------------------------------------
MEDIAONE GROUP, INC.
AND
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
PREFERRED SECURITIES GUARANTEE AGREEMENT
Dated as of October 28, 1998
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation............................2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application..........................5
SECTION 2.2 Lists of Holders of Securities............................6
SECTION 2.3 Reports by the Preferred Guarantee Trustee................6
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee...........7
SECTION 2.5 Evidence of Compliance with Conditions Precedent..........7
SECTION 2.6 Events of Default; Waiver.................................7
SECTION 2.7 Event of Default; Notice .................................7
SECTION 2.8 Conflicting Interests.....................................8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee......8
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee............11
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee....14
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility.................14
SECTION 4.2 Appointment, Removal and Resignation
of Preferred Guarantee Trustee...........................15
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee................................................16
SECTION 5.2 Waiver of Notice and Demand..............................16
SECTION 5.3 Obligations Not Affected.................................16
SECTION 5.4 Rights of Holders........................................17
SECTION 5.5 Guarantee of Payment.....................................18
SECTION 5.6 Subrogation..............................................18
SECTION 5.7 Independent Obligations..................................18
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions...............................19
SECTION 6.2 Ranking..................................................19
ARTICLE VII
TERMINATION
SECTION 7.1 Termination..............................................20
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation..............................................20
SECTION 8.2 Indemnification..........................................21
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns...................................21
SECTION 9.2 Amendments...............................................21
SECTION 9.3 Notices..................................................22
SECTION 9.4 Benefit..................................................23
SECTION 9.5 Governing Law............................................23
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
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* 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 October 28, 1998, is executed and delivered
by MediaOne Group, Inc., a Delaware corporation (the "Guarantor"), and The First
National Bank of Chicago, as trustee (the "Preferred Guarantee Trustee"), for
the benefit of the Holders (as defined herein) from time to time of the
Preferred Securi ties (as defined herein) of MediaOne Finance Trust III, a
Delaware statutory business trust (the "Issuer");
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of October 28, 1998, among the trustees of the
Issuer named therein, the Guarantor as Sponsor and the holders from time to time
of undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof $500,000,000 (including $50,000,000 issued pursuant
to an over-allot ment option provided for in the Purchase Agreement) (or up to
$517,500,000 if the remaining over-allotment is exercised) aggregate stated
liquidation amount of Preferred Securities designated the 9.04% Preferred
Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires to irrevocably and unconditionally to agree,
to the extent set forth in this Guarantee Agreement, to pay to the Holders of
the Preferred Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein;
WHEREAS, the Guarantor is also executing and delivering a guaran tee
agreement (the "Common Securities Guarantee Agreement") in substantially
identical terms to this Guarantee Agreement for the benefit of the holders of
the Common Securities (as defined herein) except that if an Event of Default (as
defined in the Indenture (as defined herein)), has occurred and is continuing,
the rights of holders of the Common Securities to receive Guarantee Payments
under the Com mon Securities Guarantee are subordinated to the rights of Holders
of Preferred Securities to receive Guarantee Payments under this Guarantee
Agreement;
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall
1
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 avail able therefore, (ii) the redemption price, including all
accrued and unpaid Distribu tions to the date of redemption (the "Redemption
Price") to the extent the Issuer has funds available therefor, with respect to
any Preferred Securities called for redemp tion by the Issuer, and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Issuer
(other than in connection with the distribution of Deben tures to the Holders in
exchange for Preferred Securities as provided in the Declara tion), the lesser
of (a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Preferred Securities to the date of payment, to the extent
the Issuer shall have funds available therefor and (b) the amount of assets of
the Issuer remaining available for distribution to Holders in liquidation of the
Issuer (in either case, the "Liquidation Distribution"). If an Event of Default
(as defined in the Indenture), has occurred and is continuing, the rights of the
holders of the Common Securities to receive Guarantee Payments under the Common
Securities Guarantee Agreement are subordinated to the rights of Holders of
Preferred Securities to receive Guarantee Payments.
