SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Qwest Communications International Inc.
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(Name of Issuer)
Common Stock, $0.01 par value
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(Title of Class of Securities)
74912110 9
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(CUSIP Number)
Ray E. Winborne
BellSouth Corporation
15G03 Campanile Building
1155 Peachtree Street
Atlanta, Georgia 30309-3610
(404) 249-3035
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(Name, Address and Telephone Number of Persons
Authorized to Receive Notices and Communications)
May 27, 1999
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box.[ ]
(Continued on following pages)
<PAGE>
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CUSIP No. 74912110 9 13D
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- -------------------------------------- ------------------------------
- ----- -----------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION
NO. OF ABOVE PERSON
BellSouth Corporation 58-1533433
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2 CHECK THE APPROPRIATE BOX IF (a)[ ]
A MEMBER OF A GROUP (b)[ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC/OO
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5 CHECK IF DISCLOSURE OF LEGAL
PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF
ORGANIZATION
Georgia
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Number of Shares 7 SOLE VOTING POWER 74,000,000
beneficially owned ------ ----------------------------------------------
by each reporting 8 SHARED VOTING POWER 0
person with ------ ----------------------------------------------
9 SOLE DISPOSITIVE POWER 74,000,000
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10 SHARED DISPOSITIVE POWER 0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
74,000,000 shares of Qwest Communications International, Inc.
Common Stock
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES Not applicable
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 10%
- --------- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
HC/CO
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<PAGE>
ITEM 1. Security and Issuer.
The title of the class of equity securities to which this Schedule
relates is the common stock, $0.01 par value per share ("Qwest Common Stock"),
of Qwest Communications International Inc., a Colorado corporation ("Qwest").
The address of Qwest's principal executive office is 700 Qwest Tower, 555
Seventeenth Street, Denver, Co. 80202.
ITEM 2. Identity and Background.
The following information is given with respect to the persons filing
this Statement:
(a) BellSouth Corporation, a Georgia corporation ("BellSouth"). See
Exhibit 1 attached hereto for information with respect to the identity and
background of the directors and executive officers of BellSouth, which
information is hereby incorporated by reference herein.
(b) The principal executive offices of BellSouth are located at 1155
Peachtree Street, Atlanta, Georgia 30309-3610.
(c) BellSouth is a holding company providing telecommunications
services, systems and products primarily through two wholly-owned subsidiaries,
BellSouth Telecommunications, Inc. and BellSouth Enterprises, Inc.
(d) BellSouth has not, during the last five years, been convicted in a
criminal proceeding.
(e) BellSouth has not, during the last five years, been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
as a result of which it was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
(f) Not applicable to BellSouth.
The name, business address, present principal occupation or employment
and the name, principal business and address of any corporation or other
organization in which such employment is conducted, of the directors and
executive officers of BellSouth are as set forth on Exhibit 1.
<PAGE>
To the knowledge of BellSouth, none of such persons has, during the
last five years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or has been a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction and as a result was
or is subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
To the knowledge of BellSouth, all such persons are citizens of the
United States of America.
ITEM 3. Source and Amount of Funds or Other Consideration.
On May 27, 1999, BellSouth acquired 74,000,000 shares of the Common Stock
of Qwest. BellSouth purchased 40,700,000 of these shares directly from Qwest for
a total of $1.923 billion. BellSouth purchased the other 33,300,000 shares from
the Anschutz Company for a total of $1.573 billion. BellSouth utilized $1.5
billion of its existing working capital and issued $2.0 billion in commercial
paper to fund the initial purchase. BellSouth anticipates that it will
permanently refinance the commercial paper with long-term debt as soon as is
practicable.
ITEM 4. Purpose of Transaction.
The purpose of the acquisition of the Qwest Common Stock by BellSouth
is to acquire an equity position in Qwest and to complement the strategic
relationship contemplated by the Master Agreement described in Item 6 below.
Pursuant to the Common Stock Purchase Agreement, dated as of April 19,
1999, between Qwest and BellSouth (as assignee of BellSouth Enterprises, Inc.)
