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Exhibit 10ab
December 30, 1994
Mr. James H. Stever
Executive Vice President
U S WEST, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
Dear Mr. Stever:
U S WEST, Inc. (the "Company"), on behalf of itself, its subsidiaries
and its shareholders, wishes to encourage your continued service and dedication
in the performance of your duties, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined in Subsection I(h)) of the
Company. The Board of Directors of the Company (the "Board") believes that the
prospect of a pending or threatened Change of Control inevitably creates
distractions and personal risks and uncertainties for its executives, and that
it is in the best interests of the Company to minimize such distractions to
certain executives and the Company. The Board further believes that it is in
the best interests of the Company to encourage its executives' full attention
and dedication to their duties, both currently and in the event of any
threatened or pending Change of Control.
Accordingly, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued retention of certain members of
the Company's management, including yourself, and the attention and dedication
of management to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a Change
of Control of the Company.
In order to induce you (the "Executive") to remain in the employ of the
Company and in consideration of your continued service to the Company, the
Company agrees that you shall receive the benefits set forth in this letter
agreement (the "Agreement") in the event that your employment with the Company
is terminated subsequent to a Change of Control of the Company in the
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circumstances hereinafter described. For purposes of this Agreement,
references to employment with the Company shall include employment with a
Subsidiary of the Company (as defined in Subsection I(w)).
I. Definitions
The meaning of each defined term that is used in this Agreement is set
forth below.
(a) AAA. The American Arbitration Association.
(b) Additional Pay. The meaning of this term is set forth in
Subsection IV(b).
(c) Agreement. The meaning of this term is set forth in the third
paragraph of this Agreement.
(d) Agreement Payments. The meaning of this term is set forth in
Subsection IV(e)(i).
(e) Beneficiaries. The meaning of this term is set forth in Subsection
VI(b).
(f) Board. The meaning of this term is set forth in the first
paragraph of this Agreement.
(g) Cause. For purposes of this Agreement, "Cause" shall mean the
Executive's willfully breaching or failing to perform his employment duties.
For purposes of this Subsection I(g), no act, or failure to act, on the part of
the Executive shall be deemed "willful" unless done, or omitted to be done, by
the Executive not in good faith and without reasonable belief that such action
or omission was in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to the Executive a certificate
of a resolution duly adopted by the affirmative vote of not less than
seventy-five percent (75%) of the entire membership of the Board at a meeting
of the Board called and held for such purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, the Executive has engaged in the conduct set forth in this
Subsection
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I(g) and specifying the particulars thereof in detail.
(h) Change of Control. For purposes of this Agreement, a "Change of
Control" shall be deemed to have occurred if there is a change of control of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), whether or not the Company is then
subject to such reporting requirement; provided that, without limitation, such
a Change of Control shall be deemed to have occurred if:
(i) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as determined for purposes of Regulation 13D-G
under the Exchange Act as currently in effect), directly or indirectly, of
securities representing twenty percent (20%) or more of the total voting power
of all of the Company's then outstanding voting securities, unless through a
transaction consummated with the prior approval of the Board; or
(ii) during any period of two consecutive calendar years,
individuals who at the beginning of such period constitute the Board and any
new director(s) whose election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority of the Board; or
(iii) the Company becomes a party to a merger, plan of
reorganization, consolidation or share exchange in which either (x) the Company
will not be the surviving corporation or (y) the Company will be the surviving
corporation and any outstanding shares of the Company's common stock will be
converted into shares of any other company (other than a reincorporation or the
establishment of a holding company involving no change of ownership of the
Company) or other securities or cash or other property (excluding payments made
solely for fractional shares); or
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(iv) the shareholders of the Company approve a merger, plan of
reorganization, consolidation or share exchange with any other corporation, and
immediately following such merger, plan of reorganization, consolidation or
share exchange the holders of the voting securities of the Company outstanding
immediately prior thereto hold securities representing fifty percent (50%) or
less of the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger, plan of
reorganization, consolidation or share exchange; provided, however, that
notwithstanding the foregoing, no Change of Control for purposes of this
Agreement shall be deemed to have occurred if one-half (1/2) or more of the
members of the Board of the Company or such surviving entity immediately after
such merger, plan of reorganization, consolidation or share exchange is
comprised of persons who served as directors of the Company immediately prior
to such merger, plan of reorganization, consolidation or share exchange or who
are otherwise designees of the Company; or
(v) any other event that a majority of the Board, in its sole
discretion, shall determine constitutes a Change of Control.
