Exhibit 10.1

 

EXECUTION COPY

 

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

 

Civil Action No. 01-CV-1451-REB-CBS

 

(Consolidated with Civil Action Nos. 01-RB-1472, 01-RB-1527, 01-RB-1616.
01-RB-1799, 01-RB-1930, 01-RB-2083, 02-RB-333, 02-RB-374, 02-D-507, 02-RB-658,
02-RB-755, 02-RB-798, and 04-RB-238)

 

In re QWEST COMMUNICATIONS INTERNATIONAL INC. SECURITIES LITIGATION

 

STIPULATION OF PARTIAL SETTLEMENT

 

This Stipulation of Partial Settlement dated as of November 21, 2005 (the
“Stipulation”), is made and entered into pursuant to Rule 23 of the Federal
Rules of Civil Procedure and contains the terms of a settlement by and among the
Settling Parties to the above-entitled Litigation: (i) the Lead Plaintiffs (on
behalf of themselves and each of the Class Members), by and through Lead
Counsel; and (ii) the Settling Defendants, by and through their counsel of
record in the Litigation.  The Stipulation is intended by the Settling Parties
to resolve fully, finally and forever discharge and settle the Released Claims,
upon and subject to the terms and conditions hereof and subject to the approval
of this Court.  All capitalized terms in this Stipulation shall have the
meanings specified for them herein.

 

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I.                 THE LITIGATION

 

On July 27, 2001, New England Healthcare Employees Pension Fund filed a class
action complaint, entitled New England Health Care Employees Fund v. Qwest et
al., Civil Action No. 01-N-1451-REB-CBS, in the United States District Court for
the District of Colorado, alleging various violations of the federal securities
laws.  A number of similar class action complaints were subsequently filed in
the United States District Court for the District of Colorado.  Pursuant to the
Private Securities Litigation Reform Act of 1995, all of the related class
action complaints were consolidated under the first filed case No. 01-N-1451;
New England Healthcare Employees Pension Fund, Clifford Mosher, Tejinder Singh,
and Satpal Singh were appointed Lead Plaintiffs; and a consolidated class action
complaint was filed.  Lead Plaintiffs filed amended complaints on December 3,
2001, April 5, 2002, May 2, 2002, August 21, 2002, and February 6, 2004.  In the
Fifth Amended Complaint, the named defendants in the Litigation were Qwest
Communications International Inc., Arthur Andersen LLP, Joseph Nacchio, Philip
Anschutz, Robin Szeliga, Robert Woodruff, Stephen Jacobsen, Drake Tempest, Marc
Weisberg, James Smith, Lewis Wilks, Craig Slater, Afshin Mohebbi, Gregory Casey,
and Vinod Khosla.  The causes of action asserted in the consolidated amended
class action complaint were for violations of the Securities Act of 1933 and the
Securities Exchange Act of 1934.  Lead Plaintiffs sought to recover money and/or
other relief on behalf of themselves and a putative class.

 

On November 4, 2002, Lead Plaintiffs moved for a temporary restraining order and
a preliminary injunction to prevent Qwest from selling certain assets, or, in
the

 

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alternative, to place the proceeds from that sale in trust.  Qwest opposed that
motion.  The Court denied Lead Plaintiffs’ request for a temporary restraining
order, and following supplemental briefing and a hearing at which both sides
presented evidence, denied Lead Plaintiffs’ request for a preliminary
injunction.

 

Defendants moved to dismiss Lead Plaintiffs’ various consolidated amended
complaints, and Lead Plaintiffs opposed Defendants’ motions.  Defendants’
motions to dismiss were granted in part and denied in part, with some Individual
Defendants being dismissed from the Litigation.  In other instances, the claims
or allegations against Defendants were narrowed.

 

Those Defendants not dismissed from the Litigation filed answers denying all
material allegations of Lead Plaintiffs’ Fifth Amended Complaint and asserted
various defenses.  Lead Plaintiffs and Defendants engaged in extensive
discovery, which has been coordinated with discovery in several other state and
federal securities actions.  For example, Qwest has produced more than 8,000,000
pages of documents, and Lead Plaintiffs and Defendants have conducted more than
50 depositions.  Those depositions began in early 2005.

 

On March 14, 2005, Lead Plaintiffs filed a motion for class certification, which
Defendants opposed.  Upon Final Settlement Approval, this Stipulation renders
Lead Plaintiffs’ motion for class certification moot as to the Settling
Defendants.

 

II.             DEFENDANTS’ DENIALS OF WRONGDOING AND LIABILITY

 

The Defendants have denied and continue to deny each and all of the claims and
contentions alleged in the Litigation.  The Defendants expressly have denied and

 

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continue to deny all charges of wrongdoing or liability against them arising out
of any of the conduct, statements, acts or omissions alleged, or that could have
been alleged, in the Litigation.  The Defendants also have denied and continue
to deny, inter alia, the allegations that the Lead Plaintiffs or the Class have
suffered any damages, and that the Lead Plaintiffs or the Class were harmed by
the conduct alleged in the Litigation.

 

Nonetheless, the Settling Defendants have concluded that further conduct of the
Litigation would be protracted and expensive, and that it is desirable that the
Litigation be fully and finally settled in the manner and upon the terms and
conditions set forth in this Stipulation.  The Settling Defendants also have
taken into account the uncertainty and risks inherent in any litigation,
especially in complex cases like this Litigation.  The Settling Defendants have,
therefore, determined that it is desirable and beneficial to them that the
Litigation be settled in the manner and upon the terms and conditions set forth
in this Stipulation.

 

This Stipulation, and any and all exhibits or documents referred to herein, or
any terms or representations herein or therein, or any action taken to carry out
this Stipulation, are not, and shall in no event be construed or be deemed to
be, evidence of, or an admission or a concession by the Defendants of any fault,
liability, or damages whatsoever.  The Defendants deny any and all wrongdoing of
any kind whatsoever and deny any liability to Lead Plaintiffs or the
Class Members.  The Defendants do not concede any infirmity in the defenses they
have asserted in the Litigation, nor are any such defenses waived.  It is the
intent of Lead Plaintiffs and the Settling Defendants that this Stipulation not
be used for any purpose of any kind other than to enforce the

 

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provisions of this Stipulation or the provisions of any related agreement,
release, or exhibit hereto, or in order to support a defense of res judicata,
collateral estoppel, accord and satisfaction, release, or other theory of claim
or issue preclusion or similar defense.  Therefore, pursuant to this
Stipulation, as ordered by this Court, and pursuant to Federal Rule of Evidence
408, any other Federal Rule of Evidence, the rules of evidence of the various
states, the rules of evidence followed by any quasi-judicial bodies, including
regulatory and self-regulatory organizations, and any other applicable law,
rule or regulation, the Settling Parties agree that the fact of entering into or
carrying out this Stipulation, the exhibits hereto, and any negotiations and
proceedings related hereto, and the settlement itself, shall not be construed
as, offered into evidence as, or deemed to be evidence of, an admission or
concession of liability by or an estoppel against any Defendant, a waiver of any
applicable statute of limitations or repose, and shall not be offered by a party
hereto into evidence, or considered, in any action or proceeding against any
Defendant in any judicial, quasi-judicial, administrative agency, regulatory or
self-regulatory organization, or other tribunal, or proceeding for any purpose
whatsoever, other than to enforce the provisions of this Stipulation or the
provisions of any related agreement, release, or exhibit hereto, or in order to
support a defense of res judicata, collateral estoppel, accord and satisfaction,
release or other theory of claim or issue preclusion or similar defense.

 

Notwithstanding the foregoing, based upon the publicly available information at
the time of this Stipulation, Settling Defendants agree that they will not
contest that the Litigation was filed in good faith, was not frivolous, and is
being settled voluntarily in an

 

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amount and manner that reasonably reflects the risks posed by the claims against
the Settling Defendants collectively.

 

III.         CLAIMS OF THE LEAD PLAINTIFFS AND BENEFITS OF SETTLEMENT

 

The Lead Plaintiffs believe that the claims asserted in the Litigation have
merit and believe that the evidence developed to date supports the claims. 
However, the Lead Plaintiffs and Lead Counsel recognize and acknowledge the
expense and length of continued proceedings necessary to prosecute the
Litigation against the Settling Defendants through trial and appeals.  The Lead
Plaintiffs and Lead Counsel also have taken into account the uncertain outcome
and the risk of any litigation, especially in complex actions such as this
Litigation, as well as the difficulties and delays inherent in such litigation. 
The Lead Plaintiffs and Lead Counsel are also mindful of the inherent problems
of proof under and possible defenses to the violations asserted in the
Litigation.  The Lead Plaintiffs and Lead Counsel believe that the settlement
set forth in the Stipulation confers substantial benefits upon the
Class Members.  Based on their evaluation, the Lead Plaintiffs and Lead Counsel
have determined that the settlement set forth in the Stipulation is in the best
interests of the Class.

 

IV.        TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT

 

NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among the Lead
Plaintiffs (for themselves and the Class Members) and the Settling Defendants,
by and through their respective counsel of record, that, subject to the approval
of the Court, the Litigation and the Released Claims shall be finally and fully
compromised, settled and released, and the Litigation shall be dismissed with
prejudice,

 

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as to all Settling Defendants, upon and subject to the terms and conditions of
this Stipulation, as follows.

 

1.              DEFINITIONS

 

As used in the Stipulation the following terms have the meanings specified
below:

 

1.1.                              “Authorized Claimant” means any Class Member
whose claim for recovery has been allowed pursuant to the terms of the
Stipulation

 

1.2.                              “Arthur Andersen LLP” means Arthur Andersen
LLP, and all of its respective past and present subsidiaries, parents,
successors and predecessors, and all of its current and former partners,
members, principals, participating principals, national directors, managing or
other agents, management personnel, officers, directors, shareholders,
administrators, servants, employees, consultants, advisors, attorneys,
accountants, representatives, successors and assigns, along with the heirs,
spouses, executors, administrators, insurers, reinsurers, representatives,
estates, successors and assigns of any such person or entities.

 

1.3.                              “Arthur Andersen Released Parties” means
Arthur Andersen LLP, AWSC Société Coopérative, en liquidation, and all of their
respective past and present subsidiaries, parents, successors and predecessors,
member firms, affiliates, related entities, and divisions,  and all of their
respective current and former partners, members, principals, participating
principals, national directors, managing or other agents, management personnel,
officers, directors, shareholders, administrators, servants, employees,
consultants, advisors, attorneys, accountants, representatives, successors

 

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and assigns, along with the heirs, spouses, executors, administrators, insurers,
reinsurers, representatives, estates, successors and assigns of any such person
or entities.

 

1.4.                              “Claimant” means any Class Member who files a
Proof of Claim in such form and manner, and within such time, as the Court shall
prescribe.

 

1.5.                              “Claims Administrator” means Gilardi & Co.
LLC.

 

1.6.                              “Class” means all persons who purchased or
otherwise acquired Qwest publicly traded securities (including common stock,
bonds, and options) from May 24, 1999 through July 28, 2002 (“Class Period”). 
Excluded from the Class are Defendants and any Persons affiliated with or
related to any Defendant.  For purposes of this Paragraph, the persons
affiliated with or related to any Defendant are members of the immediate family
of each Individual Defendant, any entity in which any Defendant has a
controlling interest, officers and directors of Qwest and its subsidiaries and
affiliates, partners, shareholders, and members of Arthur Andersen LLP, and the
legal representatives, heirs, predecessors, successors and assigns of any such
excluded party.  Also excluded from the Class are those Persons who request
exclusion from the Class in such form and manner, and within such time, as the
Court shall prescribe.  Also excluded from the Class is any current or former
officer, director, employee, or agent of Qwest who has been sued by the United
States Securities and Exchange Commission in connection with such Person’s
affiliation with or conduct related to Qwest.

 

1.7.                              “Class Member” means a Person who falls within
the definition of the Class.

 

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1.8.                              “Defendants” means Qwest Communications
International Inc., Arthur Andersen LLP, and the Individual Defendants.

 

1.9.                              “Effective Date” means the first date by which
all of the events and conditions specified in ¶ 8.1 of the Stipulation have
occurred.

 

1.10.                        “Escrow Agent” means Lead Counsel.

 

1.11.                        “Final” means: (i) if no appeal is timely filed,
the expiration date of the time for the filing or noticing of an appeal from the
Judgment; or (ii) if an appeal is timely filed, (a) the later of the date of
final affirmance on an appeal of the Judgment, the expiration of the time for a
petition for a writ of certiorari to review the affirmance, a denial of
certiorari that has been timely sought or, if certiorari is granted, the date of
final affirmance of the Judgment following review pursuant to that grant; or
(b) the date of final dismissal of any appeal from the Judgment or the final
dismissal of any proceeding on certiorari to review the Judgment.

 

1.12.                        “Final Settlement Approval” means an order by the
United States District Court for the District of Colorado finally approving the
terms of this Stipulation pursuant to FED.R.CIV.P. 23(e)(1)(A).

 

1.13.                        “Individual Defendants” means Joseph Nacchio,
Philip Anschutz, Robin Szeliga, Robert Woodruff, Stephen Jacobsen, Drake
Tempest, Marc Weisberg, James Smith, Lewis Wilks, Craig Slater, Afshin Mohebbi,
Gregory Casey, and Vinod Khosla.

 

1.14.                        “Individual Settling Defendants” means Philip
Anschutz, Robin Szeliga, Stephen Jacobsen, Drake Tempest, Marc Weisberg, James
Smith, Lewis Wilks, Craig Slater, Afshin Mohebbi, Gregory Casey, and Vinod
Khosla.

 

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1.15.                        “Judgment” means the judgment to be rendered by the
Court, substantially in the form attached hereto as Exhibit B.

 

1.16.                        “Lead Counsel” means Lerach, Coughlin, Stoia,
Geller, Rudman & Robbins LLP,  655 W. Broadway, Suite 1900, San Diego, CA
92101-3301.

 

1.17.                        “Lead Plaintiffs” means New England Healthcare
Employees Pension Fund, Satpal Singh, Tejinder Singh, and Clifford Mosher.

 

1.18.                        “Litigation” means In re Qwest Communications
Securities Litigation, Civil Action No. 01-CV-1451-REB-CBS, including all
putative class actions consolidated therein.

 

1.19.                        “Net Settlement Fund” means the Settlement Fund,
together with any interest earned thereon, less (i) any taxes, (ii) the cash
allocated to Lead Counsel for attorneys’ fees and expenses pursuant to any Fee
and Expense Application (defined in ¶ 7.1, below) approved by the Court pursuant
to ¶¶ 7.1 and 7.2 hereof, and (iii) the cash allocated to the Class Notice and
Administration Fund pursuant to ¶ 2.8 hereof.

 

1.20.                        “Non-Settling Defendant” means Joseph P. Nacchio
(“Nacchio”) and Robert S. Woodruff (“Woodruff”), or either of them.  Nacchio and
Woodruff are expressly excluded from the definitions of Qwest, Related Parties,
Released Persons, Settling Defendants, and Settling Parties.

 

1.21.                        “Person” means an individual, corporation,
partnership, limited partnership, limited liability partnership (LLP), limited
liability corporation (LLC), association, joint stock company, estate, legal
representative, trust, unincorporated

 

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association, and any business or legal entity and their spouses, heirs,
predecessors, successors, representatives, or assignees.

 

1.22.                        “Plan of Allocation” means a plan or formula of
allocation of the Settlement Fund whereby the Net Settlement Fund shall be
distributed to Authorized Claimants after payment of expenses of notice and
administration of the settlement, Taxes and Tax Expenses and such attorneys’
fees, costs, expenses and interest as may be awarded by the Court.  Any Plan of
Allocation is not part of the Stipulation and the Settling Defendants and the
Related Parties shall have no liability with respect thereto.

 

1.23.                        “Preliminary Settlement Approval” means an order by
the United States District Court for the District of Colorado preliminarily
approving the terms of this Stipulation and ordering that notice be issued to
the Class pursuant to FED.R.CIV.P. 23(e)(1)(B).

 

1.24.                        “Qwest” means Qwest Communications International
Inc., any and all successors, subsidiaries, and affiliates of Qwest
Communications International Inc.,  and any and all current and former officers,
directors, employees and agents of any of them, as well as any predecessors of
Qwest (including but not limited to U S WEST and any successors, subsidiaries,
and affiliates thereof) and their successors, subsidiaries, and affiliates, and
any and all current and former officers, directors, employees and agents of any
of them.  Notwithstanding the foregoing, neither Nacchio nor Woodruff is
included in the definition of Qwest.

 

1.25.                        “Related Parties” means each of a Settling
Defendant’s past or present directors, officers, partners, members, employees,
controlling shareholders, attorneys,

 

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accountants or auditors, banks or investment banks, advisors, personal or legal
representatives, insurers, reinsurers, predecessors, successors, parents,
subsidiaries, divisions, assigns, spouses, heirs, related or affiliated
entities, any partnership in which a Settling Defendant is a general or limited
partner, any entity in which a Settling Defendant has a controlling interest,
any member of an Individual Settling Defendant’s immediate family, or any trust
or foundation of which any Settling Defendant is the settlor or which is for the
benefit of any Individual Settling Defendant and/or member(s) of his or her
family.  Notwithstanding the foregoing, neither Nacchio nor Woodruff is included
in the definition of Related Parties.

 

1.26.                        “Released Claims” shall collectively mean all
claims, demands, rights, liabilities and causes of action of every nature and
description whatsoever, whether based in law or equity, on federal, state,
local, foreign, statutory or common law, or any other law, rule, or regulation
(including, but not limited to, all claims arising out of or relating to any
acts, omissions, disclosures, public filings, registration statements, financial
statements, audit opinions, or statements by the Settling Defendants, including
without limitation, claims for negligence, gross negligence, constructive or
actual fraud, negligent misrepresentation, conspiracy, or breach of fiduciary
duty), whether known or unknown, whether or not concealed or hidden, accrued or
not accrued, foreseen or unforeseen, matured and not matured, that were asserted
or that could have been asserted directly, indirectly, representatively or in
any other capacity, at any time, in any forum by Lead Plaintiffs, the
Class Members, or the successors or assigns of any Lead Plaintiff or
Class Member, or any of them against the Released Persons arising out of,

 

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based upon, or related in any way to: (a) the purchase, acquisition, sale, or
disposition of Qwest securities by any Lead Plaintiffs or any Class Member
during the Class Period and the allegations that were made or could have been
made in the Litigation; (b) the purchase or other acquisition of, the retention
of, the sale or other disposition of, or any other transaction involving Qwest
securities by any of the Released Persons during the Class Period; or (c) the
settlement or resolution of the Litigation (including, without limitation, any
claim for attorneys’ fees by Lead Plaintiffs or any Class Member).  Released
Claims shall also include claims related to any tax effects or tax liabilities
(including any interest, penalties and representation costs) arising out of this
Stipulation or any payment or transfer made pursuant to this Stipulation. 
Released Claims shall also include Unknown Claims otherwise subject to this
provision.  Released Claims shall not include the claims asserted in the Second
Amended and Consolidated Complaint filed in the United States District Court for
the District of Colorado on May 21, 2003 in In re Qwest Savings and Retirement
Plan ERISA Litigation 02-CV-00464-REB-CBS (and all cases consolidated therein).

 

1.27.                        “Released Persons” means each and all of the
Settling Defendants and their Related Parties, and the Arthur Andersen Released
Parties.  Notwithstanding the foregoing, neither Nacchio nor Woodruff is
included in the definition of Released Persons.

 

1.28.                        “SEC Distribution Fund” means those funds paid by
Qwest Communications International Inc. pursuant to the Final Judgment as to
Defendant Qwest Communications International Inc. in Securities and Exchange
Commission v.

 

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Qwest Communications International Inc., Civil Action No. 04-7-2179 (Oct. 21,
2004), into an account in the Court Registry Investment System initially
established in Securities and Exchange Commission v. Augustine Cruciotti, Civil
Action No. 04-D-1267 (MJW) (D. Colo.), that are made available for distribution
to the Class pursuant to the Plan of Allocation, together with such other funds
paid into that same account by other Persons pursuant to any separate final
judgments or agreements that those Persons have entered into or may enter into
with the Securities and Exchange Commission that are also made available for
distribution to the Class pursuant to the Plan of Allocation.

 

1.29.                        “Settlement Fund” means the principal amount of
$400,000,000.00 (FOUR HUNDRED million dollars) in cash plus all interest earned
thereon pursuant to this Stipulation and the SEC Distribution Fund.

 

1.30.                        “Settling Defendants” means, collectively, Qwest,
Arthur Andersen LLP, and each of the Individual Settling Defendants. 
Notwithstanding the foregoing, neither Nacchio nor Woodruff is included in the
definition of Settling Defendant.

 

1.31.                        “Settling Parties” means, collectively, each of the
Settling Defendants and the Lead Plaintiffs on behalf of themselves and the
Class Members.  Notwithstanding the foregoing, neither Nacchio nor Woodruff is
included in the definition of Settling Parties.

 

1.32.                        “Unknown Claims” means any claims that any
Class Member or Lead Plaintiffs do not know or suspect to exist in his, her, its
or their favor at the time of the release of the Released Persons which, if
known by him, her, it, or them might have affected his, her, its or their
settlement with and release of the Released Persons, or

 

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might have affected his, her, its, or their decision not to object to this
settlement.  With respect to any and all Released Claims, the Settling Parties
stipulate and agree that, upon the Effective Date, the Lead Plaintiffs shall
expressly, and each of the Class Members shall be deemed to have, and by
operation of the Judgment shall have, expressly waived the provisions, rights
and benefits of California Civil Code §1542, which provides:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

 

The Lead Plaintiffs shall expressly, and each of the Class Members shall be
deemed to have, and by operation of the Judgment shall have, expressly waived
any and all provisions, rights and benefits conferred by any law, or principle
of common law, which is similar, comparable or equivalent to California Civil
Code §1542.  The Lead Plaintiffs and Class Members may hereafter discover facts
in addition to or different from those that he, she, it or they now know or
believe to exist or to be true with respect to the subject matter of the
Released Claims, but the Lead Plaintiffs shall have, and each Class Member, upon
the Effective Date, and by operation of the Judgment shall be deemed to have,
fully, finally, and forever settled and released any and all Released Claims,
known or unknown, suspected or unsuspected, contingent or non-contingent,
whether or not concealed or hidden, which now exist, or heretofore have existed,
upon any theory of law or equity now existing or coming into existence in the
future, including, but not limited to, conduct that is negligent, intentional,
with or without malice, or a

 

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breach of any duty, law or rule, without regard to the subsequent discovery or
existence of such different or additional facts.  The Lead Plaintiffs
acknowledge, and the Class Members shall be deemed by operation of the Judgment
to have acknowledged, that the foregoing waiver was separately bargained for and
a material element of the settlement of which this release is a part.