(the "Qwest Purchase Agreement"), BellSouth is generally prohibited from
acquiring shares of Qwest Common Stock if it would result in BellSouth
beneficially owning more than 20% of the shares of Qwest Common Stock, except as
approved by the Qwest Board of Directors. The maximum ownership percentage will
be increased or terminated if Qwest or Anschutz Company sell shares of Qwest
Common Stock to third parties on certain specified terms. BellSouth has
considered and continues to explore, including with the Company, various
alternatives relating to BellSouth's interest in the Company, including
transactions which may result in the acquisition of a control position in or
combination with the Company. BellSouth has also considered and continues to
explore other strategic and commercial relationships with the Company and other
actions of the type described in items (a) through (j) of Item 4 of Schedule
13D. Based on the respective objectives of the Company and BellSouth, the
regulatory and competitive environment, and other factors that BellSouth deems
relevant, BellSouth will determine whether to take any of these actions.
BellSouth has agreed generally to not transfer any shares of Qwest Common
Stock for two years (or earlier under certain circumstances including
termination of the Master Agreement). After the general transfer restriction has
terminated, BellSouth will remain obligated not to sell shares of Qwest Common
Stock to a party if it would result in the party owning more than 5% of Qwest's
then issued and outstanding Common Stock and not selling more than a specified
volume of shares of Qwest Common Stock within specified periods of time.
Qwest has agreed that it will not repurchase shares of Qwest Common
Stock, reorganize its capital structure, or take other similar action that would
result in BellSouth beneficially owning more than 10% of the shares of Qwest
Common Stock then issued and outstanding.
Until such time as BellSouth and Qwest agree that BellSouth has
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, BellSouth is entitled to receive copies of all materials delivered
to Qwest's Board of Directors, and to have certain, periodic meetings with the
Chairman of the Board, Chief Executive Officer or President of Qwest to be
informed of discussions relating to the strategic plans of Qwest that took place
at any Qwest Board of Directors meeting, subject to certain confidentiality
obligations of BellSouth, Qwest's right to withhold certain materials or
information and other restrictions. Thereafter, BellSouth is entitled to
designate one nominee to Qwest's Board of Directors (until termination of the
Master Agreement or transfer by BellSouth of more than 18,500,000 shares of
Qwest Common Stock).
The Qwest Purchase Agreement includes an agreement by BellSouth that it
will not become a member of a Group with respect to the Qwest Common Stock or
other equity securities of Qwest or participate in a proxy contest or
solicitation in opposition to any matter which has been recommended, or in favor
of any matter which has not been approved, by the Qwest Board of Directors.
BellSouth may make a bona fide written proposal to the Qwest Board of Directors
that contemplates an acquisition or certain other transactions effecting a
change of control of Qwest (an "Acquisition Proposal") which is subject to
approval by the Qwest Board of Directors and does not require Qwest to make a
public announcement. BellSouth has agreed that it will not otherwise, without
approval of the Qwest Board of Directors, take any actions with respect to any
Acquisition Proposal (including one made by BellSouth) that would require Qwest
to make a public announcement.
Upon the occurrence of certain events, including Qwest's receiving an
Acquisition Proposal from a third party and not rejecting it within 10 days or
announcement by Qwest that it is for sale, the restrictions set forth in the
immediately preceding paragraph will terminate. Qwest has agreed to provide
notice to BellSouth within 10 days after it receives any Acquisition Proposal.
ITEM 5. Interest in Securities of the Issuer.
(a) As at the date hereof, BellSouth beneficially owns and has the
power to vote an aggregate of 74,000,000 shares of Qwest Common Stock
representing approximately 10% of Qwest Common Stock. Neither BellSouth nor, to
the knowledge of BellSouth, any director or officer of BellSouth identified in
Item 2 owns any other shares of Qwest Common Stock or has the right to purchase
any other shares of Qwest Common Stock except as set forth below:
Name Number of Shares
---------------- -----------------
Jere A. Drummond 2,332
David J. Markey 3,166
John G. Medlin, Jr. 2,332
(b) Except as provided herein with respect to the Purchase Agreement,
BellSouth does not possess sole or shared voting or dispositive power over any
of the shares of Qwest Common Stock covered by this Schedule.
(c) No transactions in Qwest Common Stock other than those reported in
this Schedule have been effected by BellSouth or, to the knowledge of BellSouth,
any director or officer of BellSouth identified in Item 2, within the past 60
days.
(d) To BellSouth's knowledge and except as provided herein, each
Stockholder has the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, the Qwest Securities.
(e) Not applicable.
ITEM 6. Contracts, Arrangements or Understandings with Respect to Securities
of the Issuer.
