LEVEL 3 COMMUNICATIONS, INC.
OUTPERFORM STOCK OPTION
MASTER AWARD AGREEMENT
Index of Defined Terms
Page No.
Accounting Firm 6
Adjusted Price 1
Affiliate 10
Aggregate Percentage S&P Performance 1
Agreement 1
Annualized Percentage Company Stock Price Performance 4
Annualized Percentage S&P Performance 4
Award 1
Award Date 1
Award Letter 1
Award Shares 1
Cause 5
Change in Control 2
Code 5
Committee 1
Company 1
Duration 4
Excise Tax 6
Exercise Consideration 3
Exercise Date 1
Fair Market Value 9
Grantee 1
Gross-Up Payment 6
Multiplier 4
NASDAQ 9
Outperform Percentage 4
Payment 6
Period 1
Permanent Total Disability 2
Plan 1
S&P End Number 3
S&P Start Number 3
Section 409A 10
Stock 3
Stock End Number 3
Stock Start Number 3
Trading Day 9
Underpayment 7
LEVEL 3 COMMUNICATIONS, INC.
OUTPERFORM STOCK OPTION
MASTER AWARD AGREEMENT
THIS OUTPERFORM STOCK OPTION MASTER AWARD AGREEMENT (the "Agreement") is
dated as of July 1, 2005, between Level 3 Communications, Inc., a Delaware
corporation (the "Company"), and the individual whose name appears on the
signature page to this Agreement (the "Grantee"), an "Employee" as defined in
the Company's 1995 Stock Plan (as amended from time to time) (the "Plan").
WHEREAS, the Company, pursuant to a grant of authority from the
Compensation Committee of the Company's Board of Directors (the "Committee"),
may, from time to time, grant to the Grantee a certain number of "Outperform
Stock Options" (each grant an "Award"), as described below, pursuant to the
Plan.
NOW, THEREFORE, the parties agree as follows:
1. Grants of Awards. Pursuant to the provisions of Section 8.1 of the Plan,
the Company, from time to time in its sole discretion, may grant Awards to the
Grantee relating to a specified number of Outperform Stock Options that, under
certain circumstances and in accordance with the terms hereof, may result in the
Grantee having the right to acquire shares of common stock of the Company, par
value $.01 per share (the "Award Shares"). Each Award will be evidenced by an
Outperform Stock Option Award Letter (an "Award Letter") in the form attached as
Exhibit A hereto (or such other form as approved by the Company), which sets
forth the date of the Award (the "Award Date"), the number of Outperform Stock
Options that are the subject of the Award, and the "Initial Price" of the Award
Shares covered by the Award. This Agreement sets forth general terms and
conditions applicable to all Awards granted on, or after the date hereof.
2. Terms and Conditions of Awards
2.1. Adjustment of Initial Price. The "Adjusted Price" shall be the Initial
Price, adjusted upward or downward as of the date of exercise of an Outperform
Stock Option (the "Exercise Date"), by a percentage equal to the aggregate
percentage increase or decrease (expressed as a whole percentage point followed
by three decimal places) in the Standard and Poor's 500 Index over the period
(the "Period") beginning on the Trading Day immediately preceding the relevant
Award Date and ending on the Trading Day immediately preceding the relevant
Exercise Date (the "Aggregate Percentage S&P Performance"). For purposes of
determining the Aggregate Percentage S&P Performance with respect to any Period,
the Standard and Poor's 500 Index as of the first day of the Period shall be
deemed to equal the closing value of such index on the Trading Day immediately
preceding the Award Date, and the Standard and Poor's 500 Index on the last day
of the Period shall be deemed to equal the average closing value of such index
over the ten-consecutive-Trading Day period immediately preceding the Exercise
Date. Notwithstanding anything in this Agreement to the contrary, under no
circumstances will the Adjusted Price be less than the Initial Price. In
addition, if the provisions
of this Section 2.1 would cause the Adjusted Price to be less than the Initial
Price, the Adjusted Price shall be fixed at the Initial Price.
2.2. Term. The term of each Award shall be four (4) years from the grant
date set forth in the related Award Letter (subject to such shorter period as
set forth in Section 4 hereof), after which the Award and any unexercised
Outperform Stock Options thereunder shall expire.
2.3. Vesting and Exercisability. Subject to Section 2.4 hereof, the
Outperform Stock Options granted under an Award shall become vested as follows.
