================================================================================
QWEST COMMUNICATIONS INTERNATIONAL INC.
EQUITY INCENTIVE PLAN
(EFFECTIVE ___________, 1997)
================================================================================
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I INTRODUCTION....................................... 1
1.1 Establishment...................................... 1
1.2 Purposes........................................... 1
ARTICLE II DEFINITIONS........................................ 1
2.1 Definitions........................................ 1
2.2 Gender and Number.................................. 3
ARTICLE III PLAN ADMINISTRATION................................ 4
ARTICLE IV STOCK SUBJECT TO THE PLAN.......................... 4
4.1 Number of Shares................................... 4
4.2 Other Shares of Stock.............................. 5
4.3 Adjustments for Stock Split, Stock Dividend, Etc... 5
4.4 Other Distributions and Changes in the Stock....... 5
4.5 General Adjustment Rules........................... 5
4.6 Determination by the Committee, Etc................ 6
ARTICLE V CORPORATE REORGANIZATION; CHANGE IN CONTROL........ 6
5.1 Reorganization..................................... 6
5.2 Required Notice.................................... 6
5.3 Acceleration of Exercisability..................... 7
5.4 Change in Control.................................. 7
5.5 Limitation on Payments............................. 8
ARTICLE VI PARTICIPATION...................................... 8
ARTICLE VII OPTIONS............................................ 8
7.1 Grant of Options................................... 8
7.2 Stock Option Certificates.......................... 9
7.3 Restrictions on Incentive Options..................12
7.4 Shareholder Privileges.............................12
ARTICLE VIII RESTRICTED STOCK AWARDS............................13
8.1 Grant of Restricted Stock Awards...................13
8.2 Restrictions.......................................13
8.3 Privileges of a Stockholder, Transferability.......13
8.4 Enforcement of Restrictions........................13
ARTICLE IX STOCK UNITS........................................14
ARTICLE X STOCK APPRECIATION RIGHTS..........................14
10.1 Persons Eligible...................................14
i
10.2 Terms of Grant.....................................14
10.3 Exercise...........................................14
10.4 Number of Shares or Amount of Cash.................14
10.5 Effect of Exercise.................................15
10.6 Termination of Services............................15
ARTICLE XI STOCK BONUSES......................................15
ARTICLE XII OTHER COMMON STOCK GRANTS..........................15
ARTICLE XIII RIGHTS OF PARTICIPANTS.............................16
13.1 Service............................................16
13.2 Nontransferability.................................16
13.3 No Plan Funding....................................16
ARTICLE XIV GENERAL RESTRICTIONS...............................16
14.1 Investment Representations.........................16
14.2 Compliance with Securities Laws....................17
14.3 Changes in Accounting Rules........................17
ARTICLE XV OTHER EMPLOYEE BENEFITS............................17
ARTICLE XVI PLAN AMENDMENT, MODIFICATION AND TERMINATION.......17
ARTICLE XVII WITHHOLDING........................................18
17.1 Withholding Requirement............................18
17.2 Withholding With Stock.............................18
ARTICLE XVIII REQUIREMENTS OF LAW................................19
18.1 Requirements of Law................................19
18.2 Federal Securities Law Requirements................19
18.3 Governing Law......................................19
ARTICLE XIX DURATION OF THE PLAN...............................19
ii
QWEST COMMUNICATIONS INTERNATIONAL INC.
EQUITY INCENTIVE PLAN
ARTICLE I
INTRODUCTION
1.1 ESTABLISHMENT. Qwest Communications International Inc., a Delaware
corporation, hereby establishes the Qwest Communications International Inc.
Equity Incentive Plan (the 'Plan') for certain key employees of the Company (as
defined in subsection 2.1(f)) and certain consultants to the Company. The Plan
permits the grant of incentive stock options within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended, non-qualified stock options,
restricted stock awards, stock appreciation rights, stock bonuses, stock units
and other stock grants to certain key employees of the Company and to certain
consultants to the Company.
1.2 PURPOSES. The purposes of the Plan are to provide those who are
selected for participation in the Plan with added incentives to continue in the
long-term service of the Company and to create in such persons a more direct
interest in the future success of the operations of the Company by relating
incentive compensation to increases in shareholder value, so that the income of
those participating in the Plan is more closely aligned with the income of the
Company's shareholders. The Plan is also designed to provide a financial
incentive that will help the Company attract, retain and motivate the most
qualified employees and consultants.
ARTICLE II
DEFINITIONS
2.1 DEFINITIONS. The following terms shall have the meanings set forth
below:
(a) 'AFFILIATED CORPORATION' means any corporation or other entity
that is affiliated with Qwest through stock ownership or otherwise and is
designated as an 'Affiliated Corporation' by the Board, provided, however, that
for purposes of Incentive Options granted pursuant to the Plan, an 'Affiliated
Corporation' means any parent or subsidiary of the Company as defined in Section
424 of the Code.
(b) 'AWARD' means an Option, a Restricted Stock Award, a Stock
Appreciation Right, a Stock Unit, grants of Stock pursuant to Article XI or
other issuances of Stock hereunder.
(c) 'BOARD' means the Board of Directors of Qwest.
(d) 'CODE' means the Internal Revenue Code of 1986, as it may be
amended from time to time.
1
(e) 'COMMITTEE' means a committee consisting of members of the Board
who are empowered hereunder to take actions in the administration of the Plan.
The Committee shall be so constituted at all times as to permit the Plan to
comply with Rule 16b-3 or any successor rule promulgated under the Securities
Exchange Act of 1934 (the '1934 Act'). Members of the Committee and any
subcommittee or special committee shall be appointed from time to time by the
Board, shall serve at the pleasure of the Board and may resign at any time upon
written notice to the Board. The Committee shall select Participants from
Eligible Employees and Eligible Consultants of the Company and shall determine
the awards to be made pursuant to the Plan and the terms and conditions thereof.
(f) 'COMPANY' means Qwest and the Affiliated Corporations.
