REGISTERED PRINCIPAL AMOUNT
No. $
U S WEST CAPITAL FUNDING, INC.
7.95% DEBENTURES DUE FEBRUARY 1, 2097
UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF
PRINCIPAL, PREMIUM AND INTEREST BY
U S WEST, INC.
CUSIP 912912 AK 8
Unless and until it is exchanged in whole or in part for Debentures in
definitive form, this Debenture may not be transferred except as a whole by
the Depositary to a nominee of the Depositary, or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary, or by
the Depositary or any such nominee to a successor Depositary or a nominee
of such successor Depositary. Unless this certificate is presented by an
authorized representative of The Depository Trust Company (55 Water Street,
New York, New York) to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate 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 is made to
Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL, since the registered owner hereof,
Cede & Co., has an interest herein.
U S WEST Capital Funding, Inc., a corporation duly organized and existing
under the laws of the State of Colorado (herein called the "Company") for value
received hereby promises to pay Cede & Co., or registered assigns, the principal
sum of
$ ( Dollars)
on February 1, 2097, by wire transfer of immediately available funds in such
coin or currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts and to pay
interest semiannually on each February 1 and August 1, commencing August 1,
1997, on said principal sum at the rate per annum specified in the title of
this Debenture, in the same manner, in like coin or currency, from the first
day of February or August, as the case may be, to which interest on this
Debenture has been paid preceding the date hereof (unless the date hereof is
a February 1 or August 1 to which interest has been paid, in which case from
the date hereof, or unless the date hereof is prior to the first payment of
interest, in which case from January 22, 1997) until payment of said
principal sum has been made or duly provided for. Notwithstanding the
foregoing, unless this Debenture shall be authenticated at a time when there
is an existing default in the payment of interest on the Debentures, if the
date hereof is between
January 15 and the immediately following February 1 or is between July 15 and
the immediately following August 1, this Debenture shall bear interest from such
February 1 or August 1; provided, however, that if the Company shall default in
the payment of interest due on such February 1 or August 1, then this Debenture
shall bear interest from the next preceding date to which interest has been paid
or, if no interest has been paid on this Debenture, from January 22, 1997. The
interest so payable on any February 1 or August 1 will, subject to certain
exceptions provided in the Indenture referred to herein, be paid to the person
in whose name this Debenture shall be registered at the close of business on the
January 15 prior to such February 1 or the July 15 prior to such August 1 unless
such February 1 or August 1 shall be a Legal Holiday (as defined in said
Indenture), in which event the next preceding day that is not a Legal Holiday.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
This Debenture is one of the duly authorized issue of Debentures of the
Company, designated as set forth herein (the "Debentures"), limited to the
aggregate principal amount of $500,000,000, all issued or to be issued under and
pursuant to an Indenture dated as of April 15, 1988, as amended by a First
Supplemental Indenture dated as of November 1, 1995, and as further amended,
modified or supplemented from time to time (as so amended, modified or
supplemented, the "Indenture"), duly executed and delivered by the Company and U
S WEST, Inc. (the "Guarantor") to First National Bank of Santa Fe (formerly
Banquest/First National Bank of Santa Fe), as Trustee (herein referred to as the
"Trustee"), to which Indenture and all Indentures supplemental thereto reference
is hereby made for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Trustee, the Company, the
Guarantor and the Holders (the words "Holders" or "Holder" meaning the
registered holders or registered holder of the Debentures).
In case an Event of Default shall occur and be continuing, the principal
hereof may be declared, and upon such declaration shall become due and payable,
in the manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions permitting the Company, the Guarantor and
the Trustee, with the written consent of the Holders of a majority in principal
amount of the outstanding Securities of each series affected by a supplemental
indenture (with each series voting as a class), to enter into a supplemental
indenture to add any provisions to or to change or eliminate any provisions of
the Indenture or of any supplemental indenture or to modify, in each case in any
manner not covered by provisions in the Indenture relating to amendments and
waivers without the consent of Holders, the rights of the Holders of each such
series. The Holders of a majority in principal amount of the outstanding
Securities of each series affected by such waiver (with each series voting as a
class), by notice to the Trustee, may waive compliance by the Company or the
Guarantor with any provision of the Indenture, any supplemental indenture or the
Securities of any such series, except a Default in payment of the principal of
or interest on any Security. However, without the consent of each Holder
affected, an amendment
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or waiver may not: (1) reduce the amount of Securities whose Holders must
consent to an amendment or waiver; (2) change the rate of or change the time for
payment of interest on any Security; (3) change the principal of or change the
fixed maturity of any Security; (4) waive a Default in the payment of the
principal of or interest on any Security; (5) make any Security payable in money
other than that stated in the Security; or (6) make any change in the provisions
of the Indenture: (i) with respect to the right of the Holders of a majority in
principal amount of any series of Securities, by notice to the Trustee, to waive
an existing Default with respect to that series and its consequences; (ii) with
respect to the right of any Holder of a Security to receive payment of principal
of and interest on the Security, on or after the respective due dates expressed
in the Security, the right of any Holder of a coupon to receive payment of
interest due as provided in such coupon, or the right to bring suit for
enforcement of any such payments on or after their respective dates; and (iii)
described in this sentence.
