EXHIBIT 10(n)
1998 U S WEST STOCK PLAN
as amended June 22, 1998
I. Purpose.
This 1998 U S WEST Stock Plan (the "Plan"), is intended to promote the
long term success of U S WEST, Inc. (the "Company") by affording certain
eligible employees, executive officers, non-employee directors of the Company
and its Subsidiaries (as defined below) and certain outside consultants or
advisors to the Company and its affiliates with an opportunity to acquire a
proprietary interest in the Company, in order to incentivize such persons and to
align the financial interests of such persons with the stockholders of the
Company. This Plan became effective upon consummation of the Separation (defined
below).
II. Definitions.
The following defined terms are used in the Plan:
A. "Agreement" shall mean the agreement or grant letter accepted by the
Participant as described in Section VIII of the Plan between the Company and a
Participant under which the Participant receives an Award pursuant to this Plan.
B. "Award" shall mean individually, collectively or in tandem, an
incentive award granted under the Plan, whether in the form of Options, SARs,
Stock Awards or Phantom Units.
C. "Board" or "Board of Directors" shall mean the Board of Directors
of the Company.
D. "Change of Control" shall mean any of the following:
1. any "person" (as such term is used in Sections 13(d) and 14(d)(2) of
the Exchange Act) who is or becomes a beneficial owner of (or otherwise has the
authority to vote), directly or indirectly, securities representing twenty
percent (20%) or more of the total voting power of all of the Company's then
outstanding voting securities, unless through a transaction arranged by, or
consummated with the prior approval of the Board of Directors; or
2. any period of two (2) consecutive calendar years during which there
shall cease to be a majority of the Board of Directors comprised as follows:
individuals who at the beginning of such period constitute the Board of
Directors and any new director(s) whose election by the Board of Directors or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved; or
3. the Company becomes a party to a merger or consolidation in which
either (i) the Company will not be the surviving corporation or (ii) the Company
will be the surviving corporation and any outstanding shares of Common Stock of
the Company will be converted into shares of any other company (other than a
reincorporation or the establishment of a holding company involving no change of
ownership of the Company) or other securities or cash or other property
(excluding payments made solely for fractional shares); or
4. any other event that a majority of the Board of Directors, in its
sole discretion, shall determine constitutes a Change of Control.
E. "Code" shall mean the Internal Revenue Code of 1986, as amended.
F. "Committee" shall mean the Human Resources Committee or the Employee
Benefits Committee or their delegates, as applicable, pursuant to provisions of
Section III of the Plan.
G. "Common Stock" shall mean the common stock, $.01 par value, of the
Company.
H. "Company" shall mean U S WEST, Inc., a Delaware corporation
(previously known as "USW-C, Inc."), and any successor thereof.
I. "Director Compensation" shall mean all cash or stock remuneration
payable to an Outside Director for service to the Company as a director, other
than reimbursement for expenses or Common Stock received upon exercise of an
Option, and shall include retainer fees for service on, and fees for attendance
at meetings of, the Board and any committees thereof.
J. "Disabled" or "Disability" shall mean long-term disability as
determined under the provisions of any U S WEST disability plan maintained for
the benefit of eligible employees of the Company or any Related Entity,
provided, however, that in the case of an Incentive Option, "disability" shall
have the meaning specified in Section 22(e)(3) of the Code.
K. "Disinterested Person" shall have the meaning set forth in Rule
16b-3(c)(2)(i) and its successor promulgated under the Exchange Act.
L. "Dividend Equivalent Rights" shall mean the right to receive the
amount of any dividends that are paid on an equivalent number of shares of
Common Stock underlying an Option or Phantom Unit, which shall be payable either
in cash or in the form of additional Phantom Units or Stock.
M. "Effective Date" shall mean the later of the date of the Separation
or the date on which the Plan was approved by the stockholders of the Company.
N. "Eligible Employee" shall mean any employee of the Company or any
Related Entity who is so employed on the date of the grant of an Award.
O. "Eligible Non-Employee" shall mean any consultant or advisor to the
Company or any Related Entity, including any member of the State Executive
Board(s) of the Company or any Related Entity that the Committee selects to
receive an Award.
P. "Employee Benefits Committee" shall mean a committee of the Company
consisting of employees of the Company or any Related Entity appointed by the
Human Resources Committee and which shall administer the Plan as provided in
Section III hereof.
Q. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
R. "Executive Officers" shall mean any Officer of the Company or any
Related Entity who, at the time of an Award, is subject to the reporting
requirements of Section 16(a) of the Exchange Act.
S. "Fair Market Value" shall mean the closing price of a share of
Common Stock as reported on the New York Stock Exchange for the applicable date,
or if there were no sales on such date, on the last day on which there were
sales.
T. "Human Resources Committee" shall mean the human resources committee
of the Board or any other committee of the Board appointed by the Board to
administer the Plan in lieu of the Human Resources Committee, which committee
shall consist of no fewer than three (3) persons, each of whom shall be a
Disinterested Person.
U. "Incentive Option" shall mean an incentive stock option under the
provisions of Section 422 of the Code.
V.(1) "Indexed" shall mean the periodic adjustment of an Option Price
based upon adjustment criteria determined by the Committee, but in no event
shall the Option Price be adjusted to an amount less than the original Option
Price.
V.(2). "Initial Grant Date" shall mean the later of (i) June 22, 1998,
or (ii) the date on which a new Outside Director is elected to the Board.
