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AMENDED AND RESTATED EMPLOYMENT AGREEMENT

Employment Agreement

AMENDED AND RESTATED EMPLOYMENT AGREEMENT | Document Parties: QWEST COMMUNICATIONS INTERNATIONAL INC You are currently viewing:
This Employment Agreement involves

QWEST COMMUNICATIONS INTERNATIONAL INC

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Title: AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Governing Law: Colorado     Date: 8/21/2009
Industry: Communications Services     Law Firm: Gibson Dunn;Vedder Price     Sector: Services

AMENDED AND RESTATED EMPLOYMENT AGREEMENT, Parties: qwest communications international inc
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Exhibit 10.1

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This Amended and Restated Employment Agreement (the “ Agreement ”) is made and entered into by and between Edward A. Mueller (“ Executive ”) and Qwest Communications International Inc., a Delaware corporation (together with Qwest Corporation, the “ Company ”).

 

WITNESSETH

 

WHEREAS, Executive and the Company entered into an Amended Employment Agreement dated August 29, 2007, as amended by an Amendment to Amended Employment Agreement dated October 15, 2008 (together, the “ Prior Agreement ”); and

 

WHEREAS, Executive and the Company wish to amend and restate the Prior Agreement as set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained Executive and the Company hereby agree as follows:

 

1.              Employment Term

 

This Agreement shall be in effect beginning on August 29, 2007 (the “ Effective Date ”), and terminating upon the earlier of (i) three years (the “ Initial Term ”) or (ii) the Date of Termination as defined in Paragraph 4.6(b).  If not terminated earlier, this Agreement will automatically be renewed at the end of its Initial Term and on each anniversary thereafter for a period of one year unless either party gives written notice of cancellation to the other party at least 90 days prior to the end of the Initial Term or anniversaries thereof.  The period of time from the Effective Date through the date the Date of Termination is referred to as the “ Employment Term .”

 

2.              Employment

 

2.1            Engagement .  (a)  During the Employment Term, Executive shall serve as Chief Executive Officer of the Company, shall report directly to the Company’s Board of Directors (the “ Board ”), and shall be responsible for the duties normally and customarily attendant to such office.  Such duties, responsibilities, power and authority shall include, without limitation, responsibility for the management, operation, strategic direction, and overall conduct of the business of the Company.  All other employees of the Company shall report to the Executive and not directly to the Board.  Executive also shall render such other services and duties of an executive nature consistent with the duties of the most senior executive officer of the Company as may from time to time be designated by the Board.  Executive shall be an employee of Qwest Corporation.

 

(b)            During the Agreement Term, while Executive is employed by the Company, the Company shall use its best efforts to cause Executive to be appointed to the Board as a director and to be elected as Chairman and to include Executive in the Board’s slate of nominees for election as a director at the applicable annual meeting of the Company’s

 



 

shareholders and shall recommend to the shareholders that Executive be elected as a director of the Company.

 

2.2            Place of Employment .  Executive’s primary workplace shall be the Company’s offices in Denver, Colorado, except for usual and customary travel on the Company’s business.  Executive will be required to maintain a residence in the Denver, Colorado area during the Employment Term.

 

2.3            Exclusive Employment .  During the Employment Term, Executive shall devote his full business time to his duties and responsibilities set forth in Paragraph 2.1.  Without limiting the generality of the foregoing, Executive shall not, without the prior written approval of the Board, during the Employment Term, render services of a business, professional or commercial nature to any other person, firm or corporation, whether for compensation or otherwise, except that Executive may (i) engage in civic, philanthropic and community service activities, (ii) make and maintain outside personal investments, and (iii) serve on the boards of the companies listed on Exhibit A hereto and any other company pre-approved by the Board or any appropriate committee of the Board so long as the foregoing activities do not materially interfere with Executive’s ability to comply with this Agreement and are not otherwise in conflict with the policies or interest of the Company.

 

3.              Compensation and General Benefits

 

3.1            Base Salary .  During the Employment Term, the Company shall pay Executive a base salary in an annualized amount equal to $1,200,000.00 (“ Base Salary ”) payable pro rata according to the Company’s regular management payroll processes, and subject to adjustment as hereinafter provided.

