-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EHK9ZyGpV7jlB02mfiD2Mrpv7QImYrpjkEg0DaarBggQ1zPEsKHwiI9y0aX4A09a 57bzxjVs24fNiRdwBeU6Zw== 0001019056-01-500611.txt : 20020412 0001019056-01-500611.hdr.sgml : 20020412 ACCESSION NUMBER: 0001019056-01-500611 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 20011205 EFFECTIVENESS DATE: 20011205 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QWEST COMMUNICATIONS INTERNATIONAL INC CENTRAL INDEX KEY: 0001037949 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 841339282 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-74622 FILM NUMBER: 1807425 BUSINESS ADDRESS: STREET 1: 1801 CALIFORNIA ST CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3039921400 MAIL ADDRESS: STREET 1: 1801 CALIFORNIA ST CITY: DENVER STATE: CO ZIP: 80202 FORMER COMPANY: FORMER CONFORMED NAME: QUEST COMMUNICATIONS INTERNATIONAL INC DATE OF NAME CHANGE: 19970416 S-8 1 qwest_s8.txt FORM S-8 As filed with the Securities and Exchange Commission on December 5, 2001. Registration No. 333-____________ ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------- Qwest Communications International Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) ------------------- Delaware 84-1339282 - ------------------------------- ------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1801 California Street Denver, Colorado 80202 (303) 992-1400 ------------------------------------------------- (Address, including zip code and telephone number of principal executive offices) ------------------- Qwest Savings & Investment Plan ------------------------------- (Full title of the plan) ------------------- Yash A. Rana Vice President, Qwest Communications International Inc. 1801 California Street, Denver, Colorado 80202 (303) 992-1400 ------------------------------------------------------------------- (Name, Address and Telephone Numbers of Person Authorized to Receive Notices and Communications on Behalf of Filing Persons)) -------------------- Copy to: Steven L. Grossman, Esq. O'Melveny & Myers, LLP 1999 Avenue of the Stars, 7th Floor, Los Angeles, California 90067 (310) 553-6700 -------------------
CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------------------------ Proposed Proposed maximum maximum Title of Amount offering aggregate Amount of securities to be price offering registration to be registered registered per unit price fee - ------------------------------------------------------------------------------------------------ Common Stock, 12,000,000 (1) $11.77 (2) $141,240,000 (2) $33,756.36 (2) par value $.01 per shares share Interests in the Plan -- -- -- -- - ------------------------------------------------------------------------------------------------
(1) This Registration Statement covers, in addition to the number of shares of Common Stock stated above and pursuant to Rule 416(c) under the Securities Act of 1933, an indeterminate number of shares and interests in the Qwest Savings & Investment Plan (the "Plan") which, by reason of certain events specified in the Plan, may become subject to the Plan. (2) Pursuant to Rule 457(h), the maximum offering price, per share and in the aggregate, and the registration fee were calculated based upon the average of the high and low prices of the Common Stock on December 4, 2001, as reported on the New York Stock Exchange and published in The Western Edition of The Wall Street Journal. The Exhibit Index for this Registration Statement is at page S-4. ================================================================================ 2 PART I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS The documents containing the information specified in Part I of Form S-8 (plan information and registrant information) will be sent or given to employees as specified by Rule 428(b)(1) of the Securities Act of 1933, as amended (the "Securities Act"). Such documents need not be filed with the Securities and Exchange Commission (the "Commission") either as part of this Registration Statement or as prospectuses or prospectus supplements pursuant to Rule 424 of the Securities Act. These documents, which include the statement of availability required by Item 2 of Form S-8, and the documents incorporated by reference in this Registration Statement pursuant to Item 3 of Form S-8 (Part II hereof), taken together, constitute a prospectus that meets the requirements of Section 10(a) of the Securities Act. 3 PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Certain Documents by Reference The following documents filed with the Commission by Qwest Communications International Inc. (the "Company") are incorporated herein by reference: (a) The Company's Form 10-K for the year ended December 31, 2000 (as amended by the Company's Annual Report on Form 10-K/A filed with the Commission on August 20, 2001); (b) The Company's Quarterly Reports on Forms 10-Q for the quarterly periods ended March 31, 2001, June 30, 2001 and September 30, 2001; (c) The Company's Current Reports on Forms 8-K filed with the Commission on January 25, 2001, February 27, 2001, March 15, 2001, March 22, 2001, March 29, 2001, April 5, 2001, April 25, 2001, April 27, 2001, May 17, 2001, June 5, 2001 (as amended by the Company's Current Report on Form 8-K/A filed with the Commission on June 5, 2001), June 8, 2001, June 20, 2001, June 21, 2001, July 20, 2001, July 26, 2001 (as amended by the Company's Current Report on Form 8-K/A filed with the Commission on July 26, 2001), August 7, 2001 (as amended by the Company's Current Report on Form 8-K/A filed with the Commission on August 13, 2001), September 10, 2001 and October 31, 2001; and (d) The description of the Company's Common Stock contained in its Registration Statement on Form 8-A filed with the Commission on December 27, 1999. All documents subsequently filed by the Company or by the Plan pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold shall be deemed to be incorporated by reference into the prospectus and to be a part hereof from the date of filing of such documents. Any statement contained herein or in a document, all or a portion of which is incorporated or deemed to be incorporated by reference herein, shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or amended, to constitute a part of this Registration Statement. Item 4. Description of Securities The Company's Common Stock, par value $.01 per share (the "Common Stock"), is registered pursuant to Section 12 of the Exchange Act and, therefore, the description of securities is omitted. 4 Item 5. Interests of Named Experts and Counsel The Opinion of Counsel as to the legality of the securities being registered hereby has been rendered by counsel who is a full time employee of the Company and is eligible to participate in the Plan. Item 6. Indemnification of Directors and Officers Section 145 of the Delaware General Corporation Law (the "DGCL") permits the board of directors of the Company to indemnify any person against expenses (including attorneys' fees), judgments, fines and amounts paid in settlements actually and reasonably incurred by him or her in connection with any threatened, pending or completed action, suit or proceeding in which such person is made a party by reason of his or her being or having been a director, officer, employee or agent of the Company, in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities (including reimbursement for expenses incurred) arising under the Securities Act of 1933, as amended (the "Securities Act"). The statute provides that indemnification pursuant to its provisions is not exclusive of other rights of indemnification to which a person may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Company's Restated Certificate of Incorporation and Bylaws provide for indemnification of its directors and officers to the fullest extent permitted by law. As permitted by Section 102 of the DGCL, the Company's Restated Certificate of Incorporation eliminates a director's personal liability for monetary damages to the Company and its stockholders arising from a breach or alleged breach of a director's fiduciary duty except for liability under Section 174 of the DGCL, for liability for any breach of the director's duty of loyalty to the Company or its stockholders, for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law or for any transaction from which the director derived an improper personal benefit. The directors and officers of the Company are covered by insurance policies indemnifying against certain liabilities, including certain liabilities arising under the Securities Act which might be incurred by them in such capacities and against which they cannot be indemnified by or on behalf of the Company. Item 7. Exemption from Registration Claimed Not applicable. Item 8. Exhibits See the attached Exhibit Index at page S-4. Item 9. Undertakings (a) The undersigned registrant hereby undertakes: 5 (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the Registration Statement; (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (h) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 6 above, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. 6 SIGNATURES The Registrant. Pursuant to the requirements of the Securities Act, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver, State of Colorado, on December 5, 2001. QWEST COMMUNICATIONS INTERNATIONAL INC. /s/ YASH A. RANA ----------------------------- By: Yash A. Rana Its: Vice President POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Yash A. Rana as his attorney in fact and agent, with full power of substitution, for him in any and all capacities, to sign any and all amendments to this Registration Statement (including post-effective amendments), and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, this Registration Statement has been signed below by the following persons in the capacities indicated and on December 5, 2001. Signature Title --------- ----- * Chairman of Board, Director - ------------------------------ Philip F. Anschutz /s/ Joseph P. Nacchio Chairman and Chief Executive Officer - ------------------------------ (Principal Executive Officer), and Joseph P. Nacchio Director * Director - ------------------------------ Linda G. Alvarado * Director - ------------------------------ Craig R. Barrett S-1 Signature Title --------- ----- * Director - ------------------------------ Hank Brown * Director - ------------------------------ Thomas J. Donohue * Director - ------------------------------ Jordan L. Haines * Director - ------------------------------ Cannon Y. Harvey * Director - ------------------------------ Peter S. Hellman * Director - ------------------------------ Vinod Khosla Director - ------------------------------ Marilyn Carlson Nelson * Director - ------------------------------ Frank P. Popoff * Director - ------------------------------ Craig D. Slater * Director - ------------------------------ W. Thomas Stephens /s/ Robin R. Szeliga Executive Vice President and Chief - ------------------------------ Financial Officer (Principal Financial Robin R. Szeliga Officer and Principal Accounting Officer) * By: /s/ YASH A. RANA ------------------------------ Yash A. Rana, Attorney-in-fact S-2 The Plan. Pursuant to the requirements of the Securities Act, the Plan has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver, State of Colorado on December 5, 2001. QWEST SAVINGS & INVESTMENT PLAN By: /s/ KIMBERLY WALKER ------------------------------------- Kimberly Walker Vice President, Qwest Asset Management S-3 EXHIBIT INDEX Exhibit Number Description - ------ ----------- 4.1 Qwest Savings & Investment Plan 4.2 Amendment 2000-3 to the Plan 4.3 Amendment 2001-1 to the Plan 4.4 Amendment 2001-2 to the Plan 4.5 Amendment 2001-3 to the Plan 4.6 Trust Agreement for the Plan 4.7 Master Trust Agreement for the Plan 5.1 Opinion of Company Counsel (opinion re legality) 5.2 Internal Revenue Service determination letter that the Plan is qualified under Section 401 of the Internal Revenue Code 23.1 Consent of Arthur Andersen LLP (consent of independent public accountants) 23.2 Consent of Company Counsel (included in Exhibit 5.1) 24. Power of Attorney (filed as an exhibit to the Company's Registration Statement on Form S-4 on October 30, 2001, and included in this Registration Statement under "Signatures") S-4 EX-4.1 3 ex4_1.txt EXHIBIT 4.1 U S WEST SAVINGS PLAN/ESOP As Amended and Restated Effective as of June 12, 1998 U S WEST SAVINGS PLAN/ESOP TABLE OF CONTENTS Page PREAMBLE.................................................................... 1 ARTICLE I DEFINITIONS................................................... 2 ARTICLE II PARTICIPATION................................................. 15 2.1 - Eligibility Requirements................................... 15 2.2 - Participation.............................................. 16 2.3 - Reemployment............................................... 16 2.4 - Designation of Beneficiary................................. 17 2.5 - Investment Funds........................................... 17 2.6 - Requirements for Participant Elections..................... 19 ARTICLE III CONTRIBUTIONS................................................. 20 3.1 - Contributions by Participants.............................. 20 3.2 - Before-Tax Contributions................................... 20 3.3 - After-Tax Contributions .................................. 21 3.4 - Employer Matching Contributions............................ 22 3.5 - Rollover Contributions..................................... 24 3.6 - Section 402(g) Limit on Before-Tax Contributions........... 25 3.7 - Section 401(k) Limitations on Before-Tax Contributions..... 25 3.8 - Section 401(m) Limitations on After-Tax Contributions...... 28 3.8A - Section 401(m) Limitations on Employer Matching Contributions.............................................. 30 3.9 - Discretionary Company Contributions........................ 32 3.10 - Limits on Employer and Before-Tax Contributions............ 32 3.11 - Allocation of Certain Forfeitures.......................... 32 3.12 - Valuation of Accounts...................................... 33 3.13 - Minimum Employer Contribution.............................. 34 ARTICLE IIIA ESOP PROVISIONS............................................... 36 3A.1 - ESOP Portion of the Plan................................... 36 3A.2 - Participating Company Contributions........................ 37 3A.3 - Investment of Participating Company Contributions.......... 37 3A.4 - Investment of ESOP Accounts................................ 37 3A.5 - Acquisition Loans.......................................... 37 3A.6 - Allocations to ESOP Accounts............................... 39 3A.7 - Distribution of Dividends.................................. 39 i 3A.8 - Provision for Allocation of ESOP Shares in Connection with Change in Control.......................................... 39 3A.9 - ESOP Diversification....................................... 41 ARTICLE IV LIMITATION ON ANNUAL ADDITIONS................................ 42 ARTICLE V VESTING....................................................... 43 5.1 - Fully Vested Accounts...................................... 43 5.2 - ESOP Account............................................... 43 ARTICLE VI DISTRIBUTIONS................................................. 45 6.1 - Distribution of Benefits after Termination of Employment... 45 6.2 - Distribution While a Participant is an Employee............ 48 6.3 - Distributions to Beneficiary(ies).......................... 51 6.4 - Distributions to Alternate Payees.......................... 52 6.5 - Inability to Locate Participant; Forfeitures of Small Amounts.................................................... 52 6.6 - Direct Rollovers........................................... 53 6.7 - Timing Distributions and Withdrawals....................... 53 6.8 - Return of Basis............................................ 53 ARTICLE VII NAMED FIDUCIARIES - ALLOCATION OF RESPONSIBILITIES.............................................. 53 7.1 - No Joint Fiduciary Responsibilities........................ 53 7.2 - The Participating Companies................................ 54 7.3 - U S WEST................................................... 54 7.4 - The Committee.............................................. 54 7.5 - The Investment Committee................................... 54 7.6 - Delegation................................................. 55 7.7 - The Trustee................................................ 55 7.8 - Allocation of Fiduciary Responsibilities................... 55 7.9 - Organization of the Committee.............................. 56 7.10 - Agent for Process.......................................... 57 7.11 - Claims Procedure........................................... 57 ARTICLE VIII TRUST AGREEMENT - INVESTMENTS................................. 58 8.1 - Trust Agreement............................................ 58 8.2 - Expenses of Trust.......................................... 58 ARTICLE IX PARTICIPATING COMPANIES....................................... 58 9.1 - Adoption of Plan........................................... 58 ii 9.2 - Agency of U S WEST......................................... 58 9.3 - Disaffiliation and Withdrawal From Plan.................... 59 ARTICLE X AMENDMENT AND TERMINATION..................................... 59 10.1 - Amendments................................................. 59 10.2 - Discontinuance or Termination of Plan...................... 60 10.3 - Failure to Contribute ..................................... 60 10.4 - Plan Merger or Consolidation; Transfer of Plan Assets...... 60 ARTICLE XI MISCELLANEOUS................................................. 61 11.1 - Contributions Not Recoverable.............................. 61 11.2 - Limitation on Participant's Rights......................... 61 11.3 - Receipt or Release......................................... 61 11.4 - Alienation................................................. 61 11.5 - Military Service........................................... 62 11.6 - Governing Law.............................................. 62 11.7 - Headings, etc. Not Part of Plan............................ 62 11.8 - Masculine Gender Includes Feminine and Neuter.............. 62 11.9 - Instruments in Counterparts................................ 63 11.10 - Loans to Account Owners.................................... 63 11.11 - Top-Heavy Plan Requirements................................ 65 11.12 - Voting Rights.............................................. 65 11.13 - Payments Due Minors or Incapacitated Persons............... 66 APPENDIX A TOP-HEAVY PROVISIONS iii U S WEST SAVINGS PLAN/ESOP PREAMBLE U S WEST, Inc., a Delaware corporation ("U S WEST"), established the U S WEST Savings and Security Plan/ESOP, effective January 1, 1984 (the "Plan"). The Plan has subsequently been amended, been merged with the U S WEST Savings Plan/ESOP for Salaried Employees, and been renamed the U S WEST Savings Plan/ESOP. The Plan's most recent favorable determination letter is dated March 6, 1997. This Plan document is effective as of the Separation Time (as defined herein, generally June 12, 1998), which is the date that the communications group and the media group separated into two public companies. The Plan and Trust are intended to comply with the provisions of the Internal Revenue Code of 1986, as amended, and the Employee Retirement Income Security Act of 1974, as amended. Each Appendix is a part of this Plan. It is intended that an Appendix will be used to address any special situations that affect the Plan. The Plan has several purposes. The purposes of the Savings Plan portion of the Plan, which is a profit-sharing plan, are to provide a convenient way for Management and Occupational employees to save on a regular and a long-term basis and to encourage such employees to make and continue careers with U S WEST and its subsidiaries. The purposes of the employee stock ownership plan portion of the Plan, which is a stock bonus plan, are to provide eligible employees with an opportunity to acquire and hold for long-term investment an ownership interest in U S WEST, and to provide such employees with a voice in major decisions affecting U S WEST and an opportunity to share in the fortunes of U S WEST. More than half of the assets in the employee stock ownership plan portion of the Plan shall be invested in U S WEST Shares at all times. In order to accomplish these purposes, the Company herein established this Plan to provide incentives and security for its employees and their beneficiaries. Except as provided by applicable law, the Trust created pursuant to this Plan (incorporated herein by this reference) and its assets shall not be used for, or diverted to, purposes other than the exclusive benefit of Participants or their beneficiaries. This Plan is intended to be a profit sharing plan and employee stock ownership plan. Contributions may be made to this Plan without regard to the current or accumulated profits of the Company. 1 ARTICLE I DEFINITIONS Whenever the following terms are used in this Plan, with the first letter capitalized, they shall have the meanings specified below. 1.1 "Account" or "Accounts" shall mean Savings Accounts and ESOP Accounts. 1.2 "Account Owner" shall mean a Participant who has an Account balance, an Alternate Payee who has an Account balance or a Beneficiary who has obtained an interest in the Account of the previous Account Owner because of the previous Account Owner's death. 1.3 "Acquisition Loan" shall mean a loan or other extension of credit used by the Trustee to finance the acquisition of U S WEST Shares, or to repay and refinance, to the extent permitted by law, a prior Acquisition Loan. 1.4 "After-Tax Account" shall mean the Account that is credited with After-Tax Contributions to the Plan in accordance with Section 3.3, together with the investment earnings (or losses) thereon. The After-Tax Account has separate subaccounts for matched and unmatched After-Tax Contributions, as well as for pre-87 and post-86 After-Tax Contributions. 1.5 "After-Tax Contributions" shall mean an amount that a Participant elects to have deducted from his salary or wages and contributed to the Participant's After-Tax Account, after income taxes have been withheld on such amounts. After-Tax Contributions shall be made by payroll deduction in accordance with the Participant's election. 1.6 "Alternate Payee" shall mean a Participant's spouse, former spouse, child, or other dependent who is recognized by a QDRO as having a right to receive all, or a portion of, the benefits payable under this Plan with respect to such Participant. 1.7 "Annual Additions" shall mean the sum credited to a Participant's Accounts for any Plan Year of (a) Participating Company contributions, (b) voluntary contributions, (c) forfeitures, (d) amounts credited to an individual medical account, as defined in section 415(l)(2) of the Code which is part of a Defined Benefit Plan maintained by the Company or a Related Company, and (e) amounts attributable to post-retirement medical benefits allocated to the separate account required with respect to a Key Employee (as defined in Section A.2(e) of Appendix A to the Plan) under a welfare benefit plan (as defined in section 419(e) of the Code) maintained by the Company or a Related Company. Participating Company contributions applied to the payment of interest on an Acquisition Loan and forfeitures of U S WEST Shares purchased with the proceeds of an Acquisition Loan shall be excluded from a Participant's Annual Addition for a Plan Year if no more than one-third of the Participating Company contribution deductible under section 404(a)(9) of the Code for that Plan Year is allocated to the Accounts of Highly Compensated Employees. The reinstatement of the forfeited benefit of a missing Account Owner pursuant to Section 6.5 is not an Annual Addition nor are rollovers, loan repayments, repayments of forfeitures for rehired Participants as described in Code section 411(a)(7)(B) and 411(a)(3)(D), or direct transfers from one qualified plan to this Plan. 2 1.8 "AT&T" shall mean the American Telephone and Telegraph Company. 1.9 "Before-Tax Account" shall mean the Account that is credited with Before-Tax Contributions as well as any Participating Company contribution made to correct a failed ADP or ACP test pursuant to Sections 3.7(d)(iii) or 3.8(d)(ii), together with any investment earnings (or losses) thereon. The Before-Tax Account has separate subaccounts for matched and unmatched Before-Tax Contributions. 1.10 "Before-Tax Contributions" shall mean an amount contributed to this Plan by a Participating Company in lieu of being paid to a Participant as salary or wages. Before-Tax Contributions shall be made under salary reduction arrangements elected by the Participant with respect to salary or wages not yet paid or otherwise available to the Participant as of the date of the Participant's election. 1.11 "Beneficiary" or "Beneficiaries" shall mean the person or persons or legal entities designated in accordance with the provisions of Section 2.4. 1.12 "Board of Directors" shall mean the Board of Directors of U S WEST. 1.13 "Break in Employment" shall mean any termination of employment with the Company and all Related Companies by reason of resignation, discharge, retirement, disability or death. If a Participant is laid off or if a Participant's disability benefits expire at a time when he is neither an Employee in active service nor on leave of absence, then the Participant shall be deemed to have had a Break in Employment at such time. A transfer by a Participant between Related Companies or between the Company and a Related Company shall not result in a Break in Employment. 1.14 "Claims Administrator" shall mean the Manager-Savings Plan or his delegate who shall have authority to grant or deny claims for benefits under the Plan for all Participating Companies. 1.15 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. 1.16 "Combined Shares Fund" shall mean a fund, maintained only in the ESOP, consisting primarily of U S WEST Shares and MediaOne Group, Inc. common stock, which shall be actively managed by an independent Investment Manager. Subject to the Employee Matters Agreement, all MediaOne Group, Inc. common stock held in the Combined Shares Fund shall be sold or otherwise disposed of prior to June 30, 2000, at which time the U S WEST Shares held in the Combined Shares Fund shall be transferred to the U S WEST Shares Fund and the Combined Shares Fund will cease to exist. 3 1.17 "Committee" shall mean the Employee Benefits Committee referred to in Section 7.4. 1.18 "Company" shall mean U S WEST, Inc., a Delaware corporation, any successor company and any adopting subsidiary approved by U S WEST, Inc., or its successor. 1.19 "Company Discretionary Contribution" shall mean an amount contributed to this Plan by a Participating Company in accordance with Section 3.9. 1.20 "Company Discretionary Contribution Account" shall mean the Account that is credited with Company Discretionary Contributions to the Plan in accordance with Section 3.9, together with the investment earnings (or losses) thereon. 1.21 "Compensation" shall mean the wages, within the meaning of Code section 3401(a), which are paid by the Company or a Related Company to or for an Employee (including amounts paid to the Employee under the Management Separation Plan), all other compensatory payments to an Employee by the Company or a Related Company (in the course of its trade or business) for which the Company or a Related Company is required to furnish the Employee a written statement under Code sections 6041(d), 6051(a)(3) and 6052, and any amounts excluded from the Employee's income under Code section 125 or 402(e)(3). Compensation shall be limited as required by Code section 401(a)(17). 1.22 "Defined Benefit Plan" shall mean a plan described in section 414(j) of the Code. 1.23 "Defined Benefit Plan Fraction" shall mean a fraction, the numerator of which is the projected annual benefit (determined as of the close of the relevant Plan Year) of the Participant under all Defined Benefit Plans maintained by the Company or a Related Company, and the denominator of which is the lesser of (a) the product of 1.25 multiplied by the dollar limitation in effect under section 415(b)(1)(A) of the Code for the Plan Year, or (b) the product of 1.4 multiplied by the amount which may be taken into account under section 415(b)(1)(B) of the Code with respect to the Participant for the Plan Year. 1.24 "Defined Contribution Plan" shall mean a plan described in section 414(i) of the Code. 1.25 "Defined Contribution Plan Fraction" shall mean a fraction, the numerator of which is the sum of the annual additions to a Participant's accounts under all Defined Contribution Plans maintained by the Company or a Related Company, and the denominator of which is the sum of the lesser of (a) or (b) for such Plan Year and for each prior Plan Year of service with one or more Related Companies, where (a) is the product of 1.25 multiplied by the dollar limitation in effect under section 415(c)(1)(A) of the Code for the Plan Year (determined without regard to section 415(c)(6) of the Code), and (b) is the product of 1.4 multiplied by the amount which may be taken into account under section 415(c)(1)(B) of the Code (or section 415(c)(7) of the Code, if applicable) with respect to the Participant for the Plan Year. Solely for purposes of this definition, contributions made directly by an Employee to a Defined Benefit Plan which maintains a qualified cost-of-living arrangement as 4 such term is defined in section 415(k)(2) shall be treated as Annual Additions. Notwithstanding the foregoing, the numerator of the Defined Contribution Plan Fraction shall be adjusted pursuant to Treasury Regulations 1.415-7(d)(1), Questions T-6 and T-7 of Internal Revenue Service Notice 83-10, and Questions Q-3 and Q-14 of Internal Revenue Service Notice 87-21. 1.26 "Direct Rollover" is a payment by the Plan to the Eligible Retirement Plan specified by the Distributee. 1.27 "Distributee" includes an Employee, a former Employee, the surviving spouse of an Employee or former Employee, and an Alternate Payee who is the Employee's or former Employee's spouse or former spouse. 1.28 "Eligible Employee" shall mean: (a) General. An Eligible Employee shall mean an Employee of a Participating Company who is: (i) a regular or regular-term Employee in active service (on a full-time or part-time basis); (ii) a regular flexible Employee; or (iii) a person classified as a temporary or incidental Employee or an intern. (b) Exclusions. An Eligible Employee shall not include any Employee of a Non-Participating Company. Anyone classified as an "occasional employee" or "ETC Employee" shall not be an Eligible Employee. An Eligible Employee shall not include any Leased Employees or any individuals who would be Leased Employees but for their length of service with the Company and Related Companies. An Eligible Employee shall not include any individual who enters into an agreement with the Company stating that he is not to participate in the Plan. (c) Non-resident Aliens. Any non-resident alien who either (i) receives from the Company or a Related Company no earned income (within the meaning of Code section 911(d)(2)) that constitutes income from sources within the United States (within the meaning of Code section 861(a)(3)) or (ii) receives from a Company or a Related Company earned income that constitutes income from sources within the United States, but such income is exempt from United States income tax by an income tax treaty or convention, shall not be an Eligible Employee. 1.29 "Eligible Retirement Plan" shall mean an individual retirement account described in section 408(a) of the Code, an individual retirement annuity described section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401(a) of the Code, that accepts the Distributee's Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution for the Participant's surviving spouse, an Eligible Retirement Plan is an individual retirement account or individual retirement annuity. 1.30 "Eligible Rollover Distribution" shall mean any distribution or withdrawal other than (a) installment payments in a series of substantially equal payments made at least annually and (i) made over the life (or life expectancy) of the Distributee or (ii) made over a specified period of 10 or more years; (b) any distribution to the extent it is required under Code section 5 401(a)(9); (c) the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); (d) a distribution to satisfy the limits of Code section 415 or 402(g); (e) a distribution to satisfy the ADP, ACP, or multiple use tests; (f) distributions under Section 3A.7 of dividends on employer securities; (g) effective January 1, 2000, a hardship distribution under Section 6.2 to an Employee under age 59 1/2; and (h) any other actual or deemed distribution that the Internal Revenue Service announces (pursuant to regulation, notice or otherwise) is not an Eligible Rollover Distribution. 1.31 "Employee" (a) General. "Employee" shall mean any individual employed as a common law employee by any Participating or Non-Participating Company on a full-time or part-time basis who receives Compensation other than a pension, retainer, or fee under contract. (b) Exclusions. An individual shall not be an Employee if he meets any of the following: (i) the individual was performing services for the Company or any Related Company under an agreement, contract, or any other arrangement pursuant to which the individual is characterized or classified by the employing company as an independent contractor (or an employee of an independent contractor); (ii) the individual's payments for services for the Company or any Related Company have not been initially treated by the employing company as subject to wage withholding under the Code and applicable state law; (iii) any individual who was not initially classified by the Company or Related Company as a common law employee of the employing company; (iv) any individual who was initially classified as a Leased Employee; or (v) any other individual who was leased by the Company or a Related Company from an entity that is the individual's employer of record. Notwithstanding paragraph (a) above, if the Company or Related Company determines or agrees that the classification or treatment was incorrect and that the individual was or is in fact a common law employee, such an individual shall not be an Employee (or an Eligible Employee or Participant) either retroactively or prospectively; however, if the Company or Related Company informs the individual in writing that he is an Employee for purposes of the Plan, he shall be an Employee with respect to service after the date specified in such writing. Notwithstanding the foregoing, if an individual files a claim with the Committee in accordance with Section 7.11 within 60 days of such initial classification, and the Committee determines that such classification is incorrect, the determination by the Committee shall be given retroactive effect. (c) Statutory Additions. Leased Employees will be treated as Employees for the purposes of (i) counting service for eligibility and vesting, (ii) determining the Leased Employee's compensation, (iii) satisfying the limit on Annual Additions in Article IV, and (iv) determining if the Plan is top-heavy, unless Leased Employees constitute less than 20% of the Participating Companies' non-highly compensated work force within the meaning of Code section 414(n)(5)(C)(ii), in which case only those Leased Employees who are not covered by a plan described in Code section 414(n)(5)(B) are treated as Employees. In addition, any individual described in subsection (b) who is actually a common-law employee of the Company or a Related Company will be treated as an Employee solely for the purpose of counting service for eligibility and vesting. 6 (d) Example. By way of example, assume a technician is leased from an entity (or hired as an independent contractor) on May 1, 1998. The Company later determines or agrees that the individual has in fact always been a common law employee and reclassifies him as such (including subjecting him to wage withholding) on June 1, 2000; however, he continues as a technician. Solely for purposes of the requirements described in (c)(i) through (c)(iv), this individual will be treated as an Employee on and after May 1, 1998. However, the individual shall not be a Employee (or an Eligible Employee or Participant) for any other purpose with respect to employment either prior or subsequent to June 1, 2000, even though other technicians of the Company are treated as Employees. The individual shall not become an Employee (or Eligible Employee or Participant) unless and until the Company informs the individual in writing that he is an Employee for purposes of the Plan. 1.32 "Employee Matters Agreement" shall mean the Employee Matters Agreement executed by Old U S WEST and USW-C, Inc. (now known as U S WEST, Inc. or the Company) in connection with the corporate split-off of USW-C, Inc. 1.33 "Employer Group" shall mean the Company and all Related Companies. The Employer Group also includes an Interchange Company if the Interchange Agreement provides that the Plan shall recognize the Employee's service with the Interchange Company. The Employer Group also includes a Portability Company if the Portability Agreement provides that the Plan shall recognize the Employee's service with the Portability Company 1.34 "Employer Matching Contribution" shall mean an amount contributed to this Plan by a Participating Company in accordance with Section 3.4. 1.35 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. 1.36 "ESOP" shall mean the employee stock ownership plan portion of the Plan. 1.37 "ESOP Account" shall mean the Account that is credited with payments to the ESOP by a Participating Company in accordance with Sections 3.4 and 3.9, together with the investment earnings (or losses) thereon. The ESOP Account shall be comprised of subaccounts entitled the Matching Contribution Account, the Company Discretionary Contribution Account, and the Pre-85 Matching Account. 1.38 "Fiduciary" shall mean anyone described in section 3(21) of ERISA who is associated in any manner with the control, management, operation, and administration of the Plan or the assets of the Plan, and such term shall be construed as including the term "Named Fiduciary" with respect to those Fiduciaries named in the Plan or who are identified as Fiduciaries pursuant to procedures specified in the Plan. 7 1.39 "Financed Shares" shall mean U S WEST Shares acquired by the Plan with the proceeds of an Acquisition Loan. 1.40 "Global Assets Fund" shall mean a fund to be invested in a broad range of securities of U.S. and non-U.S. issuers. U.S. equity investments will include large, intermediate and small capitalization companies. The equity securities in the non-U.S. component will typically include shares of larger capitalization companies of the major developed nations. The fund will also invest in debt securities of U.S. and non-U.S. issuers, including governments as well as corporations as may be purchased by the Trustee in its discretion (or in the discretion of an Investment Manager appointed by U S WEST, subject, in either case, to any general investment guidelines that may be adopted by U S WEST), and shall also include short-term obligations of the United States Government and other investments of a short-term nature, including commercial paper, purchased pending the selection and purchase of other investments of the type described in this paragraph and, pending such selection and purchase, may also include bank deposits bearing reasonable interest rates, including deposits with a Fiduciary of the Plan. The non-U.S. fixed income component will typically invest in government issuers. U.S. securities will reflect a broad range of investment maturities, qualities and sectors. 1.41 "Highly Compensated Employee" shall mean, with respect to a determination year, any Employee who: (a) at any time during the determination year or the look-back year was a 5% owner of the Company; or (b) received Compensation from the Company or any Related Company in excess of $80,000 (as adjusted pursuant to section 415(d) of the Code) during the "look-back year" and was a member of the "top-paid group" for such year. The "determination year" shall be the Plan Year for which compliance is being tested, and the "look-back year" shall be the 12-month period immediately preceding the determination year. The "top-paid group" for a look-back year shall consist of the top 20% of Employees ranked on the basis of Compensation received during the year excluding Employees described in sections 414(q)(5) and 414(q)(8) of the Code and Treasury Regulations thereunder. 1.42 "IMC" shall mean the U S WEST Investment Management Company. 1.43 "Interchange Agreement" shall mean the agreement made between Old U S WEST, AT&T and one or more other companies in connection with the reorganization of AT&T and its subsidiaries on January 1, 1984, which agreement provides for the portability of benefits with respect to certain Employees who are employed by a Participating Company and were previously employed by an Interchange Company, or who are employed by an Interchange Company and were previously employed by a Participating Company. An Interchange Agreement shall be applicable for an interchange period, which shall be such period of time as is specified in the Interchange Agreement. 1.44 "Interchange Company" shall mean a company, other than a Participating Company which is a party to the Interchange Agreement, and any subsidiary or affiliate of such company identified in the Interchange Agreement, but only so long as the Interchange Agreement is in full force and effect. Notwithstanding any other provision of the Plan, any reference to a person employed by an Interchange Company (or any similar reference) shall be limited to employees covered by the Interchange Agreement. 8 1.45 "Interest Income Fund" shall mean a fund to be invested in a diversified portfolio consisting of fixed income investments and agreements in support of capital preservation and liquidity. The fixed income investments will, in each case, represent an issuer's promise to repay principal plus a rate of interest, and may include, but are not limited to, group annuity contracts with life insurance companies, deposit agreements with banks, obligations of the United States Government or its agencies, asset-backed securities and other high quality fixed income securities. The fund will be managed to provide a stable rate of return consistent with the preservation of principal. As in all investments, there is some risk of loss. 1.46 "International Stock Fund" shall mean a fund that invests chiefly in common stocks issued by non-U.S. companies and securities of companies whose principal markets are outside the U.S. at the discretion of the Trustee (or in the discretion of an Investment Manager, subject, in either case, to any general investment guidelines that may be adopted by U S WEST). However, the fund may invest in short-term and long-term debt securities or preferred stocks when market and economic conditions warrant. Since the fund can invest in non-dollar denominated securities, it may hedge against possible variations in exchange rates between currencies by purchasing or selling currency futures. 1.47 "Investment Committee" shall mean the Plan Investment Committee referred to in Section 7.5. 1.48 "Investment Fund" shall mean one of the funds established by IMC for the investment of the assets of the Plan pursuant to Section 2.5. 1.49 "Investment Manager" shall mean a Fiduciary designated by IMC under this Plan to whom has been delegated the responsibility and authority to manage, acquire or dispose of Plan assets: (a) who (i) is registered as an investment adviser under the Investment Advisers Act of 1940; (ii) is a bank, as defined in that Act; or (iii) is an insurance company qualified to perform investment advisory services under the laws of more than one state; and (b) who has acknowledged in writing that he is a Fiduciary with respect to the management, acquisition, and control of Plan assets. 1.50 "Leased Employee" shall mean any leased employee, within the meaning of Code section 414(n), of the Company or a Related Company. 1.51 "Management Employee" shall mean an Employee of a Participating Company whose pay is at a monthly or annual rate and whose position is not subject to automatic wage progression. 1.52 "Matching Contribution Account" shall mean the Account that is credited with payments to the ESOP by a Participating Company in accordance with Section 3.4, together with the investment earnings (or losses) thereon. The Matching Contribution Account may contain separate subaccounts for any reason, 9 such as for amounts contributed to the PAYSOP, for allocations of U S WEST Shares acquired by an Acquisition Loan, and for allocations of U S WEST Shares not acquired by an Acquisition Loan. 1.53 "Matching Formula" shall mean the formula under which allocations are made to the respective Matching Contribution Accounts of Participants set forth in Section 3.4(b) and (c). 1.54 "MediaOne Group Shares Fund" shall mean a fund invested in MediaOne Group, Inc. common stock (which prior to the Separation Time was U S WEST Media Group stock). 1.55 "Media Participants" shall mean Media Employees and Terminated Media Employees, as such terms are defined in the Employee Matters Agreement. 1.56 "Minimum Employer Contribution" shall mean contributions made by a Participating Company in accordance with the provisions of Section 3.13. 1.57 "Non-Participating Company" shall mean any Related Company that is not a Participating Company. 1.58 "Normal Retirement Age" shall mean a Participant's 65th birthday. 1.59 "Occupational Employee" shall mean an Employee of a Participating Company who is not a Management Employee. 1.60 "Old U S WEST" shall mean U S WEST, Inc., a Delaware corporation, prior to the Separation Time. Effective at the Separation Time, U S WEST, Inc. was renamed MediaOne Group, Inc. On or after the Separation Time, MediaOne Group, Inc. (and the corporations that are its subsidiaries) shall not be Participating Companies or Non-Participating Companies. 1.61 "Participating Company" shall mean the Company and any Related Company that, in accordance with Article IX, participates in the Plan. A Related Company that becomes a Participating Company agrees to be bound by any Plan amendment. If a Participating Company ceases to be a Related Company, except by merger with the Company or another Related Company, the employment of each Employee of the Participating Company shall be deemed to have terminated for purposes of this Plan, except to any extent any such individual is required by law to continue to be treated under the Plan as an Employee of a Participating Company. 1.62 "Participant" shall mean an Employee or former Employee who has an Account balance in this Plan. 1.63 "Personal Choice Retirement Account" or "PCRA" shall mean an investment alternative in which, a Participant or Alternate Payee may direct the investment among designated mutual funds, common stocks and bonds and other fixed-income investments. 10 1.64 "Plan" shall mean the U S WEST Savings Plan/ESOP set forth herein, now in effect or hereafter amended. 1.65 "Plan Administrator" shall mean the Committee. 1.66 "Plan Year" shall mean the 12 consecutive-month period ending on December 31. The Plan Year shall be the limitation year for purposes of section 415 of the Code. 1.67 "Portability Agreement" shall mean the agreement made effective January 1, 1985 between Old U S WEST, and one or more other companies to implement certain mandatory portability legislation passed by Congress, which agreement provides for the portability of benefits with respect to certain Employees who are employed by certain Participating Companies and were previously employed by a Portability Company, or who are employed by a Portability Company and were previously employed by certain Participating Companies. 1.68 "Portability Company" shall mean a company other than a Participating Company which is party to the Portability Agreement and any subsidiary or affiliate of any such company identified as an interchange company in the Portability Agreement. Notwithstanding any other provisions of the Plan, any reference to a person employed by a Portability Company (or any similar reference) shall be limited to "covered employees" as defined in the Portability Agreement. 1.69 "Pre-85 Matching Account" shall mean the subaccount in the ESOP Account that was credited with the match for management employees before 1985, together with the investment earnings (or losses) thereon. 1.70 "Qualified Domestic Relations Order" ("QDRO") shall mean a domestic relations order which meets the requirements for assignment of retirement benefits under section 206(d) of ERISA and section 414(p) of the Code. 1.71 "Related Company" shall mean (a) each corporation which is a member of a controlled group of corporations (within the meaning of section 1563(a) of the Code, determined without regard to section 1563(a)(4) and (e)(3)(C) thereof) of which the Company is a component member, (b) each entity (whether or not incorporated) which is under common control with the Company, as such common control is defined in section 414(c) of the Code, (c) any organization which is a member of an affiliated service group (within the meaning of section 414(m) of the Code) of which the Company or a Related Company is a member, and (d) any organization which is required by regulations issued under section 414(o) of the Code to be treated as a Related Company. For the purposes of Article IV of this Plan the phrase "more than 50%" shall be substituted for the phrase "at least 80%" each place it appears in section 1563(a)(1) of the Code. The term "Related Company" shall also include each predecessor employer to the extent required by section 414(a) of the Code. 1.72 "Rollover Account" shall mean the Account that is credited with the amount, if any, received by the Plan in accordance with Section 3.5 as a rollover contribution, together with the investment earnings (or losses) thereon. 11 1.73 "Savings Account" shall mean the Account in the Savings Plan that is credited with Before-Tax Contributions, After-Tax Contributions, and rollover contributions (described in Section 3.5), together with the investment earnings (or losses) thereon. The Savings Account shall be comprised of subaccounts entitled the Before-Tax Account, the After-Tax Account, and the Rollover Account, each of which may in turn have subaccounts. 