On April 19, 1999, BellSouth and Qwest entered into the Qwest Purchase
Agreement and a Registration Rights Agreement; Qwest Communications Corporation
(a wholly owned subsidiary of Qwest) and BellSouth Value Added Services
Holdings, Inc. (a direct wholly owned subsidiary of BellSouth) entered into
a Master Agreement; and BellSouth and Anschutz Company entered into a Common
Stock Purchase Agreement (the "Anschutz Purchase Agreement").
Pursuant to the Master Agreement, Qwest and BellSouth (or its
subsidiaries and affiliates) have agreed to a broad alliance to coordinate the
marketing, sale and delivery of their respective products to customers and over
time, and as permitted by law, to offer customers a full suite of voice and data
products (including internet protocol based products) utilizing their respective
physical assets (such as transport, switching and systems).
The Qwest Purchase Agreement provided for the purchase by BellSouth
from Qwest of 40,700,000 shares of Qwest Common Stock (as adjusted for Qwest's
two-for-one stock split that occurred on May 24, 1999). A copy of the Qwest
Purchase Agreement is included as an Exhibit hereto and is incorporated herein
by reference. Various provisions of the Purchase Agreement are discussed in Item
4, above.
The Registration Rights Agreement provides for various demand and
piggy-back registration rights of BellSouth, and includes customary provisions
relating to registration procedures, payment of expenses and indemnification.
Under the Registration Rights Agreement following expiration of the general
restriction on transfer of shares of Qwest Common Stock set forth in the Qwest
Purchase Agreement as described in Item 4, BellSouth will have unlimited demand
registrations, subject to various limitations (including the prohibition on sale
to a third party if it would result in such party beneficially owning 5% of
Qwest's Common Stock and the volume restrictions as described in Item 4 above).
BellSouth also has unlimited piggy-back registration rights, subject to certain
restrictions, for a period of ten years from April 19, 1999. A copy of the
Registration Rights Agreement is included as an Exhibit and is incorporated
herein by reference.
The Anschutz Purchase Agreement provided for the purchase by BellSouth
from Anschutz Company of 33,300,000 shares of Qwest Common Stock (as adjusted
for Qwest's two-for-one stock split that occurred on May 24, 1999). A copy of
the Anschutz Purchase Agreement is included as an Exhibit and incorporated
herein by reference.
The preceding summary of the above agreements is not intended to be
complete and is qualified in its entirety by reference to the full text of the
Qwest Purchase Agreement, the Registration Rights Agreement and the Anschutz
Purchase Agreement, copies of each of which are filed as an Exhibit hereto.
Except as set forth herein, BellSouth does not, nor to the best
knowledge of BellSouth, does any director or executive officer of BellSouth,
have any contract, arrangement, understanding or relationship (legal or
otherwise) with any person with respect to any securities of Qwest, including,
but not limited to, transfer or voting of any securities of Qwest, finder's
fees, joint ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or loss, or the giving or withholding of proxies.
<PAGE>
ITEM 7. Material to be Filed as Exhibits.
Filed herewith are these exhibits:
(1) Name, business address, citizenship, present principal occupation,
address and principal business of the organization in which each Director and
Executive Officer of BellSouth Corporation is employed.
(2) Common Stock Purchase Agreement dated April 19, 1999, between
BellSouth Corporation and Qwest Communications International Inc.
(3) Common Stock Purchase Agreement dated April 19, 1999, between
BellSouth Corporation and Anschutz Company.
(4) Registration Rights Agreement dated April 19, 1999 between
BellSouth Corporation and Qwest Communications International Inc.
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Schedule 13D is true, complete and
correct.
BELLSOUTH CORPORATION
By: /s/ W. Patrick Shannon
------------------------
W. Patrick Shannon
Vice President and Controller
Date: June 7, 1999
EXHIBIT 1
Name, Citi- Present Position Present Principal Occupation,
Business Address zenship with BellSouth Name, Address and Principal
Business of Organization
F. Duane Ackerman USA President, Chief President and CEO
2000 Campanile Executive Officer BellSouth Corporation
1155 Peachtree St., N.E. and Director 1155 Peachtree St., N.E.
Atlanta, GA 30309-3610 Atlanta, GA 30309-3610
Telecommunications Svcs.
Richard A. Anderson USA Group President - Group President -
1701 Campanile BellSouth Business BellSouth Business
1155 Peachtree St., N.E. BellSouth Corporation
Atlanta, GA 30309-3610 1155 Peachtree Street, N.E.
