Employment Agreement - Qwest Communications International Inc. and Afshin Mohebbi
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
the 20th day of May 1999 ("Agreement Date"), by and between QWEST COMMUNICATIONS
INTERNATIONAL INC., a Colorado corporation, having its principal executive
offices in Denver Colorado (the "Company"), and AFSHIN MOHEBBI (the
"Executive").
WHEREAS, the Company engages in the business of providing a broad range of
telecommunication services and products;
WHEREAS, the Executive desires to become employed by the Company as its
President and Chief Operating Officer on the terms and conditions set forth
here, and the Company desires to employ Executive in such capacity;
NOW, THEREFORE in consideration of the mutual promises and agreements set
forth below, the Company and the Executive hereby agree as follows:
1. TERM OF EMPLOYMENT. Subject to the terms of this Agreement, the Company
hereby employs the Executive, and the Executive hereby accepts employment as
President and Chief Operating Officer for the period beginning May 20, 1999,
until terminated by either party in accordance with the terms of this Agreement.
2. POSITION AND DUTIES.
a. The Executive shall serve as President and Chief Operating Officer
of the Company and shall have such duties, responsibilities and authority as are
customarily required of and given to a President and Chief Operating Officer and
such other duties and responsibilities commensurate with such position as the
Board of Directors ("Board") of the Company shall determine from time to time.
b. The Executive will become a member of the board of directors of
Qwest on the first anniversary of employment, and Qwest may decide to move up
the timetable but is not obligated to do so. It is anticipated that the
Executive will frequently attend board meetings to make presentations and to
observe the discussion.
c. The Executive may (i) with the express authorization of the Board,
serve as a director or trustee of other for-profit corporations or businesses
which are not in competition with the business of the Company, and (ii) serve on
civic or charitable boards or committees.
3. COMPENSATION AND BENEFITS.
a. Salary. Executive shall receive for services rendered an annual
base salary of Five Hundred Thousand Dollars ($500,000) (the "Base Salary")
payable in periodic installments in accordance with the Company's payroll
practices. The Board will review the Executive's salary at least annually and
may increase (but not reduce) the Executive's annual Base Salary in its sole
discretion. Executive's first review shall be January 1, 2000. Once
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increased, such Base Salary shall not be reduced. Executive's Base Salary as so
increased shall thereafter be treated as his Base Salary hereunder.
b. ANNUAL BONUS. The Executive shall be eligible to participate in the
Company's quarterly executive bonus plan, and his target annual bonus shall be
one hundred five percent (105%) of his Base Salary. The Executive shall receive
a prorata bonus at the target bonus rate for the second quarter based on the
amount of time he is employed at the Company. In addition, the Executive will be
guaranteed a minimum bonus for the third and fourth quarters of 1999 at the
target bonus rate, but the bonus can be higher if performance warrants it.
c. BENEFITS. The Executive shall be entitled to participate in all
benefit plans now existing or established hereafter for senior executives and
employees to the extent that Executive is eligible under the general provisions
of such plans.
d. VACATION. The Executive shall be entitled to be covered by Qwest's
time off with pay policy.
e. TRAVEL, BUSINESS CLUB MEMBERSHIP AND EXPENSES. The Company shall
reimburse the Executive all reasonable expenses incurred when performing his
duties and responsibilities in accordance with the Company's expense
reimbursement policies and guidelines. The Company shall also reimburse the
Executive for reasonable attorneys' fees and charges incurred in connection with
the separation of his employment with British Telecom, resolving the terms and
conditions of the separation, negotiating and preparing the term sheets of
employment at the Company and preparing and executing this Agreement.
f. RELOCATION. The Company shall pay all reasonable expenses incurred
by the Executive in relocating to Denver, Colorado, including moving expenses,
costs of selling his current home (within the next 18 months), expenses related
to purchasing a home in Denver and related expenses.
