Exhibit 10.1


 


This STANDSTILL AGREEMENT (this “Agreement”)
is dated as of the 26th day of October, 2009 by and between Level 3
Communications, Inc., a Delaware corporation (the “Company”), and
Southeastern Asset Management, Inc., a Tennessee corporation (“Southeastern”).


 


W I T N E S S E T H:


 


WHEREAS, Southeastern is the Beneficial Owner (as
defined below) of shares of common stock, $.01 par value per share (“Common
Stock”), of the Company; and


 


WHEREAS, the Company and Southeastern are parties to
a Standstill Agreement (the “Original Agreement”), dated as of November 19,
2007; and


 


WHEREAS, The Company and Southeastern desire to
amend and restate the terms of the Original Agreement as set forth in this
Agreement; and


 


WHEREAS, pursuant to Section 4.1(a)(i)(B) of
the Original Agreement, during the Standstill Period (as defined in the
Original Agreement), Southeastern has agreed not to, without the prior written
consent of the majority of the entire Board of Directors (excluding any
representatives or designees of Southeastern), alone or in concert with others,
acquire any Common Stock, Voting Securities or Derivative Securities (as those
terms are defined in the Original Agreement) of the Company, other than in open
market transactions that do not involve the issuance of Common Stock by the
Company and unless after giving effect to such acquisition Southeastern would
Beneficially Own less than 459,500,000 shares of Common Stock;


 


WHEREAS, the Company has
provided a waiver of the Original Agreement to Southeastern in connection with
Southeastern’s acquisition from the Company on behalf of its Advisory Clients
(as defined below) of the Company’s 15% Convertible Senior Notes due 2013; and


 


WHEREAS, Southeastern has
requested that the Company consent to permitting Southeastern, on behalf of its
institutional advisory clients, to acquire, from time to time, additional
shares of Common Stock in market transactions that do not involve the issuance
of additional shares of Common Stock by the Company; and


 


WHEREAS, Southeastern and
the Company desire to extend the term of the Original Agreement by two
additional years; and


 


WHEREAS, the Company (by
action of a majority of the entire Board of Directors of the Company) has
approved this Agreement; and


 


WHEREAS, the Company and
Southeastern hereby agree to enter into this Agreement providing for standstill
and transfer restrictions, which shall supercede the Original Agreement.


 


NOW THEREFORE, in consideration of the mutual agreements,
representations, warranties and covenants herein contained, the parties hereto
agree as follows:


 

















 


1.             Definitions.  As used in
this Agreement, the following terms shall have the following respective
meanings:


 


(a)           “Advisory Clients” shall mean
those institutional investment clients of Southeastern on whose behalf
Southeastern Beneficially Owns and may acquire shares of Common Stock.


 


(b)           “Affiliate” shall mean, with
respect to any Person, any other Person controlling, controlled by or under
direct or indirect common control with such Person.  For the purposes of this definition “control,”
when used with respect to any specified Person, shall mean the power to direct
the management and policies of such Person, directly or indirectly, whether
through ownership of voting securities, by contract or otherwise; and the terms
“controlling” and “controlled” shall have meanings correlative to the
foregoing.


 


(c)           “Beneficially Own” with respect to
any securities means having “beneficial ownership” of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act, as in effect on
the date hereof); provided, however, that a Person will be deemed to
beneficially own (and have beneficial ownership of) all securities that such
Person has the right to acquire, whether such right is exercisable immediately
or with the passage of time or the satisfaction of conditions.  The terms “Beneficial Ownership” and “Beneficial
Owner” have correlative meanings.


 


(d)           “Board of Directors” shall mean
the board of directors of the Company.


 


(e)           “Derivative Security” shall mean
any subscription, option, conversion right, warrant, phantom stock right or
other agreement, security or commitment of any kind obligating the Company or
any of its subsidiaries to issue, grant, deliver or sell, or cause to be
issued, granted, delivered or sold, (i) any Voting Securities or any other
equity security of the Company, (ii) any securities convertible into, or
exchangeable or exercisable for, any Voting Securities or other equity security
of the Company or (iii) any obligations measured by the price or value of
any shares of capital stock of the Company.


 


(f)            “Exchange Act” shall mean the
Securities Exchange Act of 1934 and all of the rules and regulations
promulgated thereunder.


 


(g)           “Group” shall mean any group of
Persons who, with respect to those acquiring, holding, voting or disposing of
Voting Securities would, assuming ownership of the requisite percentage
thereof, be required under Section 13(d) of the Exchange Act to file
a statement on Schedule 13D with the SEC as a “person” within the meaning of Section 13(d)(3) of
the Exchange Act, or who would be considered a “person” for purposes of Section 13(g)(3) of
the Exchange Act.