Atlanta, GA 30309-3610
Telecommunications Svcs.
C. Sidney Boren USA Executive Staff Executive Staff Officer
2004 Campanile Officer BellSouth Corporation
1155 Peachtree St., N.E. 1155 Peachtree Street, N.E.
Atlanta, GA 30309-3610 Atlanta, GA 30309-3610
Telecommunications Svcs.
Robert L. Capell, III USA Sr. Vice President Sr. Vice President -
1706 Campanile Advanced Data Networks
1155 Peachtree Street, N.E. BellSouth Corporation
Atlanta, GA 30309-3610 1155 Peachtree Street, N.E.
Atlanta, GA 30309-3610
Telecommunications Svcs.
Keith O. Cowan USA Vice President Vice President-
2005 Campanile Corporate Development
1155 Peachtree St., N.E. BellSouth Corporation
Atlanta, GA 30309-3610 1155 Peachtree St., N.E.
Atlanta, GA 30309-3610
Telecommunications Svcs.
<PAGE>
Name, Citi- Present Position Present Principal Occupation,
Business Address zenship with BellSouth Name, Address and Principal
Business of Organization
Francis A. Dramis USA Executive Vice Executive Vice President
2007 Campanile President and Chief Information Officer
1155 Peachtree St., N.E. BellSouth Corporation
Atlanta, GA 30309-3610 1155 Peachtree Street, N.E.
Atlanta, GA 30309-3610
Telecommunications Svcs.
Mark E. Droege USA Vice President Vice President-Financial
2006 Campanile Management and Treasurer
1155 Peachtree St., N.E. BellSouth Corporation
Atlanta, GA 30309-3610 1155 Peachtree St., N.E.
Atlanta, GA 30309-3610
Telecommunications Svcs.
Jere A. Drummond USA President and President & Chief
2010 Campanile Chief Executive Executive Officer
1155 Peachtree St., N.E. Officer - BellSouth Communications Group
Atlanta, GA 30309-3610 BellSouth BellSouth Corporation
Communications 1155 Peachtree Street, N.E.
Gp. Atlanta, GA 30309-3610
Telecommunication Svcs.
Ronald M. Dykes USA Executive Vice Executive Vice President
2008 Campanile President and and Chief Financial Officer
1155 Peachtree St., N.E. Chief Financial BellSouth Corporation
Atlanta, GA 30309-3610 Officer 1155 Peachtree St., N.E.
Atlanta, GA 30309-3610
Telecommunications Svcs.
Donna A. Lee USA Senior Vice Senior Vice President-
2400 Century Parkway President Managed Network Solutions
Suite 200 BellSouth Corporation
Atlanta, GA 30345 Suite 200
2400 Century Parkway
Atlanta, GA 30345
Telecommunications Svcs.
<PAGE>
Name, Citi- Present Position Present Principal Occupation,
Business Address zenship with BellSouth Name, Address and Principal
Business of Organization
David J. Markey USA Vice President Vice President-
Suite 900 Governmental Affairs
1133 21st Street, N.W. BellSouth DC
Washington, DC 20036 Suite 900
1133 21St Street, N.W.
Washington, DC 20036
Telecommunications Svcs.
Earle Mauldin USA President and President and Chief
Suite 1000 Chief Executive Executive Officer
1100 Peachtree Street, Officer BellSouth Enterprises, Inc.
N.E. BellSouth 1100 Peachtree Street, N.E.
Atlanta, GA 30309-4599 Enterprises, Inc. Atlanta, GA 30309-4599
Telecommunications Svcs.
Charles C. Miller, III USA President- President-International
Suite 400 International BellSouth Corporation
1100 Peachtree St., N.E. Suite 400
Atlanta, GA 30309-4599 1100 Peachtree St., N.E.
Atlanta, GA 30309-4599
Telecommunications Svcs.
Charles R. Morgan USA Executive Vice Executive Vice President and
2002 Campanile President and General Counsel
1155 Peachtree St., N.E. General Counsel BellSouth Corporation
Atlanta, GA 30309-3610 1155 Peachtree St., N.E.
Atlanta, GA 30309-3610
Telecommunications Svcs.
William C. Pate USA Vice President Vice President - Advertising
1915 Campanile and Public Relations
1155 Peachtree St., N.E. BellSouth Corporation
Atlanta, GA 30309-3610 1155 Peachtree St., N.E.