1.74 "Savings Plan" shall mean the savings plan portion of the Plan. 1.75 "Savings Plan Eligible Earnings" shall mean the remuneration that is used to determine the benefits in this Plan. (a) Included Items. Savings Plan Eligible Earnings shall include: (i) basic salary rate for Management Employees or base pay for Occupational Employees (including any elective salary deferrals that excluded from federal taxable income pursuant to Code sections 402(e)(3) or 125), (ii) annual lump sum merit awards (or a pro rata portion thereof paid to Employees terminating employment under the Management Separation Plan), (iii) awards under short-term incentive plans for senior management, (iv) merit awards for performance on specific job projects; (v) annual lump sum team incentives and gain share awards, (vi) retroactive wage increases, (vii) incentive compensation including marketing and team incentive compensation, as determined from payroll records, (viii) pay in lieu of unused vacation, but only for Employees terminating under the Management Separation Plan, (ix) the 60-day transition pay for participants in the Management Separation Plan, (x) short-term disability benefits paid to an Eligible Employee under the U S WEST Disability Plan or under the terms of a Participating Company's predecessor Sickness and Accident Disability Benefit Plan received by a Participant who is absent on account of disability; 12 (xi) effective January 1, 1997, all amounts received by a Participant who is on a leave of absence, including a military or political leave of absence, approved by the Participating Company with which the Participant is employed, (xii) commissions, (xiii) for an Occupational Employee only, imputed base pay for non-paid union time solely related to U S WEST business, and any other payments similar in nature bargained for by the Employee's collective bargaining representative, and (xiv) lump sum or biweekly payments under the Reassignment Pay Protection Allowance. (b) Excluded Items. Savings Plan Eligible Earnings shall not include: (i) overtime, (ii) shift differentials, (iii) personal vehicle reimbursements, (iv) awards under any senior management long term incentive plans, (v) compensation received from a non-qualified deferred compensation plan, (vi) other premium pay including awards associated with any type of Employee suggestion plan or special community service project, (vii) payments received from redeployment or severance plans, (viii) differentials based on geographic location, (ix) pay in lieu of unused vacation (except as expressly included above), (x) workers' compensation payments, (xi) foreign service premiums, differentials, or housing allowances. (c) Limits. Savings Plan Eligible Earnings in any Plan Year shall not exceed the limit under Code section 401(a)(17) for that Plan Year, for the purpose of determining the maximum match or the maximum amount of After-Tax or Before-Tax Contributions that a Participant can make. A Participant may only elect to make Before-Tax and After-Tax Contributions from his first $150,000 (or whatever the Code section 401(a)(17) limit is for the Plan Year) of Savings Plan Eligible Earnings for the Plan Year that he receives while eligible to make Before-Tax and After-Tax Contributions. 13 (d) Time Period for Measuring Savings Plan Eligible Earnings. (i) General. Savings Plan Eligible Earnings shall only include amounts paid to an Eligible Employee, except as provided in paragraph (ii) below. Savings Plan Eligible Earnings shall only include amounts paid after the Employee has satisfied the participation requirements described in Article II, and for purposes of calculating the match, shall only include amounts paid after the Employee has become eligible to receive a match. (ii) Trailing Pay. Savings Plan Eligible Earnings shall also include amounts that are paid in the month in which the Eligible Employee terminates employment with the Company and Related Companies or in any of the following three months. 1.76 "Separation Time" shall be defined in accordance with the Employee Matters Agreement, generally June 12, 1998. 1.77 "Service" shall generally mean the duration of an Employee's employment with the Employer Group. Sections 5.2(b) and 5.2(c) contain special rules for calculating Service for vesting purposes. Service includes all time that was recognized as Service before the Separation Time under the prior terms of the Plan. After the Separation Time, the following additional periods are included in Service (but not double-counting any Service). (a) Service includes the period commencing on the day the Employee first performs an hour of work for the Employer Group (upon rehire or initial hire) and ending on the Employee's Severance Date. (b) Service includes service in the Armed Forces of the United States or the Public Health Service of the United States as a result of which such Employee is entitled to reemployment rights from the Employer Group pursuant to applicable federal law, provided the Employee returns to work within the time period specified in such law. (c) Service includes any period between an Employee's Severance Date and the date he subsequently performs an hour of work for the Employer Group upon rehire, but only if such period is less than twelve months long. 1.78 "Severance Date" shall mean the date on which an Employee resigns, retires, is discharged, or dies, or, if earlier, the first anniversary of the first day the Employee is absent from service (with or without pay) with the Employer Group for any reason other than resignation, retirement, or discharge (such as vacation, holiday, sickness, leave of absence or layoff). However, if the Employee is absent from service (a) by reason of the pregnancy of the Employee, (b) by reason of the birth of a child of the Employee, (c) by reason of the placement of a child with the Employee in connection with the adoption of such child by such Employee, or (d) for purposes of caring for such child for a period beginning immediately following such birth or placement, the 14 Severance Date shall be the second anniversary of the first day the Employee was absent from service and the period between the first and second anniversaries of the first day of absence is not included in Service. 1.79 "Testing Compensation" shall mean any definition of compensation for a Plan Year, as selected by the Committee, that satisfies the requirements of Code section 414(s) and the regulations promulgated thereunder. The definition of Testing Compensation used in one Plan Year may differ from the definition used in another Plan Year. Testing Compensation shall be limited as required by Code section 401(a)(17). 1.80 "Trust" shall mean the trust that has been established to hold and invest contributions under this Plan. 1.81 "Trustee" or "Trustees," (if more than one is appointed and acting) shall mean the trustee or trustees, whether original or successor, appointed under the Trust. 1.82 "Units" shall mean the units referred to Section 3.12. 1.83 "U.S. Asset Allocation Fund" shall mean a fund invested in a mix of U.S. stock, bond and money market portfolios. The Fund periodically shifts its asset allocation to emphasize the asset classes that offer the best investment value, while considering investment risk. 1.84 "U.S. Stock Fund" shall mean a passive fund invested in a portfolio of common stocks that closely tracks the return of the S&P 500 Index. 1.85 "U S WEST" shall mean U S WEST, Inc., a Delaware corporation, and any successor entity. 1.86 "U S WEST Shares" shall mean the common shares of U S WEST. 1.87 "U S WEST Shares Fund" shall mean a fund to be invested primarily in U S WEST Shares. The Trustee shall purchase any U S WEST Shares required for the Plan, or cause such shares to be purchased, in the open market or by private purchase, including purchase from U S WEST. Any purchase from U S WEST shall be at the Value on the date of purchase or any more favorable price that may be made available to the Trustee from time to time as a holder of U S WEST Shares. Open market purchases and purchases from U S WEST will be made pursuant to a regular program mutually agreed upon between the Trustee and U S WEST. Subject to Section 3A.7, dividends and other distributions received in cash with respect to U S WEST Shares or MediaOne Group Inc. common stock held in the U S WEST Shares Fund, MediaOne Group Shares Fund or Combined Shares Fund shall be reinvested in the U S WEST Shares Fund. Dividends and other distributions received in the form of U S WEST Shares, whether with respect to U S WEST Shares or MediaOne Group, Inc. common stock held in the U S WEST Shares Fund, MediaOne Group Shares Fund or Combined Shares Fund, shall be held in the U S WEST Shares Fund. 15 1.88 "Valuation Date" shall mean any day that the New York Stock Exchange is open, unless the Committee specifies otherwise. 1.89 "Value" shall mean the value determined as of any Valuation Date, based upon investments and earnings. ARTICLE II PARTICIPATION 2.1 - Eligibility Requirements. ------------------------- (a) Employee's Contributions. An Eligible Employee is eligible to make Before-Tax and After-Tax Contributions to the Plan from his first paycheck in the calendar month following the later of: (i) the completion of three months of Service; or (ii) the date he became an Eligible Employee. See Section 2.3 for rehires. (b) Match. An Eligible Employee is generally eligible to receive an allocation of Employer Matching Contributions after completing one year of Service. See Section 3.4 for details. (c) Rollover. An Eligible Employee is generally able to make a rollover to this Plan on any date on which he is an Eligible Employee. See Section 3.5 for details. (d) Company Discretionary Contribution. An Eligible Employee may receive an allocation of Company Discretionary Contributions, based on his Compensation paid while he was eligible to make Before-Tax and After-Tax Contributions under subsection (a) above. See Section 3.9 for details. (e) Enrolling in the Plan pursuant to Section 2.6 shall signify the Employee's acceptance of the benefits and terms of this Plan and Trust and shall signify the Employee's agreement to make contributions to the Trust pursuant to Article III of this Plan. 2.2 - Participation. ------------- (a) General. An Eligible Employee may continue to participate in the Plan while he remains an Eligible Employee. (b) Retroactive Participation. If the Eligible Employee is not provided with enrollment materials before he became eligible to make contributions to the Plan, then once the enrollment materials are provided to the Eligible Employee, he has 30 days to "enroll retroactively." By enrolling retroactively, the Eligible Employee shall be given the opportunity to make the Before-Tax and After-Tax Contributions he could have made if he had enrolled as early as he could have, and those contributions shall be matched according to the Matching Formula in effect when the make-up contributions are made (or, if greater, according to the Matching Formula in effect when the original contributions could have been made). The make-up contributions shall be subject 16 to the limits described in Article III for the Plan Year in which they were made (rather than the Plan Year in which they could have been made). (c) Trailing Pay. A former Employee may receive some pay after terminating employment ("trailing pay"), as discussed in the definition of Savings Plan Eligible Earnings. To the extent that the trailing pay comprises Savings Plan Eligible Earnings, and if the former Employee was an Eligible Employee when he ceased to be an Employee, the former Employee may make Before-Tax and After-Tax Contributions from the trailing pay, and receive the appropriate match. 2.3 - Reemployment. ------------ (a) Less than 3 Months Prior Service. A rehired Employee who has less than three months of prior Service shall become eligible to make Before-Tax and After-Tax Contributions from his first paycheck in the calendar month following the later of: (i) the completion by the Eligible Employee of three months of Service after rehire; or (ii) the date he becomes an Eligible Employee, provided that he is then an Eligible Employee. (b) 3 Months or More of Prior Service. An Employee who is rehired at a time when he has more than three months of prior Service shall become eligible to make Before-Tax and After-Tax Contributions from his first paycheck in the calendar month after he became an Eligible Employee. 2.4 - Designation of Beneficiary. -------------------------- (a) General. Except as required by subsection (b), each Participant or Alternate Payee shall designate the Beneficiary or Beneficiaries who are to receive any portion of his vested Account after his death, and each Participant or Alternate Payee may change such designation at any time and without the consent of any previously designated Beneficiary. (b) Married Participants. A married Participant's spouse shall be his Beneficiary unless the spouse has consented to the designation of a different Beneficiary. No spousal consent is necessary if it is established (to the satisfaction of a Plan representative) that there is no spouse or that the required consent cannot be obtained because the spouse cannot be located, or because of other circumstances prescribed by Treasury Regulations. To be effective, the spouse's consent must be in writing, witnessed by a notary public, and filed with the Committee. (c) Lack of Beneficiary. In the absence of an effective beneficiary designation as to part or all of a Participant's vested Account, the Beneficiary shall be the Participant's surviving spouse, if any, otherwise the Beneficiary shall be the Participant's estate. In the absence of an effective beneficiary designation as to part or all of an Alternate Payee's vested Account, the Beneficiary shall be the Alternate Payee's estate. When the Beneficiary of a deceased Participant or a deceased Alternate Payee dies, any remaining Account balance shall be paid to the Beneficiary's estate. 17 (d) Special Rules. If a charity or non-profit organization that has been designated as a beneficiary fails to return the required documents within 60 days of being notified of the benefits to be distributed, then that beneficiary shall be treated as having predeceased the Account Owner. 2.5 - Investment Funds. ---------------- The following Investment Funds shall be established under this Plan: (a) Combined Shares Fund (ESOP Account only) (b) U.S. Stock Fund (c) Interest Income Fund (d) U.S. Asset Allocation Fund (e) Global Assets Fund (f) International Stock Fund (g) U S WEST Shares Fund (h) MediaOne Group Shares Fund (i) Personal Choice Retirement Account IMC shall select the specific investments for the Investment Funds (other than the Personal Choice Retirement Account), either by selecting a mutual fund, common, group or collective trust fund, or similar vehicle, or by designating an Investment Manager (or Trustee) who will be responsible for investment of all or a portion of a particular fund. The Employee may designate in accordance with Section 2.6 that amounts contributed to his Savings Account will be initially invested in any one or more of the Investment Funds, other than the Combined Shares Fund, MediaOne Group Shares Fund or Personal Choice Retirement Account, provided that such designation shall be in increments of one percent of the aggregate contributions. Any direction for investment of a Savings Account shall be deemed to be a continuing direction until changed. An Account Owner may direct that the investment of his Savings Account be redirected into any or all other Investment Funds in one percent increments of the aggregate balance in accordance with Section 2.6; provided, however, that transfers may not be made (a) from the Interest Income Fund to the Personal Choice Retirement Account, or (b) from any Investment Fund to the Combined Shares Fund or the MediaOne Group Shares Fund. The preceding sentence shall also apply to the ESOP Account of a former Employee, Alternate Payee, Beneficiary or Participant who can diversify his ESOP Account pursuant to Section 3A.9. When the Account Owner provides an investment direction for his After-Tax or Before-Tax Contributions, the same investment direction will apply to the corresponding match (unless the match must be invested in the U S WEST Shares Fund). See Section 6.1(d)(ii)(C) for restrictions on PCRA investments. The Committee may establish any other rules and regulations regarding the Investment Funds as it deems appropriate in its sole discretion. 18 Participant loans made pursuant to Section 11.10 shall be treated as an investment of the Participant, with the result that all loan repayments, including interest, shall be allocated solely to the borrowing Participant's Account. This Plan is intended to constitute a plan described in section 404(c) of ERISA, and the regulations thereunder. Accordingly, the Committee intends to provide to Account Owner the information described in section 2550.404c-1(b)(2)(i)(B)(1) of the Department of Labor Regulations. In addition, upon request by an Account Owner, the Committee shall provide the information described in sections 2550.404c-1(b)(2)(i)(B)(2) of the Department of Labor Regulations. The Committee shall take such actions and establish such procedures as it deems necessary to ensure the confidentiality of information relating to the purchase, sale, and holding of U S WEST Shares, and the exercise of voting, tender and similar rights with respect to such shares by an Account Owner. Notwithstanding the foregoing, such information may be disclosed to the extent necessary to comply with applicable state and federal laws. In the event of a tender or exchange offer with respect to U S WEST, or in the event of a contested election with respect to the Board of Directors, U S WEST shall, at its own expense, appoint an independent Fiduciary to carry out the Committee's administrative functions with respect to U S WEST Shares. Such independent Fiduciary shall not be an "affiliate" of any Participating Company as such term is defined in section 2550.404c-1(e)(3) of the Department of Labor Regulations. The Committee may take such other actions or implement such other procedures as it deems necessary or desirable in order that the Plan comply with section 404(c) of ERISA. 2.6 - Requirements for Participant Elections. -------------------------------------- (a) This Section 2.6 sets forth the requirements for Participants (and other Account Owners to the extent applicable) to make (i) initial and subsequent elections with respect to investment of contributions into Investment Funds as set forth in Section 2.5, (ii) initial elections, suspensions or changes in Before-Tax Contributions pursuant to Section 3.2, (iii) initial elections, suspensions or changes of After-Tax Contributions pursuant to Section 3.3, (iv) elections with respect to redirection of Account balances into Investment Funds, pursuant to Section 2.5, and (v) requests for distributions pursuant to Section 6.1, voluntary withdrawals pursuant to Sections 6.2 and 6.3 and loans pursuant to Section 11.10. (b) (i) The elections described in subsection (a) shall be made according to such rules and procedures that the Committee establishes. (ii) Elections described in Section 2.6(a)(i), (ii) and (iii) will generally be effective as soon as administratively practicable, except that the initial election is not effective before the date the Participant is eligible to participate in the Plan. 19 (iii) Elections described in Section 2.6(a)(iv) will generally be effective as soon as administratively practicable. (iv) Requests described in Section 2.6(a)(v) will generally be processed on the last Valuation Date of the week in which the notice is given. Proceeds from transactions described in Section 2.6(a)(v) will be delivered as soon as practicable thereafter. (v) Elections under Sections 2.6(a)(i), (ii), and (iii) shall be made through the U S WEST Service Center, unless the Committee determines otherwise. The Committee (or its delegate) shall send the Participant a written confirmation containing the particulars of such election. If the Participant fails to object, in writing, within 120 days after the election was effective that the written confirmation is incorrect, the particulars set forth in such written confirmation shall be deemed conclusive evidence of the election made by the Participant. (c) If an Account Owner properly requested the Committee or Participating Company or recordkeeper to take some action with respect to his Account or his participation in the Plan, and such action was not taken, the Committee shall correct the mistaken action or the omission to act only if the Account Owner notifies the Committee in writing of the mistake or omission within 120 days of the mistake or omission. ARTICLE III CONTRIBUTIONS 3.1 - Contributions by Participants. ----------------------------- Every Participant may make Before-Tax Contributions pursuant to Section 3.2 and/or After-Tax Contributions pursuant to Section 3.3. A Participant may make Before-Tax Contributions and After-Tax Contributions during the same pay period provided that, subject to the limitations of Sections 3.6, 3.7, 3.8, 3.10 and Article IV, the Participant's combined After-Tax Contributions and Before-Tax Contributions for a pay period cannot exceed 16% of the Participant's Savings Plan Eligible Earnings for the pay period. 3.2 - Before-Tax Contributions. ------------------------ (a) Election to Defer. Subject to the limitations in Sections 3.1, 3.6, 3.7, 3.10 and Article IV, each Participant may elect Before-Tax Contributions, in accordance with Section 2.6, in whole percentages from 1% to 16% of the Participant's Savings Plan Eligible Earnings for each payroll period. The Participant's Savings Plan Eligible Earnings shall be reduced by the amount of his Before-Tax Contributions, which shall be credited to the Participant's Before-Tax Account, and shall be made in accordance with rules established by the Committee. See the definition of Savings Plan Eligible Earnings for Participants whose Savings Plan Eligible Earnings exceed the Code section 401(a)(17) limit for the Plan Year. 20 (b) Change in Percentage or Suspension of Before-Tax Contributions. A Participant's Before-Tax Contribution percentage will remain in effect, notwithstanding any change in Savings Plan Eligible Earnings, until the Participant elects to change the percentage. A Participant may elect to suspend, change or resume his Before-Tax Contributions in accordance with the rules set forth in Section 2.6. If a Participant's Before-Tax Contributions are halted during a Plan Year because of some limit in the Plan (as opposed to the Participant's voluntarily suspending his contributions), the Committee shall establish procedures regarding the reactivation of the Participant's election for the next Plan Year. Until changed by the Committee, the procedure will be to (i) automatically increase the Participant's After-Tax Contribution rate, to the extent possible, by the amount of Before-Tax Contributions that the Participant is precluded from making, (ii) if the Participant does not thereafter change his contribution rate, the Committee will reactivate the Participant's Before-Tax Contribution election at the beginning of the next Plan Year, and (iii) if the Participant changed his contribution rate, his election will not be reactivated the next Plan Year. In the event of a change in the Savings Plan Eligible Earnings of a Participant, the Before-Tax Contribution percentage currently in effect shall be applied with respect to such changed Savings Plan Eligible Earnings, without action by the Participant. If a Participant terminates employment with a Participating Company and is reemployed within 30 days by another Participating Company, any previous elections to make Before-Tax Contributions shall remain in effect. (c) Status of Before-Tax Contributions. To make Before-Tax Contributions under this Section, the Participating Company will reduce the Participant's Savings Plan Eligible Earnings by the amount authorized by the Participant and promptly contribute such amount to the Trustee. Before-Tax Contributions constitute Participating Company contributions under the Plan and are intended to qualify as elective contributions under Code section 401(k). 3.3 - After-Tax Contributions. ----------------------- (a) Election to Make After-Tax Contributions. (i) Subject to the limitations of Sections 3.1, 3.8 and Article IV, each Participant may elect After-Tax Contributions on his own behalf, in accordance with Section 2.6, in whole percentages from 1% to 16% of the Participant's Savings Plan Eligible Earnings for each payroll period. Such contributions by Participants shall be credited to the Participant's After-Tax Account, and shall be made in accordance with rules established by the Committee. See the definition of Savings Plan Eligible Earnings for Participants whose Savings Plan Eligible Earnings exceed the Code section 401(a)(17) limit for the Plan Year. (ii) A Participant's rate of After-Tax Contributions may be increased when his Before-Tax Contributions are limited, as described in Section 3.2(b). 21 (b) Change in Percentage or Suspension of After-Tax Contributions. A Participant's After-Tax Contribution percentage will remain in effect, notwithstanding any change in Savings Plan Eligible Earnings, until the Participant elects to change the percentage. A Participant may elect to suspend, change or resume his After-Tax Contributions in accordance with the rules set forth in Section 2.6. In the event of a change in the Savings Plan Eligible Earnings of a Participant, the After-Tax Contribution percentage currently in effect shall be applied with respect to such changed Savings Plan Eligible Earnings, without action by the Participant. If a Participant terminates employment with a Participating Company and is reemployed within 30 days by another Participating Company, any previous elections to make After-Tax Contributions shall remain in effect. (c) Status of After-Tax Contributions. To make After-Tax Contributions under this Section, the Participating Company will deduct from the Participant's Savings Plan Eligible Earnings the amount authorized by the Participant and promptly contribute such amount to the Trustee. 3.4 - Employer Matching Contributions. ------------------------------- (a) Amount of Employer Matching Contribution. The Participating Companies shall make sufficient Employer Matching Contributions to the Plan so that the Matching Contribution Account of each Participant will be allocated with an amount required by (and limited to) the Matching Formula set forth in subsections (b) and (c) below. Such allocations shall be provided through a combination of (i) Financed Shares released as a result of Employer Matching Contributions used to repay an Acquisition Loan and/or (ii) Employer Matching Contributions not used to repay an Acquisition Loan and/or (iii) forfeitures described in Section 3.11. (b) Matching Formula. Subject to the limitations of Sections 3.8A, 3.10 and Article IV and except as provided in subsections 2.2(c) and 3.4(c) below, a Participant shall receive an allocation only with respect to each paycheck made on or after the first day of the month after a Participant has completed one year of Service and while the Participant is an Eligible Employee. If a Participant makes both Before-Tax and After-Tax Contributions for a pay period, the Before-Tax Contributions will be matched first. Subject to the foregoing, the Matching Formula is as follows: (i) Occupational. (A) Before January 1, 1999, the Matching Formula for each Participant who is an Occupational Employee shall be an allocation equal to 70% of the Before-Tax Contributions and After-Tax Contributions made during such pay period by such Participant; provided, however, that the allocation for any such Participant for any pay period shall not exceed 4.2% of such Participant's Savings Plan Eligible Earnings for that pay period. The maximum allocation for the Plan Year for a Participant is equal to 4.2% of the dollar limit under Code section 401(a)(17) for the Plan Year. 22 (B) During 1999, the Matching Formula for each Participant who is an Occupational Employee shall be an allocation equal to 75% of the Before-Tax Contributions and After-Tax Contributions made during such pay period by such Participant; provided, however, that the allocation for any such Participant for any pay period shall not exceed 4.5% of such Participant's Savings Plan Eligible Earnings for that pay period. The maximum allocation for the Plan Year for a Participant is equal to 4.5% of the dollar limit under Code section 401(a)(17) for the Plan Year. (C) Effective January 1, 2000, the Matching Formula for each Participant who is an Occupational Employee shall be an allocation equal to 81% of the Before-Tax Contributions and After-Tax Contributions made during such pay period by such Participant; provided, however, that the allocation for any such Participant for any pay period shall not exceed 4.86% of such Participant's Savings Plan Eligible Earnings for that pay period. The maximum allocation for the Plan Year for a Participant is equal to 4.86% of the dollar limit under Code section 401(a)(17) for the Plan Year. (D) This Section 3.4(b)(i)(D) applies instead of (A), (B), and (C) for Occupational Employees of the Pocatello Customer Service Center. Effective as of April 1, 1998, the Matching Formula for each such Participant shall be an allocation equal to 75% of the Before-Tax Contributions and After-Tax Contributions made during such pay period by such Participant; provided, however, that the allocation for any such Participant for any pay period shall not exceed 4.5% of such Participant's Savings Plan Eligible Earnings for that pay period. The maximum allocation for the Plan Year for such a Participant is equal to 4.5% of the dollar limit under Code section 401(a)(17) for the Plan Year. (E) Effective January 1, 2000, this Section 3.4(b)(i)(E) applies instead of (C) for customer service agents. The Matching Formula for each customer service agent shall be an allocation equal to 25% of his Before-Tax Contributions and After-Tax Contributions made during such pay period; provided, however, that the allocation for any customer service agent for any pay period shall not exceed 1.5% of his Savings Plan Eligible Earnings for that pay period. The maximum allocation for the Plan Year for a customer service agent is equal to 1.5% of the dollar limit under Code section 401(a)(17) for the Plan Year. (ii) Management. The Matching Formula for each Participant who is a Management Employee shall be an allocation equal to 83-1/3% of the Before-Tax Contributions and After-Tax Contributions made during such pay period by such Participant; provided, however, that the allocation for any such Participant for any pay period shall not exceed 5% of such Participant's Savings Plan Eligible Earnings for that pay period. The maximum allocation for the Plan Year for such a Participant is equal to 5% of the dollar limit under Code section 401(a)(17) for the Plan Year. (c) Special Matching Formula Provisions. Notwithstanding subsection (b) above and subject to the limitations of Sections 3.8A, 3.10 and Article IV: 23 (i) In the case of a Participant who is an Occupational Employee employed by U S WEST Dex, Inc., a Colorado corporation, the maximum allocations under the Matching Formula shall be $3,850 for the 1998 Plan Year, $4,500 for the 1999 Plan Year, and $4,860 thereafter, or such other amount as is agreed upon as a result of collective bargaining. (ii) In the case of a Participant employed as of the Separation Time by U S WEST, Inc., allocations under the Matching Formula shall be made in accordance with the applicable formula set forth in subsection (b) for each paycheck made on or after the first day of the month after the Participant has completed three months of Service. (iii) In the case of a Participant employed by U S WEST Dex, Inc., allocations under the Matching Formula shall be made in accordance with the applicable formula set forth in subsection (b) for each paycheck made on or after the first day of the month after the Participant has completed three months of Service. (iv) The Matching Formula shall be suspended in certain situations, as described in Article VI, following a distribution or withdrawal. (v) The Matching Formula may be applied retroactively in certain situations as described in Section 2.2(b). (d) Allocation of Employer Matching Contributions. (i) Each pay period, the Matching Contribution Account maintained for each Participant shall be allocated with the Participant's allocable share, as determined under and limited to the Matching Formula, of (A) Financed Shares released from the loan suspense account (as set forth in Section 3A.6) and (B) Employer Matching Contributions not used to repay an Acquisition Loan and forfeitures described in Section 3.11. For purposes of the Matching Formula, allocations of U S WEST Shares shall be valued based on the Value as of the date of the allocation. Notwithstanding any other provision of the Plan, the allocation under this Section 3.4 for any Participant for any pay period (other than the last pay period of the Plan Year) shall not exceed the amount permitted to be allocated pursuant to the Matching Formula. (ii) In the event that the sum of the value of Financed Shares released pursuant to Sections 3A.5 and 3A.6 for the Plan Year and the Employer Matching Contributions not used to repay an Acquisition Loan exceed the total Value of required allocations as determined under the Matching Formula, such excess Value (which may be converted to a number of excess shares) shall be allocated as of December 31 of such Plan Year. A percentage of such excess Value shall be allocated to the Matching Contribution Account of each Participant who is both an Employee and a Participant on December 31 of such Plan Year; such percentage shall be determined by dividing (i) the total Value of all allocations (as of the appropriate allocation dates) to the Participant's Matching Contribution Account made during the Plan Year pursuant to the Matching Formula, by (ii) the total Value of all allocations (as of the appropriate allocation dates) to the Matching Contribution Accounts of all Participants who are Participants on December 31 of such Plan Year made during the Plan Year pursuant to the Matching Formula. 24 3.5 - Rollover Contributions. ---------------------- (a) An Eligible Employee, regardless of whether he has satisfied the participation requirements of Section 2.1, or a former Employee who retains a vested Account balance under the Plan may, in accordance with procedures approved by the Committee, make a rollover contribution. The rollover contribution may be (i) a direct rollover that meets the requirements of Code sections 401(a)(31) and 402(c) and that comes from another plan that meets the qualification requirements of Code section 401(a), (ii) a rollover that meets the requirements of Code section 402(c) of a distribution from another plan that meets the qualification requirements of Code section 401(a), or (iii) a rollover from an IRA that meets the requirements of Code section 408(d)(3)(A)(ii). (b) The Committee shall develop such other procedures, and may require such information from an individual desiring to make such a transfer, as it deems necessary or desirable to determine that the proposed rollover will meet the applicable requirements of the Code. Upon approval by the Committee, the amount transferred shall be deposited in the Trust and shall be credited to the individual's Rollover Account. Such account shall not be taken into account for purposes of determining Employer Matching Contributions. If the Plan accepts a rollover and subsequently determines that it was not a valid rollover, the Plan shall distribute the invalid rollover (adjusted to reflect investment experience) to the Participant, as soon as administratively practicable, without the Participant's consent. (c) If an Eligible Employee makes a transfer pursuant to this Section 3.5 before completing the requirements of Section 2.1, his Rollover Account shall represent his sole interest in the Plan until he becomes a Participant. Such Eligible Employee shall be entitled to direct the investment of his Rollover Account pursuant to Section 2.5 but shall not be permitted to withdraw or take a loan from the Rollover Account until he has satisfied the requirements of Section 2.1. 3.6 - Section 402(g) Limit on Before-Tax Contributions. ------------------------------------------------ (a) Before-Tax Contributions made on behalf of any Participant under this Plan and all other plans that are described in Section 3.6(c) that are maintained by the Company or a Related Company shall not exceed the limitation under Code section 402(g)(1) (as adjusted by the Secretary of the Treasury) for the taxable year of the Participant. (b) If the dollar limitation provided for in Section 3.6(a) is exceeded, the Participant is deemed to have requested a distribution of the excess amount by March 1 following the close of the Participant's taxable year, and the Committee shall distribute such excess amount, and any income allocable to such amount, to the Participant by April 15th. In determining the excess amount distributable with respect to a Participant's taxable year, excess Before-Tax Contributions previously distributed or redesignated as after-tax contributions for the Plan Year beginning in such taxable year shall reduce the amount otherwise distributable under this subsection (b). Unmatched Before-Tax Contributions shall be distributed first. If a matched Before-Tax Contribution is returned to the Participant, the match associated with that returned Before-Tax Contribution (adjusted to reflect investment experience) shall be forfeited. 25 (c) In the event that a Participant makes Before-Tax Contributions to this Plan and also makes contributions to another plan that is not sponsored by the Company or a Related Company and those contributions are subject to the limit under Code section 402(g), and all such contributions exceed the Code section 402(g) limit for such Participant's taxable year, the Participant may, not later than March 1 following the close of his taxable year, notify the Committee in writing of such excess and request that the Before-Tax Contributions made on his behalf under this Plan be reduced by an amount specified by the Participant. The Committee may then determine to distribute such excess in the same manner as provided in Section 3.6(b). Unmatched Before-Tax Contributions shall be distributed first. If a matched Before-Tax Contribution is returned to the Participant, the match associated with that returned Before-Tax Contribution (adjusted to reflect investment experience) shall be forfeited. 3.7 - Section 401(k) Limitations on Before-Tax Contributions. ------------------------------------------------------ Each Plan Year, the Plan must satisfy the actual deferral percentage test (the "ADP test") that is described in Code section 401(k)(3)(a)(ii) and the regulations. The ADP test shall be performed in accordance with the relevant provisions of the Code and the regulations, and as described more fully in this Section 3.7. Separate ADP tests will be performed for separate groups of Participants where mandatory disaggregation is required by the regulations or where permissive disaggregation is permitted by the regulations and the Committee chooses such permissive disaggregation. Furthermore, where the regulations permit the aggregation of any of the disaggregated groups with another plan or another disaggregated group, the Committee may choose such aggregation. For Plan Years beginning after 1998, the Committee may elect to exclude from the ADP test those non-Highly Compensated Employees who, at the end of the Plan Year (or the Severance Date for those who had a Severance Date during the Plan Year), had not attained age 21 and/or whose period of Service was for less than one year. To the extent permitted in the regulations, Before-Tax Contributions and the contributions discussed in Section 3.7(d)(iii) may be used to satisfy the ACP tests discussed in Sections 3.8 and 3.8A if they are not needed to satisfy the ADP test. Similarly, Participating Company contributions discussed in Section 3.8(d)(ii) may be used to satisfy the ADP test if they are not needed to satisfy the ACP test. (a) If the Committee believes that the ADP test will not be satisfied for a Plan Year, the Committee may reduce the amount of Before-Tax Contributions that some or all Highly Compensated Employees can make for the remainder of the Plan Year. In accordance with any such estimate, the Committee may modify the limits in Section 3.2(a), or set initial or interim limits, for Before-Tax Contributions relating to any Participant or class of Participants. These rules may include provisions authorizing the suspension or reduction of Before-Tax Contributions above a specified dollar amount or percentage of Savings Plan Eligible Earnings. (b) For each Plan Year, an actual deferral percentage will be determined for each Employee who was eligible to make Before-Tax Contributions at some time during the Plan Year. The actual deferral percentage is equal to the total amount of the Employee's Before-Tax Contributions allocated under Section 3.2(a) and Participating Company contributions under Section 3.7(d)(iii) for the Plan Year, divided by the Participant's Testing Compensation for the 26 Plan Year. The actual deferral ratio of a Highly Compensated Employee shall be determined by treating all cash or deferred arrangements maintained by the Company or a Related Company (other than those that cannot be aggregated) as a single arrangement. (c) The average of the actual deferral percentages for Participants who are Highly Compensated Employees for the Plan Year ("High Average") when compared with the average of the actual deferral percentages for Participants who are not Highly Compensated Employees for the Plan Year ("Low Average") must meet one of the following requirements: (i) The High Average is no greater than 1.25 times the Low Average; or (ii) The High Average is no greater than two times the Low Average, and the High Average is no greater than the Low Average plus two percentage points. (d) If the ADP test is not satisfied, the Committee shall decide which one or more of the following methods shall be employed to satisfy the ADP test. All corrections shall be accomplished if possible before March 15 of the following Plan Year, and in no event later than December 31 of the following Plan Year. (i) Excess Before-Tax Contributions for a Plan Year may be redesignated as After-Tax Contributions and accounted for separately pursuant to Section 3.2(d). Excess Before-Tax Contributions, however, may not be redesignated as After-Tax Contributions with respect to a Highly Compensated Employee to any extent that such redesignated After-Tax Contributions would exceed the limits of Sections 3.3 or 3.8 when combined with the other After-Tax Contributions of that Employee for the Plan Year. (ii) Excess Before-Tax Contributions, and any earnings attributable thereto through the end of the Plan Year may be paid to the Participant (subject to required withholding). Unmatched Before-Tax Contributions shall be returned first. If a matched Before-Tax Contribution is returned, then the match associated with it shall be forfeited. (iii) The Participating Companies, in their discretion, may make a contribution to the Plan, which will be allocated as a fixed dollar amount among the Before-Tax Accounts of Participants who are not Highly Compensated Employees and who have met the requirements of Section 2.1. Any such excess Before-Tax Contributions recharacterized as After-Tax Contributions or distributed from the Plan with respect to a Participant for a Plan Year shall be reduced by any amount previously distributed to such Participant under any other provision of Articles III or IV. (e) Excess Before-Tax Contributions shall be determined in the following manner: (i) The amount of aggregate excess Before-Tax Contributions of all Highly Compensated Employees will be determined by the Committee by reducing the actual deferral percentage of the Highly Compensated Employee(s) with the highest actual deferral percentage for the Plan Year by the 27 lesser of: (A) the amount required to enable the Plan to meet the limits in subsection (c) above; or (B) the amount required to cause the actual deferral percentage of such Highly Compensated Employee(s) to equal the actual deferral percentage of the Highly Compensated Employee(s) with the next-highest actual deferral percentage for the Plan Year. The process in the preceding sentence shall be repeated until the Plan satisfies the limits in subsection (c) above. (ii) The amount of excess Before-Tax Contributions of each Highly Compensated Employee will be determined by the Committee by reducing the Before-Tax Contributions of the Highly Compensated Employee(s) with the highest dollar amount of Before-Tax Contributions for the Plan Year by the lesser of: (A) the amount determined under paragraph (i) above; or (B) the amount required to cause the Before-Tax Contributions of such Highly Compensated Employee(s) to equal the Before-Tax Contributions of the Highly Compensated Employee(s) with the next-highest dollar amount of Before-Tax Contributions for the Plan Year. The process in the preceding sentence shall be repeated until the sum of the amounts determined under this paragraph (ii) equals the aggregate amount determined under paragraph (i) above. (iii) The earnings attributable to excess Before-Tax Contributions will be determined in accordance with Treasury Regulations. The Committee will not be liable to any Participant (or his Beneficiary, if applicable) for any losses caused by inaccurately estimating or calculating the amount of any Participant's excess Before-Tax Contributions and earnings attributable to the Before-Tax Contributions. 3.8 - Section 401(m) Limitations on After-Tax Contributions. ----------------------------------------------------- Each Plan Year, the Plan must satisfy the actual contribution percentage test (the "ACP test") that is described in Code section 401(m)(2)(A) and the regulations. The ACP test shall be performed in accordance with the relevant provisions of the Code and the regulations, and as described more fully in this Section 3.8. Separate ACP tests will be performed for separate groups of Participants where mandatory disaggregation is required by the regulations or where permissive disaggregation is permitted by the regulations and the Committee chooses such permissive disaggregation. Furthermore, where the regulations permit the aggregation of any of the disaggregated groups with another plan or another disaggregated group, the Committee may choose such aggregation. Section 3.8A explains the ACP test for the ESOP, and this Section 3.8 explains the ADP test for the After-Tax Contributions. For Plan Years beginning after 1998, the Committee may elect to exclude from the ACP test those non-Highly Compensated Employees who, at the end of the Plan Year (or the Severance Date for those who had a Severance Date during the Plan Year), had not attained age 21 and/or whose period of Service was for less than one year. To the extent permitted in the regulations, Before-Tax Contributions and the contributions discussed in Section 3.7(d)(iii) may be used to satisfy this ACP test if they are not needed to satisfy the ADP test in Section 3.7 or the ACP test in Section 3.8A below. 28 (a) If the Committee believes that the ACP test will not be satisfied for a Plan Year, the Committee may reduce the amount of After-Tax Contributions that some or all Highly Compensated Employees can make for the remainder of the Plan Year. In accordance with any such estimate, the Committee may modify the limits in Section 3.3, or set initial or interim limits, for After-Tax Contributions relating to any Participant or class of Participants. These rules may include provisions authorizing the suspension or reduction of After-Tax Contributions above a specified dollar amount or percentage of Savings Plan Eligible Earnings. (b) For each Plan Year, a contribution percentage will be determined for each Employee who was eligible to make After-Tax Contributions at some time during the Plan Year. The contribution percentage is equal to the ratio of the total amount of the Participant's After-Tax Contributions allocated under Section 3.3 for the Plan Year and any Before-Tax Contributions of the Participant redesignated as After-Tax Contributions under Sections 3.2(d), 3.7(d) and 3.8(h) in the Plan Year in which such excess Before-Tax Contributions would be included in the gross income of the Participant, divided by the Participant's Testing Compensation for the Plan Year. The contribution percentage of a Highly Compensated Employee shall be determined by treating all cash or deferred arrangements maintained by the Company or a Related Company (other than those that cannot be aggregated) as a single arrangement. (c) The average of the contribution percentages for Participants who are Highly Compensated Employees for a Plan Year ("High Average") when compared with the average of the contribution percentages for Participants who are not Highly Compensated Employees for the Plan Year ("Low Average") must meet one of the following requirements: (i) The High Average is no greater than 1.25 times the Low Average; or (ii) The High Average is no greater than two times the Low Average, and the High Average is no greater than the Low Average plus two percentage points. (d) If the ACP test is not satisfied, the Committee shall decide which one or more of the following methods shall be employed to satisfy the ACP test. All corrections shall be accomplished if possible before March 15 of the following Plan Year, and in no event later than December 31 of the following Plan Year. (i) Excess contributions (and any earnings attributable to such excess amounts through the end of the Plan Year) will be distributed to the Participant or Participants. The Plan shall distribute unmatched After-Tax Contributions before distributing any matched After-Tax Contributions. If a matched After-Tax Contribution is distributed, the associated match shall be forfeited. (ii) The Participating Companies, in their discretion, may make a contribution to the Plan, which will be allocated as a fixed dollar amount among the Before-Tax Accounts of Participants who are not Highly Compensated Employees and who have met the requirements of Section 2.1. 