(..continued)
EXHIBIT 4A
U S WEST FINANCING II
(a Delaware business trust)
19,200,000 Preferred Securities
8 % Trust Originated Preferred Securities ("TOPrS" SM)
(Liquidation Amount of $25 Per Preferred Security)
PURCHASE AGREEMENT
Dated: October 24, 1996
___________________
SM "Trust Originated Preferred Securities" and "TOPrS" are
service marks of Merrill Lynch & Co., Inc.
TABLE OF CONTENTS
SCHEDULES
Schedule A - List of Underwriters Sch A 1
Schedule B - Pricing Information Sch B-1
EXHIBITS
Exhibit A - Form of Opinion of Weil, Gotshal & Manges LLP A-1
Exhibit B - Form of Opinion of Stephen E. Brilz, Esq. B-1
Exhibit C - Form of Opinion of Morris, Nichols, Arsht & Tunnell C-1
Exhibit D - Form of Opinion of Pepper, Hamilton & Scheetz D-1
U S WEST FINANCING II
(a Delaware business trust)
19,200,000 Preferred Securities
8 % Trust Originated Preferred Securities ("TOPrS" SM)
(Liquidation Amount of $25 Per Preferred Security)
PURCHASE AGREEMENT
October 24, 1996
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Dean Witter Reynolds Inc.
A.G. Edwards & Sons, Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
Smith Barney Inc.
as Representatives of the several Underwriters
c/o MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
U S WEST FINANCING II (the "Trust"), a statutory business trust
organized under the Business Trust Act (the "Delaware Act") of the State of
Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Sections 3801
et seq.), U S WEST, Inc., a Delaware corporation (the "Guarantor"), and U
S WEST Capital Funding, Inc., a Colorado corporation ("Capital Funding" and,
together with the Trust and the Guarantor, the "Offerors") confirm their
agreement (the ___________________
SM "Trust Originated Preferred Securities" and "TOPrS" are service
marks of Merrill Lynch & Co., Inc.
"Agreement") with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Merrill Lynch and Dean Witter Reynolds Inc., A.G. Edwards &
Sons, Inc., PaineWebber Incorporated, Prudential Securities Incorporated and
Smith Barney Inc. are acting as representatives (in such capacity, the
"Representatives"), with respect to the issue and sale by the Trust and the
purchase by the Underwriters, acting severally and not jointly, of the
respective numbers of 8 % Trust Originated Preferred Securities (liquidation
amount of $25 per preferred security) of the Trust (the "Preferred
Securities") set forth in said Schedule A. The Preferred Securities to be
purchased by the Underwriters are hereinafter called the "Designated
Securities." The Preferred Securities will be guaranteed by the Guarantor
with respect to distributions and payments upon liquidation, redemption and
otherwise (the "Preferred Securities Guarantee") pursuant to the Preferred
Securities Guarantee Agreement (the "Preferred Securities Guarantee
Agreement"), dated as of October 29, 1996, between the Guarantor and The First
National Bank of Chicago, as Trustee, and entitled to the benefits of certain
backup undertakings described in the Prospectus (as defined herein) with
respect to Capital Funding's agreement pursuant to the Supplemental Indenture
(as defined herein) to pay all expenses relating to administration of the
Trust and the Guarantor's guarantee pursuant to the Supplemental Indenture of
that undertaking (the "Undertakings"). The Preferred Securities and the
related Preferred Securities Guarantees are referred to herein as the
"Securities".
The Offerors understand that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered. The entire proceeds from the
sale of the Securities will be combined with the entire proceeds from the sale
by the Trust to the Guarantor of its common securities (the "Common
Securities") guaranteed by the Guarantor, to the extent set forth in the
Prospectus, with respect to distributions and payments upon liquidation, and
redemption (the "Common Securities Guarantee" and together with the Preferred
Securities Guarantee and the Debt Guarantee (as defined herein), the
"Guarantees") pursuant to the Common Securities Guarantee Agreement (the
"Common Securities Guarantee Agreement" and, together with the Preferred
Securities Guarantee Agreement, the "Guarantee Agreements"), dated as of
October 29, 1996, between the Guarantor and The First National Bank of
Chicago, as Trustee, and will be used by the Trust to purchase $494,845,375
million aggregate principal amount of Subordinated Deferrable Interest Notes
(the "Subordinated Debt Securities") to be issued by Capital Funding. The
Preferred Securities and the Common Securities will be issued pursuant to the
amended and restated declaration of trust of the Trust, dated as of October
24, 1996 (the "Declaration"), among the Guarantor, as Sponsor, the trustees
named therein (the "Trustees") and the holders from time to time of undivided
beneficial interests in the assets of the Trust. The Subordinated Debt
Securities and the guarantee by the Guarantor of the payment of principal,
premium, if any, and interest on the Subordinated Debt Securities (the "Debt
Guarantee") will be issued pursuant to an indenture, dated as of September 6,
1995, among U S WEST, Inc., a Colorado corporation, Capital Funding and
Norwest Bank, as trustee (the "Debt Trustee"), as supplemented by a Second
Supplemental Indenture, dated as of October 31, 1995, among the Guarantor,
Capital Funding and the Debt Trustee (as so supplemented, the "Base
Indenture"),
and a supplement to the Base Indenture, dated as of October 24, 1996 (the
"Supplemental Indenture," and together with the Base Indenture and any other
amendments or supplements thereto, the "Indenture"), among the Guarantor,
Capital Funding and the Debt Trustee.