Atlanta, GA 30309-3610
Telecommunications Svcs.
<PAGE>
Name, Citi- Present Position Present Principal Occupation,
Business Address zenship with BellSouth Name, Address and Principal
Business of Organization
William F. Reddersen USA Group President Group President -
1702 Campanile Value Added Services
1155 Peachtree St., N.E. BellSouth Corporation
Atlanta, GA 30309-3610 1155 Peachtree St., N.E.
Atlanta, GA 30309-3610
Telecommunications Svcs.
John G. Robinson USA Vice President Vice President -
4509 BellSouth Center Strategic Mgmt.
675 West Peachtree St.,N.E. BellSouth Corporation
Atlanta, GA 30375 675 West Peachtree St.,N.E.
Atlanta, GA 30375
Telecommunication Svcs.
W. Patrick Shannon USA Vice President Vice President
1703 Campanile and Controller
1155 Peachtree St., N.E. BellSouth Corporation
Atlanta, GA 30309-3610 1155 Peachtree St., N.E.
Atlanta, GA 30309-3610
Telecommunications Svcs.
Richard D. Sibbernsen USA Vice President Vice President -
2003 Campanile Human Resources
1155 Peachtree St., N.E. BellSouth Corporation
Atlanta, GA 30309-3610 1155 Peachtree St., N.E.
Atlanta, GA 30309-3610
Telecommunications Svcs.
Carl E. Swearingen USA Senior Vice Senior Vice President -
2001 Campanile President and Corporate Compliance and
1155 Peachtree St., N.E. Corporate Corporate Secretary
Atlanta, GA 30309-3610 Secretary BellSouth Corporation
1155 Peachtree St., N.E.
Atlanta, GA 30309-3610
Telecommunications Svcs.
<PAGE>
Name, Citi- Present Position Present Principal Occupation,
Business Address zenship with BellSouth Name, Address and Principal
Business of Organization
F. Duane Ackerman USA Chairman of the President and CEO
2000 Campanile Board BellSouth Corporation
1155 Peachtree St., N.E. 1155 Peachtree St., N.E.
Atlanta, GA 30309-3610 Atlanta, GA 30309-3610
Telecommunications Svcs.
Reuben V. Anderson USA Director Partner, Phelps Dunbar
Phelps Dunbar Suite 500, Mtel Centre N.
Ste 500, Mtel Centre N. 200 South Lamar Street
200 South Lamar Street Jackson, MS 39201
Jackson, MS 39201 Attorneys
James H. Blanchard USA Director Chairman of the Board
Synovus Financial Corp. and CEO
Suite 301, One Arsenal Synovus Financial Corp.
901 Front Street Suite 301, One Arsenal
Columbus, GA 31901 901 Front Street
Columbus, GA 31901
Commercial Banking,
Securities Brokerage
and Data Processing
J. Hyatt Brown USA Director Chairman, President
Poe & Brown, Inc. and CEO
220 S. Ridgewood Ave. Poe & Brown, Inc.
Daytona Beach, FL 32114 220 S. Ridgewood Ave.
Daytona Beach, FL 32114
Insurance
<PAGE>
Name, Citi- Present Position Present Principal Occupation,
Business Address zenship with BellSouth Name, Address and Principal
Business of Organization
Armando M. Codina USA Director Chairman of the Board
Codina Group Inc. and CEO
Penthouse II Codina Group Inc.
Two Alhambra Plaza Penthouse II
Coral Gables, FL 33134 Two Alhambra Plaza
Coral Gables, FL 33134
Real Estate Development
Phyllis Burke Davis USA Director Retired Senior
284 Ocean Road Vice President
Box 264 Avon Products, Inc.
Bridgehampton, NY 11932 284 Ocean Road
Box 264
Bridgehampton, NY 11932
Kathleen F. Feldstein USA Director President
Economics Studies, Inc. Economics Studies, Inc.
