------------------------------------------
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AMENDED AND RESTATED DECLARATION
OF TRUST
U S WEST FINANCING [ ]
Dated as of __________, 1995
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TABLE OF CONTENTS
Page
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ARTICLE I INTERPRETATION AND DEFINITIONS.................. 2
SECTION 1.1 Definitions.............................. 2
ARTICLE II TRUST INDENTURE ACT............................ 10
SECTION 2.1 Trust Indenture Act; Application......... 10
SECTION 2.2 Lists of Holders of Securities........... 10
SECTION 2.3 Reports by the Property Trustee.......... 11
SECTION 2.4 Periodic Reports to Property
Trustee.................................. 11
SECTION 2.5 Evidence of Compliance with Conditions
Precedent................................ 11
SECTION 2.6 Events of Default; Waiver................ 11
SECTION 2.7 Event of Default; Notice................. 13
ARTICLE III ORGANIZATION..................................... 14
SECTION 3.1 Name..................................... 14
SECTION 3.2 Office................................... 14
SECTION 3.3 Purpose.................................. 14
SECTION 3.4 Authority................................ 14
SECTION 3.5 Title to Property of the Trust........... 15
SECTION 3.6 Powers and Duties of the Regular
Trustees................................. 15
SECTION 3.7 Prohibition of Actions by the
Trust and the Trustees................... 19
SECTION 3.8 Powers and Duties of the Property
Trustee.................................. 21
SECTION 3.9 Certain Duties and Responsibilities
of the Property Trustee.................. 24
SECTION 3.10 Certain Rights of Property Trustee....... 26
SECTION 3.11 Delaware Trustee......................... 29
SECTION 3.12 Execution of Documents................... 30
SECTION 3.13 Not Responsible for Recitals or
Issuance of Securities................... 30
SECTION 3.14 Duration of Trust........................ 30
SECTION 3.15 Mergers.................................. 30
ARTICLE IV SPONSOR.......................................... 33
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SECTION 4.1 Sponsor's Purchase of Common
Securities............................... 33
SECTION 4.2 Responsibilities of the Sponsor.......... 33
ARTICLE V TRUSTEES....................................... 34
SECTION 5.1 Number of Trustees....................... 34
SECTION 5.2 Delaware Trustee......................... 35
SECTION 5.3 Property Trustee; Eligibility............ 35
SECTION 5.4 Qualifications of Regular Trustees
and Delaware Trustee Generally........... 36
SECTION 5.5 Initial Trustees......................... 36
SECTION 5.6 Appointment, Removal and Resignation
of Trustees.............................. 37
SECTION 5.7 Vacancies among Trustees................. 39
SECTION 5.8 Effect of Vacancies...................... 39
SECTION 5.9 Meetings................................. 40
SECTION 5.10 Delegation of Power...................... 40
ARTICLE VI DISTRIBUTIONS.................................... 41
SECTION 6.1 Distributions............................ 41
ARTICLE VII ISSUANCE OF SECURITIES........................... 41
SECTION 7.1 General Provisions Regarding
Securities............................... 41
ARTICLE VIII TERMINATION OF TRUST............................. 42
SECTION 8.1 Termination of Trust..................... 42
ARTICLE IX TRANSFER OF INTERESTS.......................... 44
SECTION 9.1 Transfer of Securities................... 44
SECTION 9.2 Transfer of Certificates................. 44
SECTION 9.3 Deemed Security Holders.................. 45
SECTION 9.4 Book Entry Interests..................... 45
SECTION 9.5 Notices to Clearing Agency............... 46
SECTION 9.6 Appointment of Successor Clearing
Agency................................... 46
SECTION 9.7 Definitive Preferred Security
Certificates............................. 47
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SECTION 9.8 Mutilated, Destroyed, Lost or
Stolen Certificates...................... 48
ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF
SECURITIES, TRUSTEES OR OTHERS................... 49
SECTION 10.1 Liability................................ 49
SECTION 10.2 Exculpation.............................. 49
SECTION 10.3 Fiduciary Duty........................... 50
SECTION 10.4 Indemnification.......................... 51
SECTION 10.5 Outside Businesses....................... 52
ARTICLE XI ACCOUNTING....................................... 52
SECTION 11.1 Fiscal Year.............................. 52
SECTION 11.2 Certain Accounting Matters............... 52
SECTION 11.3 Banking.................................. 54
SECTION 11.4 Withholding.............................. 54
ARTICLE XII AMENDMENTS AND MEETINGS........................ 54
SECTION 12.1 Amendments............................... 54
SECTION 12.2 Meetings of the Holders of Securities;
Action by Written Consent................ 56
ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE.............. 59
SECTION 13.1 Representations and Warranties
of Property Trustee...................... 59
ARTICLE XIV MISCELLANEOUS.................................. 60
SECTION 14.1 Notices.................................. 60
SECTION 14.2 Governing Law............................ 61
SECTION 14.3 Intention of the Parties................. 62
SECTION 14.4 Headings................................. 62
SECTION 14.5 Successors and Assigns................... 62
SECTION 14.6 Partial Enforceability................... 62
SECTION 14.7 Counterparts............................. 62
iii
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
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310(a)............................................. 5.3(a)
310(b)............................................. 5.3(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)............................................. 3.9(b)
315(b)............................................. 2.8
315(c)............................................. 3.9(a)
315(d)............................................. 3.9(a)
316(a)............................................. Exhibit A, 2.6
316(c)............................................. 3.6(e)
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* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
iv
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
U S WEST FINANCING [ ]
_____ __, 1995
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of , 1995 by the undersigned trustees (together with
all other Persons from time to time duly appointed and serving as trustees in
accordance with the provisions of this Declaration, the "Trustees"), U S WEST,
Inc., a Colorado corporation, as trust sponsor (the "Sponsor"), and by the
holders, from time to time, of undivided beneficial interests in the Trust to be
issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established a trust (the
"Trust") under the Delaware Business Trust Act pursuant to a Declaration of
Trust, dated as of March 1, 1995 (the "Original Declaration") and a Certificate
of Trust filed with the Secretary of State of Delaware on March 1, 1995, for the
sole purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures of the Debenture Issuer and the Debenture
Guarantees of the Sponsor endorsed thereon;
WHEREAS, as of the date hereof, no interests in the Trust have been
issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration;
and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the
1
Trust issued hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 DEFINITIONS.
(a) Capitalized terms used in this Declaration 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 Amended and Restated Declaration has
the same meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration of Trust as modified, supplemented or amended from
time to time;
(d) all references in this Declaration to Articles and Sections and
Exhibits are to Articles and Sections of and Exhibits to this
Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Declaration unless otherwise defined in this
Declaration 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 or any successor rule thereunder.
"Appointment Event" means an event defined in the terms of the
Preferred Securities as set forth in Exhibit A which entitles the Holders of a
Majority in liquidation amount of the Preferred Securities to appoint a Special
Regular Trustee.
2
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a day on which banking
institutions in New York, New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 DEL. C. Sections 3801 ET SEQ., as it may be amended from time to time.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depository
for the Preferred Securities and in whose name or in the name of a nominee of
that organization, shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means __, 1995.
"Code" means the Internal Revenue Code of 1986.
"Common Security" has the meaning specified in Section 7.1.
"Common Securities Guarantee" means the guarantee agreement to be
dated as of , 1995 of the Sponsor in respect of the Common Securities.
"Common Security Certificate" means a definitive certificate in
fully registered form representing a Common Security substantially in the form
of Annex II to Exhibit A.
3
"Covered Person" means:
(a) any officer, director, shareholder, partner, member,
representative, employee or agent of:
(i) the Trust; or
(ii) the Trust's Affiliates; and
(b) any Holder of Securities.
"Debenture Guarantee" means the guarantee by the Sponsor of the
Debentures endorsed thereon.
"Debenture Issuer" means U S WEST Capital Funding, Inc., a
Colorado corporation.
"Debenture Trustee" means Norwest Bank Minnesota, National
Association, as trustee under the Indenture until a successor is appointed
thereunder and thereafter means such successor trustee.
"Debentures" means the series of Debentures to be issued by the
Debenture Issuer under the Indenture to be held by the Property Trustee
pursuant to Section 3.6(c), a specimen certificate for such series of
Debentures being Exhibit B.
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Definitive Preferred Security Certificates" has the meaning set
forth in Section 9.4.
"Direction" by a Person means a written direction signed:
(a) if the Person is a natural person, by that Person; or
(b) in any other case, in the name of such Person by one or more
Authorized Officers of that Person.
4
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"DTC" means the Depository Trust Company, the initial Clearing
Agency.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time or any successor legislation.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Debentures.
"Global Certificate" has the meaning set forth in Section 9.4.
"Holder" means a Person in whose name a Certificate representing
a Security is registered, such Person being a beneficial owner within the
meaning of the Business Trust Act.
"Indemnified Person" means:
(a) any Trustee;
(b) any Affiliate of any Trustee;
(c) any officers, directors, shareholders, members, partners, employees,
representatives or agents of any Trustee;
or (d) any employee or agent of the Trust or its Affiliates.
"Indenture" means the Indenture dated as of , 1995 among
the Debenture Issuer, the Sponsor, as guarantor, and Norwest Bank Minnesota,
National Association, as trustee and any indenture supplemental thereto pursuant
to which the Debentures and the Debenture Guarantees are to be issued.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Ministerial Action" has the meaning set forth in the terms of the
Securities as set forth in Exhibit A.
5
"Majority in liquidation amount of the Securities" means, except
as provided in the terms of the Preferred Securities and by the Trust Indenture
Act, Holder(s) of Securities voting together as a single class or, as the
context may require, Holder(s) of Preferred Securities or Common Securities
voting separately as a class, who vote Securities of a relevant class and the
aggregate liquidation amount (including the stated amount that would be paid
on redemption, liquidation or otherwise, plus accrued and unpaid Distributions
to the date upon which the voting percentages are determined) of the
Securities voted by such Holders represents more than 50% of the above stated
liquidation amount of all Securities of such class.
"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 Declaration 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.
"Paying Agent" has the meaning specified in Section 3.8(i).
"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.
6
"Preferred Securities Guarantee" means the guarantee agreement to be
dated as of , 1995 of the Sponsor in respect of the Preferred
Securities.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate representing
a Preferred Security substantially in the form of Annex I to Exhibit A.
"Pricing Agreement" means the pricing agreement between the Trust,
the Debenture Issuer, and the underwriters designated by the Regular Trustees
with respect to the offer and sale of the Preferred Securities.
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Property Trustee Account" has the meaning set forth in Section
3.8(c).
"Quorum" means a majority of the Regular Trustees or if there are
only two Regular Trustees, both of them.
"Regular Trustee" means any Trustee other than the Property
Trustee and the Delaware Trustee.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person which owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property Trustee,
the chairman of the board of direc-
7
tors, 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 Property
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.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"66-2/3% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities and by the Trust Indenture
Act, Holder(s) of Securities voting together as a single class or, as the
context may require, Holder(s) of Preferred Securities or Common Securities,
voting separately as a class, who vote Securities of a relevant class and the
aggregate liquidation amount (including the stated amount that would be paid
on redemption, liquidation or otherwise, plus accrued and unpaid Distributions,
to the date upon which the voting percentages are determined) of the Securities
voted by such Holders represents 66-2/3% of the above-stated liquidation amount
of all Securities of such class.
"Special Event" has the meaning set forth in the terms of the
Securities.
"Special Regular Trustee" means a Regular Trustee appointed by the
Holders of a Majority in liquidation amount of the Preferred Securities in
accordance with Section 5.6(a)(ii)(B).
8
"Sponsor" means U S WEST, Inc., a Colorado corporation or any
successor entity in a merger, in its capacity as sponsor of the Trust.
"Successor Property Trustee" means a successor Trustee possessing
the qualifications to act as Property Trustee under Section 5.3(a).