The Offerors have filed with the Securities and Exchange Commission
(the "Commission") a shelf registration statement on Form S-3 (No. 33-57889)
covering the registration of (i) the Preferred Securities, (ii) the Preferred
Securities Guarantee, (iii) the Subordinated Debt Securities and (iv) the Debt
Guarantee under the Securities Act of 1933, as amended (the "1933 Act"), which
permits the delayed or continuous offering of securities pursuant to Rule 415
of the rules and regulations of the Commission under the 1933 Act (the "1933
Act Regulations"). Promptly after execution and delivery of this Agreement,
the Offerors will either (i) prepare and file a prospectus in accordance with
the provisions of Rule 424(b) ("Rule 424(b)") of the 1933 Act Regulations or
(ii) if the Offerors have elected to rely upon Rule 434 ("Rule 434") of the
1933 Act Regulations, prepare and file a term sheet (a "Term Sheet") in
accordance with the provisions of Rule 434 and 424(b). The information
included in such Term Sheet that was omitted from such registration statement
at the time it became effective but that is deemed part of such registration
statement at the time it became effective is referred to as "Rule 434
Information." Each prospectus used before such Rule 424(b) prospectus has
been filed and any prospectus that omitted the Rule 434 Information, in each
case that was used after such effectiveness and prior to the execution and
delivery of this Agreement, is herein called a "preliminary prospectus." Such
registration statement, including the exhibits thereto, schedules thereto, if
any, and the documents incorporated by reference therein pursuant to Item 12
of Form S-3 under the 1933 Act, at the time it became effective and including
the Rule 434 Information is herein called the "Registration Statement." Any
registration statement filed pursuant to Rule 462(b) of the 1933 Act
Regulations is herein referred to as the "Rule 462(b) Registration Statement"
and after such filing the term "Registration Statement" shall include the Rule
462 (b) Registration Statement. The final prospectus, including the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
1933 Act, in the form first furnished to the Underwriters for use in
connection with the offering of the Securities is herein called the
"Prospectus." If Rule 434 is relied on, the term "Prospectus" shall refer to
the preliminary prospectus dated October 16, 1996 together with the Term Sheet
and all references in this Agreement to the date of the Prospectus shall mean
the date of the Term Sheet. For purposes of this Agreement, all references to
the Registration Statement, any preliminary prospectus, the Prospectus or any
Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which
is incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
1. Representations and Warranties. The Offerors jointly and
severally represent and warrant to each Underwriter as of the date hereof
(such date being hereinafter referred to as the "Representation Date") as
follows:
(a) Each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the 1933 Act. At the
respective times the Registration Statement became effective and at the
Representation Date, the Registration Statement, any Rule 462(b) Registration
Statement and any post-effective amendment thereto complied and will comply in
all material respects with the requirements of the 1933 Act, the 1933 Act
Regulations, the 1934 Act, the regulations of the Commission under the 1934
Act (the "1934 Act Regulations"), and the Trust Indenture Act of 1939 (the
"1939 Act") and the rules and regulations of the Commission under the 1939 Act
(the "1939 Act Regulations"), and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading. The
Prospectus, as amended or supplemented, if applicable, at the Representation
Date and at the Closing Time referred to in Section 2 hereof, will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or Prospectus made
in reliance upon and in conformity with information furnished to the Offerors
in writing by any Underwriter through Merrill Lynch expressly for use in the
Registration Statement or Prospectus.
(b) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, there has been no material adverse change or any development
involving a prospective material adverse change in the financial condition or
results of operation of the Guarantor and its subsidiaries taken as a whole.
2. Sale and Delivery to Underwriters; Closing.
(a) Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Trust agrees to sell to each Underwriter, severally and not jointly, and
each Underwriter, severally and not jointly, agrees to purchase from the
Trust, at the price per security set forth in Schedule B, the number of
Securities set forth in Schedule A opposite the name of such Underwriter, plus
any additional number of
Securities which such Underwriter may become obligated to purchase pursuant to
the provisions of Section 10 hereof.
(b) Commission. As compensation to the Underwriters for their
commitments hereunder and in view of the fact that the proceeds of the sale of
the Securities will be used to purchase the Subordinated Debt Securities
of Capital Funding, Capital Funding hereby agrees to pay to the
Representatives, for the accounts of the several Underwriters, a commission
per security set forth in Schedule B as compensation to the Underwriters for
their commitments under this Agreement.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the offices of Skadden,
Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, New York 10022, or
at such other place as shall be agreed upon by the Representatives and the
Offerors, at 10:00 A.M. (Eastern time) on the third (fourth, if the pricing
occurs after 4:30 P.M. (Eastern time) on any given day) business day after the
date hereof (unless postponed in accordance with the provisions of Section
10), or such other time not later than ten business days after such date as
shall be agreed upon by the Representatives and the Offerors (such time and
date of payment and delivery being herein called "Closing Time").
Payment shall be made to the Trust by wire transfer of immediately
available funds to a bank account designated by the Trust, against delivery to
the Representatives for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood
that each Underwriter has authorized the Representatives, for its account, to
accept delivery of, receipt for, and make payment of the purchase price for,
the Securities which it has agreed to purchase. Merrill Lynch, individually
and not as representative of the Underwriters, may (but shall not be obligated
to) make payment of the purchase price for the Securities to be purchased by
any Underwriter whose funds have not been received by the Closing Time but
such payment shall not relieve such Underwriter from its obligations
hereunder.
At the Closing Time, Capital Funding will pay, or cause to be paid, the
commission payable at such time to the Underwriters under Section 2(b) hereof
by wire transfer of immediately available funds to a bank account designated
by Merrill Lynch.
(d) Denominations; Registration. Certificates for the Securities shall
be in such denominations and registered in such names as the Representatives
may request in writing at least one full business day before the Closing Time.
The certificates for the Securities will be made available for examination
and packaging by the Representatives in The City of New York not later than
10:00 A.M. (Eastern time) on the business day prior to the Closing Time.
3. Covenants of the Offerors. Each of the Offerors jointly and
severally covenants with each Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests.
The Offerors, subject to Section 3(b), will comply with the requirements of
Rule 434, as applicable, and will notify the Representatives immediately, and
confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, and (iv) of
the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or of any order preventing or suspending the use
of any preliminary prospectus, or of the suspension of the qualification of
the Securities for offering or sale in any jurisdiction, or of the initiation
or threatening of any proceedings for any of such purposes. The Offerors will
promptly effect the filings necessary pursuant to Rule 424(b). The Offerors
will make every reasonable effort to prevent the issuance of any stop order
and, if any stop order is issued, to obtain the lifting thereof at the
earliest possible moment.
(b) Filing of Amendments. The Offerors will give the Representatives
notice of their intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)), any Term Sheet or any
amendment, supplement or revision to either the prospectus included in the
Registration Statement at the time it became effective or to the Prospectus,
whether pursuant to the 1933 Act, the 1934 Act or otherwise, will furnish the
Representatives with copies of any such documents a reasonable amount of time
prior to such proposed filing or use, as the case may be, and will not file or
use any such document to which the Representatives or counsel for the
Underwriters shall reasonably object unless the Offerors shall decide that
such document must be filed in accordance with applicable law.
