Document:

Exhibit 10.1

 

EXECUTION COPY

 

IN
THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF
COLORADO

 

Civil Action No. 01-CV-1451-REB-CBS

 

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

 

In re QWEST COMMUNICATIONS INTERNATIONAL INC. SECURITIES LITIGATION

 

STIPULATION OF PARTIAL SETTLEMENT

 

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

 

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I.                 THE
LITIGATION

 

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

 

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

 

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

 

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

 

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

 

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

 

II.             DEFENDANTS’
DENIALS OF WRONGDOING AND LIABILITY

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

III.         CLAIMS
OF THE LEAD PLAINTIFFS AND BENEFITS OF SETTLEMENT

 

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

 

IV.        TERMS
OF STIPULATION AND AGREEMENT OF SETTLEMENT

 

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

 

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

 

1.              Definitions

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.10.                        “Escrow
Agent” means Lead Counsel.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.              The
Settlement

 

a.                                       The
Settlement Fund

 

2.1                                 Qwest
Communications International Inc. (on behalf of itself and the Settling
Defendants and Released Persons) shall cause to be transferred $100,000,000.00
(one hundred million) in cash to an account controlled by the Escrow Agent no
later than 30 days after the Preliminary Settlement Approval.  If all or part of such $100 million is not
transferred to an account controlled by the Escrow Agent within 30 days after
the Preliminary Settlement Approval, such un-transferred amounts shall accrue
interest at rate of 7% annually until such time as the entire $100 million is
transferred.  Further, if all or part of
such $100 million is not transferred to an account controlled by the Escrow
Agent within 30 days after the Preliminary Settlement Approval, Lead Plaintiffs
may terminate this settlement; provided however, that the Lead Plaintiffs shall
provide Qwest Communications International Inc. written notice of their intent
to terminate, and allow Qwest Communications International Inc. 30 days to
cure.  Qwest Communications International
Inc. (on behalf of itself and the Settling Defendants and Released Persons)
shall cause to be transferred a second $100,000,000.00 (one hundred million) in
cash to an account controlled by the Escrow

 

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Agent no later than 30 days
after Final Settlement Approval.  If all
or part of such $100 million is not transferred to an account controlled by the
Escrow Agent within 30 days after Final Settlement Approval, such
un-transferred amounts shall accrue interest at rate of 7% annually until such
time as the entire $100 million is transferred. 
Further, if all or part of such $100 million is not transferred to an
account controlled by the Escrow Agent within 30 days after Final Settlement
Approval, the Lead Plaintiffs may terminate this settlement; provided however,
that the Lead Plaintiffs shall provide Qwest Communications International Inc.
written notice of their intent to terminate, and allow Qwest Communications
International Inc. 30 days to cure. 
Qwest Communications International Inc. (on behalf of itself and the
Settling Defendants and Released Persons) shall cause to be transferred another
$200,000,000.00 (two hundred million) in cash plus interest that shall accrue
from 30 days after Final Settlement Approval at a rate of 3.75% annually to an
account controlled by the Escrow Agent by January 15, 2007.  If all or part of such $200 million plus
interest that shall accrue from 30 days after Final Settlement Approval at a
rate of 3.75% annually is not transferred to an account controlled by the
Escrow Agent by January 15, 2007, such un-transferred amounts shall accrue
interest at a rate of 7% annually until such time as the entire $200 million
plus interest that shall accrue from 30 days after Final Settlement Approval at
a rate of 3.75% annually is transferred. 
Further, if all or part of such $200 million plus interest that shall
accrue from 30 days after Final Settlement Approval at a rate of 3.75% annually
is not transferred to an account controlled by the Escrow Agent by
January 15, 2007, the Lead Plaintiffs may terminate this settlement;
provided however, that the Lead

 

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Plaintiffs shall provide Qwest
Communications International Inc. written notice of their intent to terminate,
and allow Qwest Communications International Inc. 30 days to cure.  Notwithstanding any provision of this
Stipulation, no Individual Settling Defendant is obligated to make any of the
payments provided for hereunder.

 

2.2                                 Lead
Plaintiffs and Qwest Communications International Inc. shall use their best
efforts to persuade the Securities and Exchange Commission to apply to the
United States District Court for the District of Colorado for an order
authorizing and requiring that the SEC Distribution Fund be transferred to an
account controlled by the Escrow Agent for distribution pursuant to this
Stipulation and the Plan of Allocation. 
If the Securities and Exchange Commission advises the Settling Parties
that it will not apply to the United States District Court for the District of
Colorado for an order authorizing and requiring that the SEC Distribution Fund
be transferred to an account controlled by the Escrow Agent pursuant to the
terms of the Stipulation, if the United States District Court does not approve
such application, or, if for any other reason, the SEC Distribution Fund is not
distributed to the Class pursuant to this Stipulation and Plan of
Allocation, Lead Plaintiffs shall have the right, but shall not be required to,
withdraw from and terminate this Stipulation. 
Lead Counsel shall not apply for a fee based on the SEC Distribution
Fund.

 

2.3                                 It
is expressly acknowledged that Arthur Andersen LLP has agreed to contribute $10
million (ten million dollars) in connection with and as full consideration for
this settlement and shall have no obligation to make any additional contribution
either to

 

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

 

b.                                       The
Escrow Agent

 

2.4                                 The
Escrow Agent may invest the Settlement Fund deposited pursuant to ¶¶ 2.1 and
2.2 hereof in instruments backed by the full faith and credit of the United
States Government or fully insured by the United States Government or an agency
thereof and shall reinvest the proceeds of these instruments as they mature in
similar instruments at their then-current market rates.  The Escrow Agent shall bear all risks related
to investment of the Settlement Fund.

 

2.5                                 The
Escrow Agent shall not disburse the Settlement Fund except as provided in the
Stipulation, by an order of the Court, or with the written agreement of counsel
for Qwest Communications International Inc.

 

2.6                                 Subject
to further order and/or direction as may be made by the Court, the Escrow Agent
is authorized to execute such transactions on behalf of the Class Members
as are consistent with the terms of the Stipulation.

 

2.7                                 All
funds held by the Escrow Agent shall be deemed and considered to be in custodia legis of the Court, and shall
remain subject to the jurisdiction of the Court, until such time as such funds
shall be distributed pursuant to the Stipulation and/or further order(s) of the
Court.

 

2.8                                 Within
five (5) days after payment of the initial $100 million to the account
controlled by the Escrow Agent pursuant to ¶ 2.1 hereof, the Escrow Agent may
establish a “Class Notice and Administration Fund,” and may deposit up to
$5 million

 

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from the Settlement Fund in
it.  The Class Notice and
Administration Fund may be used by Lead Counsel to pay costs and expenses
reasonably and actually incurred in connection with providing notice to the
Class, locating Class Members, soliciting claims, assisting with the
filing of claims, administering and distributing the Net Settlement Fund to Authorized
Claimants, processing Proof of Claim and Release forms, and paying escrow fees
and costs, if any.  The Class Notice
and Administration Fund may also be invested and earn interest as provided for
in ¶ 2.4 of this Stipulation.

 

3.              Taxes

 

3.1                                 (a)                                  Settling
Parties and the Escrow Agent agree to treat the Settlement Fund as being at all
times a “qualified settlement fund” within the meaning of Treas. Reg.
§1.468B-1.  In addition, the Escrow Agent
shall timely make such elections as necessary or advisable to carry out the
provisions of this ¶ 3.1, including the “relation-back election” (as defined in
Treas. Reg. §1.468B-1) back to the earliest permitted date.  Such elections shall be made in compliance
with the procedures and requirements contained in such regulations.  It shall be the responsibility of the Escrow
Agent to timely and properly prepare and deliver the necessary documentation
for signature by all necessary parties, and thereafter to cause the appropriate
filing to occur.

 

(b)                                 For
the purpose of § 468B of the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder, the “administrator” shall be the
Escrow Agent.  The Escrow Agent shall
timely and properly file all informational and other tax reports and returns
necessary or advisable with respect to the Settlement Fund (including without
limitation the returns described in Treas. Reg. §1.468B-2(k)).

 

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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 A-1 and A-3 attached hereto.  The Notice shall include the general terms of
the settlement set forth in the Stipulation, the proposed Plan of Allocation,
the general terms of the Fee and Expense Application, and the date of the
Settlement Hearing as defined below.

 

4.2                                 Lead
Counsel shall request that, after notice is given, the Court hold a hearing
(the “Settlement Hearing”) and provide Final Settlement Approval for the
Litigation with respect to the Settling Defendants as set forth herein.  At or after the Settlement Hearing, Lead
Counsel also will request that the Court approve the proposed Plan of
Allocation and the Fee and Expense Application.

 

5.              Releases

 

5.1                                 Upon
the Effective Date, Lead Plaintiffs and each of the Class Members shall be
deemed to have, and by operation of the Judgment shall have: (i) fully,
finally, and forever released, relinquished and discharged all Released Claims
(including Unknown Claims) against the Released Persons, whether or not such
Class Member executes and delivers the Proof of Claim and Release,
(ii) covenanted not to sue any of the Released Persons or otherwise to
assert, directly or indirectly, any of the Released Claims against any of the
Released Persons, and (iii) agreed to be forever barred and enjoined from
doing so, in any court of law or equity, or in any other forum.

 

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5.2                                 The
Proof of Claim and Release to be executed by Class Members shall release
all Released Claims against the Released Persons and shall be substantially in
the form contained in Exhibit A-2 attached hereto.

 

5.3                                 Upon
the Effective Date, each of the Released Persons shall be deemed to have, and
by operation of the Judgment shall have, fully, finally, and forever released,
relinquished and discharged each and all of the Lead Plaintiffs,
Class Members, and Lead Counsel from all claims (including Unknown
Claims), arising out of, relating to, or in connection with the institution,
prosecution, assertion, settlement, or resolution of the Litigation or the
Released Claims.

 

5.4                                 Upon
the Effective Date, Qwest and its Related Parties and the Arthur Andersen
Released Parties shall be deemed to have, and by operation of the Judgment
shall have, fully, finally, and forever released, relinquished and discharged
one another from all claims (including Unknown Claims), arising out of,
relating to, or in connection with the Released Claims.

 

6.              Administration
and Calculation of Claims, Final Awards and Supervision and Distribution of
Settlement Fund

 

6.1                                 The
Claims Administrator, subject to such supervision and direction of the Court
and/or Lead Counsel as may be necessary or as circumstances may require, shall
administer and calculate the claims submitted by Class Members and shall
oversee distribution of the Net Settlement Fund to Authorized Claimants.

 

6.2                                 The
Settlement Fund shall be applied as follows:

 

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

 

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

 

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

 

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

 

6.3                                 Upon
the Effective Date and thereafter, and in accordance with the terms of the
Stipulation, the Plan of Allocation, or such further approval and further
order(s) of the Court as may be necessary or as circumstances may require, the
Net Settlement Fund shall be distributed to Authorized Claimants, subject to
and in accordance with ¶¶ 6.4-6.9 hereof.

 

6.4                                 Within
ninety (90) days after the mailing of the Notice or such other time as may be
set by the Court, each Person claiming to be an Authorized Claimant shall be
required to submit to the Claims Administrator a completed Proof of Claim and
Release, substantially in the form of Exhibit A-2 attached hereto, signed
under penalty of perjury and supported by such documents as are specified in
the Proof of Claim and Release and as are reasonably available to the
Authorized Claimant.

 

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6.5                                 Except
as otherwise ordered by the Court, all Class Members who fail timely to
submit a Proof of Claim and Release within such period, or such other period as
may be ordered by the Court, or otherwise allowed, shall be forever barred from
receiving any payments pursuant to the Stipulation and the settlement set forth
herein, but will in all other respects be subject to and bound by the
provisions of the Stipulation, the releases contained herein, and the
Judgment.  Notwithstanding the foregoing,
Lead Counsel may, in their discretion, accept for processing late submitted
claims so long as the distribution of the Net Settlement Fund to Authorized
Claimants is not materially delayed.

 

6.6                                 The
Net Settlement Fund shall be distributed to the Authorized Claimants
substantially in accordance with a Plan of Allocation to be described in the
Notice and approved by the Court.  If any
funds remain in the Net Settlement Fund by reason of un-cashed checks or
otherwise, then, after the Claims Administrator has made reasonable and
diligent efforts to have Class Members who are entitled to participate in
the distribution of the Net Settlement Fund cash their distribution checks, any
balance remaining in the Net Settlement Fund one (1) year after the
initial distribution of such funds shall be re-distributed to
Class Members who have cashed their checks and who would receive at least
$10.00 from such re-distribution, after payment of any taxes, and unpaid costs
or fees incurred in administering the Net Settlement Fund for such
re-distribution.  If after six months
after such re-distribution any funds shall remain in the Net Settlement fund,
then such balance shall be returned to Colorado-based non-

 

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

 

6.7                                 The
Released Persons shall have no responsibility for, interest in, or liability
whatsoever with respect to the investment or distribution of the Net Settlement
Fund, the Plan of Allocation, the determination, administration, or calculation
of claims, the payment or withholding of Taxes, or any losses incurred in
connection therewith, except that Lead Counsel agrees to confer with counsel
for Qwest prior to submission of the Plan of Allocation.

 

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

 

6.9                                 It
is understood and agreed by the Settling Parties that any proposed Plan of
Allocation of the Net Settlement Fund including, but not limited to, any
adjustments to an Authorized Claimant’s claim set forth therein, is not a part
of the Stipulation and is to be considered by the Court separately from the
Court’s consideration of the fairness, reasonableness and adequacy of the
settlement set forth in the Stipulation, and any order or proceeding relating
to the Plan of Allocation shall not operate to terminate or cancel the
Stipulation or affect the finality of the Court’s Judgment approving the

 

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

 

7.              Lead
Counsel’s Attorneys’ Fees and Reimbursement of Expenses

 

7.1                                 Lead
Counsel may submit an application or applications (the “Fee and Expense
Application”) for distributions to them from the Settlement Fund for an award
of attorneys’ fees, and reimbursement of expenses incurred in connection with
prosecuting the Litigation, plus any interest on such attorneys’ fees and
expenses at the same rate and for the same periods as earned by the Settlement
Fund (until paid).  Lead Counsel reserve
the right to make additional applications for fees and expenses incurred.  The Lead Plaintiffs may submit an application
for reimbursement of their expenses (including lost wages) incurred in
representing the Class in the Litigation.

