EXHIBIT I
QWEST COMMUNICATIONS INTERNATIONAL INC.
EQUITY INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT made as of this 14th 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 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 one hundred twenty-five thousand (125,000) 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
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 Percentage of Option
Employment That Shall Become That Shall Become
Vesting Date Vested On Each Date Exercisable On Each Date
------------ ------------------- ------------------------
October 1, 1997 20% 15%
October 1, 1998 20% 15%
October 1, 1999 20% 15%
October 1, 2000 20% 15%
October 1, 2001 20% 40%
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 and exercisability
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 AND EXERCISABILITY IN CERTAIN CIRCUMSTANCES.
(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 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) The Option Holder shall become 100% vested with
respect to the entire Option, and the entire Option shall become
exercisable, upon the occurrence of a "change in control" (as defined
in Section 5.4(b) of the Plan).
(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 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.
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
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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.
(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 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.
(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 Holder'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.
6. EXPIRATION AND TERMINATION OF THE OPTION. The Option shall expire on
March 31, 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" within the Option Period, the unvested portion of the
Option, together with that portion of the vested Option that is not yet
exercisable in accordance with the provisions of subsection 2(a), 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. The portion of the Option that is both vested and exercisable pursuant
to subsection 2(a) may be exercised by the Option Holder during the six (6)
month period beginning upon the date immediately following the day of the Option
Holder's termination of employment for "cause."
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(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 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, and including that portion of the Option that is vested but
was not yet exercisable pursuant to subsection 2(a). Notwithstanding the
foregoing, if the Option Holder voluntarily terminates his employment with the
Company before the Option has become 100% vested and exercisable pursuant to
subsection 2(a), he shall forfeit both the unvested portion of the Option and
the vested portion of the Option that is not yet exercisable pursuant to
subsection 2(a).
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.
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. 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.
(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
000 00xx Xx, Xxxxxx, XX 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 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.
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(d) 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.
(e) 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.
(f) 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.
(g) 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.
(h) GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware.
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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
-------------------------------------------
OPTION HOLDER
/s/ XXXXX X. XXXXXX
----------------------------------------------
Xxxxx X. Xxxxxx
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