Employment Agreement - Qwest Communications International Inc. and Joseph P. Nacchio
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into as of the 24th day of October, 2001 by and between Qwest
Communications International Inc., a Delaware corporation (the "Company"), and
Joseph P. Nacchio (the "Executive").
WHEREAS, the Company and the Executive mutually desire to
agree upon the terms of the Executive's continued employment with the Company
and, in addition, to agree as to certain benefits of said employment.
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 such
employment, for the period beginning on the date hereof and ending at the close
of business on December 31, 2005, unless terminated earlier as provided herein
(the "Term"). Portions of this Agreement that by their terms provide or imply
that they survive the end of the Term shall survive the end of the Term.
2. POSITION AND DUTIES:
a. During the Term, the Executive shall serve as Chairman and Chief
Executive Officer of the Company and shall have such duties,
responsibilities, and authority as are customarily required of and
given to a Chairman and Chief Executive Officer and such other duties
and responsibilities commensurate with such position as the Board of
Directors of the Company (the "Board") shall determine from time to
time. Such duties, responsibilities, and authority shall include,
without limitation, responsibility for the management, operation,
strategic direction, and overall conduct of the business of the
Company. The Executive shall perform his duties and responsibilities at
the Company's offices in New Jersey; provided, however, that the
Executive may, at the direction of the Board, be required to perform
such duties and responsibilities up to four (4) days per week at the
headquarters offices of the Company in Denver, Colorado. The Executive
shall travel as reasonably required to perform his duties and
responsibilities, provided that any such travel days shall reduce the
number of days per week that the Executive will be required to work at
the headquarters office in Denver, Colorado. For purposes of this
Agreement, the term "employment" shall include the Executive's service
to the Company in any capacity during the Term; provided the foregoing
shall not change the positions to be held by the Executive.
b. During the Term, while the Executive is employed by the Company, the
Company shall use its best efforts to include the Executive in the
Board's slate of nominees for election as directors at each annual
meeting of the Company's shareholders and shall
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recommend to the shareholders that the Executive be elected as a
director of the Company.
c. During the Term, the Executive shall devote substantially his full
business time, energy, and ability to the business of the Company. The
Executive shall report directly to the Board and shall perform his
duties subject to the overall policies and directions of the Board.
During the Term, all other employees of the Company shall report to the
Executive and not directly to the Board.
d. The Executive may (i) with 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 or the
telecommunications business of any of its subsidiaries, or, to his
knowledge, any other affiliate of the Company, present or future,
provided that, if a directorship is approved and the Board later
determines that the directorship would be with a competitive entity, it
shall notify the Executive in writing and the Executive shall have a
reasonable period of time to resign such directorship, (ii) serve on
civic or charitable boards or committees, (iii) deliver lectures,
fulfill speaking engagements, or teach at educational institutions (and
retain any fees therefrom), and (iv) manage personal investments;
provided, however, that the Executive may not engage in any of the
activities described in this Paragraph 2(d) to the extent such
activities materially interfere with the performance of the Executive's
duties and responsibilities to the Company. As used in this Agreement,
the term "affiliate" of the Company means any company controlled by,
controlling, or under common control with the Company, whether through
stock ownership or otherwise.
e. Without the prior express authorization of the Board, the Executive
shall not, directly or indirectly, during the Term (i) render services
of a business, professional, or commercial nature to any other person
or firm, whether for compensation or otherwise, or (ii) engage in any
activity competitive with the business of the Company or the
telecommunications business of any of its subsidiaries, present or
future, or, to his knowledge, of any other affiliate of the Company,
present or future, whether alone, as a partner, or as an officer,
director, employee, member or holder (directly or indirectly, such as
by means of a trust or option arrangement). The Executive may be an
investor, shareholder, joint venturer, or partner (hereinafter referred
to as "Investor"); provided, however, that his status as an Investor
shall not (i) pose a conflict of interest, (ii) require the Executive's
active involvement in the management or operation of such Investment
(recognizing that the Executive shall be permitted to monitor and
oversee the Investment), or (iii) materially interfere with the
performance of the Executive's duties and obligations hereunder. For
the purposes of clause (i) of the proviso to the preceding sentence,
the Executive shall not be deemed to be subject to a conflict of
interest merely by reason of the ownership of less than three percent
(3%) of (i) the outstanding stock of any entity whose stock is traded
on an established stock exchange or on the National Association of
Securities Dealers Automated Quotation System or (ii) the outstanding
stock, partnership interests or other form of equity interest of any
venture fund, investment pool or similar investment vehicle that shall
solicit investments on a "blind pool" basis.
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3. COMPENSATION AND BENEFITS: During the Term, while the
Executive is employed by the Company, the Company shall compensate the Executive
for his services as set forth in this Paragraph 3. The Executive recognizes that
during the Term of the Agreement, the Company reserves the right to change from
time to time the terms and benefits of any welfare, pension, or fringe benefit
plan of the Company, including the right to change any service provider, so long
as such changes are also generally applicable to all executives of the Company;
provided, however, that the Executive's minimum level of compensation and
benefits as set forth in this Paragraph 3 will be preserved in the event of any
such change.
a. SALARY: Beginning January 1, 2002, the Company shall pay the
Executive a base salary at an annual rate of One Million Five Hundred
Thousand Dollars and No Cents ($1,500,000.00). Such salary shall be
earned and shall be payable in periodic installments in accordance with
the Company's payroll practices. Amounts payable shall be reduced by
standard withholding and other authorized deductions. 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.