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities by the Trust Indenture Act,
Holder(s) of Securities voting together as a single class or, as the context
may require, Holder(s) of Preferred Securities or Common Securities, voting
separately as a class, who vote Securities of a relevant class and the
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of the Securities
voted by such Holders represents 10% of the above stated liquidation amount of
all Securities of such class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Underwriting Agreement" means the Underwriting Agreement for the
offering and sale of Preferred Securities in the form of Exhibit C.
9
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions;
(b) the Property Trustee shall be the only Trustee which is a
trustee for the purposes of the Trust Indenture Act;
(c) if and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control; and
(d) the application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES.
(a) Each of the Sponsor, the Debenture Issuer and the Regular
Trustees on behalf of the Trust shall provide the Property Trustee (i) within 14
days after each record date for payment of Distributions, a list, in such form
as the Property Trustee may reasonably require, of the names and addresses of
the Holders of the Securities ("List of Holders") as of such record date,
PROVIDED THAT none of the Sponsor, the Debenture Issuer or the Regular Trustees
on behalf of the Trust shall 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 Property Trustee by the Sponsor, the Debenture Issuer and the
Regular Trustees on behalf of the Trust, and (ii) at any other time, within 30
days of receipt by the Trust 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 Property
Trustee. The Property Trustee shall preserve, in as current a form as is
reasonably practicable, all information contained in Lists of Holders given to
it or which it receives in its
10
capacity as Paying Agent (if acting in such capacity) PROVIDED THAT the
Property Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders; and
(b) the Property Trustee shall comply with its obligations under
Section 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3 REPORTS BY THE PROPERTY TRUSTEE.
Within 60 days after May 15 of each year, the Property Trustee shall
provide to the Holders of the Securities such reports as are required by Section
313 of the Trust Indenture Act, if any, in the form and in the manner provided
by Section 313 of the Trust Indenture Act. The Property Trustee shall also
comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO PROPERTY TRUSTEE.
Each of the Sponsor, the Debenture Issuer and the Regular Trustees
on behalf of the Trust shall provide to the Property Trustee such documents,
reports and information as required by Section 314 (if any) and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Each of the Sponsor, the Debenture Issuer and the Regular Trustees
on behalf of the Trust shall provide to the Property Trustee such evidence of
compliance with any conditions precedent, if any, provided for in this
Declaration which relate to any of the matters set forth in Section 314(c) of
the Trust Indenture Act. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.6 EVENTS OF DEFAULT; WAIVER.
(a) The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences provided that if the underlying Event of
Default under the Indenture:
11
(i) is not waivable under the Indenture, the Event of
Default under the Declaration shall also not be
waivable; or
(ii) requires the consent or vote of the holders of
greater than a majority in principal amount of the
Debentures affected thereby (a "Super Majority") to be
waived, the Event of Default under the Declaration may
only be waived by the vote of the Holders of at least
the proportion in liquidation amount the Preferred
Securities which the relevant Super Majority represents
of the aggregate principal amount of the Debentures
outstanding.
Upon such waiver, any such default shall cease to exist, and any Event of
Default with respect to the Preferred Securities arising therefrom shall be
deemed to have been cured, for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default with
respect to the Preferred Securities or impair any right consequent thereon. Any
waiver by the Holders of the Preferred Securities of an Event of Default with
respect to the Preferred Securities shall also be deemed to constitute a waiver
by the Holders of the Common Securities of any such Event of Default with
respect to the Common Securities for all purposes of this Declaration without
any further act, vote or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, PROVIDED THAT, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where
the Holders of the Common Securities are deemed to have
waived such Event of Default under the Declaration as
provided below in this Section 2.6(b), the Event of
Default under the Declaration shall also be not
waivable; or
(ii) requires the consent or vote of a Super Majority
to be waived, except where the Holders of the Common
Securities are deemed to have waived such, the Event of
Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the
Declaration may only be waived by the vote of the
Holders of at least the proportion in liquidation
amount the Preferred Securities which the relevant
Super Majority represents of the aggregate principal
amount of the Debentures outstanding,
PROVIDED THAT, each Holder of Common Securities will be deemed to have
waived any Event of Default with respect to the Common Securities and its
consequences until all Events of
12
Default with respect to the Preferred Securities have been cured, waived or
otherwise eliminated and until such Events of Default have been so cured, waived
or otherwise eliminated, the Property Trustee will be deemed to be acting solely
on behalf of the Holders of the Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Property Trustee in
accordance with the terms of the Securities. Subject to the foregoing
provisions of this Section 2.6(b) upon such waiver, any such default shall
cease to exist and any Event of Default with respect to the Common Securities
arising therefrom shall be deemed to have been cured, for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or Event of Default with respect to the Common Securities or impair any right
consequent thereon.
(c) A waiver of any Event of Default under the Indenture by the
Property Trustee at the direction of the Holders of the Preferred Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration.
SECTION 2.7 EVENT OF DEFAULT; NOTICE
(a) The Property Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Securities, notices of all defaults with respect
to the Securities known to the Property Trustee, unless such defaults have been
cured before the giving of such notice (the term "defaults" for the purposes of
this Section 2.7(a) being hereby defined to be an Event of Default as defined
in the Indenture, not including any periods of grace provided for therein and
irrespective of the giving of any notice provided therein); PROVIDED, THAT,
except for a default in the payment of principal of (or premium, if any) or
interest on any of the Debentures or in the payment of any sinking fund
installment established for the Debentures, the Property 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 Property Trustee in good faith determine that the withholding
of such notice is in the interests of the Holders of the Securities.
(b) The Property Trustee shall not be deemed to have knowledge of
any default except:
(i) a default under Sections 6.01(a)(1) and 6.01(a)(2) of
the Indenture; or
(ii) any default as to which the Property Trustee shall have
received written
13
notice or a Responsible Officer charged with the
administration of the Declaration shall have obtained
written notice of.
ARTICLE III
ORGANIZATION
SECTION 3.1 NAME.
The Trust is named "U S WEST Financing [ ]", as such name may be
modified from time to time by the Regular Trustees following written notice to
the Holders of Securities. The Trust's activities may be conducted under the
name of the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 OFFICE.
The address of the principal office of the Trust is 7800 East
Orchard Road, Englewood, CO 80111. On ten Business Days written notice to the
Holders of Securities, the Regular Trustees may designate another principal
office.
SECTION 3.3 PURPOSE.
The exclusive purposes and functions of the Trust are (a) to issue
and sell Securities and use the proceeds from such sale to acquire the
Debentures and the Debenture Guarantees, and (b) except as otherwise limited
herein, to engage in only those other activities necessary, or incidental
thereto. The Trust shall not borrow money, issue debt or reinvest proceeds
derived from investments, pledge any of its assets, or otherwise undertake (or
permit to be undertaken) any activity that would (i) cause the Trust to be
classified for United States federal income tax purposes as an association
taxable as a corporation or a partnership or (ii) cause each Holder of
Securities not to be treated as owning an undivided beneficial interest in the
Debentures at any time the Securities are outstanding.
SECTION 3.4 AUTHORITY.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property
14
Trustee, the Regular Trustees shall have exclusive and complete authority to
carry out the purposes of the Trust. An action taken by the Regular Trustees in
accordance with their powers shall constitute the act of and serve to bind the
Trust and an action taken by the Property Trustee in accordance with its powers
shall constitute the act of and serve to bind the Trust. In dealing with the
Trustees acting on behalf of the Trust, no person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Declaration.
SECTION 3.5 TITLE TO PROPERTY OF THE TRUST.
Except as provided in Section 3.8 with respect to the Debentures,
the Debenture Guarantee and the Property Trustee Account or as otherwise
provided in this Declaration, legal title to all assets of the Trust shall be
vested in the Trust. The Holders shall not have legal title to any part of the
assets of the Trust, but shall have an undivided beneficial interest in the
assets of the Trust.
SECTION 3.6 POWERS AND DUTIES OF THE REGULAR TRUSTEES.
The Regular Trustees shall have the exclusive power and authority
and duty to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; PROVIDED,
HOWEVER, that the Trust may issue no more than one series of
Preferred Securities and no more than one series of Common
Securities, and, PROVIDED FURTHER, there shall be no
interests in the Trust other than the Securities and the
issuance of Securities shall be limited to a one-time,
simultaneous issuance of both Preferred Securities and Common
Securities on the Closing Date;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
15
(i) execute and file with the Securities and Exchange
Commission (the "Commission") the registration statement
on Form S-3 prepared by the Sponsor in relation to the
Preferred Securities, including any amendments thereto
prepared by the Sponsor;
(ii) execute and file any documents prepared by the Sponsor,
or take any acts as determined by the Sponsor as
necessary in order to qualify or register all or part of
the Preferred Securities in any State in which the
Sponsor has determined to qualify or register such
Preferred Securities for sale;
(iii) execute and file an application prepared by the Sponsor
to the New York Stock Exchange or any other national
stock exchange or the Nasdaq National Market for listing
upon notice of issuance of any Preferred Securities;
(iv) execute and file with the Commission a registration
statement on Form 8-A prepared by the Sponsor relating
to the registration of the Preferred Securities under
Section 12(b) of the Exchange Act, including any
amendments thereto prepared by the Sponsor; and
(v) execute and enter into the Underwriting Agreement and
Pricing Agreement providing for the sale of the
Preferred Securities;
(c) to acquire the Debentures and the Debenture Guarantee with the
proceeds of the sale of the Preferred Securities and the
Common Securities; PROVIDED, HOWEVER, that the Regular
Trustees shall cause legal title to the Debentures and the
Debenture Guarantee to be held of record in the name of the
Property Trustee for the benefit of
16
the Holders of the Preferred Securities and the Common
Securities;
(d) to give the Debenture Issuer, the Sponsor and the Property
Trustee prompt written notice of the occurrence of a Special
Event PROVIDED, THAT the Regular Trustees shall consult
with the Debenture Issuer, the Sponsor and the Property
Trustee before taking or refraining from taking any
Ministerial Action in relation to a Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established,
Section including for the purposes of Section 316(c) of the
Trust Indenture Act and with respect to Distributions, voting
rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Preferred Securities and Common
Securities as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the
Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands
of or against the Trust ("Legal Action"), unless pursuant to
Section 3.8(f), the Property Trustee has the exclusive power
to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors,
advisors, and consultants and pay reasonable compensation for
such services;
(i) to cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
17
(j) to give the certificate to the Property Trustee required by
Section 314(a)(4) of the Trust Indenture Act which
certificate may be executed by any Regular Trustee;
(k) to incur expenses which are necessary or incidental to carry
out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities
of any notice received from the Debenture Issuer of its
election (i) to defer payments of interest on the Debentures
by extending the interest payment period under the Indenture
or, (ii) to extend the scheduled maturity date on the
Debentures;
(n) to execute all documents or instruments, perform all duties
and powers, and do all things for and on behalf of the Trust
in all matters necessary or incidental to the foregoing;
(o) to take all action which may be necessary or appropriate for
the preservation and the continuation of the Trust's valid
existence, rights, franchises and privileges as a statutory
business trust under the laws of the State of Delaware and of
each other jurisdiction in which such existence is necessary
to protect the limited liability of the Holders of the
Securities or to enable the Trust to effect the purposes for
which the Trust was created;
(p) to take any action, not inconsistent with this Declaration or
with applicable law, which the Regular Trustees determine in
their discretion to be necessary or desirable in carrying out
the activities of the Trust as set out in this Section 3.6
including, but not limited to:
18
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment
Company Act;
(ii) causing the Trust not to be characterized for United
States federal income tax purposes as an association
taxable as a corporation or a partnership but for each
Holder of Securities to be treated as owning an
undivided beneficial interest in the Debentures; and
(iii) cooperating with the Debenture Issuer to ensure that
the Debentures will be treated as indebtedness of the
Debenture Issuer for United States federal income tax
purposes,
provided that such action does not adversely affect the
interests of Holders; and
(q) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be
filed with respect to the Trust to be duly prepared and filed
by the Regular Trustees, on behalf of the Trust.
The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner which is consistent with the purposes and functions of
the Trust set out in Section 3.3 and the Regular Trustees shall not take any
action which is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
SECTION 3.7 PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES.
