EMPLOYEE MATTERS AGREEMENT
TRANSFER, ASSUMPTION AND/OR DIVISION
OF EMPLOYEE BENEFITS PLANS AND EMPLOYEE ARRANGEMENTS
TABLE OF CONTENTS
Page
1. DEFINITIONS................................................................................... 1
2. GENERAL PRINCIPLES............................................................................ 7
(a) New U S WEST Liabilities............................................................. 7
(b) MediaOne Liabilities................................................................. 8
(c) Shared Liabilities................................................................... 8
(d) Class Action Liabilities............................................................. 9
(e) Appeal Rights........................................................................ 9
(f) Funded Benefits...................................................................... 9
(g) Control of litigation................................................................ 9
(h) Election to Assume Liability......................................................... 10
3. SPONSORSHIP AND ADMINISTRATION OF EMPLOYEE BENEFIT PLANS AND EMPLOYEE ARRANGEMENTS............ 11
4. EMPLOYEE SAVINGS PLANS........................................................................ 12
5. TRANSFER OF U S WEST PENSION PLAN ASSETS AND LIABILITIES...................................... 16
6. OTHER TAX-QUALIFIED PLANS..................................................................... 24
7. WELFARE PLANS................................................................................. 24
(a) Communications Plans................................................................. 24
(b) Media Plans.......................................................................... 24
(c) Joint Plans.......................................................................... 25
(d) Continuing Treatment................................................................. 27
(e) Continuance of Elections............................................................. 27
(f) Co-Payments and Maximum Benefits..................................................... 27
(g) Pre-existing conditions.............................................................. 28
(h) COBRA................................................................................ 28
(i) Long-Term Disability................................................................. 29
8. VEBA's........................................................................................ 29
9. INCENTIVE COMPENSATION........................................................................ 33
(a) Stock Options........................................................................ 33
(b) Restricted Stock..................................................................... 35
(c) LTIP................................................................................. 37
(d) ESTIP................................................................................ 37
(e) Phantom Stock........................................................................ 37
10. OTHER BENEFITS................................................................................ 39
(a) Top-hat plans........................................................................ 39
(b) Employment contracts................................................................. 40
(c) Split-dollar contracts............................................................... 40
(d) Ex-Pat Employees..................................................................... 41
(e) Vail Trust........................................................................... 41
(f) Leaves of Absence.................................................................... 41
(g) Non-Employee Director Plans.......................................................... 42
(h) Non-Employee State Executive Board Plan.............................................. 42
11. PORTABILITY................................................................................... 43
12. FURTHER AGREEMENTS............................................................................ 43
13. COOPERATION................................................................................... 44
14. NON-TERMINATION OF EMPLOYMENT; NO THIRD-PARTY BENEFICIARIES................................... 45
15. MISCELLANEOUS................................................................................. 46
(a) Payment of 1998 Administrative Costs and Expenses.................................... 46
(b) Audit Rights......................................................................... 47
(1) Information Provided............................................................ 47
(2) Vendor Contracts................................................................ 47
(c) Beneficiary Designations............................................................. 48
(d) Effect If Separation Does Not Occur.................................................. 48
(e) Provisions of Separation Agreement................................................... 48
(f) U S WEST Benefits Handbook........................................................... 48
EMPLOYEE MATTERS AGREEMENT
TRANSFER, ASSUMPTION AND/OR DIVISION
OF EMPLOYEE BENEFITS PLANS AND EMPLOYEE ARRANGEMENTS
1. DEFINITIONS
(a) All capitalized terms used in this EM Agreement shall have
the meanings set forth below or , if not set forth below,
the meaning given in the Separation Agreement.
"AirTouchTransfers" shall mean Terminated Employees whose employment is
transferred to AirTouch Communications, Inc. or any of its affiliates
prior to the Separation Time as a result of the merger agreement among
Existing U S WEST, certain subsidiaries thereof and AirTouch
Communications, Inc. and who either: (i) are eligible for retiree
medical coverage or retiree life insurance as of the date of transfer
of employment; or (ii) have an account balance in the Media Savings
Plan/ESOP immediately after the Separation Time. "Average Value" shall
mean the average Market Value of the Communications Stock or Media
Stock, as applicable, over the period of 20 Trading Days ending on the
fifth Trading Day prior to the date of the Separation Time, rounded to
the nearest one-hundred thousandth (or if there shall not be a nearest
one-hundred thousandth, to the next highest one-hundred thousandth).
"Cable Companies" shall mean MediaOne of Delaware, Inc. (f/k/a Continental
Cablevision, Inc.), MediaOne, Inc. and/or MediaOne of Michigan, Inc.
(f/k/a Booth Communications), or their predecessors.
"COBRA" shall mean the continuation coverage requirements for group health
plans under Title X of the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, and as codified in Code Section 4980B and
ERISA Sections 601 through 608.
"Communications Employees" shall mean all persons who are Employees of the
New U S WEST Group at the Separation Time, including without
limitation (1) Employees who worked for Existing U S WEST prior to the
Separation Time that are designated as Communications Employees by
Existing U S WEST as of the Separation Time, (2) Employees who, prior
to the Separation Time, worked for an entity that is a member of the
MediaOne Group that are designated as Communications Employees as of
the Separation Time, and (3) Employees who, prior to the Separation
Time, worked for Dex that are designated as Communications Employees
as of the Separation Time.
"Communications Employee Arrangements" shall mean all Employee
Arrangements sponsored by members of the New U S WEST Group after
the Separation Time.
"Communications Employee Benefit Plans" shall mean all Employee
Benefit Plans sponsored by members of the New U S WEST Group
after the Separation Time.
"DeferredBenefits" shall mean the entitlement of a Terminated
Employee, based solely on the records of the Existing U S WEST
Group at the Separation Time, to future benefits under one or
more of the Deferred Plans. Except as provided in the definition
of Terminated Media Employee and Terminated Inc. Employee, a
Terminated Employee who, according to such records, is not
entitled to any benefits under the Deferred Plans or who has
already received all of such benefits prior to the Separation
Time does not have any Deferred Benefits.
"DeferredPlans" shall mean the U S WEST Employee Savings Plan/ESOP
(except accounts attributable to AirTouch Transfers); the U S
WEST Pension Plan (including the disability pensions provided
thereunder); retiree medical benefits under any medical plan
maintained by the Existing U S WEST Group (but excluding COBRA);
and long-term disability benefits under a long-term disability
plan maintained by the Existing U S WEST Group.
"EBC" shall mean the Employee Benefits Committee of Existing U S
WEST as constituted prior to the Separation Time.
"EM Agreement" shall mean this Employee Matters Agreement,
which is Exhibit A to the Separation Agreement.
"Employee" means a person who is an employee of the Existing U S WEST
Group at the Separation Time, including an employee who is not
actively performing services because such employee is on an
approved leave of absence, short-term disability, illness or
other similar reasons. Employee shall include: (i) a person who
is a former employee of the Existing U S WEST Group; and/or (ii)
a person who has been transferred to Time Warner Communications
pursuant to the agreement of Existing U S WEST and Time Warner
Communications; and/or (iii) a person who is an employee of Time
Warner Communications at the Separation Time, including an
employee who is not actively performing services because such
employee is on an approved leave of absence, short-term
disability, illness or other similar reasons. In addition, an
individual who is described in either of the preceding sentences
(whether he works for the Existing U S WEST Group or Time Warner
Communications) immediately prior to the Separation Time who does
not report for work to the New U S WEST Group, MediaOne Group or
Time Warner Communications (depending upon his applicable
assignment) immediately after the Separation Time shall be
considered an Employee (for purposes of this EM Agreement only)
unless (1) prior to the Separation Time, he notifies the Existing
U S WEST Group or Time Warner Communications, as applicable, that
he is terminating, effective on or before the Separation Time or
(2) prior to the Separation Time, the Existing U S WEST Group or
Time Warner Communications, as applicable, notifies him that he
is terminated, effective on or before the Separation Time. All
Employees shall be either Communications Employees or Media
Employees. A former employee who is on lay-off is a Terminated
Employee, not an Employee.
"Employment Related Liabilities" shall mean all Liabilities, including
litigation costs, which relate to an Employee, a Terminated
Employee or their respective dependents and beneficiaries, in
each case relating to, arising out of or resulting from
employment by the Existing U S WEST Group or predecessor prior to
the Separation Time, including Liabilities under Employee Benefit
Plans and Employee Arrangements. Notwithstanding the preceding
sentence, the following Liabilities are not Employment Related
Liabilities: (1) any Liability which is specifically addressed in
a provision other than Section 2 of this EM Agreement, (2)
Liabilities arising under or relating to the severance agreements
between Existing U S WEST and members of the Executive Group
(which Liabilities are addressed in Schedules 3.4(a) and 3.4(b)
of the Separation Agreement) and (3) any other Liability
scheduled in the Separation Agreement.
"Executive Group" shall mean Richard D. McMormick, Charles P. Russ
III, Michael P. Glinsky, Robert W. Gras, and James T. Anderson.
"ExistingU S WEST" shall mean U S WEST, Inc., a Delaware corporation,
prior to the Separation Time.
"ExistingU S WEST Group" shall mean, prior to the Separation Time,
Existing U S WEST and all of its Subsidiaries.
"Media Employees" shall mean all persons who are Employees of the MediaOne
Group at the Separation Time, including without limitation (1)
Employees who worked for Existing U S WEST prior to the Separation
Time that are designated as Media Employees by Existing U S WEST as of
the Separation Time (including, without limitation, Employees who are
employed by Time Warner Communications), (2) Employees who, prior to
the Separation Time, worked for an entity that is a member of the New
U S WEST Group that are designated as Media Employees as of the
Separation Time and (3) Employees who, prior to the Separation Time,
worked for MGI that are designated as Media Employees as of the
Separation Time.
"Media Employee Arrangements" shall mean the Employee Arrangements
sponsored by members of the MediaOne Group after the Separation
Time.
"Media Employee Benefit Plans" shall mean the Employee Benefit Plans
sponsored by members of the MediaOne Group after the Separation
Time.
"MediaOne" shall mean MediaOne Group, Inc., a Delaware corporation, at and
after the Separation Time. MediaOne was known as U S WEST, Inc. prior
to the Separation Time.
"MediaOne Employee Benefits Committee" shall mean, effective on and after
the Separation Time, the committee of MediaOne Group, Inc. designated
to administer various Media Employee Benefit Plans and Media Employee
Arrangements.
"MediaOne Group" shall mean, at and after the Separation Time, MediaOne
Group, Inc. and all of its Subsidiaries.
"New U S WEST Employee Benefits Committee" shall mean,
effective on and after the Separation Time, the committee
of New U S WEST designated to administer various
Communications Employee Benefit Plans and Communications
Employee Arrangements.
"Non-Employee Directors" shall mean those members of the Board of
Directors of the respective corporation who are or were not
employees of that entity during their term of office. "Retired
Non-Employee Directors" shall mean those Non-Employee Directors
who have completed their term on the respective Board of
Directors prior to the Separation Time.
"Non-Employee Director Plans" shall mean the U S WEST, Inc. Deferred
Compensation Plan for Non-Employee Directors and the U S WEST, Inc.
Retirement Plan for Non-Employee Directors.
"Separation Agreement" shall mean the Separation Agreement, dated as of
June 5, 1998, between U S WEST, Inc. and USW-C, Inc.
"Terminated Communications Employees" shall mean all persons who are
Terminated Employees and who are not Terminated Media Employees or
Terminated Inc. Employees. Terminated Communications Employees shall
include (1) all Terminated Employees (other than AirTouch Transfers)
with Deferred Benefits (unless they were actively employed by one of
the Cable Companies on their last day of active employment with the
Existing U S WEST Group); (2) all Terminated Employees who were last
actively employed before November 1, 1995 (unless they were actively
employed by one of the Cable Companies on their last day of active
employment with the Existing U S WEST Group) and are not entitled to
Deferred Benefits at the Separation Time; and (3) all Terminated
Employees who were last actively employed (on or after November 1,
1995 and before the Separation Time) by an entity that is a member of
the New U S WEST Group (excluding MGI, but including Dex and its
subsidiaries) after the Separation Time and are not entitled to
Deferred Benefits at the Separation Time.
"Terminated Employee" means a person who formerly was actively
employed by the Existing U S WEST Group and who is not an
Employee. An individual who is employed by the Existing U S WEST
Group immediately prior to the Separation Time who does not
report for work to the New U S WEST Group or MediaOne Group
(depending upon his applicable assignment) immediately after the
Separation Time shall be considered a Terminated Employee if (1)
prior to the Separation Time, he notifies Existing U S WEST or
its Subsidiaries that he is terminating, effective on or before
the Separation Time or (2) prior to the Separation Time, Existing
U S WEST or its Subsidiaries notify him that he is terminated,
effective on or before the Separation Time. All members of the
Executive Group shall be Terminated Employees. Each Terminated
Employee shall be either (a) a Terminated Communications
Employee, (b) a Terminated Inc. Employee or (c) a Terminated
Media Employee, provided that, to the extent set forth in this EM
Agreement, a Terminated Employee may be classified differently
for different purposes.
