EXHIBIT 10(g)
[FORM OF CHANGE OF CONTROL AGREEMENT
FOR TIER II EXECUTIVES]
Date
Executive Name
Executive Title
Company Name
Executive Address
Dear ___________:
U S WEST, Inc. (the "Company"), on behalf of itself, its subsidiaries
and shareholders, wishes to encourage your continued service and dedication in
the performance of your duties, notwithstanding the possibility, threat or
occurrence of a Change of Control of the Company (as defined in Subsection
I(h)). The Board of Directors of the Company (the "Board") believes that the
prospect of a pending or threatened Change of Control inevitably creates
distractions, personal risks and uncertainties for its executives, and that it
is in the best interests of the Company and its shareholders to minimize such
distractions to certain executives. The Board further believes that it is in the
best interests of the Company to encourage its executives' full attention and
dedication to their duties, both currently and in the event of any threatened or
pending Change of Control.
Accordingly, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued retention of certain members of
the Company's management, including yourself, and the attention and dedication
of management to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a Change of
Control.
In order to induce you (the "Executive") to remain in the employ of the
Company, and in consideration of your continued service to the Company, the
Company agrees that you shall receive the benefits set forth in this letter
agreement (the "Agreement") in the event that your employment with the Company
is terminated subsequent to a Change of Control in the circumstances described
herein. For purposes of this Agreement, references to employment with the
Company shall include employment with a Subsidiary of the Company (as defined in
Subsection I(w)).
I. Definitions
The meaning of each defined term that is used in this Agreement is set
forth below.
(a) AAA. The American Arbitration Association.
(b) Additional Pay. The meaning of this term is set forth in
Subsection IV(b).
(c) Agreement. The meaning of this term is set forth in the third
paragraph of this Agreement.
(d) Agreement Payments. The meaning of this term is set forth in
Subsection IV(e)(i).
(e) Beneficiaries. The meaning of this term is set forth in Subsection
VI(b).
(f) Board. The meaning of this term is set forth in the first
paragraph of this Agreement.
(g) Cause. For purposes of this Agreement, "Cause" shall mean the
Executive's willfully breaching or failing to perform his employment duties. For
purposes of this Subsection I(g), no act, or failure to act, on the part of the
Executive shall be deemed "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that such action or
omission was in the best interest of the Company. Notwithstanding the foregoing,
the Executive shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to the Executive a certificate of a
resolution duly adopted by the affirmative vote of not less than seventy-five
percent (75%) of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice to the Executive and
an opportunity for the Executive, together with the Executive's counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive has engaged in the conduct set forth in this Subsection I(g) and
specifying the particulars thereof in detail.
(h) Change of Control. For purposes of this Agreement, a "Change of
Control" shall be deemed to have occurred if there is a change of control of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), whether or not the Company is then
subject to such reporting requirement; provided that, without limitation, such a
Change of Control shall be deemed to have occurred if:
(i) any "person" (as such term is used in Sections 13(d) a
"beneficial owner" (as determined for purposes of Regulation 13D-G, as
currently in effect, under the Exchange Act), directly or indirectly,
of securities representing twenty percent (20%) or more of the total
voting power of all of the Company's then outstanding voting
securities. For purposes of this Agreement, the term "person" shall not
include: (i) the Company or any of its Subsidiaries; (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or any of its Subsidiaries; or (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities;
(ii) during any period of two (2) consecutive calendar years,
individuals who at the beginning of such period constitute the Board
and any new director(s) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office, who
either were directors at the beginning of such period or whose election
or nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board, but excluding for this
purpose, any such threatened election contest (as such terms are used
in Rule 14a-11 of Regulation 14A, as currently in effect, of the
Exchange Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board;
(iii) the stockholders of the Company approve a merger,
consolidation or sale or other disposition of all or substantially all
of the assets of the Company (a "Business Combination"), in each case,
unless following such Business Combination: (i) all or substantially
all of the individuals and entities who were the "beneficial owners"
(as determined for purposes of Regulation 13D-G, as currently in
effect, of the Exchange Act) of the outstanding voting securities of
the Company immediately prior to such Business Combination beneficially
own, directly or indirectly, securities representing more than seventy
percent (70%) of the total voting power of the then outstanding voting
securities of the corporation resulting from such Business Combination
or the parent of such corporation (the "Resulting Corporation"); (ii)
no "person" (as such term is used in Sections 13(d) and 14(d)(2), as
currently in effect, of the Exchange Act), other than a trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or the Resulting Corporation, is the "beneficial owner" (as
determined for purposes of Regulation 13D-G, as currently in effect, of
the Exchange Act), directly or indirectly, of voting securities
representing twenty percent (20%) or more of the total voting power of
the then outstanding voting securities of the Resulting Corporation;
and (iii) at least a majority of the members of the board of directors
of the Resulting Corporation were members of the Board at the time of
the execution of the initial agreement, or at the time of the action of
the Board, providing for such Business Combination;
(iv) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company;
(v) any other event that a simple majority of the Board, in
its sole discretion, shall determine constitutes a Change of Control;
(i) Code. The meaning of this term is set forth in Subsection IV(e)(i).