29 (e) Excess After-Tax Contributions shall be determined in the following manner: (i) The amount of aggregate excess After-Tax Contributions of all Highly Compensated Employees will be determined by the Committee by reducing the contribution percentage of the Highly Compensated Employee(s) with the highest contribution percentage for the Plan Year by the lesser of: (A) the amount required to enable the Plan to meet the limits in subsection (c) above; or (B) the amount required to cause the contribution percentage of such Highly Compensated Employee(s) to equal the contribution percentage of the Highly Compensated Employee(s) with the next-highest contribution percentage for the Plan Year. The process in the preceding sentence shall be repeated until the Plan satisfies the limits in subsection (c) above. (ii) The amount of excess After-Tax Contributions of each Highly Compensated Employee will be determined by the Committee by reducing the After-Tax Contributions of the Highly Compensated Employee(s) with the highest dollar amount of After-Tax Contributions for the Plan Year by the lesser of: (A) the amount determined under paragraph (i) above; or (B) the amount required to cause the After-Tax Contributions of such Highly Compensated Employee(s) to equal the After-Tax Contributions of the Highly Compensated Employee(s) with the next-highest dollar amount of After-Tax Contributions for the Plan Year. The process in the preceding sentence shall be repeated until the sum of the amounts determined under this paragraph (ii) equals the aggregate amount determined under paragraph (i) above. (iii) The earnings attributable to excess After-Tax Contributions will be determined in accordance with Treasury Regulations. The Committee will not be liable to any Participant (or his Beneficiary, if applicable) for any losses caused by inaccurately estimating or calculating the amount of any Participant's excess After-Tax Contributions and earnings attributable to the After-Tax Contributions. (f) The tests of Sections 3.7(c) and 3.8(c) shall be met in accordance with the prohibition against the multiple use of the alternative limitation under Code section 401(m)(9). In the event such limitations are violated, corrections shall be made in accordance with Section 3.8(d). 3.8A - Section 401(m) Limitations on Employer Matching Contributions. ------------------------------------------------------------- Each Plan Year, the Plan must satisfy the actual contribution percentage test (the "ACP test") that is described in Code section 401(m)(2)(A) and the regulations. The ADP test shall be performed in accordance with the relevant provisions of the Code and the regulations, and as described more fully in this Section 3.8A. Separate ACP tests will be performed for separate groups of Participants where mandatory disaggregation is required by the regulations or where permissive disaggregation is permitted by the regulations and the Committee chooses such permissive disaggregation. Furthermore, where the regulations permit the aggregation of any of the disaggregated groups with another plan or another disaggregated group, the Committee may choose such aggregation. Section 3.8 explains the ACP test for the After-Tax Contributions, and this Section 3.8A explains the ACP test for the match. For Plan Years beginning after 1998, the Committee may elect to exclude from the ACP test those non-Highly Compensated Employees who, at the end of the Plan Year (or the Severance Date for those who had a Severance Date during the Plan Year), had not 30 attained age 21 and/or whose period of Service was for less than one year. To the extent permitted in the regulations, Before-Tax Contributions and the contributions discussed in Sections 3.7(d)(iii) and 3.8(d)(ii) may be used to satisfy this ACP test if they are not needed to satisfy the ADP test in Section 3.7 or the ACP test in Section 3.8. (a) If the Committee believes that the ACP test will not be satisfied for a Plan Year, the Committee may reduce the amount of Before-Tax Contributions and/or After-Tax Contributions that some or all Highly Compensated Employees can make for the remainder of the Plan Year. In accordance with any such estimate, the Committee may modify the limits in Section 3.4, or set initial or interim limits, for Before-Tax and/or After-Tax Contributions relating to any Participant or class of Participants. These rules may include provisions authorizing the suspension or reduction of After-Tax Contributions above a specified dollar amount or percentage of Savings Plan Eligible Earnings. (b) For each Plan Year, a contribution percentage will be determined for each Employee who is eligible to receive an allocation of Employer Matching Contributions (if the Employee makes the requisite After-Tax and/or Before-Tax Contributions). The contribution percentage is equal to the ratio of the total amount of the Participant's Employer Matching Contributions allocated under Section 3.4 for the Plan Year divided by the Participant's Testing Compensation for the Plan Year. (c) The average of the contribution percentages for Participants who are Highly Compensated Employees for the Plan Year ("High Average") when compared with the average of the contribution percentages for Participants who are not Highly Compensated Employees for the Plan Year for the Plan Year ("Low Average") must meet one of the following requirements: (i) The High Average is no greater than 1.25 times the Low Average; or (ii) The High Average is no greater than two times the Low Average, and the High Average is no greater than the Low Average plus two percentage points. (d) If the ACP test is not satisfied, the Committee shall decide which one or more of the following methods shall be employed to satisfy the ACP test. All corrections shall be accomplished if possible before March 15 of the following Plan Year, and in no event later than December 31 of the following Plan Year. (i) Excess Employer Matching Contributions (and any earnings attributable thereto through the end of the Plan Year) that are not vested will be forfeited. (ii) Excess Employer Matching Contributions (and any earnings attributable to such excess amounts through the end of the Plan Year) that are vested will be distributed to the Participant. (e) Excess Employer Matching Contributions shall be determined in the following manner: 31 (i) The amount of aggregate excess Employer Matching Contributions of all Highly Compensated Employees will be determined by the Committee by reducing the contribution percentage of the Highly Compensated Employee(s) with the highest contribution percentage for the Plan Year by the lesser of: (A) the amount required to enable the Plan to meet the limits in subsection (c) above; or (B) the amount required to cause the contribution percentage of such Highly Compensated Employee(s) to equal the contribution percentage of the Highly Compensated Employee(s) with the next-highest contribution percentage for the Plan Year. The process in the preceding sentence shall be repeated until the Plan satisfies the limits in subsection (c) above. (ii) The amount of excess Employer Matching Contributions of each Highly Compensated Employee will be determined by the Committee by reducing the Employer Matching Contributions of the Highly Compensated Employee(s) with the highest dollar amount of Employer Matching Contributions for the Plan Year by the lesser of: (A) the amount determined under paragraph (i) above; or (B) the amount required to cause the Employer Matching Contributions of such Highly Compensated Employee(s) to equal the Employer Matching Contributions of the Highly Compensated Employee(s) with the next-highest dollar amount of Employer Matching Contributions for the Plan Year. The process in the preceding sentence shall be repeated until the sum of the amounts determined under this paragraph (ii) equals the aggregate amount determined under paragraph (i) above. (iii) The earnings attributable to excess Employer Matching Contributions will be determined in accordance with Treasury Regulations. The Committee will not be liable to any Participant (or his Beneficiary, if applicable) for any losses caused by inaccurately estimating or calculating the amount of any Participant's excess Employer Matching Contributions and earnings attributable to the Employer Matching Contributions. 3.9 - Discretionary Company Contributions. ----------------------------------- (a) Each Participating Company may make a Company Discretionary Contribution to the Trust for any Plan Year in such amounts as the Board of Directors shall determine in its sole discretion. Notwithstanding the foregoing, Company Discretionary Contributions shall be subject to the limitations of Section 3.10 and Article IV. U S WEST may direct in its sole discretion that Company Discretionary Contributions may be used to repay an Acquisition Loan. (b) As of the last day of each Plan Year, there shall be allocated from the Company Discretionary Contribution under Section 3.9(a) for the Plan Year and/or the Financed Shares released as a result of such Company Discretionary Contribution to the Company Discretionary Contribution Account of each Participant who is employed on the last day of the Plan Year, an amount equal to that portion of the total allocable amount that the Participant's Compensation bears to the total Compensation of all such Participants. A Participant's Compensation taken into account for this purpose shall be limited to Compensation received during the Plan Year while eligible to make Before-Tax and After-Tax Contributions. If Company Discretionary Contributions are used to repay an Acquisition Loan, only those shares released as a result of such payment shall be allocated under this Section 3.9(b). 32 3.10 - Limits on Employer and Before-Tax Contributions. ----------------------------------------------- (a) Tax-Deductible Contributions. Company contributions for a Plan Year shall not exceed the amount allowable as a deduction for U S WEST's tax year (for federal income tax purposes) ending with or within the Plan Year pursuant to Code section 404, including carryforwards of unused deductions for prior tax years. (b) Timing of Contributions. The Participating Company shall pay to the Trustee any Company Discretionary Contribution or Employer Matching Contribution or other contribution for any Plan Year no later than the last day prescribed by law, including extensions of time, for the filing of U S WEST's federal income tax return for its taxable year ending with or within the Plan Year to which the contribution relates, with the following exceptions. Participating Company contributions made to satisfy the ADP or ACP test shall be paid to the Trustee within one year after the Plan Year to which they relate. Contributions required for qualified servicemen pursuant to Code section 414(u) shall be made as specified in Code section 414(u). 3.11 - Allocation of Certain Forfeitures. --------------------------------- Forfeitures shall be used to restore prior forfeitures for re-employed Participants as described in Section 5.2(d), to pay those expenses of the Plan that are properly payable from the Trust and that are not paid by a Participating Companies or charged to Accounts, or to reduce Participating Company contributions. 3.12 - Valuation of Accounts. --------------------- (a) Unit Accounting. The interest of an Account Owner in each Investment Fund, other than the Personal Choice Retirement Account, shall be represented by Units, which shall be valued and credited to such individual's Accounts as follows: (i) General Rule. On the Valuation Date immediately following the commencement of operation of each Investment Fund, the Account of each individual was (or will be) credited at the rate of one Unit for each dollar invested in each such Investment Fund as of such Valuation Date. Thereafter, the Value of a Unit representing each type of Investment Fund shall be determined at the beginning of each succeeding Valuation Date by dividing the total number of Units representing each type of Investment Fund credited to the Accounts of all Participants, former Employees and Beneficiaries immediately prior to such Valuation Date into the Value of all the assets then held by the Trustee with respect to each Investment Fund. Following such determination of the Value of the Units representing each Investment Fund, the Account of each individual who has selected each Investment Fund shall be credited, as of the end of the Valuation Date as of which the determination is made, with a number of Units representing the amount invested in each Investment Fund determined by dividing the Value of 33 a Unit of each type of investment into the amount of Before-Tax Contributions, After-Tax Contributions, Employer Matching Contributions, Company Discretionary Contributions and rollover contributions to be invested in each type of investment. An individual's Account will also be credited, as of the Valuation Date on which the determination is made, with a number of Units representing investment in the U S WEST Shares Fund determined by dividing the Value of a Unit representing investment in such fund into the amount of the individual's allocable share of any earnings attributable to dividends (but not the dividends themselves) paid with respect to U S WEST Shares held in such fund. (ii) Exceptions to the General Rule. The Committee has the authority to adjust the general procedures outlined in Section 3.12(a)(i) above in order to provide a more equitable result when the Committee determines there are extraordinary circumstances. In addition, the Committee, IMC, Investment Managers, and the Trustee have the following authority. Any Investment Fund may suspend purchases, redemptions, or postpone payment when the Trustee or Investment Manager determines that such suspension is necessary or desirable for the orderly administration or management of the Investment Fund, which could occur, for example, when a relevant exchange is closed, when trading on a relevant exchange is halted or restricted, when there are large redemption requests from Account Owners, or because of a natural disaster where the Investment Fund is managed. The Committee, IMC, Investment Manager, or Trustee shall establish special procedures to value the purchases and redemptions during the business days affected by the suspension. The Committee, IMC, Investment Manager, or Trustee may establish special procedures to value the purchases and redemptions during any period of market upheaval, when transactions are suspended, when there are large redemption requests from Account Owners, or to handle any other extraordinary or abnormal situation. (b) Allocation of Plan Expenses. All expenses of any party lawfully payable from the assets of the Plan shall be paid from such assets except to the extent that U S WEST or its delegate determines otherwise. Such expenses include, without limitation, recordkeeping and administrative fees, consultant fees, and fees for external and internal vendors (e.g. including but not limited to postage, printing and shipping expenses). Unless the Committee directs otherwise, or a Participating Company pays the fee or expense, fees and expenses shall be paid from the following Plan assets. Fees and expenses of an Investment Manager shall be deemed to be part of the cost of maintaining the portion of the Trust assets which the Investment Manager manages, and shall be payable out of that portion of the Trust assets. Consultant and administrative fees related specifically to the Interest Income Fund will be paid out of that fund. Brokerage fees, transfer taxes and other expenses incident to the purchase or sale of securities of the Trust shall be deemed to be part of the cost of such securities, or deducted in computing the proceeds therefrom, as the case may be. Transfer taxes in connection with distribution of U S WEST Shares to Account Owners shall be borne by the Trust. Taxes, if any, on any assets held or income received by the Trust shall be charged appropriately against individual Accounts as the Committee shall determine. Certain transaction fees may be charged directly to the Accounts of the individual who requests the transaction. 34 The Committee may charge an individual's Accounts for any fee or expense that is properly allocable to such Accounts. All other expenses of the Plan not specifically addressed herein shall be charged to Accounts on an equitable basis by the Committee. See also Section 6.5, which addresses certain fees that may be charged against individual Accounts. (c) Other rules. The allocations required by this Section 3.12 shall be made before the allocations required by any other Section are made. If the Committee determines that an alternative method of allocating earnings and losses would better serve the interests of Account Owners or could be more readily implemented, the Committee may substitute such alternative. 3.13 - Minimum Employer Contribution (This Section 3.13 is effective January 1, ------------------------------------------------------------------------ 1999). ----- (a) Each Plan Year, each Participating Company may make contributions to the Plan in the form of employer contributions, in cash or stock, at least equal to a specified dollar amount, on behalf of those individuals who are entitled to an allocation under Section 3.13(b). Such amount shall be determined by the Participating Company, or its delegatee, by appropriate action on or before the last day of its fiscal year that ends with such Plan Year. The Minimum Employer Contribution for a Plan year shall be paid by the Participating Company in one or more installments without interest. The Minimum Employer Contribution shall be deemed to be satisfied for the Plan Year as soon as the total of "employer contributions" for the Plan Year is at least equal to the amount of the Minimum Employer Contribution. For purposes of this Section 3.13(a), "employer contributions" means employer contributions, as defined under section 404 of the Code, including, but not limited to, Before-Tax Contributions, Employer Matching Contributions and other employer contributions. For purposes of deducting the Minimum Employer Contribution, the Participating Company shall make the contribution not later than the time prescribed by the Code for filing the Participating Company's Federal income tax return including extensions, for its taxable year that ends with such Plan Year. Notwithstanding any provision of the Plan to the contrary, the Minimum Employer Contribution made to the Plan by the Participating Company shall not revert to, or be returned to, the Participating Company. (b) Allocation of Minimum Employer Contributions. The Minimum Employer Contribution for the Plan Year shall be allocated as follows. (i) First, the Minimum Employer Contribution for the Plan Year shall be allocated during the Plan Year to each individual who is a Participant at any time during the Plan Year (1) to each such Participant's Before-Tax Account as Before-Tax Contribution pursuant to Section 3.2, (2) to each such Participant's Matching Contribution Account as Employer Matching Contributions resulting from Financed Shares released from the loan suspense account (as set forth in Section 3A.6) pursuant to Section 3.4 and (3) to each such Participant's Matching Contribution Account as Employer Matching Contributions not used to repay an Acquisition Loan pursuant to Section 3.4. 35 (ii) Second, the balance of the Minimum Employer Contribution remaining after the allocation in Section 3.13(b)(i) shall be allocated to the Matching Contribution Account of each individual who is not a Highly Compensated Employee and who is an MEC Participant (as defined below) at any time during the Plan Year and is employed on the last day of the Plan Year, in the ratio that such MEC Participant's Before-Tax Contribution during the Plan Year bears to the Before-Tax Contribution of all such MEC Participants during the Plan Year. (iii) Third, notwithstanding Article IV of the Plan, if the total contributions allocated to a Participant's Accounts including the Minimum Employer Contribution exceed the Participant's maximum Annual Additions limit for any limitation year as a result of the allocation in Section 3.13(b)(ii), then such excess shall be held in a suspense account. Such amounts shall be used to reduce employer contributions in the next and succeeding limitation years. (iv) Fourth, the balance of the Minimum Employer Contribution remaining after the allocation under Sections 3.13(b)(i), (ii) and (iii) shall be allocated as a nonelective contribution to each individual who is not a Highly Compensated Employee and who is an MEC Participant at any time during the Plan Year, in the ratio that such MEC Participant's Savings Plan Eligible Earnings for the Plan Year bears to the Savings Plan Eligible Earnings for the Plan Year of all such MEC Participants. Contributions made pursuant to this subsection 3.13(b)(iv) shall be allocated to the Company Discretionary Contribution Account of such MEC Participant and are distributable only in accordance with the distribution provisions applicable to Company Discretionary Contributions. Contributions made pursuant to this subsection shall be subject to the vesting schedule set forth in Section 5.2(A)(ii). Such contributions shall be invested under the Plan in the same manner as Company Discretionary Contributions. Contributions allocated pursuant to this Section 3.13(b)(iv) that exceed the Participant's maximum Annual Additions limit for any limitation year shall be held in a suspense account. Such amounts shall be used to reduce employer contributions in the next, and succeeding, limitation years. U S WEST may direct in its sole discretion that contributions made pursuant to this subsection may be used to repay an Acquisition Loan. (v) Each installment of the Minimum Employer Contribution shall be held in a contribution suspense account unless, or until, allocated on or before the end of the Plan Year in accordance with this Section 3.13(b). Such suspense account shall not participate in the allocation of investment gains, losses, income and deductions of the Trust as a whole, but shall be invested separately, as directed by the Participating Company, and all gains, losses, income and deductions attributable to such investment shall be applied to reduce Plan expenses, and thereafter, to reduce employer contributions. (vi) The Minimum Employer Contribution allocated to the Matching Contribution Account of a Participant pursuant to Section 3.13(b)(ii) shall be treated in the same manner as Employer Matching Contributions for all purposes of the Plan. (vii) Notwithstanding any other provision of the Plan to the contrary, any allocation of Before-Tax Contributions shall be made under either Section 3.2 or this Section 3.13(b), as appropriate, but not both Sections. Similarly, any allocation of an Employer Matching Contribution shall be made under either Section 3.4 or this Section 3.13(b), as appropriate, but not both Sections. 36 (viii) An "MEC Participant" for purposes of this Section 3.13(b) is any Employee who has satisfied the eligibility requirements of Article II, and is thereby eligible to make Before-Tax Contributions, whether or not such Employee has elected to make contributions. ARTICLE IIIA ESOP PROVISIONS 3A.1 - ESOP Portion of the Plan. ------------------------ This Article IIIA sets forth special provisions applicable only to the ESOP portion of the Plan. The ESOP is an employee stock ownership plan within the meaning of Code section 4975(e)(7). The ESOP is maintained as a portion of the Plan as authorized by Treasury Regulations section 54.4975-11(a)(5). The ESOP shall be comprised of the ESOP Accounts established under the Plan. Any reference in this Article IIIA to the ESOP portion of the Plan shall mean the ESOP Accounts established under the Plan. Unless otherwise specifically stated therein or unless the context otherwise requires, all other Articles of this Plan apply to the Plan as a whole, and not solely to the ESOP portion or the Savings Plan portion of the Plan. 3A.2 - Participating Company Contributions. ----------------------------------- Each Participating Company shall contribute to the ESOP such amounts as are required by Section 3.4 and may contribute to the ESOP such amounts as are determined under Section 3.9. Such contributions may be made in cash or U S WEST Shares. 3A.3 - Investment of Participating Company Contributions. ------------------------------------------------- As directed by U S WEST in its sole discretion, all contributions to the ESOP shall be invested in the U S WEST Shares Fund or used to repay Acquisition Loans. 3A.4 - Investment of ESOP Accounts. The ESOP is designed to invest primarily in qualifying employer securities, as defined in Code section 409(l). More than 50% of the amounts held by the ESOP shall be invested in U S WEST Shares. The following amounts, which are not invested in U S WEST Shares, shall not in the aggregate total 50% or more of the value of the ESOP's assets. (a) Shares of MediaOne Group, Inc. common stock which were held in the ESOP through the Combined Shares Fund or MediaOne Group Shares Fund immediately after the Separation Time. These shares shall be disposed of on or before June 30, 2000, in accordance with the Employee Matters Agreement. 37 (b) Amounts invested in accordance with Sections 3A.7 and 3A.9; (c) Dividends awaiting distribution in accordance with Section 3A.7; and (d) Cash as shall be determined by the Committee to be necessary to meet the needs of the ESOP. 3A.5 - Acquisition Loans. ----------------- The Plan may incur Acquisition Loans from time to time to finance the acquisition of Financed Shares or to repay a prior Acquisition Loan. An installment obligation incurred in connection with the purchase of U S WEST Shares shall constitute an Acquisition Loan. (a) An Acquisition Loan shall be for a specific term, shall bear a reasonable rate of interest and shall not be payable on demand except in the event of default. An Acquisition Loan shall provide for full payment immediately upon a Change in Control (as defined in Section 3A.8). (b) An Acquisition Loan may be secured by a collateral pledge of the Financed Shares so acquired, provided that such pledge does not violate regulations promulgated by the Federal Reserve Board or any other applicable law or regulation. No other Trust Fund assets may be pledged as collateral for an Acquisition Loan, and no lender shall have recourse against Trust Fund assets other than any Financed Shares remaining subject to pledge. Any pledge of Financed Shares must provide for the release of shares so pledged under either the General Rule or the Special Rule (as defined in paragraphs (f) and (g) below). (c) Within a reasonable time after receipt by the Trustee of the proceeds of an Acquisition Loan, the Trustee shall, as directed by the Committee, apply the loan proceeds to acquire U S WEST Shares from either U S WEST or by open market purchases, or to repay an Acquisition Loan. (d) Payments of principal and interest on any Acquisition Loan during a Plan Year shall not exceed an amount equal to the sum of Employer Matching Contributions, Company Discretionary Contributions and Trust Fund earnings in or attributable to the ESOP during or prior to such Plan Year, less payments with respect to the Acquisition Loan in prior Plan Years. For this purpose, Trust Fund earnings in or attributable to the ESOP shall include dividends on Financed Shares held in a loan suspense account, as such term is defined in paragraph (e), earnings on such dividends, earnings on the proceeds of Acquisition Loans awaiting investment in U S WEST Shares, earnings on Employer Matching Contributions and Company Discretionary Contributions, and such other amounts as may be permitted by law. (e) Any Financed Shares acquired by the Trustee shall initially be credited to a "loan suspense account" and shall be allocated to the ESOP Accounts with respect to a Plan Year on the basis of payments on the Acquisition Loan made by the Trustee during the Plan Year. The number of Financed Shares to be released from a loan suspense account for allocation to ESOP Accounts for each Plan Year shall be determined in accordance with the General Rule or the 38 Special Rule as defined in paragraphs (f) and (g) below. With respect to each Acquisition Loan, the Committee shall determine whether the General Rule or the Special Rule is to apply. (f) General Rule: The General Rule is based upon the payment of principal and interest on the Acquisition Loan. For each Plan Year during the duration of the Acquisition Loan, the Committee shall release from the loan suspense account a number of shares equal to the total number of shares held in the loan suspense account immediately prior to the release, multiplied by a fraction in which: (i) the numerator is the amount of principal and interest paid for the Plan Year; and (ii) the denominator is the sum of the numerator plus the principal and interest to be paid for all future Plan Years. (g) Special Rule: The Special Rule is based solely on principal payments. For each Plan Year during the duration of the Acquisition Loan, the Committee shall release from the loan suspense account a number of shares equal to the total number of such shares held in the loan suspense account immediately prior to the release, multiplied by a fraction in which: (i) the numerator is the amount of principal paid for the Plan Year; and (ii) the denominator is the sum of the numerator plus the principal to be paid for all future Plan Years. (h) The Committee may apply the Special Rule only if the Acquisition Loan provides for annual payments of principal and interest at a cumulative rate which is not less rapid at any time than level annual payments of such amounts for ten years, and only if the interest included in any payment is disregarded to the extent that it would be determined to be interest under standard loan amortization tables. The Special Rule shall not be applicable from the time that, by reason of a renewal, extension or refinancing, the sum of the expired duration of the Acquisition Loan, the renewal period, the extension period and the duration of a new Acquisition Loan exceeds ten years. (i) In determining the number of shares to be released for any Plan Year under either the General Rule or the Special Rule: (i) the number of future years under the Acquisition Loan must be definitely ascertainable and must be determined without taking into account any possible extensions or renewal periods; and (ii) if the Acquisition Loan provides for a variable interest rate, the interest to be paid for all future Plan Years must be computed by using the interest rate applicable as of the end of the Plan Year for which the determination is being made. 39 3A.6 - Allocations to ESOP Accounts. ---------------------------- (a) The ESOP Account maintained for each Participant shall be allocated with an amount set forth in Section 3.4(d) and, if applicable, Section 3.9(b). (b) Financed Shares shall be released from a loan suspense account and allocated to ESOP Accounts pursuant to Section 3.4(d) and, if applicable, Section 3.9(b) to the extent that such shares would be released under the General Rule or the Special Rule (whichever is applicable) based on the sum of (i) loan payments already made during such Plan Year, and (ii) Trust Fund assets (subject to the limitation in Section 3A.5(d)) that have been designated by the Committee to be used for loan payments during such Plan Year. The computation shall be made separately with respect to amounts to be allocated under Section 3.4(d) and amounts to be allocated under Section 3.9(b). 3A.7 - Distribution of Dividends. ------------------------- Dividends on the U S WEST Shares held in each ESOP Account shall be deposited in an interest bearing account and distributed in cash to such individual as determined by the Committee. Such dividends may be distributed in cash and will be distributed no later than 90 days after the last day of the Plan Year in which such dividends were paid. Interest earned on the dividends will be allocated to the ESOP Account as reinvested earnings on Employer Matching Contributions. Dividends on the U S WEST Shares held in the loan suspense account described in Section 3A.5 shall be used to repay any outstanding Acquisition Loans. See Section 6.5 for missing Account Owners and uncashed checks. 3A.8 - Provision for Allocation of ESOP Shares in Connection with Change in -------------------------------------------------------------------- Control. ------- (a) Notwithstanding any other provisions of this Plan, the provisions of this Section 3A.8 shall apply. (b) Change in Control Provisions. Upon the occurrence of a Change in Control (as defined in Section 3A.8(f)), the following provisions shall be applicable for the period commencing on the date on which a Change in Control occurs and ending with the earlier of the fifth anniversary of such date or the date on which all unallocated U S WEST Shares have been fully allocated to the ESOP Accounts of Participants (the "Change in Control Period"): (i) upon a Change in Control, U S WEST shall immediately make a contribution to the Plan in an amount sufficient to permit the Trustee to pay off all outstanding Acquisition Loans; (ii) the Trustee shall immediately use such contribution to repay all outstanding Acquisition Loans; 40 (iii) Financed Shares released from a loan suspense account as a result of such prepayment of an Acquisition Loan shall be allocated to the ESOP Accounts of Participants, without regard to the Matching Formula, in proportion to their Compensation for the Plan Year; (iv) to the extent that such allocations of released shares, together with other annual additions, would exceed the limitation in Article IV or would otherwise exceed the limitations imposed by section 415 of the Code for the limitation year, such shares shall be reallocated among other Participants to the maximum extent permitted; (v) any released shares which may not be allocated to Participants' ESOP Accounts in the Plan Year in which the Change in Control occurs shall be held in a section 415 suspense account, pursuant to Treasury Regulations section 1.415-6(b)(6), and shall be allocated to Participants' ESOP Accounts, in proportion to their Compensation, in each subsequent year to the maximum extent permitted by section 415 of the Code. (c) Restrictions on Trustees. The assets of the Plan shall not be transferred to any successor Trustee (whether by spin-off, merger, consolidation, transfer of assets, or otherwise) or to any other funding vehicle unless it is trusteed by a corporate Trustee which has trust assets in excess of ten billion dollars and such successor Trustee specifically agrees in writing to comply with the provisions of this Section 3A.8. (d) Amendment. The provisions of this Section 3A.8 may not be amended during a Change in Control Period without the written consent of a majority of both (i) all Participants who were actively employed by a Participating Company immediately prior to the Change in Control, and (ii) all Participants who are actively employed by a Participating Company at the date of such amendment. A Participant shall not be deemed to have consented in a form approved by U S WEST to any amendments affecting this Section 3A.8 unless actual written consent is received by U S WEST. (e) Restriction on Plan Termination or Merger. The Plan may not be terminated, nor may the Plan be merged or consolidated with, nor may the assets of the Plan be transferred to, any other Plan (other than pursuant to an Interchange Agreement) during any period in which any shares are unallocated. (f) Change in Control. For purposes of this Section 3A.8, a "Change in Control" shall be deemed to have occurred if a change in the beneficial ownership of U S WEST's voting stock or a change in the composition of the Board of Directors is the result of any of the following: (i) any "person" (as such term is used in sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes a beneficial owner of (or otherwise has the authority to vote), directly or indirectly, stock representing 20 percent or more of the total voting power of U S WEST's then outstanding stock, unless through a transaction arranged by, or consummated with the prior approval of the Board of Directors; 41 (ii) if a tender offer (for which a filing has been made with the Securities and Exchange Commission which purports to comply with the requirements of section 14(d) of the Securities Exchange Act of 1934 and the corresponding Securities and Exchange Commission rules) is made for U S WEST Shares, which has not been arranged by or consummated with the prior approval of the Board of Directors, then upon the first to occur: either (i) any time during the offer when the person (using the definition in (i) above) making the offer owns or has accepted for payment U S WEST Shares with 20 percent or more of the total voting power of voting stock, or (ii) three business days before the offer is to terminate unless the offer is withdrawn first if the person making the offer could own, by the terms of the offer plus any shares owned by this person, stock with 50 percent or more of the total voting power of U S WEST stock when the offer terminates; or (iii) any period of two consecutive calendar years during which there shall cease to be a majority of the Board of Directors comprised as follows: individuals who at the beginning of such period constitute the Board of Directors and any new director(s) whose election by the Board of Directors or nomination for election by U S WEST's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved. (g) U S WEST shall give written notice to the Trustee of any of the events described in paragraphs (b)(i), (b)(ii), or (b)(iii) of this Section 3A.8 upon the occurrence of such event. 3A.9 - ESOP Diversification. -------------------- (a) Special One-Time Election. An Employee who has attained age 55 may direct that all or any portion of the amounts credited to his ESOP Account be transferred among the funds specified in paragraphs (b), (c), (d), (e), (f), and (i) of Section 2.5 in accordance with Section 2.6. The direction described in this Section 3A.9(a) may be exercised only one time by any Employee and applies to amounts in the ESOP Account at the time of the direction. (b) Qualified Participant. Each Participant who has attained age 55 and has completed at least 10 years of participation in the ESOP may elect, in accordance with Section 2.6, that any whole percentage of his ESOP Account be transferred among the funds specified in paragraphs (b), (c), (d), (e), (f), and (i) of Section 2.5; provided, however, that he shall have no right to make a transfer election if the value of his ESOP Account, at the time of the transfer, is $500 or less. The election under this Section 3A.9(b) may be made once each Plan Year during the six consecutive Plan Years beginning with the Plan Year in which the Participant first elects a transfer under this subsection. (c) Non-Employee Account Owners. A former Employee, Alternate Payee, or Beneficiary may direct that all or any portion of the amounts credited to his ESOP Account be transferred among the funds specified in paragraphs (b), (c), (d), (e), (f), and (i) of Section 2.5 in accordance with Section 2.6. There is no limitation on the number of such transfers. 42 (d) Pre-85 Match. The Pre-85 Matching Account may be invested in any of the funds specified in paragraphs (b), (c), (d), (e), (f), and (i) of Section 2.5 in accordance with Section 2.6. ARTICLE IV LIMITATION ON ANNUAL ADDITIONS The Annual Additions to all the Accounts of a Participant shall not exceed the lesser of $30,000 (as adjusted by the Secretary of the Treasury) or 25% of the Participant's Compensation from the Company and all Related Companies during the Plan Year. This limitation shall not apply to any contribution for medical benefits (within the meaning of section 419A(f)(2)) after separation from service which is treated as an Annual Addition. In the event that Annual Additions to all the Accounts of a Participant would exceed the limitations of this Article IV, they shall be reduced in the following order: (i) unmatched After-Tax Contributions, (ii) unmatched Before-Tax Contributions, (iii) matched After-Tax Contributions (and the corresponding match), and (iv) matched Before-Tax Contributions (and the corresponding match). The excess Before-Tax or After-Tax Contributions, adjusted to reflect any investment earnings (but not any investment losses), shall be refunded to the Participant, subject to any required withholding. Any excess Employer Matching Contribution shall be placed in a suspense account in the Plan. The amounts in the suspense account shall be used as soon as administratively practicable, at the direction of the Committee, to reduce future Employer Matching Contributions or other contributions from a Participating Company to the Plan. If any Company or any Related Company contributes amounts, on behalf of Participants covered by the Plan, to other Defined Contribution Plans, the limitation on Annual Additions provided in this Article IV of the Plan shall be applied to Annual Additions in the aggregate to the Plan and such other plans. Reduction of Annual Additions, where required, shall be accomplished by first refunding any voluntary contributions to Participants, then by reducing contributions under such other plans pursuant to the directions of the fiduciary for administration of such other plans or under priorities, if any, established by the terms of such other plans, and then, if necessary, by reducing contributions under the Plan. For only those Plan Years beginning before January 1, 2000, the sum of the Defined Benefit Plan Fraction and the Defined Contribution Plan Fraction shall not exceed 1.0. Reduction of contributions to or benefits from all plans, where required, shall be accomplished by first reducing benefits under such other Defined Benefit Plan or plans, then by allocating any excess in the manner set out above with respect to the Plan, and finally by reducing contributions or allocating any excess contributions with respect to other Defined Contribution Plans, if any; provided, however, that adjustments necessary under this or the next preceding paragraph may be made in a different manner and priority pursuant to the agreement of the Committee and the administrators of all other plans covering such Participant, provided such adjustments are consistent with procedures and priorities prescribed by Treasury Regulations under section 415 of the Code. 43 ARTICLE V VESTING 5.1 - Fully Vested Accounts. --------------------- A Participant's Before-Tax Account, After-Tax Account and Rollover Account shall be 100% vested and nonforfeitable at all times. 5.2 - ESOP Account. ------------ (a) The interest of each Participant in his ESOP Account shall vest and become nonforfeitable as follows: (i) Such Account shall become 100% vested at such time that the Participant: (A) is entitled to retire on an immediate service pension under the U S WEST Pension Plan, (B) separates from service at the expiration of Company-provided disability benefits, (C) attains Normal Retirement Age while an Employee, (D) separates from service pursuant to the provisions of the Management Separation Plan or the terms of the applicable bargaining agreement that is similar in nature or, in accordance with a Participating Company's practices with respect to technological displacement or layoff, (E) dies while employed by the Company or a Related Company, or (F) ceases to participate in the Plan as a result of a sale or other disposition which satisfies the requirements of Code section 401(k)(10)(A)(ii) or (iii) by a Participating Company of (1) substantially all the assets used by such Participating Company in a trade or business in which the Participant is employed to an unrelated corporation or (2) its interest in a subsidiary in which the Participant is employed to an unrelated entity or individual. (ii) If paragraph (i) does not apply, the ESOP Account shall become vested in accordance with the following schedule, except that the PAYSOP subaccount of the Matching Contribution Account shall always be 100% vested: 44 Years of Vesting Service Percentage Vested --------------- ----------------- less than 3 0% 3 or more 100% (b) If a rehired Participant has an ESOP Account balance when he is rehired (or if his previously forfeited ESOP Account balance is restored pursuant to subsection (d) below), and the Participant notifies the Committee of his past Service, all Service from both episodes of employment shall be taken into account when determining the vested percentage of his ESOP Account. (c) If a rehired Participant has forfeited his ESOP Account, the forfeiture may be restored under Subsection (d) below. Whether or not such forfeiture is restored, all Service from both episodes of employment shall be taken into account when determining the vested percentage of the ESOP Account if the Participant notifies the Committee of his past Service. (d) A Participant's non-vested interest in his Accounts shall be forfeited on the fifth anniversary of his Severance Date, unless he becomes an Employee before such date or an earlier forfeiture is permitted by one of the following rules. If a Participant receives a distribution of his entire vested interest in his Accounts, his non-vested interest in his Accounts shall be forfeited as of the day he received the distribution. If a Participant has a vested Account balance of $0 when he incurs a Break in Employment, his non-vested interest in his Accounts shall be forfeited as of his last day of employment. Forfeitures shall be applied in accordance with Section 3.11. If a former Participant who has suffered a forfeiture becomes an Employee before the fifth anniversary of his Severance Date, he may repay to the Plan the entire amount previously distributed to him within 60 months after such reemployment; if he does so, any amounts previously forfeited (unadjusted for any increase or decrease in the value of Trust assets subsequent to the date on which the forfeiture occurred) shall be reinstated to the Participant's Accounts within a reasonable time after such repayment. Such reinstatement shall be made from forfeitures of Participants occurring during the Plan Year in which such reinstatement occurs to the extent such forfeitures are attributable to contributions by the same Participating Company and earnings on such contributions; provided, however, if such forfeitures are not sufficient to provide such reinstatement, the reinstatement shall be made from the current year's contribution by that Participating Company to the Plan. (e) Any repaid and reinstated amounts pursuant to Subsection (d) shall be invested according to the Participant's investment direction, except that the portion of the repaid and restored amounts replacing funds attributable to Employer Matching Contributions and Company Discretionary Contributions that must be allocated to the ESOP Account. The number of Units credited to a Participant's Accounts through the investment of the repaid and reinstated amounts shall be based on the Value of the Units representing each type of investment as of the Valuation Date on which such repayment is made. Except for the Units credited to the Participant's Accounts during the Plan Year of distribution and each of the two preceding Plan Years, such Units shall be credited with respect to the Plan Years for which Units were credited to the Participant's Accounts immediately before the distribution which resulted in the forfeiture. For purposes of the preceding sentence, the Value of the Units credited with respect to such Plan Year shall equal the Value, at the time of distribution, of the Units credited to such Plan Year which were distributed. 