respect to any of the first three quarters of any fiscal year or preliminary financial statement information with respect to any fiscal year, the Company and U S WEST shall furnish such information to the Agents, confirmed in writing, and shall cause the Prospectus to be amended or supplemented to include or incorporate by reference capsule financial information with respect to the results of operations of the Company or U S WEST, as the case may be, for the period between the end of the preceding fiscal year and the end of such quarter or for such fiscal year, as the case may be, and corresponding information for the comparable period of the preceding fiscal year, as well as such other information and explanations as shall be necessary for an understanding of such amounts, or as shall be required by the 1933 Act or the 1933 Act Regulations. 7 (j) PROSPECTUS REVISIONS -- AUDITED FINANCIAL INFORMATION. Except as otherwise provided in subsection (k) of this Section, on or prior to the date on which there shall be released to the general public financial information included in or derived from the audited financial statements of the Company or U S WEST for the preceding fiscal year, the Company and U S WEST shall cause the Registration Statement and the Prospectus to be amended, whether by the filing of documents or otherwise, to include or incorporate by reference such audited financial statements and the report or reports, and consent or consents to such inclusion or incorporation by reference, of the independent accountants with respect thereto, as well as such other information and explanations as shall be necessary for an understanding of such financial statements, or as shall be required by the 1933 Act or the 1933 Act Regulations. (k) SUSPENSION OF CERTAIN OBLIGATIONS. The Company and U S WEST shall not be required to comply with the provisions of subsections (i) or (j) of this Section during any period from the time (i) the Agents shall have suspended solicitation of purchases of the Notes in their capacities as agents pursuant to a request from the Company and (ii) no Agent shall then hold any Notes purchased as principal pursuant hereto, until the time the Company shall determine that solicitation of purchases of the Notes should be resumed or an Agent shall subsequently purchase Notes from the Company as principal. 5. CONDITIONS OF AGENTS' OBLIGATIONS. The obligations of the Agents to purchase Notes as principal and to solicit offers to purchase the Notes as agent of the Company, and the obligations of any purchasers of the Notes sold through an Agent as agent, will be subject to the accuracy of the representations and warranties on the part of the Company and U S WEST herein and to the accuracy of the statements of the officers of the Company and U S WEST made in any certificate furnished pursuant to the provisions hereof, to the performance and observance by the Company and U S WEST of all covenants and agreements herein contained on their respective parts to be performed and observed and to the following additional conditions precedent: (a) COMPLIANCE WITH THE 1933 ACT AND THE 1939 ACT. On the date hereof, the Indenture shall be qualified under the 1939 Act and no stop order suspending the effectiveness of the Registration Statement, as amended from time to time, shall be in effect, no proceedings for that purpose shall have been instituted or, to the knowledge of the Company, U S WEST, or the Agents, shall be contemplated by the SEC. (b) LEGAL OPINIONS. On the date hereof, the Agents shall have received the following legal opinions, dated as of the date hereof and in form and substance satisfactory to the Agents: (1) OPINION OF COUNSEL TO THE COMPANY AND U S WEST. The favorable opinion of Thomas O. McGimpsey, counsel to the Company and U S WEST, or other counsel satisfactory to the Agents, to the effect that: 8 (i) The Company is a corporation in good standing, duly incorporated and validly existing under the laws of the State of Colorado, and is authorized by its Articles of Incorporation to transact the business in which it is engaged, as set forth in the Prospectus; (ii) U S WEST is a corporation in good standing, duly incorporated and validly existing under the laws of the state of its incorporation, and is authorized by its Articles or Certificate of Incorporation to transact the business in which it is engaged, as set forth in the Prospectus; (iii) The execution, delivery and performance of the Indenture by the Company and U S WEST have been duly authorized by all necessary corporate action on the part of the Company and U S WEST; the Indenture has been duly and validly executed and delivered by the Company and U S WEST and (assuming due authorization, execution and delivery by the Trustee) constitutes the legal, valid, and binding agreement of the Company and U S WEST enforceable against each of them in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights or by general equitable principles; and the Indenture has been duly qualified under the 1939 Act; (iv) The Notes, when duly executed and authenticated pursuant to the Indenture and delivered in accordance with the provisions of this Agreement, will constitute legal, valid, and binding obligations of the Company enforceable against the Company in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights or by general equitable principles; (v) The execution, delivery and performance of this Agreement by the Company and U S WEST have been duly authorized by all necessary corporate action on the part of the Company and U S WEST, and this Agreement has been duly and validly executed and delivered by each of the Company and U S WEST; (vi) All federal and state regulatory consents, approvals, authorizations, or other orders (except as to state securities or "blue sky" laws, as to which such counsel need express no opinion) legally required for the execution by the Company and U S WEST of the Indenture, and the issuance and sale of the Notes and the Guarantees pursuant to the terms of this Agreement, have been obtained; (vii) Except as to financial statements and schedules contained therein, which such opinion need not pass upon, the Registration Statement (including the Prospectus) complies, and at the time it became effective complied, as to form in 9 all material respects with the requirements of the 1933 Act and the applicable instructions, rules and regulations of the SEC thereunder; (viii) The Guarantees, when duly executed pursuant to the Indenture and delivered in accordance with the provisions of this Agreement, will constitute legal, valid, and binding obligations of U S WEST, as guarantor, enforceable against U S WEST in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights or by general equitable principles; (ix) The Registration Statement is effective under the 1933 Act and, to the best of such counsel's knowledge and information, no stop order suspending the effectiveness of the Registration Statement has been issued under the 1933 Act or proceedings therefor initiated or threatened by the SEC; and (x) The enforceability and legal, valid, and binding nature of the agreements and obligations of the Company and U S WEST set forth in the Indenture, the Guarantees, the Notes and this Agreement (the "Agreements") are not affected by, and the performance of the obligations set forth in such Agreements, the issuance and sale of the Notes and the Guarantees and the consummation of the transactions contemplated in such Agreements are not prevented or restricted by, any action, suit, proceeding, order, or ruling relating to, or issued or arising as a result of, the Divestiture (as hereinafter defined). In rendering such opinion, such counsel may rely (i) as to matters of New York law upon the opinion referred to in Section 5(b)(2) hereof without independent verification; and (ii) as to matters of fact, to the extent such counsel deems proper, on certificates of responsible officers of the Company, U S WEST, and public officials. In addition, such counsel shall state that it has not independently verified the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus and does not assume any responsibility for the accuracy, completeness or fairness of such statements; however, nothing has come to such counsel's attention which leads such counsel to believe that the Registration Statement and the Prospectus (except as to the financial statements and the notes thereto, and the other financial and statistical data included therein, as to which such counsel need express no opinion), and each amendment or supplement thereto, as of their respective effective or issue dates or, if an Annual Report on Form 10-K has been filed by the Company or U S WEST with the SEC subsequent to the effectiveness of the Registration Statement, then at the time of the most recent such filing, and at the date of such opinion, contained or contains any untrue statements of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein not 10 misleading or that the Prospectus, as amended or supplemented as of the date of such opinion (or, if such opinion is being delivered in connection with the purchase of Notes by an Agent as principal pursuant to Section 8(c) hereof, at the date of any agreement by the Agent to purchase Notes as principal and at the Settlement Date with respect thereto), contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Except as specifically provided in clause (ix) above, such opinion may state that it does not address the impact on the opinions contained therein of any litigation or ruling relating to the divestiture by American Telephone and Telegraph Company of ownership of its operating telephone companies (the "Divestiture"). (2) OPINION OF COUNSEL TO THE AGENTS. The favorable opinion of Brown & Wood, counsel to the Agents, covering the matters referred to in subsection (b)(1) under the subheadings (i), (ii), (iii), (iv), (v), (vii), (viii) and (ix) and the penultimate paragraph of subsection (b)(1) above, subject to the final paragraph of subsection (b)(1) above, and with respect to such other matters as the Agents may reasonably request. In rendering such opinion, Brown & Wood may rely as to matters of Colorado law, upon the opinion referred to in Section 5(b)(1) without independent verification. (c) COMPANY OFFICERS' CERTIFICATE. On the date hereof, the Agents shall have received a certificate of the President, any Vice President, an assistant secretary or an assistant treasurer, and the chief financial officer, chief accounting officer, treasurer, controller, or an assistant treasurer or assistant controller of the Company in which such officers shall state that the representations and warranties of the Company in this Agreement are true and correct as if made at and as of such date, that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to such date, that no stop order suspending the effectiveness of the Registration Statement is in effect and no proceedings for that purpose are pending or are contemplated by the SEC, and that, subsequent to the date of the most recent financial statements in the Prospectus, there has been no material adverse change in the financial position or results of operations of the Company and its subsidiaries, taken as a whole, except as set forth in or contemplated by the Prospectus. (d) US WEST OFFICERS' CERTIFICATE. On the date hereof, the Agents shall have received a certificate of the President, any Vice President, an assistant secretary or an assistant treasurer, and the chief financial officer, chief accounting officer, treasurer, controller, or an assistant treasurer or controller of U S WEST in which such officers shall state that the representations and warranties of U S WEST in this Agreement are true and correct as if made at and as of such date, that U S WEST has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to such date, that no stop order suspending the effectiveness of the Registration Statement is in effect and no proceedings for that purpose are pending or are contemplated by the SEC, and that, subsequent to the date of the most recent 11 financial statements in the Prospectus, there has been no material adverse change in the financial position or results of operations of U S WEST and its subsidiaries, taken as a whole, except as set forth in or contemplated by the Prospectus. (e) COMFORT LETTER OF ARTHUR ANDERSEN LLP.. On the date hereof, the Agents shall have received a letter from Arthur Andersen LLP. addressed to the Company, U S WEST and the Agents, dated as of the date hereof and in form and substance satisfactory to the Agents. (f) OTHER DOCUMENTS. On the date hereof and on each Settlement Date, counsel to the Agents shall have been furnished with such documents and opinions as such counsel may reasonably require for the purpose of enabling such counsel to pass upon the issuance and sale of Notes as herein contemplated and related proceedings, or in order to evidence the accuracy and completeness of any of the representations and warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company and U S WEST in connection with the issuance and sale of Notes as herein contemplated shall be satisfactory in form and substance to the Agents and to counsel to the Agents. If any condition specified in this Section 5 shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the applicable Agent or Agents by written notice to the Company and U S WEST at any time and any such termination shall be without liability of any party to any other party, except that the covenant regarding provision of an earnings statement set forth in Section 4(d) hereof, the indemnity and contribution agreement set forth in Section 9 hereof, the provisions concerning payment of expenses under Section 10 hereof, the provisions concerning the representations, warranties, indemnities and agreements to survive delivery of Section 11 hereof, the provisions relating to notices set forth in Section 13 hereof, the provisions relating to governing law and forum set forth in Section 14 hereof, and the provisions relating to parties set forth in Section 15 hereof shall remain in effect. 6. CONDITIONS OF COMPANY'S OBLIGATIONS. The obligation of the Company to deliver the Notes upon payment therefor will be subject to the conditions that (i) the Indenture will be qualified under the 1939 Act, (ii) no stop order suspending the effectiveness of the Registration Statement, as amended from time to time, shall be in effect, and (iii) no proceedings for that purpose shall be pending before, or threatened by, the SEC. If any condition specified in this Section 6 shall not have been fulfilled when required to be fulfilled, this Agreement may be terminated by the Company by written notice to the Agents at any time and such termination shall be without liability of any party to any other party, except that the covenant regarding provision of an earnings statement set forth in Section 4(d) hereof, the indemnity and contribution agreement set forth in Section 9 hereof, the provisions regarding payment of expenses under Section 10 hereof, the provisions concerning the representations, warranties, indemnities and agreements to survive delivery of Section 11 hereof, the provisions 12 relating the notices set forth in Section 13 hereof, the provisions relating to governing law and forum set forth in Section 14 hereof, and the provisions relating to parties set forth in Section 15 hereof shall remain in effect. 7. DELIVERY OF AND PAYMENT FOR NOTES SOLD THROUGH AN AGENT. Delivery of Notes sold through an Agent as agent shall be made by the Company to such Agent for the account of any purchaser only against payment therefor in immediately available funds. In the event that a purchaser shall fail either to accept delivery of or to make payment for a Note on the date fixed for settlement, such Agent shall promptly notify the Company and deliver such Note to the Company and, if such Agent has theretofore paid the Company for such Note, the Company will promptly return such funds to such Agent. If such failure occurred for any reason other than default by such Agent in the performance of its obligations hereunder, the Company will reimburse such Agent on an equitable basis for its loss of the use of the funds for the period such funds were credited to the Company's account. 8. ADDITIONAL COVENANTS OF THE COMPANY AND U S WEST. The Company and U S WEST covenant and agree with the Agents that: (a) REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. Each acceptance by the Company of an offer for the purchase of Notes (whether to one or more Agents as principal or through an Agent as agent), and each delivery of Notes (whether to one or more Agents as principal or through an Agent as agent), shall be deemed to be an affirmation that the representations and warranties of the Company and U S WEST contained in this Agreement and in any certificate theretofore delivered to the Agents pursuant hereto are true and correct at the time of such acceptance or sale, as the case may be, and an undertaking that such representations and warranties will be true and correct at the time of delivery to such Agent or Agents or to the purchaser or its agent, as the case may be, of the Note or Notes relating to such acceptance or sale, as the case may be, as though made at and as of each such time (and it is understood that such representations and warranties shall relate to the Registration Statement and Prospectus as amended and supplemented to each such time). (b) SUBSEQUENT DELIVERY OF CERTIFICATES. Each time that the Registration Statement or the Prospectus shall be amended or supplemented (other than by an amendment or supplement providing solely for a change in the interest rate or formula applicable to the Notes or a change in the principal amount of Notes remaining to be sold or similar changes), or there is filed with the SEC any document incorporated by reference into the Prospectus or (if required in connection with the purchase of Notes by one or more Agents as principal) the Company sells Notes to such Agent or Agents as principal, each of the Company and U S WEST shall furnish or cause to be furnished to the Agent(s) forthwith a certificate in form satisfactory to the Agent(s) to the effect that the statements contained in the certificates referred to in Sections 5(c) and 5(d) hereof which were last furnished to the Agents are true and correct at the time of such amendment or 13 supplement or filing or sale, as the case may be, as though made at and as of such time (except that such statements shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to such time) or, in lieu of such certificates, certificates of the same tenor as the certificates referred to in Sections 5(c) and 5(d) hereof, modified as necessary to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such certificates. (c) SUBSEQUENT DELIVERY OF LEGAL OPINIONS. Each time that the Registration Statement or the Prospectus shall be amended or supplemented (other than by an amendment or supplement providing solely for a change in the interest rate or formula applicable to the Notes or a change in the principal amount of Notes remaining to be sold or similar changes), or there is filed with the SEC any document incorporated by reference into the Prospectus (other than a document setting forth or incorporating by reference financial statements or other information as of and for a fiscal quarter, unless specifically requested by all of the Agents) or (if required in connection with the purchase of Notes by one or more Agents as principal) the Company sells Notes to such Agent or Agents as principal, the Company and U S WEST shall furnish or cause to be furnished to the Agent(s) and to counsel to the Agents a written opinion of counsel to the Company and U S WEST, satisfactory to the Agent(s), dated the date of delivery of such opinion, in form satisfactory to the Agent(s), of the same tenor as the opinion referred to in Section 5(b)(1) hereof but modified, as necessary, to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such opinion or, in lieu of such opinion, counsel last furnishing such opinion to the Agents shall furnish the Agent(s) with a letter to the effect that the Agent(s) may rely on such last opinion to the same extent as though it was dated the date of such letter authorizing reliance (except that statements in such last opinion shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such letter authorizing reliance). (d) SUBSEQUENT DELIVERY OF COMFORT LETTERS. Each time that the Registration Statement or the Prospectus shall be amended or supplemented to include additional financial information or there is filed with the SEC any document incorporated by reference into the Prospectus which contains additional financial information, or (if required in connection with the purchase of Notes by one or more Agents as principal) the Company sells Notes to such Agent or Agents as principal, the Company and U S WEST shall cause Arthur Andersen LLP. forthwith to furnish to the Agent(s) a letter, dated the date of filing of such amendment, supplement or document with the SEC, or the date of such sale, as the case may be, in form satisfactory to the Agent(s), of the same tenor as the portions of the letter referred to in Section 5(g) hereof, but modified to relate to the Registration Statement and Prospectus, as amended and supplemented to the date of such letter, and with such other changes as may be necessary to reflect changes in the financial statements and other information derived from the accounting records of the Company and U S WEST; provided, however, that if the Registration Statement or the Prospectus is amended or supplemented solely to include financial information as of and for a fiscal quarter, Arthur Andersen LLP. may limit the scope of such letter to the unaudited financial statements included in such amendment or supplement, unless any other information included therein of an 14 accounting, financial, or statistical nature is of such a nature that, in the reasonable judgment of the Agent(s), such letter should cover such other information. 9. INDEMNIFICATION AND CONTRIBUTION. (a) The Company and U S WEST, jointly and severally, will indemnify and hold each Agent harmless against any losses, claims, damages, or liabilities, joint or several, to which such Agent may become subject, under the 1933 Act or otherwise, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or any related preliminary prospectus supplement, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and will reimburse each Agent for any legal or other expenses reasonably incurred by such Agent, as such expenses are incurred in connection with investigating or defending any such loss, claim, damage, liability or action or amounts paid in settlement of any litigation or investigation or proceeding related thereto if such settlement is effected with the written consent of the Company and U S WEST; provided, however, that the Company and U S WEST will not be liable in any such case to the extent that any such loss, claim, damage, or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in any of such documents in reliance upon and in conformity with written information furnished to the Company or U S WEST by the Agents specifically for use therein or in reliance upon and in conformity with the Statement of Eligibility of the Trustee under the Indenture. (b) The Agents will indemnify and hold harmless the Company and U S WEST against any losses, claims, damages, or liabilities to which they may become subject, under the 1933 Act or otherwise, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or any related preliminary prospectus supplement, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company or U S WEST by the Agents specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by the Company or U S WEST, as such expenses are incurred in connection with investigating or defending any such loss, claim, damage, liability, or action or amounts paid in settlement of any litigation or investigation or proceeding related thereto if such settlement is effected with the consent of the Agents. (c) Promptly after receipt by an indemnified party under this Section 9 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be 15 made against the indemnifying party under this Section, notify the indemnifying party of the commencement thereof, but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under this Section. In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section 9 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. The indemnifying party or parties shall not be liable under this Agreement with respect to any settlement made by any indemnified party or parties without prior written consent by the indemnifying party or parties to such settlement. (d) If the indemnification provided for in this Section 9 is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages, or liabilities referred to in subsection (a) or (b) above in such proportion as is appropriate to reflect the relative benefits received by the Company and U S WEST on the one hand and the Agents on the other from the offering of the Notes and also to reflect the relative fault of the Company and U S WEST on the one hand and the Agents on the other in connection with the statements or omissions which resulted in such losses, claims, damages, or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Company and U S WEST on the one hand and the Agents on the other shall be deemed to be in the same proportion as the total net proceeds from the offering of Notes by the Agents (before deducting expenses) received by the Company and U S WEST bear to the total underwriting discounts and commissions received by the Agents. