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U S WEST, INC. (to be renamed "MediaOne Group, Inc.")
AND
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
PREFERRED SECURITIES GUARANTEE AGREEMENT
Dated as of , 1998
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CROSS-REFERENCE TABLE*
Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
------------------- -----------
310(a) . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a)
310(b) . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)
310(c) . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
311(b) . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
311(c) . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
313. . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . 2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . 2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(f) . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . 3.1(b)
315(b) . . . . . . . . . . . . . . . . . . . . . . . . 2.7
315(c) . . . . . . . . . . . . . . . . . . . . . . . . 3.1(a)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . 3.1(a)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . 5.4(a), 2.6
_______________
* This Cross-Reference Table does not constitute part of the Preferred
Securities Guarantee Agreement and shall not affect the interpretation of
any of its terms or provisions.
PREFERRED SECURITIES GUARANTEE AGREEMENT
This PREFERRED SECURITIES GUARANTEE AGREEMENT ("Guarantee
Agreement"), dated as of , is executed and
delivered by U S WEST, Inc. (to be renamed "MediaOne Group, Inc."), a
Delaware corporation (the "Guarantor"), and The First National Bank of
Chicago, as trustee (the "Preferred Guarantee Trustee"), for the benefit of
the Holders (as defined herein) from time to time of the Preferred Securities
(as defined herein) of MediaOne Finance Trust I, a Delaware statutory
business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of 1998,
among the trustees of the Issuer named therein, the Guarantor as
Sponsor and the holders from time to time of undivided beneficial interests
in the assets of the Issuer, the Issuer is issuing on the date hereof
$ aggregate stated liquidation amount of Preferred Securities
designated the %Trust Originated Preferred Securities (the "Preferred
Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires to irrevocably and unconditionally to
agree, to the extent set forth in this Guarantee Agreement, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined
herein) and to make certain other payments on the terms and conditions set
forth herein.
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee Agreement") in substantially
identical terms to this Guarantee Agreement for the benefit of the holders of
the Common Securities (as defined herein) except that if an Event of Default
(as defined in the Indenture (as defined herein)), has occurred and is
continuing, the rights of holders of the Common Securities to receive
Guarantee Payments under the Common Securities Guarantee are subordinated to
the rights of Holders of Preferred Securities to receive Guarantee Payments
under this Guarantee Agreement.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS AND INTERPRETATION.
In this Guarantee Agreement, unless the context otherwise requires:
(a) Capitalized terms used in this Guarantee Agreement but not
defined in the preamble above have the respective meanings assigned to them
in this Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement has the
same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or
amended from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"AFFILIATE" has the same meaning as given to that term in Rule 405
of the Securities Act of 1933, as amended, or any successor rule thereunder.
"COMMON SECURITIES" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"COVERED PERSON" means any Holder or beneficial owner of Preferred
Securities.
"EVENT OF DEFAULT" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement.
"GUARANTEE PAYMENTS" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent
not paid or made by the Issuer: (i) any accrued and unpaid Distributions
which are required to be paid on such Preferred Securities to the extent the
Issuer shall have funds available therefore, (ii) the redemption price,
including all accrued and unpaid Distributions to the date of redemption (the
"Redemption Price") to the extent the Issuer has funds available therefor,
with respect to any Preferred Securities called for redemption by the Issuer,
and (iii) upon a voluntary or involuntary dissolution, winding-up or
termination of the Issuer (other than in connection with the distribution of
Debentures to the Holders in exchange for Preferred Securities as provided in
the Declaration), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid Distributions on the Preferred Securities to the
date of payment, to the extent the Issuer shall have funds available therefor
and (b) the amount of assets of the Issuer remaining available for
distribution to Holders in liquidation of the Issuer (in either case, the
"Liquidation Distribution"). If an Event
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of Default (as defined in the Indenture), has occurred and is continuing, the
rights of the holders of the Common Securities to receive Guarantee Payments
under the Common Securities Guarantee Agreement are subordinated to the
rights of Holders of Preferred Securities to receive Guarantee Payments.