(g) 'DISABLED' or 'DISABILITY' shall have the meaning given to such
terms in Section 22(e)(3) of the Code.
(h) 'EFFECTIVE DATE' means the effective date of the Plan, May 23,
1997.
(i) 'ELIGIBLE EMPLOYEES' means those key employees (including, without
limitation, officers and directors who are also employees) of the Company or any
subsidiary or division thereof, upon whose judgment, initiative and efforts the
Company is, or will become, largely dependent for the successful conduct of its
business. For purposes of the Plan, an employee is an individual whose wages
are subject to the withholding of federal income tax under section 3401 of the
Code.
(j) 'ELIGIBLE CONSULTANTS' means those consultants to the Company who
are determined, by the Committee, to be individuals whose services are important
to the Company and who are eligible to receive Awards, other than Incentive
Options, under the Plan.
(k) 'FAIR MARKET VALUE' means the average of the mean between the bid
and the asked prices of the Stock or the closing price, as applicable, on the
NASDAQ National Market System, the principal stock exchange or other market on
which the Stock is traded, over the five consecutive trading days ending on a
particular date or by such other method as the Committee may specify at the time
an Award is granted. If the price of the Stock is not reported on any
securities exchange or national market system, the Fair Market Value of the
Stock on a particular date shall be as determined by the Committee. If, upon
exercise of an Option, the exercise price is paid by a broker's transaction as
provided in subsection 7.2(g)(ii)(D), Fair Market Value, for purposes of the
exercise, shall be the price at which the Stock is sold by the broker.
(l) 'INCENTIVE OPTION' means an Option designated as such and granted
in accordance with Section 422 of the Code.
(m) 'NON-QUALIFIED OPTION' means any Option other than an Incentive
Option.
(n) 'OPTION' means a right to purchase Stock at a stated or formula
price for a specified period of time. Options granted under the Plan shall be
either Incentive Options or Non-Qualified Options.
2
(o) 'OPTION CERTIFICATE' shall have the meaning given to such term in
Section 7.2 hereof.
(p) 'OPTION HOLDER' means a Participant who has been granted one or
more Options under the Plan.
(q) 'OPTION PRICE' means the price at which each share of Stock
subject to an Option may be purchased, determined in accordance with subsection
7.2(b).
(r) 'PARTICIPANT' means an Eligible Employee or Eligible Consultant
designated by the Committee from time to time during the term of the Plan to
receive one or more of the Awards provided under the Plan.
(s) 'QWEST' means Qwest Communications International Inc. and any
successor thereto.
(t) 'RESTRICTED STOCK AWARD' means an award of Stock granted to a
Participant pursuant to Article VIII that is subject to certain restrictions
imposed in accordance with the provisions of such Section.
(u) 'SHARE' means a share of Stock.
(v) 'STOCK' means the $0.01 par value common stock of Qwest.
(w) 'STOCK APPRECIATION RIGHT' means the right, granted by the
Committee pursuant to the Plan, to receive a payment equal to the increase in
the Fair Market Value of a Share of Stock subsequent to the grant of such Award.
(x) 'STOCK BONUS' means either an outright grant of Stock or a grant
of Stock subject to and conditioned upon certain employment or performance
related goals.
(y) 'STOCK UNIT' means a measurement component equal to the Fair
Market Value of one share of Stock on the date for which a determination is made
pursuant to the provisions of this Plan.
2.2 GENDER AND NUMBER. Except when otherwise indicated by the context,
the masculine gender shall also include the feminine gender, and the definition
of any term herein in the singular shall also include the plural.
ARTICLE III
PLAN ADMINISTRATION
The Plan shall be administered by the Committee. In accordance with the
provisions of the Plan, the Committee shall, in its sole discretion, select the
Participants from among the Eligible Employees and Eligible Consultants,
determine the Awards to be made pursuant to the Plan, the
3
number of Stock Units, Stock Appreciation Rights or shares of Stock to be issued
thereunder and the time at which such Awards are to be made, fix the Option
Price, period and manner in which an Option becomes exercisable, establish the
duration and nature of Restricted Stock Award restrictions, establish the terms
and conditions applicable to Stock Bonuses and Stock Units, and establish such
other terms and requirements of the various compensation incentives under the
Plan as the Committee may deem necessary or desirable and consistent with the
terms of the Plan. The Committee shall determine the form or forms of the
agreements with Participants that shall evidence the particular provisions,
terms, conditions, rights and duties of Qwest and the Participants with respect
to Awards granted pursuant to the Plan, which provisions need not be identical
except as may be provided herein; provided, however, that Eligible Consultants
shall not be eligible to receive Incentive Options. The Committee may from time
to time adopt such rules and regulations for carrying out the purposes of the
Plan as it may deem proper and in the best interests of the Company. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any agreement entered into hereunder in the
manner and to the extent it shall deem expedient and it shall be the sole and
final judge of such expediency. No member of the Committee shall be liable for
any action or determination made in good faith. The determinations,
interpretations and other actions of the Committee pursuant to the provisions of
the Plan shall be binding and conclusive for all purposes and on all persons.
ARTICLE IV
STOCK SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. The number of Shares that are authorized for
issuance under the Plan in accordance with the provisions of the Plan and
subject to such restrictions or other provisions as the Committee may from time
to time deem necessary shall not exceed 10,000,000, subject to the provisions
regarding changes in capital described below. The maximum number of Shares with
respect to which a Participant may receive Options and Stock Appreciation Rights
under the Plan in any calendar year is 10,000,000 Shares. The Shares may be
either authorized and unissued Shares or previously issued Shares acquired by
Qwest. This authorization may be increased from time to time by approval of the
Board and by the stockholders of Qwest if, in the opinion of counsel for Qwest,
stockholder approval is required. Shares of Stock that may be issued upon
exercise of Options or Stock Appreciation Rights, that are issued as Restricted
Stock Awards or Stock Bonuses, that are issued with respect to Stock Units, and
that are issued as incentive compensation or other Stock grants under the Plan
shall be applied to reduce the maximum number of Shares remaining available for
use under the Plan. Qwest shall at all times during the term of the Plan and
while any Options or Stock Units are outstanding retain as authorized and
unissued Stock at least the number of Shares from time to time required under
the provisions of the Plan, or otherwise assure itself of its ability to perform
its obligations hereunder.
