EMPLOYEE MATTERS AGREEMENT
TRANSFER, ASSUMPTION AND/OR DIVISION
OF EMPLOYEE BENEFITS PLANS AND EMPLOYEE ARRANGEMENTS
TABLE OF CONTENTS
PAGE
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1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. GENERAL PRINCIPLES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) New U S WEST Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 7
(b) MediaOne Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Shared Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Class Action Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Appeal Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(f) Funded Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(g) Control of litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 10
(h) Election to Assume Liability . . . . . . . . . . . . . . . . . . . . . . 10
3. SPONSORSHIP AND ADMINISTRATION OF EMPLOYEE BENEFIT PLANS AND EMPLOYEE
ARRANGEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4. EMPLOYEE SAVINGS PLANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5. TRANSFER OF U S WEST PENSION PLAN ASSETS AND LIABILITIES. . . . . . . . . . . 17
6. OTHER TAX-QUALIFIED PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7. WELFARE PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(a) Communications Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(b) Media Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(c) Joint Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(d) Continuing Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(e) Continuance of Elections . . . . . . . . . . . . . . . . . . . . . . . . 28
(f) Co-Payments and Maximum Benefits . . . . . . . . . . . . . . . . . . . . 28
(g) Pre-existing conditions. . . . . . . . . . . . . . . . . . . . . . . . . 29
(h) COBRA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(i) Long-Term Disability . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8. VEBA's. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9. INCENTIVE COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(a) Stock Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(b) Restricted Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(c) LTIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(d) ESTIP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(e) Phantom Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10. OTHER BENEFITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(a) Top-hat plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(b) Employment contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(c) Split-dollar contracts . . . . . . . . . . . . . . . . . . . . . . . . . 41
(d) Ex-Xxx Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(e) Vail Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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(f) Leaves of Absence. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(g) Non-Employee Director Plans. . . . . . . . . . . . . . . . . . . . . . . 43
(h) Non-Employee State Executive Board Plan. . . . . . . . . . . . . . . . . 43
11. PORTABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12. FURTHER AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13. COOPERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
14. NON-TERMINATION OF EMPLOYMENT; NO THIRD-PARTY BENEFICIARIES . . . . . . . . . 46
15. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(a) Payment of 1998 Administrative Costs and Expenses. . . . . . . . . . . . 47
(b) Audit Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(1) Information Provided. . . . . . . . . . . . . . . . . . . . . . . . 48
(2) Vendor Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . 48
(c) Beneficiary Designations . . . . . . . . . . . . . . . . . . . . . . . . 49
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Effect If Separation Does Not Occur . . . . . . . . . . . . . . . . . . . . . 49
(e) Provisions of Separation Agreement . . . . . . . . . . . . . . . . . . . 49
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EMPLOYEE MATTERS AGREEMENT
TRANSFER, ASSUMPTION AND/OR DIVISION
OF EMPLOYEE BENEFITS PLANS AND EMPLOYEE ARRANGEMENTS
1. DEFINITIONS.
(a) All capitalized terms used in this EM Agreement shall have the
meanings set forth below or, if not set forth below, the meaning
given in the Separation Agreement.
"AirTouch Transfers" shall mean Terminated Employees whose employment
is transferred to AirTouch Communications, Inc. or any of its
affiliates prior to the Separation Time as a result of the merger
agreement among Existing U S WEST, certain subsidiaries thereof and
AirTouch Communications, Inc. and who either: (i) are eligible for
retiree medical coverage or retiree life insurance as of the date of
transfer of employment; or (ii) have an account balance in the Media
Savings Plan/ESOP immediately after the Separation Time.
"Average Value" shall mean the average Market Value of the
Communications Stock or Media Stock, as applicable, over the period of
20 Trading Days ending on the fifth Trading Day prior to the date of
the Separation Time, rounded to the nearest one-hundred thousandth (or
if there shall not be a nearest one-hundred thousandth, to the next
highest one-hundred thousandth).
"Cable Companies" shall mean MediaOne of Delaware, Inc. (f/k/a
Continental Cablevision, Inc.), MediaOne, Inc. and/or MediaOne of
Michigan, Inc. (f/k/a Booth Communications), or their predecessors.
"COBRA" shall mean the continuation coverage requirements for group
health plans under Title X of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and as codified in Code
Section 4980B and ERISA Sections 601 through 608.
"Communications Employees" shall mean all persons who are Employees of
the New U S WEST Group at the Separation Time, including without
limitation (1) Employees who worked for Existing U S WEST prior to the
Separation Time that are designated as Communications Employees by
Existing U S WEST as of the Separation Time, (2) Employees who, prior
to the Separation Time, worked for an entity that is a
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member of the MediaOne Group that are designated as Communications
Employees as of the Separation Time, and (3) Employees who, prior to
the Separation Time, worked for Dex that are designated as
Communications Employees as of the Separation Time.
"Communications Employee Arrangements" shall mean all Employee
Arrangements sponsored by members of the New U S WEST Group after the
Separation Time.
"Communications Employee Benefit Plans" shall mean all Employee
Benefit Plans sponsored by members of the New U S WEST Group after the
Separation Time.
"Deferred Benefits" shall mean the entitlement of a Terminated
Employee, based solely on the records of the Existing U S WEST Group
at the Separation Time, to future benefits under one or more of the
Deferred Plans. Except as provided in the definition of Terminated
Media Employee and Terminated Inc. Employee, a Terminated Employee
who, according to such records, is not entitled to any benefits under
the Deferred Plans or who has already received all of such benefits
prior to the Separation Time does not have any Deferred Benefits.
"Deferred Plans" shall mean the U S WEST Employee Savings Plan/ESOP
(except accounts attributable to AirTouch Transfers); the U S WEST
Pension Plan (including the disability pensions provided thereunder);
retiree medical benefits under any medical plan maintained by the
Existing U S WEST Group (but excluding COBRA); and long-term
disability benefits under a long-term disability plan maintained by
the Existing U S WEST Group.
"EBC" shall mean the Employee Benefits Committee of Existing U S WEST
as constituted prior to the Separation Time.
"EM Agreement" shall mean this Employee Matters Agreement, which is
Exhibit A to the Separation Agreement.
"Employee" means a person who is an employee of the Existing U S WEST
Group at the Separation Time, including an employee who is not
actively performing services because such employee is on an approved
leave of absence, short-term disability, illness or other similar
reasons. Employee shall include: (i) a person who is a former
employee of the Existing U S WEST Group; and/or (ii) a person who has
been transferred to Time Warner Communications pursuant to
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the agreement of Existing U S WEST and Time Warner Communications;
and/or (iii) a person who is an employee of Time Warner Communications
at the Separation Time, including an employee who is not actively
performing services because such employee is on an approved leave of
absence, short-term disability, illness or other similar reasons. In
addition, an individual who is described in either of the preceding
sentences (whether he works for the Existing U S WEST Group or Time
Warner Communications) immediately prior to the Separation Time who
does not report for work to the New U S WEST Group, MediaOne Group or
Time Warner Communications (depending upon his applicable assignment)
immediately after the Separation Time shall be considered an Employee
(for purposes of this EM Agreement only) unless (1) prior to the
Separation Time, he notifies the Existing U S WEST Group or Time
Warner Communications, as applicable, that he is terminating,
effective on or before the Separation Time or (2) prior to the
Separation Time, the Existing U S WEST Group or Time Warner
Communications, as applicable, notifies him that he is terminated,
effective on or before the Separation Time. All Employees shall be
either Communications Employees or Media Employees. A former employee
who is on lay-off is a Terminated Employee, not an Employee.
"Employment Related Liabilities" shall mean all Liabilities, including
litigation costs, which relate to an Employee, a Terminated Employee
or their respective dependents and beneficiaries, in each case
relating to, arising out of or resulting from employment by the
Existing U S WEST Group or predecessor prior to the Separation Time,
including Liabilities under Employee Benefit Plans and Employee
Arrangements. Notwithstanding the preceding sentence, the following
Liabilities are not Employment Related Liabilities: (1) any Liability
which is specifically addressed in a provision other than Section 2 of
this EM Agreement, (2) Liabilities arising under or relating to the
severance agreements between Existing U S WEST and members of the
Executive Group (which Liabilities are addressed in Schedules 3.4(a)
and 3.4(b) of the Separation Agreement) and (3) any other Liability
scheduled in the Separation Agreement.
"Executive Group" shall mean Xxxxxxx X. XxXxxxxxx, Xxxxxxx X. Xxxx
III, Xxxxxxx X. Xxxxxxx, Xxxxxx X. Gras, and Xxxxx X. Xxxxxxxx.
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"Existing U S WEST" shall mean U S WEST, Inc., a Delaware corporation,
prior to the Separation Time.
"Existing U S WEST Group" shall mean, prior to the Separation Time,
Existing U S WEST and all of its Subsidiaries.
"Media Employees" shall mean all persons who are Employees of the
MediaOne Group at the Separation Time, including without limitation
(1) Employees who worked for Existing U S WEST prior to the Separation
Time that are designated as Media Employees by Existing U S WEST as of
the Separation Time (including, without limitation, Employees who are
employed by Time Warner Communications), (2) Employees who, prior to
the Separation Time, worked for an entity that is a member of the New
U S WEST Group that are designated as Media Employees as of the
Separation Time and (3) Employees who, prior to the Separation Time,
worked for MGI that are designated as Media Employees as of the
Separation Time.
"Media Employee Arrangements" shall mean the Employee Arrangements
sponsored by members of the MediaOne Group after the Separation Time.
"Media Employee Benefit Plans" shall mean the Employee Benefit Plans
sponsored by members of the MediaOne Group after the Separation Time.
"MediaOne" shall mean MediaOne Group, Inc., a Delaware corporation, at
and after the Separation Time. MediaOne was known as U S WEST, Inc.
prior to the Separation Time.
"MediaOne Employee Benefits Committee" shall mean, effective on and
after the Separation Time, the committee of MediaOne Group, Inc.
designated to administer various Media Employee Benefit Plans and
Media Employee Arrangements.
"MediaOne Group" shall mean, at and after the Separation Time,
MediaOne Group, Inc. and all of its Subsidiaries.
"New U S WEST Employee Benefits Committee" shall mean, effective on
and after the Separation Time, the committee of New U S WEST
designated to administer various Communications Employee Benefit Plans
and Communications Employee Arrangements.
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"Non-Employee Directors" shall mean those members of the Board of
Directors of the respective corporation who are or were not employees
of that entity during their term of office. "Retired Non-Employee
Directors" shall mean those Non-Employee Directors who have completed
their term on the respective Board of Directors prior to the
Separation Time.
"Non-Employee Director Plans" shall mean the U S WEST, Inc. Deferred
Compensation Plan for Non-Employee Directors and the U S WEST, Inc.
Retirement Plan for Non-Employee Directors.
"Separation Agreement" shall mean the Separation Agreement, dated as
of __________, 1998, between U S WEST, Inc. and USW-C, Inc.
"Terminated Communications Employees" shall mean all persons who are
Terminated Employees and who are not Terminated Media Employees or
Terminated Inc. Employees. Terminated Communications Employees shall
include (1) all Terminated Employees (other than AirTouch Transfers)
with Deferred Benefits (unless they were actively employed by one of
the Cable Companies on their last day of active employment with the
Existing U S WEST Group); (2) all Terminated Employees who were last
actively employed before November 1, 1995 (unless they were actively
employed by one of the Cable Companies on their last day of active
employment with the Existing U S WEST Group) and are not entitled to
Deferred Benefits at the Separation Time; and (3) all Terminated
Employees who were last actively employed (on or after November 1,
1995 and before the Separation Time) by an entity that is a member of
the New U S WEST Group (excluding MGI, but including Dex and its
subsidiaries) after the Separation Time and are not entitled to
Deferred Benefits at the Separation Time.
"Terminated Employee" means a person who formerly was actively
employed by the Existing U S WEST Group and who is not an Employee.
An individual who is employed by the Existing U S WEST Group
immediately prior to the Separation Time who does not report for work
to the New U S WEST Group or MediaOne Group (depending upon his
applicable assignment) immediately after the Separation Time shall be
considered a Terminated Employee if (1) prior to the Separation Time,
he notifies Existing U S WEST or its Subsidiaries that he is
terminating, effective on or before the Separation Time or (2) prior
to the Separation Time, Existing U S WEST or its Subsidiaries notify
him that he is terminated,
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effective on or before the Separation Time. All members of the
Executive Group shall be Terminated Employees. Each Terminated
Employee shall be either (a) a Terminated Communications Employee,
(b) a Terminated Inc. Employee or (c) a Terminated Media Employee,
provided that, to the extent set forth in this EM Agreement, a
Terminated Employee may be classified differently for different
purposes.