(i) Code. The meaning of this term is set forth in Subsection
IV(e)(i).
(j) Company. The meaning of this term is set forth in the first
paragraph of this Agreement and Subsection VI(a).
(k) Controlled Group. For purposes of this Agreement, "Controlled
Group" shall mean the Company and all of the Company's Subsidiaries.
(l) Disability. For purposes of this Agreement, "Disability" shall
mean an illness, injury or similar incapacity which 52 weeks after its
commencement continues to render the Executive unable to perform the material
and substantial duties of the Executive's position or any occupation or
employment for which the Executive is qualified or may reasonably become
qualified by training, education or experience. Any question as to the
existence of a Disability upon which the Executive and the Company cannot agree
shall be determined by a qualified independent physician selected by the
Executive (or, if the Executive is unable to make such
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selection, by any adult member of the Executive's immediate family or the
Executive's legal representative), and approved by the Company, such approval
not to be unreasonably withheld. The determination of such physician made in
writing to the Company, and to the Executive, shall be final and conclusive for
all purposes of this Agreement.
(m) Employer. For purposes of this Agreement, "Employer" shall mean
the Company or the Subsidiary, as the case may be, with which the Executive
has an employment relationship.
(n) Exchange Act. This term shall have the meaning set forth in
Subsection I(h).
(o) Executive. This term shall have the meaning set forth in the third
paragraph of this Agreement.
(p) Excise Tax. This term shall have the meaning set forth in
Subsection IV(e)(i).
(q) Good Reason. For purposes of this Agreement, "Good Reason" shall
mean the occurrence, without the Executive's express written consent, of any of
the following circumstances:
(i) The assignment to the Executive of any duties inconsistent
with, or any substantial diminution in, such Executive's status or
responsibilities as in effect immediately prior to a Change of Control of the
Company, including imposition of travel obligations which differ materially
from required business travel immediately prior to the Change of Control;
(ii) Any diminution in the status or responsibilities of the
Executive's position from that which existed immediately prior to the Change of
Control, whether by reason of the Company ceasing to be a public company under
the Exchange Act, becoming a subsidiary of a successor public company, or
otherwise;
(iii) (A) A reduction in the Executive's annual base salary as
in effect immediately before the Change of Control; or (B) the failure to pay a
bonus award to which the Executive is otherwise entitled under any of the
short-term incentive plan in which the Executive participates, the U S WEST
Executive Long-Term Incentive Plan, or any successor
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incentive compensation plans at the time such awards are usually paid;
(iv) A change in the principal place of the Executive's
employment, as in effect immediately prior to the Change of Control of the
Company, to a location more than thirty-five (35) miles distant from the
location of such principal place at such time;
(v) The failure by the Company to continue in effect any
incentive compensation plan or stock option plan in which the Executive
participates immediately prior to the Change of Control, unless an equivalent
alternative compensation arrangement (embodied in an ongoing substitute or
alternative plan) has been provided to the Executive, or the failure by the
Company to continue the Executive's participation in any such incentive or
stock option plan on substantially the same basis, both in terms of the amount
of benefits provided and the level of the Executive's participation relative to
other participants, as existed immediately prior to the time of the Change of
Control;
(vi) (A) Except as required by law, the failure by the Company
to continue to provide to the Executive benefits substantially equivalent, in
the aggregate, to those enjoyed by the Executive under the qualified and
non-qualified employee benefit and welfare plans of the Company, including,
without limitation, any pension, life insurance, medical, dental, health and
accident, disability, retirement or savings plans in which the Executive was