4.2 OTHER SHARES OF STOCK. Any shares of Stock that are subject to an
Option that expires or for any reason is terminated unexercised, any shares of
Stock that are subject to an Award (other than an Option) and that are
forfeited, and any shares of Stock withheld for the payment of taxes or received
by Qwest as payment of the exercise price of an Option shall automatically
become available for use under the Plan, provided, however, that no more than
10,000,000 shares of Stock may be awarded pursuant to Incentive Options.
4
4.3 ADJUSTMENTS FOR STOCK SPLIT, STOCK DIVIDEND, ETC. If Qwest shall at
any time increase or decrease the number of its outstanding Shares or change in
any way the rights and privileges of such Shares by means of the payment of a
stock dividend or any other distribution upon such shares payable in Stock, or
through a stock split, subdivision, consolidation, combination, reclassification
or recapitalization involving the Stock, then in relation to the Stock that is
affected by one or more of the above events, the numbers, rights and privileges
of the following shall be increased, decreased or changed in like manner as if
they had been issued and outstanding, fully paid and nonassessable at the time
of such occurrence: (i) the Shares as to which Awards may be granted under the
Plan and (ii) the Shares then included in each outstanding Award granted
hereunder.
4.4 OTHER DISTRIBUTIONS AND CHANGES IN THE STOCK. If
(a) Qwest shall at any time distribute with respect to the Stock
assets or securities of persons other than Qwest (excluding cash or
distributions referred to in Section 4.3), or
(b) Qwest shall at any time grant to the holders of its Stock rights
to subscribe pro rata for additional shares thereof or for any other securities
of Qwest, or
(c) there shall be any other change (except as described in Section
4.3) in the number or kind of outstanding Shares 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 discretion determine that the event described
in subsection (a), (b), or (c) above equitably requires an adjustment in the
number or kind of Shares subject to an Option or other Award, an adjustment in
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
Participant upon the exercise of an Option or the full vesting of an Award, then
such adjustments shall be made, or other action shall be taken, by the Committee
and shall be effective for all purposes of the Plan and on each outstanding
Option or Award that involves the particular type of stock for which a change
was effected. Notwithstanding the foregoing provisions of this Section 4.4,
pursuant to Section 8.3 below, a Participant holding Stock received as a
Restricted Stock Award shall have the right to receive all amounts, including
cash and property of any kind, distributed with respect to the Stock after such
Restricted Stock Award was granted upon the Participant's becoming a holder of
record of the Stock.
4.5 GENERAL ADJUSTMENT RULES. No adjustment or substitution provided for
in this Article IV shall require Qwest to sell a fractional share of Stock under
any Option, or otherwise issue a fractional share of Stock, and the total
substitution or adjustment with respect to each Option and other Award shall be
limited by deleting any fractional share. In the case of any such substitution
or adjustment, the aggregate Option Price for the total number of shares of
Stock then subject to an Option shall remain unchanged but the Option Price per
share under each such Option shall be equitably adjusted by the Committee to
reflect the greater or lesser number of shares of Stock or other securities into
which the Stock subject to the Option may have been changed, and appropriate
adjustments shall be made to other Awards to reflect any such substitution or
adjustment.
5
4.6 DETERMINATION BY THE COMMITTEE, ETC. Adjustments under this Article
IV shall be made by the Committee, whose determinations with regard thereto
shall be final and binding upon all parties thereto.
ARTICLE V
CORPORATE REORGANIZATION; CHANGE IN CONTROL
5.1 REORGANIZATION OF QWEST. Except as provided otherwise by the
Committee at the time an Award is granted, upon the occurrence of any of the
following events, if the notice required by Section 5.2 shall have first been
given, the Plan and all Options then outstanding hereunder shall automatically
terminate and be of no further force and effect whatsoever, and other Awards
then outstanding shall be treated as described in Sections 5.2 and 5.3, without
the necessity for any additional notice or other action by the Board or Qwest:
(a) the merger or consolidation of Qwest with or into another corporation or
other reorganization (other than a reorganization under the United States
Bankruptcy Code) of Qwest (other than a consolidation, merger, or reorganization
in which Qwest is the continuing corporation and which does not result in any
reclassification or change of outstanding shares of Stock); or (b) the sale or
conveyance of the property of Qwest as an entirety or substantially as an
entirety (other than a sale or conveyance in which the Qwest continues as
holding company of an entity or entities that conduct the business or business
formerly conducted by Qwest); or (c) the dissolution or liquidation of Qwest.
5.2 REQUIRED NOTICE. At least 30 days' prior written notice of any event
described in Section 5.1 shall be given by Qwest to each Option Holder and
Participant unless (a) in the case of the events described in clauses (a) or (b)
of Section 5.1, Qwest, or the successor or purchaser, as the case may be, shall
make adequate provision for the assumption of the outstanding Options or the
substitution of new options for the outstanding Options on terms comparable to
the outstanding Options except that the Option Holder shall have the right
thereafter to purchase the kind and amount of securities or property or cash
receivable upon such merger, consolidation, other reorganization, sale or
conveyance by a holder of the number of Shares 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), or (b) Qwest, or the successor or
purchaser, as the case may be, shall make adequate provision for the adjustment
of outstanding Awards (other than Options) so that such Awards shall entitle the
Participant to receive the kind and amount of securities or property or cash
receivable upon such merger, consolidation, other reorganization, sale or
conveyance by a holder of the number of Shares that would have been receivable
with respect to such Award immediately prior to such merger, consolidation,
other reorganization, 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). The provisions of
this Article V shall similarly apply to successive mergers, consolidations,
reorganizations, sales or conveyances. Such notice shall be deemed to have been
given when delivered personally to a Participant or when mailed to a Participant
by registered or certified mail, postage prepaid, at such Participant's address
last known to the Company.