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, U S WEST, or the Agents and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages, or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), the Agents shall notbe required to contribute any amount in excess of the amount by which the total price at which the Notes sold by such Agents and distributed to the public were offered to the public exceeds the amount of any damages which such Agents have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation 16 (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (e) The obligations of the Company and U S WEST under this Section 9 shall be in addition to any liability which the Company or U S WEST may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls each Agent within the meaning of the Act or the 1934 Act; the Agents' obligations under this Section 9 shall be in addition to any liability which the Agents may otherwise have and shall extend, upon the same terms and conditions, to each director of the Company or U S WEST, to each officer of the Company or U S WEST who has signed the Registration Statement, and to each person, if any, who controls the Company or U S WEST within the meaning of the 1933 Act or the 1934 Act. 10. PAYMENT OF EXPENSES. The Company will pay all expenses incident to the performance of its obligations under this Agreement, including: (a) The preparation and filing of the Registration Statement and all amendments thereto and the Prospectus and any amendments or supplements thereto; (b) The preparation, filing and reproduction of this Agreement; (c) The preparation, printing, issuance and delivery of the Notes, including any fees and expenses relating to the use of Notes in book-entry form; (d) The fees and disbursements of the Company's accountants and counsel, of the Trustee and its counsel, and of any calculation agent or exchange rate agent; (e) The reasonable fees and disbursements of counsel to the Agents incurred in connection with the establishment of the program relating to the Notes and incurred from time to time in connection with the transactions contemplated hereby; (f) The qualification of the Notes under state securities laws in accordance with the provisions of Section 4(f) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Agents in connection therewith and in connection with the preparation of any Blue Sky or Legal Investment Survey; (g) The printing and delivery to the Agents in such quantities as are reasonably requested of copies of the Registration Statement and any amendments thereto, and of the Prospectus and any amendments or supplements thereto, and the delivery by the Agents of the Prospectus and any amendments or supplements thereto in connection with solicitations or confirmations of sales of the Notes; 17 (h) The preparation, reproducing and delivery to the Agents of copies of the Indenture and all supplements and amendments thereto; (i) Any fees charged by rating agencies for the rating of the Notes; (j) The fees and expenses incurred in connection with any listing of Notes on a securities exchange; (k) The fees and expenses incurred with respect to any filing with the National Association of Securities Dealers, Inc.; (l) Any advertising and other out-of-pocket expenses of the Agents incurred with the approval of the Company; and (m) The cost of providing any CUSIP or other identification numbers for the Notes. 11. REPRESENTATIONS, WARRANTIES, INDEMNITIES AND AGREEMENTS TO SURVIVE DELIVERY. All representations, warranties, indemnities and agreements contained in this Agreement or in certificates of officers of the Company or U S WEST submitted pursuant hereto or thereto shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of the Agents of the Company, or U S WEST, or any of their officers, directors or any controlling person, and shall survive each delivery of and payment for any of the Notes. In no event shall the Company or U S WEST be liable to the Agents for damages on account of loss of anticipated profits. 12. TERMINATION. (a) TERMINATION OF THIS AGREEMENT. This Agreement (excluding any agreement hereunder by one or more Agents to purchase Notes as principal) may be terminated, for any reason at any time, by any Agent as to itself or by the Company as to all or any of the Agents upon the giving of 7 days written notice of such termination to the other parties hereto. (b) TERMINATION OF AGREEMENT TO PURCHASE NOTES AS PRINCIPAL. The applicable Agent or Agents may terminate any agreement hereunder by such Agent or Agents to purchase Notes as principal, immediately upon notice to the Company and U S WEST, at any time prior to the Settlement Date relating thereto if (i) there has been, since the respective dates as of which information is given in the Registration Statement, any change in the financial condition of the Company or of U S WEST and its subsidiaries considered as one enterprise, or in the earnings, affairs, or business prospects of the Company or of U S WEST and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, the effect of which is, in the judgment of such Agent or Agents, so material and adverse as to make it impracticable to 18 market the Notes or enforce contracts for the sale thereof; or (ii) trading in any securities of the Company or U S WEST shall have been suspended by the SEC or the New York Stock Exchange, or trading in securities generally on the New York Stock Exchange shall have been suspended or limited or minimum prices shall have been established on such exchange; or (iii) a banking moratorium shall have been declared either by Federal or New York State authorities or a banking moratorium shall have been declared by the relevant authorities in the country or countries of origin of any foreign currency or currencies in which the Notes are denominated or payable, or (iv) there shall have occurred any outbreak or material escalation of hostilities or other calamity or crisis the effect of which in the financial markets in the United States is such as to make it, in the judgment of such Agent or Agents, impracticable to market the Notes or enforce contracts for the sale thereof; or (v) the rating assigned by any nationally recognized securities rating agency to any debt securities of the Company or U S WEST as of the date of the agreement to purchase the Notes shall have been lowered since that date or any such rating agency shall have publicly announced thatit has any of such debt securities under consideration for possible downgrade. (c) GENERAL. In the event of any such termination, no party will have any liability to any other party hereto, except that (i) the Agents shall be entitled to any commissions earned in accordance with the third paragraph of Section 3(b) hereof, (ii) if at the time of termination (a) any Agent shall own any Notes purchased by it as principal with the intention of reselling them or (b) an offer to purchase any of the Notes has been accepted by the Company but the time of delivery to the purchaser or his agent of the Notes relating thereto has not occurred, the conditions set forth in Sections 5 and 6 hereof shall remain in effect until such Notes are so resold or delivered, as the case may be, and (iii) the covenant set forth in Section 4(d) hereof, the indemnity and contribution agreements set forth in Section 9 hereof, and the provisions of Sections 10, 11, 13, 14 and 15 hereof shall remain in effect. 13. NOTICES. Unless otherwise provided herein, all notices required under the terms and provisions hereof shall be in writing, either delivered by hand, by mail or by telecopier or telegram, and any such notice shall be effective when received at the address specified below. If to the Company: U S WEST Capital Funding, Inc. 7800 East Orchard Road Englewood, Colorado 80111 Attention: Treasurer Telecopy No.: (303) 793-6657 If to U S WEST: 19 U S WEST, Inc. 7800 East Orchard Road Englewood, Colorado 80111 Attention: Treasurer Telecopy No.: (303) 793-6657 If to the Agents: [NOTICE INFORMATION] or at such other address as such party may designate from time to time by notice duly given in accordance with the terms of this Section 13. 14. GOVERNING LAW; FORUM. This Agreement and all the rights and obligations of the parties shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed in such State. Any suit, action or proceeding brought by the Company or U S WEST against any Agent in connection with or arising under this Agreement shall be brought solely in the state or federal court of appropriate jurisdiction located in the Borough of Manhattan, The City of New York. 15. PARTIES. This Agreement shall inure to the benefit of and be binding upon the Agents, the Company, U S WEST and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the parties hereto and their respective successors and the controlling persons and officers and directors referred to in Section 9 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the parties hereto and respective successors and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Notes shall be deemed to be a successor by reason merely of such purchase. 16. COUNTERPARTS. This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts hereof shall constitute a single instrument. 20 If the foregoing is in accordance with the Agents' understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument along with all counterparts will become a binding agreement among the Agents, U S WEST and the Company in accordance with its terms. Very truly yours, U S WEST CAPITAL FUNDING, INC. By: ------------------------------------- Name: Title: U S WEST, INC. By: ------------------------------------- Name: Title: Confirmed and Accepted, as of the date first above written: [AGENTS] By: ------------------------------------- Name: Title: By: ------------------------------------- Name: Title: EXHIBIT A The following terms, if applicable, shall be agreed to by one or more Agents and the Company in connection with each sale of Notes: Principal Amount: $_______ (or principal amount of foreign currency or composite currency) Interest Rate: If Fixed Rate Note, Interest Rate: If Floating Rate Note: Interest Rate Basis: Initial Interest Rate, if any: Spread and/or Spread Multiplier, if any: Interest Reset Date(s): Interest Payment Date(s): Index Maturity: Maximum Interest Rate, if any: Minimum Interest Rate, if any: Fixed Rate Commencement Date: Fixed Interest Rate: Calculation Agent: If Redeemable: Initial Redemption Date: Initial Redemption Percentage: Annual Redemption Percentage Reduction, if any: If Repayable: Optional Repayment Date(s): Stated Maturity Date: Purchase Price: ___%, plus accrued interest, if any, from ______________________ Settlement Date and Time: Specified Currency: Authorized Denominations: Additional/Other Terms: Also, in connection with the purchase of Notes by one or more Agents as principal, agreement as to whether the following will be required: Officers' Certificates pursuant to Section 8(b) of the Distribution Agreement. Legal Opinions pursuant to Section 8(c) of the Distribution Agreement. Comfort Letter pursuant to Section 8(d) of the Distribution Agreement. Stand-off Agreement pursuant to Section 4(h) of the Distribution Agreement. SCHEDULE A As compensation for the services of the Agents hereunder, the Company shall pay the applicable Agent, on a discount basis, a commission for the sale of each Note equal to the principal amount of such Note multiplied by the appropriate percentage set forth below:
PERCENT OF MATURITY RANGES PRINCIPAL AMOUNT --------------- ---------------- From 9 months to less than 1 year ___% From 1 year to less than 18 months ___ From 18 months to less than 2 years ___ From 2 years to less than 3 years ___ From 3 years to less than 4 years ___ From 4 years to less than 5 years ___ From 5 years to less than 6 years ___ From 6 years to less than 7 years ___ From 7 years to less than 10 years ___ From 10 years to less than 15 years ___ From 15 years to less than 20 years ___ From 20 years to 40 years ___ Greater than 40 years *
- ----------------- * As agreed to by the Company and the applicable Agent at the time of sale. EX-4.A 4 EXHIBIT 4.A Exhibit 4-A - ------------------------------------------------------------------------------ U S WEST CAPITAL FUNDING, Inc., Issuer, U S WEST, Inc., Guarantor and The First National Bank of Chicago, Trustee ------------------ INDENTURE DATED AS OF _________ __, 1998 -------------------- Providing for the Issuance of Debt Securities in Series of Guaranteed Debt TIE-SHEET Reconciliation and tie between Indenture dated as of __________ ___, 1998 and the Trust Indenture Act of 1939. This reconciliation section does not constitute part of the Indenture.
TRUST INDENTURE ACT INDENTURE OF 1939 Section SECTION ----------------- ------- 301(a)(1) . . . . . . . . . . . . . . . . . . . . . . . 7.10 (a)(2) . . . . . . . . . . . . . . . . . . . . . . 7.10 (a)(3) . . . . . . . . . . . . . . . . . . . . . . Inapplicable (a). . . . . . . . . . . . . . . . . . . . . . . . Inapplicable (b). . . . . . . . . . . . . . . . . . . . . . . . 7.08, 7.10 (c). . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 311(a). . . . . . . . . . . . . . . . . . . . . . . . . 7.11 (b). . . . . . . . . . . . . . . . . . . . . . . . 7.11 (c). . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 312(a). . . . . . . . . . . . . . . . . . . . . . . . . 2.07 (b). . . . . . . . . . . . . . . . . . . . . . . . 10.03 (c). . . . . . . . . . . . . . . . . . . . . . . . 10.03 313(a). . . . . . . . . . . . . . . . . . . . . . . . . 7.06 (b)(1) . . . . . . . . . . . . . . . . . . . . . . Inapplicable (b)(2) . . . . . . . . . . . . . . . . . . . . . . 7.06 (c). . . . . . . . . . . . . . . . . . . . . . . . 4.02, 11.02 (d). . . . . . . . . . . . . . . . . . . . . . . . 7.06 314(a). . . . . . . . . . . . . . . . . . . . . . . . . 4.02, 11.02 (b). . . . . . . . . . . . . . . . . . . . . . . . Inapplicable (c)(1) . . . . . . . . . . . . . . . . . . . . . . 11.04 (c)(2) . . . . . . . . . . . . . . . . . . . . . . 11.04 (c)(3) . . . . . . . . . . . . . . . . . . . . . . Inapplicable (d). . . . . . . . . . . . . . . . . . . . . . . . Inapplicable (e). . . . . . . . . . . . . . . . . . . . . . . . 11.05 (f). . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 315(a). . . . . . . . . . . . . . . . . . . . . . . . . 7.01(b) (b). . . . . . . . . . . . . . . . . . . . . . . . 7.05, 11.02 (c). . . . . . . . . . . . . . . . . . . . . . . . 7.01(a) (d). . . . . . . . . . . . . . . . . . . . . . . . 6.05, 7.01(c) (e). . . . . . . . . . . . . . . . . . . . . . . . 6.07, 6.11 316(a) (last sentence). . . . . . . . . . . . . . . . . 2.11 (a)(1)(A). . . . . . . . . . . . . . . . . . . . . 6.05 (a)(1)(B). . . . . . . . . . . . . . . . . . . . . 6.04 (a)(2) . . . . . . . . . . . . . . . . . . . . . . Inapplicable (b). . . . . . . . . . . . . . . . . . . . . . . . 6.07 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . 6.01, 6.08 (a)(2) . . . . . . . . . . . . . . . . . . . . . . 6.09 (b). . . . . . . . . . . . . . . . . . . . . . . . 2.06 318(a). . . . . . . . . . . . . . . . . . . . . . . . . 11.01
TABLE OF CONTENTS*
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 Definitions. . . . . . . . . . . . . . . . . . . . . . 1 Depositary . . . . . . . . . . . . . . . . . . . . . . 2 Global Security . . . . . . . . . . . . . . . . . . . 2 Section 1.02 Other Definitions. . . . . . . . . . . . . . . . . . . 4 Section 1.03 Incorporation by Reference of Trust Indenture Act. . . . . . . . . . . . . . . . . 4 Section 1.04 Rules of Construction. . . . . . . . . . . . . . . . . 5 ARTICLE 2. THE SECURITIES Section 2.01 Issuable in Series.. . . . . . . . . . . . . . . . . . 5 Section 2.02 Establishment of Terms and Form of Series of Securities and Guarantees . . . . 5 Section 2.03 Execution, Authentication, and Delivery. . . . . . . . . . . . . . . . . . . . . 8 Section 2.04 Registrar and Paying Agent. . . . . . . . . . . . . . 9 Section 2.05 Payment on Securities. . . . . . . . . . . . . . . . . 10 Section 2.06 Paying Agent to Hold Money in Trust. . . . . . . . . . 11 Section 2.07 Securityholder lists; Ownership of Securities . . . . 11 Section 2.08 Transfer and Exchange. . . . . . . . . . . . . . . . . 12 Section 2.09 Replacement Securities.. . . . . . . . . . . . . . . . 13 Section 2.10 Outstanding Securities.. . . . . . . . . . . . . . . . 13 Section 2.11 Treasury Securities. . . . . . . . . . . . . . . . . . 14 Section 2.12 Temporary Securities.. . . . . . . . . . . . . . . . . 14 Section 2.13 Cancellation.. . . . . . . . . . . . . . . . . . . . . 15 Section 2.14 Defaulted Interest.. . . . . . . . . . . . . . . . . . 16 Section 2.15 Global Securities. . . . . . . . . . . . . . . . . . . 16 Section 2.16 Unconditional Guarantee. . . . . . . . . . . . . . . . 17 Section 2.17 Execution of Guarantees. . . . . . . . . . . . . . . . 18 Section 2.18 Assumption by Guarantor . . . . . . . . . . . . . . . 18 ARTICLE 3. REDEMPTION Section 3.01 Notice to Trustee.. . . . . . . . . . . . . . . . . . 19 Section 3.02 Selection of Securities to be Redeemed.. . . . . . . . 19 Section 3.03 Notice of Redemption.. . . . . . . . . . . . . . . . . 19 Section 3.04 Effect of Notice of Redemption.. . . . . . . . . . . . 20 Section 3.05 Deposit of Redemption Price. . . . . . . . . . . . . . 21 Section 3.06 Securities Redeemed in Part. . . . . . . . . . . . . . 21
i ARTICLE 4. COVENANTS
Section 4.01 Payment of Securities. . . . . . . . . . . . . . . . . . 22 Section 4.02 Reports by the Guarantor . . . . . . . . . . . . . . . . 21 Section 4.03 Lien on Assets . . . . . . . . . . . . . . . . . . . . . 22 ARTICLE 5. SUCCESSOR CORPORATION Section 5.01 When the Company May Merge, etc. . . . . . . . . . . . . 22 Section 5.02 When the Guarantor May Merge, etc. . . . . . . . . . . . 23 ARTICLE 6. DEFAULTS AND REMEDIES Section 6.01 Events of Default. . . . . . . . . . . . . . . . . . . . 23 Section 6.02 Acceleration.. . . . . . . . . . . . . . . . . . . . . . 24 Section 6.03 Other Remedies Available to Trustee. . . . . . . . . . . 24 Section 6.04 Waiver of Existing Defaults. . . . . . . . . . . . . . . 25 Section 6.05 Control by Majority. . . . . . . . . . . . . . . . . . . 25 Section 6.06 Limitation on Suits by Securityholders.. . . . . . . . . 25 Section 6.07 Rights of Holders to Receive Payment. . . . . . . . . . .26 Section 6.08 Collection Suits by Trustee. . . . . . . . . . . . . . . 26 Section 6.09 Trustee May File Proofs of Claim.. . . . . . . . . . . . 26 Section 6.10 Priorities . . . . . . . . . . . . . . . . . . . . . . . 26 Section 6.11 Undertaking for Costs. . . . . . . . . . . . . . . . . . 27 . ARTICLE 7. TRUSTEE Section 7.01 Duties of Trustee.. . . . . . . . . . . . . . . . . . . 27 Section 7.02 Rights of Trustee . . . . . . . . . . . . . . . . . . . 28 Section 7.03 Individual Rights of Trustee. . . . . . . . . . . . . . 28 Section 7.04 Trustee's Disclaimer. . . . . . . . . . . . . . . . . . 29 Section 7.05 Notice of Defaults. . . . . . . . . . . . . . . . . . . 29 Section 7.06 Reports by Trustee to Holders . . . . . . . . . . . . . 29 Section 7.07 Compensation and Indemnity. . . . . . . . . . . . . . . 29 Section 7.08 Replacement of Trustee. . . . . . . . . . . . . . . . . 30 Section 7.09 Successor Trustee, Agents by Merger, etc. . . . . . . . . . . . . . . . . . . . 32 Section 7.10 Eligibility; Disqualification . . . . . . . . . . . . . 32 Section 7.11 Preferential Collection of Claims Against the Company . . . . . . . . . . . . 32
ARTICLE 8. DISCHARGE OF INDENTURE
Section 8.01 Termination of the Company's and the Guarantor's Obligations . . . . . . . . . . . 32 Section 8.02 Application of Trust Money. . . . . . . . . . . . . . . 33 Section 8.03 Repayment to the Company or the Guarantor . . . . . . . 34 Section 8.04 Indemnity for Government Obligations. . . . . . . . . . 34 ARTICLE 9. AMENDMENTS AND WAIVERS Section 9.01 Without Consent of Holders. . . . . . . . . . . . . . . 34 Section 9.02 With Consent of Holders.. . . . . . . . . . . . . . . . 35 Section 9.03 Compliance with Trust Indenture Act . . . . . . . . . . 36 Section 9.04 Revocation and Effect of Consents . . . . . . . . . . . 36 Section 9.05 Notation on or Exchange of Securities.. . . . . . . . . 36 Section 9.06 Trustee Protected.. . . . . . . . . . . . . . . . . . . 36 ARTICLE 10. SINKING FUNDS Section 10.01 Applicability of Article . . . . . . . . . . . . . . . 37 Section 10.02 Satisfaction of Sinking Fund Payments with Securities . . . . . . . . . . . 37 Section 10.03 Redemption of Securities for Sinking Fund . . . . . . . . . . . . . . . . . . 37 ARTICLE 11. MISCELLANEOUS Section 11.01 Trust Indenture Act Controls.. . . . . . . . . . . . . 38 Section 11.02 Notices. . . . . . . . . . . . . . . . . . . . . . . . 38 Section 11.03 Communication by Holders with Other Holders. . . . . . . . . . . . . . . . . . 39 Section 11.04 Certificate and Opinion as to Conditions Precedent.. . . . . . . . . . . . . . . 39 Section 11.05 Statements Required in Certificate or Opinion. . . . . . . . . . . . . . . . 40 Section 11.06 Rules by Trustee and Agents. . . . . . . . . . . . . . 40 Section 11.07 Legal Holidays.. . . . . . . . . . . . . . . . . . . . 40 Section 11.08 Governing Law. . . . . . . . . . . . . . . . . . . . . 40 Section 11.09 No Adverse Interpretation of Other Agreements.. . . . . . . . . . . . . . . . . 41 Section 11.10 No Recourse Against Others.. . . . . . . . . . . . . . 41 Section 11.11 Execution in Counterparts. . . . . . . . . . . . . . . 41
iii ARTICLE 12. REPAYMENT AT THE OPTION OF THE HOLDER Section 12.01 Applicability of Article 10 . . . . . . . . . . . . . . . . . 41 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
_________________ *This Table of Contents does not constitute part of this Indenture. INDENTURE dated as of _____ __, 1998 among U S WEST CAPITAL FUNDING, Inc., a Colorado corporation (the "Company"), U S WEST, Inc., a Delaware corporation (the "Guarantor"), and The First National Bank of Chicago, a national banking association (the "Trustee"). RECITALS OF THE COMPANY AND THE GUARANTOR The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured and unsubordinated debentures, notes, or other evidences of indebtedness ("Securities") as herein provided. The Guarantor has duly authorized the execution and delivery of this Indenture and deems it appropriate from time to time to issue its guarantees of the Securities on the terms herein provided (the "Guarantees"). All things necessary to make this Indenture a valid agreement of the Company and the Guarantor, in accordance with its terms, have been done. For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed as follows for the equal and ratable benefit of the Holders of the Securities: ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 DEFINITIONS. "Affiliate" means any person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Company, or the Guarantor, as the case may be. "Agent" means any Paying Agent, Registrar or transfer agent as may be appointed by the Company from time to time. "Authorized Newspaper" means a newspaper of general circulation, in the official language of the country of publication or in the English language, customarily published on each business day. Whenever successive weekly publications in an Authorized Newspaper are required hereunder, they may be made (unless otherwise expressly provided herein) on the same or different days of the week and in the same or different Authorized Newspapers. "Board of Directors" mean the Board of Directors of the Company or the Guarantor, as the case may be, or any duly authorized committee thereof. 1 "Board Resolution" means a copy of a resolution of the Board of Directors, certified by the Secretary or an Assistant Secretary of the Company or the Guarantor, as the case may be, to have been adopted by the Board of Directors and to be in full force and effect on the date of the certificate. "Company" means the party named as such in this Indenture until a successor replaces it and thereafter means the successor. "Company Order" means an order signed by two Officers of the Company. "Depositary" means, with respect to Securities of any Series, for which the Company shall determine that such Securities will be issued as a Global Security, The Depository Trust Company, New York, New York, another clearing agency, or any successor registered as a clearing agency under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or other applicable statute or regulation, which, in each case, shall be designated by the Company pursuant to either Section 2.01 or 2.15. "Default" means any event which is, or after notice or passage of time would be, an Event of Default. "Guarantee" means the agreement of the Guarantor in the form, set forth in Section 2.16 hereof, to be endorsed on the Securities authenticated and delivered hereunder. "Guarantor" means the party named as such in this Indenture until a successor replaces it and thereafter means the successor. "Global Security" means, with respect to any Series of Securities, a Security executed by the Company and delivered by the Trustee to the Depositary or pursuant to the Depositary's instruction, all in accordance with the Indenture, which shall be registered in the name of the Depositary or its nominee. "Holder" or "Securityholder" means a bearer of an Unregistered Security or of a coupon appertaining thereto or a person in whose name a Registered Security is registered on the Registrar's books. "Indenture" means this Indenture as amended or supplemented from time to time and shall include the forms and terms of particular Series of Securities established as contemplated hereunder. "Interest" when used with respect to an Original Issue Discount Security which by its terms bears interest only after maturity, means interest payable after maturity. "Officer" means the President, any Executive Vice-President, Vice President, the Treasurer, any Assistant Treasurer, the Secretary, any Assistant Secretary or the Comptroller or any Assistant Comptroller of the Company or the Guarantor, as the 2 case may be. "Officers' Certificate" means a certificate signed by two Officers of the Company or the Guarantor, as the case may be. "Opinion of Counsel" means a written opinion of legal counsel who is acceptable to the Company, the Guarantor and the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee. "Original Issue Discount Security" means any Security which provides for an amount less than the stated principal amount thereof to be due and payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.02. "Principal" of a Security means the principal of the Security plus, when appropriate, the premium, if any, on the Security. "Registered Security" means any Security issued hereunder and registered as to principal and interest by the Registrar. "Responsible Officer" when used with respect to the Trustee, means the chairman or any vice-chairman of the board of directors or trustees, the chairman or any vice-chairman of the executive committee of the board of directors or trustees, the president, any executive vice-president, any senior vice-president, any vice-president, any assistant vice-president, the treasurer, the secretary, any trust officer, any second or assistant vice-president, or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with a particular subject. "SEC" means the Securities and Exchange Commission. "Series" or Series of Securities" means a series of Securities. "Securities" means the debentures, notes, or other obligations of the Company issued, authenticated, and delivered under this Indenture. "Subsidiary" means any corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company and/or by one or more other Subsidiaries. For purposes of such definition, "voting stock" means stock ordinarily having voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 777aaa-777bbb) as in effect on the date of this Indenture, except as provided in Section 9.03. "Trustee" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor and if, at any time, there is more 3 than one Trustee, "Trustee" as used with respect to the Securities of any Series shall mean the Trustee with respect to that Series. "U.S. Person" means a citizen, national, or resident of the United States, a corporation, partnership, or other entity created or organized in or under the laws of the United States or any political subdivision thereof, or an estate or trust which is subject to United States federal income taxation regardless of its source of income. "Unregistered Security" means any Security issued hereunder which is not a Registered Security. "Yield to Maturity" means the yield to maturity, calculated by the Company at the time of issuance of a Series of Securities or, if applicable, at the most recent determination of interest on such Series in accordance with accepted financial practice. Section 1.02 OTHER DEFINITIONS.