19
(a) the Trust shall not, and the Trustees (including the Property
Trustee) shall cause the Trust not to, engage in any activity
other than as required or authorized by this Declaration. In
particular, the Trust shall not and the Trustees (including
the Property Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding
the Debentures, but shall distribute all such proceeds
to Holders of Securities pursuant to the terms of this
Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than
loans represented by the Debentures;
(v) possess any power or otherwise act in such a way as to
vary the Trust assets or the terms of the Securities
in any way whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust
other than the Securities; or
(vii) (A) direct the time, method and place of exercising
any trust or power conferred upon the Debenture
Trustee with respect to the Debentures, (B) waive
any past default that is waivable under Section 6.06
of the Indenture, (C) exercise any right to rescind
or annul any declaration that the principal of all
the Debentures shall be due and payable or (D) consent
to any amendment, modification or termination of
the Indenture or the Debentures, where such consent
shall be required, unless the Trust shall have
received an opinion of counsel to the effect that such
modification will not cause more than an insubstantial
risk that for United States federal income tax
purposes the Trust will be characterized as an
association taxable as a corporation or a partnership
and that
20
each Holder of Securities will not be treated as
owning an undivided beneficial interest in the
Debentures.
SECTION 3.8 POWERS AND DUTIES OF THE PROPERTY TRUSTEE.
(a) The legal title to the Debentures and the Debenture Guarantee
shall be owned by and held of record in the name of the
Property Trustee in trust for the benefit of the Holders of
the Securities. The right, title and interest of the Property
Trustee to the Debentures and the Debenture Guarantee shall
vest automatically in each Person who may hereafter be
appointed as Property Trustee as set forth in Section 5.6.
Such vesting and cessation of title shall be effective whether
or not conveyancing documents have been executed and
delivered;
(b) the Property Trustee shall not transfer its right, title and
interest in the Debentures and the Debenture Guarantee to the
Regular Trustees or to the Delaware Trustee (if the Property
Trustee does not also act as Delaware Trustee);
(c) the Property Trustee shall:
(i) establish and maintain a segregated non-interest
bearing bank account (the "Property Trustee Account")
in the name of and under the exclusive control of the
Property Trustee on behalf of the Holders of the
Securities and, upon the receipt of payments of funds
made in respect of the Debentures and Debenture
Guarantee held by the Property Trustee, deposit such
funds into the Property Trustee Account and make
payments to the Holders of the Preferred Securities
and the Common Securities from the Property Trustee
Account in accordance with Sec-
21
tion 6.1. Funds in the Property Trustee Account shall
be held uninvested until disbursed in accordance with
this Declaration. The Property Trustee Account shall
be an account which is maintained with a banking
institution the rating on whose long term unsecured
indebtedness is at least equal to the rating assigned
to the Preferred Securities by a "nationally
recognized statistical rating organization", as that
term is defined for purposes of Rule 436(g)(2) under
the Securities Act;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of
the Preferred Securities and the Common Securities to
the extent the Debentures are redeemed or mature; and
(iii) upon notice of distribution issued by the Regular
Trustees in accordance with the terms of the Preferred
Securities and the Common Securities, engage in such
ministerial activities as shall be necessary or
appropriate to effect the distribution of the
Debentures and the Debenture Guarantees to Holders of
Securities upon the occurrence of certain special
events (as may be defined in the terms of the
Securities) arising from a change in law or a change
in legal interpretation or other specified
circumstances pursuant to the terms of the Securities;
(d) the Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee
pursuant to the terms of the Securities;
22
(e) the Property Trustee shall take any Legal Action which arises
out of or in connection with an Event of Default or the
Property Trustee's duties and obligations under this
Declaration or the Trust Indenture Act;
(f) the Property Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders
of Securities pursuant to the terms of the Securities;
or
(ii) a Successor Property Trustee has been appointed and
accepted that appointment in accordance with Section
5.6;
(g) the Property Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of
Debentures and the Debenture Guarantee under the Indenture
and, if an Event of Default occurs and is continuing, the
Property Trustee shall, for the benefit of Holders of the
Securities, enforce its rights as holder of the Debentures and
the Debenture Guarantee, subject to the rights of the Holders
pursuant to the terms of such Securities;
(h) the Property Trustee may authorize one or more Persons (each,
a "Paying Agent") to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to
the Preferred Securities and any such Paying Agent shall
Trustee required by Section comply with Section 317(b) of the
Trust Indenture Act. Any Paying Agent may be removed
23
by the Property Trustee at any time and a successor Paying
Agent or additional Paying Agents may be appointed at any time
by the Property Trustee; and
(i) subject to this Section 3.8, the Property Trustee shall have
none of the powers or the authority of the Regular Trustees
set forth in Section 3.6;
The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner which is consistent with the purposes and
functions of the Trust set forth in Section 3.3 and the Property
Trustee shall not take any action which is inconsistent with the
purposes and functions of the Trust set out in Section 3.3.
SECTION 3.9 CERTAIN DUTIES AND RESPONSIBILITIES OF THE PROPERTY TRUSTEE
(a) The Property Trustee, before the occurrence of any Event of Default
and after the curing or waiver of all Events of Default that may
have occurred, shall undertake to perform only such duties as are
specifically set forth in this Declaration in Sections 2.2, 2.3,
2.7, 3.8, 3.9, 3.10 and 6.1 and in the terms of the Securities, and
no implied covenants shall be read into this Declaration against the
Property Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.6), the Property
Trustee shall exercise such of the rights and powers vested in it by
this Declaration, 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;
(b) no provision of this Declaration shall be construed to relieve the
Property 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
24
all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee
shall be determined solely by the express provisions
of this Declaration in Sections 2.2, 2.3, 2.7, 3.8,
3.9, 3.10 and 6.1 and in the terms of the Securities,
and the Property Trustee shall not be liable except
for the performance of such duties and obligations as
are specifically set forth in this Declaration, and no
implied covenants or obligations shall be read into
this Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property 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
Property Trustee and conforming to the requirements of
this Declaration; but in the case of any such
certificates or opinions that by any provision hereof
are specifically required to be furnished to the
Property Trustee, the Property 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 Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Property Trustee, unless it shall be proved that the Property
Trustee was negligent in ascertaining the pertinent facts;
25
(iii) the Property 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 Securities at the time
outstanding relating to the time, method and place of
conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under this Declaration; and
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if
it shall have reasonable ground for believing that the
repayment of such funds or liability is not reasonably assured
to it under the terms of this Declaration or adequate
indemnity against such risk or liability is not reasonably
assured to it.
SECTION 3.10 CERTAIN RIGHTS OF PROPERTY TRUSTEE.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may rely and shall be fully
protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to
have been signed, sent or presented by the proper party
or parties;
(ii) any direction or act of the Sponsor or the Regular
Trustees contemplated by this Declaration shall be
sufficiently evidenced by a Direction or an Officers'
Certificate;
26
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or
omitting any action hereunder, the Property Trustee
(unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part and, if the
Trust is excluded from the definition of an Investment
Company solely by means of Rule 3a-7, subject to the
requirements of Rule 3a-7, request and rely upon an
Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Sponsor or
the Regular Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or
any rerecording, refiling or registration thereof);
(v) the Property 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 opinion. Such counsel may
be counsel to the Sponsor or any of its Affiliates, and
may include any of its employees. The Property Trustee
shall have the right at any time to seek instructions
concerning the administration of this Declaration from
any court of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Declaration at the request or direction of any Holder,
unless such Holder shall have provided to the Property
27
Trustee adequate security and indemnity which would
satisfy a reasonable person in the position of the
Property Trustee, against the costs, expenses (including
attorneys' fees and expenses) and liabilities that might
be incurred by it in complying with such request or
direction, including such reasonable advances as may be
requested by the Property Trustee provided that, nothing
contained in this Section 3.10(a)(vi) shall be taken to
relieve the Property Trustee, upon the occurrence of an
Event of Default, of its obligation to exercise the
rights and powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
paper or document, but the Property Trustee, in its
discretion, may make such further inquiry or
investigation into such facts or matters as it may see
fit;
(viii) the Property 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
Property 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 Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the
Securities and the signature of the Property Trustee or
its agents alone shall be sufficient and effective to
28
perform any such action; and no third party shall be
required to inquire as to the authority of the Property
Trustee to so act, or as to its compliance with any of
the terms and provisions of this Declaration, both of
which shall be conclusively evidenced by the Property
Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or
right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders of
the Securities which instructions may only be given by
the Holders of the same portion in liquidation amount of
the Securities as would be entitled to direct the
Property Trustee under the terms of the Securities in
respect of such remedy, right or action, (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
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any
obligation to take any action that is discretionary under
the provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty
or obligation on the Property 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 Property 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 Property Trustee
shall be construed to be a duty.
29
SECTION 3.11 DELAWARE TRUSTEE
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Regular Trustees and the Property Trustee described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for
Trust Indenture Act. Any Paying the sole and limited purpose of fulfilling the
requirements of Section 3807 of the Business Trust Act.
SECTION 3.12 EXECUTION OF DOCUMENTS
Unless otherwise determined by the Regular Trustees and except as
otherwise required by the Business Trust Act, a majority of, or if there are
only two, both of the Regular Trustees are authorized to execute on behalf of
the Trust any documents which the Regular Trustees have the power and authority
to execute pursuant to Section 3.6, PROVIDED THAT any listing application
prepared by the Sponsor referred to in Section 3.6(b)(iii) may be executed by
any Regular Trustee.
SECTION 3.13 NOT RESPONSIBLE FOR RECITALS OR
ISSUANCE OF SECURITIES.
The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 DURATION OF TRUST.
The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have existence for 55 years from the Closing Date.
SECTION 3.15 MERGERS.
(a) The Trust may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its properties
and assets substantially as an entirety to
30
any corporation or other body, except as described in Section
3.15(b) and (c);
(b) the Trust may, with the consent of a majority of the Regular
Trustees and without the consent of the Holders of the
Securities, the Delaware Trustee or the Property Trustee,
consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any
State; PROVIDED, THAT:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of
the Trust under the Securities; or
(B) substitutes for the Securities other
securities having substantially the same terms
as the Preferred Securities (the "Successor
Securities") so long as the Successor
Securities rank the same as the Preferred
Securities rank with respect to Distributions
and payments upon liquidation, redemption and
maturity;
(ii) the Debenture Issuer expressly acknowledges a trustee
of the Successor Entity which possesses the same
powers and duties as the Property Trustee as the
Holder of the Debentures and the Sponsor expressly
acknowledges such trustee of the Successor Entity as
the holder of the Debenture Guarantee;
(iii) the Preferred Securities or any Successor Securities
are listed, or any Successor Securities will be listed
upon notification of issu-
31
ance, on any national securities exchange or other
organization on which the Preferred Securities are
then listed;
(iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities
(including any Successor Securities) to be downgraded
by any nationally recognized statistical rating
organization;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights,
preferences and privileges of the Holders of the
Securities (including any Successor Securities)
in any material respect (other than with respect
to any dilution of the Holders' interest in
the new entity);
(vi) such successor entity has a purpose identical to that
of the Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion of a
nationally recognized independent counsel to the Trust
experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights,
preferences and privileges of the Holders of the
Preferred Securities (including any Successor
Securities) in any material respect (other than with
respect to any dilution of the Holders' interest in
the new entity); and
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor
Entity will be required to register as an Investment
Company; and
(viii) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at
32
least to the extent provided by the Preferred
Securities Guarantee; and
(c) notwithstanding Section 3.15(b), the Trust shall not
consolidate, amalgamate, merge with or into, or be replaced by
any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger or replacement would cause
the Trust or Successor Entity for United States federal income
tax purposes to be classified as an association taxable as a
corporation or a partnership and each Holder of the Securities
not to be treated as owning an undivided beneficial interest in
the Debentures, except with the consent of Holders of 100% in
liquidation amount of the Securities.
ARTICLE IV
SPONSOR
SECTION 4.1 SPONSOR'S PURCHASE OF COMMON SECURITIES.
