U S WEST
SAVINGS PLAN/ESOP
TRUST AGREEMENT
TABLE OF CONTENTS
-----------------
PAGE
----
Section 1 Establishment of Trust...........................................1
Section 2 Definitions......................................................2
Section 3 No Diversion.....................................................7
Section 4 Duties of Trustee................................................7
Section 5 Participating Employees Accounts.................................8
Section 6 Investment of the Fund...........................................9
Section 7 Investment of Trust Assets......................................12
Section 8 Responsibility for Directed Funds...............................12
Section 9 Powers of Asset Managers and Trustee............................14
Section 10 Provisions Affecting Company Shares.............................20
Section 11 Expenses of the Fund............................................21
Section 12 Indemnification of Trustee......................................22
Section 13 Recordkeeping and Accounting....................................23
Section 14 Judicial Accountings............................................23
Section 15 Authorization...................................................24
Section 16 Removal and Resignation of Trustee..............................25
Section 17 Appointment of Additional Trustees..............................25
Section 18 Spendthrift Provision...........................................26
Section 19 Delegation to Company...........................................26
Section 20 Amendment.......................................................26
Section 21 Creation of Separate Trusts.....................................26
Section 22 Termination of Agreement........................................27
Section 23 Successor in Interest...........................................28
Section 24 Governing Law...................................................28
Section 25 Notices.........................................................28
Section 26 Counterparts....................................................28
Section 27 Severability....................................................28
Section 28 Continuation of Trust...........................................29
Section 29 Domestic Trust..................................................29
U S WEST
SAVINGS PLAN/ESOP
TRUST AGREEMENT
This U S WEST Savings Plan/ESOP Trust Agreement (hereinafter referred
to as the "Agreement"), made as of the Separation Time, by and between U S WEST,
Inc., a Delaware corporation (hereinafter referred to as the "Company"), and
Bankers Trust Company, a New York banking corporation (hereinafter referred to
as the "Trustee"), under the U S WEST Savings Plan/ESOP (hereinafter referred to
as the "Plan") establishes the U S WEST Savings Plan/ESOP Trust (the "Trust").
In connection with the separation of U S WEST, Inc. ("USW") into two separately
traded companies, U S WEST, Inc. (formerly USW-C, Inc.) and MediaOne Group,
Inc., USW transferred sponsorship of the Plan to USW-C now known as U S WEST,
Inc. (the "Company"). This Trust continues to hold the assets of the Plan.
WHEREAS, USW adopted the Plan, effective January 1, 1984, for the
benefit of eligible employees of USW and of such subsidiaries of USW which
determined to participate in the Plan with the approval of USW;
WHEREAS, USW amended and restated the Plan effective January 1, 1988,
to add an employee stock ownership plan and to make certain other changes;
WHEREAS, on January 1, 0000, XXX amended and restated the Plan to merge
the U S WEST Savings and Security Plan/ESOP with the U S WEST Savings Plan/ESOP
for Salaried Employees;
WHEREAS, on April 1, 0000, XXX amended and restated the Plan to merge
the U S WEST Payroll Stock Ownership Plan with the U S WEST Savings Plan/ESOP;
WHEREAS, USW and Trustee entered into the U S WEST Savings Plan/ESOP
Trust Agreement (the "Prior Agreement") in order to establish a trust known as
the U S WEST Savings Plan/ESOP Trust;
WHEREAS, the Company desires to amend and restate the Prior Agreement
in its entirety pursuant to the authority under Section 20 of the Prior
Agreement; and
WHEREAS, the Trustee is willing to continue to act as trustee of the
Trust upon all of the terms and conditions hereinafter set forth;
NOW, THEREFORE, the Company and the Trustee agree as follows:
Section 1. Establishment of Trust. The Company and the Trustee
acknowledge the establishment of this amended and restated U S WEST Savings
Plan/ESOP Trust. The Trust is intended to be tax exempt under section 501(a) of
the Code as a qualified trust described in section 401(a) of the Code. The Fund
shall be held IN TRUST by the Trustee (except to the extent that Plan assets may
be held by an insurance company in a separate account or by another trustee
pursuant to Section 4 or 21) and shall be held, invested and reinvested, without
distinction between principal and income, in accordance with the provisions of
this Agreement. The Company and the Trustee acknowledge that the Plan is
intended to satisfy the requirements to be a participant directed plan under the
Labor Department regulations promulgated under section 404(c) of ERISA (the
"section 404(c) regulations"). Nothing in the preceding sentence shall be deemed
to impose any duty on the Trustee to ensure that the Plan satisfies the
requirements of the section 404(c) regulations, except as hereinafter provided.
A Plan fiduciary (other than the Trustee) designated by the Plan, shall
establish procedures designed to safeguard the confidentiality of information
relating to the purchase, sale and holding and the exercise of voting and
similar rights with respect to Company Shares held under the Plan in accordance
with the section 404(c) regulations. The Trustee shall take appropriate action
to ensure compliance with such procedures as to information within its control.
In addition, the Trustee is designated as the independent fiduciary, described
in the section 404(c) regulations, appointed to carry out activities placed
under and within the internal control of the Trustee or its agents, relating to
any situations in which the Plan fiduciary referenced in the preceding sentence
determines, and so advises the Trustee in writing, involve a potential for undue
employer influence upon participants and beneficiaries with regard to the direct
or indirect exercise of shareholder rights. The Trustee accepts the trust
created hereunder and agrees to be bound by the terms of this Agreement. The
Trustee hereby acknowledges that it shall be a fiduciary with respect to the
Trust and the Fund with respect to those duties and obligations specifically
assumed by it which constitute it a "fiduciary" within the meaning of section
3(21) or "independent fiduciary" with respect to employer securities under
section 404(c) regulations. The Trustee shall carry out its fiduciary or other
duties and responsibilities under this Agreement in accordance with, and be
limited in the exercise of its rights by, the provisions of ERISA, the Code and
other applicable law.
Section 2. Definitions. Where used in this Agreement, unless the
context otherwise requires or unless otherwise expressly provided:
(a) "Accounting Period" shall mean either the twelve (12)
consecutive month period coincident with the calendar year or, if different, the
fiscal year of the Plan or the shorter period in any year in which the Trustee
accepts initial appointment as Trustee hereunder or ceases to act as Trustee for
any reason.
(b) "Accounts" shall mean a Participating Employee's Savings
Plan Account and ESOP Account.
(c) "Acquisition Loan" shall mean a loan or other extension of
credit to finance the acquisition of U S WEST Shares by the ESOP, or to repay
and refinance, to the extent permitted by law, a prior Acquisition Loan.
2
(d) "Agreement" shall mean all of the provisions of this
instrument and of all other written instruments amendatory hereof.
(e) "Asset Manager" shall mean the Company, Trustee, IMC, or
Investment Manager, individually or collectively as the context shall require,
with respect to those assets held in an Investment Fund over which it exercises,
or to the extent it is authorized or permitted by the terms of the Agreement to
exercise, discretionary authority or control over the management or
administration of such assets.
(f) "Bankers" shall mean Bankers Trust Company, a New York
banking corporation.
(g) "Board of Directors" shall mean the Board of Directors of
the Company, except as otherwise specifically required by the context of this
Agreement.
(h) "Change of Control" shall mean any of the following:
(i) any "person" (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) is or becomes a beneficial owner
of (or otherwise has the authority to vote), directly or
indirectly, 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
arranged by, or consummated with the prior approval of the
Company's Board of Directors; or
(ii) if a tender offer (for which a filing has been
made with the Securities and Exchange Commission which purports
to comply with the requirements of Section 14(d) of the Exchange
Act and the corresponding Securities and Exchange Commission
rules) is made for the stock of the Company, which has not been
arranged by or consummated with the prior approval of the Board
of Directors of the Company, then upon the first to occur:
either (A) any time during the offer when the person (using the
definition above) making the offer owns or has accepted for
payment stock of the Company with twenty percent (20%) or more
of the total voting power of the Company's voting stock, or (B)
three business days before the offer is to terminate unless the
offer is withdrawn first if the person making the offer could
own, by the terms of the offer plus any shares owned by this
person, stock with 50% or more of the total voting owner of the
Company's stock when the offer terminates; or
(iii) any period of two consecutive calendar years during
which there shall cease to be a majority of the Company's Board
of Directors comprised as follows: individuals who at the
beginning of such period constitute the Company's Board of
Directors and any new director(s) whose election by the
Company's Board of Directors 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
3
either were directors at the beginning of the period or whose
election or nomination for election was previously so
approved.