6
5.3 ACCELERATION OF EXERCISABILITY. Participants notified in accordance
with Section 5.2 may exercise their Options 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, attainment of financial performance goals or otherwise have been
satisfied. Upon the giving of notice in accordance with Section 5.2, all
restrictions with respect to Restricted Stock and other Awards shall lapse
immediately, all Stock Units shall become payable immediately and all Stock
Appreciation Rights shall become exercisable. Any Options, Stock Appreciation
Rights or Stock Units that are not assumed or substituted under clauses (a) or
(b) of Section 5.2 that have not been exercised prior to the event described in
Section 5.1 shall automatically terminate upon the occurrence of such event.
5.4 CHANGE IN CONTROL OF QWEST.
(a) IN GENERAL. Unless provided otherwise by the Committee at the
time of the grant of an Award, upon a change in control of Qwest as defined in
subsection 5.4(b), then (i) all Options shall become immediately exercisable in
full during the remaining term thereof, and shall remain so, whether or not the
Participants to whom such Options have been granted remain employees or
consultants of the Company; (ii) all restrictions with respect to outstanding
Restricted Stock Awards shall immediately lapse; (iii) all Stock Units shall
become immediately payable; and (iv) all other Awards shall become immediately
exercisable or shall vest, as the case may be, without any further action or
passage of time.
(b) DEFINITION. For purposes of this Plan, a 'change in control'
shall be deemed to have occurred if either (i) any individual, entity, or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act), other than
Anschutz Company, The Anschutz Corporation, or any entity or organization
controlled by Philip F. Anschutz (collectively, the 'Anschutz Entities'),
acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the 1934 Act) of twenty percent (20%) or more of either (A) the then-
outstanding shares of Stock ('Outstanding Shares') or (B) the combined voting
power of the then-outstanding voting securities of the Company entitled to vote
generally in the election of directors ('Voting Power') and such beneficial
ownership (as so defined) by such individual, entity or group of twenty percent
(20%) or more of the Outstanding Shares or the Voting Power, as the case may be,
shall then exceed the beneficial ownership (as so defined) by the Anschutz
Entities of the Outstanding Shares or the Voting Power, respectively, or (ii)
the Anschutz Entities no longer have beneficial ownership (as so defined) of
twenty percent (20%) or more of either the Outstanding Shares or the Voting
Power.
5.5 REORGANIZATION OF AFFILIATED CORPORATIONS. If an Affiliated
Corporation is merged or consolidated with another corporation (other than a
merger or consolidation pursuant to which the Affiliated Corporation continues
to be, or the continuing corporation is, affiliated with Qwest through stock
ownership or control), or if all or substantially all of the assets or more than
50% of the stock of the Affiliated Corporation is acquired by any other
corporation, business entity or person (other than a transaction in which the
successor is affiliated with Qwest through stock ownership or control), or in
the case of a reorganization (other than a reorganization under the United
States Bankruptcy Code) including a divisive reorganization under Section 355 of
the Code, or liquidation of the Affiliated Corporation, the Committee may, as to
outstanding Awards, make appropriate provision for the protection of outstanding
Awards granted to Eligible Employees of, and Eligible Consultants to, the
affected Affiliated Corporation by (i) providing for the assumption of
outstanding
7
Options or the substitution of new Options for outstanding Options by the
successor on terms comparable to the outstanding Options, (ii) providing for the
adjustment of outstanding Awards, or (iii) taking such other action with respect
to outstanding Awards as the Committee deems appropriate.
ARTICLE VI
PARTICIPATION
Participants in the Plan shall be those Eligible Employees who, in the
judgment of the Committee, are performing, or during the term of their incentive
arrangement will perform, vital services in the management, operation and
development of the Company, and significantly contribute, or are expected to
significantly contribute, to the achievement of long-term corporate economic
objectives. Eligible Consultants shall be selected from those non-employee
consultants to the Company who are performing services important to the
operation and growth of the Company. Participants may be granted from time to
time one or more Awards; provided, however, that the grant of each such Award
shall be separately approved by the Committee and receipt of one such Award
shall not result in automatic receipt of any other Award. Upon determination by
the Committee that an Award is to be granted to a Participant, written notice
shall be given to such person, specifying the terms, conditions, rights and
duties related thereto. Each Participant shall, if required by the Committee,
enter into an agreement with Qwest, in such form as the Committee shall
determine and which is consistent with the provisions of the Plan, specifying
such terms, conditions, rights and duties. Awards shall be deemed to be granted
as of the date specified in the grant resolution of the Committee, which date
shall be the date of any related agreement with the Participant. In the event
of any inconsistency between the provisions of the Plan and any such agreement
entered into hereunder, the provisions of the Plan shall govern.
ARTICLE VII
OPTIONS
7.1 GRANT OF OPTIONS. Coincident with or following designation for
participation in the Plan, a Participant may be granted one or more Options.
The Committee in its sole discretion shall designate whether an Option is an
Incentive Option or a Non-Qualified Option; provided, however, that only Non-
Qualified Options may be granted to Eligible Consultants. The Committee may
grant both an Incentive Option and a Non-Qualified Option to an Eligible
Employee at the same time or at different times. Incentive Options and Non-
Qualified Options, whether granted at the same time or at different times, shall
be deemed to have been awarded in separate grants and shall be clearly
identified, and in no event shall the exercise of one Option affect the right to
exercise any other Option or affect the number of shares for which any other
Option may be exercised, except as provided in subsection 7.2(j). An Option
shall be considered as having been granted on the date specified in the grant
resolution of the Committee.
7.2 STOCK OPTION CERTIFICATES. Each Option granted under the Plan shall
be evidenced by a written stock option certificate or agreement (an 'Option
Certificate'). An Option Certificate shall be issued by Qwest in the name of
the Participant to whom the Option is granted (the 'Option
8
Holder') and in such form as may be approved by the Committee. The Option
Certificate shall incorporate and conform to the conditions set forth in this
Section 7.2 as well as such other terms and conditions that are not inconsistent
as the Committee may consider appropriate in each case.