eligible to participate immediately prior to the Change of Control; (B) the
taking of any action by the Company which would directly or indirectly
materially reduce or deprive the Executive of any other perquisite enjoyed by
the Executive immediately prior to the Change of Control (including
Company-paid and/or reimbursed club memberships, financial counseling fees and
the like); or (C) the failure by the Company or its successor to treat the
Executive under the Company's vacation policy, past practice or special
agreement in the same manner and to the same extent as was in effect
immediately prior to the Change of Control;
(vii) The failure of the Company or any successor to obtain a
satisfactory written agreement from any successor to
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assume and agree to perform this Agreement, as contemplated in Subsection
VI(a); or
(viii) Any purported termination of the Executive's employment
that is not effected pursuant to a Notice of Termination satisfying the
requirements of Subsection III(b) or, if applicable, Subsection I(g). For
purposes of this Agreement, no such purported termination shall be effective
except as constituting Good Reason.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstances constituting Good Reason
hereunder.
(r) Gross-Up Payment. The meaning of this term is set forth in
Subsection IV(e)(i).
(s) Notice of Termination. The meaning of this term is set forth in
Subsection III(b).
(t) Other Payments. The meaning of this term is set forth in
Subsection IV(e)(i).
(u) Payments. The meaning of this term is set forth in Subsection
IV(e)(i).
(v) Retirement. For purposes of this Agreement, "Retirement" shall
mean the Executive's voluntary termination of employment with the Company,
other than for Good Reason, and in accordance with the Company's retirement
policy generally applicable to its employees or in accordance with any prior or
contemporaneous retirement arrangement established with the Executive's consent
with respect to the Executive.
(w) Subsidiary. For purposes of this Agreement, "Subsidiary" shall
mean any corporation of which more than fifty percent (50%) of the voting stock
is owned directly or indirectly by the Company.
(x) Tax Counsel. The meaning of this term is set forth in Subsection
IV(e)(ii).
(y) Termination. The meaning of this term is set forth in Subsection
III(a).
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(z) Termination Date. For purposes of this Agreement, "Termination
Date" shall mean:
(i) If the Executive's employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided that the
Executive shall not have returned to the full-time performance of his duties
during such thirty-day period); and
(ii) If the Executive's employment is terminated for Cause or
Good Reason or for any reason other than death or Disability, the date
specified in the Notice of Termination (which in the case of a termination for
Cause shall not be less than thirty (30) days and in the case of a termination
for Good Reason shall not be less than thirty (30) days nor more than sixty
(60) days, respectively, from the date such Notice of Termination is given).
II. Term of Agreement
(a) General. Upon execution by the Executive, this Agreement shall
commence as of January 1, 1995. This Agreement shall continue in effect
through December 31, 1997; provided, however, that commencing on January 1,
1998, and every third January 1 thereafter, the term of this Agreement shall
automatically be extended for three additional years unless, not later than
ninety days prior to the January 1 on which this Agreement would otherwise
automatically be extended, the Company shall have given notice that it does not
wish to extend this Agreement; provided further, however, that if a Change of
Control of the Company shall have occurred during the original or any extended
term of this Agreement, this Agreement shall continue in effect for a period of
thirty-six months beyond the month in which the Change of Control occurred.
(b) Disposition of Employer. In the event the Executive is employed
by a Subsidiary, the terms of this Agreement shall expire if such Subsidiary is
sold or otherwise disposed of prior to a Change of Control unless the Executive
continues in employment with the Controlled Group after such sale or other
disposition. If the Executive's Employer is sold or disposed of following a
Change of Control, this Agreement shall continue through its original term or
any extended term then in effect.
