EXHIBIT J
QWEST COMMUNICATIONS INTERNATIONAL INC.
EQUITY INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
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THIS AGREEMENT made as of this 1st day of January, 1998, between QWEST
COMMUNICATIONS INTERNATIONAL INC., a Delaware corporation (together with its
Affiliated Corporations, except where the context otherwise requires, the
"Company"), and Xxxxx X. Xxxxxx (the "Option Holder").
1. GRANT OF OPTION. Pursuant to the Qwest Communications International
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 two hundred thousand (200,000) shares of the $0.01 par
value common stock of the Company (the "Stock") at an exercise price per share
of $60.00 (the "Option Price"). The Option grant shall be effective as of
January 1, 1998 (the "Effective Date"). 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 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
Employment That Shall Become Vested
Vesting Date and Exercisable on Each Date
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December 1, 1998 20%
December 1, 1999 20%
December 1, 2000 20%
December 1, 2001 20%
December 1, 2002 20%
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 requirements 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. If at any time the number of shares of Stock that are covered by the
vested and exercisable portion of the Option includes a fractional share, the
number of shares of Stock as to which the Option shall be actually vested and
exercisable shall be rounded down to the next whole share of Stock.
(b) ACCELERATED VESTING IN CERTAIN CIRCUMSTANCES. 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 or
Disability, or upon a Change in Control of the Company.
(c) EMPLOYMENT RELATIONSHIP. For purposes of determining vesting and
exercisability under this Section 2 and for purposes of Section 6, the Option
Holder shall be treated as employed by the Company so long as he remains
employed by any one or more of Anschutz Company, The Anschutz Corporation, or
any other organization controlled by Xxxxxx X. Xxxxxxxx, irrespective of whether
the entity by which the Option Holder is employed remains an "Affiliated
Corporation" of the Company.
3. METHOD FOR EXERCISING THE OPTION. The Option may be exercised only
by 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 Company
may require the Option Holder, as a condition of exercise of this Option, to
give written assurance in substance and form satisfactory to the Company and its
counsel to the effect that the Option Holder is acquiring the Stock for his own
account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with federal and applicable state
securities laws. Legends evidencing such restrictions may be placed on the Stock
certificates.
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.
(a) ADJUSTMENT BY STOCK SPLIT, STOCK DIVIDEND, ETC. If at any time
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
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
effective for all purposes of this Agreement. such adjustment shall be made, or
other actions taken, by the Committee and shall be effective for all purposes of
this Agreement.
(c) APPORTIONMENT OF OPTION PRICE. Upon any occurrence described in
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
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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 AND CHANGE IN CONTROL.
(a) REORGANIZATION. Subject to the provisions of subsection 5(b),
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
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 Xxxxxx's address last known to the Company.
(c) ACCELERATION OF VESTING AND EXERCISABILITY. If the Option Holder
is notified, 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 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.
(d) CHANGE IN CONTROL. The provisions of Section 5.4 of the Plan
shall apply to the vesting and exercisability of the Option in the event of a
"change in control" of the Company.
6. EXPIRATION AND TERMINATION OF THE OPTION. The Option shall expire on
the tenth anniversary of the Effective Date, (the period from the Effective Date
to the expiration date is the "Option Period") or prior to such time as follows:
(a) TERMINATION FOR CAUSE. If the employment of the Option Holder by
the Company is terminated for "cause" within the Option Period, the entire
Option, whether or not vested, shall become void, shall be forfeited and shall
terminate immediately upon the termination of employment of the Option Holder.
For this purpose, "cause" shall mean willful misconduct, a willful failure to
perform the Option Holder's duties, insubordination, theft, dishonesty,
conviction of a felony or any other willful conduct that is materially
detrimental to the Option Holder's performance of his duties or is materially
detrimental to the Company or such other cause as the Board in good faith
reasonably determines provides cause for the discharge of the Option Holder.
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(b) TERMINATION FOR DISABILITY. If the Option Holder becomes
Disabled, the Option may be exercised by the Option Holder within two years
following the Option Holder's termination of services on account of Disability
(provided that such exercise must occur within the Option Period), but not
thereafter. In any such case, the Option may be exercised only as to the shares
as to which the Option had become exercisable on or before the date of the
Option Holder's termination of services, including those that vest as a result
of Disability pursuant to subsection 2(b).
