Exhibit 1-A
PURCHASE AGREEMENT
U S WEST CAPITAL FUNDING, INC.
$1,150,000,000
6 7/8% NOTES DUE AUGUST 15, 2001
UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF
PRINCIPAL, PREMIUM, IF ANY, AND INTEREST BY
U S WEST, INC.
August 20, 1999
J.P. Morgan Securities Inc.
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
As Representatives of the several Initial Purchasers
named in Schedule I hereto
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260-0060
Ladies and Gentlemen:
U S WEST Capital Funding, Inc., a Colorado corporation (the "COMPANY"),
proposes to issue and sell to the several Initial Purchasers listed in
Schedule I hereto (the "INITIAL PURCHASERS") for whom J.P. Morgan Securities
Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated are acting as
representatives (the "REPRESENTATIVES"), $1,150,000,000 principal amount of
its 6 7/8% Notes due August 15, 2001 (the "SECURITIES"). The Securities will
be unconditionally guaranteed as to payment of principal, premium, if any,
and interest (the "GUARANTEES") by U S WEST, Inc., a Delaware corporation
(the "GUARANTOR"), and will be issued pursuant to the provisions of an
Indenture, dated as of June 29, 1998 (the "INDENTURE"), among the Company,
the Guarantor and The First National Bank of Chicago, as trustee (the
"TRUSTEE").
The Securities will have the benefit of a Registration Rights Agreement,
dated as of August 20, 1999 (the "Registration Rights Agreement"), among the
Company, the Guarantor and the Initial Purchasers, pursuant to which the
Company and the Guarantor have agreed, for the benefit of the Initial
Purchasers and their respective direct and indirect transferees and assigns,
to register the Securities and the Guarantees under the Securities Act of
1933, as amended (the "SECURITIES ACT") subject to the terms and conditions
therein specified.
The sale of the Securities to the Initial Purchasers will be made
without registration of the Securities and the Guarantees under the
Securities Act, in reliance upon exemptions therefrom.
In connection with the sale of the Securities, the Company and the
Guarantor have prepared an offering memorandum dated the date hereof (the
"OFFERING MEMORANDUM"), for the information of the Initial Purchasers and for
delivery to prospective purchasers of the Securities. All references in this
Agreement to financial statements and schedules and other information which
is "contained," "included," "stated" or "given" in the Offering Memorandum
(or other references of like import) shall be deemed to mean and include all
such financial statements and schedules and other information which is
incorporated by reference in the Offering Memorandum.
The Guarantor has entered into an Agreement and Plan of Merger, dated as
of July 18, 1999 (as the same may have been or may hereafter be amended or
supplemented from time to time, the "MERGER AGREEMENT"), with Qwest
Communications International Inc. ("QWEST"), a Delaware corporation, pursuant
to which the Guarantor will merge with and into Qwest (the "MERGER") with
Qwest being the surviving corporation in the Merger.
The Company and the Guarantor hereby agree with the Initial Purchasers
as follows:
1. The Company agrees to issue and sell the Securities to the several Initial
Purchasers as hereinafter provided, and each Initial Purchaser, upon the
basis of the representations and warranties herein contained, but subject
to the conditions hereinafter stated, agrees to purchase, severally and not
jointly, from the Company the respective principal amount of Securities set
forth opposite such Initial Purchaser's name in Schedule I hereto at a
price (the "PURCHASE PRICE") equal to 99.524% of their principal amount,
plus accrued interest, if any, from August 25, 1999 to the date of payment
and delivery.
2. The Company and the Guarantor understand that the Initial Purchasers intend
(i) to offer privately pursuant to Rule 144A and pursuant to Regulation S
under the Securities Act their respective portions of the Securities as
soon after this Agreement has become effective as in the judgment of the
Initial Purchasers is advisable and (ii) initially to offer the Securities
upon the terms set forth in the Offering Memorandum.
Each of the Company and the Guarantor confirms that it has authorized
the Initial Purchasers, subject to the restrictions set forth below, to
distribute copies of the Offering Memorandum in connection with the offering
of the Securities. Each Initial Purchaser hereby severally makes to the
Company and the Guarantor the following representations and agreements:
(i) it is a "qualified institutional buyer" within the meaning of
Rule 144A under the Securities Act; and
(ii) (A) it will not solicit offers for, or offer to sell, the
Securities by any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act ("REGULATION
D")) and (B) it will solicit
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offers for the Securities only from, and will offer the Securities only
to, persons who it reasonably believes to be (x) in the case of offers
inside the United States, "qualified institutional buyers" within the
meaning of Rule 144A under the Securities Act and (y) in the case of
offers outside the United States, to persons other than U.S. persons
("FOREIGN PURCHASERS", which term shall include dealers or other
professional fiduciaries in the United States acting on a discretionary
basis for foreign beneficial owners (other than an estate or trust)) that,
in each case, in purchasing the Securities are deemed to have represented
and agreed as provided in the Offering Memorandum;
With respect to offers and sales outside the United States, as described in
clause (ii)(B)(y) above, each Initial Purchaser hereby severally represents
and agrees with the Company and the Guarantor that:
(i) it understands that no action has been or will be taken by the
Company or the Guarantor that would permit a public offering of the
Securities, or possession or distribution of the Offering Memorandum or any
other offering or publicity material relating to the Securities, in any
country or jurisdiction where action for that purpose is required;
(ii) it will comply with all applicable laws and regulations in each
jurisdiction in which it acquires, offers, sells or delivers Securities or
has in its possession or distributes the Offering Memorandum or any such
other material, in all cases at its own expense;
(iii) it understands that the Securities have not been and will not
be registered under the Securities Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S.
persons except in accordance with Rule 144A under the Securities Act or
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act;
(iv) it has offered the Securities and will offer and sell the
Securities (x) as part of its distribution at any time and (y) otherwise
until 40 days after the later of the commencement of the Offering and the
Closing Date, only in accordance with Rule 903 of Regulation S.
