THIS DOCUMENT CONSTITUTES A PROSPECTUS COVERING SECURITIES THAT HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933
Dated August 6, 1999
Prospectus
1999 U S WEST STOCK PLAN
I. Purpose.
This 1999 U S WEST Stock Plan, as amended (the "Plan"), is intended to
promote the long term success of U S WEST, Inc. or its successor (the "Company")
by affording certain eligible employees 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 approval by the Board of Directors (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 which is a condition subsequent to the grant of an Award to a
Participant 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. Except as excluded below, "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 shall
determine constitutes a Change of Control;
provided, however, that, except as the Board of Directors otherwise determines,
a Change of Control for purposes of the Plan does not include the merger
contemplated in the Agreement and Plan of Merger (the "Qwest Merger"), dated as
of July 18, 1999, or as later amended, between the Company and Qwest
Communications International Inc., a Delaware corporation ("Qwest").
E. "Code" shall mean the Internal Revenue Code of 1986, as amended.
F. "Committee" shall mean the Employee Benefits Committee of the Company
consisting of employee(s) of the Company or any Related Entity appointed by the
Board at the recommendation of the Human Resources Committee or its delegate(s),
as applicable, to exercise the delegated authority of the Human Resources
Committee, as set forth under 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" shall mean any member of the Board of Directors of the
Company.
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.
K. "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.
L. "Effective Date" shall mean the date on which the Plan was approved by
the Board of Directors.
M. "Eligible Employee" shall mean any employee of the Company or any
Related Entity who is not a Director or an Executive Officer (defined below) and
who is so employed on the date of the grant of an Award.
N. "Eligible Non-Employee" shall mean any consultant or advisor who is not
a Director and who has provided bona fide services to the Company or any Related
Entity and is selected by the Committee to receive an Award; provided that
services rendered by such consultant or advisor were not in connection with the
offer or sale of securities in a capital raising transaction and do not directly
or indirectly promote or maintain a market for the Company's securities as those
terms are used in the Form S-8 issued under the Securities Act.
O. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
P. "Executive Officer" 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.
Q. "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 prior to the applicable date
on which there were sales.
R. "Incentive Option" shall mean an incentive stock option under the
provisions of Section 422 of the Code.
S. "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.
T. "Nonqualified Option" shall mean an Option which does not qualify under
Section 422 of the Code.
U. "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.
V. "Optionee" shall mean a Participant to whom one or more Options have
been granted.
W. "Option Price" shall mean the price per share payable to the Company for
shares of Common Stock upon the exercise of an Option.
X. "Parent Corporation" shall mean any corporation within the meaning of
Section 424(e) of the Code.
Y. "Participant" shall mean an Eligible Employee or Eligible Non-Employee
to whom an Award is granted.
Z. "Phantom Unit" shall mean a notional account representing a value
equivalent to one share of Common Stock on the Award date.
AA. "Plan" shall mean the 1999 U S WEST Stock Plan, as amended.
AB. "Related Entity" shall mean any Parent Corporation or Subsidiary of the
Company.
AC. "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.
AD. "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.
AE. "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.
AF. "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, written agreement or
arrangement between the Company or any Related Entity and the Eligible Employee.
"Retirement" shall not apply to any Eligible Non-Employee.
AG. "Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
AH. "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 to determine the form or forms of payment at
the time of grant of the SAR.
AI. "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.
AJ. "Subsidiary" shall mean with respect to any Award other than an
Incentive Option, any corporation, joint venture, limited liability company
("LLC"), 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, (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, or (iii) in the case of an LLC, a twenty percent (20%) or more
interest in units in the LLC. In the case of any Incentive Option, Subsidiary
shall mean any corporation within the meaning of Section 424(f) of the Code.
AK. "Vested" shall mean the status of that portion of an Option or other
Award that 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 Committee shall have sole and exclusive discretion to interpret and
administer the Plan. The Committee shall have the power to adopt rules,
regulations and guidelines relating to the administration of the Plan.
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 annual or long-term financial goals of the Company, any
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;
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, regulations, procedures, 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; and
9. make all determinations, perform all other acts, exercise all other
powers and establish any other rules, regulations, procedures, and
guidelines 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 accelerate the exercisability or define
any other aspect of the grant of or the conditions of the grant of any Awards
and waive or amend any and all restrictions and conditions of any Awards.