INDENTURE TERM SECTION "Bankruptcy Law". . . . . . . . . . . . . . . . . . . . . . . . 6.01 "Custodian" . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01 "Event of Default". . . . . . . . . . . . . . . . . . . . . . . 6.01 "Legal Holiday" . . . . . . . . . . . . . . . . . . . . . . . . 11.07 "Paying Agent". . . . . . . . . . . . . . . . . . . . . . . . . 2.04 "Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04 "U.S. Government Obligations" . . . . . . . . . . . . . . . . . 8.01
Section 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the SEC. "indenture securities" means the Securities. "indenture security holder" means a Holder or a Securityholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Company and the Guarantor, if and as long as the Guarantor is liable with respect to any payment of principal of, premium, if any, and interest on any Security as a result of the Company's default in the timely payment of any amount due with respect to any Security. All other terms used in this Indenture that are defined by the TIA, defined 4 by TIA reference to another statute, or defined by SEC rule under the TIA have the meanings assigned to them therein. Section 1.04 RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles; (3) "or" is not exclusive; and (4) words in the singular include the plural, and words in the plural include the singular. ARTICLE 2. THE SECURITIES Section 2.01 ISSUABLE IN SERIES. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more Series. There may be Registered Securities and Unregistered Securities within a Series and the Unregistered Securities may be subject to such restrictions, and contain such legends, as may be required by United States laws and regulations. All Series of Securities shall be equally and ratably entitled to the benefits of this Indenture. Section 2.02 ESTABLISHMENT OF TERMS AND FORM OF SERIES OF SECURITIES AND GUARANTEES. (a) At or prior to the issuance of any Series of Securities, the following shall be established by a Company Board Resolution, by one or more Officers of the Company pursuant to a Company Board Resolution, or by an indenture supplemental hereto: (1) the title of the Securities of the Series (which title shall distinguish the Securities of the Series from the Securities of any other Series and from any other securities issued by the Company); (2) any limit upon the aggregate principal amount of the Securities of the Series which may be authenticated and delivered under this Indenture (which limit shall not pertain to Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the Series pursuant to Section 2.08, 2.09, 2.12, 3.06 or 9.05); (3) the date or dates on which the principal of the Securities of the Series is payable; 5 (4) the rate or rates at which the Securities of the Series shall bear interest, if any, or the manner of determining such rate or rates of interest, the date or dates from which such interest shall accrue, the dates on which such interest shall be payable, and, with respect to Registered Securities, the record date for the interest payable on any interest payment date, and the basis upon which interest shall be calculated if other than that of a 360-day year of twelve 30-day months; (5) the place or places where the principal of and interest on Registered and Unregistered, if any, Securities of the Series shall be payable; (6) the period or periods within which, the price or prices at which, and the terms and conditions upon which, Securities of the Series may be redeemed, in whole or in part, at the option of the Company; (7) the obligation, if any, of the Company to redeem or purchase Securities of the Series pursuant to any sinking fund or analogous provisions or upon the happening of a specified event or at the option of a Holder thereof and the period or periods within which, the price or prices at which, and the terms and conditions upon which, Securities of the Series shall be redeemed or purchased, in whole or in part, pursuant to such obligation; (8) if in other than denominations of $1,000 and any integral multiple thereof, the denominations in which Securities of the Series shall be issuable; (9) if other than the principal amount thereof, the portion of the principal amount of Securities of the Series which shall be payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.02; (10) whether Securities of the Series shall be issuable as Registered Securities or Unregistered Securities (with or without interest coupons), or both, and any restrictions applicable to the offering, sale or delivery of Unregistered Securities and whether, and the terms upon which, Unregistered Securities of a Series may be exchanged for Registered Securities of the same Series and vice versa; (11) whether and under what circumstances the Company will pay additional amounts on the Securities of that Series held by a person who is not a U.S. person in respect of taxes or similar charges withheld or deducted and, if so, whether the Company will have the option to redeem such Securities rather than pay such additional amounts; (12) the form or forms of the Securities (or forms thereof if Unregistered and Registered Securities shall be issuable in such Series), including such legends as may be required by United States laws or regulations, the form of any coupons or temporary global Security which may be issued and the forms of any certificates, opinions or other documents which may be required hereunder or under United States laws or regulations in connection with the offering, sale, delivery or exchange of Unregistered Securities; 6 (13) whether the Securities of the Series are issuable as a Global Security and, in such case, the identity of the Depositary for such Series; (14) if other than such coin or currency of the United States of America as at the time of payment is legal tender for payment of public or private debts, the coin or currency, including composite currency, in which payment of the principal of and premium, if any, or interest on the Securities of the Series shall be payable; (15) if the principal of or interest on the Securities of the Series are to be payable, at the election of the Company or a Holder thereof, in a coin or currency other than that in which the Securities are stated to be payable, the coin or currency, including composite currency, in which payment of the principal of and premium, if any, or interest on Securities of such Series as to which such election is made shall be payable, the period or periods within which, and the terms and conditions upon which, such election may be made; (16) if the amount of payments of principal of or interest on the Securities of the Series may be determined with reference to an index based on coin or currency other than that in which the Securities are stated to be payable, the manner in which such amounts shall be determined; and (17) any other terms of the Series (which terms shall not be inconsistent with the provisions of this Indenture), including any terms which may be required by or advisable under United States laws or regulations or advisable in connection with the marketing of Securities of that Series. (b) All Securities of any one Series shall be substantially identical except as to denomination and the rate or rates of interest, if any, and maturity and currency and, except as may otherwise be provided in or pursuant to a Company Board Resolution or a certificate delivered pursuant to Section 2.02(c) or in an indenture supplemental hereto. All Securities of any one Series need not be issued at the same time, and, unless otherwise provided, a Series may be reopened for issuances of additional Securities of such Series. (c) If the terms and form or forms of any Series of Securities are established by or pursuant to a Company Board Resolution, the Company shall deliver a copy of such Board Resolution to the Trustee at or prior to the issuance of such Series with (1) the form or forms of the Securities which have been approved attached thereto; or (2) if such Board Resolution authorizes a specific Officer or Officers to establish the terms and form or forms of the Securities, a certificate of such Officer or Officers establishing or providing for the establishment of the terms and form or forms of the Securities, with such form or forms of the Securities attached to the certificate establishing such form or forms. (d) Unregistered Securities and their coupons must have the following statement on their face: "Any United States person who holds this obligation will be subject to limitations under the United States income tax laws, including the limitations 7 provided in Section 165(j) and 1287 of the Internal Revenue Code of 1986, as amended." (e) At or prior to the issuance of any of the Guarantees, the exact form and terms of such Guarantees, which shall comply with the terms of Section 2.16 hereof, shall be established by an Officers' Certificate of the Guarantor. Section 2.03 EXECUTION, AUTHENTICATION, AND DELIVERY. (a) The Securities shall be executed on behalf of the Company by, and the Guarantees endorsed thereon shall be executed on behalf of the Guarantor by, its President, an Executive Vice President or a Vice President, and by its Treasurer or an Assistant Treasurer, or its Secretary or an Assistant Secretary. Signatures shall be manual or facsimile. The Company's seal shall be reproduced on the Securities and may, but need not, be attested. The Guarantor's seal shall be reproduced on the Guarantees and may, but need not, be attested. The coupons of Unregistered Securities shall bear the facsimile signature of the Treasurer or an Assistant Treasurer of the Company. (b) If an Officer whose signature is on a Security, a Guarantee or coupon no longer holds that office at the time the Security or the Guarantee is authenticated, the Security, Guarantee or coupon shall be valid nevertheless. (c) A Security or Guarantee thereon shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent, and no coupon shall be valid until the Security to which it appertains has been so authenticated. Such signature shall be conclusive evidence that the Security has been authenticated under this Indenture. Each Unregistered Security shall be dated the date of its authentication. (d) The Trustee (or an authenticating agent appointed pursuant to Section 2.03(f)) shall at any time, and from time to time, authenticate and deliver Securities of any Series executed and delivered by the Company with Guarantees endorsed thereon for original issue in an unlimited aggregate principal amount, upon receipt by the Trustee (or an authentication agent) of (i) a Company Order or directions pursuant to such a Company Order for the authentication and delivery of such Securities; (ii) if the terms and form or forms of the Securities of such Series have been established by or pursuant to a Board Resolution as permitted pursuant to Section 2.02, a copy of such Board Resolution and any certificate that may be required pursuant to Section 2.02(c); (iii) an Officers' Certificate of the Guarantor establishing the terms of the Guarantees; and (iv) an Opinion of Counsel stating: (1) if the form of such Securities has been established by or pursuant to a Board Resolution as permitted by Section 2.02, that such form has been established in conformity with provisions of this Indenture; (2) if the terms of such Securities have been established by or pursuant to a Board Resolution as permitted by Section 2.02, that such terms have been established, or provision has been made for their establishment, in conformity with the provisions of this indenture; and 8 (3) that such Securities and Guarantees, when authenticated and delivered by the Trustee (or an authenticating agent) and issued by the Company or the Guarantor, as applicable, in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company or the Guarantor, as applicable, enforceable in accordance with their terms, subject to bankruptcy, insolvency, reorganization, and other laws of general applicability relating to or affecting the enforcement of creditors' rights and to general equity principles. If the terms and form or forms of such Securities have been established by or pursuant to a Board Resolution as permitted by Section 2.02, the Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will materially and adversely affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. Notwithstanding the foregoing, until the Company has notified the Trustee and the Registrar that, as a result of the action described, the Company would not suffer adverse consequences under the provisions of United States law or regulations in effect at the time of the delivery of Unregistered Securities, (i) delivery of Unregistered Securities will be made only outside the United States and its possessions, and (ii) Unregistered Securities will be released in definitive form to the person entitled to physical delivery thereof only upon presentation of a certificate in the form prescribed by the Company. (e) The aggregate principal amount of Securities of any Series outstanding at any time may not exceed any limit upon the maximum principal amount for such Series set forth in the Board Resolution (or certificate of an Officer or Officers) or supplemental indenture pursuant to Section 2.02 or in any additional Board Resolution or supplemental indenture which shall reopen a Series of Securities pursuant to Section 2.02. (f) The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Securities. An authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Company or an Affiliate. Section 2.04 REGISTRAR AND PAYING AGENT. The Company shall maintain for each Series of Securities an office or agency where Registered Securities may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where (subject to Sections 2.05 and 2.08) Securities may be presented for payment ("Paying Agent"). With respect to any Series of Securities issued in whole or in part as Unregistered Securities, the Company shall maintain one or more Paying Agents located outside the United States and its possessions and shall maintain such Paying Agents for a period of two years after the principal of such Unregistered Securities has become due and payable. During any period thereafter for which it is necessary in order to conform to United States tax law or regulations, the 9 Company will maintain a Paying Agent outside the United States and its possessions to which the Unregistered Securities or coupons appertaining thereto may be presented for payment and will provide the necessary funds therefor to such Paying Agent upon reasonable notice. The Registrar shall keep a register with respect to each Series of Securities issued in whole or in part as Registered Securities and as to their transfer and exchange. The Company may appoint one or more co-Registrars and one or more additional Paying Agents for each Series of Securities and the Company may terminate the appointment of any co-Registrar. The term "Paying Agent" includes any additional Paying Agent. The Company shall notify the Trustee of the name and address of any Agent not a party to this Indenture. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such. Section 2.05 PAYMENT ON SECURITIES. (a) Subject to the following provisions, the Company will pay to the Trustee or the Paying Agent the amounts, in such coin or currency as is at the time legal tender for the payment of public or private debt, at the times and for the purposes set forth herein and in the text of the Securities Series, and the Company hereby authorizes and directs the Trustee or the Paying Agent, from funds so paid to it, to make or cause to be made payment of the principal of, interest, and premium if any, on the Securities and coupons of each Series as set forth herein and in the text of such Securities and coupons. The Trustee will arrange directly with any Paying Agent for the payment, or the Trustee will make payment, from funds furnished by the Company, of the principal of, interest, and premium if any, on the Securities and coupons of each Series by check drawn upon a bank specified by the Company and acceptable to the Trustee. (b) Interest, if any, on Registered Securities of a Series shall be paid on each interest payment date for such Series to the Holder thereof at the close of business on the relevant record dates specified in the Securities of such Series. The Company may pay such interest by check mailed to such Holder's address as it appears on the register for Securities of such Series. Principal of Registered Securities shall be payable only against presentation and surrender thereof at the office of the Paying Agent in The City of New York, unless the Company shall have otherwise instructed the Trustee in writing. (c) To the extent provided in the Securities of a Series, (i) interest, if any, on Unregistered Securities shall be paid only against presentation and surrender of the coupons for such interest installments as are evidenced thereby as they mature; and (ii) original issue discount (as defined in Section 1273 of the Internal Revenue Code of 1986, as amended), if any, on Unregistered Securities shall be paid only against presentation and surrender of such Securities; in either case at the office of a Paying Agent located outside of the United States and its possessions, unless the Company shall have otherwise instructed the Trustee in writing. Principal of Unregistered Securities shall be paid only against presentation and surrender thereof as provided in the Securities of a Series. If at the time a payment of principal of or interest, if any, or original issue discount, if any, on an Unregistered Security or coupon shall become due, the payment of the full amount so payable at the office or offices of all the Paying Agents outside the United States and its possessions is illegal or effectively precluded because of the imposition of exchange 10 controls or other similar restrictions on the payment of such amount in United States currency, then the Company will instruct the Trustee in writing as to how and when such payment will be made and may instruct the Trustee to make such payments at the office of a Paying Agent located in the United States, provided that the Company has determined that provision for such payment in the United States would not cause such Unregistered Security to be treated as a "registration-required obligation" under United States law and regulations. Unless otherwise instructed in writing by the Company, no payments of interest, original issue discounts, or principal with respect to Unregistered Securities shall be made by a Paying Agent (i) by transfer of funds into an account maintained by the payee in the United States, (ii) mailed to an address in the United States, or (iii) paid to a United States address by electronic funds transfer. Section 2.06 PAYING AGENT TO HOLD MONEY IN TRUST. The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust, for the benefit of Securityholders of any or all Series of Securities, or the Trustee, all money held by the Paying Agent for the payment of principal or interest on such Series of Securities, and that the Paying Agent will notify the Trustee of any default by the Company (or any other obligor on the Securities) in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. If the Company or a Subsidiary acts as Paying Agent, it shall segregate the money held by it for the payment of principal or interest on any Series of Securities and hold such money as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon so doing, the Paying Agent shall have no further liability for the money so paid. The Trustee or the Paying Agent may allow and credit to the Company (or any other obligor on the Securities) interest on any monies received by it hereunder at such rate as may be agreed upon with the Company (or any other obligor on the Securities) from time to time and as may be permitted by law. Section 2.07 SECURITYHOLDER LISTS; OWNERSHIP OF SECURITIES. (a) The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders of each Series of Securities. If the Trustee is not the Registrar, the Company shall furnish to the Trustee semiannually on or before the last day of June and December in each year, and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require, containing all the information in the possession or control of the Registrar, the Company, the Guarantor, or any of the Paying Agents other than the Trustee as to the names and addresses of Holders of each such Series of Securities. (b) Ownership of Registered Security of a Series shall be proved by the register for such Series kept by the Registrar. Ownership of Unregistered Securities may be proved by the production of such Unregistered Securities, or by a certificate or affidavit executed by the person holding such Unregistered Securities, or by a depository with whom such Unregistered Securities were deposited if the certificate or affidavit is 11 satisfactory to the Trustee. The Company, the Trustee, the Guarantor, and any agent of the Company may treat the bearer or any Unregistered Security or coupon and the person in whose name a Registered Security is registered as the absolute owner thereof for all purposes. Section 2.08 TRANSFER AND EXCHANGE. (a) Where Registered Securities of a Series are presented to the Registrar with a request to register their transfer or to exchange them for an equal principal amount of Registered Securities of the same Series containing identical terms and provisions and date of maturity of other authorized denominations, the Registrar shall register the transfer or make the exchange if its requirements for such transactions are met. (b) If both Registered and Unregistered Securities are authorized for a Series of Securities and the terms of such Securities permit, (i) Unregistered Securities may be exchanged for an equal principal amount of Registered or Unregistered Securities containing identical terms and provisions of the same Series and date of maturity in any authorized denominations upon delivery to the Registrar (or a Paying Agent, if the exchange is for Unregistered Securities) of the Unregistered Security with all unmatured coupons and all matured coupons in default appertaining thereto and if all other requirements of the Registrar (or such Paying Agent) and such Securities for such exchange are met, and (ii) Registered Securities may be exchanged for an equal principal amount of Unregistered Securities of the same Series and date of maturity in any authorized denominations (except that any coupons appertaining to such Unregistered Securities which have matured and have been paid shall be detached) upon delivery to the Registrar of the Registered Securities and if all other requirements of the Registrar (or such Paying Agent) and such Securities for such exchange are met. Notwithstanding the foregoing, the exchange of Unregistered Securities for Registered Securities or Registered Securities for Unregistered Securities will be subject to the satisfaction of the provisions of United States law and regulations in effect at the time of such exchange, and no exchange of Registered Securities for Unregistered Securities will be made until the Company has notified the Trustee and the Registrar that, as a result of such exchange, neither the Company nor the Guarantor would suffer adverse consequences under the provisions of United States law or regulations. (c) To permit registrations of transfers and exchanges the Trustee (or an authenticating agent) shall authenticate Securities upon instructions of the Registrar or, if applicable, a Paying Agent upon surrender of Securities for registration of transfer or for exchange as provided in this Section. The Company will not make any charge for any registration of transfer or exchange but may require the payment by the party requesting such registration of transfer or exchange of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. (d) Neither the Company nor the Registrar shall be required (i) to issue, register the transfer of or exchange Securities of any Series for the period of 15 days immediately preceding the selection of any such Securities to be redeemed, or (ii) to 12 register the transfer of or exchange Securities of any Series selected, called, or being called for redemption as a whole or the portion being redeemed of any such Securities selected, called, or being called for redemption in part. (e) Unregistered Securities or any coupons appertaining thereto shall be transferable by delivery. Section 2.09 REPLACEMENT SECURITIES. (a) If a mutilated Security or a Security with a mutilated coupon appertaining to it is surrendered to the Trustee (or an authenticating agent), the Company shall issue (with the Guarantee thereon executed by the Guarantor) and the Trustee (or an authenticating agent) shall authenticate a replacement Registered Security, if such surrendered security was a Registered Security, or a replacement Unregistered Security with coupons corresponding to the coupons appertaining to the surrendered Security, if such surrendered Security was an Unregistered Security of the same Series and containing identical terms and provisions, if the Trustee's (or authenticating agent's) requirements are met. (b) If the Holder of a Security claims that the Security or any coupon appertaining thereto has been lost, destroyed, or wrongfully taken, the Company shall issue (with the Guarantee thereon executed by the Guarantor) and the Trustee (or an authenticating agent), shall authenticate a replacement Registered Security, if such Holder's claim pertains to a Registered Security, or a replacement Unregistered Security with coupons corresponding to the coupons appertaining to the lost, destroyed, or wrongfully taken Unregistered Security or the Unregistered Security to which such lost, destroyed, or wrongfully taken coupon appertains, if such Holder's claim pertains to an Unregistered Security, of the same Series and containing identical terms and provisions, if the Trustee's requirements are met; provided, however, that the Trustee (or an authenticating agent), the Guarantor, or the Company may require any such Holder to provide to the Trustee and the Company security or indemnity sufficient in the judgment of the Guarantor or the Company and the Trustee (or an authenticating agent) to protect the, the Guarantor, Company, the Trustee (or an authenticating agent) and any Agent from any loss which any of them may suffer if a Security is replaced. The Company and the Trustee (or an authenticating agent) may charge the party requesting a replacement Security for its expenses in replacing a Security. (c) Every replacement Security is an additional obligation of the Company. Every replacement Guarantee is an additional obligation of the Guarantor. (d) Notwithstanding anything to the contrary contained herein, replacement Securities need not be issued in any of the circumstances described in Section 2.09 if the Company, the Guarantor, or the Trustee (or an authenticating agent) have notice that the mutilated, lost, destroyed, or wrongfully taken Security has been acquired by a bona fide purchaser. 