(j) Company. The meaning of this term is set forth in the first
paragraph of this Agreement and Subsection VI(a).
(k) Controlled Group. For purposes of this Agreement, "Controlled
Group" shall mean the Company and all of the Company's Subsidiaries.
(l) Disability. For purposes of this Agreement, "Disability" shall
mean an illness, injury or similar incapacity which 52 weeks after its
commencement continues to render the Executive unable to perform the material
and substantial duties of the Executive's position or any occupation or
employment for which the Executive is qualified or may reasonably become
qualified by training, education or experience. Any question as to the existence
of a Disability upon which the Executive and the Company cannot agree shall be
determined by a qualified independent physician selected by the Executive (or,
if the Executive is unable to make such selection, by any adult member of the
Executive's immediate family or the Executive's legal representative), and
approved by the Company, such approval not to be unreasonably withheld. The
determination of such physician made in writing to the Company, and to the
Executive, shall be final and conclusive for all purposes of this Agreement.
(m) Employer. For purposes of this Agreement, "Employer" shall mean
the Company or the Subsidiary, as the case may be, with which the Executive has
an employment relationship.
(n) Exchange Act. This term shall have the meaning set forth in
Subsection I(h).
(o) Executive. This term shall have the meaning set forth in the third
paragraph of this Agreement.
(p) Excise Tax. This term shall have the meaning set forth in
Subsection IV(e)(i).
(q) Good Reason. For purposes of this Agreement, "Good Reason" shall
mean the occurrence, without the Executive's express written consent, of any of
the following circumstances:
(i) The assignment to the Executive of any duties
materially inconsistent with, or any substantial diminution in, such
Executive's status or responsibilities as in effect immediately prior
to a Change of Control of the Company, including imposition of travel
obligations which differ materially from required business travel
immediately prior to the Change of Control;
(ii) Any material diminution in the status or
responsibilities of the Executive's position from that which existed
immediately prior to the Change of Control, whether by reason of the
Company ceasing to be a public company under the Exchange Act, becoming
a subsidiary of a successor public company, or otherwise;
(iii) (A) A reduction in the Executive's annual base
salary as in effect immediately before the Change of Control; or (B)
the failure to pay a bonus award to which the Executive is otherwise
entitled under any of the short-term incentive plan in which the
Executive participates, the U S WEST Executive Long-Term Incentive
Plan, or any successor incentive compensation plans at the time such
awards are usually paid;
(iv) A change in the principal place of the
Executive's employment, as in effect immediately prior to the Change of
Control of the Company, to a location more than thirty-five (35) miles
distant from the location of such principal place at such time;
(v) Except as required by law, the failure by the
Company to continue in effect any incentive compensation plan or stock
option plan in which the Executive participates immediately prior to
the Change of Control, unless an equivalent alternative compensation
arrangement (embodied in an ongoing substitute or alternative plan) has
been provided to the Executive, or the failure by the Company to
continue the Executive's participation in any such incentive or stock
option plan on substantially the same basis, both in terms of the
amount of benefits provided and the level of the Executive's
participation relative to other participants, as existed immediately
prior to the time of the Change of Control;
(vi) (A) Except as required by law, the failure by
the Company to continue to provide to the Executive benefits
substantially equivalent, in the aggregate, to those enjoyed by the
Executive under the qualified and non-qualified employee benefit and
welfare plans of the Company, including, without limitation, any
pension, life insurance, medical, dental, health and accident,
disability, retirement or savings plans in which the Executive was
eligible to participate immediately prior to the Change of Control; (B)
the taking of any action by the Company which would directly or
indirectly materially reduce or deprive the Executive of any other
perquisite enjoyed by the Executive immediately prior to the Change of
Control (including Company-paid and/or reimbursed club memberships,
financial counseling fees and the like); or (C) the failure by the
Company or its successor to treat the Executive under the Company's
vacation policy, past practice or special agreement in the same manner
and to the same extent as was in effect immediately prior to the Change
of Control;
(vii) The failure of the Company or any successor to
obtain a satisfactory written agreement from any successor to assume
and agree to perform this Agreement, as contemplated in Subsection
VI(a); or
(viii) Any purported termination of the Executive's
employment that is not effected pursuant to a Notice of Termination
satisfying the requirements of Subsection III(b) or, if applicable,
Subsection I(g). For purposes of this Agreement, no such purported
termination shall be effective except as constituting Good Reason.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstances constituting Good Reason
hereunder.
