EXHIBIT 10.14
QWEST COMMUNICATIONS INTERNATIONAL INC.
EQUITY INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
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THIS AGREEMENT made as of this _____ day of June, 1997, between QWEST
COMMUNICATIONS INTERNATIONAL INC., a Delaware corporation (together with its
Affiliated Corporations, except where the context otherwise requires, the
"Company"), and Xxxxxx X. Xxxxxxx (the "Option Holder").
1. GRANT OF OPTION. Pursuant to the Qwest Communications International
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Inc. Equity Incentive Plan (the "Plan") and subject to the terms and conditions
of this Agreement, the Company hereby grants to the Option Holder an option (the
"Option") to purchase three million (3,000,000) shares of the $0.01 par value
common stock of the Company (the "Stock") at an exercise price per share equal
to the per share price at which shares of the Stock are priced at the pricing
meeting (the "Pricing Meeting") for sale to the public pursuant to the IPO (as
defined below), which price shall be the "Option Price". The Option shall be
effective (the "Effective Date") at the time that Registration Statement No.
333-25391 under the Securities Act of 1933, as amended, for the Company's
initial public offering of the Stock (the "IPO") becomes effective. The Option
is not intended to qualify as an incentive stock option under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
2. REQUIREMENTS FOR EXERCISE; VESTING. (a) IN GENERAL. Except as
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otherwise provided herein, the Option shall become vested and exercisable in
increments, if the Option Holder is still in the employ of the Company on the
dates indicated in the following schedule:
Percentage of Option That Shall
Employment Vesting Date Become Exercisable on Each Date
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December 31, 1997 20%
December 31, 1998 20%
December 31, 1999 20%
December 31, 2000 20%
December 31, 2001 20%
Notwithstanding the foregoing, if the Option Holder's employment with the
Company is terminated by the Company for any reason other than "cause" (as
defined in the Employment Agreement between the Company and the Option Holder
dated as of December 21, 1996, as amended (the "Employment Agreement")), or if
the Option Holder terminates his employment for "good reason" (as defined in the
Employment Agreement), the Option Holder shall vest in one-twelfth (1/12) of the
number of shares of Stock covered by the Option that would otherwise vest for
the calendar year of termination for each full month of employment by the
Company during such calendar year. If at any time the number of shares of Stock
that are covered by the vested portion of the Option includes a
fractional share, the number of shares of Stock as to which the Option shall be
actually vested shall be rounded down to the next whole share of Stock.
Except as set forth in Section 5 hereof, the Option shall not be
exercisable as to any shares of Stock as to which the vesting requirement of
this Section 2 shall not be satisfied, regardless of the circumstances under
which the Option Holder's employment by the Company shall be terminated. The
number of shares of Stock as to which the Option may be exercised shall be
cumulative, so that once the Option shall become vested and exercisable as to
any shares of Stock it shall continue to be vested and exercisable as to such
shares, until expiration or termination of the Option as provided in Section 6
hereof.
(b) ACCELERATED VESTING IN CERTAIN CIRCUMSTANCES.
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(i) The Option Holder shall become 100% vested with respect to
the entire Option, and the entire Option shall become exercisable, in the
event of the Option Holder's death, "Disability" (as defined in the
Employment Agreement) or "retirement." For purposes of this Agreement, the
term "retirement" means the termination of employment with the Company on
or after reaching the normal retirement age of 65.
(ii) Notwithstanding the provisions of Section 5.4 of the Plan,
the Option Holder shall not become 100% vested with respect to the entire
Option upon the occurrence of a "change in control" (as defined in Section
5.4(b) of the Plan). However, if the Option Holder's employment with the
Company is terminated by the Company without "cause" (as defined in the
Employment Agreement) or the Option Holder terminates his employment for
"Good Reason" (as defined in the Employment Agreement), provided that the
occurrence of a "change in control" shall not constitute "Good Reason" for
purposes of this subsection 2(b)(ii), in each case following a "change in
control", the Option Holder shall become 100% vested with respect to the
entire Option on the date of his termination of employment with the
Company.