(c) Delivery of Registration Statements. The Offerors will furnish to
the Representatives copies of the Registration Statement, including all
exhibits thereto, the Prospectus and all amendments and supplements to such
documents, in each case as soon as available and in such quantities as are
reasonably requested. The copies of the Registration Statement, the
Prospectus and all amendments and supplements to such documents furnished to
the Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(d) Continued Compliance with Securities Laws. The Offerors will
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the
1934 Act Regulations so as to permit the completion of the distribution
of the Securities as contemplated in this Agreement and in the Prospectus. If
at any time when a prospectus is required by the 1933 Act to be delivered in
connection with sales of the Securities, any event shall occur or condition
shall exist as a result of which it is necessary to amend the
Registration Statement or amend or supplement the Prospectus in order that the
Prospectus will not include any untrue statements of a material fact or omit
to state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary at any such time to
amend the Registration Statement or amend or supplement the Prospectus in
order to comply with the requirements of the 1933 Act or the 1933 Act
Regulations, the Offerors will promptly prepare and file with the Commission,
subject to Section 3(b), such amendment or supplement as may be necessary to
correct such statement or omission or to make the Registration Statement or
the Prospectus comply with such requirements, and the Offerors will furnish to
the Underwriters such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(e) Blue Sky Qualifications. The Offerors will use its best efforts,
in cooperation with the Underwriters, to qualify the Preferred Securities and
Subordinated Debt Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions as the Representatives
may designate; provided, however, that each of the Offerors shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in
which it is not so qualified or to subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so subject.
(f) Rule 158. The Trust and the Guarantor will make generally
available to their securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated by,
the last paragraph of Section 11(a) of the 1933 Act.
(g) Listing. The Offerors will use their reasonable best efforts to
effect the listing of the Preferred Securities on the New York Stock Exchange;
if the Preferred Securities are exchanged for Subordinated Debt
Securities, Capital Funding will use its reasonable best efforts to effect the
listing of the Subordinated Debt securities on the exchange on which the
Preferred Securities were then listed.
(h) Restriction on Sale of Securities. During a period of 30 days
from the date of the Prospectus, neither the Trust, the Guarantor nor Capital
Funding will, without the prior written consent of Merrill Lynch, directly or
indirectly, offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of any Preferred
Securities or any securities convertible into or exercisable or exchangeable
for Preferred Securities or file any registration statement under the 1933 Act
with respect to any of the foregoing. The foregoing sentence shall not apply
to any of the Securities to be sold hereunder.
4. Payment of Expenses. (a) Expenses. Capital Funding will pay
all expenses incident to the performance of each Offeror's obligations under
this Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Agreement, any Agreement among
Underwriters and such other documents as may be required in connection with
the offering, purchase, sale, issuance or delivery of the Securities, (iii)
the preparation, issuance and delivery of the certificates for the Preferred
Securities to the Underwriters, (iv) the fees and disbursements of the
Guarantor's, Capital Funding's and the Trust's counsel, accountants and other
advisors, (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectus and any amendments or supplements thereto, (vii) the
preparation, printing and delivery to the Underwriters of copies of the Blue
Sky Survey and any supplement thereto, (viii) the filing fees incident to,
and the reasonable fees and disbursements of counsel to the Underwriters in
connection with, the review, if any, by the National Association of Securities
Dealers, Inc. (the "NASD") of the terms of the sale of the Securities, (ix)
the fees and expenses of the Debt Trustee, including the fees and
disbursements of counsel for the Debt Trustee, in connection with the
Indenture and the Subordinated Debt Securities; (x) the fees and expenses of
the Property Trustee and Delaware Trustee, including the fees and
disbursements of counsel for the Property Trustee and Delaware Trustee, in
connection with the Declaration and the Certificate of Trust; (xi) any fees
charged by securities rating services for rating the Preferred Securities and
the Subordinated Debt Securities, (xii) the fees and expenses incurred in
connection with the listing of the Preferred Securities and, if applicable,
the Subordinated Debt Securities on the New York Stock Exchange, (xiii) the
fees and expenses of any transfer agent or registrar for the Securities, and
(xiv) the cost of qualifying the Preferred Securities with The Depository
Trust Company.
(a) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, Capital Funding shall reimburse the Underwriters for all of
their out-of-pocket expenses, including the reasonable fees and disbursements
of counsel for the Underwriters.
5. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Offerors contained in Section 1 hereof,
to the performance by the Offerors of their covenants and other obligations
hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission. The Prospectus
shall have been filed with the Commission in accordance with Rule 424(b)
or, if the Offerors have elected to rely upon Rule 434, a Term Sheet shall
have been filed with the Commission in accordance with Rule 424(b).
(b) Opinion of Counsel. At Closing Time the Representatives shall
have received:
(i) The favorable opinion, dated as of Closing Time, of Weil, Gotshal &
Manges LLP, counsel for the Offerors, in form and substance reasonably
satisfactory to counsel for the Underwriters, substantially in the form set
forth in Exhibit A.
(ii) The favorable opinion, dated as of Closing Time, of Stephen E.
Brilz, Esq., Corporate Counsel for U S WEST, Inc., in form and substance
satisfactory to counsel for the Underwriters, substantially in the form set
forth in Exhibit B.
(iii) The favorable opinion, dated as of Closing Time, of Morris,
Nichols, Arsht & Tunnell, special Delaware counsel for the Trust and the
Guarantor, in form and substance satisfactory to counsel for the Underwriters,
substantially in the form set forth in Exhibit C.
(iv) The favorable opinion, dated as of Closing Time, of the
Pepper, Hamilton & Scheetz, special Delaware counsel for The First National
Bank of Chicago, as Property Trustee and First Chicago Delaware Inc., as
Delaware Trustee under the Declaration, in form and substance satisfactory to
counsel for the Underwriters, substantially in the form of Exhibit D.
(v) The favorable opinion, dated as of Closing Time, of Skadden, Arps,
Slate, Meagher & Flom ("SASM&F"), counsel for the Underwriters, in form and
substance satisfactory to the Underwriters.
In giving its opinion, SASM&F may rely as to certain
matters of Colorado law upon the opinion of Stephen E. Brilz, Corporate
Counsel for U S WEST, Inc., which shall be delivered in accordance with
Section 5(b)(ii) hereto, and as to certain matters relating to The First
National Bank of Chicago under the federal banking laws upon the opinion of
Pepper, Hamilton & Scheetz, special Delaware counsel to the Property Trustee,
which shall be delivered in accordance with Section 5(b)(iv) hereto.