(r) Gross-Up Payment. The meaning of this term is set forth in
Subsection IV(e)(i).
(s) Notice of Termination.The meaning of this term is set forth in
Subsection III(b).
(t) Other Payments. The meaning of this term is set forth in
Subsection IV(e)(i).
(u) Payments. The meaning of this term is set forth in Subsection
IV(e)(i).
(v) Retirement.For purposes of this Agreement, "Retirement" shall mean
the Executive's voluntary termination of employment with the Company, other than
for Good Reason, and in accordance with the Company's retirement policy
generally applicable to its employees or in accordance with any prior or
contemporaneous retirement arrangement established with the Executive's consent
with respect to the Executive.
(w) Subsidiary.For purposes of this Agreement, "Subsidiary"" shall
mean any corporation of which more than fifty percent (50%) of the voting stock
is owned directly or indirectly by the Company.
(x) Tax Counsel. The meaning of this term is set forth in
Subsection IV(e)(ii).
(y) Termination. The meaning of this term is set forth in Subsection
III(a).
(z) Termination Date. For purposes of this Agreement, "Termination
Date" shall mean:
(i) If the Executive's employment is terminated for
Disability, thirty (30) days after Notice of Termination is given
(provided that the Executive shall not have returned to the full-time
performance of his duties during such thirty-day period); and
(ii) If the Executive's employment is terminated for
Cause or Good Reason or for any reason other than death or Disability,
the date specified in the Notice of Termination (which in the case of a
termination for Cause shall not be less than thirty (30) days and in
the case of a termination for Good Reason shall not be less than thirty
(30) days nor more than sixty (60) days, respectively, from the date
such Notice of Termination is given).
II. Term of Agreement
(a) General. Upon execution by the Executive, this Agreement shall
commence as of ______________. This Agreement shall continue in effect through
December 31, 2001; provided, however, that commencing on January 1, 2002, and
every third January 1 thereafter, the term of this Agreement shall automatically
be extended for three additional years unless, not later than ninety days prior
to the January 1 on which this Agreement would otherwise automatically be
extended, the Company shall have given notice that it does not wish to extend
this Agreement; provided further, however, that if a Change of Control of the
Company shall have occurred during the original or any extended term of this
Agreement, this Agreement shall continue in effect for a period of thirty-six
months beyond the month in which the Change of Control occurred.
(b) Disposition of Employer. In the event the Executive is employed by
a Subsidiary, the terms of this Agreement shall expire if such Subsidiary is
sold or otherwise disposed of prior to a Change of Control unless the Executive
continues in employment with the Controlled Group after such sale or other
disposition. If the Executive's Employer is sold or disposed of following a
Change of Control, this Agreement shall continue through its original term or
any extended term then in effect.
(c) Deemed Change of Control. If the Executive's employment with the
Employer is terminated prior to the date on which a Change of Control occurs,
and such termination was at the request of a third party who has taken steps to
effect a Change of Control or was otherwise caused by the Change of Control,
then for all purposes of this Agreement, a Change of Control shall be deemed to
have occurred prior to such termination.
(d) Expiration of Agreement. No termination or expiration of this
Agreement shall affect any rights, obligations or liabilities of either party
that shall have accrued on or prior to the date of such termination or
expiration.