Upon the occurrence of either (i), (ii) or (iii) above, the Company shall give
written notice to the Trustee of such event.
(i) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and regulations issued thereunder.
(j) "Committee" shall mean the Investment Committee appointed
pursuant to the Plan or any Person under the Plan authorized to act on behalf of
the Committee.
(k) "Company" shall mean U S WEST, Inc. or any successor
thereto.
(l) "Company Shares" shall mean the common stock of the
Company.
(m) "Directed Fund" shall mean any Investment Fund, or part
thereof, subject to the discretionary management and control of the Company or
any Investment Manager.
(n) "Discretionary Fund" shall mean any Investment Fund, or
part thereof, subject to the discretionary or other management and control of
the Trustee.
(o) "EBC" shall mean the Employee Benefits Committee appointed
pursuant to the Plan or any Person under the Plan authorized to act on behalf of
the EBC.
(p) "Employing Company" shall mean the Company or any
subsidiary or affiliate of the Company which shall have determined to
participate in the Plan, as the context shall require.
(q) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time, and Regulations issued thereunder.
(r) "ESOP" shall mean the employee stock ownership plan
portion of the Plan.
(s) "ESOP Account" shall mean the account of a Participating
Employee in the ESOP, and shall include any sub-account established thereunder
to give effect to the provisions of the Plan.
(t) "Financed Shares" shall mean U S WEST Shares acquired by
the Plan with the proceeds of an Acquisition Loan.
(u) "Fund" shall mean all cash and other property contributed,
paid or delivered to the Trustee hereunder, whether allocated to the ESOP or the
Savings Plan, all investments made therewith and proceeds thereof and all
4
earnings and profits thereon, less payments, transfers or other distributions
which, at the time of reference, shall have been made by the Trustee, as
authorized herein. The Fund shall include each Investment Fund and all evidences
of ownership, interest or participation in an Investment Vehicle, but shall not,
solely by reason of the Fund's investment therein, be deemed to include any
assets of such Investment Vehicle.
(v) "Insurance Contract" shall mean any contract or policy
(including any annuity contract) of any kind issued by an insurance company,
whether or not providing for the allocation of amounts received by the insurance
company thereunder solely to the general account or solely to one or more
separate accounts (including separate accounts maintained for the collective
investment of qualified retirement plans), or a combination thereof, whether or
not any such allocation may be made in the discretion of the insurance company
and whether or not acquired by or on behalf of the Plan primarily to distribute
benefits or for an Investment Fund.
(w) "Investment Fund" shall mean the one or more funds
established pursuant to Section 6(a).
(x) "Investment Manager" shall mean a bank, insurance company
or investment adviser satisfying the requirements of section 3(38) of ERISA.
(y) "Investment Vehicle" shall mean any common, collective or
commingled trust, investment company corporation functioning as an investment
intermediary, Insurance Contract, investment agreement issued by any financial
institution, partnership, joint venture or other entity or arrangement to which,
or pursuant to which, assets of the Trust may be transferred or in which the
Trust has an interest, beneficial or otherwise (whether or not the underlying
assets thereof are deemed to constitute "Plan assets" for any purpose under
ERISA).
(z) "Participating Employee" shall mean an eligible employee
of an Employing Company who elects to participate in and contribute to the Plan
or who is entitled to receive distributions or payments from the Plan. It shall
also mean a former employee who qualifies as a Participant under the terms of
the Plan.
(aa) "Person" shall mean a natural person, trust, estate,
corporation of any kind or purpose, mutual company, joint-stock company,
unincorporated organization, association, partnership, joint venture, employee
organization, committee, board, participant, beneficiary, trustee, partner, or
venturer acting in an individual, fiduciary or representative capacity, as the
context may require.
(bb) "Plan" shall mean U S WEST Savings Plan/ESOP as in effect
at the Separation Time, and as amended from time to time.
(cc) "Savings Plan" shall mean the savings plan portion of the
Plan.
5
(dd) "Savings Plan Account" shall mean the account of a
Participating Employee in the Savings Plan and shall include any sub-account
established thereunder to give effect to the provisions of the Plan.
(ee) "Section" shall mean a section of this Agreement.
(ff) "Separation Time" shall mean the time at which U S WEST,
Inc. is separated into two public companies, USW-C, Inc., renamed U S WEST, Inc.
as of the Separation Time (the "Company"), and MediaOne Group, Inc.
(gg) "Suspense Account" shall mean the account within the ESOP
in which shall be held Financed Shares pending allocation to Participating
Employees' ESOP Accounts under the Plan.
(hh) "Trust" shall mean the trust established under this
Agreement pursuant to the Plan.
(ii) "Trustee" shall mean Bankers Trust Company, as Trustee of
the Trust or any successor thereto, and any substitute or additional trustee
appointed pursuant to Section 17, or trustee of a separate trust established
pursuant to Section 21, as the context may require.
(jj) "Units" shall mean a term which may be used to describe
and value the Participating Employee's interest in the ESOP, and in each
Investment Fund.
(kk) "U S WEST" shall mean U S WEST, Inc., a Delaware
corporation, the Company.
(ll) "IMC" shall mean the U S WEST Investment Management
Company, a Colorado corporation, that is organized and formed pursuant to the
Plan. Except for those functions that are the responsibility of the Committee,
the IMC shall have the authority and responsibility to monitor and perform
investment management functions.
(mm) "U S WEST Shares" shall mean Company Shares.
The plural of any term shall have a meaning corresponding to the singular
thereof as so defined and any neuter pronoun used herein shall include the
masculine or feminine, as the context may require.
6
Section 3. No Diversion.
(a) In General. No part of the corpus or income of the Fund
shall be used for, or diverted to, purposes other than for the exclusive benefit
of Participating Employees or their beneficiaries and defraying the reasonable
expenses of administering the Plan and Trust, in accordance with Section 11.
(b) Exceptions. Notwithstanding the preceding paragraph (a),
and subject to the provisions of the Plan, the Code and ERISA, contributions may
be returned to an Employing Company by the Trustee upon the written
certification of the Company to the Trustee that one or more of the following
circumstances exist:
(i) a contribution was made by an Employing Company by
a mistake of fact, and the contribution, reduced by losses (if
any) attributable thereto, will be returned to such Employing
Company within one year after it was paid to the Trustee;
(ii) a contribution of an Employing Company conditioned
upon its deductibility under section 404 of the Code, was
disallowed by the Internal Revenue Service, and the
contribution, reduced by losses (if any) attributable thereto to
the extent the deduction is disallowed by the Internal Revenue
Service, will be returned to the Employing Company within one
year after the disallowance of the deduction; or
(iii) a plan utilizing the Trust as a funding medium
failed to initially qualify under section 401, 403(a) or 405(a)
of the Code for its first fiscal year, and the portion of the
Trust allocable to such plan will be returned to the Employing
Companies maintaining such Plan within one year after the denial
of the initial qualification of such plan by the Internal
Revenue Service.
Section 4. Duties of Trustee.
(a) In General. It shall be the duty of the Trustee to (i)
hold and, consistent with Section 6, invest the Fund as herein provided, (ii)
maintain Participating Employee Accounts pursuant to Section 5, (iii) receive
and implement Participating Employee instructions with respect to any Account or
subaccount (including an alternate payee under a qualified domestic relations
order, as that term is used in section 414(p) of the Code) for which the
Participating Employee may direct the investment thereof under the provisions of
the Plan, (iv) vote Company Shares pursuant to Section 10, and (v) as provided
in the Plan on orders of the Company or the Committee or on directions of the
Committee to: (A) make distributions in cash, or in Company Shares, (B) effect
restorals, (C) transfer assets of the Fund to any insurance company pursuant to
an Insurance Contract, or to any other financial institution, or any other
trustee, (D) transfer the Accounts of any Participating Employee to a trustee of
a savings or similar plan maintained by the company to which such Participating
Employee may be transferred, (E) accept Participating Employee loans for the
Loan Fund established under the Savings Plan, and (F) incur Acquisition Loans.