Accordingly, neither such Initial Purchaser, nor any of its Affiliates, nor
any persons acting on its behalf has engaged or will engage in any directed
selling efforts (within the meaning of Regulation S) with respect to the
Securities, and such Initial Purchaser, its Affiliates and any such persons
have complied and will comply with the offering restrictions requirement of
Regulation S;
(v) it agrees that, at or prior to confirmation of sales of the
Securities, it will have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that purchases
Securities from it during the restricted period a confirmation or notice to
substantially the following effect:
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"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered
and sold within the United States or to, or for the account or benefit
of, U.S. persons (i) as part of their distribution at any time or (ii)
otherwise prior to 40 days after the closing of the offering, except
in either case in accordance with Regulation S (or Rule 144A, if
available) under the Securities Act. Terms used above have the meaning
given to them by Regulation S"; and
(vi) it agrees that (i) it has not offered or sold Securities and,
prior to six months after the issue date of such Securities, will not offer
or sell any such Securities to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations
1995, (ii) it has complied and will comply with all applicable provisions
of the Financial Services Act 1986 with respect to anything done by it in
relation to the Securities in, from or otherwise involving the United
Kingdom, and (iii) it has only issued or passed on and will only issue or
pass on in the United Kingdom any document received by it in connection
with an issue of Securities to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements)(Exemptions) Order 1996 (as amended) or is a person to whom
such document may otherwise lawfully be issued or passed on.
Terms used in this Section 2 and not otherwise defined in this Agreement have
the meanings given to them by Regulation S.
3. Payment for the Securities shall be made by wire transfer in immediately
available funds to the account specified by the Company to the
Representatives at 9:00 A.M., New York City time, on August 25, 1999, or at
such other time on the same or such other date, not later than the fifth
Business Day thereafter, as the Representatives and the Company may agree
upon in writing. The time and date of such payment are referred to herein
as the "CLOSING DATE". As used herein, the term "BUSINESS DAY" means any
day other than a day on which banks are permitted or required to be closed
in New York City.
Payment for the Securities shall be made against delivery (x) with
respect to Securities to be resold to "qualified institutional buyers" by the
Initial Purchasers, to the nominee of The Depository Trust Company for the
respective accounts of the several Initial Purchasers of the Securities of
one or more global notes (collectively, the "RESTRICTED GLOBAL NOTES")
representing such Securities and (y) with respect to Securities to be resold
to foreign purchasers by the Initial Purchasers, to the nominee of The
Depository Trust Company for the respective accounts of the several Initial
Purchasers of the Securities of one or more Regulation S global notes
(collectively, the "REGULATION S GLOBAL NOTES" and, together with the
Restricted Global Notes, the "GLOBAL NOTES") representing such Securities,
with any transfer taxes payable in connection with the transfer to the
Initial Purchasers of the Securities duly paid by the Company. The Global
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Notes will be made available for inspection by the Initial Purchasers at the
office of Brown & Wood LLP, One World Trade Center, New York, New York 10048
not later than 1:00 P.M., New York City time, on the Business Day prior to
the Closing Date.
4. The Company and the Guarantor represent and warrant to each Initial
Purchaser that:
(a) the Offering Memorandum (other than the information
concerning Qwest contained under the captions "Recent Developments - Merger
with Qwest - Qwest" and "Selected Financial Data for Qwest Communications
International Inc." and the historical financial information of Qwest in
the section entitled "Unaudited Pro Forma Financial Information", as to
which no representation is made) will not, in the form used by the Initial
Purchasers to confirm sales of the Securities and as of the Closing Date,
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances existing at such dates, not misleading; PROVIDED, HOWEVER,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with written information
furnished to the Company or the Guarantor by any Initial Purchaser, or on
behalf of any Initial Purchaser by the Representatives, specifically for
use therein;
(b) the documents incorporated by reference in the Offering
Memorandum (the "INCORPORATED DOCUMENTS"), when they were filed with the
Securities and Exchange Commission (the "COMMISSION"), conformed in all
material respects to the requirements of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading; and any further documents so filed and
incorporated by reference in the Offering Memorandum, when such documents
are filed with the Commission, will conform in all material respects to the
requirements of the Exchange Act, and will not contain an 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;
(c) the financial statements of the Guarantor, together
with the related schedules and notes thereto, included and incorporated by
reference in the Offering Memorandum present fairly the consolidated
financial position of the Guarantor and its consolidated subsidiaries as of
the dates indicated and the statement of operations, shareowners' equity
and cash flows of the Guarantor and its consolidated subsidiaries for the
periods specified; and said financial statements have been prepared in
conformity with generally accepted accounting principles and practices
applied on a consistent basis throughout the periods involved;
(d) the pro forma financial statements of the Guarantor and
Qwest and the related notes thereto included in the Offering Memorandum, to
the best
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knowledge of the Company and the Guarantor, present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to the pro forma financial
statements and have been properly complied on the bases described therein,
and the assumptions used therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred
to therein;
(e) since the respective dates as of which information is
given in the Offering Memorandum, except as otherwise stated therein, (A)
there has been no material adverse change in the financial condition or
results of operations of the Company or of the Guarantor and its
subsidiaries, taken as a whole (a "MATERIAL ADVERSE EFFECT"), (B) there
have been no transactions entered into by the Company or by the Guarantor
or any of its subsidiaries, other than those in the ordinary course of
business, which are material with respect to the Company or the Guarantor
and its subsidiaries, taken as a whole, and (C) there has been no dividend
or distribution of any kind declared, paid or made by the Company or the
Guarantor on any class of its capital stock, except for regular quarterly
dividends on the Guarantor's common stock, par value $.01 per share, in
amounts that are consistent with past practice; provided, however, that the
Guarantor's quarterly dividend paid in August 1999 was $.75 per share;
(f) this Agreement has been duly authorized, executed and
delivered by each of the Company and the Guarantor;
(g) the Indenture has been duly authorized, executed and
delivered by each of the Company and the Guarantor and (assuming the due
authorization, execution and delivery by the Trustee) constitutes the
legal, valid and binding agreement of the Company and the Guarantor
enforceable against each of them in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law);