Once increased such base salary shall not be reduced. The base salary
as so increased shall thereafter be treated as the Executive's base
salary hereunder. Prior to January 1, 2002, the Executive's base salary
shall continue to be paid at its existing rate.
b. BONUS: The Executive shall be eligible to receive a bonus in
accordance with the Company's bonus plans, as in effect from time to
time. Beginning January 1, 2002, the Executive's target bonus payment
shall be 250% of his base salary. The bonus, if any, shall be paid in
the same form and manner and at or around the same time as such bonus
payments are made to other senior executives of the Company. The
foregoing shall not limit the Board in its sole discretion from giving
Executive other bonuses. Prior to January 1, 2002, the Executive's
target bonus payment shall remain at its existing level.
c. SAVINGS AND RETIREMENT PLANS: The Executive shall be entitled to
participate in all savings and retirement plans applicable generally to
other senior executives of the Company, in accordance with the terms of
such plans, as may be amended from time to time.
d. WELFARE BENEFIT PLANS: The Executive and/or his family (including
Class 2 dependents), as the case may be, shall be eligible to
participate in and shall receive all benefits under the Company's
welfare benefit plans and programs applicable generally to other senior
executives of the Company (collectively, as amended from time to time,
the "Company Plans"), in accordance with the terms of the Company
Plans.
e. VACATION: The Executive shall be entitled to paid vacation at a rate
of twenty-five (25) days per calendar year during the Term in
accordance with the plans, policies, and programs as in effect
generally with respect to other senior executives of the Company,
including the limitations, if any, on the carry-over of accrued but
unused vacation time.
f. TRAVEL: The Executive shall be entitled to fly first-class or
business class, or to use the Company's aircraft when available and
appropriate, for business travel, including travel between the business
offices of the Company. The Company shall also pay the
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airfare of the Executive's family members with respect to travel, at
reasonable frequencies, between the headquarters office of the Company
in Denver, Colorado and the Executive's residence in New Jersey and
shall, to the extent this payment shall constitute income to the
Executive, pay the Executive an amount such that the Executive shall
have no after tax cost for the deemed income and this gross up payment;
provided that family members shall utilize available advance ticketing
programs to the extent feasible in making such travel arrangements.
g. BUSINESS CLUB MEMBERSHIPS: The Company shall pay the initiation fees
and membership dues for the Executive at business clubs in the vicinity
of the business offices of the Company approved by the Board from time
to time to the same extent that the Company pays such fees and dues
with respect to comparable business club memberships of other senior
executives of the Company. To the extent the Company is not required to
treat such fees and dues as income to the Executive it shall not do so
and, to the extent it must treat such amounts as income to the
Executive, it shall pay the Executive an amount such that the Executive
shall have no after tax cost for the deemed income and this gross up
payment.
h. EXPENSES: The Company shall reimburse the Executive for reasonable
expenses for parking at the business offices of the Company, cellular
telephone usage, entertainment, travel, meals, lodging, and similar
items incurred in the conduct of the Company's business, including
meals and lodging of the Executive when performing his duties and
responsibilities at the headquarters office of the Company in Denver,
Colorado when he is not resident in the vicinity of such business
office. Such expenses shall be reimbursed in accordance with the
Company's expense reimbursement policies and guidelines. The Company
shall also reimburse the Executive for reasonable attorney's fees and
charges incurred in connection with the preparation and execution of
this Agreement.
i. RELOCATION: If the Executive relocates to the vicinity of the
headquarters office of the Company in Denver, Colorado at any time
prior to the termination of the Term and prior to his receipt from the
Company of written notice of termination or non-renewal pursuant to
Paragraphs 4(a), 4(b), or 4(f), the Company and the Executive shall
discuss the types and amounts of relocation expenses of the Executive
that will be paid or reimbursed by the Company.
j. 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 provisions of the corporation statute of the
jurisdiction of the Company's incorporation in effect from time to time
(collectively, the "Indemnification Provisions"), and in each case
subject to the conditions thereof, the Company shall, with regard to
his past and future service, (i) indemnify the Executive, as a director
and officer of the Company or a subsidiary of the Company or a trustee
or fiduciary of an employee benefit plan of the Company or a subsidiary
of the Company, or, if the Executive shall be serving in such capacity
at the Company's written request, as a director or officer of any other
corporation (other than a subsidiary of the Company) or as a trustee or
fiduciary of an employee benefit plan not sponsored by the Company or a
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subsidiary of the Company, against all liabilities and reasonable
expenses that may be incurred by the Executive in any threatened,
pending, or completed action, suit or proceeding, whether civil,
criminal or administrative, or investigative and whether formal or
informal, because the Executive is or was a director or officer of the
Company, a director or officer of such other corporation or a trustee
or fiduciary of such employee benefit plan, and against which the
Executive may be indemnified by the Company, and (ii) pay for or
reimburse the reasonable expenses incurred by the Executive in the
defense of any proceeding to which the Executive is a party because the
Executive is or was a director or officer of the Company, a director or
officer of such other corporation or a trustee or fiduciary of such
employee benefit plan. The rights of the Executive under the
Indemnification Provisions shall survive the termination of the
employment of the Executive by the Company.
