PURCHASE AGREEMENT
QWEST CAPITAL FUNDING, INC.
$300,000,000
Floating Rate Notes due July 8, 2002
Unconditionally Guaranteed as to Payment of Principal
and Interest by
QWEST COMMUNICATIONS INTERNATIONAL INC.
July 3, 2000
Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Qwest Capital Funding, Inc., a Colorado corporation (formerly known as U S
WEST Capital Funding, Inc.*) (the "Company"), proposes to issue and sell to
Salomon Smith Barney Inc. (the "Initial Purchaser") $300,000,000 principal
amount of its Floating Rate Notes due July 8, 2002 (the "Securities"). The
Securities will be unconditionally guaranteed as to payment of principal and
interest (the "Guarantees") by Qwest Communications International Inc., a
Delaware corporation (as successor to U S WEST, Inc.) (the "Guarantor"), and
will be issued pursuant to the provisions of an Indenture, dated as of June 29,
1998 (the "Base Indenture"), as supplemented by the First Supplemental
Indenture, dated as of June 30, 2000 (the "Supplemental Indenture"), and,
together with the Base Indenture, the "Indenture"), each among the Company, the
Guarantor and Bank One Trust Company, National Association, as trustee (the
"Trustee").
The sale of the Securities to the Initial Purchaser will be made without
registration of the Securities under the Securities Act of 1933, as amended (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 Purchaser 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.
* Effective July 5, 2000, U S WEST Capital Funding, Inc. will change its name
to Qwest Capital Funding, Inc.
The Company and the Guarantor hereby agree with the Initial Purchaser as
follows:
1. The Company agrees to issue and sell the Securities to the Initial
Purchaser as hereinafter provided, and the Initial Purchaser, upon the basis of
the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase from the Company $300,000,000
principal amount of Securities at a price (the "Purchase Price") equal to
99.812% of their principal amount, plus accrued interest, if any, from July 7,
2000 to the date of payment and delivery.
2. The Company and the Guarantor understand that the Initial Purchaser
intends (i) to offer the Securities privately as soon after this Agreement has
become effective as in the judgment of the Initial Purchaser 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 Purchaser, subject to the restrictions set forth below, to distribute
copies of the Offering Memorandum in connection with the offering of the
Securities. The Initial Purchaser hereby 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 offers for the Securities only from, and will offer the Securities only
to, persons who it reasonably believes to be "qualified institutional buyers"
within the meaning of Rule 144A under the Securities Act that in purchasing the
Securities are deemed to have represented and agreed as provided in the Offering
Memorandum;
3. Payment for the Securities shall be made by wire transfer in immediately
available funds to the account specified by the Company to the Initial Purchaser
at 9:00 A.M., New York City time, on July 7, 2000, or at such other time on the
same or such other date, not later than the fifth Business Day thereafter, as
the Initial Purchaser 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 with respect to
Securities to be resold to "qualified institutional buyers" by the Initial
Purchaser, to the nominee of The
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Depository Trust Company for the account of the Initial Purchaser of one or more
global notes (the "Global Notes") representing such Securities, with any
transfer taxes payable in connection with the transfer to the Initial Purchaser
of the Securities duly paid by the Company. The Global Notes will be made
available for inspection by the Initial Purchaser at the office of Salomon Smith
Barney Inc. at the address set forth above 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 the Initial
Purchaser that:
(a) the Offering Memorandum will not, in the form used by the Initial
Purchaser to confirm sales of the Securities and prior to 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 the Initial Purchaser, 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 U S WEST, Inc. and Qwest Communications
International Inc., together with the related schedules and notes thereto,
incorporated by reference in the Offering Memorandum present fairly the
consolidated financial position of each such entity and its consolidated
subsidiaries as of the dates indicated and the statement of operations,
shareowners' equity and cash flows of each such entity 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. The pro
forma inancial statements and the related notes thereto incorporated by
reference in the Offering Memorandum present fairly the information shown
therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma
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financial statements and have been properly compiled on the bases described
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;
(d) 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 in amounts that are consistent with
past practice;
(e) this Agreement has been duly authorized, executed and delivered by each
of the Company and the Guarantor;
(f) 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);
(g) 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;
(h) 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
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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;
(i) as of the Closing Date, the Securities, the Guarantees and the
Indenture will conform in all material respects to the respective statements
relating thereto contained in the Offering Memorandum;
(j) the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein (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 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;
(k) 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
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
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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;
(l) 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;
(m) 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;
(n) 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;
(o) the Securities satisfy the requirements set forth in Rule 144A(d)(3)
under the Securities Act;
(p) assuming the accuracy of the representations of the Initial Purchaser
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
(q) 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
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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 the Initial
Purchaser as follows:
(a) to deliver to the Initial Purchaser as many copies of the Offering
Memorandum (including all amendments and supplements thereto) as the Initial
Purchaser may reasonably request;
(b) before distributing any amendment or supplement to the Offering
Memorandum, to furnish to the Initial Purchaser a copy of the proposed amendment
or supplement for review and not to distribute any such proposed amendment or
supplement to which the Initial Purchaser reasonably objects;
(c) if, at any time prior to 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 Purchaser, 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 Initial Purchaser 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;
(e) during the period of two years after the date hereof, to furnish to the
Initial Purchaser, 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 Purchaser and to counsel to the Initial Purchaser,