On the Closing Date the Sponsor will purchase all the Common
Securities issued by the Trust, at the same time as the Preferred Securities are
sold, in an amount equal to 3% of the capital of the Trust.
SECTION 4.2 RESPONSIBILITIES OF THE SPONSOR.
In connection with the issue and sale of the Preferred Securities,
the Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Preferred
Securities, including any amendments thereto;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities
and to take any and all such acts, other than actions which must be
taken by the Trust, and advise the Trust of actions it must take,
and prepare for execution and filing any documents to be executed
and filed by the Trust, as the Sponsor
33
deems necessary or advisable in order to comply with the applicable
laws of any such States;
(c) to prepare for filing by the Trust an application to the New York
Stock Exchange or any other national stock exchange or the Nasdaq
National Market for listing upon notice of issuance of any Preferred
Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of
the Preferred Securities under Section 12(b) of the Exchange Act,
including any amendments thereto; and
(e) to negotiate the terms of the Underwriting Agreement and Pricing
Agreement providing for the sale of the Preferred Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 NUMBER OF TRUSTEES.
The number of Trustees shall initially be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of
Trustees; and
(b) after the issuance of any Securities:
(i) and except as provided in Section 5.1(b)(ii) and
5.6(a)(ii)(B) with respect to the Special Regular
Trustee, the number of Trustees may be increased or
decreased by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as
a class at a meeting of the Holders of the Common
Securities; and
(ii) the number of Trustees shall be increased
automatically by one (1) if an Appointment Event has
occurred and is continuing and the Holders of a
Majority in liquidation amount of the Preferred
Securities appoint a Special Regular Trustee in
accordance with Section 5.6,
34
PROVIDED THAT in any case, the number of Trustees shall be at least five (5)
unless the Trustee that acts as the Property Trustee also acts as the Delaware
Trustee pursuant to Section 5.2 in which case the number of Trustees shall be at
least three(3).
SECTION 5.2 DELAWARE TRUSTEE.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal
place of business in the State of Delaware and otherwise meets
the requirements of applicable law,
provided that if the Property Trustee has its principal place of business in the
State of Delaware and otherwise meets the requirements of applicable law, then
the Property Trustee shall also be the Delaware Trustee and Section 3.11 shall
have no application.
SECTION 5.3 PROPERTY TRUSTEE; ELIGIBILITY.
(a) There shall at all times be one Trustee which shall act as
Property Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(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 Commission
to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District
of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to
law or to the re-
35
quirements of the supervising or examining authority
referred to above, then for the purposes of this
Section 5.3(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; and
(iii) if the Trust is excluded from the definition of an
Investment Company solely by means of Rule 3a-7 and to
the extent Rule 3a-7 requires a trustee having certain
qualifications to hold title to the "eligible assets"
of the Trust, the Property Trustee shall possess those
qualifications; and
(b) if at any time the Property Trustee shall cease to be eligible
to so act under Section 5.3(a), the Property Trustee shall
immediately resign in the manner and with the effect set
forth in Section 5.6(c);
(c) if the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Property Trustee and the Holder of the
Common Securities (as if it were the obligor referred to in
Section 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of Section 310(b) of the
Trust Indenture Act; and
(d) the Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of
clause (i) of the first proviso contained in Section 310(b)
of the Trust Indenture Act.
SECTION 5.4 QUALIFICATIONS OF REGULAR TRUSTEES AND DELAWARE TRUSTEE
GENERALLY.
Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity which shall act through one or more
Authorized Officers.
SECTION 5.5 INITIAL TRUSTEES.
The initial Regular Trustees shall be:
James T. Anderson
7800 East Orchard Road
36
Englewood, CO 80111
Charles J. Burdick
7800 East Orchard Road
Englewood, CO 80111
Roger Fox
7800 East Orchard Road
Englewood, CO 80111
The initial Delaware Trustee shall be:
Michael J. Majchrzak
300 King Street
Wilmington, DE 19801
The initial Property Trustee shall be:
The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, IL 60670-0126
SECTION 5.6 APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES.
(a) Subject to Section 5.6(b), Trustees may be appointed or
removed without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities:
(A) other than in respect to a Special Regular
Trustee, by vote of the Holders of a
Majority in liquidation amount of the Common
Securities voting as a class at a meeting of
the Holders of the Common Securities; and
(B) if an Appointment Event has occurred and is
continuing, one (1) additional Regular
Trustee (the "Special Regular Trustee") may
be appointed by vote of the Holders of a
Majority in liquidation amount of the
Preferred Securities, vot-
37
ing as a class at a meeting of the Holders
of the Preferred Securities and such Special
Regular Trustee may only be removed
(otherwise than by the operation of Section
5.6(c)), by vote of the Holders of a
Majority in liquidation amount of the
Preferred Securities voting as a class at a
meeting of the Holders of the Preferred
Securities;
(b) (i) the Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.6(a) until a
Successor Property Trustee has been appointed and has
accepted such appointment by written instrument
executed by such Successor Property Trustee and
delivered to the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with this Section 5.6(a) until a
successor Trustee possessing the qualifications to act
as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and
has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and
delivered to the Regular Trustees and the Sponsor; and
(c) a Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death,
removal or resignation, PROVIDED THAT a Special Regular
Trustee shall only hold office while an Appointment Event is
continuing and shall cease to hold office immediately after
the Appointment Event pursuant to which the Special Regular
Trustee was appointed and all other Appointment Events cease
to be continuing. Any Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in
writing signed by the
38
Trustee and delivered to the Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such
later date as is specified therein; PROVIDED, HOWEVER,
that:
(i) no such resignation of the Trustee that acts as the
Property Trustee shall be effective until:
(A) a Successor Property Trustee has been appointed and
has accepted such appointment by instrument executed
by such Successor Property Trustee and delivered to
the Trust, the Sponsor and the resigning Property
Trustee; or
(B) if the Trust is excluded from the definition of an
Investment Company solely by reason of Rule 3a-7,
until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the
holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor
Delaware Trustee has been appointed and has accepted
such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust,
the Sponsor and the resigning Delaware Trustee; and
(iii) no such resignation of a Special Regular Trustee shall
be effective until the 60th day following delivery of
the instrument of resignation of the Special Regular
Trustee to the Sponsor and the Trust or such later
date specified in such instrument during which period
the Holders of the Preferred Securities shall have the
right to appoint a successor Special Trustee as
provided in this Section 5.6; and
(d) the Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or
Successor Property Trustee, as the case may be, if the
Property Trustee or the Delaware Trustee delivers an
instrument of registration in accordance with this Section 5.6
(e) if no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided
in this Section 5.6 within 60 days after delivery to the
Sponsor and the Trust of an instrument of resignation, the
resigning Property Trustee or Delaware Trustee may petition
any court of competent jurisdiction for appointment of a
Successor Property Trustee or Successor Delaware Trustee.
Such court may thereupon after such notice, if any, as it
may deem proper and prescribe, appoint a Successor Property
Trustee or Successor Delaware Trustee, as the case may be.
SECTION 5.7 VACANCIES AMONG TRUSTEES.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by a majority of the Regular Trustees
shall be conclusive evidence of the existence of such vacancy. The vacancy
shall be filled with a Trustee appointed in accordance with Section 5.6.
SECTION 5.8 EFFECT OF VACANCIES.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee, or any one
39
of them, shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with Section 5.6, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
SECTION 5.9 MEETINGS.
Meetings of the Regular Trustees shall be held from time to time
upon the call of any Regular Trustee. Regular meetings of the Regular Trustees
may be held at a time and place fixed by resolution of the Regular Trustees.
Notice of any in-person meetings of the Regular Trustees shall be hand delivered
or otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 48 hours before such meeting. Notice of any
telephonic meetings of the Regular Trustees or any committee thereof shall be
hand delivered or otherwise delivered in writing (including by facsimile, with a
hard copy by overnight courier) not less than 24 hours before a meeting.
Notices shall contain a brief statement of the time, place and anticipated
purposes of the meeting. The presence (whether in person or by telephone) of a
Regular Trustee at a meeting shall constitute a waiver of notice of such meeting
except where a Regular Trustee attends a meeting for the express purpose of
objecting to the transaction of any activity on the ground that the meeting has
not been lawfully called or convened. Unless provided otherwise in this
Declaration, any action of the Regular Trustees may be taken at a meeting by
vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a
Quorum is present, or without a meeting by the unanimous written consent of the
Regular Trustees.
SECTION 5.10 DELEGATION OF POWER.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section 3.6
including any registration statement or amendment thereto filed with the
Commission or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the
40
execution of such instruments either in the name of the Trust or the names of
the Regular Trustees or otherwise as the Regular Trustees may deem expedient, to
the extent such delegation is not prohibited by applicable law or contrary to
the provisions of the Trust, as set forth herein.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 DISTRIBUTIONS.
If and to the extent that the Debenture Issuer makes a payment of
interest and Additional Interest (as defined in the Indenture), premium and
principal on the Debentures (or the Sponsor makes a payment in respect of the
Debenture Guarantee) held by the Property Trustee (the amount of any such
payment being a "Payment Amount"), the Property Trustee shall and is directed,
to the extent funds are available for that purpose, to make a distribution (a
"Distribution") of the Payment Amount to Holders. Holders shall receive
Distributions in accordance with the applicable terms of the relevant Holder's
Securities. Distributions shall be made on the Preferred Securities and the
Common Securities in accordance with the preferences set forth in their
respective terms.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 GENERAL PROVISIONS REGARDING SECURITIES.
(a) The Regular Trustees shall, on behalf of the Trust, issue one
class of preferred securities representing undivided
beneficial interests in the assets of the Trust having such
terms as are set forth in Exhibit A and incorporated herein by
reference (the "Preferred Securities"), and one class of
common securities representing undivided beneficial interests
in the assets of the Trust having such terms as are set forth
in Exhibit A and incorporated herein by reference (the "Common
Securities"). The Trust shall have no securities or other
interests in the assets of the Trust other than the Preferred
Securities and the Common Securities;
41
(b) the Certificates shall be signed on behalf of the Trust by the
Regular Trustees (or if there are more than two Regular
Trustees by any two of the Regular Trustees). Such signatures
may be the manual or facsimile signatures of the present or
any future Regular Trustee. Typographical and other minor
errors or defects in any such reproduction of any such
signature shall not affect the validity of any Certificate.
In case any Regular Trustee of the Trust who shall have signed
any of the Certificates shall cease to be such Regular Trustee
before the Certificate so signed shall be delivered by the
Trust, such Certificate nevertheless may be delivered as
though the person who signed such Certificate had not ceased
to be such Regular Trustee; and any Certificate may be signed
on behalf of the Trust by such persons who shall, at the
actual date of the execution of such Security, be the
Regular Trustees of the Trust, although at the date of the
execution and delivery of the Declaration any such person was
not such a Regular Trustee; Certificates shall be printed,
lithographed or engraved or may be produced in any other
manner as is reasonably acceptable to the Regular Trustees, as
evidenced by their execution thereof, and may have such
letters, numbers or other marks of identification or
designation and such legends or endorsements as the Regular
Trustees may deem appropriate, or as may be required to comply
with any law or with any rule or regulation of any stock
exchange on which Securities may be listed, or to conform to
usage;
(c) the consideration received by the Trust for the issuance of
the Securities shall constitute a contribution to the capital
of the Trust and shall not constitute a loan to the Trust;
(d) upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be
validly issued, fully paid and non-assessable; and
(e) every Person, by virtue of having become a Holder or a
Preferred Security Beneficial Owner in accordance with the
terms of this Declaration, shall be deemed to have expressly
assented and agreed to the terms of, and shall be bound by
this Declaration.
