Exhibit 10.2

 

 

QWEST COMMUNICATIONS INTERNATIONAL INC.

 

EQUITY INCENTIVE PLAN

 

(effective June 23, 1997)

 

(amended and restated, effective October 4, 2000)

 

 

 

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TABLE OF CONTENTS

 

ARTICLE I INTRODUCTION

 

1.1

Establishment

 

1.2

Purposes

 

1.3

Effective Date; Amendment

 

 

 

 

ARTICLE II DEFINITIONS

 

2.1

Definitions

 

2.2

Gender and Number

 

 

 

 

ARTICLE III PLAN ADMINISTRATION

 

3.1

General

 

3.2

Delegation by Committee

 

3.3

Grants to Non-Employee Directors

 

 

 

 

ARTICLE IV STOCK SUBJECT TO THE PLAN

 

4.1

Number of Shares

 

4.2

Other Shares of Stock

 

4.3

Adjustments for Stock Split, Stock Dividend, Etc.

 

4.4

Other Distributions and Changes in the Stock

 

4.5

General Adjustment Rules

 

4.6

Determination by the Committee, Etc.

 

 

 

 

ARTICLE V CORPORATE REORGANIZATION; CHANGE IN CONTROL

 

5.1

Reorganization of Qwest

 

5.2

Required Notice

 

5.3

Acceleration of Exercisability

 

5.4

Change in Control of Qwest

 

5.5

Reorganization of Affiliated Corporations

 

 

 

 

ARTICLE VI PARTICIPATION

 

6.1

Eligible Employees; Eligible Consultants

 

6.2

Non-Employee Directors

 

 

 

 

ARTICLE VII OPTIONS

 

7.1

Grant of Options

 

7.2

Stock Option Certificates

 

7.3

Restrictions on Incentive Options

 

7.4

Shareholder Privileges

 

 

 

 

ARTICLE VIII RESTRICTED STOCK AWARDS

 

8.1

Grant of Restricted Stock Awards

 

8.2

Restrictions

 

8.3

Privileges of a Stockholder, Transferability

 

8.4

Enforcement of Restrictions

 

 

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ARTICLE IX STOCK UNITS

 

 

 

 

ARTICLE X STOCK APPRECIATION RIGHTS

 

10.1

Persons Eligible

 

10.2

Terms of Grant

 

10.3

Exercise

 

10.4

Number of Shares or Amount of Cash

 

10.5

Effect of Exercise

 

10.6

Termination of Services

 

 

 

 

ARTICLE XI STOCK BONUSES

 

 

 

 

ARTICLE XII OTHER COMMON STOCK GRANTS

 

 

 

 

ARTICLE XIII RIGHTS OF PARTICIPANTS

 

13.1

Service

 

13.2

Nontransferability

 

13.3

No Plan Funding

 

 

 

 

ARTICLE XIV GENERAL RESTRICTIONS

 

14.1

Investment Representations

 

14.2

Compliance with Securities Laws

 

14.3

Changes in Accounting Rules

 

 

 

 

ARTICLE XV OTHER EMPLOYEE BENEFITS

 

 

 

 

ARTICLE XVI PLAN AMENDMENT, MODIFICATION AND TERMINATION

 

 

 

 

ARTICLE XVII WITHHOLDING

 

17.1

Withholding Requirement

 

17.2

Withholding With Stock

 

 

 

 

ARTICLE XVIII REQUIREMENTS OF LAW

 

18.1

Requirements of Law

 

18.2

Federal Securities Law Requirements

 

18.3

Governing Law

 

 

 

 

ARTICLE XIX DURATION OF THE PLAN

 

 

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QWEST COMMUNICATIONS INTERNATIONAL INC.

 

EQUITY INCENTIVE PLAN

 

ARTICLE I

 

INTRODUCTION

 

1.1           Establishment. Qwest Communications International Inc., a Delaware
corporation, effective June 23, 1997, established the Qwest Communications
International Inc. Equity Incentive Plan (the “Plan”) for certain 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.

 

1.3           Effective Date; Amendment. The initial effective date of the Plan
was June 23, 1997. The Plan is hereby amended and restated, as of October 4,
2000, to provide that Non-Employee Directors (as defined below) are eligible to
receive grants of non-qualified stock options under the Plan. The provisions of
the Plan, as so amended and restated, shall apply to any Award (as defined in
subsection 2.1(b)) granted on or after October 4, 2000.

 

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.

 

(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”). Except as provided in Section 3.2, 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.

 

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(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 original effective date of the Plan,
June 23, 1997.

 

(i)            “Eligible Employees” means those 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 any individual who provides
services to the Company or any subsidiary or division thereof as a common law
employee and whose remuneration is subject to the withholding of federal income
tax pursuant to section 3401 of the Code. Employee shall not include any
individual (A) who provides services to the Company or any subsidiary or
division thereof under an agreement, contract, or any other arrangement pursuant
to which the individual is initially classified as an independent contractor or
(B) whose remuneration for services has not been treated initially as subject to
the withholding of federal income tax pursuant to section 3401 of the Code even
if the individual is subsequently reclassified as a common law employee as a
result of a final decree of a court of competent jurisdiction or the settlement
of an administrative or judicial proceeding. Leased employees within the meaning
of section 414(n) of the Code shall not be treated as employees under this Plan.

 

(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
New York Stock Exchange, 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, or the individual or
individuals to whom the Committee has delegated authority to grant Awards, 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-Employee Director” means a member of the Board who is not an
employee (as defined in the second sentence of subsection 2.1(i) above) of the
Company.

 

(n)           “Non-Qualified Option” means any Option other than an Incentive
Option.

 

(o)           “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.

 

(p)           “Option Certificate” shall have the meaning given to such term in
Section 7.2 hereof.

 

(q)           “Option Holder” means a Participant who has been granted one or
more Options under the Plan.

 

(r)            “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).

 

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(s)           “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 and a Non-Employee
Director who has been granted an Option as provided in Section 6.2.

 

(t)            “Qwest” means Qwest Communications International Inc. and any
successor thereto.

 

(u)           “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.

 

(v)           “Share” means a share of Stock.

 

(w)          “Stock” means the $0.01 par value common stock of Qwest.

 

(x)            “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.

 

(y)           “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.

 

(z)            “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

 

3.1           General. 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
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.

 

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3.2           Delegation by Committee. The Committee may, from time to time,
delegate, to specified officers of Qwest, the power and authority to grant
Awards under the Plan to specified groups of employees and consultants, subject
to such restrictions and conditions as the Committee, in its sole discretion,
may impose. The delegation shall be as broad or as narrow as the Committee shall
determine. To the extent that the Committee has delegated the authority to
determine certain terms and conditions of an Award, all references in the Plan
to the Committee’s exercise of authority in determining such terms and
conditions shall be construed to include the Qwest officer or officers to whom
the Committee has delegated the power and authority to make such determination.
The power and authority to grant Awards to any employee or consultant who is
covered by Section 16(b) of the 1934 Act shall not be delegated by the
Committee.