 

7.2                                 The
attorneys’ fees, expenses and costs, as awarded by the Court, shall be paid to
Lead Counsel from the Settlement Fund, as ordered, immediately after the Court
executes an order awarding such fees and expenses.  Lead Counsel shall allocate the attorneys’
fees amongst other Plaintiffs’ counsel in a manner in which they in good faith
believe reflects the contributions of such counsel to the prosecution and
settlement of the Litigation.  In the
event that (i) the Effective Date does not occur, (ii) the judgment
and/or order making such fee and expense award is reversed or modified,
(iii) the Stipulation is canceled or terminated for any reason, or
(iv) if the dismissal with prejudice of this Litigation does not become
Final, and in the event that the fee and expense award has been paid to any
extent, then Lead Counsel shall within five (5) business days from
receiving notice from Qwest Communications International Inc. or

 

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from a court of appropriate
jurisdiction, refund to the Settlement Fund the fees, expenses and costs
previously paid to them from the Settlement Fund plus interest thereon at the
same rate as earned on the Settlement Fund in an amount consistent with such
reversal or modification.  Each
Plaintiffs’ counsel’s law firm as a condition of receiving such fees and
expenses, on behalf of itself and each partner and/or shareholder of it, agrees
that the law firm and its partners and/or shareholders are subject to the
jurisdiction of the Court for the purpose of enforcing the provisions of this
paragraph and such other agreement between Qwest Communications International Inc.
and Lead Counsel.  Without limitation,
each such law firm and its partners and/or shareholders agree that the Court
may, upon application of Qwest Communications International Inc., summarily
issue orders including, without limitation, judgments and attachment orders and
may make appropriate findings of or sanctions for contempt, against them or any
of them should such law firm fail timely to repay such fees and expenses.

 

7.3                                 The
procedure for and the allowance or disallowance by the Court of any applications
by Lead Counsel for attorneys’ fees and expenses to be paid out of the
Settlement Fund are not part of the settlement set forth in the Stipulation,
and are to be considered by the Court separately from the Court’s consideration
of the fairness, reasonableness and adequacy of the settlement set forth in the
Stipulation, and any order or proceeding relating to the Fee and Expense
Application, or any appeal from any order relating thereto or reversal or
modification thereof, shall not operate to

 

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terminate or cancel the
Stipulation, or affect or delay the finality of the Judgment approving the
Stipulation and the settlement of the Litigation set forth therein.

 

7.4                                 Settling
Defendants and their Related Parties shall have no responsibility for the
allocation among Plaintiffs’ counsel, and/or any other Person who may assert
some claim thereto, of any fee and expense award that the Court may make in the
Litigation.

 

8.              Conditions
of Settlement, Effect of Disapproval, Cancellation or Termination

 

8.1                                 The
Effective Date of the Stipulation shall be conditioned on the occurrence of the
last to occur of the following events:

 

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

 

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

 

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

 

(d)                                 the
Judgment has become Final; and

 

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

 

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8.2           Simultaneously herewith, Qwest
Communications International Inc. and the Lead Plaintiffs (individually and on
behalf of the Class) have entered into a “Supplemental Agreement Regarding
Requests for Exclusion” setting forth, among other things, certain conditions
under which this Stipulation may be withdrawn or terminated by Qwest
Communications International Inc.  The
Supplemental Agreement Regarding Requests for Exclusion shall not be filed
prior to the Settlement Hearing unless a dispute arises as to its terms or
Qwest Communications International Inc. exercises its rights thereunder.  In the event of a withdrawal from this
Stipulation pursuant to the Supplemental Agreement Regarding Requests for
Exclusion, this Stipulation shall become null and void and of no further force
and effect and the provisions of ¶ 8.4 hereof shall apply.

 

8.3           Upon the occurrence of all of the
events referenced in ¶ 8.1 hereof, any and all remaining interest or right of
Settling Defendants in or to the Settlement Fund, if any, shall be absolutely
and forever extinguished.  If all of the
conditions specified in ¶ 8.1 hereof are not met, then the Stipulation
shall be canceled and terminated subject to ¶¶ 8.4 hereof unless Lead Counsel
and counsel for Settling Defendants mutually agree in writing within thirty
(30) days of their receipt of notice of any failed condition to proceed with
the Stipulation.

 

8.4           Unless otherwise ordered by the
Court, in the event the Stipulation shall terminate, be canceled, or not become
effective for any reason, within five (5) business days after written
notification of such event is sent by counsel for Qwest Communications
International Inc. to the Escrow Agent, the Settlement Fund, plus

 

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accrued interest (except the
portion constituting the SEC Distribution Fund), and the Class Notice and
Administration Fund, plus accrued interest, shall be refunded to Qwest
Communications International Inc., less expenses due and owing as set forth in
¶ 2.8, and the SEC Distribution Fund, plus accrued interest, shall be refunded
to the account in the Court Registry Investment System from which the SEC
Distribution Fund came or otherwise treated in accordance with written instructions
provided by the Securities and Exchange Commission, provided, however, that
neither the Lead Plaintiffs nor Lead Counsel shall have any obligation to repay
any amounts actually and properly disbursed from the Class Notice and
Administration Fund, and that any expenses already incurred and properly
chargeable to the Class Notice and Administration Fund pursuant to ¶ 2.8
hereof and Taxes and Tax Expenses at the time of such termination or
cancellation but that have not been paid, shall be paid or retained in escrow
by the Escrow Agent in accordance with the terms of the Stipulation prior to
the balance being refunded.  At the
request of Qwest, the Escrow Agent or its designee shall apply for any tax
refund owed on the Settlement Fund and pay the proceeds to Qwest Communications
International Inc.

 

9.              Class Certification

 

For purposes
of this Stipulation only, the Settling Parties will stipulate to certification
of the Class as defined herein. 
Settling Defendants expressly reserve the right to contest class
certification in the event this Settlement does not become effective for any
reason.  This Stipulation, whether or not
consummated, and any proceedings

 

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taken pursuant to it, shall not
be construed as or received in evidence as an admission, concession or
presumption that class certification is appropriate in this action.

 

10.       Preferences,
Voidable Transfers, or Fraudulent Transfers

 

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

 

11.       Limitations
On Subsequent Claims Against Released Parties

 

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

 

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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

 

38

 

EXECUTION COPY

 

Administrative Board), any
present or former directors, officers, managers, partners, participating
principals, national directors or similar persons of Arthur Andersen LLP or any
of their respective agents or representatives (collectively, the “Andersen
Covered Persons”) have any personal liability with respect to the obligations
arising out of or relating to this Stipulation; and (ii) no Andersen
Covered Person shall be obligated to make, and no Andersen Covered Person in
fact will make, any capital contribution or other payment of any kind to Arthur
Andersen LLP in order for Arthur Andersen LLP to satisfy its obligations
arising out of or relating to this Stipulation. 
Notwithstanding this paragraph, Arthur Andersen LLP (but not Andersen
Covered Persons) is responsible for the contribution of $10 million (ten
million dollars) to this settlement, such payment to be made to Qwest
Communications International Inc.

 

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

 

39

 

EXECUTION COPY

 

collateral estoppel, release, good faith settlement, judgment bar or
reduction or any other theory of claim preclusion or issue preclusion or
similar defense or counterclaim.

 

12.6         The protections afforded by the
Protective Order governing the Litigation shall be unaffected by this
Stipulation.

 

12.7         All of the Exhibits to this Stipulation
are material and integral parts hereof and are fully incorporated herein by this
reference.

 

12.8         This Stipulation may be amended or
modified only by a written instrument signed by or on behalf of all Settling
Parties or their respective successors-in-interest.

 

12.9         This Stipulation, the Exhibits attached
hereto, the Supplemental Agreement Regarding Requests for Exclusion, the
executed Term Sheet between Qwest Communications International Inc. and Arthur
Andersen LLP, and the other agreements identified herein, constitute the entire
agreement among the parties hereto and no representations, warranties or
inducements have been made to any party concerning the Stipulation, its
Exhibits, or the Supplemental Agreement Regarding Requests for Exclusion, other
than the representations, warranties and covenants contained and memorialized in
such documents, and shall not be amended except by a written instrument signed
by the Settling Parties.  Except as
otherwise provided herein, each Settling Party shall bear its own costs.

 

12.10       Lead Counsel, on behalf of the Class, are
expressly authorized by the Lead Plaintiffs to take all appropriate action
required or permitted to be taken by the Class pursuant to the Stipulation
to effectuate its terms and also are expressly

 

40

 

EXECUTION COPY

 

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

 

12.11       Each counsel or other Person executing
the Stipulation or any of its Exhibits on behalf of any party hereto hereby
warrants that such Person has the full authority to do so.

 

12.12       The Stipulation may be executed in one or
more counterparts.  All executed
counterparts and each of them shall be deemed to be one and the same
instrument.  A complete set of original
executed counterparts shall be filed with the Court.

 

12.13       The Stipulation shall be binding upon,
and inure to the benefit of, the successors and assigns of the Settling
Parties.

 

12.14       The Court shall retain jurisdiction with
respect to implementation and enforcement of the terms of this Stipulation, and
all parties hereto submit to the jurisdiction of the Court for purposes of
implementing and enforcing the settlement embodied in the Stipulation.

 

12.15       This Stipulation and the Exhibits hereto
shall be considered to have been negotiated, executed and delivered, and to be
wholly performed, in the State of Delaware, and the rights and obligations of
the parties to the Stipulation shall be construed and enforced in accordance
with, and governed by, the internal, substantive laws of the State of Delaware
without giving effect to that State’s choice-of-law principles.

 

41

 

EXECUTION COPY

 

12.16       Whenever notice to Lead Plaintiffs or
Lead Counsel is required to be given pursuant to this Stipulation, it shall be
delivered by both facsimile and federal express to:

 

Keith Park

Lerach,
Coughlin, Stoia, Geller,

Rudman &
Robbins LLP

655 W.
Broadway, Suite 1900

San Diego, CA
92101-3301

Fax:  619-231-7423

 

12.17       Whenever notice to Qwest Communications
International Inc. is required to be given pursuant to this Stipulation, it
shall be delivered by both facsimile and federal express to:

 

Richard N.
Baer

General
Counsel

Qwest
Communications International Inc.

1801
California Street

Suite 5200

Denver,
Colorado 80112

Fax:  303-383-8444

 

and

 

Jonathan
Schiller

David Boyd

Alfred Levitt

Boies,
Schiller & Flexner LLP

5301 Wisconsin
Ave., N.W.

Washington DC
20015

(202) 237-2727
(phone)

(202) 237-6131
(fax)

 

42

 

EXECUTION COPY

 

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 21, 2005.

 

 

	
  By:

  	
  /s/ Michael
  J. Dowd

  	
   

  	
   

  	
  By:

  	
  /s/ Jonathan
  D. Schiller

  	
   

  
	
   

  	
  William S.
  Lerach

  	
   

  	
   

  	
  Jonathan D.
  Schiller

  	
   

  
	
   

  	
  Patrick
  Coughlin

  	
   

  	
   

  	
  David R.
  Boyd

  	
   

  
	
   

  	
  Keith Park

  	
   

  	
   

  	
  Alfred P.
  Levitt

  	
   

  
	
   

  	
  Michael J.
  Dowd

  	
   

  	
   

  	
  Boies,
  Schiller & Flexner LLP

  	
   

  
	
   

  	
  Thomas E.
  Egler

  	
   

  	
   

  	
  5301
  Wisconsin Ave, NW

  	
   

  
	
   

  	
  Lerach,
  Coughlin, Stoia, Geller,

  	
   

  	
   

  	
  Suite 800

  	
   

  
	
   

  	
  Rudman &
  Robbins LLP

  	
   

  	
   

  	
  Washington,
  DC 20015

  	
   

  
	
   

  	
  655 W.
  Broadway, Suite 1900

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  San Diego,
  CA 92101-3301

  	
   

  	
   

  	
  Counsel for
  Qwest Communication

  International Inc.

  
	
   

  	
  Lead Counsel

  	
   

  	
   

  	
   

  	
   

  

 

43

 

EXECUTION COPY

 

12.18       Whenever notice to other Settling
Defendants is required to be given pursuant to this Stipulation, it shall be
delivered by both facsimile and federal express to the signatories to this
Stipulation or their respective counsel.

 

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

 

 

	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  William S.
  Lerach

  	
   

  	
   

  	
  Jonathan D.
  Schiller

  	
   

  
	
   

  	
  Patrick
  Coughlin

  	
   

  	
   

  	
  David R.
  Boyd

  	
   

  
	
   

  	
  Keith Park

  	
   

  	
   

  	
  Alfred P.
  Levitt

  	
   

  
	
   

  	
  Michael J.
  Dowd

  	
   

  	
   

  	
  Boies,
  Schiller & Flexner LLP

  	
   

  
	
   

  	
  Thomas E.
  Egler

  	
   

  	
   

  	
  5301
  Wisconsin Ave, NW

  	
   

  
	
   

  	
  Lerach,
  Coughlin, Stoia, Geller,

  	
   

  	
   

  	
  Suite 800

  	
   

  
	
   

  	
  Rudman &
  Robbins LLP

  	
   

  	
   

  	
  Washington,
  DC 20015

  	
   

  
	
   

  	
  655 W.
  Broadway, Suite 1900

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  San Diego,
  CA 92101-3301

  	
   

  	
   

  	
  Counsel for
  Qwest

  Communication International Inc.