"GUARANTOR" shall mean U S WEST, Inc., a Delaware corporation or
any permitted successor thereof under the Indenture, in its capacity as
guarantor under this Guarantee Agreement.
"HOLDER" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities; PROVIDED, HOWEVER, that
in determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any entity directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Guarantor.
"INDEMNIFIED PERSON" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives or agents of the
Preferred Guarantee Trustee.
"INDENTURE" means the Indenture dated as of ,
1998 among MediaOne Group Funding, Inc., a Delaware corporation (the
"Debenture Issuer"), U S WEST, Inc., a Delaware corporation, as guarantor and
, as trustee, as
supplemented by a Second Supplemental Indenture dated as of ,
1998 among the Debenture Issuer, the Guarantor, as guarantor and
, as trustee, and any
indenture supplemental thereto pursuant to which certain subordinated debt
securities of the Debenture Issuer (the "Debentures") and the guarantee of
the Guarantor endorsed thereon (the "Debenture Guarantee") are to be issued
to the Property Trustee of the Issuer.
"MAJORITY IN LIQUIDATION AMOUNT OF THE PREFERRED SECURITIES" means,
except as provided by the Trust Indenture Act, Holder(s) of Preferred
Securities voting separately as a class, who vote Preferred Securities and
the aggregate liquidation amount (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined)
of the Preferred Securities voted by such Holders represents more than 50% of
the above stated liquidation amount of all Preferred Securities.
"66-2/3% IN LIQUIDATION AMOUNT OF THE PREFERRED SECURITIES" means,
Holders of Preferred Securities voting separately as a class, who vote
Preferred Securities and the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are to be determined) of the Preferred Securities voted by such
Holders represents more than 66-2/3% of the above stated liquidation amount
of all Preferred Securities.
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"OFFICERS' CERTIFICATE" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee Agreement shall include:
(a) a statement that each officer signing the Certificate has read
the covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"PERSON" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other
entity of whatever nature.
"PREFERRED GUARANTEE TRUSTEE" means The First National Bank of
Chicago until a Successor Preferred Guarantee Trustee has been appointed and
has accepted such appointment pursuant to the terms of this Guarantee
Agreement and thereafter means each such Successor Preferred Guarantee
Trustee.
"RESPONSIBLE OFFICER" means, with respect to the Preferred
Guarantee Trustee, the chairman of the board of directors, the president, any
vice-president, any assistant vice-president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or
assistant trust officer or any other officer of the Preferred Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"SUCCESSOR PREFERRED GUARANTEE TRUSTEE" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.
(a) This Guarantee Agreement is subject to the provisions of the
Trust Indenture Act that are required to be part of this Guarantee Agreement
and shall, to the extent applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by Sections
310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES.
(a) The Guarantor shall provide the Preferred Securities Trustee
(i) within 14 days after January 1 and June 30 of each year, a list, in such
form as the Preferred Guarantee Trustee may reasonably require, of the names
and addresses of the Holders of the Preferred Securities ("List of Holders")
as of such date, PROVIDED THAT the Guarantor shall not be obligated to
provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Preferred Guarantee Trustee
by the Guarantor, and (ii) at any other time, within 30 days of receipt by
the Guarantor of a written request for a List of Holders as of a date no more
than 14 days before such List of Holders is given to the Preferred Guarantee
Trustee. The Preferred Guarantee may destroy any List of Holders previously
given to it on receipt of a new List of Holders; and
(b) the Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 REPORTS BY THE PREFERRED GUARANTEE TRUSTEE.
Within 60 days after May 15 of each year, the Preferred Guarantee
Trustee shall provide to the Holders of the Preferred Securities such reports
as are required by Section 313 of the Trust Indenture Act, if any, in the
form and in the manner provided by Section 313 of the Trust Indenture Act.
The Preferred Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE.