 


(h)           “Person” shall mean an individual,
partnership, corporation, limited liability company, business trust, joint
stock company, trust, unincorporated association or joint venture.


 


(i)            “SEC” shall mean the Securities
and Exchange Commission.


 


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(j)            “Securities Act” shall mean the
Securities Act of 1933, as amended, and all of the rules and regulations
promulgated thereunder.


 


(k)           “Voting Securities” shall mean the
shares of the Common Stock and any other capital stock or equity securities of
the Company having the general voting power under ordinary circumstances to
elect members of the Board of Directors, and any other securities which are
convertible into, or exchangeable or exercisable for, Voting Securities.


 


2.             Representations and Warranties of the
Company.  The Company hereby represents and warrants to
Southeastern as follows:


 


2.1.          Authorization. 
All corporate action on the part of the Company, its officers, directors
and stockholders necessary for the authorization, execution, delivery and
performance of this Agreement has been taken. 
When executed and delivered by the Company, this Agreement shall
constitute the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors’
rights generally and by general equitable principles.  The Company has all requisite corporate power
to enter into this Agreement and to carry out and perform its obligations under
the terms of this Agreement.


 


2.2.          Consents.  All consents,
approvals, orders and authorizations required on the part of the Company in
connection with the execution, delivery or performance of this Agreement and
the consummation of the transactions contemplated herein, other than (i) such
filings required to be made after the Closing under applicable federal and
state securities laws and (ii) any of the foregoing, the failure to make
or obtain would not, individually or in the aggregate, be reasonably expected
to have a material adverse effect (a) on the Company and its subsidiaries,
taken as a whole, or (b) on the ability of the Company to perform its
obligations under this Agreement.


 


2.3.          No Conflict. 
The execution and delivery of this Agreement by the Company will not
conflict with or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit under (i) any provision of the Certificate of Incorporation or
By-laws of the Company or (ii) any agreement or instrument, permit,
franchise, license, judgment, order, statute, law, ordinance, rule or
regulations, applicable to the Company or its properties or assets, except, in
the case of clause (ii), as would not, individually or in the aggregate, be
reasonably expected to have a material adverse effect (a) on the Company
and its subsidiaries, taken as a whole, or (b) on the ability of the
Company to perform its obligations under this Agreement.


 


3.             Representations and Warranties of
Southeastern.  Southeastern, for itself (unless otherwise
indicated), represents and warrants to the Company as follows:


 


3.1.          Authorization. 
All action on the part of Southeastern and on the part of its Advisory
Clients necessary for the authorization, execution, delivery and performance of
this Agreement has been taken.  This
Agreement constitutes the legal, valid and binding obligation of Southeastern,
enforceable against Southeastern in accordance with its terms, except as such
may 


 


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be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors’
rights generally and by general equitable principles.  Southeastern has all requisite power to enter
into this Agreement and to carry out and perform its obligations under the
terms of this Agreement.


 


3.2.          No Conflict. 
The execution and delivery of this Agreement by Southeastern will not
conflict with or result in any violation of or default by Southeastern (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to a loss of a
material benefit under (i) any provision of the organizational documents
of Southeastern or (ii) any agreement or instrument, permit, franchise,
license, judgment, order, statute, law, ordinance, rule or regulations,
applicable to Southeastern or its respective properties or assets, except, in
the case of clause (ii), as would not, individually or in the aggregate, be
reasonably expected to have a material adverse effect (a) on Southeastern
or (b) on the ability of Southeastern to perform its obligations under
this Agreement.


 


3.3.          Consents.  All consents,
approvals, orders and authorizations required on the part of Southeastern and,
to its knowledge, on the part of its Advisory Clients, in connection with the
execution, delivery or performance of this Agreement have been obtained and are
effective.


 


3.4.          Beneficial Ownership. 
As of the date hereof, Southeastern Beneficially Owns approximately 28.6%
of the Common Stock, such percentage including certain shares of Common Stock issuable
upon conversion of convertible senior notes issued by the Company.  Southeastern has not formed a Group with any
other Person or Persons and is not a member of a Group.  Southeastern shall not take any actions such
that it and any other Person or Persons may be deemed to be a Group.