(h) the Registration Rights Agreement has been duly
authorized by the Company and the Guarantor and, when executed and
delivered by the Company and the Guarantor, will constitute a valid and
binding agreement of each of the Company and the Guarantor, enforceable
against the Company and the Guarantor in accordance with its terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), and except that
enforcement of
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rights to indemnification and contribution contained therein may be
limited by applicable Federal or state laws or the public policy underlying
such laws;
(i) the Securities have been duly authorized and, at the
Closing Date, will have been duly executed by the Company and, when
authenticated, issued and delivered in the manner provided for in the
Indenture and delivered against payment of the purchase price therefor as
provided in this Agreement, will constitute legal, valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law), and will be
in the form contemplated by, and entitled to the benefits of, the
Indenture;
(j) the Guarantees have been duly authorized and, at the
Closing Date, will have been duly executed by the Guarantor and, when
issued and delivered in the manner provided for in the Indenture, will
constitute legal, valid and binding obligations of the Guarantor,
enforceable against the Guarantor in accordance with their terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), and will be in the form
contemplated by, and entitled to the benefits of, the Indenture;
(k) the Exchange Notes (as defined in the Registration
Rights Agreement) have been duly authorized and, when authenticated, issued
and delivered in the manner provided for in the Indenture and issued and
delivered in exchange for the Securities in the manner contemplated in the
Registration Rights Agreement, will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law), and will be
in the form contemplated by, and entitled to the benefits of, the
Indenture;
(l) the Exchange Guarantees (as defined in the Registration
Rights Agreement) have been duly authorized and, when authenticated, issued
and delivered in the manner provided for in the Indenture and issued and
delivered in the manner contemplated in the Registration Rights Agreement,
will constitute valid and binding obligations of the Guarantor, enforceable
against the Guarantor in accordance with their terms, except as the
enforcement thereof may be limited by
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bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law);
(m) the Securities, the Guarantees, the Exchange Notes, the
Exchange Guarantees, the Indenture and the Registration Rights Agreement
will conform in all material respects to the respective statements relating
thereto contained in the Offering Memorandum;
(n) the execution, delivery and performance of this
Agreement and the Registration Rights Agreement and the consummation of the
transactions contemplated herein and therein (including, without
limitation, the issuance and sale of the Securities and the Guarantees) and
compliance by the Company and the Guarantor with their respective
obligations hereunder and thereunder have been duly authorized by all
necessary corporate action and do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company, the Guarantor or
any subsidiary of the Guarantor pursuant to, any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
agreement or instrument to which the Company, the Guarantor or any
subsidiary of the Guarantor is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Company, the
Guarantor or any subsidiary of the Guarantor is subject (collectively,
"AGREEMENTS AND INSTRUMENTS") (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation of
the provisions of the charter or bylaws of the Company, the Guarantor or
any subsidiary of the Guarantor or, to the best knowledge of the Company
and the Guarantor, any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company, the
Guarantor or any subsidiary of the Guarantor or any of their assets,
properties or operations. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness of the Company, the Guarantor or any subsidiary of
the Guarantor (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company, the Guarantor or any subsidiary of the
Guarantor;
(o) the Merger Agreement has been duly authorized, executed
and delivered by, and is a valid and binding agreement of, the Guarantor,
enforceable against the Guarantor in accordance with its terms;
(p) other than as set forth in the Offering Memorandum,
there is not pending or, to the knowledge of the Company or the Guarantor,
threatened any
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action, suit, proceeding, inquiry or investigation to which the Company,
the Guarantor or any subsidiary of the Guarantor is a party or to which
the assets, properties or operations of the Company, the Guarantor or any
subsidiary of the Guarantor is subject, before or by any court or
governmental agency or body, domestic or foreign, which might reasonably be
expected to result in a Material Adverse Effect or which might reasonably
be expected to materially and adversely affect the assets, properties or
operations of the Company, the Guarantor and any subsidiary of the
Guarantor, taken as a whole, or the consummation of the transactions
contemplated by this Agreement or the Indenture or the performance by the
Company or the Guarantor of their respective obligations thereunder;
(q) the Guarantor and its subsidiaries possess such
permits, licenses, approvals, consents and other authorizations
(collectively, "GOVERNMENTAL LICENSES") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct
the business now operated by them; the Guarantor and its subsidiaries are
in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or in the
aggregate, have a Material Adverse Effect; all of the Governmental Licenses
are valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect would not have a Material Adverse Effect; and neither
the Guarantor nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect;
(r) none of the Company, the Guarantor or any of their
respective affiliates (as defined in Rule 501(b) of Regulation D) has
directly, or through any agent, sold, offered for sale, solicited offers to
buy or otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or will be integrated with the sale of the
Securities in a manner that would require the registration under the
Securities Act of the offering contemplated by the Offering Memorandum;
(s) none of the Company, the Guarantor, any affiliate of
the Company or the Guarantor or any person acting on its or their behalf
has offered or sold the Securities by means of any general solicitation or
general advertising within the meaning of Rule 502(c) under the Securities
Act, or by means of any directed selling efforts within the meaning of Rule
902 under the Securities Act, and the Company, the Guarantor, any affiliate
of the Company and the Guarantor and any person acting on its or their
behalf has complied with and will implement the "offering restrictions"
requirements of Regulation S;
(t) the Securities satisfy the requirements set forth in
Rule 144A(d)(3) under the Securities Act;
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(u) assuming the accuracy of the representations of the
Initial Purchasers contained in Section 2 hereof, it is not necessary in
connection with the offer, sale and delivery of the Securities in the
manner contemplated by this Agreement to register the Securities under the
Securities Act or to qualify an indenture under the Trust Indenture Act of
1939 (the "TRUST INDENTURE ACT"); and
(v) none of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale of
the Securities) will violate or result in a violation of Section 7 of the
Exchange Act, or any regulation promulgated thereunder, including, without
limitation, Regulations T, U, and X of the Board of Governors of the
Federal Reserve System.