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture
Act in the form, in the manner and at the times required by Section 314 of
the Trust Indenture Act.
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SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Guarantee Agreement which relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be
given in the form of an Officers' Certificate.
SECTION 2.6 EVENTS OF DEFAULT; WAIVER.
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every
purpose of this Guarantee Agreement, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right
consequent thereon.
SECTION 2.7 EVENT OF DEFAULT; NOTICE
(a) The Preferred Guarantee Trustee shall, within 90 days after
the occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default known to the Preferred Guarantee Trustee, unless such defaults have
been cured before the giving of such notice, PROVIDED, THAT, the Preferred
Guarantee Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee, or a trust committee
of directors and/or Responsible Officers, of the Preferred Guarantee Trustee
in good faith determine that the withholding of such notice is in the
interests of the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default except any Event of Default as to which the
Preferred Guarantee Trustee shall have received written notice or a
Responsible Officer charged with the administration of the Declaration shall
have obtained written notice of.
SECTION 2.8 CONFLICTING INTERESTS.
The Declaration shall be deemed to be specifically described in
this Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE.
(a) This Guarantee Agreement shall be held by the Preferred
Guarantee Trustee for the benefit of the Holders of the Preferred Securities
and the Preferred Guarantee Trustee shall not transfer this Guarantee
Agreement to any Person except a Holder of Preferred Securities exercising
his or her rights pursuant to Section 5.4(b) or to a Successor Preferred
Guarantee Trustee on acceptance by such Successor Preferred Guarantee Trustee
of its appointment to act as Preferred Guarantee Trustee. The right, title
and interest of the Preferred Guarantee Trustee shall automatically vest in
any Successor Preferred Guarantee Trustee and such vesting and cessation of
title shall be effective whether or not conveyancing documents have been
executed and delivered.
(b) If an Event of Default has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce this Guarantee Agreement for the
benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Guarantee Agreement, and no implied covenants shall be read
into this Guarantee Agreement against the Preferred Guarantee Trustee. In
case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6), the Preferred Guarantee Trustee shall exercise such
of the rights and powers vested in it by this Guarantee Agreement, and use
the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his or her
own affairs;
(d) no provision of this Guarantee Agreement shall be construed to
relieve the Preferred Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct,
except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of
Default that may have occurred:
(A) the duties and obligations of the Preferred Guarantee
Trustee shall be determined solely by the express
provisions of this Guarantee Agreement, and the
Preferred Guarantee Trustee shall not be liable
except for the performance of such duties and
7
obligations as are specifically set forth in this
Guarantee Agreement, and no implied covenants or
obligations shall be read into this Guarantee
Agreement against the Preferred Guarantee; and
(B) in the absence of bad faith on the part of the
Preferred Guarantee Trustee, the Preferred
Guarantee Trustee may conclusively rely, as to the
truth of the statements and the correctness of the
opinions expressed therein, upon any certificates
or opinions furnished to the Preferred Guarantee
Trustee and conforming to the requirements of this
Guarantee Agreement; but in the case of any such
certificates or opinions that by any provision
hereof are specifically required to be furnished to
the Preferred Guarantee Trustee, the Preferred
Guarantee Trustee shall be under a duty to examine
the same to determine whether or not they conform
to the requirements of this Declaration;
(ii) the Preferred Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a
Responsible Officer of the Preferred Guarantee Trustee,
unless it shall be proved that the Preferred Guarantee
Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Preferred Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken
by it in good faith in accordance with the direction of
the Holders of not less than a Majority in liquidation
amount of the Preferred Securities at the time
outstanding relating to the time, method and place of
conducting any proceeding for any remedy available to
the Preferred Trustee, or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under
this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require
the Preferred Guarantee Trustee to expend or risk its
own funds or otherwise incur personal
8
financial liability in the performance of any of its
duties or in the exercise of any of its rights or
powers, if it shall have reasonable ground for
believing that the repayment of such funds or liability
is not reasonably assured to it under the terms of this
Guarantee Agreement or adequate indemnity against such
risk or liability is not reasonably assured to it.