 

2.              THE SETTLEMENT

 

A.                                       THE SETTLEMENT FUND

 

2.1                                 QWEST COMMUNICATIONS INTERNATIONAL INC. (ON
BEHALF OF ITSELF AND THE SETTLING DEFENDANTS AND RELEASED PERSONS) SHALL CAUSE
TO BE TRANSFERRED $100,000,000.00 (ONE HUNDRED MILLION) IN CASH TO AN ACCOUNT
CONTROLLED BY THE ESCROW AGENT NO LATER THAN 30 DAYS AFTER THE PRELIMINARY
SETTLEMENT APPROVAL.  IF ALL OR PART OF SUCH $100 MILLION IS NOT TRANSFERRED TO
AN ACCOUNT CONTROLLED BY THE ESCROW AGENT WITHIN 30 DAYS AFTER THE PRELIMINARY
SETTLEMENT APPROVAL, SUCH UN-TRANSFERRED AMOUNTS SHALL ACCRUE INTEREST AT RATE
OF 7% ANNUALLY UNTIL SUCH TIME AS THE ENTIRE $100 MILLION IS TRANSFERRED. 
FURTHER, IF ALL OR PART OF SUCH $100 MILLION IS NOT TRANSFERRED TO AN ACCOUNT
CONTROLLED BY THE ESCROW AGENT WITHIN 30 DAYS AFTER THE PRELIMINARY SETTLEMENT
APPROVAL, LEAD PLAINTIFFS MAY TERMINATE THIS SETTLEMENT; PROVIDED HOWEVER, THAT
THE LEAD PLAINTIFFS SHALL PROVIDE QWEST COMMUNICATIONS INTERNATIONAL INC.
WRITTEN NOTICE OF THEIR INTENT TO TERMINATE, AND ALLOW QWEST COMMUNICATIONS
INTERNATIONAL INC. 30 DAYS TO CURE.  QWEST COMMUNICATIONS INTERNATIONAL INC. (ON
BEHALF OF ITSELF AND THE SETTLING DEFENDANTS AND RELEASED PERSONS) SHALL CAUSE
TO BE TRANSFERRED A SECOND $100,000,000.00 (ONE HUNDRED MILLION) IN CASH TO AN
ACCOUNT CONTROLLED BY THE ESCROW

 

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AGENT NO LATER THAN 30 DAYS AFTER FINAL SETTLEMENT APPROVAL.  IF ALL OR PART OF
SUCH $100 MILLION IS NOT TRANSFERRED TO AN ACCOUNT CONTROLLED BY THE ESCROW
AGENT WITHIN 30 DAYS AFTER FINAL SETTLEMENT APPROVAL, SUCH UN-TRANSFERRED
AMOUNTS SHALL ACCRUE INTEREST AT RATE OF 7% ANNUALLY UNTIL SUCH TIME AS THE
ENTIRE $100 MILLION IS TRANSFERRED.  FURTHER, IF ALL OR PART OF SUCH $100
MILLION IS NOT TRANSFERRED TO AN ACCOUNT CONTROLLED BY THE ESCROW AGENT WITHIN
30 DAYS AFTER FINAL SETTLEMENT APPROVAL, THE LEAD PLAINTIFFS MAY TERMINATE THIS
SETTLEMENT; PROVIDED HOWEVER, THAT THE LEAD PLAINTIFFS SHALL PROVIDE QWEST
COMMUNICATIONS INTERNATIONAL INC. WRITTEN NOTICE OF THEIR INTENT TO TERMINATE,
AND ALLOW QWEST COMMUNICATIONS INTERNATIONAL INC. 30 DAYS TO CURE.  QWEST
COMMUNICATIONS INTERNATIONAL INC. (ON BEHALF OF ITSELF AND THE SETTLING
DEFENDANTS AND RELEASED PERSONS) SHALL CAUSE TO BE TRANSFERRED ANOTHER
$200,000,000.00 (TWO HUNDRED MILLION) IN CASH PLUS INTEREST THAT SHALL ACCRUE
FROM 30 DAYS AFTER FINAL SETTLEMENT APPROVAL AT A RATE OF 3.75% ANNUALLY TO AN
ACCOUNT CONTROLLED BY THE ESCROW AGENT BY JANUARY 15, 2007.  IF ALL OR PART OF
SUCH $200 MILLION PLUS INTEREST THAT SHALL ACCRUE FROM 30 DAYS AFTER FINAL
SETTLEMENT APPROVAL AT A RATE OF 3.75% ANNUALLY IS NOT TRANSFERRED TO AN ACCOUNT
CONTROLLED BY THE ESCROW AGENT BY JANUARY 15, 2007, SUCH UN-TRANSFERRED AMOUNTS
SHALL ACCRUE INTEREST AT A RATE OF 7% ANNUALLY UNTIL SUCH TIME AS THE ENTIRE
$200 MILLION PLUS INTEREST THAT SHALL ACCRUE FROM 30 DAYS AFTER FINAL SETTLEMENT
APPROVAL AT A RATE OF 3.75% ANNUALLY IS TRANSFERRED.  FURTHER, IF ALL OR PART OF
SUCH $200 MILLION PLUS INTEREST THAT SHALL ACCRUE FROM 30 DAYS AFTER FINAL
SETTLEMENT APPROVAL AT A RATE OF 3.75% ANNUALLY IS NOT TRANSFERRED TO AN ACCOUNT
CONTROLLED BY THE ESCROW AGENT BY JANUARY 15, 2007, THE LEAD PLAINTIFFS MAY
TERMINATE THIS SETTLEMENT; PROVIDED HOWEVER, THAT THE LEAD

 

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PLAINTIFFS SHALL PROVIDE QWEST COMMUNICATIONS INTERNATIONAL INC. WRITTEN NOTICE
OF THEIR INTENT TO TERMINATE, AND ALLOW QWEST COMMUNICATIONS INTERNATIONAL INC.
30 DAYS TO CURE.  NOTWITHSTANDING ANY PROVISION OF THIS STIPULATION, NO
INDIVIDUAL SETTLING DEFENDANT IS OBLIGATED TO MAKE ANY OF THE PAYMENTS PROVIDED
FOR HEREUNDER.

 

2.2                                 LEAD PLAINTIFFS AND QWEST COMMUNICATIONS
INTERNATIONAL INC. SHALL USE THEIR BEST EFFORTS TO PERSUADE THE SECURITIES AND
EXCHANGE COMMISSION TO APPLY TO THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF COLORADO FOR AN ORDER AUTHORIZING AND REQUIRING THAT THE SEC
DISTRIBUTION FUND BE TRANSFERRED TO AN ACCOUNT CONTROLLED BY THE ESCROW AGENT
FOR DISTRIBUTION PURSUANT TO THIS STIPULATION AND THE PLAN OF ALLOCATION.  IF
THE SECURITIES AND EXCHANGE COMMISSION ADVISES THE SETTLING PARTIES THAT IT WILL
NOT APPLY TO THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO FOR
AN ORDER AUTHORIZING AND REQUIRING THAT THE SEC DISTRIBUTION FUND BE TRANSFERRED
TO AN ACCOUNT CONTROLLED BY THE ESCROW AGENT PURSUANT TO THE TERMS OF THE
STIPULATION, IF THE UNITED STATES DISTRICT COURT DOES NOT APPROVE SUCH
APPLICATION, OR, IF FOR ANY OTHER REASON, THE SEC DISTRIBUTION FUND IS NOT
DISTRIBUTED TO THE CLASS PURSUANT TO THIS STIPULATION AND PLAN OF ALLOCATION,
LEAD PLAINTIFFS SHALL HAVE THE RIGHT, BUT SHALL NOT BE REQUIRED TO, WITHDRAW
FROM AND TERMINATE THIS STIPULATION.  LEAD COUNSEL SHALL NOT APPLY FOR A FEE
BASED ON THE SEC DISTRIBUTION FUND.

 

2.3                                 IT IS EXPRESSLY ACKNOWLEDGED THAT ARTHUR
ANDERSEN LLP HAS AGREED TO CONTRIBUTE $10 MILLION (TEN MILLION DOLLARS) IN
CONNECTION WITH AND AS FULL CONSIDERATION FOR THIS SETTLEMENT AND SHALL HAVE NO
OBLIGATION TO MAKE ANY ADDITIONAL CONTRIBUTION EITHER TO

 

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LEAD PLAINTIFFS, THE CLASS, OR ANY OF THE SETTLING DEFENDANTS IN CONNECTION WITH
THIS STIPULATION.

 

B.                                       THE ESCROW AGENT

 

2.4                                 THE ESCROW AGENT MAY INVEST THE SETTLEMENT
FUND DEPOSITED PURSUANT TO ¶¶ 2.1 AND 2.2 HEREOF IN INSTRUMENTS BACKED BY THE
FULL FAITH AND CREDIT OF THE UNITED STATES GOVERNMENT OR FULLY INSURED BY THE
UNITED STATES GOVERNMENT OR AN AGENCY THEREOF AND SHALL REINVEST THE PROCEEDS OF
THESE INSTRUMENTS AS THEY MATURE IN SIMILAR INSTRUMENTS AT THEIR THEN-CURRENT
MARKET RATES.  THE ESCROW AGENT SHALL BEAR ALL RISKS RELATED TO INVESTMENT OF
THE SETTLEMENT FUND.

 

2.5                                 THE ESCROW AGENT SHALL NOT DISBURSE THE
SETTLEMENT FUND EXCEPT AS PROVIDED IN THE STIPULATION, BY AN ORDER OF THE COURT,
OR WITH THE WRITTEN AGREEMENT OF COUNSEL FOR QWEST COMMUNICATIONS INTERNATIONAL
INC.

 

2.6                                 SUBJECT TO FURTHER ORDER AND/OR DIRECTION AS
MAY BE MADE BY THE COURT, THE ESCROW AGENT IS AUTHORIZED TO EXECUTE SUCH
TRANSACTIONS ON BEHALF OF THE CLASS MEMBERS AS ARE CONSISTENT WITH THE TERMS OF
THE STIPULATION.

 

2.7                                 ALL FUNDS HELD BY THE ESCROW AGENT SHALL BE
DEEMED AND CONSIDERED TO BE IN CUSTODIA LEGIS OF THE COURT, AND SHALL REMAIN
SUBJECT TO THE JURISDICTION OF THE COURT, UNTIL SUCH TIME AS SUCH FUNDS SHALL BE
DISTRIBUTED PURSUANT TO THE STIPULATION AND/OR FURTHER ORDER(S) OF THE COURT.

 

2.8                                 WITHIN FIVE (5) DAYS AFTER PAYMENT OF THE
INITIAL $100 MILLION TO THE ACCOUNT CONTROLLED BY THE ESCROW AGENT PURSUANT TO ¶
2.1 HEREOF, THE ESCROW AGENT MAY ESTABLISH A “CLASS NOTICE AND ADMINISTRATION
FUND,” AND MAY DEPOSIT UP TO $5 MILLION

 

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FROM THE SETTLEMENT FUND IN IT.  THE CLASS NOTICE AND ADMINISTRATION FUND MAY BE
USED BY LEAD COUNSEL TO PAY COSTS AND EXPENSES REASONABLY AND ACTUALLY INCURRED
IN CONNECTION WITH PROVIDING NOTICE TO THE CLASS, LOCATING CLASS MEMBERS,
SOLICITING CLAIMS, ASSISTING WITH THE FILING OF CLAIMS, ADMINISTERING AND
DISTRIBUTING THE NET SETTLEMENT FUND TO AUTHORIZED CLAIMANTS, PROCESSING PROOF
OF CLAIM AND RELEASE FORMS, AND PAYING ESCROW FEES AND COSTS, IF ANY.  THE
CLASS NOTICE AND ADMINISTRATION FUND MAY ALSO BE INVESTED AND EARN INTEREST AS
PROVIDED FOR IN ¶ 2.4 OF THIS STIPULATION.

 

3.              TAXES

 

3.1                                 (A)                                 
SETTLING PARTIES AND THE ESCROW AGENT AGREE TO TREAT THE SETTLEMENT FUND AS
BEING AT ALL TIMES A “QUALIFIED SETTLEMENT FUND” WITHIN THE MEANING OF TREAS.
REG. §1.468B-1.  IN ADDITION, THE ESCROW AGENT SHALL TIMELY MAKE SUCH ELECTIONS
AS NECESSARY OR ADVISABLE TO CARRY OUT THE PROVISIONS OF THIS ¶ 3.1, INCLUDING
THE “RELATION-BACK ELECTION” (AS DEFINED IN TREAS. REG. §1.468B-1) BACK TO THE
EARLIEST PERMITTED DATE.  SUCH ELECTIONS SHALL BE MADE IN COMPLIANCE WITH THE
PROCEDURES AND REQUIREMENTS CONTAINED IN SUCH REGULATIONS.  IT SHALL BE THE
RESPONSIBILITY OF THE ESCROW AGENT TO TIMELY AND PROPERLY PREPARE AND DELIVER
THE NECESSARY DOCUMENTATION FOR SIGNATURE BY ALL NECESSARY PARTIES, AND
THEREAFTER TO CAUSE THE APPROPRIATE FILING TO OCCUR.

 

(B)                                 FOR THE PURPOSE OF § 468B OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, AND THE REGULATIONS PROMULGATED THEREUNDER,
THE “ADMINISTRATOR” SHALL BE THE ESCROW AGENT.  THE ESCROW AGENT SHALL TIMELY
AND PROPERLY FILE ALL INFORMATIONAL AND OTHER TAX REPORTS AND RETURNS NECESSARY
OR ADVISABLE WITH RESPECT TO THE SETTLEMENT FUND (INCLUDING WITHOUT LIMITATION
THE RETURNS DESCRIBED IN TREAS. REG. §1.468B-2(K)).

 

20

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SUCH RETURNS (AS WELL AS THE ELECTION DESCRIBED IN ¶ 3.1(A) HEREOF) SHALL BE
CONSISTENT WITH THIS ¶ 3.1 AND IN ALL EVENTS SHALL REFLECT THAT ALL TAXES
(INCLUDING BUT NOT LIMITED TO ANY FEDERAL, STATE, OR LOCAL TAXES, AND ANY
ESTIMATED TAXES, INTEREST OR PENALTIES) ON THE INCOME EARNED BY THE SETTLEMENT
FUND SHALL BE PAID OUT OF THE SETTLEMENT FUND AS PROVIDED IN ¶ 3.1(C) HEREOF.

 

(C)                                  ALL (I) TAXES (INCLUDING BUT NOT LIMITED TO
ANY FEDERAL, STATE, OR LOCAL TAXES, AND ANY ESTIMATED TAXES, INTEREST OR
PENALTIES) ARISING WITH RESPECT TO THE INCOME EARNED BY THE SETTLEMENT FUND,
INCLUDING ANY TAXES OR TAX DETRIMENTS THAT MAY BE IMPOSED UPON THE SETTLING
DEFENDANTS OR THEIR COUNSEL WITH RESPECT TO ANY INCOME EARNED BY THE SETTLEMENT
FUND FOR ANY PERIOD DURING WHICH THE SETTLEMENT FUND DOES NOT QUALIFY AS A
“QUALIFIED SETTLEMENT FUND” FOR FEDERAL OR STATE INCOME TAX PURPOSES (“TAXES”),
AND (II) EXPENSES AND COSTS INCURRED IN CONNECTION WITH THE OPERATION AND
IMPLEMENTATION OF THIS ¶ 3.1 (INCLUDING, WITHOUT LIMITATION, EXPENSES OF TAX
ATTORNEYS AND/OR ACCOUNTANTS AND MAILING AND DISTRIBUTION COSTS AND EXPENSES
RELATING TO FILING (OR FAILING TO FILE) THE REPORTS AND RETURNS DESCRIBED IN
THIS ¶ 3.1) (“TAX EXPENSES”), SHALL BE PAID OUT OF THE SETTLEMENT FUND; IN ALL
EVENTS THE RELEASED PERSONS SHALL HAVE NO LIABILITY OR RESPONSIBILITY FOR THE
TAXES OR THE TAX EXPENSES.  THE ESCROW AGENT SHALL INDEMNIFY AND HOLD EACH OF
THE RELEASED PERSONS HARMLESS FOR TAXES AND TAX EXPENSES (INCLUDING, WITHOUT
LIMITATION, TAXES PAYABLE BY REASON OF ANY PAYMENT MADE TO OR FOR THE BENEFIT OF
THE CLASS HEREUNDER, AND TAXES PAYABLE BY REASON OF ANY SUCH INDEMNIFICATION). 
FURTHER, TAXES AND TAX EXPENSES SHALL BE TREATED AS, AND CONSIDERED TO BE, A
COST OF ADMINISTRATION OF THE SETTLEMENT FUND AND SHALL BE TIMELY PAID BY THE

 

21

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ESCROW AGENT OUT OF THE SETTLEMENT FUND WITHOUT PRIOR ORDER FROM THE COURT AND
THE ESCROW AGENT SHALL BE OBLIGATED (NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY) TO WITHHOLD FROM DISTRIBUTION TO AUTHORIZED CLAIMANTS ANY FUNDS
NECESSARY TO PAY SUCH AMOUNTS INCLUDING THE ESTABLISHMENT OF ADEQUATE RESERVES
FOR ANY TAXES AND TAX EXPENSES (AS WELL AS ANY AMOUNTS THAT MAY BE REQUIRED TO
BE WITHHELD UNDER TREAS. REG. §1.468B-2(L)(2)); NEITHER THE SETTLING DEFENDANTS
NOR THEIR COUNSEL ARE RESPONSIBLE NOR SHALL THEY HAVE ANY LIABILITY THEREFOR. 
NOTHING IN THIS ¶ 3.1 OR ANY PART OF THIS STIPULATION SHALL CONSTITUTE OR BE
CONSIDERED TO BE TAX ADVICE BY THE RELEASED PERSONS OR ANY OF THEIR RESPECTIVE
COUNSEL.  THE SETTLING PARTIES AGREE TO COOPERATE WITH THE ESCROW AGENT, EACH
OTHER, AND THEIR TAX ATTORNEYS AND ACCOUNTANTS TO THE EXTENT REASONABLY
NECESSARY TO CARRY OUT THE PROVISIONS OF THIS ¶ 3.1.

 

(D)                                 RELEASED PERSONS HAVE MADE NO REPRESENTATION
OR WARRANTY WITH RESPECT TO THE TAX TREATMENT BY ANY LEAD PLAINTIFFS OR
CLASS MEMBER OF ANY PAYMENT OR TRANSFER MADE PURSUANT TO THIS STIPULATION OR
DERIVED FROM OR MADE PURSUANT TO THE SETTLEMENT FUND.

 

(E)                                  FOR THE PURPOSE OF THIS ¶ 3.1, REFERENCES
TO THE SETTLEMENT FUND SHALL INCLUDE BOTH THE SETTLEMENT FUND AND THE
CLASS NOTICE AND ADMINISTRATION FUND AND SHALL ALSO INCLUDE ANY EARNINGS
THEREON.

 

4.              NOTICE ORDER AND SETTLEMENT HEARING

 

4.1                                 AS SOON AS PRACTICAL FOLLOWING EXECUTION OF
THE STIPULATION, LEAD COUNSEL SHALL SUBMIT THE STIPULATION TOGETHER WITH ITS
EXHIBITS TO THE COURT AND SHALL APPLY FOR ENTRY OF AN ORDER (THE “NOTICE
ORDER”), SUBSTANTIALLY IN THE FORM OF EXHIBIT A HERETO,

 

22

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REQUESTING, INTER ALIA, PRELIMINARY SETTLEMENT APPROVAL SET FORTH IN THE
STIPULATION, AND APPROVAL FOR THE MAILING OF A SETTLEMENT NOTICE (THE “NOTICE”)
AND PUBLICATION OF A SUMMARY NOTICE, SUBSTANTIALLY IN THE FORMS OF EXHIBITS A-1
AND A-3 ATTACHED HERETO.  THE NOTICE SHALL INCLUDE THE GENERAL TERMS OF THE
SETTLEMENT SET FORTH IN THE STIPULATION, THE PROPOSED PLAN OF ALLOCATION, THE
GENERAL TERMS OF THE FEE AND EXPENSE APPLICATION, AND THE DATE OF THE SETTLEMENT
HEARING AS DEFINED BELOW.

 

4.2                                 LEAD COUNSEL SHALL REQUEST THAT, AFTER
NOTICE IS GIVEN, THE COURT HOLD A HEARING (THE “SETTLEMENT HEARING”) AND PROVIDE
FINAL SETTLEMENT APPROVAL FOR THE LITIGATION WITH RESPECT TO THE SETTLING
DEFENDANTS AS SET FORTH HEREIN.  AT OR AFTER THE SETTLEMENT HEARING, LEAD
COUNSEL ALSO WILL REQUEST THAT THE COURT APPROVE THE PROPOSED PLAN OF ALLOCATION
AND THE FEE AND EXPENSE APPLICATION.

 

5.              RELEASES

 

5.1                                 UPON THE EFFECTIVE DATE, LEAD PLAINTIFFS AND
EACH OF THE CLASS MEMBERS SHALL BE DEEMED TO HAVE, AND BY OPERATION OF THE
JUDGMENT SHALL HAVE: (I) FULLY, FINALLY, AND FOREVER RELEASED, RELINQUISHED AND
DISCHARGED ALL RELEASED CLAIMS (INCLUDING UNKNOWN CLAIMS) AGAINST THE RELEASED
PERSONS, WHETHER OR NOT SUCH CLASS MEMBER EXECUTES AND DELIVERS THE PROOF OF
CLAIM AND RELEASE, (II) COVENANTED NOT TO SUE ANY OF THE RELEASED PERSONS OR
OTHERWISE TO ASSERT, DIRECTLY OR INDIRECTLY, ANY OF THE RELEASED CLAIMS AGAINST
ANY OF THE RELEASED PERSONS, AND (III) AGREED TO BE FOREVER BARRED AND ENJOINED
FROM DOING SO, IN ANY COURT OF LAW OR EQUITY, OR IN ANY OTHER FORUM.

 

23

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5.2                                 THE PROOF OF CLAIM AND RELEASE TO BE
EXECUTED BY CLASS MEMBERS SHALL RELEASE ALL RELEASED CLAIMS AGAINST THE RELEASED
PERSONS AND SHALL BE SUBSTANTIALLY IN THE FORM CONTAINED IN EXHIBIT A-2 ATTACHED
HERETO.

 

5.3                                 UPON THE EFFECTIVE DATE, EACH OF THE
RELEASED PERSONS SHALL BE DEEMED TO HAVE, AND BY OPERATION OF THE JUDGMENT SHALL
HAVE, FULLY, FINALLY, AND FOREVER RELEASED, RELINQUISHED AND DISCHARGED EACH AND
ALL OF THE LEAD PLAINTIFFS, CLASS MEMBERS, AND LEAD COUNSEL FROM ALL CLAIMS
(INCLUDING UNKNOWN CLAIMS), ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH
THE INSTITUTION, PROSECUTION, ASSERTION, SETTLEMENT, OR RESOLUTION OF THE
LITIGATION OR THE RELEASED CLAIMS.

 

5.4                                 UPON THE EFFECTIVE DATE, QWEST AND ITS
RELATED PARTIES AND THE ARTHUR ANDERSEN RELEASED PARTIES SHALL BE DEEMED TO
HAVE, AND BY OPERATION OF THE JUDGMENT SHALL HAVE, FULLY, FINALLY, AND FOREVER
RELEASED, RELINQUISHED AND DISCHARGED ONE ANOTHER FROM ALL CLAIMS (INCLUDING
UNKNOWN CLAIMS), ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THE RELEASED
CLAIMS.

 

6.              ADMINISTRATION AND CALCULATION OF CLAIMS, FINAL AWARDS AND
SUPERVISION AND DISTRIBUTION OF SETTLEMENT FUND

 

6.1                                 THE CLAIMS ADMINISTRATOR, SUBJECT TO SUCH
SUPERVISION AND DIRECTION OF THE COURT AND/OR LEAD COUNSEL AS MAY BE NECESSARY
OR AS CIRCUMSTANCES MAY REQUIRE, SHALL ADMINISTER AND CALCULATE THE CLAIMS
SUBMITTED BY CLASS MEMBERS AND SHALL OVERSEE DISTRIBUTION OF THE NET SETTLEMENT
FUND TO AUTHORIZED CLAIMANTS.

 

6.2                                 THE SETTLEMENT FUND SHALL BE APPLIED AS
FOLLOWS:

 

24

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(a)                                  to pay Lead Counsel’s attorneys’ fees and
expenses with interest thereon (the “Fee and Expense Award”), and to pay Lead
Plaintiffs’ expenses (including lost wages) incurred in representing the
Class if and to the extent allowed by the Court;

 

(b)                                 to pay all the costs and expenses reasonably
and actually incurred in connection with providing notice, locating
Class Members, soliciting Class claims, assisting with the filing of claims,
administering and distributing the Net Settlement Fund to Authorized Claimants,
processing Proof of Claim and Release forms and paying escrow fees and costs, if
any;

 

(c)                                  to pay the Taxes and Tax Expenses described
in ¶ 3.1 hereof; and

 

(d)                                 to distribute the Net Settlement Fund to
Authorized Claimants as allowed by the Stipulation, the Plan of Allocation, and
the Court.

 

6.3                                 UPON THE EFFECTIVE DATE AND THEREAFTER, AND
IN ACCORDANCE WITH THE TERMS OF THE STIPULATION, THE PLAN OF ALLOCATION, OR SUCH
FURTHER APPROVAL AND FURTHER ORDER(S) OF THE COURT AS MAY BE NECESSARY OR AS
CIRCUMSTANCES MAY REQUIRE, THE NET SETTLEMENT FUND SHALL BE DISTRIBUTED TO
AUTHORIZED CLAIMANTS, SUBJECT TO AND IN ACCORDANCE WITH ¶¶ 6.4-6.9 HEREOF.