  
	
   

  	
  Lead Counsel

  	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Frederick
  J. Baumann

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  James M.
  Lyons

  	
   

  	
   

  	
  Bruce F.
  Black

  	
   

  
	
   

  	
  Frederick J.
  Baumann

  	
   

  	
   

  	
  Martin D.
  Litt

  	
   

  
	
   

  	
  Rothgerber
  Johnson & Lyons LLP

  	
   

  	
   

  	
  Michael J.
  Hofmann

  	
   

  
	
   

  	
  1200 17th
  Street, Suite 3000

  	
   

  	
   

  	
  Holme
  Roberts & Owen LLP

  	
   

  
	
   

  	
  Denver, CO
  80202-5855

  	
   

  	
   

  	
  1700 Lincoln
  Street, Suite 4100

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Denver, CO
  80203

  
	
   

  	
  Counsel for
  Vinod Khosla

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Counsel for
  Philip Anschutz & Craig

  Slater

  	
   

  
								

 

43

 

EXECUTION COPY

 

12.18       Whenever notice to other Settling
Defendants is required to be given pursuant to this Stipulation, it shall be
delivered by both facsimile and federal express to the signatories to this
Stipulation or their respective counsel.

 

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

 

 

	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  William S.
  Lerach

  	
   

  	
   

  	
  Jonathan D.
  Schiller

  	
   

  
	
   

  	
  Patrick
  Coughlin

  	
   

  	
   

  	
  David R.
  Boyd

  	
   

  
	
   

  	
  Keith Park

  	
   

  	
   

  	
  Alfred P.
  Levitt

  	
   

  
	
   

  	
  Michael J.
  Dowd

  	
   

  	
   

  	
  Boies, Schiller &
  Flexner LLP

  	
   

  
	
   

  	
  Thomas E.
  Egler

  	
   

  	
   

  	
  5301
  Wisconsin Ave, NW

  	
   

  
	
   

  	
  Lerach,
  Coughlin, Stoia, Geller,

  	
   

  	
   

  	
  Suite 800

  	
   

  
	
   

  	
  Rudman &
  Robbins LLP

  	
   

  	
   

  	
  Washington,
  DC 20015

  	
   

  
	
   

  	
  655 W.
  Broadway, Suite 1900

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  San Diego,
  CA 92101-3301

  	
   

  	
   

  	
  Counsel for
  Qwest

  Communication International Inc.

  
	
   

  	
  Lead Counsel

  	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Bruce F.
  Black

  	
   

  
	
   

  	
  James M.
  Lyons

  	
   

  	
   

  	
  Bruce F.
  Black

  	
   

  
	
   

  	
  Frederick J.
  Baumann

  	
   

  	
   

  	
  Martin D.
  Litt

  	
   

  
	
   

  	
  Rothgerber
  Johnson & Lyons LLP

  	
   

  	
   

  	
  Michael J.
  Hofmann

  	
   

  
	
   

  	
  1200 17th
  Street, Suite 3000

  	
   

  	
   

  	
  Holme
  Roberts & Owen LLP

  	
   

  
	
   

  	
  Denver, CO
  80202-5855

  	
   

  	
   

  	
  1700 Lincoln
  Street, Suite 4100

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Denver, CO
  80203

  
	
   

  	
  Counsel for
  Vinod Khosla

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Counsel for
  Philip Anschutz & Craig

  Slater

  	
   

  
								

 

43

 

EXECUTION COPY

 

	
  By:

  	
  /s/ Mark T.
  Drooks

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Mark T.
  Drooks

  	
   

  	
   

  	
  James
  Nesland

  	
   

  
	
   

  	
  Thomas V.
  Reichert

  	
   

  	
   

  	
  Paul
  Schwartz

  	
   

  
	
   

  	
  Bird,
  Marella, Boxer & Wolpert, PC

  	
   

  	
   

  	
  Cooley
  Godward LLP

  	
   

  
	
   

  	
  1875 Century
  Park East, 23rd Floor

  	
   

  	
   

  	
  380
  Interlocken Crescent, Suite 900

  
	
   

  	
  Los Angeles,
  CA 90067-2561

  	
   

  	
   

  	
  Broomfield,
  CO 80021-8023

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Counsel for
  Robin Szeliga

  	
   

  	
   

  	
  Counsel for
  Drake Tempest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Scott B.
  Schreiber

  	
   

  	
   

  	
  Greg Waller

  	
   

  
	
   

  	
  John A.
  Freedman

  	
   

  	
   

  	
  Andrews
  Kurth LLP

  	
   

  
	
   

  	
  Elissa
  Preheim

  	
   

  	
   

  	
  600 Travis
  Street, Suite 4200

  	
   

  
	
   

  	
  Arnold &
  Porter

  	
   

  	
   

  	
  Houston,
  Texas 77002

  
	
   

  	
  555 Twelfth
  Street, NW

  	
   

  	
   

  	
   

  
	
   

  	
  Washington,
  DC 20004-1206

  	
   

  	
   

  	
  Attorneys
  for Defendant Gregory M.

  Casey

  	
   

  
	
   

  	
  Counsel for
  Arthur Andersen LLP

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Barbara
  Moses

  	
   

  	
   

  	
  David A.
  Zisser

  	
   

  
	
   

  	
  Morvillo,
  Abramowitz, Grand, Iason

  	
   

  	
   

  	
  Isaacson,
  Rosenbaum P.C.

  	
   

  
	
   

  	
  &
  Silberberg, P.C.

  	
   

  	
   

  	
  633 17th
  Street, Suite 2200

  	
   

  
	
   

  	
  565 Fifth
  Avenue

  	
   

  	
   

  	
  Denver, CO
  80202

  	
   

  
	
   

  	
  New York, NY
  10017

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Counsel for
  Marc Weisberg

  	
   

  
	
   

  	
  Counsel for
  Afshin Mohebbi

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Ty Cobb

  	
   

  	
   

  	
  Robert N.
  Miller

  	
   

  
	
   

  	
  Daniel F.
  Shea

  	
   

  	
   

  	
  Stephanie E.
  Dunn

  	
   

  
	
   

  	
  Coates Lear

  	
   

  	
   

  	
  Perkins
  Coie, LLP

  	
   

  
	
   

  	
  Hogan &
  Hartson L.L.P.

  	
   

  	
   

  	
  1899 Wynkoop
  St., Ste. 700

  	
   

  
	
   

  	
  1200
  Seventeenth St., Suite 1500

  	
   

  	
   

  	
  Denver, CO
  80202

  	
   

  
	
   

  	
  Denver, CO
  80202

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attorneys
  for Lewis Wilks and

  Stephen Jacobsen

  	
   

  	
   

  	
  Attorneys
  for James A. Smith

  	
   

  
									

 

44

 

EXECUTION COPY

 

	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Mark T.
  Drooks

  	
   

  	
   

  	
  James
  Nesland

  	
   

  
	
   

  	
  Thomas V.
  Reichert

  	
   

  	
   

  	
  Paul
  Schwartz

  	
   

  
	
   

  	
  Bird,
  Marella, Boxer & Wolpert, PC

  	
   

  	
   

  	
  Cooley
  Godward LLP

  	
   

  
	
   

  	
  1875 Century
  Park East, 23rd Floor

  	
   

  	
   

  	
  380
  Interlocken Crescent, Suite 900

  
	
   

  	
  Los Angeles,
  CA 90067-2561

  	
   

  	
   

  	
  Broomfield,
  CO 80021-8023

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Counsel for
  Robin Szeliga

  	
   

  	
   

  	
  Counsel for
  Drake Tempest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Elissa
  Preheim

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Scott B.
  Schreiber

  	
   

  	
   

  	
  Greg Waller

  	
   

  
	
   

  	
  John A.
  Freedman

  	
   

  	
   

  	
  Andrews
  Kurth LLP

  	
   

  
	
   

  	
  Elissa
  Preheim

  	
   

  	
   

  	
  600 Travis
  Street, Suite 4200

  	
   

  
	
   

  	
  Arnold &
  Porter

  	
   

  	
   

  	
  Houston,
  Texas 77002

  
	
   

  	
  555 Twelfth
  Street, NW

  	
   

  	
   

  	
   

  
	
   

  	
  Washington,
  DC 20004-1206

  	
   

  	
   

  	
  Attorneys
  for Defendant Gregory M.

  Casey

  	
   

  
	
   

  	
  Counsel for
  Arthur Andersen LLP

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Barbara
  Moses

  	
   

  	
   

  	
  David A.
  Zisser

  	
   

  
	
   

  	
  Morvillo,
  Abramowitz, Grand, Iason

  	
   

  	
   

  	
  Isaacson,
  Rosenbaum P.C.

  	
   

  
	
   

  	
  &
  Silberberg, P.C.

  	
   

  	
   

  	
  633 17th
  Street, Suite 2200

  	
   

  
	
   

  	
  565 Fifth
  Avenue

  	
   

  	
   

  	
  Denver, CO
  80202

  	
   

  
	
   

  	
  New York, NY
  10017

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Counsel for
  Marc Weisberg

  	
   

  
	
   

  	
  Counsel for
  Afshin Mohebbi

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Ty Cobb

  	
   

  	
   

  	
  Robert N.
  Miller

  	
   

  
	
   

  	
  Daniel F.
  Shea

  	
   

  	
   

  	
  Stephanie E.
  Dunn

  	
   

  
	
   

  	
  Coates Lear

  	
   

  	
   

  	
  Perkins
  Coie, LLP

  	
   

  
	
   

  	
  Hogan &
  Hartson L.L.P.

  	
   

  	
   

  	
  1899 Wynkoop
  St., Ste. 700

  	
   

  
	
   

  	
  1200
  Seventeenth St., Suite 1500

  	
   

  	
   

  	
  Denver, CO
  80202

  	
   

  
	
   

  	
  Denver, CO
  80202

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attorneys
  for Lewis Wilks and

  Stephen Jacobsen

  	
   

  	
   

  	
  Attorneys
  for James A. Smith

  	
   

  
									

 

44

 

EXECUTION COPY

 

	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Mark T.
  Drooks

  	
   

  	
   

  	
  James
  Nesland

  	
   

  
	
   

  	
  Thomas V.
  Reichert

  	
   

  	
   

  	
  Paul
  Schwartz

  	
   

  
	
   

  	
  Bird,
  Marella, Boxer & Wolpert, PC

  	
   

  	
   

  	
  Cooley
  Godward LLP

  	
   

  
	
   

  	
  1875 Century
  Park East, 23rd Floor

  	
   

  	
   

  	
  380
  Interlocken Crescent, Suite 900

  
	
   

  	
  Los Angeles,
  CA 90067-2561

  	
   

  	
   

  	
  Broomfield,
  CO 80021-8023

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Counsel for
  Robin Szeliga

  	
   

  	
   

  	
  Counsel for
  Drake Tempest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Scott B.
  Schreiber

  	
   

  	
   

  	
  Greg Waller

  	
   

  
	
   

  	
  John A.
  Freedman

  	
   

  	
   

  	
  Andrews
  Kurth LLP

  	
   

  
	
   

  	
  Elissa
  Preheim

  	
   

  	
   

  	
  600 Travis
  Street, Suite 4200

  	
   

  
	
   

  	
  Arnold &
  Porter

  	
   

  	
   

  	
  Houston,
  Texas 77002

  
	
   

  	
  555 Twelfth
  Street, NW

  	
   

  	
   

  	
   

  
	
   

  	
  Washington,
  DC 20004-1206

  	
   

  	
   

  	
  Attorneys
  for Defendant Gregory M.

  Casey

  	
   

  
	
   

  	
  Counsel for
  Arthur Andersen LLP

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Barbara
  Moses

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Barbara
  Moses

  	
   

  	
   

  	
  David A.
  Zisser

  	
   

  
	
   

  	
  Morvillo,
  Abramowitz, Grand, Iason

  	
   

  	
   

  	
  Isaacson,
  Rosenbaum P.C.

  	
   

  
	
   

  	
  &
  Silberberg, P.C.

  	
   

  	
   

  	
  633 17th
  Street, Suite 2200

  	
   

  
	
   

  	
  565 Fifth
  Avenue

  	
   

  	
   

  	
  Denver, CO
  80202

  	
   

  
	
   

  	
  New York, NY
  10017

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Counsel for
  Marc Weisberg

  	
   

  
	
   

  	
  Counsel for
  Afshin Mohebbi

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Ty Cobb

  	
   

  	
   

  	
  Robert N.
  Miller

  	
   

  
	
   

  	
  Daniel F.
  Shea

  	
   

  	
   

  	
  Stephanie E.
  Dunn

  	
   

  
	
   

  	
  Coates Lear

  	
   

  	
   

  	
  Perkins
  Coie, LLP

  	
   

  
	
   

  	
  Hogan &
  Hartson L.L.P.

  	
   

  	
   

  	
  1899 Wynkoop
  St., Ste. 700

  	
   

  
	
   

  	
  1200
  Seventeenth St., Suite 1500

  	
   

  	
   

  	
  Denver, CO
  80202

  	
   

  
	
   

  	
  Denver, CO
  80202

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attorneys
  for Lewis Wilks and

  Stephen Jacobsen

  	
   

  	
   

  	
  Attorneys
  for James A. Smith

  	
   

  
									

 

44

 

EXECUTION COPY

 

	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Mark T.
  Drooks

  	
   

  	
   

  	
  James
  Nesland

  	
   

  
	
   

  	
  Thomas V.
  Reichert

  	
   

  	
   

  	
  Paul
  Schwartz

  	
   

  
	
   

  	
  Bird,
  Marella, Boxer & Wolpert, PC

  	
   

  	
   

  	
  Cooley
  Godward LLP

  	
   

  
	
   

  	
  1875 Century
  Park East, 23rd Floor

  	
   

  	
   

  	
  380
  Interlocken Crescent, Suite 900

  
	
   

  	
  Los Angeles,
  CA 90067-2561

  	
   

  	
   

  	
  Broomfield,
  CO 80021-8023

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Counsel for
  Robin Szeliga

  	
   

  	
   

  	
  Counsel for
  Drake Tempest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Scott B.
  Schreiber

  	
   

  	
   

  	
  Greg Waller

  	
   

  
	
   

  	
  John A.
  Freedman

  	
   

  	
   

  	
  Andrews
  Kurth LLP

  	
   

  
	
   

  	
  Elissa
  Preheim

  	
   

  	
   

  	
  600 Travis
  Street, Suite 4200

  	
   

  
	
   

  	
  Arnold &
  Porter

  	
   

  	
   

  	
  Houston,
  Texas 77002

  
	
   

  	
  555 Twelfth
  Street, NW

  	
   

  	
   

  	
   

  
	
   

  	
  Washington,
  DC 20004-1206

  	
   

  	
   

  	
  Attorneys
  for Defendant Gregory M.

