-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vt+RmAdEI564EzLd4jW1q97kWLG0jRHfaIiNmtDlr8Xsk0tdJ1bLRQdNoaODqvds t5FQME7yd5bZBH/cB870DQ== 0000899733-98-000173.txt : 19981217 0000899733-98-000173.hdr.sgml : 19981217 ACCESSION NUMBER: 0000899733-98-000173 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19981214 ITEM INFORMATION: FILED AS OF DATE: 19981216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QWEST COMMUNICATIONS INTERNATIONAL INC CENTRAL INDEX KEY: 0001037949 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 841339282 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-22609 FILM NUMBER: 98770468 BUSINESS ADDRESS: STREET 1: 700 QWEST TOWER STREET 2: 555 SEVENTEENTH STREET CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3039921400 MAIL ADDRESS: STREET 1: 700 QWEST TOWER STREET 2: 555 SEVENTEENTH STREET CITY: DENVER STATE: CO ZIP: 80202 FORMER COMPANY: FORMER CONFORMED NAME: QUEST COMMUNICATIONS INTERNATIONAL INC DATE OF NAME CHANGE: 19970416 8-K 1 12/14/98 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): December 14, 1998 QWEST COMMUNICATIONS INTERNATIONAL INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE ----------------- (State or other jurisdiction of incorporation) 000-22609 84-1339282 - -------------------------------------------------------------------------------- (Commission File Number) (IRS Employer Identification No.) 700 QWEST TOWER, 555 SEVENTEENTH STREET DENVER, COLORADO 80202 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 303-291-1400 ------------ NOT APPLICABLE ----------------------------------------------------------------- (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS On December 14, 1998, the Registrant and Microsoft Corporation, a Washington corporation ("Microsoft"), announced that they had agreed to enter into a business relationship to offer communications network services, including complex Web hosting, managed software services and virtual private networking. In addition, Microsoft agreed to purchase from the Registrant 4,444,445 shares of the Registrant's common stock (the "Shares"), at a price of $45.00 per Share, for an aggregate purchase price of $200,000,025. The Registrant expects that in 1999 and 2000, the services will generate approximately $150 million in revenues, earnings before interest, taxes, depreciation and amoritzation ("EBITDA") from the services will be positive by $5 million to $10 million, and capital expenditures are expected to total approximately $150 million. EBITDA from the services for 1999 will be slightly negative. The Registrant further expects that in the first five years the services will generate more than approximately $3 billion in revenues and $1 billion in EBITDA, and that capital expenditures will total approximately $300 million. In addition, the Registrant estimates the market opportunity to be $30 billion to $35 billion by 2003, and expects to capture between 5% and 10% of the market share. As described in the Common Stock Purchase Agreement that is filed as an exhibit to this Current Report on Form 8-K, Microsoft has agreed not to transfer the Shares for a period of two years except to persons approved by the Registrant or to certain Microsoft controlled corporations. Further, unless approved by the Registrant's board of directors, (i) Microsoft is prohibited from acquiring more than 5% of the Registrant's common stock and (ii) Microsoft may not take certain actions with respect to acquisition proposals or contested proxy solicitations until the earlier of (A) such time as the officers, directors and affiliates own less than 33% of the voting power of the Registrant, (B) Microsoft otherwise disposes of the Shares, (C) the parties terminate the business relationship or (D) December 14, 2003. Pursuant to the terms of the Registration Rights Agreement that is filed as an exhibit to this Report, Microsoft has one demand registration right at any time after ninety days up to December 14, 2001 for all or any of the Shares. A copy of the Registrant's press release announcing the business relationship is attached as Exhibit 99.1 to this Current Report on Form 8-K. The Registrant separately announced that on December 11, 1998 its principal stockholder, Anschutz Company, completed the previously announced transfer to a nonaffiliated trust of approximately 9 million shares of the Registrant's common stock, which has reduced Anschutz Company's beneficial ownership of the Registrant's shares to below 50 percent. An over-allotment option has been exercised that is expected to result in the transfer of an additional 0.6 million shares from Anschutz Company to the trust. The trust has issued its own securities that will be exchanged in five years for all or a portion of the shares transferred to the trust (or, in certain limited circumstances, the cash equivalent). Investors in the trust's securities will earn quarterly cash interest payments funded by U.S. treasury securities to be acquired by the trust. The transaction has been structured so that Anschutz Company will continue to share in future increases in the value of the the Registrant's stock transferred to the trust. Following the transaction (assuming completion of the over-allotment option exercise), Anschutz Company continues to own approximately 160 million shares of the Registrant's common stock (representing approximately 48 percent of the Registrant's issued and outstanding shares). By reducing Anschutz Company's beneficial ownership below 50 percent, the Registrant should be able to use pooling accounting for business combinations effected two or more years after the transfer of shares to the trust, assuming other requirements for pooling are satisfied and there are no substantial changes in current rules for its use. This Current Report on Form 8-K may contain forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to the documents filed by the Registrant and Microsoft with the SEC, specifically the most recent reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including potential fluctuations in quarterly results, dependence on new product development, rapid technological and market change, financial risk management and future growth subject to risks. Other risk factors include satisfactory negotiation of certain licensing arrangements and satisfactory resolution of software delivery and systems integration deliverables. These cautionary statements should be considered in connection with any subsequent written or oral forward-looking statements issued by the Registrant or persons acting on its behalf. The Registrant undertakes no obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS Exhibit 10.1 Common Stock Purchase Agreement. Exhibit 10.2 Registration Rights Agreement. Exhibit 99.1 Press release of the Registrant dated December 14, 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ------------------ QWEST COMMUNICATIONS INTERNATIONAL INC. DATE: December 15, 1998 By: /s/ Robert S. Woodruff --------------------------------------- Robert S. Woodruff Executive Vice President - Finance, Chief Financial Officer and Treasurer EX-10.1 2 STOCK PURCHASE AGREEMENT COMMON STOCK PURCHASE AGREEMENT Dated as of December 14, 1998 Between QWEST COMMUNICATIONS INTERNATIONAL INC. and MICROSOFT COPORATION COMMON STOCK PURCHASE AGREEMENT This COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is made as of this 14th day of December, 1998 between Qwest Communications International Inc., a Delaware corporation (the "Company"), and Microsoft Corporation, a Washington corporation (the "Purchaser"). RECITALS WHEREAS, the Company desires to sell to the Purchaser, and the Purchaser desires to purchase from the Company, shares of the Company's Common Stock, $.01 par value per share (the "Common Stock"), on the terms and conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1 Agreement to Purchase and Sell Common Stock 1.1 Agreement to Purchase and Sell Common Stock. Upon the terms and subject to the conditions of this Agreement, the Company hereby agrees to sell to the Purchaser at the Closing (as defined below), and the Purchaser agrees to purchase from the Company at the Closing, 4,444,445 shares of Common Stock, (the "Shares") at a price of $45.00 per share (the "Per Share Purchase Price") for an aggregate purchase price of $200,000,025. SECTION 2 Closing Date; Delivery 2.1 Closing Date. The Closing of the purchase and sale of the Shares hereunder (the "Closing") shall be held at the offices of the Company at 6:00 a.m. on December 14, 1998, or at such other time and place as the Company and the Purchaser mutually agree (the date of the Closing being hereinafter referred to as the "Closing Date"). 2.2 Delivery. At the Closing, the Company will deliver to the Purchaser a certificate or certificates representing the Shares against payment of the aggregate purchase price of $200,000,025 by wire transfer of immediately available funds to an account designated by the Company. The certificate or certificates representing the Shares shall be subject to a legend restricting transfer under the Securities Act of 1933, as amended (the "Securities Act") and referring to restrictions on transfer herein, such legend to be substantially as follows: "The shares represented by this certificate have been acquired for investment and have not been registered under the Securities Act of 1933, as amended. Such shares may not be sold or transferred in the absence of such registration or an opinion of counsel reasonably satisfactory to the Company as to the availability of an exemption from registration. The shares represented by this certificate are subject to restrictions on transfer, including any sale, pledge or other hypothecation, set forth in an agreement dated as of December 14, 1998 between the Company and Microsoft Corporation, a copy of which agreement may be obtained at no cost by written request made by the holder of record of this certificate to the secretary of the Company at the Company's principal executive offices." The Company agrees (i) to remove the legend set forth in the second preceding paragraph upon receipt of an opinion of counsel in form and substance reasonably satisfactory to the Company that the Shares or the shares of Common Stock issuable upon conversion of the Shares are eligible for transfer without registration under the Securities Act and (ii) to remove the legend set forth in the immediately preceding paragraph at such time as the Shares may be transferred upon the termination of the covenants of Section 7 as provided for in Section 8.4. SECTION 3 Representations and Warranties of the Company The Company hereby represents and warrants to the Purchaser as follows: 3.1 Organization. The Company is a corporation duly organized and validly existing under the laws of the State of Delaware and is in good standing under such laws. The Company has the requisite corporate power to own and operate its properties and assets, and to carry on its business as presently conducted and as proposed to be conducted. The Company is qualified to do business as a foreign corporation in each jurisdiction in which the ownership of its property or the nature of its business requires such qualification, except where the failure to be so qualified would not have a materially adverse effect on the Company and its subsidiaries, taken as a whole. 