With respect to each Award in which the Award Date is on and after the date of
this Agreement, the Outperform Stock Options granted thereunder shall vest over
a period of two years after the Award Date, with the first 1/2 of the total
number of Outperform Stock Options under the Award (rounded to the nearest whole
share) vesting on the day preceding the first anniversary of the Award Date, and
the remainder vesting at the rate of 1/8 of the total number of Outperform Stock
Options (rounded to the nearest whole share) on the last day of each three (3)
calendar months after the first anniversary of the Award Date, such that the
last 1/8 of the Outperform Stock Options under the Award will become fully
vested on the day preceding the second anniversary of the Award Date. Vested
Outperform Stock Options shall be fully exercisable as of and after the vesting
date.
2.4. Accelerated Vesting and Exercisability.
(a) Notwithstanding anything herein or in the Plan to the contrary, in the
event that the Grantee dies, retires (in accordance with the Company's
Retirement Benefit), or suffers a "Permanent Total Disability" (as defined in
the following sentence), each Award and all Outperform Stock Options thereunder
shall thereupon become fully vested and fully exercisable. The Grantee shall be
considered to have suffered a Permanent Total Disability if the Committee
determines that the Grantee is permanently unable to earn any wages in the same
or other employment.
(b) Notwithstanding anything herein or in the Plan to the contrary, and in
accordance with the authority granted to the Committee in Section 9.2(b) of the
Plan, on the effective date of a "Change in Control" (as defined in the Plan),
(i) each Award shall be canceled as to any unexercised Outperform Stock Options,
and (ii) the Company or its successor shall pay to the Grantee in consideration
thereof an amount of cash equal to the value of any unexercised Outperform Stock
Options (regardless of whether the Outperform Stock Options were theretofore
vested), assuming for this purpose that each Outperform Stock Option had been
exercised at the price and on the day during the prior 60-day period ending on
the effective date of the Change in Control which produces the highest such
value, and (iii) any required withholding related to such payment shall be
satisfied by withholding the appropriate amount of cash from such payment.
2.5. Exercise. Subject to the limitations in Sections 2.2 and 2.3 hereof,
each Outperform Stock Option which is vested and exercisable may be exercised by
the Grantee, in whole or in part, by written, electronic, or telephonic notice
to the Company or its designated agent, in the form as may be approved from time
to time by the Committee. The notice must be
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delivered or made by the Grantee, unless (i) the Grantee is disabled or
otherwise incapacitated, in which case the notice must be delivered or made by
the Grantee's court-appointed legal guardian, (ii) the Grantee has died, in
which case the notice must be delivered or made by a court-appointed
representative of the Grantee's estate, or the heirs or legatees to whom the
Award has passed, or (iii) the Grantee has properly transferred the Award in
accordance with Section 5, in which case the notice must be delivered or made by
such transferee or the transferee's legal representative, estate, heirs or
legatees, as applicable. The notice must specify the Award and the number of
Award Shares with respect to such Award which are being exercised. The Exercise
Date shall be considered to be the date on which the exercise notice is actually
received by the Company or its designated agent, or, if the exercise notice is
actually received by the Company or its designated agent after the close of
trading of Company's common stock, par value $.01 per share, (the "Stock"), on
the Trading Day following the day the exercise notice is so received by the
Company or its designated agent.
2.6. Consideration. Upon exercise of Outperform Stock Options, the Company
shall deliver or pay to the Grantee with respect to and in cancellation of each
Outperform Stock Option exercised, consideration (the "Exercise Consideration")
equal to the product obtained when (a) the Fair Market Value (as defined in
Section 9.1) of a share of Stock as of the day prior to the Exercise Date , less
the Adjusted Price for the relevant Award Shares, is multiplied by (b) the
Multiplier (as defined in Section 2.7 below) . The Exercise Consideration may be
paid in (a) cash, (b) Stock or (c) any combination of cash or Stock, at the
Committee's sole and absolute discretion. In the event that the Company elects
to pay some or all of the Exercise Consideration in Stock, the number of shares
of Stock to be delivered shall be determined by dividing that portion of the
Exercise Consideration to be paid in Stock by the Fair Market Value of a share
of Stock as of the day prior to the Exercise Date. The payment of the Exercise
Consideration shall be, in each case, subject to withholding in accordance with
Section 9.5.
2.7. Multiplier. For purposes of this Section 2.7, the following terms are
defined:
(a) "S&P Start Number" means the closing value of the Standard and Poor's 500
Index on the Trading Day immediately preceding the relevant Award Date.