7
(b) Limitations. Any direction by the Company or the Committee
to the Trustee pursuant to this Section 4 may, but need not, specify the
application to be made of monies or securities so ordered. The Trustee may
assume that any such directions are not contrary to any applicable law or the
Plan. The Trustee shall not be responsible for the determination, computation or
application of any benefit, for the form, terms or issuer of any Insurance
Contract or investment agreement issued by a financial institution which it is
directed to purchase with assets of the Fund, for performing any functions under
any Insurance Contract which it may be directed to purchase and hold as contract
holder thereunder or under such investment agreement (other than the execution
of any documents incidental thereto on the instructions of the Company or the
Committee), for the terms of any trust agreement under which any trustee to
which it shall deliver any assets of the Fund on the order of the Company is
acting, for the investment or application of any assets of the Fund by any
trustee to which it shall so deliver any assets of the Fund, or for any other
matter affecting the administration or implementation of the Plan by the Company
or the EBC.
(c) No Duty to Enforce Contributions. The Trustee shall have
no responsibility or authority in connection with the determination of the
amounts to be transferred to it from time to time on behalf of Participating
Employees as provided in the Plan, nor shall it have any authority to bring any
action or proceeding to enforce the collection of any such amount.
Section 5. Participating Employees' Accounts. Except as the Trustee
and the Company may otherwise agree in writing, the Trustee shall not be
required to maintain any separate records or accounts with respect to any
Participant in the Plan, and any records or accounts required to be maintained
pursuant to the terms of the Plan or to comply with ERISA or the Code shall be
the responsibility of the Company (or a separate service provider engaged by the
Company or Plan administrator). If at any time the Company and Trustee agree
that the Trustee shall maintain such records, a description of the services to
be provided by the Trustee, if any shall be inserted below as a subsection of
this Section 5 of the Agreement.
(a) [reserved]
Section 6. Investment of the Fund.
8
(a) The Savings Plan. Except for amounts temporarily held in
cash in accordance with subparagraph (f) and amounts in the Loan Fund as
provided under subparagraph (c), the Savings Plan shall be invested and
reinvested in an Investment Fund, as hereinafter provided, or in such other
Investment Fund, or other investments, as directed by the Company in accordance
with Section 7:
(i) The U S WEST Shares Fund which shall be invested in
U S WEST, Inc. common stock.
(ii) The MediaOne Group Shares Fund which shall be
invested in MediaOne Group, Inc. common stock.
(iii) The U.S. Stock Fund is a passive fund invested in a
portfolio of common stocks which closely tracks the return of
the S& P 500 Index.. It will invest primarily in stocks, such
bonds, notes, debentures or preferred stocks as are convertible
into common or capital stocks, such debentures accompanied by
warrants to purchase common or capital stocks, and other types
of equity investments (including U S WEST Shares).
(iv) The Interest Income Fund which shall be invested
in a diversified portfolio consisting of fixed income
investments. The fixed income investments will, in each case,
represent an issuer's promise to repay principal plus a rate of
interest, and may include, but are not limited to, group annuity
contracts with life insurance companies, deposit agreements with
banks, obligations of the United States Government or its
agencies, asset-backed securities and other fixed income
securities.
(v) The U.S. Asset Allocation Fund which shall be
invested primarily in U.S. stocks, bonds, and money market
portfolios. The Fund periodically shifts its assets allocation
to emphasis the asset classes that offer the best investment
value, while considering investment risk.
(vi) Global Assets Fund is a diversified portfolio that
seeks to achieve its objective by pursuing active asset
allocation strategies across global equity and fixed income
markets. It will invest primarily in U.S. stocks, non-U.S.
stocks, U.S. bonds and international non-dollar bonds and cash
equivalents.
(vii) International Stock Fund which shall be invested
primarily in stocks and bonds issued by non-U.S. companies,
cash equivalents denominated in U.S. dollars or other major
foreign currencies, and other fixed income investments.
(viii) Personal Choice Retirement Account (PCRA) shall be
a fund in which a Participating Employee can direct investment
among mutual funds, common stocks and other investments.
9
(b) The ESOP. The ESOP is designed to invest primarily in
qualifying employer securities, as defined in section 409(1) of the Code. Except
for amounts temporarily held in cash in accordance with subparagraph (f) or
dividends awaiting distribution to Participating Employees or dividends or other
cash payments to be used to discharge the Acquisition Loan in accordance with
the Plan or as may otherwise be required by ERISA, all amounts transferred to
the Trustee and held in the ESOP shall be invested in one of the following
Investment Funds pursuant to the terms of the Plan:
(i) The U S WEST Shares Fund which shall be invested
in U S WEST, Inc. common stock.
(ii) The MediaOne Group Shares Fund which shall be
invested in MediaOne Group, Inc. common stock for up to two
years after the Separation Time, during which period MediaOne
Group shares shall be sold and reinvested in U S WEST, Inc.
common stock, in a manner consistent with the Employee Matters
Agreement entered into between U S WEST, Inc. and USW-C, Inc.
prior to the Separation Time, and as determined by an
independent Investment Manager (which may or may not be the
Trustee or an affiliate of the Trustee) selected by the
Company. Two years following the Separation Time, the MediaOne
Group Shares Fund shall terminate and its assets shall be
transferred to the U S WEST Shares Fund.
(iii) The Combined Shares Fund which shall be invested in
U S WEST, Inc. common stock and MediaOne Group, Inc. common
stock for a period of up to two years after the Separation Time.
During such two year period, MediaOne Group shares shall be sold
and reinvested in U S WEST, Inc. common stock in a manner
consistent with the Employee Matters Agreement entered into
between U S WEST, Inc. and USW-C, Inc. prior to the Separation
Time, and as determined by an independent Investment Manager
(which may or may not be the Trustee or an affiliate of the
Trustee) selected by the Company. Two years after the Separation
Time, the Combined Shares Fund shall terminate and its assets
shall be transferred to the U S WEST Shares Fund.
(c) The Loan Fund. The Loan Fund shall consist of funds
invested at the Company's direction in Participating Employee loan obligations.
Income under proceeds from the repayment of the principal amount of a
Participating Employee's loan shall be invested in one or more of the Investment
Funds described in Section 6(a).
(d) Purchase of Company Shares. Company Shares may be
purchased in the open market or by private purchase, including purchase from the
Company. Any purchase of Company Shares from the Company shall be at the closing
price as reported by the New York Stock Exchange on the date of purchase or, if
no sales were made on that date, at the closing price on the preceding day on
10
which sales were made, unless and until the Company and the Trustee shall agree
on a different method for determining fair market value consistent with the Plan
and applicable law, or at any more favorable price that may be made available to
the Trustee from time to time by a holder of Company Shares. The Company agrees
to sell to the Trustee, and the Trustee agrees to purchase from the Company, all
Company Shares required by the Trustee for the Plan, provided, however, that the
Company may at any time, and from time to time, refuse to sell to the Trustee
and the Trustee may at any time, and from time to time, refuse to purchase from
the Company any or all of such Company Shares. Open market purchases of Company
Shares and purchases of Company Shares from the Company will be made pursuant to
a regular program mutually agreed upon between the Trustee and the Company.
(e) Each Investment Fund Under the Savings Plan and the ESOP
Treated Separately. The Trustee shall treat each Investment Fund under the
Savings Plan and the ESOP separately and the income of each shall be accumulated
and reinvested therein except that dividends on Company Shares held in each
Participating Employee's ESOP Account may be distributed in cash to the
Participating Employees, as determined by the Committee and in accordance with
the Plan, and dividends received on Financed Shares held in the Suspense Account
shall be used to discharge the Acquisition Loan until the Acquisition Loan is
repaid. To the extent dividends on allocated Company Shares are used to
discharge the Acquisition Loan as permitted under the Plan, an equivalent value
shall be credited in Units to each Participating Employee's ESOP Account.
(f) Cash Balances. Except as otherwise provided in this
subsection (f), the Trustee shall be obligated to keep all cash balances in the
Plan at any time held by the Trustee invested daily, to the extent practicable,
so as to maintain daily cash balances at a minimum. Pending investment in the
types of investments described in the Investment Funds and subject to any
guidelines or limitations established pursuant to Section 7, an Asset Manager
may maintain any portion of the Fund or any Investment Fund in cash or in
short-term obligations of the United States Government or agencies thereof or in
other types of short-term investments, including commercial paper and commingled
funds, as it may from time to time deem to be in the best interests of the Plan;
provided, however, cash balances in the U S WEST Shares Fund, the MediaOne Group
Shares Fund and the Combined Shares Fund under the Savings Plan and the ESOP
shall be limited insofar as is prudent to needs consistent with the
implementation of the regular purchasing program and anticipated distributions
therefrom. The Trustee shall have no authority or obligation to invest or
reinvest cash balances of any Directed Fund unless and until it receives
directions from the Asset Manager thereof.