3.2 Authorization. All corporate action on the part of the Company necessary for the authorization, execution, delivery and performance of this Agreement and the Registration Rights Agreement (attached as Exhibit A hereto) by the Company, the authorization, sale, issuance and delivery of the Shares hereunder. This Agreement and the Registration Rights Agreement constitute legal, valid and binding obligations of the Company enforceable in accordance with their respective terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies, and to limitations of public policy as they may apply to Section 6 of the Registration Rights Agreement. Upon their issuance and delivery pursuant to this Agreement, the Shares will be validly issued, fully paid and nonassessable. The issuance and sale of the Shares will not give rise to any preemptive rights or rights of first refusal on behalf of any person in existence on the date hereof. 3.3 No Conflict. The execution and delivery of this Agreement and the Registration Rights Agreement do not, and the consummation of the transactions contemplated hereby and thereby will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit under, any provision of the Certificate of Incorporation or Bylaws of the Company or any mortgage, indenture, lease or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company, its properties or assets, the effect of which would have a material adverse effect on the Company and its subsidiaries, taken as a whole, or materially impair or restrict the Company's power to perform its obligations as contemplated under said agreements. 3.4 SEC Documents. The Company has filed all required reports, schedules, forms, statements and other documents required to be filed by the Company with the Securities and Exchange Commission (the "SEC") since June 27, 1997 (the "SEC Documents"). As of their respective dates, the SEC Documents complied in all material respects with requirements of the Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the case may be and the rules and regulations of the SEC promulgated thereunder applicable to such SEC Documents, and none of the SEC Documents, except to the extent that information contained in any SEC Document has been revised or superseded by a later Filed SEC Document (as defined below), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the Company's Form 10-K for the year ended December 31, 1997 and the Form 10-Q for the three months ended September 30, 1998 comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") (except, in the case of unaudited statements as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or as described in writing to the Purchaser prior to the date hereof) and fairly present the consolidated financial position of the Company and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operation and cashflows for the periods then ending in accordance with GAAP (subject, in the case of the unaudited statements, to normal year end audit adjustments). Except as set forth in the Filed SEC Documents (as defined below), neither the Company nor any of its subsidiaries has any material liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by GAAP to be set forth on a consolidated balance sheet of the Company and its consolidated subsidiaries or in the notes thereto and which can reasonably be expected to have a material adverse effect on the Company and its subsidiaries taken as a whole. 3.5 Absence of Certain Changes or Events. Except as disclosed in the SEC Documents filed and publicly available (either on the EDGAR system or by delivery to Purchaser) prior to the date of this Agreement (the "Filed SEC Documents"), since the date of the most recent audited financial statements included in the Filed SEC Documents, there has not been (i) any declaration, setting aside or payment of any dividend or distribution (whether in cash, stock or property) with respect to any of the Company's capital stock, (ii) any split, combination or reclassification of any of its capital stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, (iii) any damage, destruction or loss of property, whether or not covered by insurance, that has or is likely to have a material adverse effect on the Company and its subsidiaries taken as a whole, or (iv) any change in accounting methods, principles or practices by the Company materially affecting its assets, liabilities, or business, except insofar as may have been required by a change in GAAP. 3.6 Governmental Consent, etc. In reliance on the representations of the Purchaser contained herein, no consent, approval or authorization of, or designation, declaration or filing with, any governmental authority on the part of the Company is required in connection with the valid execution and delivery of this Agreement, or the offer, sale or issuance of the Shares, or the consummation of any other transaction contemplated hereby, except such filings as may be required to be made with the SEC and the National Association of Securities Dealers, Inc. 3.7 Litigation. Except as is disclosed in the Filed SEC Documents, there is no suit, action or proceeding pending against the Company or any of its subsidiaries that, individually or in the aggregate, would (i) have a material adverse effect on the Company and its subsidiaries taken as a whole, (ii) impair the ability of the Company to perform its obligations under this Agreement and the Registration Rights Agreement, or (iii) prevent the consummation of any of the transactions contemplated by said agreements. 3.8 Capitalization. (a) As of the date of this Agreement, the authorized capital stock of the Company consists of 600,000,000 shares of the Common Stock and 25,000,000 shares of preferred stock, par value $.01 per share, of the Company (the "Company Preferred Stock"). (b) As of November 30, 1998, there are approximately (1) 336,869,859 shares of the Common Stock issued and outstanding, (2) no shares of the Common Stock held in the treasury of the Company, (3) no shares of the Company Preferred Stock issued and outstanding, (4) 406,640,087 shares of the Common Stock reserved for issuance upon exercise of outstanding stock options issued by the Company to current or former employees and directors of the Company and its subsidiaries, (5) 506,643,587 shares of the Common Stock reserved for issuance upon exercise of authorized but unissued stock options and (6) 8,600,000 shares of the Common Stock reserved for issuance upon exercise of a warrant issued to The Anshutz Family Investment Company, LLC. (c) All outstanding shares of the Common Stock are duly authorized, validly issued, fully paid and nonassessable, free from any liens created by the Company with respect to the issuance and delivery thereof and not subject to preemptive rights. 3.9 Registration Rights. No person has the right to register shares of Common Stock on a Registration Statement filed by the Company pursuant to this Agreement. SECTION 4 Representations and Warranties of the Purchaser The Purchaser hereby represents and warrants to the Company as follows: 4.1 Organization. The Purchaser is a corporation duly organized and validly existing and in good standing under the laws of the State of Washington, with all requisite corporate power and authority to own, lease and operate its properties and to conduct its business as now being conducted. 4.2 Authority. All corporate action on the part of the Purchaser necessary for the authorization, execution, delivery and performance of this Agreement and the Registration Rights Agreement by the Purchaser has been taken. This Agreement and the Registration Rights Agreement have been duly executed and delivered by the Purchaser and constitute legal, valid and binding obligations of the Purchaser, enforceable in accordance with their respective terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies, and to limitations of public policy as they may apply to Section 6 of the Registration Rights Agreement. The execution and delivery of said agreements do not, and the consummation of the transactions contemplated hereby and thereby will not, conflict with or result in any violation of any obligation under any provision of the Articles of Incorporation or Bylaws of the Purchaser or any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Purchaser. 4.3 Investment. The Purchaser is acquiring the Shares for investment for its own account, not as a nominee or agent, and not with a view to, or for resale in connection with, any distribution thereof. The Purchaser understands that the Shares have not been registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser's representations and warranties contained herein. 4.4 Disclosure of Information. The Purchaser has had full access to all information it considers necessary or appropriate to make an informed investment decision with respect to the Shares to be purchased by the Purchaser under this Agreement. The Purchaser further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Shares and to obtain additional information necessary to verify any information furnished to the Purchaser or to which the Purchaser had access. 4.5 Investment Experience. The Purchaser understands that the purchase of the Shares involves substantial risk. The Purchaser has experience as an investor in securities of companies and acknowledges that it is able to fend for itself, can bear the economic risk of its investment in the Shares and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of this investment in the Shares and protecting its own interests in connection with this investment. 