5. The Company and the Guarantor covenant and agree with each of the several
Initial Purchasers as follows:
(a) to deliver to the Initial Purchasers as many copies of
the Offering Memorandum (including all amendments and supplements thereto)
as the Initial Purchasers may reasonably request;
(b) before distributing any amendment or supplement to the
Offering Memorandum, to furnish to the Representatives a copy of the
proposed amendment or supplement for review and not to distribute any such
proposed amendment or supplement to which the Representatives reasonably
object;
(c) if, at any time prior to the earlier of (i) three
months from the date of the Offering Memorandum and (ii) notice by the
Representatives to the Company and the Guarantor of the completion of the
initial placement of the Securities, any event shall occur as a result of
which the Offering Memorandum as then amended or supplemented would include
an untrue statement of a material fact, or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary to amend
or supplement the Offering Memorandum to comply with law, forthwith to
prepare and furnish, at the expense of the Company, to the Initial
Purchasers and to the dealers (whose names and addresses the
Representatives will furnish to the Company) to which Securities may have
been sold by the Initial Purchasers on behalf of the Initial Purchasers and
to any other dealers upon request, such amendments or supplements to the
Offering Memorandum as may be necessary to correct such statement or
omission or to effect compliance with law;
(d) to endeavor to qualify the Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the
Representatives shall reasonably request and to continue such qualification
in effect so long as reasonably required for distribution of the
Securities; PROVIDED that the Company shall not be required to file a
general consent to service of process in any jurisdiction;
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(e) during the period of two years after the date hereof,
to furnish to the Initial Purchasers, as soon as practicable after the end
of each fiscal year, a copy of the Guarantor's annual report to
shareholders, if any, for such year, and to furnish to the Initial
Purchasers and to counsel to the Initial Purchasers, (i) as soon as
available, a copy of each report of the Guarantor filed with the Commission
under the Exchange Act or mailed to stockholders, and (ii) from time to
time, such other non-confidential information concerning the Guarantor or
the Company as the Initial Purchasers may reasonably request;
(f) during the period beginning on the date hereof and
continuing to and including the Business Day following the Closing Date,
not to, directly or indirectly, sell, offer to sell, grant any option for
the sale of, or otherwise dispose of, any of its senior debt securities
having a maturity of one year or more without the prior written consent of
the Representatives;
(g) to use the net proceeds received by the Company from
the sale of the Securities pursuant to this Agreement in the manner
specified in the Offering Memorandum under the caption "Use of Proceeds";
(h) if requested by the Representatives, to use its best
efforts to cause the Securities to be eligible for the PORTAL trading
system of the National Association of Securities Dealers, Inc.;
(i) to furnish to the holders of the Securities no later
than 90 days after the end of each fiscal year an annual report (including
a balance sheet and statements of income, stockholders' equity and cash
flows of the Guarantor and its consolidated subsidiaries certified by
independent public accountants) and, no later than 45 days after the end of
each of the first three quarters of each fiscal year (beginning with the
fiscal quarter ending after the date of the Offering Memorandum),
consolidated summary financial information of the Guarantor and its
subsidiaries of such quarter in reasonable detail;
(j) during the period of two years after the Closing Date,
the Company and the Guarantor will not, and will not permit any of their
respective controlled "affiliates" (as defined in Rule 144 under the
Securities Act) to, resell any of the Securities which constitute
"restricted securities" under Rule 144 that have been reacquired by any of
them;
(k) whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, to pay or cause
to be paid all costs and expenses incident to the performance of its
obligations hereunder and under the Registration Rights Agreement,
including without limiting the generality of the foregoing, all fees, costs
and expenses (i) incident to the preparation, issuance, execution,
authentication and delivery of the Securities, including any expenses of
the Trustee, (ii) incident to the preparation, printing and distribution of
the Offering Memorandum (including all exhibits, amendments and supplements
thereto), (iii) incurred in connection with the registration or
qualification and determination of
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eligibility for investment of the Securities under the laws of such
jurisdictions as the Representatives may designate (including reasonable
fees of counsel for the Initial Purchasers and their disbursements) and
the printing of memoranda relating thereto, (iv) in connection with the
approval for trading of the Securities on any securities exchange or
inter-dealer quotation system (as well as in connection with the
designation of the Securities as PORTAL securities, if so requested),
(v) in connection with the printing (including word processing and
duplication costs) and delivery of this Agreement, the Indenture, any
Preliminary and Supplemental Blue Sky Memoranda and any Legal Investment
Survey and the furnishing to Initial Purchasers and dealers of copies of
the Offering Memorandum, including mailing and shipping, as herein
provided, (vi) payable to rating agencies in connection with the rating
of the Securities, if applicable, and (vii) any expenses incurred by the
Company in connection with a "road show" presentation to potential
investors;
(l) while the Securities remain outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) and cannot be
sold without restriction under Rule 144(k) under the Securities Act, the
Company and the Guarantor will, during any period in which the Guarantor is
not subject to Section 13 or 15(d) under the Exchange Act or is not
complying with the reporting requirements thereof, make available to the
purchasers and any holder of Securities in connection with any sale thereof
and any prospective purchaser of Securities and securities analysts, in
each case upon request, the information specified in, and meeting the
requirements of, Rule 144A(d)(4) under the Securities Act (or any successor
thereto);
(m) neither the Company nor the Guarantor will take any
action prohibited by Regulation M under the Exchange Act, in connection
with the distribution of the Securities contemplated hereby;
(n) none of the Company, the Guarantor, any of their
respective affiliates (as defined in Rule 501(b) under the Securities Act)
or any person acting on behalf of the Company, the Guarantor or such
affiliate will solicit any offer to buy or offer or sell the Securities by
means of any form of general solicitation or general advertising,
including: (i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar medium or broadcast over
television or radio; and (ii) any seminar or meeting whose attendees have
been invited by any general solicitation or general advertising;
(o) none of the Company, the Guarantor, any of their
respective affiliates (as defined in Rule 144(a)(1) under the Securities
Act) or any person acting on behalf of any of the foregoing will engage in
any directed selling efforts with respect to the Securities within the
meaning of Regulation S under the Securities Act; and
(p) none of the Company, the Guarantor, any of their
respective affiliates (as defined in Regulation 501(b) of Regulation D
under the Securities Act) or any person acting on behalf of the Company,
the Guarantor or such affiliate
12
will sell, offer for sale or solicit offers to buy or otherwise negotiate
in respect of any security (as defined in the Securities Act) which will
be integrated with the sale of the Securities in a manner which would
require the registration under the Securities Act of the Securities and
the Company and the Guarantor will take all action that is appropriate or
necessary to assure that its offerings of other securities will not be
integrated for purposes of the Securities Act with the offering
contemplated hereby.
