EXHIBIT 10AA
[FORM OF GROUP EXECUTIVE CHANGE OF CONTROL AGREEMENT]
February 12, 1996
[Name]
[Title]
[Company]
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear [Name]:
U S WEST, Inc. (the "Company"), on behalf of itself, its subsidiaries and
its 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 (as defined in Subsection I(h)) of the
Company. The Board of Directors of the Company (the "Board") believes that the
prospect of a pending or threatened Change of Control inevitably creates
distractions and personal risks and uncertainties for its executives, and that
it is in the best interests of the Company to minimize such distractions to
certain executives and the Company. 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 of the Company.
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 of the Company in the
circumstances hereinafter described. 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).
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(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) and 14(d)(2)
of the Exchange Act) is or becomes a "beneficial owner" (as determined for
purposes of Regulation 13D-G under the Exchange Act as currently in
effect), 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, unless through a transaction consummated
with the prior approval of the Board;
(ii) during any period of two 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 shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously
so approved, cease for any reason to constitute a majority of the Board;
(iii) the Company becomes a party to a merger, plan of reorganization,
consolidation or share exchange in which either (x) the Company will not be
the surviving corporation or (y) the Company will be the surviving
corporation and any outstanding shares of the Company's common stock will
be converted into shares of any other company (other than a reincorporation
or the establishment of a holding company involving no change of ownership
of the Company) or other securities or cash or other property (excluding
payments made solely for fractional shares);
(iv) the shareholders of the Company approve a merger, plan of
reorganization, consolidation or share exchange with any other corporation,
and immediately following such merger, plan of reorganization,
consolidation or share exchange the holders of the voting securities
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of the Company outstanding immediately prior thereto hold securities
representing fifty percent (50%) or less of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger, plan of reorganization, consolidation or
share exchange; provided, however, that notwithstanding the foregoing, no
Change of Control for purposes of this Subsection I(h)(iv) shall be deemed
to have occurred if one-half (1/2) or more of the members of the Board of
the Company or such surviving entity immediately after such merger, plan of
reorganization, consolidation or share exchange is comprised of persons who
served as directors of the Company immediately prior to such merger, plan
of reorganization, consolidation or share exchange or who are otherwise
designees of the Company;
(v) the Company: (A) redeems all of the outstanding shares of the U
S WEST Communications Group Common Stock or the U S WEST Media Group Common
Stock in exchange for shares of one or more wholly-owned subsidiaries of
the Company that hold all or substantially all of the assets that are
attributed to that Group; (B) distributes to the shareholders of U S WEST
Communications Group or U S WEST Media Group the shares of one or more
wholly-owned subsidiaries that hold all or substantially all of the assets
attributed to that Group; (C) converts all of the outstanding shares of U S
WEST Communications Group Common Stock into the shares of U S WEST Media
Group Common Stock, or vice versa; or (D) distributes the stock of one or
more wholly-owned subsidiaries holding all or substantially all of the
assets of the Company, under applicable law, at a time when there are no
classes of Common Stock that separately track the performance of certain
Company businesses; or
(vi) any other event that a 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).
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(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 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 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) 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;
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(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 February 12, 1996. This Agreement shall continue in effect
through December 31, 1999; provided, however, that
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commencing on January 1, 2000, 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, except as otherwise set forth below in this Subsection III(a), 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." The Executive shall not be
entitled to the benefits provided in Section IV hereof in the event of a Change
of Control as defined in Subsection I(h)(v)(A), I(h)(v)(B) or I(h)(v)(D), unless
that Change of Control also results in the termination of the Executive's
employment with the corporation that is created as a result of the events
leading to that Change of Control. For purposes of the foregoing sentence only,
"termination" shall have the same definition as Termination, defined above,
except that the reference to the "Company" in subclause (x) shall mean the
corporation created by the events leading to the Change of Control. If, in the
event of a Change of Control under Subsection I(h)(v)(A), I(h)(v)(B) or
I(h)(v)(D), the Executive's employment continues with the Company, his
entitlement to benefits shall be determined in accordance with the first
sentence of this Subsection III(a).
(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
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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
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 his full base
salary through the Termination Date at the rate in effect at the time the Notice
of Termination is given, no later than the second day following the Termination
Date, plus all other amounts to which the Executive is entitled under any
compensation plan of the Company applicable to the Executive at the time such
payments are due. Without limitation, amounts payable pursuant to this
Subsection IV(a) shall include, pursuant to the express terms of the short-term
incentive plan in which the Executive participates or otherwise, the Executive's
annual bonus under such short-term incentive plan, pro-rated to 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.
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(c) 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).
(d) 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.
(e) 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.
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(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:
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(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
10
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
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 or agreements
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
11
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 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 any Employer within the Controlled
Group, the Executive shall not, without prior written consent of the Company or
the Employer, communicate or divulge any such information, knowledge or data to
anyone other than the Company, the Employer 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:
[Name]
[Title]
[Company]
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
If to the Company:
U S WEST, Inc.
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, 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.
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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
Colorado. 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, or other legal theory, shall
be determined solely by arbitration in Denver, Colorado under the rules of the
AAA. The only legal claims between the Executive, on the one hand, and the
Company or any Subsidiary, on the other, 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 dispute or controversy arising under or Subsection III(b).
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 the impartial
arbitrator. A single arbitrator engaged in the practice of law shall conduct
any arbitration under the then current procedures of the American Arbitration
Association (the "AAA") and under the AAA's then current Model Employment
Arbitration Rules. 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.
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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 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]
Chairman, President and
Chief Executive Officer
______________________________________
[Name]
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