4.6 Accredited Investor Status. The Purchaser is an "accredited investor" within the meaning of Regulation D promulgated under the Securities Act. 4.7 Restricted Securities. The Purchaser understands that the Shares to be purchased by the Purchaser hereunder are characterized as "restricted securities" under the Securities Act inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under the Securities Act and applicable regulations thereunder such securities may be resold without registration under the Securities Act only in certain limited circumstances. The Purchaser is familiar with Rule 144 of the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act. The Purchaser understands that the Company is under no obligation to register any of the Shares sold hereunder except as provided in the Registration Rights Agreement. 4.8 Governmental Consent, etc. In reliance on the representations of the Company contained herein, no consent, approval or authorization of, or designation, declaration or filing with, any governmental authority on the part of the Purchaser is required in connection with the valid execution and delivery of this Agreement, or the offer, sale or issuance of the Shares, or the consummation of any other transaction contemplated hereby, except such filings as may be required to be made with the SEC and the National Association of Securities Dealers, Inc. 4.9 Passive Investor. The Purchaser is acquiring the Shares "solely for the purpose of investment" as such phrase is defined in 16 C.F.R. ss. 801.1(i)(1) and the Purchaser has no intention of participating in the formulation, determination or direction of the basic business decisions of the Company. SECTION 5 Conditions to Obligation of the Purchaser The Purchaser's obligation to purchase the Shares at the Closing is subject to the fulfillment on or prior to the Closing Date of the following conditions: 5.1 Representations and Warranties. Each of the representations and warranties of the Company contained in Section 3 will be true and correct on and as of the date hereof and on and as of the Closing Date with the same effect as though such representations and warranties had been made as of the Closing Date. The Purchaser shall have received a certificate signed by an officer of the Company to such effect on the Closing Date. 5.2 Covenants. All covenants, agreements and conditions contained in this Agreement to be performed by the Company on or prior to the Closing Date shall have been performed or complied with in all material respects. The Purchaser shall have received a certificate signed by an officer of the Company to such effect on the Closing Date. 5.3 No Order Pending. There shall not then be in effect any order enjoining or restraining the transactions contemplated by this Agreement. 5.4 No Law Prohibiting or Restricting Sale of the Shares. There shall not be in effect any law, rule or regulation prohibiting or restricting the sale of the Shares, or requiring any consent or approval of any Person which shall not have been obtained to issue the Shares with full benefits afforded the Preferred Stock or the Common Stock into which the Preferred Stock is convertible (except as otherwise provided in this Agreement). 5.5 Registration Rights Agreement. The Company shall have executed and delivered the Registration Rights Agreement substantially in the form attached hereto as Exhibit A. 5.6 Opinion of Counsel. The Purchaser shall have received an opinion dated as of the Closing Date of O'Melveny & Myers LLP, counsel to the Company, substantially in the form attached as Exhibit 5.6. SECTION 6 Conditions to Obligation of the Company The Company's obligation to sell and issue the Shares at the Closing is subject to the fulfillment on or prior to the Closing Date of the following conditions: 6.1 Representations and Warranties. The representations and warranties of the Purchaser contained in Section 4 will be true and correct on and as of the date hereof and on and as of the Closing Date with the same effect as though such representations and warranties had been made as of the Closing Date. The Company shall have received a certificate signed on behalf of the Purchaser by an officer of the Purchaser to such effect on the Closing Date. 6.2 Covenants. All covenants, agreements and conditions contained in this Agreement to be performed by the Purchaser on or prior to the Closing Date shall have been performed or complied with in all material respects. The Company shall have received a certificate signed on behalf of the Purchaser by an officer of the Purchaser to such effect on the Closing Date. 6.3 No Order Pending. There shall not then be in effect any order enjoining or restraining the transactions contemplated by this Agreement. 6.4 No Law Prohibiting or Restricting the Sale of the Shares. There shall not be in effect any law, rule or regulation prohibiting or restricting the sale of the Shares, or requiring any consent or approval of any Person which shall not have been obtained to issue the Shares with full benefits afforded the Common Stock (except as otherwise provided in this Agreement). 6.5 Registration Rights Agreement. The Purchaser shall have executed and delivered the Registration Rights Agreement substantially in the form attached hereto as Exhibit A. 6.6 Opinion of Counsel. The Company shall have received an opinion dated as of the Closing Date of Preston Gates & Ellis, counsel to the Purchaser, substantially in the form attached as Exhibit 6.6. SECTION 7 Covenants of the Purchaser 7.1 Purchase Restrictions. (a) Other than pursuant to the transactions contemplated by this Agreement, the Purchaser shall not, and shall not cause or permit its affiliates or any Group (as defined below) including the Purchaser or any of its affiliates to, acquire shares of the Common Stock, which when combined with shares of the Common Stock then owned by the Purchaser and its subsidiaries would result in the Purchaser Beneficially Owning (as defined below) more than 5% of the shares of the Common Stock then issued and outstanding, except pursuant to a transaction or series of transactions at prices and on terms approved by the Board of Directors of the Company. (b) Nothing in this Section 7.1 shall require the Purchaser or its subsidiaries to transfer any shares of Common Stock if the aggregate percentage ownership of the Purchaser and its subsidiaries is increased as a result of any action taken by the Company or its subsidiaries including, without limitation, by reason of any reclassification, recapitalization, stock split, reverse stock split, combination or exchange of shares, redemption, repurchase or cancellation of shares or any other similar transaction. 7.2 Other Restrictions. Neither the Purchaser nor any of its subsidiaries shall, without the approval of the Board of Directors of the Company, (1) take any action with respect to an acquisition proposal that would require the Company to make a public announcement, (2) solicit proxies or initiate, or become an active participant in, a solicitation (as such terms are defined in Regulation 14A under the Exchange Act) with respect to the Company in opposition to any matter which has been recommended by the Board of Directors of the Company or in favor of any matter which has not been approved by the Board of Directors of the Company, (3) become a member of a Group (other than a Group comprised solely of the Purchaser and its subsidiaries), or (4) enter into any discussions, negotiations, arrangements or understandings with any third party with respect to any of the foregoing. 7.3 Restrictions on Transfer of Shares. For a period of two years from the date of this Agreement, the Purchaser shall not, directly or indirectly, offer, sell, transfer, assign, exchange, encumber, pledge, hypothecate or otherwise dispose of the Beneficial Ownership of any Shares acquired pursuant to this Agreement except (i) to the Company or any persons or Groups approved in writing by the Company, or (ii) to a corporation of which the Purchaser owns more than 50% of the voting power entitled to be cast in the election of directors (a "Controlled Corporation"), so long as such Controlled Corporation agrees to hold such Shares subject to all the provisions of this Agreement, including this Section 7.3, and agrees to transfer such Shares to the Purchaser or another Controlled Corporation of the Purchaser if it ceases to be a Controlled Corporation of the Purchaser. The restrictions in this Section shall terminate in the event of a "Change or Control" or "Insolvency Proceeding." SECTION 8Miscellaneous 8.1 Certain Definitions. As used in this Agreement: (a) The term "Beneficial Ownership" shall have the meaning comprehended by Section 13(d)(3) of the Exchange Act and the rules and regulations promulgated thereunder. (b) The term "Change of Control" shall mean (i) an acquisition of Voting Stock by a Person or Group (other than the Company or its affiliates) in a purchase or transaction or series of related purchases or transactions if immediately thereafter such Person or Group has Beneficial Ownership of more than fifty percent (50%) of the combined voting power of the Company's then outstanding Voting Stock; (ii) the execution of an agreement providing for a tender offer, merger, consolidation or reorganization, or series of such related transactions involving the Company, unless the stockholders of the Company, immediately after such transaction or transactions are the Beneficial Owners of at least fifty percent (50%) of the Voting Stock; (iii) a change or changes in the membership of the Company's Board of Directors which represent a change of a majority or more of such membership during any twelve month period (unless such change or changes in membership are caused by the actions of the then existing Board of Directors and do not occur within twelve months of the commencement, threat or proposal of an Election Contest (as such term is defined in Rule 14a-11 of Regulation 14A under the Exchange Act), tender offer or other transaction which would constitute a Change of Control under (i) or (ii) of this Section 8.1(a)); or (iv) a sale of all or substantially all of the Company's assets. (c) The term "Group" shall have the meaning comprehended by Section13(d)(3) of the Exchange Act and the rules and regulations promulgated thereunder. (d) The term "Insolvency Proceeding" shall mean (i) an assignment for the benefit of creditors, (ii) the filing by the Company of a petition to have the Company adjudged insolvent, bankrupt or seeking a reorganization or liquidation under any law relating to bankruptcy, insolvency or receivership, (iii) an appointment of a receiver or trustee for all or substantially all of the assets of the Company unless appointed without the Company's consent, in which case if after sixty (60) days such appointment has not been vacated or stayed, (iv) a public admission in writing of the Company's inability to pay its debts as they come due, or (v) the adoption of a plan of liquidation or dissolution by the Board of Directors of the Company. (e) The term "Person" shall mean any person, individual, corporation, partnership, trust or other non-governmental entity or any governmental agency, court, authority or other body (whether foreign, federal, state, local or otherwise). (f) The term "Voting Stock" means the Common Stock and any other securities issued by the Company having the ordinary power to vote in the election of directors of the Company (other than securities having such power only upon the happening of a contingency). 