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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO
Civil Action No. 01-CV-1451-REB-KLM
(Consolidated with Civil Action Nos. 01-RB-1472, 01-RB-1527, 01-RB-1616. 01-RB1799, 01-RB-1930, 01-RB-2083, 02-RB-333, 02-RB-374, 02-0-507, 02-RB-658, 02-RB755, 02-RB-798, and 04-RB-238)
In re QWEST COMMUNICATIONS INTERNATIONAL INC. SECURITIES LITIGATION
STIPULATION OF SETTLEMENT
This Stipulation of Settlement ("Stipulation") dated as of August 4, 2008 is made
and entered into pursuant to Rule 23 of the Federal Rules of Civil Procedure and
contains the terms of a settlement by and among the Settling Parties to the above-
entitled Litigation: (i) the Lead Plaintiffs (on behalf of themselves and each of the N&W
Class Members), by and through Lead Counsel; and (ii) Joseph P. Nacchio ("Nacchio")
and Robert S. Woodruff ("Woodruff") (Nacchio and Woodruff, collectively, are
sometimes referred to herein as the "Settling Defendants"), by and through their counsel
of record in the Litigation. For certain purposes, as described more fully below, Qwest
Communications International
Inc. ("QCII") is also a party to this Stipulation. This
Stipulation is intended by the Settling Parties and QCII to resolve fully, and to finally and
forever discharge and sette the Released Claims, upon and subject to this Stipulation's
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terms and conditions and subject to the approval of the District Court. All capitalized
terms in this Stipulation shall have the meanings specified for them in this Stipulation.
I. THE LITIGATION.
On July 27,2001, New England Healthcare Employees Pension Fund fied a
class action complaint, entitled New England Health Care Employees Fund v. Owest et
al., Civil Action No. 01-N-1451-REB-CBS, in the United States District Court for the
District of Colorado (the "District Court"), alleging various violations of the federal
securities laws. A number of similar class action complaints were subsequently filed in
the District Court. Pursuant to the Private Securities Litigation Reform Act of 1995, all of
the related class action complaints were consolidated under the first filed case, No. 01N-1451 (the "Litigation" as defined below); New England Healthcare Employees
Pension Fund, Clifford Mosher, Tejinder Singh, and Satpal Singh were appointed Lead
Plaintiffs; and a consolidated class action complaint was filed. Lead Plaintiffs filed
amended complaints on December 3, 2001, April 5, 2002, May 2, 2002, August 21 ,
2002, and February 6, 2004. In the Fifth Amended Complaint, the named defendants in the Litigation were Nacchio, Woodruff, QCII, Arthur Andersen LLP, Philp Anschutz,
Robin Szeliga, Stephen Jacobsen, Drake Tempest, Marc Weisberg, James Smith,
Lewis Wilks, Craig Slater, Afshin Mohebbi, Gregory Casey, and Vinod Khosla. The
causes of action asserted in the Fifth Amended Complaint were for violations of the
Securities Act of 1933 and the Securities Exchange Act of 1934. Lead Plaintiffs sought
to recover money and/or other relief on behalf of themselves and a putative class.
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Defendants moved to dismiss Lead Plaintiffs' various consolidated amended
complaints, and Lead Plaintiffs opposed those motions. The Court granted the motions
to dismiss in part and denied them in part, with some individuals being dismissed from
the Litigation. In other instances, claims or allegations were narrowed.
Those Defendants not dismissed from the Litigation filed answers denying all material allegations of Lead Plaintiffs' Fifth Amended Complaint and asserted various
defenses. Lead Plaintiffs and Defendants engaged in extensive discovery, which was
coordinated with discovery in several other state and federal securities actions that have
since been settled and dismissed, and which continued in coordination with Securites
and Exchange Commission v. Nacchio, et al., Civil Action No.05-CV-00480-MSK-CBS.
On or about November 21 , 2005, Lead Plaintiffs and all Defendants except
Nacchio and Woodruff entered into a Stipulation of Partial Settlement, establishing the
terms and conditions for the settlement of all claims by a putative class of Qwest
shareholders against all Defendants except Nacchio and Woodruff (the "Qwest
Stipulation"). Nacchio and Woodruff fied objections to their exclusion from the
proposed partial settlement, and particularly to certain "bar orders" and contractual
provisions included therein. In May 2006, the Honorable Robert E. Blackburn of the
United States District Court for the District of Colorado conducted a hearing to consider
argument and objections to the proposed partial settlement as set forth in the Qwest
Stipulation.
On September 28, 2006, the District Court issued an order, certifying a class for
settlement purposes only, finding the settement set forth in the Qwest Stipulation to be
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fair, reasonable, and adequate to that class in accordance with the standards of Rule 23
of the Federal Rules of Civil Procedure and denying the objections to the proposed
settlement that had been advanced by Nacchio, Woodruff, and others (the "Partial
Settement"). The District Court approved the Qwest Stipulation and incorporated that
document into the Partial Settlement. Nacchio and Woodruff filed an appeal in the
United States Court of Appeals for the Tenth Circuit, challenging the Partial Settlement insofar as it overruled their objections and incorporated and approved the bar orders
and contractual provisions to which they had objected. None of the class members who
had objected to the Partial Settlement in the District Court pursued appeals.
The Tenth Circuit held that Nacchio and Woodruff had standing to challenge the bar orders and the contractual provisions of the Partial Settlement, and remanded to the
District Court "so that it might make appropriate findings and conclusions with respect to
Mr. Nacchio's and Mr. Woodruff's objections to the settlement." New England Health
Care Employees Pension Fund v. Woodruff, et al., 512 F.3d 1283, 1286, 1287, 1288-
89, 1290-91, reh'g and reh'g en banc denied, 520 F.3d 1255 (10th Cir. 2008). The
District Court has not yet issued a further ruling following the remand from the Tenth
Circuit Court of Appeals.
To resolve Nacchio's and Woodruff's objections to the Partial Settlement and
disputes between Qwest and the Setting Defendants arising out of the Litigation without
further litigation and delay, QCII wil contribute to the settlement of claims asserted by a
putative class against Nacchio and Woodruff in this Litigation on the terms specified
herein. This Stipulation is intended to settle and resolve all of the putative class' claims
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against Nacchio and Woodruff and to eliminate all objections that Nacchio and Woodruff
have asserted to the Partial Settlement without further litigation and delay.
II. SETTLING DEFENDANTS' AND QWEST'S DENIALS OF WRONGDOING AND
LIABILITY.
The Settling Defendants have denied and continue to deny each and all of the
claims and contentions alleged in the Litigation. The Settling Defendants have
expressly denied and continue to deny all charges of wrongdoing or liabilty against
them arising out of any of the conduct, statements, acts or omissions alleged, or that
could have been alleged, in the Litigation. The Settling Defendants also have denied
and continue to deny, inter alia, the allegations that the Lead Plaintiffs or the N&W Class were harmed by or have suffered any damages as a result of the conduct alleged
in the Litigation.