SECTION 3.2 CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE.
(a) Subject to the provisions of Section 3.1:
(i) the Preferred Guarantee Trustee may rely and shall be
fully protected in acting or refraining from acting
upon any resolution, certificate, statement,
instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed,
sent or presented by the proper party or parties;
(ii) any direction or act of the Guarantor contemplated by
this Guarantee Agreement shall be sufficiently
evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Guarantee
Agreement, the Preferred Guarantee Trustee shall deem
it desirable that a matter be proved or established
before taking, suffering or omitting any action
hereunder, the Preferred Guarantee Trustee (unless
other evidence is herein specifically prescribed) may,
in the absence of bad faith on its part and request and
rely upon an Officers' Certificate which, upon receipt
of such request, shall be promptly delivered by the
Guarantor;
(iv) the Preferred Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any
instrument (or any rerecording, refiling or
registration thereof);
(v) the Preferred Guarantee Trustee may consult with
counsel and the written advice or opinion of such
counsel with respect to legal matters shall be full and
complete authorization and protection in
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respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such
advice or opinion. Such counsel may be counsel to the
Guarantor or any of its Affiliates, and may include any
of its employees. The Preferred Guarantee Trustee
shall have the right at any time to seek instructions
concerning the administration of this Guarantee
Agreement from any court of competent jurisdiction;
(vi) the Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers
vested in it by this Guarantee Agreement at the request
or direction of any Holder, unless such Holder shall
have provided to the Preferred Guarantee Trustee
adequate security and indemnity which would satisfy a
reasonable person in the position of the Preferred
Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying
with such request or direction, including such
reasonable advances as may be requested by the
Preferred Guarantee Trustee PROVIDED, THAT, nothing
contained in this Section 3.2(a)(vi) shall be taken to
relieve the Preferred Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this
Guarantee Agreement;
(vii) the Preferred Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the
Preferred Guarantee Trustee, in its discretion, may
make such further inquiry or investigation into such
facts or matters as it may see fit;
(viii) the Preferred Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or
attorneys and the Preferred Guarantee Trustee shall not
be responsible for any misconduct
10
or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(ix) any action taken by the Preferred Guarantee Trustee or
its agents hereunder shall bind the Holders of the
Preferred Securities and the signature of the Preferred
Guarantee Trustee or its agents alone shall be
sufficient and effective to perform any such action;
and no third party shall be required to inquire as to
the authority of the Preferred Guarantee Trustee to so
act, or as to its compliance with any of the terms and
provisions of this Guarantee Agreement, both of which
shall be conclusively evidenced by the Preferred
Guarantee Trustee's or its agent's taking such action;
and
(x) whenever in the administration of this Guarantee
Agreement the Preferred Guarantee Trustee shall deem it
desirable to receive instructions with respect to
enforcing any remedy or right or taking any other
action hereunder the Preferred Guarantee Trustee (i)
may request instructions from the Holders of a Majority
in liquidation amount of the Preferred Securities, (ii)
may refrain from enforcing such remedy or right or
taking such other action until such instructions are
received, and (iii) shall be protected in acting in
accordance with such instructions; and
(b) No provision of this Guarantee Agreement shall be deemed to
impose any duty or obligation on the Preferred Guarantee Trustee to perform
any act or acts or exercise any right, power, duty or obligation conferred or
imposed on it, in any jurisdiction in which it shall be illegal, or in which
the Preferred Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to
exercise any such right, power, duty or obligation. No permissive power or
authority available to the Preferred Guarantee Trustee shall be construed to
be a duty.
(c) No provision of this Guarantee Agreement shall be deemed to
empower the Preferred Guarantee Trustee to vary the investment of any Holder
of the Preferred Securities or to act in a manner inconsistent with the
status of the Issuer as a grantor trust for federal income tax purposes.