45 Units credited from the reinstatement of forfeited amounts and from the portion of the repaid amounts attributable to Units credited to the Participant's Accounts during the Plan Year of distribution and each of the two preceding Plan Years shall be credited with respect to the Plan Year in which repayment is made and the preceding two Plan Years. The Units credited with respect to the Plan Year in which repayment is made shall equal the Value, at the time of distribution, of the Units credited with respect to the Plan Year of distribution. The Units credited with respect to each of the two Plan Years preceding the Plan Year of repayment shall equal the Value, at the time of distribution, of the Units credited with respect to each of the two Plan Years, respectively, preceding the Plan Year of distribution. Any amount reinstated pursuant to subsection (d) above shall be treated as a contribution made on the date of reinstatement for purposes of applying Section 6.2 of the Plan. ARTICLE VI DISTRIBUTIONS 6.1 - Distribution of Benefits after Termination of Employment. -------------------------------------------------------- This Section 6.1 contains the rules for distributions once a Participant is no longer on the payroll of the Company or Related Companies. See Section 6.2 for distributions while the Participant is still on the payroll of the Company or a Related Company. See Section 6.3 for distributions to Beneficiaries and Section 6.4 for distributions to Alternate Payees. (a) General Rule. In general, a Participant's distribution shall be processed as soon as practicable after the Participant's Break in Employment, and after the Participant requests the distribution pursuant to Section 2.6. (b) Exceptions to General Rule. (i) Restrictions Imposed by the Code on Before-Tax Accounts. No amount may be distributed to the Participant from his Before-Tax Account after his Break in Employment unless (A) the Break in Employment constituted a separation from service within the meaning of Code section 401(k)(2)(B)(i)(I); (B) the Participant incurred a disability for which he receives disability benefits from the Social Security Administration; (C) the Plan terminates, the Company and Related Companies do not establish or maintain any other defined contribution plan (other than an employee stock ownership plan as defined in Code section 4975(e)(7)), and the Participant receives a lump sum distribution of his Account; (D) the Participant has attained age 59 1/2; (E) the Participant has a financial hardship that would allow him (if he were still an Employee) to take a hardship withdrawal under Section 6.2; (F) the Participant's employer was the Company or a corporate Related Company that sold or disposed of substantially all of the assets used in a trade or business, the Participant continues employment with the acquiring corporation, the Participant 46 elects a lump sum distribution of his vested Account, and the distribution is paid by the end of the second calendar year after the calendar year of the asset sale; or (G) the Company or a corporate Related Company sold or disposed of its interest in a subsidiary employing the Participant, the Participant continues employment with the subsidiary, the Participant elects a lump sum distribution of his vested Account, and the distribution is paid by the end of the second calendar year after the calendar year of the sale or disposition of the subsidiary. (ii) Transfer to Another Plan. No distribution or other payment may be made to a Participant if assets attributable to the Participant's Accounts are transferred to another plan in a transaction described in Section 10.4. (iii) Rehire. No distribution shall be made under this Section after the date a Participant is reemployed by the Company or a Related Company, except for installment payments that were elected before the Participant was reemployed, as provided in Section 6.1(d)(ii)(B). (iv) QDRO. When the Committee receives a signed order from a court that purports to be a QDRO, the Participant may not receive a distribution under this Section until the Committee has finally disposed of the order, except for the minimum distribution under Section 6.1(f) below that is necessary to comply with Code section 401(a)(9). In addition, the Committee may temporarily freeze distributions under this Section (except for the minimum distribution under Section 6.1(f) below that is necessary to comply with Code section 401(a)(9)) because a domestic relations order affecting the Participant is or may be in the process of becoming a QDRO. (v) ESOP Dividends. See Section 3A.7 for the special rules relating to the distribution of dividends on U S WEST Shares in a Participant's ESOP Account. (c) Amount Distributable. The amount of the benefits distributable to a Participant upon a request for distribution following a Break in Employment shall be the vested portion of his Accounts, less the outstanding balance of any loan. See Section 6.1(b)(iv) for temporary freezes when a QDRO is involved. (d) Form of Distribution. (i) Lump Sum. The normal form of distribution shall be a single payment. (ii) Installments. (A) General. A Participant may elect in accordance with Section 2.6 that all of the amount distributable be distributed in the form of approximately equal annual installments to be paid over a period not to exceed the Participant's life expectancy (calculated at the time distributions begin, according to IRS tables, and rounded down to a whole year). Each installment shall consist of an approximately equal number of Units. Installments are paid annually, at approximately the same time each year. A Participant who elects installments may elect a lump sum payment of the remaining balance at any time. 47 (B) Rehire. If a Participant who is receiving installments becomes an Employee again, the installments will continue as originally scheduled, unless the Participant elects to discontinue installments during the period of reemployment. (1) Installments Continued. This clause (1) applies if installments are continued during the later episode of employment. A separate Account will be established for the Participant's benefits for the later episode of employment. The Participant's Account from the earlier episode of employment is not available for distribution under Section 6.2 and is ignored when determining the amount the Participant can borrow under Section 11.10. If the Participant's later episode of employment terminates before all installments are paid, then installment payments will continue to be made on the same schedule, but the amount of each remaining payment will be increased so that the entire vested balance in all the Participant's Accounts (from both episodes of employment) are paid out in the remaining installments. (2) Installments Discontinued. This clause (2) applies if installments are discontinued during the later episode of employment. Benefits from the later episode of employment will be added to the Account containing the benefits from the earlier episode of employment. The Participant may take in-service distributions under Section 6.2 from his entire Account, and may borrow from his entire Account as permitted under Section 11.10. When the Participant again terminates employment, he may make a new distribution election under this Section, and that election shall apply to his entire Account. (C) Installments Unavailable for Participants With PCRA Investments. Effective May 1, 2000, a Participant may not elect installments if any portion of his Account is invested in the PCRA. A Participant who elected installments before May 1, 2000 shall not be permitted to invest any additional amounts in the PCRA, and shall be required to sell all amounts in the PCRA no later than April 30, 2001. (D) Accounts and Investments From Which Installments are Taken. An installment shall be taken pro-rata from each of the Participant's Accounts, in proportion to the vested balance of each Account and pro rata from each investment fund in the Accounts. (iii) Deferred Withdrawals. A Participant who has not elected installment payments may elect, in accordance with Section 2.6, to receive one or two deferred withdrawals in any Plan Year. Deferred withdrawals shall either be (A) not be less than $100 and shall be in increments of $25, or (B) shall be the entire vested Account balance (ignoring any dividends that are awaiting distribution under Section 3A.7). A deferred withdrawal shall be taken from the following Accounts, in the following order: After-Tax Account (unmatched After-Tax Contributions and corresponding earnings distributed before matched After-Tax Contributions and corresponding earnings); ESOP Account; Rollover Account; Before-Tax Account (unmatched Before-Tax Contributions and corresponding earnings distributed before matched Before-Tax Contributions and corresponding earnings). (iv) In-Kind Distributions. All distributions under this Section 6.1 shall be paid in cash except to the extent that the distributed amount was invested in the U S WEST Shares Fund, the Combined Shares Fund, or 48 the MediaOne Group Shares Fund and the Employee elects to receive that portion of his withdrawal in whole shares of common stock of U S WEST, Inc. or MediaOne Group Inc., as applicable (with fractional shares paid in cash). (e) Consent. A Participant must consent to any distribution from his Accounts, with the following exceptions. A Participant's consent is not needed for distributions that are necessary to satisfy the limitations discussed in Articles III and IV. A Participant's consent is not needed for distributions to an Alternate Payee. A Participant's consent is not required for the Plan to make the minimum required distributions discussed in Section 6.1(f). (f) Latest Date of Distribution. A Participant who attains age 70 1/2 during a calendar year must elect a lump sum distribution or installments, with the lump sum or the first installment to be received in the year in which the Participant attains age 70 1/2, or by April 1 of the following year. The second installment shall be received in the year after the year in which the Participant attained age 70 1/2. Subsequent installments shall be received annually. The amount of each installment shall be at least as large as the minimum distribution required under Code section 401(a)(9), which shall be determined by not recalculating any life expectancy. 6.2 - Distribution While a Participant is an Employee. ----------------------------------------------- (a) Partial Withdrawal. (i) Amount of Withdrawal. An Employee may withdraw any specified dollar amount (in $25 increments, with a $100 minimum) from his After-Tax Account and his vested ESOP Account, except for (A) any After-Tax Contribution that was matched during the Plan Year of the withdrawal or the two preceding Plan Years, (B) any ESOP Contribution for the Plan Year of the withdrawal or for the preceding two Plan Years, or (C) investment earnings on the amounts in (A) or (B). (ii) Source of Withdrawal. A withdrawal under this subsection (a) shall be taken first from the Employee's After-Tax Account (to the extent those amounts may be withdrawn), and the remainder of the withdrawal shall be taken from the Employee's ESOP Account. Amounts shall be withdrawn from the After-Tax Account on a first-in-first-out basis, and unmatched After-Tax Contributions and corresponding earnings will be withdrawn before matched After-Tax Contributions and corresponding earnings. (iii) Limits. Only two withdrawals are permitted under this subsection (a) in any one Plan Year. If an Employee takes two withdrawals in a Plan Year, then as soon as administratively practicable after the second withdrawal, the Matching Formula for the Employee shall be zero for the next three months that the Employee makes After-Tax or Before-Tax Contributions. 49 (b) Full Withdrawal. (i) Amount of Withdrawal. An Employee may withdraw the entire amount from his After-Tax Account, his vested ESOP Account, and his Rollover Account, except for any Participating Company contribution for the Plan Year of the withdrawal or for the preceding two Plan Years (or investment earnings thereon). Furthermore, an Employee over age 59 1/2 may elect to withdraw, in addition to those amounts identified in the preceding sentence, the entire amount from his Before-Tax Account. (ii) Limits. Only one full withdrawal is permitted under this subsection (b) in any one Plan Year, except that a second full withdrawal is permitted if it is made in conjunction with a hardship withdrawal under subsection (c). As soon as administratively practicable after the full withdrawal, the Matching Formula for the Employee shall be zero for the next six months that the Employee makes After-Tax or Before-Tax Contributions. (c) Hardship Withdrawal. An Employee under age 59 1/2 may withdraw all or any portion from his Before-Tax Account, provided that the Employee has an immediate and heavy financial need, as defined in paragraph (i), the withdrawal is needed to satisfy the financial need, as explained in paragraph (ii), and the amount of the withdrawal is at least $300 but the amount of the withdrawal does not exceed the limits in paragraph (iii). (i) Financial Need. The following expenses constitute an immediate and heavy financial need: (A) medical care that has been incurred (or payments necessary to obtain medical care) on behalf of the Employee, the Employee's spouse, or the Employee's dependents (as defined in Code section 152); (B) costs directly associated with the purchase of a principal residence of the Employee (excluding mortgage payments); (C) tuition, related educational fees, and room and board for the next 12 months of post-secondary education of the Employee, the Employee's spouse, or the Employee's dependents (as defined in Code section 152); (D) payments needed to prevent the Employee from being evicted from his principal residence; (E) payments needed to prevent the foreclosure on the mortgage on the Employee's principle residence; and (F) any other expenses specifically identified in Treasury Regulation section 1.401(k)-1(d)(2)(iv)(A), as amended. 50 (ii) Satisfaction of Need. The withdrawal is necessary to satisfy the Employee's financial need if (A) the Employee has obtained all withdrawals and all non-taxable loans available from the Company's and any Related Companies' qualified plans, (B) for a period of at least 12 months from the date the Employee receives the withdrawal, he ceases to make After-Tax and Before-Tax Contributions and elective contributions to all qualified and non-qualified plans maintained by the Company or any Related Company, (C) the Before-Tax Contributions that the Employee makes in the calendar year after the withdrawal are limited to the dollar limit in effect under Code section 402(g)(1) for the calendar year after the withdrawal, less the Employee's Before-Tax Contributions made during the calendar year of the withdrawal, and (D) the Employee represents (and the Company does not have actual knowledge to the contrary) that the financial need cannot reasonably be relieved (1) through reimbursement or compensation by insurance or otherwise, (2) by liquidating the Employee's assets, (3) by ceasing After-Tax and Before-Tax Contributions to the Plan and to any other plan maintained by the Company or a Related Company, or (4) by borrowing from commercial sources on reasonable commercial terms. (iii) Maximum Withdrawal. An Employee may not withdraw more than the sum of the amount needed to satisfy his financial need and any taxes and penalties resulting from the withdrawal. The Committee shall establish procedures to determine the amount of any taxes and/or penalties that result from the hardship withdrawal. The maximum withdrawal is the Before-Tax Contributions then in the Employee's Account and any earnings credited to his Before-Tax Account before 1989. (d) Age 70 1/2 Withdrawals. An Employee who attains age 70 1/2 during a Plan Year must make a withdrawal election with respect to the balance in his Accounts. He has two choices, as detailed below. If he does not make a choice before the deadline established by the Committee (the deadline will normally be towards the end of November), he shall receive a single payment of his entire vested Account balance by the end of the Plan Year. (i) Single Payment. He may withdraw his entire vested Account balance by the end of the Plan Year in which he attains age 70 1/2. If any additional amounts are contributed to his Account after the complete withdrawal, then, each succeeding Plan Year (towards the end of the Plan Year) he shall also receive a withdrawal of the entire vested balance in his Accounts. (ii) Installments. He may elect to be paid his entire vested balance in 2 to 15 annual installments. Each installment shall consist of an approximately equal number of Units. Installments are paid annually, on approximately the same date each year. Once the Participant incurs a Break in Employment, each annual installment shall be increased, if necessary, to comply with the minimum distribution required by Code section 401(a)(9). If the Participant is still an Employee after he has received all his installments, he shall receive, each succeeding year, the entire vested balance in his Account. A Participant who has elected to receive installments may subsequently elect at any time to receive the entire remaining vested balance in his Account. 51 (iii) Accounts and Investments From Which Installments are Taken. An installment shall be taken pro-rata from each of the Participant's Accounts, in proportion to the vested balance of each Account and pro rata from each investment fund in the Accounts. (e) Form of Withdrawal. Hardship withdrawals under subsection (d) shall be paid in cash. All other withdrawals under this section 6.2 shall be paid in cash except to the extent that the withdrawn amount was invested in the U S WEST Shares Fund, the Combined Shares Fund, or the MediaOne Group Shares Fund and the Employee elects to receive that portion of his withdrawal in whole shares of common stock of U S WEST, Inc. or MediaOne Group Inc., as applicable (with fractional shares paid in cash). (f) Suspensions. The 3-month suspension in the match for partial withdrawals and the 6-month suspension in the match for full withdrawals shall run consecutively. The 3-month and 6-month suspensions shall also be treated as running during the 12-month suspension of After-Tax and Before-Tax Contributions after a hardship withdrawal. Thus, for example, an Employee who took a full withdrawal and then a hardship withdrawal will resume receiving a match immediately upon resuming his Before-Tax or After-Tax Contributions after the 12-month hardship suspension. (g) QDRO. When the Committee receives a signed order from a court that purports to be a QDRO, the Participant may not receive a distribution under this Section until the Committee has finally disposed of the order. In addition, the Committee may temporarily freeze distributions under this Section because a domestic relations order affecting the Participant is or may be in the process of becoming a QDRO. (h) ESOP Dividends. See Section 3A.7 for the special rules relating to the distribution of dividends on U S WEST Shares in a Participant's ESOP Account. 6.3 - Distributions to Beneficiary(ies). --------------------------------- (a) General. Each Beneficiary shall receive a lump sum payment of the entire amount left to him, unless the Participant elected for the Beneficiary to be paid two annual installments. Payment will be made as soon as administratively practicable following the Participant's death and the Beneficiary's completion of the distribution procedures. The second installment (if there is one) shall be paid approximately one year after the first installment. (b) Death of Beneficiary. If a Beneficiary dies after the Participant but before the lump sum payment or both installments have been made, a lump sum payment of the Participant's remaining Account balance will be made to the Beneficiary's estate. (c) Form of Withdrawal. All distributions under this Section 6.3 shall be paid in cash except to the extent that the withdrawn amount was invested in the U S WEST Shares Fund, the Combined Shares Fund, or the MediaOne Group Shares Fund and the Beneficiary elects to receive that portion of his withdrawal in whole shares of common stock of U S WEST, Inc. or MediaOne Group Inc., as applicable (with fractional shares paid in cash). 52 (d) Accounts and Investments From Which Installments are Taken. Any distribution of less than the entire balance of the Participant's Account shall be taken pro-rata from each of the Participant's Accounts, in proportion to the balance of each Account, and shall be made pro rata from the investment funds in each Account. (e) ESOP Dividends. See Section 3A.7 for the special rules relating to the distribution of dividends on U S WEST Shares in an ESOP Account. 6.4 - Distributions to Alternate Payees. --------------------------------- A QDRO may provide an Alternate Payee with the same distribution options as a Participant who has terminated employment and separated from service within the meaning of Code section 401(k)(2)(B)(i)(I); the QDRO may limit the choices otherwise available to the Alternate Payee. Sections 6.1 and 6.3, which discuss the distribution options of terminated Participants and their Beneficiaries, shall be applied to the Alternate Payee, to the extent permitted by the QDRO, by treating the Alternate Payee as a Participant who has terminated employment and separated from service. 6.5 - Inability to Locate Participant; Forfeitures of Small Amounts. ------------------------------------------------------------- Each Account Owner must file with the Committee from time to time in writing his address, the address of each beneficiary (if applicable), and each change of address. Any communication, statement, or notice addressed to such individual at the last address filed with the Committee (or if no address is filed with the Committee then at the last address as shown on the appropriate Participating Company's records) will be binding on such individual for all purposes of the Plan. The Committee is under no legal obligation to search for or locate an Account Owner, but may decide to use reasonable efforts to do so. If amounts become distributable under the Plan and the Committee is unable to locate the Account Owner to whom the distribution is payable, his Accounts shall be forfeited. The forfeiture shall be dealt with in accordance with Section 3.11. If, after such forfeiture, the missing Account Owner later claims such benefit, such Accounts shall be reinstated from available forfeitures, or if those are insufficient, by an additional Participating Company contribution. The Plan may, at the sole discretion of the Committee, charge a fee to replace uncashed checks from the Plan or to prepare any type of distribution or withdrawal, including corrective distributions pursuant to Article III. For uncashed checks, if the fee is greater than the amount of the uncashed check, and the check has remained uncashed for a certain length of time (as established by the Committee), the Account Owner shall forfeit the entire amount of the uncashed check. For distributions and withdrawals, if the fee is equal to or greater than the amount of the distribution or withdrawal, the Account Owner shall forfeit the entire amount of the distribution or withdrawal. This forfeiture shall be treated in the same fashion as a forfeiture under Section 3.11. 53 6.6 - Direct Rollovers. ---------------- If a Distributee will receive an Eligible Rollover Distribution of at least $200, the Distributee may elect, at the time and in the manner prescribed by the Committee, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover; provided, however, that a Distributee may not elect to have an Eligible Rollover Distribution of less than $500 paid directly to an Eligible Retirement Plan unless the Distributee elects to have the entire Eligible Rollover Distribution paid directly to the Eligible Retirement Plan. 6.7 - Timing of Distributions and Withdrawals. --------------------------------------- In general, any distribution or withdrawal will be processed as soon as administratively practicable, subject to the reasonable procedures promulgated by the Committee and Trustee. However, no payment will be made until the Account Owner has completed the appropriate procedures for requesting a distribution or withdrawal and the Trustee or Committee (as appropriate) has been able to verify the Account Owner's eligibility for the type of distribution or withdrawal that the Account Owner has requested. Payment may be further delayed for any administrative reason, including, for example, but not limited to, the time necessary to liquidate the assets in the Account, the time needed to prepare the check(s), and the time needed to verify the identity of a Beneficiary. 6.8 - Return of Basis. --------------- For purposes of Code section 72, the Plan contains two separate contracts, one for After-Tax Contributions made before 1987 and the investment earnings thereon, and the other for all other contributions and their investment earnings. ARTICLE VII NAMED FIDUCIARIES - ALLOCATION OF RESPONSIBILITIES 7.1 - No Joint Fiduciary Responsibilities. ----------------------------------- The named fiduciaries designated in the Plan or Trust Agreement shall have only the responsibilities specifically allocated to them herein or in the Trust Agreement. Named fiduciaries shall have only the responsibilities specifically allocated to them in such appointment. All allocations of responsibilities to named fiduciaries are intended to be mutually exclusive, and there shall be no sharing of fiduciary responsibilities. Whenever one named fiduciary is required by the Plan, Trust Agreement, or appointment to follow the directions of another named fiduciary, the two named fiduciaries shall not be deemed to have been assigned a shared responsibility, but the responsibility of the named fiduciary giving the directions shall be deemed his sole responsibility, and the responsibility of the named fiduciary receiving those directions shall be to follow them insofar as such instructions are on their face proper under applicable law. In addition, the Company may allocate responsibility for the operation and administration of the Plan in accordance with its terms. 54 7.2 - The Participating Companies. --------------------------- Each Participating Company shall be responsible for: (i) making its respective contributions hereunder and (ii) keeping accurate records with respect to its Employees and their Compensation and furnishing such data to the Committee. 7.3 - U S WEST. -------- (a) Acting in its capacity as Plan sponsor and not as a Fiduciary, U S WEST shall be responsible for: (i) Amendment or termination of the Plan pursuant to the terms of Article X herein; (ii) Subject to Section 7.8(d), appointment of any third party service providers and vendors to the Plan other than fiduciaries; and (iii) Appointment and removal of the members of the Committee and Investment Committee. (b) U S WEST shall also be responsible for exercise of the Plan Administrator's duties in the absence of the Committee. 7.4 - The Committee. ------------- U S WEST or its delegate shall appoint the Committee consisting of not fewer than three nor more than seven persons. The Committee shall be a named fiduciary of the Plan. The members of the Committee shall hold office at the pleasure of U S WEST or its delegate, and shall serve without compensation. The Committee shall comply with the provisions of ERISA pertaining to the powers and responsibilities of administrators and named fiduciaries. The Committee may delegate its responsibility to employees of U S WEST or any Related company or to agents outside of U S WEST and Related Companies. 7.5 - The Investment Committee. ------------------------ U S WEST or its delegate shall appoint the Investment Committee consisting of at least one person, but not more than seven persons. The Investment Committee shall be a named fiduciary of the Plan. The members of the Investment Committee shall hold office at the pleasure of U S WEST or its delegate, and shall serve without compensation. The Investment Committee shall comply with the provisions of ERISA pertaining to the powers and responsibilities of named fiduciaries. The Investment Committee may delegate its responsibility to employees of U S WEST or any Related Company or to agents outside of U S WEST and Related Companies. 55 7.6 - Delegation. ---------- The Committee, the Investment Committee, IMC and the other named fiduciaries may delegate any of their responsibilities hereunder by designating in writing other persons to carry out specified responsibilities, except as may be limited or prohibited by the Code or ERISA. Unless otherwise stated in the delegation, each delegation shall include all power, authority and discretion of the named fiduciary making such delegation with respect to the function delegated. 7.7 - The Trustee. ----------- The Trustee shall be responsible for: (a) the investment of the Trust Fund to the extent and in the manner provided in the Trust Agreement, (b) the custody and preservation of Trust assets delivered to it, and (c) for making such payments from the Trust Fund as the Committee, the Investment Committee or IMC shall direct. 7.8 - Allocation of Fiduciary Responsibilities. ---------------------------------------- (a) The Committee shall be the Plan Administrator and shall have all power and authority necessary for that purpose, including, but not by way of limitation, the full discretion and power to interpret the Plan, to determine the eligibility, status and rights of all persons under the Plan and in general to decide any dispute. The Committee shall direct the Trustee concerning all non-investment related distributions from the Trust Fund, in accordance with the provisions of the Plan and Trust Agreement, and shall have such other powers in the administration of the Trust Fund as may be conferred upon them by the Trust Agreement. The Committee shall maintain all Plan records except to the extent responsibility is delegated to others to maintain records of the Trust Fund. The Committee shall have the discretion and authority to determine conclusively for all parties all questions arising in the administration of the Plan, and any decision of the Committee shall not be subject to further review. (b) The Investment Committee (or its delegate) shall be the named fiduciary solely with regard to the following functions regarding the management and investment of Plan assets: (i) appointing and removing Trustees, (ii) approving processes and policies for the payment of investment related Plan expenses and approving reimbursement of expenses of U S WEST and its subsidiaries including IMC, and (iii) approving the Investment Funds to be directly managed by IMC and the general investment strategies with respect to such directly managed Investment Funds. The Investment Committee shall have all power and authority necessary for these purposes. 56 (c) IMC shall be the named fiduciary for all purposes of the management and investment of Plan assets except for those functions which are the responsibility of the Investment Committee as set forth in subsection (b) and except as provided in subsection (e) below. Such powers of IMC shall include, without limitation, appointing, removing and monitoring Investment Managers and other persons appropriate for trust management and reviewing the performance of all Investment Funds. IMC shall have all power and authority necessary for these purposes. (d) With regard to their respective functions, the Committee's, Investment Committee's and IMC's authority shall include the following: (i) the selection of agents and fiduciaries to operate and administer the Plan and Trust; (ii) the selection of agents and other providers of services to the Plan; (iii) the periodic review of the performance of such agents, service providers, managers, and fiduciaries; (iv) certifying to the Trustee the names and specimen signatures of the members of the Committee, Investment Committee or IMC (or their delegates) acting from time to time; (v) approving all expenses other than those subject to the approval of the Investment Committee; and (vi) establishing compensation arrangements for other fiduciaries, agents and service providers. (e) Notwithstanding the preceding provisions of this Section or any other provision of this Plan, neither the Investment Committee, the Committee, IMC, the Board of Directors, a Participating Company, the Trustee nor any Investment Manager shall be a Fiduciary with respect to the designation or direction by an Account Owner of Investment Funds with respect to that Account Owner's Account. Each Account Owner shall be the named Fiduciary (except as otherwise provided by section 404(c) of ERISA) with respect to any designation, direction or other exercise of control of Investment Funds with respect to his Account. As a result, with respect to designations and directions described in this Plan and any other exercise of control by an Account Owner over assets in his Account, such Account Owner shall be solely responsible for such actions and neither the Investment Committee, the Committee, IMC, the Trustee, a Participating Company, the Board of Directors nor any other person or entity which is otherwise a Fiduciary shall be liable for any loss or liability which results from such Account Owner's exercise of control. 7.9 - Organization of the Committee. ----------------------------- (a) The Committee shall elect a chairman and appoint a Secretary. The Committee shall adopt such by-laws and rules of procedures as it deems desirable for the conduct of its affairs and for the administration of the Plan. 57 (b) The Investment Committee may adopt by-laws and rules of procedure, as it deems desirable. (c) The Committee and Investment Committee may appoint agents (who need not be members of the committee) to whom it may delegate such powers, as it deems appropriate. Each committee may make its determinations with or without meetings. Each committee may authorize one or more of its members or agents to sign instructions, notices and determinations on its behalf. The action of a majority of either committee shall constitute the action of that committee. 7.10 - Agent for Process. ----------------- U S WEST's Deputy General Counsel - Litigation shall be the agent of the Plan for service of all legal process. 7.11 - Claims Procedure. ---------------- (a) All claims for benefits shall be filed in writing by the Account Owner, or his authorized representative, by completing such procedures as the Claims Administrator shall require. Such procedures shall be reasonable and may include the completion of forms and the submission of documents and additional information. (b) The Claims Administrator shall review all materials and decide whether to approve or deny the claim. If a claim is denied in whole or in part, written notice of denial shall be furnished by the Claims Administrator to the claimant within 90 days after the receipt of the claim by the Claims Administrator, unless special circumstances require an extension of time for processing the claim, in which event notification of the extension shall be provided to the claimant (prior to the expiration of the 90-day period) and the extension shall not exceed 90 days. (If a notice is not provided within the foregoing time periods, the claim shall be considered denied.) Such written notice shall set forth the specific reasons for such denial, specific reference to pertinent Plan provisions, a description of any additional material or information necessary for the claimant to perfect his claim and an explanation of why such material or information is necessary, all written in a manner calculated to be understood by the claimant. Such notice shall include appropriate information as to the steps to be taken if the claimant wishes to submit his claim for review. The claimant or the claimant's authorized representative may request such a review upon written application. The claimant may review pertinent documents and may submit issues or comments in writing. The claimant or the claimant's duly authorized representative must request such review within the reasonable period of time prescribed by the Claims Administrator. In no event shall such a period of time be less than 60 days. (c) Any appeal of a denied claim under the Plan shall be subject to review by the Committee. A decision on review shall be rendered within 60 days after the receipt of the request for review by the Committee. If special circumstances require a further extension of time for processing, a decision shall be rendered not later than 120 days following the Committee's receipt of the request for review. If such an extension of time of review is required, written notice of the extension shall be furnished to the claimant. The decision 58 of the Committee shall be furnished to the claimant in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant, as well as specific references to the pertinent Plan provisions on which the decision is based. (If the decision on review is not furnished within the foregoing time periods, the claim shall be considered denied on review.) (d) The Committee shall each have full discretionary authority to determine eligibility, status and rights of all persons under the Plan and to construe any and all terms of the Plan. ARTICLE VIII TRUST AGREEMENT - INVESTMENTS 8.1 - Trust Agreement. --------------- U S WEST has entered into a Trust Agreement to provide for the holding, investment and administration of the funds of the Plan. The Trust Agreement shall be part of the Plan and is incorporated into the Plan by this reference, and the rights and duties of any person under the Plan shall be subject to all terms and provisions of the Trust Agreement. 8.2 - Expenses of Trust. ----------------- All taxes upon or in respect of the Trust and all expenses of administering the Trust shall be paid by the Trustee out of the trust assets, to the extent not paid by a Participating Company. ARTICLE IX PARTICIPATING COMPANIES 9.1 - Adoption of Plan. ---------------- Any corporation, whether or not presently existing, which is or shall become a subsidiary of a Participating Company after the date this Plan is adopted may, with the consent of the Committee, become a party to the Plan and Trust by adopting the Plan and Trust for its Employees or by being designated by the Committee to participate in this Plan. Thereafter, such Participating Company shall promptly deliver to U S WEST a certified copy of the resolutions or other documents evidencing its adoption of the Plan and Trust and a written instrument evidencing the consent of the Committee thereto. 9.2 - Agency of U S WEST. ------------------ Each Participating Company by becoming a party to the Plan appoints U S WEST its agent with authority to act for it in all transactions in which U S WEST believes such agency will facilitate the administration of the Plan, including but not limited to the authority to amend and terminate the Plan. 59 9.3 - Disaffiliation and Withdrawal From Plan. --------------------------------------- (a) Unless U S WEST (in its sole discretion) determines otherwise, (i) any Participating Company that has adopted the Plan and that thereafter ceases for any reason to be a Related Company shall forthwith cease to be a party to the Plan, or (ii) U S WEST shall transfer sponsorship of the Plan to such disaffiliating Participating Company effective on or before the time of the disaffiliation. If sponsorship is transferred pursuant to clause (ii) of the preceding sentence, U S WEST (and the Participating Companies that remain Related Companies) shall cease to be parties to the Plan at the time of the disaffiliation. (b) Any Participating Company may, by resolution of its board of directors (or general partner or manager) and written notice thereof to U S WEST, provide from and after the end of any Plan Year for the discontinuance of Plan participation by such Participating Company and its Employees. (c) In accordance with this Section 9.3, Old U S WEST transfers sponsorship of the Plan to U S WEST immediately prior to the Separation Time. In accordance with and subject to the terms of the Employee Matters Agreement, all liabilities under this Plan to or relating to "Media Employees" or "Terminated Media Employees" as such terms are defined in the Employee Matters Agreement were transferred to the new savings plan sponsored by MediaOne Group, Inc. (or its affiliates) after the Separation Time (the "Media Plan"). In addition, the Plan transferred assets to the Media Plan in the amount set forth in the Employee Matters Agreement; such payment shall operate as a complete discharge of the Trustee, U S WEST, Inc. and its subsidiaries of all liabilities and obligations under this Plan to Media Employees and Terminated Media Employees. (d) Old U S WEST (and any subsidiary of Old U S WEST prior to the Separation Time) that is not a Related Company after the Separation Time shall be treated as Related Companies with respect to periods prior to the Separation Time but not periods after the Separation Time. Thus, if an individual was employed by Old U S WEST or any 80% owned subsidiary of Old U S WEST prior to the Separation Time (including a Media Participant) and is employed after the Separation Time by U S WEST or a Related Company, such individual's service with Old U S WEST or such subsidiary prior to the Separation Time shall be recognized under this Plan to the same extent as service with U S WEST or a Related Company, subject to all applicable break in service rules. In the case of a Media Participant, the period such person is employed by MediaOne Group, Inc. and its subsidiaries shall be included within the person's Period of Severance. ARTICLE X AMENDMENT AND TERMINATION 10.1 - Amendments. ---------- U S WEST expects this Plan to be permanent, but as future conditions cannot be foreseen it reserves the right to amend the Plan at any time, without prior notice to anyone. The Plan may be amended by a writing approved by U S 60 WEST's Board of Directors and signed on behalf of U S WEST by an officer of U S WEST duly authorized by the Board of Directors. The Plan may also be amended in writing by the Committee or other persons to the extent authority to amend the Plan has been delegated to the Committee or such other persons by the Board of Directors. Each amendment shall be effective on such date as U S WEST or its delegate may determine. No amendment or modification that affects the rights, powers, privileges, immunities or obligations of the Trustee may be made without the consent of the Trustee. Amendments may modify the rights and interests of Employees who are Participants in the Plan at the time thereof as well as future Participants but amendments may not diminish the accrued benefit (as defined in section 411(d)(6) of the Code) of any Participant as of the effective date of such amendment. 10.2 - Discontinuance or Termination of Plan. ------------------------------------- (a) The Committee, with the consent of the Chairman of the Board (or, at any time when there is no Chairman of the Board, the President) and subject to the approval of the Board of Directors (or without such approval in the case of changes that, in the opinion of the Committee, are required by federal or state statutes applicable to the Participating Company or authorized or made desirable by such statutes) may discontinue contributions to the Plan or terminate the Plan. Upon a complete discontinuance of contributions, termination or partial termination of the Plan, the Accounts of all affected Participants shall become fully vested. (b) The Participating Companies expect to continue the Plan indefinitely, but the continuance of the Plan and the payment of contributions are not assumed as contractual obligations. Any Participating Company may withdraw from the Plan as to its Employees at any time by resolution of the Participating Company's board of directors (or its general partner or its manager). (c) In the event of a complete termination of the Plan, Participants shall be deemed to have had a Break in Employment for purposes of the Plan. If such a Participant does not elect distribution of his Accounts under the Plan, the Participant will no longer have the withdrawal rights specified in Section 6.2. 10.3 - Failure to Contribute. --------------------- Any failure by one or more Participating Companies to contribute to the Trust in any year when no contribution is required under this Plan shall not of itself be a discontinuance of contributions under this Plan. 10.4 - Plan Merger or Consolidation; Transfer of Plan Assets. ----------------------------------------------------- (a) This Plan shall not be merged or consolidated with, nor shall its assets or liabilities be transferred to, any other plan unless each Account Owner in this Plan (if the Plan then terminated) would receive a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the benefit such Account Owner would have been entitled to receive immediately before the merger, consolidation or transfer (if this Plan had been terminated). Where the foregoing requirement is satisfied, this Plan and its related Trust may be merged or consolidated with another qualified plan and trust. 61 (b) U S WEST or the Committee may, in its discretion, authorize a plan to plan transfer, provided such a transfer will meet the requirements of section 414(l) of the Code and that all other actions legally required are taken. In the event of a transfer of assets from the Plan pursuant to this subsection, any corresponding benefit liabilities shall also be transferred. ARTICLE XI MISCELLANEOUS 11.1 - Contributions Not Recoverable. ----------------------------- Except where contributions or earnings are required to be returned to the Participating Company by the provisions of this Plan as permitted or required by ERISA or the Code, it shall be impossible for any part of the contributions or earnings made under this Plan to be used for, or diverted to, purposes other than the exclusive benefit of Account Owners. Notwithstanding this or any other provision of this Plan, the Participating Company shall be entitled to recover, and the Account Owners under this Plan shall have no interest in (a) any contributions made under this Plan by mistake of fact, so long as the contribution is returned within one year after payment, and (b) any contributions for which deduction is disallowed under section 404 of the Code, so long as the contributions are returned to the Participating Company within one year following such disallowance or as permitted or required by the Code or ERISA. In the event of such mistake of fact or disallowance of deductions, contributions shall be returned to the Participating Company, subject to the limitations, if any, of section 403(c) of ERISA. 11.2 - Limitation on Participant's Rights. ---------------------------------- Any Participating Company or any of its subsidiaries may terminate the employment of any Employee as freely and with the same effect as if this Plan were not in existence. Participation in this Plan by an Employee shall not constitute an express or implied contract of employment between an Employee and the Participating Company or any of its subsidiaries. All benefits under the Plan shall be provided solely from the assets of the Trust. 11.3 - Receipt or Release. ------------------ Any payment to any Account Owner in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims against the Trustee, the Committee, U S WEST, and the Participating Companies. The Trustee may require such Account Owner, as a condition precedent to such payment, to execute a receipt and release to such effect. 62 11.4 - Alienation. ---------- (a) Except as provided in (b), (c), (d), and (e) below, no Account Owner shall have any right to assign, transfer, hypothecate, encumber or anticipate his interest in any benefits under this Plan, nor shall such benefits be subject to any legal process to levy upon or attach the same for payment of any claim against any such Account Owner. (b) Subsection (a) shall apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a Participant pursuant to a domestic relations order unless such domestic relations order is a QDRO, in which case the Plan shall make payment of benefits in accordance with Section 6.4 above and the applicable requirements of any such QDRO. Whether a domestic relations order is a QDRO shall be determined by the Committee pursuant to procedures adopted and applied in compliance with Code section 414(p) and ERISA section 206(d). (c) A loan described in Section 11.10 of the Plan shall not be considered a violation of this Section. (d) An offset made pursuant to section 206(d)(4) of ERISA shall not be considered a violation of this Section. (e) Compliance with a federal tax levy pursuant to Code section 6331 or the collection by the United States on a judgment resulting from an unpaid tax assessment shall not be considered a violation of this Section. 11.5 - Military Service. ---------------- Notwithstanding any provision of this Plan to the contrary, contributions and service credit with respect to qualified military service will be provided in accordance with Code section 414(u). 11.6 - Governing Law. ------------- This Plan shall be construed, administered, and governed in all respects under applicable federal law, and to the extent that federal law is inapplicable, under the laws of the State of Colorado; provided, however, that if any provision is susceptible to more than one interpretation, such interpretation shall be given thereto as is consistent with this Plan's remaining qualified within the meaning of section 401(a) of the Code. If any provisions of this instrument shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective. 11.7 - Headings, etc. Not Part of Plan. ------------------------------- Headings and subheadings in this Plan are inserted for convenience of reference only and are not to be considered in the construction of the provisions hereof. 63 11.8 - Masculine Gender Includes Feminine and Neuter. --------------------------------------------- As used in this Plan, the masculine gender shall include the feminine gender. 11.9 - Instruments in Counterparts. --------------------------- This Plan may be executed in several counterparts, each of which shall be deemed an original, and said counterparts shall constitute but one and the same instrument, which may be sufficiently evidenced by any one counterpart. 11.10 - Loans to Account Owners. ----------------------- (a) Loans are available only to Participants who are employees of the Company or a Related Company and to Account Owners who are parties-in-interest (within the meaning of ERISA section 3(14)) with respect to the Plan (collectively referred to in this section as "Borrowers"). No loan shall be made to any individual while the individual falls into any of the following categories, nor shall any loan be made of amounts accrued while such individual fell into any of the following categories: (i) Owner-employee within the meaning of Code section 401(c)(3); or (ii) Employee or officer who owns (or is considered as owning within the meaning of Code section 318(a)(1) on any day during the taxable year of the Company or Related Company) 5% or more of the stock of the Company or any Related Company, but only if the Company or Related Company is an S corporation; or (iii) Sibling (of the whole- or half-blood), spouse, ancestor or lineal descendant of any individual described in Section 11.10(a)(i) or 11.10(a)(ii), unless such individual has furnished to the Committee a written exemption, granted by the Department of Labor, exempting the loan from the prohibited transaction provisions of ERISA and the Code. The Committee shall establish procedures to temporarily reduce the amount a Participant may borrow or to temporarily prevent a Participant from borrowing altogether when the Committee believes that an order affecting the Participant's Account is, or may be, in the process of becoming a QDRO. (b) The Committee shall grant any loan which meets each of the requirements of paragraphs (i), (ii) and (iii) below: (i) The amount of the loan, when added to the outstanding balance of all other loans to the Borrower from the Plan or any other qualified plan of the Company or any Related Company shall not exceed the lesser of: (A) $50,000, reduced by the excess, if any, of a Borrower's highest outstanding balance of all loans from the Plan or any other qualified plan maintained by the Company or any Related Company during the preceding 12 months over the outstanding balance of such loans on the loan date, or 64 (B) 50% of the value of the vested balance of the Borrower's Accounts as of the date preceding the date upon which the loan is made; (ii) The loan shall be for at least $1,000 and may be made in increments of $500 over such amount; and (iii) No more than one loan may be outstanding to a Borrower at any time. (c) Each loan granted shall, by its terms, satisfy each of the following additional requirements: (i) Each loan must be repaid within four years (except that if the Committee is satisfied that the loan proceeds are being used to purchase the principal residence of a Borrower, the Committee may, in its discretion, establish a term of up to 14 years for repayment); (ii) Each loan must require substantially level amortization over the term of the loan, with payments not less frequently than quarterly; and (iii) Each loan shall be adequately secured, with the security to consist of a portion of the Borrower's Accounts. (iv) Each loan shall bear reasonable rate of interest, which rate shall be determined by the Committee in the method determined by the Committee. Until the Committee changes the method, the Committee shall cause to be calculated quarterly the average yields, of the preceding quarter, for two, five and ten year treasury notes. A spread shall be established from the treasury yield curve to reflect credit risk. This spread shall be compared to other consumer rates offered by various financial institutions for reasonableness. Based on this information, the Committee shall approve a rate. The rate of interest in effect when a loan is approved will remain in effect for the life of the loan. (d) Loan repayment for Employee Borrowers shall be made by payroll deduction except when a Borrower is on a leave of absence or transfers to a Non-Participating Company, in which case the loan repayment must be mailed to the Plan Administrator or its designated agent each month until active status is resumed. Payment must be made by cashier's check or money order, and made payable to the Plan. Lump sum repayment of a loan will be permitted at any time except that no lump sum repayment shall be permitted prior to six months following the date of the loan. Lump sum repayment shall not be made by payroll deduction, but shall be remitted in the form of cashier's check or money order to the Plan Administrator or its designated agent. All loan payments shall be transmitted to the Trustee as soon as practicable. (e) Notwithstanding subsection (d), lump sum repayment of a loan will be permitted prior to the end of the six-month period following the date of the loan by an Employee Borrower in the case of retirement or termination of 65 employment with a Participating Company for any reason other than transfer to another Participating Company. Such repayment must be made by the last Friday which is a Valuation Date of the third calendar month following the Borrower's termination date. If the terminated Borrower does not repay the loan, the unpaid principal balance of the loan and any accrued interest shall be treated as a distribution. (f) The loan shall be payable in full on its maturity date. If a Borrower misses 6 payments, all remaining payments are accelerated and the entire outstanding balance becomes payable within 60 days after the sixth missed payment; if not repaid by then, the loan will go into default and the Borrower will not be permitted to borrow from the Plan again. The loan shall be payable in full when the Borrower dies, unless the Borrower is a Participant and his sole Beneficiary is his spouse, in which case the surviving spouse may repay the loan or the loan will be defaulted on the date the first distribution is made to the surviving spouse. The loan shall be payable in full at the end of the third month following the termination of the Borrower's employment with the Company and Related Companies. The loan shall be payable in full when the Plan terminates. The loan shall also be payable in full if the Company or Related Company receives notice from a court of bankruptcy that loan repayments are to be halted; if not repaid within the time frame established by the Committee, the loan shall be in default. (g) There shall be an administrative fee charged to a Borrower for each loan. The Committee shall have the power to modify the above rules or establish any additional rules with respect to loans extended pursuant to this Section. Such rules may be included in a separate document or documents and shall be considered a part of this Plan; provided, each rule and each loan shall be made only in accordance with the regulations and rulings of the Internal Revenue Service and Department of Labor and other applicable state or federal law. The Committee shall act in its sole discretion to ascertain whether the requirements of such regulations and rulings and this Section have been met. (h) Loan repayments will be suspended under this Plan as permitted under Code section 414(u). (i) When the Committee receives a signed order from a court that purports to be a QDRO, the Participant may not receive a loan under this Section until the Committee has finally disposed of the order. In addition, the Committee may temporarily freeze the availability of loans because a domestic relations order affecting the Participant is or may be in the process of becoming a QDRO. 11.11 - Top-Heavy Plan Requirements. --------------------------- For any Plan Year for which this Plan is a Top-Heavy Plan, as defined in Section A.3 of Appendix A, attached hereto, and despite any other provisions of this Plan to the contrary, this Plan will be subject to the provisions of Appendix A. 66 11.12 - Voting Rights. ------------- Within a reasonable time before each annual or special meeting of shareowners of U S WEST, there shall be sent to each Account Owner who has an investment in the U S WEST Shares Fund a copy of the proxy solicitation material for the meeting, together with a form requesting instructions for the Trustee on how to vote U S WEST Shares represented by Units credited to his Accounts. Upon receipt of such instructions, the Trustee shall vote the shares as instructed. The Trustee shall maintain the instructions of each Account Owner in confidence. The Trustee shall vote U S WEST Shares for which it does not receive voting instructions, including U S WEST Shares held in a loan suspense account and any other unallocated U S WEST Shares, in the same proportion as the Trustee votes U S WEST Shares for which it does receive timely instructions; provided, however, that the Trustee, as to U S WEST Shares held in the U S WEST Shares Fund and the Combined Shares Fund, and any loan suspense account, shall in all events exercise voting obligations consistent with the Trustee's fiduciary duties under ERISA. 