8.2 Best Efforts. Each of the Company and the Purchaser shall use its best efforts to take all actions required under any law, rule or regulation adopted subsequent to the date hereto to ensure that the conditions to the Closing set forth herein are satisfied on or before the Closing Date. 8.3 Governing Law. This Agreement shall be governed in all respects by the internal laws of the State of New York as applied to contracts entered into solely between residents of, and to be performed entirely within, such state, and without reference to principles of conflicts of laws or choice of laws. 8.4 Survival; Termination of Covenants. The representations and warranties in Sections 3 and 4 of this Agreement shall not survive the Closing except for the representations and warranties in Sections 4.3, 4.7 and 4.9 hereof, which shall continue to survive. The covenants of the Purchaser under Sections 7.1 and 7.2 hereof shall terminate on the earlier of (A) such time as officers, directors and affiliates of the Company have Beneficial Ownership of less than thirty-three percent (33%) of the voting power of the outstanding Voting Stock, (B) the disposal by Purchaser of all of the Shares, (C) termination of that certain Master Agreement between Qwest Communications Corporation and Purchaser dated as of the date of this Agreement, or (D) the fifth anniversary of this Agreement. Section 7.3 shall terminate on the second anniversary of this Agreement. 8.5 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. 8.6 Entire Agreement; Amendment. This Agreement and the Registration Rights Agreement constitute the full and entire understanding and agreement between the parties with regard to the subject matter hereof and thereof and supersede all prior agreements and understandings among the parties relating to the subject matter hereof. Neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought. 8.7 Notices. All notices, requests, demands or other communications which are required or may be given pursuant to the terms of this Agreement shall be in writing and shall be deemed to have been duly given: (i) on the date of delivery if personally delivered by hand, (ii) upon the third day after such notice is (a) deposited in the United States mail, if mailed by registered or certified mail, postage prepaid, return receipt requested, or (b) sent by a nationally recognized overnight express courier, or (iii) by facsimile upon written confirmation (other than the automatic confirmation that is received from the recipient's facsimile machine) of receipt by the recipient of such notice: (a) if to the Company, to it at: Qwest Communications International Inc. 700 Qwest Tower 555 Seventeenth Street Denver, CO 80202 Facsimile Number: (303) 992-1772 Attention: Chief Financial Officer with a copy addressed as set forth above but to the attention of General Counsel Facsimile Number: (303) 992-1044 and with an additional copy to: Steven L. Grossman O'Melveny & Myers LLP 1999 Avenue of the Stars Los Angeles, California 90067-6035 Facsimile Number: (310) 246-6779 (b) if to the Purchaser, to it at: Microsoft Corporation One Microsoft Way Building 8 North Office 2211 Redmond, WA 98052 Attention: Chief Financial Officer Facsimile Number: (425) 936-7369 with a copy addressed as set forth above but to the attention of General Counsel, Finance and Administration, Facsimile Number: (425) 869-1327 with a copy to: Richard B. Dodd Preston Gates & Ellis LLP 5000 Columbia Center 701 Fifth Avenue Seattle, WA 98104-7078 Facimile Number: (206) 623-7022 8.8 Brokers. (a) The Company has not engaged, consented to or authorized any broker, finder or intermediary to act on its behalf, directly or indirectly, as a broker, finder or intermediary in connection with the transactions contemplated by this Agreement. The Company hereby agrees to indemnify and hold harmless the Purchaser from and against all fees, commissions or other payments owing to any party acting on behalf of the Company hereunder. (b) The Purchaser has not engaged, consented to or authorized any broker, finder or intermediary to act on its behalf, directly or indirectly, as a broker, finder or intermediary in connection with the transactions contemplated by this Agreement. The Purchaser hereby agrees to indemnify and hold harmless the Company from and against all fees, commissions or other payments owing to any party acting on behalf of the Purchaser hereunder. 8.9 Fees, Costs and Expenses. All fees, costs and expenses (including attorneys' fees and expenses) incurred by either party hereto in connection with the preparation, negotiation and execution of this Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated hereby and thereby, shall be the sole and exclusive responsibility of such party. 8.10 Severability. If any term, provision, covenant or restriction of this Agreement or the Registration Rights Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restriction of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 8.11 Counterparts. This Agreement may be executed in two or more partially or fully executed counterparts and by facsimile signatures each of which shall be deemed an original and shall bind the signatory, but all of which together shall constitute but one and the same instrument. The execution and delivery of a Signature Page - Common Stock Purchase Agreement in the form attached to this Agreement by any party hereto who shall have been furnished the final form of this Agreement shall constitute the execution and delivery of this Agreement by such party. 8.12 Initial Public Announcement. The Company and the Purchaser shall agree on the form and content of the initial public announcement which shall be made concerning this Agreement and the Registration Rights Agreement and the transactions contemplated hereby and thereby, and neither the Company nor the Purchaser shall make such public announcement without the consent of the other, except as required by law. SIGNATURE PAGE--COMMON STOCK PURCHASE AGREEMENT IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective authorized officers as of the date set forth above. MICROSOFT CORPORATION, a Washington corporation By: /s/ Gregory B. Maffei Name: Gregory B. Maffei Title: Vice President and Chief Financial Officer QWEST COMMUNICATIONS INTERNATIONAL INC., a Delaware corporation By: /s/ Robert S. Woodruff Name: Robert S. Woodruff Title: Executive Vice President - Finance and Chief Financial Officer EX-10.2 3 REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT Dated as of December 14, 1998 Between Qwest Communications International Inc. and Microsoft Corporation -i- TABLE OF CONTENTS Page 1. Demand Registration.................................................1 2. Obligations of the Company..........................................1 5. Obligations of the Purchaser........................................6 4. Termination Provisions..............................................7 5. Expenses............................................................7 6. Indemnification and Contribution....................................7 (a) Indemnification by the Company.............................7 (b) Indemnification by the Purchaser...........................8 (c) Notice of Claims...........................................8 7. Notices............................................................10 8. Governing Law......................................................10 9. Entire Agreement; Amendments.......................................11 10. Successors and Assigns.............................................11 11. Severability.......................................................11 12. Termination of Company Obligation..................................11 13. Counterparts.......................................................11 14. No Transfer or Assignment of Registration Rights...................11 15. Interpretation.....................................................11 16. Non-Recourse.......................................................11 REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of this 14th day of December, 1998, between Qwest Communications International Inc., a Delaware corporation (the "Company"), and Microsoft Corporation, a Washington corporation (the "Purchaser"). WHEREAS, the Purchaser intends to purchase shares of Common Stock, par value, $0.01 per share (the "Common Stock") of the Company pursuant to the terms and conditions of a Stock Purchase Agreement dated as of December 14, 1998 (the "Purchase Agreement"); and WHEREAS, the Purchase Agreement requires that the Company enter into this Agreement with the Purchaser; NOW, THEREFORE, in consideration of the foregoing, the parties to this Agreement hereby agree as follows: 1. Demand Registration. If, at any time ninety days after the date of this Agreement the Purchaser shall request the Company in writing to register under the Securities Act of 1933, as amended (the "Securities Act"), any or all of the shares of the Common Stock acquired by Purchaser pursuant to the Purchase Agreement (the shares of such Common Stock so registrable are referred to as the "Subject Stock"), the Company shall use its reasonable best efforts to cause the Subject Stock to be registered as soon as reasonably practicable so as to permit the sale thereof, and in connection therewith shall prepare and file a Form S-3 registration statement with the Securities and Exchange Commission (the "SEC") under the Securities Act to effect such registration; provided, however, that the Purchaser shall be entitled to one such request, and such request shall (i) express the intention of the Purchaser to offer or cause the offering of the Subject Stock for distribution, (ii) describe the nature or method of the proposed offer and sale thereof, and (iii) contain the undertaking of the Purchaser to provide all such information and materials and take all such action as may be required in order to permit the Company to comply with all applicable requirements of the SEC and to obtain any desired acceleration of the effective date of such registration statement. In the event that Form S-3 is not then available, the registration statement shall be filed on the successor to Form S-3 or if there is no clear successor form, or if the Company is not eligible to use Form S-3 or a successor form, then the registration statement shall be filed using such form as may be available for the proposed distribution by the Purchaser with which it is least burdensome for the Company to comply. The Company agrees not to grant to any other person registration rights pursuant to which such person would have the right to register shares of Common Stock on a registration statement filed by the Company pursuant to the exercise of Purchaser's rights under this Agreement. 