"Terminated Inc. Employees" shall mean all Terminated Employees who
were last actively employed (on or after November 1, 1995 and
before the Separation Time) by Existing U S WEST (but not its
Subsidiaries) and are not entitled to Deferred Benefits at the
Separation Time. If, after the Separation Time, it is determined
by a final decision of a court of competent jurisdiction or an
agreement of MediaOne and New U S WEST that a Terminated Inc.
Employee is entitled to benefits under one or more Deferred Plans
(other than as a result of future employment with the MediaOne
Group or New U S WEST Group), such Terminated Employee shall be
considered to have Deferred Benefits solely with respect to those
Deferred Plans that owe him additional benefits (and shall
therefore be a Terminated Communications Employee solely with
respect to such Deferred Plans).
"Terminated Media Employees" shall mean (1) all Terminated Employees
(whether or not they have Deferred Benefits) who were actively
employed by one of the Cable Companies on their last day of
active employment with the Existing U S WEST Group; (2) all
Terminated Employees who were last actively employed (on or after
November 1, 1995 and before the Separation Time) by an entity
that is a member of the MediaOne Group after the Separation Time
(unless such last employer was Existing U S WEST) and are not
entitled to Deferred Benefits at the Separation Time; (3) all
Terminated Employees who were last actively employed (on or after
November 1, 1995 and before the Separation Time) by MGI and are
not entitled to Deferred Benefits at the Separation Time; and (4)
all AirTouch Transfers, regardless of their last day of
employment. Notwithstanding the foregoing, if, after the
Separation Time, it is determined by a final decision of a court
of competent jurisdiction or an agreement of MediaOne and New U S
WEST that a Terminated Media Employee described in clause (2) or
(3) above is entitled to benefits under one or more Deferred
Plans (other than as a result of future employment with the
MediaOne Group or New U S WEST Group), such Terminated Employee
shall be considered to have Deferred Benefits solely with respect
to those Deferred Plans that owe him additional benefits (and
shall therefore be a Terminated Communications Employee solely
with respect to such Deferred Plans.
"Welfare Plan" shall mean an Employee Benefit Plan which is a health
benefit, life insurance or other employee welfare benefit plan,
within the meaning of Section 3(1) of ERISA, which is maintained
by Existing U S WEST, New U S WEST, MediaOne or a Subsidiary of
any of them.
(b) All determinations under this Section 1 with respect to status as
an Employee, Terminated Employee, Media Employee, Communications
Employee, Terminated Media Employee, Terminated Inc. Employee or
Terminated Communications Employee shall be made as of the
Separation Time, unless otherwise specifically set forth in this
Section 1.
(c) Notwithstanding the foregoing definitions, in the event it is
unclear as to whether a Terminated Employee is a Terminated
Communications Employee, Terminated Inc. Employee or a Terminated
Media Employee, or in the event that a Terminated Employee was
last actively employed at a time the individual was on a
temporary transfer from one member of the Existing U S WEST Group
to another for less than 12 months, MediaOne and New U S WEST
shall agree on an equitable classification of such employee or
employees (and the assumption of any liability attributable
thereto).
2. GENERAL PRINCIPLES
(a) New U S WEST Liabilities. Except as otherwise provided in this EM
Agreement, New U S WEST and its Subsidiaries hereby assume and agree to
pay, perform, fulfill and discharge:
(1) All Employment Related Liabilities (regardless of where
such Employment Related Liabilities arose or arise or were or are
incurred) to or relating to Communications Employees and
Terminated Communications Employees;
(2) All Liabilities, including litigation costs, relating
to, or arising out of or resulting from the performance of
services to the New U S WEST Business (other than MGI) prior to
the Separation Time by an independent contractor, leased employee
or similar individual or by any person who alleges that he was an
employee of the New U S WEST Business (other than MGI) prior to
the Separation Time or the dependent or beneficiary of any such
independent contractor or alleged employee;
(3) All Liabilities, including litigation costs, which
relate to a Communications Employee or his dependents and
beneficiaries, in each case relating to, arising out of or
resulting from employment by the New U S WEST Group on or after
the Separation Time (including Liabilities under Communications
Employee Benefit Plans and Communications Employee Arrangements);
and
(4) All Liabilities, including litigation costs, relating
to, or arising out of or resulting from the performance of
services to the New U S WEST Group on or after the Separation
Time by an independent contractor, leased employee or similar
individual or by any person who alleges that he was an employee
of the New U S WEST Group on or after the Separation Time or the
dependent or beneficiary of any such independent contractor or
alleged employee.
(b) MediaOne Liabilities. Except as otherwise provided in this EM Agreement,
MediaOne and its Subsidiaries hereby assume and agree to pay, perform,
fulfill and discharge:
(1) All Employment Related Liabilities (regardless of where
such Employment Related Liabilities arose or arise or were or are
incurred) to or relating to Media Employees and Terminated Media
Employees;
(2) All Liabilities, including litigation costs, relating
to, or arising out of or resulting from the performance of
services to the MediaOne Business (other than Existing U S WEST)
or MGI prior to the Separation Time by an independent contractor,
leased employee or similar individual or by any person who
alleges that he was an employee of the MediaOne Business (other
than Existing U S WEST) or MGI prior to the Separation Time or
the dependent or beneficiary of any such independent contractor
or alleged employee;
(3) All Liabilities, including litigation costs, which
relate to a Media Employee or his dependents and beneficiaries,
in each case relating to, arising out of or resulting from
employment by the MediaOne Group on or after the Separation Time
(including Liabilities under Media Employee Benefit Plans or
Media Employee Arrangements); and
(4) All Liabilities, including litigation costs, relating
to, or arising out of or resulting from the performance of
services to the MediaOne Group on or after the Separation Time by
an independent contractor, leased employee or similar individual
or by any person who alleges that he was an employee of the
MediaOne Group on or after the Separation Time or the dependent
or beneficiary of any such independent contractor or alleged
employee.
(c) Shared Liabilities. New U S WEST and MediaOne hereby agree to share
equally:
(1) All Employment Related Liabilities (regardless of where
such Employment Related Liabilities arose or arise or were or are
incurred) to or relating to Terminated Inc. Employees; and
(2) All Liabilities, including litigation costs, relating
to, or arising out of or resulting from the performance of
services to Existing U S WEST (but not its Subsidiaries) prior to
the Separation Time by an independent contractor, leased employee
or similar individual or by any person who alleges that he was an
employee of Existing U S WEST prior to the Separation Time or the
dependent or beneficiary of any such independent contractor or
alleged employee.
(d) Class Action Liabilities. For purposes of determining whether the New U S
WEST Group or Media Group is responsible for Liabilities involving or
arising out of actions relating to more than one Employee or Terminated
Employee, the portion of Employment Related Liabilities relating to any
single Employee or Terminated Employee shall be in proportion to the total
number of Employees and Terminated Employees to which the action relates,
whether or not all such Employees or Terminated Employees submit claims.
(e) Appeal Rights. If either New U S WEST or MediaOne believes that the result
arising from the application of the foregoing provisions of this Section 2
will result in an inequitable allocation of liability, it may refer the
matter to the Separation Committee and the procedures set forth in Section
12.2 of the Separation Agreement shall apply. Any such referral must be
made in writing within sixty days after the referring party becomes aware
of the Employment Related Liability to which the referral relates.
(f) Funded Benefits. Notwithstanding the foregoing provisions of this Section
2, neither the New U S WEST Group nor the MediaOne Group shall be liable to
the extent that any Liability is payable from a trust or insurance contract
which funds the benefits under an Employee Benefit Plan or Employee
Arrangement maintained by the New U S WEST Group or MediaOne Group after
the Separation Date.
(g) Control of litigation. Except as set forth in sub-section (h) below, if any
litigation is brought by an Employee or Terminated Employee over
Liabilities addressed in this EM Agreement, the MediaOne Group shall
control the litigation if it is responsible for the Liabilities and the New
U S WEST Group shall control the litigation if it is responsible for the
Liabilities, irrespective of which party is the defendant, provided that if
the party (or its Subsidiaries) entitled to control the litigation is not
sued, it shall not control the litigation unless it agrees in writing that
it will be responsible for any resulting Liability. In the case of a shared
liability described in subsection (c) above or an action described in
subsection (d) above, the parties agree to cooperate to jointly control the
litigation, unless one of the parties agrees to assume all Liabilities
arising out of the litigation.
(h) Election to Assume Liability. In the event that any Employee or Terminated
Employee makes a claim or commences litigation which, if successful, would
result in Liability that is allocated under this EM Agreement (other than
under this paragraph (h)) exclusively to either MediaOne or New U S WEST
(the "Allocated Liability Party"), but which Liability, if any, arises from
alleged actions taken by an Employee or Terminated Employee of the business
of the other party (the "Other Party"), then the Allocated Liability Party
shall give written notice of such claim or litigation (the "Claim Notice")
to the Other Party within thirty days of becoming aware that such claim or
litigation involves an Employee or Terminated Employee of the business of
the Other Party. The Other Party may then elect, by giving written notice
(the "Election Notice") to the Allocated Liability Party within thirty days
after receiving the Claim Notice, to take control of the defense of the
claim and/or litigation and to assume all Liability, including litigation
costs, associated with such claim or litigation (other than a Liability
described in subsection (f) above). If the Election Notice is given, the
Allocated Liability Party shall cease to have any Liability with respect to
the claim or litigation which is the subject of the Election Notice and all
such Liability (other than a Liability described in subsection (f) above)
shall be assumed by the Other Party.
(i) The provisions of this Section 2 are designed solely to
allocate Liabilities between the New U S WEST Group and the
MediaOne Group. Notwithstanding any provision of this EM
Agreement, except to the extent required by the preceding
sentence, this EM Agreement shall not impose any Liability
relating to an Employee or Terminated Employee on any entity or
Subsidiary other than the entity or Subsidiary that incurred the
Liability. For example, if a Communications Employee worked
solely for one Subsidiary of New U S WEST, that Subsidiary (but
not New U S WEST or any other Subsidiary) shall be responsible
for any unfunded Liabilities owed to that individual.
3. SPONSORSHIP AND ADMINISTRATION OF EMPLOYEE BENEFIT PLANS AND
EMPLOYEE ARRANGEMENTS
(a) At or prior to the Separation Time, all Communications Employee
Benefit Plans and Communications Employee Arrangements that are
not already sponsored by a member of the New U S WEST Group shall
be transferred to and assumed by New U S WEST in accordance with
the terms of this EM Agreement. Each of such Communications
Employee Benefit Plans and Communications Employee Arrangements
is hereby amended (such amendments to be self-effectuating),
effective as of the Separation Time, to provide transfer of
sponsorship to New U S WEST. In addition, each Communications
Employee Benefit Plan and Communications Employee Arrangement is
hereby amended (such amendments to be self-effectuating),
effective as of the Separation Time, to provide that the
Liabilities to be assumed by a corresponding Media Employee
Benefit Plan or Media Employee Arrangement shall cease to be
Liabilities under such Communications Employee Benefit Plan or
Communications Employee Arrangement. New U S WEST, MediaOne and
their Subsidiaries shall take all action reasonably appropriate
prior to the Separation Time (or as soon as practicable
thereafter) to effectuate such assumptions, including amendments
of the applicable Employee Benefit Plans and Employee
Arrangements where desirable.
To the extent that any of the Communications Employee Benefit Plans or
Communications Employee Arrangements is administered by the EBC prior
to the Separation Time, such plan or arrangement shall be administered
by the New U S WEST Employee Benefits Committee on and after the
earlier of the Separation Time or the date sponsorship of the
applicable plan or arrangement is assumed by New U S WEST. In
addition, any functions or responsibilities of the Treasurer of
Existing U S WEST with respect to such plans or arrangements prior to
the Separation Time shall become duties and responsibilities of either
the Investment Committee of New U S WEST or U S WEST Investment
Management Company (such duties and responsibilities to be allocated
in accordance with the rules set forth in the U S WEST Pension Plan
after the Separation Time) on the date set forth in the preceding
sentence.
(b) To the extent that a Media Employee Benefit Plan or Media
Employee Arrangement (or, in the case of any newly adopted Media
Employee Benefit Plan or Media Employee Arrangement, the Employee
Benefit Plan or Employee Arrangement that is replaced by such
newly adopted Media plan or arrangement) is administered by the
EBC prior to the Separation Time, such plan or arrangement shall
be administered by the MediaOne Employee Benefits Committee on
and after the Separation Time. In addition, any functions or
responsibilities of the Treasurer of Existing U S WEST with
respect to such plans or arrangements prior to the Separation
Time shall become duties and responsibilities of the Treasurer of
MediaOne (or such other officer or committee as MediaOne or the
MediaOne Employee Benefits Committee shall designate) on and
after the Separation Time.