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.
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 XVII but
shall continue to govern any Awards outstanding as of the end of that period.
VII. Shares Available; Limitations.
Up to 12,000,000 shares of Common Stock may be granted under this Plan. 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. Absent an amendment of this provision by the Committee, no
Incentive Options shall be granted under this Plan and no shares of Common Stock
may be issued under this Plan in connection with the exercise of Incentive
Options. 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.
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 conditioned upon the
acceptance of 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 will be subject to amendment, modification or
alteration by the Committee pursuant to Section III.D of this Plan and without
the Participant's execution of such amendment, modification or alteration. If
the Agreement relates to the grant of an Option, it 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 subsequent
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 may grant Incentive Options or Nonqualified Options to
Eligible Employees and Nonqualified Options to Eligible Non-Employees. 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. All agreements granting options under Section IX.A shall state that the
Options issued pursuant to the Agreement are not intended to qualify for tax
benefits under Section 422 of the Code.
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
portion of an 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.
4. Shareholder Approval. If required by law to issue Incentive
Options, shareholder approval of the Plan shall be obtained within twelve
(12) months before or after adoption of the Plan.
D. Other Options - Special Tax Benefits. 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 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 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. 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 Committee shall establish the vesting schedules for awards.
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
applicable portion of 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 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 over time 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.
(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 over time in accordance with the vesting schedule
established at the time such Options were issued, unless the Committee
determines otherwise. Unless the Committee 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 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 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 that 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
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 grant Restricted Stock to Eligible Employees and Eligible
Non-Employees 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. 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 XVI.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 grant the right to earn Phantom Units to
Eligible Employees 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. Change of Control; Acceleration.
Upon the occurrence of a Change of Control or, within one year after the
closing of the Qwest Merger, the involuntary termination of a Participant, other
than a termination "for cause" as defined in Section IX.H.(v) of this Plan,
then:
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 Employee Benefits Committee, in its discretion, shall have the right
to accelerate payment of any deferrals of Vested Phantom Units.
XV. 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.
XVI. 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.
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.
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.
XVII. Amendment or Termination of Plan.
The Committee shall have the right to amend, modify, suspend or terminate
the Plan or any Awards at any time.
ADDITIONAL INFORMATION
U S WEST is subject to certain informational requirements under the
Exchange Act and has incorporated herein by reference the following documents
filed by U S WEST into this Prospectus: (i) U S WEST's Annual Report on Form
10-K for the year ended December 31, 1998, as amended by Form 10-K/A filed March
24, 1999; (ii) U S WEST's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1999 and June 30, 1999; (iii) U S WEST's Current Reports on Form 8-K
filed January 13, 1999, January 15, 1999, January 22, 1999, February 23, 1999,
February 25, 1999, February 26, 1999, April 7, 1999, April 22, 1999, May 12,
1999, May 18, 1999, May 21, 1999, May 26, 1999, June 18, 1999, June 22, 1999,
July 7, 1999, July 21, 1999 and July 26, 1999, as amended by Form 8-K/A filed
July 27, 1999; (iv) U S WEST's Proxy Statement on Schedule 14A filed March 24,
1999; and (v) the description of Common Stock and preferred stock purchase
rights of U S WEST contained in U S WEST's Registration Statement on Form 8-A
filed on May 1, 1998 (as amended by Form 8-A/A filed May 12, 1998).
All documents filed by U S WEST pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus shall be deemed to
be incorporated in this Prospectus from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained in this Prospectus or in any
subsequently filed documents which also is or is deemed to be incorporated by
reference in this Prospectus modifies or supersedes such statements. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
U S WEST shall provide, without charge, to any Participant to whom a
Prospectus is delivered, upon written or oral request, a copy of an updated
version of this prospectus and any or all of the documents that are incorporated
by reference herein. Requests for such documents or for additional information
about the Plan or its administrators should be directed to the Corporate
Secretary, U S WEST, 1801 California Street, Denver, Colorado 80202, Telephone
(303) 672-2700.