147 Clifton Street 147 Clifton Street
Belmont, MA 02178 Belmont, MA 02178
John G. Medlin, Jr. USA Director Chairman Emeritus
Wachovia Corporation Wachovia Corporation
100 North Main Street 100 North Main Street
Winston-Salem, NC 27101 Winston-Salem, NC 27101
Interstate Bank
Holding Company
Leo F. Mullin USA Director President and Chief
Delta Air Lines, Inc. Executive Officer
P. O. Box 20706 Delta Air Lines, Inc.
Atlanta, GA 30320 P. O. Box 20706
Atlanta, GA 30320
<PAGE>
Name, Citi- Present Position Present Principal Occupation,
Business Address zenship with BellSouth Name, Address and Principal
Business of Organization
Robin B. Smith USA Director Chairman and CEO
Publishers Clearing House Publishers Clearing House
382 Channel Drive 382 Channel Drive
Port Washington, NY 11050 Port Washington, NY 11050
Magazine Subscription
Company
C. Dixon Spangler, Jr. USA Director Chairman of the Board
C.D. Spangler C.D. Spangler Construction Co.
Construction Co. P. O. Box 36007
P. O. Box 36007 Charlotte, NC 28236-6007
Charlotte, NC 28236-6007 Construction Company
William S. Stavropoulos USA Director President and Chief Executive
The Dow Chemical Company Officer
2030 Willard H. Dow Center The Dow Chemical Company
Midland, MI 48674 2030 Willard H. Dow Center
Midland, MI 48674
Chemical Manufacturing
Company
J. Tylee Wilson USA Director Retired Chairman of the
121 Lamplighter Lane Board and CEO
Ponte Vedra Beach, RJR Nabisco, Inc.
FL 32082 121 Lamplighter Lane
Ponte Vedra Beach,
FL 32082
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
<PAGE>
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,
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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).
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
(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.
<PAGE>
(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
<PAGE>
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
<PAGE>
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.
<PAGE>
(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.
<PAGE>
(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)
<PAGE>
for any reason 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.
<PAGE>
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
<PAGE>
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;
<PAGE>
(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
<PAGE>
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]
<PAGE>
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
<PAGE>
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 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,
<PAGE>
COMMON STOCK PURCHASE AGREEMENT
by and between
QWEST COMMUNICATIONS INTERNATIONAL INC.
and
BELLSOUTH ENTERPRISES, INC.
Dated as of April 19, 1999
<PAGE>
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
<PAGE>
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
<PAGE>
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
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 ANSCHUTZ COMPANY, a Delaware corporation (the
"Seller").
RECITALS
A. The Seller desires to sell to the Purchaser, and the Purchaser
desires to purchase from the Seller, 16,650,000 shares of the Common Stock of
Qwest Communications International Inc., a Delaware corporation (the "Company"),
$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 "Company Purchase
Agreement"), by and between the Purchaser and the Company for the purchase of
20,350,000 shares of Common Stock on the terms and conditions set forth in the
Company 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 Company 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 Seller hereby agrees to sell to the
Purchaser at the Closing (as defined in Section 2.1), and the Purchaser agrees
to purchase from the Seller at the Closing, 16,650,000 shares (each, a "Share"
and collectively, the "Shares") of Common Stock at $94.50 per Share for an
aggregate purchase price of $1,573,425,000.00 (the "Purchase Price").
ARTICLE II
CLOSING DATE; DELIVERY
<PAGE>
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 such other time and place as the Seller and the
Purchaser mutually agree, and shall be held simultaneously with the closing of
the Company Purchase Agreement (the date of the Closing being hereinafter
referred to as the "Closing Date").
2.2 Delivery. At the Closing, the Seller will deliver to the Purchaser a
certificate or certificates representing the Shares, duly endorsed for transfer,
against payment of the aggregate Purchase Price by wire transfer of immediately
available funds to an account designated by the Seller. 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 and the Seller 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., and an agreement
dated as of April 19, 1999, between BellSouth Enterprises, Inc. and
Anschutz Company, copies of each of which 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."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser as follows:
3.1 Corporate Existence and Power. Each of the Seller and the Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. The Company (1) 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, (2) 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 (3) has
all necessary
<PAGE>
corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.
3.2 Authorization; Contravention.
The execution and delivery by the Seller of this Agreement and
the performance by the Seller of its obligations under this Agreement, and the
sale 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 Seller, or materially impair or restrict the
Seller's power to perform its obligations as contemplated under said agreements.
The Shares are validly issued, fully paid and nonassessable and free and clear
of any liens. The 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). The Shares have been validly
issued, are fully paid and nonassessable, and are owned beneficially and of
record by the Seller, free and clear of any liens, claims, encumbrances or other
contractual restrictions of any kind. The transfer and delivery of the Shares by
the Seller to the Purchaser, as contemplated by this Agreement will transfer
good title to the Shares to the Purchaser, free and clear of all security
interests, liens, claims, encumbrances and other contractual restrictions of any
kind, in each case except for any of the foregoing created or permitted to exist
by or on behalf of the Purchaser.