"Guarantor" shall mean MediaOne Group, Inc., a Delaware corpora tion
or any permitted successor thereof under the Indenture, in its capacity as
guarantor under this Guarantee Agreement.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities; provided, however, that in
deter mining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any entity directly or indirectly controlling
or controlled by or under direct or indirect common control with the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives or agents of the
Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of June 12, 1998 among
MediaOne Group Funding, Inc., a Delaware corporation (the "Debenture Issuer"),
MediaOne Group, Inc., a Delaware corporation, as guarantor and The First
National Bank of Chicago, as trustee, as supplemented by a Third Supplemental
Indenture dated as of October 28, 1998 among the Debenture Issuer, the
Guarantor, as guaran tor and The First National Bank of Chicago, as trustee, and
any indenture supplemen tal thereto pursuant to which certain subordinated debt
securities of the Debenture Issuer (the "Debentures") and the guarantee of the
Guarantor endorsed thereon (the "Debenture Guarantee") are to be issued to the
Property Trustee of the Issuer.
"Majority in liquidation amount of the Preferred Securities" means,
except as provided by the Trust Indenture Act, Holder(s) of Preferred Securities
voting separately as a class, who vote Preferred Securities and the aggregate
liquida tion amount (including the stated amount that would be paid on
redemption, liquida tion or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of the Preferred
Securities voted by such Holders represents more than 50% of the above stated
liquidation amount of all Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee Agreement shall include:
(a) a statement that each officer signing the Certificate has read
the covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Guarantee Trustee" means The First National Bank of
Chicago until a Successor Preferred Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Guarantee Agreement and
thereafter means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, the chairman of the board of directors, the president, any
vice-president, any assistant vice-president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or
assistant trust officer or any other officer of the Preferred Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions of the
Trust Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by xx.xx. 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 obliga
tions under xx.xx. 311(a), 311(b) and ss. 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Preferred Guarantee Trustee.
Within 60 days after May 15 of each year commencing May 1999, the
Preferred Guarantee Trustee shall provide to the Holders of the Preferred
Securities such reports as are required by ss. 313 of the Trust Indenture Act,
if any, in the form and in the manner provided by ss. 313 of the Trust Indenture
Act. The Preferred Guarantee Trustee shall also comply with the requirements of
ss. 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee.
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by ss. 314 (if any) and the
compliance certificate required by ss. 314 of the Trust Indenture Act in the
form, in the manner and at the times required by ss. 314 of the Trust Indenture
Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Guarantee Agreement which relate to any of the matters set forth in ss.
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to ss. 314(c)(1) may be given in the form of an
Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
The Holders of a Majority in liquidation amount of Preferred Securi
ties may, by vote, on behalf of the Holders of all of the Preferred Securities,
waive any past Event of Default and its consequences. Upon such waiver, any such
Event of Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Guarantee Agreement, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
SECTION 2.7 Event of Default; Notice
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default known to the Preferred Guarantee Trustee,
transmit by mail, first class postage prepaid, to the Holders of the Preferred
Securi ties, notices of all such Events of Default, unless such defaults have
been cured before the giving of such notice, provided, that, the Preferred
Guarantee Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee, or a trust committee of
directors and/or Responsible Officers, of the Preferred Guarantee Trustee in
good faith determine that the withholding of such notice is in the interests of
the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default except any Event of Default as to which the
Preferred Guarantee Trustee shall have received written notice or a Responsible
Officer charged with the administration of the Declaration shall have obtained
written notice of.
SECTION 2.8 Conflicting Interests.
(a) The Declaration, (b) the Preferred Securities Guarantee
Agreement dated June 12, 1998 relating to MediaOne Finance Trust I, (c) the
Preferred Securities Guarantee Agreement dated June 12, 1998 relating to
MediaOne Finance Trust II, (d) the Preferred Securities Guarantee Agreement
dated September 11, 1995 relating to MediaOne Financing A, (e) the Preferred
Securities Guarantee Agreement dated October 29, 1996 relating to MediaOne
Financing B, (f) the Amended and Restated Declaration of Trust dated June 12,
1998 of MediaOne Finance Trust I, (g) the Amended and Restated Declaration of
Trust dated June 12, 1998 of MediaOne Finance Trust II, (h) the Amended and
Restated Declaration of Trust dated September 11, 1995 of MediaOne Financing A
and (i) the Amended and Restated Declaration of Trust dated October 29, 1996 of
MediaOne Financing B shall be deemed to be specifically described in this
Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Preferred
Guarantee Trustee for the benefit of the Holders of the Preferred Securities and
the Preferred Guarantee Trustee shall not transfer this Guarantee Agreement to
any Person except a Holder of Preferred Securities exercising his or her rights
pursuant to Section 5.4(b) or to a Successor Preferred Guarantee Trustee on
acceptance by such Successor Preferred Guarantee Trustee of its appointment to
act as Preferred Guaran tee Trustee. The right, title and interest of the
Preferred Guarantee Trustee shall automatically vest in any Successor Preferred
Guarantee Trustee and such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered.