4. TERMINATION: The Executive's employment with the Company
during the Term may be terminated by the Company or the Executive only under the
circumstances described in this Paragraph 4, and subject to the provisions of
Paragraph 5.
a. DEATH OR DISABILITY: The Executive's employment hereunder shall
terminate automatically upon the Executive's death. If the Disability
of the Executive has occurred (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on
the 10th day after receipt of such notice by the Executive (the
"Disability Effective Date"), provided that, within the 10-day period
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's material duties. For purposes of this
Agreement, "Disability" shall mean any physical or mental condition
which prevents the Executive, for a period of 180 consecutive days,
from performing and carrying out his material duties and
responsibilities with the Company.
b. 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) any willful misconduct with respect to the
Company which is materially detrimental to the
Company and its subsidiaries in the aggregate,
including but not limited to theft or dishonesty
(other than good faith expense account disputes);
(2) conviction of (or pleading nolo contendere to) a
felony (other than (A) a traffic violation that is in
most jurisdictions not classified as a felony and (B)
a felony resulting from vicarious (rather than
direct) liability arising out of his position as an
officer or director of the Company);
(3) failure or refusal to attempt to follow the
written directions of the Board within a reasonable
period after receiving written notice; or
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(4) gross continuous nonfeasance with regard to the
Executive's duties, taken as a whole, which
materially continue after a written notice thereof is
given to the Executive.
c. OTHER THAN DEATH OR DISABILITY OR CAUSE: The Company may terminate
the Executive's employment for any reason other than Death, Disability,
or Cause, subject to the provisions of Paragraph 5(c).
d. 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 reason other than Death,
Disability, or Cause under Paragraph 4(c). For purposes hereof, Good
Reason shall mean:
(1) a diminution of the Executive's titles, offices,
positions or authority, excluding for this purpose an
action not taken in bad faith and which is remedied
within twenty (20) days after receipt of written
notice thereof given by the Executive;
(2) the assignment to the Executive of any duties
inconsistent with the Executive's position (including
status or reporting requirements), authority, or
material responsibilities, or the removal of the
Executive's authority or material responsibilities,
excluding for this purpose an action not taken in bad
faith and which is remedied by the Company within
twenty (20) days after receipt of notice thereof
given by the Executive;
(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, other than a
failure not occurring in bad faith and which is
remedied by the Company within twenty (20) days after
receipt of notice thereof given by the Executive;
(4) the failure of the Company to cause this
Agreement to be assumed by its successors or
permitted assigns pursuant to Paragraph 11 hereof.
(5) occurrence of a Change of Control of the Company,
which shall be deemed to have occurred upon (A)
acquisition by any individual, entity, or group
(within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), other than Anschutz Company,
The Anschutz Corporation, or any entity or
organization controlled by Philip F. Anschutz
(collectively, the Anschutz Entities"), of beneficial
ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of twenty percent
(20%) or more of either (i) the then-outstanding
shares of common stock of the Company ("Outstanding
Shares") or (ii) the combined voting power of the
then-outstanding voting securities of the Company
entitled to vote generally in the election of
directors ("Voting Power") and (B) such beneficial
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ownership (as so defined) by such individual, entity
or group of more than 20% of the Outstanding Shares
or the Voting Power, as the case may be, shall then
exceed the beneficial ownership (as so defined) by
the Anschutz Entities of the Outstanding Shares or
the Voting Power, respectively;
(6) the failure of the Company to elect or re-elect
the Executive as a director of the Company or the
removal of the Executive as a director;
(7) any person other than Philip F. Anschutz or the
Executive serving in the position of Chairman of the
Board; or
(8) the failure of the Company to maintain Directors'
and Officers' insurance ("D&O Insurance") of at least
$15 million in the aggregate.
e. OTHER THAN GOOD REASON: The Executive may terminate his employment
at any time without breaching this Agreement, subject to Paragraph 5(d)
below.
f. RESIGNATIONS: On and as of the date that the employment of the
Executive by the Company shall terminate for any reason, the Executive
shall resign from his position as a director and employee of the
Company and from all other positions he holds as a director or employee
of any subsidiary or affiliate of the Company.
g. NON-RENEWAL OF TERM: Either party may elect not to renew this
Agreement on the same or similar terms following the expiration of the
Term. The parties agree to give the other party written notice of any
such decision at least one-hundred-eighty (180) days prior to the
expiration of the Term.
5. OBLIGATIONS OF THE COMPANY AND THE EXECUTIVE UPON
TERMINATION:
a. DEATH OR DISABILITY: If the Executive's employment is terminated by
reason of the Executive's Death or Disability during the Term, the Term
shall terminate without further obligations to the Executive or his
legal representatives under this Agreement, other than for (A) payment
of the sum of (i) any base salary and bonus owed to the Executive
through the date of termination (provided that for this purpose the
amount of such bonus shall be calculated based on the number of days in
the year through the date of termination, as well as any earned bonus
for any complete year that theretofore had not been paid) and (ii) any
other compensation earned through the date of termination but not yet
paid or delivered to the Executive and any rights under Paragraph 6
("Accrued Obligations"), and (B) payment of any amounts due pursuant to
the terms of any applicable stock option (or other equity-based) plan
of the Company or any welfare or pension benefit plan of the Company as
of the date of termination or which by their specific terms extend
beyond such date of termination, (C) subject to the terms of the
applicable plans (or equivalent substitute(s) (on a fully grossed up
after tax basis) if the plan(s) prohibit participation by
ex-employees), continuation of the benefits provided in Paragraphs 3(c)
and 3(d) of this Agreement for two years following the termination of
the Executive's employment (or such shorter period as shall terminate
on the date that the
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Executive shall commence participation in a medical plan of a
subsequent employer), (D) subject to the terms of the applicable plan,
other than eligibility, retiree medical benefits for the lives of the
Executive and his spouse at the time of termination of his employment
and his dependents at the time of termination of his employment while
they remain dependents, and (E) payments due, if any, and continuation
of coverage (collectively, "Indemnification/Insurance Payments"),
pursuant to the Indemnification Provisions and D&O Insurance. All such
payments shall be paid to the Executive or his estate or beneficiary,
as applicable.