4. EMPLOYEE SAVINGS PLANS
(a) On or before the Separation Time, sponsorship of the U S WEST
Savings Plan/ESOP (consisting of the "U S WEST Savings Plan" and
the "U S WEST ESOP") shall be transferred from Existing U S WEST
to New U S WEST. Prior to the Separation Time, MediaOne shall
establish a new defined contribution plan or plans consisting of
a profit-sharing plan and a stock bonus plan which shall be an
employee stock ownership plan (the "Media Savings Plan/ESOP",
consisting of the "Media Savings Plan" and the "Media ESOP"),
effective immediately after the Separation Time, for the benefit
of Media Employees and Terminated Media Employees (excluding
persons described in clauses (2) or (3) of the definition of
Terminated Media Employee) covered by the existing U S WEST
Savings Plan/ESOP. The Media Savings Plan/ESOP shall initially
contain terms and conditions that are similar to those of the
existing U S WEST Savings Plan/ESOP, including without limitation
(1) provisions required by Section 411(d)(6) of the Code for
account balances to be transferred from the U S WEST Savings
Plan/ESOP, and (2) provisions granting credit for past service
with the Existing U S WEST Group for purposes of eligibility,
vesting, distributions and withdrawals. Each Media Employee and
Terminated Media Employee who was a participant in the U S WEST
Savings Plan/ESOP as of the Separation Time shall become a
participant in the Media Savings Plan/ESOP as of the Separation
Time.
(b) As soon as reasonably practicable after the Separation Time, New
U S WEST shall cause to be transferred from the U S WEST Savings
Plan to the Media Savings Plan assets having a fair market value
equal to the aggregate value of the account balances in the U S
WEST Savings Plan (but not the ESOP), as of the date of the
transfer, applicable to Media Employees and Terminated Media
Employees, and MediaOne shall cause the Media Savings Plan to
accept such transfers and to assume all Savings Plan liabilities
relating to Media Employees and Terminated Media Employees
(excluding persons described in clauses (2) or (3) of the
definition of Terminated Media Employee). All such liabilities
shall cease to be liabilities of the U S WEST Savings Plan. Such
transfer shall be in (i) shares of MediaOne Common Stock and New
U S WEST Common Stock to the extent such shares are allocated in
the U S WEST Savings Plan to accounts of Media Employees or
Terminated Media Employees, (ii) notes evidencing loans to Media
Employees or Terminated Media Employees, and (iii) with the
balance in cash or, to the extent that the parties mutually
agree, other securities held by the U S WEST Savings Plan.
(c) As soon as reasonably practicable after the Separation Time, New
U S WEST shall cause to be transferred from the U S WEST ESOP to
the Media ESOP assets having a fair market value equal to the
aggregate value of the account balances in the U S WEST ESOP (but
not the Savings Plan), as of the date of the transfer, applicable
to Media Employees and Terminated Media Employees, and MediaOne
shall cause the Media ESOP to accept such transfers and to assume
all ESOP liabilities relating to Media Employees and Terminated
Media Employees (excluding persons described in clauses (2) or
(3) of the definition of Terminated Media Employee). All such
liabilities shall cease to be liabilities of the U S WEST ESOP.
Such transfer shall be in shares of MediaOne Common Stock and of
New U S WEST Common Stock. To the greatest extent possible and
consistent with fiduciary duties under Sections 404 and 406 of
ERISA, the shares of Common Stock shall be transferred so that,
immediately following the transfer, the U S WEST ESOP will have
at least 60% of its assets invested in New U S WEST Common Stock
and the Media ESOP will have at least 60% of its assets invested
in MediaOne Common Stock.
(d) U S WEST Savings Plan/ESOP shall transfer to the Media Savings
Plan/ESOP all qualified domestic relations orders (within the
meaning of Section 414(p) of the Code) ("QDROs") held by the U S
WEST Savings Plan/ESOP with respect to Media Employees and
Terminated Media Employees. New U S WEST shall cause to be
transferred from the U S WEST Savings Plan/ESOP assets having a
fair market value equal to the aggregate account values relating
to such QDROs in accordance with paragraphs (b) and (c) above,
and the Media Savings Plan ESOP shall assume all liabilities
relating to such QDROs.
(e) The U S WEST ESOP will repay all "acquisition loans" (as defined
in the U S WEST Savings Plan/ESOP) prior to the Separation Time.
If, as of the Separation Time, the U S WEST ESOP holds shares of
common stock that have not been allocated to participants'
accounts, the U S WEST ESOP will transfer to the Media ESOP
unallocated shares of stock having a fair market value equal to
(x) the total market value of all unallocated shares held by the
U S WEST ESOP as of the Separation Time, multiplied by (y) the
aggregate dollar value of the Employing Company Contributions
made under the U S WEST ESOP during the first calendar quarter of
1998 as matched allotments to Media Employees and Terminated
Media Employees, divided by (z) the aggregate dollar value of the
Employing Company Contributions made under the U S WEST ESOP
during the first calendar quarter of 1998 as matched allotments
to all Employees and Terminated Employees. To the greatest extent
possible, the unallocated shares transferred to the Media ESOP
pursuant to this paragraph shall be shares of MediaOne Common
Stock.
(f) If required by law, New U S WEST and MediaOne shall cause to be
filed with the IRS all applicable Forms 5310A and any other
required forms with the appropriate governmental agency in order
for the Media Savings Plan/ESOP to receive a transfer of assets
from the U S WEST Savings Plan/ESOP on or following the
Separation Time in accordance with paragraphs (b), (c), (d) and
(e) above. Within nine months after the Separation Time, MediaOne
shall cause to be filed with the IRS a request for a
determination that the Media Savings Plan/ESOP is qualified under
Section 401(a) of the Code. MediaOne agrees to make all
reasonable amendments requested by the IRS to obtain such
determination letter.
(g) Subject to paragraph (h), and in accordance with applicable law
and to the extent consistent with fiduciary duties under Sections
404 and 406 of ERISA, the U S WEST Savings Plan and the U S WEST
ESOP will maintain a MediaOne Common Stock Fund for participants
who retain such investment of their account balances after the
Separation Time. No new investments in the MediaOne Common Stock
Fund of the U S WEST Savings Plan or in the MediaOne Common Stock
Fund of the U S WEST ESOP will be permitted after the Separation
Time. Subject to paragraph (h), and in accordance with applicable
law and to the extent consistent with fiduciary duties under
Sections 404 and 406 of ERISA, the Media Savings Plan and the
Media ESOP will maintain a New U S WEST Common Stock Fund for
participants who retain such investment of their account balances
after the Separation Time. No new investments in the New U S WEST
Common Stock Fund of the Media Savings Plan or in the New U S
WEST Common Stock Fund of the Media ESOP will be permitted after
the Separation Time. The U S WEST Savings Plan (but not the ESOP)
will maintain the MediaOne Common Stock Fund, and the Media
Savings Plan (but not the ESOP) will maintain the New U S WEST
Common Stock Fund, for at least five years after the Separation
Time; as soon as practicable after either plan sponsor decides to
eliminate such stock fund, it shall inform the issuer of the
stock to be sold so that the issuer may arrange a facility to
exercise the right of first refusal described below. When the
trustee of the U S WEST Savings Plan intends to sell MediaOne
Common Stock because the MediaOne Common Stock Fund will no
longer be maintained or the trustee of the Media Savings Plan
intends to sell New U S WEST Common Stock because the New U S
WEST Common Stock Fund will no longer be maintained, such trustee
shall first offer such stock to the issuer prior to offering such
stock for sale on the open market. After the close of business,
the issuer shall then have the right to purchase such stock at
the closing price of the stock on that day. If the issuer does
not exercise such right to purchase, the trustee shall be free to
sell the stock on the open market the next day, provided
that,subject to fiduciary duties under Sections 404 and 406 of
ERISA, the trustee shall not sell in any one day more than 20% of
the average daily trading volume of the relevant stock. (For this
purpose, the average daily trading volume is the arithmetic mean
of the reported daily trading volumes of the relevant stock on
the New York Stock Exchange (or, if not traded on the New York
Stock Exchange, the principal exchange on which the stock is
traded) in the two calendar months preceding any such sale.)
(h) Within two years after the Separation Time, the U S WEST ESOP
(but not the Savings Plan) will dispose of all investment in
MediaOne Common Stock and the Media ESOP (but not the Savings
Plan) will dispose of all investment in New U S WEST Common Stock
(each, a "Non-Employer Common Stock"). Subject to fiduciary
duties under Sections 404 and 406 of ERISA, the U S WEST ESOP
shall exchange shares of MediaOne Common Stock it holds for
shares of New U S WEST Common Stock held by the Media ESOP, and
vice versa, at the Common Stocks' relative fair market values. To
the extent such exchanges are not practicable for some or all of
the Non-Employer Common Stock held by either ESOP, the U S WEST
ESOP and the Media ESOP will sell shares of Non-Employer Common
Stock. As soon as practicable after either plan sponsor decides
to sell such Non-Employer Common Stock, it shall inform the
issuer of the stock to be sold so that the issuer may arrange a
facility to exercise the right of first refusal described below.
When the trustee of the U S WEST ESOP intends to sell MediaOne
Common Stock or the trustee of the Media ESOP intends to sell New
U S WEST Common Stock (other than because of a sale by, or
distribution to, plan participants), such trustee shall first
offer such stock to the issuer prior to offering such stock for
sale on the open market. After the close of business, the issuer
shall then have the right to purchase such stock at the closing
price of the stock on that day. If the issuer does not exercise
such right to purchase, the trustee shall be free to sell the
stock on the open market the next day. Subject to fiduciary
duties under Sections 404 and 406 of ERISA, from the Separation
Time to and including the second anniversary of the Separation
Time, neither the U S WEST ESOP nor the Media ESOP will sell in
any one day more than 20% of the average daily trading volume of
the relevant Non-Employer Common Stock. (For this purpose, the
average daily trading volume is the arithmetic mean of the
reported daily trading volumes of the relevant stock on the New
York Stock Exchange (or, if not traded on the New York Stock
Exchange, the principal exchange on which the stock is traded) in
the two calendar months preceding any such sale.)
(i) MediaOne and New U S WEST shall take such action as necessary to
ensure that participants in the U S WEST Savings Plan/ESOP and
the Media Savings Plan/ESOP are notified that a quiet period will
occur beginning on or about the Separation Time, during which
changes in investment direction with respect to participants'
accounts generally will not be permitted.
(j) The Media Savings Plan/ESOP and the assets and liabilities with
respect thereto shall be considered a Media Employee Benefit
Plan. The U S WEST Savings Plan/ESOP and the assets and
liabilities with respect thereto shall be considered a
Communications Employee Benefit Plan.
5. TRANSFER OF U S WEST PENSION PLAN ASSETS AND LIABILITIES
(a) On or prior to the Separation Time, sponsorship of the U S WEST
Pension Plan shall be transferred from Existing U S WEST to New U
S WEST. Prior to the Separation Time, MediaOne shall establish a
defined benefit pension plan (the "Media Pension Plan"),
effective immediately after the Separation Time, for the benefit
of the Media Employees and Terminated Media Employees (excluding
persons described in clauses (2) or (3) of the definition of
Terminated Media Employee) covered by the existing U S WEST
Pension Plan. The Media Pension Plan shall contain terms and
conditions that are substantially similar to those of the
existing U S WEST Pension Plan, including credit for past service
with the Existing U S WEST Group for eligibility, vesting, early
retirement, and, contingent upon the transfer of assets set forth
in paragraph (b) below, benefit accrual and compensation earned
with the Existing U S WEST Group. Notwithstanding the preceding
sentence, the Media Pension Plan shall contain two benefit
structures. In general, (1) the benefits for all Media Employees
who are employed immediately after the Separation Time and who
earned benefits under Articles V-B or V-D of such Pension Plan
prior to the Separation Time shall continue in such benefit
structure and (2) all other Media Employees, as well as all
future employees of the MediaOne Group shall participate in a
benefit structure substantially similar to the benefit structure
currently contained in the Appendix I of the U S WEST Pension
Plan, provided that this EM Agreement does not obligate MediaOne
to continue to maintain such benefit formulas for any particular
period of time. In addition, the U S WEST Pension Plan currently
contains two subsidies relating to service pensions: (i) the
early retirement pension under the grandfathered formula in
Article V-B (but not the DLS formula in Article V-D) is unreduced
(or provides for a lower reduction) for Participants that are
service pension eligible and (ii) if a lump sum service pension
is elected, a 0% interest rate applies prior to age 65. The Media
Pension Plan shall include, for all Media Employees described in
clause (2) of the second preceding sentence (but not any future
employees of the MediaOne Group or any Terminated Media
Employees) whose combined age and service (in each case rounded
up to the next integer), as of January 1, 1999, equals or exceeds
55, both of the foregoing subsidies with respect to both the DLS
formula set forth in Article 6, and the grandfathered formula in
Article 7 of Appendix I, of the Pension Plan; such provisions
shall be referred to as the "Service Pension Amendments."