11
Section 7. Investment of Trust Assets.
(a) Asset Managers. Discretionary authority for the management
and control of assets in the Fund may be retained, allocated or delegated, as
the case may be, for one or more purposes, to and among the Asset Managers by
the Company, in its absolute discretion. The terms and conditions of
appointment, authority and retention of any Asset Manager shall be the sole
responsibility of the Company or its delegate. The Company or its delegate shall
promptly notify the Trustee in writing of the appointment or removal of an Asset
Manager. Any notice of appointment pursuant to this Section 7 shall constitute a
representation and warranty that the Asset Manager has been appointed in
accordance with the provisions of the Plan and that any Asset Manager (other
than the Trustee, the Company, the Committee or the IMC) is an Investment
Manager.
(b) Limitations on Investment Discretion. The Company or its
delegate may limit, restrict or impose guidelines affecting the exercise of the
discretion conferred on any Asset Manager. Any limitations, restrictions or
guidelines applicable to the Trustee, as Asset Manager, shall be communicated in
writing to the Trustee. The Trustee shall have no responsibility with respect to
the formulation of any funding policy or any investment or diversification
policies embodied therein. The Company or its delegate shall be responsible for
communicating, and monitoring adherence to, any limitations or guidelines
imposed on any other Asset Manager by Section 6 or the guidelines described
above.
(c) Responsibility for Diversification. The Company or its
delegate shall be responsible for determining the diversification policy (if
required) of the Fund, for monitoring adherence by the Asset Managers to such
policy, and for advising the Asset Managers with respect to limitations on
employer or other securities or property contained in any Plan or imposed on
such Plan by applicable law or by the Company.
(d) Company Not Responsible. The issuance of any specific
investment directions or guidelines by the Company or its delegate shall not in
any manner be construed as an acceptance by the Company or its delegate of any
day to day investment management and supervisory powers in connection with
assets managed by the Trustee or an Investment Manager (and the Company or its
delegate shall not, as a result of issuing such directions or guidelines, be
liable for any acts or omissions of the Trustee with respect to such assets, or
be under any obligation to invest or otherwise manage such assets).
Section 8. Responsibility for Directed Funds.
(a) Responsibility for Selection of Agents. All transactions
of any kind or nature in or from a Directed Fund shall be made upon such terms
and conditions and from or through such brokers, dealers and other principals
and agents as the Asset Manager shall direct. Unless specifically agreed to by
the Trustee, no such transactions shall be executed through the facilities of
the Trustee except where the Trustee shall make available its facilities solely
for the purpose of temporary investment of cash reserves of a Directed Fund.
(However, nothing in the preceding sentence shall confer any authority upon the
Trustee to invest the cash balances of any Directed Fund unless and until it
receives directions from the Asset Manager.)
12
(b) Trustee Not Responsible for Investments in Directed Funds.
The Trustee shall be under no duty or obligation to review or to question any
direction of any Asset Manager, or to review securities or any other property
held in any Directed Fund with respect to prudence or proper diversification or
compliance with any limitation on the Asset Manager's authority under this
Agreement or the Plan, any agreement entered into between the Company and the
Investment Manager or imposed by applicable law, or to make any suggestions or
recommendation to the Company, the Committee or the Investment Manager with
respect to the retention or investment of any assets of any Directed Fund, and
shall have no authority to take any action or to refrain from taking any action
with respect to any asset of a Directed Fund unless and until it is directed to
do so by the Asset Manager.
(c) Investment Vehicles. Any Investment Vehicle, or interest
therein, acquired by or transferred to the Trustee upon the directions of the
Asset Manager shall be allocated to a designated Directed Fund, and the
Trustee's duties and responsibilities under this Agreement shall not be
increased or otherwise affected thereby. The Trustee shall be responsible solely
for the safekeeping of the physical evidence, if any, and reporting of the
Trust's ownership of or interest or participation in such Investment Vehicle.
(d) Reliance on Asset Manager. The Trustee shall be required
under this Agreement to execute documents, to settle transactions, to take
action on behalf of or in the name of the Trust and to make and receive payments
on the direction of the Asset Manager. The Trustee may rely on the direction of
the Asset Manager that (i) the transaction is in accord with applicable law,
(ii) any contract, agency, joinder, adoption, participation or partnership
agreement, deed, assignment or other document of any kind which the Trustee is
requested or required to execute to effectuate the transaction has been reviewed
by the Asset Manager and, to the extent it deems advisable and prudent, its
counsel, (iii) such instrument or document is in proper form for execution by
the Trustee, (iv) where appropriate, insurance protecting the Trust against loss
or liability has been or will be maintained in the name of or for the benefit of
the Trustee, and (v) all other acts to perfect and protect the Trust's rights
have been taken, and the Trustee shall have no duty to make any independent
inquiry or investigation as to any of the foregoing before acting upon such
direction. In addition, the Trustee shall not be liable for the default of any
Person with respect to any Investment Vehicle or any investment in a Directed
Fund or for the form, genuineness, validity, sufficiency or effect of any
document executed by, delivered to or held by it for any Directed Fund on
account of such investment, or if, for any reason (other than the negligence or
willful misconduct of the Trustee) any rights of the Trust therein shall lapse
or shall become unenforceable or worthless.
(e) Merger of Funds. The Trustee shall not have any
discretionary responsibility or authority to manage or control any asset held in
a Directed Fund upon the resignation or removal of an Asset Manager unless and
13
until it has been notified in writing by the Company that the Asset Manager's
authority has terminated and that such Directed Fund's assets are to be
integrated with the Discretionary Fund. Such notice shall not be deemed
effective until two bank business days after it has been received by the
Trustee. The Trustee shall not be liable for any losses to the Fund resulting
from the disposition of any investment made by the Asset Manager or for the
retention of any illiquid or unmarketable investment or any investment which is
not widely publicly traded or for the holding of any other investment acquired
by the Asset Manager if the Trustee is unable to dispose of such investment
because of any restrictions imposed by the Securities Act of 1933 or other
Federal or state law, or if an orderly liquidation of such investment is
impractical under prevailing conditions, or for failure to comply with any
investment limitations imposed pursuant to Section 7, or for any other,
violation of the terms of this Agreement, the Plan or applicable law as a result
of the addition of Directed Fund assets to the Discretionary Fund.
(f) Notification of Company in Event of Breach. If the Trustee
has actual knowledge that a breach of fiduciary duty committed by an Asset
Manager has occurred, it shall notify the Company thereof.
(g) Duty to Enforce Claims. The Trustee shall have no duty to
commence or maintain any action, suit or legal proceeding on behalf of the Trust
on account of or growing out of any investment made in or for a Directed Fund
unless the Trustee has been directed to do so by the Asset Manager or the
Company and unless the Trustee is either in possession of funds sufficient for
such purpose or unless it has been indemnified to its satisfaction for counsel
fees, costs and other expenses and liabilities to which it, in its sole
judgment, may be subjected by beginning or maintaining such action, suit or
legal proceeding.
(h) Restrictions on Transfer. Nothing herein shall be deemed
to empower any Asset Manager to direct the Trustee to transfer any asset of a
Directed Fund to itself except for purposes enumerated in paragraph (J), (L) or
(M) of Section 9(a)(1).
Section 9. Powers of Asset Managers and Trustee.
(a) Powers and Responsibilities of Asset Managers.
