Exhibit 10.18
SEVERANCE
AGREEMENT
This Severance Agreement
(“Agreement”), which is effective as of [Date]
(the “Effective Date”), is by and between [Name]
(“Executive”), who is an officer of Qwest
Communications International, Inc., a Delaware corporation having
its principal executive offices in Denver, Colorado or one of its
subsidiaries or affiliates (“Company”) and who is
employed by Qwest Services Corporation, a subsidiary of the
Company, and Company and any successor thereto:
WHEREAS, the Company wishes to
encourage Executive’s continued service and dedication in the
performance of Executive’s duties; and
WHEREAS, in order to induce
Executive to remain in the employ of the Company, and in
consideration for Executive’s continued service to the
Company, the Company agrees that Executive shall receive the
benefits set forth in this Agreement in the event that
Executive’s employment with the Company is terminated in the
circumstances described herein.
Therefore, in consideration of the
mutual promises set forth below, Company and Executive hereby agree
as follows:
1. TERM OF EMPLOYMENT; AT-WILL EMPLOYMENT .
This Agreement does not contain any promise or representation
concerning the duration of Executive’s employment.
Executive’s employment is at-will, and may be altered or
terminated by either Executive or the Company at any time, with or
without cause, and with or without notice. This at-will employment
relationship may not be modified unless in a written agreement
signed by Executive and either the Chief Executive Officer or the
Chief Human Resources Officer.
2 . CHANGE IN CONTROL
a. CHANGE IN CONTROL DEFINED:
For purposes of this Agreement, “Change in Control”
shall have the definition currently in the Qwest Equity Incentive
Plan (“Stock Plan”).
b. STOCK OPTIONS/EQUITY : The
Board of Directors may, in its discretion, periodically grant
Executive additional stock options or other awards under the Stock
Plan. Notwithstanding the terms of any stock option agreement to
the contrary, pursuant to the Board of Directors’ resolution
effective September 19, 2002, upon a Change in Control, all
awards granted to Executive after September 19, 2002 under the
Stock Plan shall immediately vest and all stock options shall
remain exercisable for the full term of such option.
3. TERMINATION
.
a. Termination for Cause .
The Company may, in its sole discretion, immediately terminate this
Agreement and Executive’s employment for Cause by giving
notice to Executive. If Executive’s employment is
terminated
SEVERANCE AGREEMENT
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for Cause pursuant to this paragraph
3.a., Executive shall not be entitled to any severance payment or
any other post-employment obligation provided under this Agreement.
Any one or more of the following events shall, for purposes of this
Agreement, constitute Cause:
(1) Commission of an act deemed by
the Company in its sole discretion to be an act of dishonesty,
fraud, misrepresentation or other act of moral turpitude that would
reflect negatively upon Qwest or compromise the effective
performance of Executive’s duties;
(2) Unlawful conduct resulting in
material injury to Qwest, as determined by the Company in its sole
discretion;
(3) Conviction of (or pleading nolo
contendere to) a felony or any misdemeanor involving moral
turpitude;
(4) Continued failure to perform
Executive’s duties to the satisfaction of the Chief Executive
Officer (other than such failure resulting from Executive’s
incapacity due to physical or mental illness) after the Chief
Executive Officer delivers written notice to Executive specifically
identifying the manner in which Executive has failed to
substantially perform his or her duties and Executive has been
afforded a reasonable opportunity to substantially perform his or
her duties; or
(5) Willful violation of the Qwest
Code of Conduct or other Qwest policies resulting in injury to
Qwest, as determined by the Company in its sole
discretion.
For two years following a Change in
Control, a termination for Cause shall require the approval of the
Board of Directors.
b. Severance Payments When
Termination Not By Executive.
