SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 18, 1999
QWEST COMMUNICATIONS INTERNATIONAL INC.
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
000-22609 84-1339282
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(Commission File Number) (IRS Employer Identification No.)
700 QWEST TOWER, 555 SEVENTEENTH STREET DENVER, COLORADO 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 303-992-1400
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On April 19, 1999, the Registrant (together with its
subsidiaries, "Qwest") and BellSouth Corporation (together with its
subsidiaries, "BellSouth") announced that their respective subsidiaries had
entered into a strategic relationship to provide next-generation communication
services. The Registrant announced that it expects that over five years the
relationship with BellSouth will generate approximately $500 million in
revenues, and $200 million earnings before interest, taxes, depreciation and
amortization (EBITDA). A copy of the Registrant's press release announcing the
investment and the strategic relationship is attached as Exhibit 99.1 to this
Current Report on Form 8-K (this "Report").
On April 19, 1999, the Registrant and BellSouth also announced
that they entered into an agreement pursuant to which BellSouth would purchase
from the Registrant 20,350,000 newly-issued shares of the Registrant's common
stock at a price of $94.50 per share, for an aggregate purchase price of
$1,923,075,000. The terms of this issuance and sale are more fully described in
the Common Stock Purchase Agreement that is filed as Exhibit 10.1 to this
Report. Under a separate agreement and at the request of BellSouth, Anschutz
Company, Registrant's principal stockholder ("Anschutz"), sold to BellSouth
16,650,000 shares of the Registrant's common stock at a price of $94.50 per
share, for an aggregate purchase price of $1,573,425,000. As a result of these
two purchases, BellSouth will own 37,000,000 shares (the "Shares") of the
Registrant's common stock (representing approximately 10% of the Registrant's
issued and outstanding shares) for a total investment of $3,496,500,000. The
closing of the transaction is subject to the expiration of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
other customary conditions, and is expected to occur by the end of May, 1999.
In the Common Stock Purchase Agreement and subject to the
terms and conditions thereof, BellSouth has generally agreed (1) to a
"standstill" provision under which BellSouth will not acquire more than 20% of
the outstanding shares of the Registrant's common stock, (2) not to transfer the
Shares to third parties, subject to certain exceptions, and (3) not to take
certain actions with respect to the Registrant that may influence the
Registrant. These restrictions generally terminate at the earlier of two years
after the closing of the transaction or the Registrant taking (or failing to
take) certain actions related to acquisition proposals that the registrant may
receive from other parties.
BellSouth does not have an option or any other right to
acquire additional shares of the Registrant's common stock, and the Registrant
has no obligation to issue or otherwise sell any additional shares to BellSouth.
The Common Stock Purchase Agreement also provides that
BellSouth has the right, after it obtains regulatory relief to provide interLATA
service in certain states, to designate one person to serve as a director of the
Registrant.
On April 19, 1999, the Registrant granted BellSouth
registration rights pursuant to the Registration Rights Agreement between them
that is filed as Exhibit 10.2 to this Report.
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After giving effect to the issuance and sale of the Shares to
BellSouth by the Registrant and Anschutz as described above, Anschutz will own
approximately 39 percent of the issued and outstanding shares of the
Registrant's common stock. On April 18, 1999, the Registrant granted to Anschutz
and an affiliated entity registration rights with respect to their shares of the
Registrant's common stock pursuant to the terms of the Registration Rights
Agreement between the Registrant and such parties that is filed as Exhibit 10.3
to this Report.
This Report contains or incorporates by reference
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that include,
among others, (1) statements by the Registrant concerning the benefits expected
to result from certain business activities and transactions, (2) the
Registrant's plans to complete its communications network and (3) other
statements by the Registrant of expectations, beliefs, future plans and
strategies, anticipated developments and other matters that are not historical
facts. The Registrant cautions the reader that these forward-looking statements
are subject to risks and uncertainties, including financial, regulatory
environment, and trend projections, that could cause actual events or results to
differ materially from those expressed or implied by the statements. Such risks
and uncertainties include those risks, uncertainties and risk factors
identified, among other places, in documents filed with Securities and Exchange
Commission. The most important factors that could prevent the Registrant from
achieving its stated goals include, but are not limited to, (a) the Registrant's
failure to construct its communications network on schedule and on budget; (b)
operating and financial risks related to managing rapid growth, integrating
acquired businesses and sustaining operating cash flow to meet the Registrant's
debt service requirements, make capital expenditures and fund operations; (c)
potential fluctuation in quarterly results; (d) volatility of stock price; (e)
intense competition in the communications services market; (f) dependence on new
product development; (g) the Registrant's ability to achieve year 2000
compliance; (h) rapid and significant changes in technology and markets; (i)
adverse changes in the regulatory or legislative environment affecting the
Registrant's business; and (j) failure to maintain necessary rights of way.
These cautionary statements should be considered in connection with any
subsequent written or oral forward-looking statements that may be issued by the
Registrant or persons acting on its behalf. The Registrant undertakes no
obligation to review or confirm analysts' expectations or estimates or to
release publicly any revisions to any forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Exhibit 10.1 Common Stock Purchase Agreement dated as of April 19, 1999,
by and between the Registrant and BellSouth Enterprises, Inc.
Exhibit 10.2 Registration Rights Agreement dated as of April 19, 1999, by
and between the Registrant and BellSouth Enterprises, Inc.
Exhibit 10.3 Registration Rights Agreement dated as of April 18, 1999, by
and among the Registrant, Anschutz Company and Anschutz
Family Investment Company LLC.
Exhibit 99.1 Press release of the Registrant dated April 19, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
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QWEST COMMUNICATIONS INTERNATIONAL INC.
DATE: April 26, 1999 By: /s/ Robert S. Woodruff
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Robert S. Woodruff
Executive Vice President - Finance and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit 10.1 Common Stock Purchase Agreement dated as of April 19, 1999,
by and between the Registrant and BellSouth Enterprises, Inc.
Exhibit 10.2 Registration Rights Agreement dated as of April 19, 1999, by
and between the Registrant and BellSouth Enterprises, Inc.
Exhibit 10.3 Registration Rights Agreement dated as of April 18, 1999, by
and among the Registrant, Anschutz Company and Anschutz
Family Investment Company LLC.
Exhibit 99.1 Press release of the Registrant dated April 19, 1999.
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EXHIBIT 10.1
COMMON STOCK PURCHASE AGREEMENT
by and between
QWEST COMMUNICATIONS INTERNATIONAL INC.
and
BELLSOUTH ENTERPRISES, INC.
Dated as of April 19, 1999
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TABLE OF CONTENTS
PAGE
ARTICLE I
AGREEMENT TO PURCHASE AND SELL COMMON STOCK
1.1 Agreement to Purchase and Sell Common Stock..........................1
ARTICLE II
CLOSING DATE; DELIVERY
2.1 Closing Date.........................................................1
2.2 Delivery.............................................................2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Corporate Existence and Power........................................2
3.2 Authorization; Contravention.........................................3
3.3 SEC Documents........................................................3
3.4 Approvals............................................................4
3.5 Binding Effect.......................................................4
3.6 Financial Information................................................4
3.7 Absence of Certain Changes or Events.................................4
3.8 Litigation...........................................................5
3.9 Capitalization.......................................................5
3.10 Absence of Certain Agreements........................................5
3.11 No Broker............................................................6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.1 Corporate Existence and Power........................................6
4.2 Authorization; Contravention.........................................6
4.3 Approvals............................................................6
4.4 Binding Effect.......................................................6
4.5 Investment...........................................................7
4.6 Disclosure of Information............................................7
4.7 Investment Experience................................................7
4.8 Accredited Investor Status...........................................7
4.9 Restricted Securities................................................7
4.10 Investigation........................................................7
4.11 No Broker............................................................8
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE V
CONDITIONS TO OBLIGATION OF THE PURCHASER
5.1 Representations and Warranties.......................................8
5.2 Covenants............................................................8
5.3 HSR Act..............................................................8
5.4 No Order Pending.....................................................8
5.5 No Law Prohibiting or Restricting Sale of the Shares.................8
5.6 Registration Rights Agreement........................................8
5.7 Other Purchase Agreement.............................................8
5.8 Master Agreement.....................................................9
5.9 Opinion of Counsel...................................................9
ARTICLE VI
CONDITIONS TO OBLIGATION OF THE COMPANY
6.1 Representations and Warranties.......................................9
6.2 Covenants............................................................9
6.3 HSR Act..............................................................9
6.4 No Order Pending.....................................................9
6.5 No Law Prohibiting or Restricting the Sale of the Shares.............9
6.6 Registration Rights Agreement........................................9
6.7 Other Purchase Agreement............................................10
6.8 Master Agreement....................................................10
ARTICLE VII
COVENANTS OF THE PURCHASER AND THE COMPANY
7.1 Purchase Restrictions...............................................10
7.2 Sale Restrictions...................................................11
7.3 Other Restrictions..................................................12
7.4 Early Termination...................................................13
7.5 Strategic Sessions; Director........................................14
7.6 Company Actions.....................................................15
ARTICLE VIII
MISCELLANEOUS
8.1 Certain Definitions.................................................15
8.2 Further Assurances..................................................17
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TABLE OF CONTENTS
(CONTINUED)
PAGE
8.3 Governing Law.......................................................18
8.4 Survival; Termination of Covenants..................................19
8.5 Successors and Assigns..............................................19
8.6 Amendments; Etc.....................................................19
8.7 Entire Agreement....................................................19
8.8 Notices.............................................................19
8.9 Fees, Costs and Expenses............................................20
8.10 Termination.........................................................20
8.11 Severability of Provisions..........................................21
8.12 Publicity...........................................................21
8.13 Headings and References.............................................21
8.14 Counterparts; Effectiveness.........................................21
8.15 Exclusive Jurisdiction..............................................21
8.16 Waiver of Jury Trial................................................22
8.17 Non-Recourse........................................................22
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COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made as of
April 19, 1999, by and between BELLSOUTH ENTERPRISES, INC., a Georgia
corporation (the "PURCHASER"), and QWEST COMMUNICATIONS INTERNATIONAL INC., a
Delaware corporation (the "COMPANY").
RECITALS
A. The Company desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Company, 20,350,000 shares of the
Company's Common Stock, $0.01 par value per share (the "COMMON STOCK"), on the
terms and conditions set forth in this Agreement.
B. Concurrently herewith, the Purchaser is entering into the
Common Stock Purchase Agreement dated as of April 19, 1999 (the "OTHER PURCHASE
AGREEMENT"), by and between the Purchaser and Anschutz Company, a Delaware
corporation (the "PRINCIPAL STOCKHOLDER"), for the purchase of 16,650,000 shares
of Common Stock (the "OTHER SHARES") on the terms and conditions set forth in
the Other Purchase Agreement.
C. Concurrently herewith, the Company and the Purchaser are
entering into a Registration Rights Agreement dated as of even date herewith by
and between the Company and the Purchaser (the "REGISTRATION RIGHTS AGREEMENT"),
to provide for the registration under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), of the disposition of the shares of Common Stock
purchased under this Agreement and the Other Purchase Agreement pursuant to the
terms thereof.
AGREEMENT
The parties agree as follows:
ARTICLE I
AGREEMENT TO PURCHASE AND SELL COMMON STOCK
1.1 AGREEMENT TO PURCHASE AND SELL COMMON STOCK. Upon the
terms and subject to the conditions of this Agreement, the Company hereby agrees
to sell to the Purchaser at the Closing (as defined in Section 2.1), and the
Purchaser agrees to purchase from the Company at the Closing, 20,350,000 newly
issued shares (each, a "SHARE" and collectively, the "SHARES") of Common Stock
at $94.50 per Share for an aggregate purchase price of $1,923,075,000.00 (the
"PURCHASE PRICE").
ARTICLE II
CLOSING DATE; DELIVERY
2.1 CLOSING DATE. The Closing of the purchase and sale of
the Shares hereunder (the "CLOSING") shall be held at the offices of the Company
at 10:00 a.m. on the third business day after the satisfaction or waiver of the
conditions set forth in Articles V and VI, or at
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such other time and place as the Company and the Purchaser mutually agree, and
shall be held simultaneously with the closing of the Other Purchase Agreement
(the date of the Closing being hereinafter referred to as the "CLOSING DATE").
2.2 DELIVERY. At the Closing, the Company will deliver to
the Purchaser a certificate or certificates representing the Shares against
payment of the aggregate Purchase Price by wire transfer of immediately
available funds to an account designated by the Company. The certificate or
certificates representing the Shares shall be subject to a legend restricting
transfer under the Securities Act and referring to restrictions on transfer
herein, such legend to be substantially as follows:
"The shares represented by this certificate have
been acquired for investment and have not been registered
under the Securities Act of 1933, as amended. Such shares may
not be sold or transferred in the absence of such
registration or an opinion of counsel reasonably satisfactory
to the Company as to the availability of an exemption from
registration.
The shares represented by this certificate are
subject to restrictions on transfer, including any sale,
pledge or other hypothecation, set forth in an agreement
dated as of April 19, 1999, between the Company and BellSouth
Enterprises, Inc., a copy of which agreement may be obtained
at no cost by written request made by the holder of record of
this certificate to the secretary of the Company at the
Company's principal executive offices."
The Company agrees to remove from the Shares (or from the Other Shares,
as the case may be), (1) the legend set forth in the second preceding paragraph
in connection with a transfer pursuant to an effective Registration Statement
(as defined in the Registration Rights Agreement) or upon receipt of an opinion
of counsel in form and substance reasonably satisfactory to the Company that the
Shares are eligible for transfer without registration under the Securities Act
(or, as the case may be, the legend set forth in the corresponding paragraph of
the Other Purchase Agreement in connection with a transfer pursuant to an
effective Registration Statement or upon receipt of an opinion of counsel in
form and substance reasonably satisfactory to the Company and the Seller that
the Other Shares are eligible for transfer without registration under the
Securities Act), and (2) the legend set forth in the immediately preceding
paragraph at such time as the Shares may be transferred in compliance with
Article VII or upon the termination of the covenants of Article VII (or, as the
case may be, the legend set forth in the corresponding paragraph of the Other
Purchase Agreement at such time as the Other Shares may be transferred in
compliance with Article VII hereof or upon the termination of the covenants of
Article VII hereof).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as follows:
3.1 CORPORATE EXISTENCE AND POWER. The Company (1) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware,
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(2) has all necessary corporate power and authority and all material licenses,
authorizations, consents and approvals required to own, lease, license or use
its properties now owned, leased, licensed or used and proposed to be owned,
leased, licensed or used and to carry on its business as now conducted and
proposed to be conducted, (3) is duly qualified as a foreign corporation under
the laws of each jurisdiction in which qualification is required either to own,
lease, license or use its properties now owned, leased, licensed or used or to
carry on its business as now conducted, except where the failure to effect or
obtain such qualification, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect (as defined in Section
8.1) on the Company, and (4) has all necessary corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
3.2 AUTHORIZATION; CONTRAVENTION.
(a) The execution and delivery by the Company of this
Agreement and the performance by the Company of its obligations under this
Agreement, and the authorization, sale, issuance and delivery of the Shares
hereunder, have been duly authorized by all necessary corporate action and do
not and will not contravene, violate, result in a breach of or constitute a
default under, (1) its certificate of incorporation or bylaws, (2) any
regulation of any Governmental Entity (as defined in Section 8.1) or any
decision, ruling, order or award of any arbitrator by which it or any of its
properties may be bound or affected, or (3) any agreement, indenture or other
instrument to which it is a party or by which it or its properties may be bound
or affected, except in each case referred to in the preceding clauses for
contraventions, violations, breaches or defaults that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Company, or materially impair or restrict the Company's power to perform its
obligations as contemplated under said agreements. Upon their issuance and
delivery pursuant to this Agreement, the Shares will be validly issued, fully
paid and nonassessable and free and clear of any liens. The issuance and sale of
the Shares will not give rise to any preemptive rights, rights of first refusal
or other rights to acquire Common Stock on behalf of any Person (as defined in
Section 8.1).
(b) The Board of Directors of the Company, by resolutions
duly adopted at a meeting duly called and held and not subsequently rescinded or
modified in any way, has duly approved (the "BOARD APPROVAL") for all purposes,
including for purposes of Section 203 of the Delaware General Corporation Law
("DGCL SS.203"), (1) this Agreement; (2) the issuance of the Shares to the
Purchaser, (3) the acquisition by the Purchaser of the Shares and the Other
Shares, (4) if the Purchaser shall acquire the Shares pursuant to this
Agreement, the acquisition by the Purchaser of any additional shares (or
percentage ownership) of Common Stock as and to the extent permitted or
contemplated under Sections 7.1(a) or (b) of this Agreement, and (5) the other
transactions contemplated hereby.
3.3 SEC DOCUMENTS. The Company has filed with the Securities
and Exchange Commission (the "SEC") all reports, schedules, forms, statements
and other documents required by the Securities Act or the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT"), to be filed by the Company since
June 27, 1997 (collectively, and in each case including all exhibits and
schedules thereto and documents incorporated by reference therein, the "COMPANY
SEC DOCUMENTS"). As of their respective dates, except to the extent revised or
superseded by a subsequent filing with the SEC on or before the date of this
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Agreement, the Company SEC Documents filed by the Company complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and none of the Company SEC Documents (including any
and all financial statements included therein) filed by the Company as of such
dates contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except as set forth in the Company SEC Documents, neither the
Company nor any of its subsidiaries has any material liabilities or obligations
of any nature (whether accrued, absolute, contingent or otherwise) which would
reasonably be expected to have a Material Adverse Effect on the Company.
3.4 APPROVALS. In reliance on the representations of the
Purchaser contained in Sections 4.5, 4.7, 4.8 and 4.9, no consent, approval or
authorization of or designation, declaration or filing with any Governmental
Entity on the part of the Company is required in connection with the due
execution and delivery of this Agreement, or the offer, sale or issuance of the
Shares (or the sale of the Other Shares pursuant to the Other Purchase
Agreement), except for (a) those required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), (b) such filings as may be
required to be made with the SEC and the National Association of Securities
Dealers, Inc. (the "NASD"), and (c) such filings as may be required to be made
with certain state agencies.
3.5 BINDING EFFECT. This Agreement constitutes the legally
valid and binding obligation of the Company enforceable against it in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally and general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance or injunctive relief,
regardless of whether considered in a proceeding in equity or at law.
3.6 FINANCIAL INFORMATION. The consolidated balance sheet of
the Company and its consolidated subsidiaries as of December 31, 1998, and the
related consolidated statements of operations and stockholders' equity and cash
flows for the fiscal year then ended, reported on by KPMG Peat Marwick LLP, true
and complete copies of which have been delivered to the Purchaser, comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with U.S. generally accepted accounting principles
("GAAP") applied on a consistent basis and fairly present the consolidated
financial position of the Company and its consolidated subsidiaries as of that
date and their consolidated results of operations and cash flows for the year
then ended.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the Company SEC Documents filed, or as otherwise publicly
disclosed, prior to the date hereof, since December 31, 1998, there has not been
(1) any declaration, setting aside or payment of any dividend or distribution
(whether in cash, stock or property) with respect to any of the Company's
capital stock, (2) any split, combination or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, (3) any damage, destruction or loss of
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property, whether or not covered by insurance, that has or would reasonably be
expected to have a Material Adverse Effect on the Company, (4) any change in
accounting methods, principles or practices by the Company materially affecting
its assets, liabilities, or business, except insofar as may have been required
by a change in GAAP or (5) any event or state of facts that, individually or in
the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect on the Company.
3.8 LITIGATION.
(a) There is no action, suit or proceeding pending or, to
the Company's knowledge, threatened against the Company or any of its
subsidiaries that (1) impairs (or, if successful, would so impair) in any
material respect the ability of the Company to perform its obligations under
this Agreement and the Registration Rights Agreement (or the ability of the
Principal Stockholder to perform its obligations under the Other Purchase
Agreement), or (2) restricts in any material respect or prohibits (or, if
successful, would so restrict or prohibit) the sale of the Shares to the
Purchaser (or the sale of the Other Shares under the Other Purchase Agreement).
(b) Except as disclosed in the Company SEC Documents filed
with the SEC on or prior to the date hereof, there is no action, suit or
proceeding pending or, to the Company's knowledge, threatened against the
Company or any of its subsidiaries that, individually or in the aggregate, if
determined adversely to any of them, would reasonably be expected to have a
Material Adverse Effect on the Company.
3.9 CAPITALIZATION.
(a) As of the date of this Agreement, the authorized capital
stock of the Company consists of 600,000,000 shares of the Common Stock and
25,000,000 shares of preferred stock, par value $0.01 per share, of the Company
(the "COMPANY PREFERRED STOCK").
(b) As of March 31, 1999, there were (1) 350,735,529 shares
of the Common Stock issued and outstanding, (2) no shares of the Common Stock
held in the treasury of the Company, (3) no shares of the Company Preferred
Stock issued and outstanding, (4) 40,725,059 shares of the Common Stock reserved
for issuance upon exercise of outstanding stock options issued by the Company to
current or former employees and directors of the Company and its subsidiaries,
and (5) 10,163,380 shares of the Common Stock reserved for issuance upon
exercise of authorized but unissued stock options.
(c) All outstanding shares of the Common Stock are duly
authorized, validly issued, fully paid and nonassessable, free from any liens
created by the Company with respect to the issuance and delivery thereof and not
subject to preemptive rights.
(d) No Person (other than the Purchaser and the Principal
Stockholder) has the right to cause the Company to register shares of Common
Stock on a registration statement filed pursuant to the Registration Rights
Agreement.
3.10 ABSENCE OF CERTAIN AGREEMENTS. There are no material
discussions between the Company and any Person that, as of the date hereof,
would reasonably be expected
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to lead to an agreement within 30 days after the date hereof for (1) a
transaction resulting in a Change of Control, (2) a transaction involving the
Company that would include the acquisition of Beneficial Ownership by a Person
of more than 5% of the outstanding Voting Stock (as defined in Section 8.1), or
(3) the acquisition by the Company of any business for an aggregate purchase
price (including assumption of indebtedness) of at least $1,500,000,000.00.