13 Section 2.10 OUTSTANDING SECURITIES. (a) Securities outstanding at any time are all Securities authenticated by the Trustee (or an authenticating agent), except for those canceled by it, those delivered to it for cancellation, and those described in this Section as not outstanding. (b) If a Security is replaced pursuant to Section 2.09, it ceases to be outstanding until the Trustee (or an authenticating agent), receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. (c) If the Paying Agent holds on a redemption date or maturity date money or U.S. Government Obligations sufficient to pay all amounts due on Securities of any Series on that date, then on and after that date, all Securities of such Series cease to be outstanding and interest on them ceases to accrue. (d) A Security does not cease to be outstanding because the Company, the Guarantor, or an Affiliate of either of them holds the Security. (e) In determining whether the Holders of the requisite principal amount of outstanding Securities of any Series have given any request, demand, authorization, direction, notice, consent or waiver hereunder, or whether sufficient funds are available for redemption or for any other purpose, (i) the principal amount of an Original Issue Discount Security that shall be deemed to be outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the maturity thereof pursuant to Section 6.02; and (ii) the principal amount of any security denominated in a currency other than United States dollars that shall be deemed to be outstanding for such purposes shall be that amount of United States dollars that could be obtained for such amount on such reasonable basis of exchange and as of the record date for such determination or action (or, if there shall be no applicable record date, such other date reasonably proximate to the date of such determination or action), in each case, as the Company shall specify in a written notice to the Trustee. Section 2.11 TREASURY SECURITIES. In determining whether the Holders of the requisite principal amount of Securities of any Series have concurred in any direction, waiver, or consent, Securities of such Series owned by the Company, the Guarantor, or an Affiliate of either of them shall be disregarded, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver, or consent, only Securities of such Series which the Trustee knows are so owned shall be so disregarded. Section 2.12 TEMPORARY SECURITIES. (a) Until definitive Registered Securities of any Series are ready for delivery, the Company may prepare and execute and the Trustee shall authenticate temporary Registered Securities of such Series having duly executed Guarantees endorsed 14 thereon. Temporary Registered Securities of any Series shall be substantially in the form of definitive Registered Securities of such Series but may have variations that the Company and the Guarantor considers appropriate for temporary Securities. Every temporary Registered Security shall be executed by the Company, authenticated by the Trustee, and registered by the Registrar, upon the same conditions, and with like effect, as a definitive Registered Security. Without unreasonable delay, the Company and the Guarantor shall prepare and the Trustee shall authenticate definitive Registered Securities of the same Series and containing identical terms and provisions in exchange for temporary Registered Securities. (b) Until definitive Unregistered Securities of any Series are ready for delivery, the Company may prepare and execute and the Trustee shall authenticate one or more temporary Unregistered Securities, which may have coupons attached or which may be in the form of a single temporary global Unregistered Security of that Series. The temporary Unregistered Security or Securities of any Series shall be substantially in the form approved by or pursuant to a Board Resolution and shall be delivered to one of the Paying Agents located outside the United States and its possessions or to such other person or persons as the Company shall direct against such certification as the Company may from time to time prescribe by or pursuant to a Board Resolution. The temporary Unregistered Security or Securities of a Series shall be executed by the Company and the Guarantor and authenticated by the Trustee, upon the same conditions, and with like effect, as a definitive Unregistered Security of such Series, except as provided herein or therein. A temporary Unregistered Security or Securities shall be exchangeable for definitive Unregistered Securities containing identical terms and provisions at the time and on the conditions, if any, specified in the temporary Security. Upon any exchange of a part of a temporary Unregistered Security of a Series for definitive Unregistered Securities of such Series, the temporary Unregistered Security shall be endorsed by the Trustee or Paying Agent to reflect the reduction of its principal amount by an amount equal to the aggregate principal amount of definitive Unregistered Securities of such Series so exchanged and endorsed. Section 2.13 CANCELLATION. The Company or the Guarantor at any time may deliver Securities and coupons to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities and coupons surrendered to them for registration of transfer, or for exchange, or for payment. Except as otherwise required by this Indenture, the Trustee shall cancel all Securities and coupons surrendered for registration of transfer, or for exchange, payment, or cancellation and will dispose of canceled Securities and coupons as the Company directs; provided, however, that any Unregistered Securities of a Series delivered to the Trustee for exchange prior to maturity shall be retained by the Trustee for reissue as provided herein or in the Securities of such Series. The Company may not issue new Securities to replace Securities that it has paid or delivered to the Trustee for cancellation. 15 Section 2.14 DEFAULTED INTEREST. If the Company or the Guarantor defaults on a payment of interest on a Series of Securities, either of them shall pay the defaulted interest as provided in such Securities or in any lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed. Section 2.15 GLOBAL SECURITIES. (a) If the Company shall establish pursuant to Section 2.01 that the Securities of a particular Series are to be issued as a Global Security, then the Company shall execute and the Trustee shall, in accordance with Section 2.03, authenticate and deliver, a Global Security that (i) shall represent, and shall be denominated in an amount equal to the aggregate principal amount of, all of the outstanding Securities of such Series, (ii) shall be registered in the name of the Depositary or its nominee, (iii) shall be delivered by the Trustee to the Depositary or pursuant to the Depositary's instruction and (iv) shall bear a legend substantially to the following effect: "Except as otherwise provided in Section 2.15 of the Indenture, this Security may be transferred, in whole but not in part, only to another nominee of the Depositary or to a successor Depositary or to a nominee of such successor Depositary." (b) Notwithstanding the provisions of Section 2.08, the Global Security of a Series may be transferred, in whole but not in part and in the manner provided in Section 2.08, only to another nominee of the Depositary for such Series, or to a successor Depositary for such Series selected or approved by the Company or to a nominee of such successor Depositary. (c) If at any time the Depositary for a Series of the Securities notifies the Company that it is unwilling or unable to continue as Depositary for such Series or if at any time the Depositary for such Series shall no longer be registered or in good standing under the Exchange Act, or other applicable statute or regulation, and a successor Depositary for such Series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such condition, as the case may be, this Section 2.15 shall no longer be applicable to the Securities of such Series and the Company will execute, and subject to Section 2.08, the Trustee will authenticate and deliver the Securities of such Series, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Security of such Series in exchange for such Global Security. In addition, the Company may at any time determine that the Securities of any Series shall no longer be represented by a Global Security and that the provisions of this Section 2.15 shall no longer apply to the Securities of such Series. In such event the Company will execute and subject to Section 2.08, the Trustee, upon receipt of an Officers' Certificate evidencing such determination by the Company, will authenticate and deliver the Securities of such Series, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Security of such Series in exchange for such Global Security. Upon the exchange of the Global Security for such Securities in authorized denominations, the Global Security shall be 16 canceled by the Trustee. Such Securities issued in exchange for the Global Security pursuant to this Section 2.15(c) shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Securities to the Depositary for delivery to he Persons in whose names such Securities are so registered. Section 2.16 UNCONDITIONAL GUARANTEE. (Form of Guarantee) FOR VALUE RECEIVED, the Guarantor, hereby unconditionally guarantees to the Holder of the Security upon which this Guarantee is endorsed the due and punctual payment of the principal of, sinking funds payment, if any, premium, if any, or interest on said Security, when and as the same shall be become due and payable, whether at maturity, upon redemption or otherwise, according to the terms thereof and of the Indenture referred to therein. The Guarantor agrees to determine, at least one business day prior to the date upon which a payment of principal of, sinking fund payment, if any, premium, if any, or interest on said Security is due and payable, whether the Company has available the funds to make such payment as the same shall become due and payable. In case of the failure of the Company punctually to pay any such principal, sinking fund payment, if any, premium, if any, or interest, the Guarantor hereby agrees to cause any such payment to be made punctually when and as the same shall become due and payable, whether at maturity, upon redemption, or otherwise, and as if such payment were made by the Company. The Guarantor hereby agrees that its obligations hereunder shall be unconditional, irrevocable, and absolute, irrespective of the validity, regularity, or enforceability of said Security or said Indenture, the absence of any action to enforce the same, any waiver or consent by the Holder of said Security with respect to any provisions thereof, the recovery of any judgment against the Company or any action to enforce the same, or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to said Security or indebtedness evidenced thereby, and all demands whatsoever and covenants that this Guarantee will not be discharged except by complete performance of the obligations contained in said Security and in this Guarantee. The Guarantor shall be subrogated to all rights of the Holder of said Security against the Company in respect to any amounts paid by the Guarantor pursuant to the provisions of this Guarantee; provided, however, that the Guarantor shall not, without the consent of the Holders of all of the Securities then outstanding, be entitled to enforce or to receive any payments arising out of or based upon such right of subrogation until the principal of and premium, if any, and interest on all Securities shall have been paid in full or payment thereof shall have been provided for in accordance with said 17 Indenture. Notwithstanding anything to the contrary contained herein, if following any payment of principal or interest by the Company on the Securities to the Holders of the Securities it is determined by a final decision of a court of competent jurisdiction that such payment shall be avoided by a trustee in bankruptcy (including any debtor-in-possession) as a preference under 11 U.S.C. Section 547 and such payment is paid by such Holder to such trustee in bankruptcy, then and to the extent of such repayment the obligations of the Guarantor hereunder shall remain in full force and effect. This Guarantee shall not be valid or become obligatory for any purpose with respect to a Security until a certificate of authentication on such Security shall have been signed by the Trustee (or the authenticating agent). This Guarantee shall be governed by the laws of the State of New York. IN WITNESS WHEREOF, U S WEST, Inc. has caused this Guarantee to be signed in its corporate name by the facsimile signature of two of its officers thereunto duly authorized and has caused a facsimile of its corporate seal to be affixed hereto or imprinted or otherwise reproduced hereon. Section 2.17 EXECUTION OF GUARANTEES. To evidence the Guarantee to the Securityholders specified in Section 2.16, the Guarantor hereby agrees to execute the Guarantees, in substantially the form above recited, to be endorsed on each Security authenticated and delivered by the Trustee (or the authentication agent). Each such Guarantee shall be signed on behalf of the Guarantor as set forth in Section 2.03 prior to the authentication of the Security on which it is endorsed, and the delivery of such Security by the Trustee (or the authenticating agent), after the authentication thereof hereunder, shall constitute due delivery of such Guarantee on behalf of the Guarantor. Section 2.18 ASSUMPTION BY GUARANTOR. (a) The Guarantor may, without the consent of the Securityholders, assume all of the rights and obligations of the Company hereunder with respect to a Series of Securities and under the Securities of such Series if, after giving effect to such assumption, no Default or Event of Default shall have occurred and be continuing. Upon such an assumption, the Guarantor shall execute a supplemental indenture evidencing its assumption of all such rights and obligations of the Company and the Company shall be released from its liabilities hereunder and under such Securities as obligor on the Securities of such Series. (b) The Guarantor shall assume all of the rights and obligations of the Company hereunder with respect to a Series of Securities and under the Securities of such Series if, upon a default by the Company in the due and punctual payment of the principal, sinking fund payment, if any, premium, if any, or interest on such Securities, 18 the Guarantor is prevented by any court order or judicial proceeding from fulfilling its obligations under Section 2.15 with respect to such Series of Securities. Such assumption shall result in the Securities of such Series becoming the direct obligations of the Guarantor and shall be effected without the consent of the Holders of the Securities of any Series. Upon such an assumption, the Guarantor shall execute a supplemental indenture evidencing its assumption of all such rights and obligations of the Company, and the Company shall be released from its liabilities hereunder and under such Securities as obligor on the Securities of such Series. ARTICLE 3. REDEMPTION Section 3.01 NOTICE TO THE TRUSTEE. The Company may, with respect to any Series of Securities, reserve the right to redeem and pay the Series of Securities or any part thereof, or may covenant to redeem and pay the Series of Securities or any part thereof, before maturity at such time and on such terms as provided for in such Securities. The election of the Company to redeem any Securities shall be evidenced by a Company Order. In case of any redemption at the election of the Company of all or less than all of the Securities of any Series with the same issue date, interest rate, and stated maturity, the Company shall, at least 60 days prior to the redemption date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such redemption date and of the principal amount and redemption price of Securities of such Series to be redeemed. Section 3.02 SELECTION OF SECURITIES TO BE REDEEMED. If less than all the Securities of any Series with the same issue date, interest rate, and stated maturity are to be redeemed, the particular Securities to be redeemed shall be selected, not more than 60 days prior to the redemption date, by the Trustee from the outstanding Securities of such Series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions of the principal amount of Securities of such Series; provided, however, that no such partial redemption shall reduce the portion of the principal amount of a Security of such Series not redeemed to less than the minimum denomination for a Security of that Series established pursuant to Section 2.02. The Trustee shall promptly notify the Company in writing of the Securities selected for redemption by it and, in the case of any Securities selected for partial redemption, the amount thereof to be redeemed. Section 3.03 NOTICE OF REDEMPTION. (a) At least 30 days, but not more than 90 days before a redemption date, unless a shorter period is specified in the Securities to be redeemed, the Company shall mail a notice of redemption by first-class mail to each Holder of Registered Securities that are to be redeemed. 19 (b) If Unregistered Securities are to be redeemed, notice of redemption shall be published in an Authorized Newspaper in each of The City of New York, London, and, if such Securities to be redeemed are listed on the Luxembourg Stock Exchange, Luxembourg once in each of four successive calendar weeks, the first publication to be not less than 30 nor more than 90 days before the redemption date. (c) All notices shall identify the Series of Securities to be redeemed and shall state: (1) the redemption date; (2) the redemption price; (3) if less than all the outstanding Securities of a Series are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Securities to be redeemed; (4) the name and address of the Paying Agent; (5) that Securities of the Series called for redemption and all unmatured coupons, if any, appertaining thereto must be surrendered to the Paying Agent to collect the redemption price; and (6) that interest on Securities of the Series called for redemption ceases to accrue on and after the redemption date. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at its expense. If the Company gives the notice of redemption, the Company shall promptly provide the Trustee with evidence satisfactory to the Trustee of its compliance with the notice requirements of this section. Section 3.04 EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed or published, Securities of a Series called for redemption become due and payable on the redemption date and from and after such date (unless the Company shall default in the payment of the redemption price) such Securities shall cease to bear interest. Upon surrender to the Paying Agent of such Securities together with all unmatured coupons, if any, appertaining thereto, such Securities shall be paid at the redemption price plus accrued interest to the redemption date, but installments of interest due on or prior to the redemption date will be payable, in the case of Unregistered Securities, to the bearers of the coupons for such interest upon surrender thereof, and, in the case of Registered Securities, to the Holders of such Securities of record at the close of business on the relevant record dates. 20 Section 3.05 DEPOSIT OF REDEMPTION PRICE. On or before the redemption date, the Company shall deposit with the Trustee or the Paying Agent money sufficient to pay the redemption price of and (unless the redemption date shall be an interest payment date) interest accrued to the redemption date on all Securities to be redeemed on that date. Section 3.06 SECURITIES REDEEMED IN PART. Upon surrender of a Security that is redeemed in part, the Company shall issue and the Trustee or the authenticating agent shall authenticate for the Holder of that Security a new Security or Securities of the same Series, the same form, and the same maturity in authorized denominations equal in aggregate principal amount to the unredeemed portion of the Security surrendered and having endorsed thereon a duly executed Guarantee. ARTICLE 4. COVENANTS Section 4.01 PAYMENT OF SECURITIES. (a) The Company shall pay the principal of and interest on the Securities on the dates and in the manner provided herein and in the Securities. An installment of principal or interest shall be considered paid on the date it is due if the Trustee or Paying Agent holds on that date money designated for and sufficient to pay the installment. (b) The Company shall pay interest on overdue principal of a Security of any Series at the rate of interest (or Yield to Maturity in the case of Original Issue Discount Securities) borne by such Security of that Series; to the extent lawful, it shall pay interest on overdue installments of interest at the same rate. Section 4.02 REPORTS BY THE GUARANTOR. The Guarantor covenants: (a) To file with the Trustee, within 15 days after the Guarantor is required to file the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Guarantor may be required to file with the SEC pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended, or, if the Guarantor is not required to file information, documents or reports pursuant to either of such sections, to file with the Trustee and the SEC, in accordance with rules and regulations prescribed from time to time by the SEC, such of the supplementary and periodic information, documents, and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, in respect of a security listed and registered on a national securities 21 exchange as may be prescribed from time to time in such rules and regulations; (b) to file with the Trustee and the SEC, in accordance with the TIA or the rules and regulations prescribed from time to time by the SEC, such additional information, documents, and reports with respect to compliance by the Guarantor with the conditions and covenants provided for in this Indenture as may be required from time to time by the TIA or such rules and regulations; and (c) to transmit by mail to all Holders of Registered Securities, as the names and addresses of such Holders appear on the register for each Series of Securities, and to such Holders of Unregistered Securities as have, within the two years preceding such transmission, filed their names and addresses with the Trustee for that purpose, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Guarantor pursuant to subsections (a) and (b) of this Section 4.02 as may be required by rules and regulations prescribed from time to time by the SEC. Section 4.03 LIEN ON ASSETS. If at any time the Company mortgages, pledges or otherwise subjects to any lien the whole or any part of any property or assets now owned or hereafter acquired by it, except as hereinafter provided in this Section 4.03, the Company will secure the outstanding Securities, and any other obligations of the Company which may then be outstanding and entitled to the benefit of a covenant similar in effect to this covenant, equally and ratably with the indebtedness or obligations secured by such mortgage, pledge, or lien, for as long as any such indebtedness or obligation is so secured. The foregoing covenant does not apply (i) to the creation, extension, renewal or refunding of (a) mortgages or liens created or existing at the time property is acquired, (b) mortgages or liens created within 180 days thereafter, or (c) mortgages or liens for the purpose of securing the cost of construction or improvement of property; or (ii) to the making of any deposit or pledge to secure public or statutory obligations or with any governmental agency at any time required by law in order to qualify the Company to conduct its business or any part thereof in order to entitle it to maintain self-insurance or to obtain the benefits of any law relating to workmen's compensation, unemployment