III. Termination Following Change of Control
(a) Entitlement to Benefits If a Change of Control of the Company
shall have occurred, the Executive shall be entitled to the benefits provided in
Section IV hereof upon the subsequent termination of his employment with the
Company within three years after the date of the Change of Control unless such
termination is (i) a result of the Executive's death or Retirement, (ii) for
Cause, (iii) a result of the Executive's Disability, or (iv) by the Executive
other than for Good Reason. A termination of the Executive's employment which is
not as a result of the Executive's death, Retirement or Disability and (x) if by
the Company, is not for Cause, or (y) if by the Executive, is for Good Reason,
shall be referred to hereinafter as a "Termination."
(b) Notice of Termination.Any purported termination of the Executive's
employment by the Company or by the Executive shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section VIII.
For purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific provision of this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. If the Executive's employment shall be terminated for
Cause or by the Executive for other than Good Reason, the Company shall pay the
Executive his full base salary through the Termination Date at the rate in
effect at the time Notice of Termination is given and shall pay any amounts to
be paid to the Executive pursuant to any other compensation plans, programs or
employment agreements then in effect, and the Company shall have no further
obligations to the Executive under this Agreement.
If within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice notifies the other party that a dispute exists
concerning the grounds for termination, then, notwithstanding the meaning of
"Termination Date" set forth in Subsection I(z), the Termination Date shall be
the date on which the dispute is finally resolved, whether by mutual written
agreement of the parties or by a decision rendered pursuant to Section XI;
provided that the Termination Date shall be extended by a notice of dispute only
if such notice is given in good faith and the party giving such notice pursues
the resolution of such dispute with reasonable diligence. Notwithstanding the
pendency of any such dispute, the Company will continue to pay the Executive his
full compensation in effect when the notice giving rise to the dispute was
given, and continue the Executive as a participant in all benefits plans or
perquisites in which the Executive was participating or which he was enjoying
when the Notice of Termination giving rise to the dispute was given, until the
dispute is finally resolved. Amounts paid under this Subsection III(b) are in
addition to all other amounts due under this Agreement and shall not be offset
against or reduce any other amounts due under this Agreement.
IV. Compensation Upon a Termination
In accordance with Section III, following a Change of Control of the
Company, upon a Termination of the Executive's employment, the Executive shall
be entitled to the following benefits, provided that the Termination occurs
during the three-year period immediately following the date of the Change of
Control:
(a) Standard Benefits. The Company shall pay the Executive, in cash, no
later than the second business day following the Termination Date:
(i) his full base salary through the Termination Date at the rate in
effect on either (x) the day on which Notice of Termination is given, or (y) the
day immediately preceding the date of the Change of Control, whichever is
higher;
(ii) the full annual bonus payable to Executive under any past and
current year short-term incentive plan(s) or program(s) of the Company in which
Executive participates following a termination of employment after a change of
control, as defined in such plan(s) or program(s), calculated on the basis of
the extent to which the performance factors targeted by the Human Resources
Committee of the Board have been achieved (for this purpose, the Company's
performance through the Termination Date shall be annualized based upon the
actual number of days elapsed from the beginning of the fiscal year in which the
Termination occurs through the Termination Date over a year of 360 days), which
shall be deemed to be 100% unless the performance actually achieved is greater
than 100%, in which case the actual performance levels shall be utilized. If a
change of control has not occurred within the meaning of such plan(s) or
program(s), a change of control shall be deemed to have occurred with respect to
Executive for the purpose of determining the bonus payable to Executive based on
a Change of Control occurring within the meaning of this Agreement; and
(iii) the annual grant value of any long term incentive award payable
to Executive under any long-term incentive plan(s) or program(s) of the Company
in which Executive participates following a termination of employment after a
change of control, as defined in such plan(s) or program(s). If the annual long
term incentive award has not yet been specified in any given year in which
termination occurs, the annual grant value will equal the immediate prior year's
annual grant value. If a change of control has not occurred within the meaning
of such plan(s) or program(s), a change of control shall be deemed to have
occurred with respect to Executive for the purpose of determining the bonus
payable to Executive based on a Change of Control occurring within the meaning
of this Agreement.