Nonetheless, the Settling Defendants have concluded that further conduct of the
Litigation would be protracted and expensive, and that it is desirable that the Litigation
be fully and finally settled in the manner and upon the terms and conditions set forth in
this Stipulation. The Settling Defendants also have considered the uncertainty and risks
inherent in any litigation, especially in complex cases like this Litigation. The Settling
Defendants have, therefore, determined that it is desirable and beneficial to them that
the Litigation be settled in the manner and upon the terms and conditions set forth in
this Stipulation.
This Stipulation, and any and all exhibits or documents referred to herein, or any
terms or representations herein or therein, or any action taken to carry out this
Stipulation, are not, and shall in no event be construed or be deemed to be, evidence
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of, or an admission or a concession by the Settling Defendants of any fault, liabilty,
obligation (other than those contained in this Stipulation), or damages whatsoever. The
Settling Defendants deny any and all wrongdoing of any kind whatsoever and deny any
liability to Lead Plaintiffs, to the N&W Class Members, or to Qwest. The Settling
Defendants do not concede any infirmity in the defenses they have asserted in the
Litigation, nor are any such defenses waived.
Notwithstanding the foregoing, based upon the publicly available information at
the time of this Stipulation, the Setting Defendants agree that they will not contest that
the Litigation was filed in good faith, was not frivolous, and is being settled voluntarily in an amount and manner that reasonably reflects the risks posed by the claims against
the Setting Defendants collectively.
This Stipulation, and any and all exhibits or documents referred to herein, or any
terms or representations herein or therein, or any action taken to carry out this
Stipulation, are not, and shall in no event be construed or be deemed to be, evidence
of, or an admission or a concession by Qwest of any fault, liabilty, obligation (other than
those contained in this Stipulation), or damages whatsoever. Qwest denies any and all
wrongdoing of any kind whatsoever and denies any liabilty to Lead Plaintiffs, to the N&W Class Members, or to the Settling Defendants. Qwest does not concede any
infirmity in the defenses it has asserted in the Litigation, nor are any such defenses
waived.
It is the intent of Qwest, Lead Plaintiffs, and the Settling Defendants that this
Stipulation shall not be used for any purpose of any kind other than to enforce the
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provisions of this Stipulation or the provisions of any related agreement, release, or
exhibit hereto, or in order to support a defense of res judicata, collateral estoppel,
accord and satisfaction, release, or other theory of claim or issue preclusion or similar
defense. Therefore, pursuant to this Stipulation, as ordered by this Court, and pursuant
to Federal Rule of Evidence 408, any other Federal Rule of Evidence, the rules of
evidence of the various states, the rules of evidence followed by any quasi-judicial
bodies, including regulatory and self-regulatory organizations, and any other applicable law, rule or regulation, Qwest and the Settling Parties agree that the fact of entering into
or carrying out this Stipulation, the exhibits hereto, and any negotiations and
proceedings related hereto, as well as the settement itself, (a) shall not be construed
as, offered into evidence as, or deemed to be (i) evidence of, (ii) an admission or concession of liability or obligation (other than those contained in this Stipulation) of, or
(iii) an estoppel against, any Defendant, or (iv) a waiver of any applicable statute of
limitations or repose, and (b)
shall not be offered by a party hereto into evidence, or
considered, in any action or proceeding against any Defendant in any judicial, quasi-
judicial, administrative agency, regulatory or self-regulatory organization, or other
tribunal, or proceeding for any purpose whatsoever, other than to enforce the provisions
of this Stipulation or the provisions of any related agreement, release, or exhibit hereto,
or in order to support a defense of res judicata, collateral estoppel, accord and
satisfaction, release or other theory of claim or issue preclusion or similar defense.
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II. CLAIMS OF THE LEAD PLAINTIFFS AND BENEFITS OF SETTLEMENT.
The Lead Plaintiffs believe that the claims asserted in the Litigation have merit
and believe that the evidence developed to date supports the claims. However, the
Lead Plaintiffs and Lead Counsel recognize and acknowledge the expense and length
of continued proceedings necessary to prosecute the Litigation against the Settling
Defendants through trial and appeals. The Lead Plaintiffs and Lead Counsel also have
taken into account the uncertain outcome and the risk of any liigation, especially in
complex actions such as this Litigation, as well as the difficulties, delays, problems of
proof, and possible defenses that are inherent in such litigation. The Lead Plaintiffs and
Lead Counsel are also mindful of the inherent problems of proof under and possible
defenses to the violations asserted in the Litigation and of the claims of the Settling Defendants that their available assets would not satisfy a substantial judgment against
them, as well as the existence of other liigation against the Settling Defendants that
may be resolved before the claims of the N&W Class against them can be tried, which,
if successful, wil reduce their assets further. The Lead Plaintiffs and Lead Counsel
believe that the settlement set forth in this Stipulation confers substantial benefits upon
the N&W Class Members, both because it will achieve a substantial recovery with
respect to the claims against the Settling Defendants and because it wil resolve all
remaining objections to the Partial Settlement and thus accelerate the distribution of funds that are the subject of the Partial Settlement, the substantial majority of which will be distributed to N&W Class Members who are participating in the Partial Settlement.
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Based on their evaluation, the Lead Plaintiffs and Lead Counsel have determined that the settlement set forth in this Stipulation is in the best interests of the N&W Class.
IV. TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT.
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and
among the Lead Plaintiffs (for themselves and the N&W Class Members), the Settling
Defendants, by and through their respective counsel of record, and QCII, by
and
through its counsel of record, that, subject to the approval of the Court and to the terms
and conditions of this Stipulation, the Litigation and the Released Claims shall be finally and fully compromised, settled and released, and the Litigation shall be dismissed with
prejudice as to the Settling Defendants.
1. Definitions.
As used in this Stipulation, the following terms have the meanings specified
below:
1.1, "Authorized Claimant" means any N&W Class Member whose claim for
recovery has been allowed pursuant to the terms of this Stipulation.
1 .2. "Claimant" means any N& W Class Member of a class certified in
accordance with this Stipulation who files or has filed a Proof of Claim in such form and
manner and within such time as the Court shall prescribe.
1.3. "Claims Administrator" means Gilardi & Co. LLC.
1.4. "Defendants" means QCII, Arthur Andersen LLP and each of the
individuals named as a defendant in the Litigation, including Nacchio and Woodruff.
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1 .5. "Effective Date" means the first date by which all of the events and
conditions specified in Paragraph 8.1 of this Stipulation have occurred.
1.6. "Escrow Agent" means Lead CounseL.