  Casey

  	
   

  
	
   

  	
  Counsel for
  Arthur Andersen LLP

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Barbara
  Moses

  	
   

  	
   

  	
  David A.
  Zisser

  	
   

  
	
   

  	
  Morvillo,
  Abramowitz, Grand, Iason

  	
   

  	
   

  	
  Isaacson,
  Rosenbaum P.C.

  	
   

  
	
   

  	
  &
  Silberberg, P.C.

  	
   

  	
   

  	
  633 17th
  Street, Suite 2200

  	
   

  
	
   

  	
  565 Fifth
  Avenue

  	
   

  	
   

  	
  Denver, CO
  80202

  	
   

  
	
   

  	
  New York, NY
  10017

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Counsel for
  Marc Weisberg

  	
   

  
	
   

  	
  Counsel for
  Afshin Mohebbi

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Coates
  Lear

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Ty Cobb

  	
   

  	
   

  	
  Robert N.
  Miller

  	
   

  
	
   

  	
  Daniel F.
  Shea

  	
   

  	
   

  	
  Stephanie E.
  Dunn

  	
   

  
	
   

  	
  Coates Lear

  	
   

  	
   

  	
  Perkins
  Coie, LLP

  	
   

  
	
   

  	
  Hogan &
  Hartson L.L.P.

  	
   

  	
   

  	
  1899 Wynkoop
  St., Ste. 700

  	
   

  
	
   

  	
  1200 Seventeenth
  St., Suite 1500

  	
   

  	
   

  	
  Denver, CO
  80202

  	
   

  
	
   

  	
  Denver, CO
  80202

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attorneys
  for Lewis Wilks and

  Stephen Jacobsen

  	
   

  	
   

  	
  Attorneys
  for James A. Smith

  	
   

  
									

 

44

 

EXECUTION COPY

 

	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ James
  Nesland

  	
   

  
	
   

  	
  Mark T.
  Drooks

  	
   

  	
   

  	
  James
  Nesland

  	
   

  
	
   

  	
  Thomas V.
  Reichert

  	
   

  	
   

  	
  Paul
  Schwartz

  	
   

  
	
   

  	
  Bird,
  Marella, Boxer & Wolpert, PC

  	
   

  	
   

  	
  Cooley
  Godward LLP

  	
   

  
	
   

  	
  1875 Century
  Park East, 23rd Floor

  	
   

  	
   

  	
  380
  Interlocken Crescent, Suite 900

  
	
   

  	
  Los Angeles,
  CA 90067-2561

  	
   

  	
   

  	
  Broomfield,
  CO 80021-8023

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Counsel for
  Robin Szeliga

  	
   

  	
   

  	
  Counsel for
  Drake Tempest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Scott B.
  Schreiber

  	
   

  	
   

  	
  Greg Waller

  	
   

  
	
   

  	
  John A.
  Freedman

  	
   

  	
   

  	
  Andrews
  Kurth LLP

  	
   

  
	
   

  	
  Elissa
  Preheim

  	
   

  	
   

  	
  600 Travis
  Street, Suite 4200

  	
   

  
	
   

  	
  Arnold &
  Porter

  	
   

  	
   

  	
  Houston, Texas
  77002

  
	
   

  	
  555 Twelfth
  Street, NW

  	
   

  	
   

  	
   

  
	
   

  	
  Washington,
  DC 20004-1206

  	
   

  	
   

  	
  Attorneys
  for Defendant Gregory M.

  Casey

  	
   

  
	
   

  	
  Counsel for
  Arthur Andersen LLP

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Barbara
  Moses

  	
   

  	
   

  	
  David A.
  Zisser

  	
   

  
	
   

  	
  Morvillo,
  Abramowitz, Grand, Iason

  	
   

  	
   

  	
  Isaacson,
  Rosenbaum P.C.

  	
   

  
	
   

  	
  &
  Silberberg, P.C.

  	
   

  	
   

  	
  633 17th
  Street, Suite 2200

  	
   

  
	
   

  	
  565 Fifth
  Avenue

  	
   

  	
   

  	
  Denver, CO
  80202

  	
   

  
	
   

  	
  New York, NY
  10017

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Counsel for
  Marc Weisberg

  	
   

  
	
   

  	
  Counsel for
  Afshin Mohebbi

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Ty Cobb

  	
   

  	
   

  	
  Robert N.
  Miller

  	
   

  
	
   

  	
  Daniel F. Shea

  	
   

  	
   

  	
  Stephanie E.
  Dunn

  	
   

  
	
   

  	
  Coates Lear

  	
   

  	
   

  	
  Perkins
  Coie, LLP

  	
   

  
	
   

  	
  Hogan &
  Hartson L.L.P.

  	
   

  	
   

  	
  1899 Wynkoop
  St., Ste. 700

  	
   

  
	
   

  	
  1200
  Seventeenth St., Suite 1500

  	
   

  	
   

  	
  Denver, CO
  80202

  	
   

  
	
   

  	
  Denver, CO
  80202

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attorneys
  for Lewis Wilks and

  Stephen Jacobsen

  	
   

  	
   

  	
  Attorneys
  for James A. Smith

  	
   

  
									

 

44

 

EXECUTION COPY

 

	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Mark T.
  Drooks

  	
   

  	
   

  	
  James
  Nesland

  	
   

  
	
   

  	
  Thomas V.
  Reichert

  	
   

  	
   

  	
  Paul
  Schwartz

  	
   

  
	
   

  	
  Bird,
  Marella, Boxer & Wolpert, PC

  	
   

  	
   

  	
  Cooley
  Godward LLP

  	
   

  
	
   

  	
  1875 Century
  Park East, 23rd Floor

  	
   

  	
   

  	
  380
  Interlocken Crescent, Suite 900

  
	
   

  	
  Los Angeles,
  CA 90067-2561

  	
   

  	
   

  	
  Broomfield,
  CO 80021-8023

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Counsel for
  Robin Szeliga

  	
   

  	
   

  	
  Counsel for
  Drake Tempest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Greg
  Waller

  	
   

  
	
   

  	
  Scott B.
  Schreiber

  	
   

  	
   

  	
  Greg Waller

  	
   

  
	
   

  	
  John A.
  Freedman

  	
   

  	
   

  	
  Andrews
  Kurth LLP

  	
   

  
	
   

  	
  Elissa
  Preheim

  	
   

  	
   

  	
  600 Travis
  Street, Suite 4200

  	
   

  
	
   

  	
  Arnold &
  Porter

  	
   

  	
   

  	
  Houston,
  Texas 77002

  	
   

  
	
   

  	
  555 Twelfth
  Street, NW

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Washington,
  DC 20004-1206

  	
   

  	
   

  	
  Attorneys
  for Gregory M. Casey

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Counsel for
  Arthur Andersen LLP

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Barbara
  Moses

  	
   

  	
   

  	
  David A.
  Zisser

  	
   

  
	
   

  	
  Morvillo,
  Abramowitz, Grand, Iason

  	
   

  	
   

  	
  Isaacson,
  Rosenbaum P.C.

  	
   

  
	
   

  	
  &
  Silberberg, P.C.

  	
   

  	
   

  	
  633 17th
  Street, Suite 2200

  	
   

  
	
   

  	
  565 Fifth
  Avenue

  	
   

  	
   

  	
  Denver, CO
  80202

  	
   

  
	
   

  	
  New York, NY
  10017

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Counsel for
  Marc Weisberg

  	
   

  
	
   

  	
  Counsel for
  Afshin Mohebbi

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Ty Cobb

  	
   

  	
   

  	
  Robert N.
  Miller

  	
   

  
	
   

  	
  Daniel F.
  Shea

  	
   

  	
   

  	
  Stephanie E.
  Dunn

  	
   

  
	
   

  	
  Coates Lear

  	
   

  	
   

  	
  Perkins
  Coie, LLP

  	
   

  
	
   

  	
  Hogan &
  Hartson L.L.P.

  	
   

  	
   

  	
  1899 Wynkoop
  St., Ste. 700

  	
   

  
	
   

  	
  1200
  Seventeenth St., Suite 1500

  	
   

  	
   

  	
  Denver, CO
  80202

  	
   

  
	
   

  	
  Denver, CO
  80202

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attorneys
  for Lewis Wilks and

  Stephen Jacobsen

  	
   

  	
   

  	
  Attorneys
  for James A. Smith

  	
   

  

 

44

 

EXECUTION COPY

 

	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Mark T.
  Drooks

  	
   

  	
   

  	
  James
  Nesland

  	
   

  
	
   

  	
  Thomas V.
  Reichert

  	
   

  	
   

  	
  Paul
  Schwartz

  	
   

  
	
   

  	
  Bird,
  Marella, Boxer & Wolpert, PC

  	
   

  	
   

  	
  Cooley
  Godward LLP

  	
   

  
	
   

  	
  1875 Century
  Park East, 23rd Floor

  	
   

  	
   

  	
  380
  Interlocken Crescent, Suite 900

  
	
   

  	
  Los Angeles,
  CA 90067-2561

  	
   

  	
   

  	
  Broomfield,
  CO 80021-8023

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Counsel for
  Robin Szeliga

  	
   

  	
   

  	
  Counsel for
  Drake Tempest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Scott B.
  Schreiber

  	
   

  	
   

  	
  Greg Waller

  	
   

  
	
   

  	
  John A.
  Freedman

  	
   

  	
   

  	
  Andrews
  Kurth LLP

  	
   

  
	
   

  	
  Elissa
  Preheim

  	
   

  	
   

  	
  600 Travis
  Street, Suite 4200

  	
   

  
	
   

  	
  Arnold &
  Porter

  	
   

  	
   

  	
  Houston,
  Texas 77002

  
	
   

  	
  555 Twelfth
  Street, NW

  	
   

  	
   

  	
   

  
	
   

  	
  Washington,
  DC 20004-1206

  	
   

  	
   

  	
  Attorneys
  for Defendant Gregory M.

  Casey

  	
   

  
	
   

  	
  Counsel for
  Arthur Andersen LLP

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ David A.
  Zisser

  	
   

  
	
   

  	
  Barbara
  Moses

  	
   

  	
   

  	
  David A.
  Zisser

  	
   

  
	
   

  	
  Morvillo,
  Abramowitz, Grand, Iason

  	
   

  	
   

  	
  Isaacson,
  Rosenbaum P.C.

  	
   

  
	
   

  	
  &
  Silberberg, P.C.

  	
   

  	
   

  	
  633 17th
  Street, Suite 2200

  	
   

  
	
   

  	
  565 Fifth
  Avenue

  	
   

  	
   

  	
  Denver, CO
  80202

  	
   

  
	
   

  	
  New York, NY
  10017

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Counsel for
  Marc Weisberg

  	
   

  
	
   

  	
  Counsel for
  Afshin Mohebbi

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Ty Cobb

  	
   

  	
   

  	
  Robert N.
  Miller

  	
   

  
	
   

  	
  Daniel F.
  Shea

  	
   

  	
   

  	
  Stephanie E.
  Dunn

  	
   

  
	
   

  	
  Coates Lear

  	
   

  	
   

  	
  Perkins
  Coie, LLP

  	
   

  
	
   

  	
  Hogan &
  Hartson L.L.P.

  	
   

  	
   

  	
  1899 Wynkoop
  St., Ste. 700

  	
   

  
	
   

  	
  1200
  Seventeenth St., Suite 1500

  	
   

  	
   

  	
  Denver, CO
  80202

  	
   

  
	
   

  	
  Denver, CO
  80202

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attorneys
  for Lewis Wilks and

  Stephen Jacobsen

  	
   

  	
   

  	
  Attorneys for
  James A. Smith

  	
   

  
									

 

44

 

EXECUTION COPY

 

	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Mark T.
  Drooks

  	
   

  	
   

  	
  James
  Nesland

  	
   

  
	
   

  	
  Thomas V.
  Reichert

  	
   

  	
   

  	
  Paul
  Schwartz

  	
   

  
	
   

  	
  Bird,
  Marella, Boxer & Wolpert, PC

  	
   

  	
   

  	
  Cooley
  Godward LLP

  	
   

  
	
   

  	
  1875 Century
  Park East, 23rd Floor

  	
   

  	
   

  	
  380
  Interlocken Crescent, Suite 900

  
	
   

  	
  Los Angeles,
  CA 90067-2561

  	
   

  	
   

  	
  Broomfield,
  CO 80021-8023

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Counsel for
  Robin Szeliga

  	
   

  	
   

  	
  Counsel for
  Drake Tempest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Scott B.
  Schreiber

  	
   

  	
   

  	
  Greg Waller

  	
   

  
	
   

  	
  John A.
  Freedman

  	
   

  	
   

  	
  Andrews
  Kurth LLP

  	
   

  
	
   

  	
  Elissa
  Preheim

  	
   

  	
   

  	
  600 Travis
  Street, Suite 4200

  	
   

  
	
   

  	
  Arnold &
  Porter

  	
   

  	
   

  	
  Houston,
  Texas 77002

  
	
   

  	
  555 Twelfth
  Street, NW

  	
   

  	
   

  	
   

  
	
   

  	
  Washington,
  DC 20004-1206

  	
   

  	
   

  	
  Attorneys
  for Defendant Gregory M.

  Casey

  	
   

  
	
   

  	
  Counsel for
  Arthur Andersen LLP

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Barbara
  Moses

  	
   

  	
   

  	
  David A.
  Zisser

  	
   

  
	
   

  	
  Morvillo,
  Abramowitz, Grand, Iason

  	
   

  	
   

  	
  Isaacson,
  Rosenbaum P.C.

  	
   

  
	
   

  	
  &
  Silberberg, P.C.