(a) NUMBER OF SHARES. Each Option Certificate shall state that it
covers a specified number of shares of Stock, as determined by the Committee.
(b) PRICE. The price at which each share of Stock covered by an
Option may be purchased shall be determined in each case by the Committee and
set forth in the Option Certificate, but in no event shall the price be less
than 100 percent of the Fair Market Value of the Stock on the date an Incentive
Option is granted.
(c) DURATION OF OPTIONS; RESTRICTIONS ON EXERCISE. Each Option
Certificate shall state the period of time, determined by the Committee, within
which the Option may be exercised by the Option Holder (the 'Option Period').
The Option Period must end, in all cases, not more than ten years from the date
the Option is granted. The Option Certificate shall also set forth any
installment or other restrictions on Option exercise during such period, if any,
as may be determined by the Committee. Each Option shall become exercisable
(vest) over such period of time, if any, or upon such events, as determined by
the Committee.
(d) TERMINATION OF SERVICES, DEATH, DISABILITY, ETC. The Committee
may specify the period, if any, after which an Option may be exercised following
termination of the Option Holder's services. The effect of this subsection
7.2(d) shall be limited to determining the consequences of a termination and
nothing in this subsection 7.2(d) shall restrict or otherwise interfere with the
Company's discretion with respect to the termination of any individual's
services. If the Committee does not otherwise specify, the following shall
apply:
(i) If the services of the Option Holder are terminated within the
Option Period for 'cause', as determined by the Company, the Option shall
thereafter be void for all purposes. As used in this subsection 7.2(d), '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 Company or such other
cause as the Board in good faith reasonably determines provides cause for the
discharge of an Option Holder.
(ii) If the Option Holder becomes Disabled, the Option may be
exercised by the Option Holder within one year 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
because of Disability.
(iii) If the Option Holder dies during the Option Period while
still performing services for the Company or within the one year period referred
to in (ii) above or the three-month period referred to in (iv) 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 one year following the Option
Holder's death, (provided that such exercise must occur within the Option
Period), but
9
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.
(iv) 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) by the Company within the Option
Period for any reason other than cause, Disability or the Option Holder's death,
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.
(e) TRANSFERABILITY. Each Option shall not be transferable by the
Option Holder except by will or pursuant to the laws of descent and
distribution. Each Option is exercisable during the Option Holder's lifetime
only by him or her, or in the event of Disability or incapacity, by his or her
guardian or legal representative. The Committee may, however, provide at the
time of grant or thereafter that the Option Holder may transfer a Non-Qualified
Option to a member of the Option Holder's immediate family, a trust of which
members of the Option Holder's immediate family are the only beneficiaries, or a
partnership of which members of the Option Holder's immediate family or trusts
for the sole benefit of the Option Holder's immediate family are the only
partners. Immediate family means the Option Holder's spouse, issue (by birth or
adoption), parents, grandparents, and siblings (including half brothers and
sisters and adopted siblings). During the Option Holder's lifetime the Option
Holder may not transfer an Incentive Option under any circumstances.
(f) CONSIDERATION FOR GRANT OF OPTION. Each Option Holder agrees to
remain in the employment of the Company or to continue providing consulting
services to the Company, as the case may be, at the pleasure of the Company, for
a continuous period of at least one year after the date the Option is granted,
at the rate of compensation in effect on the date of such agreement or at such
changed rate as may be fixed, from time to time, by the Company. Nothing in
this paragraph shall limit or impair the Company's right to terminate the
employment of any employee or to terminate the consulting services of any
consultant.
(g) EXERCISE, PAYMENTS, ETC.
(i) MANNER OF EXERCISE. The method for exercising each Option
granted hereunder shall be by delivery to Qwest of written notice specifying the
number of Shares with respect to which such Option is exercised. The purchase of
such Shares shall take place at the principal offices of Qwest within thirty
days following delivery of such notice, at which time the Option Price of the
Shares shall be paid in full by any of the methods set forth below or a
combination thereof. Except as set forth in the next sentence, the Option shall
be exercised when the Option Price for the number of shares as to which the
Option is exercised is paid to Qwest in full. If the Option Price is paid by
means of a broker's loan transaction described in subsection 7.2(g)(ii)(D), in
whole or in part, the closing of the purchase of the Stock under the Option
shall take place (and the Option shall be treated as exercised) on the date on
which, and only if, the sale of Stock upon which the broker's loan was based has
been closed and settled, unless the Option Holder makes an irrevocable written
election, at the time of exercise of the Option, to have the exercise
10
treated as fully effective for all purposes upon receipt of the Option Price by
Qwest regardless of whether or not the sale of the Stock by the broker is closed
and settled. A properly executed certificate or certificates representing the
Shares shall be delivered to or at the direction of the Option Holder upon
payment therefor. If Options on less than all shares evidenced by an Option
Certificate are exercised, Qwest shall deliver a new Option Certificate
evidencing the Option on the remaining shares upon delivery of the Option
Certificate for the Option being exercised.
(ii) The exercise price shall be paid by any of the following
methods or any combination of the following methods at the election of the
Option Holder, or by any other method approved by the Committee upon the request
of the Option Holder:
(A) in cash;
(B) by certified check, cashier's check or other check
acceptable to the Company, payable to the order of Qwest;
(C) by delivery to Qwest of certificates representing the
number of shares then owned by the Option Holder, the Fair Market Value of which
equals the purchase price of the Stock purchased pursuant to the Option,
properly endorsed for transfer to Qwest; provided however, that no Option may be
exercised by delivery to Qwest of certificates representing Stock, unless such
Stock has been held by the Option Holder for more than six months; for purposes
of this Plan, the Fair Market Value of any shares of Stock delivered in payment
of the purchase 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; or
(D) by delivery to Qwest of a properly executed notice of
exercise together with irrevocable instructions to a broker to deliver to Qwest
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.