 

6.4                                 WITHIN NINETY (90) DAYS AFTER THE MAILING OF
THE NOTICE OR SUCH OTHER TIME AS MAY BE SET BY THE COURT, EACH PERSON CLAIMING
TO BE AN AUTHORIZED CLAIMANT SHALL BE REQUIRED TO SUBMIT TO THE CLAIMS
ADMINISTRATOR A COMPLETED PROOF OF CLAIM AND RELEASE, SUBSTANTIALLY IN THE FORM
OF EXHIBIT A-2 ATTACHED HERETO, SIGNED UNDER PENALTY OF PERJURY AND SUPPORTED BY
SUCH DOCUMENTS AS ARE SPECIFIED IN THE PROOF OF CLAIM AND RELEASE AND AS ARE
REASONABLY AVAILABLE TO THE AUTHORIZED CLAIMANT.

 

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6.5                                 EXCEPT AS OTHERWISE ORDERED BY THE COURT,
ALL CLASS MEMBERS WHO FAIL TIMELY TO SUBMIT A PROOF OF CLAIM AND RELEASE WITHIN
SUCH PERIOD, OR SUCH OTHER PERIOD AS MAY BE ORDERED BY THE COURT, OR OTHERWISE
ALLOWED, SHALL BE FOREVER BARRED FROM RECEIVING ANY PAYMENTS PURSUANT TO THE
STIPULATION AND THE SETTLEMENT SET FORTH HEREIN, BUT WILL IN ALL OTHER RESPECTS
BE SUBJECT TO AND BOUND BY THE PROVISIONS OF THE STIPULATION, THE RELEASES
CONTAINED HEREIN, AND THE JUDGMENT.  NOTWITHSTANDING THE FOREGOING, LEAD COUNSEL
MAY, IN THEIR DISCRETION, ACCEPT FOR PROCESSING LATE SUBMITTED CLAIMS SO LONG AS
THE DISTRIBUTION OF THE NET SETTLEMENT FUND TO AUTHORIZED CLAIMANTS IS NOT
MATERIALLY DELAYED.

 

6.6                                 THE NET SETTLEMENT FUND SHALL BE DISTRIBUTED
TO THE AUTHORIZED CLAIMANTS SUBSTANTIALLY IN ACCORDANCE WITH A PLAN OF
ALLOCATION TO BE DESCRIBED IN THE NOTICE AND APPROVED BY THE COURT.  IF ANY
FUNDS REMAIN IN THE NET SETTLEMENT FUND BY REASON OF UN-CASHED CHECKS OR
OTHERWISE, THEN, AFTER THE CLAIMS ADMINISTRATOR HAS MADE REASONABLE AND DILIGENT
EFFORTS TO HAVE CLASS MEMBERS WHO ARE ENTITLED TO PARTICIPATE IN THE
DISTRIBUTION OF THE NET SETTLEMENT FUND CASH THEIR DISTRIBUTION CHECKS, ANY
BALANCE REMAINING IN THE NET SETTLEMENT FUND ONE (1) YEAR AFTER THE INITIAL
DISTRIBUTION OF SUCH FUNDS SHALL BE RE-DISTRIBUTED TO CLASS MEMBERS WHO HAVE
CASHED THEIR CHECKS AND WHO WOULD RECEIVE AT LEAST $10.00 FROM SUCH
RE-DISTRIBUTION, AFTER PAYMENT OF ANY TAXES, AND UNPAID COSTS OR FEES INCURRED
IN ADMINISTERING THE NET SETTLEMENT FUND FOR SUCH RE-DISTRIBUTION.  IF AFTER SIX
MONTHS AFTER SUCH RE-DISTRIBUTION ANY FUNDS SHALL REMAIN IN THE NET SETTLEMENT
FUND, THEN SUCH BALANCE SHALL BE RETURNED TO COLORADO-BASED NON-

 

26

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SECTARIAN, NOT-FOR-PROFIT 501(C)(3) ORGANIZATION(S) PROVIDING LEGAL SERVICES OR
OTHERWISE IN THE APPROPRIATE PUBLIC INTEREST DESIGNATED BY LEAD COUNSEL.

 

6.7                                 THE RELEASED PERSONS SHALL HAVE NO
RESPONSIBILITY FOR, INTEREST IN, OR LIABILITY WHATSOEVER WITH RESPECT TO THE
INVESTMENT OR DISTRIBUTION OF THE NET SETTLEMENT FUND, THE PLAN OF ALLOCATION,
THE DETERMINATION, ADMINISTRATION, OR CALCULATION OF CLAIMS, THE PAYMENT OR
WITHHOLDING OF TAXES, OR ANY LOSSES INCURRED IN CONNECTION THEREWITH, EXCEPT
THAT LEAD COUNSEL AGREES TO CONFER WITH COUNSEL FOR QWEST PRIOR TO SUBMISSION OF
THE PLAN OF ALLOCATION.

 

6.8                                 NO PERSON SHALL HAVE ANY CLAIM AGAINST LEAD
COUNSEL OR THE CLAIMS ADMINISTRATOR, OR THEIR COUNSEL, BASED ON DISTRIBUTIONS
MADE SUBSTANTIALLY IN ACCORDANCE WITH THE STIPULATION AND THE SETTLEMENT
CONTAINED THEREIN, THE PLAN OF ALLOCATION, OR FURTHER ORDER(S) OF THE COURT.  NO
PERSON SHALL HAVE ANY CLAIM WHATSOEVER AGAINST SETTLING DEFENDANTS, SETTLING
DEFENDANTS’ COUNSEL, OR ANY RELEASED PERSONS ARISING FROM OR RELATED TO ANY
DISTRIBUTIONS MADE, OR NOT MADE, FROM THE SETTLEMENT FUND.

 

6.9                                 IT IS UNDERSTOOD AND AGREED BY THE SETTLING
PARTIES THAT ANY PROPOSED PLAN OF ALLOCATION OF THE NET SETTLEMENT FUND
INCLUDING, BUT NOT LIMITED TO, ANY ADJUSTMENTS TO AN AUTHORIZED CLAIMANT’S CLAIM
SET FORTH THEREIN, IS NOT A PART OF THE STIPULATION AND IS TO BE CONSIDERED BY
THE COURT SEPARATELY FROM THE COURT’S CONSIDERATION OF THE FAIRNESS,
REASONABLENESS AND ADEQUACY OF THE SETTLEMENT SET FORTH IN THE STIPULATION, AND
ANY ORDER OR PROCEEDING RELATING TO THE PLAN OF ALLOCATION SHALL NOT OPERATE TO
TERMINATE OR CANCEL THE STIPULATION OR AFFECT THE FINALITY OF THE COURT’S
JUDGMENT APPROVING THE

 

27

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STIPULATION AND THE SETTLEMENT SET FORTH THEREIN, OR ANY OTHER ORDERS ENTERED
PURSUANT TO THE STIPULATION.

 

7.              LEAD COUNSEL’S ATTORNEYS’ FEES AND REIMBURSEMENT OF EXPENSES

 

7.1                                 LEAD COUNSEL MAY SUBMIT AN APPLICATION OR
APPLICATIONS (THE “FEE AND EXPENSE APPLICATION”) FOR DISTRIBUTIONS TO THEM FROM
THE SETTLEMENT FUND FOR AN AWARD OF ATTORNEYS’ FEES, AND REIMBURSEMENT OF
EXPENSES INCURRED IN CONNECTION WITH PROSECUTING THE LITIGATION, PLUS ANY
INTEREST ON SUCH ATTORNEYS’ FEES AND EXPENSES AT THE SAME RATE AND FOR THE SAME
PERIODS AS EARNED BY THE SETTLEMENT FUND (UNTIL PAID).  LEAD COUNSEL RESERVE THE
RIGHT TO MAKE ADDITIONAL APPLICATIONS FOR FEES AND EXPENSES INCURRED.  THE LEAD
PLAINTIFFS MAY SUBMIT AN APPLICATION FOR REIMBURSEMENT OF THEIR EXPENSES
(INCLUDING LOST WAGES) INCURRED IN REPRESENTING THE CLASS IN THE LITIGATION.

 

7.2                                 THE ATTORNEYS’ FEES, EXPENSES AND COSTS, AS
AWARDED BY THE COURT, SHALL BE PAID TO LEAD COUNSEL FROM THE SETTLEMENT FUND, AS
ORDERED, IMMEDIATELY AFTER THE COURT EXECUTES AN ORDER AWARDING SUCH FEES AND
EXPENSES.  LEAD COUNSEL SHALL ALLOCATE THE ATTORNEYS’ FEES AMONGST OTHER
PLAINTIFFS’ COUNSEL IN A MANNER IN WHICH THEY IN GOOD FAITH BELIEVE REFLECTS THE
CONTRIBUTIONS OF SUCH COUNSEL TO THE PROSECUTION AND SETTLEMENT OF THE
LITIGATION.  IN THE EVENT THAT (I) THE EFFECTIVE DATE DOES NOT OCCUR, (II) THE
JUDGMENT AND/OR ORDER MAKING SUCH FEE AND EXPENSE AWARD IS REVERSED OR MODIFIED,
(III) THE STIPULATION IS CANCELED OR TERMINATED FOR ANY REASON, OR (IV) IF THE
DISMISSAL WITH PREJUDICE OF THIS LITIGATION DOES NOT BECOME FINAL, AND IN THE
EVENT THAT THE FEE AND EXPENSE AWARD HAS BEEN PAID TO ANY EXTENT, THEN LEAD
COUNSEL SHALL WITHIN FIVE (5) BUSINESS DAYS FROM RECEIVING NOTICE FROM QWEST
COMMUNICATIONS INTERNATIONAL INC. OR

 

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FROM A COURT OF APPROPRIATE JURISDICTION, REFUND TO THE SETTLEMENT FUND THE
FEES, EXPENSES AND COSTS PREVIOUSLY PAID TO THEM FROM THE SETTLEMENT FUND PLUS
INTEREST THEREON AT THE SAME RATE AS EARNED ON THE SETTLEMENT FUND IN AN AMOUNT
CONSISTENT WITH SUCH REVERSAL OR MODIFICATION.  EACH PLAINTIFFS’ COUNSEL’S LAW
FIRM AS A CONDITION OF RECEIVING SUCH FEES AND EXPENSES, ON BEHALF OF ITSELF AND
EACH PARTNER AND/OR SHAREHOLDER OF IT, AGREES THAT THE LAW FIRM AND ITS PARTNERS
AND/OR SHAREHOLDERS ARE SUBJECT TO THE JURISDICTION OF THE COURT FOR THE PURPOSE
OF ENFORCING THE PROVISIONS OF THIS PARAGRAPH AND SUCH OTHER AGREEMENT BETWEEN
QWEST COMMUNICATIONS INTERNATIONAL INC. AND LEAD COUNSEL.  WITHOUT LIMITATION,
EACH SUCH LAW FIRM AND ITS PARTNERS AND/OR SHAREHOLDERS AGREE THAT THE COURT
MAY, UPON APPLICATION OF QWEST COMMUNICATIONS INTERNATIONAL INC., SUMMARILY
ISSUE ORDERS INCLUDING, WITHOUT LIMITATION, JUDGMENTS AND ATTACHMENT ORDERS AND
MAY MAKE APPROPRIATE FINDINGS OF OR SANCTIONS FOR CONTEMPT, AGAINST THEM OR ANY
OF THEM SHOULD SUCH LAW FIRM FAIL TIMELY TO REPAY SUCH FEES AND EXPENSES.

 

7.3                                 THE PROCEDURE FOR AND THE ALLOWANCE OR
DISALLOWANCE BY THE COURT OF ANY APPLICATIONS BY LEAD COUNSEL FOR ATTORNEYS’
FEES AND EXPENSES TO BE PAID OUT OF THE SETTLEMENT FUND ARE NOT PART OF THE
SETTLEMENT SET FORTH IN THE STIPULATION, AND ARE TO BE CONSIDERED BY THE COURT
SEPARATELY FROM THE COURT’S CONSIDERATION OF THE FAIRNESS, REASONABLENESS AND
ADEQUACY OF THE SETTLEMENT SET FORTH IN THE STIPULATION, AND ANY ORDER OR
PROCEEDING RELATING TO THE FEE AND EXPENSE APPLICATION, OR ANY APPEAL FROM ANY
ORDER RELATING THERETO OR REVERSAL OR MODIFICATION THEREOF, SHALL NOT OPERATE TO

 

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TERMINATE OR CANCEL THE STIPULATION, OR AFFECT OR DELAY THE FINALITY OF THE
JUDGMENT APPROVING THE STIPULATION AND THE SETTLEMENT OF THE LITIGATION SET
FORTH THEREIN.

 

7.4                                 SETTLING DEFENDANTS AND THEIR RELATED
PARTIES SHALL HAVE NO RESPONSIBILITY FOR THE ALLOCATION AMONG PLAINTIFFS’
COUNSEL, AND/OR ANY OTHER PERSON WHO MAY ASSERT SOME CLAIM THERETO, OF ANY FEE
AND EXPENSE AWARD THAT THE COURT MAY MAKE IN THE LITIGATION.

 

8.              CONDITIONS OF SETTLEMENT, EFFECT OF DISAPPROVAL, CANCELLATION OR
TERMINATION

 

8.1                                 THE EFFECTIVE DATE OF THE STIPULATION SHALL
BE CONDITIONED ON THE OCCURRENCE OF THE LAST TO OCCUR OF THE FOLLOWING EVENTS:

 

(a)                                  Qwest Communications International Inc. has
timely made or caused to be made its contributions to the Settlement Fund as
required by ¶¶ 2.1 and 2.2 hereof;

 

(b)                                 the Court has entered the Notice Order, as
required by ¶ 4.1 hereof;

 

(c)                                  the Court has entered the Judgment,
attached hereto as Exhibit B, or a judgment substantially similar in all
material respects to the Judgment attached hereto as Exhibit B;

 

(d)                                 the Judgment has become Final; and

 

(e)                                  Qwest Communications International Inc. has
waived or has not timely asserted any right to withdraw from the Settlement,
including those rights to terminate provided under ¶¶ 8.2 and 11 hereof.

 

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8.2                                 SIMULTANEOUSLY HEREWITH, QWEST
COMMUNICATIONS INTERNATIONAL INC. AND THE LEAD PLAINTIFFS (INDIVIDUALLY AND ON
BEHALF OF THE CLASS) HAVE ENTERED INTO A “SUPPLEMENTAL AGREEMENT REGARDING
REQUESTS FOR EXCLUSION” SETTING FORTH, AMONG OTHER THINGS, CERTAIN CONDITIONS
UNDER WHICH THIS STIPULATION MAY BE WITHDRAWN OR TERMINATED BY QWEST
COMMUNICATIONS INTERNATIONAL INC.  THE SUPPLEMENTAL AGREEMENT REGARDING REQUESTS
FOR EXCLUSION SHALL NOT BE FILED PRIOR TO THE SETTLEMENT HEARING UNLESS A
DISPUTE ARISES AS TO ITS TERMS OR QWEST COMMUNICATIONS INTERNATIONAL INC.
EXERCISES ITS RIGHTS THEREUNDER.  IN THE EVENT OF A WITHDRAWAL FROM THIS
STIPULATION PURSUANT TO THE SUPPLEMENTAL AGREEMENT REGARDING REQUESTS FOR
EXCLUSION, THIS STIPULATION SHALL BECOME NULL AND VOID AND OF NO FURTHER FORCE
AND EFFECT AND THE PROVISIONS OF ¶ 8.4 HEREOF SHALL APPLY.

 

8.3                                 UPON THE OCCURRENCE OF ALL OF THE EVENTS
REFERENCED IN ¶ 8.1 HEREOF, ANY AND ALL REMAINING INTEREST OR RIGHT OF SETTLING
DEFENDANTS IN OR TO THE SETTLEMENT FUND, IF ANY, SHALL BE ABSOLUTELY AND FOREVER
EXTINGUISHED.  IF ALL OF THE CONDITIONS SPECIFIED IN ¶ 8.1 HEREOF ARE NOT MET,
THEN THE STIPULATION SHALL BE CANCELED AND TERMINATED SUBJECT TO ¶¶ 8.4 HEREOF
UNLESS LEAD COUNSEL AND COUNSEL FOR SETTLING DEFENDANTS MUTUALLY AGREE IN
WRITING WITHIN THIRTY (30) DAYS OF THEIR RECEIPT OF NOTICE OF ANY FAILED
CONDITION TO PROCEED WITH THE STIPULATION.

 

8.4                                 UNLESS OTHERWISE ORDERED BY THE COURT, IN
THE EVENT THE STIPULATION SHALL TERMINATE, BE CANCELED, OR NOT BECOME EFFECTIVE
FOR ANY REASON, WITHIN FIVE (5) BUSINESS DAYS AFTER WRITTEN NOTIFICATION OF SUCH
EVENT IS SENT BY COUNSEL FOR QWEST COMMUNICATIONS INTERNATIONAL INC. TO THE
ESCROW AGENT, THE SETTLEMENT FUND, PLUS

 

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ACCRUED INTEREST (EXCEPT THE PORTION CONSTITUTING THE SEC DISTRIBUTION FUND),
AND THE CLASS NOTICE AND ADMINISTRATION FUND, PLUS ACCRUED INTEREST, SHALL BE
REFUNDED TO QWEST COMMUNICATIONS INTERNATIONAL INC., LESS EXPENSES DUE AND OWING
AS SET FORTH IN ¶ 2.8, AND THE SEC DISTRIBUTION FUND, PLUS ACCRUED INTEREST,
SHALL BE REFUNDED TO THE ACCOUNT IN THE COURT REGISTRY INVESTMENT SYSTEM FROM
WHICH THE SEC DISTRIBUTION FUND CAME OR OTHERWISE TREATED IN ACCORDANCE WITH
WRITTEN INSTRUCTIONS PROVIDED BY THE SECURITIES AND EXCHANGE COMMISSION,
PROVIDED, HOWEVER, THAT NEITHER THE LEAD PLAINTIFFS NOR LEAD COUNSEL SHALL HAVE
ANY OBLIGATION TO REPAY ANY AMOUNTS ACTUALLY AND PROPERLY DISBURSED FROM THE
CLASS NOTICE AND ADMINISTRATION FUND, AND THAT ANY EXPENSES ALREADY INCURRED AND
PROPERLY CHARGEABLE TO THE CLASS NOTICE AND ADMINISTRATION FUND PURSUANT TO ¶
2.8 HEREOF AND TAXES AND TAX EXPENSES AT THE TIME OF SUCH TERMINATION OR
CANCELLATION BUT THAT HAVE NOT BEEN PAID, SHALL BE PAID OR RETAINED IN ESCROW BY
THE ESCROW AGENT IN ACCORDANCE WITH THE TERMS OF THE STIPULATION PRIOR TO THE
BALANCE BEING REFUNDED.  AT THE REQUEST OF QWEST, THE ESCROW AGENT OR ITS
DESIGNEE SHALL APPLY FOR ANY TAX REFUND OWED ON THE SETTLEMENT FUND AND PAY THE
PROCEEDS TO QWEST COMMUNICATIONS INTERNATIONAL INC.

 

9.              CLASS CERTIFICATION

 

FOR PURPOSES OF THIS STIPULATION ONLY, THE SETTLING PARTIES WILL STIPULATE TO
CERTIFICATION OF THE CLASS AS DEFINED HEREIN.  SETTLING DEFENDANTS EXPRESSLY
RESERVE THE RIGHT TO CONTEST CLASS CERTIFICATION IN THE EVENT THIS SETTLEMENT
DOES NOT BECOME EFFECTIVE FOR ANY REASON.  THIS STIPULATION, WHETHER OR NOT
CONSUMMATED, AND ANY PROCEEDINGS

 

32

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TAKEN PURSUANT TO IT, SHALL NOT BE CONSTRUED AS OR RECEIVED IN EVIDENCE AS AN
ADMISSION, CONCESSION OR PRESUMPTION THAT CLASS CERTIFICATION IS APPROPRIATE IN
THIS ACTION.

 

10.       PREFERENCES, VOIDABLE TRANSFERS, OR FRAUDULENT TRANSFERS

 

The Settling Parties agree that, with respect to any Settling Defendant, in the
event of a final order of a court of competent jurisdiction, not subject to any
further proceedings, determining the transfer of the Settlement Fund, or any
portion thereof, by or on behalf of such Settling Defendant to be a preference,
voidable transfer, fraudulent transfer or similar transaction under Title 11 of
the United States Code (Bankruptcy) or applicable state law and any portion
thereof is required to be refunded and such amount is not promptly deposited in
the Settlement Fund by any other Settling Defendant, then, at the election of
Class Plaintiffs’ Counsel, as to such Settling Defendant only, the releases
given and the Judgments entered in favor of such Settling Defendant pursuant to
the Stipulation shall be null and void.  The releases given and the Judgments
entered in favor of other Settling Defendants shall remain in full force and
effect.

 

11.       LIMITATIONS ON SUBSEQUENT CLAIMS AGAINST RELEASED PARTIES

 

11.1                           IN ACCORDANCE WITH SECTION 21D-4(F)(7)(A) OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, 15 U.S.C. § 78U-4(F)(7)(A),
EACH OF THE RELEASED PERSONS BY VIRTUE OF THE JUDGMENT IS DISCHARGED FROM ALL
CLAIMS FOR CONTRIBUTION THAT HAVE BEEN OR MAY HEREAFTER BE BROUGHT BY OR ON
BEHALF OF ANY OF THE NON-SETTLING DEFENDANTS OR ANY OF THE SETTLING DEFENDANTS
BASED UPON, RELATING TO, OR ARISING OUT OF THE RELEASED CLAIMS.  ACCORDINGLY,
(I) THE NON-SETTLING DEFENDANTS ARE HEREBY PERMANENTLY BARRED, ENJOINED, AND
RESTRAINED FROM COMMENCING, PROSECUTING, OR ASSERTING ANY SUCH CLAIM FOR

 

33

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CONTRIBUTION AGAINST ANY RELEASED PERSON BASED UPON, RELATING TO, OR ARISING OUT
OF THE RELEASED CLAIMS, AND (II) THE RELEASED PERSONS ARE HEREBY PERMANENTLY
BARRED, ENJOINED, AND RESTRAINED FROM COMMENCING, PROSECUTING, OR ASSERTING ANY
CLAIM FOR CONTRIBUTION AGAINST THE NON-SETTLING DEFENDANTS BASED UPON, RELATING
TO, OR ARISING OUT OF THE RELEASED CLAIMS.  FOR PURPOSES OF SECTION 11 OF THIS
STIPULATION ONLY, NON-SETTLING DEFENDANTS SHALL INCLUDE ANY PERSON WHO LEAD
PLAINTIFFS MAY HEREAFTER SUE BASED UPON, RELATING TO, OR ARISING OUT OF THE
RELEASED CLAIMS (“REFORM ACT BAR ORDER”).  INCLUSION OF THE REFORM ACT BAR ORDER
IN THE JUDGMENT IS MATERIAL TO SETTLING DEFENDANTS’ DECISION TO PARTICIPATE IN
THIS STIPULATION.

 

11.2                           THE NON-SETTLING DEFENDANTS AND THE SETTLING
DEFENDANTS ARE HEREBY PERMANENTLY BARRED, ENJOINED, AND RESTRAINED FROM
COMMENCING, PROSECUTING, OR ASSERTING ANY CLAIM, IF ANY, HOWEVER STYLED, WHETHER
FOR INDEMNIFICATION, CONTRIBUTION, OR OTHERWISE AND WHETHER ARISING UNDER STATE,
FEDERAL, OR COMMON LAW, AGAINST THE RELEASED PERSONS BASED UPON, ARISING OUT OF,
OR RELATING TO THE RELEASED CLAIMS; AND THE RELEASED PERSONS ARE PERMANENTLY
BARRED, ENJOINED, AND RESTRAINED FROM COMMENCING, PROSECUTING, OR ASSERTING ANY
OTHER CLAIM, IF ANY, HOWEVER STYLED, WHETHER FOR INDEMNIFICATION, CONTRIBUTION,
OR OTHERWISE AND WHETHER ARISING UNDER STATE, FEDERAL, OR COMMON LAW, AGAINST
THE NON-SETTLING DEFENDANTS BASED UPON, ARISING OUT OF, OR RELATING TO THE
RELEASED CLAIMS (THE “COMPLETE BAR ORDER”).  IN THE EVENT THAT THE JUDGMENT
FAILS TO CONTAIN A COMPLETE BAR ORDER SUBSTANTIALLY IN CONFORMITY WITH THIS
¶ 11.2, SUCH FAILURE SHALL NOT BE A BASIS FOR LEAD PLAINTIFFS OR ANY
CLASS MEMBER TO TERMINATE THE SETTLEMENT.