3.11 NO BROKER. The Company has not engaged, consented to or
authorized any broker, finder or intermediary to act on its behalf, directly or
indirectly, as a broker, finder or intermediary in connection with the
transactions contemplated by this Agreement. The Company hereby agrees to
indemnify and hold harmless the Purchaser from and against all fees, commissions
or other payments owing to any party acting on behalf of the Company hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows:
4.1 CORPORATE EXISTENCE AND POWER. The Purchaser (1) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Georgia, (2) has all necessary corporate power and
authority and all material licenses, authorizations, consents and approvals
required to own, lease, license or use its properties now owned, leased,
licensed or used and proposed to be owned, leased, licensed or used and to carry
on its business as now conducted and proposed to be conducted, (3) is duly
qualified as a foreign corporation under the laws of each jurisdiction in which
qualification is required either to own, lease, license or use its properties
now owned, leased, licensed or used or to carry on its business as now
conducted, except where the failure to effect or obtain such qualification,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Purchaser, and (4) has all necessary corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder.
4.2 AUTHORIZATION; CONTRAVENTION. The execution and delivery
by the Purchaser of this Agreement and the performance by the Purchaser of its
obligations under this Agreement, have been duly authorized by all necessary
corporate action and do not and will not contravene, violate, result in a breach
of or constitute a default under, (1) its articles of incorporation or bylaws,
or (2) any regulation of any Governmental Entity or any decision, ruling, order
or award of any arbitrator by which it or any of its properties may be bound or
affected, except in each case referred to in the preceding clauses for
contraventions, violations, breaches or defaults that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Purchaser.
4.3 APPROVALS. No consent, approval or authorization of or
designation, declaration or filing with any Governmental Entity on the part of
the Purchaser is required in connection with the due execution and delivery of
this Agreement, or the acquisition of the Shares by Purchaser, except for (a)
those required under the HSR Act, and (b) such filings as may be required to be
made with the SEC.
4.4 BINDING EFFECT. This Agreement constitutes the legally
valid and binding obligation of the Purchaser enforceable against it in
accordance with its terms, except as may be
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limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally and general principles
of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
4.5 INVESTMENT. The Purchaser is acquiring the Shares for
investment for its own account, not as a nominee or agent, and not with a view
to, or for resale in connection with, any distribution thereof. The Purchaser
understands that the Shares have not been registered under the Securities Act by
reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Purchaser's representations and
warranties contained herein.
4.6 DISCLOSURE OF INFORMATION. The Purchaser has had full
access to all information it considers necessary or appropriate to make an
informed investment decision with respect to the Shares to be purchased by the
Company under this Agreement. The Purchaser further has had an opportunity to
ask questions and receive answers from the Purchaser regarding the terms and
conditions of the offering of the Shares and to obtain additional information
necessary to verify any information furnished to the Purchaser or to which the
Purchaser had access.
4.7 INVESTMENT EXPERIENCE. The Purchaser understands that
the purchase of the Shares involves substantial risk. The Purchaser has
experience as an investor in securities of companies and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment in the
Shares and has such knowledge and experience in financial or business matters
that it is capable of evaluating the merits and risks of this investment in the
Shares and protecting its own interests in connection with this investment.
4.8 ACCREDITED INVESTOR STATUS. The Purchaser is an
"accredited investor" within the meaning of Regulation D promulgated under the
Securities Act.
4.9 RESTRICTED SECURITIES. The Purchaser understands that
the Shares to be purchased by the Purchaser hereunder are characterized as
"restricted securities" under the Securities Act inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under the Securities Act and applicable regulations thereunder such
securities may be resold without registration under the Securities Act only in
certain limited circumstances. The Purchaser is familiar with Rule 144 of the
Securities Act, as presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act.
4.10 INVESTIGATION. The Purchaser has conducted its own
investigation of the Company and hereby acknowledges that the only
representations and warranties of the Company in connection with the Purchaser's
investment are those expressly made by the Company in Article III of this
Agreement, and the Company hereby acknowledges that such representations and
warranties are unaffected by the Purchaser's investigation of the Company.
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4.11 NO BROKER. The Purchaser hereby agrees to indemnify and
hold harmless the Company from and against all fees, commissions or other
payments owing to any party acting on behalf of the Purchaser hereunder.
ARTICLE V
CONDITIONS TO OBLIGATION OF THE PURCHASER
The Purchaser's obligation to purchase the Shares at the Closing is
subject to the fulfillment on or prior to the Closing Date of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Company contained in Article III will be
true and correct on and as of the date hereof and (except to the extent such
representations and warranties speak as of a particular date) true and correct
in all material respects as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of the Closing Date;
PROVIDED, HOWEVER, that for purposes of this Section 5.1 only, the
representations and warranties contained in Sections 3.1, 3.3, 3.6, 3.7, 3.8(b)
and 3.10 shall be deemed to be true and correct on and as of the Closing Date
unless the failure or failures of such representations and warranties to be so
true and correct (without regard to materiality qualifiers contained therein),
individually or in the aggregate, results or would reasonably be expected to
result in a Material Adverse Effect on the Company. The Purchaser shall have
received a certificate signed by an officer of the Company to such effect on the
Closing Date.
5.2 COVENANTS. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Closing Date shall have been performed or complied with in all material
respects. The Purchaser shall have received a certificate signed by an officer
of the Company to such effect on the Closing Date.
5.3 HSR ACT. The waiting period (and any extensions thereof)
under the HSR Act applicable to the transactions contemplated hereby shall have
expired or been terminated.
5.4 NO ORDER PENDING. There shall not then be in effect any
order enjoining or restraining the sale and purchase of the Shares.
5.5 NO LAW PROHIBITING OR RESTRICTING SALE OF THE SHARES.
There shall not be in effect any law, rule or regulation prohibiting or
restricting the sale and purchase of the Shares, or requiring any consent or
approval of any Person which shall not have been obtained to sell and purchase
the Shares, with full benefits afforded the Common Stock.
5.6 REGISTRATION RIGHTS AGREEMENT. The Registration Rights
Agreement shall not have been terminated.
5.7 OTHER PURCHASE AGREEMENT. The Purchaser and the
Principal Stockholder shall have consummated the acquisition by the Purchaser of
16,650,000 shares of Common Stock from the Principal Stockholder pursuant to the
terms of the Other Purchase Agreement (unless such acquisition shall not have
been consummated as a result of a breach by the Purchaser thereunder).
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5.8 MASTER AGREEMENT. The Master Agreement dated April 19,
1999, by and between the Company and the Purchaser (the "MASTER AGREEMENT")
shall not have been terminated (or notice of termination provided) in accordance
with the terms thereof.
5.9 OPINION OF COUNSEL. The Purchaser shall have received an
opinion dated as of the Closing Date of O'Melveny & Myers LLP, counsel to the
Company, substantially in the form attached hereto as EXHIBIT A.
ARTICLE VI
CONDITIONS TO OBLIGATION OF THE COMPANY
The Company's obligation to sell and issue the Shares at the Closing is
subject to the fulfillment on or prior to the Closing Date of the following
conditions:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser contained in Article IV will be true and correct on
and as of the date hereof and (except to the extent such representations and
warranties speak as of a particular date) true and correct in all material
respects as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date;
PROVIDED, HOWEVER, that for purposes of this Section 6.1 only, such
representations and warranties shall be deemed to be true and correct on and as
of the Closing Date unless the failure or failures of such representations and
warranties to be so true and correct (without regard to materiality qualifiers
contained therein), individually or in the aggregate, results or would
reasonably be expected to result in a Material Adverse Effect on the Purchaser.
The Company shall have received a certificate signed on behalf of the Purchaser
by an officer of the Purchaser to such effect on the Closing Date.
6.2 COVENANTS. All covenants, agreements and conditions
contained in this Agreement to be performed by the Purchaser on or prior to the
Closing Date shall have been performed or complied with in all material
respects. The Company shall have received a certificate signed on behalf of the
Purchaser by an officer of the Purchaser to such effect on the Closing Date.
6.3 HSR ACT. The waiting period (and any extensions thereof)
under the HSR Act applicable to the transactions contemplated hereby shall have
expired or been terminated.
6.4 NO ORDER PENDING. There shall not then be in effect any
order enjoining or restraining the sale and purchase of the Shares.
6.5 NO LAW PROHIBITING OR RESTRICTING THE SALE OF THE
SHARES. There shall not be in effect any law, rule or regulation prohibiting or
restricting the sale and purchase of the Shares, or requiring any consent or
approval of any Person which shall not have been obtained to sell and purchase
the Shares.
6.6 REGISTRATION RIGHTS AGREEMENT. The Registration Rights
Agreement shall not have been terminated.
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6.7 OTHER PURCHASE AGREEMENT. The Purchaser and the
Principal Stockholder shall have consummated the acquisition by the Purchaser of
16,650,000 shares of Common Stock from the Principal Stockholder pursuant to the
terms of the Other Purchase Agreement (unless such acquisition shall not have
been consummated as a result of a breach by the Principal Stockholder
thereunder).
6.8 MASTER AGREEMENT. The Master Agreement shall not have
been terminated (or notice of termination provided) in accordance with the terms
thereof.
ARTICLE VII
COVENANTS OF THE PURCHASER AND THE COMPANY
7.1 PURCHASE RESTRICTIONS.
(a) Other than pursuant to the transactions contemplated by
this Agreement and the Other Purchase Agreement, the Purchaser shall not, and
shall not cause or permit its Affiliates or any Group (as defined in Section
8.1) including the Purchaser or any of its Affiliates to, acquire shares of the
Common Stock, which when combined with shares of the Common Stock then owned by
the Purchaser and its subsidiaries would result in the Purchaser Beneficially
Owning (as defined in Section 8.1) more than 20% of the shares of the Common
Stock then issued and outstanding (the "STANDSTILL CAP"), except pursuant to a
transaction or series of transactions at prices and on terms approved by the
Board of Directors of the Company; PROVIDED, HOWEVER, that (1) if the Company or
the Principal Stockholder sells to any Person or Group shares of Common Stock
such that, as a result of such sale such Person or Group would Beneficially Own
more than 5% of the shares of the Common Stock then issued and outstanding and
such Person or Group is subject to an agreement with the Company or the
Principal Stockholder restricting or prohibiting the acquisition of Beneficial
Ownership of additional shares of Common Stock, the Standstill Cap will be
increased to that maximum percentage of shares of Voting Stock the Beneficial
Ownership of which such other Person or Group is permitted to acquire pursuant
to such agreement (to the extent it exceeds the Standstill Cap), and (2) if the
Company or the Principal Stockholder sells to any Person or Group a number of
shares of Common Stock such that, to the actual knowledge of the Company or the
Principal Stockholder (as applicable) at the time of such sale, as a result of
such sale such Person or Group would Beneficially Own more than 10% of the
shares of the Common Stock then issued and outstanding and such Person or Group
is not subject to an agreement with the Company or the Principal Stockholder (as
applicable) restricting or prohibiting the acquisition of Beneficial Ownership
of additional shares of Common Stock, the Standstill Cap will be terminated;
provided, further, that clause (2) of the foregoing proviso shall not apply with
respect to, and the Standstill Cap shall not terminate upon, issuances or sales
of Common Stock (A) in connection with acquisitions by the Company of all the
outstanding equity securities, or all or substantially all the assets, of a
Person in one or more transactions, or (B) to any Person required under Section
13(f) of the Exchange Act to file a Form 13F with respect to the Company or to a
Person who, as a result of such Transfer, would become a Form 13F Filer (a "FORM
13F FILER").
(b) Nothing in this Section 7.1 shall require the Purchaser
or its subsidiaries to transfer any shares of Common Stock if the aggregate
percentage ownership of the Purchaser and its subsidiaries is increased as a
result of any action taken by the Company or its subsidiaries
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including, without limitation, by reason of any reclassification,
recapitalization, stock split, reverse stock split, combination or exchange of
shares, redemption, repurchase or cancellation of shares or any other similar
transaction.
(c) Notwithstanding the Board Approval as set forth in
Section 3.2(b), as a matter of contract under this Agreement, and not under the
provisions of DGCL ss.203, the Purchaser hereby agrees that if the Closing
occurs and the Shares are acquired by the Purchaser, pursuant to this Agreement,
the Purchaser will be subject to all of the terms and restrictions set forth in
DGCL ss.203, and will be entitled to all of the rights set forth in DGCL ss.203,
to the extent applicable to the Purchaser by the terms of DGCL ss.203, in each
case as if the terms of DGCL ss.203 were set forth in their entirety in this
Section 7.1(c); PROVIDED, HOWEVER, that for purposes hereof, the term
"interested stockholder" as set forth in DGCL ss.203 shall be deemed to refer to
"20%" in all cases where it in fact refers to "15%." The present and future
stockholders of the Company (or any successor corporation) are hereby expressly
made third-party beneficiaries of the provisions of this Section 7.1(c).
(d) In the event that the Company shall adopt a stockholder
rights plan with provisions that are triggered by the acquisition of Beneficial
Ownership (or any similar concept) of a specified percentage of the Company's
Common Stock (a "TRIGGER PERCENTAGE"), the Company agrees that, for purposes of
determining application of the stockholder rights plan to the Purchaser, the
plan will be deemed to refer to "20%" in all cases where it in fact refers to
any Trigger Percentage that is below 20%.
7.2 SALE RESTRICTIONS.
(a) The Purchaser shall not, and shall not cause or permit
its Affiliates or any Group including the Purchaser or any of its wholly-owned
subsidiaries to directly or indirectly offer, sell, transfer, assign, exchange,
grant an option to purchase, encumber, pledge, hypothecate or otherwise dispose
of the Beneficial Ownership of shares of Common Stock, whether in one or more
transactions (any such act or series of acts, a "TRANSFER"), except in
compliance with all applicable requirements of law and upon the receipt of
necessary approvals of any Governmental Entity.
(b) Until the earlier of (x) the second anniversary of the
Closing Date, and (y) 60 days after termination of the Master Agreement (other
than by reason of breach thereof by the Purchaser), but in no event earlier than
fourteen months after the Closing Date (such date, the "SALE RESTRICTION
TERMINATION DATE"), the Purchaser shall not, and shall not cause or permit its
subsidiaries or any Group including the Purchaser or any of its subsidiaries to,
directly or indirectly Transfer any shares of Common Stock, other than in one or
more of the following transactions: (1) a Transfer pursuant to a tender offer or
exchange offer subject to Section 14 of the Exchange Act (or any successor
provision) (an "OFFER") for outstanding shares of Common Stock that the Company
has not, within 10 days of the commencement thereof (or such longer period as
may then be permitted under applicable law for the Company's initial
recommendation with respect to such Offer), publicly recommended that such Offer
not be accepted; and (2) any other Transfer which has been approved by the Board
of Directors of the Company.
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(c) From and after the Sale Restriction Termination Date,
the Purchaser shall not, and shall not cause or permit its subsidiaries or any
Group including the Purchaser or any of its subsidiaries to directly or
indirectly Transfer any shares of Common Stock to any Person that, to the actual
knowledge of the Purchaser, would result in such Person Beneficially Owning more
than 5% of the shares of Common Stock then issued and outstanding, except (1)
pursuant to a transaction or series of transactions at prices and on terms
approved by the Board of Directors of the Company, (2) pursuant to an
underwritten offering, or (3) to a Form 13F Filer.
(d) From and after the Sale Restriction Termination Date,
the Purchaser shall not, and shall not cause or permit its Affiliates or any
Group including the Purchaser or any of its Affiliates to directly or indirectly
Transfer (1) more than 9,250,000 shares of Common Stock in the aggregate in any
calendar quarter, or (2) in any event, more than 4,625,000 shares of Common
Stock in the aggregate in any calendar month, in each case, except (A) pursuant
to a transaction or series of transactions at prices and on terms approved by
the Board of Directors of the Company, or (B) if such Transfer is pursuant to an
underwritten public offering, the Purchaser, such Affiliate or such Group may
Transfer 18,500,000 shares, in the aggregate, less any Shares otherwise
Transferred in any calendar quarter in which the underwritten public offering
occurs.
(e) Subject to Section 7.2(a), nothing in this Agreement
(including, without limitation, Section 7.2(d)) shall prevent or restrict the
Purchaser and its Affiliates from Transferring any Shares (1) to and among each
other, provided that any such transferee shall agree in writing to be bound
hereby, or (2) to the Principal Stockholder or its Affiliates.
7.3 OTHER RESTRICTIONS.
(a) Neither the Purchaser nor any of its subsidiaries shall,
without the approval of the Board of Directors of the Company, (1) make any
public comment or proposal with respect to any Acquisition Proposal involving
the Company, (2) become a member of a Group (other than a Group comprised solely
of the Purchaser and its subsidiaries) with respect to the Common Stock or other
equity securities of the Company, (3) solicit proxies or initiate, propose or
become a participant in a solicitation (as such terms are defined in Regulation
14A under the Exchange Act) with respect to the Company in opposition to any
matter which has been recommended by the Board of Directors of the Company or in
favor of any matter which has not been approved by the Board of Directors of the
Company, (4) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the foregoing, or (5)
disclose to any third party any intention, plan or arrangement inconsistent with
the foregoing. Notwithstanding the foregoing, the Purchaser or its Affiliates
may make an Acquisition Proposal (as defined in Section 8.1) to the Board of
Directors of the Company which is subject to approval by the Board of Directors
of the Company and which does not require the Company to make a public
announcement. Other than as set forth in the immediately preceding sentence,
neither the Purchaser nor its Affiliates shall, without approval of the Board of
Directors, take any actions with respect to any Acquisition Proposal (including
any Acquisition Proposal made by the Purchaser or its Affiliates) that would
require the Company to make a public announcement.
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(b) Notwithstanding anything in this Agreement to the
contrary, (1) if the Company or the Principal Stockholder sells to any Person or
Group (other than the Principal Stockholder or its Affiliates) shares of Common
Stock such that, as a result of such sale such Person or Group would
Beneficially own more than 5% of the shares of the Common Stock then issued and
outstanding, and such Person or Group is subject to an agreement with the
Company restricting or prohibiting the actions of such Person or Group in
respect of matters similar to those addressed in Section 7.3(a), the provisions
of Section 7.3(a) (and those of Section 8.4 relating thereto) will be revised to
be the same as the corresponding provisions of such Person's or Group's
standstill provision to the extent that such revisions would cause the
Purchaser's standstill provisions to be less restrictive to the Purchaser, and
(2) if the Company or the Principal Stockholder sells to any Person or Group
(other than the Principal Stockholder or its Affiliates) shares of Common Stock
such that, as a result of such sale such Person or Group would Beneficially own
10% or more of the shares of the Common Stock then issued and outstanding, and
such Person or Group is not subject to an agreement with the Company restricting
or prohibiting the actions of such Person or Group in respect of matters similar
to those addressed in Section 7.3(a), the provisions of Section 7.3(a) (and
those of Section 8.4 relating thereto) will terminate.
(c) The Company shall provide the Purchaser with written
notice of the occurrence of any of the events set forth in the first proviso of
Section 7.1(a), or in Section 7.3(b).
7.4 EARLY TERMINATION. Notwithstanding anything in this
Agreement to the contrary, the obligations that the Purchaser and its Affiliates
and representatives have under Sections 7.1 (other than Section 7.1(c)), 7.2
(other than Section 7.2(d)) and 7.3 will terminate upon, without further action
by any Person the earliest to occur of (1) the public announcement by or on
behalf of any Person or Group (other than the Purchaser and its Affiliates) of
the commencement of an Offer to acquire Beneficial Ownership of outstanding
shares of Common Stock such that after such acquisition such Person or Group
would Beneficially Own more than 30% of the outstanding shares of Voting Stock,
but only if (A) the Company has not, within 10 days after announcement of such
Offer (or such longer period as may then be permitted under applicable law for
the Company's initial recommendation with respect to such Offer), publicly
recommended that such Offer not be accepted, or (B) all of the material
conditions to such Offer relating to the elimination or satisfaction of the
material defensive provisions established by the Company, including any rights
plan or similar defensive provision of the Company, have been satisfied or
waived; (2) the receipt by the Company of an Acquisition Proposal from any
Person or Group (other than the Purchaser and its Affiliates), but only if the
Company has not, within 10 days after receipt of such Acquisition Proposal,
rejected such Acquisition Proposal; (3) the public announcement by or on behalf
of any Person or Group (other than the Purchaser and its Affiliates) of the
commencement of a bona fide proxy or consent solicitation subject to Section 14
of the Exchange Act (or any successor provision) to elect or remove a majority
of the directors of the Company which is not, within 10 days after the
announcement of such proxy or consent solicitation (or such longer period as may
then be permitted under applicable law for the Company's initial recommendation
with respect to such Offer if such a period is specified) publicly opposed by
the Company's Board of Directors and which would, if successful, result in a
change in the composition of a majority of the Board of Directors of the
Company; (4) the occurrence of a Change of Control (as defined in Section 8.1)
of the Company; (5) the
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acceptance or approval by the Company of an Acquisition Proposal or
recommendation by the Company that an Offer be accepted; (6) the public
announcement by the Company that it is "for sale"; (7) the execution of a
definitive agreement with any Person or Group (other than the Principal
Stockholder or its Affiliates) to acquire shares of Common Stock such that, as a
result of such acquisition such Person or Group would Beneficially Own more than
30% of the shares of the Common Stock then issued and outstanding, and (8) the
execution of a definitive agreement with any Person or Group (other than the
Principal Stockholder or its Affiliates) to acquire shares of Common Stock such
that, as a result of such acquisition such Person or Group would Beneficially
Own more than 20% of the shares of Common Stock of the Company and at such time
the Principal Stockholder and its Affiliates Beneficially Own less than 20% of
the shares of Common Stock of the Company. The Company shall provide the
Purchaser with prompt written notice of the occurrence of any of the events set
forth in (i) Section 7.4(1)(B), (ii) the receipt by the Company of an
Acquisition Proposal from any Person or Group (such notice to be provided within
10 days after receipt thereof, but without disclosing the terms thereof or the
identity of such Person or Group), (iii) Section 7.4(4), (iv) Section 7.4(5), or
(v) Section 7.4(6).