The purpose of paragraphs (ii) and (iii) are to provide the value of
any past and current short term and long term incentive awards as if the
Executive had completed the entire year in which termination occurred. In
addition, the Company shall cause: (x) all unvested stock options held by
Executive on the Termination Date immediately to vest and be fully exercisable
as of the Termination Date; (y) any restrictions on all restricted stock held by
Executive on the Termination Date immediately to lapse and all shares of such
stock to fully vest as of the Termination Date; and (z) any accrued benefit or
deferred arrangement of the Company that Executive otherwise would become
entitled to if he continued employment with the Company immediately to vest as
of the termination Date.
(b) Additional Benefits. The Company shall pay to the Executive as
additional pay ("Additional Pay"), the product of (i) the lesser of (x) three
(3) or (y) the difference between sixty-five (65) and the Executive's age as of
the date of the Notice of Termination (calculated to the nearest twelfth of a
year), multiplied by (ii) the sum of (x) the Executive's annual base salary rate
in effect immediately prior to the Termination Date and (y) the Executive's
annual bonus amount under the short-term incentive plan in which the Executive
participates, such bonus amount to be calculated on the basis of the extent to
which the performance factors targeted by the Human Resources Committee of the
Board have been achieved (for this purpose, the Company's performance through
the Termination Date shall be annualized based upon the actual number of days
elapsed from the beginning of the fiscal year in which the Termination occurs
through the Termination Date over a year of 360 days), which shall be deemed to
be 100% unless the performance actually achieved is greater than 100%, in which
case the actual performance levels shall be utilized. The Company shall pay to
the Executive the Additional Pay in a lump sum, in cash, not later than the
fifteenth day following the Termination Date.
(a) Retirement Plan Benefits. If not already vested, the Executive
shall be deemed fully vested in all Company retirement plans and/or other
written agreements relating to pay upon retirement in which the Executive was a
participant, party or beneficiary immediately preceding a Change of Control, and
any additional plans and/or agreements in which such Executive became a
participant, party or beneficiary thereafter. In addition to the foregoing, for
purposes of determining the amounts to be paid to the Executive under such plans
and/or agreements, the years of service with the Company and the age of the
Executive under all such plans and agreements shall be deemed increased by the
lesser of thirty-six (36) months or such shorter period of time as would render
the Executive sixty-five (65) years of age. For purposes of this Subsection
IV(c), "plans" include, without limitation, the Company's qualified pension
plan, non-qualified and mid-career retirement plans, and "agreements" encompass
the terms of any offer letters leading to the Executive's employment with the
Company where the Executive was a signatory thereto and any written amendments
to the foregoing. In the event that the terms of the plans referenced in this
Subsection IV(c) do not for any reason (e.g., if plan amendments would cause
disqualification of qualified plans) coincide with the provisions of this
Subsection IV(c), the Executive shall be entitled to receive from the Company
under the terms of this Agreement an amount equivalent to all amounts he would
have received had all such plans continued in existence as in effect on the date
of this Agreement after being amended to coincide with the terms of this
Subsection IV(c).
(b) Health Benefits. Following the Termination Date, the Company shall
continue to provide health, vision and dental benefits to the Executive and the
Executive's eligible dependents on terms substantially equivalent to those on
which the Company provides such benefits to retired employees who were service
pension-eligible at the time of the Change of Control and whose retirement date
most closely approximates the date of the Change of Control. The eligibility of
the Executive's dependents shall be determined by the terms of the health,
vision and dental benefit plans in effect prior to the Change of Control.
(c) Gross-Up Payments.
(i) In the event that any payment or the value of
any benefit received or to be received by the Executive in connection
with the Executive's Termination or contingent upon a Change of Control
of the Company (whether received or to be received pursuant to the
terms of this Agreement (the "Agreement Payments") or of any other
plan, arrangement or agreement of the Company, its successors, any
person whose actions result in a Change of Control of the Company or
any person affiliated with any of them (or which, as a result of the
completion of the transactions causing a Change of Control, will become
affiliated with any of them) ("Other Payments" and, together with the
Agreement Payments, the "Payments")) would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") or any comparable federal, state or local excise
tax (such excise tax, together with any interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), as
determined as provided below, the Company shall pay to the Executive an
additional amount (the "Gross-Up Payment") such that the net amount
retained by the Executive, after deduction of the Excise Tax on
Agreement Payments and Other Payments and any federal, state and local
income tax and Excise Tax upon the payment provided for by this
Subsection IV(e)(i), and any interest, penalties or additions to tax
payable by the Executive with respect thereto shall be equal to the
total present value of the Agreement Payments and Other Payments at the
time such Payments are to be made. The intent of the parties is that
the Company shall be solely responsible for and shall pay, any Excise
Tax on any Payments and Gross-Up Payment and any income and employment
taxes (including, without limitation, penalties and interest) imposed
on any Gross-Up Payments as well as any loss of deduction caused by the
Gross-Up Payment.