(c) TERMINATION FOR DEATH. If the Option Holder dies during the
Option Period while still employed by or performing services for the Company or
within the two year period referred to in (b) above or the three month period
referred to in (e) below, the Option may be exercised by those entitled to do so
under the Option Holder's will or by the laws of descent and distribution within
two years following the Option Holder's death (provided that such exercise must
occur within the Option Period), but not thereafter. In any such case, the
Option may be exercised only as to the shares as to which the Option had become
exercisable on or before the date of the Option Holder's death, including those
that vest as a result of death pursuant to subsection 2(b).
(d) TERMINATION FOR RETIREMENT. If the Option Holder "retires"
(which for this purpose shall mean termination of employment with the Company on
or after reaching the normal retirement age of 65) within the Option Period, the
Option may be exercised by the Option Holder within two years following the
Option Holder's termination of services on account of "retirement" (provided
that such exercise must occur within the Option Period), but not thereafter. In
any such case, the Option may be exercised only as to the shares as to which the
Option had become exercisable on or before the date of the Option Holder's
"retirement."
(e) TERMINATION FOR OTHER REASONS. If the services of the Option
Holder are terminated (which for this purpose means that the Option Holder is no
longer employed by the Company or performing services for the Company) within
the Option Period for any reason other than cause, Disability, death or
"retirement", the Option may be exercised by the Option Holder within three
months following the date of such termination (provided that such exercise must
occur within the Option Period), but not thereafter. In any such case, the
Option may be exercised only as to the shares as to which the Option had become
exercisable on or before the date of termination of services.
(f) FORFEITURE OF UNEXERCISED OPTION IN CERTAIN CIRCUMSTANCES.
Notwithstanding the foregoing provisions of this Section 6, if, at any time
within the term of this Option, the Option Holder engages in any activity in
competition with any activity of the Company, or inimicable, contrary, or
harmful to the interests of the Company, including but not limited to: (A)
conduct related to the Option Holder's employment for which either criminal or
civil penalties against the Option Holder may be sought, (B) violation of
Company policies, including, without limitation, the Company's xxxxxxx xxxxxxx
policy, (C) accepting employment with or serving as a consultant, advisor or in
any other capacity to an employer that is in competition with or acting against
the interests of the Company, including employing or recruiting any present,
former or future employee of the Company, (D) disclosing or misusing any
confidential information or material concerning the Company, or (E)
participating in a hostile takeover attempt, then this Option shall become void,
shall be forfeited and shall terminate effective the date on which the Option
Holder enters into such activity, unless terminated sooner by operation of
another term or condition of this Option or the Plan. The provisions of this
subsection may be waived only if the Committee determines in its sole discretion
that such action is in the best interests of the Company.
7. TRANSFERABILITY. Except to the extent permitted by the Committee in
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.
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8. LIMITATION OF RIGHTS. The Option Holder or his successor shall have
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 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.
10. WITHHOLDING. The issuance of Stock pursuant to the exercise of this
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.
11. MISCELLANEOUS.
(a) NOTICES. Any notice required or permitted to be given under this
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 Qwest
Communications International Inc., 000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxxxxx 00000, or at 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
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 in the Plan or herein, as the case may be.
(d) COMPLIANCE WITH SECURITIES LAWS. This Agreement shall be subject
to the requirement that if at any time counsel to the Company shall determine
that the listing, registration or qualification of the shares of Stock subject
to the Option upon any securities exchange or under any state or federal law, or
the consent or approval of any governmental or regulatory body, is necessary as
a condition of, or in connection with, the issuance or purchase of such shares
thereunder, the Option may not be exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained on conditions acceptable to the Committee. Nothing herein
shall be deemed to require the Company to apply for or obtain such listing,
registration or qualification.
(e) CONSTRUCTION; SEVERABILITY. The section headings contained
herein 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 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,
either generally or in any particular instance, by the Committee appointed under
the Plan, but only to the extent permitted under the Plan.
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(g) BINDING EFFECT. This Agreement shall be binding upon and inure
to 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
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) GOVERNING LAW. This Agreement shall be governed by and construed
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/ XXXXXX X. XXXXXXXX
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OPTION HOLDER
/s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx
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