(h) DATE OF GRANT. An Option shall be considered as having been
granted on the date specified in the grant resolution of the Committee.
(i) WITHHOLDING.
(i) Non-Qualified Options. Upon exercise of an Option, the
Option Holder shall make appropriate arrangements with the Company to provide
for the amount of additional withholding required by Sections 3102 and 3402 of
the Code and applicable state income tax laws, including payment of such taxes
through delivery of shares of Stock or by withholding Stock to be issued under
the Option, as provided in Article XVII.
(ii) Incentive Options. If an Option Holder makes a disposition
(as defined in Section 424(c) of the Code) of any Stock acquired pursuant to the
exercise of an Incentive Option prior to the expiration of two years from the
date on which the Incentive Option was granted or prior to the expiration of one
year from the date on which the Option was exercised, the Option Holder shall
send written notice to the Company at the Company's principal place of business
of the date of such disposition, the number of shares disposed of, the amount of
proceeds received from such
11
disposition and any other information relating to such disposition as the
Company may reasonably request. The Option Holder shall, in the event of such a
disposition, make appropriate arrangements with the Company to provide for the
amount of additional withholding, if any, required by Sections 3102 and 3402 of
the Code and applicable state income tax laws.
7.3 RESTRICTIONS ON INCENTIVE OPTIONS.
(a) INITIAL EXERCISE. The aggregate Fair Market Value of the Shares
with respect to which Incentive Options are exercisable for the first time by an
Option Holder in any calendar year, under the Plan or otherwise, shall not
exceed $100,000. For this purpose, the Fair Market Value of the Shares shall be
determined as of the date of grant of the Option.
(b) TEN PERCENT STOCKHOLDERS. Incentive Options granted to an Option
Holder who is the holder of record of 10% or more of the outstanding Stock of
Qwest shall have an Option Price equal to 110% of the Fair Market Value of the
Shares on the date of grant of the Option and the Option Period for any such
Option shall not exceed five years.
7.4 SHAREHOLDER PRIVILEGES. No Option Holder shall have any rights as a
shareholder with respect to any shares of Stock covered by an Option until the
Option Holder becomes the holder of record of such Stock, and no adjustments
shall be made for dividends or other distributions or other rights as to which
there is a record date preceding the date such Option Holder becomes the holder
of record of such Stock, except as provided in Article IV.
ARTICLE VIII
RESTRICTED STOCK AWARDS
8.1 GRANT OF RESTRICTED STOCK AWARDS. Coincident with or following
designation for participation in the Plan, the Committee may grant a Participant
one or more Restricted Stock Awards consisting of Shares of Stock. The number
of Shares granted as a Restricted Stock Award shall be determined by the
Committee.
8.2 RESTRICTIONS. A Participant's right to retain a Restricted Stock
Award granted to him under Section 8.1 shall be subject to such restrictions,
including but not limited to his continuous employment by or performance of
services for the Company for a restriction period specified by the Committee or
the attainment of specified performance goals and objectives, as may be
established by the Committee with respect to such Award. The Committee may in
its sole discretion require different periods of service or different
performance goals and objectives with respect to different Participants, to
different Restricted Stock Awards or to separate, designated portions of the
Shares constituting a Restricted Stock Award. In the event of the death or
Disability of a Participant, or the retirement of a Participant in accordance
with the Company's established retirement policy, all required periods of
service and other restrictions applicable to Restricted Stock Awards then held
by him shall lapse with respect to a pro rata part of each such Award based on
the ratio between the number of full months of employment or services completed
at the time of termination of services from the grant of each Award to the total
number of months of employment or continued services required for such Award to
be fully nonforfeitable, and such portion of each such Award shall
12
become fully nonforfeitable. The remaining portion of each such Award shall be
forfeited and shall be immediately returned to Qwest. If a Participant's
employment or consulting services terminate for any other reason, any Restricted
Stock Awards as to which the period for which services are required or other
restrictions have not been satisfied (or waived or accelerated as provided
herein) shall be forfeited, and all shares of Stock related thereto shall be
immediately returned to Qwest.
8.3 PRIVILEGES OF A STOCKHOLDER, TRANSFERABILITY. A Participant shall
have all voting, dividend, liquidation and other rights with respect to Stock in
accordance with its terms received by him as a Restricted Stock Award under this
Article VIII upon his becoming the holder of record of such Stock; provided,
however, that the Participant's right to sell, encumber, or otherwise transfer
such Stock shall be subject to the limitations of Section 11.2.
8.4 ENFORCEMENT OF RESTRICTIONS. The Committee shall cause a legend to be
placed on the Stock certificates issued pursuant to each Restricted Stock Award
referring to the restrictions provided by Sections 8.2 and 8.3 and, in addition,
may in its sole discretion require one or more of the following methods of
enforcing the restrictions referred to in Sections 8.2 and 8.3:
(a) Requiring the Participant to keep the Stock certificates, duly
endorsed, in the custody of Qwest while the restrictions remain in effect; or
(b) Requiring that the Stock certificates, duly endorsed, be held in
the custody of a third party while the restrictions remain in effect.
ARTICLE IX
STOCK UNITS
A Participant may be granted a number of Stock Units determined by the
Committee. The number of Stock Units, the goals and objectives to be satisfied
with respect to each grant of Stock Units, the time and manner of payment for
each Stock Unit, and the other terms and conditions applicable to a grant of
Stock Units shall be determined by the Committee.
ARTICLE X
STOCK APPRECIATION RIGHTS
10.1 PERSONS ELIGIBLE. The Committee, in its sole discretion, may
grant Stock Appreciation Rights to Eligible Employees or Eligible Consultants.
10.2 TERMS OF GRANT. The Committee shall determine at the time of the
grant of a Stock Appreciation Right the time period during which the Stock
Appreciation Right may be exercised and any other terms that shall apply to the
Stock Appreciation Right.