7.5 STRATEGIC SESSIONS; DIRECTOR.
(a) Prior to the Regulatory Relief Date (as defined in
Section 8.1), the Purchaser shall be entitled to designate, at its option, a
representative (the "PURCHASER REPRESENTATIVE") to meet (telephonically or
otherwise) periodically, but not less frequently than once every three months,
with the Chairman of the Board, Chief Executive Officer or President of the
Company (the "COMPANY REPRESENTATIVE"). The Company shall make the sole
determination as to the identity of the Company Representative and shall give
the Purchaser 15 days notice of who the Company Representative shall be, and the
Purchaser Representative will be an executive of equivalent or higher seniority
of BellSouth Corporation. The Company Representative shall also provide to
Purchaser Representative of all materials delivered to the Company's Board of
Directors (other than those he deems to be inappropriate), and promptly (but in
any event within 3 business days) following any meeting of the Company's Board
of Directors, shall discuss with the Purchaser Representative the general
matters covered in such meeting of the Board of Directors, in each case, subject
to the proviso in the next sentence. At such meeting between the Company
Representative and the Purchaser Representative, the Company Representative will
disclose to the Purchaser Representative in all material respects the substance
of any discussions relating to the strategic plans of the Company that took
place among the Company's Board of Directors at any regular or special meeting
since the date of the last meeting between the Purchaser Representative and the
Company Representative; PROVIDED, HOWEVER, that (1) the Purchaser shall agree to
keep strictly confidential any information relating to the Company that the
Purchaser Representative shall obtain in connection with the foregoing, and
shall (A) not disclose such information, in whole or in part, to any Person
other than the Chairman of the Board, Chief Executive Officer, President,
Executive Vice Presidents, Vice President of Corporate Development or General
Counsel of BellSouth Corporation (the "KEY OFFICIALS") for any reason
whatsoever, and (B) inform the Purchaser Representative and the Key Officials of
the confidential nature of such information and of applicable securities laws
and other laws in connection therewith (or, subject to Section 7.5(c), at any
time thereafter, in the case of the resignation or removal of the Purchaser
Director); and (2) the Company Representative shall not be obligated to disclose
to the Purchaser Representative (A) sensitive competitive information of the
Company or (B) any other information if doing so could, in the
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judgment of the Company Representative, violate any obligation or duty (whether
contractual, statutory, fiduciary or otherwise) to which the Company or its
officers, directors or employees were then subject (including, without
limitation, obligations of confidentiality) or otherwise subject the Company or
any of such Persons to any liability or otherwise materially and adversely
affect the interests of the Company.
(b) After the Regulatory Relief Date (or, subject to Section
7.5(c), at any time thereafter, in the case of the resignation or removal of the
Purchaser Director), the Purchaser shall be entitled to designate, at its
option, one individual who shall be reasonably satisfactory to the Company at
time of initial designation (the "PURCHASER DIRECTOR"). Promptly following such
designation, the Board of Directors of the Company will take all action
necessary to elect the Purchaser Director as a member of the Board of Directors
of the Company, and thereafter the Company shall continue to nominate the
Purchaser Director, solicit proxies and otherwise encourage his re-election, in
each case to the extent it takes such action with respect to the other
directors, to serve until such time as provided in Section 7.5(c). The Purchaser
Director shall not be entitled to receive (A) sensitive competitive information
of the Company or (B) any other information if doing so could, in the judgment
of the Chairman or Chief Executive Officer of the Company, violate any
obligation or duty (whether contractual, statutory, fiduciary or otherwise) to
which the Company or its officers, directors or employees were then subject
(including, without limitation, obligations of confidentiality) or otherwise
subject the Company or any of such Persons to any liability or otherwise
materially and adversely affect the interests of the Company.
(c) Notwithstanding anything in this Agreement to the
contrary, the obligations that the Company and its Affiliates and
representatives have under this Section 7.5 will terminate, without further
action by any Person, upon the earliest to occur of (1) termination of the
Master Agreement, and (2) the Transfer by the Purchaser of more than 9,250,000
shares of Common Stock. At such time, or if earlier requested to do so by the
Chairman of the Board of Directors of the Company, the Purchaser Director, if
any, shall promptly resign his position as a member of the Company's Board of
Directors.
7.6 COMPANY ACTIONS. The Company shall not repurchase Shares
of Common Stock, reorganize its capital structure or take other similar action
such that, as a result of such action, the Purchaser shall Beneficially Own more
than 10% of the Shares of Common Stock then issued and outstanding.
ARTICLE VIII
MISCELLANEOUS
8.1 CERTAIN DEFINITIONS. As used in this Agreement:
(a) The term "ACQUISITION PROPOSAL" shall mean a bona fide
written proposal received by the Company from any Person or Group that
contemplates a transaction which, if effected, would constitute a Change of
Control of the Company.
(b) The term "AFFILIATE" shall have the meaning given such
term in Rule 12b-2 under the Exchange Act.
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(c) The terms "BENEFICIAL OWNERSHIP" and "BENEFICIAL OWNER"
shall have the meanings given such terms in Section 13(d)(3) of the Exchange Act
and the rules and regulations promulgated thereunder.
(d) The term "CHANGE OF CONTROL" shall mean (1) an
acquisition of, or the entering into of a definitive agreement with the Company
to acquire, Voting Stock by a Person or Group (other than the Principal
Stockholder or its Affiliates) in a purchase or transaction or series of
purchases or transactions if immediately thereafter such Person or Group has, or
would have, Beneficial Ownership of more than 50% of the combined voting power
of the Company's then outstanding Voting Stock; (2) the execution of an
agreement providing for a tender offer, merger, consolidation or reorganization,
or series of such related transactions involving the Company, unless both (x)
the stockholders of the Company, immediately after such transaction or
transactions shall Beneficially Own at least 50% of the Voting Stock of the
Company (or, if the Company shall not be the surviving company in such merger,
consolidation or reorganization, such surviving company), and (y) the Company is
not subject to an agreement that contemplates that individuals who are then
directors of the Company (or individuals designated by the Company at or before
the closing of such transaction) shall constitute less than a majority of the
directors of the Company (or such surviving company, as the case may be) after
the closing of such transaction; (3) a change or changes in the membership of
the Company's Board of Directors which represent a change of a majority or more
of such membership during any twelve month period (unless such change or changes
in membership are caused by the actions of the then existing Board of Directors
and do not occur within twelve months of the commencement, threat or proposal of
an Election Contest (as such term is defined in Rule 14a-11 of Regulation 14A
under the Exchange Act), tender offer or other transaction which would
constitute a Change of Control under (1) or (2) of this Section 8.1(b)); (4) a
sale of all or substantially all of the Company's assets; or (5) an Insolvency
Proceeding (as defined in Section 8.1).
(e) The term "GOVERNMENTAL ENTITY" shall mean any agency,
bureau, commission, court, department, official, political subdivision, tribunal
or other instrumentality of any government, whether federal, state, county or
local, domestic or foreign.
(f) The term "GROUP" shall have the meaning given such term
in Section 13(d)(3) of the Exchange Act and the rules and regulations
promulgated thereunder.
(g) The term "INSOLVENCY PROCEEDING" shall mean (1) an
assignment for the benefit of creditors, (2) the filing by the Company of a
petition to have the Company adjudged insolvent, bankrupt or seeking a
reorganization or liquidation under any law relating to bankruptcy, insolvency
or receivership, (3) an appointment of a receiver or trustee for all or
substantially all of the assets of the Company unless appointed without the
Company's consent, in which case if after 60 days such appointment has not been
vacated or stayed, (4) a public admission in writing of the Company's inability
to pay its debts as they come due, or (5) the adoption of a plan of liquidation
or dissolution by the Board of Directors of the Company.
(h) The term "MATERIAL ADVERSE EFFECT" shall mean, with
respect to any Person, a material adverse effect on the business, properties,
operations, or condition (financial or otherwise) of such Person (and its
subsidiaries), taken as a whole.
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(i) The term "PERSON" shall mean any person, individual,
corporation, partnership, trust or other non-governmental entity or any
governmental agency, court, authority or other body (whether foreign, federal,
state, local or otherwise).
(j) The term "REGULATORY RELIEF DATE" shall mean the date on
which the Purchaser and the Company mutually agree that the Purchaser and/or one
or more of its Affiliates have obtained all necessary federal and state
regulatory approvals to provide originating landline, interLATA long-distance
service (and currently prohibited terminating services) in five states
(including either Florida or Georgia) pursuant to the Communications Act of
1934, as amended by the Telecommunications Act of 1996.
(k) The term "VOTING STOCK" shall mean (1) the Common Stock
and any other securities issued by the Company having the ordinary power to vote
in the election of directors of the Company (other than securities having such
power only upon the happening of a contingency), and (2) the common stock and
any other securities issued by any successor to the Company pursuant to a
merger, consolidation or reorganization having the ordinary power to vote in the
election of directors of such successor company (other than securities having
such power only upon the happening of a contingency).
(l) As used herein, any references to specified numbers (but
not percentages) of Shares or of Common Stock shall be deemed to be references
to such number of Shares or of Common Stock as may be adjusted in the event of
any change in the capital stock of the Company by reason of stock dividends,
split-ups, reverse split-ups, mergers, recapitalizations, subdivisions,
conversions, exchanges of shares or the like occurring after the date of this
Agreement.
8.2 FURTHER ASSURANCES.
(a) Each of the Company and the Purchaser shall use its
commercially reasonable efforts to take all actions required under any law, rule
or regulation to ensure that the conditions to the Closing set forth herein are
satisfied on or before the Closing Date.
(b) In furtherance and not in limitation of the foregoing,
each of the Company and the Purchaser hereby agrees to make an appropriate
filing of a Notification and Report Form pursuant to the HSR Act with respect to
the transactions contemplated hereby and by the Other Purchase Agreement as
promptly as practicable after the date hereof (but in no event later than five
business days after the date hereof) or (y) if later, five business days after
the receipt by the Purchaser of all information from the Company reasonably
necessary for the Purchaser's preparation of such filing) and to supply as
promptly as practicable any additional information and documentary material that
may be requested pursuant to the HSR Act and to use commercially reasonably
efforts to cause the expiration or early termination of the applicable waiting
periods under the HSR Act as soon as practicable. Nothing in this Section 8.2
shall require any of the Company and its Affiliates or the Purchaser and its
Affiliates to sell or otherwise dispose of, or permit the sale or other
disposition of, any assets, whether as a condition to obtaining any approval
from a Governmental Entity or any other Person for any other reason. In addition
to any other remedies available to the Company, if the Notification and Report
Form is not filed within the period specified in the first sentence of this
Section 8.2(b) for any reason
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other than a delay by the Company, the Company may, within 5 business days after
the date of such filing and by written notice to the Purchaser, extend the
Termination Date (as defined in Section 8.10) for such number of days beyond the
period specified above that the filing was delayed.
(c) Each of the Company and the Purchaser shall, in
connection with the efforts referenced in Section 8.2(a), use commercially
reasonable efforts to obtain all requisite approvals and authorizations for the
sale and purchase of the Shares under the HSR Act or any other law, rule,
regulation, order or decree (collectively, the "LAWS"). In furtherance and not
in limitation of the foregoing, each of the Company and the Purchaser shall (1)
cooperate in all respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry, including
any proceeding initiated by a private party, (2) promptly inform the other party
of any communication received by such party from, or given by such party to any
Governmental Entity and of any material communication received or given in
connection with any proceeding by a private party, in each case regarding any of
the transactions contemplated hereby, and (3) permit the other party to review
any communication given by it to, and consult with each other in advance of any
meeting or conference with, any Governmental Entity or, in connection with any
proceeding by a private party, with any other Person, and to the extent
permitted by the Governmental Entity or other Person, give the other party the
opportunity to attend and participate in such meetings and conferences.
(d) In furtherance and not in limitation of the covenants of
the parties contained in Sections 8.2(a), (b) and (c), if any administrative or
judicial action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging the purchase of the
Shares contemplated by this Agreement as violative of any Law, each of the
Company and the Purchaser shall cooperate in all respects with each other and
use commercially reasonable efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement. Notwithstanding
the foregoing or any other provision of this Agreement, nothing in this Section
8.2 shall limit a party's right to terminate this Agreement pursuant to Section
8.10, so long as such party has complied with this Section 8.2.
(e) If any objections are asserted with respect to the
transactions contemplated hereby under any Law or if any suit is instituted by
any Governmental Entity or any private party challenging the purchase of the
Shares contemplated hereby as violative of any Law, each of the Company and the
Purchaser shall use commercially reasonable efforts to resolve any such
objections or challenge as such Governmental Entity or private party may have to
such transactions under such Law so as to permit consummation of the
transactions contemplated by this Agreement.
8.3 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to principles of conflicts of law.
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8.4 SURVIVAL; TERMINATION OF COVENANTS. The representations
and warranties in Articles III and IV of this Agreement shall survive until 30
days following the filing by the Company with the SEC of its first annual report
on Form 10-K after the date hereof, except for the representations and
warranties in Sections 3.5, 3.9 and 3.11, and in Sections 4.4 through 4.11
hereof, which shall continue to survive. The covenants and agreements of the
Purchaser under (a) Sections 7.1 (other than in 7.1(c)) and 7.3 hereof shall
terminate on the second anniversary of the Closing Date, and (b) Section 7.2
hereof that by their terms survive the Sale Restriction Termination Date shall
terminate on the fifth anniversary of the Closing Date, in each case subject to
earlier termination thereof as set forth in Section 7.4. The covenants and
agreements of the Company in Section 7.6 shall terminate on the earlier of the
fifth anniversary of the date hereof and the date on which the Purchaser shall
have Transferred all the Shares.
8.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Neither party may assign this Agreement or any
of its rights or obligations hereunder to any Person without the prior written
consent of the other party; provided that the Purchaser may assign its rights
and obligations hereunder to any of BellSouth Corporation and its direct or
indirect, wholly-owned subsidiaries.
8.6 AMENDMENTS; ETC. No amendment, modification,
termination, or waiver of any provision of this Agreement, and no consent to any
departure by a party to this Agreement from any provision of this Agreement,
shall be effective unless it shall be in writing and signed and delivered by the
other party to this Agreement, and then it shall be effective only in the
specific instance and for the specific purpose for which it is given.
8.7 ENTIRE AGREEMENT. This Agreement and the Registration
Rights Agreement embody the entire agreement and understanding of the parties
and supersede all prior agreements or understandings with respect to the subject
matter thereof.
8.8 NOTICES. All notices, requests and other communications
to any party under this Agreement shall be in writing. Communications may be
made by telecopy or similar writing. Each communication shall be given to the
party at its address set forth below or at any other address as the party may
specify for this purpose by notice to the other party. Each communication shall
be effective (1) if given by telecopy, when the telecopy is transmitted to the
proper address and the receipt of the transmission is confirmed, (2) if given by
mail, 72 hours after the communication is deposited in the mails properly
addressed with first class postage prepaid or (3) if given by any other means,
when delivered to the proper address and a written acknowledgement of delivery
is received.
(a) If to the Company, to:
Qwest Communications International Inc.
700 Qwest Tower
555 Seventeenth Street
Denver, Colorado 80202
Facsimile Number: (303) 992-1798
Attention: Chief Financial Officer
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with a copy addressed as set forth above but to the attention
of General Counsel, Facsimile Number: (303) 992-1044
and with an additional copy to:
Steven L. Grossman
O'Melveny & Myers LLP
1999 Avenue of the Stars, Suite 700
Los Angeles, California 90067
Facsimile Number: (310) 246-6779
(b) If to the Purchaser, to:
BellSouth Enterprises, Inc.
1155 Peachtree Street, N.E.
Suite 2000
Atlanta, Georgia 30309-3610
Facsimile Number: (404) 249-2658
Attention: Keith O. Cowan
and with additional copies to:
BellSouth Corporation
1155 Peachtree Street, N.E.
Atlanta, Georgia 30309-3610
Facsimile Number: (404) 249-2629
Attention: E. John Whelchel
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Facsimile Number: (212) 859-4000
Attention: Gail L. Weinstein
8.9 FEES, COSTS AND EXPENSES. All fees, costs and expenses
(including attorneys' fees and expenses) incurred by either party hereto in
connection with the preparation, negotiation and execution of this Agreement and
the consummation of the transactions contemplated hereby, shall be the sole and
exclusive responsibility of such party; PROVIDED, HOWEVER, that the Purchaser
shall pay the filing fee for the Notification and Report Form pursuant to the
HSR Act.
8.10 TERMINATION.
(a) This Agreement may be terminated at any time prior to
the Closing Date:
(1) by mutual written consent of the Company and the
Purchaser;
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(2) by either the Company or the Purchaser if the other
materially breaches this Agreement and such breach remains
uncured for 30 days after receipt by the breaching party of
written notice thereof;
(3) by either the Company or the Purchaser if the
Closing Date shall not have occurred on or before the date
that is 120 days after the date of this Agreement (the
"TERMINATION DATE"), unless prior to the Termination Date any
party reasonably determines that it is substantially unlikely
that the conditions to such party's obligations will be
fulfilled by the Termination Date and delivers to the other
party a notice to such effect, in which case this Agreement
will terminate within ten days after receipt of such notice by
the other party. The right to terminate this Agreement under
this Section 8.10(a)(3) shall be not available to any party
whose failure to fulfill any obligation under this Agreement
has been the cause of, or resulted in, the failure of any
condition to be satisfied.
(b) In the event of termination of this Agreement by either
the Company or the Purchaser as provided in this Section 8.10, this Agreement
shall forthwith become null and void and there shall be no liability or
obligation on the part of the Company or the Purchaser except with respect to
Sections 3.11, 4.11 and 8.9 and this Section 8.10(b); PROVIDED, HOWEVER, that in
the case of termination as provided in Section 8.10(a)(2), the breaching party
shall not be absolved from any liability with respect to breach of this
Agreement.
8.11 SEVERABILITY OF PROVISIONS. Any provision of this
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of the provision in any other
jurisdiction.
8.12 PUBLICITY. The Company and the Purchaser shall agree on
the form and content of the initial public announcement which shall be made
concerning this Agreement and the transactions contemplated hereby, and neither
the Company nor the Purchaser shall make such public announcement without the
consent of the other, except as required by law.
8.13 HEADINGS AND REFERENCES. Section headings in this
Agreement are included for the convenience of reference only and do not
constitute a part of this Agreement for any other purpose. References to
parties, express beneficiaries and sections in this Agreement are references to
the parties to or the express beneficiaries and sections of this Agreement, as
the case may be, unless the context shall require otherwise.
8.14 COUNTERPARTS; EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if all signatures were on the same instrument.
8.15 EXCLUSIVE JURISDICTION. Each party (1) agrees that any
action, complaint, counterclaim, investigation, petition, suit or other
proceeding, whether civil or criminal, in law or in equity, or before any
arbitrator, court or Governmental Entity (each, an "ACTION"), with respect to
this Agreement or any transaction contemplated by this Agreement shall be
brought exclusively in the courts of the State of New York or of the United
States of America for the
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Southern District of New York, in each case sitting in the Borough of Manhattan,
State of New York, (2) accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of those courts and (3)
irrevocably waives any objection, including, without limitation, any objection
to the laying of venue or based on the grounds of FORUM NON CONVENIENS, which it
may now or hereafter have to the bringing of any legal action in those
jurisdictions; PROVIDED, HOWEVER, that any party may assert in an Action in any
other jurisdiction or venue each mandatory defense, third-party claim or similar
claim that, if not so asserted in such Action, may thereafter not be asserted by
such party in an original Action in the courts referred to in clause (1) above.
8.16 WAIVER OF JURY TRIAL. Each party waives any right to a
trial by jury in any Action to enforce or defend any right under this Agreement
or any amendment, instrument, document or agreement delivered, or which in the
future may be delivered, in connection with this Agreement and agrees that any
Action shall be tried before a court and not before a jury.
8.17 NON-RECOURSE. No recourse under this Agreement shall be
had against any "controlling person" (within the meaning of Section 20 of the
Exchange Act) of any party or the stockholders, directors, officers, employees,
agents and Affiliates of such party or such controlling persons, whether by the
enforcement of any assessment or by any legal or equitable proceeding, or by
virtue of any Regulation, it being expressly agreed and acknowledged that no
personal liability whatsoever shall attach to, be imposed on or otherwise be
incurred by such controlling person, stockholder, director, officer, employee,
agent or Affiliate, as such, for any obligations of such party under this
Agreement or for any claim based on, in respect of or by reason of such
obligations or their creation; PROVIDED, HOWEVER, that nothing contained in this
Section 8.17 shall be deemed to be a waiver by the Company or any such
controlling person, stockholder, director, officer, employee, agent or Affiliate
of the Company of their respective liabilities under applicable federal or state
securities laws, rules or regulations.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BELLSOUTH ENTERPRISES, INC.
By: /s/ Keith O. Cowan
--------------------------------
Name: Keith O. Cowan
Title: Authorized Signatory
QWEST COMMUNICATIONS INTERNATIONAL INC.
By: /s/ Drake S. Tempest
--------------------------------
Drake S. Tempest
Executive Vice President and
General Counsel
S-1
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EXHIBIT A
Form of Opinion of Counsel to the Company
April ___, 1999
[VOLCANO]
Attention:
Ladies and Gentlemen:
We have acted as counsel to Qwest Communications International Inc., a
Delaware corporation (the "Company"), in connection with the Common Stock
Purchase Agreement dated as of April ___, 1999, by and between [Volcano], a
__________ corporation ("[Volcano]") and the Company (the "Purchase Agreement").
We are providing this opinion to you at the request of the Company pursuant to
Section 5.9 of the Purchase Agreement.
In our capacity as such counsel, we have examined originals or copies
of those corporate and other records and documents we considered appropriate.
As to relevant factual matters, we have relied upon, among other
things, the Company's factual representations in an Officer's Certificate dated
April ___, 1999, a copy of which has been delivered to you. In addition, we have
obtained and relied upon those certificates of public officials we considered
appropriate.
We have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals and the conformity with originals of
all documents submitted to us as copies.
On the basis of such examination, our reliance upon the assumptions in
this opinion and our consideration of those questions of law we considered
relevant, and subject to the limitations and qualifications in this opinion, we
are of the opinion that the Shares have been duly authorized by all necessary
corporate action on the part of the Company and, upon payment for and delivery
of the Shares in accordance with the Purchase Agreement and the countersigning
of the certificate or certificates representing the Shares by a duly authorized
signatory of the registrar for the Common Stock, the Shares will be validly
issued, fully paid and non-assessable.
The law covered by this opinion is limited to the present Delaware
General Corporation Law. We express no opinion as to the laws of any other
jurisdiction and no opinion regarding the statutes, administrative decisions,
rules, regulations or requirements of any county, municipality, subdivision or
local authority of any jurisdiction.