 


3.5.          Investment Company Act. 
Southeastern is not a “participant in a joint enterprise”, within
the meaning of Section 17(d) of the Investment Company Act of 1940,
as amended (the “1940 Act”) and Rule 17d-1 thereunder, with
Longleaf Partners Fund (the “Fund”) as a consequence of the
transactions contemplated by this Agreement, and the Board of Directors of the
Fund, including a majority of the directors who are not “interested persons”
(as that term is defined in the 1940 Act) of  the Fund, have found that
any interest of Southeastern in a participant in the transactions contemplated
by this Agreement is not “material” within the meaning of Rule 17d-1(d)(5) under
the 1940 Act, and have recorded or shall record the basis for that finding in
the minutes of the meeting of its Board of Directors, and to the best of
Southeastern’s knowledge no other Person is a party to the transactions
contemplated by this Agreement or has a direct or indirect Financial Interest
(as defined in 17d-1(d)(5)) in a party to such transactions other than the Fund
that would cause the exemption afforded by 17d-1(d)(5) in respect of the
Fund’s participation to be unavailable.


 


4.             Covenants.


 


4.1.          Standstill.


 


(a)           During the Standstill Period (as defined
below), Southeastern shall not, without the prior written consent of the
majority of the entire Board of Directors (excluding any 


 


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representatives
or designees of Southeastern), either directly or indirectly (including in a
manner willfully designed to circumvent the following provisions), alone or in
concert with others:


 


(i)            in any manner acquire, agree to acquire
or make any public proposal to acquire (whether directly or indirectly, by
purchase, tender or exchange offer):


 


A.            any material assets of the Company or any subsidiary
of the Company; or


 


B.            any Common Stock, Voting
Securities or Derivative Securities of the Company (x) other than in open
market transactions that do not involve the issuance of Common Stock by the
Company and (y) unless after giving effect to such acquisition
Southeastern would Beneficially Own less than 557,300,000 shares of Common
Stock (subject to appropriate adjustment to take into account any stock splits,
subdivisions, stock dividends, combinations, reclassifications or similar
events occurring after the date hereof); provided that Southeastern shall in no
event make any such acquisition for its own account or on behalf of any
Advisory Client if it or such Advisory Client is on the date of such purchase
or would become, as a result of such purchase, a “5-percent shareholder” of the
Company within the meaning of Section 382 of the Internal Revenue Code of
1986, as amended, and the regulations promulgated thereunder (including all
applicable attribution rules) (the “Code”);


 


(ii)           enter into any arrangements,
understandings or agreements (whether written or oral) with any Person or take
any action, that would cause, or have the effect of causing, directly or
indirectly, (1) a “change of control” as defined in the indentures,
supplemental indentures or credit agreements, as the case may be, relating to
any indebtedness for borrowed money of the Company or any of its subsidiaries
or (2) the Company to undergo an “ownership change” within the meaning of
the Code;


 


(iii)          form, join or participate in a Group in
connection with any of the foregoing; or


 


(iv)          make or cause the Company to make a
public announcement regarding any intention of Southeastern to take an action
which would be prohibited by any of the foregoing.


 


(b)           The term “Standstill Period” shall
mean the period beginning on February 18, 2005 and ending on February 18,
2013.


 


4.2.          Transfer Restrictions.


 


(a)           During the Standstill Period,
Southeastern shall not sell, assign, pledge, transfer or otherwise dispose or
encumber (“Transfer”) to any Person or Persons any shares of Common
Stock that it Beneficially Owns (x) in negotiated transactions (including
in accordance with Rule 144A under the Securities Act) if such Person
(together with its Affiliates) would Beneficially Own, after giving effect to
such Transfer (or series of Transfers), twenty percent (20%) or more of the
Common Stock; provided that a sale of Common Stock by Southeastern in 


 


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an
open market broker sale transaction complying with Rules 144(f) and
(g)(1) and (g)(2) under the Securities Act without knowledge by
Southeastern of the identity of the acquiror at the time of the sale
transaction shall not constitute a negotiated transaction, or (y) if the
price paid in such transaction is at a premium to the then-current market price
of the Common Stock during regular trading hours on the national securities
exchange on which the Common Stock is then traded.


 


(b)           Notwithstanding the foregoing,
Southeastern shall be permitted to tender any shares of Common Stock it
Beneficially Owns pursuant to a tender offer by a third party for shares of
Common Stock that is open to all stockholders of the Company, so long as a
majority of the entire Board of Directors (excluding any representatives or
designees of Southeastern) has recommended to the stockholders of the Company
that such stockholders accept such tender offer and tender their shares in such
tender offer.