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(c) Deemed Change of Control. If the Executive's employment with the
Employer is terminated prior to the date on which a Change of Control occurs,
and such termination was at the request of a third party who has taken steps to
effect a Change of Control or was otherwise caused by the Change of Control,
then for all purposes of this Agreement, a Change of Control shall be deemed to
have occurred prior to such termination.
(d) Expiration of Agreement. No termination or expiration of this
Agreement shall affect any rights, obligations or liabilities of either party
that shall have accrued on or prior to the date of such termination or
expiration.
III. Termination Following Change of Control
(a) Entitlement to Benefits. If a Change of Control of the Company
shall have occurred, the Executive shall be entitled to the benefits provided
in Section IV hereof upon the subsequent termination of his employment with the
Company within three years after the date of the Change of Control unless such
termination is (i) a result of the Executive's death or Retirement, (ii) for
Cause, (iii) a result of the Executive's Disability, or (iv) by the Executive
other than for Good Reason. A termination of the Executive's employment which
is not as a result of the Executive's death, Retirement or Disability and (x)
if by the Company, is not for Cause, or (y) if by the Executive, is for Good
Reason, shall be referred to hereinafter as a "Termination."
(b) Notice of Termination. Any purported termination of the
Executive's employment by the Company or by the Executive shall be communicated
by written Notice of Termination to the other party hereto in accordance with
Section VIII. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific provision of this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. If the Executive's employment
shall be terminated for Cause or by the Executive for other than Good Reason,
the Company shall pay the Executive his full base salary through the
Termination Date at the rate in effect at the time Notice of Termination is
given and shall pay any amounts to be paid to the Executive pursuant to any
other compensation plans, programs or employment agreements then in effect, and
the Company shall have no further obligations to
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the Executive under this Agreement.
If within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice notifies the other party that a dispute exists
concerning the grounds for termination, then, notwithstanding the meaning of
"Termination Date" set forth in Subsection I(z), the Termination Date shall be
the date on which the dispute is finally resolved, whether by mutual written
agreement of the parties or by a decision rendered pursuant to Section XI;
provided that the Termination Date shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Company will continue to
pay the Executive his full compensation in effect when the notice giving rise
to the dispute was given, and continue the Executive as a participant in all
benefits plans or perquisites in which the Executive was participating or which
he was enjoying when the Notice of Termination giving rise to the dispute was
given, until the dispute is finally resolved. Amounts paid under this
Subsection III(b) are in addition to all other amounts due under this Agreement
and shall not be offset against or reduce any other amounts due under this
Agreement.
IV. Compensation Upon a Termination
Following a Change of Control of the Company, upon a Termination of the
Executive's employment, the Executive shall be entitled to the following
benefits, provided that the Termination occurs during the three-year period
immediately following the date of the Change of Control:
(a) Standard Benefits. The Company shall pay the Executive his full
base salary through the Termination Date at the rate in effect at the time the
Notice of Termination is given, no later than the second day following the
Termination Date, plus all other amounts to which the Executive is entitled
under any compensation plan of the Company applicable to the Executive at the
time such payments are due. Without limitation, amounts payable pursuant to
this Subsection IV(a) shall include, pursuant to the express terms of the
short-term incentive plan in which the Executive participates or otherwise, the
Executive's annual bonus under such short-term incentive plan, pro-rated to the
Termination Date.
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(b) Additional Benefits. The Company shall pay to the Executive as
additional pay ("Additional Pay"), the product of (i) the lesser of (x) three
(3) or (y) the difference between sixty-five (65) and the Executive's age as
of the date of the Notice of Termination (calculated to the nearest twelfth of
a year), multiplied by (ii) the sum of (x) the Executive's annual base salary
rate in effect immediately prior to the Termination Date and (y) the
Executive's annual bonus amount under the short-term incentive plan in which
the Executive participates, such bonus amount to be calculated on the basis of
the extent to which the performance factors targeted by the Human Resources
Committee of the Board have been achieved (for this purpose, the Company's
performance through the Termination Date shall be annualized based upon the
actual number of days elapsed from the beginning of the fiscal year in which
the Termination occurs through the Termination Date over a year of 360 days),
which shall be deemed to be 100% unless the performance actually achieved is
greater than 100%, in which case the actual performance levels shall be
utilized. The Company shall pay to the Executive the Additional Pay in a lump
sum, in cash, not later than the fifteenth day following the Termination Date.