(1) Termination without Cause by
Company . The parties agree that the Company may terminate
Executive’s employment without Cause. Except under
circumstances described in subparagraph 3.b(2) below, if Company
terminates Executive’s employment without Cause, and
Executive signs a complete waiver and release of claims against
Qwest acceptable to Company in the form attached hereto as
Attachment A (“Waiver”), then Company shall pay
Executive the “Standard Severance Amount” defined
below. The Waiver includes, among other terms, a provision
requiring Executive to pay back to Qwest any severance received by
Executive if after the payments are made it is determined that,
while employed by Qwest or any Qwest entity, Executive engaged in
conduct constituting Cause. The Waiver does not include a release
of Qwest’s obligations, if any, to indemnify Executive under
Qwest bylaws or applicable state law. The Standard Severance Amount
will
SEVERANCE AGREEMENT
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equal one and one-half times
Executive’s highest annual base salary in effect during the
12 months preceding the termination of Executive’s
employment. The Standard Severance Amount will be paid over an
18-month period through the Company’s regular management
payroll processes. If, at the end of the 18-month period, Executive
has not breached or threatened to breach any part of this
Agreement, Executive will also receive a lump-sum payment equal to
one and one-half times Executive’s highest target annual
bonus in effect during the 12 months preceding the termination of
Executive’s employment, minus any applicable or
legally-required withholdings.
(2) Change in Control
Termination . If Company
(with the required approval of the Board of Directors) terminates
Executive’s employment without Cause within two years
following a Change in Control, then, provided Executive signs a
Waiver, as described in subparagraph 3.b.(1) above, Company shall
pay Executive the Change in Control Severance Amount defined in the
following sentence: The Change in Control Severance Amount payable
to Executive will equal (a) (i) three times
Executive’s annual base salary in effect at the time of the
termination of Executive’s employment, or, if greater,
Executive’s annual base salary in effect at the time of the
Change in Control, plus (ii) three times Executive’s
target annual bonus in effect at the time of the termination of
Executive’s employment, or, if greater, Executive’s
target annual bonus in effect at the time of the Change in Control
plus (b) a pro rata bonus payment for the portion of the bonus
payment measurement period in which Executive was employed before
the termination of Executive’s employment, calculated using
individual, business unit and company performance at 100% of
target. The Change in Control Severance amount will be paid in a
lump sum within 30 days of receiving the signed Waiver.
c. Change in Control Termination
for Good Reason . Executive may terminate his or her employment
for Good Reason after giving written notice to the Company within
sixty (60) days after an event constituting Good Reason, (as
defined in subparagraph 3.c.(1) below). If Executive terminates
Executive’s employment for Good Reason within two years
following a Change in Control, then, provided Executive signs a
Waiver (as defined in subparagraph 3.b.(1) above), Company shall
pay Executive the Change in Control Severance Amount, as described
in subparagraph 3.b.(2) above in a lump sum within 30 days of
receiving the signed Waiver.
(1) Termination for Good Reason
Following a Change in Control . For purposes of this
subparagraph 3.c., Good Reason shall mean:
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(A)
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a reduction of
either base salary or Executive’s target annual bonus, where
the salary or annual target bonus are measured immediately prior to
such reduction, as opposed to at the time of Executive’s
execution of this Agreement;
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(B)
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a material
reduction of Executive’s responsibilities, where such
responsibilities are measured immediately prior to such reduction,
as opposed to at the time of Executive’s execution of this
Agreement;
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(C)
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Company’s
material breach of this Agreement;
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(D)
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Company’s
failure to obtain the agreement of any successor to honor the terms
of this Agreement; or
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(E)
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A requirement
that Executive’s primary work location be moved to a location
that is greater than thirty-five straight line miles from
Executive’s primary work location immediately prior to the
imposition of such requirement.
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“Good Reason” shall not
include any other circumstances, including but not limited to,
Executive’s discharge for Cause, Executive’s
resignation or retirement (other than in the circumstances set
forth in (A) – (E) above), or any leave of
absence.
d. COBRA Coverage . If
Executive’s employment is terminated pursuant to subparagraph
3.b. or 3.c. above, Executive may be eligible for Qwest-subsidized
COBRA for a period of 18 months (unless Executive becomes
ineligible for or forfeits severance benefits pursuant to the terms
of this Agreement) following the Executive’s election of
COBRA health care continuation coverage (generally beginning as of
the first day of the first month following the month in which
Executive is designated as terminated on the Qwest payroll system)
on the same basis as for active employees under the group medical
plan. This provision shall not extend the period for which any
Executive is eligible for COBRA continuation coverage.
4. 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 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
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“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 4 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 4,
and this paragraph 4 shall be interpreted accordingly.
b. Except as otherwise provided in
subparagraph 4(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 280(G)(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
SEVERANCE AGREEMENT
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those disallowed due to the
including 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 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 that 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 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
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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 4, subject to the second sentence of subparagraph
(1)(C) above, Executive shall permit the Company to control
issues related to this paragraph 4 (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 or her
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 4 (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