W. "Nonqualified Option" shall mean an Option which does not qualify
under Section 422 of the Code.
X. "Officer" shall mean any executive of the Company or any Related
Entity who participates in the Company's executive compensation programs.
Y. "Option" shall mean an option granted by the Company to purchase
Common Stock pursuant to the provisions of this Plan, including Incentive
Options, Nonqualified Options and Reload Options.
Z. "Optionee" shall mean a Participant to whom one or more Options have
been granted.
AA. "Option Price" shall mean the price per share payable to the Company
for shares of Common Stock upon the exercise of an Option.
AB. "Outside Director" shall mean an individual not employed by the
Company or any Related Entity and who serves on the Board.
AC. "Parent Corporation" shall mean any corporation within the meaning
of Section 424(e) of the Code.
AD. "Participant" shall mean an Eligible Employee, Eligible Non-
Employee, Executive Officer or Outside Director who is granted an Award.
AE. "Phantom Unit" shall mean a notional account representing a value
equivalent to one share of Common Stock on the Award date.
AF. "Plan" shall mean the 1998 U S WEST Stock Plan.
AG. "Related Entity" shall mean any Parent Corporation or Subsidiary of
the Company.
AH. "Reload Option" shall mean the right to receive a further Option
for a number of shares equal to the number of shares of Common Stock
surrendered by the Optionee upon exercise of the original Option as provided in
Section IX.E of the Plan.
AI. "Restricted Period" shall mean the period of time from the date of
grant of Restricted Stock until the lapse of restrictions attached thereto under
the terms of the Agreement granting such Restricted Stock, pursuant to the
provisions of the Plan or by action of the Committee.
AJ. "Restricted Stock" shall mean an Award made by the Committee
entitling the Participant to acquire, at no cost or for a purchase price
determined by the Committee at the time of grant, shares of Common Stock which
are subject to restrictions in accordance with the provisions of Section XII
hereof.
AK. "Retirement" shall mean with respect to any Eligible Employee, that
such person has terminated employment with the Company or any Related Entity
other than "for cause" (as defined in subsection IX.H.(v)) and (i) such person
is eligible to receive an immediate service pension benefit under the U S WEST
Pension Plan, or (ii) such person would be eligible to receive an immediate
service pension under the U S WEST Pension Plan, as amended and restated
effective January 1, 1993, had that plan not been amended and restated effective
January 1, 1997, or (iii) such person specifically is treated as "retired" for
purposes of the Plan under any individually negotiated, custom, written
agreement or arrangement between the Company or any Related Entity and the
Eligible Employee. "Retirement" shall not apply to any Eligible Non-Employee.
AL. "Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
AM. "Separation" shall mean the separation of U S WEST Communications
Group and U S WEST Media Group into two separate companies pursuant to the terms
of the Separation Agreement between the Company and MediaOne Group, Inc.
(previously known as "U S WEST, Inc.").
AN. "Stock Appreciation Right" or "SAR" shall mean a grant entitling
the Participant to receive an amount in cash or shares of Common Stock or a
combination thereof having a value equal to (or if the Committee shall so
determine at the time of a grant, less than) the excess of the Fair Market Value
of a share of Common Stock on the date of exercise over the Fair Market Value of
a share of Common Stock on the date of grant (or over the Option Price, if the
Stock Appreciation Right was granted in tandem with an Option) multiplied by the
number of shares with respect to which the Stock Appreciation Right shall have
been exercised, with the Committee having sole discretion to determine the form
or forms of payment at the time of grant of the SAR.
AO. "Stock Awards" shall mean any Award which is in the form of
Restricted Stock and any outright grants of Common Stock approved by the
Committee pursuant to the Plan.
AP. "Subsidiary" shall mean with respect to any Award other than an
Incentive Option, any corporation, joint venture or partnership in which the
Company owns, directly or indirectly, (i) with respect to a corporation, stock
possessing twenty percent (20%) or more of the total combined voting power of
all classes of stock in the corporation or (ii) in the case of a joint venture
or partnership, the Company possesses a twenty percent (20%) interest in the
capital or profits of such joint venture or partnership. In the case of any
Incentive Option, Subsidiary shall mean any corporation within the meaning of
Section 424(f) of the Code.
AQ. "Vested" shall mean the status that results with respect to an
Option or other Award which may be immediately exercised under the terms of the
Agreement granting such Option or other Award, pursuant to the provisions of the
Plan or by action of the Committee.
III. Administration.
A. The Plan shall be administered by the Human Resources Committee with
respect to Officers, Executive Officers and Outside Directors and by the
Employee Benefits Committee with respect to all other Eligible Employees and
Eligible Non-Employees. The Human Resources Committee may adopt such rules,
regulations and guidelines as it determines necessary for the administration of
the Plan. Subject to any such rules, regulations and guidelines adopted by the
Human Resources Committee, the Employee Benefits Committee shall have the power
to adopt rules, regulations and guidelines to permit such Committee to
administer the Plan with respect to Eligible Employees (other than Officers and
Executive Officers) and with respect to Eligible Non-Employees.