 

3.3           Grants to Non-Employee Directors. The Committee may make grants of
Non-Qualified Options to Non-Employee Directors.

 

ARTICLE IV

 

STOCK SUBJECT TO THE PLAN

 

4.1           Number of Shares. The maximum aggregate number of Shares that may
be issued under the Plan at any time pursuant to Awards shall equal 10% of the
aggregate number of Shares that are issued and outstanding at such time
(determined as of the close of trading on the New York Stock Exchange on the
trading day immediately preceding such time), reduced by the number of Shares
that are subject to outstanding Awards granted under this Plan and outstanding
options granted under any other plan or arrangement of the Company or any
subsidiary of the Company (excluding the Company’s Employee Stock Purchase Plan)
at such time. Upon exercise of an option (whether granted under this Plan or
otherwise), the Shares issued upon exercise of such option shall no longer be
considered to be subject to an outstanding Award or option for purposes of the
immediately preceding sentence. Notwithstanding anything to the contrary
contained herein, no Award granted hereunder shall become void or otherwise be
adversely affected solely because of a change in the number of Shares of the
Company that are issued and outstanding from time to time, provided that changes
to the issued and outstanding Shares may result in adjustments to outstanding
Awards in accordance with the provisions of this Article IV. 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 40,000,000. The
maximum number of Shares as to which Incentive Options may be granted is
75,000,000. The Shares may be either authorized and unissued Shares or
previously issued Shares acquired by Qwest. Such maximum numbers 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.
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
75,000,000 shares of Stock may be awarded pursuant to Incentive Options.

 

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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, (ii) the Shares then included in each outstanding Award granted hereunder,
(iii) the maximum number of Shares available for grant to any one person in a
calendar year, (iv) the maximum number of Shares available for grant pursuant to
Incentive Options, and (v) the number of Shares subject to a delegation of
authority under Section 4.2 of this Plan.

 

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.

 

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.

 

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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 Qwest continues as a holding
company of an entity or entities that conduct the business or businesses
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.

 

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.

 

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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,
consultants or directors 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, any entity or organization
controlled by Philip F. Anschutz (collectively, the “Anschutz Entities”) or a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, acquires beneficial ownership (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of fifty percent (50%) 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”) or (ii) at any
time during any period of three consecutive years (not including any period
prior to the Effective Date), individuals who at the beginning of such period
constitute the Board (and any new director whose election by the Board or whose
nomination for election by the Company’s stockholders was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority thereof.

 

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
fifty percent (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 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.

 

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ARTICLE VI

 

PARTICIPATION

 

6.1           Eligible Employees; Eligible Consultants. 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.

 

6.2           Non-Employee Directors. The Committee may, from time to time,
grant Non-Qualified Options to one or more Non-Employee Directors, who shall be
Participants in the Plan. Each Option shall include the terms and conditions
that are determined by the Committee and that are consistent with the terms of
the Plan. Each Participant shall, if required by the Committee, enter into an
agreement with Qwest, in such form as the Committee shall determine and that is
consistent with the terms of the Plan, specifying the terms and conditions of
the Option and the rights and duties of the Participant. An Option shall be
deemed 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. 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 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.

 

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(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 the case of an Incentive Option, in no event
shall the price be less than 100 percent of the Fair Market Value of the Stock
on the date the 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 exercise of the Option 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, during 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
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 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.

 

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(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 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;

 

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(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 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.

 

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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 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 13.2.

 

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.

 

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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, 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.

 

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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 Option, 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 or thereafter, 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.

 

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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.

 

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.

 

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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 or at any time thereafter, 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 (a) 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; provided however, that the amount of Stock so withheld shall not
exceed the minimum amount required to be withheld under the method of
withholding that results in the smallest amount of withholding, or (b) to
transfer to Qwest a number of shares of Stock that were acquired by the
Participant more than six months prior to the transfer to Qwest and that have 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.

 

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.

 

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ARTICLE XIX

 

DURATION OF THE PLAN

 

Unless sooner terminated by the Board of Directors, the Plan shall terminate at
the close of business on June 22, 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: October 4, 2000

 

 

QWEST COMMUNICATIONS INTERNATIONAL INC.,
a Delaware corporation

 

 

 

By:

/s/ Drake S. Tempest

 

 

 

Executive Vice President, General Counsel, and Chief

 

 

Administrative Officer

 

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FORM OF

NON-QUALIFIED STOCK OPTION AGREEMENT

 

This Option Agreement (the “Agreement”) is made as of the              day
of                         , 200X, between Qwest Communications
International Inc., a Delaware Corporation (the “Company”),
and                          (the “Optionee”).

 

WHEREAS, pursuant to the Qwest Communications International Inc. Equity
Incentive Plan (the “Plan”), the Company desires to afford the Optionee the
opportunity to purchase shares of Company Common Stock, par value $.01 per share
(the “Common Shares”).

 

NOW, THEREFORE, in connection with the mutual covenants hereinafter set forth
and for other good and valuable consideration, the receipt and adequacy of which
is hereby acknowledged, the parties hereto agree as follows:

 

1.             DEFINITIONS: CONFLICTS.

 

Capitalized terms used and not otherwise defined herein shall have the meanings
given thereto in the Plan. The terms and provisions of the Plan are incorporated
herein by reference. In the event of a conflict or inconsistency between the
terms and provisions of the Plan and the terms and provisions of this Agreement,
the terms and provisions of the Plan shall govern and control. In the event of a
conflict or inconsistency between the terms and conditions of this Agreement and
any agreement between Optionee and U S WEST, Inc. and/or its subsidiaries, the
terms and conditions of this Agreement shall govern and control. In the event of
a conflict or inconsistency between the terms and conditions of this Agreement
and any employment agreement between Company and Optionee (other than an
agreement between the Optionee and U S WEST, Inc. and/or its subsidiaries), such
employment agreement shall govern.

 

2.             GRANT OF OPTIONS.

 

The Company hereby grants to the Optionee the right and option (the “Option” or
“Options”) to purchase up to, but not exceeding in the
aggregate,                          Common Shares, on the terms and conditions
herein set forth.

 

3.             PURCHASE PRICE.

 

The purchase price of each Common Share covered by the Option shall be
$             (the “Purchase Price”).

 

4.             TERM OF OPTIONS.

 

The term of the Option shall be ten (10) years from the date hereof, subject to
earlier termination as provided in Sections 6 and 8 hereof.

 

5.             VESTING OF OPTIONS.

 

The Option, subject to the terms, conditions and limitations contained herein,
shall vest and become exercisable with respect to the Common Shares in
installments of     % one year from the date hereof and in additional
installments of     % on each subsequent anniversary thereafter; provided that
with respect to each such installment, the Optionee has remained in continuous
employment with the Company from the date hereof through the date such
installment is designated to vest.

 

Notwithstanding the vesting schedule set forth above, the Options will vest and
become immediately exercisable in the event of the Optionee’s death or
Disability and under the circumstances described in Section 7 below.

 

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6.             TERMINATION OF EMPLOYMENT.