(c) Officers' Certificate. At Closing Time, since the date hereof or
since the respective dates as of which information is given in the Prospectus,
there shall not have occurred any change, or any development involving a
prospective change, in or affecting particularly the business or properties of
the Guarantor and any of its subsidiaries, taken as a whole, which, in the
judgment of the Representatives, materially impairs the investment quality of
the Designated Securities and the Representatives shall have received (i) a
certificate, dated as of the Closing Time, of a Vice President of the
Guarantor, (ii) a certificate, dated as of the Closing Time, of a Vice
President of Capital Funding, and (iii) a certificate, dated as of the Closing
Time, of a Trustee of the Trust, in each case in which such officers shall
state that, to the best of their knowledge after reasonable investigation, the
representations and warranties of the Offerors in this Agreement are true and
correct, that the Offerors have complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to
the Closing Time, that no stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for that purpose are
pending or are contemplated by the Commission and that, subsequent to the date
of the most recent financial statements in the Prospectus, there has been no
material adverse change in the financial position or results of operations of
the Guarantor and any of its subsidiaries, taken as a whole, except as set
forth in or contemplated by the Prospectus.
(d) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from each of Coopers &
Lybrand L.L.P. and Arthur Andersen LLP a letter dated such date, in form and
substance satisfactory to the Representatives, together with signed or
reproduced copies of such letter for each of the other Underwriters to the
effect that:
(i) they are independent public accountants with respect to the
Guarantor and its consolidated subsidiaries, including Capital Funding within
the meaning of the 1933 Act and the 1933 Act Regulations;
(ii) in their opinion, the consolidated financial statements and any
supplementary financial information and schedules audited (and, if applicable,
prospective financial statements and/or pro forma financial information
examined) by them and included or incorporated by reference in the
Registration Statement or the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act or the
Exchange Act and the related published rules and regulations thereunder; and
if applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of the
consolidated interim financial statements, selected financial data, statements
and/or condensed financial statements derived from audited financial
statements of the Guarantor for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been furnished to the
Representatives;
(iii) as to the letter from Arthur Andersen LLP, based upon limited
procedures set forth in detail in such letter, nothing has come to their
attention which causes them to believe that:
(1) the unaudited consolidated financial statements and supporting
schedules of the Guarantor included in the Registration Statement do not
comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations or are not presented
in conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements
included in the Registration Statement,
(2) the unaudited amounts of revenues, net income and net income per
share set forth under "U S WEST, Inc. Summary Financial Information" in the
Prospectus were not determined on a basis substantially consistent with that
used in determining the corresponding amounts in the audited financial
statements included in the Registration Statement, or
(3) at a specified date not more than five days prior to the date of
this Agreement, there has been any change in the capital stock of the
Guarantor and its subsidiaries, including Capital Funding, or any increase in
the consolidated long-term debt of the Guarantor and its subsidiaries,
including Capital Funding, or any decrease in consolidated net current assets
or net assets as compared with the amounts shown on the date of the most
recent consolidated balance sheet included in or incorporated by reference in
the Registration Statement and the Prospectus (June 30, 1996 balance sheet
included in the Registration Statement) or, during the period from the date of
the most recent consolidated balance sheet included in or incorporated by
reference in the Registration Statement and the Prospectus to a specified date
not more than five days prior to the date of this Agreement, there were any
decreases, as compared with the corresponding period in the preceding year, in
consolidated revenues, net income or net income per share of the Guarantor and
its subsidiaries, including Capital Funding, except in all instances for
changes, increases or decreases which the Registration Statement and the
Prospectus disclose have occurred or may occur; and
(iv) in addition to the examination referred to in their opinions and
the limited procedures referred to in clause (iii) above, they have carried
out certain specified procedures, not constituting an audit, with respect to
certain amounts, percentages and financial information which are included in
the Registration Statement and Prospectus, or incorporated therein by
reference, and which are specified by the Representatives, and have found such
amounts, percentages and financial information to be in agreement with the
relevant accounting, financial and other records of the Guarantor and its
subsidiaries, including Capital Funding, identified in such letter.
(e) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from each of Coopers & Lybrand L.L.P. and Arthur Andersen
LLP a letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in their letters furnished pursuant to subsection (d) of this
Section, except that the specified date referred to shall be a date not more
than three business days prior to Closing Time.
(f) Maintenance of Rating. At Closing Time, the Preferred Securities
and the Subordinated Debt Securities shall be rated in one of the four highest
rating categories for long term debt ("Investment Grade") by any
nationally recognized statistical rating agency, and the Trust shall have
delivered to the Representatives a letter, dated the Closing Time, from such
nationally recognized statistical rating agency, or other evidence
satisfactory to the Representatives, confirming that the Preferred Securities
and the Subordinated Debt Securities have Investment Grade ratings.
(g) Approval of Listing. At Closing Time, the Preferred Securities
shall have been approved for listing on the New York Stock Exchange, subject
only to official notice of issuance.
(h) Additional Documents. At Closing Time counsel for the
Underwriters shall have been furnished with such documents and opinions as
they may require for the purpose of enabling them to pass upon the issuance
and sale of the Preferred Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Offerors in connection with the issuance and sale of the
Preferred Securities as herein contemplated shall be satisfactory in form and
substance to the Representatives and counsel for the Underwriters.
(i) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement may be terminated by the Representatives by notice to the
Offerors at any time at or prior to Closing Time, and such termination shall
be without liability of any party to any other party except as provided in
Section 4.
6. Indemnification.
(a) Indemnification of Underwriters. The Offerors agree to jointly
and severally indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the
1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or
any amendment thereto), including the Rule 434 Information, if applicable, or
the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
govern-mental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with the
written consent of the Guarantor; and
(iii) against any and all reasonable expense as incurred (including,
subject to Section 6(c) hereof, the fees and disbursements of counsel chosen
by Merrill Lynch), in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, to the extent that any such expense is not paid
under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Trust, the Guarantor or Capital Funding by any Underwriter through Merrill
Lynch expressly for use in the Registration Statement (or any amendment
thereto) or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto); and provided, further, that this indemnity agreement
with respect to any preliminary prospectus shall not inure to the benefit of
any underwriter from whom the person asserting any such losses, liabilities,
claims, damages or expenses purchased Securities, or any person controlling
such Underwriter, if the Offerors sustain the burden that a copy of the
Prospectus (as then amended or supplemented if the Offerors shall have
furnished any such amendments or supplements thereto), but excluding documents
incorporated or deemed to be incorporated by reference, was not sent or given
by or on behalf of such Underwriter to such person, if such is required by
law, at or prior to the written confirmation of the sale of such Securities to
such person and if the Prospectus (as so amended or supplemented, but
excluding documents incorporated or deemed to be incorporated by reference
therein) would have corrected the defect giving rise to such loss, liability,
claim, damage or expense, it being understood that this proviso shall have no
application if such defect shall have been corrected in a document which is
incorporated or deemed to be incorporated by reference in the Prospectus.