(b) "S&P End Number" means the simple arithmetic average of the closing value
of the Standard and Poor's 500 Index over the ten-consecutive-Trading Day
period immediately preceding the Exercise Date.
(c) "Stock Start Number" means the Fair Market Value of the Stock on the
Trading Day immediately preceding the relevant Award Date.
(d) "Stock End Number" means the simple arithmetic average of the Fair Market
Value of the Stock over the ten-consecutive-Trading Day period immediately
preceding the Exercise Date.
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(e) "Duration" means the length of the relevant Period, measured in years and
fractions of years (expressed as a whole number followed by three decimal
places).
(f) "Annualized Percentage S&P Performance" means the annualized increase (or
decrease) between the S&P Start Number and the S&P End Number over the
Period (expressed as a whole percentage point followed by three decimal
places), captured by the following formula:
S&P End Number - S&P Start Number x 100%
----------------------------------------------------
S&P Start Number Duration
(g) "Annualized Percentage Company Stock Price Performance" means the
annualized increase (or decrease) between the Stock Start Number and the
Stock End Number over the Period (expressed as a whole percentage point
followed by three decimal places), captured by the following formula:
Stock End Number - Stock Start Number x 100%
------------------------------------------------------
Stock Start Number Duration
The "Multiplier" shall be based on the "Outperform Percentage," which is the
excess, if any, of the Annualized Percentage Company Stock Price Performance
over the Annualized Percentage S&P Performance. The Multiplier shall be
expressed as a whole number and decimals, rounded to three decimal places, and
be determined as follows:
With respect to each Award that has an Award Date that is on or after the date
of this Agreement:
If Outperform Percentage is: The Multiplier will equal:
0% or less 0
More than 0%
but less than 11% The Outperform Percentage multiplied by
100 multiplied by 4/11. (E.g., if
Outperform Percentage = 5%, the
Multiplier = 5.000 times 4/11 = 1.818)
11% or more 4.000
In no event will the Multiplier exceed 4.000 for Awards in which the Award Date
is on or after the date of this Agreement.
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3. Exempt 162(m) Treatment. The terms and conditions relating to Awards are
designed so that each Award will qualify as performance-based compensation
within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the provisions of this Agreement shall be construed
accordingly. Consequently, if at the time of any purported exercise of an Award
by the Grantee, the Grantee is a "covered employee" within the meaning of
Section 162(m) of the Code, such purported exercise shall not be effective prior
to the time that the Company's shareholders have issued such approvals, and such
other actions have been taken as may be required, to qualify the Award as such
performance-based compensation.
4. Termination of Employment/Expiration of Award.
4.1. Unvested Outperform Stock Options. Awards shall expire as to any
unvested Outperform Stock Options as of the date the Grantee ceases to be
employed by the Company or any of its Affiliates for any reason (after taking
into account any accelerated vesting upon termination of employment pursuant to
Section 2.4).
4.2. Vested Outperform Stock Options. Each Award shall expire as to all
vested Outperform Stock Options on the earliest of:
a) The fourth anniversary of the related Award Date.
b) The first anniversary of the Grantee's death or Disability.
c) The date the Grantee's employment with the Company and all of its
subsidiaries is terminated by the Company for "Cause," as defined in
Section 4.3 below.
d) If the Grantee ceases to be employed by the Company and all of its
Affiliates for any reason other than death, Disability or termination for
"Cause," the 180th day following cessation of employment or the date the
relevant Outperform Stock Options first become exercisable, subject to
Section 4.2(a) above.
4.3. Cause. The Grantee shall be considered to have been terminated by the
Company for Cause if the Grantee's termination is on account of (i) the
Grantee's conviction of or pleading guilty or no contest to a felony, (ii) the
habitual use of drugs (including alcohol) which adversely affects Grantee's job
performance, or (iii) engaging in willful misconduct or willful neglect which is
injurious to the Company; provided, however, that the Committee may in its
discretion change from time to time the circumstances which constitute Cause, so
long as any such change is communicated to the Grantee prior to any purported
termination of the Grantee for Cause. Whether the Grantee has been terminated
for the reasons listed in clauses (ii) or (iii) above shall be determined in
good faith by the Committee. If the Grantee voluntarily terminates Grantee's
employment at a time when circumstances constituting Cause exist with respect to
the Grantee (as determined by the Committee good faith), the
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Committee may in its discretion treat the Grantee's termination as being by the
Company for Cause.
