Lumen Technologies, Inc 10-Q for FY2026 Q3
Lumen Technologies, Inc. (LUMN)
10-Q
2026-11-04
For: 2026-09-30
View Original
Added on
November 04, 2026
About this 10-Q
Lumen Technologies, Inc filed this 10-Q on November 4, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Lumen reported nine-month operating revenue of $8,419 million and a net loss of $666 million. Strategic revenue increased $378 million while legacy revenue decreased $614 million; the Mass Markets Fiber-to-the-Home divestiture generated $5.72 billion. AI summary
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.72B
- down 12.1% from $3.09B a year earlier
- Net loss
- $265M
- compared with a net loss of $621M a year earlier
- Diluted EPS
- -$0.26
- compared with -$0.62 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 30, 2026
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission File Number 001-07784
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
(318 ) 388-9000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
On October 30, 2026, 1,031,042,677 shares of common stock were outstanding.
TABLE OF CONTENTS
* Unless otherwise indicated, all references to "Notes" in this quarterly report refer to these Notes to Consolidated Financial Statements. | ||||||||
1
Special Note Regarding Forward-Looking Statements
This report and other documents filed by us under the federal securities laws include, and future oral or written statements by us and our management may include, "forward-looking" statements about our business, financial condition, operating results, or prospects within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve substantial risks and uncertainties. These statements include, among others:
•forecasts of our anticipated future results of operations, cash flows, or financial position;
•statements concerning our completed transactions, including with respect to the completed sale of our Mass Markets Fiber-to-the-Home business in 11 states (Arizona, Colorado, Florida, Idaho, Iowa, Minnesota, Nebraska, Nevada, Oregon, Utah, and Washington) (the "Territory") to a wholly owned subsidiary of AT&T Inc. ("AT&T") (the "Mass Markets Fiber-to-the-Home divestiture"), the acquisition of Alkira, Inc. ("Alkira"), including the integration and anticipated benefits and risks thereof, investments, product development, statements regarding federal and state broadband support programs, including their expected impact on competition in our markets, implementation of the new enterprise resource planning system, Private Connectivity FabricSM ("PCF"), initiatives related to artificial intelligence, other network capacity buildouts, transformation plans, deleveraging plans, modernization and simplification initiatives, participation in government programs, and other initiatives, including benefits or costs associated therewith;
•statements about our liquidity, profitability, profit margins, tax positions, tax assets, tax rates, asset values, contingent liabilities, growth opportunities, growth rates, acquisition and divestiture opportunities, business prospects, regulatory and competitive outlook, product capabilities, impacts from regulatory and legislative developments, investment and expenditure plans, business strategies, leverage, capital allocation plans, financing or refinancing alternatives and sources, consent solicitations, debt issuances, debt guarantees, listings of debt securities, and our ability to manage the effects of ongoing geopolitical instability, including armed conflicts, tariffs, inflation, sanctions, supply constraints on our costs, revenues, network expansion plans, and service delivery, and the benefits of acquisitions; and
•other similar statements of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts, many of which incorporate words such as “may,” “will,” “would,” “could,” “should,” “plans,” “believes,” “expects,” “anticipates,” “estimates,” "forecasts," “projects,” "proposes," "targets," “intends,” “likely,” “seeks,” “hopes,” or variations or similar expressions with respect to the future.
These forward-looking statements are based upon our judgment and assumptions as of the date such statements are made concerning future developments and events, many of which are beyond our control. These forward-looking statements, and the assumptions upon which they are based, (i) are not guarantees of future results and are based on current expectations only, (ii) are inherently speculative, and (iii) are subject to a number of risks and uncertainties, many of which are beyond our control. Actual events and results may differ materially from those anticipated, estimated, projected, or implied by us in those statements if one or more of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect. All of our forward-looking statements are qualified in their entirety by reference to factors that could cause our actual results to differ materially from those anticipated, estimated, projected or implied by us in those forward-looking statements. These factors include, but are not limited to, risks and uncertainties relating to:
•our ability to successfully and timely implement our corporate strategies, including our transformation, modernization and simplification, buildout and deleveraging strategies and to successfully manage the decline of our legacy products;
•our ability to successfully respond to challenges with integrating, modernizing and digitally transforming our systems, capitalize on emerging market opportunities, especially artificial intelligence ("AI"), and innovate in response to new technologies and changing customer demands;
•risks associated with our use of AI in our service offerings and internal operations, including the risk that AI-enabled features do not perform as expected or produce inaccurate, biased, or harmful outputs, the
3
inadvertent disclosure of confidential, proprietary or customer data, and the introduction of security vulnerabilities through AI-generated software code;
•rapid and uncertain developments in AI technology, regulation, and market dynamics that may increase cybersecurity, legal, competitive and reputational risks and adversely affect our business;