42
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 TERMINATION OF TRUST.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Holder of the Common
Securities, the Sponsor or the Debenture Issuer;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Holder of the Common
Securities, the Sponsor or the Debenture Issuer, the
filing of a certificate of cancellation with respect to
the Trust or the revocation of the Holder of the Common
Securities, the Sponsor's or the Debenture Issuer's
charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of
the Holder of the Common Securities, the Sponsor, the
Debenture Issuer or the Trust;
(iv) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption
thereof shall have been paid to the Holders in
accordance with the terms of the Securities;
(v) upon the occurrence and continuation of a Special
Event pursuant to which the Trust shall have been
dissolved in accordance with the terms of the
Securities and all of the Debentures and Debenture
Guarantees endorsed thereon shall have been
distributed to the Holders of Securities in exchange
for all of the Securities; or
(vi) before the issuance of any Securities, with the
consent of all of the Regular Trustees and the
Sponsor; and
43
(b) as soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware; and
(c) the provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 TRANSFER OF SECURITIES.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this
Declaration and in the terms of the Securities. Any transfer
or purported transfer of any Security not made in accordance
with this Declaration shall be null and void;
(b) subject to this Article IX, Preferred Securities shall be
freely transferable; and
(c) subject to this Article IX, the Sponsor and any Related Party
may only transfer Common Securities to the Sponsor or a
Related Party of the Sponsor, PROVIDED, THAT, any such
transfer is subject to the condition precedent that the
transferor obtain the written opinion of nationally recognized
independent counsel experienced in such matters that such
transfer would not cause more than an insubstantial risk that:
(i) the Trust would be classified for United States
federal income tax purposes as an association taxable
as a corporation or a partnership and each Holder of
Securities would not be treated as owning an undivided
beneficial interest in the Debentures; and
(ii) the Trust or the transferee would be an Investment
Company.
44
SECTION 9.2 TRANSFER OF CERTIFICATES.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges which may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration and
the documents incorporated by reference herein.
SECTION 9.3 DEEMED SECURITY HOLDERS.
The Trustees may treat the Person in whose name any Certificate
shall be registered on the books and records of the Trust as the sole holder of
such Certificate and of the Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trustees shall have
actual or other notice thereof.
SECTION 9.4 BOOK ENTRY INTERESTS.
Unless otherwise specified in the terms of the Preferred Securities,
the Preferred Securities Certificates, on original issuance, will be issued in
the form of one or more, fully registered, global Preferred Security
Certificates (each a "Global Certificate"), to be delivered to DTC, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner will
receive a definitive Preferred Security Certificate representing
45
such Preferred Security Beneficial Owner's interests in such Global
Certificates, except as provided in Section 9.7. Unless and until definitive,
fully registered Preferred Security Certificates (the "Definitive Preferred
Security Certificates") have been issued to the Preferred Security Beneficial
Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration
(including the payment of Distributions on the Global
Certificates and receiving approvals, votes or consents
hereunder) as the Holder of the Preferred Securities and the
sole holder of the Global Certificates and shall have no
obligation to the Preferred Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions
of this Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial Owners shall
be exercised only through the Clearing Agency and shall be
limited to those established by law and agreements between
such Preferred Security Beneficial Owners and the Clearing
Agency and/or the Clearing Agency Participants. DTC will make
book entry transfers among the Clearing Agency Participants
and receive and transmit payments of Distributions on the
Global Certificates to such Clearing Agency Participants.
SECTION 9.5 NOTICES TO CLEARING AGENCY.
Whenever a notice or other communication to the Preferred Security
Holders is required under this Declaration, unless and until Definitive
Preferred Security Certificates shall have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.7, the Regular Trustees shall give all
such notices and communications, specified herein to be given to the Preferred
Security Holders, to the Clearing Agency, and shall have no notice obligations
to the Preferred Security Beneficial Owners.
46
SECTION 9.6 APPOINTMENT OF SUCCESSOR CLEARING AGENCY.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to such Preferred Securities.
SECTION 9.7 DEFINITIVE PREFERRED SECURITY CERTIFICATES
If:
(a) a Clearing Agency elects to discontinue its services
as securities depositary with respect to the Preferred
Securities and a successor Clearing Agency is not
appointed within 90 days after such discontinuance
pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with the
Sponsor to terminate the book entry system through the
Clearing Agency with respect to the Preferred
Securities,
then:
(c) Definitive Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the
Trust with respect to such Preferred Securities; and
(d) upon surrender of the Global Certificates by the
Clearing Agency, accompanied by registration
instructions, the Regular Trustees shall cause
Definitive Certificates to be delivered to Preferred
Security Beneficial Owners in accordance with the
instructions of the Clearing Agency. Neither the
Trustees nor the Trust shall be liable for any delay
in delivery of such instructions and each of them may
conclusively rely on and shall be protected in relying
on, such
47
instructions. The Definitive Preferred Security
Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is
reasonably acceptable to the Regular Trustees, as
evidenced by their execution thereof, and may have
such letters, numbers or other marks of identification
or designation and such legends or endorsements as the
Regular Trustees may deem appropriate, or as may be
required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which Preferred
Securities may be listed, or to conform to usage.
SECTION 9.8 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If:
(a) any mutilated Certificates should be surrendered to the
Regular Trustees, or if the Regular Trustees shall receive
evidence to their satisfaction of the destruction, loss or
theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security
or indemnity as may be required by them to keep each of them
harmless, then in the absence of notice that such Certificate
shall have been acquired by a bona fide purchaser, any two
Regular Trustees on behalf of the Trust shall execute and
deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of
like denomination. In connection with the issuance of any new
Certificate under this Section 9.8, the Regular Trustees may
require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection
therewith. Any duplicate Certificate issued pursuant to this
Section shall constitute conclusive evidence of an ownership
interest in the
48
relevant Securities, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at
any time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 LIABILITY.
(a) Except as expressly set forth in this Declaration, the
Debenture Guarantee, the Securities Guarantees and the terms of the Securities
the Sponsor shall not be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the
Holders of the Securities which shall be made solely
from assets of the Trust; and
(ii) be required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust
or otherwise; and
(b) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the Securities shall be entitled to the same limitation
of personal liability extended to stockholders of private corporations.
SECTION 10.2 EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust 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 on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration 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 gross negligence (or, in
the case of the Property Trustee except as otherwise set forth in Section 3.9)
or willful misconduct with respect to such acts or omissions; and
49
(b) an Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust 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 Trust, 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 to Holders of Securities might properly be paid.
SECTION 10.3 FIDUCIARY DUTY.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration, subject to any duties or obligations imposed on the Property
Trustee under Rule 3a-7, shall not be liable to the Trust or to any other
Covered Person for its good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise existing
at law or in equity (other than duties imposed on the Property Trustee under the
Trust Indenture Act), are agreed by the parties hereto to replace such other
duties and liabilities of such Indemnified Person;
(b) unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between an Indemnified Person and any Covered Persons;
or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provide that an
Indemnified Person shall act in a manner that is, or
provides terms that are, fair and reasonable to the
Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens
50
relating to such interests, any customary or accepted industry practices, and
any applicable generally accepted accounting practices or principles. In the
absence of bad faith by the Indemnified Person, the resolution, action or term
so made, taken or provided by the Indemnified Person shall not constitute a
breach of this Declaration or any other agreement contemplated herein or of any
duty or obligation of the Indemnified Person at law or in equity or otherwise;
and
(c) whenever in this Declaration an Indemnified Person is permitted
or required to make a decision
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to
consider such interests and factors as it desires,
including its own interests, and shall have no duty or
obligation to give any consideration to any interest
of or factors affecting the Trust or any other Person;
or
(ii) in its "good faith" or under another express standard,
the Indemnified Person shall act under such express
standard and shall not be subject to any other or
different standard imposed by this Declaration or by
applicable law.
SECTION 10.4 INDEMNIFICATION.
(a) To the fullest extent permitted by applicable law, the Sponsor
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 on
behalf of the Trust and in a manner such Indemnified Person reasonably believed
to be within the scope of authority conferred on such Indemnified Person by this
Declaration, 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 gross negligence (or, in the case of the Property Trustee,
except as otherwise set forth in Section 3.9) 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
51
Indemnified Person in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by the Sponsor prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the Sponsor of an undertaking by or on behalf of the Indemnified Person to repay
such amount if it shall be determined that the Indemnified Person is not
entitled to be indemnified as authorized in Section 10.4(a).
SECTION 10.5 OUTSIDE BUSINESSES.
Any Covered Person, the Sponsor, the Debenture Issuer, the Delaware
Trustee and the Property Trustee may engage in or possess an interest in other
business ventures of any nature or description, independently or with others,
similar or dissimilar to the business of the Trust, and the Trust and the
Holders of Securities shall have no rights by virtue of this Declaration in and
to such independent ventures or the income or profits derived therefrom and the
pursuit of any such venture, even if competitive with the business of the Trust,
shall not be deemed wrongful or improper. No Covered Person, the Sponsor, the
Debenture Issuer, the Delaware Trustee, or the Property Trustee shall be
obligated to present any particular investment or other opportunity to the Trust
even if such opportunity is of a character that, if presented to the Trust,
could be taken by the Trust, and any Covered Person, the Sponsor, the Debenture
Issuer, the Delaware Trustee and the Property Trustee shall have the right to
take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depository for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 FISCAL YEAR.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
52
SECTION 11.2 CERTAIN ACCOUNTING MATTERS.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of
account, records and supporting documents, which shall reflect
in reasonable detail, each transaction of the Trust. The
books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting
principles, consistently applied. The Trust shall use the
accrual method of accounting for United States federal income
tax purposes. The books of account and the records of the
Trust shall be examined by and reported upon, as of the end of
each Fiscal Year, by a firm of independent certified public
accountants selected by the Regular Trustees;
(b) the Regular Trustees shall cause to be prepared and delivered
to each of the Holders of Securities, within 90 days after the
end of each Fiscal Year of the Trust, annual financial
statements of the Trust, including a balance sheet of the
Trust as of the end of such Fiscal Year, and the related
statements of income or loss;
(c) the Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, any annual
United States federal income tax information statement,
required by the Code, containing such information with regard
to the Securities held by each Holder as is required by the
Code and the Treasury Regulations. Notwithstanding any right
under the Code to deliver any such statement at a later date,
the Regular Trustees shall endeavor to deliver all such
statements within 30 days after the end of each Fiscal Year of
the Trust; and
(d) the Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States
federal income tax return, on a Form 1041 or such other form
required by United States federal income tax law, and
53
any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or
local taxing authority.
SECTION 11.3 BANKING.
The Trust shall maintain one or more bank accounts in the name and
for the sole benefit of the Trust; PROVIDED, HOWEVER, that all payments of
funds in respect of the Debentures and the Debenture Guarantee held by the
Property Trustee shall be made directly to the Property Trustee Account and no
other funds of the Trust shall be deposited in the Property Trustee Account.
The sole signatories for such accounts shall be designated by the Regular
Trustees; PROVIDED, HOWEVER, that the Property Trustee shall designate the
sole signatories for the Property Trustee Account.
SECTION 11.4 WITHHOLDING.
The Trust and the Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the
Holder to applicable jurisdictions. To the extent that the Trust is required
to withhold and pay over any amounts to any authority with respect to
distributions or allocations to any Holder, the amount withheld shall be
deemed to be a distribution in the amount of the withholding to the Holder. In
the event of any claimed over-withholding, Holders shall be limited to an
action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.
54
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 AMENDMENTS.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may be
amended by, and only by, a written instrument approved and
executed by the Regular Trustees (or, if there are more than
two Regular Trustees a majority of the Regular Trustees);
PROVIDED, HOWEVER, that:
(i) no amendment shall be made, and any such purported
amendment shall be void and ineffective, to the extent
the result thereof would be to
(a) cause the Trust to be characterized for purposes
of United States federal income taxation as an
association taxable as a corporation or a
partnership and each Holder of Securities not to
be treated as owning an undivided beneficial
interest in the Debentures;
(b) reduce or otherwise adversely affect the powers
of the Property Trustee; or
(c) cause the Trust to be deemed to be an Investment
Company which is required to be registered under
the Investment Company Act;
(ii) at such time after the Trust has issued any Securities
which remain outstanding, any amendment which would
adversely affect the rights, privileges or preferences
of any Holder of Securities may be effected only with
such additional requirements as may be set forth in
the terms of such Securities;
(iii) Section 9.1(c) and this Section 12.1 shall not be
amended without
55
the consent of all of the Holders of the Securities;
(iv) Article IV shall not be amended without the consent of
the Holders of a Majority in liquidation amount of the
Common Securities; and
(v) the rights of the holders of the Common Securities
under Article V to increase or decrease the number of,
and appoint and remove Trustees shall not be amended
without the consent of the Holders of a Majority in
liquidation amount of the Common Securities (except
to the extent that such amendment relates to the
Special Regular Trustee, in which case such amendment
may only be made in accordance with the terms of the
Preferred Securities).