5. Non-Transferability. Except as specifically allowed by the Committee in
writing, an Award and the related Outperform Stock Options shall not be
transferable other than by will or the laws of descent and distribution, and
Outperform Stock Options may be exercised, during the lifetime of the Grantee,
only (i) by the Grantee or (ii) on the Grantee's behalf by a court-appointed
legal guardian. More particularly (but without limiting the generality of the
foregoing), except as provided above an Award, Outperform Stock Options, and the
right to receive Exercise Consideration may not be assigned, transferred,
pledged or hypothecated in any way, shall not be assignable by operation of law,
and shall not be subject to execution, attachment or similar process. Any
attempted assignment, transfer, pledge, hypothecation or other disposition of an
Award, Outperform Stock Options, or the right to receive Exercise Consideration
contrary to the provisions hereof and the levy of any execution, attachment or
similar process upon an Award, Outperform Stock Options, or the right to receive
Exercise Consideration shall be null and void and without effect.
6. Changes in Capital Structure, Etc. Section 9.1 of the Plan shall apply
to each Award, provided that no action may be taken by the Committee pursuant
thereto which would prevent a Pooling Transaction from qualifying as such.
7. Golden Parachute Gross-Up.
(a) In the event it is determined (as hereafter provided) that any payment
or distribution by the Company to or for the benefit of the Grantee pursuant to
the terms of the Agreement, whether paid or payable or distributed or
distributable, including without limitation the lapse or termination of any
restriction on or the vesting or exercisability of an Award or Outperform Stock
Options granted under the Agreement (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Code (or any successor provision
thereto) or to any similar tax imposed by state or local law, or any interest or
penalties with respect to such excise tax (such tax or taxes, together with any
such interest and penalties, are hereafter collectively referred to as the
"Excise Tax"), then the Grantee will be entitled to receive an additional
payment or payments (a "Gross-Up Payment") in an amount equal to the Excise Tax
plus any penalties or taxes imposed on the Grantee by virtue of such Gross-Up
Payment such that, after payment by the Grantee of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax imposed upon the Gross-Up Payment, the Grantee retains the full value of an
Award and the Outperform Stock Options thereunder, with the exception of any
regular income taxes owed by the Grantee on account of exercise of Outperform
Stock Options.
(b) Subject to the provisions of Section 7(d) hereof, all determinations
required to be made under this Agreement, including whether an Excise Tax is
payable by the Grantee and the amount of such Excise Tax and whether a Gross-Up
Payment is required and the amount of such Gross-Up Payment, will be made by an
outside "Big 4" or similar international accounting firm chosen by the Company
(the "Accounting Firm"). The Grantee will direct the Accounting Firm to submit
its determination and detailed supporting calculations to both the
6
Company and the Grantee within 15 calendar days after the date of the Change in
Control, and any other such time or times as may be requested by the Company or
the Grantee. If the Accounting Firm determines that any Excise Tax is payable by
the Grantee, the Company will pay the required Gross-Up Payment to the Grantee
within five business days after receipt of such determination and calculations.
If the Accounting Firm determines that no Excise Tax is payable by the Grantee,
it will, at the same time as it makes such determination, furnish the Grantee
with an opinion (addressed to both the Grantee and the Company) or other
evidence reasonably acceptable to the Grantee that the Grantee has substantial
authority not to report any Excise Tax on the Grantee's federal, state, local
income or other tax return. Any determination by the Accounting Firm as to the
amount of the Gross-Up Payment will be binding upon the Company and the Grantee.
As a result of the uncertainty in the application of Section 4999 of the Code
(or any successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments which will
not have been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies pursuant to Section
7(d) hereof and the Grantee thereafter is required to make a payment of any
Excise Tax, the Grantee will direct the Accounting Firm to determine the amount
of the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and the Grantee as promptly
as possible. The amount of any such Underpayment will be promptly paid by the
Company to, or for the benefit of, the Grantee within five business days after
receipt of such determination and calculations.
(c) The Company and the Grantee will each provide the Accounting Firm
access to and copies of any books, records and documents in the possession of
the Company or the Grantee, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determination contemplated by Section
7(b) hereof.
(d) The federal, state and local income and other tax returns filed by the
Grantee will be prepared and filed on a consistent basis with the determination
of the Accounting Firm with respect to the Excise Tax payable by the Grantee.