(c) Retirement Plan Benefits. If not already vested, the Executive
shall be deemed fully vested in all Company retirement plans and/or other
written agreements relating to pay upon retirement in which the Executive was a
participant, party or beneficiary immediately preceding a Change of Control,
and any additional plans and/or agreements in which such Executive became a
participant, party or beneficiary thereafter. In addition to the foregoing,
for purposes of determining the amounts to be paid to the Executive under such
plans and/or agreements, the years of service with the Company and the age of
the Executive under all such plans and agreements shall be deemed increased by
the lesser of thirty-six (36) months or such shorter period of time as would
render the Executive sixty-five (65) years of age. For purposes of this
Subsection IV(c), "plans" include, without limitation, the Company's qualified
pension plan, non-qualified and mid-career retirement plans, and "agreements"
encompass the terms of any offer letters leading to the Executive's employment
with the Company where the Executive was a signatory thereto and any written
amendments to the foregoing. In the event that the terms of the plans
referenced in this Subsection IV(c) do not for any reason (e.g., if plan
amendments would cause disqualification of qualified plans) coincide with the
provisions of this Subsection
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IV(c), the Executive shall be entitled to receive from the Company under the
terms of this Agreement an amount equivalent to all amounts he would have
received had all such plans continued in existence as in effect on the date of
this Agreement after being amended to coincide with the terms of this
Subsection IV(c).
(d) Health Benefits. Following the Termination Date, the Company shall
continue to provide health, vision and dental benefits to the Executive and the
Executive's eligible dependents on terms substantially equivalent to those on
which the Company provides such benefits to retired employees who were service
pension-eligible at the time of the Change of Control and whose retirement date
most closely approximates the date of the Change of Control. The eligibility
of the Executive's dependents shall be determined by the terms of the health,
vision and dental benefit plans in effect prior to the Change of Control.
(e) Gross-Up Payments.
(i) In the event that any payment or the value of any benefit
received or to be received by the Executive in connection with the Executive's
Termination or contingent upon a Change of Control of the Company (whether
received or to be received pursuant to the terms of this Agreement (the
"Agreement Payments") or of any other plan, arrangement or agreement of the
Company, its successors, any person whose actions result in a Change of Control
of the Company or any person affiliated with any of them (or which, as a result
of the completion of the transactions causing a Change of Control, will become
affiliated with any of them) ("Other Payments" and, together with the Agreement
Payments, the "Payments")) would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") or
any comparable federal, state or local excise tax (such excise tax, together
with any interest and penalties, are hereinafter collectively referred to as
the "Excise Tax"), as determined as provided below, the Company shall pay to
the Executive an additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive, after deduction of the Excise Tax on
Agreement Payments and Other Payments and any federal, state and local income
tax and Excise Tax upon the payment provided for by this Subsection IV(e)(i),
and any interest, penalties or additions to tax payable by the Executive with
respect
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thereto shall be equal to the total present value of the Agreement Payments and
Other Payments at the time such Payments are to be made. The intent of the
parties is that the Company shall be solely responsible for and shall pay, any
Excise Tax on any Payments and Gross-Up Payment and any income and employment
taxes (including, without limitation, penalties and interest) imposed on any
Gross-Up Payments as well as any loss of deduction caused by the Gross-Up
Payment.