g. INDEMNIFICATION. To the fullest extent permitted by the
indemnification provisions of the Articles of Incorporation and Bylaws of the
Company in effect as of the date of this Agreement, and the indemnification
provision of the laws of the jurisdiction of the Company's incorporation in
effect from time to time, the Company shall indemnify the Executive as a
director, senior officer or employee of the Company against all liabilities and
reasonable expenses that may be incurred in any threatened, pending or completed
action, suit or proceeding, and shall pay for the reasonable expenses incurred
by the Executive in the defense of or participation in any proceeding to which
the Executive is a party because of his service to the Company. The rights of
the Executive under this indemnification provision shall survive the termination
of employment.
4. STOCK OPTIONS. The Executive will receive a non-qualified stock option
grant of One Million Six Hundred Thousand (1,600,000) shares which will vest at
the rate of twenty percent (20%) per year on the 1st, 2nd, 3rd, 4th and 5th
anniversary of employment. The strike price of said options will be $39.4375.
The Executive will receive a second option grant of Four Hundred Thousand
(400,000) shares on the third anniversary of his employment on the same terms
and conditions as the first grant except that the strike price will be the
market price at the close of business on the date of the second grant. These
option grants shall be adjusted to
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accommodate any stock "splits" which occur on or after May 27, 1999. The option
shares referred to in this paragraph (1,600,000 share initial grant and 400,000
share grant on third anniversary of employment) will all automatically vest in
the event of a Change of Control of the Company as that term is defined in the
Qwest Communications International, Inc. Equity Incentive Plan in effect in May,
1999. In addition, Executive shall participate in all other regular option
grants to executives in an amount that is commensurate with his position in the
Company relative to others receiving grants.
5. LOAN. The Company shall provide the Executive a Six Hundred Thousand
Dollars ($600,000) interest-free loan on his first day of employment to
facilitate his transition to employment with the Company, and the loan will be
forgiven in equal amounts over the next three (3) years on the first, second and
third anniversary of his employment. Any unpaid balance on the loan shall be
forgiven in the event of a Change of Control of the Company termination of his
employment without cause, or termination by the Executive for good reason.
6. TERMINATION.
a. TERMINATION FOR CAUSE. The Company may immediately terminate this
Agreement for "cause" by giving written notice to the Executive. Any one or more
of the following events shall constitute "cause":
(1) Willfull misconduct with respect to the Company which is
materially detrimental to the Company;
(2) Conviction of (or pleading nolo contendre to) a felony;
(3) Failure or refusal to attempt to follow the written direction
of the Board within a reasonable period after receiving written notice;
(4) Gross continuous nonfeasance with regard to the Executive's
material duties, taken as a whole, which materially continue after a written
notice thereof is given to the Executive.
b. TERMINATION WITHOUT CAUSE. On sixty (60) days prior written notice,
the Company may terminate the Executive without "cause" (as defined in Paragraph
6 above); provided, however, that the Company shall pay all accrued salary,
bonus, vacation time, and benefits through the termination date. In addition,
the Company shall pay to the Executive (i) an amount equal to twelve (12) months
of his then Base Salary; (ii) a prorated bonus in an amount equal to the target
bonus for the fiscal year in which the Executive is terminated based on the
number of months employed during that fiscal year; and (iii) shall also provide
for continuation of all existing employee benefits for a period of eighteen (18)
months from the termination date unless Executive obtains benefits with another
employer at an earlier date.
The Company shall have the right to terminate this Agreement without cause
based on the death or permanent disability of the Executive provided that the
payments referred to in this Section 6.b are made to the Executive or his
representative.