B. The Committee may delegate to one or more of its members, or to one
or more agents, such administrative duties as it may deem advisable, and the
Committee or any person to whom it has delegated duties as aforesaid may employ
one or more persons to render advice with respect to any responsibility the
Committee or such person may have under the Plan. The Committee may employ such
legal or other counsel, consultants and agents as it may deem desirable for the
administration of the Plan and may rely upon any opinion or computation received
from any such counsel, consultant or agent. Expenses incurred by the Committee
in the engagement of such counsel, consultant or agent shall be paid by the
Company or such Related Entity whose employees have benefited from the Plan, as
determined by the Committee. The Company shall indemnify members of the
Committee and any agent of the Committee who is an employee of the Company or a
Related Entity against any and all liabilities or expenses to which they may be
subjected by reason of any act or failure to act with respect to their duties on
behalf of the Plan, except in circumstances involving such person's gross
negligence or willful misconduct.
C. In furtherance of and not in limitation of the Committee's
discretionary authority, subject to the provisions of the Plan, the Committee
shall have the authority to:
1. determine the Participants to whom Awards shall be granted and the
number of and terms and conditions upon which Awards shall be granted (which
need not be the same for all Awards or types of Awards);
2. establish, in its sole discretion, annual or long-term financial
goals of the Company, Related Entity, or division, department, or group of the
Company or Related Entity, or individual goals which the Committee shall
consider in granting Awards, if any;
3. determine the satisfaction of performance goals established by the
Committee based upon periods of time or any combinations thereof;
4. determine the time when Awards shall be granted, the Option Price of
each Option, the period(s) during which Options shall be exercisable (whether in
whole or in part), the restrictions to be applicable to Awards, and the other
terms and provisions of Awards;
5. modify grants of Awards pursuant to Paragraph D. of this Section III
or rescind grants of Awards pursuant to Section IX.H(v), respectively;
6. provide the establishment of a procedure whereby a number of shares
of Common Stock or other securities may be withheld from the total number of
shares of Common Stock or other securities to be issued upon exercise of an
Option, the lapse of restrictions on Restricted Stock and the vesting of Phantom
Units (other than an Incentive Option) to meet the obligation of withholding for
income, social security and other taxes incurred by a Participant upon such
exercise or required to be withheld by the Company in connection with such
exercise;
7. adopt, modify and rescind rules and regulations and guidelines
relating to the Plan;
8. adopt modifications to the Plan and procedures, as may be necessary
to comply with provisions of the laws and applicable regulatory rulings of
countries in which the Company or a Related Entity operates in order to assure
the legality of Awards granted under the Plan to Participants who reside in such
countries;
9. obtain the approval of the stockholders of the Company with respect
to Awards consisting of Phantom Units or Restricted Stock; provided, however, no
action shall be proposed to stockholders without the approval of the Board of
Directors; and
10. make all determinations, perform all other acts, exercise all other
powers and establish any other procedures determined by the Committee to be
necessary, appropriate or advisable in administering the Plan and to maintain
compliance with any applicable law.
D. The Committee may at any time, in its sole discretion, accelerate
the exercisability of any Awards and waive or amend any and all restrictions and
conditions of any Awards.
E. Subject to and not inconsistent with the express provisions of the
Plan, the Code and Rule 16b-3 of the Exchange Act, the Committee shall have the
authority to require, as a condition to the granting of any Option, SAR or other
Award (to the extent applicable) to any Executive Officer of the Company or any
Related Entity that the Executive Officer receiving such Option, SAR or other
Award agree not to sell or otherwise dispose of such Option, SAR or other Award
or Common Stock acquired pursuant to such Option, SAR or other Award (to the
extent applicable) or any other "derivative security" (as defined by Rule
16a-1(c) under the Exchange Act) for a period of six (6) months following the
later of (i) the date of the grant of such Option, SAR or other Award (to the
extent applicable) or (ii) the date when the other Option Price of such Option,
SAR or other Award is fixed, if such Option Price is not fixed at the date of
grant of such Option, SAR or other Award.
IV. Decisions Final.
Any decision, interpretation or other action made or taken in good
faith by the Committee arising out of or in connection with the Plan shall be
final, binding and conclusive on the Company and all Participants and their
respective heirs, executors, administrators, successors and assigns.
V. Arbitration.
Any agreement may contain, among other things, provisions that require
arbitration of any and all disputes between a Participant and the Company or any
Related Entity, in a form or forms acceptable to the Committee, in its sole
discretion.
VI. Duration of the Plan.
The Plan shall remain in effect for a period of five (5) years from the
Effective Date, unless terminated by the Board pursuant to Section XX.
VII. Shares Available; Limitations.
A. Up to 4,800,000 shares of Common Stock may be granted in calendar
year 1998 and the maximum aggregate number of shares of Common Stock that may be
granted in any other calendar year for all purposes under the Plan shall be one
percent (1.0%) of the shares outstanding (excluding shares held in the Company's
treasury) on the first day of such calendar year, provided, however, that in the
event that fewer than the full aggregate number of shares available for issuance
in any calendar year are issued in such year, the shares not issued shall be
added to the shares available for issuance in any subsequent year or years. If,
for any reason, any shares of Common Stock as to which Options, SARs, Restricted
Stock, or Phantom Units have been granted cease to be subject to exercise or
purchase hereunder (other than the exercise of SARs for cash), the underlying
shares of Common Stock shall thereafter be available for grants to Participants
under the Plan during any calendar year. Awards granted under the Plan may be
fulfilled in accordance with the terms of the Plan with (i) authorized and
unissued shares of the Common Stock or (ii) issued shares of Common Stock
reacquired by the Company, in each situation, as the Board of Directors or the
Committee may determine from time to time at its sole discretion.