 

34

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11.3                           TO THE EXTENT (BUT ONLY TO THE EXTENT) NOT
COVERED BY THE REFORM ACT BAR ORDER AND/OR THE COMPLETE BAR ORDER, THE LEAD
PLAINTIFFS, ON BEHALF OF THEMSELVES AND THE CLASS, FURTHER AGREE THAT THEY WILL
REDUCE OR CREDIT ANY SETTLEMENT OR JUDGMENT (UP TO THE AMOUNT OF SUCH SETTLEMENT
OR JUDGMENT) THEY MAY OBTAIN AGAINST A NON-SETTLING DEFENDANT BY AN AMOUNT EQUAL
TO THE AMOUNT OF ANY SETTLEMENT OR FINAL, NON-APPEALABLE JUDGMENT THAT A
NON-SETTLING DEFENDANT MAY OBTAIN AGAINST ANY OF THE RELEASED PERSONS BASED
UPON, ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THE RELEASED CLAIMS OR
THE SUBJECT MATTER THEREOF.  IN THE EVENT THAT A SETTLEMENT IS REACHED BETWEEN
LEAD PLAINTIFFS OR THE CLASS AND A NON-SETTLING DEFENDANT, OR FINAL JUDGMENT IS
ENTERED IN FAVOR OF LEAD PLAINTIFFS OR THE CLASS AGAINST A NON-SETTLING
DEFENDANT BEFORE THE RESOLUTION  OF THAT NON-SETTLING DEFENDANT’S POTENTIAL
CLAIMS AGAINST ANY RELEASED PERSON, ANY FUNDS COLLECTED ON ACCOUNT OF SUCH
SETTLEMENT OR JUDGMENT SHALL NOT BE DISTRIBUTED, BUT SHALL BE RETAINED BY THE
ESCROW AGENT  PENDING THE RESOLUTION OF ANY POTENTIAL CLAIM BY  THE NON-SETTLING
DEFENDANT CLAIM AGAINST SUCH RELEASED PERSON(S) AS PROVIDED IN PARAGRAPHS 11.3
AND 11.4 OF THIS STIPULATION.  IN THE EVENT A NON-SETTLING DEFENDANT ASSERTS A
CLAIM AGAINST A RELEASED PERSON RELATED TO ANY CLAIM OR JUDGMENT ASSERTED
AGAINST THAT NON-SETTLING DEFENDANT, OR SETTLEMENT ENTERED INTO BY THAT
NON-SETTLING DEFENDANT, ARISING FROM OR RELATED TO A CLAIM ASSERTED AGAINST THAT
NON-SETTLING DEFENDANT BY LEAD PLAINTIFFS OR ANY OTHER CLASS MEMBER, QWEST
COMMUNICATIONS INTERNATIONAL INC. AGREES TO PAY THE REASONABLE COSTS OF
DEFENDING ANY SUCH CLAIM THAT MAY BE ASSERTED AGAINST ANY RELEASED PERSON BY ANY
NON-SETTLING DEFENDANT, AND ANY SUCH RELEASED PERSON SHALL DEFEND AGAINST SUCH
CLAIM IN GOOD FAITH AND WILL NOT SETTLE

 

35

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SUCH CLAIM WITHOUT THE PRIOR WRITTEN CONSENT OF LEAD COUNSEL AND QWEST
COMMUNICATIONS INTERNATIONAL INC., WHICH CONSENT SHALL NOT BE UNREASONABLY
WITHHELD.  INCLUSION OF THIS PARAGRAPH 11.3 IN THE JUDGMENT IS MATERIAL TO
SETTLING DEFENDANTS’ DECISION TO PARTICIPATE IN THIS STIPULATION.

 

11.4                           THE CLASS WILL NOT SETTLE ANY CLAIM OR JUDGMENT
AGAINST A NON-SETTLING DEFENDANT WITHOUT OBTAINING FROM THE NON-SETTLING
DEFENDANT THE RELEASE OF ANY AND ALL CLAIMS THE NON-SETTLING DEFENDANT MAY HAVE
AGAINST ANY OF THE RELEASED PERSONS BASED UPON, ARISING OUT OF, RELATING TO OR
IN CONNECTION WITH THE RELEASED CLAIMS OR THE SUBJECT MATTER THEREOF, PROVIDED
THAT EACH SETTLING DEFENDANT SHALL EXECUTE AND PROVIDE TO THE NON-SETTLING
DEFENDANT A RELEASE IN A FORM THAT IS SATISFACTORY BOTH TO THE SETTLING
DEFENDANTS AND THE NON-SETTLING DEFENDANT.  INCLUSION OF THIS PARAGRAPH 11.4 IN
THE JUDGMENT IS MATERIAL TO SETTLING DEFENDANTS’ DECISION TO PARTICIPATE IN THIS
STIPULATION.

 

12.       MISCELLANEOUS PROVISIONS

 

12.1                           NOTWITHSTANDING ANY OTHER PROVISION IN THIS
STIPULATION, INCLUDING ¶¶ 5.4, 11.1, 11.2, 11.3, AND 11.4, THIS STIPULATION
SHALL NOT CAUSE THE RELEASED PERSONS AND NON-SETTLING DEFENDANTS TO RELEASE THE
FOLLOWING POTENTIAL CLAIMS BETWEEN OR AMONG THEMSELVES:

 

(A)                                  CLAIMS THAT ARISE FROM OR RELATE TO CLAIMS
ASSERTED BY THOSE PERSONS WHO REQUEST EXCLUSION FROM THE CLASS IN SUCH FORM AND
MANNER, AND WITHIN SUCH TIME, AS THE COURT SHALL PRESCRIBE, AND WHO ASSERT
CLAIMS THAT WOULD HAVE BEEN RELEASED CLAIMS UNDER THIS STIPULATION BUT FOR THE
PERSON’S EXCLUSION FROM THE CLASS;

 

36

--------------------------------------------------------------------------------

 

(B)                                 CLAIMS THAT ARISE FROM OR RELATE TO CLAIMS
ASSERTED IN IN RE QWEST SAVINGS AND RETIREMENT PLAN ERISA LITIGATION
02-CV-00464-REB-CBS, INCLUDING ALL ACTIONS CONSOLIDATED THEREIN.

 

(C)                                  ANY CLAIMS, RIGHTS OR OBLIGATIONS
CONCERNING ADVANCEMENT OF LEGAL FEES AND EXPENSES, OR THE RECOVERY OF LEGAL FEES
AND EXPENSES ADVANCED OR THAT MAY BE ADVANCED, BY QWEST COMMUNICATIONS
INTERNATIONAL INC. OR ANY SUBSIDIARY OR AFFILIATE OF QWEST COMMUNICATIONS
INTERNATIONAL INC. TO THE NON-SETTLING DEFENDANTS OR ANY RELEASED PERSON.

 

(D)                                 (I) THE NOVEMBER 12, 2003 DEFINITIVE
SETTLEMENT AGREEMENT AND ALL DOCUMENTS ATTACHED THERETO AND/OR CONTEMPLATED
THEREBY RELATING TO THE SETTLEMENT AMONG QWEST COMMUNICATIONS INTERNATIONAL INC.
AND CERTAIN QWEST COMMUNICATIONS INTERNATIONAL INC. DIRECTORS AND OFFICERS AND
FIDUCIARY LIABILITY INSURANCE CARRIERS, OR (II) THE INSUREDS TRUST AGREEMENT (AS
AMENDED) MADE AND ENTERED INTO AS OF JUNE 1, 2004, BY AND AMONG U.S. BANK TRUST
ASSOCIATION, U.S. BANK TRUST NATIONAL ASSOCIATION, THE HONORABLE SAM C. POINTER,
QWEST COMMUNICATIONS INTERNATIONAL INC. AND INDIVIDUAL BENEFICIARIES AS DEFINED
THEREIN.

 

(E)                                  ENFORCEMENT OF ANY BREACH OF THIS
STIPULATION.

 

12.2                           THE SETTLING PARTIES (A) ACKNOWLEDGE THAT IT IS
THEIR INTENT TO CONSUMMATE THIS STIPULATION, AND (B) AGREE TO COOPERATE TO THE
EXTENT REASONABLY NECESSARY TO EFFECTUATE AND IMPLEMENT ALL TERMS AND CONDITIONS
OF THE STIPULATION.  FURTHER, QWEST COMMUNICATIONS INTERNATIONAL INC. AND ARTHUR
ANDERSEN LLP WILL ENTER INTO AN AGREEMENT WITH LEAD COUNSEL PROVIDING FOR QWEST
COMMUNICATIONS INTERNATIONAL INC.

 

37

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AND ARTHUR ANDERSEN LLP (A) TO ATTEMPT TO MAKE CERTAIN CURRENT AND FORMER
EMPLOYEES AVAILABLE IN CONNECTION WITH LEAD PLAINTIFFS’ CONTINUED PROSECUTION OF
THE ABOVE-CAPTIONED MATTER, AND (B) TO MAKE CERTAIN OTHER DISCOVERY MATERIALS
AVAILABLE CONSISTENT WITH ITS DEFENSE OF ANY OTHER LITIGATION OR OTHER
PROCEEDING.

 

12.3                           THE SETTLING PARTIES INTEND THIS SETTLEMENT TO BE
A FINAL AND COMPLETE RESOLUTION OF ALL DISPUTES BETWEEN THEM WITH RESPECT TO THE
LITIGATION.  THE STIPULATION COMPROMISES CLAIMS THAT ARE CONTESTED AND SHALL NOT
BE DEEMED AN ADMISSION BY ANY SETTLING PARTY AS TO THE MERITS OF ANY CLAIM OR
DEFENSE.  THE SETTLING PARTIES AGREE THAT THE AMOUNT PAID TO THE SETTLEMENT FUND
AND THE OTHER TERMS OF THE STIPULATION WERE NEGOTIATED IN GOOD FAITH BY THE
SETTLING PARTIES, AND REFLECT A SETTLEMENT THAT WAS REACHED VOLUNTARILY AFTER
CONSULTATION WITH COMPETENT LEGAL COUNSEL.  THE SETTLING PARTIES RESERVE THEIR
RIGHT TO REBUT, IN A MANNER THAT SUCH PARTY DETERMINES TO BE APPROPRIATE, ANY
CONTENTION MADE IN ANY PUBLIC FORUM THAT THE LITIGATION WAS BROUGHT OR DEFENDED
IN BAD FAITH OR WITHOUT A REASONABLE BASIS.  THE SETTLING PARTIES AGREE NOT TO
OPPOSE A FINDING IN THE JUDGMENT THAT DURING THE COURSE OF THE LITIGATION, THE
SETTLING PARTIES AND THEIR RESPECTIVE COUNSEL AT ALL TIMES COMPLIED WITH THE
REQUIREMENTS OF RULE 11 OF THE FEDERAL RULES OF CIVIL PROCEDURE.

 

12.4                           NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED HEREIN, THE LEAD PLAINTIFFS AND EACH OF THE CLASS MEMBERS, FOR
THEMSELVES AND ANY OTHER PERSONS CLAIMING BY, THROUGH, OR ON BEHALF OF THEM,
ACKNOWLEDGE AND AGREE THAT (I) IN NO EVENT SHALL THE ADMINISTRATOR OF ARTHUR
ANDERSEN LLP, ANY MEMBER OF THE ADMINISTRATIVE BOARD OF ARTHUR ANDERSEN LLP (OR
ANY OFFICER, DIRECTOR, MEMBER OR SHAREHOLDER OF ANY

 

38

--------------------------------------------------------------------------------

 

ADMINISTRATIVE BOARD), ANY PRESENT OR FORMER DIRECTORS, OFFICERS, MANAGERS,
PARTNERS, PARTICIPATING PRINCIPALS, NATIONAL DIRECTORS OR SIMILAR PERSONS OF
ARTHUR ANDERSEN LLP OR ANY OF THEIR RESPECTIVE AGENTS OR REPRESENTATIVES
(COLLECTIVELY, THE “ANDERSEN COVERED PERSONS”) HAVE ANY PERSONAL LIABILITY WITH
RESPECT TO THE OBLIGATIONS ARISING OUT OF OR RELATING TO THIS STIPULATION; AND
(II) NO ANDERSEN COVERED PERSON SHALL BE OBLIGATED TO MAKE, AND NO ANDERSEN
COVERED PERSON IN FACT WILL MAKE, ANY CAPITAL CONTRIBUTION OR OTHER PAYMENT OF
ANY KIND TO ARTHUR ANDERSEN LLP IN ORDER FOR ARTHUR ANDERSEN LLP TO SATISFY ITS
OBLIGATIONS ARISING OUT OF OR RELATING TO THIS STIPULATION.  NOTWITHSTANDING
THIS PARAGRAPH, ARTHUR ANDERSEN LLP (BUT NOT ANDERSEN COVERED PERSONS) IS
RESPONSIBLE FOR THE CONTRIBUTION OF $10 MILLION (TEN MILLION DOLLARS) TO THIS
SETTLEMENT, SUCH PAYMENT TO BE MADE TO QWEST COMMUNICATIONS INTERNATIONAL INC.

 

12.5                           NEITHER THE STIPULATION NOR THE SETTLEMENT
CONTAINED HEREIN, NOR ANY ACT PERFORMED OR DOCUMENT EXECUTED PURSUANT TO OR IN
FURTHERANCE OF THE STIPULATION OR THE SETTLEMENT: (A) IS OR MAY BE DEEMED TO BE
OR MAY BE USED AS AN ADMISSION OF, OR EVIDENCE OF, THE VALIDITY OF ANY RELEASED
CLAIM, OR OF ANY WRONGDOING OR LIABILITY OF THE RELEASED PERSONS OR NON-SETTLING
DEFENDANTS; OR (B) IS OR MAY BE DEEMED TO BE OR MAY BE USED AS AN ADMISSION OF,
OR EVIDENCE OF, ANY FAULT OR OMISSION OF ANY OF THE RELEASED PERSONS OR
NON-SETTLING DEFENDANTS IN ANY CIVIL, CRIMINAL OR ADMINISTRATIVE PROCEEDING IN
ANY COURT, ADMINISTRATIVE AGENCY OR OTHER TRIBUNAL.  RELEASED PERSONS MAY FILE
THE STIPULATION AND/OR THE JUDGMENT IN ANY ACTION THAT MAY BE BROUGHT AGAINST
THEM IN ORDER TO SUPPORT A DEFENSE OR COUNTERCLAIM BASED ON PRINCIPLES OF RES
JUDICATA,

 

39

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COLLATERAL ESTOPPEL, RELEASE, GOOD FAITH SETTLEMENT, JUDGMENT BAR OR REDUCTION
OR ANY OTHER THEORY OF CLAIM PRECLUSION OR ISSUE PRECLUSION OR SIMILAR DEFENSE
OR COUNTERCLAIM.

 

12.6                           THE PROTECTIONS AFFORDED BY THE PROTECTIVE ORDER
GOVERNING THE LITIGATION SHALL BE UNAFFECTED BY THIS STIPULATION.

 

12.7                           ALL OF THE EXHIBITS TO THIS STIPULATION ARE
MATERIAL AND INTEGRAL PARTS HEREOF AND ARE FULLY INCORPORATED HEREIN BY THIS
REFERENCE.

 

12.8                           THIS STIPULATION MAY BE AMENDED OR MODIFIED ONLY
BY A WRITTEN INSTRUMENT SIGNED BY OR ON BEHALF OF ALL SETTLING PARTIES OR THEIR
RESPECTIVE SUCCESSORS-IN-INTEREST.

 

12.9                           THIS STIPULATION, THE EXHIBITS ATTACHED HERETO,
THE SUPPLEMENTAL AGREEMENT REGARDING REQUESTS FOR EXCLUSION, THE EXECUTED TERM
SHEET BETWEEN QWEST COMMUNICATIONS INTERNATIONAL INC. AND ARTHUR ANDERSEN LLP,
AND THE OTHER AGREEMENTS IDENTIFIED HEREIN, CONSTITUTE THE ENTIRE AGREEMENT
AMONG THE PARTIES HERETO AND NO REPRESENTATIONS, WARRANTIES OR INDUCEMENTS HAVE
BEEN MADE TO ANY PARTY CONCERNING THE STIPULATION, ITS EXHIBITS, OR THE
SUPPLEMENTAL AGREEMENT REGARDING REQUESTS FOR EXCLUSION, OTHER THAN THE
REPRESENTATIONS, WARRANTIES AND COVENANTS CONTAINED AND MEMORIALIZED IN SUCH
DOCUMENTS, AND SHALL NOT BE AMENDED EXCEPT BY A WRITTEN INSTRUMENT SIGNED BY THE
SETTLING PARTIES.  EXCEPT AS OTHERWISE PROVIDED HEREIN, EACH SETTLING PARTY
SHALL BEAR ITS OWN COSTS.

 

12.10                     LEAD COUNSEL, ON BEHALF OF THE CLASS, ARE EXPRESSLY
AUTHORIZED BY THE LEAD PLAINTIFFS TO TAKE ALL APPROPRIATE ACTION REQUIRED OR
PERMITTED TO BE TAKEN BY THE CLASS PURSUANT TO THE STIPULATION TO EFFECTUATE ITS
TERMS AND ALSO ARE EXPRESSLY

 

40

--------------------------------------------------------------------------------

 

AUTHORIZED TO ENTER INTO ANY MODIFICATIONS OR AMENDMENTS TO THE STIPULATION ON
BEHALF OF THE CLASS WHICH THEY DEEM APPROPRIATE.

 

12.11                     EACH COUNSEL OR OTHER PERSON EXECUTING THE STIPULATION
OR ANY OF ITS EXHIBITS ON BEHALF OF ANY PARTY HERETO HEREBY WARRANTS THAT SUCH
PERSON HAS THE FULL AUTHORITY TO DO SO.

 

12.12                     THE STIPULATION MAY BE EXECUTED IN ONE OR MORE
COUNTERPARTS.  ALL EXECUTED COUNTERPARTS AND EACH OF THEM SHALL BE DEEMED TO BE
ONE AND THE SAME INSTRUMENT.  A COMPLETE SET OF ORIGINAL EXECUTED COUNTERPARTS
SHALL BE FILED WITH THE COURT.

 

12.13                     THE STIPULATION SHALL BE BINDING UPON, AND INURE TO
THE BENEFIT OF, THE SUCCESSORS AND ASSIGNS OF THE SETTLING PARTIES.

 

12.14                     THE COURT SHALL RETAIN JURISDICTION WITH RESPECT TO
IMPLEMENTATION AND ENFORCEMENT OF THE TERMS OF THIS STIPULATION, AND ALL PARTIES
HERETO SUBMIT TO THE JURISDICTION OF THE COURT FOR PURPOSES OF IMPLEMENTING AND
ENFORCING THE SETTLEMENT EMBODIED IN THE STIPULATION.

 

12.15                     THIS STIPULATION AND THE EXHIBITS HERETO SHALL BE
CONSIDERED TO HAVE BEEN NEGOTIATED, EXECUTED AND DELIVERED, AND TO BE WHOLLY
PERFORMED, IN THE STATE OF DELAWARE, AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES TO THE STIPULATION SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
AND GOVERNED BY, THE INTERNAL, SUBSTANTIVE LAWS OF THE STATE OF DELAWARE WITHOUT
GIVING EFFECT TO THAT STATE’S CHOICE-OF-LAW PRINCIPLES.

 

41

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12.16                     WHENEVER NOTICE TO LEAD PLAINTIFFS OR LEAD COUNSEL IS
REQUIRED TO BE GIVEN PURSUANT TO THIS STIPULATION, IT SHALL BE DELIVERED BY BOTH
FACSIMILE AND FEDERAL EXPRESS TO:

 

KEITH PARK

LERACH, COUGHLIN, STOIA, GELLER,

RUDMAN & ROBBINS LLP

655 W. BROADWAY, SUITE 1900

SAN DIEGO, CA 92101-3301

FAX:  619-231-7423

 

12.17                     WHENEVER NOTICE TO QWEST COMMUNICATIONS INTERNATIONAL
INC. IS REQUIRED TO BE GIVEN PURSUANT TO THIS STIPULATION, IT SHALL BE DELIVERED
BY BOTH FACSIMILE AND FEDERAL EXPRESS TO:

 

RICHARD N. BAER

GENERAL COUNSEL

QWEST COMMUNICATIONS INTERNATIONAL INC.

1801 CALIFORNIA STREET

SUITE 5200

DENVER, COLORADO 80112

FAX:  303-383-8444

 

AND

 

JONATHAN SCHILLER

DAVID BOYD

ALFRED LEVITT

BOIES, SCHILLER & FLEXNER LLP

5301 WISCONSIN AVE., N.W.

WASHINGTON DC 20015

(202) 237-2727 (PHONE)

(202) 237-6131 (FAX)

 

42

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12.18                     WHENEVER NOTICE TO OTHER SETTLING DEFENDANTS IS
REQUIRED TO BE GIVEN PURSUANT TO THIS STIPULATION, IT SHALL BE DELIVERED BY BOTH
FACSIMILE AND FEDERAL EXPRESS TO THE SIGNATORIES TO THIS STIPULATION OR THEIR
RESPECTIVE COUNSEL.

 

IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THE STIPULATION TO BE
EXECUTED, BY THEIR DULY AUTHORIZED ATTORNEYS, DATED AS OF NOVEMBER    , 2005.

 

 

BY:

/S/ WILLIAM S. LERACH

 

 

BY:

/S/ JONATHAN D. SCHILLER

 

 

WILLIAM S. LERACH

 

 

JONATHAN D. SCHILLER

 

 

PATRICK COUGHLIN

 

 

DAVID R. BOYD

 

 

KEITH PARK

 

 

ALFRED P. LEVITT

 

 

MICHAEL J. DOWD

 

 

BOIES, SCHILLER & FLEXNER LLP

 

 

THOMAS E. EGLER

 

 

5301 WISCONSIN AVE, NW

 

 

LERACH, COUGHLIN, STOIA, GELLER,

 

 

SUITE 800

 

 

RUDMAN & ROBBINS LLP

 

 

WASHINGTON, DC 20015

 

 

655 W. BROADWAY, SUITE 1900

 

 

 

 

 

SAN DIEGO, CA 92101-3301

 

 

COUNSEL FOR QWEST COMMUNICATION
INTERNATIONAL INC.

 

LEAD COUNSEL

 

 

 

 

 

 

 

 

 

 

BY:

/S/ FREDERICK J. BAUMANN

 

 

BY:

/S/ BRUCE F. BLACK

 

 

JAMES M. LYONS

 

 

BRUCE F. BLACK

 

 

FREDERICK J. BAUMANN

 

 

MARTIN D. LITT

 

 

ROTHGERBER JOHNSON & LYONS LLP

 

 

MICHAEL J. HOFMANN

 

 

1200 17TH STREET, SUITE 3000

 

 

HOLME ROBERTS & OWEN LLP

 

 

DENVER, CO 80202-5855

 

 

1700 LINCOLN STREET, SUITE 4100

 

 

 

 

 

DENVER, CO 80203

 

 

COUNSEL FOR VINOD KHOSLA

 

 

 

 

 

 

 

 

COUNSEL FOR PHILIP ANSCHUTZ & CRAIG
SLATER

 

43

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BY:

/S/ MARK T. DROOKS

 

 

BY:

/S/ JAMES NESLAND

 

 

MARK T. DROOKS

 

 

JAMES NESLAND

 

 

THOMAS V. REICHERT

 

 

PAUL SCHWARTZ

 

 

BIRD, MARELLA, BOXER & WOLPERT, PC

 

 

COOLEY GODWARD LLP

 

 

1875 CENTURY PARK EAST, 23RD FLOOR

 

 

380 INTERLOCKEN CRESCENT, SUITE 900

 

LOS ANGELES, CA 90067-2561

 

 

BROOMFIELD, CO 80021-8023

 

 

 

 

 

 

 

 

COUNSEL FOR ROBIN SZELLGA

 

 

COUNSEL FOR DRAKE TEMPEST

 

 

 

 

 

 

BY:

/S/ ELISSA PREHEIM

 

 

BY:

/S/ GREG WALLER

 

 

SCOTT B. SCHREIBER

 

 

GREG WALLER

 

 

JOHN A. FREEDMAN

 

 

ANDREWS KURTH LLP

 

 

ELISSA PREHEIM

 

 

600 TRAVIS STREET, SUITE 4200

 

 

ARNOLD & PORTER

 

 

HOUSTON, TEXAS 77002

 

555 TWELFTH STREET, NW

 

 

 

 

 

WASHINGTON, DC 20004-1206

 

 

ATTORNEYS FOR DEFENDANT GREGORY M. CASEY

 

 

 

 

 

 

 

COUNSEL FOR ARTHUR ANDERSEN LLP

 

 

 

 

 

 

 

 

 

BY:

/S/ BARBARA MOSES

 

 

BY:

/S/ DAVID A. ZISSER

 

 

BARBARA MOSES

 

 

DAVID A. ZISSER

 

 

MORVILLO, ABRAMOWITZ, GRAND, IASON

 

 

ISAACSON, ROSENBAUM P.C.

