Exhibit 10.41

 

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

 

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MEMORANDUM OF UNDERSTANDING

 

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This Memorandum of Understanding (“MOU”) is made and entered into between the
Lead Plaintiffs (on behalf of themselves and each of the Class Members), by and
through Lead Counsel, and Qwest Communications International Inc., by and
through its counsel. All capitalized terms in this MOU shall have the meanings
specified for them in the Stipulation of Partial Settlement (“Stipulation”),
which is attached as Exhibit A. Lead Plaintiffs and Qwest Communications
International Inc. agree to execute an agreement substantially in form of the
Stipulation provided that Lead Counsel prepares a Supplemental Agreement
Regarding Requests for Exclusion, Plan of Allocation, the Exhibits to the
Stipulation and related documents acceptable to Qwest Communications
International Inc. The parties agree to perform all necessary actions to
finalize and file the Stipulation and related documents as soon as reasonably
possible.

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IN WITNESS WHEREOF, the parties hereto have caused the Stipulation to be
executed, by their duly authorized attorneys, dated as of October 31, 2005.

 

By:  

/s/ Michael J. Dowd

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  By:  

/s/ Jonathan D. Schiller

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William S. Lerach

Patrick Coughlin

Keith Park

Michael J. Dowd

Thomas E. Egler

Lerach, Coughlin, Stoia, Geller,

Rudman & Robbins LLP

655 W. Broadway, Suite 1900

San Diego, CA 92101-3301

 

Lead Counsel

     

Jonathan D. Schiller

David R. Boyd

Alfred P. Levitt

Boies, Schiller & Flexner LLP

5301 Wisconsin Ave, NW

Suite 800

Washington, DC 20015

 

Counsel for Qwest Communication

International Inc.

 

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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-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

 

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STIPULATION OF PARTIAL SETTLEMENT

 

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This Stipulation of Partial Settlement dated as of November     , 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 amount and manner that reasonably reflects the
risks posed by the claims against the Settling Defendants collectively.

 

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

 

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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     .

 

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

 

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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 Lead Plaintiffs, the Class, or any of the
Settling Defendants in connection with this Stipulation.

 

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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)).

 

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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

 

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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,

 

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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
             and              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.

 

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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.

 

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6.2 The Settlement Fund shall be applied as follows:

 

(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          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-sectarian, not-for-profit 501(c)(3) organization(s) providing legal services
or otherwise in the appropriate public interest designated by Lead Counsel.

 

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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 Stipulation and the
settlement set forth therein, or any other orders entered pursuant to the
Stipulation.

 

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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 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.

 

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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 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.

 

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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

 

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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.

 

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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

 

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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;

 

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(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.

 

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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

 

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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, 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.

 

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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 authorized to enter into any modifications or amendments to the
Stipulation on behalf of the Class which they deem appropriate.

 

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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.

 

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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)

 

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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.

 

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