1.7. "Final" means: (i) if no appeal is timely fied, the expiration date of the
time for the filng or noticing of an appeal from the Judgment; or (ii) if an appeal is timely
filed, (a) the later of the date of final affrmance on appeal of the Judgment, the
expiration of the time for a petition for a writ of certiorari to review the affrmance, a
denial of certiorari that has been timely sought or, if certiorari is granted, the date of final
affirmance of the Judgment following revi"ew pursuant to that grant; or (b) the date of
final dismissal of any appeal from the Judgment or the final dismissal of any proceeding
on certiorari to review the Judgment.
1.8. "Final Settlement Approval" means an order by the District Court finally
approving the terms of this Stipulation pursuant to FED.R.CIV.P. 23(e).
1.9. "Judgment" means the judgment or order to be rendered by the District
Court, substantially in the form attached hereto as Exhibit B.
1.10. "Lead Counsel" means Coughlin Stoia Geller Rudman & Robbins LLP,
655 W. Broadway, Suite 1900, San Diego, CA 92101-3301.
1.11. "Lead Plaintiffs" means New England Healthcare Employees Pension
Fund, Satpal Singh, Tejinder Singh, and Clifford Mosher.
1 .12. "Litigation" means In re Owest Communications Securities Litigation, Civil
Action No. 01-CV -1451-REB-KLM, including all putative class actions consolidated
therein.
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1.13. "N&W Class" means all Persons who purchased or otherwise acquired
Qwest publicly traded securities (including common stock, bonds, and options) from
May 24, 1999 through July 28, 2002 ("Class Period"), except for those Persons who
requested and obtained exclusion from the class that was certified by the Court in the
Partial Settlement and who subsequently resolved their claims against QCII, Nacchio,
Woodruff and others and provided releases of claims against QCII, Nacchio, Woodruff
and others. Excluded from the N&W Class are Defendants and any Persons affliated
with or related to any Defendant. For purposes of this Paragraph, the Persons affiliated
with or related to any Defendant are members of the immediate family of each
Defendant, any entity in which any Defendant has a controllng interest, officers and directors of QCII and its subsidiaries and affliates, and Arthur Andersen LLP ("AA") and
AA's partners, shareholders and members, and the legal representatives, heirs,
predecessors, successors and assigns of any such excluded party. Also excluded from
the N&W Class are those Persons who request exclusion from the N&W Class in such
form and manner, and within such time, as the Court shall prescribe. Also excluded
from the N&W Class is any current or former offcer, director, employee, or agent of
Qwest who has been sued by the United States Securities and Exchange Commission
in connection with such Person's affilation with or conduct related to Qwest.
1.14. "N&W Class Member" means a Person who falls within the definition of
the N&W Class.
1.15. "N&W Settlement Fund" means the principal amount of $45,000,000.00
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(forty-five million dollars) in cash, plus all interest earned thereon pursuant to this
Stipulation.
1.16. "Net N&W Settlement Fund" means the N&W Settlement Fund, together
with any interest earned thereon, less (i) any taxes, (ii) the cash allocated to Lead
Counsel for attorneys' fees and expenses pursuant to any Fee and Expense Application
(defined in Paragraph 7.1) approved by the Court pursuant to Paragraphs 7.1 and 7.2,
and (iii) the cash allocated to the N&W Class Notice and Administration Fund pursuant
to Paragraph 2.8.
1.17. "Partial Settlement" shall mean the Order of the District Court entered on
September 29, 2006 (Docket No.1 050), as amended on January 8, 2007 (Docket No.
1096), certifying a class for the purpose of implementing the partial class action
settlement provided for in the Stipulation of Partial Settlement between and among Lead
Plaintiffs, Qwest and all other Defendants except Nacchio and Woodruff, and finding
that settement to be fair, reasonable, and adequate to that class in accordance with the
standards of Rule 23 of the Federal Rules of Civil Procedure.
1.18. "Person" means an individual, corporation, partnership, limited
partnership, limited liabilty partnership (LLP), limited liabilty corporation (LLC),
association, joint stock company, estate, legal representative, trust, unincorporated
association, and any business or legal entity and their spouses, heirs, predecessors, successors, representatives, or assignees.
1.19. "Plan of Allocation" means the plan or formula of allocation that was
approved by the United States District Court for the District of Colorado as part of that
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Court's approval of the Partial Settlement, which shall be used in distributing the Net
N&W Settlement Fund as welL. The Plan of Allocation is not part of this Stipulation and
the Defendants and the Related Parties shall have no liabilty with respect to it.
1.20. "Preliminary Settlement Approval" means an order by the District Court
preliminarily approving the terms of this Stipulation and ordering that notice be issued to
the Class pursuant to FED.R.CIV.P. 23(e).
1.21. "QCII" means Qwest Communications International
Inc.
1.22. "Qwest" means QCII, any and all successors, subsidiaries, and affliates of
QCII, and any and all current and former officers, directors, employees and agents of
any of them, as well as any predecessors of QCII (including but not limited to
U S WEST and any successors, subsidiaries, and affilates thereof) and their
successors, subsidiaries, and affilates, and any and all current and former officers,
directors, employees and agents of any of them. Notwithstanding the foregoing, neither
Nacchio nor Woodruff is included in the definition of Qwest.
1 .23. "Qwest Stipulation" shall mean the Stipulation of Partial Settement,
executed by Lead Plaintiffs, Qwest and all other Defendants except Nacchio and
Woodruff and filed in this matter on November 21,2005 (Docket No. 886), which was
approved by the District Court in the Partial Settlement and incorporated into the Partial
Settlement by reference.
1 .24. "Related Parties" means each of a Settling Defendant's past or present
partners, employees, attorneys, accountants or auditors, banks or investment banks,
advisors, personal or legal representatives, insurers, reinsurers, successors, assigns,
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spouses, heirs, related or affliated entities, any partnership in which a Settling
Defendant is a general or limited partner, any entity in which a Settling Defendant has a
controllng interest, any member of a Settling Defendant's immediate family, or any trust
or foundation of which any Settling Defendant is the settlor or which is for the benefit of
any Settling Defendant and/or member(s) of his or her family.