b. TERMINATION FOR CAUSE: If the Executive's employment is terminated
by the Company for Cause, the Term shall terminate without further
obligations to the Executive or his legal representatives under this
Agreement on the date of such termination and no further payments or
benefits of any kind, including salary and bonuses, shall be payable to
the Executive, other than for (i) Accrued Obligations and (ii) the
payments and benefits provided in Paragraph 5(f).
If it is subsequently determined that the Company did not have Cause
for termination, then the Company's decision to terminate shall be
deemed to have been made under Paragraph 4(c), and the Executive shall
be entitled to receive the amounts payable under Paragraph 5(c).
c. OTHER THAN DEATH OR DISABILITY OR CAUSE: If the Company terminates
the Executive's employment during the Term for any reason other than
Death or Disability, or Cause, or the Executive terminates for Good
Reason, the Term shall terminate on the date of such termination
without further obligation to the Executive other than (A) Accrued
Obligations (B) payment of any amounts due pursuant to the terms of any
applicable stock option (or other equity-based) plan of the Company or
any welfare or pension benefit plan of the Company as of the date of
termination or which by their specific terms extend beyond such date of
termination, (C) payment to the Executive, within thirty (30) days of
the date of termination, of a lump sum equal to the product of two (2)
times the sum of the Executive's then current base salary and target
bonus, (D) subject to the terms of the applicable plans (or equivalent
substitute(s) (on a fully grossed up after tax basis) if the plan(s)
prohibit participation by ex-employees), continuation of the benefits
provided in Paragraphs 3(c) and 3(d) of this Agreement for two years
following the termination of the Executive's employment (or such
shorter period as shall terminate on the date that the Executive shall
commence participation in a medical plan of a subsequent employer), (E)
subject to the terms of the applicable plan, other than eligibility,
retiree medical benefits for the lives of the Executive and his spouse
at the time of termination of his employment and his dependents at the
time of termination of his employment while they remain dependents, and
(F) payment of Indemnification/Insurance Payments. The Company shall be
obligated to make the foregoing payments and to provide the foregoing
benefits upon the Executive and the Company signing a mutual release of
all claims against the other, substantially in the form attached as
Exhibit A; such release shall not affect the Executive's rights (x)
under the Consolidated Omnibus Budget Reconciliation Act of 1986
("COBRA"), (y) any conversion rights under any applicable life
insurance policies and (z) any rights with respect to
Indemnification/Insurance Payments.
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d. TERMINATION BY EXECUTIVE: If the Executive terminates his employment
for any reason other than for Good Reason, as defined in Paragraph
4(d), the Term shall terminate without further obligation to the
Executive on the date of such termination and no further payments or
benefits of any kind, including salary and bonuses, shall be payable to
the Executive, other than for (A) Accrued Obligations and (B) the
payments and benefits provided in Paragraph 5(f).
e. NON-RENEWAL OF AGREEMENT: If the parties do not renew this Agreement
following the expiration of the Term, the Company shall not have any
further obligation to the Executive, other than for (A) Accrued
Obligations, (B) severance at the same level and terms as is given to
other senior executives of the Company, (C) upon the Executive's
execution of a mutual release substantially in the form attached as
Exhibit A, and subject to the terms of the applicable plans (or
equivalent substitute(s) (on a fully grossed up after tax basis) if the
plan(s) prohibit participation by ex-employees), continuation of the
benefits provided in Paragraphs 3(c) and 3(d) of this Agreement for two
years following the termination of the Executive's employment (or such
shorter period as shall terminate on the date that the Executive shall
commence participation in a medical plan of a subsequent employer), (D)
upon the Executive's execution of a mutual release substantially in the
form attached as Exhibit A, subject to the terms of the applicable
plan, other than eligibility, retiree medical benefits for the lives of
the Executive and his spouse at the time of termination of his
employment and his dependents at the time of termination of his
employment while they remain dependents, and (E) the payments and
benefits provided in Paragraph 5(f).
f. EXCLUSIVE REMEDY: Except for the payments and benefits provided in
this Paragraph 5, the Executive acknowledges and agrees that upon
termination of the Term, he shall have no other claims against, and be
entitled to no other payments or benefits from, the Company under this
Agreement or pursuant to the Company's policies and plans, other than
(A) the Executive's rights under COBRA, (B) any conversion rights under
any applicable life insurance policies, (C) payment of any amounts due
pursuant to the terms of any stock option (or other equity-based) plan
of the Company or any welfare or pension benefit plan of the Company as
of the date of termination or which by their specific terms extend such
date of termination and (D) rights with respect to
Indemnification/Insurance Payments. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment. The amounts due
hereunder shall not be subject to offset.