 

(a)           Termination of Employment for Reasons other than Death,
Disability, Retirement or Cause. In the event the Optionee’s employment with the
Company terminates for reasons other than Optionee’s death, Disability,
Retirement or Cause, the Option shall remain exercisable for a period of up to
three months after Optionee’s termination of employment (but not beyond the term
of the Option), to the extent vested and exercisable at the time of Optionee’s
termination of employment.

 

(b)           Termination of Employment Because Optionee Dies, Becomes Disabled
or Retires. In the event Optionee’s employment with the Company terminates
because Optionee dies, becomes Disabled or Retires, the Option shall remain
exercisable for two years after Optionee’s termination of employment (but not
beyond the term of the Option), to the extent vested and exercisable at the time
Optionee’s employment terminated. For purposes of this Agreement, the terms
“Disabled” and “Disability” shall mean that, at the time of Optionee’s
termination of employment, Optionee is eligible for disability benefits under
the Qwest Disability Plan or the Modified Disability Pension Program under the
Qwest Pension Plan or any successor program, as such programs may be amended
from time to time. For purposes of this Agreement, the terms “Retire” and
“Retirement” shall meant that, at the time of Optionee’s termination of
employment, Optionee has one of the following age and service combinations:

 

Retirement
Age

 

Term of Employment

Any Age

 

at least 30 years

50-54

 

at least 25 years

55-59

 

at least 20 years

60-64

 

at least 15 years

65 and older

 

at least 10 years

 

(c)           Termination of Employment for Cause. In the event Optionee’s
employment with the Company is terminated by the Company for Cause, the Option
shall be forfeited as of the date of such termination, whether or not otherwise
vested or exercisable on such date. For purposes of this Agreement, any one or
more of the following events shall constitute “Cause” (i) willful misconduct or
unlawful misconduct that results in injury to Qwest; (ii) conviction of (or
pleading nolo contendere to) (a) any misdemeanor involving moral turpitude or
fraudulent conduct or (b) any felony; (iii) willful failure to perform
Optionee’s duties; or (iv) willful violation of the Qwest Code of Conduct or
other Qwest policies resulting in injury to Qwest, each as determined in the
sole and absolute discretion of Qwest.

 

(d)           Unvested Options Forfeited Upon Termination of Employment. Any
portion of the Option that has not vested as of the date Optionee’s employment
terminates shall be forfeited immediately upon termination of Optionee’s
employment with the Company, unless such termination occurs because Optionee
dies or becomes Disabled.

 

7.             CHANGE OF CONTROL.

 

In the event there is a both a Change in Control, and a subsequent termination
of Optionee’s employment by the Company for a reason other than Cause in a
two-year period after the date of such Change of Control, the Option shall vest
in full and become immediately exercisable on the date of such termination, and
shall remain vested and exercisable during the remaining term thereof.

 

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8.             FORFEITURE OF OPTION.

 

(a)           Performance for Competitors. Notwithstanding any other provision
of this Agreement, Optionee shall immediately forfeit all rights under the
Option, if, during the one-year period beginning on the date of Optionee’s
termination of employment, Optionee is employed by, advises, represents or
assists in any other way any person or entity that competes with, or intends to
compete with the Company or any other Qwest entity with respect to any product
sold or service performed by the Company or any other Qwest entity in any state
or country in which the Company or any other Qwest entity sells such products or
performs such services, and if the Committee, in its sole discretion, determines
that such actions by Optionee are detrimental to the Company. Notwithstanding
the foregoing, if Optionee is an attorney, Optionee may, subject to the
applicable rules of ethics and the nondisclosure provisions herein, perform
services solely in his or her capacity as an outside attorney on behalf of any
person or entity, even if such person or entity competes with Qwest or sells
goods or services similar to those Qwest sells.

 

(b)           Non-solicitation of Employees. Notwithstanding any other provision
of this Agreement, Optionee shall immediately forfeit all rights under the
Option, if, during the one-year period beginning on the date of Optionee’s
termination or employment, Optionee induces any employee of Qwest to leave
Qwest’s employment, and if the Committee, in its sole discretion, determines
that such actions by Optionee are detrimental to the Company.

 

(c)           Nondisclosure. Optionee will not disclose outside of the Company
or to any person within the Company who does not have a legitimate business need
to know, any Confidential Information (as defined below) during Optionee’s
employment with the Company. Optionee will not disclose to anyone or make any
use of any Confidential Information of the Company after Optionee’s employment
with the Company ends for any reason, except as required by law after timely
notice is given by Optionee to the Company. This agreement not to disclose or
use Confidential Information means, among other things, that Optionee, for a
period of two years beginning on the effective date of the termination of
Optionee’s employment with the Company or any other Qwest entity for any reason,
may not take or perform a job whose responsibilities would likely lead Optionee
to disclose or use Confidential Information. Optionee acknowledges and agrees
that the assumption and performance of such responsibilities, in that situation,
would likely result in the disclosure or use of Confidential Information and
would likely result in irreparable injury to the Company. Moreover, during
Optionee’s employment with the Company, Optionee shall not disclose or use for
the benefit of the Company, himself or any other person or entity any
confidential or trade secret information belonging to any former employer or
other person or entity to which Optionee owes a duty of confidence or
nondisclosure of such information. If a court determines that this provision is
too broad, Optionee and Company agree that the court shall modify the provision
to the extent (but not more than is) necessary to make the provision
enforceable. “Confidential Information” is any oral or written information not
generally known outside of the Company, including without limitation, trade
secrets, intellectual property, software and documentation, customer information
(including, without limitation, customer lists), company policies, practices and
codes of conduct, internal analyses, analyses of competitive products,
strategies, merger and acquisition plans, marketing plans, corporate financial
information, information related to negotiations with third parties, information
protected by the Company’s privileges (such as the attorney-client privilege),
internal audit reports, contracts and sales proposals, training materials,
employment and personnel records, performance evaluations, and other sensitive
information. This agreement does not relieve Optionee of any obligations
Optionee has to the Company under law. If Optionee fails to comply with the
provisions of this paragraph, Optionee shall immediately forfeit all rights
under the Option. Nothing in this paragraph shall prevent or limit Optionee’s
ability to provide truthful responses to legitimate inquiries from governmental
agencies.

 

3

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(d)           Post-termination finding of Cause. Notwithstanding any other
provision of this Agreement, Optionee shall immediately forfeit all rights under
the Option and shall repay to Company all proceeds from the exercise of this
Option occurring after Optionee’s termination of employment, if, within the
one-year period beginning on Optionee’s termination date, the Committee
determines that Optionee, while employed by Company, engaged in conduct
constituting Cause. This provision shall not be effective after a Change in
Control.

 

9.             TRANSFERABILITY OF OPTION.

 

Except to the extent permitted by the Committee in accordance with the
provisions of the Plan, the Optionee may not voluntarily or involuntarily
pledge, hypothecate, assign, sell or otherwise transfer the Option except by
will or the laws of descent and distribution, and during the Optionee’s
lifetime, the Option shall be exercisable only by the Optionee.