Immediately after the Separation Time, all Liabilities under the U
S WEST Pension Plan to, or relating to, Media Employees or
Terminated Media Employees (excluding persons described in
clauses (2) or (3) of the definition of Terminated Media
Employee) shall be assumed by the Media Pension Plan and
shall cease to be Liabilities of the U S WEST Pension
Plans. Such Liabilities shall include all accrued
benefits, within the meaning of Section 411(d)(6) of the
Code, all ancillary benefits (such as the death benefits
set forth in Article VII of the U S WEST Pension Plan and
disability benefits set forth in Appendix J thereof) and
any other benefits. The Media Pension Plan shall comply
with Section 411(d)(6) of the Code with respect to such
assumed Liabilities. Each Media Employee and Terminated
Media Employee who was a participant in the U S WEST
Pension Plan as of the Separation Time shall become a
participant in the Media Pension Plan as of the Separation
Time.
Notwithstanding the foregoing, the following rules shall apply to
any Terminated Employee who is not vested in the U S WEST
Pension Plan at the Separation Time who returns to
employment with either the MediaOne Group or the New U S
WEST Group after the Separation Time. To the extent
required by law, any such Terminated Employee who becomes
entitled to credit, for benefit accrual purposes, for his
service with the Old U S WEST Group prior to the
Separation Time as a result of returning to employment
after the Separation Time, then (1) any benefits
attributable to such prior service shall be payable from
the Media Pension Plan if the individual returns to
employment with the MediaOne Group and (2) any benefits
attributable to such prior service shall be payable from
the U S WEST Pension Plan if the individual returned to
employment with the New U S WEST Group.
(b) New U S WEST shall cause a "spin-off" transfer within the
meaning of Section 414(1) of the Code, from the U S WEST
Pension Plan to the Media Pension Plan in the manner and
at the times specified in paragraph (e) below. For
purposes of this Section 5, the following definitions
shall apply:
(1) "Actuaries" refer to the enrolled actuaries for
the U S WEST Pension Plan at the Separation
Time.
(2) "Contingent Amount" equals the difference
between the amount that the Final Determination
provides that should have been transferred from
the U S WEST Pension Plan to the Media Pension
Plan in connection with the spinoff and the
Media Asset Share. If the difference is
positive, that is, the Final Determination
provides that additional assets should have been
transferred to the Media Pension Plan, the
difference shall be referred to as a "Positive
Contingent Amount." If the difference is
negative, that is, the Final Determination
provides that the amount that should have been
transferred is less than the Media Asset Share,
the difference shall be referred to as a
"Negative Contingent Amount."
(3) "Final Determination" means a final
nonappealable determination by a court, or a
final settlement of litigation or a dispute
among MediaOne, New U S WEST, the U S WEST
Pension Plan and the Media Pension Plan and any
other parties to the litigation or dispute, that
provides that the amount of assets to be
transferred from U S WEST Pension Plan to the
Media Pension Plan in connection with the
spinoff should be more than or less than the
Media Asset Share.
(4) "Media Asset Share" shall mean the product of:
(i) the fair market value of the assets of the U
S WEST Pension Plan as of June 30, 1998, and
(ii) the Media Fraction. For this purpose, (i)
the value of any publicly traded security and
cash shall be determined based on the audited
reports of the trustee of the U S WEST Pension
Plan and (ii) the value of any other securities
or property shall be determined by one or more
third parties selected by MediaOne and New U S
WEST, based on the most recent appraisal or
valuation of the particular security or property
adjusted, if necessary, as determined by the
third party.
(5) "Media Economic PBO" for the U S WEST Pension
Plan shall mean the portion of the Total
Economic PBO as of June 30, 1998 attributable to
the Media Employees and Terminated Media
Employees, as calculated by the Actuaries. For
this purpose, the U S WEST Pension Plan shall be
deemed amended to include the Service Pension
Amendments.
(6) "Media Fraction" for the U S WEST Pension Plan
shall mean (i) the Media Economic PBO, divided
by (ii) the Total Economic PBO.
(7) "Premium Amount" shall equal the estimated PBGC
premiums initially paid to the PBGC by the Media
Pension Plan for plan year 1998, without regard
to any adjustment required as a result of an
audit.
(8) "Total Economic PBO" shall be the projected
benefit obligation, as defined in SFAS No. 87,
of the U S WEST Pension Plan, as calculated by
the Actuaries as of June 30, 1998 using the
actuarial methods and assumptions set forth in
Schedule 1 hereto and any others mutually
agreeable to the parties. For this purpose, the
U S WEST Pension Plan shall be deemed amended to
include the Service Pension Amendments.
(9) "Transfer Amount" shall equal the Media Asset
Share plus the Premium Amount plus the Positive
Contingent Amount and minus the Negative
Contingent Amount.
(c) In order to determine the Media Asset Share, MediaOne and
New U S WEST shall determine in good faith the Media
Employees, Terminated Media Employees, Communications
Employees, Terminated Communications Employees and
Terminated Inc. Employees as of June 30, 1998. Such
determinations shall be updated as soon as practicable but
no later than January 1, 1999, to take into account the
reclassification of Employees as of the Separation Time as
Media Employees or Communications Employees.
(d) If required by law, MediaOne and New U S WEST shall cause to be
filed all applicable Forms 5310A and any other required IRS or
PBGC forms with the appropriate governmental agency in order for
the Media Pension Plan to receive a transfer of assets from the U
S WEST Pension Plan on or following the Separation Time, in
accordance with paragraph (e) below. Within nine months after the
Separation Time, MediaOne shall cause to be filed with the IRS a
request for a determination that the Media Pension Plan is
qualified under Section 401(a) of the Code. MediaOne agrees to
make all reasonable amendments requested by the IRS to obtain
such determination letter.
(e) New U S WEST shall cause the U S WEST Pension Plan to
transfer assets in an amount equal to the Transfer Amount
(plus interest to the extent set forth below) to the Media
Pension Plan and MediaOne shall cause the Media Pension
Plan to accept such assets equal to such Transfer Amount
(and interest), as follows:
(1) On July 1, 1998, an amount equal to 98% of the
Media Asset Share, as estimated by the Actuaries
(immediately prior to July 1, 1998) and provided
to MediaOne and New U S WEST in writing. Such
estimate shall be calculated by assuming the
Media Fraction was calculated as of May 31, 1998
and by using the fair market value of the
assets, as reported by the trustee of the U S
WEST Pension Plan, on May 31, 1998.
(2) As soon as practicable after the value of the
plan assets as of June 30, 1998 is determined
and the Media Asset Share is determined by the
Actuaries and provided in writing to MediaOne
and New U S WEST (but not later than 30 days
after such writing is provided), the excess of
the Media Asset Share over the sum of (i) the
interim transfer effected under (1) above, and
(ii) any benefit payments paid to Terminated
Media Employees or Media Employees by the U S
WEST Pension Plan after June 30, 1998. (If such
amount is a negative number, such amount shall
be transferred from the Media Pension Plan to
the U S WEST Pension Plan.)
(3) In addition, if there is a Final Determination
that sets forth a Contingent Amount, New U S
WEST, the U S WEST Pension Plan, MediaOne, and
the Media Pension Plan agree as follows:
(A) If there is a Positive Contingent Amount, as soon as practicable after
the Final Determination, the U S WEST Pension Plan shall transfer the
assets equal to the Positive Contingent Amount to the Media Pension
Plan, and the Media Pension Plan shall accept such transfers; and
(B) If there is a Negative Contingent Amount, as soon as practicable after
the Final Determination, the Media Pension Plan shall transfer the
assets equal to the Negative Contingent Amount to the U S WEST Pension
Plan, and the U S WEST Pension Plan shall accept such transfers.
(4) As soon as practicable after the Premium Amount
is determined and paid by the Media Pension
Plan, an amount equal to the Premium Amount.
To the extent any of the foregoing amounts set forth in
paragraphs (1) through (4) of this subsection (e) are paid
after July 1, 1998, such amount shall be increased or
decreased by interest from July 1, 1998 to the date of
payment (to the extent not paid or previously advanced) at
a rate equal to the average monthly rate on the Mellon
Trust Short Term Interest Fund (STIF), compounded monthly,
in which the U S WEST Pension Plan and the Media Pension
Plan hold certain temporary cash funds from time to time
(such rate to be provided by the trustee of the plan
making the payment), during the period commencing on July
1, 1998 and ending with the date of payment; provided that
(i) no interest shall be paid with respect to the
Contingent Amount if the Final Determination already
provides for an adjustment reflecting interest or plan
earnings and (ii) no interest shall be paid with respect
to the Premium Amount.
With respect to all of the foregoing transfers between the U S
WEST Pension Plan and the Media Pension Plan, the specific
assets to be transferred shall be cash and other liquid
assets, as agreed upon by New U S WEST and MediaOne in
good faith so as to not treat the Media Pension Plan and
the U S WEST Pension Plan unfairly in any material
respect.
(f) Notwithstanding subsections (a) through (e) above, the
value of assets to be transferred to and liabilities to be
assumed by the Media Pension Plan shall be no less than
that necessary to satisfy the requirements of Section
414(1) of the Code, as determined by the Actuaries, based
on the assumptions used by the PBGC in the case of a
termination of a trusteed pension plan.
(g) MediaOne, New U S WEST, the U S WEST Pension Plan and the Media
Pension Plan (collectively, the "Pension Parties") all agree
that, if there is a Final Determination that provides for a
Contingent Amount, such Final Determination shall be satisfied to
the maximum extent permitted by law by making the transfers among
the U S WEST Pension Plan and the Media Pension Plan as set forth
above, as opposed to requiring any additional contributions or
payments (a "Corporate Liability") from either MediaOne, New U S
WEST or any of their Subsidiaries. The Pension Parties agree to
cooperate to the maximum extent to ensure that no such Corporate
Liability ensues as a result of any Final Determination or claims
relating to the allocation of plan assets between the two plans.
If any litigation is brought against one of the Pension Parties
claiming that the amount of assets transferred from the U S WEST
Pension Plan to the Media Pension Plan should have been higher or
lower, the other Pension Parties shall, at the request of the
Pension Party that was sued, agree to be joined in any such
litigation and to use their best efforts to ensure that any
potential Contingent Amount be satisfied by plan-to-plan
transfers, as opposed to Corporate Liability.
In addition, the Pension Parties agree that, to the extent permitted
by law, any costs of defending any claims that a Contingent
Amount is payable and any Liabilities arising out of such claims
shall be borne by the U S WEST Pension Plan and the Media Pension
Plan.
The following rules shall apply if there is any Corporate Liability
for a Contingent Amount or arising out of any claims that a
Contingent Amount is payable. Any Corporate Liability that is an
out-of-pocket cost of defending any such claims (whether or not
the claims result in litigation), such as attorneys or consultant
fees (but excluding any fees for plaintiffs' attorneys) and
travel expenses, shall be borne equally by New U S WEST and
MediaOne; provided that each party shall bear all expenses for
salaries and benefits of its employees. Any other Corporate
Liability, such as the payment of a Contingent Amount, any direct
payments to claimants in lieu of a Contingent Amount or fees for
plaintiffs' attorneys, shall be borne by (1) New U S WEST, if the
claimants asserted that the amount of plan assets transferred to
the Media Pension Plan should have been greater than the amount
actually transferred and (2) MediaOne, if the claimants asserted
that the amount of plan assets transferred to the Media Pension
Plan should have been less than the amount actually transferred.
(h) The U S WEST Pension Plan shall transfer to the Media
Pension Plan all qualified domestic relations orders
(within the meaning of Section 414(p) of the Code)
("QDROs") held by the U S WEST Pension Plan with respect
to Media Employees and Terminated Media Employees.
(i) Qualified transfers. This subsection (i) applies if a
qualified transfer, within the meaning of Code Section 420
(a "Qualified Transfer"), is made within either the U S
WEST Pension Plan or the Media Pension Plan during the
calendar year in which the Separation Time occurs.
(1) If the Internal Revenue Service, a court of
competent jurisdiction or the sponsor of the
plan in which the Qualified Transfer is made
determines that any Terminated Employees who
terminated employment during the period
commencing twelve months prior to the Qualified
Transfer and ending on the Separation Time are
entitled to vested pension benefits solely
because of the Qualified Transfer, then,
notwithstanding any other provision of this EM
Agreement, the plan in which the Qualified
Transfer is made shall provide such vested
pension benefits to such Terminated Employee.
(2) If (i) the Internal Revenue Service declines to
issue a favorable determination letter with
respect to the provisions of either the U S WEST
Pension Plan or the Media Pension Plan (the "420
Plan") setting forth the terms of a Qualified
Transfer unless Employees or other employees who
terminate employment after the Separation Time
from the business of the sponsor of the other
pension plan (the "Other Plan") are provided
vested pension benefits on account of the
Qualified Transfer or (ii) a court of competent
jurisdiction determines that such Employees or
employees are entitled to such benefits on
account of the Qualified Transfer, then the
Other Plan shall provide such Employees or
employees with the required vested pension
benefits. In addition, the sponsor of the 420
Plan shall cause the 420 Plan to transfer assets
in an amount equal to the Vesting Amount to the
Other Plan and the Other Plan shall accept such
assets equal to such Vesting Amount as follows.