(b) Indemnification of the Trust. The Guarantor and Capital Funding
agree jointly and severally to indemnify the Trust against all loss,
liability, claim, damage and expense whatsoever, as due from the Trust under
Section 6(a) hereunder.
(c) Indemnification of Offerors, Directors and Officers. Each
Underwriter severally agrees to indemnify and hold harmless the Offerors,
their directors, trustees, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Offerors within the
meaning of Section 15 of the 1933 Act against any and all loss, liability,
claim, damage and
expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto) or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Offerors by such Underwriter through
Merrill Lynch expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(d) Actions against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability which it may have otherwise
than on account of this indemnity agreement. An indemnifying party may
participate at its own expense in the defense of any such action. If it so
elects within a reasonable time after receipt of such notice, an indemnifying
party, jointly with any other indemnifying parties receiving such notice, may
assume the defense of such action with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party). If an indemnifying party
assumes the defense of such action, the indemnifying parties shall not be
liable for any fees and expenses of counsel for the indemnified parties
incurred thereafter in connection with such action other than reasonable costs
of investigation; provided, however, that any indemnified party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless the indemnified party reasonably
objects to such assumption on the ground that there may be legal defenses
available to it which are different from or in addition to those available to
such indemnifying party in which case, if such indemnified party so notified
the indemnifying party in writing that such indemnified party will employ
separate counsel, the indemnified party shall be entitled to employ separate
counsel at the expense of the indemnifying party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances. The indemnifying party or parties shall not be
liable under this Agreement with respect to any settlement made by any
indemnified party or parties without prior written consent by the indemnifying
party or parties to such settlement.
7. Contribution. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other hand from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Underwriters,
in each case as set forth on the cover of the Prospectus, or, if Rule 434 is
used, the corresponding location on the Term Sheet, bear to the aggregate
initial public offering price of the Securities as set forth on such cover.
The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter,
and each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1933 Act shall have the same rights to contribution as the Company. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Initial Securities set forth
opposite their respective names in Schedule A hereto and not joint.
8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or
in certificates of officers or Trustees of the Offerors submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or controlling person,
or by or on behalf of the Offerors, and shall survive delivery of the
Preferred Securities to the Underwriters.
9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Offerors, at any time at or prior to Closing Time
(i) if there has been, since the date of this Agreement or since the
respective dates as of which information is given in the Registration
Statement, any material adverse change or any development involving a
prospective material adverse change, in the financial condition or results of
operations of the Guarantor and its subsidiaries, taken as a whole, whether or
not arising in the ordinary course of business, or (ii) if there has
occurred any outbreak of hostilities or material escalation thereof or other
calamity or crisis the effect of which is such as to make it, in the judgment
of the Representatives, impracticable to market the Designated Securities,
(iii) if trading in the Designated Securities has been suspended by the
Commission, or if trading generally on the New York Stock Exchange has been
suspended, limited or restricted or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices for securities have been required, by
said exchange or by order of the Commission or any other governmental
authority, or if a banking moratorium has been declared by either Federal, New
York or Colorado authorities or (iv) if there has been any decrease in the
ratings of any of the debt securities of the Guarantor or Capital Funding or
of the Preferred Securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act) or such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the debt
securities of the Guarantor or Capital Funding or of the Preferred Securities,
except for such decreases or announcements which the Prospectus discloses have
occurred or may occur.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in section 4 hereof.
10. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at Closing Time to purchase the Designated
Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the
non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than
all, of the Defaulted Securities in such amounts as may be agreed upon and
upon the terms herein set forth; if, however, the Representatives shall not
have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Designated Securities, each of the non-defaulting Underwriters shall
be obligated, severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Designated Securities, this Agreement shall terminate without liability
on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Representatives or the Offerors
shall have the right to postpone Closing Time for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements. As used herein, the
term "Underwriter" includes any person substituted for an Underwriter under
this Section 10.
11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at North Tower, World
Financial Center, New York, New York 10281-1201, attention of Robin Mass, Vice
President; notices to the Trust, the Guarantor and Capital Funding shall be
directed to them at 7800 East Orchard Road, Englewood, Colorado 80111,
attention of Stephen E. Brilz, Esq., Corporate Counsel.
12. Parties. This Agreement shall each inure to the benefit of and
be binding upon the Underwriters and the Trust, the Guarantor, and Capital
Funding and their respective successors. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters and the Trust, the Guarantor, and
Capital Funding and their respective successors and the controlling persons
and officers and directors referred to in Sections 6 and 7 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters and the Trust, the Guarantor,
and Capital Funding and their respective successors, and said controlling
persons and officers and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or corporation. No purchaser of
Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY
TIME.
14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Trust a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Trust, the Guarantor, and Capital Funding in
accordance with its terms.
Very truly yours,
U S WEST, INC.
By__________________________________________
Name:
Title:
U S WEST CAPITAL FUNDING, INC.