SECTION 3.3 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor and the Preferred Guarantee Trustee does not
assume
11
any responsibility for their correctness. The Preferred Guarantee Trustee
makes no representations as to the validity or sufficiency of this Guarantee
Agreement.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Preferred Guarantee Trustee
which shall:
(i) not be an Affiliate of the Guarantor;
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Securities and
Exchange Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such
laws to exercise corporate trust powers, having a
combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision
or examination by Federal, State, Territorial or
District of Columbia authority. If such corporation
publishes reports of condition at least annually,
pursuant to law or to the requirements of the
supervising or examining authority referred to above,
then for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so
published;
(b) if at any time the Preferred Guarantee Trustee shall cease to
be eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee
shall immediately resign in the manner and with the effect set out in Section
4.2(c); and
(c) if the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation
OF PREFERRED GUARANTEE TRUSTEE.
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may
be appointed or removed without cause at any time by the Guarantor;
12
(b) the Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Preferred Guarantee Trustee and delivered to the
Guarantor;
(c) the Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been
appointed or until its removal or resignation. The Preferred Guarantee
Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing executed by the Preferred Guarantee
Trustee and delivered to the Guarantor, which resignation shall not take
effect until a Successor Preferred Guarantee Trustee has been appointed and
has accepted such appointment by instrument in writing executed by such
Successor Preferred Guarantee Trustee and delivered to the Guarantor and the
resigning Preferred Guarantee Trustee; and
(d) if no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee.
Such court may thereupon after such notice, if any, as it may deem proper and
prescribe, appoint a Successor Preferred Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1 GUARANTEE.
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim which the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2 WAIVER OF NOTICE AND DEMAND.
The Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
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SECTION 5.3 OBLIGATIONS NOT AFFECTED.
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities
to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution
or any other sums payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation under, arising
out of, or in connection with, the Preferred Securities (other than an
extension of time for payment of Distributions, Redemption Price, Liquidation
Distribution or other sum payable that results from the extension of any
interest payment period on the Debentures or any extension of the maturity
date of the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer
or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation on the Holders or any other Person to
give notice to, or obtain consent of, the Guarantor with respect to the
happening of any of the foregoing.
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SECTION 5.4 RIGHTS OF HOLDERS.
(a) The Holders of a Majority in liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Preferred Guarantee
Trustee in respect of this Guarantee Agreement or exercising any trust or
power conferred upon Preferred Guarantee Trustee under this Guarantee
Agreement; and
(b) notwithstanding the rights of the Preferred Guarantee Trustee
to enforce this Guarantee Agreement under Article III, any Holder of
Preferred Securities may institute a legal proceeding directly against the
Guarantor to enforce the Preferred Guarantee Trustee's rights under this
Guarantee Agreement, without first instituting a legal proceeding against the
Issuer, the Preferred Guarantee Trustee or any other Person.
SECTION 5.5 GUARANTEE OF PAYMENT.
This Guarantee Agreement creates a guarantee of payment and not of
collection.
SECTION 5.6 SUBROGATION.
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Guarantee Agreement;
PROVIDED, HOWEVER, that the Guarantor shall not (except to the extent
required by mandatory provisions of law) be entitled to enforce or exercise
any rights which it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under
this Guarantee Agreement, if, at the time of any such payment, any amounts
are due and unpaid under this Guarantee Agreement. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such
amount to the Holders.
SECTION 5.7 INDEPENDENT OBLIGATIONS.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
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ARTICLE VI
LIMITATION OF TRANSACTIONS;
SUBORDINATION
SECTION 6.1 LIMITATION OF TRANSACTIONS.