 

3.2            Bonus .  During the Employment Term, Executive shall be eligible to participate in and to earn incentive or bonus awards under the Company’s annual Management Bonus Plan or such successor incentive or bonus plans that the Company may adopt from time to time for the benefit of its senior executives (collectively referred to as the “ Annual Bonus Plan ”), in accordance with the terms of the Annual Bonus Plan as in effect from time to time. The target level for each annual bonus shall not be less than 200% of Executive’s Base Salary for the year, provided that the Company achieves the applicable objectives established by the Board for the year.  Executive shall receive a guaranteed minimum bonus for 2007 (to be paid in March 2008 if Executive is employed by the Company on the date of such payment), equal to the target level of Executive’s Base Salary specified above prorated to reflect the number of days Executive was employed by the Company in 2007.  Executive’s 2007 bonus may be increased by the Compensation and Human Resources Committee of the Board (“ Committee ”) in its sole discretion. The guaranteed minimum bonus under this Section 3.2 shall be considered eligible compensation for purposes of applicable Company benefit plans.

 

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3.3            Equity Incentive Compensation .  On the Grant Date (as defined in the Equity Agreement between Executive and Company dated August 10, 2007), the Company granted to Executive options and restricted stock as set forth on Exhibit B hereto and may subsequently, in the Company’s discretion, grant to Executive additional options, restricted stock, or other equity-based compensation pursuant to the Company’s Equity Incentive Plan (the “ EIP ”). The terms and conditions of the initial grants provided for in this Paragraph 3.3 and of any subsequent grants of options, restricted stock or other equity-based compensation will be determined by the Committee at the time of such grants in accordance with the EIP and will be set forth in grant agreements provided to Executive by the Company from time to time.

 

3.4            Compensation Reviews .  Executive’s compensation shall be reviewed at least annually by the Committee for the purpose of considering increases to Executive’s compensation.  In conducting this review, the Committee shall consider appropriate factors, including, without limitation, Executive’s individual performance, the Company’s financial condition and strategic direction and compensation afforded to senior executives of comparable corporations.  The Base Salary shall not be decreased without the written consent of Executive.

 

3.5            Vacation .  Executive shall be entitled to 30 days paid time off annually subject to the terms and conditions of the Company’s policy.

 

3.6            Employee Benefits .  The Executive and his eligible dependents shall be provided with health, retirement and other employee benefits and perquisites on the same basis as such benefits and are provided by the Company from time to time to the Company’s other senior executives.

 

3.7            Reimbursement of Expenses .  Upon submission of appropriate documentation in accordance with Company policy, the Company will promptly reimburse Executive for all reasonable expenses incurred by Executive (i) in connection with the negotiation and preparation of the Amended Employment Agreement dated August 29, 2007, between Executive and the Company, which reimbursement shall not exceed $40,000, and (ii) in the performance of his duties in accordance with the Company’s policies applicable to senior executives.

 

3.8       Relocation Expenses .  Company shall pay Executive’s reasonable expenses related to the relocation of his primary residence to the Denver, Colorado area, in accordance with the Company’s relocation policy applicable to senior executives.  Company will also pay reasonable out of pocket expenses of Executive’s travel between his current primary residence and Denver, Colorado and will pay Executive such additional amount as is necessary to provide Executive with an allowance of up to $5,000 per month for temporary housing and living expenses through February 15, 2008.   In addition, through June 30, 2008, Executive’s wife and/or minor child are authorized to use the Company aircraft to fly between Executive’s current primary residence and Denver, Colorado, unaccompanied by Executive.  Notwithstanding, Executive shall use his best efforts to relocate his permanent residence to Denver, Colorado as soon as possible after selling his principal residence, below.  The relocation payments shall also include provision for the Company to purchase Executive’s current principal residence as provided below.

 

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If any payment of relocation expenses and any imputed income relating to Executive’s travel or travel of Executive’s wife and/or minor child pursuant to the previous paragraph between his current primary residence and Denver as described in the previous paragraph (other than payments with respect to the purchase of Executive’s principal residence) is subject to federal or state income tax, the Company shall pay to the Executive an additional amount such that after receipt of the additional amount, and payment of all applicable taxes on the additional amount, the Executive shall effectively incur no federal or state income tax with respect to such payment.  In the event Executive does not sell his current principal residence, the Company shall purchase, or cause Executive’s current principal residence to be purchased, at such time as elected by Executive on or prior to March 31, 2008, at the then-prevailing value as determined by taking the average of the values determined by independent appraisers chosen by Executive and the Company, with a third independent appraiser to be chosen by the prior two appraisers to value the property between the two prior values if there is a more than 5% difference between the values determined by the prior two appraisers.