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 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
<PAGE>
designation, declaration or filing with any Governmental Entity on the part of
the Seller is required in connection with the due execution and delivery of this
Agreement, or the offer, sale of the Shares, except for (a) those required under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and (b) such filings as may be required to be made with the SEC.
3.5 Binding Effect. This Agreement constitutes the legally valid and binding
obligation of the Seller 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 by the Company 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 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 Sellers'
knowledge, threatened against the Seller or any of its Affiliates or the Company
or any of its subsidiaries that (1) impairs (or, if successful, would so impair)
in any material respect the ability of the Seller or the Company to perform its
respective obligations under this Agreement, or the Company Purchase Agreement
and the Registration Rights Agreement, as the case may be, or (2) restricts
<PAGE>
in any material respect or prohibits (or, if successful, would so restrict
or prohibit) the sale of the Shares to the Purchaser.
(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 Seller's knowledge, threatened against the Seller or any of its Affiliates
or 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 are (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 Seller) 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 Seller or any of its Affiliates, on the one hand, and any Person (other than
the Purchaser), on the other hand that, as of the date hereof, would reasonably
be expected 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
Seller 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 Seller 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 Seller 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 Seller hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller 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 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.
<PAGE>
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 Seller 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 Seller in connection with the Purchaser's investment are those expressly
made by the Seller in Article III of this Agreement, and the Seller hereby
acknowledges that such representations and warranties are unaffected by the
Purchaser's investigation of the Company.
4.11 No Broker. The Purchaser hereby agrees to indemnify and hold harmless the
Seller 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 Seller 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,
<PAGE>
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 Seller to such effect on the
Closing Date.
5.2 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Seller 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 Seller 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 Company Purchase Agreement. The Purchaser and the Company shall have
consummated the acquisition by the Purchaser of 20,350,000 shares of Common
Stock from the Company pursuant to the terms of the Company Purchase Agreement
(unless such acquisition shall not have been consummated as a result of a breach
by the Purchaser thereunder).
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 Holme, Roberts & Owen LLP, counsel to the Seller,
substantially in the form attached hereto as Exhibit A.
ARTICLE VI
CONDITIONS TO OBLIGATION OF THE SELLER
The Seller's obligation to sell the Shares at the Closing is subject to
the fulfillment on or prior to the Closing Date of the following conditions:
<PAGE>
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 Seller 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 Seller 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 (except as
otherwise provided in this Agreement).
6.6 Registration Rights Agreement. The Registration Rights Agreement
shall not have been terminated.
6.7 Company Purchase Agreement. The Purchaser and the Company shall have
consummated the acquisition by the Purchaser of 20,350,000 shares of Common
Stock from the Company pursuant to the terms of the Company Purchase Agreement
(unless such acquisition shall not have been consummated as a result of a breach
by the Company 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
MISCELLANEOUS
7.1 Registration Rights. The Seller hereby agrees that if any "Other Agreement"
(as defined in that certain Registration Rights Agreement between the Seller and
the
<PAGE>
Company dated as of April 18, 1999) is entered into, the Seller will cause
the Company to enter into an "Other Agreement" with the Purchaser on
substantially the same terms.
7.2 Purchaser Director. The Seller will, and will cause its Affiliates to, vote
all of their respective shares of Common Stock in favor of the election of the
Purchaser Director (as defined in Section 7.5(b) of the Company Purchase
Agreement), for so long as the Purchaser is entitled under the Company Purchase
Agreement to designate a Purchaser Director.
7.3 Certain Definitions. As used in this Agreement:
(a) The term "Affiliate" shall have the meaning given such term in Rule 12b-2
under the Exchange Act.
(b) 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.
(c) 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 Seller 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).
(d) 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.
(e) 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.
<PAGE>
(f) 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.
(g) 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.
(h) 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).
(i) 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).
(j) 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.
7.4 Further Assurances.
(a) Each of the Seller 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) Each of the Seller 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 any law, rule, regulation, order or decree (collectively, the "Laws"). In
furtherance and not in limitation of the foregoing, each of the Seller 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
<PAGE>
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.
(c) 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 Seller 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.
(d) 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 Seller 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.
