EXHIBIT 10-H.1
[FORM OF EXECUTIVES' RETENTION AGREEMENT]
Date
Name
Title
Address
City, State, Zip
Dear :
In light of the expected merger (the "Merger") of U S West, Inc.
("Company" and Qwest Communications International Inc. ("Qwest"), the Human
Resources Committee (the "Committee") and the Board of Directors of the Company
(the "Board") have concluded that it is in the best interests of the Company and
its stockholders to modify the terms of your current change of control
agreement, dated as of July 9, 1998 (the "Control Agreement"). The Committee and
the Board intend the modifications in this agreement (the "Retention Agreement")
to provide incentives to you to remain with the Company through the completion
of the Merger and to assume a key executive position at the post-merger company
(the "Merger Successor"). The Committee and the Board further intend that this
Retention Agreement be part of the retention and stay bonus program to which the
Company and Qwest agreed in their Merger agreement.
The Committee and the Board believe that the employment market for
experienced senior executives in the telecommunications industry is extremely
strong and that the Company is at some risk that you will react to the uncertain
times by leaving for a competitor before the Merger.
In addition, the Committee and the Board recognize that the current Control
Agreement and your other compensation arrangements may provide you with
insufficient incentives to remain during the pre-Merger period and with the
Merger Successor, particularly since the Company's many competitors could
compensate you for leaving and foregoing the benefits under the Control
Agreement. This Retention Agreement is intended to improve the likelihood that
you will remain with the Company, by providing you with partial payment of the
benefits under the Control Agreement and by adding significant new incentives to
remain with the Company. In exchange for this new arrangement, you are agreeing
at this time to use arbitration to settle any disputes under the Control
Agreement or this agreement, rather than retain your current ability under the
Control Agreement to choose whether the parties will use arbitration. You also
agree and understand that you will not receive the benefits under this Retention
Agreement if you voluntarily leave employment before the Merger is completed.
This Retention Agreement is intended to address these issues for the
benefit of the Company and its stockholders. It does not supersede the Control
Agreement, except as specifically indicated below. Any undefined capitalized
terms take their definitions from the Control Agreement.
Term of Agreement
This Retention Agreement will begin as of August 6, 1999 and
continue in effect until December 31, 2001. It will cease to
apply if the Company and Qwest cease efforts to complete the
Merger, but will again apply if those parties resume such
efforts before December 31, 2000. Termination or expiration
of this Retention Agreement does not affect any rights,
obligations, or liabilities of the Company or you that have
accrued on or before the date the Retention Agreement
terminates or expires.
Initial Retention
Benefits
If, but only if, the Merger is completed (or as provided
under Involuntary Termination below), the Company or the
Merger Successor will pay you the greater of the amount of
____________ or the standard benefit calculated as of the
day prior to the Merger under IV(a) of the Control Agreement
("Standard Benefits Cashout") in lieu of the potential
Standard Benefits under Section IV(a) of the Control
Agreement, the greater of _______________ ("Additional
Benefits Cashout") or the additional benefits calculated as
of the day prior to the Merger under IV(b) of the Control
Agreement in lieu of the Additional Benefits under Section
IV(b)of the Control Agreement, and will provide you with the
Retirement Plan Benefits and Health Plan Benefits set forth
in Section IV(a)(b)(a) and (b), and Executive Life Insurance
Benefits upon your separation from employment ("Non-cash
Benefits") (with the Standard Benefits Cashout, the
Additional Benefits Cashout and the Non-Cash Benefits
referred to below as the "Initial Retention Benefits,"
unless otherwise specifically referred to individually
herein). You and the Company agree that the benefits
provided under Section IV(b) (Additional Benefits) of the
Control Agreement are based on the rate in effect on either
(x) the day on which Notice of Termination is given, or (y)
the day immediately preceding the Change of Control,
whichever is higher and that this supercedes any provision
in the Control Agreement to the contrary. You agree that you
waive any claim to be paid the benefits under Sections
IV(a), IV(b), IV(a)(b)(a) and IV(a)(b)(a)(b) of the Control
Agreement if you receive the Initial Retention Benefits, and
you specifically agree that this waiver overrides any
contrary language in the No Mitigation provision of Section
IV(g) of the Control Agreement.
Pursuant to the U S WEST, Inc. 1998 Stock Plan, as amended,
(the "Plan"), the Committee and the Board have approved the
grant to you of an option to purchase ______________ shares
of common stock, par value $.01, as of August 6, 1999,
pursuant to the terms of the underlying Stock Option
Agreement (the "Option Grant"). All options awarded pursuant
to this Option Grant shall become Vested (as defined by the
Plan) in one-quarter increments upon each of the first four
(4) anniversaries following the date of the Option Grant.
The exercise price of the Option Grant shall be the closing
price of U S WEST stock as of August 6, 1999, which was
$54.3125.