1.25. "Released Claims" shall collectively mean all claims, demands, rights,
liabilities and causes of action of every nature and description whatsoever, whether
based in law or equity, on federal, state, local, foreign, statutory or common law, or any
other law, rule, or regulation (including, but not limited to, all claims arising out of or
relating to any acts, omissions, disclosures, public filings, registration statements,
financial statements, audit opinions, or statements by the Settling Defendants, including without limitation, claims for negligence, gross negligence, constructive or actual fraud,
negligent misrepresentation, conspiracy, or breach of fiduciary duty), whether known or unknown, whether or not concealed or hidden, accrued or not accrued, foreseen or
unforeseen, matured or not matured, that were asserted or that could have been
asserted directly, indirectly, representatively or in any other capacity, at any time, in any
forum by Lead Plaintiffs, the N&W Class Members, or the successors or assigns of any
Lead Plaintiff or N&W Class Member, or any of them, against the Released Persons
arising out of, based upon, or related in any way to: (a) the purchase, acquisition, sale,
or disposition of Qwest securities by any Lead Plaintiff or any N&W Class Member
during the Class Period and the allegations that were made or could have been made in
the Litigation; (b) the purchase or other acquisition of, the retention of, the sale or other
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disposition of, or any other transaction involving Qwest securities by any of the
Released Persons during the Class Period; or (c) the settlement or resolution of the
Litigation (including, without limitation, any claim for attorneys' fees by Lead Plaintiffs or
any N&W Class Member). Released Claims shall also include claims related to any tax
effects or tax liabilities (including any interest, penalties and representation costs)
arising out of this Stipulation or any payment or transfer made pursuant to this
Stipulation. Released Claims shall also include Unknown Claims otherwise subject to
this provision. Released Claims does not include claims to enforce the terms of this
Stipulation.
1 .26. "Released Persons" means each of the Settling Defendants and his
Related Parties.
1.27. "Settling Defendants" means, collectively, Joseph P. Nacchio and Robert
S. Woodruff.
1.28. "Settling Parties" means, collectively, each of the Settling Defendants and
the Lead Plaintiffs on behalf of themselves and the N&W Class Members.
1.29. "Stipulation" means this document together with all its exhibits. 1.30. "Unknown Claims" means any claims that any N&W Class Member or
Lead Plaintiffs do not know or suspect to exist in his, her, its or their favor at the time of
the release of the Released Persons which, if known by him, her, it, or them might have
affected his, her, its or their settlement with and release of the Released Persons, or
might have affected his, her, its, or their decision not to object to this settlement. With
respect to any and all Released Claims, the Settling Parties stipulate and agree that,
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upon the Effective Date, the Lead Plaintiffs shall expressly, and each of the N&W Class
Members shall be deemed to have, and by operation of the Judgment shall have,
expressly waived the provisions, rights and benefits of Caliornia Civil Code § 1542,
which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT THE TIME OF TO EXIST IN HIS OR HER FAVOR AT EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
The Lead Plaintiffs shall expressly, and each of the N&W Class Members shall be
deemed to have, and by operation of the Judgment shall have, expressly waived any
and all provisions, rights and benefits conferred by any law, or principle of common law,
which is similar, comparable or equivalent to California Civil Code §1542. The Lead
Plaintiffs and N&W Class Members may hereafter discover facts in addition to or different from those that he, she, it or they now know or believe to exist or to be true with respect to the subject matter of the Released Claims, but the Lead Plaintiffs shall
have, and each N&W Class Member, upon the Effective Date, and by operation of the
Judgment shall be deemed to have, fully, finally, and forever settled and released any and all Released Claims, known or unknown, suspected or unsuspected, contingent or
non-contingent, whether or not concealed or hidden, which now exist, or heretofore
have existed, upon any theory of law or equity now existing or coming into existence in
the future, including, but not limited to, conduct that is negligent, intentional, with or without malice, or a breach of any duty, law or rule, without regard to the subsequent
discovery or existence of such different or additional facts. The Lead Plaintiffs
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acknowledge, and the N&W Class Members shall be deemed by operation of the Judgment to have acknowledged, that the foregoing waiver was separately bargained for and a material element of the settlement of which this release is a part.
2. The Class Settlement with Nacchio and Woodruff.
2.1 Payment of the N&W Settlement Fund shall occur as follows:
a. Within 10 calendar days after the Preliminary Settlement Approval,
QCII shall transfer $2 milion in cash to an account maintained by the Escrow
Agent for the purpose of administering funds contributed by QCII to the N&W
Class settement. Within 30 calendar days after the Preliminary Settlement
Approval, QCII shall transfer an additional $38 millon in cash to an account
maintained by the Escrow Agent for the purpose of administering funds
contributed by QCII to the N&W Class settlement. If all or part of this $40 millon
is not transferred to this account within the periods specified herein, the amount
not transferred shall accrue interest at a rate of 7% annually until the entire $40
milion has been transferred. Further, if all or part of the $40 million is not
transferred to the account within the specified 30 days, Lead Plaintiffs may
terminate this N&W Class settlement; provided however, that the Lead Plaintiffs shall provide the Settling Defendants and QCII written notice of their intent to
terminate, and allow Settling Defendants and QCII 30 days to cure.
b. Within 30 calendar days after Final Settlement Approval of the
N&W Class settlement provided herein, the Settling Defendants shall cause $5
million in cash to be transferred into an account maintained by the Escrow Agent
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for the purpose of administering funds contributed by the Settling Defendants to
the N&W Class settlement. If all or part of this $5 millon is not transferred to this
account within the specified 30-day period, the amount not transferred shall
accrue interest at a rate of 7% annually until the entire $5 millon is transferred.
Further, if all or part of the $5 milion is not transferred to the account within the
specified 30 days, Lead Plaintiffs may terminate this N&W Class settlement;
provided however, that the Lead Plaintiffs shall provide the Settlng Defendants
and QCII written notice of their intent to terminate, and allow Settling Defendants
and QCII 30 days to cure.
2.2 The Escrow Agent shall maintain the QCII payments and the Setting
Defendants' payment in separate accounts, with the total of $45 millon constituting the
N&W Settlement Fund. The Escrow Agent (a) shall maintain separate accounts for
QCII's payments and the Settling Defendants' payment, (b) shall invest the N&W
Settlement Fund deposited pursuant to Paragraph 2.1 hereof in instruments with maturities of less than one year, such investments to be backed by the full faith and
credit of the United States Government or fully insured by the United States
Government or one of its agencies, and (c) shall reinvest the proceeds of these
instruments as they mature in similar instruments at their then-current market rates.
The Escrow Agent shall bear all risks related to management and investment of the
N&W Settlement Fund; however, the Escrow Agent shall not be subject to any liability based on its investment choices to the extent it complies with the foregoing sentence.
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2.3 The Settling Defendants shall not assert any claim upon or interest in the
$40 milion that QCII shall pay to the Escrow Agent, nor upon any gains resulting from
the investment of those funds. If (i) the Effective Date does not occur, (ii) the Stipulation
is canceled or terminated for any reason, or (Hi) if the dismissal with prejudice of this
Litigation does not become Final, the Settling Defendants shall not object to or
otherwise contest QCII's demand that the Escrow Agent return as directed by QCII the
$40 million contributed by QCII to the N&W Settement Fund, together with any accrued
interest thereon, minus any amounts reasonably and actually expended for the costs of
notice, administration, taxes and tax expenses, and the Settling Defendants shall take
such actions as may be reasonably requested of them to faciltate the Escrow Agent's
prompt payment of that amount, such as promptly executing any consent or written
instruction required by the Escrow Agent.