(ii) All determinations required to be made under
this Subsection IV(e), including, without limitation, whether and when
a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determinations,
shall be made by tax counsel selected by the Company and reasonably
acceptable to the Executive ("Tax Counsel"). The Company shall cause
the Tax Counsel to provide detailed supporting calculations to the
Company and the Executive within fifteen (15) business days after
notice is given by the Executive to the Company that any or all of the
Payments have occurred, or such earlier time as is requested by the
Company. Within two (2) business days after such notice is given to the
Company, the Company shall instruct the Tax Counsel to timely provide
the data required by this Subsection IV(e) to the Executive. All fees
and expenses of the Tax Counsel shall be paid solely by the Company.
Any Excise Tax as determined pursuant to this Subsection IV(e) shall be
paid by the Company to the Internal Revenue Service and/or other
appropriate taxing authority on the Executive's behalf within five (5)
days after receipt of the Tax Counsel's determination. If the Tax
Counsel determines that there is substantial authority (within the
meaning of Section 6662 of the Code) that no Excise Tax is payable by
the Executive, the Tax Counsel shall furnish the Executive with a
written opinion that failure to disclose or report the Excise Tax on
the Executive's federal income tax return will not constitute a
substantial understatement of tax or be reasonably likely to result in
the imposition of a negligence or similar penalty. Any determination by
the Tax Counsel shall be binding upon the Company and the Executive in
the absence of material mathematical or legal error. As a result of the
uncertainty in the application of Section 4999 of the Code at the time
the initial determination by the Tax Counsel hereunder, it is possible
that Gross-Up Payments will not have been made by the Corporation that
should have been made or that Gross-Up Payments have been made that
should not have been made, in each case, consistent with the
calculations required to be made hereunder. In the event the Company
exhausts its remedies pursuant to Subsection IV(e)(iii) below and the
Executive is thereafter required to make a payment of any Excise Tax,
the Tax Counsel shall determine the amount of underpayment of Excise
Taxes that has occurred and any such underpayment shall be promptly
paid by the Company to the Internal Revenue Service or other
appropriate taxing authority on the Executive's behalf or, if such
underpayment has been previously paid by the Executive, to the
Executive. In the event that the Tax Counsel determines that an
overpayment of Gross-Up Payments has occurred, any such overpayment
shall be treated for all purposes as a loan to the Executive with
interest at the applicable federal rate provided for in Section
7872(f)(2) of the Code, due and payable within ninety (90) days after
written demand to the Executive by the Company; provided, however, that
the Executive shall have no duty or obligation whatsoever to repay such
loan unless the Executive's receipt of the overpayment, or any portion
thereof, is includible in the Executive's income and the Executive's
repayment of the same is not deductible by the Executive for federal
and state income tax purposes.