Upon the occurrence of a Tax Event (as defined herein), the Company
will have the right to advance the maturity date of the Debentures to the
minimum extent required in order to allow for the payments of interest in
respect of the Debentures to be deductible (such action being referred to herein
as a "Tax Event Maturity Advancement"). Notwithstanding the foregoing, such
maturity date shall be advanced only if, in the opinion of nationally recognized
independent tax counsel experienced in such matters, after effecting a Tax Event
Maturity Advancement, interest paid on the Debentures will be deductible for
federal income tax purposes. There can be no assurance that Capital Funding
would not exercise its right to advance the maturity date of the Debentures upon
the occurrence of such a Tax Event.
In the event that the Company elects to exercise its right to advance
the maturity date of the Debentures upon the occurrence of a Tax Event, the
Company will mail a notice of the advanced maturity to each holder of record
of the Debentures by first-class mail not more than 60 days after the
occurrence of such Tax Event, stating the new maturity date of the
Debentures. Such notice shall be effective immediately upon mailing.
Capital Funding believes that the Debentures should constitute indebtedness
for federal income tax purposes under current law and that an exercise of its
right to advance the maturity date of the Debentures would not be a taxable
event to holders. Prospective investors should be aware, however, that Capital
Funding's exercise of its right to advance the maturity date of the Debentures
will be a taxable event to holders if the Debentures are treated as equity for
purposes of federal income taxation before the maturity date is advanced.
Notwithstanding the foregoing, if a Tax Event occurs and in the opinion of
nationally recognized independent tax counsel experienced in such matters, there
would in all cases, after effecting a Tax Event Maturity Advancement, be more
than an insubstantial risk that an Adverse Tax Consequence (as defined herein)
would continue to exist, the Company will have the right, within 90 days
following the occurrence of such Tax Event, to redeem the Debentures in
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whole (but not in part) at a redemption price equal to the greater of (i) 100%
of the principal amount of such Debentures or (ii) the sum, as determined by a
Quotation Agent, of the present values of the principal amount and the remaining
scheduled payments of interest from the redemption date to February 1, 2097 (the
"Remaining Life"), in each case discounted to the redemption date on a semi-
annual basis (assuming a 360-day year consisting of 30-day months) at the
Adjusted Treasury Rate, plus, in each case, accrued interest thereon to the date
of redemption.
"Tax Event" means the receipt by the Company of an opinion of nationally
recognized independent tax counsel experienced in such matters to the effect
that, as a result of an 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 thereof or therein,
or as a result of any official administrative written decision or
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such pronouncement or
decision is made on or after the date hereof, there is more than an
insubstantial risk that interest payable by the Company on the Debentures is
not, or will not be, deductible, in whole or in part, by the Company for
federal income tax purposes (referred to herein as an "Adverse Tax
Consequence").
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to the semi-annual yield to maturity of the Comparable
Treasury Issue, calculated on the third Business Day preceding such redemption
date using a price for the Comparable Treasury Issue (expressed as a percentage
of its principal amount) equal to the Comparable Treasury Price for such
redemption date, plus .50%.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity with the
Remaining Life of the Debentures.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Trustee after consultation with the Company. "Reference Treasury Dealer"
means: (i) Merrill Lynch Government Securities, Inc. and its respective
successors; PROVIDED, HOWEVER, that if the foregoing shall cease to be a
primary U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer"), the Company shall substitute therefor another Primary
Treasury Dealer; and (ii) any other Primary Treasury Dealer selected by the
Trustee after consultation with the Company.
"Comparable Treasury Price" means, with respect to any redemption date, the
average of five Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest
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and lowest of such Reference Treasury Dealer Quotations, or if the Trustee
obtains fewer than three such Reference Treasury Dealer Quotations, the average
of all such quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(express in each case as a percentage of its principal amount) quoted in writing
to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City
time, on the third Business Day preceding such redemption date.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Debentures to be redeemed
at its registered address. Unless the Company defaults in payment of the
redemption price, on and after the redemption date interest will cease to accrue
on such Debentures called for redemption.
Except as provided above, this Debenture is not redeemable by the
Company prior to maturity and is not subject to any sinking fund.
No reference herein to the Indenture and no provision of this Debenture
or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and premium, if
any, and interest on this Debenture at the place, at the respective times, at
the rate, and in the coin or currency herein prescribed.
No director, officer, employee or stockholder, as such, of the Company or
the Guarantor shall have any liability for any obligations of the Company under
this Debenture or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder, by accepting this
Debenture, waives and releases all such liability. The waiver and release are
part of the consideration for the issue of this Debenture and the Guarantee
endorsed hereon.
The laws of the State of New York shall govern the Indenture and this
Debenture.