2.4 Qwest shall not assert any claim upon or interest in the $5 milion that the
Settling Defendants shall cause to be paid to the Escrow Agent, nor upon any gains
resulting from the investment of those funds. If (i) the Effective Date does not occur, (ii)
the Stipulation is canceled or terminated for any reason, or (ii) if the dismissal with
prejudice of this Litigation does not become Final, Qwest shall not object to or otherwise
contest the Settling Defendants' demand that the Escrow Agent return as directed by
the Setting Defendants the $5 millon they have caused to be contributed to the N&W
Settlement Fund, together with any accrued interest thereon, minus any amounts
reasonably and actually expended for the costs of notice, administration, taxes and tax expenses, and QCII shall take such actions as may be reasonably requested of QCII to
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facilitate the Escrow Agent's prompt payment of that amount, such as promptly
executing any consent or written instruction required by the Escrow Agent.
2.5 The Escrow Agent shall not disburse the N&W Settlement Fund except as
provided in the Stipulation or pursuant to an order of the Court.
2.6 Subject to further order and/or direction as may be made by the Court, the
Escrow Agent is authorized to execute such transactions on behalf of the N&W Class
Members as are consistent with the terms of this Stipulation.
2.7 All funds held by the Escrow Agent shall be deemed and considered to be
in custodia legis of the Court, and shall remain subject to the jurisdiction of the Court,
until such time as such funds shall be distributed pursuant to this Stipulation and/or
further order(s) of the Court.
2.8 Upon the payment of $2 milion to the account controlled by the Escrow
Agent pursuant to Paragraph 2.1 (a), the Escrow Agent may establish an "N&W Class
Notice and Administration Fund," and may deposit that amount in it. Within five
calendar days after payment of additional amounts required by Paragraph 2.1 (a), the
Escrow Agent may deposit an additional $2 millon into the N&W Class Notice and
Administration Fund. The N&W Class Notice and Administration Fund may be used by
Lead Counsel to pay costs and expenses reasonably and actually incurred in connection with providing notice to the N&W Class, locating N&W Class Members,
soliciting claims, assisting with the filing of claims, administering and distributing the Net
N&W Settlement Fund to Authorized Claimants, processing Proof of Claim and Release
forms, and paying escrow fees and costs, if any. The N&W Class Notice and
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Administration Fund may also be invested and earn interest as provided for in
Paragraph 2.2 of this Stipulation. Any notice and administrative costs in excess of $4
million shall be paid following the Effective Date from the Net N&W Settement Fund
upon Lead Counsel's approval.
3. Taxes.
3.1 Settling Parties and the Escrow Agent agree to treat the N&W Settlement
Fund as being at all times a "qualiied settlement fund" within the meaning of Treas.
Reg. § 1.468B-1. In addition, the Escrow Agent shall timely make such elections as
necessary or advisable to carry out the provisions of this Section 3, including the
"relation-back election" (as defined in Treas. Reg. § 1.468B-1) back to the earliest
permitted date. Such elections shall be made in compliance with the procedures and
requirements contained in such regulations. It shall be the responsibilty of the Escrow
Agent to timely and properly prepare and deliver the necessary documentation for
signature by all necessary parties, and thereafter to cause the appropriate fiing to
occur.
3.2 For the purpose of § 468B of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder, the "administrator" shall be the
Escrow Agent. The Escrow Agent shall timely and properly file all informational and
other tax reports and returns necessary or advisable with respect to the N&W
Settlement Fund (including without limitation the returns described in Treas. Reg.
§1.468B-2(k)). Such returns (as well as the election described in Paragraph 3.1) shall
be consistent with this Section 3 and in all events shall reflect that all taxes (including
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but not limited to any federal, state, or local taxes, and any estimated taxes, interest or
penalties) on the income earned by the N&W Settlement Fund shall be paid out of the
N&W Settlement Fund as provided in Paragraph 3.3.
3.3 All (i) taxes (including but not limited to any federal, state, or local taxes,
and any estimated taxes, interest or penalties) arising with respect to the income earned
by the N&W Settlement Fund, including any taxes or tax detriments that may be
imposed upon the Settling Defendants or their counsel with respect to any income
earned by the N&W Settlement Fund for any period during which the N&W Settlement
Fund does not qualify as a "qualified settlement fund" for federal or state income tax
purposes and (ii) tax expenses, such as expenses and costs incurred in connection with the operation and implementation of this Section 3 (including, without limitation,
expenses of tax attorneys and/or accountants and mailing and distribution costs and
expenses relating to filing (or failng to fie) the reports and returns described in this
Section 3), shall be paid out of the N&W Settlement Fund; in all events neither the
Released Persons nor QCII shall have any liabilty or responsibilty for the taxes or the
tax expenses. The Escrow Agent shall indemnify and hold QCII and each of the
Released Persons harmless for taxes and tax expenses (including, without limitation,
taxes payable by reason of any payment made to or for the benefit of the N&W Class
hereunder, and taxes payable by reason of any such indemnification). Further, taxes
and tax expenses shall be treated as, and considered to be, a cost of administration of
the N&W Settlement Fund and shall be timely paid by the Escrow Agent out of the N&W
Settlement Fund without prior order from the Court and the Escrow Agent shall be
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obligated (notwithstanding anything herein to the contrary) to withhold from distribution
to Authorized Claimants any funds necessary to pay such amounts including the
establishment of adequate reserves for any taxes and tax expenses (as well as any
amounts that may be required to be withheld under Treas. Reg. §1.468B-2(1)(2));
neither the Settling Defendants, QCII, nor their counsel are responsible nor shall they
have any liabilty therefor. Nothing in this Section 3 or any part of this N&W Stipulation
shall constitute or be considered to be tax advice by the Released Persons or any of
their respective counseL. The Settling Parties and QCII agree to cooperate with the Escrow Agent, each other, and their tax attorneys and accountants to the extent
reasonably necessary to carry out the provisions of this Section 3.
3.4 Released Persons and QCII have made no representation or warranty
with respect to the tax treatment by any Lead Plaintiff or N&W Class Member of any
payment or transfer made pursuant to this Stipulation or derived from or made pursuant
to the N&W Settlement Fund.
3.5 For the purpose of this Section 3, references to the N&W Settlement
Fund shall include both the N&W Settement Fund and the N&W Class Notice and
Administration Fund and shall also include any earnings on either of those funds.