(iii) The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service or state or local
taxing authority, that, if successful, would result in any Excise Tax
or an underpayment of Gross-Up Payments. Such notice shall be given as
soon as practicable but no later than fifteen (15) business days after
the Executive is informed in writing of the claim and shall inform the
Company of the nature of the claim, the administrative or judicial
appeal period, and the date on which any payment of the claim must be
paid. The Executive shall not pay any portion of the claim prior to the
expiration of the thirty (30) day period following the date on which
the Executive gives such notice to the Company (or such shorter period
ending on the date that any amount under the claim is due). If the
Company notifies the Executive in writing prior to the expiration of
such thirty (30) day period that it desires to contest the claim, the
Executive shall:
(A) give the Company any information reasonably
requested by the Company relating to the claim;
(B) take such action in connection with
contesting the claim as the Company shall reasonably request
in writing from time to time, including, without limitation,
accepting legal representation concerning the claim by an
attorney selected by the Company who is reasonably acceptable
to the Executive; and
(C) cooperate with the Company in good faith in
order to effectively contest the claim;
provided, however, that the Company shall bear and pay
directly all costs and expenses (including, without limitation,
additional interest and penalties and attorneys' fees) incurred in such
contests and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including, without
limitation, interest and penalties thereon) imposed as a result of such
representation. Without limitation upon the foregoing provisions of
this Subsection IV(e)(iii), except as provided below, the Company shall
control all proceedings concerning such contest and, in its sole
opinion, may pursue or forego any and all administrative appeal,
proceedings, hearings and conferences with the taxing authority
pertaining to the claim. At the written request of the Company and upon
payment to the Executive of an amount at least equal to the claim plus
any additional amount necessary to obtain the jurisdiction of the
appropriate tribunal and/or court, the Executive shall pay the same and
xxx for a refund. The Executive agrees to prosecute any contest of a
claim to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company
requests the Executive to pay the claim and xxx for a refund, the
Company shall advance the amount of such payment to the Executive, on
an interest-free basis, and shall indemnify and hold the Executive
harmless on an after-tax basis, from any Excise Tax or income tax
(including, without limitation, interest and penalties thereon) imposed
on such advance or for any imputed income on such advance. Any
extension of the statute of limitations relating to assessment of any
Excise Tax for the taxable year of the Executive which is the subject
of the claim is to be limited solely to the claim. Furthermore, the
Company's control of the contest shall be limited to issues for which a
Gross-Up Payment would be payable hereunder. The Executive shall 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.
(iv) If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Subsection IV(e)(iii) above,
the Executive receives any refund of a claim and/or any additional
amount that was necessary to obtain jurisdiction, the Executive shall
promptly pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes applicable thereto).
If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Subsection IV(e)(iii) above, a determination is
made that the Executive shall not be entitled to any refund of the
claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund of a claim prior to the
expiration of thirty (30) days after such determination, then the
portion of such advance attributable to a claim shall be forgiven and
shall not be required to be repaid. The amount of such advance
attributable to a claim shall offset, to the extent thereof, the amount
of the underpayment required to be paid by the Company to the
Executive.
(v) If, after the advance by the Company of an
additional amount necessary to obtain jurisdiction, there is a final
determination made by the taxing authority that the Executive is not
entitled to any refund of such amount, or any portion thereof, then
such nonrefundable amount shall be repaid to the Company by the
Executive within thirty (30) days after the Executive receives notice
of such final determination. A final determination shall occur when the
period to contest or otherwise appeal any decision by an administrative
tribunal or court of initial jurisdiction has been waived or the time
for contesting or appealing the same has expired.
(f) Legal Fees and Expenses. The Company shall pay to the Executive
all reasonable legal fees and expenses as and when incurred by the Executive in
connection with this Agreement, including all such fees and expenses, if any,
incurred in contesting or disputing any Termination or in seeking to obtain or
enforce any right or benefit provided by this Agreement, regardless of the
outcome, unless, in the case of a legal action brought by or in the name of the
Executive, a decision is rendered pursuant to Section X that such action was not
brought by the Executive in good faith.
(g) No Mitigation.The Executive shall not be required to mitigate the
amount of any payment provided for in this Section IV by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for in this Section IV be reduced by any compensation earned by the Executive as
the result of employment by another employer or by retirement or other benefits
received after the Termination Date or otherwise, except as specifically
provided in this Section IV. The Company's obligation to make payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company or Employer may have against the
Executive or other parties.
V. Death and Disability Benefits
In the event of the death or Disability of the Executive after a Change
of Control of the Company, the Executive, or in the case of death, the
Executive's beneficiaries, shall receive the benefits to which they are entitled
under the retirement plans, disability policies and other applicable plans of
the Company.
VI. Successors: Binding Agreement
(a) Obligations of Successors. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company is required to perform it. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the same
terms as the Executive would be entitled hereunder if the Executive had
terminated employment for Good Reason following a Change of Control of the
Company, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Termination
Date. As used in this Agreement, the "Company" shall mean the Company as
hereinabove defined and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of law, or
otherwise.
(b) Enforceable by Beneficiaries. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees (the "Beneficiaries"). In the event of the death of the
Executive while any amount would still be payable hereunder if such death had
not occurred, all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the Executive's Beneficiaries.
