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.
2
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.
3
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
4
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
5
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;
6
(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:
7
(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
8
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