(b) If an Event of Default has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce this Guarantee Agreement for the
benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Guarantee Agreement, and no implied covenants shall be read into
this Guarantee Agreement against the Preferred Guarantee Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 2.6), the Preferred Guarantee Trustee shall exercise such of the rights
and powers vested in it by this Guarantee Agreement, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs;
(d) no provision of this Guarantee Agreement shall be construed to
relieve the Preferred Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of De
fault that may have occurred:
(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely
by the express provisions of this Guarantee
Agreement, and the Preferred Guarantee
Trustee shall not be liable except for the perfor
xxxxx of such duties and obligations as are
specifically set forth in this Guarantee Agree
ment, and no implied covenants or obligations
shall be read into this Guarantee Agreement
against the Preferred Guarantee; and
(B) in the absence of bad faith on the part of the
Preferred Guarantee Trustee, the Preferred
Guarantee Trustee may conclusively rely, as to the
truth of the statements and the correctness of the
opinions expressed therein, upon any
certificates or opinions furnished to the Pre
ferred Guarantee Trustee and conforming to the
requirements of this Guarantee Agreement; but in
the case of any such certificates or opinions that
by any provision hereof are specifically required
to be furnished to the Preferred Guar xxxxx
Trustee, the Preferred Guarantee Trustee shall be
under a duty to examine the same to determine
whether or not they conform to the requirements of
this Declaration;
(ii) the Preferred Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Respon
sible Officer of the Preferred Guarantee Trustee, unless
it shall be proved that the Preferred Guarantee Trustee
was negligent in ascertaining the pertinent facts;
(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it
in good faith in accordance with the direction of the
Holders of not less than a Majority in liquidation
amount of the Preferred Securities at the time outstand
ing relating to the time, method and place of conduct
ing any proceeding for any remedy available to the
Preferred Trustee, or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under
this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require
the Preferred Guarantee Trustee to expend or risk its
own funds or otherwise incur personal financial liabil
ity in the performance of any of its duties or in the
exercise of any of its rights or powers,if it shall have
reasonable ground for believing that the repayment of
such funds or liability is not reasonably assured to it
under the terms of this Guarantee Agreement or xxx
xxxxx 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, opin
ion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness
or other paper or document believed by it to be genuine
and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Guarantor contemplated by
this Guarantee Agreement shall be sufficiently evi
denced by an Officers' Certificate;
(iii) whenever in the administration of this Guarantee
Agreement, the Preferred Guarantee Trustee shall deem it
desirable that a matter be proved or established before
taking, suffering or omitting any action hereun der, the
Preferred Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of
bad faith on its part and request and rely upon an
Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Guar antor;
(iv) the Preferred Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any in
strument (or any rerecording, refiling or registration
thereof);
(v) the Preferred Guarantee Trustee may consult with
counsel and the written advice or opinion of such
counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in
good faith and in accordance with such advice or opin
ion. Such counsel may be counsel to the Guarantor or
any of its Affiliates, and may include any of its em-
ployees. The Preferred Guarantee Trustee shall have
the right atany time to seek instructions concerning the
administration of this Guarantee Agreement from any
court of competent jurisdiction;
(vi) the Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers
vested in it by this Guarantee Agreement at the request
or direction of any Holder, unless such Holder shall
have provided to the Preferred Guarantee Trustee xxx
xxxxx security and indemnity which would satisfy a
reasonable person in the position of the Preferred
Guarantee Trustee, against the costs, expenses (includ
ing attorneys' fees and expenses) and liabilities that
might be incurred by it in complying with such request
or direction, including such reasonable advances as
may be requested by the Preferred Guarantee Trustee
provided, that, nothing contained in this Section
-------- ----
3.2(a)(vi) shall be taken to relieve the Preferred Guar
xxxxx Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and
powers vested in it by this Guarantee Agreement;
(vii) the Preferred Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebt
edness or other paper or document, but the Preferred
Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or mat
ters as it may see fit;
(viii)the Preferred Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or
attorneys and the Preferred Guarantee Trustee shall not
be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care
by it hereunder;
(ix) any action taken by the Preferred Guarantee Trustee or
its agents hereunder shall bind the Holders of the Pre