 

3.9            Use of Corporate Aircraft .  In order to provide enhanced security for the Executive, the Company will require the use of Company aircraft for all travel (business and personal) by the Executive.  As a result of this requirement, the Company authorizes that the Executive’s spouse and family members may accompany the Executive on Company aircraft.  The Company will also make available to Executive reasonable private ground transportation for all business travel and for all travel to and from the airport.  All personal use of Company aircraft by the Executive and family members and related ground transportation to and from the airport shall be reasonable and shall be subject to annual review by the Committee.  All personal use of the Company aircraft by Executive and all use of Company aircraft by the Executive’s spouse (unless determined to be business use and substantiated as such consistent with Qwest policy) and other members of the Executive’s family shall be imputed to the Executive as income in accordance with applicable Treasury regulations, except as otherwise agreed by the Company and the Executive in writing.  The Executive shall also agree to use a Timeshare Agreement for non-family members who the Executive may invite to accompany him on Company aircraft, which will require the reimbursement by the Executive to the Company for such use up to the maximum amount permitted under FAR 91.501.

 

3.10          Home Security .  The Company shall require the Executive to obtain and maintain an appropriate home security system to provide security for the Executive at home in the Denver area and the Company shall reimburse the Executive for reasonable costs associated with the installation and maintenance of a home security system.

 

3.11          Flex Executive Benefits.   At the Executive’s initiative, the Company has agreed that Executive shall no longer receive an annual $75,000 cash payment for executive perquisites

 

4.              Termination of Employment

 

4.1            Termination Upon Death or Disability .  If Executive is unable to perform his duties as a result of death or Disability prior to the expiration of the Employment Term, Executive’s employment as Chief Executive Officer may be terminated and Executive (or Executive’s estate, or other designated beneficiary(s) as shown in the records of the Company in the case of death) shall be entitled to receive (i) the Accrued Benefits (as defined in Paragraph

 

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4.2 below); and (ii) a pro-rata amount of the annual bonus that Executive would be eligible to receive under the terms and conditions of the Company’s Annual Bonus Plan for the year in which Executive’s termination occurs.  At its discretion, and only so long as Executive satisfies the definition of “disability” contained in the Qwest Disability Plan as amended from time to time (“ the Plan ”) Company may designate Executive as an employee solely to preserve his eligibility for disability benefits under the Plan.  Except as required by law, after the Date of Termination, the Company shall have no obligation to make any other payment, including severance or other compensation, of any kind to Executive (or Executive’s estate, or other designated beneficiary(s) as shown in the records of the Company in the case of death) upon a termination of employment by death or Disability.

 

4.2            Voluntary Termination .  If Executive terminates employment with the Company without Good Reason, Executive agrees to provide the Company with thirty days’ prior written notice.  The Company, in its sole discretion following its receipt of such written notice from Executive, may accelerate the termination of Executive’s employment and the right to any further compensation to a date prior to the 30th day after such written notice is given.  In the event that Executive’s employment is terminated under this Paragraph 4.2, Executive shall receive payment for (i) any earned but unpaid Base Salary or bonus; (ii) any accrued and unpaid vacation pay through the Date of Termination; (iii) any unreimbursed business expenses; and (iv) any other benefits the Executive is entitled to receive as of the Date of Termination under the employee benefit plans of the Company, less required withholdings for applicable income and employment taxes (“ Accrued Benefits ”).  Except as required by law, after the Date of Termination, the Company shall have no obligation to make any other payment, including severance or other compensation of any kind to Executive on account of Executive’s termination of employment.

 

4.3            Termination for Cause .  The Company may terminate Executive’s employment with the Company at any time for Cause in accordance with Paragraph 4.6(a) below.  In the event that Executive’s employment is terminated under this Paragraph 4.3, Executive shall receive the Accrued Benefits.  Except as required by law, after the Date of Termination, the Company shall have no obligation to make any other payment, including severance or other compensation of any kind on account of Executive’s termination of employment or to make any payment in lieu of notice to Executive.  Except as required by law, all benefits provided by the Company to Executive under this Agreement or otherwise shall cease as of the Date of Termination.