 

10.          NO RIGHTS AS A SHAREHOLDER.

 

The Optionee shall have no rights as a shareholder with respect to any Common
Shares until the date of issuance to the Optionee of a certificate evidencing
such Common Shares. No adjustments, other than as provided in Article IV of the
Plan, shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions for which the record date is
prior to the date the certificate for such Common Shares is issued.

 

11.          REGISTRATION: GOVERNMENTAL APPROVAL.

 

The Option granted hereunder is subject to the requirement that, if at any time
the Committee determines, in its discretion, that the listing, registration, or
qualifications of Common Shares issuable upon exercise of the Option is required
by any securities exchange or under any state or Federal law, rule or
regulation, or the consent or approval of any governmental regulatory body or
other person is necessary or desirable as a condition of, or in connection with,
the issuance of Common Shares, no Common Shares shall be issued, in whole or in
part, unless such listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions or with such conditions as are
acceptable to the Committee.

 

12.          METHOD OF EXERCISING OPTION.

 

Subject to the terms and conditions of this Agreement, the Option may be
exercised by contacting the stock broker designated by the Company from time to
time and following such broker’s instructions. Alternatively, if Optionee wishes
to use his or her personal stock broker, Optionee may provide written notice to
the Company, Attention: Manager, Stock Administration. Such notice shall state
the election to exercise the Option and the number of Common Shares in respect
of which the Option is being exercised, shall be signed by the person or persons
so exercising the Option and shall be accompanied by payment in full of the
Purchase Price for such Common shares.

 

4

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Payment of such Purchase Price shall be made in United States dollars by
certified check or bank cashier’s check payable to the order of the Company or
by wire transfer to such account as may be specified by the Company for this
purpose. Subject to such procedures and rules as may be adopted from time to
time by the Committee, the Optionee may also pay such Purchase Price by
(i) tendering to the Company Common Shares with an aggregate Fair Market Value
on the date of exercise equal to such Purchase Price provided that such Common
Shares must have been held by the Optionee for more than six (6) months,
(ii) delivery to the Company of a copy of irrevocable instructions to a
stockbroker to sell Common Shares or to authorize a loan from the stockbroker to
the Optionee and to deliver promptly to the Company an amount sufficient to pay
such Purchase Price, or (iii) any combination of the methods of payment
described in clauses (i) and (ii) and in the preceding sentence. The certificate
for Common Shares as to which the Option shall have been so exercised shall be
registered in the name of the person or persons so exercising the Option. All
Common Shares purchased upon the exercise of the Option as provided herein shall
be fully paid and non-assessable.

 

13.          INCOME TAX WITHHOLDING.

 

The Company may make such provisions and take such steps as it may deem
reasonably necessary or appropriate for the withholding of all federal, state,
local and other taxes required by law to be withheld with respect to the
exercise of the Option and the issuance of the Common Shares, including, but not
limited to, deducting the amount of any such withholding taxes from any other
amount then or thereafter payable to the Optionee, or requiring the Optionee, or
the beneficiary or legal representative of the Optionee, to pay to the Company
the amount required to be withheld or to execute such documents as the Company
deems necessary or desirable to enable it to satisfy its withholding
obligations.

 

14.          COMMITTEE DISCRETION.

 

Any decision, interpretation or other action made or taken in good faith by the
Committee arising out of or in connection with this Agreement, the Plan or the
Option shall be final, binding and conclusive on the Company, Optionee and any
respective heir, executor, administrator, successor or assign.

 

15.          NON-QUALIFIED STOCK OPTION.

 

The Option granted hereunder is not intended to be an “incentive stock option”
within the meaning of Section 422 of the Code.

 

16.          WAIVER OF RIGHT TO JURY.

 

By signing this Agreement, Optionee voluntarily, knowingly and intelligently
waives any right he or she may have to a jury trial for all claims relating to
this Agreement and any other claim relating to Optionee’s employment with
Company. The Company also hereby voluntarily, knowingly, and intelligently
waives any right it might otherwise have to a jury trial for all claims relating
to this Agreement and any other claim relating to Optionee’s employment with the
Company.

 

17.          GOVERNING LAW.

 

This Agreement shall be construed and interpreted in accordance with the laws of
the State of Delaware, without regard to the conflict of laws provisions of any
state. Any action to enforce this Agreement shall be brought in Colorado state
or federal district court and the parties waive any objection to the
jurisdiction or venue of such courts.

 

18.          HEADINGS.

 

Headings are for the convenience of the parties and are not deemed to be part of
this Agreement.

 

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19.          EXECUTION.

 

This Agreement is voidable by the Company if the Optionee does not execute the
Agreement within 30 days of execution by the Company.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first written above.

 

 

QWEST COMMUNICATIONS INTERNATIONAL INC.

 

 

 

By:

 

 

 

 

 

OPTIONEE:

 

 

 

 

 

 

6

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For Non-Employee Directors

 

FORM OF

NON-QUALIFIED STOCK OPTION AGREEMENT

 

This Option Agreement (the “Agreement”) is made as of                         ,
between Qwest Communications International Inc., a Delaware Corporation (the
“Company”), and                          (the “Optionee”).

 

WHEREAS, pursuant to the Qwest Communications International Inc. Equity
Incentive Plan, the Company desires to afford the Optionee the opportunity to
purchase shares of Common Stock, par value $.01 per share (the “Common Shares”),
of the Company.

 

NOW, THEREFORE, in connection with the mutual covenants hereinafter set forth
and for other good and valuable consideration, the receipt and adequacy of which
is hereby acknowledged, the parties hereto agree as follows:

 

1.             DEFINITIONS: CONFLICTS.

 

Capitalized terms used and not otherwise defined herein shall have the meanings
given thereto in the Plan. The terms and provisions of the Plan are incorporated
herein by reference. In the event of a conflict or inconsistency between the
terms and provisions of the Plan and the terms and provisions of this Agreement,
the terms and provisions of the Plan shall govern and control.

 

2.             GRANT OF OPTIONS.

 

The Company hereby grants to the Optionee the right and option (the “Option” or
“Options”) to purchase up to, but not exceeding in the
aggregate,                          Common Shares, on the terms and conditions
herein set forth.

 

3.             PURCHASE PRICE.

 

The purchase price of each Common Share covered by the Option shall be
$             (the “Purchase Price”).

 

4.             TERM OF OPTIONS.

 

The term of the Option shall be ten (10) years from the date hereof, subject to
earlier termination as provided in Sections 6 and 7 hereof.

 

5.             VESTING OF OPTIONS.

 

The Option, subject to the terms, conditions and limitations contained herein,
shall vest and become exercisable with respect to the Common Shares in
installments of 25% one year from the date hereof and in additional installments
of 25% on each subsequent anniversary thereafter; provided that, with respect to
each such installment, the Optionee has continuously remained a member of the
Board of Directors of the Company (the “Directorship”) from the date hereof
through the date such installment is designated to vest.

 

Notwithstanding the vesting schedule set forth above, the Options will vest and
become immediately exercisable in the event of the Optionee’s death or
Disability and under the circumstances described in Section 7 below.