(ii) All determinations required to be made under this
Subsection IV(e), including, without limitation, whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determinations, shall be made by tax counsel
selected by the Company and reasonably acceptable to the Executive ("Tax
Counsel"). The Company shall cause the Tax Counsel to provide detailed
supporting calculations to the Company and the Executive within fifteen (15)
business days after notice is given by the Executive to the Company that any or
all of the Payments have occurred, or such earlier time as is requested by the
Company. Within two (2) business days after such notice is given to the
Company, the Company shall instruct the Tax Counsel to timely provide the data
required by this Subsection IV(e) to the Executive. All fees and expenses of
the Tax Counsel shall be paid solely by the Company. Any Excise Tax as
determined pursuant to this Subsection IV(e) shall be paid by the Company to
the Internal Revenue Service and/or other appropriate taxing authority on the
Executive's behalf within five (5) days after receipt of the Tax Counsel's
determination. If the Tax Counsel determines that there is substantial
authority (within the meaning of Section 6662 of the Code) that no Excise Tax
is payable by the Executive, the Tax Counsel shall furnish the Executive with a
written opinion that failure to disclose or report the Excise Tax on the
Executive's federal income tax return will not constitute a substantial
understatement of tax or be reasonably likely to result in the imposition of a
negligence or similar penalty. Any determination by the Tax Counsel shall be
binding upon the Company and the Executive in the absence of material
mathematical or legal error. As a result of the uncertainty in the application
of Section 4999 of the Code at the time the initial determination by the Tax
Counsel hereunder, it is possible that Gross-Up Payments will not have been
made by the Corporation that should have been
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made or that Gross-Up Payments have been made that should not have been made,
in each case, consistent with the calculations required to be made hereunder.
In the event the Company exhausts its remedies pursuant to Subsection
IV(e)(iii) below and the Executive is thereafter required to make a payment of
any Excise Tax, the Tax Counsel shall determine the amount of underpayment of
Excise Taxes that has occurred and any such underpayment shall be promptly paid
by the Company to the Internal Revenue Service or other appropriate taxing
authority on the Executive's behalf or, if such underpayment has been
previously paid by the Executive, to the Executive. In the event that the Tax
Counsel determines that an overpayment of Gross-Up Payments has occurred, any
such overpayment shall be treated for all purposes as a loan to the Executive
with interest at the applicable federal rate provided for in Section 7872(f)(2)
of the Code, due and payable within ninety (90) days after written demand to
the Executive by the Company; provided, however, that the Executive shall have
no duty or obligation whatsoever to repay such loan unless the Executive's
receipt of the overpayment, or any portion thereof, is includible in the
Executive's income and the Executive's repayment of the same is not deductible
by the Executive for federal and state income tax purposes.
(iii) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service or state or local taxing authority, that,
if successful, would result in any Excise Tax or an underpayment of Gross-Up
Payments. Such notice shall be given as soon as practicable but no later than
fifteen (15) business days after the Executive is informed in writing of the
claim and shall inform the Company of the nature of the claim, the
administrative or judicial appeal period, and the date on which any payment of
the claim must be paid. The Executive shall not pay any portion of the claim
prior to the expiration of the thirty (30) day period following the date on
which the Executive gives such notice to the Company (or such shorter period
ending on the date that any amount under the claim is due). If the Company
notifies the Executive in writing prior to the expiration of such thirty (30)
day period that it desires to contest the claim, the Executive shall:
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(A) give the Company any information reasonably
requested by the Company relating to the claim;
(B) take such action in connection with contesting
the claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation concerning the
claim by an attorney selected by the Company who is reasonably acceptable to
the Executive; and
(C) cooperate with the Company in good faith in
order to effectively contest the claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including, without limitation, additional interest and
penalties and attorneys' fees) incurred in such contests and shall indemnify
and hold the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including, without limitation, interest and penalties thereon)
imposed as a result of such representation. Without limitation upon the
foregoing provisions of this Subsection IV(e) (iii), except as provided below,
the Company shall control all proceedings concerning such contest and, in its
sole opinion, may pursue or forego any and all administrative appeal,
proceedings, hearings and conferences with the taxing authority pertaining to
the claim. At the written request of the Company and upon payment to the
Executive of an amount at least equal to the claim plus any additional amount
necessary to obtain the jurisdiction of the appropriate tribunal and/or court,
the Executive shall pay the same and sue for a refund. The Executive agrees to
prosecute any contest of a claim to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
requests the Executive to pay the claim and sue for a refund, the Company shall
advance the amount of such payment to the Executive, on an interest-free basis,
and shall indemnify and hold the Executive harmless on an after-tax basis,
from any Excise Tax or income tax (including, without limitation, interest and
penalties thereon) imposed on such advance or for any imputed income on such
advance. Any extension of the statute of limitations relating to assessment of
any Excise Tax for the taxable year of the Executive which is the subject of
the claim is to be limited
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solely to the claim. Furthermore, the Company's control of the contest shall
be limited to issues for which a Gross-Up Payment would be payable hereunder.
The Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(iv) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Subsection IV(e)(iii) above, the Executive
receives any refund of a claim and/or any additional amount that was necessary
to obtain jurisdiction, the Executive shall promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Subsection IV(e)(iii) above, a
determination is made that the Executive shall not be entitled to any refund of
the claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund of a claim prior to the expiration of
thirty (30) days after such determination, then the portion of such advance
attributable to a claim shall be forgiven and shall not be required to be
repaid. The amount of such advance attributable to a claim shall offset, to
the extent thereof, the amount of the underpayment required to be paid by the
Company to the Executive.
(v) If, after the advance by the Company of an additional
amount necessary to obtain jurisdiction, there is a final determination made by
the taxing authority that the Executive is not entitled to any refund of such
amount, or any portion thereof, then such nonrefundable amount shall be repaid
to the Company by the Executive within thirty (30) days after the Executive
receives notice of such final determination. A final determination shall occur
when the period to contest or otherwise appeal any decision by an
administrative tribunal or court of initial jurisdiction has been waived or the
time for contesting or appealing the same has expired.
(f) Legal Fees and Expenses. The Company shall pay to the Executive
all legal fees and expenses as and when incurred by the Executive in connection
with this Agreement, including all such fees and expenses, if any, incurred in
contesting or disputing any
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Termination or in seeking to obtain or enforce any right or benefit provided by
this Agreement, regardless of the outcome, unless, in the case of a legal
action brought by or in the name of the Executive, a decision is rendered
pursuant to Section X that such action was not brought by the Executive in good
faith.
(g) No Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for in this Section IV by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Section IV be reduced by any compensation earned by the
Executive as the result of employment by another employer or by retirement or
other benefits received after the Termination Date or otherwise, except as
specifically provided in this Section IV. The Company's obligation to make
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company or
Employer may have against the Executive or other parties.
V. Death and Disability Benefits
In the event of the death or Disability of the Executive after a Change
of Control of the Company, the Executive, or in the case of death, the
Executive's beneficiaries, shall receive the benefits to which they are
entitled under the retirement plans, disability policies and other applicable
plans of the Company.
VI. Successors; Binding Agreement
(a) Obligations of Successors. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company is required to perform it. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the same
terms as the Executive would be entitled hereunder if the Executive had
terminated employment for Good Reason following a Change of Control of the
Company, except that for purposes of implementing the foregoing,
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the date on which any such succession becomes effective shall be deemed the
Termination Date. As used in this Agreement, the "Company" shall mean the
Company as hereinabove defined and any successor to its business and/or assets
as aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(b) Enforceable by Beneficiaries. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees (the "Beneficiaries"). In the event of the death of the
Executive while any amount would still be payable hereunder if such death had
not occurred, all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the Executive's
Beneficiaries.