This opinion is furnished by us as counsel for the Company and may be
relied upon by you only in connection with the consummation of the transactions
contemplated by the Purchase Agreement. It may not be used or relied upon by you
for any other purpose or by any other
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person, nor may copies be delivered to any other person, without in each
instance our prior written consent. This opinion is expressly limited to the
matters set forth above and we render no opinion, whether by implication or
otherwise, as to any other matters. We assume no obligation to update or
supplement this opinion to reflect any facts or circumstances which may
hereafter come to our attention, or any changes in laws which may hereafter
occur.
Respectfully submitted,
EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
by and between
QWEST COMMUNICATIONS INTERNATIONAL INC.
and
BELLSOUTH ENTERPRISES, INC.
Dated as of April 19, 1999
<PAGE>
TABLE OF CONTENTS
PAGE
1. Demand Registration Rights............................................1
2. Piggy-back Registration Rights........................................3
3. Registration Provisions...............................................5
4. Blackout Provisions..................................................11
5. Termination Provisions...............................................12
6. Expenses ............................................................12
7. Indemnification .....................................................13
8. Transfer Restrictions................................................16
9. Exempt Sales ........................................................16
10. Merger, Consolidation, Exchange, Etc.................................17
11. Notices .............................................................17
12. No Waivers; Remedies.................................................18
13. Amendments, Etc .....................................................18
14. Successors and Assigns...............................................18
15. Governing Law .......................................................19
16. Counterparts; Effectiveness..........................................19
17. Severability of Provisions...........................................19
18. Headings and References..............................................19
19. Entire Agreement ....................................................19
20. Survival ............................................................19
21. Exclusive Jurisdiction...............................................19
22. Waiver of Jury Trial.................................................19
23. Affiliate ...........................................................20
24. Non-Recourse ........................................................20
25. No Inconsistent Agreements...........................................20
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made as of
April 19, 1999, by and between QWEST COMMUNICATIONS INTERNATIONAL INC., a
Delaware corporation (the "COMPANY") and BELLSOUTH ENTERPRISES, INC., a Georgia
corporation (the "STOCKHOLDER").
RECITALS
A. Pursuant to the terms of that certain Common Stock Purchase
Agreement dated as of even date herewith by and between the Stockholder and the
Company (the "COMPANY COMMON STOCK PURCHASE AGREEMENT") and that certain Common
Stock Purchase Agreement dated as of even date herewith by and between the
Stockholder and Anschutz Company, a Delaware corporation (the "ANSCHUTZ COMMON
STOCK PURCHASE AGREEMENT" and together with the Company Common Stock Purchase
Agreement, the "COMMON STOCK PURCHASE AGREEMENTS"), the Company and Anschutz
Company are selling to the Stockholder, and the Stockholder is purchasing from
the Company and Anschutz Company, an aggregate of 37,000,000 shares of the
Company's Common Stock, $.01 par value per share (the "REGISTRABLE SHARES").
B. The Company and the Stockholder desire to enter into this Agreement
to provide for, among other things, the registration under the Securities Act of
1933, as amended (the "SECURITIES ACT"), of the disposition of the Registrable
Shares.
AGREEMENT
The parties agree as follows:
1. DEMAND REGISTRATION RIGHTS.
(a) If at any time after the Sale Restriction Termination Date (as
defined in the Common Stock Purchase Agreements) (or the earlier termination of
the transfer restrictions as set forth in Section 7.4 of the Company Common
Stock Purchase Agreement) and prior to the seventh anniversary of the date of
this Agreement (such date, the "TERMINATION DATE"), on one or more occasions
when the Company shall have received the written request of the Stockholder or
holders of at least 2,500,000 Registrable Shares in the aggregate (as such
number of shares may be adjusted in the event of any change in the capital stock
of the Company by reason of stock dividends, split-ups, reverse split-ups,
mergers, recapitalizations, subdivisions, conversions, exchanges of shares or
the like) that have been acquired directly or indirectly from the Stockholder
and to which rights under this Section 1 shall have been assigned pursuant to
Section 14(a) (each such person, when requesting registration under this Section
1 or under Section 2 and thereafter in connection with any such registration,
being hereinafter referred to as a "REGISTERING STOCKHOLDER"), the Company shall
give written notice of the receipt of such request to each potential Registering
Stockholder and each other person known by the Company to have rights with
respect to the registration under the Securities Act of the disposition of
securities of the Company. The Company shall use reasonable best efforts as
promptly as practicable to include in a Registration Statement the Registrable
Shares owned by the
<PAGE>
Registering Stockholders (all such Registrable Shares collectively, the
"TRANSACTION REGISTRABLE SHARES") that in each case shall have been duly
specified by such Registering Stockholders by written notice received by the
Company not later than 20 Business Days after the Company shall have given
written notice to the Registering Stockholders pursuant to this Section 1(a).
(b) If the Registering Stockholders initiating a request for
registration of Registrable Shares pursuant to Section 1(a) shall state in such
written notice that they intend to distribute the Transaction Registrable Shares
covered by their request by means of an underwritten offering, the Company shall
include such information in the written notice delivered by the Company pursuant
to Section 1(a). The Company shall select the managing underwriter for the
offering and any additional investment bankers and managers to be used in
connection with the offering, in each case with the consent of the Registering
Stockholders holding a majority of the Transaction Registrable Shares, which
consent shall not be unreasonably withheld, conditioned or delayed.
(c) Notwithstanding anything herein to the contrary:
(1) The Company shall not be required to prepare and file
pursuant to this Section 1, and the Company shall be entitled not to file and,
if filed, to withdraw a Registration Statement including less than 2,500,000
Transaction Registrable Shares in the aggregate (as such number of shares may be
adjusted in the event of any change in the capital stock of the Company by
reason of stock dividends, split-ups, reverse split-ups, mergers,
recapitalizations, subdivisions, conversions, exchanges of shares or the like);
(2) subject to the following clause (3) and Section 2(b), the
Company shall not be required to prepare and file pursuant to this Section 1
more than two Registration Statement in any one year period and four
Registration Statements in the aggregate; PROVIDED that a Registration Statement
shall be deemed not to have been prepared and filed if (A) the Registration
Statement (i) is withdrawn by Registering Stockholders pursuant to Section 4(c),
or (ii) does not become effective for any other reason except (x) the withdrawal
therefrom of 30% or more of the Transaction Registrable Shares requested to be
included in such registration statement or the determination by Registering
Stockholders owning 30% or more of such Transaction Registrable Shares not to
proceed with the contemplated distribution of such Transaction Registrable
Shares, or (y) the withdrawal of the Registration Statement by the Company
pursuant to Section 1(c)(1), (B) the Company fails to use reasonable best
efforts to cause the Registration Statement to remain effective under the
Securities Act and the Prospectus to remain current during the entire period
referred to in Section 3(e), as the same may be extended pursuant to Section
4(d), or (C) the Company withdraws the Registration Statement pursuant to
Section 5 before the Registering Stockholders have sold all the Transaction
Registrable Shares owned by them in accordance with the manner of distribution
contemplated by the Registration Statement with respect to such Transaction
Registrable Shares;
(3) the Company shall not be required to prepare and file a
Registration Statement pursuant to this Section 1 during the period from the
date of filing of a registration statement of the Company involving an
underwritten offering of any Equity Securities of the Company to the date that
is the earlier of (A) the date of the withdrawal of the registration
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statement or the request to file the registration statement by the security
holder requesting the registration and (B) the date that is 90 days following
the effective date of the registration statement;
(4) if a requested registration pursuant to this Section 1 shall
involve an underwritten offering, and if the managing underwriter shall advise
the Company and the Registering Stockholders in writing that, in its opinion,
the number of Transaction Registrable Shares proposed to be included in the
registration is so great as to adversely affect the offering, including the
price at which the Transaction Registrable Shares could be sold, the Company
shall include in the registration the maximum number of securities which it is
so advised can be sold without the adverse effect, allocated as follows:
(A) FIRST, all Transaction Registrable Shares duly requested
to be included in the registration, allocated pro rata among all Registering
Stockholders on the basis of the relative number of Transaction Registrable
Shares that each Registering Stockholder shall have duly requested to be
included in the registration or such other basis as the Registering Stockholders
shall agree; and
(B) SECOND, any other securities proposed to be registered by
the Company other than for its own account, including, without limitation,
securities proposed to be registered by the Company pursuant to the exercise by
any person other than a Registering Stockholder of a "piggy-back" right
requesting the registration of shares of Common Stock pursuant to an agreement
with the Company in existence as of the date of this Agreement that expressly
provides, in effect, that the Company is required to include such shares of
Common Stock in the Registration Statement; PROVIDED that if 30% or more of the
Transaction Registrable Shares requested to be included in a registration
pursuant to this Section 1 are so excluded from any registration and an
investment banking firm of recognized national standing shall advise the Company
that the number of the Transaction Registrable Shares requested to be
registered, at the time of the request and in light of the market conditions
then prevailing, did not exceed the number that would have an adverse effect on
the offering of such Transaction Registrable Shares, including the price of
which such Transaction Registrable Shares could be sold, there shall be provided
one additional registration under the preceding clause (2) in respect of each
such exclusion or series of related exclusions; and
(5) before the Registration Statement becomes effective, any
Registering Stockholder may withdraw from the registration any Transaction
Registrable Shares owned by the Registering Stockholder; provided that, subject
to Section 1(c)(1), withdrawal of Transaction Registrable Shares shall not
relieve the Company from its obligations under this Agreement with respect to
Transaction Registrable Shares that are not withdrawn from the Registration
Statement.
2. PIGGY-BACK REGISTRATION RIGHTS.
(a) From and after the date of this Agreement to and including the date
that is the 10th anniversary of the date of this Agreement, if the Company shall
determine to register or qualify by a registration statement filed under the
Securities Act and under any applicable state securities laws, any offering of
any Equity Securities of the Company, other than an offering
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with respect to which a Registering Stockholder shall have requested a
registration pursuant to Section 1, the Company shall give notice of such
determination to each potential Registering Stockholder and each other person
known by the Company to have rights with respect to the registration under the
Securities Act of the disposition of securities of the Company. The Company
shall use reasonable best efforts as promptly as practicable to include in a
Registration Statement the Transaction Registrable Shares that in each case
shall have been duly specified by such Registering Stockholders by written
notice received by the Company not later than 20 Business Days after the Company
shall have given written notice to the Registering Stockholders pursuant to this
Section 2(a).
(b) Notwithstanding anything herein to the contrary:
(1) the Company shall not be required by this Section 2 to
include any Registrable Shares in (A) a registration statement on Form S-4 or
S-8 (or any successor form), (B) a registration statement filed in connection
with an exchange offer or other offering of securities solely to the then
existing stockholders of the Company or (C) a registration statement required
pursuant to the exercise by any person other than a Registering Stockholder of a
"demand" right requesting the registration of shares of the Company's Common
Stock pursuant to an agreement with the Company in existence as of the date of
this Agreement that expressly provides, in effect, that the Company may not
include any Registrable Shares in the registration statement;
(2) if a registration pursuant to this Section 2 involves an
underwritten offering, the Company shall select the managing underwriter for the
offering and any additional investment bankers and managers to be used in
connection with the offering, and if the managing underwriter advises the
Company in writing that, in its opinion, the number of securities requested to
be included in the registration is so great as to adversely affect the offering,
including the price at which the securities could be sold, the Company shall
include in the registration the maximum number of securities which it is so
advised can be sold without the adverse effect, allocated as follows:
(A) FIRST, all securities proposed to be registered by the
Company for its own account;
(B) SECOND, all securities proposed to be registered by the
Company pursuant to the exercise by any person other than a Registering
Stockholder of a "demand" right requesting the registration of shares of Company
Common Stock pursuant to an agreement with the Company in existence as of the
date of this Agreement;
(C) THIRD, all securities proposed to be registered by the
Company other than for its own account pursuant to the exercise by any person
other than a Registering Stockholder of a "piggy-back" right requesting the
registration of shares of Company Common Stock pursuant to an agreement with the
Company in existence as of the date of this Agreement that expressly provides,
in effect, that no securities of the Company other than those referred to in the
preceding clauses (A) and (B) shall be included in such registration unless all
shares of Company Common Stock requested by such person to be included in such
registration are so included; and
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(D) FOURTH, any other securities proposed to be registered by
the Company other than for its own account, including, without limitation,
Transaction Registrable Shares duly requested to be included in the registration
and securities proposed to be registered by the Company pursuant to the exercise
by any person other than a Registering Stockholder of a "piggy-back" right
requesting the registration of shares of Company Common Stock pursuant to an
agreement with the Company, allocated pro rata among all Registering
Stockholders and such other persons on the basis of the relative number of
Transaction Registrable Shares or other securities that each Registering
Stockholder or other person has duly requested to be included in such
registration; PROVIDED that if 30% or more of the Transaction Registrable Shares
requested to be included in a registration pursuant to this Section 2 are so
excluded from any registration and an investment banking firm of recognized
national standing shall advise the Company that the number of the Transaction
Registrable Shares requested to be registered, at the time of the request and in
light of the market conditions then prevailing, did not exceed the number that
would have an adverse effect on the offering of such Transaction Registrable
Shares, including the price of which such Transaction Registrable Shares could
be sold, there shall be provided one additional registration under Section
1(c)(2) in respect of each such exclusion or series of related exclusions;
(3) before the Registration Statement becomes effective, any
Registering Stockholder may withdraw from the registration any Transaction
Registrable Shares owned by the Registering Stockholder; PROVIDED that, subject
to Section 2(b)(4), the withdrawal of Transaction Registrable Shares shall not
relieve the Company from its obligations under this Agreement with respect to
Transaction Registrable Shares that are not withdrawn from the Registration
Statement; and
(4) the Company may withdraw the Registration Statement at any
time before it becomes effective.
3. REGISTRATION PROVISIONS. With respect to each registration pursuant to
this Agreement:
(a) Notwithstanding anything herein to the contrary, the Company shall
not be required to include in any registration any of the Registrable Shares
owned by a Registering Stockholder if (1) the Company shall deliver to the
Registering Stockholder an opinion, satisfactory in form, scope and substance to
the Registering Stockholder and addressed to the Registering Stockholder by
legal counsel satisfactory to the Registering Stockholder, to the effect that
the distribution of such Registrable Shares proposed by the Registering
Stockholder is exempt from registration under the Securities Act and all
applicable state securities laws, (2) such Registering Stockholder or any
underwriter of such Registrable Shares shall fail to furnish to the Company the
information in respect of the distribution of such Registrable Shares that may
be required under this Agreement to be furnished by the Registering Stockholder
or the underwriter to the Company or (3) if such registration involves an
underwritten offering, such Registrable Shares are not included in such
underwritten offering on the same terms and conditions as shall be applicable to
the other securities being sold through underwriters in the registration or the
Registering Stockholder fails to enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwritten offering.
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(b) The Company shall make available for inspection by each Registering
Stockholder participating in the registration, each underwriter of Transaction
Registrable Shares owned by the Registering Stockholder and their respective
accountants, counsel and other representatives all financial and other records,
pertinent corporate documents and properties of the Company as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility in connection with each registration of Transaction Registrable
Shares owned by the Registering Stockholder, and shall cause the Company's
officers, directors and employees to supply all information reasonably requested
by any such person in connection with such registration; provided that records
and documents which the Company determines, in good faith, after consultation
with counsel for the Company and counsel for the Registering Stockholder or
underwriter, as the case may be, to be confidential and which it notifies such
persons are confidential shall not be disclosed to them, except in each case to
the extent that (1) the disclosure of such records or documents is necessary to
avoid or correct a misstatement or omission in the Registration Statement or (2)
the release of such records or documents is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction. Each Registering Stockholder
shall, upon learning that disclosure of any such records or documents is sought
in a court of competent jurisdiction, give notice to the Company, and allow the
Company, at the Company's expense, to undertake appropriate action and to
prevent disclosure of any such records or documents deemed confidential.
(c) Each Registering Stockholder shall furnish, and shall cause each
underwriter of Transaction Registrable Shares owned by the Registering
Stockholder to be distributed pursuant to the registration to furnish, to the
Company in writing promptly upon the request of the Company the information
regarding the Registering Stockholder or the underwriter, the contemplated
distribution of the Transaction Registrable Shares and the other information
regarding the proposed distribution by the Registering Stockholder and the
underwriter that shall be required in connection with the proposed distribution
by the applicable securities laws of the United States of America and the states
thereof in which the Transaction Registrable Shares are contemplated to be
distributed. The information furnished by any Registering Stockholder or any
underwriter shall be certified by the Registering Stockholder or the
underwriter, as the case may be, and shall be stated to be specifically for use
in connection with the registration.
(d) The Company shall use reasonable best efforts to prepare and file
with the Securities and Exchange Commission the Registration Statement,
including the Prospectus, and each amendment thereof or supplement thereto,
under the Securities Act and as required under any applicable state securities
laws, on the form that is then required or available for use by the Company to
permit each Registering Stockholder, upon the effective date of the Registration
Statement, to use the Prospectus in connection with the contemplated
distribution by the Registering Stockholder of the Transaction Registrable
Shares requested to be so registered. A registration pursuant to Section 1 shall
be effected pursuant to Rule 415 (or any similar provision then in force) under
the Securities Act if the manner of distribution contemplated by the Registering
Stockholder initiating the request for such registration shall include an
offering on a delayed or continuous basis. The Company shall furnish to each
Registering Stockholder drafts of the Registration Statement and the Prospectus
and each amendment thereof or supplement thereto for its timely review prior to
the filing thereof with the Securities and Exchange Commission, and shall use
its reasonable best efforts to reflect in each such document, when so filed with
the Securities and Exchange Commission, such comments as the Registering
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Stockholder reasonably may propose. If any Registration Statement refers to any
Registering Stockholder by name or otherwise as the holder of any securities of
the Company but such reference is not required by the Securities Act or any
similar federal statute then in force, then the Registering Stockholder shall
have the right to require, the deletion of such reference. The Company shall
deliver to each Registering Stockholder, without charge, such number of copies
of the Registration Statement and each amendment or post-effective amendment
thereof and such number of copies of each document incorporated therein by
reference, as the Registering Stockholder may reasonably may request. If the
registration shall have been initiated solely by the Company or shall not have
been initiated by a Registering Stockholder, the Company shall not be obligated
to prosecute the registration, and may withdraw the Registration Statement at
any time prior to the effectiveness thereof, if the Company shall determine in
good faith not to proceed with the offering of securities included in the
Registration Statement. In all other cases, the Company shall use reasonable
best efforts to cause the Registration Statement to become effective and, as
soon as practicable after the effectiveness thereof, shall deliver to each
Registering Stockholder evidence of the effectiveness and such number of copies
of the Prospectus, including any preliminary prospectus, and each amendment
thereof or supplement thereto, as the Registering Stockholder may reasonably
request. The Company consents to the use by each Registering Stockholder of each
Prospectus and each amendment thereof and supplement thereto in connection with
the distribution, in accordance with this Agreement, of the Transaction
Registrable Shares owned by the Registering Stockholder. In addition, the
Company shall qualify or register under the securities laws or blue sky laws of
such states as may be reasonably requested by each Registering Stockholder with
respect to the Transaction Registrable Shares of the Registering Stockholder
that shall have been included in the Registration Statement, and to continue
such registration or qualification in effect for so long as such registration
statement remains in effect; PROVIDED that the Company shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation in any state in which it is not subject to process or qualified as
of the date of the request. The Company shall advise the Stockholder and each
Registering Stockholder in writing, promptly after the occurrence of any of the
following, of (1) the filing of the Registration Statement or any Prospectus, or
any amendment thereof or supplement thereto, with the Securities and Exchange
Commission, (2) the effectiveness of the Registration Statement and any
post-effective amendment thereto, (3) the receipt by the Company of any
communication from the Securities Exchange Commission with respect to the
Registration Statement or the Prospectus, or any amendment thereof or supplement
thereto, including, without limitation, any stop order suspending the
effectiveness thereof, any comments with respect thereto and any requests for
amendments or supplements and (4) the receipt by the Company of any notification
with respect to the suspension of the qualification of Transaction Registrable
Shares owned by the Registering Stockholders for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
(e) The Company shall use reasonable best efforts to cause the
Registration Statement to remain effective under the Securities Act and the
Prospectus to remain current, including the filing of necessary amendments,
post-effective amendments and supplements, and shall furnish copies of such
amendments, post-effective amendments and supplements to the Registering
Stockholders, so as to permit the Registering Stockholders to distribute the
Transaction Registrable Shares owned by them in their respective manner of
distribution during their respective contemplated periods of distribution, but
in no event longer than the earlier of six
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consecutive months from the effective date of the Registration Statement and the
consummation of the distribution of the Transaction Registrable Shares included
in such registration; provided that the period shall be increased by the number
of days that any Registering Stockholder shall have been required by Section 4
to refrain from disposing under the registration any of the Transaction
Registrable Shares owned by the Registering Stockholder. During such respective
contemplated periods of distribution, the Company shall comply with the
provisions of the Securities Act applicable to it with respect to the
disposition of all Transaction Registrable Shares owned by the Registering
Stockholders that shall have been included in the Registration Statement in
accordance with their respective contemplated manner of disposition by the
Registering Stockholders set forth in the Registration Statement, the Prospectus
or the supplement, as the case may be.
(f) Any obligation of the Company under this Agreement, including any
obligation to use its reasonable best efforts or take such actions as are
reasonably required shall not preclude the Company from taking any action or
omitting to take any action (other than omitting to file necessary amendments,
post-effective amendments and supplements if a Suspension Notice or Termination
Notice is not then in effect pursuant to Section 4 or Section 5, respectively)
that would result in the Company issuing a Suspension Notice or Termination
Notice.
(g) The Company shall notify each Registering Stockholder, at any time
when a prospectus with respect to the Transaction Registrable Shares owned by
the Registering Stockholders is required to be delivered under the Securities
Act, when the Company becomes aware of the happening of any event as a result of
which the Prospectus (as then in effect) contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein (in the case of the Prospectus or any preliminary prospectus, in light
of the circumstances under which they were made) not misleading; and, as
promptly as practicable thereafter, but subject to Sections 4 and 5, the Company
shall use reasonable best efforts to prepare and file with the Securities and
Exchange Commission an amendment or supplement to the Registration Statement or
the Prospectus so that, as thereafter delivered to the purchasers of such
Transaction Registrable Shares, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The Company also shall notify each Registering
Stockholder, when the Company becomes aware of the occurrence thereof, of the
issuance by the Securities and Exchange Commission of an order suspending the
effectiveness of the Registration Statement; as promptly as practicable
thereafter, but subject to Sections 4 and 5, the Company shall use reasonable
best efforts to obtain the withdrawal of such order at the earliest possible
moment.