11.13 - Payments Due Minors or Incapacitated Persons. -------------------------------------------- If any person entitled to a payment under the Plan is a minor, or if the Committee determines than any such person is incapacitated by reason of physical or mental disability, whether or not legally adjudicated an incompetent, the Committee shall have the power to cause the payments becoming due to such person to be made to the legal guardian or conservator of such person, or if none, to a parent of a minor or the responsible adult with whom a minor maintains his residence or to the custodian for a minor under the Uniform Gifts to Minors Act (or Gift to Minors Act), if permitted by the laws of the state in which the minor resides. Payments made pursuant to such power shall operate as a complete discharge of the Trust, the Trustee, the Plan, Participating Companies, and the Committee. 67 APPENDIX A ---------- TOP-HEAVY PROVISIONS -------------------- Section 11.11 of the Plan shall be construed in accordance with this Appendix A. Definitions in this Appendix A shall govern for the purposes of this Appendix A. Any other words and phrases used in this Appendix A, however, shall have the same meanings that are assigned to them under the Plan, unless the context clearly requires otherwise. A.1 - General. ------- This Appendix A shall be effective for Plan Years beginning on or after January 1, 1984. This Appendix A shall be interpreted in accordance with section 416 of the Code and the regulations thereunder. A.2 - Definitions. ----------- (a) The "Benefit Amount" for any Employee means (1) in the case of any defined benefit plan, the present value of his normal retirement benefit, determined on the Valuation Date as if the Employee terminated on such Valuation Date, plus the aggregate amount of distributions made to such Employee within the five-year period ending on the Determination Date (except to the extent already included on the Valuation Date) and (2) in the case of any defined contribution plan, the sum of the amounts credited, on the Determination Date, to each of the accounts maintained on behalf of such Employee (including accounts reflecting any nondeductible Employee contributions) under such plan plus the aggregate amount of distributions made to such Employee within the five-year period ending on the Determination Date. For purposes of this Section, the present value shall be computed using a 5% interest assumption and the mortality assumptions contained in the defined benefit plan for benefit equivalence purposes, provided that, if more than one defined benefit plan is being aggregated for top-heavy purposes, the actuarial assumptions which shall be used for testing top-heaviness are those of the plan with the lowest interest assumption, provided further that if the lowest interest assumption is the same for two or more plans, the actuarial assumptions used shall be that of the plan with the greatest value of assets on the applicable date. (b) "Company" means any company (including unincorporated organizations) participating in the Plan or plans included in the "aggregation group" as defined in this Appendix A. (c) "Determination Date" means the last day of the preceding Plan Year or, in the case of the first Plan Year of the Plan, the last day of the Plan Year. (d) "Employees" means Employees, former Employees, beneficiaries, and former beneficiaries who have a Benefit Amount greater than zero on the Determination Date. (e) "Key Employee" means any Employee who, during the Plan Year containing the Determination Date or during the four preceding Plan Years, is: (1) one of the ten Employees of a Company having annual compensation from such Company of more than the limitation in effect under section 415(c)(1)(A) of the Code and owning (or considered as owning within the meaning of section 318 of the Code) both more than a 1/2% interest and the largest interests in such Company (if two Employees have the same interest the Employee having the greater annual compensation from the Company shall be treated as having a larger interest); (2) a 5% owner of a Company; (3) a 1% owner of a Company who has an annual compensation above $150,000; or (4) an officer of a Company having an annual compensation greater than 50% of the amount in effect under section 415(b)(1)(A) of the Code for any such Plan Year (however, no more than the lesser of (A) 50 Employees or (B) the greater of 3 Employees or 10% of the Company's Employees shall be treated as officers). For purposes of determining the number of Employees taken into account under this Section A.2(e)(4), Employees described in section 414(q)(8) of the Code shall be excluded. (f) A "Non-Key Employee" means an Employee who is not a Key Employee. (g) "Valuation Date" means the first day (or such other date which is used for computing plan costs for minimum funding purposes) of the 12-month period ending on the Determination Date. (h) A "Year of Service" shall be calculated using the Plan rules that normally apply for determining vesting service. These definitions shall be interpreted in accordance with section 416(i) of the Code and the regulations thereunder and such rules are hereby incorporated by reference. The term "Key Employee" shall not include any officer or Employee of an entity referred to in section 414(d) of the Code. For the purpose of this subsection, "compensation" shall mean compensation as defined in section 414(q)(7) of the Code and shall be determined without regard to sections 125, 402(e)(3), 402(h)(1)(B) or, in the case of employer contributions made pursuant to a salary reduction agreement, section 403(b). A.3 - Top-Heavy Definition. -------------------- The Plan shall be top-heavy for any Plan Year if, as of the Determination Date, the "top-heavy ratio" exceeds 60%. The top-heavy ratio is the sum of the Benefit Amounts for all Employees who are Key Employees divided by the sum of the Benefit Amounts for all Employees. For purposes of this calculation only, the following rules shall apply: (a) The Benefit Amounts of all Non-Key Employees who were Key Employees during any prior Plan Year shall be disregarded. (b) The Benefit Amounts of all Employees who have not performed any services for any Company at any time during the five-year period ending on the Determination Date shall be disregarded; provided, however, if an Employee performs no services for five years and then again performs services, such Employee's Benefit Amount shall be taken into account. (c) (1) Required Aggregation. This calculation shall be made by aggregating any plans, of the Company or a Related Company, qualified under section 401(a) of the Code in which a Key Employee participates or which enables this Plan to meet the requirements of section 401(a)(4) or 410 of the Code; all plans so aggregated constitute the "aggregation group." (2) Permissive Aggregation. The Company may also aggregate any such plan to the extent that such plan, when aggregated with this aggregation group, continues to meet the requirements of section 401(a)(4) and section 410 of the Code. If an aggregation group includes two or more defined benefit plans, the actuarial assumptions used in determining an Employee's Benefit Amount shall be the same under each defined benefit plan and shall be specified in such plans. The aggregation group shall also include any terminated plan which covered a Key-Employee and which was maintained within the five-year period ending on the Determination Date. (d) This calculation shall be made in accordance with section 416 of the Code (including 416(g)(3)(B) and (g)(4)(A)) and the regulations thereunder and such rules are hereby incorporated by reference. For purposes of determining the accrued benefit of a Non-Key Employee who is a Participant in a defined benefit plan, this calculation shall be made using the method which is used for accrual purposes for all defined benefit plans of the Company, or if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under section 411(b)(1)(C) of the Code. A.4 - Minimum Benefits or Contributions, Compensation Limitations, and Section ------------------------------------------------------------------------ 415 Limitations. --------------- If the Plan is top-heavy for any Plan Year, the following provisions shall apply to such Plan Year: (a) (1) Except to the extent not required by section 416 of the Code or any other provision of law, notwithstanding any other provision of this Plan, if the Plan and all other plans which are part of the aggregation group are defined contribution plans, each Participant (and any other Employee required by section 416 of the Code) other than Key Employees shall receive an allocation of employer contributions and forfeitures from a plan which is part of the aggregation group at least equal to 3% (or, if lesser, the largest percentage allocated to any Key Employee for the Plan Year) of such Participant's compensation for such Plan Year (the "defined contribution minimum"). For purposes of this subsection, salary reduction contributions on behalf of a Key Employee must be taken into account. For purposes of this subsection, a non-Key Employee shall be entitled to a contribution if he is employed on the last day of the Plan Year (A) regardless of his level of compensation, (B) without regard to whether he has made any mandatory contributions required under the Plan, and (C) regardless of whether he has less than 1,000 Hours of Service (or the equivalent) for the accrual computation period. (2) Except to the extent not required by section 416 of the Code or any other provision of law, notwithstanding any other provisions of the Plan, if the Plan or any other plan which is part of the aggregation group is a defined benefit plan each Participant who is a participant in any such defined benefit plan (who is not a Key Employee) who accrues a full Year of Service during such Plan Year shall be entitled to an annual normal retirement benefit from a defined benefit plan which is part of the aggregation group which shall not be less than the product of (A) the Employee's average compensation for the five consecutive years when the Employee had the highest aggregate compensation and (B) the lesser of 2% per Year of Service or 20% (the "defined benefit minimum"). A Non-Key Employee shall not fail to accrue a benefit merely because he is not employed on a specified date or is excluded from participation because his compensation is less than a stated minimum or he fails to make mandatory Employee contributions. For purposes of calculating the defined benefit minimum, (A) compensation shall not include compensation in Plan Years after the last Plan Year in which the Plan is top-heavy and (B) a Participant shall not receive a Year of Service in any Plan Year before January 1, 1984 or in any Plan Year in which the Plan is not top-heavy. This defined benefit minimum shall be expressed as a life annuity (with no ancillary benefits) commencing at normal retirement age. Benefits paid in any other form or time shall be the actuarial equivalent (as provided in the plan for retirement benefit equivalence purposes) of such life annuity. Except to the extent not required by section 416 of the Code or any other provisions of law, each Participant (other than Key Employees) who is not a participant in any such defined benefit plan shall receive the defined contribution minimum (as defined in paragraph (a)(1) above). (3) If a non-Key Employee is covered by plans described in both paragraphs (1) and (2) above, he shall be entitled only to the minimum described in paragraph (1), except that for the purpose of paragraph (1) "3% (or, if lesser, the largest percentage allocated to any key Employee for the Plan Year)" shall be replaced by "5%". Notwithstanding the preceding sentence, if the accrual rate under the plan described in (2) would comply with this Section A.5 absent the modifications required by this Section, the minimum described in paragraph (1) above shall not be applicable. (b) For purposes of this Section, "compensation" shall mean all earnings included in the Employee's Form W-2 for the calendar year that ends within the Plan Year, not in excess of $150,000, as adjusted by the Secretary of the Treasury. (c) (1) Unless the Plan qualifies for an exception under Section A.5(c)(2), "1.0" shall be substituted for "1.25" in the definitions of Defined Benefit Plan Fraction and Defined Contribution Plan Fraction used in Article IV of the Plan. (2) A Plan qualifies for an exception from the rule of Section A.5(c)(1) if the Benefit Amount of all Employees who are Key Employees does not exceed 90% of the sum of the Benefit Amounts for all Employees and one of the following requirements is met: (A) A defined benefit minimum of 3% per Year of Service (up to 30%) is provided; (B) For Participants covered only by a defined contribution plan, a defined contribution minimum of 4% is provided; (C) For Participants covered by both types of plans, benefits from the defined contribution minimum are comparable to the 3% defined benefit minimum; (D) The plan provides a floor offset where the floor is a 3% defined benefit minimum; or (E) A defined contribution minimum of 7-1/2% of compensation is provided for any non-Key Employee who is covered under both a defined benefit plan and a defined contribution plan (each of which is top-heavy) of a Company. EX-4.2 4 ex4_2.txt EXHIBIT 4.2 AMENDMENT 2000-3 U S WEST SAVINGS PLAN/ESOP The U S WEST Savings Plan/ESOP as amended and restated as of June 12, 1998, and executed June 28, 2000 (the "Plan") is hereby amended under Section 10.1 of the Plan as follows, effective as of January 1, 2001 unless otherwise noted: 1. Effective June 30, 2000, the following sentence shall be added at the end of the first paragraph of the Preamble: "Effective June 30, 2000, U S WEST merged into Qwest Communications International, Inc. which became the Plan sponsor, but did not become a Participating Company." 2. Section 1.14 shall be replaced in its entirety by the following: "1.14 `Claims Administrator' shall mean the Manager-Savings Plan or his delegate or such person(s) as determined by the Executive Vice President - Human Resources (or its successor), Qwest Communications Corporation." 3. Section 1.18 shall be replaced in its entirety by the following: "1.18 `Company' shall mean Qwest Communications International Inc., a Delaware corporation or any successor company. If the context so warrants, it shall also include any Participating Company." 4. Section 1.21 shall be replaced in its entirety by the following: "1.21 `Compensation' (a) Occupational Employees. `Compensation' shall mean the wages, within the meaning of Code section 3401(a), which are paid by the Company or a Related Company to or for an Employee (including amounts paid to the Employee under the Management Separation Plan), all other compensatory payments to an Employee by the Company or a Related Company (in the course of its trade or business) for which the Company or a Related Company is required to furnish the Employee a written statement under Code sections 6041(d), 6051(a)(3) and 6052, and any amounts excluded from the Employee's income under Code section 125 or 402(e)(3). Compensation shall be limited as required by Code section 401(a)(17). (b) Management Employees. `Compensation' shall mean the amounts specified in subsection (b)(i) below and excluding amounts specified in subsection (b)(ii) below. (i) Compensation shall include the following amounts: (A) The Management Employee's salary, wages, fees for professional services and other amounts received (without regard to whether or not an amount is paid in cash) for personal services actually rendered in the course of employment with the Company or a Related Company to the extent the amounts are includable in gross income, including overtime, commissions, compensation based on profits, tips, bonuses, all foreign earned income as defined in Code section 911(b) (whether or not excludable from gross income under Code section 911), and any amounts that are excluded from income under Code sections 931 or 933; and (B) Elective deferrals (as defined in Code section 402(g)(3)) and amounts that are contributed or deferred by the Company or a Related Company at the election of the Management Employee and that are not includable in gross income of the Management Employee by reason of Code sections 125 or 132(f). (ii) Compensation shall not include the following amounts: (A) Contributions made by the Company or a Related Company to a plan of deferred compensation, to the extent that, before the application of the limitations of Code section 415 to such plan, such contributions are not includable in the gross income of the Management Employee for the taxable year in which such contributions were contributed; (B) Contributions made by the Company or a Related Company on behalf of a Management Employee to a simplified employee pension plan described in Code section 408(k), to the extent such contributions are not excludable in the Management Employee's gross income; (C) Any distributions from a plan of deferred compensation, regardless of whether such amounts are includable in the gross income of the Management Employee; (D) Amounts realized from the exercise of a non-qualified stock option; (E) Amounts realized when restricted stock or property held by the Management Employee becomes freely transferable or is no longer subject to a substantial risk of forfeiture, as described in Code section 83; (F) Amounts realized from the sale, exchange, or other disposition of stock acquired under an incentive stock option; (G) Other amounts that receive special tax benefits, including premiums for group term life insurance, to the extent that the premiums are not includable in the Management Employee's gross income; 2 (H) Contributions made by the Company or a Related Company (whether or not pursuant to a salary reduction agreement) towards the purchase of an annuity described in Code section 403(b) (whether or not such contributions are excludable from the gross income of the Management Employee); (I) Reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, deferred compensation, and welfare benefits; and (J) Amounts earned while the Management Employee is not an Eligible Employee or a Management Employee." 5. Clause (iii) of Section 1.28(a) shall be replaced in its entirety by the following: "(iii) except as set forth in Section 1.28(b), a person classified as a temporary Employee, incidental Employee or an intern." 6. Effective June 30, 2000, the following sentence shall be added at the end of Section 1.28(b) and the words "the Company" in the preceding sentence shall be replaced by the words "a Participating Company:" "An Eligible Employee shall not include: (i) any Employee who was an employee of Qwest (or its subsidiaries) immediately before the merger of U S WEST into Qwest, or (ii) any Employee given an offer of employment to become a Management Employee on or after July 10, 2000, or (iii) any person who becomes a Temporary Employee on or after January 1, 2001. A Temporary Employee is any Employee (without respect to titles or job descriptions such as temporary work, project work, term assignment, temporary assignment etc.) who is performing an assignment which is not intended to be ongoing and which is intended to have a specified end date (by reference to a calendar end date or the project end date)." 7. Effective June 30, 2000, the bracketed language in Section 1.40 shall be replaced in its entirety by the following: "(or in the discretion of an Investment Manager, subject, in either case, to any general investment guidelines that may be adopted by the Investment Committee or IMC)" 8. Section 1.42 shall be replaced in its entirety by the following: "1.42 `IMC' shall mean the Qwest Investment Management Company." 3 9. Effective June 30, 2000, the first sentence of Section 1.61 shall be replaced by the following two sentences: "1.61 `Participating Company' shall mean any Related Company that, in accordance with Article IX, participates in the Plan. Effective June 30, 2000, Qwest is not a Participating Company." 10. Effective December 30, 2000, Section 1.66 shall be replaced in its entirety by the following: "1.66 `Plan Year' shall mean: (a) until December 31, 1999, the period beginning on January 1 and ending on December 31, (b) the period beginning on January 1, 2000 and ending on December 30, 2000, and (c) from December 31, 2000 onwards, the period beginning on December 31 and ending on December 30." 11. Effective June 30, 2000, the following words shall be added to the end of the second sentence of Section 1.87: "or its affiliates." 12. Section 2.1(a) shall be replaced in its entirety by the following: "(a) Employee's Contributions. An Eligible Employee who is a Management Employee is eligible to make Before-Tax and After-Tax Contributions to the Plan as soon as administratively feasible following the date he becomes an Eligible Employee. An Eligible Employee who is an Occupational Employee is eligible to make Before-Tax and After-Tax Contributions to the Plan from his first paycheck in the calendar month following the later of: (i) the completion of three months of Service; or (ii) the date he becomes an Eligible Employee. See Section 2.3 for rehires." 13. Section 2.1(b) shall be replaced in its entirety by the following: "(b) Match. An Eligible Employee who is a Management Employee is generally eligible to receive an allocation of Employer Matching Contributions commencing with his first Before-Tax Contribution to the Plan. An Eligible Employee who is an Occupational Employee is generally eligible to receive an allocation of Employer Matching Contributions commencing with his completion of one year of Service. See Section 3.4 for details." 14. Effective July 10, 2000, Section 2.3 shall be replaced in its entirety by the following: "2.3 - Reemployment. 4 (a) Occupational Employees with Less than 3 Months Prior Service. A rehired Occupational Employee who has less than three months of prior Service shall become eligible to make Before-Tax and After-Tax Contributions from his first paycheck in the calendar month following the later of: (i) the completion by the Eligible Employee of three months of Service after rehire; or (ii) the date he becomes an Eligible Employee. (b) Occupational Employees with 3 Months or More of Prior Service. An Occupational Employee who is rehired at a time when he has more than three months of prior Service shall become eligible to make Before-Tax and After-Tax Contributions from his first paycheck in the calendar month after he became an Eligible Employee. (c) Management Employees. A rehired Management Employee given an offer of employment to become an Employee on or after July 10, 2000 shall not be eligible to make Before-Tax or After-Tax Contributions." 15. A new Section 2.7 shall be added to read as follows: "2.7 - Automatic Before-Tax Contributions For Eligible Employees Who Are Management Employees. In the event the Plan is amended to provide for participation by newly hired (or rehired) Management Employees, the following rules apply. Unless a newly hired or rehired Management Employee files a contrary election with the Plan, as soon as administratively feasible following the date such Management Employee becomes an Eligible Employee, three percent of such Management Employee's Savings Plan Eligible Earnings shall automatically be deducted from the Management Employee's paychecks as Before-Tax Contributions to the Plan. Subject to Section 3.2(b), such automatic deduction shall continue until the earlier of: (i) the Participant elects to change the percentage of his Savings Plan Eligible Earnings deducted from his paychecks as Before-Tax Contributions to the Plan, or (ii) the Management Employee ceases to be an Eligible Employee or a Management Employee. Absent a contrary election by the Participant, all Before-Tax Contributions (and any Employer Matching Contributions attributable thereto) automatically made to the Plan under this Section 2.7 shall be deemed to be invested in the Interest Income Fund pursuant to Section 2.5(c)." 16. The first sentence of Section 3.4(b) shall be replaced in its entirety by the following: "Subject to the limitations of Sections 3.8A, 3.10 and Article IV and except as provided in subsections 2.2(c) and 3.4(c) below: (i) a Participant who is an Occupational Employee shall receive an allocation only with respect to each paycheck made on or after the first day of the month after the Participant has completed one year of Service and while the Participant is an Eligible Employee, and (ii) a Participant who is a Management Employee shall receive an allocation only while the Participant is an Eligible Employee." 5 17. Section 3.4(b)(ii) shall be replaced in its entirety by the following: "(ii) Management. The Matching Formula for each Participant who is a Management Employee shall be an allocation equal to 100% of the Before-Tax Contributions and After-Tax Contributions made during such pay period by such Participant; provided, however, that the allocation for any such Participant for any pay period shall not exceed 3% of such Participant's Savings Plan Eligible Earnings for that pay period. The maximum allocation for the Plan Year for such a Participant is equal to 3% of the dollar limit under Code section 401(a)(17) for the Plan Year." 18. Sections 3.4(c)(ii) and 3.4(c)(iii) are deleted in their entirety and shall be replaced by the notation "Intentionally Left Blank." 19. New Sections 3A.9(e) and 3A.9(f) shall be added to read as follows: "(e) Management Employee Diversification Election. A Management Employee may direct that all or a portion of the amounts credited to his ESOP Account be transferred among the funds specified in paragraphs (b), (c), (d), (e), (f) and (i) of Section 2.5 in accordance with Sections 2.5 and 2.6. (f) Crediting of Diversified Amounts. All diversified amounts shall remain credited to a Management Employee's ESOP Account after diversification." 20. The following sentence shall be added at the end of Section 5.1: "The ESOP Account of each Participant who is a Management Employee on or after January 1, 2001 shall be 100% vested and nonforfeitable at all times." 21. The following sentence shall be added as the first sentence of Section 5.2: "The following provisions of this Section 5.2 shall not apply to any Participant who is a Management Employee on or after January 1, 2001." 22. Effective August 11, 2000, Section 7.3(a) shall be replaced in its entirety by the following: "(a) Acting in its capacity as Plan sponsor and not as a Fiduciary, the Company or its delegates shall be responsible for: (i) Amendment or termination of the Plan pursuant to the terms of Article X herein; 6 (ii) Subject to Section 7.8(d), appointment of any third party service providers and vendors to the Plan other than fiduciaries; and (iii) Appointment and removal of the members of the Committee, Investment Committee and Plan Design Committee." 23. Effective August 11, 2000, Section 7.9(b) shall be replaced in its entirety by the following: "(b) The Investment Committee and Plan Design Committee may adopt by-laws and rules of procedure, as it deems desirable." 24. Effective August 11, 2000, the last three sentences of Section 7.9(c) shall be deleted and a new Section 7.9(d) shall be added to read as follows: "(d) Each committee may make its determinations with or without meetings. Each committee may authorize one or more of its members or agents to sign instructions, notices and determinations on its behalf. The action of the majority of the committee shall constitute the action of that committee." 25. Section 7.10 shall be replaced in its entirety by the following: "7.10 - Agent for Process. The General Counsel of the Company shall be the agent of the Plan for service of all legal process." 26. Effective August 11, 2000, Sections 9.1, 10.1, 10.2(a) and 10.4(b) shall be amended by replacing the word "Committee" with "Plan Design Committee" wherever it appears. 27. Effective August 11, 2000, the following words shall be added after the first occurrence of the word "Qwest" in the first sentence of Section 9.3(a): "or its delegates" 7 EX-4.3 5 ex4_3.txt EXHIBIT 4.3 AMENDMENT 2001-1 U S WEST SAVINGS PLAN/ESOP The U S WEST Savings Plan/ESOP as amended and restated as of June 12, 1998, and executed June 28, 2000 (the "Plan") is hereby amended under Section 10.1 of the Plan as follows, effective as of June 30, 2000 unless otherwise noted: 1. The following sentence shall be added at the end of Section 1.28(a): "Any Participant who transfers to Qwest or another Non-Participating Company that was a subsidiary of Qwest prior to June 30, 2000, shall remain an Eligible Employee and a Participant while employed by such Non-Participating Company so long as such Participant meets the other requirements of this Section 1.28." 2. The second sentence of Section 1.61 shall be revised to read as follows: "Qwest and its subsidiaries owned prior to the merger of US WEST into Qwest are not Participating Companies, except to the extent set forth in Section 1.28(a)." 3. Subsection 3.4(b)(i)(E) shall be revised to read as follows: "(E) Effective January 1, 2000, this Section 3.4(b)(i)(E) applies instead of (C) for customer service agents. The Matching Formula for each customer service agent shall be an allocation equal to 25% of his Before-Tax Contributions and After-Tax Contributions made during each pay period; provided, however, that the allocation for any customer service agent for any pay period shall not exceed 1.5% of his Savings Plan Eligible Earnings for that pay period. The maximum allocation for the Plan Year for a customer service agent is equal to 1.5% of the dollar limit under Code Section 410(a)(17) for the Plan Year. Effective January 1, 2001, the Matching Formula for each customer service agent shall be an allocation equal to 50% of his Before-Tax Contributions and After-Tax Contributions made during each pay period; provided, however, that the allocation for any customer service agent for any pay period shall not exceed 3% of his Savings Plan Eligible Earnings for that pay period. The maximum allocation for the Plan Year for a customer service agent is equal to 3% of the dollar limit under Code Section 410(a)(17) for the Plan Year." EX-4.4 6 ex4_4.txt EXHIBIT 4.4 AMENDMENT 2001-2 U S WEST SAVINGS PLAN/ESOP The U S WEST Savings Plan/ESOP as amended and restated as of June 12, 1998, and executed June 28, 2000 (the "Plan") is hereby amended under Section 10.1 of the Plan as follows, effective immediately unless otherwise noted: 1. Effective June 30, 2000, the word "Management" shall be inserted before the word "Employee" in Section 1.28(b)(iii) and the last sentence of Section 1.28(b). 2. Section 1.50 is amended to read as follows: "1.50 `Leased Employee' means any person who is not a common law employee of a Company or a Related Company and who performs services for a Company or a Related Company on a substantially full-time basis for a period of at least one year pursuant to an agreement between the Company or Related Company and another person, and such services are performed under the primary direction or control of the Company or Related Company." 3. Section 3.7 is amended by adding two sentences to the end of the first paragraph to read as follows: "For purposes of determining whether the Plan satisfies the requirements of this Section 3.7, all compensation deferrals and elective contributions under any other plan which is aggregated with the Plan for purposes of Section 401(a) or 410(b) of the Code (other than Section 410(b)(2)(A)(ii)) are to be treated as made under a single plan. Furthermore, if two or more plans are permissively aggregated for purposes of the test described in this Section 3.7, the aggregated plans must also satisfy Code Sections 401(a)(4) and 410(b) as though they were a single plan." 4. The first paragraph of Section 3.7(c) is amended to read as follows: "(c) The average of the actual deferral percentages for Participants who are Highly Compensated Employees for the current Plan Year ("High Average") when compared with the average of the actual deferral percentages for Participants who are not Highly Compensated Employees for the same Plan Year ("Low Average") must meet one of the following requirements:" 5. Section 3.8 is amended by adding two sentences to the end of the first paragraph to read as follows: "For purposes of determining whether the Plan satisfies the requirements of this Section 3.8, all compensation deferrals, elective contributions and voluntary after-tax contributions under any other plan which is aggregated with the Plan for purposes of Section 401(a) or 410(b) of the Code (other than Section 410(b)(2)(A)(ii)) are to be treated as made under a single plan. Furthermore, if two or more plans are permissively aggregated for purposes of the test described in this Section 3.8, the aggregated plans must also satisfy Code Sections 401(a)(4) and 410(b) as though they were a single plan." 6. Section 3.8A is amended by adding two sentences to the end of the first paragraph to read as follows: "For purposes of determining whether the Plan satisfies the requirements of this Section 3.8A, all compensation deferrals, elective contributions and matching contributions under any other plan which is aggregated with the Plan for purposes of Section 401(a) or 410(b) of the Code (other than Section 410(b)(2)(A)(ii)) are to be treated as made under a single plan. Furthermore, if two or more plans are permissively aggregated for purposes of the test described in this Section 3.8A, the aggregated plans must also satisfy Code Sections 401(a)(4) and 410(b) as though they were a single plan." 2 7. The first paragraph of Section 3.8(c) is amended to read as follows: "(c) The average of the contribution percentages for Participants who are Highly Compensated Employees for the current Plan Year ("High Average") when compared with the average of the contribution percentages for Participants who are not Highly Compensated Employees for the same Plan Year ("Low Average") must meet one of the following requirements:" 8. Section 3.8A(b) is amended by adding a sentence to the end to read as follows: "The contribution percentage of a Highly Compensated Employee shall be determined by treating all matching arrangements maintained by the Company or a Related Company (other than those maintained in the ESOP portion of the Plan or any other arrangement that cannot be aggregated) as a single arrangement." 9. The first paragraph of Section 3.8A(c) is amended to read as follows: "(c) The average of the contribution percentages for Participants who are Highly Compensated Employees for the current Plan Year ("High Average") when compared with the average of the contribution percentages for Participants who are not Highly Compensated Employees for the same Plan Year ("Low Average") must meet one of the following requirements:" 10. The second sentence of Section 3.8A is amended by replacing the word "ADP" with "ACP." 3 EX-4.5 7 ex4_5.txt EXHIBIT 4.5 AMENDMENT 2001-3 U S WEST SAVINGS PLAN/ESOP The U S WEST Savings Plan/ESOP as amended and restated as of June 12, 1998, and executed June 28, 2000 (the "Plan") is hereby amended under Section 10.1 of the Plan as follows, effective January 1, 2001, unless otherwise noted: 1. Effective November 19, 2001, the name of the Plan is changed to the "Qwest Savings & Investment Plan" and all references to the "U S WEST Savings Plan/ESOP" shall hereinafter be deemed a reference to the Qwest Savings and Investment Plan. 2. Effective November 19, 2001, Section 1.64 is amended to read as follows: "1.64 `Plan' shall mean the Qwest Savings & Investment Plan set forth herein, now in effect or hereinafter amended." 3. Section 1.21 is amended to add the phrase "or 132(f)(4)" to the end of the first sentence thereof. 4. Section 1.75(a)(i) is amended to add the phrase "or 132(f)(4)" to the bracketed language at the end of the first sentence thereof. 5. Section 3A.9(e) is amended to read as follows: "(e) Management Employee Diversification Election. A Management Employee may direct that all or a portion of the contributions (and earnings thereon) credited to his ESOP Account on or after January 1, 2001, be transferred among the funds specified in paragraphs (b), (c), (d), (e), (f) and (i) of Section 2.5 in accordance with Sections 2.5 and 2.6." 6. Section 3.1 is amended to read as follows: "3.1 - Contributions by Participants. Every Participant may make Before-Tax Contributions pursuant to Section 3.2 and/or After-Tax Contributions pursuant to Section 3.3. A Participant may make Before-Tax Contributions and After-Tax Contributions during the same pay period provided that, subject to the limitations of Sections 3.6, 3.7, 3.8, 3.10 and Article IV, such Participant's combined Before-Tax Contributions and After-Tax contributions for a pay period cannot exceed 16% of such Participant's Savings Plan Eligible Earnings for the pay period (in the case of an Occupational Employee) and 18% of such Participant's Savings Plan Eligible Earnings for the pay period (in the case of a Management Employee)." 7. Section 3.2(a) is amended to read as follows: "(a) Election to Defer. Subject to the limitations in Sections 3.1, 3.6, 3.7, 3.10 and Article IV, each Participant may elect Before-Tax Contributions, in accordance with Section 2.6, in whole percentages from 1% to 16% of such Participant's Savings Plan Eligible Earnings for each payroll period (in the case of an Occupational Employee) and from 1% to 18% of such Participant's Savings Plan Eligible Earnings for each payroll period (in the case of a Management Employee). Participants' Savings Plan Eligible Earnings shall be reduced by the amount of their Before-Tax Contributions, which shall be credited to Participants' Before-Tax Accounts, and shall be made in accordance with rules established by the Committee. See the definition of Savings Plan Eligible Earnings for Participants whose Savings plan Eligible Earnings exceed the Code Section 401(a)(17) limit for the Plan Year." 2 8. Section 3.3(a)(i) is amended to read as follows: "(i) Subject to the limitations of Sections 3.1, 3.8 and Article IV, each Participant may elect After-Tax Contributions on his own behalf, in accordance with Section 2.6, in whole percentages from 1% to 16% of such Participant's Savings Plan Eligible Earnings for each payroll period (in the case of an Occupational Employee) and from 1% to 18% of such Participant's Savings Plan Eligible Earnings for each payroll period (in the case of a Management Employee). Such contributions by Participants shall be credited to Participants' After-Tax Accounts, and shall be made in accordance with rules established by the Committee. See the definition of Savings Plan Eligible Earnings for Participants whose Savings plan Eligible Earnings exceed the Code Section 401(a)(17) limit for the Plan Year." EX-4.6 8 ex4_6.txt EXHIBIT 4.6 U S WEST SAVINGS PLAN/ESOP TRUST AGREEMENT TABLE OF CONTENTS ----------------- PAGE ---- Section 1 Establishment of Trust...........................................1 Section 2 Definitions......................................................2 Section 3 No Diversion.....................................................7 Section 4 Duties of Trustee................................................7 Section 5 Participating Employees Accounts.................................8 Section 6 Investment of the Fund...........................................9 Section 7 Investment of Trust Assets......................................12 Section 8 Responsibility for Directed Funds...............................12 Section 9 Powers of Asset Managers and Trustee............................14 Section 10 Provisions Affecting Company Shares.............................20 Section 11 Expenses of the Fund............................................21 Section 12 Indemnification of Trustee......................................22 Section 13 Recordkeeping and Accounting....................................23 Section 14 Judicial Accountings............................................23 Section 15 Authorization...................................................24 Section 16 Removal and Resignation of Trustee..............................25 Section 17 Appointment of Additional Trustees..............................25 Section 18 Spendthrift Provision...........................................26 Section 19 Delegation to Company...........................................26 Section 20 Amendment.......................................................26 Section 21 Creation of Separate Trusts.....................................26 Section 22 Termination of Agreement........................................27 Section 23 Successor in Interest...........................................28 Section 24 Governing Law...................................................28 Section 25 Notices.........................................................28 Section 26 Counterparts....................................................28 Section 27 Severability....................................................28 Section 28 Continuation of Trust...........................................29 Section 29 Domestic Trust..................................................29 U S WEST SAVINGS PLAN/ESOP TRUST AGREEMENT This U S WEST Savings Plan/ESOP Trust Agreement (hereinafter referred to as the "Agreement"), made as of the Separation Time, by and between U S WEST, Inc., a Delaware corporation (hereinafter referred to as the "Company"), and Bankers Trust Company, a New York banking corporation (hereinafter referred to as the "Trustee"), under the U S WEST Savings Plan/ESOP (hereinafter referred to as the "Plan") establishes the U S WEST Savings Plan/ESOP Trust (the "Trust"). In connection with the separation of U S WEST, Inc. ("USW") into two separately traded companies, U S WEST, Inc. (formerly USW-C, Inc.) and MediaOne Group, Inc., USW transferred sponsorship of the Plan to USW-C now known as U S WEST, Inc. (the "Company"). This Trust continues to hold the assets of the Plan. WHEREAS, USW adopted the Plan, effective January 1, 1984, for the benefit of eligible employees of USW and of such subsidiaries of USW which determined to participate in the Plan with the approval of USW; WHEREAS, USW amended and restated the Plan effective January 1, 1988, to add an employee stock ownership plan and to make certain other changes; WHEREAS, on January 1, 1994, USW amended and restated the Plan to merge the U S WEST Savings and Security Plan/ESOP with the U S WEST Savings Plan/ESOP for Salaried Employees; WHEREAS, on April 1, 1997, USW amended and restated the Plan to merge the U S WEST Payroll Stock Ownership Plan with the U S WEST Savings Plan/ESOP; WHEREAS, USW and Trustee entered into the U S WEST Savings Plan/ESOP Trust Agreement (the "Prior Agreement") in order to establish a trust known as the U S WEST Savings Plan/ESOP Trust; WHEREAS, the Company desires to amend and restate the Prior Agreement in its entirety pursuant to the authority under Section 20 of the Prior Agreement; and WHEREAS, the Trustee is willing to continue to act as trustee of the Trust upon all of the terms and conditions hereinafter set forth; NOW, THEREFORE, the Company and the Trustee agree as follows: Section 1. Establishment of Trust. The Company and the Trustee acknowledge the establishment of this amended and restated U S WEST Savings Plan/ESOP Trust. The Trust is intended to be tax exempt under section 501(a) of the Code as a qualified trust described in section 401(a) of the Code. The Fund shall be held IN TRUST by the Trustee (except to the extent that Plan assets may be held by an insurance company in a separate account or by another trustee pursuant to Section 4 or 21) and shall be held, invested and reinvested, without distinction between principal and income, in accordance with the provisions of this Agreement. The Company and the Trustee acknowledge that the Plan is intended to satisfy the requirements to be a participant directed plan under the Labor Department regulations promulgated under section 404(c) of ERISA (the "section 404(c) regulations"). Nothing in the preceding sentence shall be deemed to impose any duty on the Trustee to ensure that the Plan satisfies the requirements of the section 404(c) regulations, except as hereinafter provided. A Plan fiduciary (other than the Trustee) designated by the Plan, shall establish procedures designed to safeguard the confidentiality of information relating to the purchase, sale and holding and the exercise of voting and similar rights with respect to Company Shares held under the Plan in accordance with the section 404(c) regulations. The Trustee shall take appropriate action to ensure compliance with such procedures as to information within its control. In addition, the Trustee is designated as the independent fiduciary, described in the section 404(c) regulations, appointed to carry out activities placed under and within the internal control of the Trustee or its agents, relating to any situations in which the Plan fiduciary referenced in the preceding sentence determines, and so advises the Trustee in writing, involve a potential for undue employer influence upon participants and beneficiaries with regard to the direct or indirect exercise of shareholder rights. The Trustee accepts the trust created hereunder and agrees to be bound by the terms of this Agreement. The Trustee hereby acknowledges that it shall be a fiduciary with respect to the Trust and the Fund with respect to those duties and obligations specifically assumed by it which constitute it a "fiduciary" within the meaning of section 3(21) or "independent fiduciary" with respect to employer securities under section 404(c) regulations. The Trustee shall carry out its fiduciary or other duties and responsibilities under this Agreement in accordance with, and be limited in the exercise of its rights by, the provisions of ERISA, the Code and other applicable law. Section 2. Definitions. Where used in this Agreement, unless the context otherwise requires or unless otherwise expressly provided: (a) "Accounting Period" shall mean either the twelve (12) consecutive month period coincident with the calendar year or, if different, the fiscal year of the Plan or the shorter period in any year in which the Trustee accepts initial appointment as Trustee hereunder or ceases to act as Trustee for any reason. (b) "Accounts" shall mean a Participating Employee's Savings Plan Account and ESOP Account. (c) "Acquisition Loan" shall mean a loan or other extension of credit to finance the acquisition of U S WEST Shares by the ESOP, or to repay and refinance, to the extent permitted by law, a prior Acquisition Loan. 2 (d) "Agreement" shall