3. METHOD FOR EXERCISING THE OPTION. The Option may be exercised only by
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delivery of written notice of exercise, together with payment of the Option
Price as provided below, in person or through certified or registered mail, fax
or overnight delivery to the Company at the following address: Qwest
Communications International Inc., Attention: Chief Financial Officer, 000
Xxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000, or such other address as
shall be furnished in writing to the Option Holder by the Company. Such written
notice shall specify that the Option is being exercised, and the number of
shares of Stock with respect to which the Option is exercised, and shall be
accompanied by payment of the Option Price.
The shares of Stock subject to this Option and this Option have been
registered on a Form S-8 Registration Statement. Notwithstanding the provisions
of Section 14.2 of the Plan, prior to the issuance of shares of Stock pursuant
to this Option, the Company shall file a Registration Statement (on such form as
may be selected by the Company) and take such other actions as may be reasonably
required to permit the Option Holder to sell immediately such shares.
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The purchase of such Stock shall take place at the address of the Company
set forth above upon delivery of the notice of exercise, at which time the
Option Price for the Stock shall be paid in full (i) by certified or cashier's
check payable to the Company's order, or (ii) by wire transfer to such account
as may be specified by the Company for this purpose, or (iii) by delivery to the
Company of certificates representing the number of shares of Stock then owned by
the Option Holder, the Fair Market Value of which equals the Option Price of the
Stock to be purchased pursuant to the Option, properly endorsed for transfer to
the Company; provided, however, that no Option may be exercised by delivery to
the Company of certificates representing Stock, unless such Stock has been held
by the Option Holder for more than six months, or (iv) by delivery to the
Company of a properly executed notice of exercise together with irrevocable
instructions to a broker to deliver to the Company promptly the amount of the
proceeds of the sale of all or a portion of the Stock or of a loan from the
broker to the Option Holder required to pay the Option Price. For purposes of
this Option, the Fair Market Value of any shares of Stock delivered in payment
of the Option Price upon exercise of the Option shall be the Fair Market Value
as of the exercise date; the exercise date shall be the day of delivery of the
certificates for the Stock used as payment of the Option Price.
Upon such notice to the Company and payment of the Option Price, the
exercise of the Option shall be deemed to be effective, and a properly executed
certificate or certificates representing the Stock so purchased shall be issued
by the Company and delivered to the Option Holder.
4. ADJUSTMENT OF THE OPTION.
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(a) ADJUSTMENT BY STOCK SPLIT, STOCK DIVIDEND, ETC. If at any time
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the Company increases or decreases the number of its outstanding shares of
Stock, or changes in any way the rights and privileges of such shares, by means
of the payment of a stock dividend or the making of any other distribution on
such shares payable in Stock, or through a Stock split or subdivision of shares,
or a consolidation or combination of shares, or through a reclassification or
recapitalization involving the Stock, the numbers, rights and privileges of the
shares of Stock included in the Option shall be increased, decreased or changed
in like manner as if such shares had been issued and outstanding, fully paid and
non-assessable at the time of such occurrence.
(b) OTHER DISTRIBUTIONS AND CHANGES IN THE STOCK. If the Company
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shall at any time distribute with respect to the Stock assets or securities of
persons other than the Company (excluding cash or distributions referred to in
subsection (a)) or grant to the holders of its Stock rights to subscribe pro
rata for additional shares thereof or for any other securities of the Company or
there shall be any other change (except as described in subsection (a)) in the
kind of outstanding shares of Stock or of any stock or other securities into
which the Stock shall be changed or for which it shall have been exchanged, and
if the Committee shall in its good faith discretion determine that the event
equitably requires an adjustment in the number or kind of shares subject to an
Option, an adjustment to the Option Price, or the taking of any other action by
the Committee, including without limitation, the setting aside of any property
for delivery to the Option Holder upon the exercise of the Option, then such
adjustment shall be made, or other actions taken, by the Committee and shall be
effective for all purposes of this Agreement.
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(c) APPORTIONMENT OF OPTION PRICE. Upon any occurrence described in
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the preceding subsections (a) and (b), the aggregate Option Price for the shares
of Stock then subject to the Option shall remain unchanged and shall be
apportioned ratably over the increased or decreased number or changed kinds of
securities or other properties subject to the Option. Any fractional shares
resulting from any of the foregoing adjustments shall be disregarded and
eliminated from this Option.