6. SPECIAL TAX PROVISION:
a. Anything in this Agreement to the contrary notwithstanding, in the
event that the Executive receives any amount or benefit (collectively,
the "Covered Payments") (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company,
any person whose actions result in a change of ownership or effective
control covered by Section 280G(b)(2) of the Internal Revenue Code of
1986, as amended (the "Code") or any person affiliated with the Company
or such person) that
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is or becomes subject to the excise tax imposed by or under Section
4999 of the Code (or any similar tax that may hereafter be imposed)
and/or any interest or penalties with respect to such excise tax (such
excise tax, together with such interest and penalties, is hereinafter
collectively referred to as the "Excise Tax") by reason of the
application of Section 280G(b)(2) of the Code, the Company shall pay to
the Executive an additional amount (the "Tax Reimbursement Payment")
such that after payment by the Executive of all taxes (including,
without limitation, any interest or penalties and any Excise Tax
imposed on or attributable to the Tax Reimbursement Payment itself),
the Executive retains an amount of the Tax Reimbursement Payment equal
to the sum of (i) the amount of the Excise Tax imposed upon the Covered
Payments, and (ii) without duplication, an amount equal to the product
of (A) any deductions disallowed for federal, state or local income tax
purposes because of the inclusion of the Tax Reimbursement Payment in
Executive's adjusted gross income, and (B) the highest applicable
marginal rate of federal, state or local income taxation, respectively,
for the calendar year in which the Tax Reimbursement Payment is made or
is to be made. The intent of this Paragraph 6 is that after the
Executive pays federal, state and local income taxes and any payroll
taxes, the Executive will be in the same position as if the Executive
were not subject to the Excise Tax under Section 4999 of the Code and
did not receive the extra payments pursuant to this Paragraph 6, and
this Paragraph 6 shall be interpreted accordingly.
b. Except as otherwise provided in Paragraph 6(a), for purposes of
determining whether any of the Covered Payments will be subject to the
Excise Tax and the amount of such Excise Tax, such Covered Payments
will be treated as "parachute payments" (within the meaning of Section
280G(b)(2) of the Code) and such payments in excess of the Code Section
280G(b)(3) "base amount" shall be treated as subject to the Excise Tax,
unless, and except to the extent that, the Company's independent
certified public accountants or legal counsel (reasonably acceptable to
the Executive) appointed by such public accountants (or, if the public
accountants decline such appointment and decline appointing such legal
counsel, such independent certified public accountants as promptly
mutually agreed on in good faith by the Company and the Executive) (the
"Accountant"), deliver a written opinion to the Executive, reasonably
satisfactory to the Executive's legal counsel, that, in the event such
reporting position is contested by the Internal Revenue Service, there
will be a more likely than not chance of success with respect to a
claim that the Covered Payments (in whole or in part) do not constitute
"parachute payments," represent reasonable compensation for services
actually rendered (within the meaning of Section 280G(b)(4) of the
Code) in excess of the "base amount" allocable to such reasonable
compensation, or such "parachute payments" are otherwise not subject to
such Excise Tax (with appropriate legal authority, detailed analysis
and explanation provided therein by the Accountant); and the value of
any Covered Payments which are non-cash benefits or deferred payments
or benefits shall be determined by the Accountant in accordance with
the principles of Section 280G of the Code.
c. For purposes of determining the amount of the Tax Reimbursement
Payment, the Executive shall be deemed to pay federal, state and/or
local income taxes at the highest applicable marginal rate of income
taxation for the calendar year in which the Tax Reimbursement Payment
is made or is to be made, and to have otherwise allowable deductions
for federal, state and local income tax purposes at least equal to
those
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disallowed due to the inclusion of the Tax Reimbursement Payment in the
Executive's adjusted gross income.
d. (1) (A) In the event that prior to the time
the Executive has filed any of the
Executive's tax returns for a calendar year
in which Covered Payments are made, the
Accountant determines, for any reason
whatsoever, the correct amount of the Tax
Reimbursement Payment to be less than the
amount determined at the time the Tax
Reimbursement Payment was made, the
Executive shall repay to the Company, at the
time that the amount of such reduction in
the Tax Reimbursement Payment is determined
by the Accountant, the portion of the prior
Tax Reimbursement Payment attributable to
such reduction (including the portion of the
Tax Reimbursement Payment attributable to
the Excise Tax and federal, state and local
income taxes imposed on the portion of the
Tax Reimbursement Payment being repaid by
the Executive, using the assumptions and
methodology utilized to calculate the Tax
Reimbursement Payment (unless manifestly
erroneous)), plus interest on the amount of
such repayment at the rate provided in
Section 1274(b)(2)(B) of the Code.
(B) In the event that the determination set
forth in (A) above is made by the Accountant
after the filing by the Executive of any of
the Executive's tax returns for a calendar
year in which Covered Payments are made, the
Executive shall file at the request of the
Company an amended tax return in accordance
with the Accountant's determination, but no
portion of the Tax Reimbursement Payment
shall be required to be refunded to the
Company until actual refund or credit of
such portion has been made to the Executive,
and interest payable to the Company shall
not exceed the interest received or credited
to the Executive by such tax authority for
the period it held such portion (less any
tax the Executive must pay on such interest
and which the Executive is unable to deduct
as a result of payment of the refund).