insurance, old age pensions or other social security, or with any court, board, commission, or governmental agency as security incident to the proper conduct of any proceeding before it. Nothing contained in this Indenture prevents any entity other than the Company from mortgaging, pledging, or subjecting to any lien any of its property or assets, whether or not acquired from the Company or the Guarantor. ARTICLE 5. SUCCESSOR CORPORATION Section 5.01 WHEN THE COMPANY MAY MERGE, ETC. The Company may consolidate with, or merge into, or be merged into, or transfer or lease its properties and assets substantially as an entirety to, any person 22 provided (i) that the person is a corporation which assumes by supplemental indenture all the obligations of the Company under the Securities and any coupons appertaining thereto and under this Indenture; and (ii) that after giving effect thereto, no Default or Event of Default shall have occurred and be continuing. Thereafter, all such obligations of the Company shall terminate. Section 5.02 WHEN THE GUARANTOR MAY MERGE, ETC. The Guarantor may consolidate with, or merge into, or be merged into, or transfer or lease its properties and assets substantially as an entirety to, any person provided (i) that the person is a corporation which assumes by supplemental indenture all the obligations of the Guarantor under the Guarantees and under this Indenture; and (ii) that after giving effect thereto, no Default or Event of Default shall have occurred and be continuing. Thereafter, all such obligations of the Guarantor shall terminate. ARTICLE 6. DEFAULTS AND REMEDIES Section 6.01 EVENTS OF DEFAULT. An "Event of Default" occurs with respect to the Securities of any Series if: (1) the Company or the Guarantor default in the payment of interest on any Security of that Series when the same becomes due and payable and the Default continues for a period of 90 days; (2) the Company or the Guarantor default in the payment of the principal of any Security of that Series when the same becomes due and payable at maturity, upon redemption, or otherwise; (3) the Company or the Guarantor fail to comply with any of its other agreements in the Securities of that Series, in this Indenture, or in any supplemental indenture under which the Securities of that Series may have been issued, and the Default continues for the period and after the notice specified below; (4) the Company or the Guarantor, pursuant to or within the meaning of any Bankruptcy Law: (a) commence a voluntary case, (b) consent to the entry of an order for relief against it in an involuntary case, (c) consent to the appointment of a Custodian of it or for all or substantially all of its property, or 23 (d) make a general assignment for the benefit of its creditors; or (5) a court of competent jurisdiction enters an order under any Bankruptcy Law that: (a) is for relief against the Company or the Guarantor in an involuntary case, (b) appoints a Custodian of the Company or the Guarantor, or for all or substantially all of its property, or (c) orders the liquidation of the Company or the Guarantor, and the order or decree remains unstayed and in effect for 90 days. The term "Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator, or similar official under any Bankruptcy Law. A Default under clause (3) is not an Event of Default until the Trustee or the Holders of at least 25% in principal amount of all the outstanding Securities of that Series notify the Company or the Guarantor (and the Trustee in the case of notification by such Holders) of the Default and the Company or the Guarantor, as the case may be, does not cure the Default within 90 days after receipt of the notice. The notice must specify the Default, demand that it be remedied, and state that the notice is a "Notice of Default." Section 6.02 ACCELERATION. If an Event of Default occurs with respect to the Securities of any Series and is continuing, the Trustee, by notice to the Company and the Guarantor, or the Holders of at least 25% in principal amount of all of the outstanding Securities of that Series, by notice to the Company, the Guarantor, and the Trustee, may declare the principal (or, if the Securities of that Series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of that Series) of all the Securities of that Series to be due and payable. Upon such declaration, such principal (or, in the case of Original Issue Discount Securities, such specified amount) shall be due and payable immediately. The Holders of a majority in principal amount of all of the Securities of that Series, by notice to the Trustee, may rescind such a declaration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration. Section 6.03 OTHER REMEDIES AVAILABLE TO TRUSTEE. (a) If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Securities of the Series that is in default or to enforce the performance of any provision of 24 the Securities of that Series or this Indenture. (b) The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. Section 6.04 WAIVER OF EXISTING DEFAULTS. The Holders of a majority in principal amount of any Series of Securities by notice to the Trustee may waive an existing Default with respect to that Series and its consequences, except a Default in the payment of the principal of or interest on any Security. Section 6.05 CONTROL BY MAJORITY. The Holders of a majority in principal amount of the Securities of each Series affected (with each such Series voting as a class) may direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or that would involve the Trustee in personal liability. Section 6.06 LIMITATION ON SUITS BY SECURITYHOLDERS. A Securityholder may pursue a remedy with respect to this Indenture or the Securities of any Series only if: (1) the Holder gives to the Trustee written notice of a continuing Event of Default; (2) the Holders of at least 25% in principal amount of the Securities of that Series make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee indemnity satisfactory to the Trustee against any loss, liability, or expense to be, or which may be, incurred by the Trustee in pursuing the remedy; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and (5) during such 60 day period, the Holders of a majority in principal amount of the Securities of that Series do not give the Trustee a direction inconsistent with the request. 25 A Securityholder of any Series may not use this Indenture to prejudice the rights of another Securityholder of that Series or any other Series or to obtain a preference or priority over another Securityholder of that Series or any other Series. Section 6.07 RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, the right of any Holder of a Security to receive payment or principal of and interest on the Security, on or after the respective due dates expressed in the Security, and the right of any Holder of a coupon to receive payment of interest due as provided in such coupon, or to bring suit for the enforcement of any such payment, on or after such respective dates, shall not be impaired or affected without the consent of such Holder. Section 6.08 COLLECTION SUITS BY TRUSTEE. If a Default specified in Section 6.01(1) or (2) occurs and continues for the period specified therein, if any, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or the Guarantor for the whole amount of such principal and interest then in default. Section 6.09 TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Securityholders allowed in any judicial proceedings relating to the Company, the Guarantor or their creditors or property. Section 6.10. PRIORITIES. If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order: FIRST: to the Trustee for amounts due under Section 7.07; SECOND: to Holders of Securities in respect of which or for the benefit of which such money has been collected for amounts due and unpaid on such Securities for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and interest, respectively; and THIRD: to the person or persons lawfully entitled thereto, or as a court of competent jurisdiction may direct. The Trustee may fix a record date (with respect to Registered Securities) and payment date for any such payment to Holders of Securities. Any such record date shall not be less than 10 days nor more than 60 days 26 prior to the applicable payment date. Section 6.11. UNDERTAKING FOR COSTS. If any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable attorneys' fees against any party litigant in this suit having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07, or a suit by Holders of more than 10% in principal amount of the Securities of any Series. ARTICLE 7. TRUSTEE Section 7.01 DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise its rights, duties and powers under this Indenture and use the same degree of care and skill in their exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (1) The Trustee need perform only those duties that are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon notices, certificates, opinions or other documents furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the notices, certificates, opinions or other documents to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) This paragraph does not limit the effect of paragraph (b) of this Section; (2) The Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and 27 (3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Sections 6.04 and 6.05. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraph (a), (b), and (c) of this Section. (e) The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against any loss, liability, or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree with the Company or the Guarantor. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 7.02 RIGHTS OF TRUSTEE. (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may consult with counsel or require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on a Board Resolution, the written advice of counsel acceptable to the Company, the Guarantor, and the Trustee, a certificate of an Officer or Officers delivered pursuant to Section 2.02(b), an Officers' Certificate, or an Opinion of Counsel. (c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers. (e) Except as otherwise provided in Section 7.01, the Trustee shall not be liable for any action or omission of any Agent which is not the Trustee. Section 7.03 INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company, or one of its Affiliates with the same rights it would have if it were not Trustee, subject to Sections 7.10 and 7.11. Any Agent may do the same with like rights. Section 7.04 TRUSTEE'S DISCLAIMER. 28 The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities or the Guarantees. It shall not be accountable for the Company's use of the proceeds from the Securities or for monies paid over to the Company or by the Company to any Holders or to any Paying Agent pursuant to the Indenture, and it shall not be responsible for any statement in the Securities other than its certificate of authentication. Section 7.05 NOTICE OF DEFAULTS. If a Default occurs and is continuing with respect to the Securities of any Series and if it is known to the Trustee, the Trustee shall mail to each Holder of a Security of that Series entitled to receive reports pursuant to Section 4.02(c) (and, if Unregistered Securities of that Series are outstanding, shall cause to be published at least once in an Authorized Newspaper in each of The City of New York, London, and, if Securities of that Series are listed on The Luxembourg Stock Exchange, Luxembourg) notice of the Default within 90 days after it occurs. Except in the case of a Default in payment on the Securities of any Series, the Trustee may withhold the notice if and so long as its Corporate Trust Committee or a committee of its Responsible Officers in good faith determines that withholding such notice is in the interests of Securityholders of that Series. Section 7.06 REPORTS BY TRUSTEE TO HOLDERS. (a) Within 60 days after each anniversary date of the first issue of a Series of Securities, the Trustee shall mail to each Securityholder of that Series entitled to receive reports pursuant to Section 4.02(c) a brief report dated as of such date that complies with TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b). (b) At the time that it mails such a report to Securityholders of any Series, the Trustee shall file a copy of that report with the SEC and with each stock exchange on which the Securities of that Series are listed. The Company shall provide written notice to the Trustee when the Securities of any Series are listed on any stock exchange. Section 7.07 COMPENSATION AND INDEMNITY. (a) The Company and the Guarantor shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company and the Guarantor shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred by it in connection with the performance of its duties under this Indenture. Such expenses shall include the reasonable compensation and expenses of the Trustee's agents and counsel. (b) The Company and the Guarantor shall indemnify the Trustee against any loss or liability incurred by it arising out of or in connection with its acceptance or administration of the trust or trusts hereunder. The Trustee shall notify the Company and 29 the Guarantor promptly of any claim for which it may seek indemnity. The Company and the Guarantor shall defend the claim, and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company and the Guarantor shall pay the reasonable fees and expenses of such counsel. Neither the Company nor the Guarantor need pay for any settlement made without its consent. (c) Neither the Company nor the Guarantor need reimburse any expense or indemnify against any loss of liability incurred by the Trustee through negligence or bad faith. (d) To secure the payment obligations of the Company and the Guarantor pursuant to this Section, the Trustee shall have a lien prior to the Securities of any Series on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Securities of a Series. (e) If the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(4) or (5) occurs, such expenses and the compensation for such services are intended to constitute expenses of administration under any Bankruptcy Law. Section 7.08 REPLACEMENT OF TRUSTEE. (a) The resignation or removal of the Trustee and the appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section. (b) The Trustee may resign with respect to the Securities of any Series by so notifying the Company and the Guarantor. The Holders of a majority in principal amount of the Securities of any Series may remove the Trustee with respect to that Series by so notifying the Trustee, the Company, and the Guarantor and may appoint a successor Trustee for such Series with the Company's and the consent of the Guarantor. (c) The Company and the Guarantor may remove the Trustee with respect to Securities of any Series if: (1) the Trustee fails to comply with Section 7.10; (2) the Trustee is adjudged a bankrupt or an insolvent; (3) a receiver or public officer takes charge of the Trustee or its property; or (4) the Trustee becomes incapable of acting. In addition, the Company and the Guarantor may remove the Trustee with respect to Securities of any Series without cause if the Company and the Guarantor give written notice to the Trustee of such proposed removal at least six months in advance of 30 the proposed effective date of such removal; provided, however, that such removal shall not become effective if a Default exists on the date of the giving of such notice or occurs prior to the date such removal is scheduled to become effective. (d) If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, with respect to Securities of any Series, the Company and the Guarantor shall promptly appoint a successor Trustee for such Series. (e) If a successor Trustee with respect to the Securities of any Series does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, the Guarantor, or the Holders of a majority in principal amount of the Securities of the applicable Series may petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) If the Trustee with respect to the Securities of any Series fails to comply with Section 7.10, any Securityholder of the applicable Series may petition any court of competent jurisdiction for the removal of such Trustee and the appointment of a successor Trustee. (g) A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee, the Guarantor, and the Company. Thereupon, the resignation or removal of the retiring Trustee for any Series of Securities shall become effective, and the successor Trustee shall have all the rights, powers, and duties of the retiring Trustee with respect to all Series of Securities for which the successor Trustee is to be acting as Trustee under this Indenture. The retiring Trustee shall promptly transfer all property held by it as Trustee with respect to such Series of Securities to the successor Trustee subject to the lien provided for in Section 7.07. The Company shall give notice of each appointment of a successor Trustee for any Series of Securities by publishing notice of such event once in an Authorized Newspaper in each of The City of New York, London, and, if Securities of that Series are listed on The Luxembourg Stock Exchange, Luxembourg, and by mailing written notice of such event by first-class mail to the Holders of Securities of such Series entitled to receive reports pursuant to Section 4.02(c). (h) All provisions of this Section 7.08 except subparagraphs (c)(1) and (d) and the words "subject to the lien provided for in Section 7.07" in subparagraph (g) shall apply also to any Paying Agent located outside the U.S. and its possessions and required by Section 2.04. (i) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) Series, the Company, the Guarantor, the retiring Trustee, and such successor Trustee shall execute and deliver a supplemental indenture wherein such successor Trustee shall accept such appointment, and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, such successor Trustee all the rights, powers, trusts, and duties of the retiring Trustee with respect to the Securities of that or those Series to which the appointment of such successor Trustee relates; (2) if the retiring Trustee is not retiring 31 with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those Series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee; and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee. Section 7.09 SUCCESSOR TRUSTEE, AGENTS BY MERGER, ETC. If the Trustee or any Agent consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business assets to, another corporation, the successor corporation, without any further act, shall be the successor Trustee or Agent, as the case may be. Section 7.10. ELIGIBILITY; DISQUALIFICATION. This Indenture shall always have a Trustee with respect to each Series of Securities who satisfies the requirements of TIA Section 310(a)(1). The Trustee shall always have a combined capital and surplus of at least $10,000,000 as set forth in its most recent published annual report of condition. The Trustee is subject to TIA Section 310(b), including the optional provision permitted by the second sentence of TIA Section 310(b)(9), except that there shall be excluded from the operation of TIA Section 310(b)(1) each Series of Securities and all indentures of the Company, the Guarantor, or any of their Affiliates now or hereafter existing which may be excluded under the proviso of TIA Section 310(b)(1). Section 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY. The Trustee is subject to TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated. ARTICLE 8. DISCHARGE OF INDENTURE Section 8.01 TERMINATION OF THE COMPANY'S AND THE GUARANTOR'S OBLIGATIONS. (a) The Company and the Guarantor reserve the right to terminate all of their obligations under the Securities and this Indenture with respect to the Securities of any Series or any installment of principal and premium, if any, or interest on that Series if the Company and the Guarantor irrevocably deposits in trust with the Trustee money or U.S. Government Obligations sufficient to pay, when due, principal, premium, if any, and 32 interest on the Securities of that Series to maturity or redemption or such installment of principal and premium, if any, or interest, as the case may be, and if all other conditions set forth in the Securities of that Series are met. The Company or the Guarantor shall designate the installment or installments of principal or interest to be so satisfied. (b) However, the Company's and the Guarantor's obligations in Sections 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 4.01, 7.07, 7.08, 8.03 and 8.04 shall survive until the Securities are no longer outstanding. Thereafter, the Company's obligations in Sections 7.07, 8.03 and 8.04 shall survive. (c) Before or after a deposit, the Company or the Guarantor may make arrangements satisfactory to the Trustee for the redemption of Securities at a future date in accordance with Article 3. (d) After a deposit by the Company or the Guarantor in accordance with this Section in respect of the Securities of a Series, the Trustee upon request shall acknowledge in writing the discharge of the Company's and the Guarantor's obligations under the Securities of the Series in respect of which the deposit has been made and under this Indenture with respect to the Securities of that Series except for those surviving obligations specified above. (e) In order to have money available on a payment date to pay principal of and premium, if any, or interest on the Securities of any Series, the U.S. Government Obligations shall be payable as to principal of or interest on or before such payment date in such amounts as will provide the necessary money. U.S. Government Obligations shall not be callable at the issuer's option. (f) "U.S. Government Obligations" means: (i) direct obligations of the United States of America for the payment of which the full faith and credit of the United States of America is pledged; or (ii) obligations of a person controlled or supervised by and acting as an agency or instrumentality of the United States of America, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America. Section 8.02 APPLICATION OF TRUST MONEY. The Trustee shall hold money or U.S. Government Obligations deposited with it pursuant to Section 8.01. It shall apply the deposited money and the money from U.S. Governmental Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Securities of each Series in respect of which the deposit shall have been made. 33 Section 8.03 REPAYMENT TO THE COMPANY OR THE GUARANTOR. (a) Subject to the provisions of Section 7.07(d), the Trustee and the Paying Agent shall promptly pay to the Company or the Guarantor, as the case may be, upon request, any money or securities held by them at any time in excess of that required for the payment of principal, premium, if any, or interest on the Securities. (b) The Trustee and the Paying Agent shall promptly pay to the Company or the Guarantor, as the case may be, upon request, any money held by them for the payment of principal or interest that remains unclaimed for two years. After that, Securityholders entitled to the money must look to the Company and the Guarantor for payment as general creditors unless an abandoned property law designates another person. Upon payment to the Company, or the Guarantor, the Trustee and Paying Agent are released of any further obligation or liability with respect to the utilization of such moneys. Section 8.04 INDEMNITY FOR GOVERNMENT OBLIGATIONS. The Company and the Guarantor shall pay and shall indemnify the Trustee and each Securityholder of each Series in respect of which the deposit shall have been made against any tax, fee, or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such obligations. ARTICLE 9. AMENDMENTS AND WAIVERS Section 9.01 WITHOUT CONSENT OF HOLDERS. The Company, the Guarantor, and the Trustee may enter into one or more supplemental indentures without consent of any Securityholder for any of the following purposes: (1) to cure any ambiguity, defect, or inconsistency herein, in the Securities of any Series or in the Guarantees; (2) to comply with Article 5; (3) to provide for uncertificated Securities in addition to or in place of certificated Securities; (4) to add to the covenants of the Company and the Guarantor for the benefit of the Holders of all or any Series of Securities (and if such covenants are to be for the benefit of less than all Series of Securities, stating that such covenants are expressly being included solely for the benefit of such Series) or to surrender any right or power herein conferred upon the Company; (5) to add to, delete from, or revise the conditions, limitations, and 34 restrictions on the authorized amount, terms, or purposes of issue, authentication, and delivery of Securities, as herein set forth; (6) to secure the Securities pursuant to Section 4.03. (7) to make any change that does not adversely affect the rights of any Securityholder in any material respect; or (8) to provide for the issuance of and establish the form and terms and conditions of Securities of any Series and the Guarantees as provided in Section 2.02, to establish the form of any certifications required to be furnished pursuant to the terms of this Indenture or any Series of Securities, or to add to the rights of the Holders of any Series of Securities. Section 9.02 WITH CONSENT OF HOLDERS. (a) With the written consent of the Holders of a majority in principal amount of the outstanding Securities of each Series affected by such supplemental indenture (with each Series voting as a class), the Company, the Guarantor, and the Trustee may enter into a supplemental indenture to add any provisions to or to change or eliminate any provisions of this Indenture or of any supplemental indenture or to modify, in each case in any manner not covered by Section 9.01, the rights of the Securityholders of each such Series. The Holders of a majority in principal amount of the outstanding Securities of each Series affected by such waiver (with each Series voting as a class), by notice to the Trustee, may waive compliance by the Company or the Guarantor with any provision of this Indenture, any supplemental indenture, or the Securities of any such Series, except a Default in the payment of the principal of or interest on any Security. However, without the consent of each Securityholder affected, an amendment or waiver may not: (1) reduce the amount of Securities whose Holders must consent to an amendment or waiver; (2) change the rate of or change the time for payment of interest on any Security; (3) change the principal of or change the fixed maturity of any Security; (4) waive a Default in the payment of the principal of or interest on any Security; (5) make any Security payable in money other than that stated in the Security; or (6) make any change in Section 6.04, 6.07, or 9.02(a) (third sentence). 