Deferred Retention
Benefits
The Company will also pay you a deferred retention benefit
("Deferred Retention Benefit"). The Deferred Retention
Benefit will consist of _______________ shares of common
stock in the form of restricted stock of the Company,
effective immediately prior to the Merger. If, but only if,
the Merger is completed, one-half of the shares will cease
to be restricted and thus nonforfeitable by you if you
remain employed by the Merger Successor or a Subsidiary on
the second anniversary of the completion of the Merger, and
the remainder of the shares of restricted stock will cease
to be restricted and thus nonforfeitable by you if you
remain employed by the Merger Successor or a Subsidiary on
the fourth anniversary of the completion of the Merger (the
"Fourth Anniversary") ("Deferred Retention Benefits" and
with the sum of those benefits and the Initial Retention
Benefits referred to as "Total Retention Benefits"). The
Deferred Retention Benefits will be reflected in a
restricted stock agreement between you and the Company.
Timing of Payments
On or before September 30, 1999, you will receive an
opportunity to elect the timing of payments of your Initial
Retention Benefits. You will be able to elect to have the
Initial Retention Benefits paid either (i) in total, at the
Fourth Anniversary or (ii) 50% at the completion of the
Merger and 50% on the Fourth Anniversary. If the Merger
occurs, you will receive the earned portion of the Initial
Retention Benefits and Deferred Retention Benefits for which
you have qualified, if any, no later than the earlier of the
Fourth Anniversary or 30 days after the date your employment
ends for any reason. You will forfeit any unvested portion
of the Option Grant and the Deferred Retention Benefits if
the Company or the Merger Successor terminate your
employment for Cause or you resign without Good Reason.
Vested options pursuant to the Option Grant and any other
stock options you may hold, must be exercised within five
(5) years of the later of the date of vesting or termination
of employment, not to exceed the life of the option. The
portion of the Initial Retention Benefit that is not paid at
the completion of the Merger will be deemed held in phantom
stock for purposes of tracking earnings before payment or
forfeiture. Any applicable pension additur will be
calculated based upon the date of your termination of
employment for any reason.
Loss of Payments
You agree that you will not be entitled to any unearned
Initial Retention Benefits, any unvested portion of the
Option Grant or unvested Deferred Retention Benefits if (i)
the Company terminates your employment for Cause (as defined
in Section I(g) of the Control Agreement), (ii) you resign
with or without Good Reason before or as of the completion
of the Merger, (iii) or you resign without Good Reason after
the completion of the Merger.
Involuntary
Termination
If the Company provides you with notice of its termination
of your employment without Cause ("Involuntary Termination")
before completion of the Merger and the Merger occurs, you
will receive the sum _______________ of and no other
benefits under this Retention Agreement (other than the
benefit of any stock options issued under this Retention
Agreement which have become vested) or the Control Agreement
or under any other severance agreement. If, but only if, the
Merger occurs, and after the Merger occurs, the Company or
the Merger Successor provide you with notice of Involuntary
Termination before you are entitled to the Deferred
Retention Benefits or before the Option Grant is fully
vested, the Deferred Retention Benefits and the Option Grant
will continue to vest as if you had remained employed.
Resignation for
Good Reason
If you resign for Good Reason after the Merger is completed,
you will be treated as though the Company had terminated
your employment under the Involuntary Termination section.
For purposes of this Retention Agreement and the Control
Agreement, the Company and you agree that if the Merger
occurs, "Good Reason" has the meaning in Section I(q) of the
Control Agreement but with the reasons in I(q)(i) and
I(q)(ii) being measured (beginning two (2) months after the
completion of the Merger) against your position at the
Merger Successor or a Subsidiary for a period of four years
after the completion of the Merger rather than your position
at the Company before and after the Merger.
Gross-up Payments
Nothing in this Retention Agreement waives any rights you
may have under the Control Agreement to receive Gross-Up
Payment(s) under Section IV(C) of the Control Agreement.
Legal Fees and
Expenses
The Company or the Merger Successor will pay your reasonable
legal fees and expenses with regard to this Retention
Agreement as though it were expressly described in Section
IV(f) of the Control Agreement.
Incorporation by
Reference
The following provisions of the Control Agreement will apply
to this Retention Agreement as though the provisions
specifically referred to this agreement: Sections VI
(Successors; Binding Agreement); VIII (Notice); and, except
as set forth below, Sections IX (Miscellaneous) and XI
(Arbitration). The last two sentences of Miscellaneous would
instead read as follows for this Retention Agreement: "The
obligations of the Company under the Initial Retention
Benefits and Deferred Retention Benefits sections survive
the expiration of the term of this Retention Agreement, as
do your obligations to comply with the Arbitration section."
Arbitration
You agree that the arbitration provisions of Section XI of
the Control Agreement will apply to all disputes referenced
in that section or that arise under or with respect to this
Retention Agreement. You further agree that this Retention
Agreement serves as your required written agreement to
arbitrate such matters. You therefore agree that Section XI
of the Control Agreement will apply without the need for any
further agreement by you.
If you accept the terms of this Agreement, please sign in the space
indicated below. We encourage you to consult with any advisors you choose.
/S/ XXXXXXX X. XXXXXXXX
__________________________________
Name-CEO
Accepted and agreed to:
_________________________________
Name-Band 1
_________________________________
Date