(i) General Powers of Asset Managers. Without in any
way limiting the powers and discretion conferred upon any Asset
Manager by the other provisions of this Agreement or by law,
each Asset Manager shall be vested with the following powers and
discretion with respect to the assets of the Fund subject to its
management and control, and, upon the directions of the Asset
Manager of a Directed Fund, the Trustee shall make, execute,
acknowledge and deliver any and all documents of transfer and
conveyance and any and all other instruments that may be
necessary or appropriate to enable such Asset Manager to carry
out such powers and discretion:
14
(A) to sell, exchange, convey, transfer or
otherwise dispose of any property by private contract or
at public auction (subject to the provisions of the Plan
and this Agreement with respect to Company Shares), and no
person dealing with the Asset Manager shall be bound to
see to the application of the purchase money or to inquire
into the validity, expediency or propriety of any such
sale or other disposition;
(B) to enter into contracts or to make commitments
either alone or in company with others to sell or acquire
property;
(C) to purchase or sell, write or issue, puts,
calls or other options, covered or uncovered, to enter
into financial futures contracts, forward placement
contracts and standby contracts, and in connection
therewith, to deposit, hold (or direct Bankers, as Trustee
or in its individual capacity, to deposit or hold) or
pledge assets of the Fund;
(D) to purchase part interests in real property or
in mortgages on real property, wherever such real property
may be situated;
(E) to lease to others for any term without regard
to the duration of the Trust any real property or part
interest in real property;
(F) to delegate to a manager or the holder or
holders of a majority interest in any real property or
mortgage on real property or in any oil, mineral or gas
properties, the management and operation of any part
interest in such property or properties (including the
authority to sell such part interests or otherwise carry
out the decisions of such manager or the holder or holders
of such majority interest);
(G) to vote upon any stocks, bonds or other
securities (but subject to the suspension of any voting
rights as a result of any broker loan or similar agreement
and subject, further, to the provisions of the Plan and
this Agreement with respect to Company Shares); to give
general or special proxies or powers of attorney with or
without power of substitution; to exercise any conversion
privileges, subscription rights or other options and to
make any payments incidental thereto; to consent to or
otherwise participate in corporate reorganizations or
other changes affecting corporate securities and to
delegate discretionary powers and to pay any assessments
or charges in connection therewith; and generally to
exercise any of the powers of an owner with respect to
stocks, bonds, securities or other property;
(H) to organize corporations under the laws of any
state for the purpose of acquiring or holding title to
property (or, in the case of a Directed Fund, to direct
the Trustee to organize such corporations or to appoint an
ancillary trustee acceptable to the Trustee for such
purpose);
15
(I) to invest in a fund consisting of securities
issued by corporations and selected and retained solely
because of their inclusion in, and in accordance with, one
or more commonly used indices of such securities, with the
objective of providing investment results for the fund
which approximate the overall performance of such
designated index;
(J) to enter into any partnership, as a general or
limited partner, or joint venture;
(K) to purchase units or certificates issued by an
investment company or pooled trust or comparable entity;
(L) to transfer money or other property to an
insurance company issuing an Insurance Contract or to a
financial institution pursuant to an investment agreement;
(M) to transfer assets of a Discretionary or
Directed Fund to a common, collective or commingled trust
fund exempt from tax under the Code maintained by an Asset
Manager or an affiliate of an Asset Manager or by another
trustee who is designated by the Company, to be held and
invested subject to all of the terms and conditions
thereof, and such trust shall be deemed adopted as part of
the Trust and the Plan to the extent that assets of the
Trust are invested therein; provided, however, that any
transfer from a Directed Fund to a commingled trust
maintained by Bankers may be made only with the prior
approval of the Trustee and shall be invested only in one
or more short-term investment funds or other special
purpose funds established from time to time thereunder;
and
(N) to be reimbursed for the expenses incurred in
exercising any of the foregoing powers or to pay the
reasonable expenses incurred by any agent, manager or
trustee appointed pursuant hereto to the extent permitted
by the Plan.
(ii) Duty of Care. In exercising any of the powers
delegated under this Section 9, the Asset Manager shall
discharge its duties hereunder with the care, skill, prudence,
and diligence under the circumstances then prevailing that a
prudent person acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of like
character and with like aims, consistent with the requirements
of ERISA.
(b) Additional Powers of Trustee. In addition, the Trustee is
hereby authorized:
(i) to register any securities held in the Fund in its
own name or in the name of a nominee and to hold any securities
in bearer form, and to combine certificates representing such
securities with certificates of the same issue held by the
16
Trustee in other fiduciary or representative capacities or as
agent for customers, or to deposit or to arrange for the deposit
of such securities in any qualified central depository even
though, when so deposited, such securities may be merged and
held in bulk in the name of the nominee of such depository with
other securities deposited therein by other depositors, or to
deposit or arrange for the deposit of any securities issued by
the United States Government, or any agency or instrumentality
thereof, with a Federal Reserve Bank, but the books and records
of the Trustee shall at all times show that all such investments
are part of the Fund;
(ii) to employ suitable agents, depositories and
counsel, domestic or foreign, and to charge their reasonable
expenses and compensation against the Fund to the extent
permitted by the Plan, and to confer upon any such depository
the powers conferred upon the Trustee by paragraph (i) of this
Section 9(b), as well as the power to appoint subagents and
depositories, wherever situated, in connection with the
retention of securities or other property;
(iii) with the written consent of the Company, to borrow
money from any source as may be necessary or advisable to
effectuate the purposes of the Trust on such terms and
conditions as the Trustee may deem advisable;
(iv) to deposit any funds of the Trust in accounts
deposits or savings certificates, which bear a reasonable rate
of interest, issued and maintained by Bankers, in its separate
corporate capacity, or in any other institution affiliated with
Bankers;
(v) to make any distribution or transfer of assets
required under the Plan as of a valuation date and, in
furtherance thereof, to value such assets in accordance with the
Plan;
(vi) with the written consent of the Company, to
maintain and operate one or more market inventory funds as a
vehicle to exchange securities among Discretionary and Directed
Funds without alienating the property from the Trust;
(vii) with the consent of the Company, to loan securities
held in the Fund to brokers or dealers or other borrowers under
such terms and conditions as the Trustee, in its absolute
discretion, deems advisable, to secure the same in any manner
permitted by law and the provisions of this Agreement, and
during the term of any such loan, to permit the loaned
securities to be transferred into the name of and voted by the
borrowers or others, and, in connection with the exercise of the
powers hereinabove granted, to hold any property deposited as
collateral by the borrower pursuant to any master loan agreement
in bulk, either as provided in paragraph (i) of this Section
9(b) or otherwise, together with the unallocated interests of
other lenders, and to retain any such property upon the default
of the borrower, whether or not investment in such property is
17
authorized under this Agreement, and to receive compensation
therefor out of any amounts paid by or charged to the account of
the borrower;
(viii) with the written consent of the Company, to enroll
the Fund in a program maintained by Bankers to permit
Participating Employees' accounts to participate in dividend
reinvestment plans offered by issuers of securities held in
accounts, such as the Fund, in order to realize upon the
discount from market value offered shareholders without any
investment risk or other impact on the managed assets in the
Fund, and to receive compensation therefor (including
reimbursement for its out-of-pocket costs associated therewith)
out of the income received by the Fund from participation in
such program;
(ix) subject to Section 6(f), to hold uninvested cash
awaiting investment and such additional cash balances as it
shall deem reasonable or necessary, without incurring any
liability for the payment of interest thereon;
(x) to delegate to the Company by mutual agreement in
writing any of its functions under this Agreement except the
custody of assets (other than notes evidencing Participating
Employee loans and supporting documentation), and to be relieved
from any and all liability or responsibility, with respect to
functions so delegated to the Company, for any action taken or
not taken by the Company;
(xi) to hold, invest and reinvest the assets of the Fund
in common with the assets of qualified employee benefit plans of
the Company or its affiliates held as separate trusts by the
Trustee; provided, however, that the Trustee's records shall at
all times show the equitable share of the Fund in such common
fund;
(xii) subject to the prior written approval of the
Company, to compromise, compound, submit to arbitration or
settle any debt or obligation owing to or from it as Trustee; to
reduce or increase the rate of interest on extension, or
otherwise modify, foreclose upon default, or enforce any such
obligation; to xxx or defend suits or legal proceedings to
protect or enforce any interest in the Trust and to represent
the Trust in all suits or legal proceedings in any court or
before any other administrative agency, body or tribunal;
provided, however, that the Trustee shall not need the approval
of the Company to pursue any claim involving Bankers in its
capacity as Trustee; and provided, further, that the Trustee
shall exercise the foregoing powers with respect to any amount
due or owing from a Participating Employee only upon the
directions of the Company;
(xiii) with the written consent of the Company, to utilize
BT Brokerage Corporation to execute transactions in Company
Shares where the use of BT Brokerage Corporation would be
appropriate applying the criteria normally applied by Bankers in
selecting any other broker;
18
(xiv) to execute and deliver such instruments and to take
any and all actions, including the filing with the United States
Department of Labor for exemptive or other administrative relief
from the provisions of ERISA or the Code, as the Trustee, upon
prior consultation with the Company, or the Company determines
to be necessary or desirable to carry out any of the foregoing
powers or otherwise in the best interests of the Trust; and
(xv) generally, consistent with the provisions of this
Agreement to perform all acts (whether or not expressly
authorized herein) which it may deem necessary and prudent for
the protection of the assets of the Trust.