(c) Employment. Except in the event of a Change of Control and,
thereafter, only as specifically set forth in this Agreement, nothing in this
Agreement shall be construed to (i) limit in any way the right of the Company
or a Subsidiary to terminate the Executive's employment at any time for any
reason or for no reason; or (ii) be evidence of any agreement or understanding,
expressed or implied, that the Company or a Subsidiary will employ the
Executive in any particular position, on any particular terms or at any
particular rate of remuneration.
VII. Confidential Information.
The Executive shall hold in fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge or data relating to
the Company, the Subsidiaries and their respective businesses, which shall have
been obtained during the Executive's employment by the Employer and which shall
not be public knowledge (other than by acts by the Executive or his
representatives in violation of this Agreement). After termination of the
Executive's employment with the Company or any Employer within the Controlled
Group, the Executive shall not, without prior written consent of the Company or
the Employer, communicate or divulge any such information, knowledge or data to
anyone other than the Company, the Employer or those designated by them. In no
event shall an asserted violation of this Section VII constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
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VIII. Notice
All notices and communications hereunder shall be in writing and shall
be given by hand delivery to the other party, by registered or certified mail,
return receipt requested, postage prepaid, or by overnight mail, addressed as
follows:
If to the Executive:
Mr. James H. Stever
U S WEST, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
If to the Company:
U S WEST, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
Attn.: Executive Vice President, General Counsel
and Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
IX. Miscellaneous
No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and
signed by the Executive and the Company's Chief Executive Officer. No waiver
by either party hereto at any time of any breach by the other party hereto of,
or compliance with, any conditions or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Colorado. All references to sections of the Code or the
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Exchange Act shall be deemed also to refer to any successor provisions of such
sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law. The
obligations of the Company under Sections IV and V shall survive the expiration
of the term of this Agreement.
X. Validity
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
XI. Arbitration
The Executive may agree in writing with the Company (in which case this
Article XI shall have effect but not otherwise) that any dispute that may arise
directly or indirectly in connection with this Agreement, the Executive's
employment or the termination of the Executive's employment, whether arising in
contract, statute, tort, fraud, misrepresentation, or other legal theory, shall
be determined solely by arbitration in Denver, Colorado under the rules of the
AAA. The only legal claims between the Executive, on the one hand, and the
Company or any Subsidiary, on the other, that would not be included in this
agreement to arbitration are claims by the Executive for workers' compensation
or unemployment compensation benefits, claims for benefits under a Company or
Subsidiary benefit plan if the plan does not provide for arbitration of such
disputes, and claims by the Executive that seek judicial relief in the form of
specific performance of the right to be paid until the Termination Date during
the pendency of any dispute or controversy arising under or Subsection III(b).
If this Article XI is in effect, any claim with respect to this Agreement, the
Executive's employment or the termination of the Executive's employment must be
established by a preponderance of the evidence submitted to the impartial
arbitrator. A single arbitrator engaged in the practice of law shall conduct
any arbitration under the then current procedures of the American Arbitration
Association (the "AAA") and under the AAA's then current Model Employment
Arbitration Rules. The arbitrator shall have the authority to order a
pre-hearing exchange of information by the parties including, without
limitation, production of requested documents, and examination by deposition of
parties and
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their authorized agents. If this Article XI is in effect, the decision of the
arbitrator (i) shall be final and binding, (ii) shall be rendered within ninety
(90) days after the impanelment of the arbitrator, and (iii) shall be kept
confidential by the parties to such arbitration. The arbitration award may be
enforced in any court of competent jurisdiction. The Federal Arbitration Act,
9 U.S.C. 1-15, not state law, shall govern the arbitrability of all claims.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign both originals of this letter and return to the Executive Vice
President, General Counsel and Secretary of the Company one of the fully
executed originals of this letter which will then constitute our agreement on
this subject.
Sincerely,
U S WEST, Inc.
By: /s/ Richard D. McCormick
Richard D. McCormick
Chairman, President and
Chief Executive Officer
/s/ James H. Stever
James H. Stever