 


5.             Miscellaneous Provisions.


 


5.1.          Public Statements or
Releases.  Neither the Company
nor Southeastern shall make any public announcement with respect to the
existence or terms of this Agreement or the transactions provided for herein
without the prior approval of the other party, which shall not be unreasonably
withheld or delayed.  Notwithstanding the
foregoing, nothing in this Section 5.1 shall prevent either party from
making any public announcement it considers necessary in order to satisfy its
obligations under the law or the rules of any national securities exchange
or market, provided such party, to the extent practicable, provides the other
party with an opportunity to review and comment on any proposed public
announcement before it is made.


 


5.2.          Pronouns.  All pronouns
or any variation thereof shall be deemed to refer to the masculine, feminine or
neuter, singular or plural, as the identity of the person, persons, entity or
entities may require.


 


5.3.          Notices.


 


(a)           Any notices, reports or other
correspondence (hereinafter collectively referred to as “correspondence”)
required or permitted to be given hereunder shall be sent by postage prepaid
first class mail, courier or delivered by hand to the party to whom such
correspondence is required or permitted to be given hereunder.  The date of giving any notice shall be the
date of its actual receipt.


 


(b)           All correspondence to the Company shall
be addressed as follows:


 


Level
3 Communications, Inc.


1025
Eldorado Boulevard


Broomfield,
CO 80021


Attention:  Thomas C. Stortz, Esq.


 


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with a copy to:


 


Willkie Farr &
Gallagher LLP

787 Seventh Avenue

New York, NY 10019

Attention:  David K. Boston


 


(c)           All correspondence to Southeastern shall
be addressed as follows:


 


Southeastern
Asset Management, Inc.

6410 Poplar Avenue, Suite 900

Memphis, TN 38119


Attention:  Andrew R. McCarroll, Vice President and
General Counsel


 


(d)           Any Person may change the address to
which correspondence to it is to be addressed by notification as provided for
herein.


 


5.4.          Captions.  The captions
and paragraph headings of this Agreement are solely for the convenience of reference
and shall not affect its interpretation.


 


5.5.          Severability. 
Should any part or provision of this Agreement be held unenforceable or
in conflict with the applicable laws or regulations of any jurisdiction, the
invalid or unenforceable part or provisions shall be replaced with a provision
which accomplishes, to the extent possible, the original business purpose of
such part or provision in a valid and enforceable manner, and the remainder of
this Agreement shall remain binding upon the parties hereto.


 


5.6.          Governing Law. 
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, without giving effect to conflict of law
principles thereof.


 


5.7.          Waiver.  No waiver of
any term, provision or condition of this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be, or be construed
as, a further or continuing waiver of any such term, provision or condition or
as a waiver of any other term, provision or condition of this Agreement.


 


5.8.          Assignment.  The rights
and obligations of the parties hereto shall inure to the benefit of and shall
be binding upon the authorized successors and permitted assigns of each
party.  None of the parties may assign
its rights or obligations under this Agreement or designate another person (i) to
perform all or part of its obligations under this Agreement or (ii) to
have all or part of its rights and benefits under this Agreement, in each case
without the prior written consent of the other party.  In the event of any assignment in accordance
with the terms of this Agreement, the assignee shall specifically assume and be
bound by the provisions of the Agreement by executing and agreeing to an
assumption agreement reasonably acceptable to the Company.


 


5.9.          Counterparts. 
This Agreement may be signed in one or more counterparts, each of which
shall be an original, but all of which together shall constitute one instrument


 


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5.10.        Entire Agreement. 
This Agreement constitutes the entire agreement between the parties
hereto respecting the subject matter hereof and supersedes all prior
agreements, negotiations, understandings, representations and statements respecting
the subject matter hereof, whether written or oral, including, without
limitation.  Except as expressly provided
in Section 4.1, no modification, alteration, waiver or change in any of
the terms of this Agreement shall be valid or binding upon the parties hereto
unless made in writing and duly executed by the Company and Southeastern.


 


[Signature
page follows]


 


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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.


 


	
   

  	
  LEVEL 3 COMMUNICATIONS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas C. Stortz

  
	
   

  	
   

  	
  Name: 

  	
  Thomas C. Stortz

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President and Chief Legal Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SOUTHEASTERN ASSET MANAGEMENT,
  INC., on behalf of certain institutional clients

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Andrew R. McCarroll

  
	
   

  	
  Name: Andrew R. McCarroll

  
	
   

  	
  Title:
  Vice President and General Counsel

  



 


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