•our ability to fully realize, sustain, and achieve the anticipated benefits from the Mass Markets Fiber-to-the-Home divestiture and refinancing transactions, as well as any current or future acquisitions, divestitures and other material transactions, and to manage associated risks;
•the effects of intense competition from existing and future competitors, including increased pricing pressures;
•revenue and profitability declines associated with reduced pricing for legacy services and lower margins for many of our newer offerings;
•our ability to successfully and timely attain our key operating imperatives, including simplifying and consolidating our network, simplifying and automating our service support systems, replacing aging or obsolete plant and equipment, strengthening our relationships with customers, and attaining projected cost savings;
•our ability to successfully adjust to changes in customer demand for our products and services, including increased demand for high-speed data transmission services, low-latency connectivity, and scalable infrastructure driven by the growth of AI applications and workloads, and the risk that we may misjudge the timing, scale, or nature of such demand, leading to potential misalignment of our investments or strategic priorities;
•our ability to successfully and timely monetize our network-related assets through leases, commercial service arrangements or similar transactions (including as part of our PCF solutions);
•our ability to generate cash flows sufficient to fund our growth, interest payments on our substantial indebtedness, and other cash requirements;
•our dependence on cash flows from our subsidiaries;
•our complex debt structure and our ability to comply with our debt obligations and covenants, including our ability to make transfers of cash in compliance therewith;
•our obligations under the guarantees we have provided of indebtedness issued or incurred by our subsidiaries, including our unsecured guarantees of Qwest Corporation’s New Qwest Notes (as defined in Note 5 below) and of certain first lien notes and credit facility indebtedness of Level 3 Financing, Inc., the possibility that we may be required to perform under those guarantees, and the effects of the related simplification of our subsidiaries’ separate SEC reporting obligations;
•our ability to obtain future financing or refinancing on acceptable terms and the impact of changes in our debt ratings, our debt covenants, changes in interest rates, market conditions, and the macroeconomic environment on such ability;
•our ability to effectively retain and hire key personnel and to successfully negotiate collective bargaining agreements on reasonable terms without work stoppages;
•our ability to safeguard our network, and to avoid the adverse impact of cyber-attacks (including state-sponsored attacks targeting telecommunications infrastructure), security breaches, service outages, system failures, or similar events impacting our network or the availability and quality of our services;
•the negative impact of increases in the costs of our pension, healthcare, post-employment, or other benefits, including those caused by changes in capital markets, interest rates, mortality rates, demographics, or regulations;
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•our reliance on other communications providers, key suppliers and vendors, key customer contracts and landowners and our ability to maintain positive relationships with key partners;
•our ability to timely obtain necessary hardware, software, equipment, services, governmental permits, and other items on favorable terms;
•the effects of, and our ability to comply with, complex and evolving regulations and judicial proceedings affecting our industry;
•the outcome of regulatory, governmental, or legislative actions relating to allegations regarding the potential environmental or public health impacts of lead-sheathed cables in our network infrastructure;
•any adverse developments in legal or regulatory proceedings involving us;
•our ability to protect and continue to use intellectual property necessary to conduct our operations;
•our ability to use our net operating loss carryforwards in the amounts projected and to fully realize any anticipated benefits from recently-enacted federal tax legislation;
•the effects of adverse weather, terrorism, epidemics, pandemics, war, rioting, vandalism, societal unrest, political discord, inflation, trade policy changes, trade wars and tensions, sanctions, armed conflicts (including the ongoing conflict in the Middle East) and other social, political, and economic factors; and
•other risks and uncertainties identified under the "Risk Factors" section or other portions of this report or in our other filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2025.
Additional factors or risks that we currently deem immaterial, that are not presently known to us, or that arise in the future could also cause our actual results to differ materially from our expected results. Given these uncertainties, investors are cautioned not to unduly rely upon our forward-looking statements, which speak only as of the date made. We undertake no obligation to publicly update or revise any forward-looking statements for any reason, whether as a result of new information, future events or developments, changed circumstances, or otherwise. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. Furthermore, any information about our intentions contained in any of our forward-looking statements reflects our intentions as of the date of such forward-looking statement, and is based upon, among other things, our assessment of regulatory, technological, industry, competitive, economic, or market conditions as of such date. We may change our intentions, strategies, or plans (including our capital allocation plans) at any time and without notice, based upon any changes in such factors or otherwise, and we undertake no obligation to make any public announcement of such changed intentions, except to the extent required by applicable law.