B. The maximum number of shares of Common Stock that shall be subject
to the grant of an Award in any calendar year for Awards other than Options or
SARs shall not exceed one-third (1/3) of the total number of shares of Common
Stock subject to Awards granted under the Plan for such calendar year.
C. The maximum number of shares of Common Stock with respect to which
Awards may be granted to any individual Participant in any calendar year may not
exceed eight hundred thousand (800,000).
D. The cumulative number of shares of Common Stock that may be issued
under this Plan in connection the exercise of Incentive Options shall not exceed
ten million (10,000,000).
VIII. Grant of Awards.
A. The Committee shall determine the type or types of Award(s) to be
made to each Participant. Awards may be granted singly, in combination or in
tandem subject to restrictions set forth in Section IX.C for Incentive Options.
The types of Awards that may be granted under the Plan are Options, with or
without Reload Options, SARs, Stock Awards and Phantom Units, and with respect
to Phantom Units and Restricted Stock, with or without Dividend Equivalent
Rights.
B. Each grant of an Award under this Plan shall be evidenced by an
Agreement dated as of the date of the grant of the Award, other than Stock
Awards consisting of an outright grant of shares of Common Stock. This Agreement
shall set forth the terms and conditions of the Award, as may be determined by
the Committee, and if the Agreement relates to the grant of an Option, shall
indicate whether the Option that it evidences, is intended to be an Incentive
Option or a Nonqualified Option. Each grant of an Award is conditioned upon the
acceptance by the Participant of the terms of the Agreement. Unless otherwise
extended by the Committee, a Participant shall have ninety (90) days from the
date of the Agreement to accept its terms.
IX. Options.
The Committee, in its sole discretion, may grant Incentive Options or
Nonqualified Options to Eligible Employees, Officers and Executive Officers and
Nonqualified Options to Eligible Non-Employees. Any Options granted to a
Participant under the Predecessor Plan which remain outstanding as of the
Effective Date shall be governed by the terms and conditions of the Plan, except
to the extent the provisions of the Plan are inconsistent with the terms of the
Options granted under the Predecessor Plans, in which event the applicable
provisions of the Predecessor Plans shall govern; provided, however, that in no
event shall there be a modification of the terms of any Incentive Option granted
under the Predecessor Plan. The terms and conditions of the Options granted
under this Section IX shall be determined from time to time by the Committee, as
set forth in the Agreement granting the Option, and subject to the following
conditions:
A. Nonqualified Options. The Option Price for each share of Common
Stock issuable pursuant to a Nonqualified Option may be an amount at or above
the Fair Market Value on the date such Option is granted, may be Indexed from
the original Option Price and may be granted with or without Dividend Equivalent
Rights; provided, however, that with respect to Nonqualified Options granted to
any Executive Officer, no Dividend Equivalent Rights may be granted.
B. Incentive Options. The Option Price for each share of Common Stock
issuable pursuant to an Incentive Option shall not be less than one hundred
percent (100%) of the Fair Market Value on the date such Option is granted and
may be Indexed from the original Option Price.
C. Incentive Options; Special Rules. Options granted in the form of
Incentive Options shall be subject to the following provisions:
1. Grant. No Incentive Option shall be granted pursuant to this Plan
more than ten (10) years after the Effective Date.
2. Annual Limit. The aggregate Fair Market Value (determined at the
time the Option is granted) of the shares of Common Stock with respect to which
one or more Incentive Options are exercisable for the first time by any Optionee
during any calendar year under the Plan or under any other stock plan of the
Company or any Related Entity shall not exceed $100,000 or such other maximum
amount permitted under Section 422 of the Code. Any Option purporting to
constitute an Incentive Option in excess of such limitation shall constitute a
Nonqualified Option.
3. 10% Stockholder. If any Optionee to whom an Incentive Option is to
be granted pursuant to the provisions of the Plan is, on the date of grant, an
individual described in Section 422(b)(6) of the Code, then the following
special provisions shall be applicable to the Option granted to such individual:
(a) the Option Price of shares subject to such Incentive Option shall
not be less than 110% of the Fair Market Value of Common Stock on the date of
grant; and
(b) the Option shall not have a term in excess of (5) years from the
date of grant.
D. Other Options. The Committee may establish rules with respect to,
and may grant to Eligible Employees, Options to comply with any amendment to the
Code made after the Effective Date providing for special tax benefits for stock
options.
E. Reload Options. Without in any way limiting the authority of the
Committee to make Awards hereunder, the Committee shall have the authority to
grant Reload Options. Any such Reload Option shall be subject to such other
terms and conditions as the Committee may determine. Notwithstanding the above,
(i) the Committee shall have the right, in its sole discretion, to withdraw a
Reload Option to the extent that the grant thereof will result in any adverse
accounting consequences to the Company and (ii) no additional Reload Options
shall be granted upon the exercise of a Reload Option.
F. Term of Option. No Option shall be exercisable after the expiration
of ten (10) years from the date of grant of the Option.
G. Exercise of Stock Option. Each Option shall be exercisable in one or
more installments as the Committee in its sole discretion may determine at the
time of the Award and as provided in the Agreement. The right to purchase shares
shall be cumulative so that when the right to purchase any shares has accrued
such shares or any part thereof may be purchased at any time thereafter until
the expiration or termination of the Option, subject to rules on sequential
exercise for Incentive Options pursuant to Paragraph C.2. of this Section IX.