mean all of the provisions of this instrument and of all other written instruments amendatory hereof. (e) "Asset Manager" shall mean the Company, Trustee, IMC, or Investment Manager, individually or collectively as the context shall require, with respect to those assets held in an Investment Fund over which it exercises, or to the extent it is authorized or permitted by the terms of the Agreement to exercise, discretionary authority or control over the management or administration of such assets. (f) "Bankers" shall mean Bankers Trust Company, a New York banking corporation. (g) "Board of Directors" shall mean the Board of Directors of the Company, except as otherwise specifically required by the context of this Agreement. (h) "Change of Control" shall mean any of the following: (i) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) is or becomes a beneficial owner of (or otherwise has the authority to vote), directly or indirectly, Securities representing twenty percent (20%) or more of the total voting power of all of the Company's then outstanding voting Securities, unless through a transaction arranged by, or consummated with the prior approval of the Company's Board of Directors; or (ii) if a tender offer (for which a filing has been made with the Securities and Exchange Commission which purports to comply with the requirements of Section 14(d) of the Exchange Act and the corresponding Securities and Exchange Commission rules) is made for the stock of the Company, which has not been arranged by or consummated with the prior approval of the Board of Directors of the Company, then upon the first to occur: either (A) any time during the offer when the person (using the definition above) making the offer owns or has accepted for payment stock of the Company with twenty percent (20%) or more of the total voting power of the Company's voting stock, or (B) three business days before the offer is to terminate unless the offer is withdrawn first if the person making the offer could own, by the terms of the offer plus any shares owned by this person, stock with 50% or more of the total voting owner of the Company's stock when the offer terminates; or (iii) any period of two consecutive calendar years during which there shall cease to be a majority of the Company's Board of Directors comprised as follows: individuals who at the beginning of such period constitute the Company's Board of Directors and any new director(s) whose election by the Company's Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who 3 either were directors at the beginning of the period or whose election or nomination for election was previously so approved. Upon the occurrence of either (i), (ii) or (iii) above, the Company shall give written notice to the Trustee of such event. (i) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and regulations issued thereunder. (j) "Committee" shall mean the Investment Committee appointed pursuant to the Plan or any Person under the Plan authorized to act on behalf of the Committee. (k) "Company" shall mean U S WEST, Inc. or any successor thereto. (l) "Company Shares" shall mean the common stock of the Company. (m) "Directed Fund" shall mean any Investment Fund, or part thereof, subject to the discretionary management and control of the Company or any Investment Manager. (n) "Discretionary Fund" shall mean any Investment Fund, or part thereof, subject to the discretionary or other management and control of the Trustee. (o) "EBC" shall mean the Employee Benefits Committee appointed pursuant to the Plan or any Person under the Plan authorized to act on behalf of the EBC. (p) "Employing Company" shall mean the Company or any subsidiary or affiliate of the Company which shall have determined to participate in the Plan, as the context shall require. (q) "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and Regulations issued thereunder. (r) "ESOP" shall mean the employee stock ownership plan portion of the Plan. (s) "ESOP Account" shall mean the account of a Participating Employee in the ESOP, and shall include any sub-account established thereunder to give effect to the provisions of the Plan. (t) "Financed Shares" shall mean U S WEST Shares acquired by the Plan with the proceeds of an Acquisition Loan. (u) "Fund" shall mean all cash and other property contributed, paid or delivered to the Trustee hereunder, whether allocated to the ESOP or the Savings Plan, all investments made therewith and proceeds thereof and all 4 earnings and profits thereon, less payments, transfers or other distributions which, at the time of reference, shall have been made by the Trustee, as authorized herein. The Fund shall include each Investment Fund and all evidences of ownership, interest or participation in an Investment Vehicle, but shall not, solely by reason of the Fund's investment therein, be deemed to include any assets of such Investment Vehicle. (v) "Insurance Contract" shall mean any contract or policy (including any annuity contract) of any kind issued by an insurance company, whether or not providing for the allocation of amounts received by the insurance company thereunder solely to the general account or solely to one or more separate accounts (including separate accounts maintained for the collective investment of qualified retirement plans), or a combination thereof, whether or not any such allocation may be made in the discretion of the insurance company and whether or not acquired by or on behalf of the Plan primarily to distribute benefits or for an Investment Fund. (w) "Investment Fund" shall mean the one or more funds established pursuant to Section 6(a). (x) "Investment Manager" shall mean a bank, insurance company or investment adviser satisfying the requirements of section 3(38) of ERISA. (y) "Investment Vehicle" shall mean any common, collective or commingled trust, investment company corporation functioning as an investment intermediary, Insurance Contract, investment agreement issued by any financial institution, partnership, joint venture or other entity or arrangement to which, or pursuant to which, assets of the Trust may be transferred or in which the Trust has an interest, beneficial or otherwise (whether or not the underlying assets thereof are deemed to constitute "Plan assets" for any purpose under ERISA). (z) "Participating Employee" shall mean an eligible employee of an Employing Company who elects to participate in and contribute to the Plan or who is entitled to receive distributions or payments from the Plan. It shall also mean a former employee who qualifies as a Participant under the terms of the Plan. (aa) "Person" shall mean a natural person, trust, estate, corporation of any kind or purpose, mutual company, joint-stock company, unincorporated organization, association, partnership, joint venture, employee organization, committee, board, participant, beneficiary, trustee, partner, or venturer acting in an individual, fiduciary or representative capacity, as the context may require. (bb) "Plan" shall mean U S WEST Savings Plan/ESOP as in effect at the Separation Time, and as amended from time to time. (cc) "Savings Plan" shall mean the savings plan portion of the Plan. 5 (dd) "Savings Plan Account" shall mean the account of a Participating Employee in the Savings Plan and shall include any sub-account established thereunder to give effect to the provisions of the Plan. (ee) "Section" shall mean a section of this Agreement. (ff) "Separation Time" shall mean the time at which U S WEST, Inc. is separated into two public companies, USW-C, Inc., renamed U S WEST, Inc. as of the Separation Time (the "Company"), and MediaOne Group, Inc. (gg) "Suspense Account" shall mean the account within the ESOP in which shall be held Financed Shares pending allocation to Participating Employees' ESOP Accounts under the Plan. (hh) "Trust" shall mean the trust established under this Agreement pursuant to the Plan. (ii) "Trustee" shall mean Bankers Trust Company, as Trustee of the Trust or any successor thereto, and any substitute or additional trustee appointed pursuant to Section 17, or trustee of a separate trust established pursuant to Section 21, as the context may require. (jj) "Units" shall mean a term which may be used to describe and value the Participating Employee's interest in the ESOP, and in each Investment Fund. (kk) "U S WEST" shall mean U S WEST, Inc., a Delaware corporation, the Company. (ll) "IMC" shall mean the U S WEST Investment Management Company, a Colorado corporation, that is organized and formed pursuant to the Plan. Except for those functions that are the responsibility of the Committee, the IMC shall have the authority and responsibility to monitor and perform investment management functions. (mm) "U S WEST Shares" shall mean Company Shares. The plural of any term shall have a meaning corresponding to the singular thereof as so defined and any neuter pronoun used herein shall include the masculine or feminine, as the context may require. 6 Section 3. No Diversion. (a) In General. No part of the corpus or income of the Fund shall be used for, or diverted to, purposes other than for the exclusive benefit of Participating Employees or their beneficiaries and defraying the reasonable expenses of administering the Plan and Trust, in accordance with Section 11. (b) Exceptions. Notwithstanding the preceding paragraph (a), and subject to the provisions of the Plan, the Code and ERISA, contributions may be returned to an Employing Company by the Trustee upon the written certification of the Company to the Trustee that one or more of the following circumstances exist: (i) a contribution was made by an Employing Company by a mistake of fact, and the contribution, reduced by losses (if any) attributable thereto, will be returned to such Employing Company within one year after it was paid to the Trustee; (ii) a contribution of an Employing Company conditioned upon its deductibility under section 404 of the Code, was disallowed by the Internal Revenue Service, and the contribution, reduced by losses (if any) attributable thereto to the extent the deduction is disallowed by the Internal Revenue Service, will be returned to the Employing Company within one year after the disallowance of the deduction; or (iii) a plan utilizing the Trust as a funding medium failed to initially qualify under section 401, 403(a) or 405(a) of the Code for its first fiscal year, and the portion of the Trust allocable to such plan will be returned to the Employing Companies maintaining such Plan within one year after the denial of the initial qualification of such plan by the Internal Revenue Service. Section 4. Duties of Trustee. (a) In General. It shall be the duty of the Trustee to (i) hold and, consistent with Section 6, invest the Fund as herein provided, (ii) maintain Participating Employee Accounts pursuant to Section 5, (iii) receive and implement Participating Employee instructions with respect to any Account or subaccount (including an alternate payee under a qualified domestic relations order, as that term is used in section 414(p) of the Code) for which the Participating Employee may direct the investment thereof under the provisions of the Plan, (iv) vote Company Shares pursuant to Section 10, and (v) as provided in the Plan on orders of the Company or the Committee or on directions of the Committee to: (A) make distributions in cash, or in Company Shares, (B) effect restorals, (C) transfer assets of the Fund to any insurance company pursuant to an Insurance Contract, or to any other financial institution, or any other trustee, (D) transfer the Accounts of any Participating Employee to a trustee of a savings or similar plan maintained by the company to which such Participating Employee may be transferred, (E) accept Participating Employee loans for the Loan Fund established under the Savings Plan, and (F) incur Acquisition Loans. 7 (b) Limitations. Any direction by the Company or the Committee to the Trustee pursuant to this Section 4 may, but need not, specify the application to be made of monies or securities so ordered. The Trustee may assume that any such directions are not contrary to any applicable law or the Plan. The Trustee shall not be responsible for the determination, computation or application of any benefit, for the form, terms or issuer of any Insurance Contract or investment agreement issued by a financial institution which it is directed to purchase with assets of the Fund, for performing any functions under any Insurance Contract which it may be directed to purchase and hold as contract holder thereunder or under such investment agreement (other than the execution of any documents incidental thereto on the instructions of the Company or the Committee), for the terms of any trust agreement under which any trustee to which it shall deliver any assets of the Fund on the order of the Company is acting, for the investment or application of any assets of the Fund by any trustee to which it shall so deliver any assets of the Fund, or for any other matter affecting the administration or implementation of the Plan by the Company or the EBC. (c) No Duty to Enforce Contributions. The Trustee shall have no responsibility or authority in connection with the determination of the amounts to be transferred to it from time to time on behalf of Participating Employees as provided in the Plan, nor shall it have any authority to bring any action or proceeding to enforce the collection of any such amount. Section 5. Participating Employees' Accounts. Except as the Trustee and the Company may otherwise agree in writing, the Trustee shall not be required to maintain any separate records or accounts with respect to any Participant in the Plan, and any records or accounts required to be maintained pursuant to the terms of the Plan or to comply with ERISA or the Code shall be the responsibility of the Company (or a separate service provider engaged by the Company or Plan administrator). If at any time the Company and Trustee agree that the Trustee shall maintain such records, a description of the services to be provided by the Trustee, if any shall be inserted below as a subsection of this Section 5 of the Agreement. (a) [reserved] Section 6. Investment of the Fund. 8 (a) The Savings Plan. Except for amounts temporarily held in cash in accordance with subparagraph (f) and amounts in the Loan Fund as provided under subparagraph (c), the Savings Plan shall be invested and reinvested in an Investment Fund, as hereinafter provided, or in such other Investment Fund, or other investments, as directed by the Company in accordance with Section 7: (i) The U S WEST Shares Fund which shall be invested in U S WEST, Inc. common stock. (ii) The MediaOne Group Shares Fund which shall be invested in MediaOne Group, Inc. common stock. (iii) The U.S. Stock Fund is a passive fund invested in a portfolio of common stocks which closely tracks the return of the S& P 500 Index.. It will invest primarily in stocks, such bonds, notes, debentures or preferred stocks as are convertible into common or capital stocks, such debentures accompanied by warrants to purchase common or capital stocks, and other types of equity investments (including U S WEST Shares). (iv) The Interest Income Fund which shall be invested in a diversified portfolio consisting of fixed income investments. The fixed income investments will, in each case, represent an issuer's promise to repay principal plus a rate of interest, and may include, but are not limited to, group annuity contracts with life insurance companies, deposit agreements with banks, obligations of the United States Government or its agencies, asset-backed securities and other fixed income securities. (v) The U.S. Asset Allocation Fund which shall be invested primarily in U.S. stocks, bonds, and money market portfolios. The Fund periodically shifts its assets allocation to emphasis the asset classes that offer the best investment value, while considering investment risk. (vi) Global Assets Fund is a diversified portfolio that seeks to achieve its objective by pursuing active asset allocation strategies across global equity and fixed income markets. It will invest primarily in U.S. stocks, non-U.S. stocks, U.S. bonds and international non-dollar bonds and cash equivalents. (vii) International Stock Fund which shall be invested primarily in stocks and bonds issued by non-U.S. companies, cash equivalents denominated in U.S. dollars or other major foreign currencies, and other fixed income investments. (viii) Personal Choice Retirement Account (PCRA) shall be a fund in which a Participating Employee can direct investment among mutual funds, common stocks and other investments. 9 (b) The ESOP. The ESOP is designed to invest primarily in qualifying employer securities, as defined in section 409(1) of the Code. Except for amounts temporarily held in cash in accordance with subparagraph (f) or dividends awaiting distribution to Participating Employees or dividends or other cash payments to be used to discharge the Acquisition Loan in accordance with the Plan or as may otherwise be required by ERISA, all amounts transferred to the Trustee and held in the ESOP shall be invested in one of the following Investment Funds pursuant to the terms of the Plan: (i) The U S WEST Shares Fund which shall be invested in U S WEST, Inc. common stock. (ii) The MediaOne Group Shares Fund which shall be invested in MediaOne Group, Inc. common stock for up to two years after the Separation Time, during which period MediaOne Group shares shall be sold and reinvested in U S WEST, Inc. common stock, in a manner consistent with the Employee Matters Agreement entered into between U S WEST, Inc. and USW-C, Inc. prior to the Separation Time, and as determined by an independent Investment Manager (which may or may not be the Trustee or an affiliate of the Trustee) selected by the Company. Two years following the Separation Time, the MediaOne Group Shares Fund shall terminate and its assets shall be transferred to the U S WEST Shares Fund. (iii) The Combined Shares Fund which shall be invested in U S WEST, Inc. common stock and MediaOne Group, Inc. common stock for a period of up to two years after the Separation Time. During such two year period, MediaOne Group shares shall be sold and reinvested in U S WEST, Inc. common stock in a manner consistent with the Employee Matters Agreement entered into between U S WEST, Inc. and USW-C, Inc. prior to the Separation Time, and as determined by an independent Investment Manager (which may or may not be the Trustee or an affiliate of the Trustee) selected by the Company. Two years after the Separation Time, the Combined Shares Fund shall terminate and its assets shall be transferred to the U S WEST Shares Fund. (c) The Loan Fund. The Loan Fund shall consist of funds invested at the Company's direction in Participating Employee loan obligations. Income under proceeds from the repayment of the principal amount of a Participating Employee's loan shall be invested in one or more of the Investment Funds described in Section 6(a). (d) Purchase of Company Shares. Company Shares may be purchased in the open market or by private purchase, including purchase from the Company. Any purchase of Company Shares from the Company shall be at the closing price as reported by the New York Stock Exchange on the date of purchase or, if no sales were made on that date, at the closing price on the preceding day on 10 which sales were made, unless and until the Company and the Trustee shall agree on a different method for determining fair market value consistent with the Plan and applicable law, or at any more favorable price that may be made available to the Trustee from time to time by a holder of Company Shares. The Company agrees to sell to the Trustee, and the Trustee agrees to purchase from the Company, all Company Shares required by the Trustee for the Plan, provided, however, that the Company may at any time, and from time to time, refuse to sell to the Trustee and the Trustee may at any time, and from time to time, refuse to purchase from the Company any or all of such Company Shares. Open market purchases of Company Shares and purchases of Company Shares from the Company will be made pursuant to a regular program mutually agreed upon between the Trustee and the Company. (e) Each Investment Fund Under the Savings Plan and the ESOP Treated Separately. The Trustee shall treat each Investment Fund under the Savings Plan and the ESOP separately and the income of each shall be accumulated and reinvested therein except that dividends on Company Shares held in each Participating Employee's ESOP Account may be distributed in cash to the Participating Employees, as determined by the Committee and in accordance with the Plan, and dividends received on Financed Shares held in the Suspense Account shall be used to discharge the Acquisition Loan until the Acquisition Loan is repaid. To the extent dividends on allocated Company Shares are used to discharge the Acquisition Loan as permitted under the Plan, an equivalent value shall be credited in Units to each Participating Employee's ESOP Account. (f) Cash Balances. Except as otherwise provided in this subsection (f), the Trustee shall be obligated to keep all cash balances in the Plan at any time held by the Trustee invested daily, to the extent practicable, so as to maintain daily cash balances at a minimum. Pending investment in the types of investments described in the Investment Funds and subject to any guidelines or limitations established pursuant to Section 7, an Asset Manager may maintain any portion of the Fund or any Investment Fund in cash or in short-term obligations of the United States Government or agencies thereof or in other types of short-term investments, including commercial paper and commingled funds, as it may from time to time deem to be in the best interests of the Plan; provided, however, cash balances in the U S WEST Shares Fund, the MediaOne Group Shares Fund and the Combined Shares Fund under the Savings Plan and the ESOP shall be limited insofar as is prudent to needs consistent with the implementation of the regular purchasing program and anticipated distributions therefrom. The Trustee shall have no authority or obligation to invest or reinvest cash balances of any Directed Fund unless and until it receives directions from the Asset Manager thereof. 11 Section 7. Investment of Trust Assets. (a) Asset Managers. Discretionary authority for the management and control of assets in the Fund may be retained, allocated or delegated, as the case may be, for one or more purposes, to and among the Asset Managers by the Company, in its absolute discretion. The terms and conditions of appointment, authority and retention of any Asset Manager shall be the sole responsibility of the Company or its delegate. The Company or its delegate shall promptly notify the Trustee in writing of the appointment or removal of an Asset Manager. Any notice of appointment pursuant to this Section 7 shall constitute a representation and warranty that the Asset Manager has been appointed in accordance with the provisions of the Plan and that any Asset Manager (other than the Trustee, the Company, the Committee or the IMC) is an Investment Manager. (b) Limitations on Investment Discretion. The Company or its delegate may limit, restrict or impose guidelines affecting the exercise of the discretion conferred on any Asset Manager. Any limitations, restrictions or guidelines applicable to the Trustee, as Asset Manager, shall be communicated in writing to the Trustee. The Trustee shall have no responsibility with respect to the formulation of any funding policy or any investment or diversification policies embodied therein. The Company or its delegate shall be responsible for communicating, and monitoring adherence to, any limitations or guidelines imposed on any other Asset Manager by Section 6 or the guidelines described above. (c) Responsibility for Diversification. The Company or its delegate shall be responsible for determining the diversification policy (if required) of the Fund, for monitoring adherence by the Asset Managers to such policy, and for advising the Asset Managers with respect to limitations on employer or other securities or property contained in any Plan or imposed on such Plan by applicable law or by the Company. (d) Company Not Responsible. The issuance of any specific investment directions or guidelines by the Company or its delegate shall not in any manner be construed as an acceptance by the Company or its delegate of any day to day investment management and supervisory powers in connection with assets managed by the Trustee or an Investment Manager (and the Company or its delegate shall not, as a result of issuing such directions or guidelines, be liable for any acts or omissions of the Trustee with respect to such assets, or be under any obligation to invest or otherwise manage such assets). Section 8. Responsibility for Directed Funds. (a) Responsibility for Selection of Agents. All transactions of any kind or nature in or from a Directed Fund shall be made upon such terms and conditions and from or through such brokers, dealers and other principals and agents as the Asset Manager shall direct. Unless specifically agreed to by the Trustee, no such transactions shall be executed through the facilities of the Trustee except where the Trustee shall make available its facilities solely for the purpose of temporary investment of cash reserves of a Directed Fund. (However, nothing in the preceding sentence shall confer any authority upon the Trustee to invest the cash balances of any Directed Fund unless and until it receives directions from the Asset Manager.) 12 (b) Trustee Not Responsible for Investments in Directed Funds. The Trustee shall be under no duty or obligation to review or to question any direction of any Asset Manager, or to review securities or any other property held in any Directed Fund with respect to prudence or proper diversification or compliance with any limitation on the Asset Manager's authority under this Agreement or the Plan, any agreement entered into between the Company and the Investment Manager or imposed by applicable law, or to make any suggestions or recommendation to the Company, the Committee or the Investment Manager with respect to the retention or investment of any assets of any Directed Fund, and shall have no authority to take any action or to refrain from taking any action with respect to any asset of a Directed Fund unless and until it is directed to do so by the Asset Manager. (c) Investment Vehicles. Any Investment Vehicle, or interest therein, acquired by or transferred to the Trustee upon the directions of the Asset Manager shall be allocated to a designated Directed Fund, and the Trustee's duties and responsibilities under this Agreement shall not be increased or otherwise affected thereby. The Trustee shall be responsible solely for the safekeeping of the physical evidence, if any, and reporting of the Trust's ownership of or interest or participation in such Investment Vehicle. (d) Reliance on Asset Manager. The Trustee shall be required under this Agreement to execute documents, to settle transactions, to take action on behalf of or in the name of the Trust and to make and receive payments on the direction of the Asset Manager. The Trustee may rely on the direction of the Asset Manager that (i) the transaction is in accord with applicable law, (ii) any contract, agency, joinder, adoption, participation or partnership agreement, deed, assignment or other document of any kind which the Trustee is requested or required to execute to effectuate the transaction has been reviewed by the Asset Manager and, to the extent it deems advisable and prudent, its counsel, (iii) such instrument or document is in proper form for execution by the Trustee, (iv) where appropriate, insurance protecting the Trust against loss or liability has been or will be maintained in the name of or for the benefit of the Trustee, and (v) all other acts to perfect and protect the Trust's rights have been taken, and the Trustee shall have no duty to make any independent inquiry or investigation as to any of the foregoing before acting upon such direction. In addition, the Trustee shall not be liable for the default of any Person with respect to any Investment Vehicle or any investment in a Directed Fund or for the form, genuineness, validity, sufficiency or effect of any document executed by, delivered to or held by it for any Directed Fund on account of such investment, or if, for any reason (other than the negligence or willful misconduct of the Trustee) any rights of the Trust therein shall lapse or shall become unenforceable or worthless. (e) Merger of Funds. The Trustee shall not have any discretionary responsibility or authority to manage or control any asset held in a Directed Fund upon the resignation or removal of an Asset Manager unless and 13 until it has been notified in writing by the Company that the Asset Manager's authority has terminated and that such Directed Fund's assets are to be integrated with the Discretionary Fund. Such notice shall not be deemed effective until two bank business days after it has been received by the Trustee. The Trustee shall not be liable for any losses to the Fund resulting from the disposition of any investment made by the Asset Manager or for the retention of any illiquid or unmarketable investment or any investment which is not widely publicly traded or for the holding of any other investment acquired by the Asset Manager if the Trustee is unable to dispose of such investment because of any restrictions imposed by the Securities Act of 1933 or other Federal or state law, or if an orderly liquidation of such investment is impractical under prevailing conditions, or for failure to comply with any investment limitations imposed pursuant to Section 7, or for any other, violation of the terms of this Agreement, the Plan or applicable law as a result of the addition of Directed Fund assets to the Discretionary Fund. (f) Notification of Company in Event of Breach. If the Trustee has actual knowledge that a breach of fiduciary duty committed by an Asset Manager has occurred, it shall notify the Company thereof. (g) Duty to Enforce Claims. The Trustee shall have no duty to commence or maintain any action, suit or legal proceeding on behalf of the Trust on account of or growing out of any investment made in or for a Directed Fund unless the Trustee has been directed to do so by the Asset Manager or the Company and unless the Trustee is either in possession of funds sufficient for such purpose or unless it has been indemnified to its satisfaction for counsel fees, costs and other expenses and liabilities to which it, in its sole judgment, may be subjected by beginning or maintaining such action, suit or legal proceeding. (h) Restrictions on Transfer. Nothing herein shall be deemed to empower any Asset Manager to direct the Trustee to transfer any asset of a Directed Fund to itself except for purposes enumerated in paragraph (J), (L) or (M) of Section 9(a)(1). Section 9. Powers of Asset Managers and Trustee. (a) Powers and Responsibilities of Asset Managers. (i) General Powers of Asset Managers. Without in any way limiting the powers and discretion conferred upon any Asset Manager by the other provisions of this Agreement or by law, each Asset Manager shall be vested with the following powers and discretion with respect to the assets of the Fund subject to its management and control, and, upon the directions of the Asset Manager of a Directed Fund, the Trustee shall make, execute, acknowledge and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to enable such Asset Manager to carry out such powers and discretion: 14 (A) to sell, exchange, convey, transfer or otherwise dispose of any property by private contract or at public auction (subject to the provisions of the Plan and this Agreement with respect to Company Shares), and no person dealing with the Asset Manager shall be bound to see to the application of the purchase money or to inquire into the validity, expediency or propriety of any such sale or other disposition; (B) to enter into contracts or to make commitments either alone or in company with others to sell or acquire property; (C) to purchase or sell, write or issue, puts, calls or other options, covered or uncovered, to enter into financial futures contracts, forward placement contracts and standby contracts, and in connection therewith, to deposit, hold (or direct Bankers, as Trustee or in its individual capacity, to deposit or hold) or pledge assets of the Fund; (D) to purchase part interests in real property or in mortgages on real property, wherever such real property may be situated; (E) to lease to others for any term without regard to the duration of the Trust any real property or part interest in real property; (F) to delegate to a manager or the holder or holders of a majority interest in any real property or mortgage on real property or in any oil, mineral or gas properties, the management and operation of any part interest in such property or properties (including the authority to sell such part interests or otherwise carry out the decisions of such manager or the holder or holders of such majority interest); (G) to vote upon any stocks, bonds or other securities (but subject to the suspension of any voting rights as a result of any broker loan or similar agreement and subject, further, to the provisions of the Plan and this Agreement with respect to Company Shares); to give general or special proxies or powers of attorney with or without power of substitution; to exercise any conversion privileges, subscription rights or other options and to make any payments incidental thereto; to consent to or otherwise participate in corporate reorganizations or other changes affecting corporate securities and to delegate discretionary powers and to pay any assessments or charges in connection therewith; and generally to exercise any of the powers of an owner with respect to stocks, bonds, securities or other property; (H) to organize corporations under the laws of any state for the purpose of acquiring or holding title to property (or, in the case of a Directed Fund, to direct the Trustee to organize such corporations or to appoint an ancillary trustee acceptable to the Trustee for such purpose); 15 (I) to invest in a fund consisting of securities issued by corporations and selected and retained solely because of their inclusion in, and in accordance with, one or more commonly used indices of such securities, with the objective of providing investment results for the fund which approximate the overall performance of such designated index; (J) to enter into any partnership, as a general or limited partner, or joint venture; (K) to purchase units or certificates issued by an investment company or pooled trust or comparable entity; (L) to transfer money or other property to an insurance company issuing an Insurance Contract or to a financial institution pursuant to an investment agreement; (M) to transfer assets of a Discretionary or Directed Fund to a common, collective or commingled trust fund exempt from tax under the Code maintained by an Asset Manager or an affiliate of an Asset Manager or by another trustee who is designated by the Company, to be held and invested subject to all of the terms and conditions thereof, and such trust shall be deemed adopted as part of the Trust and the Plan to the extent that assets of the Trust are invested therein; provided, however, that any transfer from a Directed Fund to a commingled trust maintained by Bankers may be made only with the prior approval of the Trustee and shall be invested only in one or more short-term investment funds or other special purpose funds established from time to time thereunder; and (N) to be reimbursed for the expenses incurred in exercising any of the foregoing powers or to pay the reasonable expenses incurred by any agent, manager or trustee appointed pursuant hereto to the extent permitted by the Plan. (ii) Duty of Care. In exercising any of the powers delegated under this Section 9, the Asset Manager shall discharge its duties hereunder with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims, consistent with the requirements of ERISA. (b) Additional Powers of Trustee. In addition, the Trustee is hereby authorized: (i) to register any securities held in the Fund in its own name or in the name of a nominee and to hold any securities in bearer form, and to combine certificates representing such securities with certificates of the same issue held by the 16 Trustee in other fiduciary or representative capacities or as agent for customers, or to deposit or to arrange for the deposit of such securities in any qualified central depository even though, when so deposited, such securities may be merged and held in bulk in the name of the nominee of such depository with other securities deposited therein by other depositors, or to deposit or arrange for the deposit of any securities issued by the United States Government, or any agency or instrumentality thereof, with a Federal Reserve Bank, but the books and records of the Trustee shall at all times show that all such investments are part of the Fund; (ii) to employ suitable agents, depositories and counsel, domestic or foreign, and to charge their reasonable expenses and compensation against the Fund to the extent permitted by the Plan, and to confer upon any such depository the powers conferred upon the Trustee by paragraph (i) of this Section 9(b), as well as the power to appoint subagents and depositories, wherever situated, in connection with the retention of securities or other property; (iii) with the written consent of the Company, to borrow money from any source as may be necessary or advisable to effectuate the purposes of the Trust on such terms and conditions as the Trustee may deem advisable; (iv) to deposit any funds of the Trust in accounts deposits or savings certificates, which bear a reasonable rate of interest, issued and maintained by Bankers, in its separate corporate capacity, or in any other institution affiliated with Bankers; (v) to make any distribution or transfer of assets required under the Plan as of a valuation date and, in furtherance thereof, to value such assets in accordance with the Plan; (vi) with the written consent of the Company, to maintain and operate one or more market inventory funds as a vehicle to exchange securities among Discretionary and Directed Funds without alienating the property from the Trust; (vii) with the consent of the Company, to loan securities held in the Fund to brokers or dealers or other borrowers under such terms and conditions as the Trustee, in its absolute discretion, deems advisable, to secure the same in any manner permitted by law and the provisions of this Agreement, and during the term of any such loan, to permit the loaned securities to be transferred into the name of and voted by the borrowers or others, and, in connection with the exercise of the powers hereinabove granted, to hold any property deposited as collateral by the borrower pursuant to any master loan agreement in bulk, either as provided in paragraph (i) of this Section 9(b) or otherwise, together with the unallocated interests of other lenders, and to retain any such property upon the default of the borrower, whether or not investment in such property is 17 authorized under this Agreement, and to receive compensation therefor out of any amounts paid by or charged to the account of the borrower; (viii) with the written consent of the Company, to enroll the Fund in a program maintained by Bankers to permit Participating Employees' accounts to participate in dividend reinvestment plans offered by issuers of securities held in accounts, such as the Fund, in order to realize upon the discount from market value offered shareholders without any investment risk or other impact on the managed assets in the Fund, and to receive compensation therefor (including reimbursement for its out-of-pocket costs associated therewith) out of the income received by the Fund from participation in such program; (ix) subject to Section 6(f), to hold uninvested cash awaiting investment and such additional cash balances as it shall deem reasonable or necessary, without incurring any liability for the payment of interest thereon; (x) to delegate to the Company by mutual agreement in writing any of its functions under this Agreement except the custody of assets (other than notes evidencing Participating Employee loans and supporting documentation), and to be relieved from any and all liability or responsibility, with respect to functions so delegated to the Company, for any action taken or not taken by the Company; (xi) to hold, invest and reinvest the assets of the Fund in common with the assets of qualified employee benefit plans of the Company or its affiliates held as separate trusts by the Trustee; provided, however, that the Trustee's records shall at all times show the equitable share of the Fund in such common fund; (xii) subject to the prior written approval of the Company, to compromise, compound, submit to arbitration or settle any debt or obligation owing to or from it as Trustee; to reduce or increase the rate of interest on extension, or otherwise modify, foreclose upon default, or enforce any such obligation; to sue or defend suits or legal proceedings to protect or enforce any interest in the Trust and to represent the Trust in all suits or legal proceedings in any court or before any other administrative agency, body or tribunal; provided, however, that the Trustee shall not need the approval of the Company to pursue any claim involving Bankers in its capacity as Trustee; and provided, further, that the Trustee shall exercise the foregoing powers with respect to any amount due or owing from a Participating Employee only upon the directions of the Company; (xiii) with the written consent of the Company, to utilize BT Brokerage Corporation to execute transactions in Company Shares where the use of BT Brokerage Corporation would be appropriate applying the criteria normally applied by Bankers in selecting any other broker; 18 (xiv) to execute and deliver such instruments and to take any and all actions, including the filing with the United States Department of Labor for exemptive or other administrative relief from the provisions of ERISA or the Code, as the Trustee, upon prior consultation with the Company, or the Company determines to be necessary or desirable to carry out any of the foregoing powers or otherwise in the best interests of the Trust; and (xv) generally, consistent with the provisions of this Agreement to perform all acts (whether or not expressly authorized herein) which it may deem necessary and prudent for the protection of the assets of the Trust. (c) Limitation of Powers. The foregoing provisions of this Section 9 shall not be deemed to expand the permissible investments for any Investment Fund under Section 6.1 or to limit the Company's power to restrict the exercise of such powers by an Asset Manager as provided in Section 7(b). In addition, any powers conferred on any Asset Manager under subparagraph (a) or on the Trustee under subparagraph (b) may be suspended or revoked at any time by the Company upon notice to the Asset Manager or the Trustee as the case may be. Any oral notice hereunder shall be promptly confirmed in writing to the Trustee and the Asset Manager, but the Trustee shall have no responsibility hereunder unless and until it has received notice in accordance with Section 25. (d) Retention of Company Shares. Notwithstanding the powers hereinabove conferred on the Trustee and subject to the requirements of ERISA and Section 10, the Trustee or appointed Investment Manager shall purchase and retain Company Shares held in the Savings Plan (other than in the U.S. Stock Fund and the U.S. Asset Allocation Fund described in Section 6(a)) and the ESOP regardless of market fluctuations and, in the normal course, the Trustee shall sell such Company Shares only to meet administrative and distribution requirements of the Plan or accommodate elections by Participating Employees to transfer Units from one Investment Fund to another in accordance with the provisions of the Plan. (e) Acquisition Loan. The Trustee shall, at the written direction of the Committee, borrow sums of money for the purchase of Company Shares for the ESOP (as permitted by the Plan) in a manner and under conditions which will cause the loan to be an "exempt loan" within the meaning of section 4975(d)(3) of the Code. Selection of the lender and determination of the terms and conditions of the Acquisition Loan shall be the sole responsibility of the Committee, and the Trustee shall be responsible only for executing any instruments required by the Committee to effectuate the loan transaction as instructed by the Committee. The Trustee may require a certification from the Committee that the Acquisition Loan is such an "exempt loan" and an opinion of counsel to the Committee in form and substance satisfactory to the Trustee prior to executing any note or pledge agreement in connection therewith. The Trustee shall hold and invest or disburse the Acquisition Loan proceeds, and shall pledge as collateral, hold unallocated in a Suspense Account or otherwise hold Company Shares acquired with the proceeds of such Loan, all in accordance with the written instructions of the Committee. Nothing herein is intended to affect 19 the Trustee's power to borrow and repay sums of money in order to meet obligations and other financial needs of the Plan or the Fund in accordance with the other provisions of the Agreement through loans which are not "exempt loans" as described above; provided, however, that such loans do not constitute prohibited transactions as defined in section 406 of ERISA. Section 10. Provisions Affecting Company Shares. (a) Voting. Each Participating Employee shall direct the Trustee on how to vote the Company Shares allocated to his ESOP Account and his Savings Plan Account (but only to the extent such shares are invested in any of the Investment Funds that may hold U S WEST Shares described in Section 6(a)(i) and 6(b)(i), (ii) and (iii)) at each annual meeting and at each special meeting of stockholders of the Company. The Employing Company shall cause each Participating Employee (or his beneficiary) to be provided with a copy of a notice of each such stockholder meeting and the proxy statement, together with the appropriate form for indicating his voting instructions to the Trustee. Upon receipt of such instructions, the Trustee shall vote the Company Shares as instructed. Each Participating Employee (or his beneficiary) shall be a "named fiduciary" for purposes of instructing the Trustee on voting the Company Shares allocated to his ESOP Account and Savings Plan Account (but only to the extent such shares are invested in any of the Investment Funds described in Section 6(a)(i) and Section 6(b)(i), (ii), and (iii)). If the proxy materials so provide, a Participating Employee may also direct the Trustee to authorize the designated proxies to vote such Company Shares in accordance with the recommendations of the Board of Directors. The Trustee shall maintain the instructions of Participating Employees in confidence with respect to the Employer. The Trustee shall vote all Company Shares held in the Suspense Accounts as well as all Company Shares held in any of the Investment Funds that may hold U S WEST Shares described in Section 6(a)(i) and Section 6(b)(i), (ii) and (iii) for which it does not receive timely instructions, in the same proportion as the Trustee votes Company Shares for which it receives timely instructions; provided, however, that the Trustee shall in all events exercise voting obligations with respect to all Company Shares in each such Investment Fund and in the Suspense Account consistent with the Trustee's fiduciary duties under ERISA. No Investment Manager shall have voting authority or responsibility with respect to any Company Shares held in the Investment Funds described in Section 6(a)(i) and Section 6(b)(i), (ii) and (iii), or the Suspense Account. (b) Response to Tender Offers. The Committee shall have the right to direct the Trustee as to the manner in which to respond to any tender, exchange or purchase offer, or any matter related thereto, with respect to any Company Shares held in the ESOP (whether or not allocated to Participating Employees' Accounts). Each Participating Employee shall have the right, to the extent of Company Shares allocated to the Participating Employees' Savings Accounts (other than in the U.S. Stock Fund and the U.S. Asset Allocation Fund described in Section 6(a)), to direct the Trustee in writing as to the manner in which to respond to a tender offer or exchange offer with respect to the Company Shares. If the Trustee does not receive timely direction from a Participating Employee as to the manner in which to respond to such a tender offer or exchange offer, the Trustee shall tender or exchange any such Company Stock in accordance with the directions of the Committee. 20 (c) Proceeds of Sale. If any Company Shares allocated to Participating Employees' Accounts (other than in the U.S. Stock Fund and the U.S. Asset Allocation Fund that may hold U S WEST Shares described in Section 6(a)) are sold or exchanged in a tender, exchange or purchase offer or in a transaction relating thereto or following any such offer or in a similar transaction, including a merger or reorganization of the Company, in which the stockholders of the Company receive cash or non-equity securities, the cash or securities received in exchange therefor shall be held in one or more separate Accounts for the Participating Employees in respect of whose interests the Company Shares were sold or exchanged. Any cash shall be invested in short-term investments pending amendment of the Plan and Trust to provide for the future investment thereof. If any Company Shares held in the Suspense Account are sold or exchanged in a tender, exchange or purchase offer or in a transaction relating thereto or following any such offer or in a similar transaction, including a merger or reorganization of the Company in which the stockholders of the Company receive cash or non-equity securities, any cash received therefor shall be used to pay principal and interest under any outstanding Acquisition Loans incurred to acquire such Company Shares and any securities received therefor shall be liquidated by the Trustee as soon as practicable and the proceeds thereof shall be used for the same purpose. If, after repayment of all amounts of principal and interest under an Acquisition Loan, there remains in such Suspense Account any proceeds from the sale or exchange of such Company Shares, or attributable thereto, such excess amount shall be allocated to Participating Employees' Accounts in accordance with the directions of the Committee. Section 11. Expenses of the Fund. Expenses of administering the Plan, including the fees and expenses of the Trustee, may be charged to the Trust. Such expenses include, but are not limited to, recordkeeping and administrative fees, consultant fees, and fees for internal and external vendors (e.g., including, but not limited to, postage, printing and shipping expenses). Fees and expenses of an Investment Manager shall be deemed to be part of the cost of maintaining the portion of the Trust Fund which the Investment Manager manages, and shall be payable out of that portion of the Trust Fund. Consultant and administrative fees related specifically to any Fund will be paid out of that fund. Brokerage fees, transfer taxes and other expenses incident to the purchase or sale of securities of the Trust shall be deemed to be part of the cost of such securities, or deducted in computing the proceeds therefrom, as the case may be. Transfer taxes, in connection with distribution of Company Shares to employees or their beneficiaries shall be borne by the Trust. Taxes, if any, on any assets held or income received by the Trust shall be charged appropriately against the Accounts of Participating Employees as the Committee shall determine. 