5
PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LUMEN TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in millions, except per share amounts, and shares in thousands) | |||||||||||||||||||||||
| OPERATING REVENUE | $ | ||||||||||||||||||||||
| OPERATING EXPENSES | |||||||||||||||||||||||
| Cost of services and products (exclusive of depreciation and amortization) | |||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||
| Net gain on sale of business | ( | ( | |||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Goodwill impairment | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| OPERATING (LOSS) INCOME | ( | ( | ( | ||||||||||||||||||||
| OTHER (EXPENSE) INCOME | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Net gain (loss) on early retirement of debt (Note 5) | ( | ( | ( | ||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Total other expense, net | ( | ( | ( | ( | |||||||||||||||||||
| LOSS BEFORE INCOME TAXES | ( | ( | ( | ( | |||||||||||||||||||
| Income tax (benefit) expense | ( | ( | ( | ||||||||||||||||||||
| NET LOSS | $ | ( | ( | ( | ( | ||||||||||||||||||
| BASIC AND DILUTED LOSS PER COMMON SHARE | |||||||||||||||||||||||
| BASIC | $ | ( | ( | ( | ( | ||||||||||||||||||
| DILUTED | $ | ( | ( | ( | ( | ||||||||||||||||||
| WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | |||||||||||||||||||||||
| BASIC | |||||||||||||||||||||||
| DILUTED | |||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
6
LUMEN TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| NET LOSS | $ | ( | ( | ( | ( | ||||||||||||||||||
| OTHER COMPREHENSIVE INCOME | |||||||||||||||||||||||
| Items related to employee benefit plans: | |||||||||||||||||||||||
Change in net actuarial loss, net of tax of $( | |||||||||||||||||||||||
Change in net prior service cost, net of tax of $ | ( | ( | ( | ( | |||||||||||||||||||
Foreign currency translation adjustment, net of tax of $ | ( | ||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||
| COMPREHENSIVE LOSS | $ | ( | ( | ( | ( | ||||||||||||||||||
See accompanying notes to consolidated financial statements.
7
LUMEN TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| September 30, 2026 | December 31, 2025 | ||||||||||
| (Dollars in millions and shares in thousands) | |||||||||||
| ASSETS | |||||||||||
| CURRENT ASSETS | |||||||||||
| Cash and cash equivalents | $ | ||||||||||
Accounts receivable, net of allowance of $ | |||||||||||
| Assets held for sale | |||||||||||
| Other current assets, net | |||||||||||
| Total current assets | |||||||||||
Property, plant and equipment, net of accumulated depreciation of $ | |||||||||||
| GOODWILL AND OTHER ASSETS | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Other assets, net | |||||||||||
| Total goodwill and other assets | |||||||||||
| TOTAL ASSETS | $ | ||||||||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||||||||
| CURRENT LIABILITIES | |||||||||||
| Current maturities of long-term debt | $ | ||||||||||
| Accounts payable | |||||||||||
| Accrued expenses and other liabilities | |||||||||||
| Salaries and benefits | |||||||||||
| Income and other taxes | |||||||||||
| Current operating lease liabilities | |||||||||||
| Interest | |||||||||||
| Other current liabilities | |||||||||||
| Liabilities held for sale | |||||||||||
| Current portion of deferred revenue | |||||||||||
| Total current liabilities | |||||||||||
| LONG-TERM DEBT | |||||||||||
| DEFERRED CREDITS AND OTHER LIABILITIES | |||||||||||
| Deferred income taxes, net | |||||||||||
| Benefit plan obligations, net | |||||||||||
| Deferred revenue | |||||||||||
| Other liabilities | |||||||||||
| Total deferred credits and other liabilities | |||||||||||
| COMMITMENTS AND CONTINGENCIES (Note 11) | |||||||||||
| STOCKHOLDERS' DEFICIT | |||||||||||
Preferred stock—non-redeemable, $ | |||||||||||
Common stock, | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total stockholders' deficit | ( | ( | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | ||||||||||
See accompanying notes to consolidated financial statements.