The Grantee will make proper payment of the amount of any Excise Tax, and at the
request of the Company, provide to the Company true and correct copies (with any
amendments) of the Grantee's federal income tax return as filed with the
Internal Revenue Service and corresponding state and local tax returns, if
relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by the Company, evidencing such payment. If prior
to the filing of the Grantee's federal income tax return, or corresponding state
and local tax return, if relevant, the Accounting Firm determines that the
amount of the Gross-Up Payment should be reduced, the Grantee will within five
business days pay to the Company the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by Sections
7(b) and (d) hereof will be borne by the Company. If such fees and expenses are
initially advanced by the Grantee, the Company will reimburse the Grantee the
full amount of such fees and expenses
7
within five business days after receipt from the Grantee of a statement therefor
and reasonable evidence of his payment thereof.
(f) The Grantee will notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of a Gross-Up Payment. Such notification will be given as promptly as
practicable but no later than 10 business days after the Grantee actually
receives notice of such claim and the Grantee will further apprise the Company
of the nature of such claim and the date on which such claim is requested to be
paid (in each case, to the extent known by the Grantee). The Grantee will not
pay such claim prior to the earlier of (a) the expiration of the 30-calendar-day
period following the date on which he gives such notice to the Company, and (b)
the date that any payment of an amount with respect to such claim is due. If the
Company notifies the Grantee in writing prior to the expiration of such period
that it desires to contest such claim, the Grantee will (i) provide the Company
with any written records or documents in the Grantee's possession relating to
such claim reasonably requested by the Company, (ii) take such action in
connection with contesting such claim as the Company will reasonably request in
writing from time to time, including without limitation accepting legal
representation with respect to such claim by an attorney competent in respect of
the subject matter and reasonably selected by the Company, (iii) cooperate with
the Company in good faith in order effectively to contest such claim, and (iv)
permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company will bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and will indemnify and hold harmless the Grantee, on an after-tax basis,
from and against any Excise Tax or income tax, including interest and penalties
with respect thereto, imposed as a result of such representation and payment of
costs and expenses. Without limiting the foregoing provisions of this Section
7(f), the Company may, at its option, control all proceedings taken in
connection with the contest of any claim contemplated by this Section 7(f) and,
at its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim (provided, however, that the Grantee may participate therein at his
own cost and expense) and may, at its option, either direct the Grantee to pay
the tax claimed and sue for a refund or contest the claim in any permissible
manner, and the Grantee agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company will determine; provided, however,
that if the Company directs the Grantee to pay the tax claimed and sue for a
refund, the Company will advance the amount of such payment to the Grantee on an
interest-free basis and will indemnify and hold the Grantee harmless, on an
after-tax basis, from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Grantee with respect to
which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of any such contested claim
will be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Grantee will be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
8
(g) If, after the receipt by the Grantee of an amount advanced by the
Company pursuant to Section 7(f) hereof, the Grantee receives any refund with
respect to such claim, the Grantee will (subject to the Company's complying with
the requirements of Section 7(f) hereof) promptly pay to the Company the amount
of such refund (together with any interest paid or credited thereon after any
taxes applicable thereto). If, after the receipt by the Grantee of an amount
advanced by the Company pursuant to Section 7(f) hereof, a determination is made
that the Grantee will not be entitled to any refund with respect to such claim
and the Company does not notify the Grantee in writing of its intent to contest
such denial or refund prior to the expiration of 30 calendar days after such
determination, then such advance will be forgiven and will not be required to be
repaid and the amount of such advance will offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid pursuant to this Agreement.
(h) If Grantee takes action to enforce this Section 7 against the Company
(which for this purpose shall include making preparations for taking such
enforcement action), and such enforcement action is in whole or part successful
(whether by decision of a court or arbitrator, by settlement, by mutual
agreement of Grantee and the Company, or otherwise), the Company shall promptly
pay directly or, at Grantee's election, reimburse Grantee for, all legal and
other expert fees and expenses incurred by Grantee in connection with such
action.
8. General. Subject to the provisions of Section 2.6 with respect to the
form of the payment of the Exercise Consideration, the Company shall at all
times during the term of this Agreement reserve and keep available such number
of shares of Stock as will be sufficient to satisfy the requirements of this
Agreement, shall pay all original issue and transfer taxes with respect to the
issue and transfer of shares of Stock pursuant hereto and all other fees and
expenses necessarily incurred by the Company in connection therewith, and will
from time to time use its best efforts to comply with all laws and regulations
which, in the opinion of counsel for the Company, shall be applicable thereto.