"Terminated Inc. Employees" shall mean all Terminated Employees who
were last actively employed (on or after November 1, 1995 and before
the Separation Time) by Existing U S WEST (but not its Subsidiaries)
and are not entitled to Deferred Benefits at the Separation Time. If,
after the Separation Time, it is determined by a final decision of a
court of competent jurisdiction or an agreement of MediaOne and New U
S WEST that a Terminated Inc. Employee is entitled to benefits under
one or more Deferred Plans (other than as a result of future
employment with the MediaOne Group or New U S WEST Group), such
Terminated Employee shall be considered to have Deferred Benefits
solely with respect to those Deferred Plans that owe him additional
benefits (and shall therefore be a Terminated Communications Employee
solely with respect to such Deferred Plans, provided that if the
Deferred Plan is the U S WEST Pension Plan, the individual shall also
be a Terminated Communications Employee with respect to the U S WEST
Nonqualified Pension Plan).
"Terminated Media Employees" shall mean (1) all Terminated Employees
(whether or not they have Deferred Benefits) who were actively
employed by one of the Cable Companies on their last day of active
employment with the Existing U S WEST Group; (2) all Terminated
Employees who were last actively employed (on or after November 1,
1995 and before the Separation Time) by an entity that is a member of
the MediaOne Group after the Separation Time (unless such last
employer was Existing U S WEST) and are not entitled to Deferred
Benefits at the Separation Time; (3) all Terminated Employees who were
last actively employed (on or after November 1, 1995 and before the
Separation Time) by MGI and are not entitled to Deferred Benefits at
the Separation Time; and (4) all AirTouch Transfers, regardless of
their last day of employment. Notwithstanding the foregoing, if,
after the Separation Time, it is determined by a final decision of a
court of competent jurisdiction or an agreement of MediaOne and New U
S WEST that a Terminated Media Employee described in clause (2) or (3)
above is entitled to benefits under one or more
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Deferred Plans (other than as a result of future employment with
the MediaOne Group or New U S WEST Group), such Terminated Employee
shall be considered to have Deferred Benefits solely with respect
to those Deferred Plans that owe him additional benefits (and shall
therefore be a Terminated Communications Employee solely with
respect to such Deferred Plans, provided that if the Deferred Plan
is the U S WEST Pension Plan, the individual shall also be a
Terminated Communications Employee with respect to the U S WEST
Nonqualified Pension Plan).
"Welfare Plan" shall mean an Employee Benefit Plan which is a health
benefit, life insurance or other employee welfare benefit plan, within
the meaning of Section 3(1) of ERISA, which is maintained by Existing
U S WEST, New U S WEST, MediaOne or a Subsidiary of any of them.
(b) All determinations under this Section 1 with respect to status as an
Employee, Terminated Employee, Media Employee, Communications
Employee, Terminated Media Employee, Terminated Inc. Employee or
Terminated Communications Employee shall be made as of the Separation
Time, unless otherwise specifically set forth in this Section 1.
(c) Notwithstanding the foregoing definitions, in the event it is unclear
as to whether a Terminated Employee is a Terminated Communications
Employee, Terminated Inc. Employee or a Terminated Media Employee, or
in the event that a Terminated Employee was last actively employed at
a time the individual was on a temporary transfer from one member of
the Existing U S WEST Group to another for less than 12 months,
MediaOne and New U S WEST shall agree on an equitable classification
of such employee or employees (and the assumption of any liability
attributable thereto).
2. GENERAL PRINCIPLES.
(a) New U S WEST Liabilities. Except as otherwise provided in this EM
Agreement, New U S WEST and its Subsidiaries hereby assume and agree
to pay, perform, fulfill and discharge:
(1) All Employment Related Liabilities (regardless of where such
Employment Related Liabilities arose or arise or were or are incurred)
to or relating to Communications Employees and Terminated
Communications Employees;
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(2) All Liabilities, including litigation costs, relating to, or
arising out of or resulting from the performance of services to the
New U S WEST Business (other than MGI) prior to the Separation Time by
an independent contractor, leased employee or similar individual or by
any person who alleges that he was an employee of the New U S WEST
Business (other than MGI) prior to the Separation Time or the
dependent or beneficiary of any such independent contractor or alleged
employee;
(3) All Liabilities, including litigation costs, which relate to a
Communications Employee or his dependents and beneficiaries, in each
case relating to, arising out of or resulting from employment by the
New U S WEST Group on or after the Separation Time (including
Liabilities under Communications Employee Benefit Plans and
Communications Employee Arrangements); and
(4) All Liabilities, including litigation costs, relating to, or
arising out of or resulting from the performance of services to the
New U S WEST Group on or after the Separation Time by an independent
contractor, leased employee or similar individual or by any person who
alleges that he was an employee of the New U S WEST Group on or after
the Separation Time or the dependent or beneficiary of any such
independent contractor or alleged employee.
(b) MediaOne Liabilities. Except as otherwise provided in this EM
Agreement, MediaOne and its Subsidiaries hereby assume and agree to
pay, perform, fulfill and discharge:
(1) All Employment Related Liabilities (regardless of where such
Employment Related Liabilities arose or arise or were or are incurred)
to or relating to Media Employees and Terminated Media Employees;
(2) All Liabilities, including litigation costs, relating to, or
arising out of or resulting from the performance of services to the
MediaOne Business (other than Existing U S WEST) or MGI prior to the
Separation Time by an independent contractor, leased employee or
similar individual or by any person who alleges that he was an
employee of the MediaOne Business (other than Existing U S WEST) or
MGI prior to the Separation Time or the dependent or beneficiary of
any such independent contractor or alleged employee;
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(3) All Liabilities, including litigation costs, which relate to a
Media Employee or his dependents and beneficiaries, in each case
relating to, arising out of or resulting from employment by the
MediaOne Group on or after the Separation Time (including Liabilities
under Media Employee Benefit Plans or Media Employee Arrangements);
and
(4) All Liabilities, including litigation costs, relating to, or
arising out of or resulting from the performance of services to the
MediaOne Group on or after the Separation Time by an independent
contractor, leased employee or similar individual or by any person who
alleges that he was an employee of the MediaOne Group on or after the
Separation Time or the dependent or beneficiary of any such
independent contractor or alleged employee.
(c) Shared Liabilities. New U S WEST and MediaOne hereby agree to share
equally:
(1) All Employment Related Liabilities (regardless of where such
Employment Related Liabilities arose or arise or were or are incurred)
to or relating to Terminated Inc. Employees; and
(2) All Liabilities, including litigation costs, relating to, or
arising out of or resulting from the performance of services to
Existing U S WEST (but not its Subsidiaries) prior to the Separation
Time by an independent contractor, leased employee or similar
individual or by any person who alleges that he was an employee of
Existing U S WEST prior to the Separation Time or the dependent or
beneficiary of any such independent contractor or alleged employee.
(d) Class Action Liabilities. For purposes of determining whether the New
U S WEST Group or Media Group is responsible for Liabilities involving
or arising out of actions relating to more than one Employee or
Terminated Employee, the portion of Employment Related Liabilities
relating to any single Employee or Terminated Employee shall be in
proportion to the total number of Employees and Terminated Employees
to which the action relates, whether or not all such Employees or
Terminated Employees submit claims.
(e) Appeal Rights. If either New U S WEST or MediaOne believes that the
result arising from the application of the foregoing provisions of
this Section 2 will result in an inequitable allocation of liability,
it may refer the matter to the Separation Committee and
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the procedures set forth in Section 12.2 of the Separation Agreement
shall apply. Any such referral must be made in writing within sixty
days after the referring party becomes aware of the Employment Related
Liability to which the referral relates.
(f) Funded Benefits. Notwithstanding the foregoing provisions of this
Section 2, neither the New U S WEST Group nor the MediaOne Group shall
be liable to the extent that any Liability is payable from a trust or
insurance contract which funds the benefits under an Employee Benefit
Plan or Employee Arrangement maintained by the New U S WEST Group or
MediaOne Group after the Separation Date.
(g) Control of litigation. Except as set forth in sub-section (h) below,
if any litigation is brought by an Employee or Terminated Employee
over Liabilities addressed in this EM Agreement, the MediaOne Group
shall control the litigation if it is responsible for the Liabilities
and the New U S WEST Group shall control the litigation if it is
responsible for the Liabilities, irrespective of which party is the
defendant, provided that if the party (or its Subsidiaries) entitled
to control the litigation is not sued, it shall not control the
litigation unless it agrees in writing that it will be responsible for
any resulting Liability. In the case of a shared liability described
in subsection (c) above or an action described in subsection (d)
above, the parties agree to cooperate to jointly control the
litigation, unless one of the parties agrees to assume all Liabilities
arising out of the litigation.
(h) Election to Assume Liability. In the event that any Employee or
Terminated Employee makes a claim or commences litigation which, if
successful, would result in Liability that is allocated under this EM
Agreement (other than under this paragraph (h)) exclusively to either
MediaOne or New U S WEST (the "Allocated Liability Party"), but which
Liability, if any, arises from alleged actions taken by an Employee or
Terminated Employee of the business of the other party (the "Other
Party"), then the Allocated Liability Party shall give written notice
of such claim or litigation (the "Claim Notice") to the Other Party
within thirty days of becoming aware that such claim or litigation
involves an Employee or Terminated Employee of the business of the
Other Party. The Other Party may then elect, by giving written notice
(the "Election Notice") to the Allocated Liability Party within thirty
days after receiving the Claim Notice, to take control of the
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defense of the claim and/or litigation and to assume all Liability,
including litigation costs, associated with such claim or litigation
(other than a Liability described in subsection (f) above). If the
Election Notice is given, the Allocated Liability Party shall cease to
have any Liability with respect to the claim or litigation which is
the subject of the Election Notice and all such Liability (other than
a Liability described in subsection (f) above) shall be assumed by the
Other Party.
(i) The provisions of this Section 2 are designed solely to allocate
Liabilities between the New U S WEST Group and the MediaOne Group.
Notwithstanding any provision of this EM Agreement, except to the
extent required by the preceding sentence, this EM Agreement shall not
impose any Liability relating to an Employee or Terminated Employee on
any entity or Subsidiary other than the entity or Subsidiary that
incurred the Liability. For example, if a Communications Employee
worked solely for one Subsidiary of New U S WEST, that Subsidiary (but
not New U S WEST or any other Subsidiary) shall be responsible for any
unfunded Liabilities owed to that individual.
3. SPONSORSHIP AND ADMINISTRATION OF EMPLOYEE BENEFIT PLANS AND EMPLOYEE
ARRANGEMENTS.
(a) At or prior to the Separation Time, all Communications Employee
Benefit Plans and Communications Employee Arrangements that are not
already sponsored by a member of the New U S WEST Group shall be
transferred to and assumed by New U S WEST in accordance with the
terms of this EM Agreement. Each of such Communications Employee
Benefit Plans and Communications Employee Arrangements is hereby
amended (such amendments to be self-effectuating), effective as of the
Separation Time, to provide transfer of sponsorship to New U S WEST.
In addition, each Communications Employee Benefit Plan and
Communications Employee Arrangement is hereby amended (such amendments
to be self-effectuating), effective as of the Separation Time, to
provide that the Liabilities to be assumed by a corresponding Media
Employee Benefit Plan or Media Employee Arrangement shall cease to be
Liabilities under such Communications Employee Benefit Plan or
Communications Employee Arrangement. New U S WEST, MediaOne and their
Subsidiaries shall take all action reasonably appropriate prior to the
Separation Time (or as soon as practicable thereafter) to effectuate
such assumptions, including amendments of the
11
applicable Employee Benefit Plans and Employee Arrangements where
desirable.
To the extent that any of the Communications Employee Benefit Plans or
Communications Employee Arrangements is administered by the EBC prior
to the Separation Time, such plan or arrangement shall be administered
by the New U S WEST Employee Benefits Committee on and after the
earlier of the Separation Time or the date sponsorship of the
applicable plan or arrangement is assumed by New U S WEST. In
addition, any functions or responsibilities of the Treasurer of
Existing U S WEST with respect to such plans or arrangements prior to
the Separation Time shall become duties and responsibilities of the
Treasurer of New U S WEST (or such other officer as New U S WEST shall
designate) on the date set forth in the preceding sentence.