(c) Limitation of Powers. The foregoing provisions of this
Section 9 shall not be deemed to expand the permissible investments for any
Investment Fund under Section 6.1 or to limit the Company's power to restrict
the exercise of such powers by an Asset Manager as provided in Section 7(b). In
addition, any powers conferred on any Asset Manager under subparagraph (a) or on
the Trustee under subparagraph (b) may be suspended or revoked at any time by
the Company upon notice to the Asset Manager or the Trustee as the case may be.
Any oral notice hereunder shall be promptly confirmed in writing to the Trustee
and the Asset Manager, but the Trustee shall have no responsibility hereunder
unless and until it has received notice in accordance with Section 25.
(d) Retention of Company Shares. Notwithstanding the powers
hereinabove conferred on the Trustee and subject to the requirements of ERISA
and Section 10, the Trustee or appointed Investment Manager shall purchase and
retain Company Shares held in the Savings Plan (other than in the U.S. Stock
Fund and the U.S. Asset Allocation Fund described in Section 6(a)) and the ESOP
regardless of market fluctuations and, in the normal course, the Trustee shall
sell such Company Shares only to meet administrative and distribution
requirements of the Plan or accommodate elections by Participating Employees to
transfer Units from one Investment Fund to another in accordance with the
provisions of the Plan.
(e) Acquisition Loan. The Trustee shall, at the written
direction of the Committee, borrow sums of money for the purchase of Company
Shares for the ESOP (as permitted by the Plan) in a manner and under conditions
which will cause the loan to be an "exempt loan" within the meaning of section
4975(d)(3) of the Code. Selection of the lender and determination of the terms
and conditions of the Acquisition Loan shall be the sole responsibility of the
Committee, and the Trustee shall be responsible only for executing any
instruments required by the Committee to effectuate the loan transaction as
instructed by the Committee. The Trustee may require a certification from the
Committee that the Acquisition Loan is such an "exempt loan" and an opinion of
counsel to the Committee in form and substance satisfactory to the Trustee prior
to executing any note or pledge agreement in connection therewith. The Trustee
shall hold and invest or disburse the Acquisition Loan proceeds, and shall
pledge as collateral, hold unallocated in a Suspense Account or otherwise hold
Company Shares acquired with the proceeds of such Loan, all in accordance with
the written instructions of the Committee. Nothing herein is intended to affect
19
the Trustee's power to borrow and repay sums of money in order to meet
obligations and other financial needs of the Plan or the Fund in accordance with
the other provisions of the Agreement through loans which are not "exempt loans"
as described above; provided, however, that such loans do not constitute
prohibited transactions as defined in section 406 of ERISA.
Section 10. Provisions Affecting Company Shares.
(a) Voting. Each Participating Employee shall direct the
Trustee on how to vote the Company Shares allocated to his ESOP Account and his
Savings Plan Account (but only to the extent such shares are invested in any of
the Investment Funds that may hold U S WEST Shares described in Section 6(a)(i)
and 6(b)(i), (ii) and (iii)) at each annual meeting and at each special meeting
of stockholders of the Company. The Employing Company shall cause each
Participating Employee (or his beneficiary) to be provided with a copy of a
notice of each such stockholder meeting and the proxy statement, together with
the appropriate form for indicating his voting instructions to the Trustee. Upon
receipt of such instructions, the Trustee shall vote the Company Shares as
instructed. Each Participating Employee (or his beneficiary) shall be a "named
fiduciary" for purposes of instructing the Trustee on voting the Company Shares
allocated to his ESOP Account and Savings Plan Account (but only to the extent
such shares are invested in any of the Investment Funds described in Section
6(a)(i) and Section 6(b)(i), (ii), and (iii)). If the proxy materials so
provide, a Participating Employee may also direct the Trustee to authorize the
designated proxies to vote such Company Shares in accordance with the
recommendations of the Board of Directors. The Trustee shall maintain the
instructions of Participating Employees in confidence with respect to the
Employer. The Trustee shall vote all Company Shares held in the Suspense
Accounts as well as all Company Shares held in any of the Investment Funds that
may hold U S WEST Shares described in Section 6(a)(i) and Section 6(b)(i), (ii)
and (iii) for which it does not receive timely instructions, in the same
proportion as the Trustee votes Company Shares for which it receives timely
instructions; provided, however, that the Trustee shall in all events exercise
voting obligations with respect to all Company Shares in each such Investment
Fund and in the Suspense Account consistent with the Trustee's fiduciary duties
under ERISA. No Investment Manager shall have voting authority or responsibility
with respect to any Company Shares held in the Investment Funds described in
Section 6(a)(i) and Section 6(b)(i), (ii) and (iii), or the Suspense Account.
(b) Response to Tender Offers. The Committee shall have the
right to direct the Trustee as to the manner in which to respond to any tender,
exchange or purchase offer, or any matter related thereto, with respect to any
Company Shares held in the ESOP (whether or not allocated to Participating
Employees' Accounts). Each Participating Employee shall have the right, to the
extent of Company Shares allocated to the Participating Employees' Savings
Accounts (other than in the U.S. Stock Fund and the U.S. Asset Allocation Fund
described in Section 6(a)), to direct the Trustee in writing as to the manner in
which to respond to a tender offer or exchange offer with respect to the Company
Shares. If the Trustee does not receive timely direction from a Participating
Employee as to the manner in which to respond to such a tender offer or exchange
offer, the Trustee shall tender or exchange any such Company Stock in accordance
with the directions of the Committee.
20
(c) Proceeds of Sale. If any Company Shares allocated to
Participating Employees' Accounts (other than in the U.S. Stock Fund and the
U.S. Asset Allocation Fund that may hold U S WEST Shares described in Section
6(a)) are sold or exchanged in a tender, exchange or purchase offer or in a
transaction relating thereto or following any such offer or in a similar
transaction, including a merger or reorganization of the Company, in which the
stockholders of the Company receive cash or non-equity securities, the cash or
securities received in exchange therefor shall be held in one or more separate
Accounts for the Participating Employees in respect of whose interests the
Company Shares were sold or exchanged. Any cash shall be invested in short-term
investments pending amendment of the Plan and Trust to provide for the future
investment thereof.
If any Company Shares held in the Suspense Account are sold or
exchanged in a tender, exchange or purchase offer or in a transaction relating
thereto or following any such offer or in a similar transaction, including a
merger or reorganization of the Company in which the stockholders of the Company
receive cash or non-equity securities, any cash received therefor shall be used
to pay principal and interest under any outstanding Acquisition Loans incurred
to acquire such Company Shares and any securities received therefor shall be
liquidated by the Trustee as soon as practicable and the proceeds thereof shall
be used for the same purpose. If, after repayment of all amounts of principal
and interest under an Acquisition Loan, there remains in such Suspense Account
any proceeds from the sale or exchange of such Company Shares, or attributable
thereto, such excess amount shall be allocated to Participating Employees'
Accounts in accordance with the directions of the Committee.
Section 11. Expenses of the Fund. Expenses of administering the Plan,
including the fees and expenses of the Trustee, may be charged to the Trust.
Such expenses include, but are not limited to, recordkeeping and administrative
fees, consultant fees, and fees for internal and external vendors (e.g.,
including, but not limited to, postage, printing and shipping expenses). Fees
and expenses of an Investment Manager shall be deemed to be part of the cost of
maintaining the portion of the Trust Fund which the Investment Manager manages,
and shall be payable out of that portion of the Trust Fund. Consultant and
administrative fees related specifically to any Fund will be paid out of that
fund. Brokerage fees, transfer taxes and other expenses incident to the purchase
or sale of securities of the Trust shall be deemed to be part of the cost of
such securities, or deducted in computing the proceeds therefrom, as the case
may be. Transfer taxes, in connection with distribution of Company Shares to
employees or their beneficiaries shall be borne by the Trust. Taxes, if any, on
any assets held or income received by the Trust shall be charged appropriately
against the Accounts of Participating Employees as the Committee shall
determine.
21
Section 12. Indemnification of Trustee.
(a) General. The Company will indemnify and hold harmless the
Trustee of and from any liability and expense (including reasonable counsel
fees) incurred in connection with or arising out of any action taken or omitted
with respect to any disbursement, investment, purchase, sale, Acquisition Loan
or other loan, or transfer of any part of the Fund made by the Trustee in
accordance with the directions of the Company, the Committee, the IMC or an
Investment Manager.