10.3 EXERCISE. A Stock Appreciation Right shall entitle a Participant
to receive a number of shares of Stock (without any payment to Qwest, except for
applicable withholding taxes), cash,
13
or Stock and cash, as determined by the Committee in accordance with Section
10.4 below. If a Stock Appreciation Right is issued in tandem with an Option,
except as may otherwise be provided by the Committee, the Stock Appreciation
Right shall be exercisable during the period that its related Option is
exercisable. A Participant desiring to exercise a Stock Appreciation Right shall
give written notice of such exercise to Qwest, which notice shall state the
proportion of Stock and cash that the Participant desires to receive pursuant to
the Stock Appreciation Right exercised. Upon receipt of the notice from the
Participant, Qwest shall deliver to the person entitled thereto (i) a
certificate or certificates for Stock and/or (ii) a cash payment, in accordance
with Section 10.4 below. The date Qwest receives written notice of such exercise
hereunder is referred to in this Article X as the 'exercise date'. The delivery
of Stock or cash received pursuant to such exercise shall take place at the
principal offices of Qwest within 30 days following delivery of such notice.
10.4 NUMBER OF SHARES OR AMOUNT OF CASH. Subject to the discretion of
the Committee to substitute cash for Stock, or Stock for cash, the number of
Shares that may be issued pursuant to the exercise of a Stock Appreciation Right
shall be determined by dividing: (a) the total number of Shares of Stock as to
which the Stock Appreciation Right is exercised, multiplied by the amount by
which the Fair Market Value of one share of Stock on the exercise date exceeds
the Fair Market Value of one Share of Stock on the date of grant of one Share of
Stock Appreciation Right, by (b) the Fair Market Value of one Share of Stock on
the exercise date; provided, however, that fractional shares shall not be issued
and in lieu thereof, a cash adjustment shall be paid. In lieu of issuing Stock
upon the exercise of a Stock Appreciation Right, the Committee in its sole
discretion may elect to pay the cash equivalent of the Fair Market Value of the
Stock on the exercise date for any or all of the Shares of Stock that would
otherwise be issuable upon exercise of the Stock Appreciation Right.
10.5 EFFECT OF EXERCISE. If a Stock Appreciation Right is issued in
tandem with an Option, the exercise of the Stock Appreciation Right or the
related Option will result in an equal reduction in the number of corresponding
Options or Stock Appreciation Rights that were granted in tandem with such Stock
Appreciation Rights and Options.
10.6 TERMINATION OF SERVICES. Upon the termination of the services of
a Participant, any Stock Appreciation Rights then held by such Participant shall
be exercisable within the time periods, and upon the same conditions with
respect to the reasons for termination of services, as are specified in Section
7.2(d) with respect to Options.
ARTICLE XI
STOCK BONUSES
The Committee may award Stock Bonuses to such Participants, subject to such
conditions and restrictions, as it determines in its sole discretion. Stock
Bonuses may be either outright grants of Stock, or may be grants of Stock
subject to and conditioned upon certain employment or performance related goals.
14
ARTICLE XII
OTHER COMMON STOCK GRANTS
From time to time during the duration of this Plan, the Board may, in its
sole discretion, adopt one or more incentive compensation arrangements for
Participants pursuant to which the Participants may acquire shares of Stock,
whether by purchase, outright grant, or otherwise. Any such arrangements shall
be subject to the general provisions of this Plan and all shares of Stock issued
pursuant to such arrangements shall be issued under this Plan.
ARTICLE XIII
RIGHTS OF PARTICIPANTS
13.1 SERVICE. Nothing contained in the Plan or in any Award, or other
Award granted under the Plan shall confer upon any Participant any right with
respect to the continuation of his employment by, or consulting relationship
with, the Company, or interfere in any way with the right of the Company,
subject to the terms of any separate employment agreement or other contract to
the contrary, at any time to terminate such services or to increase or decrease
the compensation of the Participant from the rate in existence at the time of
the grant of an Award. Whether an authorized leave of absence, or absence in
military or government service, shall constitute a termination of service shall
be determined by the Committee at the time.
13.2 NONTRANSFERABILITY. Except as provided otherwise at the time of
grant, no right or interest of any Participant in an Option, a Stock
Appreciation Right, a Restricted Stock Award (prior to the completion of the
restriction period applicable thereto), a Stock Unit, or other Award granted
pursuant to the Plan, shall be assignable or transferable during the lifetime of
the Participant, either voluntarily or involuntarily, or subjected to any lien,
directly or indirectly, by operation of law, or otherwise, including execution,
levy, garnishment, attachment, pledge or bankruptcy. In the event of a
Participant's death, a Participant's rights and interests in Options, Stock
Appreciation Rights, Restricted Stock Awards, other Awards, and Stock Units
shall, to the extent provided in Articles VII, VIII, IX, X and XI, be
transferable by will or the laws of descent and distribution, and payment of any
amounts due under the Plan shall be made to, and exercise of any Options may be
made by, the Participant's legal representatives, heirs or legatees.
Notwithstanding the foregoing, the Option Holder may not transfer an Incentive
Option during the Option Holder's lifetime. If in the opinion of the Committee
a person entitled to payments or to exercise rights with respect to the Plan is
disabled from caring for his affairs because of mental condition, physical
condition or age, payment due such person may be made to, and such rights shall
be exercised by, such person's guardian, conservator or other legal personal
representative upon furnishing the Committee with evidence satisfactory to the
Committee of such status.
13.3 NO PLAN FUNDING. Obligations to Participants under the Plan will
not be funded, trusteed, insured or secured in any manner. The Participants
under the Plan shall have no security interest in any assets of the Company, and
shall be only general creditors of the Company.
15
ARTICLE XIV
GENERAL RESTRICTIONS
14.1 INVESTMENT REPRESENTATIONS. Qwest may require any person to whom
an Option, Stock Appreciation Right, Restricted Stock Award, Stock Unit, or
Stock Bonus is granted, as a condition of exercising such Option or Stock
Appreciation Right, or receiving such Restricted Stock Award, Stock Unit, or
Stock Bonus, to give written assurances in substance and form satisfactory to
Qwest and its counsel to the effect that such person 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 Qwest 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.