(h) If requested by any Registering Stockholder or an underwriter of
Transaction Registrable Shares owned by the Registering Stockholder, the Company
shall as promptly as practicable prepare and file with the Securities and
Exchange Commission an amendment or supplement to the Registration Statement or
the Prospectus containing such information as the Registering Stockholder or the
underwriter requests to be included therein, including, without limitation,
information with respect to the Transaction Registrable Shares being sold by the
Registering Stockholder to the underwriter, the purchase price being paid
therefor by such underwriter and other terms of the underwritten offering of the
Transaction Registrable Shares to be sold in such offering.
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(i) The Stockholder shall (1) offer to sell or otherwise distribute
Registrable Shares in reliance upon a registration contemplated pursuant to
Section 1 or 2 only (A) if the Stockholder is a Registering Stockholder and the
Registrable Shares are Transaction Registrable Shares and (B) after the related
Registration Statement shall have been filed with the Securities and Exchange
Commission, (2) sell or otherwise distribute Registrable Shares in reliance upon
such registration only (A) if the Stockholder is a Registering Stockholder and
the Registrable Shares are Transaction Registrable Shares and (B) the related
Registration Statement is then effective under the Securities Act, (3) not sell
or otherwise distribute Transaction Registrable Shares in reliance upon a
registration contemplated by Section 1 or 2 during any period specified in a
Suspension Notice delivered to the Registering Stockholder pursuant to Section 4
or after receiving a Termination Notice pursuant to Section 5 (until the
Registering Stockholder shall have received written notice from the Company
pursuant to Section 3(d) that the registration of such Transaction Registrable
Shares is again effective), (4) distribute Transaction Registrable Shares only
in accordance with the manner of distribution contemplated by the Prospectus
with respect to the Transaction Registrable Shares owned by the Registering
Stockholder and (5) report to the Company distributions made by the Registering
Stockholder of Transaction Registrable Shares pursuant to the Prospectus. Each
Registering Stockholder, by participating in a registration pursuant to this
Agreement, acknowledges that the remedies of the Company at law for failure by
the Registering Stockholder to comply with the undertaking contained in this
paragraph (i) would be inadequate and that the failure would not be adequately
compensable in damages and would cause irreparable harm to the Company, and
therefore agrees that undertakings made by the Registering Stockholder in this
paragraph (i) may be specifically enforced.
(j) If the registration involves an underwritten offering, each
Registering Stockholder shall cause the underwriter or underwriters selected for
such underwriting to enter into an underwriting agreement in customary form and
shall enter into such Underwriting Agreement with such underwriter or
underwriters.
(k) If the registration involves an underwritten offering, the Company
shall enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting and shall deliver to
each Registering Stockholder, its counsel and each underwriter of Transaction
Registrable Shares owned by the Registering Stockholders to be distributed
pursuant to such registration, the certificates, opinions of counsel and comfort
letters that are customarily delivered in connection with underwritten
offerings.
(l) Before sales of Transaction Registrable Shares under a Registration
Statement, the Company shall cooperate with each Registering Stockholder and
each underwriter of Transaction Registrable Shares owned by the Registering
Stockholder to facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legends) representing the Transaction Registrable
Shares to be sold under the Registration Statement and to enable such
Transaction Registrable Shares to be in such denominations and registered in
such names as the Registering Stockholder or the underwriter may request.
(m) The Company shall use reasonable best efforts to (1) comply with
all applicable rules and regulations of the Securities and Exchange Commission,
and (2) make available to its securityholders, as soon as reasonably
practicable, an earning statement covering the period of at
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least twelve months, but not more than eighteen months, beginning with the first
calendar month after the effective date of the Registration Statement, which
earning statement shall satisfy the provisions of Section 11(a) of the
Securities Act.
(n) The Company shall use reasonable best efforts to cause the
Transaction Registrable Shares to be listed on each national securities exchange
on which Company Common Stock shall then be listed, if any, and to be qualified
for inclusion in the NASDAQ/National Market, as the case may be, if Company
Common Stock is then so qualified, and in each case if the listing or inclusion
of the Transaction Registrable Shares is then permitted under the rules of such
national securities exchange or the NASD, as the case may be.
(o) For the purposes of this Agreement, the following terms shall have
the following meanings:
(1) "BENEFICIAL OWNER" has the meaning given to it in Section
13(d)(3) of the Exchange Act and the rules and regulations promulgated
thereunder;
(2) "BUSINESS DAY" means any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of the State of Colorado or is a
day on which banking institutions located in such state are authorized or
required by law or other governmental action to close;
(3) "EQUITY SECURITIES" of a person means the capital stock of
the person and all other securities convertible into or exchangeable or
exercisable for any shares of its capital stock, all rights or warrants to
subscribe for or to purchase, all options for the purchase of, and all calls,
commitments or claims of any character relating to, any shares of its capital
stock and any securities convertible into or exchangeable or exercisable for any
of the foregoing;
(4) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended;
(5) "PROSPECTUS" means (A) the prospectus relating to the
Transaction Registrable Shares owned by the Registering Stockholders included in
a Registration Statement, (B) if a prospectus relating to the Transaction
Registrable Shares shall be filed with the Securities and Exchange Commission
pursuant to Rule 424 (or any similar provision then in force) under the
Securities Act, such prospectus, and (C) in the event of any amendment or
supplement to the prospectus after the effective date of the Registration
Statement, then from and after the effectiveness of the amendment or the filing
with the Securities and Exchange Commission of the supplement, the prospectus as
so amended or supplemented;
(6) "REGISTRATION STATEMENT" means (A) a registration statement
filed by the Company in accordance with Section 3(d), including exhibits and
financial statements thereto, in the form in which it shall become effective,
the documents incorporated by reference therein pursuant to Item 12 of Form S-3
(or any similar provision or forms then in force) under the Securities Act and
information deemed to be a part of such registration statement pursuant to
paragraph (B) of Rule 430A (or any similar provision then in force) and (B) in
the event of any amendment thereto after the effective date of the registration
statement, then from and after the effectiveness of the amendment, the
registration statement as so amended; and
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(7) information "CONTAINED", "INCLUDED" or "STATED" in a
Registration Statement or a Prospectus (or other references of like import)
includes information incorporated by reference.
4. BLACKOUT PROVISIONS.
(a) Notwithstanding anything in this Agreement to the contrary, by
delivery of written notice to any of the Registering Stockholders and the other
holders of Registrable Shares (a "SUSPENSION NOTICE"), stating which one or more
of the following limitations shall apply to the addressee of such Suspension
Notice, the Company may (1) postpone effecting a registration under this
Agreement, or (2) require such addressee to refrain from disposing of
Transaction Registrable Shares under the registration, in either case for a
reasonable time specified in the notice but not exceeding 90 days in any one
year period (which period may not be extended or renewed).
(b) The Company may postpone effecting a registration or apply to any
person specified in clause (2) of Section 4(a) any of the limitations on
dispositions specified in such clause if (1) the Company in good faith
determines that such registration or disposition would materially impede, delay
or interfere with any material financing, offer or sale of Equity Securities or
debt securities of the Company, acquisition, disposition or other material
transaction by the Company or any of its material subsidiaries, (2) an
investment banking firm of recognized national standing shall advise the Company
in writing that effecting the registration or the disposition by such person of
Registrable Shares or other Equity Securities of the Company, as the case may
be, would materially and adversely affect an offering of Equity Securities of
the Company, by the Company for its own account the preparation of which had
then been commenced, or (3) the Company in good faith determines that the
Company is in possession of material non-public information the disclosure of
which during the period specified in such notice the Company reasonably believes
would not be in the best interests of the Company; provided that the Company may
not take any action pursuant to this Section 4(b) for a period of time in excess
of 90 days in any one year period.
(c) If the Company shall take any action pursuant to Section 4(a) with
respect to a Registering Stockholder or other holder of Registrable Shares in
connection with a registration, then (1) not later than 30 days after the action
is taken, Registering Stockholders holding a majority of the Transaction
Registrable Shares may by written notice to the Company elect to withdraw a
registration that shall have been requested pursuant to Section 1 or (2) if the
registration shall not have been withdrawn pursuant to the preceding clause (1),
the period during which the Registering Stockholder may exercise its rights
under Sections 1 and 2 shall be extended by one day beyond the Termination Date
for each day that, pursuant to Section 4(a), the Company postpones effecting a
registration, requires the Registering Stockholder or other holder to refrain
from disposing of Transaction Registrable Shares under a registration or
otherwise requires the Registering Stockholder or other holder to refrain from
disposing of Registrable Shares.
(d) If the Company shall take any action pursuant to clause 2 of
Section 4(a) with respect to any Registering Stockholder or other holder of
Registrable Shares in a period during which the Company shall be required under
Section 3(e) to cause the Registration Statement to
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remain effective under the Securities Act and the Prospectus to remain current,
such period shall be extended for such person by one day beyond the end of such
period for each day that, pursuant to Section 4(a), the Company shall require
such person to refrain from disposing of Transaction Registrable Shares owned by
such person.
5. TERMINATION PROVISIONS.
(a) Notwithstanding anything in this Agreement to the contrary, if, in
the opinion of counsel for the Company (which counsel shall be reasonably
acceptable to the Registering Stockholder; PROVIDED, HOWEVER, that any of
O'Melveny & Myers LLP and Holme Roberts & Owen LLP shall be deemed reasonably
acceptable to the Registering Stockholder for purposes of this Section 5(a)),
there shall have arisen any legal impediment to the offering of Transaction
Registrable Shares pursuant to this Agreement or if any legal action or
administrative proceeding shall have been instituted or threatened or any other
claim shall have been made relating to the registration or the offer made by the
related prospectus or against any of the parties involved in the offering, the
Company may at any time upon written notice (a "TERMINATION NOTICE") to each
Registering Stockholder participating in the registration (1) terminate the
effectiveness of the related Registration Statement or (2) withdraw from the
Registration Statement the Transaction Registrable Shares owned by the
Registering Stockholder; provided that, promptly after those matters shall be
resolved to the satisfaction of counsel for the Company, then the Company shall
notify each affected Registering Stockholder in writing that such matters have
been resolved and, pursuant to Section 1 or 2, as the case may be, shall, upon
the written direction of such affected Registering Stockholder and subject to
the limitations in Section 1(b) or elsewhere herein, cause the registration of
Transaction Registrable Shares formerly covered by the Registration Statement
that were removed from registration by the action of the Company.
(b) If the Company shall take any action pursuant to Section 5(a) with
respect to a Registering Stockholder or other holder of Registrable Shares, then
the period during which the Registering Stockholder may exercise its rights
under Sections 1 and 2 shall be extended by one day beyond the Termination Date
for a number of days equal to (1) the number of days during which the Company
shall be required under Section 3(e) to cause the Registration Statement to
remain effective under the Securities Act and the Prospectus to remain current
minus (2) the number of days during which the Registration Statement was
effective before the date of the action taken pursuant to Section 5(a).
6. EXPENSES.
(a) The Company shall pay all expenses (other than underwriting
discounts and commissions in respect of the Transaction Registrable Shares)
incurred in connection with the performance of its obligations under Sections 1
and 2 hereof), whether or not any related Registration Statement shall become
effective, including, without limitation:
(1) preparing, printing and filing each Registration Statement
and Prospectus and each qualification or notice required to be filed under
federal and state securities laws or the rules and regulations of the National
Association of Securities Dealers, Inc. (the "NASD") in connection with a
registration pursuant to Section 1 or 2;
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(2) all fees and expenses of complying with federal and state
securities laws and the rules and regulations of the NASD;
(3) furnishing to each Registering Stockholder such number of
copies of the related Registration Statement and the number of copies of the
related Prospectus that may be required by Sections 3(d) and 3(e) to be so
furnished, together with a like number of copies of each amendment,
post-effective amendment or supplement;
(4) performing its obligations under Sections 3(d), 3(e) and
3(k);
(5) printing and issuing share certificates, including the
transfer agent's and registrar's fees, in connection with each distribution so
registered;
(6) preparing audited financial statements required by the
Securities Act and the rules and regulations thereunder to be included in the
Registration Statement and preparing audited financial statements for use in
connection with the registration other than audited financial statements
required by the Securities Act and the rules and regulations thereunder,
including fees and expenses of the Company's outside independent accountants
(including any fees and expenses in connection with any comfort letters and any
special audits incident to or required by any registration or qualification);
(7) internal expenses of the Company (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties);
(8) premiums or other expenses relating to liability insurance
required by the Company or underwriters of the Registering Stockholders;
(9) fees and disbursements of underwriters of the Registering
Stockholders customarily paid by issuers or sellers of securities;
(10) listing of the Registrable Shares on national securities
exchanges and inclusion of the Registrable Shares on the NASDAQ/National Market;
and
(11) fees and expenses of any special experts retained by the
Company in connection with the registration, including fees and disbursements of
the Company's outside counsel.
(b) The Registering Stockholders shall bear all other expenses incident
to the distribution by the respective Registering Stockholders of the
Transaction Registrable Shares owned by them in connection with a registration
pursuant to this Agreement, including, without limitation (but excluding the
expenses referred to in paragraph (a)(8) above), the selling expenses of the
Registering Stockholders, commissions, underwriting discounts, insurance and
fees of counsel for the Registering Stockholders.
7. INDEMNIFICATION.
(a) The Company shall indemnify and hold harmless each Registering
Stockholder participating in a registration pursuant to this Agreement, each
underwriter of Transaction
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Registrable Shares owned by the Registering Stockholder to be distributed
pursuant to the registration, each partner in the Registering Stockholder, the
officers and directors of the Registering Stockholder and the underwriter and
each person, if any, who controls the Registering Stockholder, any partner in
the Registering Stockholder or the underwriter within the meaning of Section 15
(or any successor provision) of the Securities Act, and their respective
successors, against all claims, losses, damages and liabilities to third parties
(or actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in the Registration
Statement or the Prospectus or other document incident thereto or any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and shall
reimburse each such Registering Stockholder and each other person indemnified
pursuant to this Section 7(a) for any legal and any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action; provided that the Company shall not be liable in
any case to the extent that any such claim, loss, damage or liability arises out
of or is based on any untrue statement or omission based upon written
information furnished to the Company by the Registering Stockholder or the
underwriter of such Transaction Registrable Shares specifically for use in the
Registration Statement or the Prospectus.
(b) Each Registering Stockholder, by participating in a registration
pursuant to this Agreement, thereby agrees to indemnify and to hold harmless the
Company and its officers and directors and each person, if any, who controls any
of them within the meaning of Section 15 (or any successor provision) of the
Securities Act, and their respective successors, against all claims, losses,
damages and liabilities to third parties (or actions in respect thereof) arising
out of or based upon any untrue statement (or alleged untrue statement) of a
material fact contained in the Registration Statement or the Prospectus or other
document incident thereto or any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and shall reimburse the Company and each
other person indemnified pursuant to this Section 7(b) for any legal and any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action; provided that (x) this
Section 7(b) shall apply only if (and only to the extent that) the statement or
omission was made in reliance upon and in conformity with information furnished
to the Company in writing by the Registering Stockholder specifically for use in
the Registration Statement or the Prospectus and (y) in no event shall the
liability of a Registering Stockholder under this Section 7 exceed the amount of
the gross proceeds paid to the Registering Stockholder in consideration of the
sale of Transaction Registrable Shares pursuant to such registration.
(c) If any action or proceeding (including any governmental
investigation or inquiry) shall be brought, asserted or threatened against any
person indemnified under this Section 7, the indemnified person shall promptly
notify the indemnifying party in writing, and the indemnifying party shall
assume the defense of the action or proceeding, including the employment of
counsel satisfactory to the indemnified person and the payment of all expenses.
The indemnified person shall have the right to employ separate counsel in any
action or proceeding and to participate in the defense of the action or
proceeding, but the fees and expenses of that counsel shall be at the expense of
the indemnified person unless:
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(1) the indemnifying party shall have agreed to pay those fees
and expenses; or
(2) the indemnifying party shall have failed to assume the
defense of the action or proceeding or shall have failed to employ counsel
reasonably satisfactory to the indemnified person in the action or proceeding;
or
(3) the named parties to the action or proceeding (including any
impleaded parties) include both the indemnified person and the indemnifying
party, and the indemnified person shall have been advised by counsel that there
may be one or more legal defenses available to the indemnified person that are
different from or additional to those available to the indemnifying party (in
which case, if the indemnified person notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such action or proceeding on behalf of the indemnified person;
it being understood, however, that the indemnifying party shall not, in
connection with any one action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys at any time for
the indemnified person, which firm shall be designated in writing by the
indemnified person).
The indemnifying party shall not be liable for any settlement of any action or
proceeding effected without its written consent, but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such action or
proceeding, the indemnifying party shall indemnify and hold harmless the
indemnified person from and against any loss or liability by reason of the
settlement or judgment.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified person (other than by reason of exceptions
provided in this Section 7) in respect of losses, claims, damages, liabilities
or expenses referred to in this Section 7, then each applicable indemnifying
party, in lieu of indemnifying the indemnified person, shall contribute to the
amount paid or payable by the indemnified person as a result of the losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified person on the other in connection with the statements or omissions
which resulted in the losses, claims, damages, liabilities or expenses as well
as any other relevant equitable considerations. The relative fault of the
indemnifying party on the one hand and of the indemnified person on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the indemnifying
party or by the indemnified person and by these persons' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The parties agree that it would not be just and equitable
if contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding sentence.
The amount paid or payable by a person as a result of the losses, claims,
damages, liabilities and expenses shall be deemed to include any legal or other
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fees or expenses reasonably incurred by the person in connection with
investigating or defending any action or claim. Notwithstanding in the foregoing
to the contrary, no Registering Stockholder or underwriter of Transaction
Registrable Shares owned by the Registering Stockholder shall be required to
contribute any amount in excess of the amount by which (1) in the case of the
Registering Stockholder, the gross proceeds paid to the Registering Stockholder
in consideration of the sale pursuant to the registration of Transaction
Registrable Shares owned by it or (2) in the case of the underwriter, the total
price at which such Transaction Registrable Shares purchased by it and
distributed to the public were offered to the public exceeds, in any such case,
the amount of any damages that the Registering Stockholder or underwriter, as
the case may be, has otherwise been required to pay by reason of any untrue or
alleged untrue statement or omission. No person guilty of fraudulent
representation (within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation.
(e) Each Registering Stockholder participating in a registration
pursuant to Section 1 shall cause each underwriter of any Transaction
Registrable Shares owned by the Registering Stockholder to be distributed
pursuant to the registration to agree in writing on terms reasonably
satisfactory to the Company to indemnify and to hold harmless the Company and
its officers and directors and each person, if any, who controls any of them
within the meaning of Section 15 (or any similar provision then in force) of the
Securities Act, and their respective successors, against all claims, losses,
damages and liabilities to third parties (or actions in respect thereof) arising
out of or based upon any untrue statement (or alleged untrue statement) of a
material fact contained in the Registration Statement or the Prospectus or other
document incident thereto or any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and to reimburse the Company and each other
person indemnified pursuant to the agreement for any legal or any other expense
reasonably incurred in connection with investigating or defending any claim,
loss, damage, liability or action; provided that the agreement shall apply only
if (and only to the extent that) the statement or omission was made in reliance
upon and in conformity with information furnished to the Company in writing by
the underwriter specifically for use in the Registration Statement or the
Prospectus.
8. TRANSFER RESTRICTIONS. The Stockholder agrees that before any sale or
other disposition of any Registrable Shares other than in a sale registered
under the Securities Act or pursuant to Rule 144 (or any similar provisions then
in force) under the Securities Act (unless the Company shall have been advised
by counsel that the sale does not meet the requirements of Rule 144, as the case
may be, for such sale), it will deliver to the Company an opinion of counsel, in
form and substance reasonably satisfactory to the Company, to the effect that
such registration is unnecessary.
9. EXEMPT SALES.
(a) The Company shall make all filings with the Securities and Exchange
Commission required by Rule 144(c) (or any similar provision then in force)
under the Securities Act to permit the sale of Registrable Shares by any holder
thereof (other than an Affiliate of the Company) to satisfy the conditions of
Rule 144 (or any similar provision then in force). The Company shall, promptly
upon the written request of the holder of Registrable Shares, deliver to
16
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such holder a written statement as to whether the Company has complied with all
such filing requirements.
(b) Before sales of Registrable Shares proposed to be sold pursuant to
an exemption from the registration requirements of the Securities Act, the
Company shall, subject to Section 8(c), cooperate with the holder of such
Registrable Shares, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing such Registrable
Shares, in connection with the closing of the sales and to enable such
Registrable Shares, to be in such denominations and registered in such names as
the holder may request.
10. MERGER, CONSOLIDATION, EXCHANGE, ETC. In the event, directly or
indirectly, (1) the Company shall merge with and into, or consolidate with, any
other person or (2) any person shall merge with and into, or consolidate, the
Company and the Company shall be the surviving corporation of such merger or
consolidation and, in connection with such merger or consolidation, all or part
of the Registrable Shares shall be changed into or exchanged for stock or other
securities of any other person, then, in each such case, proper provision shall
be made so that such other person shall be bound by the provisions of this
Agreement and the term the "Company" shall thereafter be deemed to refer to such
other person.
11. NOTICES. All notices, requests and other communications to any party
under this Agreement shall be in writing. Communications may be made by telecopy
or similar writing. Each communication shall be given to the party at its
address set forth below or at any other address as the party may specify for
this purpose by notice to the other party. Each communication shall be effective
(1) if given by telecopy, when the telecopy is transmitted to the proper address
and the receipt of the transmission is confirmed, (2) if given by mail, 72 hours
after the communication is deposited in the mails properly addressed with first
class postage prepaid or (3) if given by any other means, when delivered to the
proper address and a written acknowledgement of delivery is received.
(a) If to the Company, to:
Qwest Communications International Inc.
700 Qwest Tower
555 Seventeenth Street
Denver, Colorado 80202
Facsimile Number: (303) 992-1798
Attention: Chief Financial Officer
with a copy addressed as set forth above but to the attention
of General Counsel, Facsimile Number: (303) 992-1044
and with an additional copy to:
Steven L. Grossman
O'Melveny & Myers LLP
1999 Avenue of the Stars, Suite 700
Los Angeles, California 90067
Facsimile Number: (310) 246-6779
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(b) If to the Stockholder, to:
BellSouth Enterprises, Inc.