Ownership of Debentures shall be proved by the register for the Debentures
kept by the Registrar. The Company, the Guarantor, the Trustee and any agent of
the Company may treat the person in whose name a Debenture is registered as the
absolute owner thereof for all purposes.
Terms used herein without definition that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
Unless the Certificate of Authentication hereon has been executed by the
Trustee under the Indenture referred to herein by the manual signature of one of
its authorized officers, or on behalf of the Trustee by the manual signature of
an authorized officer of the Trustee's authenticating agent, this Debenture
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed, manually or by facsimile, and its corporate seal or a facsimile of its
corporate seal to be imprinted hereon.
Dated: January 22, 1997
U S WEST Capital Funding, Inc.
By:______________________________
James T. Anderson
President
(SEAL)
By:_____________________________
J. Roger Fox
Assistant Treasurer
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein, issued under
the Indenture described herein.
FIRST NATIONAL BANK OF SANTA FE
By Citibank, N.A., as Authenticating Agent
By:
----------------------
Authorized Officer
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GUARANTEE OF U S WEST, INC.
FOR VALUE RECEIVED, U S WEST, Inc., a corporation duly organized and
existing under the laws of the State of Delaware (the "Guarantor"), hereby
unconditionally guarantees to the holder of the Debenture upon which this
Guarantee is endorsed the due and punctual payment of the principal of and
premium, if any, and interest on said Debenture, when and as the same shall
become due and payable, whether at maturity, upon redemption or otherwise,
according to the terms thereof and of the Indenture referred to therein.
The Guarantor agrees to determine, at least one business day prior to
the date upon which a payment of principal of or premium, if any, or interest
on said Debenture is due and payable, whether U S WEST Capital Funding, Inc.
(the "Company") has available the funds to make such payment as the same
shall become due and payable. In case of the failure of the Company
punctually to pay any such principal premium, if any, or interest, the
Guarantor hereby agrees to cause any such payment to be made punctually when
and as the same shall become due and payable, whether at maturity or
otherwise, and as if such payment were made by the Company.
The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrevocable and absolute, irrespective of the validity,
regularity, or enforceability of said Debenture or said Indenture, the absence
of any action to enforce the same, any waiver or consent by the holder of said
Debenture with respect to any provisions thereof, the recovery of any judgment
against the Company or any action to enforce the same, or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. The Guarantor hereby waives diligence, presentment, demand or
payment, filing of claims with a court in the event of merger or bankruptcy of
the Company, any right to require a proceeding first against the Company,
protest or notice with respect to said Debenture or indebtedness evidenced
thereby and all demands whatsoever and covenants that this Guarantee will not be
discharged except by complete performance of the obligations contained in said
Debenture and in this Guarantee.
The Guarantor shall be subrogated to all rights of the holder of said
Debenture against the Company in respect of any amounts paid by the Guarantor
pursuant to the provisions of this Guarantee; provided, however, that the
Guarantor shall not, without the consent of the holders of all of the
Debentures then outstanding, be entitled to enforce or to receive any
payments arising out of, or based upon, such right of subrogation until the
principal of and, premium, if any, and interest on all Debentures of the
Company known as "7.95% Debentures due February 1, 2097" shall have been paid
in full or payment thereof shall have been provided for in accordance with
said Indenture.
Notwithstanding anything to the contrary contained herein, if following
any payment of principal, premium, or interest by the Company on the
Debentures to the holders of the Debentures, it is
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determined by a final decision of a court of competent jurisdiction that such
payment shall be avoided by a trustee in bankruptcy (including any
debtor-in-possession) as a preference under 11 U.S.C. Section 547 and such
payment is paid by such holder to such trustee in bankruptcy, then and to the
extent of such repayment the obligations of the Guarantor hereunder shall remain
in full force and effect.
This Guarantee shall not be valid or become obligatory for any purpose with
respect to a Debenture until the certificate of authentication of such Debenture
shall have been signed by the Trustee or on its behalf by the Trustee's
authenticating agent.
This Guarantee shall be governed by the laws of the State of New York.
IN WITNESS WHEREOF, U S WEST, Inc. has caused this Guarantee to be
signed in its corporate name by the signature of two of its officers thereunto
duly authorized and has caused its corporate seal to be affixed hereunto.
U S WEST, Inc.
By: ______________________________
James T. Anderson
Vice President and Treasurer
(SEAL)
By: ______________________________
Stephen E. Brilz
Assistant Secretary
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FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________
Please insert social security number or other identifying number of
assignee:
________________________________
Please print or type name and address (including zip code) of
assignee:
________________________________
________________________________
________________________________
________________________________
the within Debenture and all rights thereunder, hereby irrevocably constituting
and appointing _____________________ attorney to transfer said Debenture of U S
WEST Capital Funding, Inc. on the books of the Company, with full power of
substitution in the premises.
________________________________
Dated: __________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of this Debenture in every particular without alteration
or enlargement or any change whatsoever.
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