8
LUMEN TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| (Dollars in millions) | |||||||||||
| OPERATING ACTIVITIES | |||||||||||
| Net loss | $ | ( | ( | ||||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Net gain on sale of business | ( | ||||||||||
| Goodwill impairment | |||||||||||
| Deferred income taxes | ( | ( | |||||||||
| Provision for uncollectible accounts | |||||||||||
| Net loss on early retirement of debt | |||||||||||
| Stock-based compensation | |||||||||||
| Changes in current assets and liabilities: | |||||||||||
| Accounts receivable | ( | ( | |||||||||
| Accounts payable | ( | ||||||||||
| Accrued income and other taxes | |||||||||||
| Other current assets and liabilities, net | ( | ||||||||||
| Retirement benefits | ( | ||||||||||
| Change in deferred revenue | |||||||||||
| Changes in other assets and liabilities, net | |||||||||||
| Other, net | ( | ||||||||||
| Net cash provided by operating activities | |||||||||||
| INVESTING ACTIVITIES | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Proceeds from sale of business | |||||||||||
| Payment for acquisition, net of cash acquired | ( | ||||||||||
| Proceeds from sale of property, plant and equipment, and other assets | |||||||||||
| Other, net | ( | ||||||||||
| Net cash provided by (used in) investing activities | ( | ||||||||||
| FINANCING ACTIVITIES | |||||||||||
| Net proceeds from issuance of long-term debt | |||||||||||
| Payments of long-term debt | ( | ( | |||||||||
| Debt issuance and extinguishment costs and related fees | ( | ( | |||||||||
| Other, net | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | ( | ||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | ||||||||||
| Supplemental cash flow information: | |||||||||||
| Income taxes paid, net | $ | ( | ( | ||||||||
Interest paid (net of capitalized interest of $ | ( | ( | |||||||||
| Supplemental noncash information regarding financing activities: | |||||||||||
| Cancellation of term loans as part of refinancings (Note 5) | $ | ( | ( | ||||||||
| Issuance of term loans as part of refinancings (Note 5) | |||||||||||
| Cash, cash equivalents and restricted cash: | |||||||||||
| Cash and cash equivalents | $ | ||||||||||
| Restricted cash included in Other current assets, net | |||||||||||
| Restricted cash included in Other assets, net | |||||||||||
| Total | $ | ||||||||||
See accompanying notes to consolidated financial statements.
9
LUMEN TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(UNAUDITED)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in millions except per share amounts) | |||||||||||||||||||||||
| COMMON STOCK | |||||||||||||||||||||||
| Balance at beginning of period | $ | ||||||||||||||||||||||
| Shares withheld to satisfy tax withholdings | ( | ( | ( | ( | |||||||||||||||||||
| Stock-based compensation | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Balance at end of period | |||||||||||||||||||||||
| ACCUMULATED OTHER COMPREHENSIVE LOSS | |||||||||||||||||||||||
| Balance at beginning of period | ( | ( | ( | ( | |||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||
| Balance at end of period | ( | ( | ( | ( | |||||||||||||||||||
| ACCUMULATED DEFICIT | |||||||||||||||||||||||
| Balance at beginning of period | ( | ( | ( | ( | |||||||||||||||||||
| Net loss | ( | ( | ( | ( | |||||||||||||||||||
| Balance at end of period | ( | ( | ( | ( | |||||||||||||||||||
| TOTAL STOCKHOLDERS' DEFICIT | $ | ( | ( | ( | ( | ||||||||||||||||||
See accompanying notes to consolidated financial statements.
10
LUMEN TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
References in the Notes to "Lumen Technologies" or "Lumen," "we," "us," the "Company," and "our" refer to Lumen Technologies, Inc. and its consolidated subsidiaries, unless the context otherwise requires.
Note 1— Background
General
We are a leading digital networking services company, empowering enterprise businesses to fuel growth in a multi-cloud, AI-first marketplace by connecting people, data, and applications quickly, securely, and effortlessly. We are unleashing the world's digital potential by providing a broad array of integrated products and services to our domestic and global Business customers and our domestic Mass Markets customers. On February 2, 2026, we completed the sale of our Mass Markets Fiber-to-the-Home business in 11 states to AT&T, which impacted our Mass Markets customer base. On July 1, 2026, our wholly owned subsidiary, Level 3 Communications, LLC ("Level 3 Communications"), acquired Alkira, Inc. ("Alkira"), a provider of a cloud-native, carrier-agnostic networking platform that enables enterprises to design, deploy, and operate connectivity and network services across hybrid and multi-cloud environments. For more information on the divestiture and acquisition, see Note 2—Divestiture and Acquisition. We operate one of the world’s most interconnected communications networks. Our platform empowers our customers to swiftly adjust digital programs to meet immediate demands, create efficiencies, accelerate market access, and reduce costs, which allows our customers to rapidly evolve their IT programs to address dynamic changes. Our specific products and services are detailed in Note 4—Revenue Recognition.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and the applicable rules and regulations of the U.S. Securities and Exchange Commission ("SEC") for interim financial reporting. Certain information and disclosures normally included in our audited annual financial statements have been condensed or omitted. We believe these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. Interim results are not necessarily indicative of results for the entire year. These consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2025.
The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries in which we have a controlling interest. Intercompany amounts and transactions with our consolidated subsidiaries have been eliminated.
Reclassifications
In the first quarter of 2026, we updated our product category framework for Business revenue, eliminating the previously disclosed Grow, Nurture, Harvest, and Other categories and replacing them with Strategic and Legacy categories. Certain prior period amounts have been reclassified to conform to the current period presentation.
Summary of Significant Accounting Policies
Refer to the significant accounting policies described in Note 1—Background and Summary of Significant Accounting Policies to the consolidated financial statements in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2025.