5. REORGANIZATION.
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(a) REORGANIZATION. Subject to the provisions of subsection 5(b),
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upon the occurrence of any of the following events, if the notice required by
subsection 5(b) shall have first been given, the Option shall automatically
terminate and be of no further force and effect whatsoever, without the
necessity for any additional notice or other action by the Board or the Company:
(i) the merger or consolidation of the Company with or into another corporation
or other reorganization (other than a reorganization under the United States
Bankruptcy Code) of the Company (other than a consolidation or merger in which
the Company is the continuing corporation and which does not result in any
reclassification or change of outstanding shares of Stock); or (ii) the sale or
conveyance of the property of the Company as an entirety or substantially as an
entirety (other than a sale or conveyance in which the Company continues as a
holding company of an entity or entities that conduct the business or businesses
formerly conducted by the Company); or (iii) the dissolution or liquidation of
the Company.
(b) REQUIRED NOTICE. At least 30 days' prior written notice of any
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event described in subsection 5(a) shall be given by the Company to the Option
Holder, unless in the case of the events described in clauses (i) or (ii) of
subsection 5(a), the Company, or the successor or purchaser, as the case may be,
shall make adequate provision for the assumption of the Option or the
substitution of new options for the Option on terms comparable to the Option
except that the Option Holder shall have the right thereafter to purchase the
kind and amount of shares of stock or other securities or property or cash
receivable upon such merger, consolidation, sale or conveyance by a holder of
the number of shares of Stock that would have been receivable upon exercise of
the Option immediately prior to such merger, consolidation, sale or conveyance
(assuming such holder of Stock failed to exercise any rights of election and
received per share the kind and amount received per share by a majority of the
non-electing shares). Notwithstanding the provisions of this Section 5 to the
contrary, the Company shall give the notice provided by this subsection 5(b) in
the case of the events described in subsection 5(a)(i) or (ii) only if the
consideration to be received by the stockholders of the Company upon such event
consists solely of cash or non-equity securities. In the event of any other
transaction described in subsection 5(a)(i) or (ii), the Company shall arrange
for the substitution or assumption of the Option in accordance with the
provisions of this subsection 5(b). The provisions of this Section 5 shall
similarly apply to successive mergers, consolidations, sales or conveyances.
Such notice shall be deemed to have been given when delivered personally to the
Option Holder or when mailed to the Option Holder by registered or certified
mail, postage prepaid, at the Option Holder's address last known to the Company.
(c) ACCELERATION OF EXERCISABILITY. If the Option Holder is notified,
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in accordance with subsection 5(b), of a transaction described in subsection
5(a), the entire Option shall become 100% vested and exercisable, and he may
exercise his Option at any time before the
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occurrence of the event requiring the giving of notice (but subject to
occurrence of such event), regardless of whether all conditions of exercise
relating to length of service or otherwise have been satisfied.
6. EXPIRATION AND TERMINATION OF THE OPTION. The Option shall expire on
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June 30, 2003 (the period from the Effective Date to the expiration date is the
"Option Period") or prior to such time as follows:
(a) If the employment of the Option Holder by the Company is
terminated for "cause" (as defined in the Employment Agreement) within the
Option Period, the unvested portion of the Option shall terminate in its
entirety immediately upon the termination of employment of the Option Holder.
The vested portion of the Option may be exercised by the Option Holder during
the six (6) month period beginning upon the day immediately following the date
of the Option Holder's termination of employment for "cause."
(b) If the employment of the Option Holder by the Company terminates
for any reason other than "cause," the Option may be exercised by the Option
Holder (or in the event of his death, by those entitled to do so under his will
or by the laws of descent and distribution) until the end of the Option Period.
In any such case, the Option may be exercised only as to the shares of Stock as
to which the Option had become vested on or before the date of the Option
Holder's termination of employment, including those that vest as a result of
such termination.
7. TRANSFERABILITY. Except to the extent permitted by the Committee in
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accordance with the provisions of the Plan, the Option may not be transferred
except by will or pursuant to the laws of descent and distribution, and it shall
be exercisable during the Option Holder's life only by him, or in the event of
Disability or incapacity, by his guardian or legal representative, and after his
death, only by those entitled to do so under his will or the applicable laws of
descent and distribution. Except as specifically provided herein, upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the
Option or any right or privilege granted hereunder, or upon the levy of any
attachment or similar process upon the rights and privileges herein conferred,
the Option and the rights and privileges hereunder shall become immediately null
and void.