 

4.4            Termination Without Cause .  The Company may, at any time and without prior written notice, terminate Executive without Cause.  In the event that Executive’s employment with the Company is terminated without Cause, Executive shall receive the Accrued Benefits.  In addition, if Executive’s employment with the Company is terminated without Cause prior to the first anniversary of the Effective Date, Executive shall be entitled to receive the following severance payments:  (a) a pro-rata amount of the annual bonus that Executive would be eligible to receive under the Company’s Annual Bonus Plan for the year in which Executive’s termination occurs, to be paid to Executive on March 1 of the year following the Date of Termination; (b) an amount equal to his annual Base Salary, less required withholdings for applicable income and employment taxes, to be paid to Executive according to the Company’s regular management payroll schedule over 12 months; and (c) an amount equal to Executive’s

 

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Annual Bonus at target to be paid to Executive on March 1 of the year following the Date of Termination.  If Executive’s employment is terminated after the first anniversary of the Effective Date, Executive shall be entitled to receive the following severance payments: (x) a pro-rata amount of the annual bonus that Executive would be eligible to receive under the Company’s Annual Bonus Plan for the year in which Executive’s termination occurs, to be paid to Executive on March 1 of the year following the Date of Termination; (y) an amount equal to two times Executive’s annual Base Salary, less required withholdings for applicable income and employment taxes, to be paid to Executive according to the Company’s regular management payroll schedule over 24 months; and (z) (i) an amount equal to Executive’s Annual Bonus at target, to be paid to Executive on March 1 of the year following the Date of Termination, and (ii) a second payment in an amount equal to his Annual Bonus at target, to be paid to Executive on March 1 of the second year following the Date of Termination.  Upon a termination at any time pursuant to this paragraph 4.4, Executive shall also be entitled to receive eighteen months of medical coverage for Executive and his qualified beneficiaries under COBRA subsidized at active management employee rates.  All payments under this paragraph 4.4 are subject to the restrictions set forth in paragraphs 4.8 and may be withheld in order to satisfy the requirements of Section 409A of the Internal Revenue Code.  Executive’s entitlement to the severance payments in this paragraph is conditioned on (i) Executive’s executing and delivering to the Company of a release of claims against the Company, in the form attached as Exhibit C, and on such release becoming effective, and (ii) Executive’s compliance with the restrictive covenants set forth in Articles 6 and 7.  Executive agrees that the Company shall have a right of offset against all severance payments for amounts owed to the Company by the Executive.  However, no such offset shall accelerate or defer any benefit provided under this Agreement in violation of Code Section 409A.  Except as specifically provided in this Paragraph 4.4 and except as required by law, all benefits provided by the Company to Executive under this Agreement or otherwise shall cease as of the Date of Termination.

 

4.5            Termination for Good Reason .  Notwithstanding anything in this Article 4 to the contrary, Executive may voluntarily terminate his employment with the Company for Good Reason.  If Executive terminates his employment for Good Reason, he shall receive the benefits detailed in Paragraph 4.4 (subject to the same conditions set forth in Paragraph 4.4).

 

4.6            Certain Definitions .  For purposes of this Agreement, the following terms shall have the meanings set forth below.

 

(a)            Cause ” shall mean the occurrence of any one or more of the following events:

 

(1)            Commission of an act deemed by the Company in its reasonable discretion to be an act of dishonesty, fraud, misrepresentation or other act of moral turpitude that would reflect negatively upon Qwest or compromise the effective performance of Executive’s duties;

 

(2)            Unlawful conduct that would reflect negatively upon Qwest or compromise the effective performance of Executive’s duties, as determined by the Company in its reasonable discretion;

 

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(3)            Conviction of (or pleading nolo contendere to) any felony or a misdemeanor involving moral turpitude;

 

(4)            Continued failure to substantially perform Executive’s duties to the satisfaction of the Board (other than such failure resulting from Executive’s incapacity due to physical or mental illness) after the Company delivers written notice to Executive specifically identifying the manner in which Executive has failed to substantially perform his or her duties and Executive has been afforded a reasonable opportunity of at least 30 days to substantially perform his duties; or

 

(5)            A willful violation of the Qwest Code of Conduct or other Qwest policies that would reflect negatively upon Qwest or compromise the effective performance of Executive’s duties as determined by the Company in its reasonable discretion.