(b) Notwithstanding Section 12.1(a)(ii), this Declaration may be
amended without the consent of the Holders of the Securities
to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this
Declaration that may be defective or inconsistent with
any other provision of this Declaration;
(iii) add to the covenants, restrictions or obligations
of the Sponsor; and
(iv) conform to any change in Rule 3a-7 or written
change in interpretation or application of Rule 3a-7
by any legislative body, court, government agency or
regulatory authority which amendment does not have a
material adverse effect on the right, preferences or
privileges of the Holders.
SECTION 12.2 MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY WRITTEN
CONSENT.
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Regular Trustees (or as provided in
the terms of the Securities) to consider and act on any matter
on which Holders of
56
such class of Securities are entitled to act under the terms
of this Declaration, the terms of the Securities or the rules
of any stock exchange on which the Preferred Securities are
listed or admitted for trading. The Regular Trustees shall
call a meeting of such class of Holders, if directed to do so
by the Holders of at least 10% in liquidation amount of such
class of Securities. Such direction shall be given by
delivering to the Regular Trustees one or more calls in a
writing stating that the signing Holders of Securities wish to
call a meeting and indicating the general or specific purpose
for which the meeting is to be called. Any Holders of
Securities calling a meeting shall specify in writing the
Security Certificates held by the Holders of Securities
exercising the right to call a meeting and only those
specified shall be counted for purposes of determining whether
the required percentage set forth in the second sentence of
this paragraph has been met; and
(b) except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings
of Holders of Securities:
(i) notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat
at least 7 days and not more than 60 days before the
date of such meeting. Whenever a vote, consent or
approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any
stock exchange on which the Preferred Securities are
listed or admitted for trading, such vote, consent or
approval may be given at a meeting of the Holders of
Securities. Any action that may be taken at a meeting
of the Holders of Securities may be taken without a
meeting if a consent in writing setting forth the
action so taken is signed by the Holders of Securities
owning not less than the mini-
57
mum amount of Securities in liquidation amount that
would be necessary to authorize or take such action at
a meeting at which all Holders of Securities having a
right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall
be given to the Holders of Securities entitled to vote
who have not consented in writing. The Regular
Trustees may specify that any written ballot submitted
to the Security Holder for the purpose of taking any
action without a meeting shall be returned to the
Trust within the time specified by the Regular
Trustees;
(ii) each Holder of a Security may authorize any Person to
act for it by proxy on all matters in which a Holder
of Securities is entitled to participate, including
waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid
after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the Holder
of Securities executing it. Except as otherwise
provided herein, all matters relating to the giving,
voting or validity of proxies shall be governed by the
General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations
thereunder, as if the Trust were a Delaware
corporation and the Holders of the Securities were
stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other
Person that the Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the
terms of the Secu-
58
rities or the listing rules of any stock exchange on
which the Preferred Securities are then listed or
trading, otherwise provides, the Regular Trustees, in
their sole discretion, shall establish all other
provisions relating to meetings of Holders of
Securities, including notice of the time, place or
purpose of any meeting at which any matter is to be
voted on by any Holders of Securities, waiver of any
such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements,
voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
SECTION 13.1 REPRESENTATIONS AND WARRANTIES OF PROPERTY TRUSTEE.
The Trustee which acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a national banking association with
trust powers, duly organized, validly existing and in good standing under
the laws of the United States, with trust power and authority to execute
and deliver, and to carry out and perform its obligations under the terms
of, the Declaration.
(b) The execution, delivery and performance by the Property
Trustee of the Declaration has been duly authorized by all necessary
corporate action on the part of the Property Trustee. The Declaration has
been duly executed and delivered by the Property Trustee, and it
constitutes a legal, valid and binding obligation of the Property Trustee,
enforceable against it in accordance with its terms, subject to
59
applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in
equity or at law).
(c) The execution, delivery and performance of the Declaration by
the Property Trustee does not conflict with or constitute a breach of the
Articles of Organization or By-laws of the Property Trustee.
(d) No consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Property Trustee, of the
Declaration.
(e) The Property Trustee, pursuant to the Declaration, shall hold
legal title and a valid ownership interest in the Debentures and the
Debenture Guarantee under the law of its place of incorporation and
Delaware law.
(f) If the Property Trustee does not also act as the Delaware
Trustee, the Delaware Trustee under Delaware law is a natural person who
is a resident of the State of Delaware.
(g) Pursuant to a Co-Trustee Agreement between the Property
Trustee and the Delaware Trustee dated as of March 1, 1995, the
Delaware Trustee has been authorized to perform its obligations under
the Certificate of Trust and the Declaration. The Declaration under
Delaware law constitutes a legal, valid and binding obligation of the
Delaware Trustee, enforceable against the Delaware Trustee in accordance
with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors'
rights generally and to general principles of equity and the discretion
of the court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law).
60
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 NOTICES.
All notices provided for in this Declaration 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 Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address
as the Trust may give notice of to the Holders of the
Securities):
U S WEST FINANCING [ ]
7800 East Orchard Road
Englewood, CO 80111
Attention: [ ]
(b) if given to the Property Trustee, at the mailing address set
forth below (or such other address as the Property Trustee may
give notice of to the Holders of the Securities):
THE FIRST NATIONAL BANK OF CHICAGO
One First National Plaza
Suite 0126
Chicago, IL 60670-0126
Attention: [ ]
(c) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other
address as the Holder of the Common Securities may give notice
to the Trust):
U S WEST, Inc.
7800 East Orchard Road
Englewood, CO 80111
Attention: [ ]
(d) if given to any other Holder, at the address set forth on the
books and records of the Trust.
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
61
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 14.2 GOVERNING LAW.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 14.3 INTENTION OF THE PARTIES.
It is the intention of the parties hereto that the Trust not be
characterized for United States federal income tax purposes as an association
taxable as a corporation or a partnership but rather, the Trust be characterized
as a grantor trust or otherwise in a manner that each Holder of Securities be
treated as owning an undivided beneficial interest in the Debentures. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
SECTION 14.4 HEADINGS.
Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision hereof.
SECTION 14.5 SUCCESSORS AND ASSIGNS
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 14.6 PARTIAL ENFORCEABILITY.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
62
SECTION 14.7 COUNTERPARTS.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
63
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
James T. Anderson
as Trustee
- -----------------------------------
Charles J. Burdick
as Trustee
- -----------------------------------
Roger Fox
as Trustee
- -----------------------------------
Michael J. Majchrzak
as Trustee
- -----------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
By:
-------------------------
Name:
Title:
U S WEST, INC.
as Sponsor
By:
-----------------------
Name:
Title:
64
EXHIBIT A
TERMS OF
_% TRUST ORIGINATED PREFERRED SECURITIES
__% TRUST ORIGINATED COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of _________, 1995 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to below):
1. DESIGNATION AND NUMBER.
(a) PREFERRED SECURITIES. Preferred Securities of the
Trust with an aggregate liquidation amount with respect to the assets of the
Trust of $[_____ million ($_________)] and a liquidation amount with respect to
the assets of the Trust of $25 per Preferred Security, are hereby designated
for the purposes of identification only as "____% Trust Originated Preferred
Securities" (the "Preferred Securities"). The Preferred Security Certificates
evidencing the Preferred Securities shall be substantially in the form attached
hereto as Annex I, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice or to
conform to the rules of any stock exchange on which the Preferred Securities are
listed.
(b) COMMON SECURITIES. Common Securities of the Trust
with an aggregate liquidation amount with respect to the assets of the Trust of
$[_______ million ($______)] and a liquidation amount with respect to the
assets of the Trust of $25 per Common Security, are hereby designated for the
purposes of identification only as "__% Trust Originated Common Securities"
(the "Common Securities"). The Common Security Certificates evidencing the
Common Securities shall be substantially in the form attached hereto as Annex
II, with such changes and
additions thereto or deletions therefrom as may be required by ordinary usage,
custom or practice.
2. DISTRIBUTIONS.
(a) Periodic Distributions payable on each Security will
be fixed at a rate per annum of [*.*]% (the "Coupon Rate") of the stated
liquidation amount of $25 per Security, such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee. Distributions
in arrears for more than one quarter will bear interest thereon at the Coupon
Rate (to the extent permitted by applicable law). The term "Distributions"
as used in these terms includes such periodic cash distributions and any such
interest payable unless otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the Debentures or the
Debenture Guarantee held by the Property Trustee. The amount of
Distributions payable for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year of twelve 30-day months,
and for any period shorter than a full quarterly Distribution period for
which Distributions are computed, Distributions will be computed on the basis
of the actual number of days elapsed in such a 30-day month.
(b) Distributions on the Securities will be cumulative, will
accrue from _________, 1995 and will be payable quarterly in arrears, on
March 31, June 30, September 30, and December 31 of each year, commencing on
__________, 1995, except as otherwise described below. The Debenture Issuer
has the right under the Indenture to defer payments of interest by extending
the interest payment period from time to time on the Debentures for a period
not exceeding 20 consecutive quarters (each, an "Extension Period") and, as a
consequence of such extension, Distributions will also be deferred. Despite
such deferral, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the Coupon Rate during
any such Extension Period. Prior to the termination of any such Extension
Period, the Debenture Issuer may further extend such Extension Period; PROVIDED
THAT such Extension Period together with all such previous and further
extensions thereof may not exceed 20 consecutive quarters. Payments of accrued
Distributions will be payable to Holders as they appear on the books and records
2
of the Trust on the first record date after the end of the Extension Period.
Upon the termination of any Extension Period and the payment of all amounts then
due, the Debenture Issuer may commence a new Extension Period, subject to the
above requirements.
(c) Distributions on the Securities will be payable to the
Holders thereof as they appear on the books and records of the Trust on the
relevant record dates. While the Preferred Securities remain in book-entry only
form, the relevant record dates shall be one Business Day prior to the relevant
payment dates which payment dates correspond to the interest payment dates on
the Debentures. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment in respect of the Preferred
Securities will be made as described under the heading "Description of the
Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust
Company" in the Prospectus Supplement dated ______, 1995 to the Prospectus dated
______, 1995 (together, the "Prospectus") of the Trust included in the
Registration Statement on Form S-3 of the Sponsor, the Debenture Issuer, the
Trust and certain other business trusts. The relevant record dates for the
Common Securities shall be the same record date as the Preferred Securities.
If the Preferred Securities shall not continue to remain
in book-entry-only form, the relevant record dates for the Preferred Securities,
shall conform to the rules of any securities exchange on which the securities
are listed and, if none, shall be selected by the Regular Trustees, which dates
shall be at least one Business Day but less than 60 Business Days before the
relevant payment dates, which payment dates correspond to the interest payment
dates on the Debentures. Distributions payable on any Securities that are not
punctually paid on any Distribution payment date, as a result of the Debenture
Issuer or the Sponsor having failed to make a payment under the Debentures or
the Debenture Guarantee, as the case may be, will cease to be payable to the
Person in whose name such Securities are registered on the relevant record date,
and such defaulted Distribution will instead be payable to the Person in whose
name such Securities are registered on the special record date or other
specified date determined in accordance with the Indenture. If any date on
which Distributions are payable on the Securities is not a Business Day, then
payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
(d) In the event that there is any money or other property
held by or for the Trust that is not accounted for hereunder, such property
shall be distrib-
3
uted Pro Rata (as defined herein) among the Holders of the Securities.