35 (b) It is not necessary under this Section 9.02 for the Securityholders to consent to the particular form of any proposed supplemental indenture, but it is sufficient if they consent to the substance thereof. (c) Promptly after the execution by the Company, the Guarantor, and the Trustee of any supplemental indenture pursuant to the provisions of this Section 9.02, the Company shall transmit by mail a notice, setting forth in general terms the substance of such supplemental indenture, to all Holders of Registered Securities, as the names and addresses of such Holders appear on the register for each Series of Securities, and to such Holders of Unregistered Securities as are entitled to receive reports pursuant to Section 4.02(c). Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. Section 9.03 COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to this Indenture or the Securities of one or more Series shall be set forth in a supplemental indenture that complies with the TIA as then in effect. Section 9.04 REVOCATION AND EFFECT OF CONSENTS. Until an amendment or waiver becomes effective, a consent to it by a Holder of a Security is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security even if a notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to his Security or portion of his Security if the Trustee receives a written notice of revocation before the date the amendment or waiver becomes effective. After an amendment or waiver becomes effective, it shall bind every Securityholder of each Series affected by such amendment or wavier. Section 9.05 NOTATION ON OR EXCHANGE OF SECURITIES. The Trustee shall place an appropriate notation about an amendment or waiver on any Security of any Series thereafter authenticated. The Company, in exchange for Securities of that Series may issue and the Trustee shall authenticate new Securities of that Series that reflect the amendment or waiver. Section 9.06 TRUSTEE PROTECTED. The Trustee need not sign any supplemental indenture that adversely affects its rights or obligations. 36 ARTICLE 10. SINKING FUNDS Section 10.01 APPLICABILITY OF ARTICLE. The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of a Series, except as otherwise permitted or required by any form of Security of such Series issued pursuant to this Indenture. The minimum amount of any sinking fund payment provided for by the terms of Securities of any Series is herein referred to as "mandatory sinking fund payment," and any payment in excess of such minimum amount provided for by the terms of Securities of such Series is herein referred to as an "optional sinking fund payment." If provided for by the terms of Securities of any Series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 10.02. Each sinking fund payment shall be applied to the redemption of Securities of any Series as provided for by the terms of Securities of such Series. Section 10.02 SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES. The Company may, in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such Series to be made pursuant to the terms of such Securities as provided for by the terms of such Series (1) deliver outstanding Securities of such Series (other than any of such Securities previously called for redemption or any of such Securities in respect of which cash shall have been released to the Company), and (2) apply as a credit Securities of such Series which have been redeemed either at the election of the Company pursuant to the terms of such Series of Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, provided that such Series of Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the redemption price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. If as a result of the delivery or credit of Securities of any Series in lieu of cash payments pursuant to this Section 10.02, the principal amount of Securities of such Series to be redeemed in order to exhaust the aforesaid cash payment shall be less than $500,000, the Trustee shall not call Securities of such Series for redemption, except upon Company Order, and such cash payment shall be held by the Trustee or a Paying Agent and applied to the next succeeding sinking fund payment, provided, however, that the Trustee or such Paying Agent shall at the request of the Company from time to time pay over and deliver to the Company any cash payment so being held by the Trustee or such Paying Agent upon delivery by the Company to the Trustee of Securities of that Series purchased by the Company having an unpaid principal amount equal to the cash payment required to be released to the Company. Section 10.03 REDEMPTION OF SECURITIES FOR SINKING FUND. 37 Not less than 60 days prior to each sinking fund payment date for any Series of Securities, the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuring mandatory sinking fund payment for that Series pursuant to the terms of that Series, the portion thereof, if any, which is to be satisfied by payment of cash, and the portion thereof, if any, which is to be satisfied by delivering and crediting of Securities of that Series pursuant to Section 10.02, and the optional amount, if any, to be added in cash to the next ensuing mandatory sinking fund payment, and will also deliver to the Trustee any Securities to be so credited and not theretofore delivered. If such Officers' Certificate shall specify an optional amount to be added in cash to the next ensuing mandatory sinking fund payment, the Company shall thereupon be obligated to pay the amount therein specified. Not less than 30 days before each such sinking fund payment date, the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 3.02 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 3.03. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 3.04, 3.05 and 3.06. ARTICLE 11. MISCELLANEOUS Section 11.01 TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or conflicts with a provision which is required to be included in this Indenture by the TIA, the required provision shall control. Section 11.02 NOTICES. (a) Any notice or communication by the Company, the Guarantor, or the Trustee is duly given if in writing and delivered in person or mailed by certified mail: if to the Company to: U S WEST Capital Funding, Inc. 1801 California Street Denver, Colorado 80202 Attention: Treasurer if to the Guarantor to: U S WEST, Inc. 1801 California Street Denver, Colorado 80202 Attention: Treasurer 38 if to the Trustee to: The First National Bank of Chicago One First National Plaza Suite 0126 Chicago, Illinois 60670-0126 Attention: Corporate Trust Services Division (b) The Company, the Guarantor, or the Trustee by notice to the others may designate additional or different addresses for subsequent notices or communications. (c) Any notice or communication to Holders of Securities entitled to receive reports pursuant to Section 4.02(c) shall be mailed by first-class mail to the addresses for Holders of Registered Securities shown on the register kept by the Registrar and to addresses filed with the Trustee for other Holders. Failure to so mail a notice or communication or any defect in such notice or communication shall not affect its sufficiency with respect to other Holders of Securities of that or any other Series entitled to receive notice. (d) If a notice of communication is mailed in the manner provided above within the time prescribed, it is conclusively presumed to have been duly given, whether or not the addressee receives it. (e) If the Company or the Guarantor mails a notice or communication to Securityholders, it shall mail a copy to the Trustee and to each Agent at the same time. (f) If it shall be impractical in the opinion of the Trustee, the Guarantor, or the Company to make any publication of any notice required hereby in an Authorized Newspaper, any publication or other notice in lieu thereof which is made or given with the approval of the Trustee shall constitute a sufficient publication of such notice. Section 11.03 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS. Securityholders of any Series may communicate pursuant to TIA Section 312(b) with other Securityholders of that Series or of all Series with respect to their rights under this Indenture or under the Securities of that Series or of all Series. The Company, the Guarantor, the Trustee, the Registrar, and anyone else shall have the protection of TIA Section 312(c). Section 11.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company or the Guarantor to the Trustee to take any action under this Indenture, the Company or the Guarantor shall furnish to the Trustee: (1) an Officers' Certificate stating that, in the opinion of the signers, all 39 conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. Section 11.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Section 11.06 RULES BY TRUSTEE AND AGENTS. The Trustee may make reasonable rules for action by or a meeting of Securityholders of one or more Series. The Paying Agent or Registrar may make reasonable rules and set reasonable requirements for its functions. Section 11.07 LEGAL HOLIDAYS. Except as may otherwise be provided in the form of Securities of any particular Series pursuant to the provisions of this Indenture, a "Legal Holiday" is a Saturday, Sunday, or a day on which banking institutions are not required to be open. If a payment date is a Legal Holiday at a place of payment, payment may be made at such place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. Section 11.08 GOVERNING LAW. The laws of the State of New York shall govern this Indenture, the Securities, and any coupons appertaining thereto. Section 11.09 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. 40 This Indenture may not be used to interpret another indenture, loan, or debt agreement of the Company or an Affiliate. No such indenture, loan, or debt agreement may be used to interpret this Indenture. Section 11.10. NO RECOURSE AGAINST OTHERS. No director, officer, employee, or stockholder, as such, of the Company or the Guarantor shall have any liability for any obligations of the Company or the Guarantor under the Securities or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Securityholder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. Section 11.11. EXECUTION IN COUNTERPARTS. This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one instrument. Section 11.12. CURRENCIES. Except as may otherwise be provided in the form of Securities of any particular Series pursuant to the provisions of this Indenture, all references in this Indenture or in the Securities to "dollars," "$," or any similar reference shall be to the currency of the United States of America. ARTICLE 12. REPAYMENT AT THE OPTION OF HOLDERS Section 12.01 APPLICABILITY OF ARTICLE. Securities of any Series which are repayable at the option of the Holders thereof before their stated maturity shall be repaid in accordance with the terms of the Securities of such Series. 41 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. U S WEST CAPITAL FUNDING, INC. By:__________________________________ Name:________________________________ Title: ______________________________ (SEAL) Attest:__________________________________ Name:_____________________________ Title:____________________________ U S WEST, INC. By:__________________________________ Name:________________________________ Title: ______________________________ (SEAL) Attest:__________________________________ Name:_____________________________ Title:____________________________ THE FIRST NATIONAL BANK OF CHICAGO, as Trustee By:__________________________________ Name:________________________________ Title: ______________________________ (SEAL) Attest:__________________________________ Name:_____________________________ Title:____________________________ 42 EX-5 5 EXHIBIT 5 EXHIBIT 5 May 6, 1998 U S WEST, Inc. U S WEST Capital Funding, Inc. 7800 East Orchard Road Englewood, Colorado 80111 Re: Public Offering of Debt Securities Gentlemen and Ladies: I have examined the Registration Statement on Form S-3 filed contemporaneously herewith (the "Registration Statement") by USW-C, Inc. (to be renamed "US WEST, Inc.") (the "Company") and U S WEST Capital Funding, Inc. (collectively, the "Registrants"), with the Securities and Exchange Commission (the "Commission") in connection with the registration under the Securities Act of 1933, as amended, of up to $3,500,000,000 of debt securities ("Debt Securities"). I have examined the form of Indenture to be entered into, by and among the Company, U S WEST Capital Funding, Inc., and First National Bank of Chicago, as Trustee, under which the Debt Securities are to be issued (the "Indenture"), and such other documents, certificates and matters of fact as I have deemed necessary for purposes of this opinion. I am familiar with the proceedings taken and proposed to be taken by the Registrants in connection with the proposed authorization, issue and sale of the Debt Securities. I am also familiar with the proposed opinion of legal counsel qualified to practice in New York concerning the validity, legality, and binding effect of the Debt Securities under New York law, upon which opinion I will rely in delivering my opinion pursuant to Section 6(b)(2) of the Distribution Agreement and Section 5(c) of the Underwriting Agreement, each of which has been filed as an exhibit to the Registration Statement. Based upon the foregoing, and in reliance thereon, it is my opinion that, subject to the receipt of payment for the Debt Securities and subject to the terms of the Debt Securities being otherwise in compliance with then applicable law, when the Debt Securities have been duly authorized, executed, authenticated and delivered in accordance with the terms of the applicable resolutions of the respective Boards of Directors of the Registrants, and any legally required consents, approvals, authorizations, and other orders of the Commission or any other judicial or regulatory authorities to be obtained, and, to the extent applicable, the articles or certificate of incorporation and bylaws of the registrants and the Indenture, the Debt Securities will constitute legally issued and binding obligations of the Company and/or U S WEST Capital Funding, Inc., except as may be limited by bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting creditors' rights generally, and except that the remedies of specific performance and injunctive and other forms of equitable relief are subject to certain equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement, and I further consent to the use of my name under the caption "Legal Opinions" in the Prospectus forming a part of the Registration Statement. Very truly yours, /s/ Thomas O. McGimpsey ----------------------- Thomas O. McGimpsey EX-12 6 EXHIBIT 12 EXHIBIT 12 USW-C, INC. RATIO OF EARNINGS TO FIXED CHARGES (DOLLARS IN MILLIONS)
Year Ended ----------------------------------------------------------------------------------------- Pro forma 12/31/97(3) 12/31/97(1) 12/31/96(1) 12/31/95(1) 12/31/94(1) 12/31/93(1)(2) ----------- ----------- ----------- ----------- ----------- -------------- Income before income taxes, extra- ordinary items and cumulative effect of change in accounting principle $ 2,190 $ 2,429 $ 2,377 $ 2,248 $ 2,214 $ 962 Interest expense (net of amounts capitalized) 644 405 448 429 381 415 Interest factor on rentals (1/3) 91 91 79 83 80 88 ----------- ----------- ----------- ----------- ----------- -------------- Earnings $ 2,925 $ 2,925 $ 2,904 $ 2,760 $ 2,675 $ 1,465 ----------- ----------- ----------- ----------- ----------- -------------- ----------- ----------- ----------- ----------- ----------- -------------- Interest expense $ 664 $ 425 $ 479 $ 468 $ 417 $ 415 Interest factor on rentals (1/3) 91 91 79 83 80 88 ----------- ----------- ----------- ----------- ----------- -------------- Fixed charges $ 755 $ 516 $ 558 $ 551 $ 497 $ 503 ----------- ----------- ----------- ----------- ----------- -------------- ----------- ----------- ----------- ----------- ----------- -------------- Ratio of earnings to fixed charges 3.87 5.67 5.20 5.01 5.38 2.91 ----------- ----------- ----------- ----------- ----------- -------------- ----------- ----------- ----------- ----------- ----------- --------------
- ---------------------------------------- (1) Historical ratios are based on the combined historical results of U S WEST and exclude the effects of $3.9 billion of indebtedness (the "Dex Indebtedness") which was refinanced by U S WEST in connection with the Dex Alignment (as previously defined in the Registration Statement). (2) 1993 ratio includes a one-time restructuring charge of $930 million. Excluding the restructuring charge, the ratio would have been 4.76. (3) Based on the unaudited Pro Forma combined results of U S WEST which gives effect to the refinancing by U S WEST of $3.9 billion of Dex Indebtedness in connection with the Dex Alignment. For further information please see U S WEST's Pro Forma financial statements included in Old U S WEST's Proxy Statement (as defined below) incorporated herein by reference. EX-23.A 7 EXHIBIT 23.A Exhibit 23-A CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our reports dated February 12, 1998 (except with respect to the matter discussed in Note 21 of the U S WEST, Inc. consolidated financial statements, as to which the date is April 6, 1998) on the consolidated financial statements, the consolidated financial statement schedule, and the Supplementary Selected Proportionate Results of Operations of U S WEST, Inc., included in U S WEST, Inc.'s Form 10-K, as amended on Form 10-K/A filed April 13, 1998, and the combined financial statements and combined financial statement schedule of USW-C, Inc. and the consolidated financial statements and the Supplementary Selected Proportionate Results of Operations of U S WEST, Inc. included in U S WEST, Inc.'s proxy statement on Schedule 14A filed April 20, 1998, respectively, all for the years ended December 31, 1997 and 1996, and to all references to our Firm included in this registration statement. /s/ Arthur Andersen LLP Denver, Colorado, May 6, 1998. EX-23.B 8 EXHIBIT 23.B Exhibit 23-B CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in this joint Registration Statement on Form S-3 of USW-C, Inc. and U S WEST Capital Funding, Inc. of our reports dated February 12, 1996 on our audits of the consolidated financial statements and financial statement schedule of U S WEST, Inc. for the year ended December 31, 1995, which reports are included in U S WEST, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1997, as amended by Form 10-K/A filed April 13, 1998 and of our report dated February 12, 1996 on our audit of the consolidated financial statements of U S WEST, Inc. for the year ended December 31, 1995, included in U S WEST Inc.'s Proxy Statement dated April 20, 1998. We consent to the incorporation by reference in this joint Registration Statement on Form S-3 of USW-C, Inc. and U S WEST Capital Funding, Inc. of our reports dated February 6, 1998, on our audit of the combined financial statements and combined financial statement schedule of New U S WEST for the year ended December 31, 1995, which report is included in U S WEST Inc.'s Proxy Statement dated April 20, 1998. We also consent to the reference to our firm under the caption "Experts". /s/ Coopers & Lybrand L.L.P. Denver, Colorado May 6, 1998 EX-24 9 EXHIBIT 24 Exhibit 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: WHEREAS, USW-C, Inc., a Delaware corporation (hereinafter referred to as the "Company"), proposes to file with the Securities and Exchange Commission, under the provisions of the Securities Act of 1933, as amended, a Registration Statement on Form S-3, (the "Registration Statement") for the registration of Guarantees of $3,500,000,000 of debt securities to be issued by U S WEST Capital Funding, Inc.; and WHEREAS, each of the undersigned is a Director and/or an Officer of the Company; NOW, THEREFORE, each of the undersigned constitutes and appoints STEPHEN E. BRILZ and THOMAS O. MCGIMPSEY, and each of them, as attorneys for him or her and in his or her name, place, and stead, and in his or her capacity as a Director or officer, or both, of the Company, to execute and file such Registration Statement, and thereafter to execute and file any amended registration statement or statements or supplements thereto, hereby giving and granting to said attorneys full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as he or she might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof. IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney this 6th day of May, 1998. /s/ SOLOMON D. TRUJILLO Director and Officer - ----------------------- Solomon D. Trujillo /s/ ALLAN R. SPIES Officer - ------------------ Allan R. Spies POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: WHEREAS, U S WEST Capital Funding, Inc., a Colorado corporation (hereinafter referred to as the "Company"), proposes to file with the Securities and Exchange Commission, under the provisions of the Securities Act of 1933, as amended, a Registration Statement on Form S-3, (the "Registration Statement") for the registration of $3,500,000,000 of debt securities to be issued by the Company; and WHEREAS, each of the undersigned is an Officer or Director, or both, of the Company as indicated below each signature; NOW, THEREFORE, each of the undersigned constitutes and appoints STEPHEN E. BRILZ and THOMAS 0. MCGIMPSEY as attorney for him and in his name, place, and stead, and in his capacity as an Officer or Director of the Company, to execute and file such Registration Statement, and thereafter to execute and file any amended registration statement or statements or supplements thereto, hereby giving and granting to said attorney full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as he might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorney may or shall lawfully do, or cause to be done, by virtue hereof. IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney this 6th day of May, 1998. /s/ ALLAN R. SPIES President and Director - ---------------------- Allan R. Spies /s/ SEAN P. FOLEY Vice-President, Treasurer and Director - ---------------------- Sean P. Foley /s/ OSCAR X. MUNOZ Vice President and Controller - ---------------------- Oscar X. Munoz /s/ MICHAEL P. GLINSKY Director - ---------------------- Michael P. Glinsky EX-25 10 EXHIBIT 25 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ___ --------------------------------- THE FIRST NATIONAL BANK OF CHICAGO (EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER) A NATIONAL BANKING ASSOCIATION 36-0899825 (I.R.S. EMPLOYER IDENTIFICATION NUMBER) ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) THE FIRST NATIONAL BANK OF CHICAGO ONE FIRST NATIONAL PLAZA, SUITE 0286 CHICAGO, ILLINOIS 60670-0286 ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919 (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE) --------------------------------- U S WEST CAPITAL FUNDING, INC. (EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARACTER) COLORADO 84-1028672 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 7800 EAST ORCHARD ROAD ENGLEWOOD, COLORAD 80111 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) --------------------------------- USW-C, INC. (TO BE RENAMED "U S WEST, INC.") (EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARACTER) DELAWARE 0953188 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 7800 EAST ORCHARD ROAD ENGLEWOOD, COLORADO 80111 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) DEBT SECURITIES GUARANTEE OF DEBT SECURITIES OF U S WEST CAPITAL FUNDING, INC., BY U S WEST, INC. (TITLE OF INDENTURE SECURITIES) 2 ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. Comptroller of the Currency, Washington, D.C.; Federal Deposit Insurance Corporation, Washington, D.C.; and The Board of Governors of the Federal Reserve System, Washington D.C.. (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. No such affiliation exists with the trustee. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF ELIGIBILITY. 