11
Recent Accounting Pronouncements
In December 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-12 “Codification Improvements.” The ASU represents changes to the Codification that clarify, correct errors, or make minor improvements. The amendments make the Codification easier to understand and apply. The amendments in ASU 2025-12 are effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years, with early adoption permitted. Except for the amendments to Topic 260, "Earnings Per Share" this ASU can be applied either prospectively or retrospectively with transition method elected on an issue-by-issue basis. The Company is currently evaluating ASU 2025-12 to determine the impact it may have on our consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11, "Interim Reporting (Topic 270): Narrow-Scope Improvements." This ASU clarifies that the interim reporting requirements in Topic 270 apply to all entities that issue interim financial statements prepared in accordance with U.S. GAAP and consolidates such requirements within Topic 270. The amendments provide a comprehensive list within Topic 270 of required interim disclosures, establish a principle requiring disclosure of events or changes occurring after the end of the most recent annual reporting period that have a material impact on interim results and clarifies the form and content requirements applicable to interim financial statements. The amendments in ASU 2025-11 are effective for the interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. This ASU can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating ASU 2025-11 to determine the impact it may have on our consolidated financial statements.
In December 2025, the FASB issued ASU 2025-10, "Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities." This ASU establishes authoritative guidance on the accounting for government grants received by business entities. The amendments in ASU 2025-10 are effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods, with early adoption permitted. This ASU can be applied using a modified prospective approach, a modified retrospective approach, or a retrospective approach. The Company is currently evaluating ASU 2025-10 to determine the impact it may have on our consolidated financial statements.
In November 2025, the FASB issued ASU 2025-09, "Derivatives and Hedging (Topic 815): Hedge Accounting Improvements." This ASU introduces five targeted improvements to better align hedge accounting with entities’ risk management activities. The amendments in ASU 2025-09 are effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods, with early adoption permitted and should be applied on a prospective basis for all hedging relationships. The Company early adopted ASU 2025-09 prospectively, effective January 1, 2026. The adoption did not have an impact on our consolidated financial statements.
In November 2025, the FASB issued ASU 2025-08, "Financial Instruments — Credit Losses (Topic 326): Purchased Loans." This ASU requires that loans acquired without credit deterioration and deemed “seasoned” will be considered purchased seasoned loans and accounted for using the gross-up approach at acquisition (i.e., record the loan at its purchase price and separately record an allowance for expected credit losses). Seasoned loans include all loans acquired in a business combination, that do not have “more-than-insignificant” deterioration of credit quality since origination, as well as loans purchased at least 90 days after origination, where the purchaser was not involved in the origination of the loans. The amendments in ASU 2025-08 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. This ASU should be applied prospectively to loans that are acquired on or after the initial application date. The Company early adopted ASU 2025-08 prospectively, effective January 1, 2026. The adoption did not have an impact on our consolidated financial statements.
12
In September 2025, the FASB issued ASU 2025-07, "Derivatives and Hedging (Topic 815)" and "Revenue from Contracts with Customers (Topic 606)." The guidance refines the scope of Topic 815 to clarify which contracts are subject to derivative accounting. This ASU also provides clarification under Topic 606 for share-based payments from a customer in a revenue contract. The amendments in ASU 2025-07 are effective for fiscal years beginning after December 15, 2026, and interim reporting periods, with early adoption permitted. This ASU is permitted to be applied either prospectively to new contracts entered into on or after the date of adoption or on a modified retrospective basis through a cumulative-effect adjustment to the opening balance of retained earnings. The Company early adopted ASU 2025-07 prospectively, effective January 1, 2026. The adoption did not have an impact on our consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, "Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software" which amends the guidance in ASC 350-40, "Intangibles — Goodwill and Other — Internal-Use Software." This ASU modernizes the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach. The amendments in ASU 2025-06 are effective for fiscal years beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted. This ASU is permitted to be applied prospectively, retrospectively or through a modified transition approach. The Company early adopted ASU 2025-06 prospectively, effective January 1, 2026. The adoption of ASU 2025-06 did not have a material impact on our consolidated financial statements.
In July 2025, the FASB issued ASU 2025-05 "Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets." This ASU provides entities with a practical expedient to simplify the estimation of expected credit losses on current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606 by allowing the assumption that current conditions as of the balance sheet date will not change during the remaining life of the asset. The amendments in ASU 2025-05 are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early prospective adoption permitted. The Company adopted ASU 2025-05 effective January 1, 2026. The adoption of ASU 2025-05 did not have a material impact on our consolidated financial statements.