The Option Price shall be payable (i) in cash or by an equivalent means
acceptable to the Committee, (ii) by delivery (constructive or otherwise) to the
Company of shares of Common Stock owned by the Optionee or (iii) by any
combination of the above as provided in the Agreement. Shares delivered to the
Company in payment of the Option Price shall be valued at the Fair Market Value
on the date of the exercise of the Option.
H. Vesting. The Agreement shall specify the date or dates on which the Optionee
may begin to exercise all or a portion of his Option. Subsequent to such date or
dates, the Option shall be deemed vested and fully exercisable.
(i) Death. In the event of the death of any Optionee, all Options held
by such Optionee on the date of his death shall become Vested Options and the
estate of such Optionee, shall have the right, at any time and from time to time
within one year after the date of death, or such other period, if any, as the
Committee in its sole discretion may determine, to exercise the Options of the
Optionee (but not after the earlier of the expiration date of the Option or, in
the case of an Incentive Option, one (1) year from the date of death).
(ii) Disability. If the employment of any Optionee is terminated
because of Disability, all Options held by such Optionee on the date of his or
her termination shall be retained by such Optionee, and such Options that are
not yet Vested Options shall become Vested Options in accordance with the
vesting schedule established at the time such Options were issued. The Optionee
shall have the right to exercise Vested Options at any time and from time to
time, but not after the expiration date of the Option or, in the case of
Incentive Options where tax-advantaged treatment is desired, one year from the
date of termination of employment.
(iii) Retirement. Upon an Optionee's Retirement, all Options held by
such Optionee on the date of his or her Retirement shall be retained by such
Optionee, and such Options that are not yet Vested Options shall become Vested
Options in accordance with the vesting schedule established at the time such
Options were issued, unless the Committee, in its sole discretion, determines
otherwise. Unless the Committee, in its sole discretion, determines otherwise,
the Optionee shall have the right to exercise Vested Options at any time and
from time to time, but not after the expiration date of the Option. In the case
of Incentive Options where tax-advantaged treatment is desired, the Optionee
shall have the right to exercise Vested Options three months from the date of
Retirement.
(iv) Other Termination. If the employment with the Company or a Related
Entity of an Optionee is terminated for any reason other than for death or
Disability and other than "for cause" as defined in subparagraph (v) below, such
Optionee shall have the right, in the case of a Vested Option, for a period of
three (3) months after the date of such termination or such longer period as
determined by the Committee, to exercise any such Vested Option, but in any
event not after the expiration date of any such Option.
(v) Termination For Cause. Notwithstanding any other provision of the
Plan to the contrary, if the Optionee's employment is terminated by the Company
or any Related Entity "for cause" (as defined below), such Optionee shall
immediately forfeit all rights under his Options except as to the shares of
Common Stock already purchased prior to such termination. Termination "for
cause" shall mean (unless another definition is agreed to in writing by the
Company and the Optionee) termination by the Company because of: (a) the
Optionee's willful and continued failure to substantially perform his duties
(other than any such failure resulting from the Optionee's incapacity due to
physical or mental impairment) after a written demand for substantial
performance is delivered to the Optionee by the Company, which demand
specifically identifies the manner in which the Company believes the Optionee
has not substantially performed his duties, (b) the willful conduct of the
Optionee which is demonstrably and materially injurious to the Company or
Related Entity, monetarily or otherwise, or (c) the conviction of the Optionee
for a felony by a court of competent jurisdiction.
X. Foreign Options and Rights.
The Committee may make Awards of Options to Eligible Employees,
Officers, Executive Officers and Eligible Non-Employees who are subject to the
tax laws of nations other than the United States, which Awards may have terms
and conditions as determined by the Committee as necessary to comply with
applicable foreign laws. The Committee may take any action which it deems
advisable to obtain approval of such Option by the appropriate foreign
governmental entity; provided, however, that no such Award may be granted
pursuant to this Section X and no action may be taken which would result in a
violation of the Exchange Act, the Code or any other applicable law.
XI. Stock Appreciation Rights.
The Committee shall have the authority to grant SARs to Eligible
Employees, Officers, Executive Officers and Eligible Non-Employees either alone
or in connection with an Option. SARs granted in connection with an Option shall
be granted either at the time of grant of the Option or by amendment to the
Option. SARs granted in connection with an Option shall be subject to the same
terms and conditions as the related Option and shall be exercisable only at such
times and to such extent as the related Option is exercisable. A SAR granted in
connection with an Option may be exercised only when the Fair Market Value of
the Common Stock of the Company exceeds the Option Price of the related Option.
A SAR granted in connection with an Option shall entitle the Participant to
surrender to the Company unexercised the related Option, or any portion thereof
and to receive from the Company cash and/or shares of Common Stock equal to that
number of shares of Common Stock having an aggregate value equal to the excess
of (i) the Fair Market Value of one share of Common Stock on the day of the
surrender of such Option over (ii) the Option Price per share of Common Stock
multiplied by (iii) the number of shares of Common Stock that may be exercised
under the Option, or surrendered; provided, however, that no fractional shares
shall be issued. A SAR granted singly shall entitle the Participant to receive
the excess of (i) the Fair Market Value of a share of Common Stock on the date
of exercise over (ii) the Fair Market Value of a share of Common Stock on the
date of the grant of the SAR multiplied by (iii) the number of SARs exercised.