(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 information concerning the Guarantor or the Company as the
Initial Purchaser 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 Initial Purchaser;
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(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) to furnish to the holders of the Securities as soon as practical 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,
as soon as practicable 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;
(i) 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 "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;
(j) 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,
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 eligibility for investment of the Securities under the laws of such
jurisdictions as the Initial Purchaser may designate (including fees of counsel
for the Initial Purchaser 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 Purchaser 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;
(k) 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
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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);
(l) neither the Company nor the Guarantor will not take any action
prohibited by Regulation M under the Exchange Act, in connection with the
distribution of the Securities contemplated hereby;
(m) 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;
and
(n) 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 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 obligation of the Initial Purchaser hereunder to purchase the
Securities on the Closing Date is 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) 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 or the
Guarantor by any "nationally recognized
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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 in the earnings, affairs or business prospects of the Company or of
the Guarantor 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 Initial Purchaser, 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 Initial Purchaser 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 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, except as set forth in or contemplated by the Offering Memorandum;
(e) the Initial Purchaser 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, except as set forth in or
contemplated by the Offering Memorandum;
(f) Holme, Roberts & Owen LLP, counsel for the Company and the Guarantor,
shall have furnished to the Initial Purchaser their written opinion, dated the
Closing Date, in form and substance satisfactory to the Initial Purchaser, to
the effect that:
(i) The Company is a corporation 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.
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(ii) The Guarantor is a corporation 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 Supplemental 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 Supplemental
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 federal or state 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 materiality, commercial
reasonableness, good faith, fair dealing and to the discretion of the court
before which any proceeding therefore may be brought, and public policy
(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 Purchaser
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 federal or state 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 materiality, commercial
reasonableness, good faith, fair dealing and to the discretion of the court
before which any proceeding therefore may be brought, and public policy
(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 Purchaser 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 federal or state 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 materiality, commercial
reasonableness, good faith, fair dealing and to the discretion of the court
before which any proceeding therefore may be brought, and public policy
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
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(vi) 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.
(vii) 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
Supplemental Indenture or the issuance and sale of the Securities and the
Guarantees to the Initial Purchaser 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 Purchaser.
(viii) The statements in the Offering Memorandum under the headings
"Description of Notes" and "Notice to Investors" insofar as such statements
constitute a summary of certain provisions of the documents referred to therein,
are accurate in all material respects.
(ix) The Securities satisfy the requirements set forth in Rule 144A(d)(3)
under the Securities Act.
(x) Based upon the representations, warranties and agreements of the
Company and the Guarantor in Sections 4(m), 4(n), 5(n), 5(o) and 6(a) of this
Agreement and of the Initial Purchaser 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 Purchaser under this Agreement or in connection with the initial
resale of such Securities by the Initial Purchaser 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
Initial Purchaser and its counsel, at which conferences the contents of the
Offering Memorandum and related
12
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 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 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 Holme, Roberts & Owen LLP described above shall be rendered
to the Initial Purchaser and the Company at the request of the Company and shall
so state therein.
(g) Yash Rana, Esq., Associate General Counsel and Assistant Secretary for
the Company and the Guarantor shall have furnished to the Initial Purchaser his
written opinion, dated the Closing Date, in form and substance satisfactory to
the Initial Purchaser, to the effect that:
(i) The Company is a corporation, 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, 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 Supplemental 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 Supplemental
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
13
agreement of the Company and the Guarantor enforceable against each of them in
accordance with its terms, subject to applicable federal or state 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
materiality, commercial reasonableness, good faith, fair dealing and to the
discretion of the court before which any proceeding therefore may be brought,
and public policy (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 Purchaser
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 federal or state 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 materiality, commercial
reasonableness, good faith, fair dealing and to the discretion of the court
before which any proceeding therefore may be brought, and public policy
(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 Purchaser 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 federal or state 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 materiality, commercial
reasonableness, good faith, fair dealing and to the discretion of the court
before which any proceeding therefore may be brought, and public policy
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
(vi) 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.
(vii) 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 or the execution of the
Supplemental Indenture and the issuance and sale of the Securities and the
Guarantees to the
14
Initial Purchaser 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.