6. The several obligations of the Initial Purchasers hereunder to purchase the
Securities on the Closing Date are subject to the performance by the
Company and the Guarantor of their respective obligations hereunder and to
the following additional conditions:
(a) the representations and warranties of the Company and
the Guarantor contained herein are true and correct on and as of the
Closing Date as if made on and as of the Closing Date, the statements of
the officers of the Company and the Guarantor made pursuant to the
provisions hereof are true and correct and the Company and the Guarantor
shall have complied with all agreements and all conditions on their part to
be performed or satisfied hereunder at or prior to the Closing Date;
(b) except as previously disclosed to the Initial
Purchasers by the Company, the Guarantor or Qwest, as applicable, prior to
the execution of this Agreement, on or after the date of this Agreement and
prior to the Closing Date, there shall not have occurred any downgrading,
nor shall any notice have been given of (i) any downgrading, (ii) any
intended or potential downgrading or (iii) any review or possible change
that does not indicate an improvement, in the rating accorded any debt
securities of or guaranteed by the Company, the Guarantor or Qwest by any
"nationally recognized statistical rating organization", as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act;
(c) since the respective dates as of which information is
given in the Offering Memorandum, there shall not have been any change in
the financial condition of the Company or of the Guarantor and its
subsidiaries, taken as a whole, or of Qwest and its subsidiaries, taken as
a whole, or in the earnings, affairs or business prospects of the Company
or of the Guarantor and its subsidiaries, taken as a whole, or of Qwest and
its subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Offering Memorandum, the effect of which is, in the
judgment of the Representatives, so material and adverse as to make it
impracticable or inadvisable to proceed with the offering or the delivery
of the Securities on the Closing Date on the terms and in the manner
contemplated in the Offering Memorandum;
(d) the Representatives shall have received on and as of
the Closing Date a certificate of the President, any Vice President, the
Treasurer or any Assistant Treasurer of the Company in which such officers
shall state that, to the best of their knowledge after reasonable
investigation, the representations and warranties of the Company in this
Agreement are true and correct as if made at and
13
as of the Closing Date, that the Company has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date and that, since the respective
dates as of which information is given in the Offering Memorandum, there
has been no material adverse change in the financial condition or results
of operations of the Company, or, to the best knowledge of the Company, of
Qwest, and its subsidiaries, taken as a whole, except as set forth in or
contemplated by the Offering Memorandum;
(e) the Representatives shall have received on and as of
the Closing Date a certificate of the President, any Vice President, the
Treasurer or any Assistant Treasurer of the Guarantor in which such
officers shall state that, to the best of their knowledge after reasonable
investigation, the representations and warranties of the Guarantor in this
Agreement are true and correct as if made at and as of the Closing Date,
that the Guarantor has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior
to the Closing Date and that, since the respective dates as of which
information is given in the Offering Memorandum, there has been no material
adverse change in the financial condition or results of operations of the
Guarantor and its subsidiaries, taken as a whole, or, to the best knowledge
of the Guarantor, of Qwest, and its subsidiaries, taken as a whole, except
as set forth in or contemplated by the Offering Memorandum;
(f) Cadwalader, Wickersham & Taft, counsel for the Company
and the Guarantor, shall have furnished to the Representatives their
written opinion, dated the Closing Date, in form and substance satisfactory
to the Representatives, to the effect that:
(i) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Colorado and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now
being conducted.
(ii) The Guarantor is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now
being conducted.
(iii) The execution, delivery and performance of the
Indenture by the Company and the Guarantor have been duly authorized
by all necessary corporate action on the part of the Company and the
Guarantor. The Indenture has been duly and validly executed and
delivered by the Company and the Guarantor and (assuming the due
authorization, execution and delivery thereof by the Trustee),
constitutes the legal, valid and binding agreement of the Company and
the Guarantor enforceable against each of them in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditor's rights and remedies generally, and subject, as to
14
enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
(iv) The Securities, when duly executed and authenticated
in the manner contemplated in the Indenture and issued and delivered
to the Initial Purchasers against payment therefor in accordance with
the provisions hereof, will constitute legal, valid and binding
obligations of the Company, entitled to the benefits of the Indenture
and enforceable against the Company in accordance with their terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditor's
rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(v) The Guarantees, when duly executed in the manner
contemplated in the Indenture and issued and delivered to the Initial
Purchasers in accordance with the provisions of this Agreement, will
constitute legal, valid and binding obligations of the Guarantor
enforceable against the Guarantor in accordance with their terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditor's
rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(vi) The Exchange Notes (as defined in the Registration
Rights Agreement) have been duly authorized and, when duly executed in
the manner contemplated in the Indenture and issued and delivered in
exchange for the Securities in the manner contemplated in the
Registration Rights Agreement, will constitute legal, valid and
binding obligations of the Company enforceable against the Company in
accordance with their terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditor's rights and remedies generally, and
subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding
at law or in equity), and will be in the form contemplated by, and
entitled to the benefits of, the Indenture.
(vii) The Exchange Guarantees (as defined in the
Registration Rights Agreement) have been duly authorized and, when
duly executed in the manner contemplated in the Indenture and issued
and delivered in the manner contemplated in the Registration Rights
Agreement, will constitute legal, valid and binding obligations of the
Guarantor enforceable against the Guarantor in accordance with their
terms, subject to applicable bankruptcy,
15
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditor's rights and remedies generally, and
subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(viii) The execution, delivery and performance of this
Agreement by the Company and the Guarantor have been duly authorized
by all necessary corporate action on the part of the Company and the
Guarantor; and this Agreement has been duly and validly executed and
delivered by each of the Company and the Guarantor.
(ix) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and the Guarantor,
and is a valid and binding agreement of the Company and the Guarantor,
enforceable against the Company and the Guarantor in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditor's rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity),
and except that enforcement of rights to indemnification and
contribution contained therein may be limited by applicable federal or
state laws or the public policy underlying such laws.
(x) The Merger Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of,
the Guarantor, enforceable against the Guarantor in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditor's rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
(xi) No consent, approval, authorization or other action
by, or filing or registration with, any federal governmental authority
is required in connection with the execution and delivery by the
Company or the Guarantor of the Indenture or the issuance and sale of
the Securities and the Guarantees to the Initial Purchasers pursuant
to the terms of this Agreement, except such consents, approvals,
authorizations or registrations as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the Initial Purchasers.