 

 

& SILBERBERG, P.C.

 

 

633 17TH STREET, SUITE 2200

 

 

565 FIFTH AVENUE

 

 

DENVER, CO 80202

 

NEW YORK, NY 10017

 

 

 

 

 

 

 

 

COUNSEL FOR MARC WEISBERG

 

 

COUNSEL FOR AFSHIN MOHEBBI

 

 

 

 

 

 

 

 

 

BY:

/S/ COATES LEAR

 

 

BY:

/S/ STEPHANIE E. DUNN

 

 

TY COBB

 

 

ROBERT N. MILLER

 

 

DANIEL F. SHEA

 

 

STEPHANIE E. DUNN

 

 

COATES LEAR

 

 

PERKINS COIE, LLP

 

 

HOGAN & HARTSON L.L.P.

 

 

1899 WYNKOOP ST., STE. 700

 

1200 SEVENTEENTH ST., SUITE 1500

 

 

DENVER, CO 80202

 

 

DENVER, CO 80202

 

 

 

 

 

 

 

 

 

 

 

ATTORNEYS FOR LEWIS WILKS AND
STEPHEN JACOBSEN

 

 

ATTORNEYS FOR JAMES A. SMITH

 

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

 

Civil Action No. 01-cv-1451-REB-CBS
(Consolidated with Civil Action Nos. 01-cv-1472-REB-CBS, 01-cv-1527-REB-CBS,
01-cv-1616-REB-CBS, 01-cv-1799-REB-CBS, 01-cv-1930-REB-CBS, 01-cv-2083-REB-CBS,
02-cv-0333-REB-CBS, 02-cv-0374-REB-CBS, 02-cv-0507-REB-CBS, 02-cv-0658-REB-CBS,
02-cv-755-REB-CBS, 02-cv-798-REB-CBS and 04-cv-0238-REB-CBS)

 

In re QWEST COMMUNICATIONS INTERNATIONAL, INC. SECURITIES LITIGATION

 

[PROPOSED] ORDER PRELIMINARILY APPROVING PARTIAL SETTLEMENT
AND APPROVING FORM AND MANNER OF NOTICE

 

EXHIBIT A

 

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WHEREAS, Lead Plaintiffs (on behalf of themselves and the Class Members) in the
above-captioned consolidated litigation (the “Litigation”), have entered into a
Stipulation of Partial Settlement dated as of November     , 2005 (the
“Stipulation”) with Settling Defendants that is subject to review and approval
under Rule 23 of the Federal Rules of Civil Procedure (“Fed. R. Civ. P.”)  and
that, together with the exhibits thereto, sets forth the terms and conditions
for the proposed partial settlement of the Litigation and the dismissal of the
Litigation against the Settling Defendants (as defined in the Stipulation) with
prejudice; and the Court having read and considered the Stipulation and the
accompanying documents; and the parties to the Stipulation having consented to
entry of this Order; and all capitalized terms used herein having the same
meanings set forth in the Stipulation;

 

NOW, THEREFORE, IT IS HEREBY ORDERED:

 

1.             (a)           The Court hereby certifies, for settlement purposes
only,(1) a class pursuant to Fed. R. Civ. P. 23(b)(3), defined as follows:(2)

 

all persons who purchased or otherwise acquired Qwest publicly traded securities
(including common stock, bonds, and options) from May 24, 1999 through July 28,
2002 (“Class Period”). Excluded from the Class are Defendants and any Persons
affiliated with or related to any Defendant. For purposes of this paragraph, the
persons affiliated with or related to any Defendant are members of the immediate
family of each Individual Defendant, any entity in which any Defendant has a
controlling interest,

 

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(1)           Settling Defendants expressly reserve the right to contest class
certification in the event the settlement does not become effective for any
reason.

 

(2)           All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Stipulation.

 

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officers and directors of Qwest and its subsidiaries and affiliates, partners,
shareholders, and members of Arthur Andersen LLP, and the legal representatives,
heirs, predecessors, successors and assigns of any such excluded party. Also
excluded from the Class are those Persons who request exclusion from the Class
in such form and manner, and within such time, as the Court shall prescribe. 
Also excluded from the Class is any current or former officer, director,
employee, or agent of Qwest who has been sued by the United States Securities
and Exchange Commission in connection with such Person’s affiliation with or
conduct related to Qwest.

 

(b)           The Court finds that (i) members of the Class are so numerous as
to make joinder impracticable; (ii) the claims of the Lead Plaintiffs are
typical of the claims of the Class they seek to represent; (iii) the interests
of the members of the Class will be, and have been, fairly and adequately
represented by the Lead Plaintiffs and Lead Counsel; (iv) a class action is
superior to other available methods for the fair and efficient adjudication of
this Litigation; (v) common questions of law and fact exist as to all members of
the Class; and (vi) such common questions predominate over any questions solely
affecting individual members of the Class.

(c)           The Court finds that pursuant to Fed. R. Civ. P. 23, Lead
Plaintiffs New England Healthcare Employees Pension Fund, Satpal Singh, Tejinder
Singh, and Clifford Mosher are adequate class representatives.

 

2.             The terms of the Settlement as set forth in the Stipulation, are
preliminarily approved.  A hearing (the “Settlement Hearing”), pursuant to Fed.
R. Civ. P. 23(e), shall be held before the Court on                         ,
2005, at        ..m. in Courtroom      of the United States Courthouse, 901 19th
Street, Room A-105, Denver, Colorado (or such adjourned time or times as the
Court may set without further notice to the Class):

 

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(a)           to determine whether the terms of the settlement as set forth in
the Stipulation are fair, reasonable, adequate to the Class and should be
approved by the Court;

 

(b)           to determine whether the Judgment as provided under the
Stipulation should be entered;

 

(c)           to determine whether the proposed Plan of Allocation for
distributing the settlement proceeds among Class Members should be approved by
the Court;

 

(d)           to determine the amount of fees and expenses awarded to Lead
Counsel and the amounts that should be ordered reimbursed to the Lead Plaintiffs
for their expenses (including lost wages) incurred in prosecuting the
Litigation; and

 

(e)           to rule upon such other matters as the Court may deem appropriate.

 

3.             The Court approves, in form and content, the Notice of Pendency
and Proposed Partial Settlement of Class Action (the “Notice”), the Proof of
Claim and Release, and the Summary Notice (the “Summary Notice”), annexed as
exhibits A-1, A-2, and A-3 respectively to the Stipulation and this Order, and
finds that the publication, mailing, and Internet posting of such notices in the
manner and form set forth in the Stipulation and as set forth herein, meets the
requirements of Rule 23 of the Fed. R. Civ. P., §21D(a)(7) of the Exchange Act,
15 U.S.C. §78u-4(a)(7), as amended by the Private Securities Litigation Reform
Act of 1995, due process, the rules of this Court, and any other applicable law,
and is the best notice practicable under the circumstances and shall constitute
due and sufficient notice to all persons entitled thereto.

 

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4.             Gilardi & Co. LLC is hereby appointed Claims Administrator to
supervise and administer the notice process as well as process claims as more
fully set forth in the Stipulation.

 

5.             (a)           On or before                         , 2005
(“Notice Date”), (i) a copy of the Notice and Proof of Claim and Release
substantially in the forms annexed as Exhibits A-1 and A-2 to the Stipulation
shall be mailed by first class mail to each member of the Class to the extent
shown by the records of Qwest or its transfer agent at the address set forth in
such records, and (ii) the Stipulation and all exhibits thereto shall be posted
on the Internet at the Claims Administrator’s Internet website, www.gilardi.com.

 

(b)           On or before                         , 2005, a copy of the Summary
Notice, substantially in the form annexed as Exhibit A-3 to the Stipulation,
shall be published on two separate occasions in the national edition of
Investor’s Business Daily.

 

(c)           At or prior to the Settlement Hearing provided in paragraph 2 of
this Order, Lead Counsel shall file with the Court, proof, by affidavit or
declaration, of such mailing and publication.

 

6.             Within ten (10) days after the receipt of the Notice and the
Proof of Claim and Release, nominees who hold or held the publicly traded
securities of Qwest purchased or acquired during the period May 24, 1999 through
July 28, 2002, inclusive, for the benefit of another Person shall either (i)
request additional copies of the Notice and the Proof of Claim form, and, within
ten days after the receipt of the additional copies of the Notice and the Proof
of Claim form, mail them to such beneficial owners and send a statement to the
Claims Administrator confirming that the mailings were made as directed; or (ii)
send a list

 

4

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of names and addresses of such beneficial owners to the Claims Administrator
who, in turn, shall promptly mail the Notice and Proof of Claim to such
beneficial owners.  The Claims Administrator shall advise such nominees that
their reasonable costs in providing the Notice and Proof of Claim and Release to
such beneficial owners will be reimbursed upon submission of appropriate
documentation.

 

7.             Any member of the Class may be excluded from the Class by
complying on or before fifty (50) calendar days after the Notice Date, with the
instructions and procedures set forth in Section VIII of the Notice regarding
exclusion from the Class.  Any Member of the Class who has not requested to be
excluded from the Class in the manner set forth in Section VIII of the Notice
may, but is not required to, enter an appearance in this Litigation pro se or
through counsel of his, her or its own choice.  Any member of the Class who does
not enter an appearance shall be represented by Lead Counsel.

 

8.             Any member of the Class who has not requested to be excluded from
the Class and who wants to object to the approval of the settlement on the terms
set forth in the Stipulation, the application by Lead Counsel for an award of
attorneys’ fees and expenses, reimbursement of the expenses (including lost
wages) of Lead Plaintiffs, or the proposed Plan of Allocation may do so by
appearing at the Settlement Hearing either in person or through an attorney or
by filing a written objection consisting of documents, briefs, or affidavits
with the Court.  As set forth in Section XII of the Notice, in order to appear
at the Settlement Hearing or otherwise object to the settlement, any such Class
Member must file a written notice of objection with the Clerk of the Court on or
before fifty (50) calendar days after the Notice Date.  This written objection
must also be served by

 

5

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hand or first class mail on the parties set forth in Section XIII of the
Notice.  Any Class Member who intends to object to the approval of the
settlement on the terms set forth in the Stipulation, the application by Lead
Counsel for an award of attorneys’ fees and expenses, reimbursement of the
expenses (including lost wages) of Lead Plaintiffs, or the proposed Plan of
Allocation, and who desires to present evidence at the Settlement Hearing must
include in his, her or its written objections the identity of any witnesses he,
she or it may call to testify, and any exhibits he, she or it intends to
introduce into evidence at the Settlement Hearing.  Any Class Member who does
not make his, her, or its objection in the manner provided for herein shall be
deemed to have waived such objection and shall forever be foreclosed from making
any objection to the fairness, reasonableness, or adequacy of the proposed
settlement as incorporated in the Stipulation, the proposed Plan of Allocation,
the awards to Plaintiffs’ Lead Counsel of attorneys’ fees and expenses or any
reimbursement of expenses of Lead Plaintiffs (including lost wages), unless
otherwise ordered by the Court.

 

9.             Class Members who want to participate in the settlement shall
complete and submit a Proof of Claim and Release in accordance with the
instructions contained therein.  Unless the Court orders otherwise, all Proofs
of Claim and Releases must be submitted no later than ninety (90) calendar days
after the Notice Date.  Any Class Member for whom a timely and valid Proof of
Claim and Release has not been submitted within the time provided for shall,
unless otherwise ordered by the Court, be barred from sharing in the
distribution of the proceeds of the settlement but shall nonetheless be bound by
the terms of the Judgment.

 

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10.           Neither Defendants nor Defendants’ counsel shall have any
responsibility for the Plan of Allocation or any application for attorneys’ fees
or reimbursement of expenses submitted by Lead Counsel, and such matters will be
considered separately from the fairness, reasonableness and adequacy of the
proposed settlement.

 

11.           All proceedings against the Settling Defendants in the Litigation
are stayed until further order of the Court, except as may be necessary to
implement the settlement or comply with the terms of the settlement.

 

12.           On the Effective Date, all members of the Class for whom timely,
valid, and complete requests for exclusion from the Class have not been
submitted in accordance with the provisions of Section VIII of the Notice shall
conclusively be deemed to have dismissed with prejudice all claims asserted
against the Settling Defendants in the Litigation and to have released all the
Released Claims, and shall be forever barred and enjoined from asserting,
prosecuting, or continuing the prosecution of any of the Released Claims against
the Settling Defendants pursuant to the terms of the Stipulation.

 

13.           Pending the final determination of the fairness, reasonableness,
and adequacy of the proposed settlement, no member of the Class, other than
those for whom timely, valid, and complete requests for exclusion from the Class
have been submitted, may, either directly, representatively, or in any other
capacity, prosecute, institute, or commence any individual, class, or derivative
action with respect to the Released Claims against any of the Released Persons.

 

14.           The Court reserves the right to approve the settlement with such
modifications as may be agreed to by the Settling Parties, if appropriate,
without further

 

7

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notice to Class Members, and retains jurisdiction to consider all further
applications arising out of or connected with the proposed settlement, as well
as any applications for awards of fees and expenses to counsel to the Class.

 

15.           The Claims Administrator, subject to such supervision of the Court
and/or Lead Counsel, as may be necessary or as circumstances may require, shall
provide notice to the Class and administer the processing of Proof of Claim and
Release forms.  All reasonable costs incurred in identifying and notifying Class
Members as well as in administering the settlement fund shall be paid as set
forth in the Stipulation.

 

16.           All funds held by the Escrow Agent shall be deemed and considered
to be in custodia legis of the Court, and shall remain subject to the
jurisdiction of the Court.  Neither Settling Defendants nor their counsel shall
have any responsibility for the handling of the funds held by the Escrow Agent.

 

17.           All papers in support of the settlement, the Plan of Allocation,
any application by Lead Counsel for attorneys’ fees and expenses and
reimbursement of the Lead Plaintiffs’ expenses (including lost wages) shall be
filed with the Court and served on or before forty (40) calendar days after the
Notice Date and any reply to objections shall be filed and served fourteen (14)
calendar days prior to the Settlement Hearing.

 

DATED:

 

 

 

 

THE HONORABLE ROBERT E. BLACKBURN
UNITED STATES DISTRICT JUDGE

 

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

 

Civil Action No. 01-cv-1451-REB-CBS
(Consolidated with Civil Action Nos. 01-cv-1472-REB-CBS, 01-cv-1527-REB-CBS,
01-cv-1616-REB-CBS, 01-cv-1799-REB-CBS, 01-cv-1930-REB-CBS, 01-cv-2083-REB-CBS,
02-cv-0333-REB-CBS, 02-cv-0374-REB-CBS, 02-cv-0507-REB-CBS, 02-cv-0658-REB-CBS,
02-cv-755-REB-CBS, 02-cv-798-REB-CBS and 04-cv-0238-REB-CBS)

 

In re QWEST COMMUNICATIONS INTERNATIONAL, INC. SECURITIES LITIGATION

 

NOTICE OF PENDENCY AND PARTIAL SETTLEMENT OF CLASS ACTION

EXHIBIT A-1

 

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TO:                            ALL PERSONS OR ENTITIES THAT PURCHASED OR
OTHERWISE ACQUIRED QWEST COMMUNICATIONS INTERNATIONAL, INC. (“QWEST”) PUBLICLY
TRADED SECURITIES (INCLUDING COMMON STOCK, BONDS AND OPTIONS) FROM MAY 24, 1999
THROUGH JULY 28, 2002

 

PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY.  YOUR RIGHTS MAY BE
AFFECTED BY PROCEEDINGS IN THIS ACTION.  PLEASE NOTE THAT IF YOU ARE A MEMBER OF
THE CLASS YOU MAY BE ENTITLED TO SHARE IN THE PROCEEDS OF THE SETTLEMENT FUND
DESCRIBED IN THIS NOTICE.  TO CLAIM YOUR SHARE OF THIS FUND, YOU MUST SUBMIT A
VALID PROOF OF CLAIM AND RELEASE POSTMARKED ON OR BEFORE
                          , 2005.

 

This Notice has been sent to you pursuant to Rule 23 of the Federal Rules of
Civil Procedure and Orders of the United States District Court for the District
of Colorado (the “Court”).  The purpose of this Notice is to inform you of the
partial settlement of this consolidated class action (the “Litigation”) and of
the hearing to be held by the Court to consider the fairness, reasonableness,
and adequacy of the settlement.  The partial settlement resolves the claims
against the Settling Defendants (defined below) but does not resolve the claims
against Joseph P. Nacchio (former Chief Executive Officer of Qwest) and Robert
S. Woodruff (former Chief Financial Officer of Qwest), who are not parties to
this settlement.  This Notice describes the rights you may have in connection
with the settlement and what steps you may take in relation to the settlement
and the Litigation.

 

The partial settlement creates a fund in the principal amount of $400,000,000.00
in cash (the “Settlement Fund”).  The Settlement Fund may be increased under
certain circumstances described in this Notice and in the Stipulation of Partial
Settlement dated as of November     , 2005 (“Stipulation”).  Based on an
estimate of the number of shares,

 

1

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bonds, and options entitled to participate in the settlement and the anticipated
number of claims to be submitted by Class Member(s) (defined below), the average
distribution from the Settlement Fund would be approximately $0.     per share
before deduction of Court-approved fees and expenses (see the Plan of Allocation
below for a more detailed description of how the Settlement Fund will be
allocated to the different types of Qwest publicly traded securities).  For all
types of Qwest securities, your actual recovery from the Settlement Fund will
depend on a number of variables including the number of claimants and the types
and amounts of securities they purchased, the type and number of Qwest publicly
traded securities you purchased, the expense of administrating the claims
process and the timing of your purchases and sales, if any (see Plan of
Allocation below).

 

The Settling Parties to the Litigation do not agree that the Lead Plaintiffs
(defined below) would have prevailed on any of the claims asserted in the
Litigation, or on the average amount of damages per security that would have
been recoverable if Lead Plaintiffs were to have prevailed on their claims. 
Other issues that are the subject of the Litigation on which the parties
disagree include: (1) whether any of the statements allegedly made or facts
allegedly omitted by the Settling Defendants were false, material or otherwise
actionable; (2) the extent to which external factors, such as general market
conditions, influenced the trading price of Qwest publicly traded securities at
various times during the Class Period (defined below); (3) the extent to which
the various matters that Lead Plaintiffs allege were materially false or
misleading influenced (if at all) the trading price of Qwest publicly traded
securities at various times during the Class Period; (4) the extent to which the
various allegedly adverse material facts that Lead Plaintiffs allege were
omitted

 

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influenced (if at all) the trading price of Qwest publicly traded securities at
various times during the Class Period; and (5) the appropriate economic model
for determining the amount by which the trading prices of Qwest publicly traded
securities were allegedly artificially inflated (if at all) at any time during
the Class Period.

 

Counsel for the Lead Plaintiffs believe that the substantial recovery obtained
given Qwest’s financial condition is the largest possible recovery and is in the
best interest of the Class (defined below).  Because of the risks associated
with continuing to litigate and proceeding to trial, there was a danger that the
Lead Plaintiffs would not have prevailed on any of their claims, in which case
the Class would have received nothing.  Indeed, the Settling Defendants assert
that they never made any false or misleading statements or omissions at any
time.  In addition, the amount of damages recoverable by the Class, if any, was
and continues to be vigorously challenged by the Settling Defendants.  If the
Litigation were tried, recoverable damages, if any, would have been limited to
losses caused by conduct actionable under the laws and, had the Litigation gone
to trial, the Settling Defendants intended to assert that all or most of the
losses of the members of the Class were caused by non-actionable market,
industry or general economic factors.  The Settling Defendants also would have
asserted that throughout the Class Period the uncertainties and risks associated
with Qwest’s business and financial condition as well as the merger between
Qwest and US West were fully and adequately disclosed.

 

Lead Counsel have not received any payment for their services in conducting the
Litigation on behalf of the members of the Class, nor have they been reimbursed
for their out-of-pocket expenditures.  If the settlement is approved by the
Court, Lead Counsel will

 

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apply to the Court (1) for attorneys fees of up to 24% of the settlement
proceeds, and reimbursement of expenses incurred not to exceed $       million,
and (2) compensation of up to $                     for each of the Lead
Plaintiffs to reimburse them for their expenses (including lost wages) incurred
in prosecuting the Litigation, all to be paid from the Settlement Fund.  If the
amounts requested by Lead Counsel are approved by the Court, the average cost
would be approximately $0.     per share.  The average cost per share could vary
depending on the number of shares for which valid claims are submitted.

 

This Notice is not an expression of any opinion by the Court about the merits of
any of the claims or defenses asserted by any party in the Litigation.

 

For further information regarding this Settlement you may contact: Rick Nelson,
Lerach Coughlin Stoia & Robbins LLP, 655 West Broadway, Suite 1900, San Diego,
California 92101, Telephone: 800/449-4900.  Please do not contact the Court or
Qwest.

 

NOTICE OF SETTLEMENT HEARING ON PROPOSED SETTLEMENT

 

A settlement hearing will be held on                           , 2005, at
             .m., before the Honorable Robert E. Blackburn, United States
District Judge, District of Colorado, United States Courthouse, 901 19th Street,
Room A-105, Denver, Colorado (the “Settlement Hearing”).  The purpose of the
Settlement Hearing will be to determine: (1) whether the settlement consisting
of $400,000,000 in cash (plus any accrued interest) should be approved as fair,
reasonable and adequate to members of the Class; (2) whether the proposed plan
to distribute the settlement proceeds (the “Plan of Allocation”) is fair,
reasonable, and adequate; (3) whether the application by Lead Counsel for an
award of attorneys’ fees and reimbursement of expenses and the Lead Plaintiffs’
request for

 

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reimbursement of their expenses (including lost wages) should be approved; and
(4) whether the Litigation should be dismissed with prejudice and the Released
Persons (defined below) released from all Released Claims (defined below)
against them.  The Court may adjourn or continue the Settlement Hearing or
modify any dates set forth herein without further notice to the Class.

 

I.              DEFINITIONS USED IN THIS NOTICE

 

1.             “Arthur Andersen LLP” means Arthur Andersen LLP, and all of its
respective past and present subsidiaries, parents, successors and predecessors,
and all of its current and former partners, members, principals, participating
principals, national directors, managing or other agents, management personnel,
officers, directors, shareholders, administrators, servants, employees,
consultants, advisors, attorneys, accountants, representatives, successors and
assigns, along with the heirs, spouses, executors, administrators, insurers,
reinsurers, representatives, estates, successors and assigns of any such person
or entities.

 

2.             “Arthur Andersen Released Parties” means Arthur Andersen LLP,
AWSC Société Coopérative, en liquidation, and all of their respective past and
present subsidiaries, parents, successors and predecessors, member firms,
affiliates, related entities, and divisions, and all of their respective current
and former partners, members, principals, participating principals, national
directors, managing or other agents, management personnel, officers, directors,
shareholders, administrators, servants, employees, consultants advisors,
attorneys, accountants, representatives, successors and

 

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assigns, along with the heirs, spouses, executors, administrators, insurers,
reinsurers, representatives, estates, successors and assigns of any such person
or entities.

 

3.             “Authorized Claimant” means any Class Member whose claim for
recovery has been allowed pursuant to the terms of the Stipulation

 

4.             “Claims Administrator” means Gilardi & Co. LLC.

 

5.             “Class” means all persons who purchased or otherwise acquired
Qwest publicly traded securities (including common stock, bonds, and options)
from May 24, 1999 through July 28, 2002 (“Class Period”). Excluded from the
Class are Defendants and any Persons affiliated with or related to any
Defendant. For purposes of this paragraph, the persons affiliated with or
related to any Defendant are members of the immediate family of each Individual
Defendant, any entity in which any Defendant has a controlling interest,
officers and directors of Qwest and its subsidiaries and affiliates, partners,
shareholders, and members of Arthur Andersen LLP, and the legal representatives,
heirs, predecessors, successors and assigns of any such excluded party. Also
excluded from the Class are those Persons who request exclusion from the Class
in such form and manner, and within such time, as the Court shall prescribe.
Also excluded from the Class is any current or former officer, director,
employee, or agent of Qwest who has been sued by the United States Securities
and Exchange Commission in connection with such Person’s affiliation with or
conduct related to Qwest.

 

6.             “Class Member” means a Person who falls within the definition of
the Class.