2. Obligations of the Company. (a) Whenever the Company is required by the provisions of this Agreement to use its reasonable best efforts to effect the registration of any Subject Stock under the Securities Act, the Company shall (i) prepare and, as soon as reasonably practicable, file with the SEC a registration statement with respect to the shares of Subject Stock, and shall use its reasonable best efforts to cause such registration statement to become effective and to remain effective until the earlier of (A) the sale of the shares of Subject Stock so registered, (B) the withdrawal at the request of Purchaser of such shares from such registration statement or (C) six months after the registration statement becomes effective but in no event shall such effective period specified in sub-clause (C) end without Purchaser's written consent (x) sooner than two years and six months from the date of this Agreement nor (y) later than three years from the date of this Agreement; (ii) subject to paragraph (b) below, prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be reasonably necessary to make and to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all securities proposed to be registered pursuant to such registration statement until the earlier of (A), (B) or (C) in (i) above; and (iii) take all such other action reasonably necessary to permit the shares of Subject Stock held by the Purchaser to be registered and disposed of in accordance with the method of disposition described herein. (b) Notwithstanding anything in this Agreement to the contrary, by delivery of written notice to the Purchaser (a "Suspension Notice"), stating which one or more of the following limitations shall apply to the Purchaser, the Company may (1) postpone effecting the registration under this Agreement or (2) require the Purchaser to refrain from disposing of Subject Stock under the registration, in each case for a reasonable time specified in the notice but not exceeding an aggregate of 90 days in any one year period (which period may not be extended or renewed). The Company may postpone effecting a registration or require the Purchaser to refrain from disposing of Subject Stock under the registration, if (1) the Company in good faith determines that such registration or disposition would materially impede, delay or interfere with any material financing, offer or sale of equity securities or debt securities of the Company, acquisition, disposition or other material transaction by the Company or any of its material subsidiaries, (2) an investment banking firm of recognized national standing shall advise the Company in writing that effecting the disposition by such person of Subject Stock would materially and adversely affect an offering of equity securities of the Company, by the Company for its own account the preparation of which had then been commenced, or (3) the Company in good faith determines that the Company is in possession of material non-public information the disclosure of which during the period specified in such notice the Company reasonably believes would not be in the best interests of the Company; provided that the Company may not take any action pursuant to this Section with respect to any of the limitations on dispositions specified in clause (2) for a period of time in excess of 90 days in any one year period. (c) In connection with any registration statement, the following provisions shall apply: (1) The Company shall furnish to the Purchaser, prior to the filing thereof with the SEC, a copy of any registration statement, and each amendment thereof and each amendment or supplement, if any, to the prospectus included therein and shall use its reasonable efforts to reflect in each such document, when so filed with the SEC, such comments as the Purchaser and its counsel reasonably may propose. (2) The Company shall take such action as may be necessary so that: (i) any registration statement and any amendment thereto and any prospectus forming part thereof and any amendment or supplement thereto (and each report or other document incorporated therein by reference) complies in all material respects with the Securities Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the respective rules and regulations thereunder, and (ii) any registration statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (3) (A) The Company shall advise the Purchaser and, if requested by the Purchaser, confirm such advice in writing: (i) when a registration statement and any amendment thereto has been filed with the SEC and when the registration statement or any post-effective amendment thereto has become effective; and (ii) of any request by the SEC for amendments or supplements to the registration statement or the prospectus included therein or for additional information. (B) The Company shall advise the Purchaser and, if requested by Purchaser, confirm such advice in writing of: (i) the issuance by the SEC of any stop order suspending effectiveness of the registration statement or the initiation of any proceedings for that purpose; and (ii) the receipt by the Company of any notification with respect to the suspension of the qualification of the securities included therein for sale in any jurisdiction or the initiation of any proceeding for such purpose. (4) The Company shall notify the Purchaser at any time when a Prospectus with respect to the Subject Stock is required to be delivered under the Securities Act, when the Company becomes aware of the happening of any event as a result of which the Registration Statement or the Prospectus (as then in effect) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein (in the case of the Prospectus or any preliminary Prospectus, in light of the circumstances under which they were made) not misleading; and, as promptly as practicable thereafter, but subject to Sections 2(b) and 4, the Company shall use its reasonable best efforts to prepare and file with the SEC an amendment or supplement to the Registration Statement or the Prospectus so that, as thereafter delivered to the purchasers of the Subject Stock, such Prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. As promptly as practicable after the issuance by the SEC of an order suspending the effectiveness of the Registration Statement, but subject to Sections 2(b) and 4, the Company shall use its best efforts to obtain the withdrawal of such order at the earliest possible moment. (5) The Company shall furnish to the Purchaser with respect to the registration statement relating to the Subject Stock, without charge, such number of copies of such registration statement and any post-effective amendment thereto, including financial statements and schedules, and all reports, other documents and exhibits (including those incorporated by reference) as the Purchaser shall reasonably request. (6) The Company shall furnish to the Purchaser such number of copies of any prospectus (including any preliminary prospectus and any amended or supplemented prospectus) relating to the Subject Stock as the Purchaser may reasonably request in order to effect the offering and sale of the shares of Subject Stock to be offered and sold, but only while the Company shall be required under the provisions hereof to cause the registration statement to remain current, and the Company consents (except during the continuance of any event described in Sections 2(b) or 4 to the use of the Prospectus or any amendment or supplement thereto by the Purchaser in connection with the offering and sale of the Subject Stock covered by the Prospectus or any amendment or supplement thereto. (7) Prior to any offering of Subject Stock pursuant to any registration statement, the Company shall use its reasonable best efforts to register or qualify the shares of Subject Stock covered by such registration statement under the securities or blue sky laws of such states as the Purchaser shall reasonably request, maintain any such registration or qualification current until the earlier of (i) the sale of the shares of Subject Stock so registered, (ii) termination pursuant to Section 4 or (iii) the withdrawal of Subject Stock from the registration statement, and do any and all other acts and things either reasonably necessary or advisable to enable the Purchaser to consummate the public sale or other disposition of the shares of Subject Stock in domestic jurisdictions where the Purchaser desires to effect such sales or other disposition; provided, however, that the Company shall not be required to take any action that would subject it to the general jurisdiction of the courts of any jurisdiction in which it is not so subject or to qualify as a foreign corporation in any jurisdiction where the Company is not so qualified. (8) In connection with any offering of shares of Subject Stock registered pursuant to this Agreement, the Company shall (x) furnish the Purchaser, at the Company's expense, on a timely basis with certificates free of any restrictive legends representing ownership of the shares of Subject Stock being sold in such denominations and registered in such names as the Purchaser shall request and (y) instruct the transfer agent and registrar of the Subject Stock to release any stop transfer orders with respect to the shares of Subject Stock. (9) The Company shall make generally available to its security holders or otherwise provide in accordance with Section 11(a) of the Securities Act as soon as reasonably practicable after the effective date of the registration statement an earnings statement satisfying the provisions of Section 11(a) of the Securities Act. (10) The Company shall, if requested, promptly include or incorporate in a prospectus supplement or post-effective amendment to a registration statement, such information as the Purchaser or any underwriters reasonably request to be included therein in accordance with Section 3(b) and to which the Company does not reasonably object and shall make all required filings of