The Vesting Amount shall equal the [excess, if
any, of the Media Share (calculated for this
purpose on the assumption that all participants
in the U S WEST Pension Plan were vested at the
Separation Time) over the actual Media Share],
as determined by the Actuaries and provided to
MediaOne and New U S WEST in writing, increased
with interest in accordance with subsection (e)
above.
(j) The Media Pension Plan and the assets and liabilities with
respect thereto shall be considered a Media Employee
Benefit Plan. The U S WEST Pension Plan and the assets and
liabilities with respect thereto shall be considered a
Communications Employee Benefit Plan.
6. OTHER TAX-QUALIFIED PLANS
Any other plan that is qualified under Section 401 of the Code and is
not described in Section 4 or 5 above shall be retained by the
entity that sponsors it before the Separation Time.
7. WELFARE PLANS
(a) Communication Plans. As of the Separation Time, any Welfare Plan,
including all insurance or amounts held in trust and associated
therewith to the extent attributable solely to such plan, which
exclusively covers Communications Employees, Terminated Communications
Employees and/or Terminated Inc. Employees and their eligible spouses
and dependents shall be transferred to and assumed by New U S WEST and
shall be deemed to be amended to provide for such transfer and
assumption. New U S WEST or its Subsidiaries shall assume and pay the
Liability with respect thereto (whether accrued or arising before or
after the Separation Time). All such plans shall be considered
Communications Employee Benefit Plans.
(b) Media Plans. As of the Separation Time, any Welfare Plan, including
all insurance or amounts held in trust and associated therewith to the
extent attributable solely to such plan, which exclusively covers
Media Employees and/or Terminated Media Employees and their eligible
spouses and dependents shall be retained by the MediaOne Group and, if
necessary, are hereby amended to provide for such retention (without
the need for any further action). MediaOne or its Subsidiaries shall
assume and pay the Liability with respect thereto (whether accrued or
arising before or after the Separation Time). All such plans shall be
considered Media Employee Benefit Plans.
(b) Joint Plans. This subsection (c) addresses the treatment of any
Welfare Plan (including, without limitation, any retiree medical plan
or retiree life insurance plan) which, as of the Separation Time,
covers both: (1) Communications Employees, Terminated Communications
Employees and/or Terminated Inc. Employees; and (2) Media Employees
and/or Terminated Media Employees (a "Joint Welfare Plan").
(1) As of the Separation Time, each Joint Welfare Plan shall be
transferred to and assumed by New U S WEST or one of its
Subsidiaries. Each of such Joint Welfare Plans is hereby amended
as set forth in Section 3 of this EM Agreement. At and
immediately following the Separation Time, New U S WEST or its
Subsidiaries shall maintain as a separate plan and assume and pay
the Liabilities and expenses (whether accrued or arising before
or after the Separation Time) with respect to that portion of the
Joint Welfare Plans as relates to obligations to Communications
Employees, Terminated Communications Employees and Terminated
Inc. Employees; in addition, any such retiree medical plan shall
assume any retiree medical Liabilities or expenses of persons
described in clauses (2) or (3) of the definition of Terminated
Media Employee. This EM Agreement does not obligate New U S WEST
to continue to maintain such plans or their terms for any
particular period of time. All such plans shall be considered
Communications Employee Benefit Plans.
(2) As soon as practicable, MediaOne or its Subsidiaries shall
establish and maintain one or more separate plans corresponding
to each of the Joint Welfare Plans. Such Plans shall be effective
as of the Separation Time and shall contain such benefits as
desired by MediaOne. However, such plans shall assume and pay the
Liabilities and expenses (whether accrued or arising before or
after the Separation Time) under the Joint Welfare Plans with
respect to Media Employees and Terminated Media Employees,
provided that any new Media retiree medical plan shall not assume
any retiree medical Liabilities or expenses of persons described
in clauses (2) or (3) of the definition of Terminated Media
Employee. All Liabilities and expenses assumed by such Media
Employee Benefit Plans shall cease to be Liabilities of the
Communications Employee Benefit Plans described in the preceding
paragraph. The Liabilities of each such Joint Welfare Plan so
assumed by MediaOne or its Subsidiaries together with each such
separate plan established by MediaOne, shall be considered a
Media Employee Benefit Plan. Unless MediaOne or its Subsidiaries
adopts a plan with respect to a Joint Welfare Plan prior to the
Separation Time, MediaOne is hereby deemed to have adopted
(without the requirement of any additional action), effective as
of the Separation Time, a separate Media Welfare Plan that is
substantially identical in all respects to the Joint Welfare Plan
it replaces, provided that this EM Agreement does not obligate
MediaOne to continue to maintain such terms for any particular
period of time.
(3) MediaOne and New U S WEST shall use commercially reasonable
efforts to obtain, effective as of the Separation Time, separate
coverages or to split the coverages between MediaOne and New U S
WEST under the Joint Welfare Plans that provided benefits through
Provider Contracts prior to the Separation Time. Such coverage
shall be on substantially the same terms and conditions as
applied immediately before the Separation Time, or such other
terms and conditions as are acceptable to MediaOne and New U S
WEST. To the extent practicable, such coverages shall be obtained
by entering into a separate contract between MediaOne and the
third party. For purposes of this paragraph, the term "Provider
Contract" shall mean a contract to provide benefits with an
insurance company, health maintenance organization, preferred
provider organization or similar provider of benefits, as well as
third party administrative services contracts. To the extent such
efforts are not successful with respect to any Provider Contract,
then New U S WEST shall administer such Provider Contract on an
equitable basis for the benefit of both MediaOne and New U S WEST
until the expiration of the applicable contract. For any period
after the Separation Time when MediaOne is participating in any
such Provider Contract administered by New U S WEST, MediaOne
shall pay an allocable share of the cost of such contract based
upon the actual experience attributable to Media Employees and
Terminated Media Employees thereunder, or if actual experience is
not readily determinable, based upon the relative headcount of
Media Employees and Terminated Media Employees to all individuals
covered by such Provider Contract. Such payments shall include
interest on any funds advanced by New U S WEST at a rate to be
agreed upon in a services agreement to be effective as of the
Separation Time.
(d) Continuing Treatment. Notwithstanding the foregoing provisions of this
Section 7, all treatments which have been precertified or are being
provided as of the Separation Time shall be provided without
interruption under the appropriate Welfare Plan until such treatment
is concluded or discontinued pursuant to applicable plan rules and
limitations, but New U S WEST, in the case of a Communications
Employee or Terminated Communications Employee, or MediaOne, in the
case of a Media Employee or Terminated Media Employee, shall be
responsible for all expenses relating to, arising out of or resulting
from such on-going treatments after the Separation Time.
(e) Continuance of Elections. MediaOne and New U S WEST shall cause the
Welfare Plans which they or their Subsidiaries maintain after the
Separation Time to recognize and maintain all coverage and
contribution elections made by Employees under the Welfare Plans
maintained by the Existing U S WEST Group prior to the Separation Time
and shall apply such elections under the Welfare Plans maintained by
MediaOne and New U S WEST or their Subsidiaries, whichever is
applicable, for the remainder of the period or periods for which such
elections are by their terms applicable. Neither the transfer or other
movement of employment from one member of the Existing U S WEST Group
to another member on or before the Separation Time nor the transfer
and assignment to the New U S WEST Group or the MediaOne Group in
connection with the Reorganization, Contribution and Separation shall
constitute or be treated as a "status change" under the Welfare Plans
maintained by either Existing U S WEST, New U S WEST, MediaOne or
their Subsidiaries.
(f) Co-Payments and Meximum Benefits. MediaOne and New U S WEST shall
cause the Welfare Plans which they or their Subsidiaries maintain
after the Separation Time to recognize and give credit for:
(1) All amounts applied to deductibles,
out-of-pocket maximums, and other applicable
benefit coverage limits with respect to
Employees covered by Welfare Plans maintained by
the Existing U S WEST Group prior to the
Separation Time for the remainder of the year in
which the Separation Time occurs; and
(2) All benefits paid to Employees under the Welfare
Plans maintained by the Existing U S WEST Group
prior to the Separation Time for purposes of
determining when such persons have reached their
lifetime maximum benefits under the Welfare
Plans maintained by MediaOne and New U S WEST or
their Subsidiaries, whichever is applicable,
after the Separation Time.
(g) Pre-existing conditions. After the Separation Time, any group health
plan maintained by MediaOne and New U S WEST or their Subsidiaries
shall be prohibited from making exceptions from the coverage of
individuals who were Employees or Terminated Employees prior to the
Separation Time and their eligible spouses and dependents for
pre-existing conditions except to the extent such exception is
applicable under the plan in effect immediately prior to the
Separation Time.
(h) COBRA. Notwithstanding the foregoing provisions of this Section 7:
(1) New U S WEST or its Subsidiaries shall be
responsible for providing coverage required
under COBRA, including the administration of
such coverage, to (A) all Employees and
Terminated Employees (and their eligible spouses
and dependents) whose entitlement to benefits
under COBRA is attributable to a "qualifying
event," as defined in COBRA, which occurred
before the Separation Time under any group
health plan other than a group health plan
maintained by the Cable Companies and (B) all
Communications Employees, Terminated
Communications Employees and Terminated Inc.
Employees if such individual's entitlement to
benefits under COBRA is attributable to a
"qualifying event" which occurs on or after the
Separation Time.
(2) MediaOne or its Subsidiaries shall be
responsible for providing coverage required
under COBRA, including the administration of
such coverage, to (A) all Employees and
Terminated Employees (and their eligible spouses
and dependents) whose entitlement to benefits
under COBRA is attributable to a "qualifying
event," as defined in COBRA, which occurred
before the Separation Time under any group
health plan maintained by the Cable Companies
and (B) all Media Employees and Terminated Media
Employees if such individual's entitlement to
benefits under COBRA is attributable to a
"qualifying event" which occurs on or after the
Separation Time.
(i) Long-Term Disability. Notwithstanding the foregoing provisions of this
Section 7, this subsection (i) applies to long-term disability
benefits provided to Terminated Employees other than through the U S
WEST Pension Plan ("LTD").
(1) New U S WEST shall be responsible for providing
LTD, including the administration of such
coverage, to Terminated Communications
Employees, Terminated Inc. Employees and
Terminated Media Employees who were employed
immediately prior to commencing LTD by an
employer other than one of the Cable Companies.
(2) MediaOne shall be responsible for providing LTD,
including the administration of such coverage,
to Terminated Media Employees who were employed
immediately prior to commencing LTD by one of
the Cable Companies.
8. VEBA's
(a) As of the Separation Time, sponsorship of the U S WEST
Benefit Assurance Trust ("BAT"), the U S WEST Management
Benefit Assurance Trust ("MBAT") and U S WEST Life Insurance
Welfare Trust ("Life Insurance Trust") shall be transferred
from Existing U S WEST to New U S WEST. In addition, each of
the BAT, MBAT and Life Insurance Trust are hereby amended
(such amendments to be self-effectuating), effective as of
the Separation Time, to provide that the "Company" (as well
as the sponsor, settlor and all other similar terms) under
such trusts shall be New U S WEST and that the trust shall
be administered by New U S WEST.
(b) Sponsorship of the U S WEST VEBA Trust shall be retained by
MediaOne or, at its option, transferred to Multimedia.
(c) Effective as of the Separation Time, MediaOne shall adopt
one or more new voluntary employee benefit associations or
modify the U S WEST VEBA Trust (the "Media VEBA") to assume,
immediately after the Separation Time, all Liabilities under
the MBAT and Life Insurance Trust to, or relating to, Media
Employees or Terminated Media Employees (excluding persons
described in clauses (2) or (3) of the definition of
Terminated Media Employee); all such Liabilities shall cease
to be Liabilities of the MBAT and Life Insurance Trust. The
Media VEBA shall comply with Code Sections 419, 419A, 501(a)
and 501(c)(9).
(d) As soon as practicable after the Separation Time, New U S
WEST shall cause a transfer of assets from the MBAT and Life
Insurance Trust to the Media VEBA in the manner and at the
times specified in paragraph (f) below. For purposes of this
Section, the following definitions shall apply:
(i) "Total Economic APBO" shall be the accumulated
postretirement benefit obligation (as defined in SFAS No.
106) of the MBAT and Life Insurance Trust (excluding
liabilities for supplemental and dependent life insurance),
as calculated by the Actuaries, as of June 30, 1998 using
actuarial methods and assumptions set forth in Schedule 2
hereto and any others mutually agreeable to the parties.
(ii) "Actuaries" refer to the actuaries for the MBAT and Life
Insurance Trust at the Separation Time.
(iii)"Media Economic APBO" shall mean the portion of the Total
Economic APBO attributable to the Media Employees and
Terminated Media Employees, as calculated by the Actuaries.
(iv) "Media Fraction" shall mean (1) the Media Economic APBO,
divided by (2) the Total Economic APBO.
(v) "Media Asset Share" shall mean the product of: (1) the fair
market value as of June 30, 1998 and (2) the Media Fraction.