3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION.
In the event of any voluntary or involuntary dissolution,
winding-up or termination of the Trust, the Holders of the Securities on the
date of the dissolution, winding-up or termination as the case may be, will be
entitled to receive out of the assets of the Trust available for distribution to
Holders of Securities after satisfaction of liabilities to creditors, an amount
equal to the aggregate of the stated liquidation amount of $25 per Security plus
accrued and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"), unless, in connection with such
dissolution, winding-up or termination, Debentures in an aggregate principal
amount equal to the aggregate stated liquidation amount of such Securities, with
an interest rate equal to the Coupon Rate of, and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid Distributions on, such
Securities, shall be distributed on a Pro Rata basis to the Holders of the
Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Securities shall be paid on a Pro Rata basis.
4. REDEMPTION AND DISTRIBUTION.
(a) Upon the repayment of the Debentures in whole or in part,
whether at maturity or upon redemption, the proceeds from such repayment or pay-
ment shall be simultaneously applied to redeem Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
repaid or redeemed, at a redemption price of $25 per Security plus an amount
equal to accrued and unpaid Distributions thereon at the date of the redemption,
payable in cash (the "Redemption Price"). Holders will be given not less than
30 nor more than 60 days notice of such redemption.
4
(b) If fewer than all the outstanding Securities are to be
so redeemed, the Common Securities and the Preferred Securities will be
redeemed Pro Rata and the Preferred Securities to be redeemed will be as
described in Paragraph 4(f)(ii) below.
(c) If, at any time, a Tax Event or an Investment Company
Event (each as defined below, and each a "Special Event") shall occur and be
continuing the Regular Trustees shall dissolve the Trust and, after satisfaction
of creditors, cause Debentures held by the Property Trustee, having an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the Coupon Rate of, and accrued and unpaid interest
equal to accrued and unpaid Distributions on and having the same record date for
payment as the Securities, to be distributed to the Holders of the Securities,
together with the Debt Guarantee in liquidation of such Holders' interests in
the Trust on a Pro Rata basis, within 90 days following the occurrence of such
Special Event (the "90 Day Period"), PROVIDED, HOWEVER, that in the case of
the occurrence of a Tax Event, as a condition of such dissolution and
distribution, the Regular Trustees shall have received an opinion of a
nationally recognized independent tax counsel experienced in such matters (a "No
Recognition Opinion"), which opinion may rely on published revenue rulings of
the Internal Revenue Service, to the effect that the Holders of the Securities
will not recognize any gain or loss for United States federal income tax
purposes as a result of the dissolution of the Trust and the distribution of
Debentures and PROVIDED, FURTHER, that, if at the time there is available to
the Trust the opportunity to eliminate, within the 90 Day Period, the Special
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure that has no adverse
effect on the Trust, the Debenture Issuer, the Sponsor or the Holders of the
Securities ("Ministerial Action"), the Trust will pursue such Ministerial Action
in lieu of dissolution.
If, in the case of the occurrence of a Tax Event (i) the Debenture
Issuer has received an opinion (a "Redemption Tax Opinion") of a nationally
recognized independent tax counsel experienced in such matters that, as a result
of a Tax Event, there is more than an insubstantial risk that the Debenture
Issuer would be preclud-
5
ed from deducting the interest on the Debentures for United States federal
income tax purposes even after the Debentures were distributed to the Holders of
Securities in liquidation of such Holders' interests in the Trust as described
in this paragraph 4(c), or (ii) the Regular Trustees shall have been informed by
such tax counsel that a No Recognition Opinion cannot be delivered to the Trust,
the Debenture Issuer shall have the right at any time, upon not less than 30
nor more than 60 days notice, to redeem the Debentures in whole or in part for
cash within 90 days following the occurrence of such Tax Event, and following
such redemption, Securities with an aggregate liquidation amount equal to the
aggregate principal amount of the Debentures so redeemed shall be redeemed by
the Trust at the Redemption Price on a Pro Rata basis; PROVIDED, HOWEVER, that,
if at the time there is available to the Trust the opportunity to eliminate,
within such 90 day period, the Tax Event by taking some Ministerial Action, the
Trust or the Debenture Issuer will pursue such Ministerial Action in lieu of
redemption.
"Tax Event" means that the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced in such
matters (a "Dissolution Tax Opinion") to the effect that on or after the date of
the Prospectus Supplement, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority therefore or therein, or (b) any amendment to, or change in, an
interpretation or application of any such laws or regulations by any legislative
body, court, governmental agency or regulatory authority, which amendment or
change is enacted, promulgated, issued or announced or which interpretation or
pronouncement is issued or announced or which action is taken, in each case on
or after the date of the Prospectus Supplement, there is more than an
insubstantial risk that (i) the Trust is or will be within 90 days of the date
thereof, subject to United States federal income tax with respect to interest
accrued or received on the Debentures, (ii) the Trust is, or will be within 90
days of the date thereof, subject to more than a de minimis amount of taxes,
duties or other governmental charges, or (iii) interest payable by the Debenture
Issuer to the Trust on the Debentures is not, or within 90 days of the date
thereof will not be, deductible, in whole or in
6
part, by the Debenture Issuer for United States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall
have received an opinion of a nationally recognized independent counsel
experienced in practice under the Investment Company Act that, as a result of
the occurrence of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act
Law"), there is more than an insubstantial risk that the Trust is or will
be considered an Investment Company which is required to be registered
under the Investment Company Act, which Change in 1940 Act Law becomes
effective on or after the date of the Prospectus Supplement.
On and from the date fixed by the Regular Trustees for any
distribution of Debentures and dissolution of the Trust: (i) the Securities will
no longer be deemed to be outstanding, (ii) The Depository Trust Company (the
"Depository") or its nominee (or any successor Clearing Agency or its nominee),
as the record Holder of the Preferred Securities, will receive a registered
global certificate or certificates representing the Debentures and the Debenture
Guarantee to be delivered upon such distribution and any certificates
representing Securities, except for certificates representing Preferred
Securities held by the Depository or its nominee (or any successor Clearing
Agency or its nominee), will be deemed to represent beneficial interests in the
Debentures having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the Coupon Rate of,
and accrued and unpaid interest equal to accrued and unpaid Distributions on
such Securities until such certificates are presented to the Debenture Issuer or
its agent for transfer or reissue.
(d) The Trust may not redeem fewer than all the outstanding
Securities unless all accrued and unpaid Distributions have been paid on all
Securities for all quarterly Distribution periods terminating on or before the
date of redemption.
(e) If the Debentures and the Debenture Guarantee are distributed
to holders of the Securities,
7
pursuant to the terms of the Indenture, the Debenture Issuer will use its best
efforts to have the Debentures listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities were listed immediately prior to the
distribution of the Debentures.
(f) REDEMPTION OR DISTRIBUTION PROCEDURES. (i) Notice of any
redemption of, or notice of distribution of Debentures in exchange for the
Securities (a "Redemption/Distribution Notice") will be given by the Trust by
mail to each Holder of Securities to be redeemed or exchanged not fewer than 30
nor more than 60 days before the date fixed for redemption or exchange thereof
which, in the case of a redemption, will be the date fixed for redemption of the
Debentures. For purposes of the calculation of the date of redemption or
exchange and the dates on which notices are given pursuant to this paragraph
4(f)(i), a Redemption/Distribution Notice shall be deemed to be given on the day
such notice is first mailed, by first-class mail, postage prepaid, to Holders of
Securities. Each Redemption/Distribution Notice shall be addressed to the
Holders of Securities at the address of each such Holder appearing in the books
and records of the Trust. No defect in the Redemption/Distribution Notice or in
the mailing of either thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect to any other
Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata and, in
the event Preferred Securities are held in book-entry only form by the
Depository or its nominee (or any successor Clearing Agency or its nominee), the
Depository will reduce Pro Rata the amount of the interest of each Clearing
Agency Participant in the Preferred Securities to be redeemed; provided that if,
as a result of such Pro Rata redemption, Clearing Agency Participants would hold
fractional interests in the Preferred Securities, the Depository will adjust the
amount of the interest of each Clearing Agency Participant to be redeemed to
avoid such fractional interests.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice which notice may only be issued if the Debentures
are redeemed as set out in this paragraph 4 (which notice will be irrevoca-
8
ble) then (a) while the Preferred Securities are in book-entry only form, with
respect to the Preferred Securities, by 12:00 noon, New York City time, on the
redemption date, provided that the Debenture Issuer has paid the Property
Trustee a sufficient amount of cash in connection with the related redemption or
maturity of the Debentures, the Property Trustee will deposit irrevocably with
the Depository (or successor Clearing Agency) funds sufficient to pay the
applicable Redemption Price with respect to the Preferred Securities and will
give the Depositary irrevocable instructions and authority to pay the Redemption
Price to the Holders of the Preferred Securities, and (b) if the Preferred
Securities are issued in definitive form, with respect to the Preferred
Securities, and with respect to the Common Securities, provided that the
Debenture Issuer has paid the Property Trustee a sufficient amount of cash in
connection with the related redemption or maturity of the Debentures, the
Property Trustee will pay the relevant Redemption Price to the Holders of such
Securities by check mailed to the address of the relevant Holder appearing on
the books and records of the Trust on the redemption date. If a
Redemption/Distribution Notice shall have been given and funds deposited as
required, if applicable, then immediately prior to the close of business on the
date of such deposit, or on the redemption date, as applicable, Distributions
will cease to accrue on the Securities so called for redemption and all rights
of Holders of such Securities so called for redemption will cease, except the
right of the Holders of such Securities to receive the Redemption Price, but
without interest on such Redemption Price. Neither the Regular Trustees nor the
Trust shall be required to register or cause to be registered the transfer of
any Securities which have been so called for redemption. If any date fixed for
redemption of Securities is not a Business Day, then payment of the Redemption
Price payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date fixed for redemption. If
payment of the Redemption Price in respect of Securities is improperly withheld
or refused and not paid either by the Property Trustee or by the Sponsor as
guarantor pursuant to the relevant Securities Guarantee, Distributions on such
Securities will continue to accrue, from the origi-
9
nal redemption date to the actual date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the
Regular Trustees on behalf of the Trust to (a) in respect of the Preferred
Securities, the Depository or its nominee (or any successor Clearing Agency
or its nominee) if the Global Certificates have been issued or if Definitive
Preferred Security Certificates have been issued, to the Holder thereof, and
(b) in respect of the Common Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws), provided the
acquiror is not the Holder of the Common Securities or the obligor under the
Indenture, the Sponsor or any of its subsidiaries may at any time and from
time to time purchase outstanding Preferred Securities by tender, in the open
market or by private agreement.
5. VOTING RIGHTS - PREFERRED SECURITIES.
(a) Except as provided under paragraphs 5(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Preferred
Securities will have no voting rights.
(b) If (i) the Trust fails to make Distributions in full on the
Preferred Securities for 6 consecutive quarterly Distribution periods, or (ii)
an Event of Default occurs and is continuing (each of (i) and (ii) being an
"Appointment Event"), then the Holders of the Preferred Securities, acting as a
single class, will be entitled by the vote of a Majority in liquidation amount
of the Preferred Securities to appoint a Special Regular Trustee in accordance
with Section 5.6(a)(ii)(b) of the Declaration. Any Holder of Preferred
Securities (other than the Sponsor, or any entity directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Sponsor) will be entitled to nominate any person to be appointed as Special
Regular Trustee. For purposes of determining whether the Trust has failed to
make Distributions in full for 6 consecutive quarterly Distribution periods,
Distributions shall be deemed to remain in arrears,
10
notwithstanding any payments in respect thereof, until full cumulative
Distributions have been or contemporaneously are paid with respect to all
quarterly Distribution periods terminating on or prior to the date of payment of
such cumulative Distributions.