 

(b)            Date of Termination ” shall mean (i) if Executive is terminated as Chief Executive Officer by the Company for Disability, thirty days after written notice of such termination is given to Executive (provided that Executive shall not have returned to the performance of his duties on a full-time basis during such 30-day period); (ii) if Executive’s employment is terminated by the Company for any other reason, the date on which a written notice of termination is given, provided that, in the case of a termination for Cause under Paragraph 4.6(a)(iv) above, Executive shall not have cured the matter or matters stated in the notice of termination within the 30-day notice period provided in Paragraph 4.6(a) above; (iii) if Executive terminates employment for Good Reason, the date of Executive’s resignation; provided that the notice and cure provisions in Paragraph 4.6(d) have been complied with; (iv) if Executive terminates employment for other than a Good Reason, the date specified in Executive’s notice in compliance with Paragraph 4.2; or (v) in the event of Executive’s death, the date of death.

 

(c)            Disability ” shall mean that Executive either (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of not less than three months under the Company’s Disability Plan.

 

(d)            Good Reason ” shall mean Executive’s resignation from employment within 180 days after the occurrence of one of the events enumerated in this Paragraph 4.6(d), provided, however, that Executive must provide written notice to the Company within ninety days after the occurrence of the event allegedly constituting Good Reason, and the Company shall have thirty days after such notice is given to cure:

 

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(i) a change of Executive’s title as Chairman and Chief Executive Officer or a material reduction in Executive’s responsibilities without Executive’s written consent;

 

(ii) a reduction in Base Salary or target Annual Bonus at any time during the Employment Term without Executive’s written consent;

 

(iii) relocation of Executive’s primary workplace to any place more than 35 miles from the Company’s offices in Denver, Colorado as of the Effective Date, except for usual and customary travel by the Executive on the Company’s business to an extent substantially consistent with the Executive’s business travel obligations as of the Effective Date; or

 

(iv) any material breach by the Company of any provision of this Agreement.

 

4.7            Notice of Termination .  Any termination of Executive’s employment by the Company or by Executive under this Article 4 (other than in the case of death) shall be communicated by a written notice (the “ Notice of Termination ”) to the other party hereto, indicating the specific termination provision in this Agreement relied upon.  If the termination provisions relied upon require notice and an opportunity to cure, then the Notice of Termination should set forth in reasonable detail any facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.  The Notice of Termination should specify a Date of Termination and shall be delivered within the time periods set forth in the various subparagraphs of this Article 4, as applicable (the “ Notice Period ”); provided, however, that the Company may pay to Executive all Base Salary, benefits and other rights due to Executive during the Notice Period instead of employing Executive during such Notice Period.

 

4.8            Code Section 409A .  Notwithstanding anything herein to the contrary, to the extent that the Board reasonably determines, in its sole discretion, that any payment or benefit to be provided under Article 4 or Paragraph 5.1 to or for the benefit of Executive would be subject to the additional tax imposed under Section 409A(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the “ Code ”) or a successor or comparable provision, the commencement of such payments and/or benefits shall be delayed until the earlier of (i) the date that is six months following the Date of Termination or (ii) the date of Executive’s death (such date is referred to herein as the “ Distribution Date ”), provided, if at such time Executive is a “specified employee” of the Company (as defined in Treasury Regulation Section 1.409A-1(i)) and if amounts payable under this Article 4 or Paragraph 5.1 are on account of an “involuntary separation from service” (as defined in Treasury Regulation Section 1.409A-1(m)), Executive shall receive payments during the six-month period immediately following the Date of Termination equal to the lesser of (x) the amount payable under this Article 4 or Paragraph 5.1, as the case may be, or (y) two times the compensation limit in effect under Code Section 401(a)(17) for the calendar year in which the Termination Date occurs (with any amounts that otherwise would have been payable under this Article 4 or Paragraph 5.1 during such six-month period being paid on the first regular payroll date following the six-month anniversary of the Date of Termination).  In the event that the Board determines that the commencement of any of

 

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the employee benefits to be provided under Article 4 or Paragraph 5.1 are to be delayed pursuant to the preceding sentence, the Company shall require Executive to bear the full cost of such employee benefits until the Distribution Date at which time the Company shall reimburse Ex


 
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