Payment of any fractional shares of Common Stock shall be made in cash. A SAR
shall become a Vested Award upon (i) a Participant becoming Disabled, or (ii)
the death of a Participant.
XII. Restricted Stock.
The Committee may, in its sole discretion, grant Restricted Stock to
Eligible Employees, Eligible Non-Employees, Officers or Executive Officers
subject to the provisions below.
A. Restrictions. A stock certificate representing the number of shares of
Restricted Stock granted shall be held in custody by the Company for the
Participant's account. The Participant shall have all rights and privileges of a
stockholder as to such Restricted Stock, including the right to receive
dividends and the right to vote such shares, except that, subject to the
provisions of Paragraph B. below, the following restrictions shall apply: (i)
the Participant shall not be entitled to delivery of the certificate until the
expiration of the Restricted Period; (ii) none of the shares of Restricted Stock
may be sold, transferred, assigned, pledged, or otherwise encumbered or disposed
of during the Restricted Period; (iii) the Participant shall, if requested by
the Company, execute and deliver to the Company, a stock power endorsed in
blank. The Restricted Period shall lapse upon a Participant becoming Disabled or
the death of a Participant. If a Participant ceases to be an employee of the
Company or a Related Entity prior to the expiration of the Restricted Period
applicable to such shares, except as a result of the death or Disability of the
Participant, shares of Restricted Stock still subject to restrictions shall be
forfeited unless otherwise determined by the Committee, and all rights of the
Participant to such shares shall terminate without further obligation on the
part of the Company. Upon the forfeiture (in whole or in part) of shares of
Restricted Stock, such forfeited shares shall become shares of Common Stock held
in the Company's treasury without further action by the Participant.
B. Terms and Conditions. The Committee shall establish the terms and conditions
for Restricted Stock pursuant to Section III of the Plan, including whether any
shares of Restricted Stock shall have voting rights or a right to any dividends
that are declared. Terms and conditions established by the Committee need not be
the same for all grants of Restricted Stock. The Committee may provide for the
restrictions to lapse with respect to a portion or portions of the Restricted
Stock at different times or upon the occurrence of different events, and the
Committee may waive, in whole or in part, any or all restrictions applicable to
a grant of Restricted Stock. Restricted Stock Awards may be issued for no cash
consideration or for such minimum consideration as may be required by applicable
law or such other consideration as may be determined by the Committee.
C. Delivery of Restricted Shares. At the end of the Restricted Period as herein
provided, a stock certificate for the number of shares of Restricted Stock with
respect to which the restrictions have lapsed shall be delivered (less any
shares delivered pursuant to Section XIX.C in satisfaction of any withholding
tax obligation), free of all such restrictions, except applicable securities law
restrictions, to the Participant or the Participant's estate, as the case may
be. The Company shall not be required to deliver any fractional share of Common
Stock but shall pay, in lieu thereof, the Fair Market Value (measured as of the
date the restrictions lapse) of such fractional share to the Participant or the
Participant's estate, as the case may be. Notwithstanding the foregoing, the
Committee may authorize the delivery of the Restricted Stock to a Participant
during the Restricted Period, in which event any stock certificates in respect
of shares of Restricted Stock thus delivered to a Participant during the
Restricted Period applicable to such shares shall bear an appropriate legend
referring to the terms and conditions, including the restrictions, applicable
thereto.
XIII. Phantom Units.
A. General. The Committee may, in its sole discretion, grant the right to earn
Phantom Units to Eligible Employees, Officers, Executive Officers and Eligible
Non-Employees. The Committee shall determine the criteria for the earning of
Phantom Units, pursuant to Section III of the Plan. Upon satisfaction of such
criteria, a Phantom Unit shall be deemed a Vested Award. A Phantom Unit granted
by the Committee shall provide for payment in shares of Common Stock. A Phantom
Unit shall become a Vested Award upon (i) a Participant becoming Disabled, or
(ii) the death of a Participant. Shares of Common Stock issued pursuant to this
Section XIII may be issued for no cash consideration or for such minimum
consideration as may be required by applicable law or such other consideration
as may be determined by the Committee. The Committee shall determine whether a
Participant granted a Phantom Unit shall be entitled to a Dividend Equivalent
Right.
B. Unfunded Claim. The establishment of Phantom Units under the Plan are
unfunded obligations of the Company. The interest of a Participant in any such
units shall be considered a general unsecured claim against the Company to the
extent that the conditions for the earning of the Phantom Units have been
satisfied. Nothing contained herein shall be construed as creating a trust or
fiduciary relationship between the Participant, the Company or the Committee.
C. Issuance of Common Stock. Upon a Phantom Unit becoming a Vested Award,
unless a Participant has elected to defer under Paragraph D. below, shares of
Common Stock representing the Phantom Units shall be distributed to the
Participant, unless the Committee, with the consent of the Participant, provides
for the payment of the Phantom Units in cash or partly in cash and partly in
shares of Common Stock equal to the value of the shares of Common Stock which
would otherwise be distributed to the Participant.
D. Deferral of Phantom Units. Prior to the year with respect to which a Phantom
Unit may become a Vested Award, the Participant may elect not to receive Common
Stock upon the vesting of such Phantom Unit and for the Company to continue to
maintain the Phantom Unit on its books of account. In such event, the value of a
Phantom Unit shall be payable in shares of Common Stock pursuant to the
agreement of deferral.