(xii) The statements in the Offering Memorandum under the
headings "Description of Notes", "Exchange Offer; Registration Rights"
and "Notice to Investors" insofar as such statements constitute a
summary of certain
16
provisions of the documents referred to therein, are accurate in all
material respects.
(xiii) The Securities satisfy the requirements set forth in
Rule 144A(d)(3) under the Securities Act.
(xiv) Based upon the representations, warranties and
agreements of the Company and the Guarantor in Sections 4(r), 4(s),
5(n), 5(o), 5(p) and 6(a) of this Agreement and of the Initial
Purchasers in Section 2 of this Agreement and on the truth and
accuracy of the representations and agreements deemed to be made by
the purchasers of the Securities contained in the Offering Memorandum,
it is not necessary in connection with the offer, sale and delivery of
the Securities to the Initial Purchasers under this Agreement or in
connection with the initial resale of such Securities by the Initial
Purchasers in accordance with Section 2 of this Agreement to register
the Securities under the Securities Act or to qualify the Indenture
under the Trust Indenture Act; PROVIDED, HOWEVER, that such counsel
need not express any opinion with respect to the conditions under
which the Securities may be further resold.
In rendering such opinion, such counsel may rely as to matters of
fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and the Guarantor and of public
officials. Such counsel may also rely as to matters of Colorado law upon
the opinion referred to in Section 6(g) without independent verification.
In addition, such counsel shall state that it has participated in
conferences with representatives of the Company, the Guarantor and with the
Representatives and their counsel, at which conferences the contents of the
Offering Memorandum and related matters were discussed; such counsel has
not independently verified and are not passing upon and assume no
responsibility for the accuracy, completeness or fairness of the statements
contained in the Offering Memorandum and the limitations inherent in the
examination made by such counsel and the nature and extent of such
counsel's participation in such conferences are such that such counsel is
unable to assume, and does not assume, any responsibility for the accuracy,
completeness or fairness of such statements; however, based upon such
counsel's participation in the aforesaid conferences, no facts have come to
its attention which lead it to believe that the Incorporated Documents
(except as to the financial statements and the notes thereto, and the other
financial, statistical and accounting data included or incorporated by
reference therein or omitted therefrom, as to which such counsel need
express no belief), when they were filed with the Commission, complied as
to form in all material respects with the requirements of the Exchange Act
and the rules and regulations of the Commission thereunder or that the
Offering Memorandum (except as to the financial statements and the notes
thereto, and the other financial, statistical and accounting data included
or incorporated by reference therein or omitted therefrom), as of its issue
date or at the Closing Date, contained or contains any untrue statement of
a material fact or
17
omitted or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
Such opinion may state that it does not address the impact on the
opinions contained therein of any litigation or ruling relating to the
divestiture by American Telephone and Telegraph Company of ownership of its
operating telephone companies (the "DIVESTITURE").
The opinion of Cadwalader, Wickersham & Taft described above shall be
rendered to the Initial Purchasers and the Company at the request of the
Company and shall so state therein.
(g) Thomas O. McGimpsey, a Senior Attorney and Secretary for the
Company and a Senior Attorney and Assistant Secretary for the Guarantor,
shall have furnished to the Initial Purchasers his written opinion, dated
the Closing Date, in form and substance satisfactory to the Initial
Purchasers, to the effect that:
(i) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Colorado and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now
being conducted.
(ii) The Guarantor is a corporation duly incorporated,
validly existing and in good standing under the laws of the state of
its incorporation and has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business
as now being conducted.
(iii) The execution, delivery and performance of the
Indenture by the Company and the Guarantor have been duly authorized
by all necessary corporate action on the part of the Company and the
Guarantor. The Indenture has been duly and validly executed and
delivered by the Company and the Guarantor and (assuming the due
authorization, execution and delivery thereof by the Trustee),
constitutes the legal, valid and binding agreement of the Company and
the Guarantor enforceable against each of them in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditor's rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
(iv) The Securities, when duly executed and authenticated
in the manner contemplated in the Indenture and issued and delivered
to the Initial Purchasers against payment therefor in accordance with
the provisions hereof, will constitute legal, valid and binding
obligations of the Company, entitled to the benefits of the Indenture
and enforceable against the Company in accordance with their terms,
subject to applicable bankruptcy,
18
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditor's rights and remedies generally, and
subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(v) The Guarantees, when duly executed in the manner
contemplated in the Indenture and issued and delivered to the Initial
Purchasers in accordance with the provisions hereof, will constitute
legal, valid and binding obligations of the Guarantor enforceable
against the Guarantor in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditor's
rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(vi) The Exchange Notes (as defined in the Registration
Rights Agreement) have been duly authorized and, when duly executed in
the manner contemplated in the Indenture and issued and delivered in
exchange for the Securities in the manner contemplated in the
Registration Rights Agreement, will constitute legal, valid and
binding obligations of the Company enforceable against the Company in
accordance with their terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditor's rights and remedies generally, and
subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding
at law or in equity).
(vii) The Exchange Guarantees (as defined in the
Registration Rights Agreement) have been duly authorized and, when
duly executed in the manner contemplated in the Indenture and issued
and delivered in the manner contemplated in the Registration Rights
Agreement, will constitute legal, valid and binding obligations of the
Guarantor enforceable against the Guarantor in accordance with their
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditor's rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
(viii) The execution, delivery and performance of this
Agreement by the Company and the Guarantor have been duly authorized
by all necessary corporate action on the part of the Company and the
Guarantor; and this Agreement has been duly and validly executed and
delivered by each of the Company and the Guarantor.
19
(ix) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and the Guarantor,
and is a valid and binding agreement of the Company and the Guarantor,
enforceable against the Company and the Guarantor in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditor's rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity),
and except that enforcement of rights to indemnification and
contribution contained therein may be limited by applicable federal or
state laws or the public policy underlying such laws.
(x) The execution, delivery and performance of the Merger
Agreement by the Guarantor has been duly authorized by all necessary
corporate action on the part of the Guarantor. The Merger Agreement
has been duly and validly executed and delivered by the Guarantor,
enforceable against the Guarantor in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditor's
rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(xi) To the best of his knowledge, neither the Company,
the Guarantor nor any of its subsidiaries is in violation of its
charter or by-laws and no default by the Company, the Guarantor or any
of its subsidiaries exists in the due performance or observance of any
material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument that is described or referred to in the
Offering Memorandum.