(b) To the extent that a Media Employee Benefit Plan or Media Employee
Arrangement (or, in the case of any newly adopted Media Employee
Benefit Plan or Media Employee Arrangement, the Employee Benefit Plan
or Employee Arrangement that is replaced by such newly adopted Media
plan or arrangement) is administered by the EBC prior to the
Separation Time, such plan or arrangement shall be administered by the
MediaOne Employee Benefits Committee on and after the Separation Time.
In addition, any functions or responsibilities of the Treasurer of
Existing U S WEST with respect to such plans or arrangements prior to
the Separation Time shall become duties and responsibilities of the
Treasurer of MediaOne (or such other officer as MediaOne shall
designate) on and after the Separation Time.
4. EMPLOYEE SAVINGS PLANS.
(a) On or before the Separation Time, sponsorship of the U S WEST Savings
Plan/ESOP (consisting of the "U S WEST Savings Plan" and the "U S WEST
ESOP") shall be transferred from Existing U S WEST to New U S WEST.
Prior to the Separation Time, Multimedia shall establish a new defined
contribution plan or plans consisting of a profit-sharing plan and a
stock bonus plan which shall be an employee stock ownership plan (the
"Media Savings Plan/ESOP", consisting of the "Media Savings Plan" and
the "Media ESOP"), effective immediately after the Separation Time,
for the benefit of Media Employees and Terminated Media Employees
(excluding persons described in clauses (2) or (3) of the definition
of Terminated Media Employee) covered by the existing U S WEST Savings
12
Plan/ESOP. The Media Savings Plan/ESOP shall initially contain terms
and conditions that are similar to those of the existing U S WEST
Savings Plan/ESOP, including without limitation (1) provisions
required by Section 411(d)(6) of the Code for account balances to be
transferred from the U S WEST Savings Plan/ESOP, and (2) provisions
granting credit for past service with the Existing U S WEST Group for
purposes of eligibility, vesting, distributions and withdrawals. Each
Media Employee and Terminated Media Employee who was a participant in
the U S WEST Savings Plan/ESOP as of the Separation Time shall become
a participant in the Media Savings Plan/ESOP as of the Separation
Time.
(b) As soon as reasonably practicable after the Separation Time, New U S
WEST shall cause to be transferred from the U S WEST Savings Plan to
the Media Savings Plan assets having a fair market value equal to the
aggregate value of the account balances in the U S WEST Savings Plan
(but not the ESOP), as of the date of the transfer, applicable to
Media Employees and Terminated Media Employees, and Multimedia shall
cause the Media Savings Plan to accept such transfers and to assume
all Savings Plan liabilities relating to Media Employees and
Terminated Media Employees (excluding persons described in clauses (2)
or (3) of the definition of Terminated Media Employee). All such
liabilities shall cease to be liabilities of the U S WEST Savings
Plan. Such transfer shall be in (i) shares of MediaOne Common Stock
and New U S WEST Common Stock to the extent such shares are allocated
in the U S WEST Savings Plan to accounts of Media Employees or
Terminated Media Employees, (ii) notes evidencing loans to Media
Employees or Terminated Media Employees, and (iii) with the balance in
cash or, to the extent that the parties mutually agree, other
securities held by the U S WEST Savings Plan.
(c) As soon as reasonably practicable after the Separation Time, New U S
WEST shall cause to be transferred from the U S WEST ESOP to the Media
ESOP assets having a fair market value equal to the aggregate value of
the account balances in the U S WEST ESOP (but not the Savings Plan),
as of the date of the transfer, applicable to Media Employees and
Terminated Media Employees, and Multimedia shall cause the Media ESOP
to accept such transfers and to assume all ESOP liabilities relating
to Media Employees and Terminated Media Employees (excluding persons
described in clauses (2) or (3) of the definition of Terminated Media
Employee). All such
13
liabilities shall cease to be liabilities of the U S WEST ESOP.
Such transfer shall be in shares of MediaOne Common Stock and of
New U S WEST Common Stock. To the greatest extent possible and
consistent with fiduciary duties under Sections 404 and 406 of
ERISA, the shares of Common Stock shall be transferred so that,
immediately following the transfer, the U S WEST ESOP will have at
least 60% of its assets invested in New U S WEST Common Stock and
the Media ESOP will have at least 60% of its assets invested in
MediaOne Common Stock.
(d) U S WEST Savings Plan/ESOP shall transfer to the Media Savings
Plan/ESOP all qualified domestic relations orders (within the meaning
of Section 414(p) of the Code) ("QDROs") held by the U S WEST Savings
Plan/ESOP with respect to Media Employees and Terminated Media
Employees. New U S WEST shall cause to be transferred from the U S
WEST Savings Plan/ESOP assets having a fair market value equal to the
aggregate account values relating to such QDROs in accordance with
paragraphs (b) and (c) above, and the Media Savings Plan ESOP shall
assume all liabilities relating to such QDROs.
(e) The U S WEST ESOP will repay all "acquisition loans" (as defined in
the U S WEST Savings Plan/ESOP) prior to the Separation Time. If, as
of the Separation Time, the U S WEST ESOP holds shares of common stock
that have not been allocated to participants' accounts, the U S WEST
ESOP will transfer to the Media ESOP unallocated shares of stock
having a fair market value equal to (x) the total market value of all
unallocated shares held by the U S WEST ESOP as of the Separation
Time, multiplied by (y) the aggregate dollar value of the Employing
Company Contributions made under the U S WEST ESOP during the first
calendar quarter of 1998 as matched allotments to Media Employees and
Terminated Media Employees, divided by (z) the aggregate dollar value
of the Employing Company Contributions made under the U S WEST ESOP
during the first calendar quarter of 1998 as matched allotments to all
Employees and Terminated Employees. To the greatest extent possible,
the unallocated shares transferred to the Media ESOP pursuant to this
paragraph shall be shares of MediaOne Common Stock.
(f) If required by law, New U S WEST and Multimedia shall cause to be
filed with the IRS all applicable Forms 5310A and any other required
forms with the appropriate governmental agency in order for the Media
Savings Plan/ESOP to receive a transfer of
14
assets from the U S WEST Savings Plan/ESOP on or following the
Separation Time in accordance with paragraphs (b), (c), (d) and (e)
above. Within nine months after the Separation Time, Multimedia
shall cause to be filed with the IRS a request for a determination
that the Media Savings Plan/ESOP is qualified under Section 401(a)
of the Code. Multimedia agrees to make all reasonable amendments
requested by the IRS to obtain such determination letter.
(g) Subject to paragraph (h), and in accordance with applicable law and to
the extent consistent with fiduciary duties under Sections 404 and 406
of ERISA, the U S WEST Savings Plan and the U S WEST ESOP will
maintain a MediaOne Common Stock Fund for participants who retain such
investment of their account balances after the Separation Time. No
new investments in the MediaOne Common Stock Fund of the U S WEST
Savings Plan or in the MediaOne Common Stock Fund of the U S WEST ESOP
will be permitted after the Separation Time. Subject to paragraph
(h), and in accordance with applicable law and to the extent
consistent with fiduciary duties under Sections 404 and 406 of ERISA,
the Media Savings Plan and the Media ESOP will maintain a New U S WEST
Common Stock Fund for participants who retain such investment of their
account balances after the Separation Time. No new investments in the
New U S WEST Common Stock Fund of the Media Savings Plan or in the New
U S WEST Common Stock Fund of the Media ESOP will be permitted after
the Separation Time. The U S WEST Savings Plan (but not the ESOP)
will maintain the MediaOne Common Stock Fund, and the Media Savings
Plan (but not the ESOP) will maintain the New U S WEST Common Stock
Fund, for at least five years after the Separation Time; as soon as
practicable after either plan sponsor decides to eliminate such stock
fund, it shall inform the issuer of the stock to be sold so that the
issuer may arrange a facility to exercise the right of first refusal
described below. When the trustee of the U S WEST Savings Plan
intends to sell MediaOne Common Stock because the MediaOne Common
Stock Fund will no longer be maintained or the trustee of the Media
Savings Plan intends to sell New U S WEST Common Stock because the New
U S WEST Common Stock Fund will no longer be maintained, such trustee
shall first offer such stock to the issuer prior to offering such
stock for sale on the open market. After the close of business, the
issuer shall then have the right to purchase such stock at the closing
price of the stock on that day. If the issuer does not exercise such
right to purchase, the trustee
15
shall be free to sell the stock on the open market the next day,
provided that,subject to fiduciary duties under Sections 404 and
406 of ERISA, the trustee shall not sell in any one day more than
20% of the average daily trading volume of the relevant stock.
(For this purpose, the average daily trading volume is the
arithmetic mean of the reported daily trading volumes of the
relevant stock on the New York Stock Exchange (or, if not traded on
the New York Stock Exchange, the principal exchange on which the
stock is traded) in the two calendar months preceding any such
sale.)
(h) Within two years after the Separation Time, the U S WEST ESOP (but not
the Savings Plan) will dispose of all investment in MediaOne Common
Stock and the Media ESOP (but not the Savings Plan) will dispose of
all investment in New U S WEST Common Stock (each, a "Non-Employer
Common Stock"). Subject to fiduciary duties under Sections 404 and
406 of ERISA, the U S WEST ESOP shall exchange shares of MediaOne
Common Stock it holds for shares of New U S WEST Common Stock held by
the Media ESOP, and VICE VERSA, at the Common Stocks' relative fair
market values. To the extent such exchanges are not practicable for
some or all of the Non-Employer Common Stock held by either ESOP, the
U S WEST ESOP and the Media ESOP will sell shares of Non-Employer
Common Stock. As soon as practicable after either plan sponsor
decides to sell such Non-Employer Common Stock, it shall inform the
issuer of the stock to be sold so that the issuer may arrange a
facility to exercise the right of first refusal described below. When
the trustee of the U S WEST ESOP intends to sell MediaOne Common Stock
or the trustee of the Media ESOP intends to sell New U S WEST Common
Stock (other than because of a sale by, or distribution to, plan
participants), such trustee shall first offer such stock to the issuer
prior to offering such stock for sale on the open market. After the
close of business, the issuer shall then have the right to purchase
such stock at the closing price of the stock on that day. If the
issuer does not exercise such right to purchase, the trustee shall be
free to sell the stock on the open market the next day. Subject to
fiduciary duties under Sections 404 and 406 of ERISA, from the
Separation Time to and including the second anniversary of the
Separation Time, neither the U S WEST ESOP nor the Media ESOP will
sell in any one day more than 20% of the average daily trading volume
of the relevant Non-Employer Common Stock. (For this purpose, the
average daily trading volume is the arithmetic mean of the reported
daily trading volumes of the relevant
16
stock on the New York Stock Exchange (or, if not traded on the New
York Stock Exchange, the principal exchange on which the stock is
traded) in the two calendar months preceding any such sale.)
(i) MediaOne and New U S WEST shall take such action as necessary to
ensure that participants in the U S WEST Savings Plan/ESOP and the
Media Savings Plan/ESOP are notified that a quiet period will occur
beginning on or about the Separation Time, during which changes in
investment direction with respect to participants' accounts generally
will not be permitted.
(j) The Media Savings Plan/ESOP and the assets and liabilities with
respect thereto shall be considered a Media Employee Benefit Plan.
The U S WEST Savings Plan/ESOP and the assets and liabilities with
respect thereto shall be considered a Communications Employee Benefit
Plan.
5. TRANSFER OF U S WEST PENSION PLAN ASSETS AND LIABILITIES.
(a) On or prior to the Separation Time, sponsorship of the U S WEST
Pension Plan shall be transferred from Existing U S WEST to New U S
WEST. Prior to the Separation Time, Multimedia shall establish a
defined benefit pension plan (the "Media Pension Plan"), effective
immediately after the Separation Time, for the benefit of the Media
Employees and Terminated Media Employees (excluding persons described
in clauses (2) or (3) of the definition of Terminated Media Employee)
covered by the existing U S WEST Pension Plan. The Media Pension Plan
shall contain terms and conditions that are substantially similar to
those of the existing U S WEST Pension Plan, including credit for past
service with the Existing U S WEST Group for eligibility, vesting,
early retirement, and, contingent upon the transfer of assets set
forth in paragraph (b) below, benefit accrual and compensation earned
with the Existing U S WEST Group. Notwithstanding the preceding
sentence, the Media Pension Plan shall contain two benefit structures.