CERTAIN FEDERAL INCOME TAX EFFECTS
It is the opinion of the Company that the following are certain income tax
consequences of participation in the Plan. This section is only a summary, does
not purport to be complete and, among other things, does not cover state and
local tax treatment. Furthermore, differences in financial situation may cause
Federal, state and local tax consequences to vary. Therefore, consultation with
an accountant, legal counsel or other financial advisor regarding tax
consequences is urged.
1. Nonqualified Options, Stock Appreciation Rights and Phantom Units. An
individual who receives a grant of a Nonqualified Option, a SAR, or a phantom
unit will not recognize any taxable income upon such grant. However, the
individual generally will recognize ordinary income upon exercise of a
Nonqualified Option in an amount equal to the excess of the fair market value of
the shares at the time of exercise over the exercise price. Similarly, upon the
receipt of cash or shares pursuant to the exercise of a SAR, the individual
generally will recognize ordinary income in an amount equal to the sum of the
cash and the fair market value of the shares received; likewise, upon the
vesting of a phantom unit, the individual generally will recognize ordinary
income in an amount equal to the fair market value of the shares, plus cash, if
any, received.
An individual who exercises a Nonqualified Option by delivering U S WEST
Common Stock to U S WEST will not recognize gain or loss with respect to the
exchange of such U S WEST Common Stock, even if the fair market value of the
shares so delivered is different from the individual's tax basis. The
individual, however, will be taxed as described above with respect to the
exercise of the Nonqualified Option as if he or she had paid the exercise price
in cash.
2. Restricted Stock. Absent a written election pursuant to Section 83(b) of
the Code filed with the IRS within 30 days after the date of transfer of such
shares (a "Section 83(b) election"), an individual who receives restricted stock
under the Plan generally will recognize ordinary income at the earlier of the
time at which (i) the shares become transferable or (ii) the restrictions that
impose a substantial risk of forfeiture of such shares lapse, in an amount equal
to the excess of the fair market value (on such date) of such shares over the
consideration paid for such restricted stock, if any. If a Section 83(b)
election is made, the individual will recognize ordinary income, as of the
transfer date, in an amount equal to the excess of the fair market value of the
shares as of that date over the price paid for such award, if any.
3. Consequences to Company. A federal income tax deduction generally will
be allowed to U S WEST in an amount equal to the ordinary income included by the
employee with respect to his or her Nonqualified Option, SAR, phantom unit, or
restricted stock, provided that such amount constitutes an ordinary and
necessary business expense to U S WEST and is reasonable and the limitations of
Sections 280G and 162(m) of the Code do not apply.
4. Change of Control. In general, if the total amount of payments to an
individual that are contingent upon a "change of control" of U S WEST (as
defined in Section 280G of the Code), including payments under the Plan that
vest upon a "change of control," equals or exceeds three times the individual's
"base amount" (generally, such individual's average annual compensation for the
five calendar years preceding the change of control), then, subject to certain
exceptions, the payments may be treated as "parachute payments" under the Code,
in which case a portion of such payments would be non-deductible to U S WEST and
the individual would be subject to a 20% excise tax on such portion of the
payments.
RESALE RESTRICTIONS
Resale restrictions imposed by federal and/or state securities laws may
restrict certain Participants from transferring securities received under the
Plan. For example, Participants who hold "restricted securities" or are deemed
"affiliates," as those terms are defined in Rule 144 under the Securities Act,
may not sell securities issued by U S WEST to the public except pursuant to (a)
an effective registration statement filed by U S WEST with the SEC under the
Securities Act; or (b) an exemption from the registration requirements of the
Securities Act. Rule 144 provides an exemption for resale, subject to certain
conditions, such as a holding period, availability of public information,
limitation on amount of securities sold, manner of sale, and notice of sale.
This prospectus is not available for any resale.
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
The Plan is not subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). The Plan is administered by the Employee Benefits
Committee. The Employee Benefits Committee consists of the Senior Vice
President-Law and Corporate Human Resources of U S WEST and other officers of U
S WEST designated by the Senior Vice President-Law and Corporate Human
Resources.
EXPERTS
The financial statements and schedules incorporated by reference in this
Prospectus have been audited by Arthur Andersen LLP, independent public
accounts, as indicated in their reports with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in giving said
reports.