14.2 COMPLIANCE WITH SECURITIES LAWS. Each Option, Stock Appreciation
Right, Restricted Stock Award, Stock Unit, and Stock Bonus grant shall be
subject to the requirement that, if at any time counsel to Qwest shall determine
that the listing, registration or qualification of the shares subject to such
Option, Stock Appreciation Right, Restricted Stock Award, Stock Unit, or Stock
Bonus grant 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 shares
thereunder, such Option, Stock Appreciation Right, Restricted Stock Award, Stock
Unit or Stock Bonus grant may not be accepted or 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 Qwest to apply for or to obtain such listing,
registration or qualification.
14.3 CHANGES IN ACCOUNTING RULES. Except as provided otherwise at the
time an Award is granted, notwithstanding any other provision of the Plan to the
contrary, if, during the term of the Plan, any changes in the financial or tax
accounting rules applicable to Options, Stock Appreciation Rights, Restricted
Stock Awards, Stock Units or other Awards shall occur which, in the sole
judgment of the Committee, may have a material adverse effect on the reported
earnings, assets or liabilities of Qwest, the Committee shall have the right and
power to modify as necessary, any then outstanding and unexercised Options,
Stock Appreciation Rights, outstanding Restricted Stock Awards, outstanding
Stock Units and other outstanding Awards as to which the applicable services or
other restrictions have not been satisfied.
ARTICLE XV
OTHER EMPLOYEE BENEFITS
The amount of any compensation deemed to be received by a Participant as a
result of the exercise of an Option or Stock Appreciation Right, the sale of
shares received upon such exercise, the vesting of any Restricted Stock Award,
receipt of Stock Bonuses, distributions with respect to Stock Units, or the
grant of Stock shall not constitute 'earnings' or 'compensation' with respect to
which any other employee benefits of such employee are determined, including
without limitation benefits under any pension, profit sharing, 401(k), life
insurance or salary continuation plan.
16
ARTICLE XVI
PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Board may at any time terminate, and from time to time may amend or
modify the Plan provided, however, that no amendment or modification may become
effective without approval of the amendment or modification by the shareholders
if shareholder approval is required to enable the Plan to satisfy any applicable
statutory or regulatory requirements, or if Qwest, on the advice of counsel,
determines that shareholder approval is otherwise necessary or desirable.
No amendment, modification or termination of the Plan shall in any manner
adversely affect any Options, Stock Appreciation Rights, Restricted Stock
Awards, Stock Units, Stock Bonuses or other Award theretofore granted under the
Plan, without the consent of the Participant holding such Options, Stock
Appreciation Rights, Restricted Stock Awards, Stock Units, Stock Bonuses or
other Awards.
ARTICLE XVII
WITHHOLDING
17.1 WITHHOLDING REQUIREMENT. Qwest's obligations to deliver shares
of Stock upon the exercise of any Option, or Stock Appreciation Right, the
vesting of any Restricted Stock Award, payment with respect to Stock Units, or
the grant of Stock shall be subject to the Participant's satisfaction of all
applicable federal, state and local income and other tax withholding
requirements.
17.2 WITHHOLDING WITH STOCK. At the time the Committee grants an
Option, Stock Appreciation Right, Restricted Stock Award, Stock Unit, Stock
Bonus, other Award, or Stock, it may, in its sole discretion, grant the
Participant an election to pay all such amounts of tax withholding, or any part
thereof, by electing to transfer to Qwest, or to have Qwest withhold from shares
otherwise issuable to the Participant, shares of Stock having a value equal to
the amount required to be withheld or such lesser amount as may be elected by
the Participant. All elections shall be subject to the approval or disapproval
of the Committee. The value of shares of Stock to be withheld shall be based on
the Fair Market Value of the Stock on the date that the amount of tax to be
withheld is to be determined (the 'Tax Date'). Any such elections by
Participants to have shares of Stock withheld for this purpose will be subject
to the following restrictions:
(a) All elections must be made prior to the Tax Date.
(b) All elections shall be irrevocable.
(c) If the Participant is an officer or director of Qwest within the
meaning of Section 16 of the 1934 Act ('Section 16'), the Participant must
satisfy the requirements of such Section 16 and any applicable Rules thereunder
with respect to the use of Stock to satisfy such tax withholding obligation.
17
ARTICLE XVIII
REQUIREMENTS OF LAW
18.1 REQUIREMENTS OF LAW. The issuance of Stock and the payment of
cash pursuant to the Plan shall be subject to all applicable laws, rules and
regulations.
18.2 FEDERAL SECURITIES LAW REQUIREMENTS. If a Participant is an
officer or director of Qwest within the meaning of Section 16, Awards granted
hereunder shall be subject to all conditions required under Rule 16b-3, or any
successor rule promulgated under the 1934 Act, to qualify the Award for any
exception from the provisions of Section 16(b) of the 1934 Act available under
that Rule. Such conditions shall be set forth in the agreement with the
Participant which describes the Award or other document evidencing or
accompanying the Award.
18.3 GOVERNING LAW. The Plan and all agreements hereunder shall be
construed in accordance with and governed by the laws of the State of Delaware.
ARTICLE XIX
DURATION OF THE PLAN
Unless sooner terminated by the Board of Directors, the Plan shall
terminate at the close of business on ______________, 2007, and no Option, Stock
Appreciation Right, Restricted Stock Award, Stock Unit, Stock Bonus, other Award
or Stock shall be granted, or offer to purchase Stock made, after such
termination. Options, Stock Appreciation Rights, Restricted Stock Awards, other
Awards, and Stock Units outstanding at the time of the Plan termination may
continue to be exercised, or become free of restrictions, or paid, in accordance
with their terms.
Dated: To be effective _________________, 1997.
QWEST COMMUNICATIONS
INTERNATIONAL INC., a
Delaware corporation
By:_____________________________
18
Equity incentive Plan - Qwest Communications International Inc.
Was this helpful?