  	
   

  	
   

  	
  633 17th
  Street, Suite 2200

  	
   

  
	
   

  	
  565 Fifth
  Avenue

  	
   

  	
   

  	
  Denver, CO
  80202

  	
   

  
	
   

  	
  New York, NY
  10017

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Counsel for
  Marc Weisberg

  	
   

  
	
   

  	
  Counsel for
  Afshin Mohebbi

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Stephanie
  E. Dunn

  	
   

  
	
   

  	
  Ty Cobb

  	
   

  	
   

  	
  Robert N.
  Miller

  	
   

  
	
   

  	
  Daniel F.
  Shea

  	
   

  	
   

  	
  Stephanie E.
  Dunn

  	
   

  
	
   

  	
  Coates Lear

  	
   

  	
   

  	
  Perkins
  Coie, LLP

  	
   

  
	
   

  	
  Hogan &
  Hartson L.L.P.

  	
   

  	
   

  	
  1899 Wynkoop
  St., Ste. 700

  	
   

  
	
   

  	
  1200
  Seventeenth St., Suite 1500

  	
   

  	
   

  	
  Denver, CO
  80202

  	
   

  
	
   

  	
  Denver, CO
  80202

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attorneys
  for Lewis Wilks and

  Stephen Jacobsen

  	
   

  	
   

  	
  Attorneys
  for James A. Smith

  	
   

  
									

 

44

 

DECLARATION OF
SERVICE BY MAIL

 

I, the undersigned, declare:

 

1.             That
declarant is and was, at all times herein mentioned, a citizen of the United
States and a resident of the County of San Diego, over the age of 18 years, and
not a party to or interested party in the within action; that declarant’s business
address is 655 West Broadway, Suite 1900, San Diego, California 92101.

 

2.             That
on November 23, 2005, declarant served the STIPULATION
OF PARTIAL SETTLEMENT by depositing a true copy thereof in a United
States mailbox at San Diego, California in a sealed envelope with postage
thereon fully prepaid and addressed to the parties listed on the attached
Service List.

 

3.             That
there is a regular communication by mail between the place of mailing and the
places so addressed.

 

I declare under penalty of perjury that the
foregoing is true and correct. Executed this 23rd day of November, 2005, at San
Diego, California.

 

 

	
   

  	
  /s/ Adriana
  Del Carmen

  	
   

  
	
   

  	
  ADRIANA DEL
  CARMEN

  	
   

  

 

 

QWEST (LEAD)

Service List - 11/22/2005
(201-067)

Page 1 of 4

 

Defendant(s)

 

	
  Scott B. Schreiber

  	
  Timothy Atkeson

  
	
  John A. Freeman

  	
  Joshua D. Franklin

  
	
  Kwame Clement

  	
  Arnold & Porter LLP

  
	
  Arnold & Porter

  	
  370 Seventeenth Street, Suite 4500

  
	
  555 Twelfth Street, N.W.

  	
  Denver, CO 80202-1370

  
	
  Washington, DC 20004

  	
  303/863-1000

  
	
  202/942-5000

  	
  303/832-0428(Fax)

  
	
  202/942-5999(Fax)

  	
   

  
	
   

  	
   

  
	
  Mark T. Drooks

  	
  David Boies

  
	
  Thomas V. Reichert

  	
  Boies, Schiller & Flexner, LLP

  
	
  Bird, Marella, Boxer & Wolpert,
  P.C.

  	
  333 Main Street

  
	
  1875 Century Park East, 23rd Floor

  	
  Armonk, NY 10504

  
	
  Los Angeles, CA 90067-2561

  	
  914/749-8200

  
	
  310/201-2100

  	
  914/749-8300(Fax)

  
	
  310/201-2110(Fax)

  	
   

  
	
   

  	
   

  
	
  Alfred Levitt

  	
  David W. Shapiro

  
	
  Jonathan D. Schiller

  	
  John F. Cove, Jr.

  
	
  David Boyd

  	
  Boies, Schiller & Flexner, LLP

  
	
  Boies, Schiller & Flexner, LLP

  	
  1999 Harrison Street

  
	
  5301 Wisconsin Avenue, N.W., Suite 800

  	
  Oakland, CA 94612

  
	
  Washington, DC 20015-2015

  	
  510/874-1005

  
	
  202/237-2727

  	
  510/874-1460(Fax)

  
	
  202/237-6131(Fax)

  	
   

  
	
   

  	
   

  
	
  David Meister

  	
  James E. Nesland

  
	
  James Miller

  	
  Paul H. Schwartz

  
	
  David Cook

  	
  Jeff Smith

  
	
  Clifford Chance US LLP

  	
  Cooley Godward, LLP

  
	
  31 West 52nd Street

  	
  380 Interlocken Crescent, Suite 900

  
	
  New York, NY 10019

  	
  Broomfield, CO 80021-8023

  
	
  212/878-8000

  	
  720/566-4000

  
	
  212/878-8375(Fax)

  	
  720/566-4099(Fax)

  

 

1

 

QWEST (LEAD)

Service List - 11/22/2005
(201-067)

Page 2 of 4

 

	
  Holly Stein Sollod

  	
  Bruce F. Black

  
	
  Jennifer H. Weddle

  	
  Michael J. Hofmann

  
	
  Holland & Hart

  	
  Holme Roberts & Owen LLP

  
	
  555 Seventeenth Street, Suite 3200

  	
  1700 Lincoln Street, Suite 4100

  
	
  Denver, CO 80202

  	
  Denver, CO 80203

  
	
  302/295-8000

  	
  303/861-7000

  
	
  303/295-8261(Fax)

  	
  303/866-0200(Fax)

  
	
   

  	
   

  
	
  Mark C. Hansen

  	
  Walter W. Garnsey, Jr.

  
	
  Rebecca Beynon

  	
  Kelly Haglund Garnsey & Kahn LLC

  
	
  David Schwarz

  	
  1441 Eighteenth Street, Suite 300

  
	
  Kellogg, Huber, Hansen, Todd,
  Evans & Figel,

  	
  Denver, CO 80202-1255

  
	
  P.L.L.C.

  	
  303/296-9412

  
	
  1615 M Street, N.W., Suite 400

  	
  303/293-8705(Fax)

  
	
  Washington, DC 20036

  	
   

  
	
  202/326-7900

  	
   

  
	
  202/326-7999(Fax)

  	
   

  
	
   

  	
   

  
	
  Barbara Moses

  	
  Eric S. Goldstein

  
	
  Haley Fabricant

  	
  Roberta A. Kaplan

  
	
  Morovillo, Abramowitz, Grand,
  Iason & Silberberg

  	
  Marguertie S. Dougherty

  
	
  565 Fifth Avenue

  	
  Paul, Weiss, Rifkind, Wharton &
  Garrison LLP

  
	
  New York, NY 10017

  	
  1285 Avenue of the Americas

  
	
  212/856-9600

  	
  New York, NY 10019-6064

  
	
  212/856-9494(Fax)

  	
  212/373-3000

  
	
   

  	
  212/757-3990(Fax)

  
	
   

  	
   

  
	
  Robert N. Miller

  	
  Frederick J. Baumann

  
	
  Stephanie E. Dunn

  	
  James M. Lyons

  
	
  Perkins Coie LLP

  	
  Rothgerber Johnson & Lyons LLP

  
	
  1899 Wynkoop Street, Suite 700

  	
  1200 17th Street, Suite 3000

  
	
  Denver, CO 80202

  	
  Denver, CO 80202-5839

  
	
  303/291-2300

  	
  303/623-9000

  
	
  303/291-2400(Fax)

  	
  303/623-9222(Fax)

  

 

2

 

QWEST (LEAD)

Service List - 11/22/2005
(201-067)

Page 3 of 4

 

	
  Terence C. Gill

  	
  Neil Peck

  
	
  Marcy M. Heronimus

  	
  James D. Kilroy

  
	
  Sherman & Howard L.L.C.

  	
  Snell & Wilmer, LLP

  
	
  633 Seventeenth Street, Suite 3000

  	
  One Tabor Center, SUite 1900

  
	
  Denver, CO 80202

  	
  1200 Seventeenth Street

  
	
  303/297-2900

  	
  Denver, CO 80202

  
	
  303/298-0940(Fax)

  	
  303/634-2000

  
	
   

  	
  303/634-2020(Fax)

  
	
   

  	
   

  
	
  Charles A. Stillman

  	
   

  
	
  Diana Nehro

  	
   

  
	
  Stillman & Friedman, P.C.

  	
   

  
	
  425 Park Avenue

  	
   

  
	
  New York, NY 10022

  	
   

  
	
  212/223-0200

  	
   

  
	
  212/223-1942(Fax)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Plaintiff(s)

  	
   

  
	
   

  	
   

  
	
  Robert J. Dyer III

  	
  Michelle M. McCarron

  
	
  Kip B. Shuman

  	
  Lerach Coughlin Stoia Geller
  Rudman &

  
	
  Jeffrey A. Berens

  	
  Robbins LLP

  
	
  Dyer & Shuman, LLP

  	
  9601 Wilshire Blvd., Suite 510

  
	
  801 East 17th Avenue

  	
  Los Angeles, CA 90210

  
	
  Denver, CO 80218-1417

  	
  310/859-3100

  
	
  303/861-3003

  	
  310/278-2148(Fax)

  
	
  303/830-6920(Fax)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  William S. Lerach

  	
   

  
	
  Spencer A. Burkholz

  	
   

  
	
  Thomas E. Egler

  	
   

  
	
  Lerach Coughlin Stoia Geller
  Rudman &

  	
   

  
	
  Robbins LLP

  	
   

  
	
  655 West Broadway, Suite 1900

  	
   

  
	
  San Diego, CA 92101

  	
   

  
	
  619/231-1058

  	
   

  
	
  619/231-7423(Fax)

  	
   

  

 

3

 

QWEST (LEAD)

Service List - 11/22/2005
(201-067)

Page 4 of 4

 

	
  Intervenor Plaintiff

  	
   

  
	
   

  	
   

  
	
  William J. Leone

  	
   

  
	
  District of Colorado

  	
   

  
	
  United States Attorney

  	
   

  
	
  1225 17th Street, Suite 700

  	
   

  
	
  Denver, CO 80202

  	
   

  
	
  303/454-0100

  	
   

  
	
  303/454-0400(Fax)

  	
   

  

 

4

 

EXHIBIT A

 

 

IN THE
UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

 

Civil Action No. 01-cv-1451-REB-CBS

(Consolidated with Civil Action Nos. 01-cv-1472-REB-CBS, 01-cv-1527-REB-CBS, 01-cv-1616-REB-CBS,
01-cv-1799-REB-CBS, 01-cv-1930-REB-CBS, 01-cv-2083-REB-CBS, 02-cv-0333-REB-CBS,
02-cv-0374-REB-CBS, 02-cv-0507-REB-CBS, 02-cv-0658-REB-CBS, 02-cv-755-REB-CBS,
02-cv-798-REB-CBS and 04-cv-0238-REB-CBS)

 

In re QWEST COMMUNICATIONS INTERNATIONAL, INC. SECURITIES LITIGATION

 

[PROPOSED]
ORDER PRELIMINARILY APPROVING PARTIAL SETTLEMENT

AND APPROVING FORM AND MANNER OF NOTICE

 

EXHIBIT A

 

 

WHEREAS, Lead Plaintiffs (on behalf of
themselves and the Class Members) in the above-captioned consolidated
litigation (the “Litigation”), have entered into a Stipulation of Partial
Settlement dated as of November 21, 2005 (the “Stipulation”) with Settling
Defendants that is subject to review and approval under Rule 23 of the
Federal Rules of Civil Procedure (“Fed. R. Civ. P.”)  and that, together with the exhibits thereto,
sets forth the terms and conditions for the proposed partial settlement of the
Litigation and the dismissal of the Litigation against the Settling Defendants
(as defined in the Stipulation) with prejudice; and the Court having read and
considered the Stipulation and the accompanying documents; and the parties to
the Stipulation having consented to entry of this Order; and all capitalized
terms used herein having the same meanings set forth in the Stipulation;

 

NOW, THEREFORE, IT IS HEREBY ORDERED:

 

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

 

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

 

(1)           Settling Defendants
expressly reserve the right to contest class certification in the event the
settlement does not become effective for any reason.  In addition, this paragraph (and paragraph 1(c) below)
are without prejudice to the rights of Non-Settling Defendants to contest class
certification or Lead Plaintiffs’ status as adequate class representatives.

 

1

 

excluded
party. Also excluded from the Class are those Persons who request exclusion
from the Class in such form and manner, and within such time, as the Court
shall prescribe.  Also excluded from the
Class is any current or former officer, director, employee, or agent of Qwest
who has been sued by the United States Securities and Exchange Commission in
connection with such Person’s affiliation with or conduct related to Qwest.

 

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

 

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

 

2.             The terms of the
settlement as set forth in the Stipulation, are preliminarily approved.  A hearing (the “Settlement Hearing”),
pursuant to Fed. R. Civ. P. 23(e), shall be held before the Court on
                        ,
2006, at        ..m. in Courtroom
     of the United States Courthouse, 901 19th Street, Room A-105,
Denver, Colorado (or such adjourned time or times as the Court may set without
further notice to the Class):

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

4

 

the Notice and Proof of Claim
and Release to such beneficial owners will be reimbursed upon submission of
appropriate documentation.

 

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

 

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

 

5

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

14.           The Court reserves
the right to approve the settlement with such modifications as may be agreed to
by the Settling Parties, if appropriate, without further notice to Class Members,
and retains jurisdiction to consider all further applications arising out of or
connected with the proposed settlement, as well as any applications for awards
of fees and expenses to counsel to the Class.