4. Notice Order and Settement Hearing.
4.1 As soon as practicable following execution of this Stipulation, Lead
Counsel shall submit this Stipulation together with its exhibits to the Court and shall
apply for entry of an order (the "Notice Order"), substantially in the form of Exhibit A, requesting, inter alia, Preliminary Settlement Approval as set forth in this Stipulation,
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and approval for the mailng of a settement notice (the "Notice") and publication of a
summary notice, substantially in the forms of Exhibits A-1 and A-3. The Notice shall
include the general terms of the settlement set forth in this Stipulation, the Plan of Allocation, the general terms of the Fee and Expense Application as defined in
Paragraph 7.1, below, and the date of the Settlement Hearing as defined in Paragraph
4.2 below.
4.2 Lead Counsel shall request that, after notice is given, the Court hold a
hearing (the "Settement Hearing") and provide Final Settlement Approval for the
settlement set forth in this Stipulation. At or after the Settlement Hearing, Lead Counsel
also wil request that the Court approve the Fee and Expense Application.
5. Releases, Settlng Defendants' Withdrawal of Objections and
Confirmation of Partial Settlement.
5.1 Upon the Effective Date, Lead Plaintiffs and each of the N&W Class
Members shall be deemed to have, and by operation of the Judgment shall have: (i)
fully, finally, and forever released, relinquished and discharged all Released Claims
(including Unknown Claims) against the Released Persons, whether or not each such N&W Class Member executes and delivers the Proof of Claim and Release; (ii)
covenanted not to sue any of the Released Persons or otherwise to assert, directly or
indirectly, any of the Released Claims against any of the Released Persons; and (ii)
agreed to be forever barred and enjoined from doing so, in any court of law or equity, or
in any other forum.
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5.2 The Proof of Claim and Release to be executed by N&W Class Members
shall release all Released Claims against the Released Persons and shall be
substantially in the form contained in Exhibit A-2.
5.3 Upon the Effective Date, each of the Released Persons shall be deemed
to have, and by operation of the Judgment shall have, fully, finally, and forever released,
relinquished and discharged each and all of the Lead Plaintiffs, N&W Class Members,
and Lead Counsel from all claims (including Unknown Claims), arising out of, relating to,
or in connection with the institution, prosecution, assertion, settlement, or resolution of the Litigation or the Released Claims.
5.4 Upon the Effective Date, the Settling Defendants and their Related
Parties shall be deemed to have, and by operation of the Judgment shall have, fully,
finally, and forever released, relinquished and discharged one another from all claims
(including Unknown Claims), arising out of, relating to, or in connection with the
Released Claims.
5.5 Upon the Effective Date:
(a) the Settling Defendants shall be deemed to have, and by operation
of the Judgment shall have withdrawn, waived, and abandoned any and all
objections, challenges, and appeals they have now, have ever had, or may in the
future ever have to the Qwest Stipulation and to the Partial Settlement;
(b) there being no objections, challenges, or appeals to or from the
Partial Settement other than those withdrawn, waived, and abandoned pursuant
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to Paragraph 5.5(a), the Partial Settement shall be "Final" as defined in
Paragraph 1.11 and used in Paragraph 8.1 (d) of the Qwest Stipulation; and
(c) the finality of the Partial Settlement pursuant to Paragraph 5.5(b)
being the last to occur of the conditions to the "Effective Date" of the Partial
Settlement stated in Paragraph 8.1 of the Qwest Stipulation, the Effective Date of
this N&W Stipulation shall also be the "Effective Date" of the Partial Settlement
under Paragraph 8.1 of the Qwest Stipulation.
6. Administration and Calculation of Claims, Final Awards and
Supervision and Distribution of the N&W Settlement Fund.
6.1 The Claims Administrator, subject to such supervision and direction of
the Court and/or Lead Counsel as may be necessary or as circumstances may require, shall administer and calculate the claims submitted by N&W Class Members and shall
oversee distribution of the Net N&W Settement Fund to Authorized Claimants.
6.2 The N&W Settlement Fund shall be applied as follows:
(a) to pay Lead Counsel's attorneys' fees and expenses with interest
thereon (the "Fee and Expense Award"), and to pay Lead Plaintiffs' expenses (including lost wages) incurred in representing the N&W Class if and to the extent allowed by the Court;
(b) to pay all the costs and expenses reasonably and actually incurred
in connection with providing notice, locating N&W Class Members, soliciting N&W Cla.ss claims, assisting with the fiing of claims, administering and
distributing the Net N&W Settement Fund to Authorized Claimants, processing
Proof of Claim and Release forms and paying escrow fees and costs, if any;
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(c) to pay the taxes and tax expenses described in Section 3; and
(d) to distribute the Net N&W Settlement Fund to Authorized Claimants
as allowed by this Stipulation, the Plan of Allocation, and the Court.
6.3 Upon the Effective Date and thereafter, and in accordance with the terms
of this Stipulation, the Plan of Allocation, or such further approval and further order(s) of
the Court as may be necessary or as circumstances may require, the Net N&W
Settement Fund shall be distributed to Authorized Claimants, subject to and in
accordance with Paragraphs 6.4-6.9.
6.4 Within ninety (90) calendar days after the mailng of the Notice or such
other time as may be set by the Court, each Person claiming to be an Authorized Claimant shall be required to submit to the Claims Administrator a completed Proof of Claim and Release, substantially in the form of Exhibit A-2, signed under penalty of perjury and supported by such documents as are specified in the Proof of Claim and
Release and as are reasonably available to the Authorized Claimant, provided, however, that any Person who submitted a Proof of Claim and Release to participate in
the Partial Settlement shall be deemed to be a N&W Class Member and shall
participate in the N& W Class based on the information included in the Proof of Claim
and Release that such Person submitted in the Partial Settlement unless such Person
submits a Proof of Claim and Release in this proceeding (in which case, the Proof of Claim and Release filed in the Partial Settlement shall be disregarded for these
purposes) or unless such Person is specifically excluded from the N&W Class.
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6.5 Except as set forth in Paragraph 6.4, above, or except as otherwise
ordered by the Court, all N&W Class Members who fail timely to submit a Proof of Claim and Release within such period, or such other period as may be ordered by the Court, or otherwise allowed, shall be forever barred from receiving any payments pursuant to
this Stipulation and the settlement set forth herein, but will in all other respects be
subject to and bound by the provisions of this Stipulation, the releases contained herein,
and the Judgment. Notwithstanding the foregoing, Lead Counsel may, in their
discretion, accept for processing late submitted claims so long as the distribution of the
Net N&W Settlement Fund to Authorized Claimants is not materially delayed.
6.6 The Net N&W Settement Fund shall be distributed to the Authorized
Claimants substantially in accordance with the Plan of Allocation previously approved by the Court in relation to the Partial Settlement, which shall be described in the Notice.