In general, (1) the benefits for all Media Employees who are employed
immediately after the Separation Time and who earned benefits under
Articles V-B or V-D of such Pension Plan prior to the Separation Time
shall continue in such benefit structure and (2) all other Media
Employees, as well as all future employees of the MediaOne Group shall
participate in a benefit structure substantially similar to the
benefit structure currently contained in the Appendix I of the U S
WEST Pension Plan, provided that this EM Agreement does not obligate
17
Multimedia to continue to maintain such benefit formulas for any
particular period of time. In addition, the U S WEST Pension Plan
currently contains two subsidies relating to service pensions: (i) the
early retirement pension under the grandfathered formula in Article
V-B (but not the DLS formula in Article V-D) is unreduced (or provides
for a lower reduction) for Participants that are service pension
eligible and (ii) if a lump sum service pension is elected, a 0%
interest rate applies prior to age 65. The Media Pension Plan shall
include, for all Media Employees described in clause (2) of the second
preceding sentence (but not any future employees of the MediaOne Group
or any Terminated Media Employees) whose combined age and service (in
each case rounded up to the next integer), as of January 1, 1999,
equals or exceeds 55, both of the foregoing subsidies with respect to
both the DLS formula set forth in Article 6, and the grandfathered
formula in Article 7, of Appendix I of the Pension Plan; such
provisions shall be referred to as the "Service Pension Amendments."
Immediately after the Separation Time, all Liabilities under the U S
WEST Pension Plan to, or relating to, Media Employees or Terminated
Media Employees (excluding persons described in clauses (2) or (3) of
the definition of Terminated Media Employee) shall be assumed by the
Media Pension Plan and shall cease to be Liabilities of the U S WEST
Pension Plans. Such Liabilities shall include all accrued benefits,
within the meaning of Section 411(d)(6) of the Code, all ancillary
benefits (such as the death benefits set forth in Article VII of the U
S WEST Pension Plan and disability benefits set forth in Appendix J
thereof) and any other benefits. The Media Pension Plan shall comply
with Section 411(d)(6) of the Code with respect to such assumed
Liabilities. Each Media Employee and Terminated Media Employee who
was a participant in the U S WEST Pension Plan as of the Separation
Time shall become a participant in the Media Pension Plan as of the
Separation Time.
Notwithstanding the foregoing, the following rules shall apply to any
Terminated Employee who is not vested in the U S WEST Pension Plan at
the Separation Time who returns to employment with either the MediaOne
Group or the New U S WEST Group after the Separation Time. To the
extent required by law, any such Terminated Employee who becomes
entitled to credit, for benefit accrual purposes, for his service with
the Old U S WEST Group prior to the Separation
18
Time as a result of returning to employment after the Separation
Time, then (1) any benefits attributable to such prior service
shall be payable from the Media Pension Plan if the individual
returns to employment with the MediaOne Group and (2) any benefits
attributable to such prior service shall be payable from the U S
WEST Pension Plan if the individual returned to employment with the
New U S WEST Group.
(b) New U S WEST shall cause a "spin-off" transfer within the meaning of
Section 414(1) of the Code, from the U S WEST Pension Plan to the
Media Pension Plan in the manner and at the times specified in
paragraph (e) below. For purposes of this Section 5, the following
definitions shall apply:
(1) "Actuaries" refer to the enrolled actuaries for the U S WEST
Pension Plan at the Separation Time.
(2) "Contingent Amount" equals the difference between the amount that
the Final Determination provides that should have been
transferred from the U S WEST Pension Plan to the Media Pension
Plan in connection with the spinoff and the Media Asset Share.
If the difference is positive, that is, the Final Determination
provides that additional assets should have been transferred to
the Media Pension Plan, the difference shall be referred to as a
"Positive Contingent Amount." If the difference is negative,
that is, the Final Determination provides that the amount that
should have been transferred is less than the Media Asset Share,
the difference shall be referred to as a "Negative Contingent
Amount."
(3) "Final Determination" means a final nonappealable determination
by a court, or a final settlement of litigation or a dispute
among Multimedia, New U S WEST, the U S WEST Pension Plan and the
Media Pension Plan and any other parties to the litigation or
dispute, that provides that the amount of assets to be
transferred from U S WEST Pension Plan to the Media Pension Plan
in connection with the spinoff should be more than or less than
the Media Asset Share.
(4) "Media Asset Share" shall mean the product of: (i) the fair
market value of the assets of the U S WEST Pension Plan as of the
end of the month coinciding with or immediately preceding
19
the Separation Time, and (ii) the Media Fraction; increased or
decreased by an amount to be agreed to by New U S WEST and
MediaOne to reflect the rate of return of the U S WEST Pension
Plan (or any other mutually agreeable rate) during the period, if
any, commencing immediately after the end of the month coinciding
with or immediately preceding the Separation Time and ending on
the Separation Time.
(5) "Media Economic PBO" for the U S WEST Pension Plan shall mean the
portion of the Total Economic PBO as of the Separation Time
attributable to the Media Employees and Terminated Media
Employees, as calculated by the Actuaries. For this purpose, the
U S WEST Pension Plan shall be deemed amended to include the
Service Pension Amendments.
(6) "Media Fraction" for the U S WEST Pension Plan shall mean (i) the
Media Economic PBO, divided by (ii) the Total Economic PBO.
(7) "Premium Amount" shall equal the estimated PBGC premiums
initially paid to the PBGC by the Media Pension Plan for plan
year 1998, without regard to any adjustment required as a result
of an audit.
(8) "Total Economic PBO" shall be the projected benefit obligation,
as defined in SFAS No. 87, of the U S WEST Pension Plan, as
calculated by the Actuaries as of the Separation Time using
actuarial methods and assumptions mutually agreeable to the
parties. For this purpose, the U S WEST Pension Plan shall be
deemed amended to include the Service Pension Amendments.
(9) "Transfer Amount" shall equal the Media Asset Share plus the
Premium Amount plus the Positive Contingent Amount and minus the
Negative Contingent Amount.
(c) In order to determine the Media Asset Share, Multimedia and New U S
WEST shall determine in good faith the Media Employees, Terminated
Media Employees, Communications Employees, Terminated Communications
Employees and Terminated Inc. Employees as of the Separation Time.
Such determinations shall be updated six months after the Separation
Time to take into account the
20
reclassification of Employees as of the Separation Time as Media
Employees or Communications Employees.
(d) If required by law, Multimedia and New U S WEST shall cause to be
filed all applicable Forms 5310A and any other required IRS or PBGC
forms with the appropriate governmental agency in order for the Media
Pension Plan to receive a transfer of assets from the U S WEST Pension
Plan on or following the Separation Time, in accordance with paragraph
(e) below. Within nine months after the Separation Time, Multimedia
shall cause to be filed with the IRS a request for a determination
that the Media Pension Plan is qualified under Section 401(a) of the
Code. Multimedia agrees to make all reasonable amendments requested
by the IRS to obtain such determination letter.
(e) New U S WEST shall cause the U S WEST Pension Plan to transfer assets
in an amount equal to the Transfer Amount (plus interest to the extent
set forth below) to the Media Pension Plan and Multimedia shall cause
the Media Pension Plan to accept such assets equal to such Transfer
Amount (and interest), as follows:
(1) Immediately after the Separation Time or as soon as reasonably
practicable thereafter, an amount equal to 98% of the Media Asset
Share, as estimated by the Actuaries (immediately prior to the
Separation Time) and provided to Multimedia and New U S WEST in
writing.
(2) As soon as practicable after the value of the plan assets as of
the Separation Time is determined and the Media Asset Share is
determined by the Actuaries and provided in writing to MediaOne
and New U S WEST (but not later than 30 days after such writing
is provided), the excess of the Media Asset Share over the sum of
(i) the interim transfer effected under (1) above, and (ii) any
benefit payments paid to Terminated Media Employees or Media
Employees by the U S WEST Pension Plan after the Separation Time.
(If such amount is a negative number, such amount shall be
transferred from the Media Pension Plan to the U S WEST Pension
Plan.)
(3) In addition, if there is a Final Determination that sets forth a
Contingent Amount, New U S WEST, the U S WEST Pension Plan,
Multimedia, and the Media Pension Plan agree as follows:
21
(A) If there is a Positive Contingent Amount, as soon as
practicable after the Final Determination, the U S WEST
Pension Plan shall transfer the assets equal to the Positive
Contingent Amount to the Media Pension Plan, and the Media
Pension Plan shall accept such transfers; and
(B) If there is a Negative Contingent Amount, as soon as
practicable after the Final Determination, the Media Pension
Plan shall transfer the assets equal to the Negative
Contingent Amount to the U S WEST Pension Plan, and the U S
WEST Pension Plan shall accept such transfers.
(4) As soon as practicable after the Premium Amount is determined and
paid by the Media Pension Plan, an amount equal to the Premium
Amount.
To the extent any of the foregoing amounts set forth in paragraphs (1)
through (4) of this subsection (e) are paid after the Separation Time,
such amount shall be increased or decreased by interest from the
Separation Time to the date of payment (to the extent not paid or
previously advanced) at a rate to be agreed to by New U S WEST and
MediaOne to reflect the rate of return of the U S WEST Pension Plan or
the Media Pension Plan, whichever is applicable (or any other mutually
agreeable rate), during the period commencing with the Separation Time
and ending with the date of payment; provided that (i) no interest
shall be paid with respect to the Contingent Amount if the Final
Determination already provides for an adjustment reflecting interest
or plan earnings and (ii) no interest shall be paid with respect to
the Premium Amount.
With respect to all of the foregoing transfers between the U S WEST
Pension Plan and the Media Pension Plan, the specific assets to be
transferred shall be agreed upon by New U S WEST and Multimedia in
good faith so as to not treat the Media Pension Plan and the U S WEST
Pension Plan unfairly in any material respect.
(f) Notwithstanding subsections (a) through (e) above, the value of assets
to be transferred to and liabilities to be assumed by the Media
Pension Plan shall be no less than that necessary to satisfy the
requirements of Section 414(1) of the Code, as
22
determined by the Actuaries, based on the assumptions used by the PBGC
in the case of a termination of a trusteed pension plan.
(g) Multimedia, New U S WEST, the U S WEST Pension Plan and the Media
Pension Plan (collectively, the "Pension Parties") all agree that, if
there is a Final Determination that provides for a Contingent Amount,
such Final Determination shall be satisfied to the maximum extent
permitted by law by making the transfers among the U S WEST Pension
Plan and the Media Pension Plan as set forth above, as opposed to
requiring any additional contributions or payments (a "Corporate
Liability") from either MediaOne, New U S WEST or any of their
Subsidiaries. The Pension Parties agree to cooperate to the maximum
extent to ensure that no such Corporate Liability ensues as a result
of any Final Determination or claims relating to the allocation of
plan assets between the two plans. If any litigation is brought
against one of the Pension Parties claiming that the amount of assets
transferred from the U S WEST Pension Plan to the Media Pension Plan
should have been higher or lower, the other Pension Parties shall, at
the request of the Pension Party that was sued, agree to be joined in
any such litigation and to use their best efforts to ensure that any
potential Contingent Amount be satisfied by plan-to-plan transfers, as
opposed to Corporate Liability.
In addition, the Pension Parties agree that, to the extent permitted
by law, any costs of defending any claims that a Contingent Amount is
payable and any Liabilities arising out of such claims shall be borne
by the U S WEST Pension Plan and the Media Pension Plan.
The following rules shall apply if there is any Corporate Liability
for a Contingent Amount or arising out of any claims that a Contingent
Amount is payable. Any Corporate Liability that is an out-of-pocket
cost of defending any such claims (whether or not the claims result in
litigation), such as attorneys or consultant fees (but excluding any
fees for Plaintiffs' attorneys) and travel expenses, shall be borne
equally by New U S WEST and Multimedia; provided that each party shall
bear all expenses for salaries and benefits of its employees. Any
other Corporate Liability, such as the payment of a Contingent Amount,
any direct payments to claimants in lieu of a Contingent Amount or
fees for plaintiffs' attorneys, shall be borne by (1) New U S WEST, if
the claimants asserted that the amount of
23
plan assets transferred to the Media Pension Plan should have been
greater than the amount actually transferred and (2) Multimedia, if
the claimants asserted that the amount of plan assets transferred to
the Media Pension Plan should have been less than the amount actually
transferred.