For this purpose, (i) the value of any publicly traded
security and cash shall be determined based on the audited
reports of the trustee of the applicable trust and (ii) the
value of any other securities or property shall be
determined by one or more third parties selected by MediaOne
and New U S WEST, based on the most recent appraisal or
valuation of the particular security or property adjusted,
if necessary, as determined by the third party.
(vi) "Supplemental and Dependent Life Assets" shall mean any
assets which are segregated for the purpose of
providing supplemental and dependent life insurance.
Notwithstanding the above, the Total Economic APBO, the Media Economic
APBO and the Media Asset Share shall be determined separately for the
MBAT and the Life Insurance Trust. In addition, in order to determine
the Media Asset Share, the provisions of Section 5(c) shall apply.
(e) Within nine months after the Separation Time, MediaOne
shall cause to be filed with the IRS a request for a
determination that the Media VEBA is tax-exempt under
Section 501(c)(9) of the Code (unless the New VEBA is
the existing U S WEST VEBA Trust and New U S WEST
agrees no such filing is required). MediaOne agrees to
make all reasonable amendments requested by the IRS to
obtain such letter. New U S WEST and MediaOne agree to
cooperate with each other to fulfill any filing and/or
regulatory reporting obligations with respect to such
transfers.
(f) New U S WEST shall cause the following asset transfers
from the MBAT and Life Insurance Trust to the Media
VEBA and MediaOne shall cause the Media VEBA to accept
such asset transfers:
(1) On July 1, 1998, an amount equal to 98% of the Media
Asset Share, as estimated by the Actuaries in writing
(immediately prior to July 1, 1998) to MediaOne and New
U S WEST. Such estimate shall be calculated by assuming
the Media Fraction was calculated as of May 31, 1998
and by using the fair market value of the assets, as
reported by the trustee of the applicable trust, on May
31, 1998.
(2) On July 1, 1998, an amount equal to the Supplemental
and Dependent Life Assets multiplied by a fraction, the
numerator of which is the amount of premiums paid by
Media Employees and Terminated Media Employees for
supplemental and dependent life insurance during the
last full calendar year prior to the Separation Time
and the denominator of which is the total premiums for
such coverage paid by all Employees and Terminated
Employees during that year.
(3) As soon as practicable after the value of the assets as
of June 30, 1998 is determined and the Media Asset
Share is determined by the Actuaries in writing to
MediaOne and New U S WEST (but not later than 30 days
after such writing is provided), the excess of the
Media Asset Share over the sum of the interim transfer
under (1) above and any benefit payments to Terminated
Media Employees by the MBAT and Life Insurance Trust
after June 30, 1998. (If such amount is a negative
number, such amount shall be transferred from the Media
VEBA to the MBAT and Life Insurance Trust.)
(4) In the event there is any litigation or claims that the
amount transferred from the MBAT and Life Insurance
Trusts to the Media VEBA should be larger or smaller,
the amount transferred shall be adjusted in accordance
with all of the provisions set forth in Section 5 of
this EM Agreement relating to a Contingent Amount and
claims over the amount of the transfer. In addition,
the parties agree that, to the extent permitted by law,
any costs of defending any such claims and any
Liabilities arising out of such claims shall be borne
by the MBAT, Life Insurance Trust and the Media VEBA.
Any such Liability for a transfer or arising out of any
claims that a transfer is payable which cannot be borne
by the MBAT, Life Insurance Trust or the Media VEBA
shall be borne by New U S WEST or MediaOne in
accordance with the last paragraph of Section 5(g) of
this EM Agreement.
To the extent any of the foregoing amounts is paid after
July 1, 1998, such amount shall be increased or
decreased by interest from July 1, 1998 to the date of
payment (to the extent not paid or previously advanced)
at a rate equal to the average monthly rate on the
Mellon Trust Short Term Interest Fund (STIF),
compounded monthly, in which the MBAT and Life
Insurance Trust and the Media VEBA hold certain
temporary cash funds from time to time (such rate to be
provided by the trustee of the plan making the
payment), during the period commencing on July 1, 1998
and ending with the date of payment; provided that no
interest shall be paid with respect to the amounts in
clause (4) above if the Final Determination already
provides for an adjustment reflecting interest or plan
earnings.
With respect to all of the foregoing transfers and any
transfer required by subsection (g) below, the specific
assets to be transferred shall be cash and other liquid
assets, as agreed upon by New U S WEST and MediaOne in
good faith so as to not treat the MBAT, Life Insurance
Trust and Media VEBA unfairly in any material respect.
(g) As soon as practicable after July 1, 1998, MediaOne
shall cause a transfer of assets from the U S WEST VEBA
Trust to the MBAT in an amount equal to the balance in
the U S WEST VEBA Trust immediately prior to July 1,
1998 (and before any transfers described in paragraph
(f) above) multiplied by a fraction, the numerator of
which is the amount of contributions made to that trust
for calendar year 1998 (up through June 30, 1998) on
behalf of the New U S WEST Group and the denominator of
which is the total amount of all contributions made to
that trust for 1998 (up through June 30, 1998),
increased by interest on the unpaid amount due from
July 1, 1998 to the date of payment at the rate of (8%)
per annum. In lieu of these transfers, the parties may
agree to offset the amount to be transferred against
the transfers required in subsection (f) above.
9. INCENTIVE COMPENSATION
(a) Stock Options. Options to purchase shares of Communications Stock
("Communications Options") and shares of Media Stock ("Media Options")
which are unexercised as of the Separation Time and which were issued
pursuant to the terms of the Amended U S WEST 1994 Stock Plan, the U S
WEST Media Group 1996 Stock Option Plan, the U S WEST Media Group 1997
Stock Option Plan and the U S WEST Communications Group 1997 Stock
Option Plan (collectively the "Option Plans") shall be treated as
follows:
(1) New U S WEST shall assume the U S WEST
Communications Group 1997 Stock Option Plan and
all obligations under such plan.
(2) MediaOne shall retain the U S WEST Media Group
1996 Stock Option Plan and the U S WEST Media
Group 1997 Stock Option Plan and all obligations
under such plans.
(3) MediaOne shall retain the Amended U S WEST 1994
Stock Plan and all obligations with respect to
Media Options under such plan.
(4) New U S West shall establish a new stock plan to
be effective as of the Separation Time and shall
assume, under such plan, all obligations with
respect to Communications Options issued under
the Amended U S WEST 1994 Stock Plan.
(5) Unexercised options issued under any of the
Option Plans shall continue in effect for their
original term subject to paragraph (6) below and
the following adjustments to reflect the
transactions contemplated by the Separation
Agreement.
(i) No Media Dividend shall be distributed with
respect to any Media Options. However, in
accordance with the following sentence, the
number of Media Options held by any person shall
be converted into a higher number of options to
purchase shares of MediaOne Common Stock and the
exercise price of each such option shall be
decreased. The number of options shall be
increased and the exercise price of each share
under each option shall be decreased to reflect
the Media Dividend in a manner consistent with
Accounting Rule EITF 90-9 in order to preserve
the economic value of the options.
(ii) The Communications Options shall be converted to
options to purchase shares of New U S WEST
Common Stock on a one for one basis; the
exercise price shall not change.
(6) Vested options under any of the Option Plans
shall be exercised on and after the Separation
Time by an Employee by contacting the stock plan
administrator for his or her employer or former
employer. New U S WEST and MediaOne each agrees
to act as agent (the "crossover agent") for the
other (the "other company") in the case of an
exercise of an option by an Employee of the
crossover agent under an Option Plan of the
other company. In addition, New U S WEST agrees
to act as crossover agent in the case of an
exercise of an option by a Terminated
Communications Employee or Terminated Inc.
Employee under an Option Plan of MediaOne;
MediaOne agrees to act as crossover agent in the
case to an exercise of an option by a Terminated
Media Employee under an Option Plan of New U S
WEST. The crossover agent for the other company
shall, by itself and/or through its own
third-party arrangements (i) effect an option
exercise of the applicable shares; (ii) report
such exercise to the other company on a timely
basis, not to exceed 30 days after the exercise;
(iii) collect from the Employee, and remit
and/or report to the Employee and/or the
appropriate tax authorities, as applicable, all
taxes incurred by the crossover agent (as the
employing company) resulting from the exercise
of an option under the other company's Option
Plan, and all taxes required to be withheld from
the Employee's proceeds as a result of the
exercise of an option under the other company's
Option Plan; (iv) deliver the stock to the
Employee or pay the Employee the excess of the
sales proceeds of the applicable shares over the
sum of the exercise price and all taxes required
to be withheld from the Employee's proceeds as a
result of the exercise; and (v) pay the other
company an amount equal to the exercise price of
such option on a timely basis, not to exceed 30
days after the exercise. In addition, the other
company agrees to honor the separation policies
of the crossover agent (or its subsidiaries) in
effect at the Separation Time for purposes of
determining if a separated Employee is eligible
to exercise an option under the other company's
Option Plan. Written approval of the other
company shall be required before any changes
adopted after the Separation Time in the
crossover agent's separation policies may apply
with respect to the crossover agent's Employees'
exercise of options under the other company's
Option Plan.
(b) Restricted Stock. Communications Stock and Media Stock issued to
Employees or Terminated Employees under the Amended U S WEST 1994
Stock Plan which has not become vested under the terms of that plan as
of the Separation Time ("Restricted Communications Stock" and
"Restricted Media Stock" respectively) shall be treated as follows:
(1) Immediately prior to the Separation Time, Media
Employees and Terminated Media Employees shall
surrender any Restricted Communications Stock
they hold and receive Restricted Media Stock in
exchange. The number of shares of Restricted
Media Stock received by each such individual
shall equal the number of shares of Restricted
Communications Stock surrendered by such
individual multiplied by 1.0645 and further
multiplied by the ratio of the Average Value of
the Communications Stock to the Average Value of
the Media Stock.
(2) Immediately prior to the Separation Time,
Communications Employees, Terminated
Communications Employees and Terminated Inc.
Employees shall surrender any Restricted Media
Stock they hold as of the Separation Time and
receive Restricted Communications Stock in
exchange. The number of shares of Restricted
Communications Stock received by each such
individual shall equal that number of shares of
Restricted Media Stock surrendered by such
individual multiplied by 1.0645 and further
multiplied by the ratio of the Average Value of
the Media Stock to the Average Value of the
Communications Stock.
(3) Following the adjustments in paragraphs (1) and
(2) above, MediaOne shall retain the Amended U S
WEST 1994 Stock Plan and all obligations under
such plan with respect to Media Restricted Stock
and shall amend such plan to provide for
restricted stock ("Restricted MediaOne Common
Stock") after the Separation Time. In order to
reflect the transactions contemplated by the
Separation Agreement, the Restricted Media Stock
shall be subject to the following adjustments.
Following the adjustments in paragraphs (1) and
(2) above, (i) the Restricted Media Stock shall
be converted to Restricted MediaOne Common Stock
on a one for one basis and (ii) each share of
Restricted Media Stock, including shares
described in paragraph (1) above but not those
described in paragraph (2) above, shall receive
the Media Dividend, provided that such Media
Dividend shall be free of all restrictions under
the plan.
(4) Following the adjustments in paragraphs (1) and
(2) above, New U S WEST shall assume, under the
new stock plan adopted pursuant to subsection
(a)(4) above, all obligations under the Amended
U S WEST 1994 Stock Plan with respect to
Restricted Communications Stock and shall amend
such plan to provide for restricted stock
("Restricted New U S WEST Common Stock") after
the Separation Time. In order to reflect the
transactions contemplated by the Separation
Agreement, following the adjustments in
paragraphs (1) and (2) above, the Restricted
Communications Stock shall be converted to
Restricted New U S WEST Common Stock on a one
for one basis.
(5) Except for the Media Dividend set forth in
paragraph (3) above, each share of Restricted
New U S WEST Common Stock and Restricted
MediaOne Common Stock outstanding after the
application of the foregoing paragraphs of this
subsection (b) ("Post-Separation Restricted
Stock") shall vest in accordance with the
vesting period applicable to the grant of
restricted stock to which each share of
Post-Separation Restricted Stock is
attributable.
(c) LTIP. The U S WEST Communications Long-Term Incentive Plan ("LTIP")
shall be terminated as of the Separation Time and a new long-term
incentive plan (the "Communications LTIP") shall be established by New
U S WEST. Awards under the LTIP to Communications Employees shall be
assumed by the Communications LTIP and shall continue under their
original terms subject to adjustment to reflect the transactions
contemplated by the Separation Agreement; MediaOne shall cease to have
any Liability with respect to such awards. The measurement period for
awards under the LTIP to Media Employees shall terminate as of the
Separation Time and the awards shall be calculated and paid out in
Restricted MediaOne Group Common Stock as of that time.
(d) ESTIP. The U S WEST, Inc. Executive Short Term Incentive Plan
("ESTIP") shall be retained by MediaOne and a new executive incentive
plan (the "Communications ESTIP") shall be established by New U S
WEST. Awards under the ESTIP to Communications Employees shall be
assumed by the Communications ESTIP and shall continue under their
original terms subject to adjustment to reflect the transactions
contemplated by the Separation Agreement; MediaOne shall cease to have
any Liability with respect to such awards.