So long as any Preferred Securities remain outstanding, (a) the
Guarantor will not (and the Guarantor will cause the Debenture Issuer not to)
declare or pay any dividend on, or make any distributions with respect to, or
redeem, purchase, or make a liquidation payment with respect to, any of its
capital stock, and (b) the Guarantor will not (and the Guarantor will cause
the Debenture Issuer not to) make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) which rank pari passu with or junior to the
Debentures, if at such time (i) there shall have occurred any Event of
Default or (ii) there shall have occurred any Event of Default under the
Declaration; PROVIDED, THAT, clause (a) above does not apply to any stock
dividends paid by the Guarantor where the dividend stock is the same as that
on which the dividend is being paid.
SECTION 6.2 RANKING.
This Guarantee Agreement will constitute an unsecured obligation of
the Guarantor and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Guarantor, including the Debenture Guarantee,
(ii) pari passu with the most senior preferred or preference stock now or
hereafter issued by the Guarantor and with any guarantee now or hereafter
entered into by the Guarantor in respect of any preferred or preference stock
of any Affiliate of the Guarantor, and (iii) senior to the Guarantor's common
stock; PROVIDED, THAT, this Guarantee Agreement shall be pari passu with the
guarantee issued by the Guarantor in connection with the % Trust
Originated Preferred Securities of MediaOne Finance Trust II.
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ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION.
This Guarantee Agreement shall terminate upon full payment of the
Redemption Price of all Preferred Securities, upon the distribution of the
Debentures to the Holder's of all of the Preferred Securities or upon full
payment of the amounts payable in accordance with the Declaration upon
liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case
may be, if at any time any Holder of Preferred Securities must restore
payment of any sums paid under the Preferred Securities or under this
Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person
for any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith in accordance
with this Guarantee Agreement and in a manner such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Guarantee Agreement or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions; and
(b) an Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as
to matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence
and amount of assets from which Distributions (as defined in the Declaration)
to Holders of Preferred Securities might properly be paid.
SECTION 8.2 INDEMNIFICATION.
(a) To the fullest extent permitted by applicable law, the
Guarantor shall indemnify and hold harmless each Indemnified Person from and
against any loss, damage or claim incurred by such Indemnified Person by
reason of any act or omission performed or omitted by such Indemnified Person
in good faith in accordance with this Guarantee Agreement and in a manner
such Indemnified Person reasonably believed to be within the scope of
authority conferred on such Indemnified Person by this in accordance with
this Guarantee Agreement, except
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that no Indemnified Person shall be entitled to be indemnified in respect of
any loss, damage or claim incurred by such Indemnified Person by reason of
negligence or willful misconduct with respect to such acts or omissions; and
(b) to the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any
claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Guarantor prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Guarantor of an
undertaking by or on behalf of the Indemnified Person to repay such amount if
it shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 8.2(a).
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 SUCCESSORS AND ASSIGNS.
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives
of the Guarantor and shall inure to the benefit of the Holders of the
Preferred Securities then outstanding.
SECTION 9.2 AMENDMENTS.
Except with respect to any changes which do not adversely affect
the rights of Holders (in which case no consent of Holders will be required),
this Guarantee Agreement may only be amended with the prior approval of the
Holders of at least a Majority in liquidation amount of the Preferred
Securities. The provisions of Section 12.2 of the Declaration with respect
to meetings of Holders of the Securities apply to the giving of such approval.
SECTION 9.3 NOTICES.
All notices provided for in this Guarantee Agreement shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
(a) if given to the Preferred Guarantee Trustee at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):
The First National Bank of Chicago
One First Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
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(b) if given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Preferred Securities):
U S WEST, Inc. (to be renamed "MediaOne Group, Inc.")
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
(c) if given to any Holder of Preferred Securities, at the address
set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
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SECTION 9.4 BENEFIT.
This Guarantee Agreement is solely for the benefit of the Holders
of the Preferred Securities and subject to Section 3.1(a) is not separately
transferable from the Preferred Securities.
SECTION 9.5 GOVERNING LAW.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
U S WEST, Inc. (to be renamed "MediaOne
Group, Inc.")
By:____________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF
CHICAGO
as Preferred Guarantee Trustee
By:____________________________________
Name:
Title:
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