such prospectus supplement or post-effective amendment as soon as practicable after they are notified of the matters to be included or incorporated in such prospectus supplement or post-effective amendment. (11) In the event Purchaser proposes to conduct an underwritten public offering, then the Company shall: (i) enter into an underwriting agreement containing representations, warranties, indemnities and agreements then customarily included by an issuer in underwriting agreements with respect to secondary underwritten distributions, and in connection therewith cause the same to contain indemnification provisions and procedures substantially identical to those set forth in Section 6 (or such other provisions and procedures acceptable to the managing underwriters, if any) with respect to all parties to be indemnified pursuant to Section 6; (ii) make reasonably available for inspection by Purchaser and its counsel, any underwriter participating in any distribution pursuant to such registration statement, and any attorney, accountant or other agent retained by Purchaser or any such underwriter, all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries; and cause the Company's officers, directors and employees to make reasonably available for inspection all relevant information reasonably requested by Purchaser or any such underwriter, attorney, accountant or agent in connection with any such registration statement, in each case, as is customary for similar due diligence examinations; provided, however, that any records or documents that the Company determines, in good faith, after consultation with counsel to the Company and counsel to the Purchaser, to be confidential and which it notifies such persons are confidential shall not be disclosed to them, except in each case to the extent that (A) the disclosure of such records or documents is necessary to avoid or correct a misstatement or omission in the registration statement or (B) the release of such records or documents is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, (the Purchaser shall, upon learning that disclosure of any such records or documents is sought in a court of competent jurisdiction, give notice to the Company, and allow the Company, at the Company's expense, to undertake appropriate action and to prevent disclosure of any such records or documents deemed confidential); (iii) obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any) addressed to Purchaser and the underwriters, if any, covering such matters as are customarily covered in opinions requested in underwritten offerings (it being agreed that the matters to be covered by such opinion or written statement by such counsel delivered in connection with such opinions shall include a negative assurance statement as to the absence of material misstatements or omissions of material facts required to be stated in the registration statement in order to make the statements therein not misleading in such form as such counsel customarily provides in underwritten offerings); (iv) obtain "cold comfort" letters and updates thereof from the independent public accountants of the Company (and, if necessary, any other independent public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration statement), addressed to Purchaser and the underwriters, if any, in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with primary underwritten offerings; (v) deliver such documents and certificates as may be reasonably requested by Purchaser and the managing underwriters. The foregoing actions set forth in clauses (iii), (iv), and (v) of this Section 2(c)(11) shall be performed at each closing under any underwritten offering to the extent required thereunder, but, in any event, need not be performed by the Company more than twice. The managing underwriter for the offering and any additional investment bankers and managers to be used in connection with the offering shall be selected by the Company subject in each case to the consent of the Purchaser which consent shall not be unreasonably withheld, conditioned or delayed. (12) The Company will use its best efforts to cause the Subject Stock to be admitted for quotation on the Nasdaq National Market or other stock exchange or trading system on which the Common Stock primarily trades on or prior to the effective date of any registration statement hereunder. (13) Any obligation of the Company under this Agreement, including any obligation to use its "best efforts," "reasonable best efforts" or take such actions as are reasonably required, shall not preclude the Company from taking any action or omitting to take any action (other than omitting to file necessary amendments, post-effective amendments and supplements if a Suspension Notice or Termination Notice is not then in effect pursuant to Section 2(b) or 4, respectively) that would result in the Company issuing a Suspension Notice or Termination Notice pursuant to Section 2(b) or 4, respectively. (d) With a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of the Subject Stock to the public without registration, the Company agrees to: (1) make all filings with the SEC required by Rule 144(c) (or any similar provision then in force) under the Securities Act to permit the sale of the Subject Stock by any holder thereof to satisfy the conditions of Rule 144 (or any similar provision then in force). (2) during the term of this Agreement, to furnish to the Purchaser upon request (i) a written statement by the Company as to its compliance with the reporting requirements of Rule 144, (ii) a copy of the most recent annual or quarterly report of the Company, and (iii) such other reports and documents of the Company as the Purchaser may reasonably request in availing itself of any rule or regulation of the SEC allowing the Purchaser to sell any such securities without registration. 3. Obligations of the Purchaser. (a) The Purchaser shall, (i) offer to sell or otherwise distribute the Subject Stock in reliance upon a registration contemplated by this Agreement only after a registration statement shall have been filed with the SEC, (ii) sell or otherwise distribute the Subject Stock in reliance upon such registration only if a registration statement is then effective under the Securities Act, (iii) not sell or otherwise distribute any of the Subject Stock during any period specified in a Suspension Notice delivered to the Purchaser pursuant to Section 2(b) or after receiving a Termination Notice pursuant to Section 4 (until the Purchaser shall have received written notice from the Company that the registration is again effective), (iv) distribute the Subject Stock only in accordance with the manner of distribution contemplated by the prospectus and (v) report to the Company distributions made by the Purchaser of shares of the Subject Stock pursuant to the prospectus. The Purchaser, by participating in a registration pursuant to this Agreement, acknowledges that the remedies of the Company at law for failure by the Purchaser to comply with the undertaking contained in this paragraph (a) would be inadequate and that the failure would not be adequately compensable in damages and would cause irreparable harm to the Company, and therefore agrees that undertakings made by the Purchaser in this paragraph (a) may be specifically enforced. (b) The Purchaser shall furnish, and shall cause each underwriter of the Subject Stock to be distributed pursuant to the registration to furnish, to the Company in writing promptly upon the request of the Company the information regarding the Purchaser or the underwriter, the contemplated distribution of the Subject Stock and the other information regarding the proposed distribution by the Purchaser and the underwriter that shall be required in connection with the proposed distribution by the applicable securities laws of the United States of America and the states thereof in which the Subject Stock are contemplated to be distributed. The information furnished by the Purchaser or any underwriter shall be certified by the Purchaser or the underwriter, as the case may be, and shall be stated to be specifically for use in connection with the registration. (c) The obligations of the Company to maintain a registration statement are conditioned upon (i) the Purchaser or any underwriter of the Subject Stock furnishing to the Company the information in respect of the distribution of the Subject Stock that may be required under this Agreement to be furnished by the Purchaser or the underwriter to the Company and (ii) if such registration involves an underwritten offering, the Purchaser entering into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwritten offering. (d) If the Purchaser intends to distribute the Subject Stock by means of an underwritten offering, the Purchaser shall cause the underwriter or underwriters selected for such underwriting to enter into an underwriting agreement in customary form and shall enter into such underwriting agreement with such underwriter or underwriters. 4. Termination Provisions. Notwithstanding anything in this Agreement to the contrary, if, in the opinion of counsel for the Company (which opinion shall be reasonably acceptable to counsel for the Purchaser), there shall have arisen any legal impediment to the offering of the Subject Stock pursuant to this Agreement or if any legal action or administrative proceeding shall have been instituted or threatened or any other claim shall have been made relating to the registration or the offer made by the related prospectus or against any of the parties involved in the offering, the Company may at any time upon written notice to the Purchaser (a "Termination Notice") terminate the effectiveness of the related Registration Statement; provided that, promptly after those matters shall be resolved to the satisfaction of counsel for the Company, then, the Company shall cause the registration of the Subject Stock formerly covered by the Registration Statement that were removed from registration by the action of the Company. 5. Expenses. The Company shall pay all fees and expenses incurred in connection with the performance of its obligations under Sections 1 and 2 hereof, including, without limitation, all SEC and blue sky registration and filing fees, printing expenses, transfer agents' and registrars' fees, and the reasonable fees and disbursements of the Company's outside counsel and independent accountants incurred in connection with the preparation, filing and amendment of any registration statement authorized by this Agreement (but excluding underwriters' and brokers' discounts and commissions). 