(c) Employment. Except in the event of a Change of Control and,
thereafter, only as specifically set forth in this Agreement, nothing in this
Agreement shall be construed to (i) limit in any way the right of the Company or
a Subsidiary to terminate the Executive's employment at any time for any reason
or for no reason; or (ii) be evidence of any agreement or understanding,
expressed or implied, that the Company or a Subsidiary will employ the Executive
in any particular position, on any particular terms or at any particular rate of
remuneration.
VII. Confidential Information
The Executive shall hold in fiduciary capacity for the benefit of the
Company or its subsidiaries all secret or confidential information, knowledge or
data relating to the Company, the Subsidiaries and their respective businesses,
which shall have been obtained during the Executive's employment by the Employer
and which shall not be public knowledge (other than by acts by the Executive or
his representatives in violation of this Agreement). After termination of the
Executive's employment with the Company or its subsidiaries or any Employer
within the Controlled Group, the Executive shall not, without prior written
consent of the Company or its subsidiaries or the Employer, communicate or
divulge any such information, knowledge or data to anyone other than the
Company, the Employer, or its subsidiaries or those designated by them. In no
event shall an asserted violation of this Section VII constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
VIII. Notice
All notices and communications hereunder shall be in writing and shall
be given by hand delivery to the other party, by registered or certified mail,
return receipt requested, postage prepaid, or by overnight mail, addressed as
follows:
If to the Executive:
Executive Name
Company Name
Executive Address
If to the Company:
U S WEST, Inc.
0000 Xxxxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Vice President - Law and Human Resources
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
IX. Miscellaneous
No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and signed
by the Executive and the Company's Chief Executive Officer. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any conditions or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Delaware. All references to sections of the Code or the Exchange Act shall be
deemed also to refer to any successor provisions of such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law. The obligations of the Company under Sections
IV and V shall survive the expiration of the term of this Agreement.
X. Validity
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
XI. Arbitration
The Executive may agree in writing with the Company (in which case
this Article XI shall have effect but not otherwise) that any dispute that may
arise directly or indirectly in connection with this Agreement, the Executive's
employment or the termination of the Executive's employment, whether arising in
contract, statute, tort, fraud, misrepresentation, discrimination, common law or
other legal theory, shall be resolved by arbitration in Denver, Colorado, under
the rules of the American Arbitration Association (the "AAA"). The only legal
claims between the Executive and the Company or any Subsidiary that would not be
included in this agreement to arbitration are claims by the Executive for
workers' compensation or unemployment compensation benefits, claims for benefits
under a Company or Subsidiary benefit plan if the plan does not provide for
arbitration of such disputes, and claims by the Executive that seek judicial
relief in the form of specific performance of the right to be paid until the
Termination Date during the pendency of any applicable dispute or controversy.
If this Article XI is in effect, any claim with respect to this Agreement, the
Executive's employment or the termination of the Executive's employment must be
established by a preponderance of the evidence submitted to an impartial
arbitrator. A single arbitrator engaged in the practice of law shall conduct any
arbitration under the applicable rules and procedures of the AAA. The arbitrator
shall have the authority to order a pre-hearing exchange of information by the
parties including, without limitation, production of requested documents, and
examination by deposition of parties and their authorized agents. If this
Article XI is in effect, the decision of the arbitrator: (i) shall be final and
binding; (ii) shall be rendered within ninety (90) days after the impanelment of
the arbitrator; and (iii) shall be kept confidential by the parties to such
arbitration. The arbitration award may be enforced in any court of competent
jurisdiction. The Federal Arbitration Act, 9 U.S.C. 1-15, not state law, shall
govern the arbitrability of all claims. Executive acknowledges that this Article
XI shall be applicable only in the event of a change of control and does not
otherwise supercede or modify and other agreement to arbitrate disputes in
effect between Executive and the Company.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign both originals of this letter and return to the Vice President - Law
and Corporate Human Resources one of the fully executed originals of this letter
which will then constitute our agreement on this subject.
Sincerely,
U S WEST, Inc.
By: ______________________________
[Name of President & CEO]
President and Chief Executive Officer
U S WEST, Inc.
-------------------------------------
[Name of Employee]