(xii) All state regulatory consents, approvals,
authorizations or other orders (except as to the state securities or
Blue Sky laws, as to which such counsel need express no opinion)
legally required for the execution of the Indenture and the issuance
and sale of the Securities and the Guarantees to the Initial
Purchasers pursuant to the terms of this Agreement have been obtained;
PROVIDED that such counsel may rely on opinions of local counsel
satisfactory to said counsel.
(xiii) The enforceability and the legal, valid and binding
nature of the respective agreements and obligations of the Company and
the Guarantor set forth in the Indenture, the Registration Rights
Agreement, the Securities, the Guarantees, the Exchange Notes and the
Exchange Guarantees (collectively, the "AGREEMENTS") are not affected
by, and the performance of the obligations set forth in such
Agreements, the issuance and sale of the
20
Securities and the Guarantees and the consummation of the
transactions contemplated by such Agreements are not prevented or
restricted by, any action, suit, proceeding, order or ruling relating
to or issued or arising as a result of, the Divestiture.
(xiv) To the best of such counsel's knowledge, there is not
pending or threatened any action, suit, proceeding, inquiry or
investigation to which the Company, the Guarantor or any subsidiary of
the Guarantor is a party or to which the assets, properties or
operations of the Company, the Guarantor or any subsidiary of the
Guarantor is subject, before or by any court or governmental agency or
body, domestic or foreign, which might reasonably be expected to
result in a Material Adverse Effect or which might reasonably be
expected to materially and adversely affect the assets, properties or
operations thereof or the consummation of the transactions
contemplated by this Agreement, the Registration Rights Agreement or
the Indenture or the performance by the Company or the Guarantor of
their respective obligations hereunder or thereunder.
In rendering such opinion, such counsel may rely as to matters of New
York law upon the opinion referred to in Section 6(f) without independent
verification.
(h) on the date of the issuance of the Offering Memorandum and also
on the Closing Date, Arthur Andersen LLP shall have furnished to the
Initial Purchasers letters, dated the respective dates of delivery thereof,
in form and substance satisfactory to the Representatives, containing
statements and information of the type customarily included in accountants
"comfort letters" to underwriters with respect to the financial statements
and certain financial information of the Company, the Guarantor and Qwest
contained in the Offering Memorandum;
(i) the Initial Purchasers shall have received on and as of the
Closing Date an opinion of Brown & Wood LLP, counsel to the Initial
Purchasers, with respect to the validity of the Indenture and the
Securities, and such other related matters as the Initial Purchasers may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(j) the Initial Purchasers shall have received prior to the Closing
Date a copy of the Registration Rights Agreement, in the form and substance
satisfactory to the Initial Purchasers, duly executed by the Company and
the Guarantor, and the Registration Rights Agreement shall be in full force
and effect at the Closing Date; and
(k) on or prior to the Closing Date the Company shall have
furnished to the Initial Purchasers such further certificates and documents
as the Initial Purchasers shall reasonably request.
21
7. (a) The Company and the Guarantor jointly and severally agree to indemnify
and hold harmless each Initial Purchaser against any losses, claims,
damages or liabilities, joint or several, to which such Initial Purchaser
may become subject, as incurred, under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Offering Memorandum or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and will reimburse each Initial Purchaser, as
incurred, for any legal or other expenses reasonably incurred by such
Initial Purchaser in connection with investigating or defending any such
loss, claim, damage, liability or action or amounts paid in settlement of
any litigation or investigation or proceeding related thereto if such
settlement is effected with the written consent of the Company and the
Guarantor; PROVIDED, HOWEVER, that the Company and the Guarantor will not
be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in any of such
documents in reliance upon and in conformity with written information
furnished to the Company or the Guarantor by any Initial Purchaser, or on
behalf of any Initial Purchaser by the Representatives, specifically for
use therein.
(b) Each Initial Purchaser will indemnify and hold harmless the Company
and the Guarantor against any losses, claims, damages or liabilities to which
the Company or the Guarantor may become subject, as incurred, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the Offering Memorandum or any amendment or supplement thereto,
or arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company or the Guarantor by such Initial
Purchaser, or on behalf of such Initial Purchaser by the Representatives,
specifically for use therein, and will reimburse the Company and the
Guarantor, as incurred, for any legal or other expenses reasonably incurred
by the Company and the Guarantor in connection with investigating or
defending any such loss, claim, damage, liability or action.
(c) Promptly after receipt by an indemnified party under this Section 7
of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against the indemnifying party under
this Section 7, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 7. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein and, to the
extent that
22
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified party
under this Section 7 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. The indemnifying party or parties shall
not be liable under this Agreement with respect to any settlement made by any
indemnified party or parties without prior written consent by the
indemnifying party or parties to such settlement.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or (b)
above, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantor on the one hand and the
Initial Purchasers on the other from the offering of the Securities or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company and the Guarantor on the one hand and the Initial Purchasers on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities as well as any other relevant
equitable considerations. The relative benefits received by the Company and
the Guarantor on the one hand and the Initial Purchasers on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the
total discounts and commissions received by the Initial Purchasers. The
relative fault 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 Company and the Guarantor or the Initial Purchasers and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which
is the subject of this subsection (d). Notwithstanding the provisions of
this subsection (d), no Initial Purchaser shall be required to contribute any
amount in excess of the amount by which the total price at which the
Securities purchased by it were offered exceeds the amount of any damages
which such Initial Purchaser has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations in this subsection (d) to contribute are several in
proportion to the respective principal amount of the Securities set forth
opposite their names in Schedule I hereto, and not joint.
23
(e) The obligations of the Company and the Guarantor under this Section
7 shall be in addition to any liability which the Company or the Guarantor
may otherwise have and shall extend, upon the same terms and conditions, to
each person, if any, who controls any Initial Purchaser within the meaning of
the Securities Act or the Exchange Act; and the obligations of the Initial
Purchasers under this Section 7 shall be in addition to any liability which
the respective Initial Purchasers may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who controls the
Company or the Guarantor within the meaning of the Securities Act or the
Exchange Act.