(C) In the event the Executive receives a
refund pursuant to (B) above and repays such
amount to the Company, the Executive shall
thereafter file for any refunds or credits
that may be due to Executive by reason of
the repayments to the Company. The Executive
and the Company shall mutually agree upon
the course of action, if any, to be pursued
(which shall be at the expense of the
Company) if the Executive's claim for such
refund or credit is denied.
(2) In the event that the Excise Tax is later
determined by the Accountant or the Internal
Revenue Service to exceed the amount taken
into account hereunder at the time a Tax
Reimbursement
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Payment was made (including by reason of any
payment the existence or amount of which
could not be determined at the time of the
earlier Tax Reimbursement Payment), the
Company shall make an additional Tax
Reimbursement Payment in respect of such
excess (plus any interest or penalties
payable with respect to such excess) once
the amount of such excess is finally
determined.
(3) In the event of any controversy with the
Internal Revenue Service (or other taxing
authority) under this Paragraph 6, subject
to the second sentence of subparagraph
(1)(C) above, Executive shall permit the
Company to control issues related to this
Paragraph 6 (at its expense), provided that
such issues do not potentially materially
adversely affect the Executive, but the
Executive shall control any other issues. In
the event the issues are interrelated, the
Executive and the Company shall in good
faith cooperate so as not to jeopardize
resolution of either issue. In the event of
any conference with any taxing authority as
to the Excise Tax or associated income
taxes, the Executive shall permit the
representative of the Company to accompany
the Executive, and the Executive and his
representative shall cooperate with the
Company and its representative.
(4) With regard to any initial filing for a
refund or any other action required pursuant
to this Paragraph 6 (other than by mutual
agreement) or, if not required, agreed to by
the Company and the Executive, the Executive
shall cooperate fully with the Company,
provided that the foregoing shall not apply
to actions that are provided herein to be at
the Executive's sole discretion.
e. The Tax Reimbursement Payment, or any portion thereof, payable by
the Company shall be paid not later than the fifth day following the
determination by the Accountant, and any payment made after such fifth
day shall bear interest at the rate provided in Code Section
1274(b)(2)(B) to the extent and for the period after such fifth day
that Executive has an obligation to make payment or estimated payment
of the Excise Tax. The Company shall use its best efforts to cause the
Accountant to promptly deliver the initial determination required
hereunder with respect to Covered Payments paid or payable in any
calendar year; if the Accountant's determination is not delivered
within ninety (90) days after Covered Payments are paid or distributed,
the Company shall pay the Executive the Tax Reimbursement Payment set
forth in an opinion from counsel recognized as knowledgeable in the
relevant areas selected by Executive, and reasonably acceptable to the
Company, within five (5) days after delivery of such opinion. The
Company may withhold from the Tax Reimbursement Payment and deposit
into applicable taxing authorities such amounts as they are required to
withhold by applicable law. To the extent that the Executive is
required to pay estimated or other taxes on amounts received by the
Executive beyond any withheld amounts, the Executive shall promptly
make such payments. The amount of such payment shall be subject to
later adjustment in accordance with the determination of the Accountant
as provided herein.
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f. The Company shall be responsible for (i) all charges of the
Accountant, (ii) if subparagraph (e) is applicable, the reasonable
charges for the opinion given by the Executive's legal counsel, and
(iii) all reasonable charges in connection with the preparation and
filing of any amended tax returns on behalf of the Executive requested
by the Company, required hereunder, or required by applicable law. The
Company shall gross-up for tax purposes any income to the Executive
arising pursuant to this subparagraph (f) so that the economic effect
to the Executive is the same as if the benefits were provided on a
non-taxable basis.
g. The Executive and the Company shall mutually agree on and promulgate
further guidelines in accordance with this Paragraph 6 to the extent
that, if any, necessary to effect the reversal of excessive or
shortfall Tax Reimbursement Payments. The foregoing shall not in any
way be inconsistent with Paragraph 6(d)(1)(C).
7. CONFIDENTIAL INFORMATION: During and after the Term, the
Executive agrees that he shall not use or disclose any Confidential Information
relating to the Company or any of its subsidiaries or other affiliates of the
Company, present and future, and their respective businesses, which shall have
been obtained by the Executive during his employment by the Company or any of
its subsidiaries or other affiliates of the Company and which shall not be or
become public knowledge (other than by acts by the Executive or his
representatives in violation of this Agreement), provided that the Executive
may, (a) while employed by the Company, disclose such information, knowledge, or
data as he in good faith deems appropriate, and (b) otherwise comply with legal
process, so long as the Executive gives prompt notice to the Company of any
required disclosure and reasonably cooperates (without being required to incur
any expense or subject himself to sanction or penalty) with the Company if the
Company determines to oppose, challenge, or quash the legal process.
"Confidential Information" consists of any oral or written information not
generally known outside of the Company and its subsidiaries and affiliates,
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 privileges (such as
the attorney-client privilege), internal audit reports, contracts and sales
proposals, training materials, employment records, performance evaluations, and
other sensitive information. This provision is not intended, and shall not be
interpreted, to limit or reduce any confidentiality obligations the Executive
otherwise owes the Company under applicable law.