 

7.             “Defendants” means Qwest Communications International Inc.,
Arthur Andersen LLP, and the Individual Defendants.

 

6

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8.             “Individual Defendants” means Joseph Nacchio, Philip Anschutz,
Robin Szeliga, Robert Woodruff, Stephen Jacobsen, Drake Tempest, Marc Weisberg,
James Smith, Lewis Wilks, Craig Slater, Afshin Mohebbi, Gregory Casey, and Vinod
Khosla.

 

9.             “Individual Settling Defendants” means Philip Anschutz, Robin
Szeliga, Stephen Jacobsen, Drake Tempest, Marc Weisberg, James Smith, Lewis
Wilks, Craig Slater, Afshin Mohebbi, Gregory Casey, and Vinod Khosla.

 

10.           “Judgment” means the judgment to be rendered by the Court,
substantially in the form attached as Exhibit B to the Stipulation.

 

11.           “Lead Counsel” means Lerach, Coughlin, Stoia, Geller, Rudman &
Robbins LLP, 655 W. Broadway, Suite 1900, San Diego, CA 92101-3301.

 

12.           “Lead Plaintiffs” means New England Healthcare Employees Pension
Fund, Satpal Singh, Tejinder Singh, and Clifford Mosher.

 

13.           “Net Settlement Fund” means the Settlement Fund, together with any
interest earned thereon, less (i) any taxes, (ii) the cash allocated to Lead
Counsel for attorneys’ fees and expenses pursuant to any Fee and Expense
Application approved by the Court pursuant to ¶7.1 and 7.2 of the Stipulation,
and (iii) the cash allocated to the Class Notice and Administration Fund
pursuant to ¶2.8 of the Stipulation.

 

14.           “Non-Settling Defendant” means Joseph P. Nacchio (“Nacchio”) and
Robert S. Woodruff (“Woodruff’), or either of them. Nacchio and Woodruff are
expressly excluded from the definitions of Qwest, Related Parties, Released
Persons, Settling Defendants, and Settling Parties.

 

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15.           “Plan of Allocation” means a plan or formula of allocation of the
Settlement Fund whereby the Net Settlement Fund shall be distributed to
Authorized Claimants after payment of expenses of notice and administration of
the settlement, Taxes and Tax Expenses and such attorneys’ fees, costs, expenses
and interest as may be awarded by the Court. Any Plan of Allocation is not part
of the Stipulation and the Settling Defendants and the Related Parties shall
have no liability with respect thereto.

 

16.           “Qwest” means Qwest Communications International Inc., any and all
successors, subsidiaries, and affiliates of Qwest Communications International
Inc., and any and all current and former officers, directors, employees and
agents of any of them, as well as any predecessors of Qwest (including but not
limited to US West and any successors, subsidiaries, and affiliates thereof) and
their successors, subsidiaries, and affiliates, and any and all current and
former officers, directors, employees and agents of any of them. Notwithstanding
the foregoing, neither Nacchio nor Woodruff is included in the definition of
Qwest.

 

17.           “Related Parties” means each of a Settling Defendant’s past or
present directors, officers, partners, members, employees, controlling
shareholders, attorneys, accountants or auditors, banks or investment banks,
advisors, personal or legal representatives, insurers, reinsurers, predecessors,
successors, parents, subsidiaries, divisions, assigns, spouses, heirs, related
or affiliated entities, any partnership in which a Settling Defendant is a
general or limited partner, any entity in which a Settling Defendant has a
controlling interest, any member of an Individual Settling Defendant’s immediate
family, or any trust or foundation of which any Settling Defendant is the
settlor or which is

 

8

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for the benefit of any Individual Settling Defendant and/or member(s) of his or
her family. Notwithstanding the foregoing, neither Nacchio nor Woodruff is
included in the definition of Related Parties.

 

18.           “Released Claims” shall collectively mean all claims, demands,
rights, liabilities and causes of action of every nature and description
whatsoever, whether based in law or equity, on federal, state, local, foreign,
statutory or common law, or any other law, rule, or regulation (including, but
not limited to, all claims arising out of or relating to any acts, omissions,
disclosures, public filings, registration statements, financial statements,
audit opinions, or statements by the Settling Defendants, including without
limitation, claims for negligence, gross negligence, constructive or actual
fraud, negligent misrepresentation, conspiracy, or breach of fiduciary duty),
whether known or unknown, whether or not concealed or hidden, accrued or not
accrued, foreseen or unforeseen, matured and not matured, that were asserted or
that could have been asserted directly, indirectly, representatively or in any
other capacity, at any time, in any forum by Lead Plaintiffs, the Class Members,
or the successors or assigns of any Lead Plaintiff or Class Member, or any of
them against the Released Persons arising out of, based upon, or related in any
way to: (a) the purchase, acquisition, sale, or disposition of Qwest securities
by any Lead Plaintiffs or any

 

9

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Class Member during the Class Period and the allegations that were made or could
have been made in the Litigation; (b) the purchase or other acquisition of, the
retention of, the sale or other disposition of, or any other transaction
involving Qwest securities by any of the Released Persons during the Class
Period; or (c) the settlement or resolution of the Litigation (including,
without limitation, any claim for attorneys’ fees by Lead Plaintiffs or any
Class Member). Released Claims shall also include claims related to any tax
effects or tax liabilities (including any interest, penalties and representation
costs) arising out of this Stipulation or any payment or transfer made pursuant
to this Stipulation.  Released Claims shall also include Unknown Claims
otherwise subject to this provision. Released Claims shall not include the
claims asserted in the Second Amended and Consolidated Complaint filed in the
United States District Court for the District of Colorado on May 21, 2003 in In
re Qwest Savings and Retirement Plan ERISA Litigation 02-CV-00464-REB-CBS (and
all cases consolidated therein).

 

19.           “Released Persons” means each and all of the Settling Defendants
and their Related Parties, and the Arthur Andersen Released Parties.
Notwithstanding the foregoing, neither Nacchio nor Woodruff is included in the
definition of Released Persons.

 

20.           “SEC Distribution Fund” means those funds paid by Qwest
Communications International Inc. pursuant to the Final Judgment as to Defendant
Qwest Communications International Inc. in Securities and Exchange Commission v.
Qwest Communications International Inc., Civil Action No. 04-7-2179 (Oct. 21,
2004), into an account in the Court Registry Investment System initially
established in Securities and Exchange Commission v. Augustine Cruciotti, Civil
Action No. 04-D-1267 (MJW) (D. Colo.), that are made available for distribution
to the Class pursuant to the Plan of Allocation, together with such other funds
paid into that same account by other Persons pursuant to any separate final
judgments or agreements that those Persons have entered into or may enter into
with the Securities and Exchange Commission that are also made available for
distribution to the Class pursuant to the Plan of Allocation.

 

10

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21.           “Settlement Fund” means the principal amount of $400,000,000.00
(FOUR HUNDRED million dollars) in cash plus all interest earned thereon pursuant
to this Stipulation and the SEC Distribution Fund.

 

22.           “Settling Defendants” means, collectively, Qwest, Arthur Andersen
LLP, and each of the Individual Settling Defendants. Notwithstanding the
foregoing, neither Nacchio nor Woodruff is included in the definition of
Settling Defendant.

 

23.           “Settling Parties” means, collectively, each of the Settling
Defendants and the Lead Plaintiffs on behalf of themselves and the Class
Members. Notwithstanding the foregoing, neither Nacchio nor Woodruff is included
in the definition of Settling Parties.

 

24.           “Unknown Claims” means any claims that any Class Member or Lead
Plaintiffs do not know or suspect to exist in his, her, its or their favor at
the time of the release of the Released Persons which, if known by him, her, it,
or them might have affected his, her, its or their settlement with and release
of the Released Persons, or might have affected his, her, its, or their decision
not to object to this settlement. With respect to any and all Released Claims,
the Settling Parties stipulate and agree that, upon the Effective Date, the Lead
Plaintiffs shall expressly, and each of the Class Members shall be deemed to
have, and by operation of the Judgment shall have, expressly waived the
provisions, rights and benefits of California Civil Code §1542, which provides:

 

11

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A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

 

The Lead Plaintiffs shall expressly, and each of the Class Members shall be
deemed to have, and by operation of the Judgment shall have, expressly waived
any and all provisions, rights and benefits conferred by any law, or principle
of common law, which is similar, comparable or equivalent to California Civil
Code §1542. The Lead Plaintiffs and Class Members may hereafter discover facts
in addition to or different from those that he, she, it or they now know or
believe to exist or to be true with respect to the subject matter of the
Released Claims, but the Lead Plaintiffs shall have, and each Class Member, upon
the Effective Date, and by operation of the Judgment shall be deemed to have,
fully, finally, and forever settled and released any and all Released Claims,
known or unknown, suspected or unsuspected, contingent or non-contingent,
whether or not concealed or hidden, which now exist, or heretofore have existed,
upon any theory of law or equity now existing or coming into existence in the
future, including, but not limited to, conduct that is negligent, intentional,
with or without malice, or a breach of any duty, law or rule, without regard to
the subsequent discovery or existence of such different or additional facts. The
Lead Plaintiffs acknowledge, and the Class Members shall be deemed by operation
of the Judgment to have acknowledged, that the foregoing waiver was separately
bargained for and a material element of the settlement of which this release is
a part.

 

12

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II.                                     THE LITIGATION

 

On July 27, 2001, New England Healthcare Employees Pension Fund filed a class
action complaint, entitled New England Health Care Employees Fund v. Qwest et
a/., Civil Action No. 01-N-1451-REB-CBS, in the United States District Court for
the District of Colorado, alleging various violations of the federal securities
laws. A number of similar class action complaints were subsequently filed in the
United States District Court for the District of Colorado.  Pursuant to the
Private Securities Litigation Reform Act of 1995, all of the related class
action complaints were consolidated under the first filed case No. 01-N-1451;
New England Healthcare Employees Pension Fund, Clifford Mosher, Tejinder Singh,
and Satpal Singh were appointed Lead Plaintiffs; and a consolidated class action
complaint was filed.  Lead Plaintiffs filed amended complaints on December 3,
2001, April 5, 2002, May 2, 2002, August 21, 2002, and February 6, 2004.  In the
Fifth Amended Complaint, the named defendants in the Litigation were Qwest
Communications International Inc., Arthur Andersen LLP, Joseph Nacchio, Philip
Anschutz, Robin Szeliga, Robert Woodruff, Stephen Jacobsen, Drake Tempest, Marc
Weisberg, James Smith, Lewis Wilks, Craig Slater, Afshin Mohebbi, Gregory Casey,
and Vinod Khosla. The causes of action asserted in the Fifth Amended Complaint
were for violations of the Securities Act of 1933 and the Securities Exchange
Act of 1934. Lead Plaintiffs sought to recover money and/or other relief on
behalf of themselves and a putative class.

 

On November 4, 2002, Lead Plaintiffs moved for a temporary restraining order and
a preliminary injunction to prevent Qwest from selling certain assets, or, in
the alternative, to place the proceeds from that sale in trust. Qwest opposed
that motion. The Court denied

 

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Lead Plaintiffs’ request for a temporary restraining order, and following
supplemental briefing and a hearing at which both sides presented evidence,
denied Lead Plaintiffs’ request for a preliminary injunction.

 

Defendants moved to dismiss Lead Plaintiffs’ various consolidated amended
complaints, and Lead Plaintiffs opposed Defendants’ motions. Defendants’ motions
to dismiss were granted in part and denied in part, with some Individual
Defendants being dismissed from the Litigation. In other instances, the claims
or allegations against Defendants were narrowed.

 

Those Defendants not dismissed from the Litigation filed answers denying all
material allegations of Lead Plaintiffs’ Fifth Amended Complaint and asserted
various defenses. Lead Plaintiffs and Defendants engaged in extensive discovery,
which has been coordinated with discovery in several other state and federal
securities actions. For example, Qwest has produced more than 8,000,000 pages of
documents, and Lead Plaintiffs and Defendants have conducted more than 50
depositions. Those depositions began in early 2005.

 

On March 14, 2005, Lead Plaintiffs filed a motion for class certification, which
Defendants opposed. Upon Final Settlement Approval, the Stipulation renders Lead
Plaintiffs’ motion for class certification moot as to the Settling Defendants.

 

III.           CLAIMS OF THE LEAD PLAINTIFFS AND BENEFITS OF SETTLEMENT

 

The Lead Plaintiffs believe that the claims asserted in the Litigation have
merit and believe that the evidence developed to date supports the claims.
However, the Lead Plaintiffs and Lead Counsel recognize and acknowledge the
expense and length of

 

14

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continued proceedings necessary to prosecute the Litigation against the Settling
Defendants through trial and appeals. The Lead Plaintiffs and Lead Counsel also
have taken into account the uncertain outcome and the risk of any litigation,
especially in complex actions such as this Litigation, as well as the
difficulties and delays inherent in such litigation. The Lead Plaintiffs and
Lead Counsel are also mindful of the inherent problems of proof under and
possible defenses to the violations asserted in the Litigation. The Lead
Plaintiffs and Lead Counsel believe that the settlement set forth in the
Stipulation confers substantial benefits upon the Class Members.  Based on their
evaluation, the Lead Plaintiffs and Lead Counsel have determined that the
settlement set forth in the Stipulation is in the best interests of the Class.

 

IV.                                DEFENDANTS’ STATEMENT AND DENIALS OF
WRONGDOING AND LIABILITY

 

The Defendants have denied and continue to deny each and all of the claims and
contentions alleged in the Litigation. The Defendants expressly have denied and
continue to deny all charges of wrongdoing or liability against them arising out
of any of the conduct, statements, acts or omissions alleged, or that could have
been alleged, in the Litigation. The Defendants also have denied and continue to
deny, inter alia, the allegations that the Lead Plaintiffs or the Class have
suffered any damages, and that the Lead Plaintiffs or the Class were harmed by
the conduct alleged in the Litigation.

 

Nonetheless, the Settling Defendants have concluded that further conduct of the
Litigation would be protracted and expensive, and that it is desirable that the
Litigation be fully and finally settled in the manner and upon the terms and
conditions set forth in the Stipulation.  The Settling Defendants also have
taken into account the uncertainty and risks

 

15

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inherent in any litigation, especially in complex cases like this Litigation.
The Settling Defendants have, therefore, determined that it is desirable and
beneficial to them that the Litigation be settled in the manner and upon the
terms and conditions set forth in this Stipulation.

 

V.                                    TERMS OF THE PROPOSED SETTLEMENT

 

The Settlement Fund consists of $400 million in cash, plus any accrued interest
thereon.  Additionally, the Settlement Fund may include an additional
approximately $250 million in cash from the SEC Distribution Fund, should the
United States Securities and Exchange Commission agree that those monies may be
distributed pursuant to the Plan of Allocation.  A portion of the Settlement
Fund will be used for certain administrative expenses, including costs of
printing and mailing notice of the settlement, the cost of publishing newspaper
notices, payment of any taxes assessed against the Settlement Fund and costs
associated with the processing of claims submitted.  In addition, as explained
below, a portion of the Settlement Fund may be awarded by the Court to Lead
Counsel as attorneys’ fees and for reimbursement of out-of-pocket expenses and
to Lead Plaintiffs for reimbursement of their expenses (including lost wages) in
representing the Class.  The balance of the Settlement Fund (the “Net Settlement
Fund”) will be distributed according to the Plan of Allocation described below
to the Class Members who submit valid and timely Proof of Claim and Release
forms.

 

16

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VI.                                PLAN OF ALLOCATION

 

The Net Settlement Fund will be distributed to Class Members who submit valid
and timely Proof of Claim and Release forms (“Authorized Claimants”) under the
Plan of Allocation described here.

 

The Net Settlement Fund will be distributed to Class Members who submit valid,
timely Proof of Claim forms (“Authorized Claimants”) under the Plan of
Allocation described below.  The Plan of Allocation provides that you will be
eligible to participate in the distribution of the Net Settlement Fund only if
you have a net loss on all transactions in Amazon common stock, notes/debt or
options.

 

Each Authorized Claimant shall be paid the percentage of the Net Settlement Fund
that each Authorized Claimant’s claim bears to the total of the claims of all
Authorized Claimants.  Payment in this manner shall be deemed conclusive against
all Authorized Claimants.

 

The total of all profits shall be subtracted from the total of all losses from
transactions during the Class Period to determine if a Class Member has a
claim.  Only if a Class Member had a net loss, after all profits from
transactions in Amazon common stock, notes/debt or options during the Class
Period are subtracted from all losses, will such Class Member be eligible to
receive a distribution from the Net Settlement Fund.

 

Qwest Common Stock

 

1.                                       For shares of Qwest common stock that
were purchased from May 24, 1999 through June 19, 2001, and

 

a)                                      sold prior to June 20, 2001, the claim
per share is $0 per share;

 

17

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b)                                     sold from June 20, 2001 to August 1,
2001, the claim per share is $1.74 per share;

 

c)                                      sold from August 2, 2001 to September
26, 2001, the claim per share is $4.03 per share;

 

d)                                     sold from September 27, 2001 to October
30, 2001, the claim per share is $7.33 per share;

 

e)                                      sold from October 31, 2001 to February
12, 2002, the claim per share is $10.38 per share;

 

f)                                        retained at the end of February 12,
2002, the claim per share is $11.16 per share.

 

2.                                       For shares of Qwest common stock that
were acquired in the June 30, 2000 merger with U.S. West, and

 

a)                                      sold prior to June 20, 2001, the claim
per share is $0 per share;

 

b)                                     sold from June 20, 2001 to August 1,
2001, the claim per share is $2.18 per share;

 

c)                                      sold from August 2, 2001 to September
26, 2001, the claim per share is $5.04 per share;

 

d)                                     sold from September 27, 2001 to October
30, 2001, the claim per share is $9.16 per share;

 

e)                                      sold from October 31, 2001 to February
12, 2002, the claim per share is $12.98 per share;

 

18

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f)                                        retained at the end of February 12,
2002, the claim per share is $13.95 per share.

 

3.                                       For shares of Qwest common stock that
were purchased from June 20, 2001 through August 1, 2001, and

 

a)                                      sold prior to August 2, 2001, the claim
per share is $0 per share;

 

b)                                     sold from August 2, 2001 to September 26,
2001, the claim per share is $2.29 per share;

 

c)                                      sold from September 27, 2001 to October
30, 2001, the claim per share is $5.59 per share;

 

d)                                     sold from October 31, 2001 to February
12, 2002, the claim per share is $8.64 per share;

 

e)                                      retained at the end of February 12,
2002, the claim per share is $9.42 per share.

 

4.                                       For shares of Qwest common stock that
were purchased from August 2, 2001 through September 26, 2001, and

 

a)                                      sold prior to September 27, 2001, the
claim per share is $0 per share;

 

b)                                     sold from September 27, 2001 to October
30, 2001, the claim per share is $3.30 per share;

 

c)                                      sold from October 31, 2001 to February
12, 2002, the claim per share is $6.35 per share;

 

d)                                     retained at the end of February 12, 2002,
the claim per share is $7.13 per share.

 

19

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5.                                       For shares of Qwest common stock that
were purchased from September 27, 2001 through October 30, 2001, and

 

a)                                      sold prior to October 31, 2001, the
claim per share is $0 per share;

 

b)                                     sold from October 31, 2001 to February
12, 2002, the claim per share is $3.05 per share;

 

c)                                      retained at the end of February 12,
2002, the claim per share is $3.83 per share.

 

6.                                       For shares of Qwest common stock that
were purchased from October 31, 2001 through February 12, 2002, and

 

a)                                      sold prior to 2/13/2001, the claim per
share is $0 per share;

 

b)                                     retained at the end of February 12, 2002,
the claim per share is $0.78 per share.

 

7.                                       For shares of Qwest common stock that
were purchased from 2/13/2002 through July 28, 2002, and

 

a)                                      sold prior to 6/26/2002, the claim per
share is $0;

 

b)                                     sold from 6/26/2002 through 12/31/2002,
the claim per share is the lesser of:

 

i)                                         $4.19 price per share less the sales
price per share,

 

ii)                                      the purchase price per share less the
sales price per share, or

 

iii)                                   $0.10 per share;

 

c)                                      retained at the end of 12/31/2002, the
claim per share is $0 per share.

 

20

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PUBLICLY TRADED QWEST NOTES/DEBT

 

“July Exchange Notes” defined as notes issued pursuant to July 12, 2001
Registration Statement:

 

Qwest Capital Funding Note 7.25% due 2/15/2011

 

Qwest Capital Funding Note 7.75% due 2/15/2031

 

“October Exchange Notes” defined as notes issued pursuant to October 30, 2001
Registration Statement:

 

Qwest Capital Funding Note 5.875% due 8/03/04

 

Qwest Capital Funding Note 7.0% due 8/03/2009

 

Qwest Capital Funding Note 7.625% due 8/03/21

 

July Exchange Notes

 

For Qwest July Exchange Notes purchased or otherwise acquired from 7/12/2001
through July 28, 2002, and

 

a)                                      sold prior to January 1, 2004, the claim
per $1,000 par value Note is the difference between the purchase price per
$1,000 par value Note and the sales price per $1,000 par value Note;

 

b)                                     retained at the end of December 31, 2003,
the claim per $1,000 par value Note is $0.

 

October Exchange Notes

 

For Qwest October Exchange Notes purchased or otherwise acquired from October
30, 2001 through July 28, 2002, and

 

21

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a)                                      sold prior to January 1, 2004, the claim
per $1,000 par value Note is 25 percent of the difference between the purchase
price per $1,000 par value Note and the sales price per $1,000 par value Note;

 

b)                                     retained at the end of December 31, 2003,
the claim per $1,000 par value Note is $0.

 

All Other Publicly Traded Notes/Debt

 

For all other publicly traded Qwest Notes/Debt purchased from October 30, 2001
through July 28, 2002, and

 

a)                                      sold prior to January 1, 2004, the claim
per $1,000 par value Note/Debt is 10  percent of the difference between the
purchase price per $1,000 par value Note/Debt and the sales price per $1,000 par
value Note/Debt;

 

b)                                     retained at the end of December 31, 2003,
the claim per $1,000 par value Note/Debt is $0.

 

QWEST OPTIONS

 

Call Options

 

1.                                       For Call Options on Qwest common stock
that were purchased during the period 5/24/99 through 7/28/02, and,

 

a)                                      owned at the end of one of the following
dates: June 19, 2001, August 1, 2001, September 26, 2001, October 30, 2001,
February 12, 2002 or 6/25/2002, the claim per Call Option is the difference
between the price paid for the Call Option less the proceeds received upon the
settlement of the Call Option contract;

 

22

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b)                                     not owned at the end of one of the
following dates: June 19, 2001, August 1, 2001, September 26, 2001, October 30,
2001, February 12, 2002 or 6/25/2002, the claim per Call Option is $0.

 

2.               For Call Options on Qwest common stock that were written during
the period 5/24/99 through 7/28/02, the claim per Call Option is $0.

 

Put Options

 

1.                                       For Put Options on Qwest common stock
that were written during the period 5/24/99 through 7/28/02, and

 

a)                                      owned at the end of one of the following
dates: June 19, 2001, August 1, 2001, September 26, 2001, October 30, 2001,
February 12, 2002 or 6/25/2002, the claim per Put Option is the difference
between the amount paid upon settlement of the Put Option contract less the
initial proceeds received upon the sale of the Put Option contract.

 

b)                                     not owned at the end of one of the
following dates: June 19, 2001, August 1, 2001, September 26, 2001, October 30,
2001, February 12, 2002 or 6/25/2002, the claim per Put Option is $0.

 

2.                                       For Put Options on Qwest common stock
that were purchased during the period 5/24/99 through 7/28/02, the claim per Put
Option is $0.

 

3.                                       Note:  In the case the option was
exercised for Qwest common stock, the amount paid, or proceeds received, upon
the settlement of the option contract equals the intrinsic value of the option
using Qwest common stock’s closing price on the date the option was exercised.

 

23

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The total recovery for publicly traded notes/debt shall not exceed 5% of the Net
Settlement Fund.  Total recovery for options shall not exceed 1% of the Net
Settlement Fund.  Based on the Section 11 claims under the Securities Act of
1933, shares of Qwest common stock acquired in the June 30, 2000 Merger with
U.S. West will receive a 25% premium from shares purchased on the open market
during the Class Period.  The date of purchase or sale is the “contract” or
“trade” date as distinguished from the “settlement” date.  The determination of
the price paid per share or security and the price received per share or
security shall be exclusive of all commissions, taxes, fees and charges.