 

1

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[**Notwithstanding anything to the contrary in any other agreement, plan or
other document, the Optionee agrees that no provision in any severance,
separation, change of control, retention, employment or other plan or agreement
between the Optionee and any of U S WEST, Inc. and its subsidiaries or of which
the Optionee was a beneficiary shall affect the terms of the Option granted
hereunder.**] NOTE: THIS PROVISION ONLY APPLIES TO THE FORMER U S WEST
DIRECTORS.

 

6.             TERMINATION OF DIRECTORSHIP.

 

(a)           Except as set forth in the Plan, in the event the Optionee’s
Directorship is terminated for reasons other than due to death, Disability, or
cause, the Option shall remain exercisable for a period of up to three months
after such termination, to the extent exercisable at the time of such
termination. In the event the Optionee’s Directorship terminates by reason of
death or Disability, the Option shall vest in full in accordance with Section 5
and shall remain exercisable for a period of up to twenty-four (24) months after
such termination. In the event the Optionee’s Directorship is terminated for
cause, the Option shall immediately lapse as of the date of such termination
whether or not exercisable on such date. Upon any termination of the Optionee’s
Directorship, the Option shall lapse as to any Common Shares for which it has
yet to become exercisable as of the date of such termination.

 

(b)           For purposes of this Agreement, “cause” shall have the meaning set
forth in the Company’s bylaws as in effect from time to time.

 

7.             CHANGE OF CONTROL

 

(a)           For purposes of this Agreement, “change in control” shall have the
meaning set forth in the Plan.

 

(b)           In the event there is a change in control, the Option shall vest
in full and become immediately exercisable on the date of such change of
control, and shall remain vested and exercisable during the remaining term
thereof.

 

8.             TRANSFERABILITY OF OPTION.

 

Except to the extent permitted by the Committee in accordance with the
provisions of the Plan, the Optionee may not voluntarily or involuntarily
pledge, hypothecate, assign, sell or otherwise transfer the Option except by
will or the laws of descent and distribution, and during the Optionee’s
lifetime, the Option shall be exercisable only by the Optionee.

 

9.             NO RIGHTS AS A SHAREHOLDER.

 

The Optionee shall have no rights as a shareholder with respect to any Common
Shares until the date of issuance to the Optionee of a certificate evidencing
such Common Shares. No adjustments, other than as provided in Article IV of the
Plan, shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions for which the record date is
prior to the date the certificate for such Common Shares is issued.

 

2

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10.          REGISTRATION: GOVERNMENTAL APPROVAL.

 

The Option granted hereunder is subject to the requirement that, if at any time
the Committee determines, in its discretion, that the listing, registration, or
qualifications of Common Shares issuable upon exercise of the Option is required
by any securities exchange or under any state or Federal law, rule or
regulation, or the consent or approval of any governmental regulatory body or
other person is necessary or desirable as a condition of, or in connection with,
the issuance of Common Shares, no Common Shares shall be issued, in whole or in
part, unless such listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions or with such conditions as are
acceptable to the Committee.

 

11.          METHOD OF EXERCISING OPTION.

 

Subject to the terms and conditions of this Agreement, the Option may be
exercised by written notice to the Company, Attention: Manager, Stock
Administration. Such notice shall state the election to exercise the Option and
the number of Common Shares in respect of which the Option is being exercised,
shall be signed by the person or persons so exercising the Option and shall be
accompanied by payment in full of the Purchase Price for such Common shares.

 

Payment of such Purchase Price shall be made in United States dollars by
certified check or bank cashier’s check payable to the order of the Company or
by wire transfer to such account as may be specified by the Company for this
purpose. Subject to such procedures and rules as may be adopted from time to
time by the Committee, the Optionee may also pay such Purchase Price by
(i) tendering to the Company Common Shares with an aggregate Fair Market Value
on the date of exercise equal to such Purchase Price provided that such Common
Shares must have been held by the Optionee for more than six (6) months,
(ii) delivery to the Company of a copy of irrevocable instructions to a
stockbroker to sell Common Shares or to authorize a loan from the stockbroker to
the Optionee and to deliver promptly to the Company an amount sufficient to pay
such Purchase Price, or (iii) any combination of the methods of payment
described in clauses (i) and (ii) and in the preceding sentence. The certificate
for Common Shares as to which the Option shall have been so exercised shall be
registered in the name of the person or persons so exercising the Option. All
Common Shares purchased upon the exercise of the Option as provided herein shall
be fully paid and non-assessable.

 

12.          INCOME TAX WITHHOLDING.

 

The Company may make such provisions and take such steps as it may deem
necessary or appropriate for the withholding of all federal, state, local and
other taxes required by law to be withheld with respect to the exercise of the
Option and the issuance of the Common Shares, including, but not limited to,
deducting the amount of any such withholding taxes from any other amount then or
thereafter payable to the Optionee, or requiring the Optionee, or the
beneficiary or legal representative of the Optionee, to pay to the Company the
amount required to be withheld or to execute such documents as the Company deems
necessary or desirable to enable it to satisfy its withholding obligations.

 

13.          NON-QUALIFIED STOCK OPTION.

 

The Option granted hereunder is not intended to be an “incentive stock option”
within the meaning of Section 422 of the Code.

 

14.          BINDING EFFECT.

 

This Agreement shall be binding upon the heirs, executors, administrators and
successors of the parties hereto.

 

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15.          GOVERNING LAW.

 

This Agreement shall be construed and interpreted in accordance with the laws of
the State of Delaware.

 

16.          HEADINGS.

 

Headings are for the convenience of the parties and are not deemed to be part of
this Agreement.

 

17.          EXECUTION.

 

This Agreement is voidable by the Company if the Optionee does not execute the
Agreement within 30 days of execution by the Company.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first written above.

 

 

QWEST COMMUNICATIONS INTERNATIONAL INC.

 

 

 

By:

 

 

 

 

 

OPTIONEE:

 

 

 

 

 

 

4

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Form agreement used prior to 3/2003

 

FORM OF

NON-QUALIFIED STOCK OPTION AGREEMENT

 

This Option Agreement (the “Agreement”) is made as of the              day of  
                      , 200            , between Qwest Communications
International Inc., a Delaware Corporation (the “Company”), and (the
“Optionee”).

 

WHEREAS, pursuant to the Qwest Communications International Inc. Equity
Incentive Plan, the Company desires to afford the Optionee the opportunity to
purchase shares of Common Stock, par value $.01 per share (the “Common Shares”),
of the Company.

 

NOW, THEREFORE, in connection with the mutual covenants hereinafter set forth
and for other good and valuable consideration, the receipt and adequacy of which
is hereby acknowledged, the parties hereto agree as follows:

 

1.             DEFINITIONS: CONFLICTS.

 

Capitalized terms used and not otherwise defined herein shall have the meanings
given thereto in the Plan. The terms and provisions of the Plan are incorporated
herein by reference. In the event of a conflict or inconsistency between the
terms and provisions of the Plan and the terms and provisions of this Agreement,
the terms and provisions of the Plan shall govern and control.