ferred Securities and the signature of the Preferred
Guarantee Trustee or its agents alone shall be sufficient
and effective to perform any such action; and no third
party shall be required to inquire as to the authority of
the Preferred Guarantee Trustee to so act, or as to its
compliance with any of the terms and provisions of
this Guarantee Agreement, both of which shall be
conclusively evidenced by the Preferred Guarantee
Trustee's or its agent's taking such action; and
(x) whenever in the administration of this Guarantee
Agreement the Preferred Guarantee Trustee shall deem
it desirable to receive instructions with respect to en
forcing any remedy or right or taking any other action
hereunder the Preferred Guarantee Trustee (i) may
request instructions from the Holders of a Majority in
liquidation amount of the Preferred Securities, (ii) may
refrain from enforcing such remedy or right or taking
such other action until such instructions are received,
and (iii) shall be protected in acting in accordance with
such instructions; and
(b) No provision of this Guarantee Agreement shall be deemed to
impose any duty or obligation on the Preferred Guarantee Trustee to perform any
act or acts or exercise any right, power, duty or obligation conferred or
imposed on it, in any jurisdiction in which it shall be illegal, or in which the
Preferred Guarantee Trustee shall be unqualified or incompetent in accordance
with applicable law, to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or authority available to
the Preferred Guarantee Trustee shall be construed to be a duty.
(c) No provision of this Guarantee Agreement shall be deemed to
empower the Preferred Guarantee Trustee to vary the investment of any Holder of
the Preferred Securities or to act in a manner inconsistent with the status of
the Issuer as a grantor trust for federal income tax purposes.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee.
The recitals contained in this Guarantee shall be taken as the state
ments of the Guarantor, and the Preferred Guarantee Trustee does not assume any
responsibility for their correctness. The Preferred Guarantee Trustee makes no
representations as to the validity or sufficiency of this Guarantee Agreement.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility.
(a) There shall at all times be a Preferred Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor;
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State
or Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Securities and
Exchange Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such
laws to exercise corporate trust powers, having a com
bined capital and surplus of at least 50 million U.S.
dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of
Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law
or to the requirements of the supervising or examining
authority referred to above, then for the purposes of
this Section 4.1(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report
of condition so published;
(b) if at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immedi ately resign in the manner and with the effect set out in Section 4.2(c);
and
(c) if the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of ss. 310(b) of the Trust Indenture
Act, the Preferred Guarantee Trustee and Guarantor shall in all respects comply
with the provisions of ss. 310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation
of Preferred Guarantee Trustee.
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may
be appointed or removed without cause at any time by the Guarantor;
(b) the Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Preferred Guarantee Trustee and delivered to the Guarantor;
(c) the Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee; and
(d) if no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning Pre ferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon after such notice, if any, as it may deem proper and
prescribe, appoint a Successor Preferred Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim which the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 5.3 Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connec tion with, the Preferred Securities (other than an extension of
time for payment of Distributions, Redemption Price, Liquidation Distribution or
other sum payable that
results from the extension of any interest payment period on the Debentures or
any extension of the maturity date of the Debentures permitted by the
Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Issuer granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation on the Holders or any other Person to
give notice to, or obtain consent of, the Guarantor with respect to the
happening of any of the foregoing.
SECTION 5.4 Rights of Holders.
(a) The Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of this Guarantee Agreement or exercising any trust or power conferred
upon the Preferred Guarantee Trustee under this Guarantee Agreement; and
(b) notwithstanding the rights of the Preferred Guarantee Trustee to
enforce this Guarantee Agreement under Article III, any Holder of Preferred
Securities may institute a legal proceeding directly against the Guarantor to
enforce the Preferred Guarantee Trustee's rights under this Guarantee Agreement,
without
first instituting a legal proceeding against the Issuer, the Preferred Guarantee
Trustee or any other Person. The Guarantor waives any right or remedy to require
that any action be brought first against the Issuer or any other person or
entity before proceed ing directly against the Guarantor.
SECTION 5.5 Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection.