7.5 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.
7.6 Survival . 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.
7.7 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.
7.8 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
<PAGE>
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.
7.9 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.
7.10 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 Seller, to:
Anschutz Company
2400 Qwest Tower
555 Seventeenth Street
Denver, Colorado 80202
Facsimile Number: (303) 298-8881
Attention: Cannon Y. Harvey, President
and with additional copies to:
Qwest Communications International Inc.
700 Qwest Tower
555 Seventeenth Street
Denver, Colorado 80202
Facsimile Number: (303) 992-1798
Attention: Chief Financial Officer
Holme Roberts & Owen LLP
1700 Lincoln Street, Suite 4100
Denver, Colorado 80203
Facsimile Number: (303) 866-0200
Attention: Joseph W. Morrisey
<PAGE>
(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
7.11 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. The Purchaser shall pay the filing fee
for filing of the Notification and Report Form pursuant to the HSR Act.
7.12 Termination.
(a) This Agreement may be terminated at any time prior to the Closing Date:
(1) by mutual written consent of the Seller and the Purchaser;
(2) by either the Seller 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 Seller 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
<PAGE>
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 Seller 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 Seller 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.
7.13 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.
7.14 Publicity. The Seller 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 Seller nor
the Purchaser shall make such public announcement without the consent of the
other, except as required by law.
7.15 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.
7.16 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.
7.17 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 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, (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.
7.18 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,
<PAGE>
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.
7.19 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 Seller 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]
<PAGE>
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
ANSCHUTZ COMPANY
By: /s/ Craig D. Slater
Name: Craig D. Slater
Title: V.P.
S-1
<PAGE>
Exhibit A
Form of Opinion of Counsel to the Seller
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.
<PAGE>
COMMON STOCK PURCHASE AGREEMENT
by and between
ANSCHUTZ COMPANY
and
BELLSOUTH ENTERPRISES, INC
Dated as of April 19, 1999
<PAGE>
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 SELLER
3.1 Corporate Existence and Power.....................................2
3.2 Authorization; Contravention......................................3
3.3 SEC Documents.....................................................3
3.4 Approvals.........................................................3
3.5 Binding Effect....................................................4
3.6 Financial Information.............................................4
3.7 Absence of Certain Changes or Events..............................4
3.8 Litigation........................................................4
3.9 Capitalization....................................................5
3.10 Absence of Certain Agreements.....................................5
3.11 No Broker.........................................................5
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........................................................6
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
<PAGE>
TABLE OF CONTENTS
(continued)
Page
4.11 No Broker.........................................................7
ARTICLE V
CONDITIONS TO OBLIGATION OF THE PURCHASER
5.1 Representations and Warranties....................................7
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 Company Purchase Agreement........................................8
5.8 Master Agreement..................................................8
ARTICLE VI
CONDITIONS TO OBLIGATION OF THE SELLER
6.1 Representations and Warranties....................................8
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 Company Purchase Agreement........................................9
6.8 Master Agreement..................................................9
ARTICLE VII
MISCELLANEOUS
7.1 Registration Rights...............................................9
7.2 Purchaser Director...............................................10
7.3 Certain Definitions..............................................10
7.4 Further Assurances...............................................11
7.5 Governing Law....................................................12
7.6 Survival.........................................................12
7.7 Successors and Assigns...........................................12
7.8 Amendments; Etc..................................................12
7.9 Entire Agreement.................................................12
7.10 Notices..........................................................13
7.11 Fees, Costs and Expenses.........................................14
7.12 Termination......................................................14
<PAGE>
TABLE OF CONTENTS
(continued)
Page
7.13 Severability of Provisions.......................................14
7.14 Publicity........................................................15
7.15 Headings and References..........................................15
7.16 Counterparts; Effectiveness......................................15
7.17 Jurisdiction.....................................................15
7.18 Waiver of Jury Trial.............................................15
7.19 Non-Recourse.....................................................15
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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.
<PAGE>
(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
<PAGE>
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
<PAGE>
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.
<PAGE>
(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
<PAGE>
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
<PAGE>
(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
<PAGE>
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;
<PAGE>
(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
<PAGE>
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:
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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.
<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]
<PAGE>
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
QWEST COMMUNICATIONS
INTERNATIONAL INC.
By: /s/ Drake S. Tempest
Name: Drake S. Tempest
Title: Executive Vice President
and General Counsel
<PAGE>
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