 

2.             GRANT OF OPTIONS.

 

The Company hereby grants to the Optionee the right and option (the “Option” or
“Options”) to purchase up to, but not exceeding in the
aggregate,                          Common Shares, on the terms and conditions
herein set forth.

 

3.             PURCHASE PRICE.

 

The purchase price of each Common Share covered by the Option shall be
$            (the “Purchase Price”).

 

4.             TERM OF OPTIONS.

 

The term of the Option shall be ten (10) years from the date hereof, subject to
earlier termination as provided in Sections 6 and 8 hereof.

 

5.             VESTING OF OPTIONS.

 

The Option, subject to the terms, conditions and limitations contained herein,
shall vest and become exercisable with respect to the Common Shares in
installments of     % one year from the date hereof and in additional
installments of     % on each subsequent anniversary thereafter; provided that,
with respect to each such installment, the Optionee has remained in continuous
employment with the Company from the date hereof through the date such
installment is designated to vest.

 

Notwithstanding the vesting schedule set forth above, the Options will vest and
become immediately exercisable in the event of the Optionee’s death or
Disability and under the circumstances described in Section 7 below.

 

[Notwithstanding anything to the contrary in any other agreement, plan or other
document, the Optionee agrees that no provision in any severance, separation,
change of control, retention, employment or other plan or agreement between the
Optionee and any of U S WEST, Inc. and its subsidiaries or of which the Optionee
was a beneficiary shall affect the terms of the Option granted hereunder.]

 

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6.             TERMINATION OF EMPLOYMENT.

 

(a)           Except as set forth in the Plan, in the event the Optionee’s
employment with the Company is terminated for reasons other than due to death,
Disability, or cause, the Option shall remain exercisable for a period of up to
three months after cessation of employment, to the extent exercisable at the
time of cessation of employment. In the event the Optionee’s employment with the
Company terminates by reason of death or Disability, the Option shall remain
exercisable for a period of up to twenty-four (24) months after cessation of
employment, to the extent exercisable at the time of cessation of employment. In
the event the Optionee’s employment with the Company is terminated by the
Company for cause, the Option shall immediately lapse as of the date of such
termination whether or not exercisable on such date. Upon any cessation of the
Optionee’s employment with the Company, the Option shall lapse as to any Common
Shares for which it has yet to become exercisable as of the date of cessation of
employment.

 

(b)           For purposes of this Agreement, “cause” shall mean willful
misconduct, a willful failure to perform the Optionee’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 of
Directors of the Company in good faith reasonably determines provides cause for
the discharge of the Optionee.

 

9.             CHANGE OF CONTROL

 

(a)           For purposes of this Agreement, “change in control” shall have the
meaning set forth in the Plan.

 

(b)           In the event there is [both a change in control and subsequent
termination of the Optionee’s employment with the Company (i) by the Company for
reasons other than cause or (ii) by the Optionee because of a material
diminution of his duties and responsibilities, in each case following] a change
in control, the Option shall vest in full and become immediately exercisable on
the date of such termination, and shall remain vested and exercisable during the
remaining term thereof.

 

10.          FORFEITURE OF OPTION.

 

Notwithstanding any other provision of this Agreement, if the Optionee engages
in any activity in competition with any activity of the Company, or otherwise
contrary or harmful to the interests of the Company, including but not limited
to (i) conduct related to the Optionee’s employment for which either criminal or
civil penalties against the Optionee may be sought, (ii) violation of Company
policies, including without limitation, the Company’s insider trading policy,
(iii) accepting employment with or serving as a consultant, or 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, (iv) disclosing or misusing any confidential
information or material concerning the Company, or (v) participating in a
hostile takeover attempt, then this Option shall become void, shall be forfeited
and shall terminate effective the date on which the Optionee enters into such
activity, unless the Option was terminated sooner by operation of another term
or condition of this Agreement or the Plan.

 

9.             TRANSFERABILITY OF OPTION.

 

Except to the extent permitted by the Committee in accordance with the
provisions of the Plan, the Optionee may not voluntarily or involuntarily
pledge, hypothecate, assign, sell or otherwise transfer the Option except by
will or the laws of descent and distribution, and during the Optionee’s
lifetime, the Option shall be exercisable only by the Optionee.

 

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10.          NO RIGHTS AS A SHAREHOLDER.

 

The Optionee shall have no rights as a shareholder with respect to any Common
Shares until the date of issuance to the Optionee of a certificate evidencing
such Common Shares. No adjustments, other than as provided in Article IV of the
Plan, shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions for which the record date is
prior to the date the certificate for such Common Shares is issued.

 

11.          REGISTRATION: GOVERNMENTAL APPROVAL.

 

The Option granted hereunder is subject to the requirement that, if at any time
the Committee determines, in its discretion, that the listing, registration, or
qualifications of Common Shares issuable upon exercise of the Option is required
by any securities exchange or under any state or Federal law, rule or
regulation, or the consent or approval of any governmental regulatory body or
other person is necessary or desirable as a condition of, or in connection with,
the issuance of Common Shares, no Common Shares shall be issued, in whole or in
part, unless such listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions or with such conditions as are
acceptable to the Committee.

 

12.          METHOD OF EXERCISING OPTION.

 

Subject to the terms and conditions of this Agreement, the Option may be
exercised by written notice to the Company, Attention: Manager, Stock
Administration. Such notice shall state the election to exercise the Option and
the number of Common Shares in respect of which the Option is being exercised,
shall be signed by the person or persons so exercising the Option and shall be
accompanied by payment in full of the Purchase Price for such Common shares.

 

Payment of such Purchase Price shall be made in United States dollars by
certified check or bank cashier’s check payable to the order of the Company or
by wire transfer to such account as may be specified by the Company for this
purpose. Subject to such procedures and rules as may be adopted from time to
time by the Committee, the Optionee may also pay such Purchase Price by
(i) tendering to the Company Common Shares with an aggregate Fair Market Value
on the date of exercise equal to such Purchase Price provided that such Common
Shares must have been held by the Optionee for more than six (6) months,
(ii) delivery to the Company of a copy of irrevocable instructions to a
stockbroker to sell Common Shares or to authorize a loan from the stockbroker to
the Optionee and to deliver promptly to the Company an amount sufficient to pay
such Purchase Price, or (iii) any combination of the methods of payment
described in clauses (i) and (ii) and in the preceding sentence. The certificate
for Common Shares as to which the Option shall have been so exercised shall be
registered in the name of the person or persons so exercising the Option. All
Common Shares purchased upon the exercise of the Option as provided herein shall
be fully paid and non-assessable.

 

13.          INCOME TAX WITHHOLDING.

 

The Company may make such provisions and take such steps as it may deem
necessary or appropriate for the withholding of all federal, state, local and
other taxes required by law to be withheld with respect to the exercise of the
Option and the issuance of the Common Shares, including, but not limited to,
deducting the amount of any such withholding taxes from any other amount then or
thereafter payable to the Optionee, or requiring the Optionee, or the
beneficiary or legal representative of the Optionee, to pay to the Company the
amount required to be withheld or to execute such documents as the Company deems
necessary or desirable to enable it to satisfy its withholding obligations.