 

7

 

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

 

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

 

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

 

 

	
  DATED:

  	
   

  	
   

  	
   

  
	
   

  	
  THE HONORABLE ROBERT E.
  BLACKBURN

  UNITED STATES DISTRICT JUDGE

  

 

8

 

EXHIBIT A-1

 

 

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

 

Civil Action No. 01-cv-1451-REB-CBS

(Consolidated with Civil Action Nos. 01-cv-1472-REB-CBS, 01-cv-1527-REB-CBS,
01-cv-1616-REB-CBS, 01-cv-1799-REB-CBS, 01-cv-1930-REB-CBS, 01-cv-2083-REB-CBS,
02-cv-0333-REB-CBS, 02-cv-0374-REB-CBS, 02-cv-0507-REB-CBS, 02-cv-0658-REB-CBS,
02-cv-755-REB-CBS, 02-cv-798-REB-CBS and 04-cv-0238-REB-CBS)

 

In re QWEST COMMUNICATIONS
INTERNATIONAL, INC. SECURITIES LITIGATION

 

NOTICE OF PENDENCY AND PARTIAL SETTLEMENT OF
CLASS ACTION

EXHIBIT A-1

 

 

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

 

PLEASE READ THIS NOTICE CAREFULLY AND IN ITS
ENTIRETY.  YOUR RIGHTS MAY BE AFFECTED BY
PROCEEDINGS IN THIS ACTION.  PLEASE NOTE
THAT IF YOU ARE A MEMBER OF THE CLASS YOU MAY BE ENTITLED TO SHARE IN THE
PROCEEDS OF THE SETTLEMENT FUND DESCRIBED IN THIS NOTICE.  TO CLAIM YOUR SHARE OF THIS FUND, YOU MUST
SUBMIT A VALID PROOF OF CLAIM AND RELEASE POSTMARKED ON OR BEFORE                           ,
2006.

 

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

 

The partial settlement creates a fund in the
principal amount of $400,000,000.00 in cash (the “Settlement Fund”).  The Settlement Fund may be increased under
certain circumstances described in this Notice and in the Stipulation of
Partial Settlement dated as of November 21, 2005 (“Stipulation”).  Based on an estimate of the number of shares,

 

1

 

bonds,
and options entitled to participate in the settlement and the anticipated number
of claims to be submitted by Class Member(s) (defined below), the average
distribution from the Settlement Fund would be approximately $0.19 per share
before deduction of Court-approved fees and expenses (see the Plan of
Allocation below for a more detailed description of how the Settlement Fund
will be allocated to the different types of Qwest publicly traded
securities).  For all types of Qwest publicly
traded securities, your actual recovery from the Settlement Fund will depend on
a number of variables including the number of claimants and the types and
amounts of securities they purchased, the type and number of Qwest publicly
traded securities you purchased, the expense of administrating the claims
process and the timing of your purchases and sales, if any (see Plan of
Allocation below).

 

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

 

2

 

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

 

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

 

Lead Counsel have not received any payment
for their services in conducting the Litigation on behalf of the members of the
Class, nor have they been reimbursed for their

 

3

 

out-of-pocket
expenditures.  If the settlement is
approved by the Court, Lead Counsel will apply to the Court (1) for attorneys
fees of up to 24% of the settlement proceeds, and reimbursement of expenses
incurred not to exceed $5.2 million, and (2) compensation of up to $40,000 for
each of the Lead Plaintiffs to reimburse them for their expenses (including
lost wages) incurred in prosecuting the Litigation, all to be paid from the
Settlement Fund.  If the amounts
requested by Lead Counsel are approved by the Court, the average cost would be
approximately $0.05 per share.  The
average cost per share could vary depending on the number of shares for which
valid claims are submitted.

 

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

 

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

 

NOTICE OF SETTLEMENT
HEARING ON PROPOSED SETTLEMENT

 

A settlement hearing will be held on                           ,
2006, at              .m.,
before the Honorable Robert E. Blackburn, United States District Judge,
District of Colorado, United States Courthouse, 901 19th Street, Room A-105,
Denver, Colorado (the “Settlement Hearing”). 
The purpose of the Settlement Hearing will be to determine:
(1) whether the settlement consisting of $400,000,000 in cash (plus any
accrued interest) should be approved as fair, reasonable and adequate to
members of the Class; (2) whether the proposed plan to distribute the
settlement proceeds (the “Plan of Allocation”) is fair,

 

4

 

reasonable,
and adequate; (3) whether the application by Lead Counsel for an award of
attorneys’ fees and reimbursement of expenses and the Lead Plaintiffs’ request
for reimbursement of their expenses (including lost wages) should be approved;
and (4) whether the Litigation should be dismissed with prejudice and the
Released Persons (defined below) released from all Released Claims (defined
below) against them.  The Court may
adjourn or continue the Settlement Hearing or modify any dates set forth herein
without further notice to the Class.

 

I.              DEFINITIONS USED IN THIS NOTICE

 

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

 

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

 

5

 

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.

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14.           “Non-Settling
Defendant” means Joseph P. Nacchio (“Nacchio”) and Robert S. Woodruff
(“Woodruff’), or either of them. Nacchio and Woodruff are expressly excluded

 

7

 

from the definitions
of Qwest, Related Parties, Released Persons, Settling Defendants, and Settling
Parties.

 

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

 

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

 

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

 

8

 

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.

 

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

 

9

 

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

 

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

 

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

 

10

 

Securities and
Exchange Commission that are also made available for distribution to the Class
pursuant to the Plan of Allocation.

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

12

 

II.                                     THE
LITIGATION

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

III.                                 CLAIMS
OF THE LEAD PLAINTIFFS AND BENEFITS OF SETTLEMENT

 

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

 

14

 

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

 

IV.                                DEFENDANTS’
STATEMENT AND DENIALS OF WRONGDOING AND LIABILITY

 

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

 

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

 

15

 

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 the Stipulation.

 

V.                                    TERMS
OF THE PROPOSED SETTLEMENT

 

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

 

VI.                                PLAN
OF ALLOCATION

 

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

 

16

 

below.  The Plan of Allocation provides that you will
be eligible to participate in the distribution of the Net Settlement Fund only
if you have a net loss on all transactions in Qwest publicly traded securities,
notes/debt or options.

 

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

 

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

 

Qwest Common Stock

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

19

 

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

 

a)                                      sold
prior to February 13, 2002, the claim per share is $0 per share;

 

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

 

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

 

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

 

b)                                     sold
from June 26, 2002, through December 31, 2002, the claim per share is the
lesser of:

 

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

 

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

 

iii)                                   $0.10
per share;

 

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

 

PUBLICLY
TRADED QWEST NOTES/DEBT

 

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

 

Qwest Capital
Funding Note 7.25% due February 15, 2011

 

Qwest Capital
Funding Note 7.75% due February 15, 2031

 

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

 

20

 

Qwest Capital
Funding Note 5.875% due August 3, 2004

 

Qwest Capital
Funding Note 7.0% due August 3, 2009

 

Qwest Capital
Funding Note 7.625% due August 3, 2021

 

July Exchange Notes

 

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

 

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

 

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

 

October Exchange Notes

 

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

 

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

 

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

 

All Other Publicly Traded
Notes/Debt

 

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

 

21

 

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

 

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

 

QWEST OPTIONS

 

Call Options

 

1.                                       For
Call Options on Qwest common stock that were purchased
during the period May 24, 1999 through July 28, 2002, and,

 

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

 

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

 

2.                                       For
Call Options on Qwest common stock that were written
during the period May 24, 1999 through July 28, 2002, the claim
per Call Option is $0.

 

Put Options

 

1.                                       For
Put Options on Qwest common stock that were written
during the period May 24, 1999 through July 28, 2002, and

 

22

 

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

 

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

 

2.                                       For
Put Options on Qwest common stock that were purchased
during the period May 24, 1999 through July 28, 2002, the claim
per Put Option is $0.

 

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

 

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

 

23

 

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

 

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

 

VII.                            PARTICIPATION
IN THE CLASS

 

If you fall within the definition of the
Class, you are a Class Member unless you elect to be excluded from the Class (see Section VIII below).  If you do not request to be excluded from the
Class in the manner specified in Section VIII below, you will be bound by any
Judgment entered with respect to the settlement in the Litigation whether or
not you submit a Proof of Claim and Release form.

 

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

 

24

 

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

 

VIII.                        EXCLUSION
FROM THE CLASS

 

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

 

Qwest Claims Administrator

c/o Gilardi & Co. LLC

P.O. Box 5100

Larkspur, California 94977-5100

 

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

 

First, list your name, address, and telephone
number.

 

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

 

25

 

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

 

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

 

YOUR EXCLUSION
REQUEST MUST BE POSTMARKED ON OR BEFORE                     ,
2006, AND, IN ORDER TO BE VALID, MUST CONTAIN ALL OF THE FOREGOING
INFORMATION.  IF YOU SUBMIT A VALID
TIMELY, AND COMPLETE REQUEST FOR EXCLUSION, YOU SHALL HAVE NO RIGHTS UNDER THE
SETTLEMENT, SHALL NOT SHARE IN THE DISTRIBUTION OF THE NET SETTLEMENT FUND, AND
SHALL NOT BE BOUND BY THE STIPULATION OR THE FINAL JUDGMENT.  IF YOUR EXCLUSION REQUEST FAILS TO CONTAIN
ALL THE FOREGOING INFORMATION, IT WILL BE INVALID AND YOU WILL BE BOUND BY THE
TERMS AND CONDITIONS OF THE STIPULATION AND JUDGMENT.

 

IX.                                DISMISSAL
AND RELEASES

 

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

 

26

 

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

 

X.                                    APPLICATION
FOR FEES AND EXPENSES

 

At the Settlement Hearing, Lead Counsel will
request the Court to award attorneys’ fees of up to 24% of the Settlement Fund,
plus reimbursement of expenses, not to exceed $5.2 million, which were incurred
in connection with the Litigation, plus interest thereon.  Lead Counsel will not apply for an award of
attorneys’ fees and/or expenses based on the monies from the SEC Distribution
Fund.  In addition, certain of the Lead
Plaintiffs in the Litigation may seek compensation of up to $40,000 each for
their expenses incurred (including lost wages) in prosecuting the
Litigation.  This compensation will be
paid from the Settlement Fund and will not be paid from the SEC Distribution
Fund.  Class Members are not personally
liable for any such fees or expenses.  To
date, Lead Counsel have not received any payment for their services in
conducting the Litigation nor have counsel been reimbursed for all of their
out-of-pocket expenses incurred.

 

XI.                                CONDITIONS
FOR SETTLEMENT

 

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

 

27

 

null
and void, and the parties to the Stipulation will be restored to their
respective positions in the Litigation prior to the settlement.

 

XII.                            THE
RIGHT TO BE HEARD AT THE SETTLEMENT HEARING

 

Any Class Member who has not validly, timely,
and completely requested to be excluded from the Class, and who objects to any
aspect of the settlement, the Plan of Allocation, Lead Counsel’s application
for attorneys’ fees and expenses, or the Lead Plaintiffs’ request for
reimbursement may appear and be heard at the Settlement Hearing.  Any such person must file a written notice of
objection, filed with the Clerk of the Court on or before                     ,
2006, and served by hand or first class mail on each of the following:

 

CLERK OF THE COURT

DISTRICT OF COLORADO

United States Courthouse

901 19th Street, Room A-105

Denver, CO  80294

 

and

 

LERACH COUGHLIN STOIA GELLER
  RUDMAN & ROBBINS LLP

KEITH F. PARK

655 West Broadway, Suite 1900

San Diego, CA  92101-3301

 

Lead Counsel for Plaintiffs

 

BOIES,
SCHILLER & FLEXNER LLP

ALFRED LEVITT

5301 Wisconsin Ave., N.W., Suite 800

Washington, DC  20015

 

Counsel for Settling Defendant Qwest

 

28

 

ARNOLD &
PORTER LLP

JOHN FREEDMAN

555 Twelfth Street, N.W.

Washington, DC  20004-1202

 

Counsel for Defendant Arthur Andersen LLP

 

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

 

XIII.                        SPECIAL
NOTICE TO NOMINEES

 

If you, as nominee for a beneficial owner,
hold or held any Qwest publicly traded securities purchased or acquired during
the Class Period, then, within ten (10) days after you receive this Notice, you
must either: (1) request additional copies of the Notice and the Proof of Claim
form, and, within ten (10) days after the receipt of the additional copies of
the Notice and the Proof of Claim form, send them by first class mail to all
such beneficial owners and send a statement to the Claims Administrator
confirming that the mailings were made as directed; or (2) provide a list
of the names and addresses of such beneficial owners to the Qwest Claims
Administrator:

 

29

 

Qwest Claims Administrator

c/o Gilardi & Co. LLC

P.O. Box 5100

Larkspur, California 94977-5100

 

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

 

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

 

XIV.                       EXAMINATION
OF PAPERS

 

This Notice is a summary and does not describe
all of the details of the Stipulation. 
For full details of the matters discussed in this Notice, you may review
the pleadings and Stipulation filed with the Court, which may be inspected
during business hours, at the office of the Clerk of the Court, United States
District Court, District of Colorado, United States Courthouse, 901 19th
Street, Room A-105, Denver, Colorado. 
Further, the Stipulation, its exhibits, and additional copies of this
Notice and the Proof of Claim and Release are available on the Internet at
www.gilardi.com.