(h) The U S WEST Pension Plan shall transfer to the Media Pension Plan all
qualified domestic relations orders (within the meaning of Section
414(p) of the Code) ("QDROs") held by the U S WEST Pension Plan with
respect to Media Employees and Terminated Media Employees.
(i) Qualified transfers. This subsection (i) applies if a qualified
transfer, within the meaning of Code Section 420 (a "Qualified
Transfer"), is made within either the U S WEST Pension Plan or the
Media Pension Plan during the calendar year in which the Separation
Time occurs.
(1) If the Internal Revenue Service, a court of competent
jurisdiction or the sponsor of the plan in which the Qualified
Transfer is made determines that any Terminated Employees who
terminated employment during the period commencing twelve months
prior to the Qualified Transfer and ending on the Separation Time
are entitled to vested pension benefits solely because of the
Qualified Transfer, then, notwithstanding any other provision of
this EM Agreement, the plan in which the Qualified Transfer is
made shall provide such vested pension benefits to such
Terminated Employee.
(2) If (i) the Internal Revenue Service declines to issue a favorable
determination letter with respect to the provisions of either the
U S WEST Pension Plan or the Media Pension Plan setting forth the
terms of a Qualified Transfer unless Employees or other employees
who terminate employment after the Separation Time from the
business of the sponsor of the other pension plan are provided
vested pension benefits on account of the Qualified Transfer or
(ii) a court of competent jurisdiction determines that such
Employees or employees are entitled to such benefits on account
of the Qualified Transfer, then such other pension plan shall
provide such Employees or employees with the required vested
pension benefits.
24
(j) The Media Pension Plan and the assets and liabilities with respect
thereto shall be considered a Media Employee Benefit Plan. The U S
WEST Pension Plan and the assets and liabilities with respect thereto
shall be considered a Communications Employee Benefit Plan.
6. OTHER TAX-QUALIFIED PLANS.
Any other plan that is qualified under Section 401 of the Code and is not
described in Section 4 or 5 above shall be retained by the entity that
sponsors it before the Separation Time.
7. WELFARE PLANS.
(a) Communications Plans. As of the Separation Time, any Welfare Plan,
including all insurance or amounts held in trust and associated
therewith to the extent attributable solely to such plan, which
exclusively covers Communications Employees, Terminated Communications
Employees and/or Terminated Inc. Employees and their eligible spouses
and dependents shall be transferred to and assumed by New U S WEST and
shall be deemed to be amended to provide for such transfer and
assumption. New U S WEST or its Subsidiaries shall assume and pay the
Liability with respect thereto (whether accrued or arising before or
after the Separation Time). All such plans shall be considered
Communications Employee Benefit Plans.
(b) Media Plans. As of the Separation Time, any Welfare Plan, including
all insurance or amounts held in trust and associated therewith to the
extent attributable solely to such plan, which exclusively covers
Media Employees and/or Terminated Media Employees and their eligible
spouses and dependents shall be retained by the MediaOne Group and, if
necessary, are hereby amended to provide for such retention (without
the need for any further action). MediaOne or its Subsidiaries shall
assume and pay the Liability with respect thereto (whether accrued or
arising before or after the Separation Time). All such plans shall be
considered Media Employee Benefit Plans.
(c) Joint Plans. This subsection (c) addresses the treatment of any
Welfare Plan (including, without limitation, any retiree medical plan
or retiree life insurance plan) which, as of the Separation Time,
covers both: (1) Communications Employees, Terminated Communications
Employees and/or Terminated Inc. Employees; and (2) Media Employees
and/or Terminated Media Employees (a "Joint Welfare Plan").
25
(1) As of the Separation Time, each Joint Welfare Plan shall be
transferred to and assumed by New U S WEST or one of its
Subsidiaries. Each of such Joint Welfare Plans is hereby amended
as set forth in Section 3 of this EM Agreement. At and
immediately following the Separation Time, New U S WEST or its
Subsidiaries shall maintain as a separate plan and assume and pay
the Liabilities and expenses (whether accrued or arising before
or after the Separation Time) with respect to that portion of the
Joint Welfare Plans as relates to obligations to Communications
Employees, Terminated Communications Employees and Terminated
Inc. Employees; in addition, any such retiree medical plan shall
assume any retiree medical Liabilities or expenses of persons
described in clauses (2) or (3) of the definition of Terminated
Media Employee. This EM Agreement does not obligate New U S WEST
to continue to maintain such plans or their terms for any
particular period of time. All such plans shall be considered
Communications Employee Benefit Plans.
(2) As soon as practicable, Multimedia or its Subsidiaries shall
establish and maintain one or more separate plans corresponding
to each of the Joint Welfare Plans. Such Plans shall be
effective as of the Separation Time and shall contain such
benefits as desired by Multimedia. However, such plans shall
assume and pay the Liabilities and expenses (whether accrued or
arising before or after the Separation Time) under the Joint
Welfare Plans with respect to Media Employees and Terminated
Media Employees, provided that any new Media retiree medical plan
shall not assume any retiree medical Liabilities or expenses of
persons described in clauses (2) or (3) of the definition of
Terminated Media Employee. All Liabilities and expenses assumed
by such Media Employee Benefit Plans shall cease to be
Liabilities of the Communications Employee Benefit Plans
described in the preceding paragraph. The Liabilities of each
such Joint Welfare Plan so assumed by Multimedia or its
Subsidiaries together with each such separate plan established by
Multimedia, shall be considered a Media Employee Benefit Plan.
Unless Multimedia or its Subsidiaries adopts a plan with respect
to a Joint Welfare Plan prior to the Separation Time, Multimedia
is hereby deemed to have
26
adopted (without the requirement of any additional action),
effective as of the Separation Time, a separate Media Welfare
Plan that is substantially identical in all respects to the
Joint Welfare Plan it replaces, provided that this EM Agreement
does not obligate Multimedia to continue to maintain such terms
for any particular period of time.
(3) MediaOne (and Multimedia) and New U S WEST shall use commercially
reasonable efforts to obtain, effective as of the Separation
Time, separate coverages or to split the coverages between
Multimedia and New U S WEST under the Joint Welfare Plans that
provided benefits through Provider Contracts prior to the
Separation Time. Such coverage shall be on substantially the
same terms and conditions as applied immediately before the
Separation Time, or such other terms and conditions as are
acceptable to Multimedia and New U S WEST. To the extent
practicable, such coverages shall be obtained by entering into a
separate contract between Multimedia and the third party. For
purposes of this paragraph, the term "Provider Contract" shall
mean a contract to provide benefits with an insurance company,
health maintenance organization, preferred provider organization
or similar provider of benefits, as well as third party
administrative services contracts. To the extent such efforts
are not successful with respect to any Provider Contract, then
New U S WEST shall administer such Provider Contract on an
equitable basis for the benefit of both Multimedia and New U S
WEST until the expiration of the applicable contract. For any
period after the Separation Time when Multimedia is participating
in any such Provider Contract administered by New U S WEST,
Multimedia shall pay an allocable share of the cost of such
contract based upon the actual experience attributable to Media
Employees and Terminated Media Employees thereunder, or if actual
experience is not readily determinable, based upon the relative
headcount of Media Employees and Terminated Media Employees to
all individuals covered by such Provider Contract. Such payments
shall include interest on any funds advanced by New U S WEST at a
rate to be agreed upon in a services agreement to be effective as
of the Separation Time.
27
(d) Continuing Treatment. Notwithstanding the foregoing provisions of
this Section 7, all treatments which have been precertified or are
being provided as of the Separation Time shall be provided without
interruption under the appropriate Welfare Plan until such treatment
is concluded or discontinued pursuant to applicable plan rules and
limitations, but New U S WEST, in the case of a Communications
Employee or Terminated Communications Employee, or Multimedia, in the
case of a Media Employee or Terminated Media Employee, shall be
responsible for all expenses relating to, arising out of or resulting
from such on-going treatments after the Separation Time.
(e) Continuance of Elections. Multimedia and New U S WEST shall cause the
Welfare Plans which they or their Subsidiaries maintain after the
Separation Time to recognize and maintain all coverage and
contribution elections made by Employees under the Welfare Plans
maintained by the Existing U S WEST Group prior to the Separation Time
and shall apply such elections under the Welfare Plans maintained by
Multimedia and New U S WEST or their Subsidiaries, whichever is
applicable, for the remainder of the period or periods for which such
elections are by their terms applicable. Neither the transfer or
other movement of employment from one member of the Existing U S WEST
Group to another member on or before the Separation Time nor the
transfer and assignment to the New U S WEST Group or the MediaOne
Group in connection with the Reorganization, Contribution and
Separation shall constitute or be treated as a "status change" under
the Welfare Plans maintained by either Existing U S WEST, New U S
WEST, Multimedia or their Subsidiaries.
(f) Co-Payments and Maximum Benefits. Multimedia and New U S WEST shall
cause the Welfare Plans which they or their Subsidiaries maintain
after the Separation Time to recognize and give credit for:
(1) All amounts applied to deductibles, out-of-pocket maximums, and
other applicable benefit coverage limits with respect to
Employees covered by Welfare Plans maintained by the Existing U S
WEST Group prior to the Separation Time for the remainder of the
year in which the Separation Time occurs; and
(2) All benefits paid to Employees under the Welfare Plans maintained
by the Existing U S WEST Group prior to the Separation Time for
purposes of determining when such persons have
28
reached their lifetime maximum benefits under the Welfare Plans
maintained by Multimedia and New U S WEST or their Subsidiaries,
whichever is applicable, after the Separation Time.
(g) Pre-existing conditions. After the Separation Time, any group health
plan maintained by Multimedia and New U S WEST or their Subsidiaries
shall be prohibited from making exceptions from the coverage of
individuals who were Employees or Terminated Employees prior to the
Separation Time and their eligible spouses and dependents for
pre-existing conditions except to the extent such exception is
applicable under the plan in effect immediately prior to the
Separation Time.
(h) COBRA. Notwithstanding the foregoing provisions of this Section 7:
(1) New U S WEST or its Subsidiaries shall be responsible for
providing coverage required under COBRA, including the
administration of such coverage, to (A) all Employees and
Terminated Employees (and their eligible spouses and dependents)
whose entitlement to benefits under COBRA is attributable to a
"qualifying event," as defined in COBRA, which occurred before
the Separation Time under any group health plan other than a
group health plan maintained by the Cable Companies and (B) all
Communications Employees, Terminated Communications Employees and
Terminated Inc. Employees if such individual's entitlement to
benefits under COBRA is attributable to a "qualifying event"
which occurs on or after the Separation Time.
(2) MediaOne or its Subsidiaries shall be responsible for providing
coverage required under COBRA, including the administration of
such coverage, to (A) all Employees and Terminated Employees (and
their eligible spouses and dependents) whose entitlement to
benefits under COBRA is attributable to a "qualifying event," as
defined in COBRA, which occurred before the Separation Time under
any group health plan maintained by the Cable Companies and (B)
all Media Employees and Terminated Media Employees if such
individual's entitlement to benefits under COBRA is attributable
to a "qualifying event" which occurs on or after the Separation
Time.
29
(i) Long-Term Disability. Notwithstanding the foregoing provisions of
this Section 7, this subsection (i) applies to long-term disability
benefits provided to Terminated Employees other than through the U S
WEST Pension Plan ("LTD").
(1) New U S WEST shall be responsible for providing LTD, including
the administration of such coverage, to Terminated Communications
Employees, Terminated Inc. Employees and Terminated Media
Employees who were employed immediately prior to commencing LTD
by an employer other than one of the Cable Companies.
(2) MediaOne shall be responsible for providing LTD, including the
administration of such coverage, to Terminated Media Employees
who were employed immediately prior to commencing LTD by one of
the Cable Companies.
8. VEBA'S.
(a) As of the Separation Time, sponsorship of the U S WEST Benefit
Assurance Trust ("BAT"), the U S WEST Management Benefit Assurance
Trust ("MBAT") and U S WEST Life Insurance Welfare Trust ("Life
Insurance Trust") shall be transferred from Existing U S WEST to New U
S WEST. In addition, each of the BAT, MBAT and Life Insurance Trust
are hereby amended (such amendments to be self-effectuating),
effective as of the Separation Time, to provide that the "Company" (as
well as the sponsor, settlor and all other similar terms) under such
trusts shall be New U S WEST and that the trust shall be administered
by New U S WEST.
(b) Sponsorship of the U S WEST VEBA Trust shall be retained by MediaOne
or, at its option, transferred to Multimedia.