E. Financial Hardship. Notwithstanding any other provision hereof, at the
written request of a Participant who has elected to defer pursuant to Paragraph
D. above, the Committee, in its sole direction, upon a finding that continued
deferral will result in financial hardship to the Participant, may authorize the
payment of all or a part of a Participant's Vested Phantom Units in a single
installment or the acceleration of payment of any multiple installments thereof;
provided, however, that distributions will not be made under this paragraph if
such distribution would result in liability of an Executive Officer under
Section 16 of the Exchange Act.
F. Distribution upon Death. The Committee shall pay the Fair Market Value of
the Phantom Units of a deceased Participant to the estate of the Participant, as
soon as practicable following the death of the Participant. The value of the
Phantom Units for the purpose of such distribution shall be based upon the Fair
Market Value of shares of Common Stock underlying the Phantom Units on the date
of the Participant's death.
XIV. Stock Awards to Outside Directors.
Each Outside Director shall be granted a Stock Award on his or her
Initial Grant Date consisting of 3,000 shares of Restricted Stock, which shall
vest in 20% increments, with the first 600 shares vesting six months after the
Initial Grant Date, the next 600 shares vesting one year after the Initial Grant
Date, and the remaining shares vesting at a rate of 600 shares per year
thereafter for the next three years.
XV. Outside Director's Compensation.
A. Payment in Common Stock. Each Outside Director may elect to receive payment
of all or any portion of Director Compensation comprised of retainer fees for
service on the Board and any committees thereof in Common Stock. The amount of
Common Stock then issuable shall be based on the Fair Market Value of the Common
Stock on the dates such retainer fees are otherwise due and payable to the
Outside Director. When any fees are paid in Common Stock under this Section
XV.A, any fractional shares of Common Stock shall be paid in cash. Certificates
evidencing such Common Stock shall be delivered promptly following such date. If
an Outside Director elects to receive payment of retainer fees in Common Stock
as described in this Section XV.A, the election shall be (i) in writing, (ii)
delivered to the Secretary of the Company at least six months in advance of the
payment date, and (iii) irrevocable.
B. Deferral of Payment. Each Outside Director may elect to defer the receipt of
Common Stock payable pursuant to Section XV.A, in which event such Outside
Director shall receive an equivalent number of Phantom Units with Dividend
Equivalent Rights. Any such Phantom Units shall become Vested Awards at such
time as the Outside Director no longer serves as a member of the Board. If an
Outside Director elects to defer receipt of Common Stock and receive Phantom
Units pursuant to this Section XV.B, the election shall be (i) in writing, (ii)
delivered to the Secretary of the Company in the year preceding the year in
which the Director Compensation would otherwise be paid and at least six months
in advance of the date when Common Stock would otherwise be issued, and (iii)
irrevocable.
C. Director Stock Options. On his or her Initial Grant Date, each Outside
Director shall be granted an Option to purchase thirty thousand (30,000) shares
Common Stock, such Options to become Vested Options in 1/3 increments over three
years, beginning one year after the Initial Grant Date. On the third anniversary
of the Initial Grant Date, and each year thereafter, Outside Directors shall
receive an annual grant of an Option to purchase ten thousand (10,000) shares of
Common Stock, which Options shall become Vested Options one year after the date
of each respective grant. Upon retirement of an Outside Director from the Board,
all unvested Options shall become immediately vested and shall remain
exercisable notwithstanding the retirement of the Director from the Board, until
the expiration date of the Option, which shall occur ten years from the date of
grant.
D. Pension Replacement. After the Effective Date, no new pension benefits will
be granted to Outside Directors; however, the Company will grandfather vested
pension benefits accrued by Directors as of the Effective Date relating to
service on the Board of U S WEST, Inc. prior to the Separation. In lieu thereof,
Outside Directors shall receive a Stock Award consisting of the number of shares
of Restricted Stock determined by dividing (a) the dollar amount equal to ten
(10) times the amount of the annual retainer paid to Board members, by (b) the
closing price on recipient's Initial Grant Date for Common Stock listed on the
New York Stock Exchange as reported in the Wall Street Journal, which Stock
Award shall be subject to the following vesting schedule: (i) 50% of the Stock
Award shall vest five years after the recipient's Initial Grant Date, and (ii)
the remainder shall vest at a rate of 10% per year thereafter for the next five
years.
XVI. Federal Securities Law.
With respect to grants of Awards to Directors and Executive Officers,
the Company intends that the provisions of this Plan and all transactions
effected in accordance with Plan shall comply with Rule 16b-3 under the Exchange
Act. Accordingly, the Committee shall administer and interpret the Plan to the
extent practicable, to maintain compliance with such rule.
XVII. Change of Control; Acceleration.
Upon the occurrence of a Change of Control:
A. in the case of all outstanding Options and SARs, each such Option
and SAR shall automatically become immediately fully exercisable by the
Participant;
B. restrictions applicable to Restricted Stock shall automatically be
deemed lapsed and conditions applicable to Phantom Units shall automatically be
deemed waived, and the Participants who receive such grants shall become
immediately entitled to receipt of the Common Stock subject to such grants; and
C. the Human Resources Committee, in its discretion, shall have the
right to accelerate payment of any deferrals of Vested Phantom Units.