21 Section 12. Indemnification of Trustee. (a) General. The Company will indemnify and hold harmless the Trustee of and from any liability and expense (including reasonable counsel fees) incurred in connection with or arising out of any action taken or omitted with respect to any disbursement, investment, purchase, sale, Acquisition Loan or other loan, or transfer of any part of the Fund made by the Trustee in accordance with the directions of the Company, the Committee, the IMC or an Investment Manager. In addition, if the Trustee succeeds to responsibilities hereunder for management of assets previously managed by another trustee or by an Investment Manager or other fiduciary (including the Company, the Committee and the IMC), the Company hereby agrees to hold the Trustee harmless from any liability and expense (including reasonable and necessary counsel fees) incurred by or assessed against the Trustee as the direct or indirect result of any act or omission of such other trustee, Investment Manager or other fiduciary. (b) Limitation. Notwithstanding anything contained herein to the contrary, the Company shall have no responsibility to the Trustee under the undertaking in subparagraph (a) if the Trustee knowingly participated in or knowingly undertook to conceal any act or omission of a custodian (or other depository) or trustee appointed by the Trustee to hold title to, or other indicia of ownership of, property of the Trust (or other independent parties engaged by the Trustee in its discretion), which the Trustee knew to constitute a breach of its fiduciary responsibility, or if the Trustee failed to perform any of the duties undertaken by it in accordance with the provisions of this Agreement, or if the Trustee fails to act in conformity with the direction of an authorized representative of the Company, the Committee, the IMC or an Investment Manager. (c) Reliance on Counsel. The Trustee may from time to time consult with counsel, who may be counsel to the Company, and shall be fully protected in acting upon the advice of counsel to the extent permitted by law. (d) Cumulative Effect. The Trustee's rights under this Section 12 are cumulative and shall be in addition to, any right under other provisions of this Agreement or applicable Law. Section 13. Recordkeeping and Accounting. (a) Trustee's Recordkeeping. The Trustee shall keep accurate and detailed accounts of all investments, receipts, disbursements, transfers and other transactions hereunder, and all accounts, books and records relating thereto shall be open to inspection and audit at all reasonable times by any Person designated by the Company. (b) Trustee's Accounting. Within 90 days following the close of an Accounting Period, the Trustee shall file with the Company (and with any other Person as may be directed by the Company) a written account setting forth 22 all investments, receipts, disbursements and other transactions effected by it during such Accounting Period. Upon the expiration of one year from the date of filing such account, the Trustee shall be forever released and discharged from all liability and accountability to the Company, the Committee, the Employing Companies and any other Person in privity with the Company, the Committee or the Employing Companies under this Agreement with respect to the transactions shown in such accounting, except with respect to any such acts or transactions as to which the Company shall file written objections with the Trustee within such one-year period or with respect to acts or transactions which the Company could not reasonably have discovered prior to the expiration of such one-year period by reviewing such account, and except for willful misconduct, gross negligence, lack of good faith or fraud on the part of the Trustee, except insofar as applicable law may otherwise provide. Nothing in this Section 13 shall preclude the Company from requiring accountings and similar reports from the Trustee at more frequent intervals as may be agreed to by the Trustee. Section 14. Judicial Accountings. Except to the extent that sections 502 and 504 of ERISA may provide otherwise, in order to protect the Fund against waste, no one other than the Company or the Committee may require the Trustee to account or may institute an action or proceeding against the Trustee or the Fund. However, nothing herein shall in any way limit the right of the Trustee to bring an action or proceeding to settle its account or for such other relief as it may deem appropriate. 23 Section 15. Authorizations. (a) The Committee. All directions, orders, requests, instructions and objections of the Committee to the Trustee shall be in writing signed by the Secretary of the Committee, or by such other Person as may be designated from time to time by the Committee, and the Trustee shall act and shall be fully protected in acting in accordance with such directions, orders, requests and instructions. The Secretary or an Assistant Secretary of the Company shall furnish the Trustee from time to time certification of actions of the Company's Board of Directors or the chief executive officer, as the case may be, evidencing the appointment and termination of office of any members of the Committee and the appointment of successors thereto and with certified copies of resolutions of the Committee evidencing the appointment and termination of office of its Secretary, Assistant Secretary or any other Person as may be designated to sign or act on behalf of the Committee and the appointment of successors thereto. (b) The Company. Any action required to be taken by the Company may be evidenced by a resolution of its Board of Directors certified to the Trustee over the signature of its Secretary or an Assistant Secretary or may be evidenced in writing by such Person as may be authorized by the Company to act on its behalf hereunder, such authorization to be evidenced by a resolution certified as aforesaid. Any action by the Committee may be evidenced by minutes or resolutions certified to the Trustee over the signature of its Secretary or an Assistant Secretary or such other Person or in such other manner as may be authorized thereunto; and the Trustee shall be fully protected in acting in accordance therewith. (c) The IMC. Any action required to be taken by IMC may be evidenced by a resolution of its Board of Directors certified to the Trustee over the signature of its Secretary or an Assistant Secretary or may be evidenced in writing by such Person as may be authorized by IMC to act on its behalf hereunder, such authorization to be evidenced by a resolution certified as aforesaid. (d) Investment Manager. The Investment Manager shall furnish the Trustee with the names and signatures of those persons authorized to act on its behalf hereunder, and the Trustee shall assume no responsibility hereunder for failure to act with respect to any Directed Fund subject to the management and control of an Investment Manager unless and until it shall receive appropriate directions from the Investment Manager. The Trustee may rely on prior written notice of the appointment of an Investment Manager by the Company and of the appointment of any Person authorized to act on behalf of the Investment Manager until it has received written notice to the contrary from the Company or the Investment Manager; provided, however, that all directions given by the Investment Manager to the Trustee shall be in writing, signed by a duly authorized representative of the Investment Manager and, provided, further, that the Trustee may accept oral directions for the purchase or sale of securities subject to confirmation in writing, or, where appropriate and upon such terms as shall be mutually agreed upon between the Trustee and the Investment Manager, such other means of confirmation as may be approved, from time to time, for use by applicable regulatory authorities. The Trustee shall make available to the 24 Investment Manager copies of, or extracts from, such portions of its accounts, books and records relating to the accounts of the Investment Manager as may be necessary or appropriate in connection with the exercise of the Investment Manager's functions hereunder. Section 16. Removal and Resignation of Trustee. (a) The Trustee may be removed by the Company at any time upon sixty (60) days' notice in writing to the Trustee unless a shorter period of notice shall be agreed to by the Trustee. The Trustee may resign at any time upon 60 days' notice in writing to the Company or the Committee. Notwithstanding the preceding sentence, if a successor trustee shall not have been appointed within such 60 day period, the Trustee shall continue to act as Trustee hereunder until the earlier of the appointment of a successor or 120 days following the date of the Trustee's written notice of resignation. Upon such removal or resignation of the Trustee, the Company shall appoint and designate a successor trustee who shall have the same powers and duties as those conferred upon the Trustee hereunder and, upon acceptance of such appointment by the successor trustee, the Trustee shall assign, transfer and pay over to such successor trustee the funds and properties then constituting the Fund, as well as such records, files and other data compiled or maintained by the Trustee on behalf of the Company as the successor trustee shall reasonably request. Any compensation paid to the Trustee in advance shall be prorated to the date of resignation or removal of the Trustee, and any unearned portion thereof shall be credited to the Company. (b) If, for any reason, the Company cannot or does not act to appoint a successor trustee within a reasonable period of time but not later than one hundred eighty (180) days from the effective date of the removal or resignation of the Trustee, the Trustee may apply to a court of competent jurisdiction for the appointment of a successor trustee. Any expenses incurred by the Trustee in connection therewith shall be charged to and paid from the Trust as an expense of administration. The Trustee shall continue to serve and to receive its compensation and reimbursement of its expenses until its successor accepts the Trust and receives delivery of the Fund. Section 17. Appointment of Additional Trustees. The Company shall have authority to direct that there shall be more than one trustee under this Agreement and to designate such additional trustee or trustees. In the event that there shall be two or more trustees acting hereunder, the Company may but shall not be required to direct that a portion of the Fund shall be held by each of said trustees. If such a direction is given, each trustee shall individually invest and keep invested the portion of the Fund held by it or from time to time paid over to it, all upon the conditions set forth in this Agreement as though the Company had entered into a separate trust agreement with each trustee having the same terms as this Agreement. Each such trustee shall be subject to the same duties and responsibilities and shall have the same powers and rights with respect to the investment of the portion of the Fund held by it as a single trustee would have with respect to the entire Fund. Each trustee shall have no duties or responsibilities and shall have no powers or rights with respect to the investment of the portion of the Fund held not by it but by another such trustee. 25 Section 18. Spendthrift Provision. Except to the extent required by applicable law or permitted by the Plan in the case of the Loan Fund described in Section 6(c), no right or interest of any Participating Employee or beneficiary in the Trust or in the net earnings and profits therefrom shall be assigned or transferred, or used as collateral for a loan, in whole or in part, either directly, by operation of law, or otherwise excluding, by way of illustration but not by way of limitation, execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner, and no such right or interest of any Participating Employee or beneficiary in the Fund shall be liable for or subject to any obligation or liability of such Participating Employee. Section 19. Delegation to Company. The Company shall act for each Employing Company participating in the Plan and for each such subsidiary or affiliate of the Company or any Employing Company participating in the Plan in all matters arising under and with respect to the Plan and this Agreement (including, by way of illustration but not of limitation, the power to modify or amend this Agreement in accordance with Section 20 hereof), except to the extent otherwise provided herein. The Employing Company's election to participate in the Plan shall be deemed an election to be bound by and accept the terms of this Agreement as though it were a party hereto without the further act of the Trustee. Section 20. Amendment. The Company reserves the right at any time and from time to time to modify or amend, in whole or in part, any or all of the provisions of this Agreement by notice thereof in a writing delivered to the Trustee, provided that no modification or amendment which increases the duties or responsibilities of the Trustee shall be made without the consent of the Trustee, and, provided further, that no modification or amendment shall authorize or permit any part of the corpus or income of the Fund to be used for, or diverted to, purposes other than for the exclusive benefit of the Participating Employees or their beneficiaries or permit any part of the Fund under any circumstances to revert to the Company (except as may otherwise be permitted by Section 3). If the Plan shall be amended, the Company shall promptly furnish to the Trustee a copy of the amendment, duly certified by the Secretary or an Assistant Secretary of the Company. Section 21. Creation of Separate Trusts. The Company may at any time request the Trustee to segregate the Fund into separate portions applicable to the Participating Employees of one or more of the respective Employing Companies. In the event of such a request, the Trustee shall make such segregation, based upon its accounts, and shall hold each such portion in a separate trust under and pursuant to all of the terms of this Agreement. After any such segregation into separate trusts pursuant to this Section 21, the right of the Company with respect to the removal, appointment and designation of Trustees may be exercised separately with respect to one or more of such separate trusts. At any time after such portion of the Fund as is allocable to the Participating Employees of any Employing Company shall have been segregated 26 into a separate trust, such Employing Company, by action of its board of directors, may determine that the trust shall be liquidated, in which event distribution of the trust shall be made by the Trustee on orders certified by the Employing Company as being in accordance with the Plan, ERISA, and the Code. Section 22. Termination of Agreement. (a) General. This Agreement may be terminated in whole or in part at any time by the Company upon 60 days' notice in writing to the Trustee, unless a shorter period of notice shall be agreed upon. In the event of the termination of the Trustee as provided in Section 16, or upon the termination of the Trust as herein provided, or in the event that the Trustee receives notice from the Company that the Plan has lost its qualified status or ceased to be exempt from federal income taxation under the Code, or in the event that the Trustee receives notice from the Company that any portion of the assets of the Fund allocable to any group of employees of any Employing Company is to be withdrawn by such Employing Company for a purpose consistent with ERISA, the Code and this Agreement, and the Company has approved such withdrawal, the Trustee shall pay over the allocable share (or part thereof) of the Fund affected by the termination or withdrawal, as the case may be, in cash or in property, or in a combination of both, to a trustee of the Plan or other Person in such amount and in such manner as may be directed by the Company. Such allocable share shall be calculated as of the date of such termination or withdrawal, but actual payment of such cash or property may be postponed to the valuation date under the Plan next succeeding the date of termination or withdrawal. Upon such transfer and delivery the Trustee shall make such accounting of its trusteeship as the Company or the Committee may request, but unless otherwise requested by the Company, the Trustee shall render an accounting in accordance with Section 13 hereof. If at any time the Fund shall become exhausted as a result of any actions taken pursuant to this Section or any other provision of this Agreement, this Agreement shall be deemed to have terminated according to its terms as between the Company and an affected Trustee. (b) Continuation of Powers. Upon the termination of the Plan or the Trust, or upon the resignation or removal of the Trustee as hereinabove provided, the Trustee shall continue to have and may exercise all the title, powers, discretion, rights and duties conferred or imposed upon it by law or by this Agreement until the final distribution of the Fund, or any portion thereof reserved by the Trustee pursuant to the foregoing provisions of this Agreement, unless otherwise directed, in writing, by the Company or the Committee. 27 Section 23. Successor in Interest. Any corporation which shall by merger, consolidation, purchase or otherwise, succeed to all or substantially all of the trust business of the Trustee shall thereupon, and without any appointment, assignment or action by anyone, become the Trustee. The Trustee shall notify the Company of any such merger, consolidation, purchase or other form of reorganization described in the preceding sentence within five business days thereof, at which time the Company may elect to remove the Trustee in accordance with the provisions of Section 16. Section 24. Governing Law. This Agreement shall be administered, construed and enforced according to the internal laws of the State of New York (without regard to any conflict of laws provisions), to the extent such laws have not been preempted by ERISA or other applicable federal law. The actual administration of the Trust may be conducted in such location within the United States, and the location of its assets (or indicia of ownership thereof) shall be within the United States or if the provisions of section 404(b) of ERISA are complied with, outside the jurisdiction of the district courts of the United States), as the Company in its sole discretion shall determine from time to time. Upon any such change in the location of the administration or the assets of the Trust, the Company may, in its sole discretion, direct that the Trust shall cease to be administered, governed, and interpreted in accordance with the laws of the State of New York, or the laws of such other jurisdiction as may then be applicable to the Trust, and shall, instead, be administered, governed and interpreted in accordance with the laws of the jurisdiction to which the administration and/or the assets of the Trust have been transferred. Section 25. Notices. Except as may otherwise be provided in the Agreement, any notice, demand, direction or instruction to be given to the Company hereunder shall be in writing and shall be duly given if mailed or delivered to the Company at 1801 California Street, Denver, Colorado 80202, Attention: Treasurer, and to the Trustee at Bankers Trust Company as Trustee of the U S WEST Savings Plan/ESOP, Bankers Trust Plaza, 20th Floor, Mail Stop 2202, New York, New York 10006, Attention: Retirement Services Group or at such other address as shall be specified by either party hereto to the other, in writing. Any notice or other communication shall be deemed to have been given to, or received by, the appropriate party as of the date on which it is personally or electronically delivered or, if mailed, on the fifth (5th) business day after the date of the postmark applied by the United States Postal Service. Section 26. Counterparts. This Agreement may be executed in any number of separate counterparts, each of which shall be deemed an original, but the several counterparts shall together constitute one and the same agreement of the parties hereto. This Agreement is intended to be the complete and exclusive statement of the terms hereof, and may not be modified or amended orally. Section 27. Severability. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be held contrary to any provision of law or contrary to policy of law, although not expressly prohibited, or against public policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements, provision or terms shall be enforced 28 only to the extent not contrary to law or contrary to policy of law or against public policy or invalid and otherwise shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or the rights of the parties hereto or the Plan. Section 28. Continuation of Trust. The dissolution, resignation or removal of any Trustee, for any reason whatsoever, shall not operate to terminate this Agreement insofar as the duties and obligations of any other Trustees appointed pursuant to Section 17 are concerned. Section 29. Domestic Trust. The Trust shall be maintained at all times as a domestic trust in the United States and shall be at all times qualified under section 401(a) of the Code, or any successor provision thereto, and exempt from federal income taxation under section 501(a) of the Code, or any successor provision thereto, as long as any assets of a Plan are held by a Trustee hereunder. 29 EX-4.7 9 ex4_7.txt EXHIBIT 4.7 QWEST DB/DC MASTER TRUST AGREEMENT by and between QWEST ASSET MANAGEMENT COMPANY and BOSTON SAFE DEPOSIT AND TRUST COMPANY QWEST DB/DC ----------- MASTER TRUST AGREEMENT ---------------------- TABLE OF CONTENTS ----------------- PAGE SECTION 1. - GENERAL.........................................................2 1.1 Definitions.....................................................2 1.2 Compliance With Law.............................................3 SECTION 2. - ESTABLISHMENT OF COMBINED MASTER TRUST..........................3 2.1 Appointment and Acceptance of Master Trustee....................3 2.2 Master Trustee Responsibilities.................................4 2.3 Purpose; Exclusive Benefit......................................4 SECTION 3. - AUTHORITIES.....................................................4 3.1 Authorized Parties..............................................4 3.2 Authorized Instructions.........................................5 SECTION 4. - POWERS AND DUTIES...............................................5 4.1 General Powers and Duties of Master Trustee.....................5 4.2 Power of Attorney...............................................8 4.3 Contractual Income and Settlement; Market Practice Settlements.....................................................9 SECTION 5. - INVESTMENT OF THE FUND.........................................10 5.1 Appointment of Investment Managers.............................10 5.2 Directed Powers of Master Trustee..............................12 5.3 Brokerage......................................................16 5.4 Standard of Care...............................................16 5.5 Force Majeure..................................................17 SECTION 6. - INVESTMENT FUNDS...............................................17 6.1 Establishment of Investment Funds..............................17 6.2 Permissible Types of Investments...............................18 6.3 Cash and Cash Balances.........................................19 SECTION 7. - UNITS OF PARTICIPATION; VALUATION..............................19 7.1 Units of Participation.........................................19 7.2 Valuation of Investment Funds..................................20 7.3 Valuation of Units.............................................20 7.4 Valuation Rules................................................21 SECTION 8. - ADDITIONS AND WITHDRAWALS......................................23 8.1 Additions and Withdrawals......................................23 8.2 Investment Cash in Short-Term Investment Funds of the Master Trustee........................................................24 (i) SECTION 9. - REPORTING AND RECORDKEEPING....................................25 9.1 Accountings by Master Trustee..................................25 9.2 Review of Reports..............................................26 9.3 Non-Fund Assets................................................27 SECTION 10. - COMPENSATION, EXPENSES, TAXES, INDEMNIFICATION.................27 10.1 Compensation and Expenses......................................27 10.2 Tax Obligations................................................28 10.3 Indemnification................................................28 10.4 Damages........................................................29 SECTION 11. - AMENDMENT, RESIGNATION, REMOVAL................................29 11.1 Amendment......................................................29 11.2 Removal or Resignation of Master Trustee.......................29 SECTION 12. - ADDITIONAL PROVISIONS..........................................30 12.1 Loss of Qualification..........................................30 12.2 Assignment or Alienation.......................................30 12.3 Successors and Assigns.........................................30 12.4 Governing Law..................................................30 12.5 Necessary Parties..............................................31 12.6 No Third Party Beneficiaries...................................31 12.7 Representations................................................31 12.8 Execution in Counterparts......................................31 (ii) QWEST DB/DC MASTER TRUST AGREEMENT THIS MASTER TRUST AGREEMENT, effective as of the 31st day of May, 2001, by and among Qwest Asset Management Company (the "Company"), in its corporate capacity, as a Named Fiduciary (as defined below) of the Qwest Pension Plan (the "DB Plan") and the US WEST Savings Plan/ESOP (the "DC Plan") and BOSTON SAFE DEPOSIT AND TRUST COMPANY (the "Master Trustee"). WITNESSETH: WHEREAS, the DB Plan and the DC Plan are employee benefit plans intended to meet the requirements of ss. 401(a) of the Code for the benefit of the employees therein described (the "Plan", individually or the "Plans", collectively); and WHEREAS, the assets of the DB Plan are held in the Qwest Pension Trust established pursuant to a restated and amended Trust Agreement dated as of the 12th day of June, 1998, as amended (the "DB Trust"); and WHEREAS, the assets of the DC Plan are held in the US WEST Savings Plan/ESOP Trust established pursuant to an amended and restated Trust Agreement dated as of the 5th day of June, 1998 (the "DC Trust" and, together with the DB Trust, the "Participating Trusts"); and WHEREAS, the Company desires to establish a master trust to facilitate the combined investment of certain assets held in each of the Participating Trusts on a collective basis by the establishment of a combined master trust (the "DB/DC Master Trust"); and WHEREAS, the Plans of which the Participating Trusts form a part provide for one or more fiduciaries named in the Plans, or identified as a fiduciary pursuant to a procedure specified in the Plans, which have been allocated the power to manage and control the assets of the Plans (the "Named Fiduciary"), as described in Exhibit A; and WHEREAS, the Investment Committee, as the Named Fiduciary, has the power to appoint a trustee in accordance with the terms of the Plans and has appointed Boston Safe Deposit and Trust Company as Master Trustee; NOW, THEREFORE, the Company, in its corporate capacity and as Named Fiduciary, and the Master Trustee, each intending to be legally bound, agree as follows: SECTION 1. - GENERAL -------------------- 1.1 Definitions. The terms used herein shall have the following meanings: (a) "Agreement" means this instrument, including all amendments thereto. (b) "Authorized Instructions" means all directions and instructions to the Master Trustee from an Authorized Party provided in accordance with Section 3.2 of this Agreement. (c) "Authorized Party" means any person or entity properly identified by the Company, the Named Fiduciary, the DC Trustee, the DB Trustee or the Investment Manager to the Master Trustee in accordance with Section 3.1 of this Agreement. (d) "Code" means the Internal Revenue Code of 1986, as amended. (e) "DB Trustee" means the trustee of the DB Trust, currently Boston Safe Deposit and Trust Company. (f) "DC Trustee" means the trustee of the DC Trust, currently Bankers Trust. (g) "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. 3 (h) "Investment Fund" means one of the separate investment funds established pursuant to Section 6.1 of this Agreement, to which the particular provision of the Agreement is being applied. (i) "Investment Manager" means an investment manager, within the meaning of ss. 3(38) of ERISA which has been appointed by the Named Fiduciary with respect to an Investment Fund pursuant to Section 5.1. (j) "Master Trust Fund" means all of the assets held pursuant to this Agreement as such assets shall exist from time to time. (k) "Tax Obligations" means the responsibility for payment of taxes, withholding, certification and reporting requirements, claims for exemptions or refund, interest, penalties and other related expenses of the Master Trust Fund. 1.2 Compliance with Law. The DB/DC Master Trust is intended to comply with ERISA and to be tax-exempt under ss. 501(a) of the Code. The Company represents that the Plans are qualified under ss. 401 (a) of the Code and shall immediately notify the Master Trustee if any Plan ceases to be so qualified. SECTION 2. - ESTABLISHMENT OF DB/DC MASTER TRUST ------------------------------------------------ 2.1 Appointment and Acceptance of Master Trustee. The Named Fiduciary hereby appoints BOSTON SAFE DEPOSIT AND TRUST COMPANY as Master Trustee of the DB/DC Master Trust with respect to the Master Trust Fund. The Master Trust Fund shall be held by the Master Trustee in trust and dealt with in accordance with the provisions of this Agreement. The Master Trustee hereby accepts its appointment as master trustee, acknowledges that it assumes the duties established by this Agreement and agrees to be bound by the terms contained herein. 4 2.2 Master Trustee Responsibilities. The Master Trustee is not a party to, and has no duties or responsibilities under, any of the Plans other than those that may be expressly contained in this Agreement except to the extent that the Master Trustee is also the trustee of a Participating Trust. In any case in which a provision of this Agreement conflicts with any provision in a Plan or any trust agreement relating to the Participating Trusts, this Agreement shall control. The Master Trustee shall have no duties, responsibilities or liability with respect to the acts or omissions of any trustee of a Participating Trust except to the extent that the Master Trustee is also the trustee of such Participating Trust. 2.3 Purpose; Exclusive Benefit. This DB/DC Master Trust is established and shall be operated exclusively for the collective investment of certain of the assets of the Participating Trusts. Except as may be permitted by law or by the terms of the Plans or this Agreement, at no time prior to the satisfaction of all liabilities with respect to participants and their beneficiaries under the Plans shall any part of the Master Trust be used for or diverted to any purpose other than for the exclusive benefit of the participants and their beneficiaries. SECTION 3. - AUTHORITIES ------------------------ 3.1 Authorized Parties. The Company shall furnish the Master Trustee with a written list of the names, signatures and extent of authority of all persons authorized to direct the Master Trustee and otherwise act on behalf of the Company and the Participating Trusts under the terms of this Agreement. The Named Fiduciary will provide the Master Trustee with a written list of the names, signatures and extent of authority of all persons authorized to act on behalf of the Named Fiduciary. The Named Fiduciary shall cause the DB Trustee, the DC Trustee and each Investment Manager appointed in accordance with Section 5.1 to furnish the Master Trustee with a written list of the names and signatures of the person or persons who are authorized to represent the DB 5 Trustee, the DC Trustee or an Investment Manager, respectively. The Master Trustee shall be entitled to rely on and shall be fully protected in acting upon direction from an Authorized Party until notified in writing by the Company, the Named Fiduciary, the DB Trustee, the DC Trustee or the Investment Manager, as appropriate, of a change of the identity of an Authorized Party and, except as provided by ERISA, the Master Trustee shall not be responsible or liable for any diminution of value of any securities or other property held by the Master Trustee (or its subcustodians), except with respect to any property for which the Trustee is acting as Investment Manager in which event its responsibility and liability shall be determined based on the agreement pursuant to which it has been appointed Investment Manager and applicable law. 3.2 Authorized Instructions. All directions and instructions to the Master Trustee from an Authorized Party shall be in writing, transmitted by mail or by facsimile or shall be an electronic transmission, provided the Master Trustee may, in its discretion, accept oral directions and instructions and may require confirmation in writing. The Master Trustee shall be entitled to rely on and shall be fully protected in acting in accordance with all such directions and instructions which it reasonably believes to have been given by an Authorized Party and in failing to act in the absence thereof. SECTION 4. - POWERS AND DUTIES ------------------------------ 4.1 General Powers and Duties of Master Trustee. In administering the DB/DC Master Trust, the Master Trustee shall be specifically authorized to: (a) Appoint custodians, subcustodians or sub-trustees, domestic or foreign (including affiliates of the Master Trustee), as to part or all of the Master Trust Fund, except that the indicia of ownership of any asset of the Master Trust Fund shall not be held outside the jurisdiction of the 6 District Courts of the United States unless in compliance with ss. 404(b) of ERISA and regulations thereunder; provided that the Master Trustee shall not be liable for the acts or omissions of any custodian or subcustodian appointed under this Section 4.1(a) pursuant to Authorized Instructions; (b) Hold property in nominee name, in bearer form, or in book entry form, in a clearinghouse corporation or in a depository (including an affiliate of the Master Trustee), so long as the Master Trustee's records clearly indicate that the assets held are a part of the Master Trust Fund; provided that the Master Trustee shall not be responsible for any losses resulting from the deposit or maintenance of securities or other property (in accordance with market practice, custom or regulation) with any recognized foreign or domestic clearing facility, book-entry system, centralized custodial depository, or similar organization; (c) Collect income payable to and distributions due to the Master Trust Fund and sign on behalf of the DB/DC Master Trust any declarations, affidavits, certificates of ownership and other documents required to collect income and principal payments, including but not limited to, tax reclamations, rebates and other withheld amounts; provided that the Master Trustee shall not be responsible for the failure to receive payment of (or late payment of) distributions with respect to securities or other property of the Master Trust Fund except where the failure is the result of negligence or willful misconduct of the Master Trustee or its affiliates; (d) Subject to the timely receipt of notice from an issuer or an Authorized Party, collect proceeds from securities, certificates of deposit or other investments which may mature or be called; (e) Submit or cause to be submitted to the Named Fiduciary or the Investment Manager, as designated by the Named Fiduciary, on a best efforts basis all information actually received by the Master Trustee regarding ownership rights pertaining to property held in the Master Trust Fund; 7 (f) Attend to involuntary corporate actions; (g) Determine the fair market value of the Master Trust Fund daily, or for such other period as may be mutually agreed upon, in accordance with methods consistently followed and uniformly applied. In determining fair market value of the Master Trust Fund, the Master Trustee shall be entitled to rely on and shall be protected in relying on values provided by an Authorized Party; (h) Render periodic statements for property held hereunder; (i) Subject to the prior written approval of the Named Fiduciary, settle, compromise, or submit to arbitration any claims, debts, or damages, due or owing to or from the Master Trust Fund, extend the time of payment of any obligation due the Master Trust Fund, commence or defend suits or legal proceedings and represent the Master Trust Fund in all suits or legal proceedings in any court or before any other body or tribunal; (j) Employ suitable agents and legal counsel, who may be counsel for the Company, and, as a part of its reimbursable expenses under this Agreement, pay their reasonable compensation and expenses. In the event that the Master Trustee obtains written approval from the Named Fiduciary for the employment of counsel, the Master Trustee shall be entitled to rely on and may act upon advice of counsel on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice; (k) To the extent consistent with applicable law, deposit cash in interest bearing accounts or non-interest bearing accounts, in either case in the banking department of the Master Trustee or an affiliated banking organization; 8 (l) Take all action necessary to pay for authorized transactions or make authorized distributions, provided that, unless otherwise provided in Section 10.1 of this Agreement, the power to borrow or raise moneys from any lender, which may be the Master Trustee in its corporate capacity or any affiliate or agent of the Master Trustee, shall be exercised as directed by the Named Fiduciary; (m) Take any and all actions, including the appointment of agents, necessary to settle transactions in futures and/or options contracts, short-selling programs, foreign exchange or foreign exchange contracts, swaps, synthetic GICs, BICs and similar instruments and other derivative investments; (n) Make, execute and deliver any and all documents, agreements or other instruments in writing as is necessary or desirable for the accomplishment of any of the powers and duties in this Agreement; and (o) Generally take all action, whether or not expressly authorized, which the Master Trustee may deem necessary or desirable for the fulfillment of its duties hereunder. Unless specifically provided otherwise in this Section 4.1, the powers described in this Section 4.1 may be exercised by the Master Trustee with or without Authorized Instructions, but where the Master Trustee acts on Authorized Instructions, the Master Trustee shall be fully protected as described in Section 3.2. 4.2 Power of Attorney. The Named Fiduciary appoints the Master Trustee as the DB/DC Master Trust's true and lawful attorney-in-fact and authorizes the Master Trustee to delegate the power of attorney to its global custodians with full powers of substitution to: 9 (a) Sign, file and deliver all requests or claims for refund or reduction of , or exemption from, any withholding or similar taxes, collect the refund of the tax and transfer the amounts collected as directed; (b) Vote securities or execute proxies held in the DB/DC Master Trust as directed and exercise rights as directed, related to the securities as a result of corporate actions; (c) Safekeep securities in the name of the DB/DC Master Trust, receive dividends, interest, other payments and sale proceeds on behalf of the DB/DC Master Trust, sign on behalf of the DB/DC Master Trust any and all forms pertaining to instructions for sale or purchase of securities, and give specific instructions regarding securities, cash and related transactions that are registered in the name of the DB/DC Master Trust. The global custodian is authorized to perform any other actions necessary to carry out the intent of this Section. Any charges or expenses incurred in connection with acts permitted under this Section shall be paid by the DB/DC Master Trust. 4.3 Contractual Income and Settlement; Market Practice Settlements. (a) Contractual Income. In accordance with the Master Trustee's standard operating procedure, the Master Trustee shall credit the Master Trust Fund with income and maturity proceeds on securities on contractual payment date net of any taxes or upon actual receipt. To the extent the Master Trustee credits income on contractual payment date, the Master Trustee may reverse such accounting entries to the contractual payment date if the Master Trustee reasonably believes that such amount will not be received. (b) Contractual Settlement. In accordance with the Master Trustee's standard operating procedure, the Master Trustee will attend to the settlement of securities transactions on the basis of either contractual 10 settlement date accounting or actual settlement date accounting. To the extent the Master Trustee settles certain securities transactions on the basis of contractual settlement date accounting, the Master Trustee may reverse to the contractual settlement date any entry relating to such contractual settlement if the Master Trustee reasonably believes that such amount will not be received. (c) Market Practice Settlements. Settlements of transactions may be effected in trading and processing practices customary in the jurisdiction or market where the transaction occurs. The Named Fiduciary acknowledges that this may, in certain circumstances, require the delivery of cash or securities (or other property) without the concurrent receipt of securities (or other property) or cash. In such circumstances, the Master Trustee shall have no responsibility for nonreceipt of payment (or late payment) or nondelivery of securities or other property (or late delivery) by the counterparty unless the nonreceipt is due directly to the negligence or willful misconduct of the Master Trustee or its affiliates. All settlements of transactions shall be carried out through the Master Trustee and each Investment Manager is authorized to issue instructions to the Master Trustee with respect to all deliveries of funds or securities in connection with the settlement of transactions entered into with respect to an Investment Fund (or Sub-Fund) at the direction of such Investment Manager. SECTION 5.- INVESTMENT OF THE FUND ---------------------------------- 5.1 Appointment of Investment Managers. The Named Fiduciary shall have the power to appoint and remove one or more Investment Managers, which may be the Master Trustee or an affiliate of the Master Trustee, as investment manager(s) for each Investment Fund established pursuant to Section 6.1 and shall monitor the investment performance of each such Investment Manager. If the Named Fiduciary appoints more than one Investment Manager for any one Investment 11 Fund, the Named Fiduciary shall designate a specified portion of such Investment Fund to be managed by each such Investment Manager, each such portion being referred to herein as a "Sub-Fund" of an Investment Fund. In its discretion, and upon prior written notice to the Master Trustee as agreed by the Named Fiduciary and the Master Trustee , the Named Fiduciary may change the percentage of the assets of such Investment Fund that are allocated to the Sub-Funds thereunder. It is the Named Fiduciary's intent that all of the assets in each Investment Fund will, at all times, be subject to the management and control of an Investment Manager. If for whatever reason at any time there is no Investment Manager in place with respect to any such assets, the Named Fiduciary shall become responsible for such assets as if it were the Investment Manager and, in such event, all references to Investment Manager herein with respect to such assets shall be references to the Named Fiduciary. Except as may be provided in a separate investment management agreement, the Master Trustee shall not be responsible, directly or indirectly, for the investment or reinvestment of the assets of the Master Trust Fund, which investment and reinvestment (including, without limitation, all actions taken by the Master Trustee at the direction of the Investment Manager in connection therewith) shall be the sole responsibility of the Investment Manager with respect to such assets. The Master Trustee shall be entitled to rely entirely on an Investment Manager's directions, shall be under no duty to determine or make inquiry whether an Investment Manager's directions received by it are in accordance with the provisions of the Participating Trusts, the Plans or applicable law, and shall have no duty to review or recommend the sale, retention, or other disposition of any assets purchased or retained in accordance with an Investment Manager's directions. Except as provided by ERISA, the Master Trustee shall have no liability for any loss to the Master Trust Fund 12 resulting from the purchase, sale, or retention of any assets or the taking of any other action in accordance with an Investment Manager's directions, or resulting from not having sold such assets so purchased or retained or from not having taken any other action in the absence of an Investment Manager's directions, to make such sale or take any other action. 5.2 Directed Powers of Master Trustee. In addition to the powers enumerated in Section 4.1, the Master Trustee shall have and exercise the following powers and authority in the administration of the Master Trust Fund; provided, however, that such powers and authority are to be exercised by the Master Trustee with respect to the assets of any Investment Fund (or Sub-Fund) only as directed by the Investment Manager that has been appointed to direct the investment of such Investment Fund (or Sub-Fund). (a) Settle purchases and sales and engage in other transactions, including free receipts and deliveries, exchanges and other voluntary corporate actions, with respect to securities or other property received by the Master Trustee; (b) Sell for cash, to convert, redeem, or exchange for other securities or other property, to tender securities pursuant to tender offers, or otherwise to dispose of any securities or other property at any time held by the Master Trustee; (c) Exercise any conversion privilege and/or subscription right available in connection with any securities or other property at any time held by it; to oppose or to consent to the reorganization, consolidation, merger, or readjustment of the finances of any corporation, company, association, or any other entity, or to the sale, mortgage, pledge, or lease of the property of any corporation, company, association, or other entity any of the securities of which may at any time be held by it and to do any act with reference thereto, including the exercise of options, the making of agreements 13 or subscriptions and the payment of expenses, assessments or subscriptions which may be deemed necessary or advisable in connection therewith, and to hold and retain any securities or other property which it may so acquire; and to deposit any property in any voting trust or with any protective, reorganization or similar committee or with depositories designated thereby, to delegate power thereto, and to pay or agree to pay part of the expenses and compensation of any such committee and any assessments levied with respect to property so deposited; (d) Exercise, personally, by proxy, or by general or limited power of attorney, any right privilege, or other option including the right to vote, appurtenant to any securities or other property held by it at any time; (e) Invest and reinvest all or any part of the assets of such Investment Fund (or Sub-Fund), and to hold part of the Investment Fund (or Sub-Fund) uninvested; (f) Purchase, enter into, sell, hold, and generally deal in any manner in and with contracts for the immediate or future delivery of financial instruments of any issuer or of any other property; to grant, purchase, sell, exercise, permit to exercise, permit to be held in escrow, and otherwise to acquire, dispose of, hold, and generally deal in any manner with and in all forms of options in any combination; and, in connection with its exercise of the powers herein above granted, to deposit any securities or other property as collateral with any broker-dealer or other person, and to take all other appropriate action in connection with such contracts; (g) Establish an account with a securities broker-dealer in order to effect various securities transactions, including but not limited to short sales transactions and other margin transactions which may include the carrying of securities on margin, and to allow such broker-dealer or a mutually agreed upon third party agent to hold as margin in connection therewith certain property of the Master Trust Fund; 14 (h) Enter into agreements (sometimes referred to as "swaps") to exchange cash flows or other amounts (as specified in or determined in accordance with such agreement), including, without limitation, interest rate swaps, currency swaps, caps, collars, or floors, or any option with respect to any such transaction; (i) Borrow money, with or without security, from any legally permissible source, to encumber property by mortgages or deeds of trust to secure repayment of such indebtedness, to assume existing mortgages or deeds of trust on acquired properties, and to acquire properties subject to existing mortgages or deeds of trust; (j) Form corporations and to create trusts to hold title to any securities or other property, all upon such terms and conditions as may be deemed advisable by the Investment Manager; (k) Lend the assets of the Master Trust Fund in accordance with the terms and conditions of a separate lending agreement; (l) Settle investments in any collective investment fund, including a collective investment fund maintained by the Master Trustee or an affiliate and appoint agents and sub-trustees. To the extent that any investment is made in any such collective investment fund, the terms of the collective trust indenture shall solely govern the investment duties, responsibilities and powers of the trustee of such collective investment fund and, to the extent required by law, such terms, responsibilities and powers shall be incorporated herein by reference and shall be a part of this Agreement. For purposes of valuation, the value of the interest maintained by the Fund in such collective investment fund shall be the fair market value of the collective investment fund 15 units held, determined in accordance with generally recognized valuation procedures. The Named Fiduciary expressly understands and agrees that any such collective investment fund may provide for the lending of its securities by the collective investment fund trustee and that such collective investment fund trustee will receive compensation for the lending of securities that is separate from any compensation of the Master Trustee hereunder, or any compensation of the collective investment fund trustee for the management of such fund. The Master Trustee is authorized to invest in a collective fund which invests in Mellon Financial Corporation stock in accordance with the terms and conditions of the Department of Labor Prohibited Transaction Exemption 95-56 (the "Exemption") granted to Mellon Bank, N.A. and its affiliates and to use a cross-trading program in accordance with the Exemption. The Named Fiduciary acknowledges receipt of the notice entitled "Cross-Trading Information", a copy of which is attached to this Agreement as Exhibit B; (m) Enter into any Insurance Contract with any insurance company or companies, either for the purposes of investment or otherwise. The Master Trustee shall not be responsible in any way for the form, terms, payment provisions or issuer of any Insurance Contract which it is directed to purchase and hold, or for performing any functions under any such Insurance Contract which it may be directed to purchase and hold as contract holder thereunder (other than the execution of any documents incidental thereto and transfer or receipt of funds thereunder in accordance with the Investment Manager's directions); (n) Generally to exercise the same powers as an owner of property and to do all acts, whether or not expressly authorized, which may be considered necessary or desirable by the Investment Manager for the protection of such Investment Fund (or Sub-Fund). 