(c) Effective as of the Separation Time, Multimedia shall adopt one or
more new voluntary employee benefit associations or modify the U S
WEST VEBA Trust (the "Media VEBA") to assume, immediately after the
Separation Time, all Liabilities under the MBAT and Life Insurance
Trust to, or relating to, Media Employees or Terminated Media
Employees (excluding persons described in clauses (2) or (3) of the
definition of Terminated Media Employee); all such Liabilities shall
cease to be Liabilities of the MBAT and Life Insurance Trust. The
Media VEBA shall comply with Code Sections 419, 419A, 501(a) and
501(c)(9).
30
(d) As soon as practicable after the Separation Time, New U S WEST shall
cause a transfer of assets from the MBAT and Life Insurance Trust to
the Media VEBA in the manner and at the times specified in paragraph
(f) below. For purposes of this Section, the following definitions
shall apply:
(i) "Total Economic APBO" shall be the accumulated
postretirement benefit obligation (as defined in SFAS No.
106) of the MBAT and Life Insurance Trust (excluding
liabilities for supplemental and dependent life insurance),
as calculated by the Actuaries, as of the Separation Time
using actuarial methods and assumptions mutually agreeable
to the parties.
(ii) "Actuaries" refer to the actuaries for the MBAT and Life
Insurance Trust at the Separation Time.
(iii) "Media Economic APBO" shall mean the portion of the
Total Economic APBO attributable to the Media Employees
and Terminated Media Employees, as calculated by the
Actuaries.
(iv) "Media Fraction" shall mean (1) the Media Economic APBO,
divided by (2) the Total Economic APBO.
(v) "Media Asset Share" shall mean the product of: (1) the fair
market value of the assets of the MBAT and Life Insurance
Trust as of the end of the month coinciding with or
immediately preceding the Separation Time BUT excluding
Supplemental and Dependent Life Assets, and (2) the Media
Fraction; increased or decreased by an amount to be agreed
to by New U S WEST and MediaOne to reflect the rate of
return of the MBAT and Life Insurance Trust (or any other
mutually agreeable rate) during the period, if any,
commencing immediately after the end of the month coinciding
with or immediately preceding the Separation Time and ending
on the Separation Time.
(vi) "Supplemental and Dependent Life Assets" shall mean any
assets which are
31
segregated for the purpose of providing supplemental and
dependent life insurance.
Notwithstanding the above, the Total Economic APBO, the Media
Economic APBO and the Media Asset Share shall be determined
separately for the MBAT and the Life Insurance Trust. In
addition, in order to determine the Media Asset Share, the
provisions of Section 5(c) shall apply.
(e) Within nine months after the Separation Time, Multimedia shall cause
to be filed with the IRS a request for a determination that the Media
VEBA is tax-exempt under Section 501(c)(9) of the Code (unless the New
VEBA is the existing U S WEST VEBA Trust and New U S WEST agrees no
such filing is required). Multimedia agrees to make all reasonable
amendments requested by the IRS to obtain such letter. New U S WEST
and Multimedia agree to cooperate with each other to fulfill any
filing and/or regulatory reporting obligations with respect to such
transfers.
(f) New U S WEST shall cause the following asset transfers from the MBAT
and Life Insurance Trust to the Media VEBA and Multimedia shall cause
the Media VEBA to accept such asset transfers:
(1) Immediately after the Separation Time or as soon as reasonably
practicable thereafter, an amount equal to 98% of the Media Asset
Share, as estimated by the Actuaries in writing (immediately
prior to the Separation Time) to Multimedia and New U S WEST.
(2) Immediately after the Separation Time or as soon as reasonably
practicable thereafter, an amount equal to the Supplemental and
Dependent Life Assets multiplied by a fraction, the numerator of
which is the amount of premiums paid by Media Employees and
Terminated Media Employees for supplemental and dependent life
insurance during the last full calendar month prior to the
Separation Time and the denominator of which is the total
premiums for such coverage paid by all Employees and Terminated
Employees during that month.
(3) As soon as practicable after the value of the assets as of the
Separation Time is determined and the Media Asset Share is
determined by the
32
Actuaries in writing to Multimedia and New U S WEST (but not
later than 30 days after such writing is provided), the excess
of the Media Asset Share over the sum of the interim transfer
under (1) above and any benefit payments to Terminated Media
Employees by the MBAT and Life Insurance Trust after the
Separation Time. (If such amount is a negative number, such
amount shall be transferred from the Media VEBA to the MBAT and
Life Insurance Trust.)
(4) In the event there is any litigation or claims that the amount
transferred from the MBAT and Life Insurance Trusts to the Media
VEBA should be larger or smaller, the amount transferred shall be
adjusted in accordance with all of the provisions set forth in
Section 5 of this EM Agreement relating to a Contingent Amount
and claims over the amount of the transfer. In addition, the
parties agree that, to the extent permitted by law, any costs of
defending any such claims and any Liabilities arising out of such
claims shall be borne by the MBAT, Life Insurance Trust and the
Media VEBA. Any such Liability for a transfer or arising out of
any claims that a transfer is payable which cannot be borne by
the MBAT, Life Insurance Trust or the Media VEBA shall be borne
by New U S WEST or Multimedia in accordance with the last
paragraph of Section 5(g) of this EM Agreement.
To the extent any of the foregoing amounts is paid after the
Separation Time, such amount shall be increased or decreased by
interest from the Separation Time to the date of payment (to the
extent not paid or previously advanced) at a rate to be agreed to by
New U S WEST and MediaOne to reflect the rate of return of the MBAT
and Life Insurance Trust or the Media VEBA, whichever is applicable
(or any other mutually agreeable rate), during the period commencing
with the Separation Time and ending with the date of payment; provided
that no interest shall be paid with respect to the amounts in clause
(4) above if the Final Determination already provides for an
adjustment reflecting interest or plan earnings.
With respect to all of the foregoing transfers and any transfer
required by subsection (g) below, the specific assets to be
transferred shall be agreed upon by New U S WEST and Multimedia in
good faith so as to not treat the MBAT, Life Insurance Trust and Media
VEBA unfairly in any material respect.
33
(g) As soon as practicable after the Separation Time, MediaOne shall cause
a transfer of assets from the U S WEST VEBA Trust to the MBAT in an
amount equal to the balance in the U S WEST VEBA Trust immediately
prior to the Separation Time (and before any transfers described in
paragraph (f) above) multiplied by a fraction, the numerator of which
is the amount of contributions made to that trust for calendar year
1998 (up through the Separation Time) on behalf of the New U S WEST
Group and the denominator of which is the total amount of all
contributions made to that trust for 1998 (up through the Separation
Time), increased by interest on the unpaid amount due from the
Separation Time to the date of payment at the rate of (8%) per annum.
In lieu of these transfers, the parties may agree to offset the amount
to be transferred against the transfers required in subsection (f)
above.
9. INCENTIVE COMPENSATION.
(a) Stock Options. Options to purchase shares of Communications Stock
("Communications Options") and shares of Media Stock ("Media Options")
which are unexercised as of the Separation Time and which were issued
pursuant to the terms of the Amended U S WEST 1994 Stock Plan, the U S
WEST Media Group 1996 Stock Option Plan, the U S WEST Media Group 1997
Stock Option Plan and the U S WEST Communications Group 1997 Stock
Option Plan (collectively the "Option Plans") shall be treated as
follows:
(1) New U S WEST shall assume the U S WEST Communications Group 1997
Stock Option Plan and all obligations under such plan.
(2) MediaOne shall retain the U S WEST Media Group 1996 Stock Option
Plan and the U S WEST Media Group 1997 Stock Option Plan and all
obligations under such plans.
(3) MediaOne shall retain the Amended U S WEST 1994 Stock Plan and
all obligations with respect to Media Options under such plan.
(4) New U S West shall establish a new stock plan to be effective as
of the Separation Time and shall assume, under such plan, all
obligations with respect to Communications Options issued under
the Amended U S WEST 1994 Stock Plan.
(5) Unexercised options issued under any of the Option Plans shall
continue in effect for their
34
original term subject to paragraph (6) below and the following
adjustments to reflect the transactions contemplated by the
Separation Agreement.
(i) No Media Dividend shall be distributed with respect to any
Media Options. However, in accordance with the following
sentence, the number of Media Options held by any person shall be
converted into a higher number of options to purchase shares of
MediaOne Common Stock and the exercise price of each such option
shall be decreased. The number of options shall be increased and
the exercise price of each share under each option shall be
decreased to reflect the Media Dividend in a manner consistent
with Accounting Rule EITF 90-9 in order to preserve the economic
value of the options.
(ii) The Communications Options shall be converted to options to
purchase shares of New U S WEST Common Stock on a one for one
basis; the exercise price shall not change.
(6) Vested options under any of the Option Plans shall be exercised
on and after the Separation Time by an Employee by contacting the
stock plan administrator for his or her employer or former
employer. New U S WEST and MediaOne each agrees to act as agent
(the "crossover agent") for the other in the case of an exercise
of an option by an Employee of the crossover agent under an
Option Plan of the non-employing company. The crossover agent
for the non-employing company shall, by itself and/or through its
own third-party arrangements (i) effect an option exercise of the
applicable shares; (ii) report such exercise to the non-employing
company on a timely basis, not to exceed 30 days after the
exercise; (iii) collect from the Employee, and remit and/or
report to the Employee and/or the appropriate tax authorities, as
applicable, all taxes incurred by the crossover agent (as the
employing company) resulting from the exercise of an option under
the non-employing company's Option Plan, and all taxes required
to be withheld from the Employee's proceeds as a result of the
exercise of an option under the non-employing company's Option
Plan; (iv) deliver the stock to the Employee or pay the Employee
the excess of the sales proceeds of
35
the applicable shares over the sum of the exercise price and all
taxes required to be withheld from the Employee's proceeds as a
result of the exercise; and (v) pay the non-employing company an
amount equal to the exercise price of such option on a timely
basis, not to exceed 30 days after the exercise. In addition,
the non-employing company agrees to honor the separation
policies adopted by the crossover agent (or its subsidiaries)
for purposes of determining if a separated Employee is eligible
to exercise an option under the non-employing company's Option
Plan. New U S WEST and MediaOne shall agree on the treatment of
options exercised by Terminated Employees after the Separation
Time.
(b) Restricted Stock. Communications Stock and Media Stock issued to
Employees or Terminated Employees under the Amended U S WEST 1994
Stock Plan which has not become vested under the terms of that plan as
of the Separation Time ("Restricted Communications Stock" and
"Restricted Media Stock" respectively) shall be treated as follows:
(1) Immediately prior to the Separation Time, Media Employees and
Terminated Media Employees shall surrender any Restricted
Communications Stock they hold and receive Restricted Media Stock
in exchange. The number of shares of Restricted Media Stock
received by each such individual shall equal the number of shares
of Restricted Communications Stock surrendered by such individual
multiplied by 1.0645 and further multiplied by the ratio of the
Average Value of the Communications Stock to the Average Value of
the Media Stock.
(2) Immediately prior to the Separation Time, Communications
Employees, Terminated Communications Employees and Terminated
Inc. Employees shall surrender any Restricted Media Stock they
hold as of the Separation Time and receive Restricted
Communications Stock in exchange. The number of shares of
Restricted Communications Stock received by each such individual
shall equal that number of shares of Restricted Media Stock
surrendered by such individual multiplied by 1.0645 and further
multiplied by the ratio of the Average Value of the Media Stock
to the Average Value of the Communications Stock.
36
(3) Following the adjustments in paragraphs (1) and (2) above,
MediaOne shall retain the Amended U S WEST 1994 Stock Plan and
all obligations under such plan with respect to Media Restricted
Stock and shall amend such plan to provide for restricted stock
("Restricted MediaOne Common Stock") after the Separation Time.
In order to reflect the transactions contemplated by the
Separation Agreement, the Restricted Media Stock shall be subject
to the following adjustments. Following the adjustments in
paragraphs (1) and (2) above, (i) the Restricted Media Stock
shall be converted to Restricted MediaOne Common Stock on a one
for one basis and (ii) each share of Restricted Media Stock,
including shares described in paragraph (1) above but not those
described in paragraph (2) above, shall receive the Media
Dividend, provided that such Media Dividend shall be free of all
restrictions under the plan.