1155 Peachtree Street, N.E.
Suite 2000
Atlanta, Georgia 30309-3610
Facsimile Number: (404) 249-2658
Attention: Keith O. Cowan
and with additional copies to:
E. John Whelchel
BellSouth Corporation
1155 Peachtree Street, N.E.
Atlanta, Georgia 30309-3610
Facsimile Number: (404) 249-2629
Gail L. Weinstein
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Facsimile Number: (212) 859-4000
12. NO WAIVERS; REMEDIES. No failure or delay by any party in exercising
any right, power or privilege under this Agreement shall operate as a waiver of
the right, power or privilege. A single or partial exercise of any right, power
or privilege shall not preclude any other or further exercise of the right,
power or privilege or the exercise of any other right, power or privilege. The
rights and remedies provided in this Agreement shall be cumulative and not
exclusive of any rights or remedies provided by law.
13. AMENDMENTS, ETC. No amendment, modification, termination or waiver of
any provision of this Agreement, and no consent to any departure by a party to
this Agreement from any provision of this Agreement, shall be effective unless
it shall be in writing and signed and delivered by the other party to this
Agreement, and then it shall be effective only in the specific instance and for
the specific purpose for which it is given.
14. SUCCESSORS AND ASSIGNS.
(a) Each holder of Registrable Shares may assign to any permitted
transferee of Registrable Shares, its rights and delegate to the transferee its
obligations under this Agreement including, without limitation, the rights of
assignment pursuant to this Section 14; PROVIDED that (1) any assignment of
rights under Section 1 of one or more demand registration right must indicate in
writing the number of demand rights so assigned and the Company must receive
notice of such assignment and (2) such transferee shall accept such rights and
assume such obligations for the benefit of the Company by written instrument, in
form and substance reasonably satisfactory to the Company. Thereafter, without
any further action by any person, all references in this Agreement to the holder
of such Registrable Shares, and all comparable references, shall be deemed to be
references to the transferee, and the transferor shall be released
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from each obligation or liability under this Agreement with respect to the
Registrable Shares so transferred.
(b) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties to this Agreement, the express beneficiaries thereof
and their respective permitted heirs, executors, legal representatives,
successors and assigns, and no other person.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without regard to
principles of conflicts of law.
16. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
all signatures were on the same instrument.
17. SEVERABILITY OF PROVISIONS. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of the prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of the provision in any other jurisdiction.
18. HEADINGS AND REFERENCES. Section headings in this Agreement are
included for the convenience of reference only and do not constitute a part of
this Agreement for any other purpose. References to parties, express
beneficiaries and sections in this Agreement are references to the parties to or
the express beneficiaries and sections of this Agreement, as the case may be,
unless the context shall require otherwise.
19. ENTIRE AGREEMENT. This Agreement and the Common Stock Purchase
Agreements embody the entire agreement and understanding of the parties and
supersedes all prior agreements or understandings with respect to the subject
matters thereof.
20. SURVIVAL. Except as otherwise specifically provided in this Agreement,
each representation, warranty or covenant of each party contained in to this
Agreement shall remain in full force and effect, notwithstanding any
investigation or notice to the contrary or any waiver by the other party of a
related condition precedent to the performance by such other party of an
obligation under this Agreement.
21. EXCLUSIVE JURISDICTION. Each party (1) agrees that any action,
complaint, counterclaim, investigation, petition, suit or other proceeding,
whether civil or criminal, in law or in equity, or before any arbitrator, court
or governmental authority (each, an "ACTION"), with respect to this Agreement or
any transaction contemplated by this Agreement shall be brought exclusively in
the courts of the State of New York or of the United States of America for the
Southern District of New York, in each case sitting in the Borough of Manhattan,
State of New York, (2) accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of those courts and (3)
irrevocably waives any objection, including, without limitation, any objection
to the laying of venue or based on the grounds of FORUM NON CONVENIENS, which it
may now or hereafter have to the bringing of any legal action in those
jurisdictions; PROVIDED, HOWEVER, that any party may assert in an Action in any
other jurisdiction or venue each mandatory defense, third-party claim or similar
claim that, if not so asserted in such Action, may thereafter not be asserted by
such party in an original Action in the courts referred to in clause (1) above.
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<PAGE>
22. WAIVER OF JURY TRIAL. Each party waives any right to a trial by jury in
any Action to enforce or defend any right under this Agreement or any amendment,
instrument, document or agreement delivered, or which in the future may be
delivered, in connection with this Agreement and agrees that any Action shall be
tried before a court and not before a jury.
23. AFFILIATE. Nothing contained in this Agreement shall constitute
Stockholder or any Registering Stockholder an "affiliate" of any of the Company
and its Subsidiaries within the meanings of the Securities Act or the Exchange
Act, respectively, including, without limitation, Rule 501 under the Securities
Act and Rule 13e-3 under the Exchange Act.
24. NON-RECOURSE. No recourse under this Agreement shall be had against any
"controlling person" (within the meaning of Section 20 of the Exchange Act) of
any party or the stockholders, directors, officers, employees, agents and
Affiliates of such party or such controlling persons, whether by the enforcement
of any assessment or by any legal or equitable proceeding, or by virtue of any
Regulation, it being expressly agreed and acknowledged that no personal
liability whatsoever shall attach to, be imposed on or otherwise be incurred by
such controlling person, stockholder, director, officer, employee, agent or
Affiliate, as such, for any obligations of such party under this Agreement or
for any claim based on, in respect of or by reason of such obligations or their
creation; provided, however, that nothing contained in this Section 24 shall be
deemed to be a waiver by the Company or any such controlling person,
stockholder, director, officer, employee, agent or affiliate of the Company of
their respective liabilities under applicable federal or state securities laws,
rules or regulations.
25. NO INCONSISTENT AGREEMENTS.
(a) The Company shall not enter into, or amend or otherwise modify, any
agreement to afford to any person other than the Stockholder and the holders of
Registrable Shares rights with respect to the registration under the Securities
Act of shares of Company Common Stock or other securities or the inclusion of
any such shares or other securities in any registration that are inconsistent
with, or conflict with, the rights of the Stockholders and the holders of
Registrable Shares under this Agreement, including, without limitation, Sections
1 and 2.
(b) Without derogating from the generality of Section 25(a), after the
date of this Agreement, the Company shall not enter into, or amend or otherwise
modify, any agreement to afford to any person other than the Stockholder and the
holders of Registrable Shares the right to require the Company to include in any
registration pursuant to Section 1 any securities of the Company pursuant to the
exercise of any "piggy-back" right under an agreement with the Company not in
existence as of the date of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective authorized officers as of the date first written
above.
BELLSOUTH ENTERPRISES, INC.
By: /s/ Keith O. Cowan
----------------------------------
Name: Keith O. Cowan
----------------------------------
Title: Authorized Signatory
---------------------------------
QWESTCOMMUNICATIONS
INTERNATIONAL INC.
By: /s/ Drake S. Tempest
----------------------------------
Name: Drake S. Tempest
Title: Executive Vice President
and General Counsel
EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of April 18, 1999 among QWEST
COMMUNICATIONS INTERNATIONAL INC., a Delaware corporation (the "COMPANY"),
ANSCHUTZ COMPANY, a Delaware corporation ("ANSCHUTZ"), ANSCHUTZ FAMILY
INVESTMENT COMPANY LLC, a Colorado limited liability company ("AFIC"). Anschutz,
AFIC and their respective successors and assigns, are collectively referred to
as the "STOCKHOLDERS."
RECITALS
A. As of the date of this Agreement, Anschutz owns beneficially and of
record approximately 160,000,000 shares of Common Stock, par value $.001 per
share (the "COMPANY COMMON STOCK"), of the Company and AFIC owns beneficially
and of record a warrant (the "WARRANT") to acquire 8,600,000 shares of Company
Common Stock. All shares of Company Common Stock owned beneficially or of record
by the Stockholders from time to time are collectively referred to as the
"REGISTRABLE SHARES."
B. Each of the Company and the Stockholders desire to enter into this
Agreement to provide for, among other things, the registration under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), of the disposition of
the Registrable Shares.
C. The Company may in the future enter into agreements similar to this
Agreement with one or more persons approved in writing by the Stockholders
(collectively, the "OTHER AGREEMENTS") to provide for, among other things, the
registration under the Securities Act of the disposition of shares of Company
Common Stock owned by such other persons. All such shares of Company Common
Stock are collectively referred to as "OTHER REGISTRABLE SHARES."
AGREEMENT
The parties agree as follows:
SECTION 1. DEMAND REGISTRATION RIGHTS.
(a) From and after the date of this Agreement and to and including the
date that is the 10th anniversary of the date of this Agreement, subject to
extension pursuant to Section 4 (as so extended from time to time, the
"TERMINATION DATE"), on one or more occasions when the Company shall have
received the written request of a Stockholder or holders of at least 2,500,000
Registrable Shares in the aggregate (as such number of shares may be adjusted in
the event of any change in the capital stock of the Company by reason of stock
dividends, split-ups, reverse split-ups, mergers, recapitalizations,
subdivisions, conversions, exchanges of shares or the like) that have been
acquired directly or indirectly from Stockholder and to which rights under this
Section 1 shall have been assigned pursuant to Section 14(a) (each such person,
when requesting registration under this Section 1 or under Section 2 and
thereafter in connection with any such registration, being hereinafter referred
to as a "REGISTERING STOCKHOLDER"), the Company shall give written notice of the
receipt of such request to each
<PAGE>
potential Registering Stockholder, each person known by the Company to have
rights under Other Agreements with respect to the registration of the
disposition of shares of Company Common Stock (each such person, when requesting
registration under this Section 1 or Section 2, or similar provisions in the
Other Agreements, and thereafter in connection with any such registration, being
hereafter referred to as an "OTHER REGISTERING STOCKHOLDER") and each other
person known by the Company to have rights with respect to the registration
under the Securities Act of the disposition of securities of the Company. The
Company shall use reasonable best efforts as promptly as practicable to include
in a Registration Statement the Registrable Shares owned by the Registering
Stockholders and the Other Registrable Shares owned by the Other Registering
Stockholders (all such Registrable Shares and Other Registrable Shares,
collectively, "TRANSACTION REGISTRABLE SHARES") that in each case shall have
been duly specified by such Registering Stockholders and Other Registering
Stockholders by written notice received by the Company not later than 20
Business Days after the Company shall have given written notice to the
Registering Stockholders and the Other Registering Stockholders pursuant to this
Section 1(a).
(b) If the Registering Stockholders initiating a request for
registration of Registrable Shares pursuant to Section 1(a) shall state in such
written notice that they intend to distribute the Transaction Registrable Shares
covered by their request by means of an underwritten offering, the Company shall
include such information in the written notice delivered by the Company pursuant
to Section 1(a). If, on the one hand, at the time the Registering Stockholders
deliver such written notice to the Company, the Registering Stockholders are the
Beneficial Owners of 20% or more of the shares of the Company Common Stock, then
the Registering Stockholders shall select the managing underwriter of the
offering and any additional investment bankers and managers to be used in
connection with the offering, in each case with the consent of the Company,
which consent shall not be unreasonably withheld, conditioned or delayed. If, on
the other hand, at the time the Registering Stockholders deliver such written
notice to the Company, the Registering Stockholders are the Beneficial Owners of
less than 20% of the shares of the Company Common Stock, then the Company shall
select the managing underwriter for the offering and any additional investment
bankers and managers to be used in connection with the offering, in each case
with the consent of the Registering Stockholders and Other Registering
Stockholders holding a majority of the Transaction Registrable Shares, which
consent shall not be unreasonably withheld, conditioned or delayed.
(c) Notwithstanding anything herein to the contrary:
(1) The Company shall not be required to prepare and file pursuant
to this Section 1, and the Company shall be entitled not to file and,
if filed, to withdraw a Registration Statement including less than
2,500,000 Transaction Registrable Shares in the aggregate (as such
number of shares may be adjusted in the event of any change in the
capital stock of the Company by reason of stock dividends, split-ups,
reverse split-ups, mergers, recapitalizations, subdivisions,
conversions, exchanges of shares or the like);
(2) subject to the following clause (3) and Section 2(b), the
Company shall not be required to prepare and file pursuant to this
Section 1 more than eight
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(8) Registration Statements in the aggregate; provided that a
Registration Statement shall be deemed not to have been prepared and
filed if (A) the Registration Statement (i) is -------- withdrawn by
Registering Stockholders pursuant to Section 4(c) or (ii) does not
become effective for any other reason except (x) the withdrawal
therefrom of 30% or more of the Transaction Registrable Shares
requested to be included in such registration statement or the
determination by Registering Stockholders and Other Registering
Stockholders owning 30% or more of such Transaction Registrable Shares
not to proceed with the contemplated distribution of such Transaction
Registrable Shares or (y) the withdrawal of the Registration Statement
by the Company pursuant to Section 1(c)(1), (B) the Company fails to
use reasonable best efforts to cause the Registration Statement to
remain effective under the Securities Act and the Prospectus to remain
current during the entire period referred to in Section 3(e), as the
same may be extended pursuant to Section 4(d), or (C) the Company
withdraws the Registration Statement pursuant to Section 5 before the
Registering Stockholders have sold all the Transaction Registrable
Shares owned by them in accordance with the manner of distribution
contemplated by the Registration Statement with respect to such
Transaction Registrable Shares;
(3) the Company shall not be required to prepare and file a
Registration Statement pursuant to this Section 1 during the period
from the date of filing of a registration statement of the Company
involving an underwritten offering of any Equity Securities of the
Company to the date that is the earlier of (A) the date of the
withdrawal of the registration statement or the request to file the
registration statement by the security holder requesting the
registration and (B) the date that is 90 days following the effective
date of the registration statement;
(4) if a requested registration pursuant to this Section 1 shall
involve an underwritten offering, and if the managing underwriter shall
advise the Company, the Registering Stockholders and the Other
Registering Stockholders in writing that, in its opinion, the number of
Transaction Registrable Shares proposed to be included in the
registration is so great as to adversely affect the offering, including
the price at which the Transaction Registrable Shares could be sold,
the Company shall include in the registration the maximum number of
securities which it is so advised can be sold without the adverse
effect, allocated as follows:
(A) first, all Transaction Registrable Shares duly requested
to be included in the registration, allocated pro rata among all
Registering Stockholders and Other Registering Stockholders on
the basis of the relative number of Transaction Registrable
Shares that each Registering Stockholder or Other Registering
Stockholder shall have duly requested to be included in the
registration or such other basis as the Registering Stockholders
and the Other Registering Stockholders shall agree; and
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(B) second, any other securities proposed to be registered
by the Company other than for its own account, including, without
limitation, securities proposed to be registered by the Company
pursuant to the exercise by any person other than a Registering
Stockholder or an Other Registering Stockholder of a "piggy-back"
right requesting the registration of shares of Common Stock
pursuant to an agreement with the Company in existence as of the
date of this Agreement that expressly provides, in effect, that
the Company is required to include such shares of Common Stock in
the Registration Statement;
provided that if 30% or more of the Transaction Registrable
Shares requested to be included in a registration pursuant to
this Section 1 are so excluded from any registration and an
investment banking firm of recognized national standing shall
advise the Company that the number of the Transaction Registrable
Shares requested to be registered, at the time of the request and
in light of the market conditions then prevailing, did not exceed
the number that would have an adverse effect on the offering of
such Transaction Registrable Shares, including the price of which
such Transaction Registrable Shares could be sold, there shall be
provided one additional registration under the preceding clause
(2) in respect of each such exclusion or series of related
exclusions; and
(5) before the Registration Statement becomes effective, any
Registering Stockholder may withdraw from the registration any
Transaction Registrable Shares owned by the Registering Stockholder;
provided that, subject to Section 1(c)(1), withdrawal of Transaction
Registrable Shares shall not relieve the Company from its obligations
under this Agreement with respect to Transaction Registrable Shares
that are not withdrawn from the Registration Statement;
SECTION 2. PIGGY-BACK REGISTRATION RIGHTS.
(a) From and after the date of this Agreement to and including the date
that is the 10th anniversary of the date of this Agreement, if the Company shall
determine to register or qualify by a registration statement filed under the
Securities Act and under any applicable state securities laws, any offering of
any Equity Securities of the Company, other than an offering with respect to
which a Registering Stockholder shall have requested a registration pursuant to
Section 1, the Company shall give notice of such determination to each potential
Registering Stockholder, each potential Other Registering Stockholder and each
other person known by the Company to have rights with respect to the
registration under the Securities Act of the disposition of securities of the
Company. The Company shall use reasonable best efforts as promptly as
practicable to include in a Registration Statement the Transaction Registrable
Shares that in each case shall have been duly specified by such Registering
Stockholders and Other Registering Stockholders by written notice received by
the Company not later than 20 Business Days after the Company shall have given
written notice to the Registering Stockholders and the Other Registering
Stockholders pursuant to this Section 2(a).
(b) Notwithstanding anything herein to the contrary:
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(1) the Company shall not be required by this Section 2 to
include any Registrable Shares or Other Registrable Shares in (A) a
registration statement on Form S-4 or S-8 (or any successor form), (B)
a registration statement filed in connection with an exchange offer or
other offering of securities solely to the then existing stockholders
of the Company or (C) a registration statement required pursuant to the
exercise by any person other than a Registering Stockholder or an Other
Registering Stockholder of a "demand" right requesting the registration
of shares of Company Common Stock pursuant to an agreement with the
Company in existence as of the date of this Agreement that expressly
provides, in effect, that the Company may not include any Registrable
Shares in the registration statement;
(2) if a registration pursuant to this Section 2 involves an
underwritten offering, the Company shall select the managing
underwriter for the offering and any additional investment bankers and
managers to be used in connection with the offering, and if the
managing underwriter advises the Company in writing that, in its
opinion, the number of securities requested to be included in the
registration is so great as to adversely affect the offering, including
the price at which the securities could be sold, the Company shall
include in the registration the maximum number of securities which it
is so advised can be sold without the adverse effect, allocated as
follows:
(A) FIRST, all securities proposed to be registered by the
Company for its own account;
(B) SECOND, all securities proposed to be registered by the
Company pursuant to the exercise by any person other than a
Registering Stockholder or an Other Registering Stockholder of a
"demand" right requesting the registration of shares of Company
Common Stock pursuant to an agreement with the Company in
existence as of the date of this Agreement;
(C) THIRD, all securities proposed to be registered by the
Company other than for its own account pursuant to the exercise
by any person other than a Registering Stockholder or an Other
Registering Stockholder of a "piggy-back" right requesting the
registration of shares of Company Common Stock pursuant to an
agreement with the Company in existence as of the date of this
Agreement that expressly provides, in effect, that no securities
of the Company other than those referred to in the preceding
clauses (A) and (B) shall be included in such registration unless
all shares of Company Common Stock requested by such person to be
included in such registration are so included; and
(D) FOURTH, any other securities proposed to be registered
by the Company other than for its own account, including, without
limitation, Transaction Registrable Shares duly requested to be
included in the registration and securities proposed to be
registered by the Company
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pursuant to the exercise by any person other than a Registering
Stockholder or an Other Registering Stockholder of a "piggy-back"
right requesting the registration of shares of Company Common
Stock pursuant to an agreement with the Company, allocated pro
rata among all Registering Stockholders, Other Registering
Stockholders and such other persons on the basis of the relative
number of Transaction Registrable Shares or other securities that
each Registering Stockholder, Other Registering Stockholder or
other person has duly requested to be included in such
registration;
PROVIDED that if 30% or more of the Transaction Registrable
Shares requested to be included in a registration pursuant to
this Section 2 are so excluded from any registration and an
investment banking firm of recognized national standing shall
advise the Company that the number of the Transaction Registrable
Shares requested to be registered, at the time of the request and
in light of the market conditions then prevailing, did not exceed
the number that would have an adverse effect on the offering of
such Transaction Registrable Shares, including the price of which
such Transaction Registrable Shares could be sold, there shall be
provided one additional registration under Section 1(c)(2) in
respect of each such exclusion or series of related exclusions;
(3) before the Registration Statement becomes effective, any
Registering Stockholder may withdraw from the registration any
Transaction Registrable Shares owned by the Registering Stockholder;
PROVIDED that, subject to Section 2(b)(4), the withdrawal of
Transaction Registrable Shares shall not relieve the Company from its
obligations under this Agreement with respect to Transaction
Registrable Shares that are not withdrawn from the Registration
Statement; and
(4) the Company may withdraw the Registration Statement at any
time before it becomes effective.
SECTION 3. REGISTRATION PROVISIONS. With respect to each registration
pursuant to this Agreement:
(a) Notwithstanding anything herein to the contrary, the Company shall
not be required to include in any registration any of the Registrable Shares
owned by a Registering Stockholder if (1) the Company shall deliver to the
Registering Stockholder an opinion, satisfactory in form, scope and substance to
the Registering Stockholder and addressed to the Registering Stockholder by
legal counsel satisfactory to the Registering Stockholder, to the effect that
the distribution of such Registrable Shares proposed by the Registering
Stockholder is exempt from registration under the Securities Act and all
applicable state securities laws, (2) such Registering Stockholder or any
underwriter of such Registrable Shares shall fail to furnish to the Company the
information in respect of the distribution of such Registrable Shares that may
be required under this Agreement to be furnished by the Registering Stockholder
or the underwriter to the Company or (3) if such registration involves an
underwritten offering, such
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Registrable Shares are not included in such underwritten offering on the same
terms and conditions as shall be applicable to the other securities being sold
through underwriters in the registration or the Registering Stockholder fails to
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwritten offering.
(b) The Company shall make available for inspection by each Registering
Stockholder participating in the registration, each underwriter of Transaction
Registrable Shares owned by the Registering Stockholder and their respective
accountants, counsel and other representatives all financial and other records,
pertinent corporate documents and properties of the Company as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility in connection with each registration of Transaction Registrable
Shares owned by the Registering Stockholder, and shall cause the Company's
officers, directors and employees to supply all information reasonably requested
by any such person in connection with such registration; provided that records
and documents which the Company determines, in good faith, after consultation
with counsel for the Company and counsel for the Registering Stockholder or
underwriter, as the case may be, to be confidential and which it notifies such
persons are confidential shall not be disclosed to them, except in each case to
the extent that (1) the disclosure of such records or documents is necessary to
avoid or correct a misstatement or omission in the Registration Statement or (2)
the release of such records or documents is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction. Each Registering Stockholder
shall, upon learning that disclosure of any such records or documents is sought
in a court of competent jurisdiction, give notice to the Company, and allow the
Company, at the Company's expense, to undertake appropriate action and to
prevent disclosure of any such records or documents deemed confidential.