8. NONSOLICITATION: The Executive agrees that during the Term
of this Agreement and for a period of one (1) year following the termination of
the Term, he will not, directly or indirectly, knowingly, whether alone or with
others, solicit any employee of the Company or any of its subsidiaries or other
affiliates, present or future (while an affiliate) who is being compensated at a
rate of Fifty Thousand Dollars ($50,000.00) or more, to leave the employment of
such company or to work for any individual or firm then in competition with the
business of the Company or any of its subsidiaries or other affiliates, present
or future. The Executive understands and agrees that his agreement not to
solicit means, among other things, that he may not have any part in hiring
anyone who is an employee of the Company or its
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subsidiaries or affiliates, even if the Executive is contacted by the employee
first. The Executive further understands and agrees that for purposes of this
nonsolicitation paragraph, employees of the Company or its subsidiaries or
affiliates shall mean persons who are or were employed by the Company or its
subsidiaries or affiliates at the relevant time or during the six months
preceding the relevant time. The Executive may give references with respect to
such employees.
9. NONCOMPETITION: The Executive agrees that during the Term
of this Agreement and for a period of one (1) year following the termination of
the Term for any reason, he will not directly or indirectly, whether as
principal, agent, officer, director, employee, consultant, partner, shareholder,
or otherwise, alone or with others, engage in any activity competitive with the
business of the Company or the telecommunications business of any of its
subsidiaries or affiliates, present or future. The foregoing shall not be
violated by the Executive owning less than three percent (3%) of the outstanding
equity or debt securities of any entity. In addition to any and all other
remedies available to the Company, if the Executive breaches his obligations set
forth in this Paragraph 9 he shall forfeit and shall not be entitled to any
Company benefits or stock options, vested or unvested. The Executive agrees that
the restrictions set forth in this Paragraph 9 are necessary and reasonable to
protect the Company's business and the Executive represents that these
restrictions will not prevent him from earning a livelihood.
10. REMEDIES:
a. The Executive agrees that in addition to any other remedy
available to the Company pursuant to statute, common law or this or any other
agreement, and notwithstanding any agreement regarding alternative dispute
resolution that the Executive and the Company enter into now or in the future,
the Company may seek injunctive relief from a court to enforce the
confidentiality, nonsolicitation, and/or noncompete provisions set forth in
Paragraphs 7, 8, and 9 above, pending any decision on the merits by an
arbitrator. The Executive agrees that the remedies as provided for in this
Agreement supersede all prior inconsistent agreements into which he has entered,
including without limitation, any agreements or provisions found in prior stock
option agreements.
b. If a court or arbitrator determines that any provision of
this Agreement is too broad, the Executive and the Company agree that the court
or arbitrator should modify the provision to the extent (but not more than)
necessary to make the provision enforceable. All other provisions of the
Agreement shall be enforceable as drafted.
11. SUCCESSORSHIP: This Agreement shall inure to the benefit
of and be binding upon the Company and its successors and permitted assigns and
any such successor or permitted assignee shall be deemed substituted for the
Company under the terms of this Agreement for all purposes. As used herein,
"successor" and "assignee" shall be limited to any person, firm, corporation, or
other business entity which at any time, whether by purchase, merger, or
otherwise, directly or indirectly acquires the stock of the Company or to which
the Company assigns this Agreement by operation of law or otherwise in
connection with any sale of all or substantially all of the assets of the
Company, provided that any successor or permitted assignee promptly assumes in a
writing delivered to the Executive this Agreement and, in no event, shall any
such succession or assignment release the Company from its obligations
hereunder.
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12. ARBITRATION:
a. Any and all controversies, claims, or disputes arising out of or in
any way relating to this Agreement, Executive's employment with the
Company, or the termination thereof, shall be resolved by final and
binding arbitration in New York, New York before a single arbitrator in
accordance with the applicable rules and procedures of the American
Arbitration Association (the "AAA"). The arbitration shall be commenced
by filing a demand for arbitration with the AAA within eighteen (18)
months after the occurrence of the facts giving rise to any such
controversy, claim, or dispute. The Federal Arbitration Act, 9 U. S.C.
Sections 1-16, as it may be amended from time to time, shall govern the
arbitrability of all claims, and the arbitrator shall decide all issues
relating to arbitrability. The costs of such arbitration, including the
arbitrator's fees, shall be split evenly between the parties to the
arbitration. Each party to the arbitration shall be responsible for the
payment of its own attorneys' fees, provided that, if the Executive
prevails as to any matter in any such arbitration, the Company shall
pay the reasonable attorneys' fees incurred by the Executive in
connection with those matters on which he prevails, in an amount to be
determined by the arbitrator.
b. Claims covered by this agreement to arbitrate include, but are not
limited to, claims sounding in contract, statute, tort, fraud,
misrepresentation, discrimination or any other legal theory, including
but not limited to claims under Title VII of the Civil Rights Act of
1964, as amended; claims under the Civil Rights Act of 1991; claims
under the Age Discrimination in Employment Act of 1967, as amended;
claims under 42 U.S.C. sections 1981, 1981a, 1983, 1985, or 1988;
claims under the Family and Medical Leave Act of 1993; claims under the
Americans with Disabilities Act of 1990, as amended; claims under the
Rehabilitation Act of 1973, as amended; claims under the Fair Labor
Standards Act of 1938, as amended; claims under the Employee Retirement
Income Security Act of 1974, as amended; claims under the Colorado
Anti-Discrimination Act; or claims under any other similar federal,
state, or local laws or regulations, whenever brought or amended. The
only legal claims between Executive and the Company that are not
included within this agreement for arbitration are claims by the
Executive for workers' compensation or unemployment compensation
benefits.