(4) Following the adjustments in paragraphs (1) and (2) above, New U
S WEST shall assume, under the new stock plan adopted pursuant to
subsection (a)(4) above, all obligations under the Amended U S
WEST 1994 Stock Plan with respect to Restricted Communications
Stock and shall amend such plan to provide for restricted stock
("Restricted New U S WEST Common Stock") after the Separation
Time. In order to reflect the transactions contemplated by the
Separation Agreement, following the adjustments in paragraphs (1)
and (2) above, the Restricted Communications Stock shall be
converted to Restricted New U S WEST Common Stock on a one for
one basis.
(5) Except for the Media Dividend set forth in paragraph (3) above,
each share of Restricted New U S WEST Common Stock and Restricted
MediaOne Common Stock outstanding after the application of the
foregoing paragraphs of this subsection (b) ("Post-Separation
Restricted Stock") shall vest in accordance with the vesting
period applicable to the grant of restricted stock to which each
share of Post-Separation Restricted Stock is attributable.
(c) LTIP. The U S WEST Communications Long-Term Incentive Plan ("LTIP")
shall be terminated as of the Separation Time and a new long-term
incentive plan (the "Communications LTIP") shall be established by
37
New U S WEST. Awards under the LTIP to Communications Employees
shall be assumed by the Communications LTIP and shall continue under
their original terms subject to adjustment to reflect the transactions
contemplated by the Separation Agreement; MediaOne shall cease to have
any Liability with respect to such awards. The measurement period for
awards under the LTIP to Media Employees shall terminate as of the
Separation Time and the awards shall be calculated and paid out in
Restricted MediaOne Group Common Stock as of that time.
(d) ESTIP. The U S WEST, Inc. Executive Short Term Incentive Plan
("ESTIP") shall be retained by MediaOne and a new executive incentive
plan (the "Communications ESTIP") shall be established by New U S
WEST. Awards under the ESTIP to Communications Employees shall be
assumed by the Communications ESTIP and shall continue under their
original terms subject to adjustment to reflect the transactions
contemplated by the Separation Agreement; MediaOne shall cease to have
any Liability with respect to such awards.
(e) Phantom Stock. The units issued under the Amended U S WEST 1994 Stock
Plan which are valued in accordance with Communications Stock
("Phantom Communications Stock") and the units issued under the
Amended U S WEST 1994 Stock Plan which are valued in accordance with
Media Stock ("Phantom Media Stock") shall be treated as follows:
(1) The Phantom Communications Stock of a Media Employee or a Media
Director (as defined in Section 10(g) below) prior to the
Separation Time shall be converted into Phantom Media Stock
immediately prior to the Separation Time. The number of units of
Phantom Media Stock received by each such individual shall equal
the number of units of Phantom Communications Stock surrendered
by such individual multiplied by the ratio of the Average Value
of the Communications Stock to the Average Value of the Media
Stock.
(2) The Phantom Media Stock of a Communications Employee or
Communications Director (as defined in Section 10(g) below) prior
to the Separation Time shall be converted into Phantom
Communications Stock immediately prior to the Separation Time.
The number of units of Phantom Communications Stock received by
each such individual shall equal the number of units
38
of Phantom Media Stock surrendered by such individual multiplied
by the ratio of the Average Value of the Media Stock to the
Average Value of the Communications Stock.
(3) Following the adjustments in paragraphs (1) and (2) above,
MediaOne shall retain the Amended U S WEST 1994 Stock Plan and
all obligations under such plan with respect to Phantom Media
Stock and shall amend such plan to provide for units which are
valued in accordance with MediaOne Common Stock ("Phantom
MediaOne Common Stock") after the Separation Time. In order to
reflect the transactions contemplated by the Separation
Agreement, following the adjustments in paragraphs (1) and (2)
above, the Phantom Media Stock, including units described in
paragraph (1) above but not those described in paragraph (2)
above, shall be converted to Phantom MediaOne Common Stock on the
following basis. The number of units of Phantom MediaOne Common
Stock credited shall equal the number of units of Phantom Media
Stock surrendered by such individual multiplied by the ratio of
the Average Value of the Media Stock to the excess of the Average
Value of the Media Stock over the product of the Dividend Number
multiplied by the Average Value of the Communications Stock.
(4) Following the adjustments in paragraphs (1) and (2) above, New U
S WEST shall assume, under the new stock plan adopted pursuant to
subsection (a)(4) above, all obligations under the Amended U S
WEST 1994 Stock Plan with respect to Phantom Communications Stock
and shall amend such plan to provide for units which are valued
in accordance with New U S WEST Common Stock ("Phantom New U S
WEST Common Stock") after the Separation Time. In order to
reflect the transactions contemplated by the Separation
Agreement, following the adjustments in paragraphs (1) and (2)
above, the Phantom Communications Stock shall be converted to
Phantom New U S WEST Common Stock on a one for one basis.
(5) MediaOne and New U S WEST shall cause all plans referred to in
this subsection (e) to be amended, as appropriate, to effect the
changes described herein as of the Separation Time.
39
10. OTHER BENEFITS.
(a) Top-hat plans. As of the Separation Time:
(1) New U S WEST or a Subsidiary shall assume all plans maintained by
the Existing U S WEST Group prior to the Separation Time which
are intended to be described in Section 201(2) of ERISA ("Top-hat
Plans") and all Liabilities and obligations with respect to
Communications Employees, Terminated Communications Employees and
Terminated Inc. Employees under such plans. Such Top-hat Plans
shall include, without limitation, the U S WEST Nonqualified
Pension Plan and the U S WEST Deferred Compensation Plan. All
such plans shall be Communications Employee Benefit Plans. The
MediaOne Group shall have no Liabilities with respect to such
plans.
(2) MediaOne or a Subsidiary shall establish new Top-hat Plans
corresponding to the Top-hat Plans maintained by the Existing U S
WEST Group before the Separation Time and shall assume, under
such plans, all Liabilities and obligations with respect to Media
Employees and Terminated Media Employees under the Top-hat Plans
maintained by the Existing U S WEST Group prior to the Separation
Time. All such plans shall be Media Employee Benefit Plans. All
such Liabilities and obligations shall cease to be Liabilities or
obligations of the Top-hat Plans assumed by New U S WEST pursuant
to the preceding paragraph (1).
(3) Subject to paragraph (4) below, any trusts maintained by Existing
U S WEST or its Subsidiaries for the purpose of providing
benefits under a Top-hat Plan (the "Existing U S WEST Rabbi
Trusts") shall be transferred to and assumed by New U S WEST.
(4) MediaOne or a Subsidiary shall establish prior to the Separation
Time one or more trusts (the "MediaOne Rabbi Trusts") for the
purpose of providing benefits under its Top-hat Plans which
correspond to the Existing U S WEST Rabbi Trusts. As of the
Separation Time, Existing U S West shall cause the trustee or
trustees of the Existing U S WEST Rabbi Trusts to transfer to the
trustee or trustees of the MediaOne Rabbi Trusts any amounts held
in the Existing U
40
S WEST Rabbi Trusts attributable to the benefits of Terminated
Media Employees.
(b) Employment contracts. Except for the severance agreements with
members of the Executive Group, all individual employment contracts,
including but not limited to severance agreements, retention
agreements, change-of-control agreements and letter agreements,
entered into by a member of the Existing U S WEST Group and a single
Communications Employee or a Terminated Communications Employee shall
be retained by, or assigned to and assumed by, as applicable, the New
U S WEST Group, provided they do not expire by their own terms as of
the Separation Time. The MediaOne Group shall have no Liabilities
with respect to such agreements. Any such employment contracts, other
than agreements described in paragraph (d) below, entered into by any
member of the Existing U S WEST Group and a single Media Employee or a
Terminated Media Employee shall be retained by, or assigned to and
assumed by, as applicable, the MediaOne Group, provided they do not
expire by their own terms as of the Separation Time. The New U S WEST
Group shall have no Liabilities with respect to such agreements. Any
Liability under such employment contracts, other than the severance
agreements with members of the Executive Group, entered into by any
member of the Existing U S WEST Group and a single Terminated Inc.
Employee shall be borne in accordance with Section 2(c) and (f) of
this EM Agreement.
(c) Split-dollar contracts. All split-dollar insurance contracts entered
into by the Existing U S WEST Group for the benefit of a
Communications Employee or a Terminated Communications Employee shall
be retained by, or assigned to and assumed by, as applicable, New U S
WEST; the MediaOne Group shall have no interest in, or Liabilities
with respect to, such contracts. Any such split-dollar insurance
contracts entered into by the Existing U S WEST Group for the benefit
of a Media Employee or a Terminated Media Employee shall be retained
by, or assigned to and assumed by, as applicable, MediaOne; the New U
S WEST Group shall have no interest in, or Liabilities with respect
to, such contracts. In order to assign and assume any such split
dollar life policies, the parties agree to accept any collateral
assignments, policy endorsements or such other documentation executed
by or on behalf of the applicable employees or terminated employees,
or any trustee of any trust to which such policy rights or incidents
of ownership under the policies have been assigned, as well as
41
entering into any such agreements as may be necessary to fulfill
obligations to any insurance company or insurance agent or broker
under the policies to be assigned.
(d) Ex-Xxx Employees. This sub-section applies to Employees ("Ex-Xxx
Employees") currently employed by International who have entered into
agreements with Existing U S WEST or a Subsidiary which give such
Employees re-employment rights with Existing U S WEST or a domestic
Subsidiary thereof. If an Ex-Xxx Employee notifies Existing U S WEST
in writing prior to May 1, 1998 that he wishes to exercise his right
to return to domestic employment prior to the Separation Time, the
Communications Business will either: (1) re-employ the Ex-Xxx
Employee in accordance with his re-employment right; or (2) enter into
a new agreement with the Ex-Xxx Employee terminating his re-employment
right. Any costs associated with re-employing the Ex-Xxx Employee or
terminating his re-employment right in accordance with the prior
sentence shall be borne by the Communications Business. If an Ex-Xxx
Employee does not notify Existing U S WEST in writing prior to May 1,
1998 that he wishes to exercise his right to return to domestic
employment prior to the Separation Time, all obligations under the
agreement which provides the re-employment right shall be assumed by
MediaOne. Any costs associated with assuming the re-employment right
of the Ex-Xxx Employee in accordance with the prior sentence shall be
borne by New U S WEST and/or MediaOne as determined by the parties
through good faith negotiations to be completed prior to the
Separation Time.
(e) Vail Trust. The Xxxxxxxx X. Xxxx Memorial Fund shall be transferred
to and assumed by New U S WEST as of the Separation Time.
(f) Leaves of Absence. Each member of the MediaOne Group and the New U S
WEST Group shall honor all terms and conditions of leaves of absence
that have been granted to any Employee before the Separation Time,
including such leaves that are commenced after the Separation Time, to
the extent that such Employees are assigned to that entity. Each such
entity shall be solely responsible for administering such leaves of
absence and compliance with all applicable laws relating to leaves of
absence, including the Family Medical Leave Act. Unless members of
the New U S WEST Group or MediaOne Group adopt other policies prior to
the Separation Time, each shall be considered to have adopted leave of
absence programs,
42
effective as of the Separation Time, which are substantially
identical in all material respects to the leave of absence programs
in effect at the respective entities at the Separation Time.
(g) Non-Employee Director Plans.
(1) As of the Separation Time, New U S WEST shall assume the
Non-Employee Director Plans and all Liabilities and obligations
under such plans with respect to individuals who will be
directors of New U S WEST immediately after the Separation Time
and Retired Non-Employee Directors (collectively referred to as
"Communications Directors"). The MediaOne Group shall have no
Liabilities with respect to such agreements.
(2) As of the Separation Time, MediaOne shall establish new plans for
its non-employee directors ("Media Non-Employee Director Plans")
corresponding to the Non-Employee Director Plans maintained by U
S WEST before the Separation Time and shall assume, under such
plans, all Liabilities and obligations under the Non-Employee
Director Plans with respect to individuals who will be directors
of MediaOne ("Media Directors") immediately after the Separation
Time. All such Liabilities and obligations shall cease to be
Liabilities or obligations of the Non-Employee Director Plans
assumed by New U S WEST pursuant to paragraph (1) above. The New
U S WEST Group shall have no Liabilities with respect to such
agreements.
(3) MediaOne and New U S WEST shall cause all plans referred to in
this sub-section (g) to be amended, as appropriate, to effect the
changes described herein as of the Separation Time.
(h) Non-Employee State Executive Board Plan. As of the Separation Time,
New U S WEST shall assume the U S WEST Communications, Inc.