8. LIMITATION OF RIGHTS. The Option Holder or his successor shall have
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no rights as a stockholder with respect to the shares of Stock covered by this
Option until the Option Holder or his successors become the holder of record of
such shares.
9. STOCK RESERVE. The Company shall at all times during the term of this
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Agreement reserve and keep available such number of shares of Stock as will be
sufficient to satisfy the requirements of this Agreement, and the Company shall
pay all original issue taxes (if any) on the exercise of the Option, and all
other fees and expenses necessarily incurred by the Company in connection
therewith.
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10. WITHHOLDING. The issuance of Stock pursuant to the exercise of this
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Option shall be subject to the requirement that the Option Holder shall make
appropriate arrangements with the Company to provide for the amount of
additional income and other tax withholding applicable to the exercise of the
Option. The Option Holder shall have the right to elect to pay any or all such
amounts of tax withholding by electing to transfer to the Company, or to have
the Company withhold from shares of Stock otherwise issuable to the Option
Holder, shares of Stock having a value equal to the amount required to be
withheld, or such lesser amount as may be elected by the Option Holder. If such
an election is made by the Option Holder, the value of shares of Stock to be
withheld shall be based upon the Fair Market Value of the Stock on the date that
the amount of tax to be withheld is to be determined.
11. MISCELLANEOUS.
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(a) NOTICES. Any notice required or permitted to be given under this
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Agreement shall be in writing and shall be given by first class registered or
certified mail, postage prepaid, or by personal delivery to the appropriate
party, addressed:
(i) If to the Company, to Qwest Communications International
Inc., Attention: Chief Financial Officer, 000 Xxxxxxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxx, Xxxxxxxx 00000, or at such other address as may have been
furnished to the Option Holder in writing by the Company; or
(ii) If to the Option Holder, to the Option Holder at #0 Xxxxx
Xxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000, or at such other address as may
have been furnished to the Company by the Option Holder.
Any such notice shall be deemed to have been given as of the second day after
deposit in the United States mails, postage prepaid, properly addressed as set
forth above, in the case of mailed notice, or as of the date delivered in the
case of personal delivery.
(b) AMENDMENT. Except as provided herein, this Agreement may not be
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amended or otherwise modified unless evidenced in writing and signed by the
Company and the Option Holder.
(c) DEFINED TERMS. Capitalized terms shall have the meaning set forth
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in the Plan or herein, as the case may be.
(d) DISPUTES. Notwithstanding the provisions of Article III of the
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Plan, if any dispute arises between the Option Holder and the Company with
respect to the meaning or interpretation of the Plan or this Agreement, such
dispute shall be resolved on a de novo basis pursuant to the arbitration
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provisions contained in Section 9 of the Employment Agreement.
(e) CONSTRUCTION; SEVERABILITY. The section headings contained herein
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are for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement. The invalidity or unenforceability of any
provision of this Agreement shall not affect
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the validity or enforceability of any other provision of this Agreement, and
each other provision of this Agreement shall be severable and enforceable to the
extent permitted by law.
(f) WAIVER. Any provision contained in this Agreement may be waived,
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either generally or in any particular instance, by the Committee appointed under
the Plan, but only to the extent permitted under the Plan.
(g) BINDING EFFECT. This Agreement shall be binding upon and inure to
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the benefit of the Company and the Option Holder and their respective heirs,
executors, administrators, legal representatives, successors and assigns.
(h) RIGHTS TO EMPLOYMENT. Nothing contained in this Agreement shall
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be construed as giving the Option Holder any right to be retained in the employ
of the Company and this Agreement is limited solely to governing the rights and
obligations of the Option Holder with respect to the Stock and the Option.
(i) NON-APPLICABILITY OF SECTION 14.3. The provisions of Section
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14.3 of the Plan shall not apply to the Option granted to the Option Holder
hereunder.
(j) GOVERNING LAW. This Agreement shall be governed by and construed
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in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
QWEST COMMUNICATIONS INTERNATIONAL INC.
By /s/
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OPTION HOLDER
/s/
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Xxxxxx X. Xxxxxxx
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