By__________________________________________
Name:
Title:
U S WEST FINANCING II
By__________________________________________
Name:
Title: Trustee
By__________________________________________
Name:
Title: Trustee
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By__________________________________________
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
SCHEDULE A
Name of Underwriter Number of Securities
- ---------------------------------------------------
Merrill Lynch, Pierce, Fenner & Smith Incorporated 2,240,000
Dean Witter Reynolds Inc. 2,240,000
A.G. Edwards & Sons, Inc. 2,240,000
PaineWebber Incorporated 2,240,000
Prudential Securities Incorporated 2,240,000
Smith Barney Inc. 2,240,000
Robert W. Baird & Co. Incorporated 180,000
Bear, Stearns & Co. Inc. 180,000
Alex, Brown & Sons Incorporated 180,000
Cowen & Company 180,000
Dain Bosworth Incorporated 180,000
Dillon, Reed & Co, Inc. 180,000
Donaldson, Lufkin & Jenrette Securities Corporation 180,000
EVEREN Securities, Inc. 180,000
The Ohio Company 180,000
Oppenheimer & Co., Inc. 180,000
Piper Jaffray Inc. 180,000
Raymond James & Associates, Inc. 180,000
Tucker Anthony Incorporated 180,000
Wheat, First Securities, Inc. 180,000
Advest, Inc. 90,000
Artemis Capital Group 90,000
J.C. Bradford & Co. 90,000
JW Charles Securities, Inc. 90,000
Craigle Incorporated 90,000
Crowell, Weedon & Co. 90,000
Davenport & Co. of Virginia, Inc. 90,000
D. A. Davidson & Co. Incorporated 90,000
Fahnestock & Co. Inc. 90,000
Gibraltar Securities Co. 90,000
Gruntal & Co., Incorporated 90,000
J.J.B. Hilliard, W. L. Lyons, Inc. 90,000
Interstate/Johnson Lane Corporation 90,000
Janney Montgomery Scott Inc. 90,000
Josephthal Lyon & Ross Incorpoated 90,000
Kennedy, Cabot & Co. 90,000
Legg Mason Wood Walker, Incorporated 90,000
McDonald & Company Securities, Inc. 90,000
McGinn, Smith & Co., Inc. 90,000
Mesirow Financial, Inc. 90,000
Morgan Keegan & Company, Inc. 90,000
David A. Noyes & Company 90,000
Olde Discount Corporation 90,000
Pryor, McClendon, Counts & Co., Inc. 90,000
Ragen MacKenzie Incorporated 90,000
Rauscher Pierce Refsnes, Inc. 90,000
The Robinson-Humphrey Company, Inc. 90,000
Roney & Co., LLC 90,000
Scott & Stringfellow, Inc. 90,000
Muriel Siebert & Co., Inc. 90,000
Stifel, Nicolaus & Company, Incorporated 90,000
Stone & Youngberg 90,000
Sutro & Co. Incorporated 90,000
US Clearing Corp. 90,000
Utendahl Capital Partners, L.P. 90,000
Yamaichi International (America), Inc. 90,000
--------------------
Total 19,200,000
====================
SCHEDULE B
U S WEST FINANCING II
19,200,000 Preferred Securities
8 % Trust Originated Preferred Securities ("TOPrS")
(Liquidation Amount of $25 Per Preferred Security)
15. The initial public offering price per security for the Preferred
Securities, determined as provided in said Section 2, shall be $25.00.
16. The purchase price per security for the Preferred Securities to be
paid by the several Underwriters shall be $25.00, being an amount equal
to the initial public offering price set forth above.
17. The commission per Preferred Security to be paid by Capital
Funding to the Underwriters for their commitments hereunder shall be $.7875;
provided, however, that the commission per Preferred Security for sales of
10,000 or more Preferred Securities to a single purchaser shall be $.50.
Exhibit A
FORM OF OPINION OF WEIL, GOTSHAL & MANGES LLP
TO BE DELIVERED PURSUANT TO
SECTION 5(b)(i)
(a) The Registration Statement is effective under the 1933 Act and, to
the best of their knowledge and information, no stop order suspending the
effectiveness of the Registration Statement has been issued under the 1933 Act
or proceedings therefor initiated or threatened by the Commission.
(b) At the time the Registration Statement became effective and at the
Representation Date, the Registration Statement (other than the
Incorporated Documents, the financial statements and supporting schedules,
included therein and other financial and statistical data included therein and
those parts of the Registration Statement that constitute the Debt Trustee's
and the Property Trustee's respective Statements of Eligibility and
Qualification under the 1939 Act (form T-1), as to which no opinion need be
rendered) complied as to form in all material respects with the requirements
of the 1933 Act, the 1933 Act Regulations, the 1939 Act, and the 1939 Act
Regulations.
(c) The statements in the Prospectus under the captions "Description
of the Preferred Securities", "Description of the Subordinated Debt Securities
and the Debt Guarantee", "Effect of Obligations under the Subordinated
Debt Securities, the Debt Guarantee and the Preferred Securities Guarantee",
in the Prospectus under the captions "Description of the Preferred
Securities", "Description of the Preferred Securities Guarantees", and
"Description of the Subordinated Debt Securities and the Debt Guarantees"
insofar as they constitute summaries of legal matters or documents, have been
reviewed by them and are accurate in all material respects.
(d) The Purchase Agreement has been duly executed and delivered by the
Offerors.
(e) No federal authorization, approval, consent or order of any court
or governmental authority or agency is required in connection with the
issuance and sale of the Common Securities or the offering of the Preferred
Securities, the Subordinated Debt Securities or the Guarantees, except such as
have been obtained under the 1933 Act or the 1933 Act Regulations or the
1934 Act or the 1934 Act Regulations and the qualification of the Declaration
and the Indenture under the 1939 Act.
(f) The Declaration and the Preferred Securities Guarantee have been
duly qualified under the 1939 Act.
(g) Assuming that the Preferred Securities Guarantee Agreement has
been duly authorized by the Guarantor, the Preferred Securities Guarantee
Agreement has been duly executed and delivered by the Guarantor and assuming
due authorization, execution and delivery by First Chicago, constitutes a
valid and binding obligation of the Guarantor, enforceable against the
Guarantor in accordance with its terms, except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions.
(h) Assuming that the Indenture has been duly authorized by each of
the Guarantor and Capital Funding and has been duly authorized, executed and
delivered by the Debt Trustee, the Indenture has been duly executed and
delivered by each of the Guarantor and Capital Funding and is a valid and
binding obligation of each of the Guarantor and Capital Funding, enforceable
against each of the Guarantor and Capital Funding in accordance with its
terms, except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions; and the Indenture has been duly qualified under the
1939 Act.
(i) Assuming that the Subordinated Debt Securities have been duly
authorized by Capital Funding, the Subordinated Debt Securities have been duly
executed by Capital Funding, and when authenticated in the manner
provided in the Indenture and delivered against payment therefor as described
in the Prospectus, will constitute valid and binding obligations of Capital
Funding, enforceable against Capital Funding in accordance with their terms,
except to the extent that enforcement thereof may be limited by the Bankruptcy
Exceptions.
(j) Assuming that the Debt Guarantee has been duly authorized by the
Guarantor, the Debt Guarantee has been duly executed by the Guarantor, and
when authenticated in the manner provided in the Indenture and delivered
against payment therefor as described in the Prospectus, constitute a valid
and binding obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms, except to the extent that enforcement thereof may
be limited by the Bankruptcy Exceptions.