(c) Each Registering Stockholder shall furnish, and shall cause each
underwriter of Transaction Registrable Shares owned by the Registering
Stockholder to be distributed pursuant to the registration to furnish, to the
Company in writing promptly upon the request of the Company the information
regarding the Registering Stockholder or the underwriter, the contemplated
distribution of the Transaction Registrable Shares and the other information
regarding the proposed distribution by the Registering Stockholder and the
underwriter that shall be required in connection with the proposed distribution
by the applicable securities laws of the United States of America and the states
thereof in which the Transaction Registrable Shares are contemplated to be
distributed. The information furnished by any Registering Stockholder or any
underwriter shall be certified by the Registering Stockholder or the
underwriter, as the case may be, and shall be stated to be specifically for use
in connection with the registration.
(d) The Company shall use reasonable best efforts to prepare and file
with the Securities and Exchange Commission the Registration Statement,
including the Prospectus, and each amendment thereof or supplement thereto,
under the Securities Act and as required under any applicable state securities
laws, on the form that is then required or available for use by the Company to
permit each Registering Stockholder, upon the effective date of the Registration
Statement, to use the Prospectus in connection with the contemplated
distribution by the Registering Stockholder of the Transaction Registrable
Shares requested to be so registered. A registration pursuant to Section 1 shall
be effected pursuant to Rule 415 (or any similar provision then in force) under
the Securities Act if the manner of distribution contemplated by the
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<PAGE>
Registering Stockholder initiating the request for such registration shall
include an offering on a delayed or continuous basis. The Company shall furnish
to each Registering Stockholder drafts of the Registration Statement and the
Prospectus and each amendment thereof or supplement thereto for its timely
review prior to the filing thereof with the Securities and Exchange Commission
and shall use its reasonable best efforts to reflect in each such document, when
so filed with the Securities and Exchange Commission, such comments as the
Registering Stockholder reasonably may propose. If any Registration Statement
refers to any Registering Stockholder by name or otherwise as the holder of any
securities of the Company but such reference is not required by the Securities
Act or any similar federal statute then in force, then the Registering
Stockholder shall have the right to require, the deletion of such reference. The
Company shall deliver to each Registering Stockholder, without charge, such
number of copies of the Registration Statement and each amendment or
post-effective amendment thereof and such number of copies of each document
incorporated therein by reference as the Registering Stockholder may reasonably
request. If the registration shall have been initiated solely by the Company or
shall not have been initiated by a Registering Stockholder, the Company shall
not be obligated to prosecute the registration, and may withdraw the
Registration Statement at any time prior to the effectiveness thereof, if the
Company shall determine in good faith not to proceed with the offering of
securities included in the Registration Statement. In all other cases, the
Company shall use reasonable best efforts to cause the Registration Statement to
become effective and, as soon as practicable after the effectiveness thereof,
shall deliver to each Registering Stockholder evidence of the effectiveness and
such number of copies of the Prospectus including any preliminary prospectus and
each amendment thereof or supplement thereto as the Registering Stockholder may
reasonably request. The Company consents to the use by each Registering
Stockholder of each Prospectus and each amendment thereof and supplement thereto
in connection with the distribution, in accordance with this Agreement, of the
Transaction Registrable Shares owned by the Registering Stockholder. In
addition, the Company shall qualify or register under the securities laws or
blue sky laws of such states as may be reasonably requested by each Registering
Stockholder with respect to the Transaction Registrable Shares of the
Registering Stockholder that shall have been included in the Registration
Statement, and to continue such registration or qualification in effect for so
long as such Registration Statement remains in effect; provided that the Company
shall not be obligated to file any general consent to service of process or to
qualify as a foreign corporation in any state in which it is not subject to
process or qualified as of the date of the request. The Company shall advise
each Stockholder and each Registering Stockholder in writing, promptly after the
occurrence of any of the following, of (1) the filing of the Registration
Statement or any Prospectus, or any amendment thereof or supplement thereto,
with the Securities and Exchange Commission, (2) the effectiveness of the
Registration Statement and any post-effective amendment thereto, (3) the receipt
by the Company of any communication from the Securities Exchange Commission with
respect to the Registration Statement or the Prospectus, or any amendment
thereof or supplement thereto, including, without limitation, any stop order
suspending the effectiveness thereof, any comments with respect thereto and any
requests for amendments or supplements and (4) the receipt by the Company of any
notification with respect to the suspension of the qualification of Transaction
Registrable Shares owned by the Registering Stockholders for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose.
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<PAGE>
(e) The Company shall use reasonable best efforts to cause the
Registration Statement to remain effective under the Securities Act and the
Prospectus to remain current, including the filing of necessary amendments,
post-effective amendments and supplements, and shall furnish copies of such
amendments, post-effective amendments and supplements to the Registering
Stockholders, so as to permit the Registering Stockholders to distribute the
Transaction Registrable Shares owned by them in their respective manner of
distribution during their respective contemplated periods of distribution, but
in no event longer than the earlier of six consecutive months from the effective
date of the Registration Statement and the consummation of the distribution of
the Transaction Registrable Shares included in such registration; provided that
the period shall be increased by the number of days that any Registering
Stockholder shall have been required by Section 4 to refrain from disposing
under the registration any of the Transaction Registrable Shares owned by the
Registering Stockholder. During such respective contemplated periods of
distribution, the Company shall comply with the provisions of the Securities Act
applicable to it with respect to the disposition of all Transaction Registrable
Shares owned by the Registering Stockholders that shall have been included in
the Registration Statement in accordance with their respective contemplated
manner of disposition by the Registering Stockholders set forth in the
Registration Statement, the Prospectus or the supplement, as the case may be.
(f) Any obligation of the Company under this Agreement, including any
obligation to use its reasonable best efforts or take such actions as are
reasonably required shall not preclude the Company from taking any action or
omitting to take any action (other than omitting to file necessary amendments,
post-effective amendments and supplements if a Suspension Notice or Termination
Notice is not then in effect pursuant to Section 4 or Section 5, respectively)
that would result in the Company issuing a Suspension Notice or Termination
Notice.
(g) The Company shall notify each Registering Stockholder, at any time
when a prospectus with respect to the Transaction Registrable Shares owned by
the Registering Stockholders is required to be delivered under the Securities
Act, when the Company becomes aware of the happening of any event as a result of
which the Prospectus (as then in effect) contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein (in the case of the Prospectus or any preliminary prospectus, in light
of the circumstances under which they were made) not misleading; and, as
promptly as practicable thereafter, but subject to Sections 4 and 5, the Company
shall use reasonable best efforts to prepare and file with the Securities and
Exchange Commission an amendment or supplement to the Registration Statement or
the Prospectus so that, as thereafter delivered to the purchasers of such
Transaction Registrable Shares, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The Company also shall notify each Registering
Stockholder, when the Company becomes aware of the occurrence thereof, of the
issuance by the Securities and Exchange Commission of an order suspending the
effectiveness of the Registration Statement; as promptly as practicable
thereafter, but subject to Sections 4 and 5, the Company shall use reasonable
best efforts to obtain the withdrawal of such order at the earliest possible
moment.
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(h) If requested by any Registering Stockholder or an underwriter of
Transaction Registrable Shares owned by the Registering Stockholder, the Company
shall as promptly as practicable prepare and file with the Securities and
Exchange Commission an amendment or supplement to the Registration Statement or
the Prospectus containing such information as the Registering Stockholder or the
underwriter requests to be included therein, including, without limitation,
information with respect to the Transaction Registrable Shares being sold by the
Registering Stockholder to the underwriter, the purchase price being paid
therefor by such underwriter and other terms of the underwritten offering of the
Transaction Registrable Shares to be sold in such offering.
(i) Each Stockholder shall (1) offer to sell or otherwise distribute
Registrable Shares in reliance upon a registration contemplated pursuant to
Section 1 or 2 only (A) if the Stockholder is a Registering Stockholder and the
Registrable Securities are Transaction Registrable Securities and (B) after the
related Registration Statement shall have been filed with the Securities and
Exchange Commission, (2) sell or otherwise distribute Registrable Shares in
reliance upon such registration only (A) if the Stockholder is a Registering
Stockholder and the Registrable Securities are Transaction Registrable
Securities and (B) the related Registration Statement is then effective under
the Securities Act, (3) not sell or otherwise distribute Transaction Registrable
Securities in reliance upon a registration contemplated by Section 1 or 2 during
any period specified in a Suspension Notice delivered to the Registering
Stockholder pursuant to Section 4 or after receiving a Termination Notice
pursuant to Section 5 (until the Registering Stockholder shall have received
written notice from the Company pursuant to Section 3(d) that the registration
of such Transaction Registrable Shares is again effective), (4) distribute
Transaction Registrable Shares only in accordance with the manner of
distribution contemplated by the Prospectus with respect to the Transaction
Registrable Shares owned by the Registering Stockholder and (5) report to the
Company distributions made by the Registering Stockholder of Transaction
Registrable Shares pursuant to the Prospectus. Each Registering Stockholder, by
participating in a registration pursuant to this Agreement, acknowledges that
the remedies of the Company at law for failure by the Registering Stockholder to
comply with the undertaking contained in this paragraph (i) would be inadequate
and that the failure would not be adequately compensable in damages and would
cause irreparable harm to the Company, and therefore agrees that undertakings
made by the Registering Stockholder in this paragraph (i) may be specifically
enforced.
(j) If the registration involves an underwritten offering, each
Registering Stockholder shall cause the underwriter or underwriters selected for
such underwriting to enter into an underwriting agreement in customary form and
shall enter into such Underwriting Agreement with such underwriter or
underwriters.
(k) If the registration involves an underwritten offering, the Company
shall enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting and shall deliver to
each Registering Stockholder, its counsel and each underwriter of Transaction
Registrable Shares owned by the Registering Stockholders to be distributed
pursuant to such registration, the certificates, opinions of counsel and comfort
letters that are customarily delivered in connection with underwritten
offerings.
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(l) Before sales of Transaction Registrable Shares under a Registration
Statement, the Company shall cooperate with each Registering Stockholder and
each underwriter of Transaction Registrable Shares owned by the Registering
Stockholder to facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legends) representing the Transaction Registrable
Shares to be sold under the Registration Statement and to enable such
Transaction Registrable Shares to be in such denominations and registered in
such names as the Registering Stockholder or the underwriter may request.
(m) The Company shall use reasonable best efforts to (1) comply with
all applicable rules and regulations of the Securities and Exchange Commission,
and (2) make available to its securityholders, as soon as reasonably
practicable, an earning statement covering the period of at least twelve months,
but not more than eighteen months, beginning with the first calendar month after
the effective date of the Registration Statement, which earning statement shall
satisfy the provisions of Section 11(a) of the Securities Act.
(n) The Company shall use reasonable best efforts to cause the
Transaction Registrable Shares to be listed on each national securities exchange
on which Company Common Stock shall then be listed, if any, and to be qualified
for inclusion in the NASDAQ/National Market, as the case may be, if Company
Common Stock is then so qualified, and in each case if the listing or inclusion
of the Transaction Registrable Shares is then permitted under the rules of such
national securities exchange or the NASD, as the case may be.
(o) For the purposes of this Agreement, the following terms shall have
the following meanings:
(1) "BENEFICIAL OWNER" has the meaning given to it in Rule 13d-3
of the Exchange Act and the rules and regulations promulgated
thereunder;
(2) "BUSINESS DAY" means any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of the State of
Colorado or is a day on which banking institutions located in such
state are authorized or required by law or other governmental action to
close;
(3) "EQUITY SECURITIES" of a person means the capital stock of
the person and all other securities convertible into or exchangeable or
exercisable for any shares of its capital stock, all rights or warrants
to subscribe for or to purchase, all options for the purchase of, and
all calls, commitments or claims of any character relating to, any
shares of its capital stock and any securities convertible into or
exchangeable or exercisable for any of the foregoing;
(4) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended;
(5) "PROSPECTUS" means (A) the prospectus relating to the
Transaction Registrable Shares owned by the Registering Stockholders
included in a Registration Statement, (B) if a prospectus relating to
the Transaction Registrable Shares shall be filed with the Securities
and Exchange Commission pursuant to Rule 424 (or any similar provision
then in force) under the Securities Act, such
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prospectus, and (C) in the event of any amendment or supplement to the
prospectus after the effective date of the Registration Statement, then
from and after the effectiveness of the amendment or the filing with
the Securities and Exchange Commission of the supplement, the
prospectus as so amended or supplemented;
(6) "REGISTRATION STATEMENT" means (A) a registration
statement filed by the Company in accordance with Section 3(d),
including exhibits and financial statements thereto, in the form in
which it shall become effective, the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 (or any similar
provision or forms then in force) under the Securities Act and
information deemed to be a part of such registration statement pursuant
to paragraph (b) of Rule 430A (or any similar provision then in force)
and (B) in the event of any amendment thereto after the effective date
of the registration statement, then from and after the effectiveness of
the amendment, the registration statement as so amended; and
(7) information "CONTAINED", "INCLUDED" or "STATED" in a
Registration Statement or a Prospectus (or other references of like
import) includes information incorporated by reference.
SECTION 4. BLACKOUT PROVISIONS.
(a) Notwithstanding anything in this Agreement to the contrary, by
delivery of written notice to any of the Registering Stockholders and the other
holders of Registrable Shares (a "SUSPENSION NOTICE"), stating which one or more
of the following limitations shall apply to the addressee of such Suspension
Notice, the Company may (1) postpone effecting a registration under this
Agreement, or (2) require such addressee to refrain from disposing of
Transaction Registrable Shares under the registration, in either case for a
reasonable time specified in the notice but not exceeding 90 days (which period
may not be extended or renewed).
(b) The Company may postpone effecting a registration or apply to any
person specified in clause (2) of Section 4(a) any of the limitations on
dispositions specified in such clause if (1) the Company in good faith
determines that such registration or disposition would materially impede, delay
or interfere with any material financing, offer or sale of Equity Securities or
debt securities of the Company, acquisition, disposition or other material
transaction by the Company or any of its material subsidiaries, (2) an
investment banking firm of recognized national standing shall advise the Company
in writing that effecting the registration or the disposition by such person of
Registrable Shares or other Equity Securities of the Company, as the case may
be, would materially and adversely affect an offering of Equity Securities of
the Company, by the Company for its own account the preparation of which had
then been commenced, or (3) the Company in good faith determines that the
Company is in possession of material non-public information the disclosure of
which during the period specified in such notice the Company reasonably believes
would not be in the best interests of the Company; provided that the Company may
not take any action pursuant to this Section 4(b) for a period of time in excess
of 90 days in any one year period.
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(c) If the Company shall take any action pursuant to Section 4(a) with
respect to a Registering Stockholder or other holder of Registrable Shares in
connection with a registration, then (1) not later than 30 days after the action
is taken, Registering Stockholders and Other Registering Stockholders holding a
majority of the Transaction Registrable Shares may by written notice to the
Company elect to withdraw a registration that shall have been requested pursuant
to Section 1 or (2) if the registration shall not have been withdrawn pursuant
to the preceding clause (1), the period during which the Registering Stockholder
may exercise its rights under Sections 1 and 2 shall be extended by one day
beyond the Termination Date for each day that, pursuant to Section 4(a), the
Company postpones effecting a registration, requires the Registering Stockholder
or other holder to refrain from disposing of Transaction Registrable Shares
under a registration or otherwise requires the Registering Stockholder or other
holder to refrain from disposing of Registrable Shares.
(d) If the Company shall take any action pursuant to clause 2 of
Section 4(a) with respect to any Registering Stockholder or other holder of
Registrable Shares in a period during which the Company shall be required under
Section 3(e) to cause the Registration Statement to remain effective under the
Securities Act and the Prospectus to remain current, such period shall be
extended for such person by one day beyond the end of such period for each day
that, pursuant to Section 4(a), the Company shall require such person to refrain
from disposing of Transaction Registrable Shares owned by such person.
SECTION 5. TERMINATION PROVISIONS.
(a) Notwithstanding anything in this Agreement to the contrary, if, in
the opinion of counsel for the Company (which counsel shall be reasonably
acceptable to the Registering Stockholder, provided that O'Melveny & Myers LLP
and Holme Roberts & Owen LLP shall be deemed reasonably acceptable to the
Registering Stockholder for purposes of this Section 5(a)), there shall have
arisen any legal impediment to the offering of Transaction Registrable Shares
pursuant to this Agreement or if any legal action or administrative proceeding
shall have been instituted or threatened or any other claim shall have been made
relating to the registration or the offer made by the related prospectus or
against any of the parties involved in the offering, the Company may at any time
upon written notice (a "TERMINATION NOTICE") to each Registering Stockholder
participating in the registration (1) terminate the effectiveness of the related
Registration Statement or (2) withdraw from the Registration Statement the
Transaction Registrable Shares owned by the Registering Stockholder; provided
that, promptly after those matters shall be resolved to the satisfaction of
counsel for the Company, then the Company shall notify each affected Registering
Stockholder in writing that such matters have been resolved and, pursuant to
Section 1 or 2, as the case may be, shall, upon the written direction of such
affected Registering Stockholder and subject to the limitations in Section 1(b)
or elsewhere herein, cause the registration of Transaction Registrable Shares
formerly covered by the Registration Statement that were removed from
registration by the action of the Company.
(b) If the Company shall take any action pursuant to Section 5(a) with
respect to a Registering Stockholder or other holder of Registrable Shares, then
the period during which the Registering Stockholder may exercise its rights
under Sections 1 and 2 shall be extended by one day beyond the Termination Date
for a number of days equal to (1) the number of days during which the Company
shall be required under Section 3(e) to cause the Registration
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Statement to remain effective under the Securities Act and the Prospectus to
remain current minus (2) the number of days during which the Registration
Statement was effective before the date of the action taken pursuant to Section
5(a).
SECTION 6. EXPENSES.
(a) The Company shall pay all expenses (other than underwriting
discounts and commissions in respect of the Transaction Registrable Shares)
incurred in connection with the performance of its obligations under Sections 1
and 2 hereof, whether or not any related Registration Statement shall become
effective including, without limitation:
(1) preparing, printing and filing each Registration Statement
and Prospectus and each qualification or notice required to be filed
under federal and state securities laws or the rules and regulations of
the National Association of Securities Dealers, Inc. (the "NASD") in
connection with a registration pursuant to Section 1 or Section 2;
(2) all fees and expenses of complying with federal and state
securities laws and the rules and regulations of the NASD;
(3) furnishing to each Registering Stockholder such number of
copies of the related Registration Statement and the number of copies
of the related Prospectus that may be required by Sections 3(d) and
3(e) to be so furnished, together with a like number of copies of each
amendment, post-effective amendment or supplement;
(4) performing its obligations under Sections 3(d), 3(e) and
3(k);
(5) printing and issuing share certificates, including the
transfer agent's and registrar's fees, in connection with each
distribution so registered;
(6) preparing audited financial statements required by the
Securities Act and the rules and regulations thereunder to be included
in the Registration Statement and preparing audited financial
statements for use in connection with the registration other than
audited financial statements required by the Securities Act and the
rules and regulations thereunder, including fees and expenses of the
Company's outside independent accountants (including any fees and
expenses in connection with any comfort letters and any special audits
incident to or required by any registration or qualification);
(7) internal expenses of the Company (including, without
limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties);
(8) premiums or other expenses relating to liability insurance
required by the Company or underwriters of the Registering
Stockholders;
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(9) fees and disbursements of underwriters of the Registering
Stockholders customarily paid by issuers or sellers of securities;
(10) listing of the Registrable Shares on national securities
exchanges and inclusion of the Registrable Shares on the
NASDAQ/National Market; and
(11) fees and expenses of any special experts retained by the
Company in connection with the registration including fees and
disbursements of the Company's outside counsel.
(b) The Registering Stockholders shall bear all other expenses incident
to the distribution by the respective Registering Stockholders of the
Transaction Registrable Shares owned by them in connection with a registration
pursuant to this Agreement, including, without limitation (but excluding the
expenses referred to in paragraph (a)(8) above), the selling expenses of the
Registering Stockholders, commissions, underwriting discounts, insurance and
fees of counsel for the Registering Stockholders.
SECTION 7. INDEMNIFICATION.
(a) The Company shall indemnify and hold harmless each Registering
Stockholder participating in a registration pursuant to this Agreement, each
underwriter of Transaction Registrable Shares owned by the Registering
Stockholder to be distributed pursuant to the registration, each partner in the
Registering Stockholder, the officers and directors of the Registering
Stockholder and the underwriter and each person, if any, who controls the
Registering Stockholder, any partner in the Registering Stockholder or the
underwriter within the meaning of Section 15 (or any successor provision) of the
Securities Act, and their respective successors, against all claims, losses,
damages and liabilities to third parties (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in the Registration Statement or the Prospectus or other
document incident thereto or any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and shall reimburse each such Registering
Stockholder and each other person indemnified pursuant to this Section 7(a) for
any legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action;
provided that the Company shall not be liable in any case to the extent that any
such claim, loss, damage or liability arises out of or is based on any untrue
statement or omission based upon written information furnished to the Company by
the Registering Stockholder or the underwriter of such Transaction Registrable
Shares specifically for use in the Registration Statement or the Prospectus.
(b) Each Registering Stockholder, by participating in a registration
pursuant to this Agreement, thereby agrees to indemnify and to hold harmless the
Company and its officers and directors and each person, if any, who controls any
of them within the meaning of Section 15 (or any successor provision) of the
Securities Act, and their respective successors, against all claims, losses,
damages and liabilities to third parties (or actions in respect thereof) arising
out of or based upon any untrue statement (or alleged untrue statement) of a
material fact contained in the Registration Statement or the Prospectus or other
document incident thereto or any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to
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<PAGE>
make the statements therein not misleading, and shall reimburse the Company and
each other person indemnified pursuant to this Section 7(b) for any legal and
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action; provided that (x)
this Section 7(b) shall apply only if (and only to the extent that) the
statement or omission was made in reliance upon and in conformity with
information furnished to the Company in writing by the Registering Stockholder
specifically for use in the Registration Statement or the Prospectus and (y) in
no event shall the liability of a Registering Stockholder under this Section 7
exceed the amount of the gross proceeds paid to the Registering Stockholder in
consideration of the sale of Transaction Registrable Shares pursuant to such
registration.