The indemnity and contribution agreements contained in this Section 7
and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Initial Purchaser or any person controlling any Initial
Purchaser or by or on behalf of the Company or the Guarantor or any person
controlling the Company or the Guarantor and (iii) acceptance of and payment
for any of the Securities.
8. Notwithstanding anything herein contained, this Agreement may be terminated
in the absolute discretion of the Initial Purchasers, by notice given to
the Company and the Guarantor, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of
the New York Stock Exchange, the American Stock Exchange, the Nasdaq
National Market, the Chicago Board Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade, (ii) trading of any securities of
or guaranteed by the Company, the Guarantor or Qwest shall have been
suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York shall have
been declared by either Federal or New York State authorities, or (iv)
there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in the judgment
of the Initial Purchasers, is material and adverse and which, in the
judgment of the Initial Purchasers, makes it impracticable to market the
Securities on the terms and in the manner contemplated in the Offering
Memorandum.
9. This Agreement shall become effective upon the execution and delivery
hereof by the parties hereto.
If, on the Closing Date any one or more of the Initial Purchasers shall
fail or refuse to purchase Securities which it or they have agreed to
purchase hereunder on such date, and the aggregate principal amount of
Securities which such defaulting Initial Purchaser or Initial Purchasers
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate principal amount of the Securities to be purchased on such date,
the other Initial Purchasers shall be obligated severally in the proportions
that the principal amount of Securities set forth opposite their respective
names in Schedule I bears to the aggregate principal amount of Securities set
forth opposite the names of all such non-defaulting Initial Purchasers, or in
such other proportions as the Initial Purchasers may specify, to purchase the
Securities which such defaulting Initial Purchaser or Initial Purchasers
agreed but failed or refused to purchase on such date; PROVIDED that in no
event shall the principal
24
amount of Securities that any Initial Purchaser has agreed to purchase
pursuant to Section 1 be increased pursuant to this Section 9 by an amount in
excess of one-tenth of such principal amount of Securities without the
written consent of such Initial Purchaser. If, on the Closing Date any
Initial Purchaser or Initial Purchasers shall fail or refuse to purchase
Securities which it or they have agreed to purchase hereunder on such date,
and the aggregate principal amount of Securities with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of
Securities to be purchased on such date, and arrangements satisfactory to the
Initial Purchasers, the Company and the Guarantor for the purchase of such
Securities are not made within 36 hours after such default, this Agreement
shall terminate without liability on the part of any non-defaulting Initial
Purchaser, the Company or the Guarantor. In any such case either the Initial
Purchasers, the Company or the Guarantor shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Offering Memorandum or in any other
documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Initial Purchaser from liability
in respect of any default of such Initial Purchaser under this Agreement.
10. If this Agreement shall be terminated by the Initial Purchasers, or any of
them, because of any failure or refusal on the part of the Company or the
Guarantor to comply with the terms or to fulfill any of the conditions of
this Agreement, or if for any reason the Company or the Guarantor shall be
unable to perform its obligations under this Agreement or any condition of
the Initial Purchasers' obligations cannot be fulfilled, (i) the Company
and the Guarantor shall remain responsible for the expenses to be paid or
reimbursed by them pursuant to Section 5(k) and (ii) the Company and the
Guarantor agree to reimburse the Initial Purchasers or such Initial
Purchasers as have so terminated this Agreement with respect to themselves,
severally, for the out-of-pocket expenses reasonably incurred by such
Initial Purchasers in connection with this Agreement or the offering
contemplated hereunder, not exceeding $75,000, and for the fees and
disbursements of their counsel.
11. This Agreement shall inure to the benefit of and be binding upon the
Company, the Guarantor, the Initial Purchasers, any controlling persons
referred to herein and their respective successors and assigns. Nothing
expressed or mentioned in this Agreement is intended or shall be construed
to give any other person, firm or corporation any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision
herein contained. No Initial Purchaser of Securities from any Initial
Purchaser shall be deemed to be a successor by reason merely of such
purchase.
12. All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any
standard form of telecommunication. Notices to the Initial Purchasers
shall be given to the Initial Purchasers c/o J.P. Morgan Securities Inc.,
60 Wall Street, New York, New York 10260 (telefax: 648-5909); Attention:
Syndicate Department. Notices to the Company and the Guarantor shall be
given to each of them at 1801 California Street, Denver, Colorado 80202
(telefax: (303) 896-6468); Attention: Sean P. Foley.
25
13. This Agreement may be signed in counterparts, each of which shall be an
original and all of which together shall constitute one and the same
instrument.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF
LAWS PROVISIONS THEREOF.
26
If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
U S WEST CAPITAL FUNDING,
INC.
By: /s/ Sean P. Foley
--------------------------
Name: Sean P. Foley
Title: Treasurer
U S WEST, INC.
By: /s/ Sean P. Foley
--------------------------
Name: Sean P. Foley
Title: Treasurer
Accepted: August 20, 1999
J.P. MORGAN SECURITIES INC.
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: J.P. MORGAN SECURITIES INC.
By: /s/ John E. Simmons
--------------------------
Name: John E. Simmons
Title: Vice President
For themselves and as Representatives of the
other Initial Purchasers named in Schedule I hereto.
27
SCHEDULE I
Principal Amount
of Securities
Initial Purchaser To Be Purchased
----------------- ---------------
J.P. Morgan Securities Inc............................... $431,250,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated....... 431,250,000
Banc of America Securities LLC........................... 57,500,000
Lehman Brothers Inc...................................... 57,500,000
Salomon Smith Barney Inc................................. 57,500,000
ABN AMRO Incorporated.................................... 11,500,000
Banc One Capital Markets, Inc............................ 11,500,000
BNY Capital Markets, Inc................................. 11,500,000
Commerzbank Capital Markets Corporation.................. 11,500,000
Fleet Securities, Inc.................................... 11,500,000
Mellon Financial Markets, Inc............................ 11,500,000
Norwest Investments Services Inc......................... 11,500,000
Muriel Siebert & Co., Inc................................ 11,500,000
Utendahl Capital Partners, L.P........................... 11,500,000
The Williams Capital Group, L.P.......................... 11,500,000
--------------
Total: $1,150,000,000