In May 2025, the FASB issued ASU 2025-04 "Compensation - Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer (“ASU 2025-04”)." This ASU clarifies the guidance on the accounting for share-based payment awards that are granted by an entity as consideration payable to its customer, with the intent to reduce diversity in practice and improve existing guidance by revising the definition of a “performance condition” and eliminating a forfeiture policy election for service conditions associated with share-based consideration payable to a customer. It also clarifies the guidance in Topic 606 on the variable consideration constraint does not apply to share-based consideration payable to a customer “regardless of whether an award’s grant date has occurred”. ASU 2025-04 will be effective for the annual periods beginning after December 15, 2026 with early adoption permitted. The Company early adopted ASU 2025-04 prospectively, effective January 1, 2026. The adoption did not have an impact on our consolidated financial statements.
In May 2025, the FASB issued ASU 2025-03 "Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity." This ASU revises current guidance for determining the accounting acquirer for a transaction effected primarily by exchanging equity interests in which the legal acquiree is a variable interest entity that meets the definition of a business. The amendments require an entity to consider the same factors that are currently required for determining which entity is the accounting acquirer in other acquisition transactions. The amendments in ASU 2025-03 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early prospective adoption permitted. The Company early adopted ASU 2025-03 prospectively, effective January 1, 2026. The adoption did not have an impact on our consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, "Disaggregation of Income Statement Expenses." This ASU requires additional footnote disclosure of the details of certain income statement expense line items as well as additional disclosure about selling expenses. The amendments in ASU 2024-03 are effective for the annual period of fiscal 2027, and early adoption is permitted. The guidance is to be applied prospectively, with the option for retrospective application. The Company is currently evaluating ASU 2024-03 and the impact the adoption of this standard will have on our disclosures.
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Subsequent Event
Stock Exchange Listing
On October 6, 2026, our common stock, no par value per share (the “Common Stock”), as well as the 6.500 % Notes due 2051 and the 6.750 % Notes due 2052 (the “Notes”) issued by Qwest Corporation, a wholly-owned subsidiary of the Company and guaranteed by the Company, began trading on The Nasdaq Stock Market LLC ("Nasdaq") following our voluntary withdrawal from listing on the New York Stock Exchange at the close of trading on October 5, 2026.
The Common Stock continues to trade under the symbol “LUMN,” and the Notes continue to trade under the symbols “CTGG” and “CTHH.”
Note 2—Divestiture and Acquisition
Mass Markets Fiber-to-the-Home Divestiture
On February 2, 2026, we and certain of our affiliates completed the sale of our Mass Markets Fiber-to-the-Home business in 11 states to AT&T in exchange for pre-tax cash proceeds of $5.72 billion, which were subject to post-closing adjustments. During the nine months ended September 30, 2026, we recorded a $569 million net pre-tax gain on the disposal associated with the sale of our Mass Markets Fiber-to-the-Home business. This gain is reflected as operating income within the consolidated statements of operations.
In connection with the sale, Lumen entered into a transition services agreement under which it will provide to the purchaser various support services. Lumen and the purchaser also executed long-term agreements under which Lumen and the purchaser will provide to each other various network and other commercial services. In certain of these arrangements, Lumen identified contractual terms that are unfavorable compared to prevailing market terms. These agreements include an indefeasible right to use (“IRU”) arrangement under which Lumen granted the purchaser an IRU for specified Lumen retained fiber assets for an initial term of 20 years at no incremental charge.
Lumen recorded $729 million of liabilities initially measured at fair value, with an offset to the net gain on disposal, for contractual credits and commercial agreements. We estimated the initial fair value of the commercial agreements in the amount of $497 million using the income approach that considered the differential in revenue attributable to contractual and market pricing assumptions. The resulting cash flows were calculated on an after-tax basis and discounted using an estimated weighted average cost of capital. We also recorded an initial fair value liability of $232 million for contractual credits based on the expected use and resulting discounted cash flows. In addition, we agreed to reimburse the purchaser for certain matters for which future cash payments by Lumen could be required. Lumen has estimated the fair value of these payments to be $36 million, which is included in Other liabilities on our consolidated balance sheet and has reduced our net gain on the sale accordingly.
We determined that of the cash proceeds of $5.72 billion received, $729 million associated with the fair value of the contractual credits and commercial agreements described above should be classified as cash provided by operating activities within the consolidated statements of cash flows, based on the nature of those cash flows. The remaining proceeds are treated as cash flows from investing activities within the consolidated statements of cash flows.