 

For Settlement Class Members who held shares at the beginning of the Settlement
Class Period or made multiple purchases or sales during the Settlement Class
Period, the first-in, first-out (“FIFO”) method will be applied to such
holdings, acquisitions and sales for purposes of calculating a claim.  Under the
FIFO method, sales of shares during the Settlement Class Period will be matched,
in chronological order, first against shares held at the beginning of the
Settlement Class Period.  The remaining sales of shares during the Settlement
Class Period will then be matched, in chronological order, against shares
purchased or acquired during the Settlement Class Period.

 

The Court has reserved jurisdiction to allow, disallow or adjust the claim of
any Class Member on equitable grounds.

 

VII.                            PARTICIPATION IN THE CLASS

 

If you fall within the definition of the Class, you are a Class Member unless
you elect to be excluded from the Class (see Section VIII below).  If you do not
request to be excluded from the Class in the manner specified in Section VIII
below, you will be bound by

 

24

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any Judgment entered with respect to the settlement in the Litigation whether or
not you submit a Proof of Claim and Release form.

 

If you are a Class Member, you need do nothing (other than timely file a
properly completed Proof of Claim and Release form if you wish to participate in
the distribution of the Net Settlement Fund).  Your interests will be
represented by Lead Plaintiffs and Lead Counsel.  If you choose, you may enter
an appearance individually or through your own counsel at your own expense;
provided, however, that in order to be heard at the Settlement Hearing or pose
an objection to the settlement, you and your counsel must follow the procedures
set forth in Section XII below.

 

TO PARTICIPATE IN THE DISTRIBUTION OF THE NET SETTLEMENT FUND, YOU MUST TIMELY
COMPLETE AND RETURN THE PROOF OF CLAIM AND RELEASE FORM THAT ACCOMPANIES THIS
NOTICE.  The Proof of Claim and Release form must be postmarked on or before
                        , 2006, and sent to the Qwest Claims Administrator at
the address below.  Unless the Court orders otherwise, if you do not timely
submit a valid Proof of Claim and Release form, you will be barred from
receiving any payments from the Net Settlement Fund, but will in all other
respects be bound by the provisions of the Stipulation and the Judgment.

 

VIII.                        EXCLUSION FROM THE CLASS

 

You may request to be excluded from the Class.  To do so, you must mail a
written request stating that you wish to be excluded from the Class to:

 

Qwest Claims Administrator
c/o Gilardi & Co. LLC
P.O. Box 5100
Larkspur, California 94977-5100

 

25

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In order to be valid and effective, the request for exclusion must contain the
following information:

 

First, list your name, address, and telephone number

 

Second, for each purchase or other acquisition of any Qwest stock, bonds, or
options from May 24, 1999 through July 28, 2002, identify (i) the date the
stock, bonds, or options were purchased or otherwise acquired; (ii) the number
of shares, bonds, or options that were purchased or otherwise acquired; and
(iii) the price paid for each share, bond, or option purchased or otherwise
acquired.

 

Third, for each purchase or other acquisition of any Qwest stock, bonds, or
options from May 24, 1999 through July 28, 2002, state whether such stock, bonds
or options were sold or otherwise disposed of and, for each such sale or
disposition identify (i) the date the stocks, bonds, or options were sold or
otherwise disposed of; (ii) the number of shares, bonds, or options that were
sold or otherwise disposed of; and (iii) the price obtained for each share,
bond, or option sold or otherwise disposed of.

 

Fourth, separately identify the number of shares of Qwest common stock (if any)
acquired as a result of the merger between Qwest and US West, the record date of
which was June 30, 2000.

 

YOUR EXCLUSION REQUEST MUST BE POSTMARKED ON OR BEFORE                     ,
2005, AND, IN ORDER TO BE VALID, MUST CONTAIN ALL OF THE FOREGOING INFORMATION. 
IF YOU SUBMIT A VALID TIMELY, AND COMPLETE REQUEST FOR EXCLUSION, YOU SHALL HAVE
NO RIGHTS UNDER THE SETTLEMENT, SHALL NOT SHARE IN THE DISTRIBUTION OF THE NET
SETTLEMENT

 

26

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FUND, AND SHALL NOT BE BOUND BY THE STIPULATION OR THE FINAL JUDGMENT.  IF YOUR
EXCLUSION REQUEST FAILS TO CONTAIN ALL THE FOREGOING INFORMATION, IT WILL BE
INVALID AND YOU WILL BE BOUND BY THE TERMS AND CONDITIONS OF THE STIPULATION AND
JUDGMENT.

 

IX.                                DISMISSAL AND RELEASES

 

If the Settlement is approved, the Court will enter a Judgment in the
Litigation.  The Judgment will dismiss the Released Claims with prejudice as to
all Settling Defendants.

 

The Judgment will also provide that all Class Members who have not validly and
timely requested to be excluded from the Class shall be deemed to have released
and forever discharged all Released Claims (to the extent members of the Class
have such claims) against all the Released Persons.

 

X.                                    APPLICATION FOR FEES AND EXPENSES

 

At the Settlement Hearing, Lead Counsel will request the Court to award
attorneys’ fees of     % of the Settlement Fund, plus reimbursement of expenses,
not to exceed $       million, which were incurred in connection with the
Litigation, plus interest thereon.  Lead Counsel will not apply for an award of
attorneys’ fees and/or expenses based on the monies from the SEC Distribution
Fund.  In addition, certain of the Lead Plaintiffs in the Litigation may seek
compensation of up to $                   each for their expenses incurred
(including lost wages) in prosecuting the Litigation.  This compensation will be
paid from the Settlement Fund and will not be paid from the SEC Distribution
Fund.  Class Members are not personally liable for any such fees or expenses.
 To date, Lead Counsel have not

 

27

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received any payment for their services in conducting the Litigation nor have
counsel been reimbursed for all of their out-of-pocket expenses incurred.

 

XI.                                CONDITIONS FOR SETTLEMENT

 

The settlement is conditioned upon the occurrence of certain events described in
the Stipulation.  Those events include, among other things: (1) entry of the
Judgment by the Court as provided for in the Stipulation; and (2) expiration of
the time to appeal from or alter or amend the Judgment.  If, for any reason, any
one of the conditions described in the Stipulation is not met, the Stipulation
might be terminated and, if terminated, will become null and void, and the
parties to the Stipulation will be restored to their respective positions in the
Litigation prior to the Settlement.

 

XII.                            THE RIGHT TO BE HEARD AT THE SETTLEMENT HEARING

 

Any Class Member who has not validly, timely, and completely requested to be
excluded from the Class, and who objects to any aspect of the settlement, the
Plan of Allocation, Lead Counsel’s application for attorneys’ fees and expenses,
or the Lead Plaintiffs’ request for reimbursement may appear and be heard at the
Settlement Hearing.  Any such person must file a written notice of objection,
filed with the Clerk of the Court on or before                     , 2005, and
served by hand or first class mail on each of the following:

 

CLERK OF THE COURT
DISTRICT OF COLORADO
United States Courthouse
901 19th Street, Room A-105
Denver, CO  80294

 

and

 

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LERACH COUGHLIN STOIA GELLER
  RUDMAN & ROBBINS LLP
KEITH F. PARK
655 West Broadway, Suite 1900
San Diego, CA  92101-3301

 

Lead Counsel for Plaintiffs

 

BOIES, SCHILLER & FLEXNER LLP
ALFRED LEVITT
5301 Wisconsin Ave., N.W., Suite 800
Washington, DC  20015

 

Counsel for Settling Defendant Qwest

 

ARNOLD & PORTER LLP
JOHN FREEDMAN
555 Twelfth Street, N.W.
Washington, DC  20004-1202

 

Counsel for Defendant Arthur Andersen LLP

 

Any such written objection must demonstrate the objecting person’s membership in
the Class, including the number and type of Qwest publicly traded securities
purchased and sold during the Class Period, and contain a statement of the
reasons for objection.  Only Class Members who have submitted written notices of
objection in this manner will be entitled to be heard at the Settlement Hearing,
unless the Court orders otherwise.  In addition, any Class Member who desires to
present evidence at the Settlement Hearing must include in his, her or its
written objections the identity of any witnesses he, she or it may call to
testify, and any exhibits he, she or it intends to introduce into evidence at
the Settlement Hearing.

 

XIII.                        SPECIAL NOTICE TO NOMINEES

 

If you, as nominee for a beneficial owner, hold or held any Qwest publicly
traded securities purchased or acquired during the Class Period, then, within
ten (10) days after

 

29

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you receive this Notice, you must either: (1) request additional copies of the
Notice and the Proof of Claim form, and, within ten days after the receipt of
the additional copies of the Notice and the Proof of Claim form, send them by
first class mail to all such beneficial owners and send a statement to the
Claims Administrator confirming that the mailings  were made as directed; or
(2) provide a list of the names and addresses of such beneficial owners to the
Qwest Claims Administrator:

 

Qwest Claims Administrator
c/o Gilardi & Co. LLC
P.O. Box 5100
Larkspur, California 94977-5100

 

If you choose to mail the Notice and Proof of Claim and Release yourself, you
may obtain from the Qwest Claims Administrator (without cost to you) as many
additional copies of these documents as you will need to complete the mailing.

 

Regardless of whether you choose to complete the mailing yourself or elect to
have the mailing performed for you, you may obtain reimbursement for or
advancement of reasonable administrative costs actually incurred or expected to
be incurred by you in connection with forwarding the Notice and Proof of Claim
and Release form and which would not have been incurred but for the obligation
to forward the Notice and Proof of Claim and Release form, upon submission of
appropriate documentation to the Qwest Claims Administrator.

 

XIV.                       EXAMINATION OF PAPERS

 

This Notice is a summary and does not describe all of the details of the
Stipulation.  For full details of the matters discussed in this Notice, you may
review the pleadings and Stipulation filed with the Court, which may be
inspected during business hours, at the office

 

30

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of the Clerk of the Court, United States District Court, District of Colorado,
United States Courthouse, 901 19th Street, Room A-105, Denver, Colorado. 
Further, the Stipulation, its exhibits, and additional copies of this Notice and
the Proof of Claim and Release are available on the Internet at www.gilardi.com.

 

If you have any questions about the settlement of the Litigation, you may
contact Lead Counsel by writing:

 

LERACH COUGHLIN STOIA GELLER
  RUDMAN & ROBBINS LLP
KEITH F. PARK
655 West Broadway, Suite 1900
San Diego, CA  92101-3301

 

PLEASE DO NOT CONTACT THE COURT OR QWEST REGARDING THIS NOTICE.

 

DATED:

 

, 2005

BY ORDER OF THE COURT

 

UNITED STATES DISTRICT COURT

 

DISTRICT OF COLORADO

 

31

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

 

Civil Action No. 01-cv-1451-REB-CBS
(Consolidated with Civil Action Nos. 01-cv-1472-REB-CBS, 01-cv-1527-REB-CBS,
01-cv-1616-REB-CBS, 01-cv-1799-REB-CBS, 01-cv-1930-REB-CBS, 01-cv-2083-REB-CBS,
02-cv-0333-REB-CBS, 02-cv-0374-REB-CBS, 02-cv-0507-REB-CBS, 02-cv-0658-REB-CBS,
02-cv-755-REB-CBS, 02-cv-798-REB-CBS and 04-cv-0238-REB-CBS)

 

In re QWEST COMMUNICATIONS INTERNATIONAL, INC. SECURITIES LITIGATION

 

PROOF OF CLAIM AND RELEASE

 

EXHIBIT A-2

 

--------------------------------------------------------------------------------

 

I.                                         GENERAL INSTRUCTIONS

 

1.                                       To recover from the Settlement Fund as
a Class Member based on your claims in the consolidated action entitled In re
Qwest Communications International, Inc. Securities Litigation, Civil Action
No. 01-cv-1451-REB-CBS (the “Litigation”), you must complete and sign this Proof
of Claim and Release.  If you fail to execute and submit a timely, properly
completed and addressed (as set forth in paragraph 3 below) Proof of Claim and
Release, your claim may be rejected and you may be precluded from any recovery
from the Settlement Fund created in connection with the settlement of the
Litigation.

 

2.                                       Submission of this Proof of Claim and
Release, however, does not assure that you will share in the Settlement Fund.

 

3.                                       YOU MUST MAIL YOUR COMPLETED AND SIGNED
PROOF OF CLAIM AND RELEASE POSTMARKED ON OR BEFORE                           ,
2006, ADDRESSED AS FOLLOWS:

 

Qwest Claims Administrator

c/o Gilardi & Co. LLC

P.O. Box 5100

Larkspur, California  94977-5100

 

If you are NOT a Class Member (as defined in the Notice of Pendency and Partial
Settlement of Class Action) DO NOT submit a Proof of Claim and Release form.

 

If you are a Class Member and you have not validly and timely requested
exclusion, you will be bound by the terms of the Final Judgment entered in the
Litigation, WHETHER OR NOT YOU SUBMIT A PROOF OF CLAIM AND RELEASE.

 

1

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II.                                     DEFINITIONS

 

All capitalized terms not otherwise defined herein shall have the same meaning
as set forth in the Notice of Pendency and Partial Settlement of Class Action
(“Notice”) that accompanies this Proof of Claim and Release.

 

III.                                 IDENTIFICATION OF CLAIMANT

 

1.                                       If you purchased Qwest publicly traded
securities during the Class Period and held the securities in your name, you are
the beneficial purchaser, seller or holder as well as the record purchaser,
seller or holder.  If, however, you purchased Qwest publicly traded securities
during the Class Period and the securities were registered in the name of a
third party, such as a nominee or brokerage firm, you are the beneficial
purchaser, seller or holder of these securities, but the third party is the
record purchaser, seller or holder of these securities.

 

2.                                       Use Part I of this form entitled
“Claimant Identification” to identify each purchaser, seller or holder of record
(“nominee”), if different from the beneficial purchaser of Qwest publicly traded
securities which forms the basis of this claim.  THIS CLAIM MUST BE SUBMITTED BY
THE ACTUAL BENEFICIAL PURCHASER OR THE LEGAL REPRESENTATIVE OF SUCH PURCHASER OF
QWEST PUBLICLY TRADED SECURITIES UPON WHICH THIS CLAIM IS BASED.

 

3.                                       All joint beneficial purchasers,
sellers or holders must sign this claim.  Executors, administrators, guardians,
conservators and trustees must complete and sign this claim on behalf of persons
represented by them and their authority must accompany this claim and their
titles or capacities must be stated.  The Social Security (or taxpayer

 

2

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identification) number and telephone number of one of the beneficial owner(s)
may be used in verifying this claim.  Failure to provide the foregoing
information could delay verification of your claim or result in rejection of
your claim.

 

IV.                                IDENTIFICATION OF TRANSACTION(S)

 

1.                                       Use Part II of this form entitled
“Schedule of Transactions in Qwest Publicly Traded Securities” to supply all
required details of your transaction(s) in Qwest publicly traded securities.  If
you need more space or additional schedules, attach separate sheets giving all
of the required information in substantially the same form.  Sign and print or
type your name on each additional sheet.

 

2.                                       On the schedules, provide all of the
requested information with respect to all of your holdings of Qwest publicly
traded securities as of May 24, 1999, all of your purchases and sales of Qwest
publicly traded securities which took place at any time beginning May 24, 1999
through and including July 28, 2002 (the “Class Period”), as well as proof of
your holdings of Qwest publicly traded securities as of the close of trading on
July 28, 2002, whether such transactions resulted in a profit or a loss. 
Failure to report all such transactions may result in the rejection of your
claim.

 

3.                                       List each purchase and sale in the
Class Period separately by security and in chronological order, by trade date,
beginning with the earliest.  You must accurately provide the month, day and
year of each such transaction you list.

 

4.                                       The date of covering a “short sale” is
deemed to be the date of purchase of Qwest securities.  The date of a “short
sale” is deemed to be the date of sale of Qwest securities.

 

3

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5.                                       Broker confirmations or other
documentation of your transactions in Qwest publicly traded securities should be
attached to your claim.  Failure to provide this documentation could delay
verification of your claim or result in rejection of your claim.

 

4

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UNITED STATES DISTRICT COURT

 

DISTRICT OF COLORADO

 

In re Qwest Communications International, Inc. Securities Litigation

Civil Action No. 01-cv-1451-REB-CBS

 

PROOF OF CLAIM

 

Must be Postmarked No Later Than:
                          , 2006

 

Please Type or Print

 

PART I:                                                     CLAIMANT
IDENTIFICATION

 

 

 

 

Beneficial Owner’s Name (First, Middle, Last)

 

 

 

 

 

 

 

 

Street Address

 

 

 

 

 

 

 

 

 

City

 

State or Province

 

 

 

 

 

 

 

 

 

Zip Code or Postal Code

 

Country

 

 

 

 

 

 

 

 

 

Individual

Social Security Number or

 

 

 

 

Taxpayer Identification Number

 

 

Corporation/Other

 

 

 

 

 

 

 

 

Area Code

 

Telephone Number (work)

 

 

 

 

 

 

 

 

 

Area Code

 

Telephone Number (home)

 

 

5

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Record Owner’s Name (if different from beneficial owner listed above)

 

 

 

PART II:                                                 SCHEDULE OF
TRANSACTIONS IN QWEST PUBLICLY TRADED SECURITIES

 

A.                                   Number of shares of Qwest common stock held
at the beginning of trading on May 24, 1999:
                                                

 

B.                                     Number and type of bonds held at
beginning of trading on May 24, 1999:
                                                            

 

C.                                     Number of shares of Qwest common stock
acquired in the Merger between Qwest and US West:

 

Trade Date
Month Day Year

 

Number of Shares or Bonds
Sold (specify)

 

Total Sales Price

 

1.

 

 

 

 

 

2.

 

 

 

 

 

3.

 

 

 

 

 

 

D.                                    Purchases (May 24, 1999 – July 28, 2002,
inclusive) of Qwest common stock and bonds:

 

Trade Date
Month Day Year

 

Number of Shares or Bonds
Purchased (specify)

 

Total Purchase Price

 

1.

 

 

 

 

 

2.

 

 

 

 

 

3.

 

 

 

 

 

 

IMPORTANT:                                                                 
Identify by number listed above all purchases in which you covered a “short
sale”:                                                  

6

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E.                                      Sales (May 24, 1999 – July 28, 2002,
inclusive) of Qwest common stock and bonds:

 

Trade Date
Month Day Year

 

Number of Shares or Bonds
Sold (specify)

 

Total Sales Price

 

1.

 

 

 

 

 

2.

 

 

 

 

 

3.

 

 

 

 

 

 

F.                                      Number of shares of Qwest common stock
or bonds (specify) held at close of trading on July 28, 2002: 
                                                

 

G.                                     For bond purchasers, please list the
following information for each bond purchased during the Class Period that was
later redeemed at any time:

 

Type of Bond

 

Date of Redemption

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPTION TRANSACTIONS IN QWEST

 

H.                                    Number of Qwest options held at beginning
of trading on May 24, 1999                                                  

 

I.                                         Options:  Purchases and/or sales
during the period May 24, 1999 – July 28, 2002, inclusive:

 

Type
[C]all
[P]ut

 

[B]uy
[S]ell

 

Trade Date
Mth/Day/Year

 

Number of
Option Contracts
Purchased/Sold

 

Total Price

 

Price
Received

 

1.

 

 

 

 

 

 

 

 

 

 

 

2.

 

 

 

 

 

 

 

 

 

 

 

3.

 

 

 

 

 

 

 

 

 

 

 

4.

 

 

 

 

 

 

 

 

 

 

 

 

7

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J.                                        Number of Qwest options held at close
of trading on July 28, 2002:                                                  

 

If you require additional space, attach extra schedules in the same format as
above.  Sign and print your name on each additional page.

 

YOU MUST READ THE RELEASE AND SIGN ON PAGE           .

 

8

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V.                                    SUBMISSION TO JURISDICTION OF COURT AND
ACKNOWLEDGMENTS

 

I (We) submit this Proof of Claim and Release under the terms of the Stipulation
of Partial Agreement of Settlement described in the Notice.  I (We) also submit
to the jurisdiction of the United States District Court for the District of
Colorado with respect to my (our) claim as a Class Member and for purposes of
enforcing the release set forth herein.  I (We) further acknowledge that I (we)
will be bound by and subject to the terms of any Final Judgment that may be
entered in the Litigation.  I (We) agree to furnish additional information such
as transactions in other Qwest publicly traded securities to the Claims
Administrator to support this claim if requested to do so.  I (We) have not
submitted any other claim covering the same purchases, sales or holdings of
Qwest publicly traded securities during the Class Period and know of no other
person having done so on my (our) behalf.

 

VI.                                RELEASE

 

1.                                       I (We) hereby acknowledge full and
complete satisfaction of, and do hereby fully, finally and forever settle,
release and discharge from the Released Claims each and all of the Released
Persons as those terms are defined below.

 

2.                                       “Arthur Andersen LLP” means Arthur
Andersen LLP, and all of its respective past and present subsidiaries, parents,
successors and predecessors, and all of its current and former partners,
members, principals, participating principals, national directors, managing or
other agents, management personnel, officers, directors, shareholders,
administrators, servants, employees, consultants, advisors, attorneys,
accountants, representatives, successors and assigns, along with the heirs,

 

9

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spouses, executors, administrators, insurers, reinsurers, representatives,
estates, successors and assigns of any such person or entities.

 

3.                                       “Arthur Andersen Released Parties”
means Arthur Andersen LLP, AWSC Société Coopérative, en liquidation, and all of
their respective past and present subsidiaries, parents, successors and
predecessors, member firms, affiliates, related entities, and divisions, and all
of their respective current and former partners, members, principals,
participating principals, national directors, managing or other agents,
management personnel, officers, directors, shareholders, administrators,
servants, employees, consultants advisors, attorneys, accountants,
representatives, successors and assigns, along with the heirs, spouses,
executors, administrators, insurers, reinsurers, representatives, estates,
successors and assigns of any such person or entities.

 

4.                                       “Individual Settling Defendants” means
Philip Anschutz, Robin Szeliga, Stephen Jacobsen, Drake Tempest, Marc Weisberg,
James Smith, Lewis Wilks, Craig Slater, Afshin Mohebbi, Gregory Casey, and Vinod
Khosla.

 

5.                                       “Qwest” means Qwest Communications
International Inc., any and all successors, subsidiaries, and affiliates of
Qwest Communications International Inc., and any and all current and former
officers, directors, employees and agents of any of them, as well as any
predecessors of Qwest (including but not limited to US West and any successors,
subsidiaries, and affiliates thereof) and their successors, subsidiaries, and
affiliates, and any and all current and former officers, directors, employees
and agents of any of them.  Notwithstanding the foregoing, neither Nacchio nor
Woodruff is included in the definition of Qwest.

 

10

--------------------------------------------------------------------------------

 

6.                                       “Related Parties” means each of a
Settling Defendant’s past or present directors, officers, partners, members,
employees, controlling shareholders, attorneys, accountants or auditors, banks
or investment banks, advisors, personal or legal representatives, insurers,
reinsurers, predecessors, successors, parents, subsidiaries, divisions, assigns,
spouses, heirs, related or affiliated entities, any partnership in which a
Settling Defendant is a general or limited partner, any entity in which a
Settling Defendant has a controlling interest, any member of an Individual
Settling Defendant’s immediate family, or any trust or foundation of which any
Settling Defendant is the settlor or which is for the benefit of any Individual
Settling Defendant and/or member(s) of his or her family. Notwithstanding the
foregoing, neither Nacchio nor Woodruff is included in the definition of Related
Parties.

 

7.                                       “Released Claims” shall collectively
mean all claims, demands, rights, liabilities and causes of action of every
nature and description whatsoever, whether based in law or equity, on federal,
state, local, foreign, statutory or common law, or any other law, rule, or
regulation (including, but not limited to, ail claims arising out of or relating
to any acts, omissions, disclosures, public filings, registration statements,
financial statements, audit opinions, or statements by the Settling Defendants,
including without limitation, claims for negligence, gross negligence,
constructive or actual fraud, negligent misrepresentation, conspiracy, or breach
of fiduciary duty), whether known or unknown, whether or not concealed or
hidden, accrued or not accrued, foreseen or unforeseen, matured and not matured,
that were asserted or that could have been asserted directly, indirectly,
representatively or in any other capacity, at any time, in any forum by Lead
Plaintiffs, the

 

11

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Class Members, or the successors or assigns of any Lead Plaintiff or
Class Member, or any of them against the Released Persons arising out of, based
upon, or related in any way to: (a) the purchase, acquisition, sale, or
disposition of Qwest securities by any Lead Plaintiffs or any Class Member
during the Class Period and the allegations that were made or could have been
made in the Litigation; (b) the purchase or other acquisition of, the retention
of, the sale or other disposition of, or any other transaction involving Qwest
securities by any of the Released Persons during the Class Period; or (c) the
settlement or resolution of the Litigation (including, without limitation, any
claim for attorneys’ fees by Lead Plaintiffs or any Class Member). Released
Claims shall also include claims related to any tax effects or tax liabilities
(including any interest, penalties and representation costs) arising out of this
Stipulation or any payment or transfer made pursuant to this Stipulation.
Released Claims shall also include Unknown Claims otherwise subject to this
provision. Released Claims shall not include the claims asserted in the Second
Amended and Consolidated Complaint filed in the United States District Court for
the District of Colorado on May 21, 2003 in In re Qwest Savings and Retirement
Plan ERISA Litigation 02-CV-00464-REB-CBS (and all cases consolidated therein).