c. The Executive recognizes and acknowledges that he is voluntarily,
knowingly and intelligently waiving any right he may otherwise have to
seek remedies in court or other forums, including the right to a jury
trial. The Company likewise recognizes and acknowledges that it is
voluntarily, knowingly and intelligently waiving any right it might
otherwise have to seek remedies against Executive in court or other
forums, including the right to a jury trial.
d. All arbitration proceedings will be confidential. The arbitrator's
decision and award shall be final and binding, as to all claims that
were, or could have been, raised in the arbitration, and judgment upon
the award rendered by the arbitrator may be entered to any court having
jurisdiction thereof. The arbitrator's award shall be in writing and
shall reveal the essential findings and conclusions on which the award
is based.
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13. GOVERNING LAW: The provisions of this Agreement shall be
construed in accordance with, and governed by, the laws of the State of New York
without regard to principles of conflict of laws.
14. SAVINGS CLAUSE: If any provision of this Agreement or the
application thereof is held invalid, the invalidity shall not affect other
provisions or applications of the Agreement which can be given effect without
the invalid provisions or applications and to this end the provisions of this
Agreement are declared to be severable.
15. WAIVER OF BREACH: No waiver of any breach of any term or
provision of this Agreement shall be construed to be, nor shall be, a waiver of
any other breach of this Agreement. No waiver shall be binding unless in writing
and signed by the party waiving the breach.
16. MODIFICATION: No provision of this Agreement may be
amended, modified, or waived except by written agreement signed by the parties
hereto.
17. ASSIGNMENT OF AGREEMENT: The Executive acknowledges that
his services are unique and personal. Accordingly, the Executive may not assign
his rights or delegate his duties or obligations under this Agreement to any
person or entity; provided, however, that payments may be made to the
Executive's estate or beneficiaries as expressly set forth herein. If the
Executive dies before all amounts owed to him from the Company have been paid,
such amounts owing shall be paid to the Executive's estate or beneficiaries.
18. ENTIRE AGREEMENT: This Agreement is an integrated document
and constitutes and contains the complete understanding and agreement of the
parties with respect to the subject matter addressed herein, and supersedes and
replaces all prior negotiations and agreements, whether written or oral,
concerning the subject matter hereof.
19. 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. The captions of this Agreement are not part of the
provisions and shall have no force or effect.
20. NOTICES: Notices and all other communications provided for
in this Agreement shall be in writing and shall be delivered personally or sent
by registered or certified mail, return receipt requested, postage prepaid, or
sent by facsimile or prepaid overnight courier to the parties at the facsimile
phone numbers or addresses set forth below (or at such other numbers or
addresses as shall be specified by the parties by like notice). Such notices,
demands, claims, and other communications shall be deemed given:
a. in the case of delivery by overnight service with guaranteed next
day delivery, such next day or the day designated for delivery;
b. in the case of certified or registered United States mail, five days
after deposit in the United States mail; or
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c. in the case of facsimile, the date upon which the transmitting party
received confirmation of receipt by facsimile, telephone, or otherwise;
and
d. in the case of personal delivery, when received.
Communications that are to be delivered by facsimile or by the United
States mail or by overnight service are to be delivered to the
facsimile phone numbers or addresses set forth below:
(1) To the Company:
Qwest Communications International Inc.
1801 California Street
Denver, Colorado 80202
Attention: General Counsel
Facsimile: (303) 296-2782
(2) To the Executive:
Joseph P. Nacchio
At the address and/or facsimile number maintained in
the Company's business records.
Each party, by written notice furnished to the other party, may modify the
acceptable delivery number or address, except that notice of such a change of
number or address shall be effective only upon receipt. In the event that the
Company is aware that the Executive is not at the location when notice is being
given, notice shall be deemed given when received by the Executive, whether at
the aforementioned location or at another location.
21. TAX WITHHOLDING: The Company may withhold from any amounts
payable under this Agreement such federal, state, or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
22. REPRESENTATION: The Executive represents that he is
knowledgeable and sophisticated as to business matters, including the subject
matter of this Agreement, that he has read this Agreement and that he
understands its terms. The Executive acknowledges that, prior to assenting to
the terms of this Agreement, he has been given a reasonable time to review it,
to consult with counsel of his choice, and to negotiate at arm's-length with the
Company as to its contents. The Executive and the Company agree that the
language used in this Agreement is the language chosen by the parties to express
their mutual intent, and that they have entered into this Agreement freely and
voluntarily and without pressure or coercion from anyone.
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IN WITNESS WHEREOF, the Company and the Executive, intending
to be legally bound, have executed this Agreement on the day and year first
above written.
QWEST COMMUNICATIONS INTERNATIONAL INC.
By: /S/ PHILIP F. ANSCHUTZ
---------------------------------------
Name: Philip F. Anschutz
Title: Chairman of the Board
JOSEPH P. NACCHIO
/S/ JOSEPH P. NACCHIO
------------------------------------------
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