SECTION 5.6 Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Guarantee Agreement; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any rights which
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust for
the Holders and to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwith standing the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions.
So long as any Preferred Securities remain outstanding, (a) the
Guarantor will not (and the Guarantor will cause the Debenture Issuer not to)
declare or pay any dividend on, or make any distributions with respect to, or
redeem, purchase, or make a liquidation payment with respect to, any of its
capital stock, and (b) the Guarantor will not (and the Guarantor will cause the
Debenture Issuer not to) make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities (including
guarantees) which rank pari passu with or junior to the Debentures, if at such
time (i) there shall have occurred any Event of Default or (ii) there shall have
occurred any Event of Default under the Declaration; provided, that, clause (a)
above does not apply to any stock dividends paid by the Guarantor where the
dividend stock is the same as that on which the dividend is being paid.
SECTION 6.2 Ranking.
This Guarantee Agreement will constitute an unsecured obligation of
the Guarantor and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Guarantor, including the Debenture Guarantee, (ii)
pari passu with the most senior Preferred or preference stock now or hereafter
issued by the Guaran tor and with any guarantee now or hereafter entered into by
the Guarantor in respect of any Preferred or preference stock of any Affiliate
of the Guarantor, and (iii) senior to the Guarantor's common stock; provided,
that, this Guarantee Agreement shall be pari passu with the guarantee issued by
the Guarantor in connection with (w) the 9.30% Trust Originated Preferred
Securities of MediaOne Finance Trust I, (x) the 9.50% Trust Originated Preferred
Securities of MediaOne Finance Trust II, (y) the 7.96% Trust Originated
Preferred Securities of MediaOne Financing A and (z) the 8.25% Trust Originated
Preferred Securities of MediaOne Financing B.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.
This Guarantee Agreement shall terminate upon full payment of the
Redemption Price of all Preferred Securities, upon the distribution of the
Debentures to the Holder's of all of the Preferred Securities or upon full
payment of the amounts payable in accordance with the Declaration upon
liquidation of the Issuer. Notwith standing the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder of Preferred Securi ties must restore payment of
any sums paid under the Preferred Securities or under this Preferred Securities
Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or account
able in damages or otherwise to the Guarantor or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Guarantee Agreement and in a manner such Indemnified Person reasonably believed
to be within the scope of the authority conferred on such Indemnified Person by
this Guarantee Agreement or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of such Indemnified
Person's negligence or willful misconduct with respect to such acts or
omissions; and
(b) an Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions (as defined in the Declaration) to
Holders of Preferred Securities might properly be paid.
SECTION 8.2 Indemnification.
(a) To the fullest extent permitted by applicable law, the Guaran
tor shall indemnify and hold harmless each Indemnified Person from and against
any loss, damage or claim incurred by such Indemnified Person by reason of any
act or omission performed or omitted by such Indemnified Person in good faith in
accor dance with this Guarantee Agreement and in a manner such Indemnified
Person reasonably believed to be within the scope of authority conferred on such
Indemni fied Person by this in accordance with this Guarantee Agreement, except
that no Indemnified Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by reason of
negligence or willful misconduct with respect to such acts or omissions; and
(b) to the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Guarantor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Guarantor of an undertaking by or on behalf of
the Indemnified Person to repay such amount if it shall be determined that the
Indemni fied Person is not entitled to be indemnified as authorized in Section
8.2(a).
The provisions of this Section 8.2 shall survive termination of this
Guarantee or the resignation or removal of the Preferred Guarantee Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding.
SECTION 9.2 Amendments.
Except with respect to any changes which do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Guarantee Agreement may only be amended with the prior approval of the Holders
of at least a Majority in liquidation amount of the Preferred Securities. The
provi sions of Section 12.2 of the Declaration with respect to meetings of
Holders of the Securities apply to the giving of such approval.
SECTION 9.3 Notices.
All notices provided for in this Guarantee Agreement shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
(a) if given to the Preferred Guarantee Trustee at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):
The First National Bank of Chicago
One First Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
(b) if given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Preferred Securities):
MediaOne Group, Inc.
000 Xxxxxxxxx Xxxxx 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.
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.
MEDIAONE GROUP, INC.
By: /s/ Xxxxxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxx
Title: Vice President and Treasurer
THE FIRST NATIONAL BANK OF CHICAGO
as Preferred Guarantee Trustee
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