XVIII. Adjustment of Shares.
A. In the event there is any change in the Common Stock by reason of
any consolidation, combination, liquidation, reorganization, recapitalization,
stock dividend, stock split, split-up, split-off, spin-off, combination of
shares, exchange of shares or other like change in capital structure of the
Company, the number or kind of shares or interests subject to an Award and the
per share price or value thereof shall be appropriately adjusted by the
Committee at the time of such event, provided that each Participant's economic
position with respect to the Award shall not, as a result of such adjustment, be
worse than it had been immediately prior to such event. Any fractional shares or
interests resulting from such adjustment shall be rounded up to the next whole
share of Common Stock. Notwithstanding the foregoing, (i) each such adjustment
with respect to an Incentive Option shall comply with the rules of Section
424(a) of the Code, and (ii) in no event shall any adjustment be made which
would render any Incentive Option granted hereunder other than an "incentive
stock option" for purposes of Section 422 of the Code.
B. In the event of an acquisition by the Company of another corporation
where the Company assumes outstanding stock options or similar obligations of
such corporation, the number of Awards available under the Plan shall be
appropriately increased to reflect the number of such options or other
obligations assumed.
XIX. Substitute Options.
Options, shares of Restricted Stock and Phantom Units issued in
substitution of outstanding options for U S WEST Communications Group Stock,
restricted shares of U S WEST Communications Group Stock and phantom units with
respect to U S WEST Communications Group Stock pursuant to the terms of the
Employee Matters Agreement entered into by the Company and MediaOne Group, Inc.
(previously known as "U S WEST, Inc.") shall be administered pursuant to the
provisions of the Plan to the extent not inconsistent with the terms of the
grant of such options, restricted stock and phantom units and such Employee
Matters Agreement.
XX. Miscellaneous Provisions.
A. Assignment or Transfer. Except as otherwise permitted by this Section, no
grant of any "derivative security" (as defined in the rules issued under Section
16 of the Exchange Act) made under the Plan or any rights or interests therein
shall be assignable or transferable except by last will and testament or the
laws of descent and distribution. No grant of any such derivative security shall
be assignable or transferable pursuant to a domestic relations order. An
Optionee who is an Officer or an Outside Director may assign or transfer an
Option (other than an Incentive Option) as a gift to one or more members of his
or her immediate family or to trusts maintained for the benefit of such
immediate family members if such assignment or transfer is not pursuant to a
domestic relations order and (i) such assignment or transfer is expressly
approved in advance by the Committee or its delegate(s) or (ii) such Option was
granted to the Optionee on or after August 15, 1996, and the Agreement
pertaining to such Option expressly permits the assignment or transfer of the
Option.
B. Investment Representation; Legends. The Committee may require each
Participant acquiring shares of Common Stock pursuant to an Award to represent
to and agree with the Company in writing that such Participant is acquiring the
shares without a view to distribution thereof. No shares of Common Stock shall
be issued pursuant to an Award until all applicable securities law and other
legal and stock exchange requirements have been satisfied. The Committee may
require the placing of stop-orders and restrictive legends on certificates for
Common Stock as it deems appropriate.
C. Withholding Taxes. In the case of distributions of Common Stock or other
securities hereunder, the Company, as a condition of such distribution, may
require the payment (through withholding from the Participant's salary, payment
of cash by the Participant, reduction of the number of shares of Common Stock or
other securities to be issued (except in the case of an Incentive Option), or
otherwise) of any federal, state, local or foreign taxes required by law to be
withheld with respect to such distribution.
D. Costs and Expenses. The costs and expenses of administering the Plan shall
be borne by the Company and shall not be charged against any Award nor to any
Participant receiving an Award.
E. Other Incentive Plans. The adoption of the Plan does not preclude the
adoption by appropriate means of any other incentive plan for employees.
F. Effect on Employment. Nothing contained in the Plan or any agreement related
hereto or referred to herein shall affect, or be construed as affecting, the
terms of employment of any Participant except to the extent specifically
provided herein or therein. Nothing contained in the Plan or any agreement
related hereto or referred to herein shall impose, or be construed as imposing,
an obligation on (i) the Company or any Related Entity to continue the
employment of any Participant and (ii) any Participant to remain in the employ
of the Company or any Related Entity.
G. Noncompetition. Any Agreement may contain, among other things, provisions
prohibiting Participants from competing with the Company or any Related Entity
in a form or forms acceptable to the Committee, in its sole discretion.
H. Governing Law. This Plan and actions taken in connection herewith shall be
governed and construed in accordance with the laws of the State of Colorado.
XXI. Amendment or Termination of Plan.
The Board shall have the right to amend, modify, suspend or terminate
the Plan at any time, provided that, with respect to Incentive Options, no
amendment shall be made that (i) decreases the minimum Option Price in the case
of any Incentive Option, or (ii) modifies the provisions of the Plan with
respect to Incentive Options, unless such amendment is made by or with the
approval of the stockholders or unless the Board receives an opinion of counsel
to the Company that stockholder approval is not necessary with respect to any
modifications relating to Incentive Options; and provided further that no
amendment shall be made that (i) increases the number of shares of Common Stock
that may be issued under the Plan, (ii) permits the Option Price for any Option
to be less than Fair Market Value on the date such Option is granted, or (iii)
extends the period during which awards may be granted under the Plan beyond five
(5) years from the Effective Date, unless such amendment is made by or with the
approval of stockholders. No amendment, modification, suspension or termination
of the Plan shall alter or impair any Awards previously granted under the Plan,
without the consent of the holder thereof.