 

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

 

30

 

LERACH COUGHLIN STOIA GELLER
  RUDMAN & ROBBINS LLP

KEITH F. PARK

655 West Broadway, Suite 1900

San Diego, CA  92101-3301

 

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

 

	
  DATED:

  	
   

  	
  , 2005

  	
  BY ORDER OF THE COURT

  
	
   

  	
  UNITED STATES DISTRICT COURT

  
	
   

  	
  DISTRICT OF COLORADO

  

 

31

 

EXHIBIT A-2

 

 

IN THE UNITED STATES DISTRICT
COURT

FOR THE DISTRICT OF COLORADO

 

Civil Action No. 01-cv-1451-REB-CBS

(Consolidated with Civil Action Nos. 01-cv-1472-REB-CBS, 01-cv-1527-REB-CBS, 01-cv-1616-REB-CBS,
01-cv-1799-REB-CBS, 01-cv-1930-REB-CBS, 01-cv-2083-REB-CBS, 02-cv-0333-REB-CBS,
02-cv-0374-REB-CBS, 02-cv-0507-REB-CBS, 02-cv-0658-REB-CBS, 02-cv-755-REB-CBS,
02-cv-798-REB-CBS and 04-cv-0238-REB-CBS)

 

In re QWEST COMMUNICATIONS INTERNATIONAL,
INC. SECURITIES LITIGATION

 

PROOF OF CLAIM AND RELEASE

 

EXHIBIT A-2

 

 

I.                                         GENERAL INSTRUCTIONS

 

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

 

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

 

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

 

Qwest Claims Administrator

c/o Gilardi & Co. LLC

P.O. Box 5100

Larkspur, California  94977-5100

 

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

 

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

 

1

 

II.                                     DEFINITIONS

 

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

 

III.                                 IDENTIFICATION OF CLAIMANT

 

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

 

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

 

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

 

2

 

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

 

IV.                                IDENTIFICATION OF TRANSACTION(S)

 

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

 

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

 

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

 

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

 

3

 

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

 

4

 

UNITED STATES DISTRICT COURT

 

DISTRICT OF COLORADO

 

In re Qwest
Communications International, Inc. Securities Litigation

Civil Action No. 01-cv-1451-REB-CBS

 

PROOF OF CLAIM

 

Must be Postmarked No Later
Than:

                          ,
2006

 

Please Type or Print

 

PART I:                                                     CLAIMANT
IDENTIFICATION

 

	
   

  	
   

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Street Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  City

  	
   

  	
  State or Province

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Zip Code or Postal Code

  	
   

  	
  Country

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Individual

  
	
  Social Security Number or

  	
   

  	
   

  	
   

  	
   

  
	
  Taxpayer Identification Number

  	
   

  	
   

  	
  Corporation/Other

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Area Code

  	
   

  	
  Telephone Number (work)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Area Code

  	
   

  	
  Telephone Number (home)

  	
   

  
									

 

5

 

	
   

  	
   

  	
   

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

  	
   

  	
   

  

 

PART II:                                                 SCHEDULE OF
TRANSACTIONS IN QWEST PUBLICLY TRADED SECURITIES

 

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

 

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

 

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

 

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

 

	
  Trade Date

  Month Day Year

  	
   

  	
  Number of Shares or Bonds

  Purchased (specify)

  	
   

  	
  Total Purchase Price

  	
   

  
	
  1.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

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

 

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

 

	
  Trade Date

  Month Day Year

  	
   

  	
  Number of Shares or Bonds

  Sold (specify)

  	
   

  	
  Total Sales Price

  	
   

  
	
  1.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

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

 

6

 

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

 

	
  Type of Bond

  	
   

  	
  Date of Redemption

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

OPTION
TRANSACTIONS IN QWEST

 

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

 

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

 

	
  Type

  [C]all

  [P]ut

  	
   

  	
  [B]uy

  [S]ell

  	
   

  	
  Trade Date

  Mth/Day/Year

  	
   

  	
  Number of

  Option Contracts

  Purchased/Sold

  	
   

  	
  Total Price

  	
   

  	
  Price

  Received

  	
   

  
	
  1.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

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

 

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

 

YOU
MUST READ THE RELEASE AND SIGN ON PAGE
          .

 

7

 

V.                                    SUBMISSION TO JURISDICTION OF
COURT AND ACKNOWLEDGMENTS

 

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

 

VI.                                RELEASE

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

10

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

13

 

SUBSTITUTE
FORM W-9

 

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

 

PART I

 

	
  NAME:

  	
   

  

 

Check appropriate box:

 

	
  o                                    Individual/Sole
  Proprietor

  	
  o                                    Pension
  Plan

  
	
  o                                    Corporation

  	
  o                                    Partnership

  	
  o                                    Trust

  
	
  o                                    IRA

  	
  o                                    Other

  	
   

  

 

Enter TIN on appropriate
line.

 

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

 

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

 

For other entities, it
is your EIN.

 

	
      
            -     
       -          
           

  	
  or

  	
      
       -          
                
           

  
	
  Social Security Number

  	
   

  	
  Employer Identification Number

  

 

PART II

 

For Payees Exempt from Backup
Withholding

 

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

 

PART III

 

Certification

 

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

 

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

 

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

 

14

 

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

 

15

 

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

 

SEE ENCLOSED FORM W-9
INSTRUCTIONS

 

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

 

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

 

Executed this
                  
day of
                                                         ,

(Month / Year)

in
                                                 ,
                                                                                  .

(City)                                                                                                                                                                     (State
/ Country)

 

	
   

  	
   

  
	
   

  	
  (Sign your name here)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Type or print your name here)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Capacity of person(s) signing,

  
	
   

  	
  e.g., Beneficial
  Purchaser,

  
	
   

  	
  Executor or Administrator)

  

 

ACCURATE
CLAIMS PROCESSING TAKES A

SIGNIFICANT AMOUNT OF TIME.

THANK YOU FOR YOUR PATIENCE.

 

Reminder Checklist:

 

1.                                       Please sign
the above release and declaration.

 

2.                                       Remember to
attach supporting documentation, if available.

 

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

 

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

 

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

 

16

 

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

 

17

 

 

EXHIBIT A-3

 

 

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

 

Civil Action No. 01-cv-1451-REB-CBS

(Consolidated with Civil Action Nos. 01-cv-1472-REB-CBS, 01-cv-1527-REB-CBS,
01-cv-1616-REB-CBS, 01-cv-1799-REB-CBS, 01-cv-1930-REB-CBS, 01-cv-2083-REB-CBS,
02-cv-0333-REB-CBS, 02-cv-0374-REB-CBS, 02-cv-0507-REB-CBS, 02-cv-0658-REB-CBS,
02-cv-755-REB-CBS, 02-cv-798-REB-CBS and 04-cv-0238-REB-CBS)

 

In re QWEST COMMUNICATIONS INTERNATIONAL, INC. SECURITIES LITIGATION

 

SUMMARY NOTICE

 

EXHIBIT A-3

 

 

 

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

 

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

 

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

 

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

 

1

 

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

 

If you are a Class Member, in order to be
eligible to share in the distribution of the Settlement Fund, you must submit a
Proof of Claim and Release no later than
                         ,
2006, establishing that you are entitled to recovery.  You will be bound by any Judgment rendered in
the Litigation whether or not you make a claim, unless you request exclusion
from the Class.

 

If you wish to request exclusion from the Class
you must do so in writing by
                        ,
2006 and in accordance with the procedures set forth in the Notice.  If you request exclusion from the Class you
will not participate in the distribution of the Settlement Fund and you will
not be bound by the Judgment in the Litigation. 
If your exclusion request fails to contain all the information required
in the Notice, or otherwise fails to comply with the procedures set forth in
the Notice, it will be invalid and you will be bound by the terms and
conditions of the Stipulation and Judgment.

 

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

 

2

 

of
the settlement unless, his, her or its objection or opposition, including the
basis therefor, is made in writing and mailed or delivered such that it is
filed with the Court and served on each of the following no later than
                                   ,
2006:

 

CLERK OF THE COURT

DISTRICT OF COLORADO

United States Courthouse

901 19th Street, Room A-105

Denver, CO  80294

 

and

 

LERACH COUGHLIN STOIA GELLER
  RUDMAN & ROBBINS LLP

KEITH F. PARK

655 West Broadway, Suite 1900

San Diego, CA  92101-3301

 

Lead Counsel for Plaintiffs

 

BOIES, SCHILLER & FLEXNER LLP

ALFRED LEVITT

5301 Wisconsin Ave., N.W., Suite 800

Washington, DC  20015

 

Counsel for Settling Defendant Qwest

 

ARNOLD & PORTER LLP

JOHN FREEDMAN

555 Twelfth Street, N.W.

Washington, DC  20004-1202

 

Counsel for Defendant Arthur Andersen LLP

 

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

 

 

	
  DATED: 

  	
   

  	
  , 2005

  	
   

  	
  BY ORDER OF THE COURT 

  
	
   

  	
   

  	
  UNITED STATES DISTRICT COURT 

  
	
   

  	
   

  	
  DISTRICT OF COLORADO

  

 

3

 

EXHIBIT B

 

 

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

 

Civil Action No. 01-cv-1451-REB-CBS

(Consolidated with Civil Action Nos. 01-cv-1472-REB-CBS, 01-cv-1527-REB-CBS,
01-cv-1616-REB-CBS, 01-cv-1799-REB-CBS, 01-cv-1930-REB-CBS, 01-cv-2083-REB-CBS,
02-cv-0333-REB-CBS, 02-cv-0374-REB-CBS, 02-cv-0507-REB-CBS, 02-cv-0658-REB-CBS,
02-cv-755-REB-CBS, 02-cv-798-REB-CBS and 04-cv-0238-REB-CBS)

 

In re QWEST COMMUNICATIONS INTERNATIONAL, INC. SECURITIES LITIGATION

 

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

 

EXHIBIT B

 

 

A hearing having been conducted by the Court
to determine whether the terms and conditions of the Stipulation of Partial
Settlement, dated as of November 21, 2005 (the “Stipulation”) are fair,
reasonable and adequate for the settlement of all claims asserted by the Lead
Plaintiffs and members of the Class against the Settling Defendants, due and
adequate notice having been given to the Class required by the Court’s Order
Preliminarily Approving Partial Settlement and Approving Form and Manner of
Notice, and the Court having considered all papers filed and proceedings had
herein and otherwise being fully informed in the premises and good cause
appearing:

 

IT IS HEREBY ORDERED, ADJUDGED AND DECREED
THAT:

 

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

 

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

 

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

 

1

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

5

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

 

	
  DATED: 

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE HONORABLE ROBERT E. BLACKBURN

  
	
   

  	
   

  	
  UNITED STATES DISTRICT JUDGE

  

 

8Exhibit 10.1

 

PROMISSORY NOTE

 

	
  $3,000,000

  	
   

  	
  Nassau County, New York

  
	
   

  	
   

  	
  As of December 1,
  2005

  

 

FOR VALUE RECEIVED, HAUPPAUGE COMPUTER WORKS, INC., a New
York corporation (the “Borrower”), HEREBY PROMISES TO PAY
to the order of JPMORGAN CHASE BANK, N.A. (the “Bank”),
at its offices located at 395 North Service Road, Melville, New York 11747,
or at such other place as the Bank or any holder hereof may from time to time
designate, the principal sum of THREE MILLION  DOLLARS ($3,000,000), or such lesser amount as may
constitute the outstanding balance hereof, in lawful money of the United
States, on March 31, 2006 or earlier as hereinafter referred to, and to
pay interest in like money at such office or place from the date hereof on the
unpaid principal balance of each Loan (as hereinafter defined) at the
Eurodollar Rate or the Prime Rate (as hereinafter defined and provided for in
the following paragraph) per annum, which shall be payable at the end of each
Interest Period (as hereinafter defined) until such Loan(s) shall be due and
payable (whether at maturity, by acceleration or otherwise) and thereafter, on
demand.  Interest after maturity shall be
payable at a rate three percent (3%)
per annum above the Bank’s Prime Rate which rate shall be computed for actual
number of days elapsed on the basis of a 360-day year and shall be adjusted as
of the date of each such change, but in no event higher than the maximum
permitted under applicable law.  “Prime
Rate” shall mean the rate of interest as is publicly announced at the Bank’s
principal office from time to time as its Prime Rate.

 

The Borrower shall give the Bank irrevocable written
notice (or telephonic notice promptly confirmed in writing) not later than
11:00 a.m., New York, New York time, three Business Days prior to the date
of each proposed Eurodollar Loan (as hereinafter defined) or prior to 11:00 a.m.
New York, New York time on the date of each proposed Prime Loan (as hereinafter
defined).  Such notice shall be
irrevocable and shall specify (i) the amount and whether the proposed
borrowing shall be a Eurodollar Loan or a Prime Rate Loan, (ii) the
initial Interest Period if a Eurodollar Loan, and (iv) the proposed date
of borrowing.  Each borrowing of a Eurodollar
Loan shall be in an amount not less than $500,000 or, if greater, whole
multiples of $100,000 in excess thereof. 
The Bank is authorized to enter on the Grid Schedule attached
hereto (i) the amount of each loan made from time to time hereunder (the “Loan”),
(ii) the date on which each Loan is made, (iii) the date on which
each Loan shall be due and payable to the Bank, which date shall be March 31,
2006 (“Maturity Date”), (iv) the applicable interest rate to be paid on
each Loan which shall, at the Borrower’s option in accordance herewith, be at (a) the
Adjusted Eurodollar Rate plus one and 85/100 percent (1.85%) (the “Eurodollar
Rate”) or (b) the Prime Rate minus one percent (1.0%) (such Loans, the “Eurodollar
Loan” or the “Prime Loan”), (v) the amount of each payment made hereunder,
and (vi) the outstanding principal balance of the Loans hereunder from
time to time, all of which entries, in the absence of manifest error, shall be
conclusive and binding on the Borrower; provided, however, that
the failure of the Bank to make any such entries shall not relieve the Borrower
from its obligation to pay any amount due hereunder.

 

 

Prepayment

 

(a)           No prepayments shall be permitted hereunder
on any Loan while the Eurodollar Rate shall be applicable to such Loan on any
date other than the last day of the applicable Interest Period.  A Loan may be prepaid at any time while the
Prime Rate shall be applicable to such Loan upon two days prior notice.

 

(b)           The Borrower shall reimburse the Bank on
demand for any loss incurred or to be incurred by it in the reemployment of
funds released by any prepayment of the Loan made in contravention of the terms
hereof.  Such loss shall be the
difference as reasonably determined by the Bank between the cost of obtaining
the funds for the Loan and any lesser amount which may be realized by the Bank
in reemploying the funds received in prepayment during the period from the date
of prepayment to the end of the current Interest Period of such Loan.