6. Indemnification and Contribution. (a) Indemnification by the Company. In the case of any offering registered pursuant to this Agreement, the Company agrees to indemnify and hold the Purchaser, each underwriter (if any) of shares of Subject Stock under such registration statements and each person who controls any of the foregoing within the meaning of Section 15 of the Securities Act harmless against any and all losses, claims, damages or liabilities to which they or any of them may become subject under the Securities Act or any other statute or common law or otherwise, and to reimburse them, from time to time upon request, for any legal or other expenses reasonably incurred by them in connection with investigating any claims and defending any actions, insofar as any such losses, claims, damages, liabilities or actions shall arise out of or shall be based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the registration statement (or any amendment thereto) relating to the sale of such shares of Subject Stock, including all documents incorporated therein by reference, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus (as amended or supplemented if the Company shall have filed with the SEC any amendment thereof or supplement thereto), if used prior to the effective date of such registration statement or contained in the prospectus (as amended or supplemented if the Company shall have filed with the SEC any amendment thereof or supplement thereto), if used within the period during which the Company shall be required to keep the registration statement to which such prospectus relates current pursuant to the terms of this Agreement, or the omission or alleged omission to state therein (if so used) a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the indemnification agreement contained in this Section 6(a) shall not apply to such losses, claims, damages, liabilities or actions which shall arise out of or shall be based upon any such untrue statement or alleged untrue statement, or any such omission or alleged omission, if such statement or omission shall have been (x) made in reliance upon and in conformity with information furnished in writing to the Company by the Purchaser or any such underwriter specifically for use in connection with the preparation of the registration statement or any preliminary prospectus or prospectus contained in the registration statement or any such amendment thereof or supplement thereto, or (y) made in any preliminary prospectus, and the prospectus shall have corrected such statement or omission and a copy of such prospectus shall have been delivered to the Purchaser or any such underwriter prior to the time such prospectus is required to be delivered by the Purchaser or the underwriter under applicable law. (b) Indemnification by the Purchaser. In the case of each offering registered pursuant to this Agreement, the Purchaser agrees, in the same manner and to the same extent as set forth in Section 6(a) of this Agreement to indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, its directors and those officers of the Company who shall have signed any such registration statement with respect to any statement in or omission from such registration statement or any preliminary prospectus (as amended or as supplemented, if amended or supplemented as aforesaid) or prospectus contained in such registration statement (as amended or as supplemented, if amended or supplemented as aforesaid), if such statement or omission shall have been made in reliance upon and in conformity with information furnished in writing to the Company by the Purchaser specifically for use in connection with the preparation of such registration statement or any preliminary prospectus or prospectus contained in such registration statement or any such amendment thereof or supplement thereto. (c) Notice of Claims. Each party indemnified under Section 6(a) or Section 6(b) of this Agreement shall, promptly after receipt of notice of the commencement of any action against such indemnified party in respect of which indemnity may be sought, notify the indemnifying party in writing of the commencement thereof, enclosing a copy of all papers served on such indemnified party. The omission of any indemnified party so to notify an indemnifying party of any such action shall not relieve the indemnifying party from any liability in respect of such action which it may have to such indemnified party on account of the indemnity agreement contained in Section 6(a) or Section 6(b) of this Agreement, unless the indemnifying party was prejudiced by such omission, and in no event shall relieve the indemnifying party from any other liability which it may have to such indemnified party. In case any such action shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party; provided, that if any indemnified party or parties reasonably determine that there may be legal defenses available to such indemnified party that are different from or in addition to those available to such indemnifying party or that representation of such indemnifying party and any indemnified party by the same counsel would present a conflict of interest, then such indemnifying party shall not be entitled to assume such defense. If an indemnifying party is not entitled to assume the defense of such action as a result of the proviso to the preceding sentence, counsel for such indemnifying party shall be entitled to conduct the defense of such indemnifying party and counsel for the indemnified party shall be entitled to conduct the defense of such indemnified party or parties. If an indemnifying party assumes the defense of an action in accordance with and as permitted by the provisions of this paragraph, such indemnifying party shall not be liable to such indemnified party under Section 6(a) or Section 6(b) of this Agreement for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. In no event shall the indemnifying party be liable for the fees and expenses of more than one counsel (in addition to local counsel) separate from its own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. The indemnifying party shall not be liable for any settlement of any action or proceeding effected without its written consent, but if settled with its written consent, or if there be a final judgment for the plaintiff in any such action or proceeding, the indemnifying party shall indemnify and hold harmless the indemnified persons from and against any loss or liability by reason of the settlement or judgment. (d) In order to provide for just and equitable contribution in circumstances in which the indemnity provided for in this Section 6 is for any reason held to be unavailable to the indemnified parties although applicable in accordance with its terms, the Company and Purchaser shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity incurred by the Company and Purchaser, as incurred; provided that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person that was not guilty of such fraudulent misrepresentation. As between the Company, on the one hand, and Purchaser, on the other hand, such parties shall contribute to such aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by such indemnity agreement in such proportion as shall be appropriate to reflect the relative fault of the Company, on the one hand, and the Purchaser, on the other hand, with respect to the statements or omissions which resulted in such loss, liability, claim, damage or expense, or action in respect thereof, as well as any other relevant equitable considerations. The relative fault of the Company, on the one hand, and of the Purchaser, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or by or on behalf of the Purchaser, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 6 were to be determined by pro rata allocation or by any other method of allocation that does not take into account the relevant equitable considerations. For purposes of this Section 6(d), each person who controls the Company or the Purchaser within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as Purchaser or the Company, as the case may be. No party shall be liable for contribution with respect to any action, suit, proceeding or claim settled without its written consent. (e) The Company may require, as a condition to entering into any underwriting agreement with respect to the registration of Subject Stock, that the Company shall have received an undertaking reasonably satisfactory to it from each underwriter named in any such underwriting agreement, severally and not jointly, to comply with the provisions of paragraphs (a) through (d) of this Section 6. (f) The obligations of the Company and Purchaser under this Section 6 shall survive the completion of any offering of Subject Stock in a registration statement. 7. Notices. Any notice or other communication given under this Agreement shall be sufficient if in writing and sent by registered or certified mail, return receipt requested, postage prepaid, to a party at its address set forth below (or at such other address as shall be designated for such purpose by such party in a written notice to the other party hereto): (a) if to the Company, to it at: Qwest Communications International Inc. 700 Qwest Tower 555 Seventeenth Street Denver, CO 80202 Facsimile Number: (303) 992-1772 Attn: Chief Financial Officer with a copy addressed as set forth above but to the attention of General Counsel, facsimile number: (303) 992-1044 and with an additional copy to: Steven L. Grossman O'Melveny & Myers LLP 1999 Avenue of the Stars Los Angeles, California 90067-6035 Facsimile Number: (310) 246-6779 (b) if to the Purchaser, to it at: Microsoft Corporation One Microsoft Way Building 8 North Office 2211 Redmond, WA 98052-6399 Attention: Chief Financial Officer Facsimile Number: (425) 936-7369 with a copy addressed as set forth above but to the attention of General Counsel, Finance and Administration, facsimile number: (425) 869-1327 with a copy to: Richard B. Dodd Preston Gates & Ellis LLP 5000 Columbia Center 701 Fifth Avenue Seattle, WA 98104-7078 Facsimile Number: (206) 623-7022 All such notices and communications shall be effective when received by the addressee. 8. Governing Law. This Agreement shall be governed in all respects by the internal laws of the State of New York as applied to contracts entered into solely between residents of, and to be performed entirely within, such state, and without reference to principles of conflicts of laws or choice of laws. 9. Entire Agreement; Amendments. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subject matter hereof and supersedes all prior agreements and understandings among the parties relating to the subject matter hereof. Neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought. 10. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. 11. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restriction of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 12. Termination of Company Obligation. All registration rights provided hereunder shall terminate upon the earlier to occur of the third anniversary of the date of this Agreement. 13. Counterparts This Agreement may be executed in two or more partially or fully executed counterparts and by facsimile signatures each of which shall be deemed an original and shall bind the signatory, but all of which together shall constitute but one and the same instrument. The execution and delivery of a Signature Page - Registration Rights Agreement in the form attached to this Agreement by any party hereto who shall have been furnished the final form of this Agreement shall constitute the execution and delivery of this Agreement by such party. 14. No Transfer or Assignment of Registration Rights. The registration rights set forth in this Agreement shall not be transferable or assignable by the Purchaser, except to (i) any person or group approved in writing by the Company; or (ii) a corporation of which the Purchaser owns more than 50% of the voting power entitled to be cast in the election of directors; provided, however, that each transferee agrees in writing to be subject to all the terms and conditions of this Agreement and the Purchase Agreement. 15. Interpretation. The words "include," "includes," and "including" when used therein shall be deemed in each case to be followed by the words "without limitation." The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 16. Non-Recourse. No recourse under this Agreement shall be had against any "controlling person" (within the meaning of Section 20 of the Exchange Act) of the Company or the stockholders, directors, officers, employees, agents and affiliates of the Company or such controlling persons, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any law, rule, regulation, order or decree, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by such controlling person, stockholder, director, officer, employee, agent or affiliate, as such, for any obligations of the Company under this Agreement or for any claim based on, in respect of or by reason of such obligations or their creation; provided, however, that nothing contained in this Section 16 shall be deemed to be a waiver by the Company or any such controlling person, stockholder, director, officer, employee, agent or affiliate of the Company of their respective liabilities under applicable federal or state securities laws, rules or regulations. [The balance of this page intentionally left blank.] SIGNATURE PAGE--REGISTRATION RIGHTS AGREEMENT IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective authorized officers as of the date set forth above. QWEST COMMUNICATIONS INTERNATIONAL INC., a Delaware corporation By: /s/ Robert S. Woodruff Name: Robert S. Woodruff Title: Executive Vice President - Finance and Chief Financial Officer MICROSOFT CORPORATION, a Washington corporation By: /s/ Gregory B. Maffei Name: Gregory B. Maffei Title: Vice President and Chief Financial Officer EX-99.1 4 Exhibit 99.1 Press release of the Registrant dated December 14, 1998. Microsoft Invests $200 Million in Qwest; Qwest to Deliver Complete Line of Electronic Commerce, Enterprise Network and Managed Software Solutions Based on Windows NT Server REDMOND, Wash. -- Dec. 14, 1998 -- Microsoft Corp. and Qwest Communications International Inc. today announced a strategic relationship that will redefine the boundaries for electronic commerce, Web hosting and other mission-critical business software applications and services. This relationship will enable businesses to have high-speed network services that maximize network resources, reduce costs, generate new sources of revenue and optimize management of computing operations. The Qwest service, built on the Microsoft(R) Windows NT(R) Server operating system and Qwest's Internet Protocol (IP)-based fiber optic network, is designed for businesses of all sizes. To accelerate Qwest's time-to-market with business services, Microsoft will license a broad range of its software to Qwest. In addition, Microsoft will become a shareholder in Qwest by purchasing $200 million of Qwest's common stock at $45 per share. Beginning in the second quarter of 1999, Qwest will offer businesses a complete, single-source high-speed service that is scalable and secure. Qwest's high-speed network will also support the development, integration and maintenance of advanced hosting services, including dedicated electronic commerce, Web application hosting, streaming media, managed software services and virtual private networking built on Microsoft platforms. Qwest will create a new business unit focused on the new markets starting in January 1999. Qwest expects the new service to generate approximately $150 million in revenues during the first two years, most of it in 2000. Qwest also expects the earnings before income taxes plus depreciation and amortization (EBITDA) for this business to be slightly negative in 1999 and slightly positive in 2000, and capital expenditures to total approximately $150 million in the first two years. "Qwest is confident that, by working with Microsoft, we will further the development of broadband applications and accelerate growth in the adoption of complete Web-enabled solutions. We will help drive the availability of applications at performance and pricing levels that will significantly enhance the productivity of businesses," said Joseph P. Nacchio, president and CEO of Qwest Communications. "By working with Microsoft and its distribution channels, we believe that we will be able to accelerate by as much as 12 months our own plans for the delivery of Web-enabled applications." "Microsoft is pleased to have this opportunity to work closely with Qwest in shaping this new end-to-end network service. We are investing in the company and its approach because we think this innovative broadband solution has the potential to bring enormous benefit to customers," said Steve Ballmer, president of Microsoft. "We believe this strategic relationship demonstrates that Windows NT Server meets communications companies' needs for a stable, secure and scalable solution to deliver a wide range of new network services." The network service will offer businesses new ways to acquire advanced communications services. For example, Qwest will deliver new services, such as instant technology upgrades and usage-sensitive billing, which will help businesses realize a quick return on their investment. The spectrum of advanced services offered will include the following: Dedicated electronic commerce, offering businesses an easy-to-use, customized system that will allow business partners to purchase goods and services and monitor order status in a secure, high-speed network environment. Qwest's service offering will help companies more rapidly deploy electronic commerce solutions and begin realizing the cost-efficiencies associated with Web-enabling sales, transactions, business supply chains and inventory management. Web application hosting, allowing companies to migrate mission-critical business applications such as electronic mail, human resources, finance and other operations to secure off-site servers with high-speed access and a single point of contact for around-the-clock customer support. Aside from the Microsoft product line, businesses will also have the flexibility to deploy Windows NT Server-based industry applications with increased functionality and reliability. Streaming media, providing businesses with a scalable, on-demand delivery capability that will enable distribution of images to single and multiple locations to support videoconferencing, PC-to-PC conferencing and video distribution services. Managed software services, providing a complete outsourced solution of platforms, tools and utilities to enable the enterprise IT organization to effectively and efficiently provide for asset management, software distribution and management, network management, network performance tuning and desktop management. Virtual Private Networking (VPN) and Virtual Private Dial-up Networking, offering businesses an end-to-end solution to connect their LANs, hosting sites, business partners, branch offices, telecommuters and mobile employees in an integrated, secure and simple manner. ### About Qwest Qwest Communications International Inc. (Nasdaq: QWST) is a leader in reliable and secure broadband Internet-based data, voice and image communications for businesses and consumers. Headquartered in Denver, Qwest has more than 8,000 employees and 80 sales offices in North America, Europe and Mexico. The Qwest Macro Capacity (SM) Fiber Network, designed with the newest optical networking, will span more than 18,500 route miles in the United States when it is completed in mid-1999. About Microsoft Founded in 1975, Microsoft (Nasdaq: MSFT) is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day. ######### This release may contain forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to the documents filed by Qwest and Microsoft with the SEC, specifically the most recent reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including potential fluctuations in quarterly results, dependence on new product development, rapid technological and market change, financial risk management and future growth subject to risks. Other risk factors include satisfactory negotiation of certain licensing arrangements and satisfactory resolution of software delivery and systems integration deliverables. These cautionary statements should be considered in connection with any subsequent written or oral forward-looking statements issued by Qwest or persons acting on its behalf. Qwest undertakes no obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Microsoft and Windows NT are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries. The Qwest logo is a registered trademark of Qwest Communications International Inc. in the U.S. and certain other countries. Other product and company names herein may be trademarks of their respective owners.
Contact Information: Media Contact: Investor Relation Contact: Waggener Edstrum for Microsoft Contact: Qwest Communications Qwest Communications Waggener Edstrum for Microsoft Tyler Gronbach Lee Wolfe Judi Meinhalt (303) 886-0814 (800) 567-7296 (408) 986-1140
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