1. A copy of the articles of association of the trustee now in effect. 2. A copy of the certificates of authority of the trustee to commence business. 3. A copy of the authorization of the trustee to exercise corporate trust powers. 4. A copy of the existing by-laws of the trustee. 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 3 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not Applicable. 9. Not Applicable. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, The First National Bank of Chicago, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and State of Illinois, on the 24th day of April, 1998. THE FIRST NATIONAL BANK OF CHICAGO, TRUSTEE BY /s/ STEVEN M. WAGNER ------------------------------------------- STEVEN M. WAGNER FIRST VICE PRESIDENT 4 EXHIBIT 1 A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE NOW IN EFFECT ARTICLES OF ASSOCIATION OF THE FIRST NATIONAL BANK OF CHICAGO (Corrected To July 12, 1996) FIRST. The title of this Association, organized for the purpose of carrying on the business of banking under the laws of the United States, shall be "The First National Bank of Chicago". SECOND. The main office of this Association shall be in Chicago, County of Cook, State of Illinois. The business of the Association shall be conducted at its main office and its branches. THIRD. The Board of Directors of this Association shall consist of not less than five nor more than twenty-five persons, the exact number of directors within such minimum and maximum limits to be fixed and determined from time to time by resolution of a majority of the full Board of Directors or by resolution of the shareholders at any annual or special meeting thereof. Any vacancy in the Board of Directors may be filled by action of a majority of the remaining directors between meetings of shareholders. The Board of Directors, by the vote of a majority of the full Board, may, between meetings of shareholders, increase the membership of the Board within such maximum limit by not more than four members if the number of directors last elected by shareholders was 16 or more and by not more than two members if the number of directors last elected by shareholders was 15 or less. FOURTH. The regular annual meeting of the shareholders of this Association shall be held at its main banking house, or other convenient place duly authorized by the Board of Directors, on such day of each year as is specified therefor in the by-laws. FIFTH. The amount of authorized capital stock of this Association shall be Five Hundred Twenty-Five Million Eight Hundred Fifty-Eight Thousand Two Hundred Dollars ($525,858,200) divided into 26,292,910 shares of common stock of the par value per share of Twenty Dollars ($20); but said capital stock may be increased or decreased from time to time, in accordance with the provisions of the laws of the United States. In the event of any such increase in the capital stock of this Association by the sale of additional shares or the distribution of additional shares as a stock dividend, each shareholder of this Association (unless otherwise provided by the shareholders' vote or votes authorizing the increase) shall be entitled, in proportion to the number of shares of said capital stock owned by him before such increase, to proportionate rights in respect of such additional shares as follows: (1) to the extent that such shareholder's proportionate right in respect of such additional shares shall embrace one or more whole shares of such additional shares, to receive (a) in the case of a sale, a transferable warrant entitling the holder to subscribe, within the specified subscription period, for such one or more whole shares of such additional shares Page 5 or (b) in the case of a stock dividend, a certificate evidencing such one or more whole shares of such additional shares; and (2) to the extent that such shareholder's proportionate right in respect of such additional shares shall embrace a fraction of a share, to receive (a) in the case of a sale, a fractional subscription warrant, conditioned that it shall be void unless, within the specified subscription period, it is combined with other such fractional subscription warrants in the aggregate entitling the holder thereof to subscribe for a whole share or whole shares of such additional shares and such subscription is completed by such holder of such combined fractional warrants or (b) in the case of a stock dividend, a fractional warrant which shall not represent or entitle the holder thereof to any of the privileges of a shareholder of this Association but may be combined with other such fractional warrants in the aggregate entitling the holder thereof to exchange them for a whole share or whole shares of such additional shares and conditioned that the holder exchanging such combined fractional warrants for such whole share or whole shares of such additional shares shall receive any dividends applicable to such whole share or whole shares declared after the date of such fractional warrants and payable in respect of such whole share or whole shares at the time of such exchange. In the event of an increase in the capital stock of this Association in pursuance of a statutory consolidation to which this Association may be a party, the additional shares shall be issued in such a manner as the contract or plan of consolidation may provide, pursuant to and in contemplation of the statute under which said consolidation is effected. In the event of an increase in the capital stock of this Association in pursuance of a plan or contract (other than in the case of a statutory consolidation) for the acquisition by this Association of the assets, in whole or in part, and the good will of another banking institution or banker, the additional shares shall be subscribed for by or issued to any persons, firms, trustees or corporations, whether or not shareholders of this Association, as, in its discretion in the execution of such plan or contract, the Board of Directors may approve. The Association, at any time and from time to time, may authorize and issue debt obligations, whether or not subordinated, without the approval of the shareholders. SIXTH. The Board of Directors shall appoint one of its members President of this Association, who shall be Chairman of the Board; but the Board of Directors may appoint a director, in lieu of the President, to be Chairman of the Board, who shall perform such duties as may be designated by the Board of Directors. The Board of Directors shall have the power to appoint one or more Vice Presidents; to appoint a Cashier and such other officers as may be required to transact the business of this Association; to fix the salaries to be paid to all officers of this Association; and to dismiss such officers, or any of them; but the Board of Directors may delegate to the Chairman of the Board the authority to exercise such powers of appointment, salary determination and dismissal. The Board of Directors shall have the power to define the duties of officers and employees of this Association, to require bonds from them, and to fix the penalty thereof; to regulate the manner in which directors shall be elected or appointed, and to appoint judges of election; in the event of an increase of the capital stock of this Association to regulate the manner in which such increase shall be made; to make all by-laws that it may be lawful for them to make for the general regulation of the business of this Association and the management of its affairs; and generally to do and perform all acts that it may be lawful for a Board of Directors to do and perform. Page 6 The Board of Directors, without the approval of the shareholders, shall have the power to change the location of the main office of this Association, subject to such limitations as from time to time may be provided by law. SEVENTH. This Association shall have succession from the date of its organization certificate until such time as it be dissolved by the act of its shareholders in accordance with the provisions of the banking laws of the United States, or until its franchise becomes forfeited by reason of violation of law, or until terminated by either a general or a special act of Congress, or until its affairs be placed in the hands of a receiver and finally wound up by him. EIGHTH. The Board of Directors of this Association, the Chairman of the Board, or the President, may call a special meeting of the shareholders at any time: Provided, however, that, unless otherwise provided by the by-laws or the laws of the United States, or waived by the shareholders, notice of the time, place and purpose of the meeting shall be given to each shareholder of record of this Association entitled to act and vote at such meeting, by a notice in writing either mailed (prepaid first class postage) to such shareholder at his address as shown upon the books of this Association or delivered manually to such shareholder, not less than ten days prior to the date fixed for any such meeting. NINTH. (a) This Association shall indemnify and hold harmless each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he, or a person of whom he is the legal representative, is or was a director, officer or employee of this Association, or is or was serving at the request of this Association as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, to the fullest extent permitted by the General Corporation Law of Delaware, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits this Association to provide broader indemnification rights than said law permitted this Association to provide prior to such amendment) against all expenses (including attorneys' fees, judgments, fines, penalties and amounts paid in settlement) actually and reasonably incurred by him in connection therewith. This Association may, by action of the Board of Directors, provide indemnification to agents of this Association with a lesser or the same scope and effect as the foregoing indemnification of directors, officers and employees of this Association. (b) Expenses incurred by a director, officer or employee in defending a civil or criminal action, suit or proceeding shall be paid by this Association in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director, officer or employee to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by this Association. Such expenses incurred by agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate. (c) The indemnification provided by this Article does not authorize this Association to indemnify any director, officer or employee against expenses, penalties, or other payments incurred in an administrative proceeding or action instituted by an appropriate bank regulatory agency which proceeding or action results in a final order against such director, officer or employee assessing civil money penalties or requiring affirmative action in the form of payments to this Association. (d) The indemnification and advancement of expenses provided by, or granted pursuant to, this Article Ninth shall not be deemed exclusive of any other rights to which a person Page 7 seeking indemnification or advancement of expenses may be entitled under any statute, by-law, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. Notwithstanding the provisions of this Article, this Association may indemnify any person referred to in paragraph (a) of this Article to the fullest extent permitted under the statutes applicable to national banking associations and the rules, regulations and interpretations promulgated thereunder by the primary regulator of national banking associations, in each case now or hereafter in effect. (e) This Association shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of this Association, or is or was serving at the request of this Association as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not this Association would have the power to indemnify him against such liability under the provisions of this Article. This provision does not, however, authorize this Association to purchase insurance covering civil money penalties assessed against a director or employee of this Association pursuant to a formal order by an appropriate bank regulatory agency. (f) Neither the amendment nor repeal of this Article Ninth, nor the adoption of any provision of these Articles of Association inconsistent with this Article Ninth, shall eliminate or reduce the effect of this Article Ninth in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article Ninth, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision. TENTH. These Articles of Association may, subject to the provisions of the banking laws of the United States, be amended at any regular or special meeting of the shareholders by the affirmative vote of the shareholders owning at least a majority of the stock of this Association. Page 8 EXHIBIT 2 A COPY OF THE CERTIFICATES OF AUTHORITY OF THE TRUSTEE TO COMMENCE BUSINESS CERTIFICATE I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify that: 1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and control of all records pertaining to the chartering of all National Banking Associations. 2. "The First National Bank of Chicago," Chicago, Illinois, (Charter No. 8) is a National Banking Association formed under the laws of the United States and is authorized thereunder to transact the business of banking on the date of this Certificate. IN TESTIMONY WHEREOF, I have hereunto subscribed my name and caused my seal of office to be affixed to these presents at the Treasury Department in the City of Washington and District of Columbia, this 17th day of December, 1997. /s/ Eugene A. Ludwig -------------------- Comptroller of the Currency Page 9 EXHIBIT 3 A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE TRUST POWERS CERTIFICATE I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify that: 1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and control of all records pertaining to the chartering of all National Banking Associations. 2. "The First National Bank of Chicago," Chicago, Illinois, (Charter No. 8) was granted, under the hand and seal of the Comptroller, the right to act in all fiduciary capacities authorized under the provisions of the Act of Congress approved September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a, and that the authority so granted remains in full force and effect on the date of this Certificate. IN TESTIMONY WHEREOF, I have hereunto subscribed my name and caused my seal of office to be affixed to these presents at the Treasury Department in the City of Washington and District of Columbia, this 17th day of December, 1997. /s/ Eugene A. Ludwig -------------------- Comptroller of the Currency Page 10 EXHIBIT 4 A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE BY-LAWS OF THE FIRST NATIONAL BANK OF CHICAGO AS AMENDED AND RESTATED JULY 12, 1996 ARTICLE I CORPORATE GOVERNANCE To the extent not inconsistent with applicable Federal banking statutes or regulations, or safe and sound banking practices, the Bank shall follow the corporate governance procedures of the Delaware General Corporation Law, as amended. ARTICLE II SHAREHOLDERS SECTION 1. ANNUAL MEETING. The regular annual meeting of shareholders of the Bank to elect directors and to transact whatever other business may properly come before the meeting shall be held in its main office on the second Friday in May if not a legal holiday under the Laws of Illinois, and if a legal holiday, then on the next business day following, at 11:30 A.M., or on such other date and time as shall be designated by the Board of Directors. If, for any cause, the annual election of directors should not be held on that date, the Board shall order the election to be held on some subsequent day, of which special notice shall be given. SECTION 2. JUDGES OF ELECTION. To the extent required by law, the Board of Directors shall, prior to the time of the election of directors, appoint three persons to be Judges of Election, who shall hold and conduct the same, and who shall, after the election has been held, certify under their hands to the Cashier of the Bank the result thereof and the names of the directors-elect. SECTION 3. NOTICE TO DIRECTORS-ELECT. The Cashier upon receiving the Certificate of the Judges of Election as aforesaid, shall cause the same to be recorded upon the minute book of the Bank, and shall notify the directors-elect of their election and of the time at which they are required to meet at the main office of the Bank for the purpose of organizing the new Board. If at the time fixed for the meeting of the directors-elect there should not be a quorum present, the members present may adjourn from time to time until a quorum is obtained. SECTION 4. SPECIAL MEETINGS. Special meetings of the shareholders may be called in accordance with Article EIGHTH of the Bank's Articles of Association. Page 11 SECTION 5. RECORD DATE. The Board of Directors may fix in advance a day not more than sixty (60) or less than ten (10) days prior to the date of holding any regular or special meeting of shareholders as the day as of which shareholders entitled to notice of and to vote at such meeting shall be determined. SECTION 6. NOTICE. The Bank shall mail notice of any meeting of shareholders at least 10 days prior to the meeting by first class mail, unless the Office of the Comptroller of the Currency determines that an emergency circumstance exists. If the Bank is a wholly-owned subsidiary of a company, the sole shareholder may waive notice of the shareholder's meeting. SECTION 7. CONSENT OF SHAREHOLDERS IN LIEU OF ANNUAL OR SPECIAL MEETING. Unless otherwise restricted by law or the Articles of Association, any action which may be taken at any annual or special shareholder meeting may be taken without a meeting, without prior notice and without a vote, if written consent setting forth the action so taken shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those shareholders who did not give written consent. SECTION 8. MINUTES. The proceedings of shareholders at all regular and special meetings or by written consent in lieu of a meeting shall be recorded in the minute book, together with the Articles of Association of the Bank and the returns of the Judges of Election. The minutes of each meeting shall be signed by the Presiding Officer, and attested by the Cashier, or other officer of the Bank acting in place of the Cashier. ARTICLE III DIRECTORS SECTION 1. AUTHORITY. The Board of Directors shall have the power to manage and administer the business and affairs of the Bank. Except as expressly limited by law, all corporate powers of the Bank shall be vested in and may be exercised by the Board of Directors. SECTION 2. NUMBER. The Board of Directors shall at all times consist of not less than five nor more than twenty-five individuals. The exact number within such minimum and maximum limits shall be fixed and determined from time to time by resolution of a majority of the full Board of Directors or by resolution of the shareholders at any meeting thereof; provided, however, that the Board of Directors may not increase the number of directors to a number which: (1) exceeds by more than two the number of directors last elected by shareholders where such number was fifteen or less; or (ii) exceeds by more than four the number of directors last elected by shareholders where such number was sixteen or more, but in no event shall the number of directors exceed twenty-five. SECTION 3. TERM OF OFFICE. Each director shall hold office from the date of his election or appointment until the next annual shareholder meeting. Any director ceasing to Page 12 be the owner of the amount of stock required by law or in any other manner becoming disqualified shall thereupon vacate his office as director. SECTION 4. COMPENSATION. The Board of Directors may provide that a reasonable fee be paid to any of its members or to the members of any duly authorized committee for services rendered. No such payment shall preclude any director from serving the Bank in any other capacity and receiving compensation therefor. SECTION 5. REGULAR MEETINGS. Regular meetings of the Board of Directors shall be held on such dates, times and locations as determined by the Chairman of the Board and communicated in writing to the directors. SECTION 6. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by the Chairman of the Board or the President. Such meetings shall be held at such times and at such places as shall be determined by the officer calling the meeting. Notice of any special meeting of directors shall be given to each director at the director's business or residence in writing by hand delivery, first-class or overnight mail or courier service, telegram or facsimile transmission, or orally by telephone. If mailed by first-class mail, such notice shall be deemed adequately delivered when deposited in the United States mail so addressed, with postage thereon prepaid, at least two (2) days before such meeting. If by telegram, overnight mail or courier service, such notice shall be deemed adequately delivered when the telegram is delivered to the telegraph company or the notice is delivered to the overnight mail or courier service company at least twenty-four (24) hours before such meeting. If by facsimile transmission, such notice shall be deemed adequately delivered when the notice is transmitted at least twelve (12) hours before such meeting. Such notice need not state the purposes of the meeting. Any or all directors may waive notice of any meeting, either before or after the meeting. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except when the director attends for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. SECTION 7. QUORUM; MAJORITY VOTE. A quorum of directors shall be required to transact business at any regular or special meeting of the Board of Directors. A majority of the directors shall constitute a quorum. Each director shall be entitled to one vote. A vote by a majority of the directors present at any regular or special meeting of the Board of Directors at which a quorum is present shall be required to approve any matter or proposal at any such meeting. SECTION 8. VACANCIES. When any vacancy occurs in the Board of Directors, a majority of the remaining members of the Board, according to the laws of the United States, may appoint a director to fill such vacancy at any regular meeting of the Board of Directors, or at a special meeting called for that purpose at which a quorum is present, or if the directors remaining in office constitute fewer than a quorum of the Board of Directors, by the affirmative vote of a majority of all the directors remaining in office, or by shareholders at a special meeting called for that purpose. At any such shareholder meeting, each shareholder entitled to vote shall have the right to multiply the number of votes he or she is entitled to cast by the number of vacancies being filled and cast the Page 13 product for a single candidate or distribute the product among two or more candidates. A vacancy that will occur at a specific later date (by reason of a resignation effective at a later date) may be filled before the vacancy occurs but the new director may not take office until the vacancy occurs. SECTION 9. PRESIDING OFFICER. The Chairman of the Board shall preside at all meetings of the Board of Directors at which he is present. In the absence of the Chairman of the Board, the President shall perform the duties of the Chairman of the Board and shall preside at the meetings of the Board of Directors. In the absence of the Chairman of the Board and the resident, the Vice Chairman of the Board (or in the event there be more than one Vice Chairman of the Board, the Vice Chairmen of the Board in the order designated, or in the absence of any designation, then in the order of their election) shall perform their duties and shall preside at the meetings of the Board of Directors. SECTION 10. MINUTES OF MEETING. The Cashier shall act as secretary to the Board of Directors to take minutes at any regular or special meeting of the Board of Directors. If the Cashier is not present at any such meeting, the Chairman of the Board may designate a secretary pro tem to take minutes at the meeting. The Cashier or secretary pro tem shall record the actions and proceedings at each regular or special meeting of the Board of Directors as minutes of the meeting and shall maintain such minutes in a minute book of proceedings of such meetings of the Board of Directors. Minutes of each such meeting shall be signed by the presiding officer and secretary of each meeting. SECTION 11. PARTICIPATION IN MEETINGS BY TELEPHONE Unless otherwise restricted by law or the Articles of Association, members of the Board of Directors, or of any committee thereof, may participate in a meeting of the Board of Directors or committee by means of conference telephone or similar communications equipment which allows each person participating in the meeting to hear each other. Participation in such a meeting shall constitute presence in person at such meeting. SECTION 12. CONSENT OF DIRECTORS IN LIEU OF MEETING. Unless otherwise restricted by law or the Articles of Association, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. SECTION 13. COMMITTEES. The Board of Directors may, by resolution passed by a majority of the entire Board, designate one or more committees, each committee to consist of two or more of the Directors of the Bank. The Board of Directors may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Bank, and may authorize the seal of the Bank to be affixed to all papers which may require it; provided, however, that in the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Such committee or committees shall have such name or names as Page 14 may be determined from time to time by resolution adopted by the Board of Directors. As used in these By-Laws, "entire Board" means the total number of Directors the Bank would have if there were no vacancies. There shall be an Executive Committee composed and created as the Board of Directors may designate by resolution passed by a majority of the entire Board. During intervals between the regular meetings of the Board of Directors, the Executive Committee, to the extent permitted by law, the Articles of Association of the Bank and the By-Laws, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Bank. Unless otherwise provided by the Board of Directors, a majority of the members of any committee appointed by the Board of Directors pursuant to this Section shall constitute a quorum at any meeting thereof and the act of a majority of the members present at a meeting at which a quorum is present shall be the act of such committee. Any such committee shall, subject to any rules prescribed by the Board of Directors, prescribe its own rules for calling, giving notice of and holding meetings and its method of procedure at such meetings and shall keep a written record of all action taken by it. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. SECTION 14. HONORARY DIRECTORS. Any person who has at any time been Chairman of the Board, President or Vice Chairman of the Board of the Bank may, after retirement from the Board of Directors, be appointed by the Board of Directors as an Honorary Director on a year-to-year basis. In no case shall an Honorary Director serve as such for more than five years. Honorary Directors shall serve in an advisory capacity to the Board of Directors, shall have no vote and shall not be considered directors for the purpose of determining a quorum. Honorary Directors shall be reimbursed for their expenses in attending meetings of the Board of Directors and shall receive such fees, if any, for attendance at each meeting of the Board of Directors as may be fixed from time to time by the Board of Directors but shall not receive any other directors' fees or any other compensation for their services. ARTICLE IV OFFICERS SECTION 1. OFFICER TITLES. The officers of the Bank shall include a Chairman of the Board and a President and may include one or more Vice Chairmen of the Board, Executive Vice Presidents, Senior Vice Presidents, First Vice Presidents, Vice Presidents and Assistant Vice Presidents, a General Auditor, a General Counsel, a Cashier, and such other officers as may be appropriate for the prompt and orderly transaction of the business of the Bank. Individuals appointed as Chairman of the Board, President and Vice Chairman of the Board must be members of the Board. The same person may hold any two or more offices. The Chairman of the Board shall have such authority to establish officer titles as from time to time delegated by the Board of Directors and to delegate such authority further to other officers of the Bank. Page 15 SECTION 2. CHIEF EXECUTIVE OFFICER. The Chairman of the Board shall be the chief executive officer of the Bank. In case of the death or disability of the Chairman of the Board, his powers shall be exercised and his duties discharged by the President. In the event of the death or disability of the Chairman of the Board and the President, the Vice Chairman of the Board (or in the event there be more than one Vice Chairman of the Board, the Vice Chairmen of the Board in the order designated, or in the absence of any designation, then in the order of their election) shall exercise the powers and discharge the duties of the Chairman of the Board. SECTION 3. ELECTION OF OFFICERS. The Board of Directors of the Bank shall have authority to appoint the officers of the Bank. The Chairman of the Board shall have such authority to appoint officers as from time to time delegated by the Board of Directors, and to delegate such authority further to other officers of the Bank. SECTION 4. AUTHORITY AND RESPONSIBILITY. The authorities and responsibilities of all officers, in addition to those specifically prescribed herein, shall be those usually pertaining to their respective offices, or as may be designated by the Board of Directors or by the Chairman of the Board or by the President, or by any officer of the Bank designated by one of the foregoing. SECTION 5. TERM OF OFFICE. Officers shall be appointed for an indefinite term, and their employment may be terminated or they may be removed from office at any time. The Board of Directors shall have authority to terminate or remove officers of the Bank. The Chairman of the Board shall have such authority to terminate or remove officers as from time to time delegated by the Board of Directors, and to delegate such authority further to other officers of the Bank. SECTION 6. SURETY. All officers and employees of the Bank who shall be responsible for any moneys, funds or valuables of the Bank shall give bond, or be covered by a blanket bond, in such penal sum and with such security as shall be approved by the Board, conditioned for the faithful and honest discharge of their duties as such officers or employees and that they will faithfully apply and account for all such moneys, funds and valuables and deliver the same on proper demand to the order of the Board of the Bank, or to the person or persons authorized to receive the same. ARTICLE V SEAL SECTION 1. DESCRIPTION. The following is a description of the Seal adopted by the Board of the Bank: Female with left arm resting on shield, bale of goods and sheaf of grain at her side, ship and sea in the distance; the whole surrounded with the words, "The First National Bank of Chicago". SECTION 2. ATTESTATION. Any instrument which is executed for and on behalf of the Bank by its duly authorized officers may, when necessary, be attested and sealed with Page 16 the corporate seal by any officer of the Bank other than the officer who executes such instrument on behalf of the Bank. ARTICLE VI TRANSFERS OF REAL ESTATE Any Vice President or higher ranking officer shall have authority on behalf of and in the name of the Bank, to execute any document or instrument and to take action which may be necessary or appropriate to purchase, convey, lease, or otherwise affect any real estate or interest in real estate owned or to be owned by the Bank; provided, however, any document or instrument purchasing, conveying or leasing real estate used or to be used by the Bank as banking facilities must be executed by a Senior Vice President or higher ranking officer, or any other officer designated by any of the foregoing. Any Assistant Vice President or higher ranking officer shall have authority to execute and deliver on behalf of and in the name of the Bank, releases of mortgages or trust deeds. ARTICLE VII STOCK AND STOCK CERTIFICATES SECTION 1. INCREASE OF STOCK. In the event of any increase in the capital stock of the Bank the preemptive rights of the shareholders in respect of any such increased stock shall be as set forth in Article FIFTH of the Articles of Association. Any warrants or certificates issuable to shareholders in connection with any increase of the capital stock of the Bank, shall be delivered to the respective shareholders entitled thereto, either by hand or by mail, first-class postage prepaid, addressed to their respective addresses as shown on the books of the Bank. If, in the event of a sale of additional shares, any subscription rights shall not have been exercised at the expiration of the specified subscription period, such unsubscribed new shares may be issued and sold at such price, not less than the par value thereof, to such persons and on such terms as the Board of Directors may determine. SECTION 2. TRANSFERS OF STOCK. The stock of the Bank shall be assignable only upon the books of the Bank, subject to the restrictions of the Act, and a transfer book shall be kept in which all assignments and transfers of stock shall be made. Transfers of stock may be suspended preparatory to any election or payment of any dividends. SECTION 3. CERTIFICATES OF STOCK. Certificates of stock signed by any Vice President or higher ranking officer and the Cashier or any Assistant Cashier may be issued to shareholders, and the Certificates shall state upon the face thereof that the stock is transferable only upon the books of the Bank. If such Certificates are manually countersigned by two other officers of the Bank, the signatures of the officers designated in the preceding sentence may be facsimiles, engraved or printed. In case any officer who has signed or whose facsimile signature has been placed upon such Certificates shall have Page 17 ceased to be such officer before such Certificates are issued, they may be issued by the Bank with the same effect as if such officer had not ceased to be such at the date of issue. In case of transfer of stock, new Certificates of stock shall not be issued until other Certificate or Certificates of stock of an equal amount shall first have been surrendered and cancelled. Any one of the following officers of the Bank: the Chairman of the Board, the President, or any Vice Chairman of the Board is each hereby authorized to cause new Certificates of stock of the Bank to be issued to replace Certificates reported to have been lost, stolen or destroyed, upon receipt of: (a) appropriate affidavit or affidavits setting forth whether the Certificates were lost, stolen or destroyed and the circumstances thereof, and (b) a bond or bonds (blanket or otherwise) or an agreement or agreements of indemnity, sufficient in the opinion of any of such officers to protect the interests of the Bank issuing such new Certificates. ARTICLE VIII BANKING HOURS The Bank shall be open for business during such days of the year and for such hours as the Board of Directors or any officer of the Bank designated by the Board of Directors may from time to time determine. ARTICLE IX CONTRACTS, CERTIFICATES OF DEPOSIT AND NOTES SECTION 1. EXECUTION OF CONTRACTS. Any officer of the bank and such other persons as may be authorized by the Board of Directors are severally and respectively authorized to execute documents and to take action in the Bank's name in connection with any and all transactions conducted in the ordinary course of business of the Bank. SECTION 2. CERTIFICATES OF DEPOSIT AND NOTES. Notwithstanding the foregoing, all certificates of deposits and notes evidencing obligations of the Bank shall be signed either manually or by facsimile signature by any officer of the Bank, and, if such signature is not a manual signature, shall be validated by the manual signature of another officer of the Bank whose signature does not already appear on said certificate of deposit or note or by the authorized officers of corporate fiduciaries or agents with whom the Board of Directors may from time to time by resolution authorize the officers of the Bank to contract for services in connection with the validation and delivery of certificates of deposit or notes issued by the Bank. Page 18 ARTICLE X VOTING RIGHTS The vote of the Bank as stockholder in any corporation in which it may hold stock or upon any securities carrying voting rights which it shall have the right to vote in its individual capacity as a Bank, shall be cast at any stockholders' or shareholders' meeting by any Vice President or higher ranking officer, or the Cashier, in person, or by some person or persons authorized by written proxy signed by one of said officers. In all cases where shares of stock or other securities carrying voting rights and owned by the Bank shall be held in the name of a nominee of the Bank, any Vice President or higher ranking officer, or the Cashier, may authorize such nominee to vote such stock or other securities in person, either unconditionally or upon such terms, limitations, or conditions as such officer may direct, or any such officer may authorize such nominee to execute a proxy to vote such shares of stock or other securities carrying voting rights, either unconditionally or upon such terms, conditions and/or limitations as such officer shall approve. ARTICLE XI EXAMINATIONS It shall be the duty of the General Auditor to examine, from time to time, the various operations of the Bank, verify its assets and liabilities, and perform such other procedures as are required to determine that the accounting records are accurate and to ascertain whether the Bank is in a sound and solvent condition. Major discrepancies and defalcations shall be reported to the Board promptly and other reports shall be made directly to the Board when deemed appropriate either by the General Auditor or the Board. In the event of the death, resignation, absence or inability of the General Auditor, the Board of Directors shall appoint a competent person who shall make such examinations and reports, pending the election of a successor to the General Auditor or the return of the General Auditor to his duties. ARTICLE XII BONDS OF INDEMNITY Bonds of indemnity given to secure the issuance of duplicate or substitute notes, bonds, stock certificates, checks, debentures or other securities which may have been lost, destroyed or stolen or to secure the payment of any such lost, destroyed or stolen securities or to secure the payment by the Bank of funds deposited by any public authorities, shall be executed by any Assistant Vice President or higher ranking officer, and, if required, sealed with the corporate seal and attested by some other officer of the Bank. Page 19 ARTICLE XIII AUTHORITY TO SELL STOCKS, BONDS, ETC. SECTION 1. U.S. OBLIGATIONS. Any Assistant Vice President or higher ranking officer may at any time, in his discretion, sell, assign and transfer any and all United States bonds now standing, or which may hereafter stand, in the name of the Bank, and to appoint one or more attorneys for that purpose. SECTION 2. OTHER OBLIGATIONS. Any Assistant Vice President or higher ranking officer may at any time, in his discretion, sell, assign and transfer any and all notes, bonds, certificates of indebtedness or obligations of any corporation, firm or individual, which said notes, bonds, certificates of indebtedness or obligations are now registered, or may hereafter be registered, in the name of, or for the benefit of, the Bank, or are payable or indorsed to the Bank. SECTION 3. STOCK. Any Assistant Vice President or higher ranking officer may at any time in his discretion, sell, assign and transfer to any assignee or transferee, for and on behalf of the Bank and in its name, any and all shares of capital stock of any corporation or corporations held by the Bank. ARTICLE XIV FIDUCIARY ACTIVITIES 1. AUTHORITY TO SIGN AS REGISTRAR, TRANSFER AGENT, ETC. Any officer of the Bank shall have the right to sign, countersign, certify, register, authenticate and identify all bonds, notes, interim certificates, and depositary receipts, warrants, participation certificates, certificates of stock and similar instruments for or in respect of which the Bank may be acting as Trustee, Registrar, Transfer Agent or otherwise. 2. AUTHORITY TO VOTE STOCK. The vote of the Bank as stockholder in any corporation or mutual fund in which it may hold capital stock in any fiduciary capacity, unless the governing instrument directs otherwise, may be voted by any officer of the Bank in person, electronically or by written proxy signed by one of said officers. 3. AUTHORITY TO SELL, ASSIGN AND TRANSFER STOCKS, ETC. Any officer of the Bank may sell, assign and transfer to any assignee or transferee for the Bank and in its name, any and all shares of the capital stock or other securities and obligations of any individual or entity held by the Bank in any fiduciary capacity, and sign and deliver any instruments with respect to any such items. 4. AUTHORITY TO SIGN CHECKS AND OTHER INSTRUMENTS. Any officer of the Bank is authorized to sign for and on behalf of the Bank: checks against any account or accounts of any organizational unit of the Bank exercising fiduciary powers; petitions; schedules; accounts; reports; receipts for funds or securities deposited with the Bank as fiduciary and all instruments or documents that may be necessary or desirable in connection with the execution of any fiduciary powers of the Bank. Page 20 5. DELEGATION OF AUTHORITY. Anything in this Article XIV to the contrary notwithstanding, the Chairman of the Board is authorized to designate in writing such persons as shall be authorized in the name of the Bank to sign or countersign any or all of the documents and instruments enumerated in this Article XIV relating to transactions conducted in connection with the execution of any fiduciary powers of the Bank. ARTICLE XV AMENDMENT OF BY-LAWS These By-Laws may be changed or amended by the vote of a majority of the directors present at any regularly constituted meeting of the Board of Directors. ARTICLE XVI EMERGENCY OPERATION OF BANK In the event of an emergency declared by the President of the United States or the person performing his functions, due to threatened or actual enemy attack or disaster, the officers and employees of the Bank will continue to conduct the affairs of the Bank under such guidance from the directors as may be available, except as to matters which by statute require specific approval of the Board of Directors, and subject to conformance with any governmental directives during the emergency. ARTICLE XVII DELEGATION OF AUTHORITY Each of the Chairman of the Board, the President, any Vice Chairman of the Board and the Cashier of the Bank are severally and respectively authorized to designate in writing such persons who shall be authorized in the name and on behalf of the Bank to sign any document or instrument, including certificates of deposit and notes, and to take action which may be necessary or appropriate to the conduct of the Bank's business, in its individual capacity or any other capacity. Any such authorization to sign such document or instrument and to take any action may be general or limited as is determined in the discretion of the Chairman of the Board, the President, any Vice Chairman of the Board or the Cashier. Page 21 EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT April 24, 1998 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: In connection with the qualification of the indenture among U S WEST Capital Funding, Inc., U S WEST, Inc., and The First National Bank of Chicago, as Trustee, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, THE FIRST NATIONAL BANK OF CHICAGO BY: /s/ STEVEN M. WAGNER -------------------------------------- STEVEN M. WAGNER FIRST VICE PRESIDENT Page 22 EXHIBIT 7
LEGAL TITLE OF BANK: THE FIRST NATIONAL BANK OF CHICAGO CALL DATE: 12/31/97 ST-BK: 17-1630 FFIEC 031 ADDRESS: ONE FIRST NATIONAL PLAZA, STE 0303 PAGE RC-1 CITY, STATE ZIP: CHICAGO, IL 60670 FDIC CERTIFICATE NO.: 0/3/6/1/8
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31,1997 ALL SCHEDULES ARE TO BE REPORTED IN THOUSANDS OF DOLLARS. UNLESS OTHERWISE INDICATED, REPORT THE AMOUNT OUTSTANDING AS OF THE LAST BUSINESS DAY OF THE QUARTER. SCHEDULE RC--BALANCE SHEET
C400 DOLLAR AMOUNTS IN ------------ THOUSANDS RCFD BIL MIL THOU ----------------- ---- ------------ ASSETS 1. CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS (FROM SCHEDULE RC-A): a. NONINTEREST-BEARING BALANCES AND CURRENCY AND COIN(1). . . . . 0081 4,267,336 1.a. b. INTEREST-BEARING BALANCES(2) . . . . . . . . . . . . . . . . . 0071 6,893,837 1.b. 2. SECURITIES a. HELD-TO-MATURITY SECURITIES(FROM SCHEDULE RC-B, COLUMN A). . . 1754 0 2.a. b. AVAILABLE-FOR-SALE SECURITIES (FROM SCHEDULE RC-B, COLUMN D) . 1773 5,691,722 2.b. 3. FEDERAL FUNDS SOLD AND SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL 1350 6,339,940 3. 4. LOANS AND LEASE FINANCING RECEIVABLES: a. LOANS AND LEASES, NET OF UNEARNED INCOME (FROM SCHEDULE RC-C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2122 25,202,984 4.a. b. LESS: ALLOWANCE FOR LOAN AND LEASE LOSSES. . . . . . . . . . . RCFD 3123 419,121 4.b. c. LESS: ALLOCATED TRANSFER RISK RESERVE. . . . . . . . . . . . . RCFD 3128 0 4.c. d. LOANS AND LEASES, NET OF UNEARNED INCOME, ALLOWANCE, AND RESERVE (ITEM 4.a MINUS 4.b AND 4.c) . . . . . . . . . . . . . 2125 24,783,863 4.d. 5. TRADING ASSETS (FROM SCHEDULE RD-D) . . . . . . . . . . . . . . . 3545 6,703,332 5. 6. PREMISES AND FIXED ASSETS (INCLUDING CAPITALIZED LEASES). . . . . 2145 743,426 6. 7. OTHER REAL ESTATE OWNED (FROM SCHEDULE RC-M). . . . . . . . . . . 2150 7,727 7. 8. INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATED COMPANIES (FROM SCHEDULE RC-M). . . . . . . . . . . . . . . . . . 2130 134,959 8. 9. CUSTOMERS' LIABILITY TO THIS BANK ON ACCEPTANCES OUTSTANDING. . . 2155 644,340 9. 10. INTANGIBLE ASSETS (FROM SCHEDULE RC-M). . . . . . . . . . . . . . 2143 268,501 10. 11. OTHER ASSETS (FROM SCHEDULE RC-F) . . . . . . . . . . . . . . . . 2160 2,004,432 11. 12. TOTAL ASSETS (SUM OF ITEMS 1 THROUGH 11). . . . . . . . . . . . . 2170 58,483,415 12.
- --------------- (1) INCLUDES CASH ITEMS IN PROCESS OF COLLECTION AND UNPOSTED DEBITS. (2) INCLUDES TIME CERTIFICATES OF DEPOSIT NOT HELD FOR TRADING.
LEGAL TITLE OF BANK: THE FIRST NATIONAL BANK OF CHICAGO CALL DATE: 09/30/97 ST-BK: 17-1630 FFIEC 031 ADDRESS: ONE FIRST NATIONAL PLAZA, STE 0303 PAGE RC-2 CITY, STATE ZIP: CHICAGO, IL 60670 FDIC CERTIFICATE NO.: 0/3/6/1/8
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN THOUSANDS BIL MIL THOU ----------------- ------------ LIABILITIES 13. DEPOSITS: a. IN DOMESTIC OFFICES (SUM OF TOTALS OF COLUMNS A AND C FROM SCHEDULE RC-E, PART 1). . . . . . . . . . . . . . . . . . RCON 2200 21,756,846 13.a (1) NONINTEREST-BEARING(1) . . . . . . . . . . . . . . . . . . RCON 6631 9,197,227 13.a.1 (2) INTEREST-BEARING . . . . . . . . . . . . . . . . . . . . . RCON 6636 559,619 13.a.2 b. IN FOREIGN OFFICES, EDGE AND AGREEMENT SUBSIDIARIES, AND IBFS (FROM SCHEDULE RC-E, PART II) . . . . . . . . . . . . . . RCFN 2200 14,811,410 13.b. (1) NONINTEREST BEARING. . . . . . . . . . . . . . . . . . . . RCFN 6631 332,801 13.b.1 (2) INTEREST-BEARING . . . . . . . . . . . . . . . . . . . . . RCFN 6636 14,478,609 13.b.2 14. FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE: RCFD 2800 4,535,422 14 15. a. DEMAND NOTES ISSUED TO THE U.S. TREASURY RCON 2840 43,763 15.a b. TRADING LIABILITIES(FROM SCHEDULE RC-D).................................... RCFD 3548 6,523,239 15.b 16. OTHER BORROWED MONEY: A. WITH A REMAINING MATURITY OF ONE YEAR OR LESS . . . . . . . . RCFD 2332 1,360,165 16.a B. WITH A REMAINING MATURITY OF THAN ONE YEAR THROUGH THREE YEARS . . . . . . A547 576,492 16.b . C. WITH A REMAINING MATURITY OF MORE THAN THREE YEARS ....................... A548 703,981 16.c 17. NOT APPLICABLE 18. BANK'S LIABILITY ON ACCEPTANCE EXECUTED AND OUTSTANDING RCFD 2920 644,341 18 19. SUBORDINATED NOTES AND DEBENTURES (2) . . . . . . . . . . . . . . RCFD 3200 1,700,000 19 20. OTHER LIABILITIES (FROM SCHEDULE RC-G). . . . . . . . . . . . . . RCFD 2930 1,322,077 20 21. TOTAL LIABILITIES (SUM OF ITEMS 13 THROUGH 20). . . . . . . . . . RCFD 2948 53,987,736 21 22. NOT APPLICABLE EQUITY CAPITAL 23. PERPETUAL PREFERRED STOCK AND RELATED SURPLUS . . . . . . . . . . RCFD 3838 0 23 24. COMMON STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3230 200,858 24 25. SURPLUS (EXCLUDE ALL SURPLUS RELATED TO PREFERRED STOCK). . . . . RCFD 3839 2,999,001 25 26. a. UNDIVIDED PROFITS AND CAPITAL RESERVES . . . . . . . . . . . . RCFD 3632 1,273,239 26.a. b. NET UNREALIZED HOLDING GAINS (LOSSES) ON AVAILABLE-FOR-SALE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 8434 24,096 26.b. 27. CUMULATIVE FOREIGN CURRENCY TRANSLATION ADJUSTMENTS . . . . . . . RCFD 3284 (1,515) 27 28. TOTAL EQUITY CAPITAL (SUM OF ITEMS 23 THROUGH 27) . . . . . . . . RCFD 3210 4,495,679 28 29. TOTAL LIABILITIES AND EQUITY CAPITAL (SUM OF ITEMS 21 AND 28) . . RCFD 3300 58,483,415 29
MEMORANDUM TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION 1. INDICATE IN THE BOX AT THE RIGHT THE NUMBER OF THE STATEMENT BELOW THAT BEST DESCRIBES THE MOST COMPREHENSIVE LEVEL OF AUDITING WORK PERFORMED FOR THE BANK BY INDEPENDENT EXTERNAL NUMBER ------ AUDITORS AS OF ANY DATE DURING 1996.........RCFD 6724....N/A. M.1 ------ 1 = INDEPENDENT AUDIT OF THE BANK CONDUCTED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS BY A CERTIFIED PUBLIC ACCOUNTING FIRM WHICH SUBMITS A REPORT ON THE BANK 2 = INDEPENDENT AUDIT OF THE BANK'S PARENT HOLDING COMPANY CONDUCTED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS BY A CERTIFIED PUBLIC ACCOUNTING FIRM WHICH SUBMITS A REPORT ON THE CONSOLIDATED HOLDING COMPANY (BUT NOT ON THE BANK SEPARATELY) 3 = DIRECTORS' EXAMINATION OF THE BANK CONDUCTED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS BY A CERTIFIED PUBLIC ACCOUNTING FIRM (MAY BE REQUIRED BY STATE CHARTERING AUTHORITY) 4 = DIRECTORS' EXAMINATION OF THE BANK PERFORMED BY OTHER EXTERNAL AUDITORS (MAY BE REQUIRED BY STATE CHARTERING AUTHORITY) 5 = REVIEW OF THE BANK'S FINANCIAL STATEMENTS BY EXTERNAL AUDITORS 6 = COMPILATION OF THE BANK'S FINANCIAL STATEMENTS BY EXTERNAL AUDITORS 7 = OTHER AUDIT PROCEDURES (EXCLUDING TAX PREPARATION WORK) 8 = NO EXTERNAL AUDIT WORK - ---------------- (1) INCLUDES TOTAL DEMAND DEPOSITS AND NONINTEREST-BEARING TIME AND SAVINGS DEPOSITS. (2) INCLUDES LIMITED-LIFE PREFERRED STOCK AND RELATED SURPLUS. -----END PRIVACY-ENHANCED MESSAGE-----