 

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14.          NON-QUALIFIED STOCK OPTION.

 

The Option granted hereunder is not intended to be an “incentive stock option”
within the meaning of Section 422 of the Code.

 

15.          BINDING EFFECT.

 

This Agreement shall be binding upon the heirs, executors, administrators and
successors of the parties hereto.

 

16.          GOVERNING LAW.

 

This Agreement shall be construed and interpreted in accordance with the laws of
the State of Delaware.

 

17.          HEADINGS.

 

Headings are for the convenience of the parties and are not deemed to be part of
this Agreement.

 

18.          EXECUTION.

 

This Agreement is voidable by the Company if the Optionee does not execute the
Agreement within 30 days of execution by the Company.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first written above.

 

 

QWEST COMMUNICATIONS INTERNATIONAL INC.

 

 

 

By:

 

 

 

 

 

OPTIONEE:

 

 

 

 

 

 

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RESTRICTED STOCK AGREEMENT

 

 

This Restricted Stock Agreement (“Agreement”) is made as of the          day of
                , between Qwest Communications International Inc., a Delaware
corporation (the “Company”), and                                         , (the
“Grantee”).

 

WHEREAS, pursuant to the Qwest Communications International Inc. Equity
Incentive Plan (the “Plan”), the Company desires to grant shares of Common
Stock, par value $0.01 per share, of the Company (“Common Stock”) to the Grantee
subject to the restrictions and on the terms and conditions specified below.

 

NOW THEREFORE, in connection with the mutual covenants hereinafter set forth and
for other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto agree as follows:

 

1.                                      DEFINITIONS:  CONFLICTS.

 

Capitalized terms used and not otherwise defined herein shall have the meanings
given thereto in the Plan.  The terms and provisions of the Plan are
incorporated herein by reference.  Except as specifically otherwise provided
herein, in the event of a conflict or inconsistency between the terms and
provisions of the Plan and the terms and provisions of this Agreement, the terms
and provisions of the Plan shall govern and control.  In the event of a conflict
or inconsistency between the terms and conditions of this Agreement and any
agreement between Grantee and U S WEST, Inc. and/or its subsidiaries, the terms
and conditions of this Agreement shall govern and control.  In the event of a
conflict or inconsistency between the terms and conditions of this Agreement and
any employment agreement between Company and Grantee (other than an agreement
between the Grantee and U S WEST, Inc. and/or its subsidiaries), such employment
agreement shall govern.

 

2.                                      GRANT OF RESTRICTED STOCK.

 

The Company hereby grants to the Grantee            shares (the “Shares”) of
Common Stock (the “Restricted Stock”), effective as of                (the
“Transfer Date”), with a value of $           per Share on the Transfer Date. 
After the Grantee becomes the holder of record with respect to the Stock, the
Grantee shall be treated as the beneficial owner of the Stock and shall have the
right to receive all amounts, including cash and property of any kind,
distributed with respect to the Stock.

 

3.                                      RESTRICTIONS.

 

The Grantee shall not sell, assign, transfer by gift or otherwise, pledge,
hypothecate, or otherwise dispose of, by operation of law or otherwise, any of
the Shares for the period commencing on the Transfer Date and ending on the
Expiration Date (as defined in Section 4 below), except as otherwise provided in
Section 4 or Section 5 or as otherwise permitted by this Agreement or the terms
of the Plan.

 

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If any transfer of Shares is made or attempted to be made contrary to the terms
of this Agreement, the Company shall have the right to acquire for its own
account, without the payment of any consideration therefor, such Shares from the
owner thereof or his transferee, at any time before or after such prohibited
transfer.  In addition to any other legal or equitable remedies it may have, the
Company may enforce its rights to specific performance to the extent permitted
by law and may exercise such other equitable remedies then available to it.  The
Company may refuse for any purpose to recognize any transferee who receives
Shares contrary to the provisions of this Agreement as a stockholder of the
Company and may retain and/or recover all dividends on such Shares that were
paid or payable subsequent to the date on which the prohibited transfer was made
or attempted.

 

4.                                      VESTING; LAPSE OF RESTRICTIONS.

 

Except as otherwise provided in this Agreement, the Shares of Restricted Stock
shall vest in installments if the Grantee has been employed continuously by the
Company from the Transfer Date through the dates specified in the following
schedule:

 

Date

 

Vested Percentage

 

 

 

 

 

 

 

 

%

 

 

 

%

 

 

 

%

 

The Restricted Stock shall be fully vested and this Agreement shall terminate on
the last date set forth in the vesting schedule above (the “Expiration Date”). 
Shares that have become vested and as to which the restrictions have lapsed
shall be referred to as Vested Shares.  Shares that have not become vested and
as to which the restrictions have not lapsed shall be referred to as Unvested
Shares.

 

Notwithstanding the vesting schedule set forth above, the Unvested Shares will
become Vested Shares in the event of the Grantee’s death or Disability.

 

After the restrictions have lapsed, the Grantee may sell, assign, transfer by
gift or otherwise, hypothecate, or otherwise dispose of, by operation of law or
otherwise, any of the Vested Shares at the Grantee’s discretion.

 

5.                                      CHANGE OF CONTROL.

 

(a)                                  For purposes of this Agreement, “change in
control” shall have the meaning set forth in the Plan.

 

(b)                                 In the event there is both a change in
control and a subsequent termination by the Company of the Grantee’s employment
with the Company (i) by the Company for reasons other than cause or (ii) by the
Grantee because of a material diminution of his duties and responsibilities, in
each case following a change in control, all

 

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Unvested Shares shall vest in full and become Vested Shares on the date of such
termination.

 

(c)                                  For purposes of this Agreement, “cause”
shall mean willful misconduct, a willful failure to perform the Grantee’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 of Directors of the Company in good faith reasonably
determines provides cause for the discharge of the Grantee.

 

6.                                      TERMINATION OF EMPLOYMENT; FORFEITURE OF
UNVESTED SHARES.

 

In the event the Grantee’s employment with the Company is terminated for any
reason other than due to death or Disability, all Unvested Shares shall be
forfeited and the Grantee shall immediately transfer and assign to the Company,
without the requirement of consideration, all Unvested Shares, which shall
promptly be tendered to the Company by the delivery of certificates, if any, for
such Unvested Shares, duly endorsed in blank by the Grantee or the Grantee’s
representative or with stock powers attached thereto duly endorsed, at the
Company’s principal offices, all in form suitable for the transfer of such
Shares to the Company without the payment of any consideration therefor by the
Company.  After the time at which any such Shares are required to be delivered
to the Company for transfer to the Company, the Company shall not pay any
dividend to the Grantee on account of such Shares or permit the Grantee to
exercise any of the privileges or rights of a stockholder with respect to such
Shares, but shall, in so far as permitted by law, treat the Company as the owner
of such Shares.

 

7.                                      ADJUSTMENT OF THE SHARES.

 

Upon the occurrence of an event described in Article IV of the Plan, the Shares
shall be adjusted in accordance with Article IV.