 

8.                                       “Released Persons” means each and all
of the Settling Defendants and their Related Parties, and the Arthur Andersen
Released Parties. Notwithstanding the foregoing, neither Nacchio nor Woodruff is
included in the definition of Released Persons.

 

9.                                       “Settling Defendants” means,
collectively, Qwest, Arthur Andersen LLP, and each of the Individual Settling
Defendants. Notwithstanding the foregoing, neither Nacchio nor Woodruff is
included in the definition of Settling Defendant.

 

12

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10.                                 “Unknown Claims” means any claims that any
Class Member or Lead Plaintiffs do not know or suspect to exist in his, her, its
or their favor at the time of the release of the Released Persons which, if
known by him, her, it, or them might have affected his, her, its or their
settlement with and release of the Released Persons, or might have affected his,
her, its, or their decision not to object to this settlement. With respect to
any and all Released Claims, the Settling Parties stipulate and agree that, upon
the Effective Date, the Lead Plaintiffs shall expressly, and each of the
Class Members shall be deemed to have, and by operation of the Judgment shall
have, expressly waived the provisions, rights and benefits of California Civil
Code §1542, which provides:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

 

The Lead Plaintiffs shall expressly, and each of the Class Members shall be
deemed to have, and by operation of the Judgment shall have, expressly waived
any and all provisions, rights and benefits conferred by any law, or principle
of common law, which is similar, comparable or equivalent to California Civil
Code §1542. The Lead Plaintiffs and Class Members may hereafter discover facts
in addition to or different from those that he, she, it or they now know or
believe to exist or to be true with respect to the subject matter of the
Released Claims, but the Lead Plaintiffs shall have, and each Class Member, upon
the Effective Date, and by operation of the Judgment shall be deemed to have,
fully, finally, and forever settled and released any and all Released Claims,
known or unknown, suspected or unsuspected, contingent or non-contingent,
whether or not concealed or

 

13

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hidden, which now exist, or heretofore have existed, upon any theory of law or
equity now existing or coming into existence in the future, including, but not
limited to, conduct that is negligent, intentional, with or without malice, or a
breach of any duty, law or rule, without regard to the subsequent discovery or
existence of such different or additional facts. The Lead Plaintiffs
acknowledge, and the Class Members shall be deemed by operation of the Judgment
to have acknowledged, that the foregoing waiver was separately bargained for and
a material element of the settlement of which this release is a part.

 

11.                                 This release shall be of no force or effect
unless and until the Court approves the Stipulation of Partial Settlement, and
the Effective Date (as defined in the Stipulation) has occurred.

 

12.                                 I (We) hereby warrant and represent that I
(we) have not assigned or transferred or purported to assign or transfer,
voluntarily or involuntarily, any matter released pursuant to this release or
any other part or portion thereof.

 

13.                                 I (We) hereby warrant and represent that I
(we) have included information about all of my (our) purchase and sales
transactions in Qwest publicly traded securities which occurred during the
Class Period and the number of securities held by me (us) at the beginning of
trading on May 24, 1999, and at the close of trading on July 28, 2002.

 

14.                                 I (We) hereby warrant and represent that I
(we) am (are) not excluded from the Class as defined herein and in the Notice.

 

14

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SUBSTITUTE FORM W-9

 

Request for Taxpayer Identification Number (“TIN”) and Certification

 

PART I

 

NAME:

 

 

Check appropriate box:

 

o                                    Individual/Sole Proprietor

o                                    Pension Plan

o                                    Corporation

o                                    Partnership

o                                    Trust

o                                    IRA

o                                    Other

 

 

Enter TIN on appropriate line.

 

For individuals, this is your social security number (“SSN”).

 

For sole proprietors, you must show your individual name, but you may also enter
your business or “doing business as” name.  You may enter either your SSN or
your Employer Identification Number (“EIN”).

 

For other entities, it is your EIN.

 

               -           -                    

or

          -                                   

Social Security Number

 

Employer Identification Number

 

PART II

 

For Payees Exempt from Backup Withholding

 

If you are exempt from backup withholding, enter your correct TIN in Part I and
write “exempt” on the following line: 
                                                                .

 

PART III

 

Certification

 

UNDER THE PENALTY OF PERJURY, I (WE) CERTIFY THAT:

 

1.                                       The number shown on this form is my
correct TIN; and

 

2.                                       I (We) certify that I am (we are) NOT
subject to backup withholding under the provisions of Section 3406 (a)(1)(C) of
the Internal Revenue Code because:  (a) I am (we are) exempt from backup
withholding; or (b) I (we) have not been notified by the Internal Revenue
Service that I am (we are) subject to backup withholding as a

 

15

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result of a failure to report all interest or dividends; or (c) the Internal
Revenue Service has notified me (us) that I am (we are) no longer subject to
backup withholding.

 

16

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NOTE:                                                            If you have
been notified by the Internal Revenue Service that you are subject to backup
withholding, you must cross out Item 2 above.

 

SEE ENCLOSED FORM W-9 INSTRUCTIONS

 

The Internal Revenue Service does not require your consent to any provision of
this document other than the certification required to avoid backup withholding.

 

I declare under penalty of perjury under the laws of the United States of
America that the foregoing information supplied by the undersigned is true and
correct.

 

Executed this                    day of                                       ,
(Month / Year)

 

in                                           ,
                                                            .
(City)                                          (State / Country)

 

 

 

 

(Sign your name here)

 

 

 

 

 

(Type or print your name here)

 

 

 

 

 

(Capacity of person(s) signing,

 

e.g., Beneficial Purchaser,

 

Executor or Administrator)

 

ACCURATE CLAIMS PROCESSING TAKES A
SIGNIFICANT AMOUNT OF TIME.
THANK YOU FOR YOUR PATIENCE.

 

Reminder Checklist:

 

1.                                       Please sign the above release and
declaration.

 

2.                                       Remember to attach supporting
documentation, if available.

 

3.                                       Do not send original or copies of stock
certificates.

 

4.                                       Keep a copy of your claim form for your
records.

 

5.                                       If you desire an acknowledgment of
receipt of your claim form, please send it Certified Mail, Return Receipt
Requested.

 

17

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6.                                       If you move, please send us your new
address.

 

18

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

 

Civil Action No. 01-cv-1451-REB-CBS
(Consolidated with Civil Action Nos. 01-cv-1472-REB-CBS, 01-cv-1527-REB-CBS,
01-cv-1616-REB-CBS, 01-cv-1799-REB-CBS, 01-cv-1930-REB-CBS, 01-cv-2083-REB-CBS,
02-cv-0333-REB-CBS, 02-cv-0374-REB-CBS, 02-cv-0507-REB-CBS, 02-cv-0658-REB-CBS,
02-cv-755-REB-CBS, 02-cv-798-REB-CBS and 04-cv-0238-REB-CBS)

 

In re QWEST COMMUNICATIONS INTERNATIONAL, INC. SECURITIES LITIGATION

 

SUMMARY NOTICE

 

EXHIBIT A-3

 

--------------------------------------------------------------------------------

 

 

TO:                            ALL PERSONS OR ENTITIES THAT PURCHASED OR
OTHERWISE ACQUIRED QWEST COMMUNICATIONS INTERNATIONAL, INC. (“QWEST”) PUBLICLY
TRADED SECURITIES (INCLUDING COMMON STOCK, BONDS AND OPTIONS) FROM MAY 24, 1999
THROUGH JULY 28, 2002

 

YOU ARE HEREBY NOTIFIED that a Settlement Hearing will be held on
                         , 2005, at            .m., before the Honorable Robert
E. Blackburn, United States District Judge, District of Colorado, United States
Courthouse, 901 19th Street, Room A-105, Denver, Colorado.  The Settlement
Hearing is to consider a partial settlement of certain litigation on behalf of
the class defined above (the “Litigation”).  The purpose of the Settlement
Hearing is to determine: (1) whether the proposed partial settlement of the
claims in the Litigation for the sum of $400,000,000 (the “Settlement Fund”)
should be approved by the Court as fair, reasonable and adequate; (2) whether
the Litigation should be dismissed with prejudice against the Settling
Defendants; (3) whether the Plan of Allocation of the settlement proceeds is
fair, reasonable and adequate and should be approved; (4) whether the
application of Lead Counsel for the payment of attorneys’ fees and reimbursement
of expenses incurred by Lead Counsel in connection with the Litigation should be
approved; and (5) whether the application for reimbursement of the expenses
(including lost wages) of the Lead Plaintiffs in the Litigation should be
approved.  All capitalized terms used herein shall have the meaning assigned to
them in the Stipulation.

 

If you purchased publicly traded securities of Qwest during the period beginning
May 24, 1999 through and including July 28, 2002, you may be a Class Member and
your rights may be affected by the partial settlement of the Litigation.

 

If you have not received a detailed Notice of Pendency and Partial Settlement of
Class Action (“Notice”) and a copy of the Proof of Claim and Release, you may
obtain

 

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copies of the same by contacting: Qwest Claims Administrator, c/o Gilardi & Co.
LLC, P.O. Box 5100, Larkspur, California 94977-5100 or downloading these
documents at www.gilardi.com.  You may also download the Stipulation of Partial
Settlement at the same site.  These documents are also available for review at
the Court.

 

If you are a Class Member, in order to be eligible to share in the distribution
of the Settlement Fund, you must submit a Proof of Claim and Release no later
than                          , 2005, establishing that you are entitled to
recovery.  You will be bound by any Judgment rendered in the Litigation whether
or not you make a claim, unless you request exclusion from the Class.

 

If you wish to request exclusion from the class you must do so in writing by
                        , 2005 and in accordance with the procedures set forth
in the Notice.  If you request exclusion from the class you will not participate
in the distribution of the Settlement Fund and you will not be bound by the
Judgment in the Litigation.  If your exclusion request fails to contain all the
information required in the Notice, or otherwise fails to comply with the
procedures set forth in the Notice, it will be invalid and you will be bound by
the terms and conditions of the Stipulation and Judgment.

 

Any Class Member may file an objection to the settlement, if he, she or it has
any information why the proposed partial settlement of the Litigation should not
be approved or why judgment should not be entered thereon; why any attorneys’
fees, costs, or expenses requested by Lead Counsel or Lead Plaintiffs should not
be awarded; or why the Plan of Allocation should not be approved; provided,
however, that no Class Member may be entitled to appear at the Settlement
Hearing or contest approval of the terms and conditions

 

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of the settlement unless, his, her or its objection or opposition, including the
basis therefor, is made in writing and mailed or delivered such that it is filed
with the Court and served on each of the following no later than
                                   , 2005:

 

CLERK OF THE COURT
DISTRICT OF COLORADO
United States Courthouse
901 19th Street, Room A-105
Denver, CO  80294

 

And

 

LERACH COUGHLIN STOIA GELLER
  RUDMAN & ROBBINS LLP
KEITH F. PARK
655 West Broadway, Suite 1900
San Diego, CA  92101-3301

 

Lead Counsel for Plaintiffs

 

BOIES, SCHILLER & FLEXNER LLP
ALFRED LEVITT
5301 Wisconsin Ave., N.W., Suite 800
Washington, DC  20015

 

Counsel for Settling Defendant Qwest

 

ARNOLD & PORTER LLP
JOHN FREEDMAN
555 Twelfth Street, N.W.
Washington, DC  20004-1202

 

Counsel for Defendant Arthur Andersen LLP

 

PLEASE DO NOT CONTACT THE COURT OR QWEST REGARDING THIS NOTICE.

 

 

DATED:

 

, 2005

 

BY ORDER OF THE COURT

 

 

UNITED STATES DISTRICT COURT

 

 

DISTRICT OF COLORADO

 

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

 

Civil Action No. 01-cv-1451-REB-CBS
(Consolidated with Civil Action Nos. 01-cv-1472-REB-CBS, 01-cv-1527-REB-CBS,
01-cv-1616-REB-CBS, 01-cv-1799-REB-CBS, 01-cv-1930-REB-CBS, 01-cv-2083-REB-CBS,
02-cv-0333-REB-CBS, 02-cv-0374-REB-CBS, 02-cv-0507-REB-CBS, 02-cv-0658-REB-CBS,
02-cv-755-REB-CBS, 02-cv-798-REB-CBS and 04-cv-0238-REB-CBS)

 

In re QWEST COMMUNICATIONS INTERNATIONAL, INC. SECURITIES LITIGATION

 

[PROPOSED] PARTIAL FINAL JUDGMENT AND ORDER OF PARTIAL DISMISSAL WITH PREJUDICE

 

EXHIBIT B

 

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A hearing having been conducted by the Court to determine whether the terms and
conditions of the Stipulation of Partial Settlement, dated as of November    ,
2005 (the “Stipulation”) are fair, reasonable and adequate for the settlement of
all claims asserted by the Lead Plaintiffs and members of the Class against the
Settling Defendants, due and adequate notice having been given to the Class
required by the Court’s Order Preliminarily Approving Settlement and Providing
for Notice, and the Court having considered all papers filed and proceedings had
herein and otherwise being fully informed in the premises and good cause
appearing:

 

IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:

 

1.                                       The Stipulation, including the
definitions contained therein, is incorporated by reference in this Judgment.

 

2.                                       The Court has jurisdiction over the
subject matter of the Litigation and all parties to the Litigation, including
Class Members.

 

3.                                       The Court finds that the prerequisites
for a class action under Federal Rules of Civil Procedure (“Fed. R. Civ. P.”)
23(a) and (b)(3) have been satisfied in that: (a) the number of Class Members is
so numerous that joinder of all members thereof is impracticable; (b) there are
questions of law and fact common to the Class; (c) the claims of the Lead
Plaintiffs are typical of the claims of the Class they seek to represent; (d)
the Lead Plaintiffs have represented and will fairly and adequately represent
the interests of the Class; (e) the questions of law and fact common to members
of the Class predominate over any questions affecting any individual members of
the Class; and (f) a class action is superior to other available methods for the
fair and efficient adjudication of the controversy.

 

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4.                                       Pursuant to Fed. R. Civ. P. 23, this
Court hereby finally certifies this Litigation as a class action (for settlement
purposes only) on behalf of all persons who purchased or otherwise acquired
Qwest publicly traded securities (including common stock, bonds, and options)
from May 24, 1999 through July 28, 2002 (“Class Period”). Excluded from the
Class are Defendants and any Persons affiliated with or related to any
Defendant. For purposes of this paragraph, the persons affiliated with or
related to any Defendant are members of the immediate family of each Individual
Defendant, any entity in which any Defendant has a controlling interest,
officers and directors of Qwest and its subsidiaries and affiliates, partners,
shareholders, and members of Arthur Andersen LLP, and the legal representatives,
heirs, predecessors, successors and assigns of any such excluded party. Also
excluded from the Class are those Persons who request exclusion from the Class
in such form and manner, and within such time, as the Court shall prescribe.
Also excluded from the Class is any current or former officer, director,
employee, or agent of Qwest who has been sued by the United States Securities
and Exchange Commission in connection with such Person’s affiliation with or
conduct related to Qwest.

 

5.                                       Notice of the pendency of this
Litigation as a class action and of the proposed partial settlement was given to
all Class Members who could be identified with reasonable effort.  The form and
method of notifying the Class of the pendency of the Litigation as a class
action and of the terms and conditions of the proposed partial settlement met
the requirements of Fed. R. Civ. P. 23, §21D(a)(7) of the Exchange Act, 15
U.S.C. §78u-4(a)(7), as amended by the Private Securities Litigation Reform Act
of 1995, due process, the rules of this Court, and any other applicable law;
constituted the best notice practicable

 

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under the circumstances; and constituted due and sufficient notice to all
persons and entities entitled thereto.

 

6.                                       Pursuant to Rule 23 of the Federal
Rules of Civil Procedure, the Court approves the settlement on the terms set
forth in the Stipulation as fair, reasonable and adequate to the Class, and the
Settling Parties are directed to consummate the Stipulation in accordance with
its terms and conditions.

 

7.                                       The Litigation is hereby dismissed with
prejudice and without costs as against any of the Settling Defendants or the
Released Persons.

 

8.                                       Except as to any claim of any
individual or entity (identified on Exhibit 1 hereto) who has validly and timely
requested exclusion from the Class, upon the Effective Date, Lead Plaintiffs and
each of the Class Members shall be deemed to have, and by operation of the
Judgment shall have: (i) fully, finally, and forever released, relinquished and
discharged all Released Claims (including Unknown Claims) against the Released
Persons, whether or not such Class Member executes and delivers the Proof of
Claim and Release, (ii) covenanted not to sue any of the Released Persons or
otherwise to assert, directly or indirectly, any of the Released Claims against
any of the Released Persons, and (iii) agreed to be forever barred and enjoined
from doing so, in any court of law or equity, or in any other forum.

 

9.                                       Upon the Effective Date, each of the
Released Persons shall be deemed to have, and by operation of this Judgment
shall have, fully, finally, and forever released, relinquished and discharged
the Lead Plaintiffs, each and all of the Class Members (except as to any
individual or entity who has validly, timely, and completely requested exclusion

 

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from the Class), and Lead Counsel from all claims (including Unknown Claims)
arising out of, relating to, or in connection with the institution, prosecution,
assertion, settlement or resolution of the Litigation, or the Released Claims.

 

10.                                 Neither the Stipulation nor the settlement
contained herein, nor any act performed or document executed pursuant to or in
furtherance of the Stipulation or the settlement: (a) is or may be deemed to be
or may be used as an admission of, or evidence of, the validity of any Released
Claim, or of any wrongdoing or liability of the Released Persons or Non-Settling
Defendants; or (b) is or may be deemed to be or may be used as an admission of,
or evidence of, any fault or omission of any of the Released Persons or
Non-Settling Defendants in any civil, criminal or administrative proceeding in
any court, administrative agency or other tribunal.  Released Persons may file
the Stipulation and/or the Judgment in any action that may be brought against
them in order to support a defense or counterclaim based on principles of res
judicata, collateral estoppel, release, good faith settlement, judgment bar or
reduction or any other theory of claim preclusion or issue preclusion or similar
defense or counterclaim.

 

11.                                 In accordance with Section 21 D-4(f)(7)(A)
of the Private Securities Litigation Reform Act of 1995, 15 U.S.C. §
78u-4(f)(7)(A), each of the Released Persons by virtue of this Judgment is
discharged from all claims for contribution that have been or may hereafter be
brought by or on behalf of any of the Non-Settling Defendants or any of the
Settling Defendants based upon, relating to, or arising out of the Released
Claims. Accordingly, (i) the Non-Settling Defendants are hereby permanently
barred, enjoined, and restrained from commencing, prosecuting, or asserting any
such claim for contribution against any

 

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Released Person based upon, relating to, or arising out of the Released Claims,
and (ii) the Released Persons are hereby permanently barred, enjoined, and
restrained from commencing, prosecuting, or asserting any claim for contribution
against the Non-Settling Defendants based upon, relating to, or arising out of
the Released Claims.  For purposes of Paragraphs 11, 12, 13, and 14 of this
Judgment only, Non-Settling Defendants shall include any Person who Lead
Plaintiffs may hereafter sue based upon, relating to, or arising out of the
Released Claims (“Reform Act Bar Order”).

 

12.                                 The Non-Settling Defendants and the Settling
Defendants are hereby permanently barred, enjoined, and restrained from
commencing, prosecuting, or asserting any claim, if any, however styled, whether
for indemnification, contribution, or otherwise and whether arising under state,
federal, or common law, against the Released Persons based upon, arising out of,
or relating to the Released Claims; and the Released Persons are permanently
barred, enjoined, and restrained from commencing, prosecuting, or asserting any
other claim, if any, however styled, whether for indemnification, contribution,
or otherwise and whether arising under state, federal, or common law, against
the Non-Settling Defendants based upon, arising out of, or relating to the
Released Claims (the “Complete Bar Order”).

 

13.                                 To the extent (but only to the extent) not
covered by the Reform Act Bar Order and/or the Complete Bar Order, the Lead
Plaintiffs, on behalf of themselves and the Class, further agree that they will
reduce or credit any settlement or judgment (up to the amount of such settlement
or judgment) they may obtain against a Non-Settling Defendant by an amount equal
to the amount of any settlement or final, non-appealable judgment that a

 

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Non-Settling Defendant may obtain against any of the Released Persons based
upon, arising out of, relating to, or in connection with the Released Claims or
the subject matter thereof. In the event that a settlement is reached between
Lead Plaintiffs or the Class and a Non-Settling Defendant, or final judgment is
entered in favor of Lead Plaintiffs or the Class against a Non-Settling
Defendant before the resolution of that Non-Settling Defendant’s potential
claims against any Released Person, any funds collected on account of such
settlement or judgment shall not be distributed, but shall be retained by the
Escrow Agent pending the resolution of any potential claim by the Non-Settling
Defendant claim against such Released Person(s) as provided in Paragraphs 11.3
and 11.4 of the Stipulation.  In the event a Non-Settling Defendant asserts a
claim against a Released Person related to any claim or judgment asserted
against that Non-Settling Defendant, or settlement entered into by that
Non-Settling Defendant, arising from or related to a claim asserted against that
Non-Settling Defendant by Lead Plaintiffs or any other Class Member, Qwest
Communications International Inc. agrees to pay the reasonable costs of
defending any such claim that may be asserted against any Released Person by any
Non-Settling Defendant, and any such Released Person shall defend against such
claim in good faith and will not settle such claim without the prior written
consent of Lead Counsel and Qwest Communications International Inc., which
consent shall not be unreasonably withheld.

 

14.                                 The Class will not settle any claim or
judgment against a Non-Settling Defendant without obtaining from the
Non-Settling Defendant the release of any and all claims the Non-Settling
Defendant may have against any of the Released Persons based upon, arising out
of, relating to or in connection with the Released Claims or the subject

 

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matter thereof, provided that each Settling Defendant shall execute and provide
to the Non-Settling Defendant a release in a form that is satisfactory both to
the Settling Defendants and the Non-Settling Defendant.

 

15.                                 Any Plan of Allocation submitted by Lead
Plaintiffs’ or Lead Counsel or any order regarding any attorneys’ fees and
expense application shall in no way disturb or affect this Judgment and shall be
separate and apart from this Judgment.

 

16.                                 Without affecting the finality of this
Judgment in any way, this Court hereby retains continuing jurisdiction over: (a)
implementation of the settlement and any award or distribution of the Settlement
Fund, including interest earned thereon; (b) disposition of the Settlement Fund;
(c) hearing and determining applications for attorneys’ fees, interest and
expenses in the Litigation; and (d) the Settling Parties for purposes of
construing, enforcing and administering the Stipulation.

 

17.                                 The Court finds that, at all times in
connection with the institution, prosecution, defense and resolution of the
Litigation, no Settling Party violated the provisions of Fed. R. Civ. P. 11.

 

18.                                 No Person shall have any claim against Lead
Counsel or the Claims Administrator, or their counsel, based on distributions
made substantially in accordance with the Stipulation and the settlement
contained therein, the Plan of Allocation, or further order(s) of the Court. No
Person shall have any claim whatsoever against Settling Defendants, Settling
Defendants’ counsel, or any Released Persons arising from or related to any
distributions made, or not made, from the Settlement Fund.

 

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19.                                 Without further order of the Court, the
Settling Parties may agree to reasonable extensions of time to carry out any of
the provisions of the Stipulation.

 

20.                                 In the event that the Effective Date does
not occur, this Order and Judgment shall automatically be rendered null and void
and shall be vacated and, in such event, all orders entered and releases
delivered in connection herewith shall be null and void.

 

 

DATED:

 

 

 

 

 

 

THE HONORABLE ROBERT E. BLACKBURN

 

 

UNITED STATES DISTRICT JUDGE

 

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