In addition, if the Trustee succeeds to responsibilities
hereunder for management of assets previously managed by another trustee or by
an Investment Manager or other fiduciary (including the Company, the Committee
and the IMC), the Company hereby agrees to hold the Trustee harmless from any
liability and expense (including reasonable and necessary counsel fees) incurred
by or assessed against the Trustee as the direct or indirect result of any act
or omission of such other trustee, Investment Manager or other fiduciary.
(b) Limitation. Notwithstanding anything contained herein to
the contrary, the Company shall have no responsibility to the Trustee under the
undertaking in subparagraph (a) if the Trustee knowingly participated in or
knowingly undertook to conceal any act or omission of a custodian (or other
depository) or trustee appointed by the Trustee to hold title to, or other
indicia of ownership of, property of the Trust (or other independent parties
engaged by the Trustee in its discretion), which the Trustee knew to constitute
a breach of its fiduciary responsibility, or if the Trustee failed to perform
any of the duties undertaken by it in accordance with the provisions of this
Agreement, or if the Trustee fails to act in conformity with the direction of an
authorized representative of the Company, the Committee, the IMC or an
Investment Manager.
(c) Reliance on Counsel. The Trustee may from time to time
consult with counsel, who may be counsel to the Company, and shall be fully
protected in acting upon the advice of counsel to the extent permitted by law.
(d) Cumulative Effect. The Trustee's rights under this Section
12 are cumulative and shall be in addition to, any right under other provisions
of this Agreement or applicable Law.
Section 13. Recordkeeping and Accounting.
(a) Trustee's Recordkeeping. The Trustee shall keep accurate
and detailed accounts of all investments, receipts, disbursements, transfers and
other transactions hereunder, and all accounts, books and records relating
thereto shall be open to inspection and audit at all reasonable times by any
Person designated by the Company.
(b) Trustee's Accounting. Within 90 days following the close
of an Accounting Period, the Trustee shall file with the Company (and with any
other Person as may be directed by the Company) a written account setting forth
22
all investments, receipts, disbursements and other transactions effected by it
during such Accounting Period. Upon the expiration of one year from the date of
filing such account, the Trustee shall be forever released and discharged from
all liability and accountability to the Company, the Committee, the Employing
Companies and any other Person in privity with the Company, the Committee or the
Employing Companies under this Agreement with respect to the transactions shown
in such accounting, except with respect to any such acts or transactions as to
which the Company shall file written objections with the Trustee within such
one-year period or with respect to acts or transactions which the Company could
not reasonably have discovered prior to the expiration of such one-year period
by reviewing such account, and except for willful misconduct, gross negligence,
lack of good faith or fraud on the part of the Trustee, except insofar as
applicable law may otherwise provide. Nothing in this Section 13 shall preclude
the Company from requiring accountings and similar reports from the Trustee at
more frequent intervals as may be agreed to by the Trustee.
Section 14. Judicial Accountings. Except to the extent that sections
502 and 504 of ERISA may provide otherwise, in order to protect the Fund against
waste, no one other than the Company or the Committee may require the Trustee to
account or may institute an action or proceeding against the Trustee or the
Fund. However, nothing herein shall in any way limit the right of the Trustee to
bring an action or proceeding to settle its account or for such other relief as
it may deem appropriate.
23
Section 15. Authorizations.
(a) The Committee. All directions, orders, requests,
instructions and objections of the Committee to the Trustee shall be in writing
signed by the Secretary of the Committee, or by such other Person as may be
designated from time to time by the Committee, and the Trustee shall act and
shall be fully protected in acting in accordance with such directions, orders,
requests and instructions. The Secretary or an Assistant Secretary of the
Company shall furnish the Trustee from time to time certification of actions of
the Company's Board of Directors or the chief executive officer, as the case may
be, evidencing the appointment and termination of office of any members of the
Committee and the appointment of successors thereto and with certified copies of
resolutions of the Committee evidencing the appointment and termination of
office of its Secretary, Assistant Secretary or any other Person as may be
designated to sign or act on behalf of the Committee and the appointment of
successors thereto.
(b) The Company. Any action required to be taken by the
Company may be evidenced by a resolution of its Board of Directors certified to
the Trustee over the signature of its Secretary or an Assistant Secretary or may
be evidenced in writing by such Person as may be authorized by the Company to
act on its behalf hereunder, such authorization to be evidenced by a resolution
certified as aforesaid. Any action by the Committee may be evidenced by minutes
or resolutions certified to the Trustee over the signature of its Secretary or
an Assistant Secretary or such other Person or in such other manner as may be
authorized thereunto; and the Trustee shall be fully protected in acting in
accordance therewith.
(c) The IMC. Any action required to be taken by IMC may be
evidenced by a resolution of its Board of Directors certified to the Trustee
over the signature of its Secretary or an Assistant Secretary or may be
evidenced in writing by such Person as may be authorized by IMC to act on its
behalf hereunder, such authorization to be evidenced by a resolution certified
as aforesaid.
(d) Investment Manager. The Investment Manager shall furnish
the Trustee with the names and signatures of those persons authorized to act on
its behalf hereunder, and the Trustee shall assume no responsibility hereunder
for failure to act with respect to any Directed Fund subject to the management
and control of an Investment Manager unless and until it shall receive
appropriate directions from the Investment Manager. The Trustee may rely on
prior written notice of the appointment of an Investment Manager by the Company
and of the appointment of any Person authorized to act on behalf of the
Investment Manager until it has received written notice to the contrary from the
Company or the Investment Manager; provided, however, that all directions given
by the Investment Manager to the Trustee shall be in writing, signed by a duly
authorized representative of the Investment Manager and, provided, further, that
the Trustee may accept oral directions for the purchase or sale of securities
subject to confirmation in writing, or, where appropriate and upon such terms as
shall be mutually agreed upon between the Trustee and the Investment Manager,
such other means of confirmation as may be approved, from time to time, for use
by applicable regulatory authorities. The Trustee shall make available to the
24
Investment Manager copies of, or extracts from, such portions of its accounts,
books and records relating to the accounts of the Investment Manager as may be
necessary or appropriate in connection with the exercise of the Investment
Manager's functions hereunder.
Section 16. Removal and Resignation of Trustee.
(a) The Trustee may be removed by the Company at any time upon
sixty (60) days' notice in writing to the Trustee unless a shorter period of
notice shall be agreed to by the Trustee. The Trustee may resign at any time
upon 60 days' notice in writing to the Company or the Committee. Notwithstanding
the preceding sentence, if a successor trustee shall not have been appointed
within such 60 day period, the Trustee shall continue to act as Trustee
hereunder until the earlier of the appointment of a successor or 120 days
following the date of the Trustee's written notice of resignation. Upon such
removal or resignation of the Trustee, the Company shall appoint and designate a
successor trustee who shall have the same powers and duties as those conferred
upon the Trustee hereunder and, upon acceptance of such appointment by the
successor trustee, the Trustee shall assign, transfer and pay over to such
successor trustee the funds and properties then constituting the Fund, as well
as such records, files and other data compiled or maintained by the Trustee on
behalf of the Company as the successor trustee shall reasonably request. Any
compensation paid to the Trustee in advance shall be prorated to the date of
resignation or removal of the Trustee, and any unearned portion thereof shall be
credited to the Company.
(b) If, for any reason, the Company cannot or does not act to
appoint a successor trustee within a reasonable period of time but not later
than one hundred eighty (180) days from the effective date of the removal or
resignation of the Trustee, the Trustee may apply to a court of competent
jurisdiction for the appointment of a successor trustee. Any expenses incurred
by the Trustee in connection therewith shall be charged to and paid from the
Trust as an expense of administration. The Trustee shall continue to serve and
to receive its compensation and reimbursement of its expenses until its
successor accepts the Trust and receives delivery of the Fund.
Section 17. Appointment of Additional Trustees. The Company shall have
authority to direct that there shall be more than one trustee under this
Agreement and to designate such additional trustee or trustees. In the event
that there shall be two or more trustees acting hereunder, the Company may but
shall not be required to direct that a portion of the Fund shall be held by each
of said trustees. If such a direction is given, each trustee shall individually
invest and keep invested the portion of the Fund held by it or from time to time
paid over to it, all upon the conditions set forth in this Agreement as though
the Company had entered into a separate trust agreement with each trustee having
the same terms as this Agreement. Each such trustee shall be subject to the same
duties and responsibilities and shall have the same powers and rights with
respect to the investment of the portion of the Fund held by it as a single
trustee would have with respect to the entire Fund. Each trustee shall have no
duties or responsibilities and shall have no powers or rights with respect to
the investment of the portion of the Fund held not by it but by another such
trustee.