Not later than 30 days after such right to appoint a Special
Regular Trustee arises, the Regular Trustees will convene a meeting for the
purpose of appointing a Special Regular Trustee. If the Regular Trustees
fail to convene such meeting within such 30-day period, the Holders of 10% in
liquidation amount of the Preferred Securities will be entitled to convene
such meeting in accordance with Section 12.2 of the Declaration. The record
date for such meeting will be the close of business on the Business Day which
is one Business Day before the day on which notice of the meeting is sent to
Holders. The provisions of the Declaration relating to the convening and
conduct of the meetings of the Holders will apply with respect to any such
meeting.
A Special Regular Trustee may be removed without cause at any time
by vote of the Holders of a Majority in liquidation amount of the Preferred
Securities at a meeting of the Holders of the Preferred Securities in accordance
with Section 5.6(a)(ii)(b) of the Declaration. The Holders of 10% in
liquidation amount of the Preferred Securities will be entitled to convene such
a meeting in accordance with Section 12.2 of the Declaration. The record date
for such meeting will be the close of business on the Business Day which is one
Business Day before the day on which the notice of meeting is sent to Holders.
Notwithstanding the appointment of a Special Regular Trustee, the Debenture
Issuer shall retain all rights under the Indenture, including the right to
extend the interest payment period on the Debentures.
Subject to the requirements of the second to last sentence of
this paragraph, the Holders of a Majority in liquidation amount of the
Preferred Securities voting separately as a class may direct the time,
method, and place of conducting any proceeding for any remedy available to
the Property Trustee, or exercising any trust or power conferred upon the
Property Trustee under the Declaration, including (i) directing the time,
method, place of conducting any pro-
11
ceeding for any remedy available to the Debenture Trustee, or exercising any
trust or power conferred on the Debenture Trustee with respect to the
Debentures, (ii) waive any past default and its consequences that is waivable
under Section 6.06 of the Indenture, or (iii) exercise any right to rescind
or annul a declaration that the principal of all the Debentures shall be due
and payable, provided, however, that where a consent under the Indenture
would require the consent or act of the Holders greater than a majority in
principal amount of Debentures affected thereby (a "Super Majority"), the
Property Trustee may only give such consent or take such action at the
direction of the Holders of at least the proportion in liquidation amount of
the Preferred Securities which the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding. The Property
Trustee shall not revoke any action previously authorized or approved by a
vote of the Holders of the Preferred Securities. Other than with respect to
directing the time, method and place of conducting any remedy available to
the Property Trustee or the Debenture Trustee as set forth above, the
Property Trustee shall not take any action in accordance with the directions
of the Holders of the Preferred Securities under this paragraph unless the
Property Trustee has obtained an opinion of tax counsel to the effect that
for the purposes of United States federal income tax the Trust will not be
classified as an association taxable as a corporation or a partnership and
that each Holder of the Securities will be treated as owning an undivided
beneficial interest in the Debentures on account of such action. If the
Property Trustee fails to enforce its rights under the Declaration, any
Holder of Preferred Securities may, after a period of 30 days has elapsed
from such holder's written request to the Property Trustee to enforce such
rights, institute a legal proceeding directly against any Person to enforce
the Property Trustee's rights under the Declaration, without first
instituting a legal proceeding against the Property Trustee or any other
Person.
Any approval or direction of Holders of Preferred Securities may be
given at a separate meeting of Holders of Preferred Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Preferred Securities. Each such notice
will
12
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Preferred Securities will
be required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Sponsor, or by any entity directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Sponsor shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
6. VOTING RIGHTS - COMMON SECURITIES.
(a) Except as provided under paragraphs 6(b), 6(c) and 7 and as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees subject
to the exclusive right of the Holders of the Preferred Securities to appoint,
remove or replace a Special Regular Trustee.
(c) Subject to Section 2.6 of the Declaration and only after
all Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated and subject to the requirements of the
second to last sentence of this paragraph, the Holders of a Majority in
liquidation amount of the Common Securities voting separately as a class may
direct the time, method, and place of conducting any proceeding for any
remedy available to the Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under the Declaration, including (i)
directing the time, method, place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred
on the Debenture Trustee with respect to the Debentures, (ii) waive any past
default and its consequences that is
13
waivable under Section 6.06 of the Indenture, or (iii) exercise any right to
rescind or annul a declaration that the principal of all the Debentures shall
be due and payable, provided, however, that where a consent or action
under the Indenture would require the consent or act of the Holders of greater
than a majority in principal amount of Debentures affected thereby (a "Super
Majority"), the Property Trustee may only give such consent or take such
action at the direction of the Holders of at least the proportion in
liquidation amount of the Common Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding.
Pursuant to this paragraph 6(c), the Property Trustee shall not revoke any
action previously authorized or approved by a vote of the Holders of the
Preferred Securities. Other than with respect to directing the time, method
and place of conducting any remedy available to the Property Trustee or the
Debenture Trustee as set forth above, the Property Trustee shall not take any
action in accordance with the directions of the Holders of the Common
Securities under this paragraph unless the Property Trustee has obtained an
opinion of tax counsel to the effect that for the purposes of United States
federal income tax the Trust will not be classified as an association taxable
as a corporation or a partnership and that each Holder of the Securities will
be treated as owning an undivided beneficial interest in the Debentures on
account of such action. If the Property Trustee fails to enforce its rights
under the Declaration, any Holder of Common Securities may, after a period of
30 days has elapsed from such holder's written request to the Property
Trustee to enforce such rights, institute a legal proceeding directly against
any Person to enforce the Property Trustee's rights under the Declaration,
without first instituting a legal proceeding against the Property Trustee or
any other Person.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought
14
and (iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. AMENDMENTS TO DECLARATION AND INDENTURE.
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or
the Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Preferred
Securities, whether by way of amendment to the Declaration or otherwise, or
(ii) the dissolution, winding-up or termination of the Trust, other than as
described in Section 8.1 of the Declaration, then the Holders of outstanding
Preferred Securities as a class, will be entitled to vote on such amendment
or proposal (but not on any other amendment or proposal) and such amendment
or proposal shall not be effective except with the approval of the Holders of
at least 66-2/3% in liquidation amount of the Securities, voting together as
a single class, provided, however, that the rights of Holders of Preferred
Securities under Article V of the Declaration to appoint, remove or replace a
Special Regular Trustee shall not be amended without the consent of each
Holder of Preferred Securities, provided, further, if any amendment or
proposal referred to in clause (i) above would adversely affect only the
Preferred Securities or the Common Securities, then only the affected class
will be entitled to vote on such amendment or proposal and such amendment or
proposal shall not be effective except with the approval of 66-2/3% in
liquidation amount of such class of Securities.
(b) In the event the consent of the Property Trustee as the holder of the
Debentures and the Debenture Guarantee is required under the Indenture with
respect to any amendment, modification or termination of the Indenture, the
Debentures or the Debenture Guarantee, the Property Trustee shall request the
direction of the Holders of the Securities with respect to such amendment,
modification or termination and shall vote with respect to such amendment,
modification or termination as directed by a Majority in liquidation amount
of the Securities voting together as a single class; provided, however, that
where a consent under the Indenture would require the consent of the holders
of greater than a majority in aggregate principal amount of the Debentures (a
"Super Majority"), the Property Trustee may only give such consent at the
direction of the Holders of at least the proportion in liquidation amount of
the Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding; provided, further, that the
Property Trustee shall not take any action in accordance with the directions
of the Holders of the Securities under this paragraph 7(b) unless the
Property Trustee has obtained an opinion of tax counsel to the effect that
for the purposes of United Stated federal income tax the Trust will not be
classified as an association taxable as a corporation or a partnership and
that each Holder of the Securities will be treated as owning an undivided
beneficial interest in the Debentures on account of such action.
8. PRO RATA.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
of Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, in relation to a payment, an Event of Default
under the Indenture has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
Preferred Securities pro rata according to the aggregate liquidation amount of
Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate liquidation
amount of Common Securities held by the relevant Holder relative to the
15
aggregate liquidation amount of all Common Securities outstanding.
9. RANKING.
The Preferred Securities rank PARI PASSU and payment thereon
shall be made Pro Rata with the Common Securities except that where an Event of
Default occurs and is continuing under the Indenture in respect of the
Debentures held by the Property Trustee, the rights of Holders of the Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption and otherwise are subordinated to the rights to payment of the
Holders of the Preferred Securities.
10. LISTING.
The Regular Trustees shall use their best efforts to cause the
Preferred Securities to be listed for quotation on the New York Stock Exchange
Limited.
11. ACCEPTANCE OF SECURITIES
GUARANTEE AND INDENTURE.
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture.
12. NO PREEMPTIVE RIGHTS.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional Securities.
13. MISCELLANEOUS.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the
Preferred Securities Guarantee and the Indenture to a Holder without charge on
written request to the Trust at its principal place of business.
16
ANNEX I
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT -]
This Preferred Security is a Global Certificate within the meaning of the
Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depository") or a nominee of the Depository.
This Preferred Security is exchangeable for Preferred Securities registered in
the name of a person other than the Depository or its nominee only in the
limited circumstances described in the Declaration and no transfer of this
Preferred Security (other than a transfer of this Preferred Security as a whole
by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository) may be
registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York) to
the Trust or its agent for registration of transfer, exchange or payment, and
any Preferred Security issued is registered in the name of Cede & Co. or such
other name as requested by an authorized representative of The Depository Trust
Company and any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the
registered owner hereof, Cede & Co., has an interest herein.]
Certificate Number Number of Preferred Securities
CUSIP NO.
Certificate Evidencing Preferred Securities
of
U S WEST FINANCING [ ]
Preferred Securities.
(liquidation amount $25 per Preferred Security)
17
U S WEST FINANCING [ ], a business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that __________ (the
"Holder") is the registered owner of preferred securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the _______ Trust Originated Preferred Securities (liquidation amount
$25 per Preferred Security) (the "Preferred Securities"). The Preferred
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Preferred
Securities represented hereby are issued and shall in all respects be subject to
the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of __________, 1995, as the same may be amended from time to time
(the "Declaration") including the designation of the terms of the Preferred
Securities as set forth in Exhibit A to the Declaration. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration. The
Holder is entitled to the benefits of the Preferred Securities Guarantee to the
extent provided therein. The Sponsor will provide a copy of the Declaration,
the Preferred Securities Guarantee and the Indenture to a Holder without charge
upon written request to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Preferred
Securities as evidence of indirect beneficial ownership in the Debentures.
18
IN WITNESS WHEREOF, the Trust has executed this certificate this day
of __________ , 199_.
[ ]
as Trustee
_______________________________________________________
[ ]
as Trustee
_______________________________________________________
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee) and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________ agent
to transfer this Preferred Security Certificate on the books of the Trust. The
agent may substitute another to act for him or her.
Date: ___________________________________________________
Signature: ______________________________________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
19
ANNEX II
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
U S WEST FINANCING [ ]
Common Securities.
(liquidation amount $25 per Common Security)
U S WEST FINANCING [ ], a business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that ___________ (the
"Holder") is the registered owner of Common securities of the Trust representing
undivided beneficial interests in the assets of the Trust designated the _______
Trust Originated Common Securities (liquidation amount $25 per Common Security)
(the "Common Securities"). The Common Securities are transferable on the books
and records of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer.
The designation, rights, privileges, restrictions, preferences and other terms
and provisions of the Common Securities represented hereby are issued and shall
in all respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of ____________, 1995, as the same
may be amended from time to time (the "Declaration") including the designation
of the terms of the Common Securities as set forth in Exhibit A to the
Declaration. Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Common Securities Guarantee to the extent provided therein. The Sponsor will
provide a copy of the Declaration, the Common Securities Guarantee and the
Indenture to a Holder without charge upon written request to the Trust at its
principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
20
IN WITNESS WHEREOF, the Trust has executed this certificate this day
of ____________, 199__.
[ ]
as Trustee
________________________________________________________
[ ]
as Trustee
________________________________________________________
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee) and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________ agent
to transfer this Common Security Certificate on the books of the Trust. The
agent may substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
21
EXHIBIT B
SPECIMEN OF DEBENTURE
EXHIBIT C
UNDERWRITING AGREEMENT