(viii) To 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 (i) might reasonably be expected to materially and
adversely affect the assets, properties or operations of the Guarantor and its
subsidiaries, taken as a whole, or (ii) challenge the issuance and sale of the
Securities or the payments by the Company and the Guarantor of principal and
interest on the Securities.
Such opinion may state that it does not address the impact of the opinions
contained therein of any litigation or ruling relating to the Divestiture.
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) Thomas O. McGimpsey, a former Senior Attorney and Secretary for U S
WEST Capital Funding, Inc. and a former Senior Attorney and Assistant Secretary
for U S WEST, Inc., shall have furnished to the Initial Purchaser his written
opinion, dated as of June 30, 2000, in form and substance satisfactory to the
Initial Purchaser, to the effect that:
(i) U S WEST Capital Funding, Inc. is a corporation duly incorporated and
validly existing under the laws of the State of Colorado.
(ii) U S WEST, Inc. is a corporation duly incorporated and validly existing
under the laws of the State of Delaware.
(iii) The execution, delivery and performance of the Base Indenture by U S
WEST Capital Funding, Inc. and U S WEST, Inc. have been duly authorized by all
necessary corporate action on the part of U S WEST Capital Funding, Inc. and U S
WEST, Inc. The Base Indenture has been duly and validly executed and delivered
by U S WEST Capital Funding, Inc. and U S WEST, Inc.
(iv) 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 U S WEST Capital Funding, Inc. or U S WEST,
Inc. of the Base Indenture.
15
In addition, such counsel shall state that it has participated in
conferences with representatives of U S WEST Capital Funding, Inc., U S WEST,
Inc. and with the Initial Purchaser and its 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.
(i) on the date of the issuance of the Offering Memorandum and also on the
Closing Date, Arthur Andersen LLP and KPMG LLP shall have furnished to the
Initial Purchaser letters, dated the respective dates of delivery thereof, in
form and substance satisfactory to the Initial Purchaser, 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 contained in the Offering Memorandum;
(j) the Initial Purchaser shall have received on and as of the Closing Date
an opinion of Brown & Wood LLP, counsel to the Initial Purchaser, with respect
to the validity of the Indenture and the Securities, and such other related
matters as the Initial Purchaser 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; and
(k) on or prior to the Closing Date the Company shall have furnished to the
Initial Purchaser such further certificates and documents as the Initial
Purchaser shall reasonably request.
7. (a) The Company and the Guarantor jointly and severally agree to
indemnify and hold harmless the Initial Purchaser against any losses, claims,
damages or liabilities, joint or several, to which the 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
16
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 the Initial Purchaser, as incurred, for
any legal or other expenses reasonably incurred by the 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 the Initial Purchaser
specifically for use therein.
(b) The 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 the Initial Purchaser 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 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
17
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 Purchaser 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 Purchaser 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 Purchaser 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 Purchaser. 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 Purchaser 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), the Initial Purchaser
shall not 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 the 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.
(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 the
person, if any, who controls the Initial Purchaser within the meaning of the
Securities Act or the Exchange Act; and the obligations of the Initial Purchaser
under this Section 7 shall be in addition to any liability which the respective
Initial Purchaser 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.
18
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
the Initial Purchaser or any person controlling the 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 Purchaser, 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 National Association of
Securities Dealers, Inc., 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 or the Guarantor 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
Purchaser, is material and adverse and which, in the judgment of the Initial
Purchaser, 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.
10. If this Agreement shall be terminated by the Initial Purchaser 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 Purchaser's
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 Purchaser for the out-of-pocket expenses reasonably incurred by the
Initial Purchaser 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 Purchaser, 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 purchaser
of Securities from any Initial Purchaser shall be deemed to be a successor by
reason merely of such purchase.
19
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 Purchaser shall be given to
Salomon Smith Barney Inc., 388 Greenwich Street, New York, New York 10013
(telefax: (212) 316-5711); Attention: Office of the General Counsel. Notices to
the Company and the Guarantor shall be given at ___________________, Denver,
Colorado 80202 (telefax: (303) 896-6468); Attention: ___________.
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, PROVIDED THAT THE PARTIES HERETO ELECT PURSUANT TO
SECTION 5-1401 OF THE GENERAL OBLIGATION LAW OF NEW YORK TO HAVE THIS AGREEMENT
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
20
If the foregoing is in accordance with your understanding, please sign and
return a counterpart hereof.
Very truly yours,
QWEST CAPITAL FUNDING, INC.
By: /s/ Yash A. Rana
--------------------------------------------
Name: Yash A. Rana
Title: Assistant Secretary
By: /s/ Yash A. Rana
Name: Yash A. Rana
Title: Assistant Secretary
Accepted: July 3, 2000
SALOMON SMITH BARNEY INC.
By: /s/ Martha D. Bailey
----------------------------------------------------------
Name: Martha D. Bailey
Title: First Vice President and Counsel
21