(e) Phantom Stock. The units issued under the Amended U S WEST 1994 Stock
Plan or any Top-hat Plan (as defined in Section 10(a)(1)) of Existing
U S WEST which are valued in accordance with Communications Stock
("Phantom Communications Stock") and the units issued under the
Amended U S WEST 1994 Stock Plan or any Top-hat Plan of Existing U S
WEST which are valued in accordance with Media Stock ("Phantom Media
Stock") shall be treated as follows:
(1) The Phantom Communications Stock of a Media Employee, a Media Director
(as defined in Section 10(g) below), or in the case of a Top-hat Plan,
a Terminated Media Employee prior to the Separation Time shall be
converted into Phantom Media Stock immediately prior to the Separation
Time. The number of units of Phantom Media Stock received by each such
individual shall equal the number of units of Phantom Communications
Stock surrendered by such individual multiplied by the ratio of the
Average Value of the Communications Stock to the Average Value of the
Media Stock.
(2) The Phantom Media Stock of a Communications Employee, Communications
Director (as defined in Section 10(g) below) or in the case of a
Top-hat Plan, a Terminated Communications Employee or Terminated Inc.
Employee prior to the Separation Time shall be converted into Phantom
Communications Stock immediately prior to the Separation Time. The
number of units of Phantom Communications Stock received by each such
individual shall equal the number of units of Phantom Media Stock
surrendered by such individual multiplied by the ratio of the Average
Value of the Media Stock to the Average Value of the Communications
Stock.
(3) Following the adjustments in paragraphs (1) and (2) above, MediaOne
shall retain the Amended U S WEST 1994 Stock Plan and all obligations
under such plan with respect to Phantom Media Stock. MediaOne shall
also establish new Top-hat Plans as set forth in Section 10(a)(2).
MediaOne shall amend such plans to provide for units which are valued
in accordance with MediaOne Common Stock ("Phantom MediaOne Common
Stock") after the Separation Time. In order to reflect the
transactions contemplated by the Separation Agreement, following the
adjustments in paragraphs (1) and (2) above, the Phantom Media Stock,
including units described in paragraph (1) above but not those
described in paragraph (2) above, shall be converted to Phantom
MediaOne Common Stock on the following basis. The number of units of
Phantom MediaOne Common Stock credited shall equal the number of units
of Phantom Media Stock surrendered by such individual multiplied by
the ratio of the Average Value of the Media Stock to the excess of the
Average Value of the Media Stock over the product of the Dividend
Number multiplied by the Average Value of the Communications Stock.
(4) Following the adjustments in paragraphs (1) and (2) above, New U S
WEST shall assume, under the new stock plan adopted pursuant to
subsection (a)(4) above, all obligations under the Amended U S WEST
1994 Stock Plan with respect to Phantom Communications Stock. New U S
WEST shall also retain certain Top-hat Plans as set forth in Section
10(a)(1). New U S WEST shall amend such plans to provide for units
which are valued in accordance with New U S WEST Common Stock
("Phantom New U S WEST Common Stock") after the Separation Time. In
order to reflect the transactions contemplated by the Separation
Agreement, following the adjustments in paragraphs (1) and (2) above,
the Phantom Communications Stock shall be converted to Phantom New U S
WEST Common Stock on a one for one basis.
(5) MediaOne and New U S WEST shall cause all plans referred to in this
subsection (e) to be amended, as appropriate, to effect the changes
described herein as of the Separation Time.
10. OTHER BENEFITS
(a) Top-hat plans. As of the Separation Time:
(1) New U S WEST or a Subsidiary shall assume all plans maintained by
the Existing U S WEST Group prior to the Separation Time which
are intended to be described in Section 201(2) of ERISA ("Top-hat
Plans") and all Liabilities and obligations with respect to
Communications Employees, Terminated Communications Employees and
Terminated Inc. Employees under such plans. Such Top-hat Plans
shall include, without limitation, the U S WEST Nonqualified
Pension Plan and the U S WEST Deferred Compensation Plan. All
such plans shall be Communications Employee Benefit Plans. The
MediaOne Group shall have no Liabilities with respect to such
plans.
(2) MediaOne or a Subsidiary shall establish new Top-hat Plans
corresponding to the Top-hat Plans maintained by the Existing U S
WEST Group before the Separation Time and shall assume, under
such plans, all Liabilities and obligations with respect to Media
Employees and Terminated Media Employees under the Top-hat Plans
maintained by the Existing U S WEST Group prior to the Separation
Time. All such plans shall be Media Employee Benefit Plans. All
such Liabilities and obligations shall cease to be Liabilities or
obligations of the Top-hat Plans assumed by New U S WEST pursuant
to the preceding paragraph (1).
(3) Subject to paragraph (4) below, any trusts maintained by Existing
U S WEST or its Subsidiaries for the purpose of providing
benefits under a Top-hat Plan (the "Existing U S WEST Rabbi
Trusts") shall be transferred to and assumed by New U S WEST.
(4) MediaOne or a Subsidiary shall establish prior to the Separation
Time one or more trusts (the "MediaOne Rabbi Trusts") for the
purpose of providing benefits under its Top-hat Plans which
correspond to the Existing U S WEST Rabbi Trusts. As of the
Separation Time, Existing U S West shall cause the trustee or
trustees of the Existing U S WEST Rabbi Trusts to transfer to the
trustee or trustees of the MediaOne Rabbi Trusts any amounts held
in the Existing U S WEST Rabbi Trusts attributable to the
benefits of Terminated Media Employees.
(5) See Section 9(e) for additional rules that apply to Phantom
Communications Stock and Phantom Media Stock under the Top-hat
Plans.
(b) Employment contracts. Except for the severance agreements with members
of the Executive Group, all individual employment contracts, including
but not limited to severance agreements, retention agreements,
change-of-control agreements and letter agreements, entered into by a
member of the Existing U S WEST Group and a single Communications
Employee or a Terminated Communications Employee shall be retained by,
or assigned to and assumed by, as applicable, the New U S WEST Group,
provided they do not expire by their own terms as of the Separation
Time. The MediaOne Group shall have no Liabilities with respect to
such agreements. Any such employment contracts, other than agreements
described in paragraph (d) below, entered into by any member of the
Existing U S WEST Group and a single Media Employee or a Terminated
Media Employee shall be retained by, or assigned to and assumed by, as
applicable, the MediaOne Group, provided they do not expire by their
own terms as of the Separation Time. The New U S WEST Group shall have
no Liabilities with respect to such agreements. Any Liability under
such employment contracts, other than the severance agreements with
members of the Executive Group, entered into by any member of the
Existing U S WEST Group and a single Terminated Inc. Employee shall be
borne in accordance with Section 2(c) and (f) of this EM Agreement.
(c) Split-dollar contracts. All split-dollar insurance contracts entered
into by the Existing U S WEST Group for the benefit of a
Communications Employee or a Terminated Communications Employee shall
be retained by, or assigned to and assumed by, as applicable, New U S
WEST; the MediaOne Group shall have no interest in, or Liabilities
with respect to, such contracts. Any such split-dollar insurance
contracts entered into by the Existing U S WEST Group for the benefit
of a Media Employee or a Terminated Media Employee shall be retained
by, or assigned to and assumed by, as applicable, MediaOne; the New U
S WEST Group shall have no interest in, or Liabilities with respect
to, such contracts. In order to assign and assume any such split
dollar life policies, the parties agree to accept any collateral
assignments, policy endorsements or such other documentation executed
by or on behalf of the applicable employees or terminated employees,
or any trustee of any trust to which such policy rights or incidents
of ownership under the policies have been assigned, as well as
entering into any such agreements as may be necessary to fulfill
obligations to any insurance company or insurance agent or broker
under the policies to be assigned.
(d) Ex-Pat Employees. This sub-section applies to Employees ("Ex-Pat
Employees") currently employed by International who have entered into
agreements with Existing U S WEST or a Subsidiary which give such
Employees re-employment rights with Existing U S WEST or a domestic
Subsidiary thereof. If an Ex-Pat Employee notifies Existing U S WEST
in writing prior to May 1, 1998 that he wishes to exercise his right
to return to domestic employment prior to the Separation Time, the
Communications Business will either: (1) re-employ the Ex-Pat Employee
in accordance with his re-employment right; or (2) enter into a new
agreement with the Ex-Pat Employee terminating his re-employment
right. Any costs associated with re-employing the Ex-Pat Employee or
terminating his re-employment right in accordance with the prior
sentence shall be borne by the Communications Business. If an Ex-Pat
Employee does not notify Existing U S WEST in writing prior to May 1,
1998 that he wishes to exercise his right to return to domestic
employment prior to the Separation Time, all obligations under the
agreement which provides the re-employment right shall be assumed by
MediaOne. Any costs associated with assuming the re-employment right
of the Ex-Pat Employee in accordance with the prior sentence shall be
borne by New U S WEST and/or MediaOne as determined by the parties
through good faith negotiations to be completed prior to the
Separation Time.
(e) Vail Trust. The Theodore N. Vail Memorial Fund shall be transferred to
and assumed by New U S WEST as of the Separation Time.
(f) Leaves of Absence. Each member of the MediaOne Group and the New U S
WEST Group shall honor all terms and conditions of leaves of absence
that have been granted to any Employee before the Separation Time,
including such leaves that are commenced after the Separation Time, to
the extent that such Employees are assigned to that entity. Each such
entity shall be solely responsible for administering such leaves of
absence and compliance with all applicable laws relating to leaves of
absence, including the Family Medical Leave Act. Unless members of the
New U S WEST Group or MediaOne Group adopt other policies prior to the
Separation Time, each shall be considered to have adopted leave of
absence programs, effective as of the Separation Time, which are
substantially identical in all material respects to the leave of
absence programs in effect at the respective entities at the
Separation Time.
(g) Non-Employee Director Plans.
(1) As of the Separation Time, New U S WEST shall assume the
Non-Employee Director Plans and all Liabilities and obligations
under such plans with respect to individuals who will be
directors of New U S WEST immediately after the Separation Time
and Retired Non-Employee Directors (collectively referred to as
"Communications Directors"). The MediaOne Group shall have no
Liabilities with respect to such agreements.
(2) As of the Separation Time, MediaOne shall establish new plans for
its non-employee directors ("Media Non-Employee Director Plans")
corresponding to the Non-Employee Director Plans maintained by U
S WEST before the Separation Time and shall assume, under such
plans, all Liabilities and obligations under the Non-Employee
Director Plans with respect to individuals who will be directors
of MediaOne ("Media Directors") immediately after the Separation
Time. All such Liabilities and obligations shall cease to be
Liabilities or obligations of the Non-Employee Director Plans
assumed by New U S WEST pursuant to paragraph (1) above. The New
U S WEST Group shall have no Liabilities with respect to such
agreements. (3) MediaOne and New U S WEST shall cause all plans
referred to in this sub-section (g) to be amended, as
appropriate, to effect the changes described herein as of the
Separation Time.
(h) Non-Employee State Executive Board Plan. As of the Separation Time,
New U S WEST shall assume the U S WEST Communications, Inc.
Non-Employee State Executive Board Deferred Compensation Plan (and any
predecessor plan) and be solely responsible for all Liabilities
thereunder. New U S WEST shall cause such plan to be amended, as
appropriate, to effect the changes described herein as of the
Separation Time.
11. PORTABILITY
Existing U S WEST and, if necessary after the Separation Time, MediaOne and
New U S WEST shall use reasonable best efforts to seek an amendment
of the Mandatory Portability Agreement established as of January 1,
1985, as referenced in the U S WEST Pension Plan (the "MPA"), to
allow New U S WEST to become a "Tier II Signatory Company" under the
MPA with the same rights and obligations as have been granted to
AirTouch Communications, Inc. as a Tier II Signatory Company.
MediaOne and New U S WEST may mutually agree to additional situations
where service credit would be granted for employees transferring
between one another (or their Subsidiaries) with associated trust
asset transfers after the Separation Time.
12. FURTHER AGREEMENTS
(a) From and after the Separation Time, MediaOne shall, and shall cause its
Subsidiaries and successors to, provide credit under all Media Employee
Arrangements and Media Employee Benefit Plans to Media Employees and
Terminated Media Employees for service with the Existing U S WEST Group
prior to the Separation Time for purposes of eligibility to participate,
vesting and eligibility to retire, and for purposes of calculating any
severance benefits, to the same extent such credit was provided under
Employee Arrangements and Employee Benefit Plans prior to the Separation
Time.
(b) From and after the Separation Time, New U S WEST shall, and shall cause its
Subsidiaries and successors to, provide credit under all Communications
Employee Arrangements and Communications Employee Benefit Plans to
Communications Employees, Terminated Communications Employees and
Terminated Inc. Employees for service with the Existing U S WEST Group
prior to the Separation Time for purposes of eligibility to participate,
vesting and eligibility to retire, and for purposes of calculating any
severance benefits, to the same extent such credit was provided under
Employee Arrangements and Employee Benefit Plans prior to the Separation
Time.