 

8.                                      FORFEITURE OF UNVESTED SHARES.

 

Notwithstanding any other provision of this Agreement, if the Grantee engages in
any activity in competition with any activity of the Company, or otherwise
contrary or harmful to the interests of the Company, including but not limited
to:

 

(i)                                     Conduct:  Conduct related to the
Grantee’s employment for which either criminal or civil penalties against the
Grantee may be sought,

 

(ii)                                  Violation of Company Policy:  Violating
Company policies, including without limitation, the Company’s insider trading
policy,

 

(iii)                               Performance for Competitors:  Accepting
employment with, advising, representing or assisting in any other way any person
or entity that competes with, or intends to compete with the Company or any
other Qwest entity with respect to any product sold or service performed by the
Company or any other Qwest entity in any state or country in which the Company
or any other Qwest entity sells such products or performs such services, and if
the Committee, in its sole discretion,

 

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determines that such actions by Grantee are detrimental to the Company. 
Notwithstanding the foregoing, if Grantee is an attorney, Grantee may, subject
to the applicable rules of ethics and the nondisclosure provisions herein,
perform services solely in his or her capacity as an outside attorney on behalf
of any person or entity, even if such person or entity competes with Qwest or
sells goods or services similar to those Qwest sells.

 

(iv)                              Non-solicitation of Employees:  Inducing any
employee of Qwest to leave Qwest’s employment, and if the Committee, in its sole
discretion, determines that such actions by Grantee are detrimental to the
Company.

 

(v)                                 Nondisclosure:  Disclosing outside of the
Company or to any person within the Company who does not have a legitimate
business need to know, any Confidential Information (as defined below) during
Grantee’s employment with the Company.  Grantee will not disclose to anyone or
make any use of any Confidential Information of the Company after Grantee’s
employment with the Company ends for any reason, except as required by law after
timely notice is given by Grantee to the Company.  This agreement not to
disclose or use Confidential Information means, among other things, that
Grantee, for a period of two years beginning on the effective date of the
termination of Grantee’s employment with the Company or any other Qwest entity
for any reason, may not take or perform a job whose responsibilities would
likely lead Grantee to disclose or use Confidential Information.  Grantee
acknowledges and agrees that the assumption and performance of such
responsibilities, in that situation, would likely result in the disclosure or
use of Confidential Information and would likely result in irreparable injury to
the Company.  Moreover, during Grantee’s employment with the Company, Grantee
shall not disclose or use for the benefit of the Company, himself or any other
person or entity any confidential or trade secret information belonging to any
former employer or other person or entity to which Grantee owes a duty of
confidence or nondisclosure of such information.  If a court determines that
this provision is too broad, Grantee and Company agree that the court shall
modify the provision to the extent (but not more than is) necessary to make the
provision enforceable. “Confidential Information” is any oral or written
information not generally known outside of the Company, including without
limitation, trade secrets, intellectual property, software and documentation,
customer information (including, without limitation, customer lists), company
policies, practices and codes of conduct, internal analyses, analyses of
competitive products, strategies, merger and acquisition plans, marketing plans,
corporate financial information, information related to negotiations with third
parties, information protected by the Company’s privileges (such as the
attorney-client privilege), internal audit reports, contracts and sales
proposals, training materials, employment and personnel records, performance
evaluations, and other sensitive information.  This agreement does not relieve
Grantee of any obligations Grantee has to the Company under law.  If Grantee
fails to comply with the provisions of this paragraph, Grantee shall immediately
forfeit all rights under the Option.  Nothing in this paragraph shall prevent or
limit

 

4

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Grantee’s ability to provide truthful responses to legitimate inquiries from
governmental agencies.

 

(vi)                              Hostile Takover:  Participating in a hostile
takeover attempt,

 

then this Agreement and all outstanding Unvested Shares shall become null and
void and shall be forfeited and this Agreement and all outstanding Unvested
Shares shall terminate effective the date on which the Grantee enters into any
of the following activity, unless the Agreement and outstanding Shares were
terminated sooner by operation of another term or condition of this Agreement or
the Plan.

 

9.                                      ENFORCEMENT OF RESTRICTIONS.

 

If a certificate or certificates representing Shares is issued, it shall bear
the following legend:

 

“The Shares of stock represented by this Certificate are subject to all of the
terms of a Restricted Stock Agreement between Qwest Communications International
Inc. and the registered owner of this Certificate (the “Agreement”) and to the
terms of the Qwest Communications International Inc. Equity Incentive Plan. 
Copies of the Agreement and the Plan are on file at the office of the Company. 
The Agreement, among other things, limits the right of the Owner to transfer the
Shares represented hereby and provide in certain circumstances that all or a
portion of the Shares must be returned to the Company.”

 

The Company may, in its sole discretion, require the Grantee to keep the
certificate, if any, representing the Shares, duly endorsed, in the custody of
the Company while the Shares are subject to the restrictions contained in
Section 2.  The Company may, in its sole discretion, require that the
certificate, if any, representing the Shares, duly endorsed, be held in the
custody of a third party while the Shares are subject to the restrictions
contained in Section 2.

 

10.                               TAX WITHHOLDING.

 

Notwithstanding any Plan provision to the contrary, upon the vesting of any
portion of the Shares, the Company shall withhold from the Vested Shares a
number of Shares having a value equal to the minimum amount required to be
withheld under applicable federal, state and local income and other tax laws
(collectively, “Withholding Taxes”).  In such case, the value of the Shares to
be withheld shall be based on the Fair Market Value (as defined in the Plan) of
the Shares on the date the amount of the Withholding Taxes is determined (the
“Tax Date”).

 

11.                               BINDING EFFECT.

 

This Agreement shall be binding upon the heirs, executors, administrators and
successors of the parties hereto.

 

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12.                               WAIVER OF RIGHT TO JURY.

 

By signing this Agreement, Grantee voluntarily, knowingly and intelligently
waives any right he or she may have to a jury trial for all claims relating to
this Agreement and any other claim relating to Grantee’s employment with
Company.  The Company also hereby voluntarily, knowingly, and intelligently
waives any right it might otherwise have to a jury trial for all claims relating
to this Agreement and any other claim relating to Grantee’s employment with the
Company.

 

13.                               GOVERNING LAW.

 

This Agreement shall be construed and interpreted in accordance with the laws of
the State of Delaware, without regard to the conflict of laws provisions of any
state.  Any action to enforce this Agreement shall be brought in Colorado state
or federal district court and the parties waive any objection to the
jurisdiction or venue of such courts.

 

14.                               HEADINGS.

 

Headings are for the convenience of the parties and are not deemed to be part of
this Agreement.

 

15.                               EXECUTION.

 

This Agreement is voidable by the Company if the Grantee does not execute the
Agreement within thirty (30) days of execution by the Company.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the dates
set forth opposite their signatures to be effective as of the date and year
first written above.

 

 

 

 

QWEST COMMUNICATIONS INTERNATIONAL INC.

 

 

 

 

 

 

 

 

Date:

 

 

By:

 

 

 

 

 

 

 

 

 

 

 

 

 

GRANTEE:

 

 

 

 

 

 

 

 

Date:

 

 

 

 

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