If any funds remain in the Net N&W Settlement Fund by reason of un-cashed checks or otherwise, then, after the Claims Administrator has made reasonable and diligent efforts
to have N&W Class Members who are entitled to participate in the distribution of the Net
N&W Settement Fund cash their distribution checks, any balance remaining in the Net
N&W Settlement Fund one year after the initial distribution of such funds shall be re-
distributed to N&W Class Members who have cashed their checks and who would
receive at least $10.00 from such re-distribution, after payment of any taxes and unpaid
costs or fees incurred in administering the Net N&W Settlement Fund for such re-
distribution. If six months after such re-distribution any funds shall remain in the Net
N&W Settlement fund, then such balance shall be paid to Colorado-based non-
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sectarian, not-for-profit 501 (c)(3) organization(s) providing legal services or otherwise in
the appropriate public interest designated by Lead CounseL.
6.7 The Released Persons shall have no responsibilty for, interest in, or
liabiliy whatsoever with respect to the investment or distribution of the Net N&W Settement Fund, the Plan of Allocation, the determination, administration, or
calculation of claims, the payment or withholding of taxes, or any losses incurred in
connection therewith.
6.8 No Person shall have any claim against Lead Counselor the Claims
Administrator, or their counsel, based on distributions made substantially in
accordance with this Stipulation and the settlement contained therein, the Plan of
Allocation, or further order(s) of the Court. No Person shall have any claim whatsoever
against Settling Defendants, QCII, counsel for the Settling Defendants or QCII, or any
Released Persons arising from or related to any distributions made, or not made, from
the N&W Settlement Fund.
6.9 It is understood and agreed by the Setting Parties that the Plan of
Allocation of the Net N&W Settlement Fund including, but not limited to, any
adjustments to an Authorized Claimant's claim set forth therein, is not a part of this Stipulation and is to be considered by the Court separately from the Court's
consideration of the fairness, reasonableness, and adequacy of the settlement set
forth in this Stipulation, and any order or proceeding relating to the Plan of Allocation shall not operate to terminate or cancel this Stipulation or affect the finality of the
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Court's Judgment approving this Stipulation and the settlement set forth therein, or any
other orders entered pursuant to this Stipulation.
7. Lead Counsel's Attorneys' Fees and Reimbursement of Expenses.
7.1 Lead Counsel may submit an application or applications (the "Fee and
Expense Application") for distributions to them from the N&W Settlement Fund for an
award of attorneys' fees, and reimbursement of expenses incurred in connection with
prosecuting the Litigation, plus any interest on such attorneys' fees and expenses at the
same rate and for the same periods as earned by the N&W Settlement Fund (until paid).
Lead Counsel reserves the right to make additional applications for fees and expenses
incurred. The Lead Plaintiffs may submit an application for reimbursement of their
expenses (including lost wages) incurred in representing the N&W Class in the
Litigation.
7.2 The attorneys' fees, expenses and costs, as awarded by the Court, shall
be paid to Lead Counsel from the N&W Settlement Fund, as ordered, immediately after the Court executes an order awarding such fees and expenses, but no earlier than the
Final Settlement Approval. Lead Counsel shall allocate the attorneys' fees amongst
other Plaintiffs' counsel in a manner in which they in good faith believe reflects the
contributions of such counsel to the prosecution and settlement of the Litigation. In the
event that (i) the Effective Date does not occur, (ii) the judgment and/or order making
such fee and expense award is reversed or modified, (iii) the Stipulation is canceled or
terminated for any reason, or (iv) if the dismissal with prejudice of this Litigation does
not become Final, and in the event that the fee and expense award has been paid to
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any extent, then Lead Counsel shall within five (5) business days from receiving notice from QCII, from one or both Settling Defendants, or from a court of appropriate
jurisdiction, refund to the N&W Settement Fund the fees, expenses and costs
previously paid to them from the N&W Settlement Fund plus interest thereon at the
same rate as earned on the N&W Settlement Fund in an amount consistent with such
reversal or modification. Each Plaintiffs' counsel's law firm as a condition of receiving
such fees and expenses, on behalf of itself and each partner and/or shareholder of it,
agrees that the law firm and its partners and/or shareholders are subject to the
jurisdiction of the Court for the purpose of enforcing the provisions of this paragraph. Without limitation, each such law firm and its partners and/or shareholders agree that
the Court may, upon application of QCII or of one or both Settling Defendants, summarily issue orders including, without limitation, judgments and attachment orders
and may make appropriate findings of or sanctions for contempt, against them or any of
them should such law firm fail timely to repay such fees and expenses.
7.3 The procedure for and the allowance or disallowance by the Court of any
applications by Lead Counsel for attorneys' fees and expenses to be paid out of the
N&W Settement Fund are not part of the settlement set forth in this Stipulation, and are
to be considered by the Court separately from the Court's consideration of the fairness, reasonableness and adequacy of the settlement set forth in this Stipulation, and any order or proceeding relating to the Fee and Expense Application, or any appeal from
any order relating thereto or reversal or modification thereof, shall not operate to
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terminate or cancel this Stipulation, or affect or delay the finality of the Judgment
approving this Stipulation and the settlement of the Litigation set forth therein.
7.4 Settling Defendants, QCII, and the Related Parties shall have no
responsibiliy for the allocation among Plaintiffs' counsel, and/or any other Person who
may assert some claim thereto, of any fee and expense award that the Court may make
in the Litigation.
8. Conditions of Settlement, Effect of Disapproval, Cancellation, or
Termination.
8.1 The Effective Date of this Stipulation shall be conditioned on the
occurrence of the last to occur of the following events:
(a) The Setting Defendants and Qwest have timely made or caused to
be made the contributions to the N&W Settlement Fund as required by
Paragraph 2.1 ;
(b) the Court has entered the Notice Order, as required by Paragraph
4.1 ;
(c) QCII has waived or has not timely asserted any right to withdraw
from the N&W Settlement, including the rights to terminate provided under
Paragraph 8.2.
(d) the Court has entered the Judgment, attached as Exhibit B, or a
judgment substantially similar in all material respects; and
(e) the Judgment has become FinaL.
8.2 Simultaneously herewith, QCII, the Settling Defendants, and the Lead
Plaintiffs (individually and on behalf of the N&W Class) have entered into a
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"Supplemental Agreement Regarding Requests for Exclusion" setting forth, among
other things, certain conditions under which this Stipulation may be withdrawn or
terminated by QCII. In the event of a withdrawal from or termination of this Stipulation
pursuant to the Supplemental Agreement Regarding Requests for Exclusion, this
Stipulation shall become null and void and of no further force and effect and the
provisions of Paragraph 8.4 shall apply. In addition, QCII and the Settling Defendants
have entered into an agreement relating to QCII's participation in this Stipulation.