(c) MediaOne and New U S WEST shall promptly reimburse each other for all valid
liability and expenses addressed in this EM Agreement which are paid by the
other and that constitutes a liability of MediaOne or New U S WEST, as the
case may be, upon presentation of an invoice thereon. In the event that
payment in full is not received within 45 days from the date of the
invoice, interest shall accrue at the rate of 7% per annum from the date of
the invoice.
13. COOPERATION
(a) MediaOne, New U S WEST and their Subsidiaries shall cooperate with each
other in carrying out, implementing and defending the terms of this EM
Agreement, including cooperating with each other with respect to any claims
or litigation challenging the terms of the EM Agreement.
(b) Each party shall exchange such information with the other party and their
respective agents and vendors (without obtaining releases), as may be
reasonably requested by the other party, with respect thereto. MediaOne and
New U S WEST and their respective authorized agents shall, subject to
applicable laws on confidentiality, be given reasonable and timely access
to, and may make copies of, all information relating to the subjects of
this EM Agreement in the custody of the other party, to the extent
reasonably requested by the other party. If any provision of this Agreement
is dependent on the consent of any third party (such as a vendor or a
union) and such consent is withheld, MediaOne and New U S WEST shall use
their reasonable best efforts to implement the applicable provisions of
this Agreement to the full extent practicable. If any provision of this
Agreement cannot be implemented due to the failure of such third party to
consent, MediaOne and New U S WEST shall negotiate in good faith to
implement the provision in a mutually satisfactory manner. The phrase
"reasonable best efforts" as used herein shall not be construed to require
the incurrence of any non-routine or unreasonable expense or liability or
the waiver of any right of MediaOne and New U S WEST (and their respective
Subsidiaries).
(c) MediaOne and New U S WEST agree to good faith mutual cooperation in any
investigation, inquiry or litigation which jointly involves them or in
which either party makes a reasonable request for such cooperation. Each
party will make its Employees available on a reasonable basis to give
testimony and assistance in connection with any lawsuit, dispute,
investigation or proceeding involving the other party and arising out of
activities for which the Employee had responsibility prior to the
Separation Time. The party requesting such availability (the "Requesting
Party") shall reimburse the Employee for all reasonable out-of-pocket
travel and other expenses incurred in so cooperating, including without
limitation airplane fare, hotel accommodations, meal charges and other
similar expenses, as well as reasonable fees and disbursements for
independent counsel for the Employee, if the matter requires that the
Employee have independent representation. Such expenses will be reimbursed
promptly after Employee's submission to the Requesting Party of statements
and such reasonable detail as the Requesting Party may require. Any request
for cooperation, and the degree of cooperation provided, pursuant to this
paragraph will take into account (1) the significance of the matters at
issue in the lawsuit, dispute, investigation or proceeding, and (ii) the
Employee's other personal and business commitments. In any case in which
either MediaOne or New U S WEST becomes aware that one of its Employees is
called (except by the other party) as a witness to testify in any discovery
or court proceeding relating to the other party, the party employing such
individual will notify the other party immediately in order to give the
other party a reasonable opportunity to appear and/or assert any privilege
to which it may be entitled.
14. NON-TERMINATION OF EMPLOYMENT; NO THIRD-PARTY BENEFICIARIES
(a) No provision of this EM Agreement or the Separation Agreement shall be
construed to create any right, or accelerate entitlement, to any
compensation or benefit whatsoever on the part of any Employee or
Terminated Employee or other future, present or former employee of
MediaOne, New U S WEST, or their respective Subsidiaries under any Employee
Benefit Plan or Employee Arrangement maintained by any of such entities or
otherwise.
(b) Without limiting the generality of the foregoing provisions of subsection
14(a) above, except for the severance agreements applicable to the
Executive Group, neither (1) the transactions described in the Separation
Agreement including without limitation the Reorganization, Contribution and
Separation, (2) the termination of the Participating Company status of New
U S WEST or a New U S WEST Subsidiary, (3) the transfer of sponsorship of
any Employee Benefit Plans or Employee Arrangements to New U S WEST, (4)
the transfer of an Employee from one member of the Existing U S WEST Group
to another member in connection with or in anticipation of the
Reorganization, Contribution or Separation at any time on or before the
Separation Time nor (5) the assignment and transfer of an Employee to the
New U S WEST Group or MediaOne Group, shall cause any Employee to be deemed
to have incurred a termination of employment which entitles such individual
to the commencement of benefits under any Employee Benefit Plan or Employee
Arrangement maintained by MediaOne, New U S WEST, or their respective
Subsidiaries; nor shall any of the events set forth in clauses (1) through
(5) of this subsection 14(b) be treated as, or result in, a change in
control under any such Employee Benefit Plan or Employee Arrangement.
(c) To the extent applicable, each Employee Benefit Plan and Employee
Arrangement is hereby amended (without the need for further action) to
incorporate the provisions stated in subsection 14(b).
(d) Except as expressly provided in this Agreement, nothing in this Agreement
shall preclude New U S WEST or MediaOne or their respective Subsidiaries,
at any time after the Separation Time, from amending, merging, modifying,
terminating, eliminating, reducing, or otherwise altering in any respect
any Employee Benefit Plan or Employee Arrangement maintained by such party,
any benefit under any such plan or arrangement, or any trust, insurance
policy or funding vehicle related to any such plan or arrangement.
(e) No provision in this EM Agreement or in the Separation Agreement shall
confer upon any person other than the signatories hereto any rights or
remedies with respect to the employment, compensation, benefits, or other
terms and conditions of employment of any persons.
15. MISCELLANEOUS
(a) Payment of 1998 Administrative Costs and Expenses. Each member of the
Existing U S WEST Group shall be responsible for their allocable share of
the budgeted costs for benefits in 1998 until the Separation Time, as well
as their allocable share of unanticipated expenses incurred prior to the
Separation Time. In addition, MediaOne shall pay New U S WEST for all
expenses and costs relating to benefits incurred after the Separation Time
to the extent that the additional expenses are (i) reasonable and necessary
and (ii) incurred as a result of, and for the purpose of, the normal
administration of the Media Employee Benefit Plans or Employee Arrangements
after the Separation Time. If any expenses are incurred at the request of
MediaOne, they shall be the sole responsibility of MediaOne.
(b) Audit Rights.
(1) Information Provided. Each of MediaOne and New U S WEST, and their
duly authorized representatives, shall have the right to conduct
audits with respect to all information provided to it by the other
party. The party conducting the audit (the "Auditing Party") shall
have the sole discretion to determine the procedures and guidelines
for conducting audits and the selection of audit representatives under
this paragraph (1); provided, that no audits shall be permitted with
respect to the allocation or transfer of plan assets and liabilities.
The Auditing Party shall have the right to make copies of any records
at its expense, subject to the confidentiality provisions set forth in
the Separation Agreement, which are incorporated by reference herein.
The party being audited shall provide the Auditing Party's
representatives with reasonable access during normal business hours to
its operations, computer systems and paper and electronic files, and
provide workspace to its representatives. After any audit is
completed, the party being audited shall have the right to review a
draft of the audit findings and to comment on those findings in
writing within five business days after receiving such draft.
The Auditing Party's audit rights under this paragraph (1) shall
include the right to audit, or participate in an audit facilitated by
the party being audited, of any Subsidiaries and Affiliates of the
party being audited and of any benefit providers and third parties
with whom the party being audited has a relationship, or agents of
such party, to the extent any such persons are affected by or
addressed in this Agreement (collectively, the "Non-parties"). The
party being audited shall, upon written request from the Auditing
Party, provide an individual (at the Auditing Party's expense) to
supervise any audit of a Non-party. The Auditing Party shall be
responsible for supplying, at the Auditing Party's expense, additional
personnel sufficient to complete the audit in a reasonably timely
manner. The responsibility of the party being audited shall be limited
to providing, at the Auditing Party's expense, a single individual at
each audited site for purposes of facilitating the audit.
(2) Vendor Contracts. After the Separation Time, MediaOne and New U S WEST
and their duly authorized representatives shall have the right to
conduct joint audits with respect to any Provider Contracts that
relate to both the MediaOne Welfare Plans and the New U S WEST Welfare
Plans. The scope of such audits shall encompass the review of all
correspondence, account records, claim forms, cancelled drafts (unless
retained by the bank), provider bills, medical records submitted with
claims, billing corrections, vendor's internal corrections of previous
errors and any other documents or instruments relating to the services
performed by the vendor under the applicable vendor contracts.
MediaOne and New U S WEST shall agree on the performance standards,
audit methodology, auditing policy and quality measures and reporting
requirements relating to the audits described in this paragraph (2)
and the manner in which costs incurred in connection with such audits
will be shared.
(c) Beneficiary Designations. All beneficiary designations made under
the Employee Benefit Plans or Employee Arrangements prior to the
Separation Time shall be transferred to and be in full force and
effect under the corresponding new Communications or Media
Employee Benefit Plans or Employee Arrangements until such
beneficiary designations are replaced or revoked by the
individual who made the beneficiary designation.
(d) Effect If Separation Does Not Occur. If the Separation does not
occur, then all actions and events that are, under this EM
Agreement, to be taken or occur effective as of the Separation
Time, immediately after the Separation Time, or otherwise
contingent upon or in connection with the Separation, shall not
be taken or occur. In addition, to the extent actions are taken
or events occur prior to the Separation Time in connection with
the Reorganization or Contribution or in anticipation of the
Separation, then such events or actions shall be reversed or
deemed null and void.
(e) Provisions of Separation Agreement. The provisions of Articles X
- XII of the Separation Agreement shall, to the extent applicable
and not inconsistent with this EM Agreement, shall also apply to
this EM Agreement.
(f) U S WEST Benefits Handbook. Notwithstanding any provision of the
Separation Agreement regarding the use of the U S WEST name or
otherwise, MediaOne may use and refer to the booklet entitled
"Your U S WEST Benefits Handbook" (as in effect at the Separation
Time) for the purposes of explaining benefits to its employees.
IN WITNESS WHEREOF, each of the parties has caused this EM
Agreement to be duly executed on its behalf by its officers
thereunto duly authorized, all as of the day and year first
written in the Separation Agreement.
U S WEST, Inc.
/s/ Charles M. Lillis
By:_____________________________________
Name: Charles M. Lillis
Title: Executive Vice President
USW-C, Inc.
/s/ Solomon D. Trujillo
By:_____________________________________
Name: Solomon D. Trujillo
Title: President and Chief Executive
Officer
U S WEST, Inc., plan sponsor of the:
Media Pension Plan
Media Savings Plan
Media VEBA
Other Media Employee Benefit Plans
/s/ Charles M. Lillis
By:_____________________________________
Name: Charles M. Lillis
Title: Executive Vice President
USW-C, Inc., plan sponsor of the:
U S WEST Pension Plan
U S WEST Savings Plan
MBAT and Life Insurance Trust
Other Communications Employee Benefit Plans
/s/ Solomon D. Trujillo
By:_____________________________________
Name: Solomon D. Trujillo
Title: President and Chief Executive
Officer
SCHEDULE 1
U S WEST, Inc. Pension Spin-Off Assumptions
- - -------------------------------------------------------------------------------
Economic
Investment return and discount rate 8.0%
GATT lump sum rate 6.5%
Salary increase Current U S WEST tables
Demographic
Mortality UP 94
Retirement Current U S WEST tables
Turnover U S WEST Current U S WEST tables
MediaOne Two times current U S WEST management tables
MediaOne Group Current U S WEST management table
Lump sum take rate DVP: 95%
SPE: 70%
Assets
Method Fair market value
Liabilities
Method FAS 87 projected unit credit attribution
based on lump sum accrual pattern
- - -------------------------------------------------------------------------------
SCHEDULE 2
U S WEST, Inc. Retiree Health and Life Spin-Off Assumptions
- - -------------------------------------------------------------------------------
Economic
Investment return and discount rate 8.0%
Salary increase Current U S WEST tables
Demographic
Mortality UP 94
Retirement Current U S WEST tables
Turnover U S WEST Current U S WEST tables
MediaOne Group Current U S WEST management table
MediaOne Two times current U S WEST management table
Assets
Method FAS 106 projected unit credit attribution.
Life benefits limited to $50,000 and exclude dependen
amd supplemental benefits
- - -------------------------------------------------------------------------------
Annual Medical Trend Annual Dental Trend
Health care trend rates: 1998 to 2,000 8.0% 1997 to 1998 6.0%
1998 to 1999 5.8
1999 to 2000 5.7
2000 to 2001 5.5
2001 to 2005 7.0 2001 to 2002 5.3
2002 to 2003 5.2
2006 to 2010 6.0 2003 and beyond 5.0
2011 and beyond 5.5
- - -------------------------------------------------------------------------------
HMOs HMOs Dental
1997 per capita costs 55 $2,701 $3,423 $251
60 3,265 4,138 251
65 600 1,709 251
70 600 1,741 251
Percentage electing HMOs 1997 and 1998 50%
1999 and 2000 60
2001 and 2002 70
2003 and 2004 80
2005 and 2006 90
2007 and later 100