16 The Master Trustee shall not be responsible in any way for the form, terms (including, without limitation, any representations and warranties given by it on behalf of the Master Trust Fund) or payment provisions of, or the identity of the counterparty to, any contract or agreement which it is directed to enter into by an Investment Manager, or for performing any functions under any such agreement whether pursuant to such agreement or otherwise directed by such Investment Manager. In connection therewith, the Master Trustee shall be entitled to rely upon any representation or direction given by the Investment Manager, including, without limitation, any direction regarding the accuracy of any such representations and warranties or regarding the Investment Manager's authority to give such directions, and shall be under no obligation to perform any independent investigation or review regarding any of the foregoing; provided, however, that nothing herein shall relieve the Master Trustee from any liability for any acts taken or omitted by such Master Trustee for which it has responsibility under this Agreement, or for any acts taken or omitted by an Investment Manager if the Master Trustee knowingly participated in or knowingly undertook to conceal such act or omission, knowing such act or omission constituted a breach of fiduciary duty by the Investment Manager. In the event that the Master Trustee has actual knowledge of any act or omission of an Investment Manager which constitutes a violation of ERISA or this Agreement, it shall immediately notify the Named Fiduciary in writing thereof. 5.3 Brokerage. With respect to the securities of any Investment Fund, (or Sub-Fund), the Investment Manager appointed for such Investment Fund (or Sub-Fund) shall have sole and exclusive authority to designate from time to time the broker or brokers through whom transactions will be effected. Such Investment Manager will determine the rate or rates to be paid for brokerage services. Such Investment Manager may select brokerage firms providing research 17 or other services, where rates may be higher than those charged by other brokers who provide more limited services or who are not considered to provide the same quality of execution. If an Investment Manager selects one or more brokers that are affiliates of the Investment Manager, such Investment Manager shall comply with Prohibited Transaction Class Exemption 86-128 under ERISA and Rule 11a2-2(T) under the Securities Exchange Act of 1934, to the extent applicable, and with any other applicable law. 5.4 Standard of Care. The Master Trustee shall discharge its duties under this Agreement with the care and skill required under ERISA with respect to such duties. Except as provided by ERISA, the Master Trustee shall not be responsible or liable for any losses or damages suffered by the Master Trust Fund arising as a result of the insolvency of any custodian, subtrustee or subcustodian, except to the extent the Master Trustee was negligent in its selection or continued retention of such entity. 5.5 Force Majeure. Except as provided otherwise by ERISA and notwithstanding anything in this Agreement to the contrary, the Master Trustee shall not be responsible or liable for its failure to perform under this Agreement or for any losses to the Master Trust Fund resulting from any event beyond the reasonable control of the Master Trustee, its agents or subcustodians, including but not limited to nationalization, strikes, expropriation, devaluation, seizure, or similar action by any governmental authority, de facto or de jure; or enactment, promulgation, imposition or enforcement by any such governmental authority of currency restrictions, exchange controls, levies or other charges affecting the Master Trust Fund's property; or the breakdown, failure or malfunction of any utilities or telecommunications systems; or any order or regulation of any banking or securities industry including changes in market rules and market conditions affecting the execution or settlement of transactions; or acts of war, terrorism, insurrection or revolution; or acts of God; or any other similar event. 18 SECTION 6. - INVESTMENT FUNDS ----------------------------- 6.1 Establishment of Investment Funds. The Master Trust Fund shall consist of such one or more separate Investment Funds as the Named Fiduciary may establish from time to time. The Named Fiduciary shall establish each such Investment Fund by delivery of written notice thereof to the Trustee. Each such notice shall set forth (i) the name of the Investment Fund it establishes, (ii) the effective date of such Investment Fund's establishment, and (iii) the types of property in which the assets of such Investment Fund may be invested; provided that the Named Fiduciary (not the Master Trustee) shall be solely responsible for monitoring each Investment Manager's compliance with (iii). Each such Investment Fund shall be separately held, managed, administered, valued, invested, reinvested, distributed, accounted for, and otherwise dealt with hereunder. The Named Fiduciary may terminate an Investment Fund and/or Investment Manager by providing prior written notice to the Master Trustee as agreed by the Named Fiduciary and the Master Trustee. As of the Valuation Date next following the effective date of such termination, all of the interests of each such Participating Trust shall be withdrawn from such Investment Fund pursuant to Section 8. 6.2 Permissible Types of Investments. Subject to the investment objectives, guidelines, and restrictions established by the Named Fiduciary for any particular Investment Fund pursuant to Section 6.1, the Investment Manager of each Investment Fund (or Sub-Fund) may in its sole discretion, as it deems proper, cause any or all of the assets of such Investment Fund (or Sub-Fund) to be invested in any property, real or personal, or part interest therein, 19 wherever situated, without being limited to the classes of property in which trustees are authorized to invest trust funds by any law or any rule of court of any State and without regard to the proportion any such property may bear to the entire amount of the DB/DC Master Trust. The Named Fiduciary shall be solely responsible for monitoring and reviewing the performance of each Investment Manager, including, without limitation, for assuring that the Investment Manager is complying with the applicable investment objectives, guidelines and restrictions and is otherwise acting within the scope of its authority. The Master Trustee shall have no responsibility to perform any such review or monitoring functions with respect to the Investment Managers. 6.3 Cash and Cash Balances. The Master Trust shall invest cash in any Investment Fund (or Sub-Fund), as directed by the Investment Manager of such Investment Fund (or Sub-Fund), in short-term investments including, without limitation, deposits in, or short-term instruments of, the Master Trustee (or any affiliate of the Master Trustee) or any custodian (or any affiliate of any custodian), or in one or more short-term collective investment funds administered by the Master Trustee (or any affiliate of the Master Trustee) or any custodian (or any affiliate of any custodian) as trustee thereof for the collective investment of assets of employee pension or profit sharing trusts, as long as each such collective investment fund is available for the investment of assets of directed accounts and such fund constitutes a qualified trust under the applicable provisions of the Code (and while any portion of such Investment Fund or Sub-Fund is so invested, such collective investment funds shall constitute part of the applicable pension or profit-sharing plans, and the instrument creating such funds shall constitute part of this Agreement). Except as provided in Section 8, all income from such deposits, short-term instruments, or short-term collective investment funds shall be added to the Investment Fund (or Sub-Fund) to which it is allocable. 20 SECTION 7. - UNITS OF PARTICIPATION; VALUATION ---------------------------------------------- 7.1 Units of Participation. Subject to the provisions of Section 8 for the purpose of maintaining the beneficial interests of the Participating Trusts in the Master Trust Fund, each Investment Fund of the Master Trust Fund shall be divided into units of participation ("Units"), and the beneficial interest of each Participating Trust in each Investment Fund shall be expressed by the number of Units and fractions of a Unit allocated to it as hereinafter set forth. The Master Trustee shall maintain an account to which shall be credited the number of Units of each Investment Fund allocated to each Participating Trust. Each Unit in a particular Investment Fund shall have a proportionate interest in such Investment Fund and none shall have priority or preference over any other. 7.2 Valuation of Investment Funds. The Master Trustee shall determine the value of each Investment Fund and the Units thereof in United States Dollars as of the close of business on each business day. A business day shall mean any day on which securities are traded on the New York Stock Exchange. Each day as of which such value is determined is referred to herein as a "Valuation Date." As of each Valuation Date the Trustee shall determine the total value of the assets of each Investment Fund on the basis of the Valuation Rules set forth in Section 7.4. 7.3 Valuation of Units. The initial value of each Unit of each Investment Fund shall be ten dollars ($10.00). Thereafter, the value of each Unit of each Investment Fund shall be determined by dividing the net value of the assets of the Investment Fund, as established as of a Valuation Date under 21 Section 7.2, by the number of Units outstanding on such Valuation Date, as reported to the Master Trustee by the Named Fiduciary or its agent. For purposes of valuation, the net value of the assets of the Investment Fund shall equal the aggregate value of the assets of the Investment Fund less the value of the accrued liabilities incurred by the Investment Fund. The Unit value shall be determined as of each Valuation Date before taking into account additions to and withdrawals from the Investment Fund occurring as of such Valuation Date. As of any Valuation Date, the Named Fiduciary may direct the Master Trustee to make a uniform change in the number of all outstanding Units of any Investment Fund, either by creating a larger number of smaller Units or a smaller number of larger Units, having an aggregate current value at that Valuation Date equal to the current value at that Valuation Date of such Investment Fund. 7.4 Valuation Rules. The assets of each Investment Fund shall be determined, and securities shall be valued, by the Master Trustee as of each Valuation Date on the basis of the following valuation rules: (a) The Master Trustee shall use its customary procedures to price the assets comprising the Investment Fund on a Valuation Date. In certain circumstances when prices are not available, the Master Trustee shall require the Named Fiduciary or its investment manager to direct the Master Trustee as to a price to be used, and the Master Trustee shall be protected in relying upon such direction in determining the price. (b) Upon request of the Master Trustee, the Investment Manager of an Investment Fund (or Sub-Fund) holding securities or other property shall certify the value of any such securities or other property held in the DB/DC Master Trust, and such certification shall be regarded as a direction of the Investment Manager. 22 (c) Notwithstanding anything herein contained to the contrary, for the purposes of valuing the assets of the DB/DC Master Trust, the Master Trustee may retain such one or more pricing services (whether or not affiliated with the Master Trustee) as the Master Trustee shall deem advisable and the Master Trustee shall not have the duty to confirm or validate any information or valuation provided by any such pricing services, nor shall the Master Trustee be responsible or liable for any act or omission of any such pricing service selected by it, in the absence of negligence by the Master Trustee. (d) The Named Fiduciary shall cause each Investment Manager to access the Master Trustee's on-line system to review and approve or reconcile by an agreed time on each Valuation Date the Investment Fund's (or Sub-Fund's) investment transactions affecting the Investment Fund (or Sub-Fund) since the prior Valuation Date. Failure of the Investment Manager to notify the Master Trustee of a change by an agreed time shall constitute approval. The Master Trustee shall be entitled to conclusively rely upon such approval or reconciliation in determining the Unit value of the Investment Fund. (e) In the event that there has been a misstatement of a Unit value on any Valuation Date, the Master Trustee shall not be required to restate such Unit value unless the discrepancy is material. For purposes of this Agreement, "material" shall mean any discrepancy exceeding or equaling one-tenth of one percent (.001) of the Unit value after comparing the stated Unit value to the corrected Unit value. Units transacted on a misstatement of Unit value shall be restated using the corrected Unit value. If any material misstatement results 23 in a loss to the Investment Fund, the Master Trustee shall be responsible to the Investment Fund for such loss only to the extent that such loss is directly caused by the negligence of the Master Trustee. SECTION 8. - ADDITIONS AND WITHDRAWALS -------------------------------------- 8.1 Additions and Withdrawals. No addition to or withdrawal from any Investment Fund by a Participating Trust shall be permitted except on the basis of the Unit value determined as prescribed in Section 7.3 hereof. No addition to or withdrawal from an Investment Fund shall be made except as of a time immediately after the close of business on the Valuation Date on which such Unit value is determined, pursuant to notice or direction from the Named Fiduciary (or an agent designated by the Named Fiduciary) to the Master Trustee by a time mutually agreed by the Named Fiduciary and the Master Trustee. No such notice or direction may be canceled or countermanded after the agreed upon time. Notwithstanding the foregoing, any addition or withdrawal processed in error shall be corrected on the basis of the Unit value of the Valuation Date on which the error occurred. Additions to an Investment Fund (including a Participating Trust's initial purchase of Units in such Investment Fund) shall be made by a Participating Trust in cash or in securities acceptable to the Named Fiduciary and the Master Trustee. The number of Units of such Investment Fund to be assigned to the Participating Trust with respect to an addition shall be equal to (a) the amount of such cash, if any, plus the value of such securities, if any, at the close of business on the Valuation Date, divided by the Unit value computed as of the close of business on the Valuation Date. Withdrawals from an Investment Fund shall be made in cash, except to the extent that the Named Fiduciary determines that particular withdrawals are to be made in kind (in whole or in part). In the case of a withdrawal which is to be made in kind in whole or in part, the Named Fiduciary shall have absolute 24 discretion as to the selection of the securities of the Investment Fund to be transferred to the withdrawing Participating Trust in satisfaction of the in kind portion of such withdrawal. The cash to be paid or securities to be transferred to a Participating Trust with respect to a withdrawal made as of a Valuation Date from an Investment Fund shall have an aggregate value, determined as of the close of business on such Valuation Date, equal to the Unit value multiplied by the number of Units redeemed. The Master Trust Fund shall transfer to a Participating Trust making a withdrawal from an Investment Fund as of a Valuation Date the cash and/or securities constituting payment of the withdrawal as if such transfer had been completed on such Valuation Date. The Master Trustee may, in its discretion, or shall, to the extent directed by the Named Fiduciary, withhold a portion of any withdrawal to secure the payment of the compensation of the Master Trustee or the Investment Manager(s) of such Investment Fund, if such compensation exceeds the value of the property which would be remaining in the Master Trust after such withdrawal is made, due or to become due with respect to the Participating Trust concerned. Any such withheld portion shall be invested in short-term investments specified by the Named Fiduciary, for the account of the Participating Trust, as described in Section 6.3 until such compensation has been paid. 8.2 Investment Cash in Short-Term Investment Funds of the Master Trustee. If the Master Trustee receives cash from a Participating Trust prior to a Valuation Date for the purpose of an addition to the Master Trust Fund or an Investment Fund (including cash received as a result of a withdrawal by such Participating Trust from a different Investment Fund), the Trustee, as directed by the Named Fiduciary, shall temporarily invest such cash in one or more short-term collective investment funds as described in Section 6.3 (and subject to the requirements described in that Section). All income credited to the 25 Participating Trust from such short-term collective investment funds shall be taken into account in determining the number of Units to be assigned to the Participating Master Trust as of the Valuation Date, as described in Section 8.1. SECTION 9. - REPORTING AND RECORDKEEPING ---------------------------------------- 9.1 Accountings by Master Trustee. The Master Trustee shall maintain the records of the DB/DC Master Trust and each Investment Fund on the basis of a fiscal year ending December 31st of each year. The Master Trustee shall keep accurate and detailed records of all transactions involving the Master Trust Fund, and the respective Investment Funds (and Sub-Funds). The Master Trustee shall make such records available for inspection and audit at all reasonable times at the principal office of the Master Trustee by any person designated by the Named Fiduciary. The Master Trustee shall furnish to the Named Fiduciary, no less frequently than annually, an opinion of the Master Trustee's public accounting firm as to the adequacy of the Master Trustee's internal accounting procedures and controls. The Master Trustee shall render a monthly account at a time mutually agreed upon by the Named Fiduciary and the Master Trustee after the last Valuation Date of each calendar month to the Named Fiduciary showing, as of such Valuation Date, the number of Units then held by the Participating Trusts in each Investment Fund, the then value of each Unit and the number of Units purchased or redeemed by each Participating Trust with regard to each Investment Fund during such calendar month. The Master Trustee shall also render an annual account to the Named Fiduciary within an agreed time after December 31 of each fiscal year. Such annual account shall consist of a statement of the assets held in each Investment Fund (and each Sub-Fund) of the Master Trust Fund and the fair market 26 value of each such asset as of the close of the fiscal year, and a summary of the transactions of each Investment Fund (and Sub-Fund) of the Master Trust Fund since the Master Trustee's last annual account. The Master Trustee shall provide a similar account to the Named Fiduciary and to the trustee of each Participating Trust having an interest in the Investment Fund to which such account relates, within a reasonable time following termination of the Master Trust Fund. Except as provided in Section 9.3 hereof, the Master Trustee shall not be required to render any account, annually or otherwise, in any court. The Named Fiduciary, the Investment Managers, the trustees of the Participating Trusts, and the Master Trustee shall provide each other with such other reports and information as may reasonably be requested by any of them. 9.2 Review of Reports. If, within one year after the Master Trustee mails to the Named Fiduciary an account, report or statement with respect to the Master Trust Fund, the Named Fiduciary has not given the Master Trustee written notice of any exception or objection thereto, the account, report or statement, as the case may be, shall be deemed to have been approved, and in such case, the Master Trustee shall not be liable for any matters in such account, report or statement. The Named Fiduciary or its agent shall have the right at its own expense and with prior written notice to the Master Trustee, to inspect the Master Trustee's books and records directly relating to the Master Trust Fund during normal business hours. 9.3 Non-Fund Assets. The duties of the Master Trustee hereunder shall be limited to the assets held in the Master Trust Fund, and the Master Trustee shall have no duties with respect to assets held by any other person including, without limitation, the trustees of the Participating Trusts or any other trustee for the Plans. The Company and the Named Fiduciary hereby agree that the Master Trustee shall not serve as, and shall not be deemed to be, a co-trustee under any circumstances. 27 SECTION 10. - COMPENSATION, EXPENSES, TAXES, INDEMNIFICATION ------------------------------------------------------------ 10.1 Compensation and Expenses. The Master Trustee shall be entitled to compensation for services under this Agreement as mutually agreed. The Named Fiduciary acknowledges that, as part of the Master Trustee's compensation, the Master Trustee may earn interest on balances, including without limitation, disbursement balances and balances arising from purchase and sale transactions, provided that the Master Trustee shall not earn balances on funds listed as assets of the Master Trust. The Master Trustee shall also be entitled to reimbursement for reasonable expenses incurred by it in the discharge of its duties under this Agreement. All such fees and expenses shall be charged to and collected from the Fund unless paid by the Company. If the Master Trustee advances cash or securities for any purpose, including the purchase or sale of foreign exchange or of contracts for foreign exchange, or in the event that the Master Trustee shall incur or be assessed taxes, interest, charges, expenses, assessments, or other liabilities in connection with the performance of this Agreement, except such as may arise from its own negligent action, negligent failure to act or willful misconduct, any property at any time held for the Master Trust Fund shall be security therefor and the Master Trustee shall be entitled to collect from the Fund sufficient cash for reimbursement, and if such cash is insufficient, dispose of the assets of the Master Trust Fund to the extent necessary to obtain reimbursement. To the extent the Master Trustee advances funds to the Master Trust Fund for disbursements or to effect the settlement of purchase transactions, the Master Trustee shall be entitled to collect from the Master Trust Fund either (i) with respect to domestic assets, an amount equal to what would have been earned on 28 the sums advanced (an amount approximating the "federal funds" interest rate) or (ii) with respect to non-domestic assets, the rate applicable to the appropriate foreign market. 10.2 Tax Obligations. To the extent an Authorized Party has provided necessary information to the Master Trustee, the Master Trustee shall use reasonable efforts to assist such Authorized Party with respect to any Tax Obligations. The Named Fiduciary shall cause each Authorized Party to notify the Master Trustee in writing of any Tax Obligations. Notwithstanding the foregoing, the Master Trustee shall have no responsibility or liability for any Tax Obligations now or hereafter imposed on the Company or the Master Trust Fund by any taxing authorities, domestic or foreign, except as provided by applicable law. To the extent the Master Trustee is responsible under any applicable law for any Tax Obligation, the Named Fiduciary shall cause the appropriate Authorized Party to inform the Master Trustee of all Tax Obligations, shall direct the Master Trustee with respect to the performance of such Tax Obligations, and shall provide the Master Trustee with the necessary funds and all information required by the Master Trustee to meet such Tax Obligations. All such Tax Obligations shall be paid from the Master Trust Fund unless paid by the Company. 10.3 Indemnification. (a) Subject to such limitations as may be imposed by ERISA or other applicable law, the Plan will indemnify and hold harmless the Master Trustee of and from any liability or expense in connection with or arising out of: (i) any action taken or omitted in good faith with respect to any investment or disbursement of any part of the Master Trust Fund made by the Master Trustee in accordance with directions of the Named Fiduciary or any inaction with respect to 29 any Named Fiduciary in the absence of directions from the Named Fiduciary therefore, except with respect to the lending of securities, which shall be governed by a separate agreement, or investment of uninvested cash balances (to the extent no directions are received), or (ii) any action taken or omitted in good faith by the Master Trustee with respect to any Investment Fund in accordance with any direction of the Investment Manager or any inaction with respect to any such Investment Fund in the absence of directions from the Investment Manager, except with respect to the lending of securities, which shall be governed by a separate agreement, or investment of uninvested cash balances (to the extent no directions are received), or (iii) any action taken in good faith by the Master Trustee pursuant to a notification of an order to purchase or sell securities issued by an Investment Manager or the Named Fiduciary directly to a broker or dealer. Anything hereinabove to the contrary notwithstanding, the Plan shall have no responsibility to the Master Trustee under the foregoing undertaking with respect to any actions or failures to act by persons engaged directly by the Master Trustee (without direction of the Named Fiduciary or an Investment Manager) pursuant to this Agreement (including, but not limited to, custodians or other depositories and persons employed pursuant to this Agreement), or if the Master Trustee knowingly participated in or knowingly undertook to conceal any act or omission of the Named Fiduciary, Investment Manager or other "fiduciary" as defined in ss.3(21) of ERISA, if the Master Trustee knew or should have known such act or omission constituted a breach of fiduciary responsibility, or if the Master Trustee fails to perform any of the duties agreed to be undertaken by it pursuant to the provisions of this Agreement, or 30 if the Master Trustee fails to act in conformity with the lawful directions of an Authorized Party of the Named Fiduciary or an Investment Manager. (b) Subject to such limitations as may be imposed by ERISA or other applicable law, and the prior written approval of the Named Fiduciary, in addition to the fees and expenses set forth in this Agreement, the Named Fiduciary may, in its sole discretion, direct the Master Trustee to advance reasonable and necessary fees and expenses (including reasonable attorneys fees and disbursements) from the Master Trust Fund to the Master Trustee or Investment Manager in connection with any claim, action, suit or proceeding or appeal therefrom, whether civil, criminal, administrative, investigative or otherwise, brought against a trustee or Investment Manager with respect to the affairs of the Master Trust Fund in advance of the final disposition of any such claim, action, suit or proceeding or appeal therefrom, provided that if it shall be determined that such Master Trustee or Investment Manager breached a fiduciary duty owed to the Plan or a responsibility owed to the Plan under this Agreement, such Master Trustee or Investment Manager shall repay such advance to the Master Trust Fund with interest. (c) To the extent that the Master Trustee is not indemnified pursuant to subsections 10.3(a) or (b) above, the Company shall indemnify and hold harmless the Master Trustee from and against any loss, costs, damages or expenses including without limitation reasonable attorneys' fees and expenses which the Master Trustee may incur or pay out by reason of any alleged or actual act, or failure to act, on the part of the Company or other Named Fiduciary, or any Investment Manager, whether or not the Master Trustee may also 31 be considered liable for that person's alleged or actual act or failure to act underss.405 of ERISA, unless the Master Trustee had actual knowledge that such act or omission constituted a violation of ERISA or this Agreement, or if the loss, costs, damages or expenses resulted from the failure of the Master Trustee to perform any of the duties agreed to be undertaken by it pursuant to the provisions of the Agreement, or negligence or willful misconduct in performing such duties. This indemnification shall survive the termination of this Agreement. 32 SECTION 11. - AMENDMENT, RESIGNATION, REMOVAL --------------------------------------------- 11.1 Amendment. This Agreement may be amended by written agreement signed by the parties hereto. 11.2 Removal or Resignation of Master Trustee. The Master Trustee may be removed with respect to all or part of the Master Trust Fund upon receipt of sixty (60) days' written notice (unless a shorter or longer period is agreed upon) from the Named Fiduciary. In the event the Named Fiduciary fails to appoint a successor trustee within sixty (60) days of receipt of written notice of removal, the Master Trustee reserves the right to seek the appointment of a successor trustee from a court of competent jurisdiction. The Master Trustee may resign as Master Trustee hereunder upon sixty (60) days' written notice (unless a shorter or longer period is agreed upon) delivered to the Named Fiduciary. In the event the Named Fiduciary fails to appoint a successor trustee within sixty (60) days of receipt of written notice of resignation, the Master Trustee shall continue to serve as Master Trustee for an additional thirty (30) days after which the Master Trustee reserves the right to seek the appointment of a successor trustee from a court of competent jurisdiction. In the event of such removal or resignation, a successor trustee will be appointed by the Named Fiduciary and the retiring Master Trustee shall transfer the Master Trust Fund, less such amounts as may be reasonable and necessary to cover its compensation and expenses. The Master Trustee shall have no duties, responsibilities or liability with respect to the acts or omissions of any successor trustee. Any compensation paid to the Master Trustee in advance shall be prorated to the date of resignation or removal of the Master Trustee, and any unearned portion thereof shall be repaid by the Master Trustee to the Master Trust. 33 SECTION 12.- ADDITIONAL PROVISIONS ---------------------------------- 12.1 Loss of Qualification. The Company shall promptly notify the Master Trustee of any determination by the Internal Revenue Service that any Plan has ceased to be qualified under ss. 401(a) of the Code. Upon such event or in the event that any Plan shall otherwise cease to become qualified, the equitable share of such Plan participating in the Master Trust Fund shall be promptly segregated and withdrawn from the Master Trust Fund. 12.2 Assignment or Alienation. Except as may be provided by law, the Master Trust Fund shall not be subject to any form of attachment, garnishment, sequestration or other actions of collection afforded creditors of the Company, participants or beneficiaries under any of the Plans. 12.3 Successors and Assigns. Neither the Company nor the Master Trustee may assign this Agreement without the prior written consent of the other, except that the Master Trustee may assign its rights and delegate its duties hereunder to any corporation or entity which directly or indirectly is controlled by, or is under common control with, the Master Trustee upon notification to the Company. This Agreement shall be binding upon, and inure to the benefit of, the Company and the Master Trustee and their respective successors and permitted assigns. Any entity which shall by merger, consolidation, purchase, or otherwise, succeed to substantially all the trust business of the Master Trustee shall, upon such succession and without any appointment or other action by the Company or the Named Fiduciary, be and become successor trustee hereunder, upon notification to the Company. 12.4 Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Colorado (without regard to any conflict of laws provision)to the extent not preempted by ERISA or other applicable Federal law. The actual administration of the Master Trust Fund may 34 be conducted in such location within the United States, and the location of its assets (or indicia of ownership thereof) may be changed within the United States (unless the provisions of ss.404(b) of ERISA and the regulations thereunder are complied with, in which case, the location of certain assets may be maintained outside the jurisdiction of the district courts of the United States), as the Named Fiduciary and the Master Trustee shall mutually agree from time to time. Upon any such change in the location of the administration of the assets of the DB/DC Master Trust, the Named Fiduciary may agree that the Master Trust Fund shall cease to be administered, governed, and interpreted in accordance with the laws of Colorado, or the laws of such other jurisdiction as may then be applicable to the DB/DC Master Trust, and shall, instead be administered, governed and interpreted in accordance with the laws of the jurisdiction to which the administration of the assets of the Master Trust Fund have been transferred. 12.5 Necessary Parties. The Master Trustee reserves the right to seek a judicial or administrative determination as to its proper course of action under this Agreement. Nothing contained herein will be construed or interpreted to deny the Master Trustee, the Named Fiduciary or the Company the right to have the Master Trustee's account judicially determined. To the extent permitted by law, only the Master Trustee, the Named Fiduciary and the Company shall be necessary parties in any application to the courts for an interpretation of this Agreement or for an accounting by the Master Trustee, and no participant under any of the Plans or other person having an interest in the Master Trust Fund shall be entitled to any notice or service of process. Any final judgment entered in such an action or proceeding shall, to the extent permitted by law, be conclusive upon all persons. 35 12.6 No Third Party Beneficiaries. The provisions of this Agreement are intended to benefit only the parties hereto, their respective successors and assigns, and participants and their beneficiaries under the Plans. There are no other third party beneficiaries. 12.7 Representations. The Company and the Master Trustee hereby each represent and warrant to the other that it has full authority to enter into this Agreement upon the terms and conditions hereof and that the individual executing this Agreement on its behalf has the requisite authority to bind the Company, the Named Fiduciary, or the Master Trustee to this Agreement. 12.8 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and said counterparts shall constitute but one and the same instrument and may be sufficiently evidenced by one counterpart. 36 EXHIBIT A Named Fiduciaries The Investment Committee (or its delegate) is the named fiduciary of the Plans responsible for the appointment and removal of one or more trustees, for establishing, revising and monitoring asset allocation ranges for the Plans, approving or vetoing private equity placements in excess of $50 million, approving processes and policies for payment of Plan expenses and approving reimbursement of expenses of the Company and its Subsidiaries, including QAM, approving derivative policies, and approving the general investment strategies utilized by QAM with respect to assets directly managed by QAM. The Employee Benefits Committee is the named fiduciary responsible for the administration of the Plans and for directing the Trustee concerning all distributions from the Master Trust Fund in accordance with the provisions of the Plans. Qwest Asset Management Company ("QAM") is the named fiduciary for all purposes of the management and investment of Plan assets other than those responsibilities of the Investment Committee. Such powers shall include, but are not limited to, the authority to enter into trust agreements, appointing, removing and monitoring investment managers and other persons appropriate for trust management. QAM shall also have the responsibility of monitoring the performance of the Trustee. This Exhibit A shall be deemed amended to the extent a Plan's provisions regarding the Named Fiduciaries and their duties are amended without requiring formal amendment of the DB/DC Master Trust. 38 EXHIBIT B CROSS-TRADING INFORMATION As part of the cross-trading program covered by the Exemption for Mellon Bank, N.A. and its affiliates, Mellon Bank, N.A. is to provide to each affected employee benefit plan the following information: I The existence of the cross-trading program ------------------------------------------ Mellon Bank, N.A. has developed and intends to utilize, wherever practicable, a cross-trading program for Indexed Accounts and Large Accounts as those terms are defined in the Exemption. II The "triggering events" creating cross-trade opportunities ---------------------------------------------------------- In accordance with the Exemption three "triggering events" may create opportunities for cross-trading transactions. They are generally the following (see the Exemption for more information): 1) change in the composition or weighting of the index by the independent organization creating and maintaining the index; 2) A change in the overall level of investment in an Indexed Account as a result of investments and withdrawals on the account's opening date, where the Account is a bank collective fund, or on any relevant date for non-bank collective funds; provided, however, a change in an Indexed Account resulting from investments or withdrawals of assets of Mellon Bank, N.A.'s own plans (other than Mellon Bank, N.A.'s defined contribution plans under which participants may direct among various investment options, including Indexed Accounts) are excluded as a "triggering event"; or 3) A recorded declaration by Mellon Bank, N.A. that an accumulation of cash in an Indexed Account attributable to interest or dividends on, and/or tender offers for, portfolio securities equal to not more than 0.5% of the Account's total value has occurred. III The pricing mechanism utilized for securities purchased or ---------------------------------------------------------- sold ---- Securities will be valued at the current market value for the securities on the date of the crossing transaction. Equity securities - the current market value for the equity security will be the closing price on the day of trading as determined by an independent pricing service; unless the 39 security was added to or deleted from an index after the close of trading, in which case the price will be the opening price for that security on the next business day after the announcement of the addition or deletion. Debt securities - the current market value of the debt security will be the price determined by Mellon Bank, N.A. as of the close of the day of trading according to the Securities and Exchange Commission's Rule 17a-7(b)(4) under the Investment Company Act of 1940. Debt securities that are not reported securities or traded on an exchange will be valued based on an average of the highest current independent bids and the lowest current independent offers on the day of cross trading. Mellon Bank, N.A. will use reasonable inquiry to obtain such prices from at least three independent sources that are brokers or market makers. If there are fewer than three independent sources to price a certain debt security, the closing price quotations will be obtained from all available sources. IV. The allocation methods ---------------------- Direct cross-trade opportunities will be allocated among potential buyers or sellers of debt or equity securities on a pro rata basis. With respect to equity securities, please note Mellon Bank, N.A. imposes a trivial share constraint to reduce excessive custody ticket charges to participating accounts. V. Other procedures implemented by Mellon Bank, N.A. for its --------------------------------------------------------- cross-trading practices ----------------------- Mellon Bank, N.A. has developed certain internal operational procedures for cross trading debt and equity securities. These procedures are available upon request. 40 EX-5.1 10 ex5_1.txt EXHIBIT 5.1 [QWEST LETTERHEAD] December 5, 2001 Qwest Communications International Inc. 1801 California Street Denver, Colorado 80202 Re: Registration on Form S-8 of Qwest Communications International Inc. Ladies and Gentlemen: At your request, I have examined the Registration Statement on Form S-8 to be filed by Qwest Communications International Inc. ("Company") with the Securities and Exchange Commission in connection with the registration under the Securities Act of 1933, as amended, of 12,000,000 shares of Common Stock of the Company, $.01 par value per share ("Shares") and interests in the Plan (together with the Shares, the "Securities"), to be issued pursuant to the Qwest Savings & Investment Plan ("Plan"). I have examined the proceedings heretofore taken and to be taken in connection with the authorization of the Plan and the Shares that may be sold pursuant to the Plan. Based upon the foregoing examination and upon such matters of fact and law as I have deemed relevant, I am of the opinion that the Securities have been duly authorized by all necessary corporate action on the part of the Company and, when issued in accordance with such authorization and appropriate actions as contemplated thereby and by the Plan and related agreements, the Securities will be validly issued, fully paid and nonassessable. I consent to the use of this opinion as an exhibit to the aforesaid Registration Statement. Respectfully submitted, /s/ YASH RANA -------------------------------------------- Yash A. Rana Vice President and Associate General Counsel EX-5.2 11 ex5_2.txt EXHIBIT 5.2 INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY P. O. BOX 2508 CINCINNATI, OH 45201 Employer Identification Number: Date: July 20, 2001 84-0953188 DLN: U S WEST INC. 17007189008000 C/O MICHAEL A WISNEV ESQ Person to Contact: O'MELVENY 7 MYERS LLP MARGARET LEUNG ID #95084 1999 AVENUE OF THE STARS Contact Phone Number: LOS ANGELES, CA 90067-6035 (877) 829-5500 Plan Name: U S WEST SAVINGS PLAN/ESOP Plan Number: 004 Dear Applicant: We have made a favorable determination on the plan identified above based on the information you have supplied. Please keep this letter, the application forms submitted to request this letter and all correspondence with the Internal Revenue Service regarding your application for a determination letter in your permanent records. You must retain this information to preserve your reliance on this letter. Continued qualification of the plan under its present form will depend on its effect in operation. See section 1.401-1(b)(3) of the Income Tax Regulations. We will review the status of the plan in operation periodically. The enclosed Publication 794 explains the significance and the scope of this favorable determination letter based on the determination requests selected on your application forms. Publication 794 describes the information that must be retained to have reliance on this favorable determination letter. The publication also provide examples of the effect of a plan's operation on its qualified status and discusses the reporting requirements for qualified plans. Please read Publication 794. This letter relates only to the status of your plan under the Internal Revenue Code. It is not a determination regarding the effect of other federal or local statutes. This determination is subject to your adoption of the proposed amendments submitted in your letter dated 5/30/01. The proposed amendments should be adopted on or before the date prescribed by the regulations under Code section 401(b). This plan satisfies the requirements of Code section 4975(e) (7). This plan has been mandatorily disaggregated, permissively aggregated, or restructured to satisfy the nondiscrimination requirements. This plan satisfies the nondiscrimination in amount requirement of section 1.401(a) (4)-1(b) (2) of the regulations on the basis of a design-based safe harbor described in the regulations. -2- U S WEST INC This plan satisfies the nondiscriminatory current availability requirements of section 1.401(a) (4)-4(b) of the regulations with respect to those benefits, rights and features that are currently available to all employees in the plan's coverage group. For this purpose, the plan's coverage group consists of those employees treated as currently benefiting for purposes of demonstrating that the plan satisfies the minimum coverage requirements of section 410(b) of the Code. This plan satisfies the nondiscriminatory current availability requirements of section 1.401(a) (4)-4(b) of the regulations with respect to those benefits, rights, and features that are currently available to all employees in the plan's coverage group. For this purpose, the plan's coverage group consists of those employees treated as currently benefiting for purposes of demonstrating that the plan satisfies the minimum coverage requirements of section 410(b) of the Code. This plan also satisfies the requirements of section 1.401(a) (4)-4(b) of the regulations with respect to the specific benefits, rights, or features for which you have provided information. This letter considers the changes in qualification requirements made by the Uruguay Round Agreements Act, Pub. L 103-465, the Small Business Job Protection Act of 1996, Pub. L 104-188, the Uniformed Services Employment and Reemployment Rights Act of 1994, Pub. L 103-353, the Taxpayers Relief Act of 1997, Pub. L 105-34 and the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L 105-206, and the Community Renewal Tax Relief Act of 2000, Pub. L 106-554. The requirement for employee benefits plans to file summary plan descriptions (SPD) with the U.S. Department of Labor was eliminated effective August 5, 1997. For more details, call 1-800-998-7542 for a free copy of the SPD card. The information on the enclosed addendum is an integral part of this determination. Please be sure to read and keep it with this letter. We have sent a copy of this letter to your representative as indicated in the power of attorney. -3- U S WEST INC If you have questions concerning this matter, please contact the person whose name and telephone number are shown above. Sincerely yours, /s/ PAUL T. SHULTZ ------------------------------ Paul T. Shultz Director, Employee Plans Rulings & Agreements Enclosures: Publication 794 Addendum -4- U S WEST INC This determination letter also applies to the amendments dated 3/20/97, 5/12/97, 11/21/97, 6/12/98, 11/20/99 and 6/28/00. This determination letter supersedes the letter dated July 18, 2001. EX-23.1 12 ex23_1.txt EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Qwest Communications International Inc. Registration Statement on Form S-8 of our report dated January 24, 2001, on the consolidated balance sheets of Qwest Communications International Inc. (the "Company") as of December 31, 2000 and 1999, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2000, incorporated by reference in the Company's Annual Report on Form 10-K dated March 16, 2001 (as amended by the Company's Form 10-K/A dated August 20, 2001) and to all references to our firm included in this Registration Statement. /s/ ARTHUR ANDERSEN LLP Denver, Colorado, December 5, 2001. -----END PRIVACY-ENHANCED MESSAGE-----