(k) The Trust will be classified as a grantor trust and not as an
association taxable as a corporation for United States federal income tax
purposes.
(l) The Trust is not an "investment company" or a company "controlled"
by an "investment company" within the meaning of the 1940 Act.
In addition, such counsel shall state that it has participated in
conferences with officers and other representatives of the Offerors,
representatives of the independent public accountants for the Offerors and
with you and your counsel, at which conferences the contents of the
Registration Statement and the Prospectus and related matters were discussed;
such counsel has not independently verified the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus and the limitations inherent in the examination made by such
counsel and the nature and extent of such counsel's participation in such
conferences are such that such counsel is not passing upon, and is unable to
assume, and does not assume, any responsibility for, the accuracy,
completeness or fairness of such statements, except for those made under the
captions "Description of the Preferred Securities", "Description of the
Preferred Securities Guarantees", and "Description of the Subordinated Debt
Securities and the Debt Guarantees"; however, based upon such counsel's
participation in the aforesaid conferences, no facts have come to its
attention which lead it to believe that the Registration Statement, and each
amendment thereto, as of the date of the filing of the annual report on Form
10-K of the Guarantor for the year ended December 31, 1995 with the Commission
(other than the financial statements and the notes thereto, the financial
statements schedules, the other financial and statistical data therein and the
operating data included in the Prospectus Supplement under the caption
"Summary Historical and Pro Forma Financial Data", as to which such counsel
need express no belief and those parts of the Registration Statement that
constitute the Debt Trustee's and the Property Trustee's respective Statements
of Eligibility and Qualification under the 1939 Act (form T-1)), contained any
untrue statements of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that, as of its date, the Prospectus or any further amendments
or supplement or supplement thereto made by the Offerors prior to the Closing
Time (except as aforesaid) includes any untrue statement of a material fact or
omits to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading or
that, as of such Closing Time, either the Prospectus or any further amendment
or supplement thereto made by the Offerors prior to such Closing Time (except
as aforesaid) includes any untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
In giving such opinion, Weil, Gotshal & Manges LLP may rely as to
matters governed by the laws of the State of Colorado on an opinion or
opinions of Stephen E. Brilz, Esq., and as to certain matters governed by the
laws of the State of Delaware, on an opinion or opinions of Morris, Nichols,
Arsht & Tunnell, respectively, and as to certain matters relating to The First
National Bank of Chicago under the federal banking laws on an opinion of
Pepper, Hamilton & Scheetz, provided that such opinion or opinions shall be
addressed to the Underwriters, shall be dated as of such date and shall
expressly permit Weil, Gotshal & Manges LLP to rely thereon.\
Exhibit B
FORM OF OPINION OF STEPHEN E. BRILZ, ESQ.
TO BE DELIVERED PURSUANT TO
SECTION 5(b)(ii)
( The Guarantor has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and Prospectus
and to enter into and perform its obligations under the Purchase Agreement,
the Declaration, the Indenture and each of the Guarantee Agreements and to
purchase, own and hold the Common Securities issued by the Trust.
( Capital Funding has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Colorado
with corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Registration Statement and
Prospectus and to enter into and perform its obligations under the Purchase
Agreement and the Indenture.
( The Declaration has been duly authorized, executed and delivered by
the Guarantor and each of the Regular Trustees.
( The Purchase Agreement, the Guarantee Agreements, the Indenture, the
Subordinated Debt Securities and the Debt Guarantee have been duly authorized,
executed and delivered by the Guarantor.
( The Purchase Agreement, the Indenture, the Subordinated Debt
Securities, and the Debt Guarantee have been duly authorized, executed and
delivered by Capital Funding.
( The execution, delivery and performance of the Purchase Agreement,
the Declaration, the Preferred Securities, the Common Securities, the
Indenture, the Subordinated Debt Securities, the Guarantee Agreements, the
Indenture and the Guarantees and the consummation of the transactions
contemplated herein and therein and compliance by the Offerors with their
respective obligations hereunder and thereunder will not conflict with in any
material matter or result in a material breach or violation of any term or
provision of, or constitute a default under any indenture, mortgage, deed of
trust, loan agreement, or other agreement or instrument known to such counsel
to which the Guarantor, any of U S WEST Communications Group, Inc., U S WEST
Communications Inc., U S WEST New Vector Group, Inc. and Capital Funding (the
"Significant Subsidiaries") or the Trust is a party or by which any of them
may be bound, or to which any of the property or assets of the Guarantor, any
of the Significant Subsidiaries or the Trust is subject, nor will such action
result in any violation of the provisions of the charter or by-laws of the
Guarantor or of Capital Funding or the Declaration or the Certificate of
Trust, or any statute (other than the Act or state securities or Blue Sky
laws) or any order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the Guarantor or any of
its subsidiaries or any of their properties; except any statute, order, rule
or regulation the violation of which would not have a material adverse effect
on the consolidated financial position, shareholders' equity or results of the
Guarantor taken as a whole.
( No state authorization, approval, consent or order of any court or
governmental authority or agency is required in connection with the issuance
and sale of the Common Securities or the offering of the Preferred Securities,
the Subordinated Debt Securities or the Guarantees, except such as have
been obtained under the 1933 Act or the 1933 Act Regulations and the
qualification of the Declaration and the Indenture under the 1939 Act and such
as may be required under state securities law.
( All of the issued and outstanding Common Securities of the Trust are
directly owned by the Guarantor free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.
( The Property Trustee is the record holder of Subordinated Debt
Securities and the Debt Guarantee and no security interest, mortgage, pledge,
lien, encumbrance, claim or equity is noted thereon or on the register.
( Each of the documents incorporated by reference in the Registration
Statement or Prospectus at the time they were filed or last amended (other
than the financial statements and related schedules and other financial or
statistical data included or incorporated by reference therein as to which
such counsel need express no opinion), complied as to form in all material
respects with the requirements of the 1933 Act, the 1933 Act Regulations, the
1934 Act, the 1934 Act Regulations, as applicable.
In giving such opinion, Stephen E. Brilz, Esq. may rely as to certain
matters governed by the laws of the State of Delaware or the State of New York
on an opinion or opinions of Morris, Nichols, Arsht & Tunnell and Weil,
Gotshal & Manges LLP, respectively, provided that such opinion or opinions
shall be addressed to the Underwriters, shall be dated as of such date and
shall expressly permit Stephen E. Brilz, Esq. to rely thereon.