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c. TERMINATION BY EXECUTIVE FOR GOOD REASON. The Executive may
terminate his employment for Good Reason upon written notice to the Company, and
in such event, said employment termination shall be treated as termination by
the Company for reasons other than good cause, and the Executive shall receive
the payments referred to in the proceeding Paragraph 6.b. For purposes of this
Agreement, Good Reason shall mean:
(1) A diminution of the Executive's titles, offices, positions or
authority;
(2) The assignment to the Executive of any duties inconsistent
with the Executive's position, authority or material responsibilities, or the
removal of the Executive's authority or material responsibilities;
(3) The failure by the Company to timely make any payment due
hereunder or to comply with any of the material provisions of this Agreement;
(4) The occurrence of a Change of Control of the Company, as
defined in the Qwest Equity Incentive Plan;
(5) The failure of the Company to elect or re-elect the Executive
as a director of the Company, or the removal of the Executive at a director.
7. PROPRIETARY INFORMATION OBLIGATIONS. During the term of employment under
this Agreement, the Executive will have access to and become acquainted with the
Company's confidential and proprietary information (collectively, "Proprietary
Information"), including but not limited to information or plans concerning
Company's business, customer and technical information and records. Executive
shall not disclose any of the Company's Proprietary Information, directly or
indirectly, or use it in any way, either during the term of this Agreement or at
any time thereafter, except as reasonably necessary in the course of his
employment for the Company or is authorized in writing by the Company. All
documents and records relating to the Company's business, whether prepared by
the Executive or otherwise, coming into his possession, shall remain the
Company's exclusive property and shall be returned to the Company on termination
of employment.
8. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure to
the benefit of and be enforceable by the Executive and the Company, and their
respective successors and assigns, except that Executive may not assign any of
his duties under this Agreement without the Company's prior written consent.
9. DISPUTE RESOLUTION AND BINDING ARBITRATION. The Executive and the
Company agree that, if a dispute arises concerning or relating to Executive's
employment with the Company or the terms and conditions to this Agreement, the
dispute will be submitted to binding arbitration under the employment rules of
the American Arbitration Association ("AAA") then in effect. The arbitration
shall take place in Santa Clara County, California and both the Executive and
the Company agree to submit to the jurisdiction of the arbitrator selected in
accordance with the AAA rules and procedures. The arbitrator shall decide all
issues relating to arbitrability. The costs of such arbitration, including the
arbitrator's fees, shall initially be split evenly between the parties to the
arbitration. If the Executive prevails as to
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any matter in such arbitration, the Company shall pay the reasonable attorneys
fees and costs (including arbitrator fees, arbitration costs, etc.) incurred by
the Executive in connection with those matters on which he prevails in an amount
to be determined by the arbitrator.
10. CHOICE OF LAW. All questions concerning the construction validity and
interpretation of this Agreement will be governed by the internal law, and not
the law of conflicts, of the State of California.
11. SEVERABILITY. If any term, provision or part of this Agreement is found
by a court to be invalid, illegal, or incapable of being enforced by any rule of
law or public policy, all other terms, provisions and parts of this Agreement
shall nevertheless remain in full force and effect as long as the economic or
legal substance of the transactions contemplated hereby is not effected in any
manner materially adverse to any party.
12. CONSTRUCTION. Each party has cooperated in the drafting and preparation
of this Agreement. Hence, in any construction to be made of this Agreement, the
same shall not be construed against any party on the basis that the party was
the drafter.
13. ATTORNEYS FEES. If any legal proceeding is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys fees as well as costs and disbursements, in addition to any
other relief to which the prevailing party may be entitled.
14. NOTICES. Any notices provided hereunder must be in writing and shall be
deemed effective on the earlier of personal delivery (including personal
delivery by telecopy or private overnight carrier) or the third day after
mailing by first class mail to the recipient at the address indicated below:
To the Company: [Withheld]
To Executive: [Withheld]
With a copy to: [Withheld]
or to such other address or to the attention of such other person as the
recipient party will have specified by prior written notice to the sending
party.
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IN WITNESS WHEREOF, the parties now execute this Agreement, to be effective
as of the Agreement Date first above written.
QWEST COMMUNICATIONS
INTERNATIONAL INC.
By:
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EXECUTIVE:
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AFSHIN MOHEBBI
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