Neither the Supplemental Agreement Regarding Requests for Exclusion nor the
agreement between QCII and the Settling Defendants shall be fied unless a dispute
arises as to its terms, or, with respect to the Supplemental Agreement Regarding
Requests for Exclusion, if QCII exercises its right thereunder to terminate the
Stipulation.
8.3 Upon the occurrence of all of the events referenced in Paragraph 8.1, any
and all remaining interest or right of Settling Defendants and of QCII in or to the N&W
Settement Fund, if any, shall be absolutely and forever extinguished. If any or all of
the conditions specified in Paragraph 8.1 are not met, then, unless Lead Counsel and
counsel for the Settling Defendants and counsel for QCII mutually agree in writing to
proceed with this Stipulation within thirty business days of their receipt of notice of any failed condition, this Stipulation shall be canceled and terminated and shall become
null and void, and the parties shall proceed in all respects as if this Stipulation had not
been executed and without prejudice in any way from the negotiation, fact, or terms of this Stipulation, except that Paragraph 8.4 shall survive.
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8.4 Unless otherwise ordered by the Court, in the event this Stipulation shall
terminate, be canceled, or not become effective for any reason, within five business
days after written notification of such event is sent by counsel for Settling Defendants
or QCII to the Escrow Agent, the N&W Settlement Fund, plus accrued interest and the
N&W Class Notice and Administration Fund, plus accrued interest, shall be paid in
accordance with written instructions received from counsel for the Settling Defendants (as to any and all amounts Settling Defendants caused to be contributed) and QCII (as
to any and all amounts QCII contributed), less expenses, taxes and tax expenses due
and owing as set forth in Paragraph 2.8; provided, however, that neither the Lead Plaintiffs nor Lead Counsel shall have any obligation to repay any amounts actually
and properly disbursed from the N&W Class Notice and Administration Fund, and that,
prior to the balance of that fund being refunded, any expenses already incurred and
properly chargeable to the N&W Class Notice and Administration Fund pursuant to
Paragraph 2.8 hereof, and taxes and tax expenses due at the time of such termination
or cancellation but that have not been paid, shall be paid or retained in escrow by the
Escrow Agent in accordance with the terms of this Stipulation. At the request of
counsel for one or both Settling Defendants or QCII, the Escrow Agent or its designee
shall apply for any tax refund owed on the N&W Settlement Fund and pay the
proceeds in accordance with the written instructions of counsel for the Settling
Defendants or QCII.
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9. Class Certification.
9.1 For purposes of this Stipulation only, the Settling Parties wil stipulate to
certification of the N&W Class as defined herein. The Settling Defendants expressly
reserve the right to contest class certification in the event this N&W Class settlement
does not become effective for any reason. This Stipulation, whether or not
consummated, and any proceedings taken pursuant to it, shall not be construed as or
received in evidence as an admission, concession or presumption that class certification
is appropriate in this action.
10. Limitations On Subsequent Claims Against Released Parties.
10.1 Upon entry of the Judgment, the Settling Defendants shall be afforded all
protections against future claims for contribution arising out of the Litigation as provided
by Section 21 D~4(f)(7)(A) of the Private Securities Litigation Reform Act of 1995
("PSLRA"), 15 U.S.C. § 78u-4(f)(7)(A), and any subsequent verdict or judgment in the Litigation shall be reduced as required by the reduction provision set forth in Section
21D-4(f)(7)(B) of the PSLRA, 15 U.S.C. § 78u-4(f)(7)(B).
11. Miscellaneous Provisions.
11 .1 Notwithstanding any other provision in this Stipulation, including
Paragraphs 5.4 and 10.1, this Stipulation shall not cause the Released Persons to release the following potential claims between or among themselves:
(a) Claims that arise from or relate to claims asserted by those
Persons who request exclusion from the N&W Class in such form and manner,
and within such time, as the Court shall prescribe, and who assert claims that
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would have been Released Claims under this Stipulation but for the Person's
exclusion from the N&W Class;
(b) Any claims, rights or obligations concerning advancement of legal
fees and expenses, or the recovery of legal fees and expenses advanced or that
may be advanced, by Qwest to any Released Person;
(c) (i) the November 12, 2003 Definitive Settlement Agreement and all
documents attached thereto and/or contemplated thereby relating to the
settement among QCII and certain directors and officers and fiduciary liability
insurance carriers, or (ii) the Insureds Trust Agreement (as amended) made and
entered into as of June 1, 2004, by and among U.S. Bank Trust Association, U.S. Bank Trust National Association, the Honorable Sam C. Pointer, QCII and
Individual Beneficiaries as defined therein; and
(d) Enforcement of any breach of this Stipulation.
11.2 The Settling Parties and QCII (a) acknowledge that it is their intent to
consummate this Stipulation, and (b) agree to cooperate to the extent reasonably
necessary to effectuate and implement all terms and conditions of this Stipulation.
11.3 The Setting Parties and QCII intend this settlement to be a final and
complete resolution of all disputes between them with respect to the Litigation. This
Stipulation compromises claims that are contested and shall not be deemed an
admission by any Settling Party or Qwest as to the merits of any claim or defense. The
Settling Parties and QCII agree that the amount paid to the N&W Settlement Fund and
the other terms of this Stipulation were negotiated in good faith by the Settling Parties
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and QCII, and reflect a settement that was reached voluntarily after consultation with
competent legal counseL. The Settling Parties and QCII reserve their right to rebut, in a
manner that such party determines to be appropriate, any contention made in any public forum that the Litigation was brought or defended in bad faith or without a reasonable
basis. The Settling Parties and QCII agree not to oppose a finding in the Judgment that
during the course of the Litigation, the Settling Parties and their respective counsel at all
times complied with the requirements of Rule 11 of the Federal Rules of Civil
Procedure.
11.4 Neither this Stipulation nor the settlement it contains, nor any act
performed or document executed pursuant to or in furtherance of this Stipulation or the
settlement: (a) is or may be deemed to be or may be used as an admission or evidence
as to the validity of any Released Claim, or as to any fault, wrongdoing, omission,
obligation or liabilty of the Released Persons or of Qwest, or (b) is or may be deemed
to be or may be used as an admission or evidence as to any fault, wrongdoing,
omission, obligation, or liabilty of any of the Released Persons or of Qwest in any civil,
criminal or administrative proceeding in any court, administrative agency or other
tribunal, except that Released Persons and Qwest may fie this Stipulation and/or the
Judgment in any action that may be brought against them in order to support a defense
or counterclaim in the nature of res judicata, collateral estoppel, release, good faith
settement, judgment bar or reduction or other theory of claim preclusion or issue
preclusion.
37
Case 1:01-cv-01451-REB-KLM
Document 1127
Filed 08/15/2008
Page 38 of 51
EXECUTION COpy
11.5 The protections afforded by the protective order go