Exhibit C
FORM OF OPINION OF MORRIS, NICHOLS, ARSHT & TUNNELL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)(iii)
( The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Act; all filings required
under the laws of the State of Delaware with respect to the creation and valid
existence of the Trust as a business trust have been made; under the
Delaware Act and the Declaration, the Trust has the business trust power and
authority to (x) own property and conduct its business, all as described in
the Prospectus, (y) enter into and perform its obligations under the Purchase
Agreement, and (z) issue and perform its obligations under the Preferred
Securities and the Common Securities.
( Assuming the Declaration has been duly authorized, executed and
delivered by the Trustees and the Guarantor, the Declaration is a valid and
binding obligation of the Guarantor and the Trustees, enforceable against the
Guarantor and the Trustees, in accordance with its terms, except as
enforcement thereof may be limited by the (i) bankruptcy, insolvency,
moratorium, receivership, reorganization, liquidation, fraudulent conveyance
and other similar laws relating to or affecting the rights and remedies of
creditors generally, (ii) principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law), and (iii)
considerations of public policy or the effect of applicable law relating to
fiduciary duties.
( Under the Delaware Act and the Declaration, the execution and
delivery by the Trust of the Purchase Agreement, and the performance by the
Trust of its obligations thereunder, have been duly authorized by all
necessary business trust action on the part of the Trust; and the Purchase
Agreement has been duly executed by the Trust under the laws of Delaware.
( The Common Securities have been duly authorized by the Declaration
and are validly issued and represent undivided beneficial interests in the
assets of the Trust; and under the Delaware Act and the Declaration, the
issuance of the Common Securities is not subject to preemptive rights.
( The Preferred Securities have been duly authorized by the Declaration
and, when delivered to and paid for pursuant to this Agreement, will be
validly issued, and (subject to the qualifications set forth herein) fully
paid and non-assessable undivided beneficial interests in the assets of the
Trust; the holders of the Preferred Securities, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended
to stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware; and under the Delaware Act and the
Declaration, the issuance of the Preferred Securities is not subject to
preemptive rights. Such counsel may note that the Preferred Security holders
may be obligated, pursuant to the Declaration, to (i) provide indemnity and/or
security in connection
with and pay taxes or governmental charges arising from transfers of Preferred
Security Certificates and the issuance of replacement Preferred Security
Certificates, and (ii) provide security and indemnity in connection with
requests of or directions to the Property Trustee to exercise its rights and
powers under the Declaration.
( The issuance and sale by the Trust of the Preferred Securities and
Common Securities; the execution, delivery and performance by the Trust of the
Purchase Agreement; the consummation of the transactions contemplated
herein; and compliance by the Trust with its obligations hereunder will not
violate any of the provisions of the Certificate of Trust or the Declaration,
or any applicable Delaware law or administrative regulation.
( Assuming that the Trust derives no income from or in connection with
sources within the State of Delaware and has no assets, activities (other than
having a Delaware Trustee as required by the Delaware Act and the filing
of documents with the Delaware Secretary of State) or employees in the State
of Delaware, no authorization, approval, consent or order of any Delaware
court or governmental authority or agency is required to be obtained by the
Trust solely in connection with the issuance and sale of the Common Securities
and the Preferred Securities or the purchase by the Trust of the Subordinated
Debt Securities and the Guarantees except such as have been obtained and such
as may be required by state securities laws.
Exhibit D
FORM OF OPINION OF PEPPER, HAMILTON & SCHEETZ
TO BE DELIVERED PURSUANT TO
SECTION 5(b)(iv)
( The First National Bank of Chicago ("FNBC") is a national banking
association with trust powers, duly organized, validly existing and in good
standing under the laws of the United States, with all necessary power and
authority to execute and deliver, and to carry out and perform its obligations
under the terms of the Declaration and the Preferred Securities
Guarantee.
( First Chicago Delaware Inc. ("FCD") is a Delaware corporation duly
organized, validly existing and in good standing under the laws of Delaware,
with full power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of the Declaration.
( The execution, delivery and performance by each of FNBC and FCD of
the Declaration, and the execution, delivery and performance by FNBC, in its
capacity as the Guarantee Trustee, of the Preferred Securities Guarantee, have
been duly authorized by all necessary corporate action on the part of
FNBC and FCD, respectively, in the case of the Declaration, and by FNBC, in
the case of the Preferred Securities Guarantee. The Declaration and the
Preferred Securities Guarantee, when duly executed and delivered by FNBC and
FCD, respectively, in the case of the Declaration, and by FNBC, in its
capacity as the Guarantee Trustee, in the case of the Preferred Securities
Guarantee, will constitute the legal, valid and binding obligation of FNBC and
FCD, in the case of the Declaration, and by FNBC, in the case of the Preferred
Securities Guarantee, enforceable against FNBC and FCD in the case of the
Declaration, and by FNBC, in its capacity as the Guarantee Trustee, in the
case of the Preferred Securities Guarantee, in accordance with their terms.
To the best of such counsel's knowledge, there are no actions,
proceedings or investigations pending or threatened against or affecting FNBC
or FCD before any court, arbitrator, administrative agency or other
governmental authority which, if adversely decided, would materially and
adversely affect either of FNBC or FCD's ability to carry out the transactions
contemplated in the Declaration or, in the case of FNBC, in its capacity as
the Guarantee Trustee, in the Preferred Securities Guarantee.
( The execution, delivery and performance by each of FNBC and FCD of
the Declaration, and the execution, delivery and performance by FNBC, in its
capacity as the Guarantee Trustee, of the Preferred Securities Guarantee, do
not conflict with, or constitute a breach of, the articles of association or
the certificate of incorporation, as the case may be, or bylaws.
( No consent, approval or authorization of, or registration with or
notice to, any Delaware or federal banking authority is required for the
execution, delivery or performance by each of FNBC and FCD of the Declaration,
or by FNBC, in its capacity as the Guarantee Trustee, of the Preferred
Securities Guarantee.
In giving such opinion, Pepper, Hamilton & Scheetz may rely as to
matters governed by the laws of the State of Colorado on an opinion of Stephen
E. Brilz, Esq. provided that such opinion shall be addressed to the
Underwriters, shall be dated as of such date and shall expressly permit
Pepper, Hamilton & Scheetz to rely thereon.