9. Miscellaneous
9.1. Fair Market Value and Trading Day. For purposes of this Agreement, the
"Fair Market Value" of the Stock shall mean as of any date of determination (i)
the closing price per share of Stock on the national securities exchange on
which the Stock is principally traded as of 4:15 pm New York City Time, or (ii)
if the Stock is not listed or admitted to trading on any such exchange, the last
sale price of a share of Stock as reported by the NASD, Inc. Automated Quotation
("NASDAQ") system, or (iii) if the Stock is not then listed on any securities
exchange and prices therefore are not then quoted in the NASDAQ system, then the
value determined by the Committee in good faith. The term "Trading Day" means
any day on which the Stock is traded, as contemplated by subsection (i) or (ii)
above.
9.2. No Stockholder Rights. The Grantee shall not have any of the rights of
a stockholder with respect to the Award Shares resulting from any Award prior to
the issuance of Stock, if any, to the Grantee upon the due exercise of the
Outperform Stock Options.
9.3. No Abrogation of Company's Rights. Nothing in this Agreement shall
confer upon the Grantee any right to continued employment with the Company or
interfere
9
in any way with the right of the Company to terminate the Grantee's employment
at any time. The transfer of employment between any combination of the Company
and any Affiliate of the Company shall not be deemed a termination of
employment.
9.4. Effect of the Plan. The terms and provisions set forth in the Plan are
incorporated herein by reference as if they were set forth herein; provided,
however, that in the event of a direct conflict between the terms of the Plan
and the terms of this Agreement, the terms of this Agreement shall govern.
Reference to provisions of the Plan are to such provisions as they shall be
subsequently amended or renumbered; provided that no amendment to the Plan which
adversely affects an Award shall be effective as to that Award without the
written consent of the Grantee. The Grantee acknowledges that a current version
of the Plan is available on the Company's intranet site, and the Company agrees
to supply to the Grantee a paper copy of the current version of the Plan upon
the Grantee's request.
9.5. Withholding. Notwithstanding anything contained herein to the
contrary, other than Subsection 2.4(b)(iii) and Section 7, no payment shall be
made to a Grantee upon the exercise of Outperform Stock Options until provision
has been made for the satisfaction of all required withholding in accordance
with the Plan.
9.6. Plan and Agreement Govern. Although any information sent to or made
available to the Grantee concerning the Plan and this Award is intended to be an
accurate summary of the terms and conditions of the Award, this Agreement and
the Plan are the authoritative documents governing the Award and any
inconsistency between the Agreement and the Plan, on one hand, and any other
summary information, on the other hand, shall be resolved in favor of the
Agreement and the Plan.
9.7. Affiliate. The term "Affiliate" shall have the mean ascribed to it in
the Plan.
9.8. Amendments. Notwithstanding anything herein to the contrary, this
Agreement may be amended by the Committee from time to time without the consent
of the Grantee to the extent the Committee deems it appropriate to cause this
Agreement and/or each Award hereunder to comply with Section 409A of the
Internal Revenue Code of 1986, as amended ("Section 409A") (including the
distribution requirements thereunder) or be exempt from Section 409A and/or the
tax penalty under Section 409A(a)(1)(B).
10
IN WITNESS WHEREOF, this Agreement is executed by the Grantee and by an
authorized officer on behalf of the Company, as of the date first above written.
LEVEL 3 COMMUNICATIONS, INC.
BY:
ITS:
GRANTEE:
(Please sign)
Name:
(Please print)
Date of Hire:
11
EXHIBIT A
LEVEL 3 COMMUNICATIONS, INC.
OUTPERFORM STOCK OPTION AWARD LETTER
This Outperform Stock Option Award (the "Award") when taken together with
the Master Award Agreement dated as of July 1, 2005 (the "Master Agreement")
constitutes an award to the individual whose name appears on the signature line
below (the "Grantee") of Outperform Stock Options with respect to the shares of
common stock of Level 3 Communications, Inc. (the "Common Stock") under the
Level 3 Communications, Inc. 1995 Stock Plan (as amended from time to time).
The terms and conditions of this Award are set forth below and in the
Master Agreement, the provisions of which are incorporated herein by reference.
A. The date of grant of this Award is __________ (the "Award Date").
B. The number of Outperform Stock Options with respect to which this
Outperform Stock Option Award Letter relates pursuant to Section 2.3(b) of
the Master Agreement is __________.
C. The Initial Price per share for each Award Share covered by this Award is
$__________.
LEVEL 3 COMMUNICATIONS, INC.
BY:
ITS:
GRANTEE:
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