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These liabilities were recorded on our consolidated balance sheet at the fair value as of the transaction close date of February 2, 2026 as follows:
| Balance Sheet Classification | Initial Fair Value Liabilities | |||||||
| (Dollars in millions) | ||||||||
| Other current liabilities | $ | |||||||
| Current portion of deferred revenue | ||||||||
| Deferred revenue | ||||||||
| Other liabilities | ||||||||
| Total liabilities | $ | |||||||
We do not believe this divestiture transaction represents a strategic shift for Lumen and therefore, does not meet the criteria to be classified as a discontinued operation. As a result, we continued to report our operating results for the Mass Markets Fiber-to-the-Home business in the Territory (the "disposal group") in our consolidated operating results through the disposal date. As a result of closing the transaction on February 2, 2026, we derecognized net assets of $4.4 billion, primarily comprised of (i) property, plant and equipment, net of accumulated depreciation, of $2.9 billion, (ii) goodwill of $1.3 billion, and (iii) other net assets of $186 million.
As of May 21, 2025, the assets and liabilities of the disposal group were classified as held for sale and measured at the lower of (i) the carrying value when we classified the disposal group as held for sale or (ii) the fair value of the disposal group, less costs to sell. Effective with the designation of the disposal group as held for sale on May 21, 2025, we suspended recording depreciation of property, plant and equipment while these assets were classified as held for sale.
Alkira Acquisition
On May 4, 2026, our wholly owned subsidiary, Level 3 Communications, LLC ("Level 3 Communications"), entered into an agreement and plan of merger to acquire Alkira, Inc. ("Alkira"), a provider of a cloud-native, carrier-agnostic networking platform that enables enterprises to design, deploy, and operate connectivity and network services across hybrid and multi-cloud environments. The transaction closed July 1, 2026, and pursuant to the merger agreement, Apollo Sub, Inc., a wholly owned subsidiary of Level 3 Communications, was merged with and into Alkira, with Alkira surviving the merger as a wholly-owned subsidiary of Level 3 Communications in exchange for $485 million cash which is subject to finalization of customary working capital and other post-closing adjustments. The financial results of Alkira have been included in our consolidated financial statements since the transaction closed.
We allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values. These fair values were based on estimates and assumptions made by management at the time of acquisition. The allocation of the purchase price was completed as of September 30, 2026. The major classes of assets and liabilities to which we allocated the purchase price follow:
| Balance Sheet Classification | Estimated Fair Value | |||||||
| (Dollars in millions) | ||||||||
| Cash | $ | |||||||
| Goodwill | ||||||||
| Intangible assets | ||||||||
| Other assets | ||||||||
| Other liabilities | ( | |||||||
| Net assets acquired | $ | |||||||
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Goodwill includes the acquired workforce and was primarily attributable to strategic benefits and anticipated synergies that are expected to be achieved from the integration of Alkira. None of the goodwill is expected to be deductible for income tax purposes. The purchase price allocated to identified intangible assets acquired follows:
| Intangible Asset | Estimated Fair Value | Amortization Period | ||||||||||||
| (Dollars in millions) | (Period in years) | |||||||||||||
| Developed technology | $ | |||||||||||||
| Customer relationships | ||||||||||||||
| Trade name | ||||||||||||||
| Total identified intangible assets | $ | |||||||||||||
Developed technology consists of a cloud networking platform that enables enterprises to design, deploy and manage connectivity across public clouds, data centers, branch locations and other on-premise environments, remote users and external networks. We utilized the replacement cost method to estimate the fair value of the developed technology, considering factors such as historical cost, market participant profit mark-up, obsolescence and opportunity cost. The economic useful life was determined based on the technology cycle.
Customer relationships represent the fair value of future projected cash flows that will be derived from sales of products to existing customers of Alkira as of the transaction close. We estimated the fair value of customer relationships using the multi-period excess earnings method considering such factors as annual recurring revenue for existing customers, customer attrition, growth projections, margin attributable to existing customers, and contributory asset charges to reflect the use of other assets to sustain the customer relationships. The economic useful life was determined by evaluating factors such as the cash flows over the forecast period, term of contracts acquired, customer retention, and the economic lives of similar assets held by Lumen.
As a part of the transaction, Lumen acquired the Alkira trade name which Lumen expects to retain until the technology integration is complete. We utilized the relief-from-royalty method to estimate the fair value of the Alkira trade name. The estimated useful life represents the period of use until integration is complete.
Note 3—Goodwill and Intangible Assets
Goodwill consisted of the following:
| September 30, 2026 | December 31, 2025 | ||||||||||
| (Dollars in millions) | |||||||||||
| Goodwill | $ | ||||||||||
Intangible assets, net is composed of the following:
September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
Customer relationships | $ | $ | |||||||||||||||||||||
Capitalized software(1) | |||||||||||||||||||||||
Patents and other | |||||||||||||||||||||||
Total | $ | ||||||||||||||||||||||
______________________________________________________________________
(1) Certain capitalized software with a gross carrying value of $259 million became fully amortized during 2025 and was retired during the first quarter of 2026.
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As of September 30, 2026 and December 31, 2025, the gross carrying amount of goodwill and other intangible assets was $13.7 billion and $13.4 billion, respectively.