(c) If any action or proceeding (including any governmental
investigation or inquiry) shall be brought, asserted or threatened against any
person indemnified under this Section 7, the indemnified person shall promptly
notify the indemnifying party in writing, and the indemnifying party shall
assume the defense of the action or proceeding, including the employment of
counsel satisfactory to the indemnified person and the payment of all expenses.
The indemnified person shall have the right to employ separate counsel in any
action or proceeding and to participate in the defense of the action or
proceeding, but the fees and expenses of that counsel shall be at the expense of
the indemnified person unless:
(1) the indemnifying party shall have agreed to pay those fees
and expenses; or
(2) the indemnifying party shall have failed to assume the
defense of the action or proceeding or shall have failed to employ
counsel reasonably satisfactory to the indemnified person in the action
or proceeding; or
(3) the named parties to the action or proceeding (including any
impleaded parties) include both the indemnified person and the
indemnifying party, and the indemnified person shall have been advised
by counsel that there may be one or more legal defenses available to
the indemnified person that are different from or additional to those
available to the indemnifying party (in which case, if the indemnified
person notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of
such action or proceeding on behalf of the indemnified person; it being
understood, however, that the indemnifying party shall not, in
connection with any one action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys at any time for the indemnified
person, which firm shall be designated in writing by the indemnified
person).
The indemnifying party shall not be liable for any settlement of any action or
proceeding effected without its written consent, but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such action or
proceeding, the indemnifying party shall indemnify and hold harmless the
indemnified person from and against any loss or liability by reason of the
settlement or judgment.
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(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified person (other than by reason of exceptions
provided in this Section 7) in respect of losses, claims, damages, liabilities
or expenses referred to in this Section 7, then each applicable indemnifying
party, in lieu of indemnifying the indemnified person, shall contribute to the
amount paid or payable by the indemnified person as a result of the losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified person on the other in connection with the statements or omissions
which resulted in the losses, claims, damages, liabilities or expenses as well
as any other relevant equitable considerations. The relative fault of the
indemnifying party on the one hand and of the indemnified person on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the indemnifying
party or by the indemnified person and by these persons' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The parties agree that it would not be just and equitable
if contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding sentence.
The amount paid or payable by a person as a result of the losses, claims,
damages, liabilities and expenses shall be deemed to include any legal or other
fees or expenses reasonably incurred by the person in connection with
investigating or defending any action or claim. Notwithstanding in the foregoing
to the contrary, no Registering Stockholder or underwriter of Transaction
Registrable Shares owned by the Registering Stockholder shall be required to
contribute any amount in excess of the amount by which (1) in the case of the
Registering Stockholder, the gross proceeds paid to the Registering Stockholder
in consideration of the sale pursuant to the registration of Transaction
Registrable Shares owned by it or (2) in the case of the underwriter, the total
price at which such Transaction Registrable Shares purchased by it and
distributed to the public were offered to the public exceeds, in any such case,
the amount of any damages that the Registering Stockholder or underwriter, as
the case may be, has otherwise been required to pay by reason of any untrue or
alleged untrue statement or omission. No person guilty of fraudulent
representation (within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation.
(e) Each Registering Stockholder participating in a registration
pursuant to Section 1 shall cause each underwriter of any Transaction
Registrable Shares owned by the Registering Stockholder to be distributed
pursuant to the registration to agree in writing on terms reasonably
satisfactory to the Company to indemnify and to hold harmless the Company and
its officers and directors and each person, if any, who controls any of them
within the meaning of Section 15 (or any similar provision then in force) of the
Securities Act, and their respective successors, against all claims, losses,
damages and liabilities to third parties (or actions in respect thereof) arising
out of or based upon any untrue statement (or alleged untrue statement) of a
material fact contained in the Registration Statement or the Prospectus or other
document incident thereto or any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and to reimburse the Company and each other
person indemnified pursuant to the agreement for any legal or any other expense
reasonably incurred in connection with investigating or defending any claim,
loss, damage, liability or action; provided that the agreement shall apply only
if (and only to the extent
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that) the statement or omission was made in reliance upon and in conformity with
information furnished to the Company in writing by the underwriter specifically
for use in the Registration Statement or the Prospectus.
SECTION 8. TRANSFER RESTRICTIONS.
(a) Each Stockholder agrees that before any sale or other disposition
of any Registrable Shares or the Warrant other than in a sale registered under
the Securities Act or pursuant to Rule 144 or 144A (or any similar provisions
then in force) under the Securities Act (unless the Company shall have been
advised by counsel that the sale does not meet the requirements of Rule 144 or
Rule 144A, as the case may be, for such sale), it will deliver to the Company an
opinion of counsel, in form and substance reasonably satisfactory to the
Company, to the effect that such registration is unnecessary.
(b) (1) Except as provided to the contrary in this Section 8,
each instrument or certificate evidencing or representing any
Registrable Shares that is transferred to any person other than an
affiliate of Anschutz or AFIC, shall bear legends substantially in the
following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH SAID ACT. THE SHARES ARE ALSO SUBJECT TO THE
RESTRICTIONS STATED IN A REGISTRATION RIGHTS AGREEMENT DATED AS OF
APRIL 18, 1999, A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE
SECRETARY OF THE COMPANY."
(2) Except as provided to the contrary in this Section 8,
each instrument or certificate evidencing or representing the Warrant
that is transferred to any person other than an affiliate of Anschutz
or AFIC, shall bear legends substantially in the following form:
"THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES
OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH SAID ACT. THIS WARRANT AND SUCH SHARES ARE ALSO SUBJECT
TO THE RESTRICTIONS STATED IN A REGISTRATION RIGHTS AGREEMENT DATED AS
OF APRIL 18, 1999, A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE
SECRETARY OF THE COMPANY."
(c) The Company acknowledges that it has already removed the legends
from the instruments representing the Registrable Shares and Warrant held by
Anschutz or AFIC as of the date of this Agreement. If any other holder of any
Registrable Shares or the Warrant shall
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<PAGE>
request in writing that the Company remove any or all of the legends stated in
Section 8(b) from the instruments or certificates evidencing or representing
such Registrable Shares or the Warrant, as the case may be, then, as soon as
practicable following the later of the date of receipt of such request and the
date of receipt of such instruments or certificates bearing such legends, the
Company shall issue and deliver to the registered owner of such Registrable
Shares or the Warrant, as the case may be, or its registered transferee
instruments or certificates evidencing or representing such Registrable Shares
or the Warrant, as the case may be, without such legends if either (1) such
substitute instruments or certificates are issued in connection with a sale that
is registered under the Securities Act or (2) the holder of such Registrable
Shares or the Warrant has received either an opinion of counsel, which opinion
and counsel shall be reasonably satisfactory to Stockholder, or a "no-action"
letter obtained by the holder from the staff of the Securities and Exchange
Commission, to the effect that the restrictions imposed by Rule 144 under the
Securities Act no longer apply to such Registrable Shares or the Warrant, as the
case may be.
SECTION 9. EXEMPT SALES.
(a) The Company shall make all filings with the Securities and Exchange
Commission required by Rule 144(c) (or any similar provision then in force)
under the Securities Act to permit the sale of Registrable Shares by any holder
thereof (other than an Affiliate of the Company) to satisfy the conditions of
Rule 144 (or any similar provision then in force). The Company shall, promptly
upon the written request of the holder of Registrable Shares, deliver to such
holder a written statement as to whether the Company has complied with all such
filing requirements.
(b) Before sales of Registrable Shares or the Warrant proposed to be
sold pursuant to an exemption from the registration requirements of the
Securities Act, the Company shall, subject to Section 8(c), cooperate with the
holder of such Registrable Shares or the Warrant, as the case may be, to
facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legends) representing such Registrable Shares or Warrant, as the
case may be, in connection with the closing of the sales and to enable such
Registrable Shares or the Warrant, as the case may be, to be in such
denominations and registered in such names as the holder may request.
SECTION 10. MERGER, CONSOLIDATION, EXCHANGE, ETC. In the event,
directly or indirectly, (1) the Company shall merge with and into, or
consolidate with, any other person or (2) any person shall merge with and into,
or consolidate, the Company and the Company shall be the surviving corporation
of such merger or consolidation and, in connection with such merger or
consolidation, all or part of the Registrable Shares or the securities issuable
upon exercise of the Warrant shall be changed into or exchanged for stock or
other securities of any other person, then, in each such case, proper provision
shall be made so that such other person shall be bound by the provisions of this
Agreement and the term the "Company" shall thereafter be deemed to refer to such
other person.
SECTION 11. NOTICES. All notices, requests and other communications to
any party under this Agreement shall be in writing. Communications may be made
by telecopy or similar writing. Each communication shall be given to the party
at its address stated on the
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signature pages of this Agreement or at any other address as the party may
specify for this purpose by notice to the other party. Each communication shall
be effective (1) if given by telecopy, when the telecopy is transmitted to the
proper address and the receipt of the transmission is confirmed, (2) if given by
mail, 72 hours after the communication is deposited in the mails properly
addressed with first class postage prepaid or (3) if given by any other means,
when delivered to the proper address and a written acknowledgement of delivery
is received.
SECTION 12. NO WAIVERS; REMEDIES. No failure or delay by any party in
exercising any right, power or privilege under this Agreement shall operate as a
waiver of the right, power or privilege. A single or partial exercise of any
right, power or privilege shall not preclude any other or further exercise of
the right, power or privilege or the exercise of any other right, power or
privilege. The rights and remedies provided in this Agreement shall be
cumulative and not exclusive of any rights or remedies provided by law.
SECTION 13. AMENDMENTS, ETC. No amendment, modification, termination or
waiver of any provision of this Agreement, and no consent to any departure by a
party to this Agreement from any provision of this Agreement, shall be effective
unless it shall be in writing and signed and delivered by the other party to
this Agreement, and then it shall be effective only in the specific instance and
for the specific purpose for which it is given.
SECTION 14. SUCCESSORS AND ASSIGNS.
(a) Each holder of Registrable Shares or the Warrant may assign to any
transferee of Registrable Shares or the Warrant, as the case may be, its rights
and delegate to the transferee its obligations under this Agreement including,
without limitation, the rights of assignment pursuant to this Section 14;
provided that (i) any assignment of rights under Section 1 of one or more demand
registration right must indicate in writing the number of demand rights so
assigned and the Company must receive notice of such assignment and (ii) such
transferee shall accept such rights and assume such obligations for the benefit
of the Company by written instrument, in form and substance reasonably
satisfactory to the Company. Thereafter, without any further action by any
person, all references in this Agreement to the holder of such Registrable
Shares or the Warrant, as the case may be, and all comparable references, shall
be deemed to be references to the transferee, and the transferor shall be
released from each obligation or liability under this Agreement with respect to
the Registrable Shares or the Warrant so transferred.
(b) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties to this Agreement, the express beneficiaries thereof
and their respective permitted heirs, executors, legal representatives,
successors and assigns, and no other person.
SECTION 15. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York without
regard to principles of conflict of law.
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SECTION 16. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if all signatures were on the same instrument.
SECTION 17. SEVERABILITY OF PROVISIONS. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of the provision in any other
jurisdiction.
SECTION 18. HEADINGS AND REFERENCES. Section headings in this Agreement
are included for the convenience of reference only and do not constitute a part
of this Agreement for any other purpose. References to parties, express
beneficiaries and sections in this Agreement are references to the parties to or
the express beneficiaries and sections of this Agreement, as the case may be,
unless the context shall require otherwise.
SECTION 19. ENTIRE AGREEMENT. This Agreement embodies the entire
agreement and understanding of the parties and supersedes all prior agreements
or understandings with respect to the subject matters of this Agreement.
SECTION 20. SURVIVAL. Except as otherwise specifically provided in this
Agreement, each representation, warranty or covenant of each party contained in
to this Agreement shall remain in full force and effect, notwithstanding any
investigation or notice to the contrary or any waiver by the other party of a
related condition precedent to the performance by such other party of an
obligation under this Agreement.
SECTION 21. NON-EXCLUSIVE JURISDICTION. Each party, and each express
beneficiary of this Agreement as a condition of its right to enforce or defend
any right under or in connection with this Agreement, (1) agrees that any Action
with respect to this Agreement or any transaction contemplated by this Agreement
may be brought in the courts of the State of New York or of the United States of
America for the Southern District of New York, in each case sitting in the
Borough of Manhattan, State of New York and (2) accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
those courts and (3) irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to the bringing of any
legal action in those jurisdictions.
SECTION 22. AFFILIATE. Nothing contained in this Agreement shall
constitute Stockholder or any Registering Stockholder an "affiliate" of any of
the Company and its Subsidiaries within the meanings of the Securities Act or
the Exchange Act, respectively, including, without limitation, Rule 501 under
the Securities Act and Rule 13e-3 under the Exchange Act.
SECTION 23. NON-RECOURSE. No recourse under this Agreement shall be had
against any "controlling person" (within the meaning of Section 20 of the
Exchange Act) of any party or the stockholders, directors, officers, employees,
agents and Affiliates of such party or such controlling persons, whether by the
enforcement of any assessment or by any legal or
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equitable proceeding, or by virtue of any Regulation, it being expressly agreed
and acknowledged that no personal liability whatsoever shall attach to, be
imposed on or otherwise be incurred by such controlling person, stockholder,
director, officer, employee, agent or Affiliate, as such, for any obligations of
such party under this Agreement or for any claim based on, in respect of or by
reason of such obligations or their creation; provided, however, that nothing
contained in this Section 23 shall be deemed to be a waiver by the Company.or
any such controlling person, stockholder, director, officer, employee, agent or
affiliate of the Company of their respective liabilities under applicable
federal or state securities laws, rules or regulations.
SECTION 24. NO INCONSISTENT AGREEMENTS.
(a) The Company shall not enter into, or amend or otherwise modify, any
agreement to afford to any person other than the Stockholders, the holders of
Registrable Shares and the holders of the Other Registrable Shares and rights
with respect to the registration under the Securities Act of shares of Company
Common Stock or other securities or the inclusion of any such shares or other
securities in any registration that are inconsistent with, or conflict with, the
rights of the Stockholders and the holders of Registrable Shares under this
Agreement, including, without limitation, Sections 1 and 2.
(b) Without derogating from the generality of Section 24(a), after the
date of this Agreement, the Company shall not enter into, or amend or otherwise
modify, any agreement to afford to any person other than the Stockholders, the
holders of Registrable Shares and the holders of Other Registrable Shares the
right to require the Company to include in any registration pursuant to Section
1 any securities of the Company pursuant to the exercise of any "piggy-back"
right under an agreement with the Company not in existence as of the date of
this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective authorized officers as of the date first written
above in New York, New York.
QWEST COMMUNICATIONS INTERNATIONAL INC.
By: /s/ Drake S. Tempest
---------------------------------------
Name: Drake S. Tempest
Title: Executive Vice President and
General Counsel
Address: 555 Seventeenth Street
Denver, Colorado 80202
Telecopy: (303) 992-1798
ANSCHUTZ COMPANY
By: /s/ Craig D. Slater
---------------------------------------
Name: Craig D. Slater
Title: Vice President
Address: 555 Seventeenth Street
Denver, Colorado 80202
Telecopy: (303) 298-8881
ANSCHUTZ FAMILY INVESTMENT
COMPANY LLC
By: /s/ Craig D. Slater
---------------------------------------
Name: Craig D. Slater
Title: Vice President
Address: 555 Seventeenth Street
Denver, Colorado 80202
Telecopy: (303) 298-8881
EXHIBIT 99.1
BELLSOUTH AND QWEST ANNOUNCE STRATEGIC
RELATIONSHIP TO PROVIDE NEXT-GENERATION DIGITAL
COMMUNICATIONS SERVICES; BELLSOUTH TAKES 10 PERCENT STAKE IN QWEST
ATLANTA, April 19 /PRNewswire/ -- BellSouth Corporation (NYSE: BLS - news) and
Qwest Communications International Inc. (Nasdaq: QWST - news) today announced a
strategic relationship that will significantly accelerate the companies' efforts
to provide a full set of integrated digital data, image and voice communications
services to their customers. The relationship includes three basic components:
* Qwest and BellSouth immediately begin coordinated marketing of
services, with Qwest offering its full portfolio of data
networking, Internet and voice services. BellSouth will offer
a full complement of local networking services.
* Once BellSouth is allowed into the long distance business, the
companies will jointly develop and deliver a comprehensive set
of end-to-end, high-speed data, image and voice communications
services to business customers, with a heavy emphasis on the
fast-growing broadband and Internet-based data services.
BellSouth will assume retail leadership with customers based
in the South; Qwest will provide support resources to assist
BellSouth in the region as required with the primary emphasis
of the Qwest sales force being focused on the rest of the
country.
* And finally, as part of the agreement, BellSouth will invest
approximately $3.5 billion at $94.50 a share for about a 10
percent equity stake in Qwest. Qwest will issue 20,350,000 new
shares to BellSouth in exchange for approximately $1.93
billion in cash. At BellSouth's request, Qwest's principal
stockholder, Anschutz Company, will sell 16,650,000 shares to
BellSouth for approximately $1.57 billion. This will reduce
Anschutz Company's ownership interest in Qwest to
approximately 39 percent.
"This is a significant step in our objective of becoming the premier data
communications provider to our customers," said Duane Ackerman, Chairman and CEO
of BellSouth. "This relationship allows our customers to enjoy the range of
benefits from a comprehensive set of Internet and broadband digital solutions."
Once BellSouth receives permission to enter the long-distance market, the two
companies will offer seamless, high-capacity and high-speed network services
such as fame relay, ATM, and Internet Protocol and advanced applications
including web-hosting, electronic commerce, video streaming, Managed Network
Services, Managed Software Services and enhanced virtual private network
services.
"We are delighted to have this strategic relationship with a like-minded,
customer-focused company that is committed to offering customers end-to-end
high-speed communications
<PAGE>
services and who understands the tremendous potential the Internet and data
communications marketplace has to offer," said Joseph P. Nacchio, Qwest Chairman
and CEO. "Moving forward, the BellSouth/Qwest relationship will provide
customers with a comprehensive communications solution set and global reach that
is unmatched in the industry."
The companies also pointed out that after BellSouth receives approval to offer
long-distance data and voice services, the agreement will enable both of them to
use each other's assets to develop infrastructure and/or distribution
capabilities in serving their respective customers across the globe. BellSouth
has extensive operations throughout Latin America as well as significant
presence in Europe. Qwest has a stronger presence in Europe and is beginning to
move into the Asia/Pacific and Latin American regions.
In addition, the relationship will also use the strategic alliances each has
with key Internet and technology companies including Microsoft, Cisco, Lotus and
others to the customers' advantage.
"There is a natural fit to our strategies that bodes well for our customers in
the future," said Ackerman. "Given the rapid change occurring in the
communications industry today, there is no doubt that together we have the
potential to be an even more significant driving force."
The equity aspect of the transaction is subject to Hart-Scott-Rodino review. The
deal is expected to close by the end of May.
BellSouth is a $23 billion communications services company. It provides
telecommunications, wireless communications, cable and digital TV, directory
advertising and publishing, and Internet and data services to nearly 34 million
customers in 19 countries worldwide.
Qwest Communications International Inc. is a leader in reliable and secure
broadband Internet-based data, voice and image communications for businesses and
consumers. Headquartered in Denver, Qwest has more than 8,000 employees and 80
sales offices in North America, Europe and Mexico. The Qwest Macro Capacity(SM)
Fiber Network, designed with the newest optical networking, will span more than
18,500 route miles in the United States when it is completed by mid-1999, and
the additional 315-mile network route recently announced will be complete by the
end of year. In addition, Qwest and KPN, the Dutch telecommunications company,
are forming a venture to build and operate a high-capacity European fiber optic,
Internet Protocol-based network that has 2,100 miles and will span 9,100 miles
when it is completed in 2001. Qwest also has nearly completed a 1,400-mile
network in Mexico. For more information, please visit the Qwest web site at
www.qwest.com.
For more information about BellSouth Corporation, visit the BellSouth Web page
at: http://www.bellsouth.com. For more information about Qwest Communications
International Inc., visit the Qwest Web page at: http://www.qwest.com.
BellSouth Note: This release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 and are based on
a number of assumptions, including but not limited to: (1) continued domestic
economic growth and demand for BellSouth's services; (2) economic, monetary,
regulatory and political stability where BellSouth
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<PAGE>
conducts its international operations; (3) the reasonable accuracy of
BellSouth's expectations of the impact on its international operations of
weakening currencies in Latin America as compared to the U.S. dollar; (4) the
reasonable accuracy of BellSouth's expectations of the results of regulatory
actions as well as costs and recoveries with respect to access reform, universal
service and interconnection; (5) the reasonable accuracy of BellSouth's estimate
of regulatory authorization to provide wireline long distance services and the
impact of competition in its markets; and (6) satisfactory identification and
completion of Year 2000 software and hardware revisions by BellSouth and
entities with which it does business. Any developments significantly deviating
from these assumptions could cause actual results to differ materially from
those forecast or implied in the aforementioned forward-looking statements.
Qwest Note: This release may contain forward-looking statements that involve
risks and uncertainties. These statements may differ materially from actual
future events or results. Readers are referred to the documents filed by Qwest
with the SEC, specifically the most recent reports which identify important risk
factors that could cause actual results to differ from those contained in the
forward-looking statements, including potential fluctuations in quarterly
results, dependence on new product development, rapid technological and market
change, failure to complete the network on schedule and on budget, financial
risk management and future growth subject to risks, Qwest's ability to achieve
Year 2000 compliance, and adverse changes in the regulatory or legislative
environment. Qwest undertakes no obligation to review or confirm analysts'
expectations or estimates or to release publicly any revisions to any
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
CONTACT: Jill Greenman, 404-249-2068, or Tim Klein, 404-249-4135, or
Jeff Battcher, 404-713-0274, all of BellSouth Corporation, or
Tyler Gronbach, 303-992-2155, or Investor Relations, Lee
Wolfe, 800-567-7296, both of Qwest Communications
International Inc.
3