Non-Employee State Executive Board Deferred Compensation Plan (and any
predecessor plan) and be solely responsible for all Liabilities
thereunder. New U S WEST shall cause such plan to be amended, as
appropriate, to effect the changes described herein as of the
Separation Time.
43
11. PORTABILITY.
Existing U S WEST and, if necessary after the Separation Time, MediaOne and
New U S WEST shall use reasonable best efforts to seek an amendment of the
Mandatory Portability Agreement established as of January 1, 1985, as
referenced in the U S WEST Pension Plan (the "MPA"), to allow New U S WEST
to become a "Tier II Signatory Company" under the MPA with the same rights
and obligations as have been granted to AirTouch Communications, Inc. as a
Tier II Signatory Company. MediaOne and New U S WEST may mutually agree to
additional situations where service credit would be granted for employees
transferring between one another (or their Subsidiaries) with associated
trust asset transfers after the Separation Time.
12. FURTHER AGREEMENTS.
(a) From and after the Separation Time, MediaOne shall, and shall cause
its Subsidiaries and successors to, provide credit under all Media
Employee Arrangements and Media Employee Benefit Plans to Media
Employees and Terminated Media Employees for service with the Existing
U S WEST Group prior to the Separation Time for purposes of
eligibility to participate, vesting and eligibility to retire, and for
purposes of calculating any severance benefits, to the same extent
such credit was provided under Employee Arrangements and Employee
Benefit Plans prior to the Separation Time.
(b) From and after the Separation Time, New U S WEST shall, and shall
cause its Subsidiaries and successors to, provide credit under all
Communications Employee Arrangements and Communications Employee
Benefit Plans to Communications Employees, Terminated Communications
Employees and Terminated Inc. Employees for service with the Existing
U S WEST Group prior to the Separation Time for purposes of
eligibility to participate, vesting and eligibility to retire, and for
purposes of calculating any severance benefits, to the same extent
such credit was provided under Employee Arrangements and Employee
Benefit Plans prior to the Separation Time.
(c) MediaOne and New U S WEST shall promptly reimburse each other for all
valid liability and expenses addressed in this EM Agreement which are
paid by the other and that constitutes a liability of MediaOne or New
U S WEST, as the case may be, upon presentation of an invoice thereon.
In the event that payment in full is not received within 45 days from
the date of
44
the invoice, interest shall accrue at the rate of 7% per annum from
the date of the invoice.
13. COOPERATION.
(a) MediaOne, New U S WEST and their Subsidiaries shall cooperate with
each other in carrying out, implementing and defending the terms of
this EM Agreement, including cooperating with each other with respect
to any claims or litigation challenging the terms of the EM Agreement.
(b) Each party shall exchange such information with the other party and
their respective agents and vendors (without obtaining releases), as
may be reasonably requested by the other party, with respect thereto.
MediaOne and New U S WEST and their respective authorized agents
shall, subject to applicable laws on confidentiality, be given
reasonable and timely access to, and may make copies of, all
information relating to the subjects of this EM Agreement in the
custody of the other party, to the extent reasonably requested by the
other party. If any provision of this Agreement is dependent on the
consent of any third party (such as a vendor or a union) and such
consent is withheld, MediaOne and New U S WEST shall use their
reasonable best efforts to implement the applicable provisions of this
Agreement to the full extent practicable. If any provision of this
Agreement cannot be implemented due to the failure of such third party
to consent, MediaOne and New U S WEST shall negotiate in good faith to
implement the provision in a mutually satisfactory manner. The phrase
"reasonable best efforts" as used herein shall not be construed to
require the incurrence of any non-routine or unreasonable expense or
liability or the waiver of any right of MediaOne and New U S WEST (and
their respective Subsidiaries).
(c) MediaOne and New U S WEST agree to good faith mutual cooperation in
any investigation, inquiry or litigation which jointly involves them
or in which either party makes a reasonable request for such
cooperation. Each party will make its Employees available on a
reasonable basis to give testimony and assistance in connection with
any lawsuit, dispute, investigation or proceeding involving the other
party and arising out of activities for which the Employee had
responsibility prior to the Separation Time. The party requesting
such availability (the "Requesting Party") shall reimburse the
Employee for all reasonable out-of-pocket travel and other expenses
incurred in so cooperating, including without
45
limitation airplane fare, hotel accommodations, meal charges and
other similar expenses, as well as reasonable fees and
disbursements for independent counsel for the Employee, if the
matter requires that the Employee have independent representation.
Such expenses will be reimbursed promptly after Employee's
submission to the Requesting Party of statements and such
reasonable detail as the Requesting Party may require. Any
request for cooperation, and the degree of cooperation provided,
pursuant to this paragraph will take into account (1) the
significance of the matters at issue in the lawsuit, dispute,
investigation or proceeding, and (ii) the Employee's other
personal and business commitments. In any case in which either
MediaOne or New U S WEST becomes aware that one of its Employees
is called (except by the other party) as a witness to testify in
any discovery or court proceeding relating to the other party, the
party employing such individual will notify the other party
immediately in order to give the other party a reasonable
opportunity to appear and/or assert any privilege to which it may
be entitled.
14. NON-TERMINATION OF EMPLOYMENT; NO THIRD-PARTY BENEFICIARIES.
(a) No provision of this EM Agreement or the Separation Agreement shall be
construed to create any right, or accelerate entitlement, to any
compensation or benefit whatsoever on the part of any Employee or
Terminated Employee or other future, present or former employee of
MediaOne, New U S WEST, or their respective Subsidiaries under any
Employee Benefit Plan or Employee Arrangement maintained by any of
such entities or otherwise.
(b) Without limiting the generality of the foregoing provisions of
subsection 14(a) above, except for the severance agreements applicable
to the Executive Group, neither (1) the transactions described in the
Separation Agreement including without limitation the Reorganization,
Contribution and Separation, (2) the termination of the Participating
Company status of New U S WEST or a New U S WEST Subsidiary, (3) the
transfer of sponsorship of any Employee Benefit Plans or Employee
Arrangements to New U S WEST, (4) the transfer of an Employee from one
member of the Existing U S WEST Group to another member in connection
with or in anticipation of the Reorganization, Contribution or
Separation at any time on or before the Separation Time nor (5) the
assignment and transfer of an Employee to the New U S
46
WEST Group or MediaOne Group, shall cause any Employee to be
deemed to have incurred a termination of employment which entitles
such individual to the commencement of benefits under any Employee
Benefit Plan or Employee Arrangement maintained by MediaOne, New U
S WEST, or their respective Subsidiaries; nor shall any of the
events set forth in clauses (1) through (5) of this subsection
14(b) be treated as, or result in, a change in control under any
such Employee Benefit Plan or Employee Arrangement.
(c) To the extent applicable, each Employee Benefit Plan and Employee
Arrangement is hereby amended (without the need for further action) to
incorporate the provisions stated in subsection 14(b).
(d) Except as expressly provided in this Agreement, nothing in this
Agreement shall preclude New U S WEST or MediaOne or their respective
Subsidiaries, at any time after the Separation Time, from amending,
merging, modifying, terminating, eliminating, reducing, or otherwise
altering in any respect any Employee Benefit Plan or Employee
Arrangement maintained by such party, any benefit under any such plan
or arrangement, or any trust, insurance policy or funding vehicle
related to any such plan or arrangement.
(e) No provision in this EM Agreement or in the Separation Agreement shall
confer upon any person other than the signatories hereto any rights or
remedies with respect to the employment, compensation, benefits, or
other terms and conditions of employment of any persons.
15. MISCELLANEOUS.
(a) Payment of 1998 Administrative Costs and Expenses. Each member of the
Existing U S WEST Group shall be responsible for their allocable share
of the budgeted costs for benefits in 1998 until the Separation Time,
as well as their allocable share of unanticipated expenses incurred
prior to the Separation Time. In addition, MediaOne shall pay New
U S WEST for all expenses and costs relating to benefits incurred
after the Separation Time to the extent that the additional
expenses are (i) reasonable and necessary and (ii) incurred as a
result of, and for the purpose of, the normal administration of the
Media Employee Benefit Plans or Employee Arrangements after the
Separation Time. If any expenses are incurred at the request of
MediaOne, they shall be the sole responsibility of MediaOne.
47
(b) Audit Rights.
(1) Information Provided. Each of MediaOne and New U S WEST, and
their duly authorized representatives, shall have the right to conduct
audits with respect to all information provided to it by the other
party. The party conducting the audit (the "Auditing Party") shall
have the sole discretion to determine the procedures and guidelines
for conducting audits and the selection of audit representatives under
this paragraph (1); provided, that no audits shall be permitted with
respect to the allocation or transfer of plan assets and liabilities.
The Auditing Party shall have the right to make copies of any records
at its expense, subject to the confidentiality provisions set forth in
the Separation Agreement, which are incorporated by reference herein.
The party being audited shall provide the Auditing Party's
representatives with reasonable access during normal business hours to
its operations, computer systems and paper and electronic files, and
provide workspace to its representatives. After any audit is
completed, the party being audited shall have the right to review a
draft of the audit findings and to comment on those findings in
writing within five business days after receiving such draft.
The Auditing Party's audit rights under this paragraph (1) shall
include the right to audit, or participate in an audit facilitated by
the party being audited, of any Subsidiaries and Affiliates of the
party being audited and of any benefit providers and third parties
with whom the party being audited has a relationship, or agents of
such party, to the extent any such persons are affected by or
addressed in this Agreement (collectively, the "Non-parties"). The
party being audited shall, upon written request from the Auditing
Party, provide an individual (at the Auditing Party's expense) to
supervise any audit of a Non-party. The Auditing Party shall be
responsible for supplying, at the Auditing Party's expense, additional
personnel sufficient to complete the audit in a reasonably timely
manner. The responsibility of the party being audited shall be
limited to providing, at the Auditing Party's expense, a single
individual at each audited site for purposes of facilitating the
audit.
(2) Vendor Contracts. After the Separation Time, MediaOne and New U
S WEST and their duly authorized representatives shall have the right
to conduct joint audits with respect to any Provider Contracts that
relate to both the MediaOne Welfare Plans and the New
48
U S WEST Welfare Plans. The scope of such audits shall encompass
the review of all correspondence, account records, claim forms,
cancelled drafts (unless retained by the bank), provider bills,
medical records submitted with claims, billing corrections,
vendor's internal corrections of previous errors and any other
documents or instruments relating to the services performed by the
vendor under the applicable vendor contracts. MediaOne and New U S
WEST shall agree on the performance standards, audit methodology,
auditing policy and quality measures and reporting requirements
relating to the audits described in this paragraph (2) and the
manner in which costs incurred in connection with such audits will
be shared.
(c) Beneficiary Designations. All beneficiary designations made under the
Employee Benefit Plans or Employee Arrangements prior to the
Separation Time shall be transferred to and be in full force and
effect under the corresponding new Communications or Media Employee
Benefit Plans or Employee Arrangements until such beneficiary
designations are replaced or revoked by the individual who made the
beneficiary designation.
(d) Effect If Separation Does Not Occur. If the Separation does not
occur, then all actions and events that are, under this EM Agreement,
to be taken or occur effective as of the Separation Time, immediately
after the Separation Time, or otherwise contingent upon or in
connection with the Separation, shall not be taken or occur. In
addition, to the extent actions are taken or events occur prior to the
Separation Time in connection with the Reorganization or Contribution
or in anticipation of the Separation, then such events or actions
shall be reversed or deemed null and void.
(e) Provisions of Separation Agreement. The provisions of Articles X -
XII of the Separation Agreement shall, to the extent applicable and
not inconsistent with this EM Agreement, shall also apply to this EM
Agreement.
49
IN WITNESS WHEREOF, each of the parties has caused this EM Agreement to be
duly executed on its behalf by its officers thereunto duly authorized, all as
of the day and year first above written.
U S WEST, Inc.
By:
-------------------------------------
Name:
Title:
USW-C, Inc.
By:
-------------------------------------
Name:
Title:
U S WEST Multimedia Communications,
Inc., plan sponsor of the:
Media Pension Plan
Media Savings Plan
Media VEBA
Other Media Employee Benefit Plans
By:
-------------------------------------
Name:
Title:
USW-C, Inc., plan sponsor of the:
U S WEST Pension Plan
U S WEST Savings Plan
MBAT and Life Insurance Trust
Other Communications Employee Benefit Plans
By:
-------------------------------------
Name:
Title:
50