25
Section 18. Spendthrift Provision. Except to the extent required by
applicable law or permitted by the Plan in the case of the Loan Fund described
in Section 6(c), no right or interest of any Participating Employee or
beneficiary in the Trust or in the net earnings and profits therefrom shall be
assigned or transferred, or used as collateral for a loan, in whole or in part,
either directly, by operation of law, or otherwise excluding, by way of
illustration but not by way of limitation, execution, levy, garnishment,
attachment, pledge, bankruptcy or in any other manner, and no such right or
interest of any Participating Employee or beneficiary in the Fund shall be
liable for or subject to any obligation or liability of such Participating
Employee.
Section 19. Delegation to Company. The Company shall act for each
Employing Company participating in the Plan and for each such subsidiary or
affiliate of the Company or any Employing Company participating in the Plan in
all matters arising under and with respect to the Plan and this Agreement
(including, by way of illustration but not of limitation, the power to modify or
amend this Agreement in accordance with Section 20 hereof), except to the extent
otherwise provided herein. The Employing Company's election to participate in
the Plan shall be deemed an election to be bound by and accept the terms of this
Agreement as though it were a party hereto without the further act of the
Trustee.
Section 20. Amendment. The Company reserves the right at any time and
from time to time to modify or amend, in whole or in part, any or all of the
provisions of this Agreement by notice thereof in a writing delivered to the
Trustee, provided that no modification or amendment which increases the duties
or responsibilities of the Trustee shall be made without the consent of the
Trustee, and, provided further, that no modification or amendment shall
authorize or permit any part of the corpus or income of the Fund to be used for,
or diverted to, purposes other than for the exclusive benefit of the
Participating Employees or their beneficiaries or permit any part of the Fund
under any circumstances to revert to the Company (except as may otherwise be
permitted by Section 3). If the Plan shall be amended, the Company shall
promptly furnish to the Trustee a copy of the amendment, duly certified by the
Secretary or an Assistant Secretary of the Company.
Section 21. Creation of Separate Trusts. The Company may at any time
request the Trustee to segregate the Fund into separate portions applicable to
the Participating Employees of one or more of the respective Employing
Companies. In the event of such a request, the Trustee shall make such
segregation, based upon its accounts, and shall hold each such portion in a
separate trust under and pursuant to all of the terms of this Agreement. After
any such segregation into separate trusts pursuant to this Section 21, the right
of the Company with respect to the removal, appointment and designation of
Trustees may be exercised separately with respect to one or more of such
separate trusts. At any time after such portion of the Fund as is allocable to
the Participating Employees of any Employing Company shall have been segregated
26
into a separate trust, such Employing Company, by action of its board of
directors, may determine that the trust shall be liquidated, in which event
distribution of the trust shall be made by the Trustee on orders certified by
the Employing Company as being in accordance with the Plan, ERISA, and the Code.
Section 22. Termination of Agreement.
(a) General. This Agreement may be terminated in whole or in
part at any time by the Company upon 60 days' notice in writing to the Trustee,
unless a shorter period of notice shall be agreed upon. In the event of the
termination of the Trustee as provided in Section 16, or upon the termination of
the Trust as herein provided, or in the event that the Trustee receives notice
from the Company that the Plan has lost its qualified status or ceased to be
exempt from federal income taxation under the Code, or in the event that the
Trustee receives notice from the Company that any portion of the assets of the
Fund allocable to any group of employees of any Employing Company is to be
withdrawn by such Employing Company for a purpose consistent with ERISA, the
Code and this Agreement, and the Company has approved such withdrawal, the
Trustee shall pay over the allocable share (or part thereof) of the Fund
affected by the termination or withdrawal, as the case may be, in cash or in
property, or in a combination of both, to a trustee of the Plan or other Person
in such amount and in such manner as may be directed by the Company. Such
allocable share shall be calculated as of the date of such termination or
withdrawal, but actual payment of such cash or property may be postponed to the
valuation date under the Plan next succeeding the date of termination or
withdrawal. Upon such transfer and delivery the Trustee shall make such
accounting of its trusteeship as the Company or the Committee may request, but
unless otherwise requested by the Company, the Trustee shall render an
accounting in accordance with Section 13 hereof. If at any time the Fund shall
become exhausted as a result of any actions taken pursuant to this Section or
any other provision of this Agreement, this Agreement shall be deemed to have
terminated according to its terms as between the Company and an affected
Trustee.
(b) Continuation of Powers. Upon the termination of the Plan
or the Trust, or upon the resignation or removal of the Trustee as hereinabove
provided, the Trustee shall continue to have and may exercise all the title,
powers, discretion, rights and duties conferred or imposed upon it by law or by
this Agreement until the final distribution of the Fund, or any portion thereof
reserved by the Trustee pursuant to the foregoing provisions of this Agreement,
unless otherwise directed, in writing, by the Company or the Committee.
27
Section 23. Successor in Interest. Any corporation which shall by
merger, consolidation, purchase or otherwise, succeed to all or substantially
all of the trust business of the Trustee shall thereupon, and without any
appointment, assignment or action by anyone, become the Trustee. The Trustee
shall notify the Company of any such merger, consolidation, purchase or other
form of reorganization described in the preceding sentence within five business
days thereof, at which time the Company may elect to remove the Trustee in
accordance with the provisions of Section 16.
Section 24. Governing Law. This Agreement shall be administered,
construed and enforced according to the internal laws of the State of New York
(without regard to any conflict of laws provisions), to the extent such laws
have not been preempted by ERISA or other applicable federal law. The actual
administration of the Trust may be conducted in such location within the United
States, and the location of its assets (or indicia of ownership thereof) shall
be within the United States or if the provisions of section 404(b) of ERISA are
complied with, outside the jurisdiction of the district courts of the United
States), as the Company in its sole discretion shall determine from time to
time. Upon any such change in the location of the administration or the assets
of the Trust, the Company may, in its sole discretion, direct that the Trust
shall cease to be administered, governed, and interpreted in accordance with the
laws of the State of New York, or the laws of such other jurisdiction as may
then be applicable to the Trust, and shall, instead, be administered, governed
and interpreted in accordance with the laws of the jurisdiction to which the
administration and/or the assets of the Trust have been transferred.
Section 25. Notices. Except as may otherwise be provided in the
Agreement, any notice, demand, direction or instruction to be given to the
Company hereunder shall be in writing and shall be duly given if mailed or
delivered to the Company at 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000,
Attention: Treasurer, and to the Trustee at Bankers Trust Company as Trustee of
the U S WEST Savings Plan/ESOP, Bankers Trust Plaza, 20th Floor, Mail Stop 2202,
New York, New York 10006, Attention: Retirement Services Group or at such other
address as shall be specified by either party hereto to the other, in writing.
Any notice or other communication shall be deemed to have been given to, or
received by, the appropriate party as of the date on which it is personally or
electronically delivered or, if mailed, on the fifth (5th) business day after
the date of the postmark applied by the United States Postal Service.
Section 26. Counterparts. This Agreement may be executed in any number
of separate counterparts, each of which shall be deemed an original, but the
several counterparts shall together constitute one and the same agreement of the
parties hereto. This Agreement is intended to be the complete and exclusive
statement of the terms hereof, and may not be modified or amended orally.
Section 27. Severability. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be held contrary to any
provision of law or contrary to policy of law, although not expressly
prohibited, or against public policy, or shall for any reason whatsoever be held
invalid, then such covenants, agreements, provision or terms shall be enforced
28
only to the extent not contrary to law or contrary to policy of law or against
public policy or invalid and otherwise shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or the rights of the parties hereto or the Plan.
Section 28. Continuation of Trust. The dissolution, resignation or
removal of any Trustee, for any reason whatsoever, shall not operate to
terminate this Agreement insofar as the duties and obligations of any other
Trustees appointed pursuant to Section 17 are concerned.
Section 29. Domestic Trust. The Trust shall be maintained at all times
as a domestic trust in the United States and shall be at all times qualified
under section 401(a) of the Code, or any successor provision thereto, and exempt
from federal income taxation under section 501(a) of the Code, or any successor
provision thereto, as long as any assets of a Plan are held by a Trustee
hereunder.
29