 

Increased Costs

 

If at any time after the date hereof, the Board of
Governors of the Federal Reserve System or any political subdivision of the
United States of America or any other government, governmental agency or
central bank shall impose or modify any reserve or capital requirement on or in
respect of loans made by or deposits with the Bank or shall impose on the Bank
any other conditions affecting Eurodollar Loans,
and the result of the foregoing is to increase the cost to (or, in the case of
Regulation D, to impose a cost on the Bank of making or maintaining any Eurodollar Loans or to reduce the amount of any sum
receivable by the Bank in respect thereof, by an amount deemed by the Bank to
be material, then, within 30 days after notice and demand by the Bank, the
Borrower shall pay to the Bank such additional amounts as will compensate the
Bank for such increased cost or reduction; provided, that the Borrower
shall not be obligated to compensate the Bank for any increased cost resulting
from the application of Regulation D as required by the definitions of Adjusted
Eurodollar Rate.  Any such obligation by
the Borrower to the Bank shall not be due and owing until the Bank has
delivered written notice to the Borrower. 
Failure by the Bank to provide such notice shall not be deemed a waiver
of any of its rights hereunder.  A
certificate of the Bank claiming compensation hereunder and setting forth the
additional amounts to be paid to it hereunder and the method by which such
amounts were calculated shall be conclusive in the absence of manifest error.

 

Indemnity

 

The Borrower shall indemnify the Bank against any
net loss or expense which the Bank may sustain or incur as a consequence of the
occurrence of any default hereunder or any loss or reasonable expense sustained
or incurred in liquidating or employing deposits from third parties acquired to
effect or maintain any Eurodollar Loan or
any part thereof which the Bank may sustain or incur as a consequence of any
default in payment of the principal amount of the Loan or any part thereof or
interest accrued thereon.  The Bank shall
provide to the Borrower a statement, supported where applicable by documentary
evidence, explaining the amount of any such loss or expense, which statement
shall be conclusive absent manifest error.

 

Change In Legality

 

(a)           Notwithstanding anything to the contrary contained
elsewhere in this Note, if any change after the date hereof in any law or
regulation or in the interpretation thereof by any governmental authority
charged with the administration thereof shall make it unlawful (based on the
opinion of any counsel, whether in-house, special or general, for the Bank) for
the Bank to make or maintain any 

 

2

 

Eurodollar Loan or
to give effect to its obligations as contemplated hereby with respect to any Eurodollar Loan, then, by written notice to the Borrower by
the Bank, the Bank may require that all outstanding Eurodollar Loans
made hereunder be converted to Prime Loans, whereupon all such Eurodollar Loans shall be automatically converted to Prime
Loans as of the effective date of such notice as provided in paragraph (b) below.

 

(b)           For purposes of this Section, a notice to the
Borrower by the Bank pursuant to paragraph (a) above shall be effective,
if lawful and if any Eurodollar Loans shall
then be outstanding, on the last day of the then current Interest Period;
otherwise, such notice shall be effective on the date of receipt by the
Borrower.

 

Events of Default.

 

If the Borrower shall default in the punctual
payment of any sum payable with respect to, or in the observance or performance
of any of the terms and conditions of this Note, or any other agreement with or
in favor of the Bank, or if a default or event of default that is accelerated
shall occur for any reason under any such agreement, or in the event of default
in any other material indebtedness of the Borrower exceeding $25,000 in the
aggregate, or if any warranty, representation or statement of fact made in
writing to the Bank at any time by an officer, partner or other designated
representative of the Borrower is false or misleading in any material respect
when made, or the Borrower fails on request to furnish any financial
information or permit the inspection of its books or records, or if the
Borrower shall be dissolved or shall fail to maintain its existence in good
standing, or if the usual business of the Borrower shall be suspended or
terminated, or if any levy, execution, seizure, attachment or garnishment shall
be issued, made or filed on or against any material portion of the property of
the Borrower, or if the Borrower shall become insolvent (however defined or
evidenced), make an assignment for the benefit of creditors or make or send a
notice of intended bulk transfer, or if a committee of creditors is appointed
for, or any petition or proceeding for any relief under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, receivership,
liquidation or dissolution law or statute now or hereafter in affect (whether
at law or in equity) is filed or commenced by or against the Borrower or any
material portion of its property which, as to involuntary proceeding(s) are not
dismissed within thirty (30) days, or if any trustee or receiver is appointed
for the Borrower or any such property, or if a default or event of default
shall occur under the Guaranty or the Pledge Agreement, or if any provision of this
Note, the Guaranty or the Pledge Agreement shall, for any reason, cease to be
in full force and effect in accordance with its terms or the Borrower or the
Guarantor shall so assert in writing, or any of the foregoing events shall
occur with respect to the Guarantor or any other guarantor of the Borrower’s
obligations hereunder (each an “Event of Default”) - then and in any such
event, which non-monetary Events of Default continue unremedied for fifteen (15)
days (except for voluntary bankruptcy which is an automatic Event of Default
hereunder), in addition to all rights and remedies of the Bank under applicable
law and otherwise, all such rights and remedies cumulative, not exclusive and
enforceable alternatively, successively and concurrently, the Bank shall have
the right immediately to set off against this note and/or any liabilities of
the Borrower to the Bank all monies owed by the Bank in any capacity to the
Borrower, whether or not due, and the Bank shall be deemed to have exercised
such right to set off and to have made a charge against any such money
immediately upon the occurrence of any of the foregoing events of default even
though such charge is made or entered on the books of the Bank subsequent to
those events.  Further the Bank may, at
its option, declare any and all of the amounts owing under this Note to be due
and payable, whereupon the maturity of the then unpaid balance hereof shall be
accelerated and the same, together with all interest accrued hereon, shall
forthwith become due and payable.

 

3

 

Definitions

 

A.            Adjusted Eurodollar Rate

 

“Adjusted Eurodollar Rate” shall mean, with respect
to any Eurodollar Loan for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next 1/8 of 1%) equal to (i) the
Eurodollar Rate in effect for such Interest Period and (ii) Statutory
Reserves.

 

“Eurodollar Rate” shall mean, with respect to any
Eurodollar Loan for any Interest Period, the rate (rounded upwards, if
necessary, to the next 1/8 of 1%) at which dollar deposits approximately equal
in principal amount to the Bank’s Eurodollar Loan and for the maturity equal to
the applicable Interest Period are offered by the Bank in immediately available
funds in an Interbank Market for Eurodollars at approximately 11:00 a.m.,
New York City time, two Business Days prior to the commencement of such
Interest Period.

 

B.            Assessment Rate

 

“Assessment Rate” shall mean for any date the annual
rate (rounded upwards, if necessary, to the next higher 1/100 of 1%) most
recently estimated by the Bank as the then current net annual assessment rate
that will be employed for determining amounts payable by the Bank to the Federal
Deposit Insurance Corporation (or any successor) for insurance by such
Corporation (or such successor) of time deposits made in dollars at the Bank’s
domestic offices.

 

C.            Business Day

 

“Business Day” shall mean any day other than a
Saturday, Sunday or other day on which the Bank is authorized or required by
law or regulation to close, and which is a day on which transactions in dollar
deposits are being carried out in London, England for Eurodollar Loans and New
York City for Prime Loans.

 

D.            Eurodollar Loan

 

“Eurodollar Loan” shall mean a Loan bearing interest
at the Eurodollar Rate plus 1.85%.

 

E.             Guarantor

 

“Guarantor” shall mean Hauppauge Digital, Inc.,
a Delaware corporation.

 

F.             Guaranty

 

“Guaranty”
shall mean the Guaranty, dated as of the date hereof, by the Guarantor wherein
the Guarantor guaranteed the obligations of the Borrower owing to the Bank, as
amended, restated, supplemented or otherwise modified, from time to time.

 

4

 

G.            Interest Period

 

(i) For Eurodollar Loans, Interest Period shall
mean the period commencing on the date of such Loan and ending 1 month after
the date of such Loan (as selected by the Borrower and recorded on the Grid Schedule attached
hereto), provided that.   upon the expiration
of the first Interest Period and each Interest Period thereafter, each
Eurodollar Loan will be automatically continued with an Interest Period of the
same duration, unless the Borrower shall notify the Bank that it intends to
convert a Eurodollar Loan to a Prime Loan or if the Bank is prohibited from
making Eurodollar Loans, in accordance with provisions set forth in this Note.

 

(ii) For Prime Loans, Interest Period shall
mean the last day of each calendar month during the term hereof and on the date
on which an Prime Loan is converted to a Eurodollar Loan.

 

No Interest Period shall extend past the Maturity
Date.  In addition, if any Interest
Period would end on a day which shall not be a Business Day, such Interest
Period shall be extended to the next succeeding Business Day.

 

H.            Prime Loan

 

“Prime Loan” shall mean a Loan bearing interest at
the Prime Rate.

 

I.              Pledge Agreement

 

“Pledge Agreement” shall mean the Share Pledge
Agreement, dated as of the date hereof, between the Guarantor and the Bank, as
amended, restated, supplemented or modified, from time to time.

 

J.             Statutory Reserves

 

“Statutory Reserves” shall mean a fraction
(expressed as a decimal, the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the maximum
reserve percentages (including, without limitation, any marginal, special
emergency or supplemental reserves) expressed as a decimal established by the
Board of Governors of the Federal Reserve System and any other banking authority
to which the Bank is subject for Eurocurrency Liabilities as defined in
Regulation D.  Eurodollar Loans shall be
deemed to constitute Eurocurrency Liabilities and as such shall be deemed to be
subject to such reserve requirements without benefit of or credit for
proration, exceptions or offsets which may be available from time to time to
the Bank under such Regulation D. 
Statutory Reserves shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.

 

Miscellaneous

 

The Borrower hereby gives to the Bank a lien on,
security interest in and right of set-off against all moneys, securities and
other property of the Borrower and the proceeds thereof, now or hereafter 

 

5

 

delivered
to, remaining with or in transit in any manner to the Bank, its correspondents,
affiliates or its agents from or for the Borrower, whether for safekeeping,
custody, pledge, transmission, collection or otherwise or coming into
possession, control or custody of the Bank in any way, and also, any balance of
any deposit accounts and credits of the Borrower with, and any and all claims
of the Borrower against the Bank at any time existing, as collateral security
for the payment of this Note and of all other liabilities and obligations now
or hereafter owed by the Borrower to the Bank, contracted with or acquired by
the Bank, whether joint, several, absolute, contingent, secured, unsecured,
matured or unmatured (all of which are hereafter collectively called “Liabilities”),
hereby authorizing the Bank at any time or times, without prior notice, to
apply such balances, credits or claims, or any part thereof, to such
Liabilities in such amounts as it may select, whether contingent, unmatured or
otherwise and whether any collateral security therefor is deemed adequate or
not.  The collateral security described
herein shall be in addition to any collateral security described in any
separate agreement executed by the Borrower, including, without limitation, the
Pledge Agreement.

 

Notices

 

Any notices, requests and demand to or upon the
respective parties hereto to be effective shall be in writing (or by telex, fax
or similar electronic transfer confirmed in writing), and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made (a) when
delivered by hand or (b) if given by mail, on the third business day after
deposited in the mails by certified mail, return receipt requested, or (c) if
by telex, fax or similar electronic transfer, when sent and receipt has been
confirmed, addressed as follows:

 

(i)            if to the Bank to:

 

JPMorgan Chase Bank, N.A.

395 North Service Road, Suite 302

Melville, New York 10004-1699

Telephone #          (631) 755-5078

Fax #                       (631) 755-0137

Attention:              Christopher Jantzen, Vice President

 

(ii)           if to the Borrower to:

 

Hauppauge Computer Works, Inc.

91 Cabot Court

Hauppauge, NY 11788

Telephone #          (631) 434-1600

Fax #                       (631) 434-3198

Attention:              Gerald Tucciarone, Assistant Secretary

 

(iii)          As to each such party at such other address
as such party shall have designated to the other in a written notice comply
with the provisions hereof.

 

The Borrower hereby waives diligence, demand,
presentment, protest and notice of any kind, and assents to extensions of the
time of payment, release, surrender or substitution of security, or forbearance
or other indulgence, without notice.

 

6

 

This Note may not be changed, modified or terminated
orally, but only by an agreement in writing signed by the party to be charged
and consented to in writing by the party hereof.

 

In the event the Bank or any holder hereof shall
refer this Note to an attorney for collection, the Borrower agrees to pay, in
addition to unpaid principal and interest, all the costs and expenses incurred
in attempting or effecting collection hereunder, including reasonable attorney’s
fees, whether or not suit is instituted.

 

In the event of any litigation with respect to this
Note, THE BORROWER WAIVES THE RIGHT TO A TRIAL BY JURY
and all rights of setoff and rights to interpose counter-claims and
cross-claims.  The Borrower hereby
irrevocably consents to the jurisdiction of the courts of the State of New York
and of any Federal court located in such State in connection with any action or
proceeding arising out of or relating to this Note.  This Note shall be governed by and construed
in accordance with the laws of the State of New York applicable to contract
made and to be performed in such State, and shall be binding upon the successors
and assigns of the Borrower and inure to the benefit of the Bank, its
successors, endorsees and assigns.

 

If any term or provision of this Note shall be held
invalid, illegal or unenforceable the validity of all other terms and
provisions hereof shall in no way be affected thereby.

 

	
  DATED: December 1, 2005

  	
   

  	
  HAUPPAUGE COMPUTER WORKS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Gerald Tucciarone

  	
   

  
	
   

  	
   

  	
  Name: Gerald Tucciarone

  
	
   

  	
   

  	
  Title: Assistant Secretary

  

 

ACKNOWLEDGMENT

 

	
  STATE OF NEW
  YORK

  	
  )

  	
   

  
	
   

  	
  )

  	
  SS:

  
	
  COUNTY OF NASSAU

  	
  )

  	
   

  

 

On
the 1st day of December in the year 2005 before me, the undersigned,
personally appeared Gerald Tucciarone, personally known to me or proved to me
on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his capacity, and that by his signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument.

 

 

	
   

  	
   

  	
  /s/ Fred S. Skolnik

  
	
   

  	
   

  	
  Notary Public

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [NOTARY STAMP]

  

 

7

 

GRID SCHEDULE

 

	
   

  	
   

  	
   

  	
   

  	
  APPLICABLE

  	
   

  	
   

  	
   

  	
  INTEREST

  	
   

  
	
  DATE

  	
   

  	
  TYPE

  	
   

  	
  INTEREST RATE

  	
   

  	
  AMOUNT

  	
   

  	
  PERIOD

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