As a result of the acquisition of Alkira, Inc. described in Note 2—Divestiture and Acquisition, the net carrying amount of goodwill, customer relationships and other intangible assets were $475 million as of September 30, 2026, which represents the excess of the purchase price over the fair value of the net tangible assets acquired.
We are required to assess our goodwill and other indefinite-lived intangible assets for impairment annually, or, under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be impairment. We are required to write down the value of goodwill only when our assessment determines the carrying value of equity of any of our reporting units exceeds its fair value. Our annual impairment assessment date for goodwill is October 31, at which date we assess our reporting units.
The Company assigned the goodwill to its Alkira reporting unit, which is expected to benefit from the acquisition.
The following table shows the rollforward of goodwill from December 31, 2025 to September 30, 2026.
| (Dollars in millions) | |||||
As of December 31, 2025 | $ | ||||
| Alkira Acquisition | |||||
As of September 30, 2026 | $ | ||||
Total amortization expense for intangible assets was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
Amortization expense | $ | ||||||||||||||||||||||
Note 4—Revenue Recognition
We categorize revenue from our operations within the products and services listed below based on the customers we serve, as follows: (i) revenue from Business customers is primarily reflected in the 'Strategic' and 'Legacy' categories, and (ii) revenue from Mass Markets customers is primarily reflected in 'Fiber Broadband', 'Other Broadband', and 'Voice and Other' categories.
Product and Service Categories
•Strategic: Includes existing and emerging products and services in which we are significantly investing, including offerings that leverage modernized infrastructure, higher-capacity technologies, and scalable or on-demand delivery models, such as dark fiber and conduit, IP, higher speed wavelength services, colocation facilities, certain Ethernet and VPN data network services, and digital services, such as Edge Fabric and Network-as-a-Service ("NaaS");
•Legacy: Includes our services that are generally provided over legacy platforms or lower-capacity configurations, such as traditional Ethernet, IP, and VPN data network services, delivered in locations or with technologies not currently suited for scalable or on-demand models, lower-speed wavelength services, voice and private line services, as well as managed and professional services and equipment sales;
•Fiber Broadband: Under which we provide high speed broadband services to residential and small business customers utilizing our fiber-based network infrastructure, representing the fiber-based business-to-customer products and services that remain following the Mass Markets Fiber-to-the-Home divestiture;
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•Other Broadband: Under which we provide primarily lower speed broadband services to residential and small business customers utilizing our copper-based network infrastructure; and
•Voice and Other: Under which we derive revenues from (i) providing local and long-distance voice services, professional services, and other ancillary services, and (ii) federal broadband and state support programs.
Sales Channels
Under our Business customer revenue, we provide products and services under five sales channels to meet the needs of our enterprise and commercial customers. The five sales channels, organized by customer focus, include:
•Large Enterprise: Large enterprise customers and carriers in North America.
•Mid-Market Enterprise: Medium-sized enterprises in North America, served directly and through indirect channel partners.
•Public Sector: U.S. Federal government, state and local governments, and research and education institutions.
•Wholesale: Other communication companies providing wireline, wireless, cable, voice, and data center services.
•International and Other: Multinational and global enterprise customers and carriers.
By organizing our offerings through these customer-focused sales channels, we streamline operations and deliver targeted solutions.
Reconciliation of Total Revenue to Revenue from Contracts with Customers
The following tables provide total revenue by sales channel and product category. They also provide the amount of revenue that is not subject to Topic 606, but is instead governed by other accounting standards. The amounts in the tables below include revenue for the Mass Markets Fiber-to-the-Home business prior to its sale on February 2, 2026:
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| Three Months Ended September 30, 2026 | Nine Months Ended September 30, 2026 | ||||||||||||||||||||||
| Total Revenue | Adjustments for Non-ASC 606 Revenue (1) | Total Revenue from Contracts with Customers | Total Revenue | Adjustments for Non-ASC 606 Revenue (1) | Total Revenue from Contracts with Customers | ||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Sales Channel and Product Category | |||||||||||||||||||||||
| Large Enterprise | |||||||||||||||||||||||
| Strategic | $ | ( | ( | ||||||||||||||||||||
| Legacy | |||||||||||||||||||||||
| Total Large Enterprise Revenue | ( | ( | |||||||||||||||||||||
| Mid-Market Enterprise | |||||||||||||||||||||||
| Strategic | ( | ( | |||||||||||||||||||||
| Legacy | ( | ( | |||||||||||||||||||||
| Total Mid-Market Enterprise Revenue | ( | ( | |||||||||||||||||||||
| Public Sector | |||||||||||||||||||||||
| Strategic | ( | ( | |||||||||||||||||||||
| Legacy | ( | ||||||||||||||||||||||
| Total Public Sector Revenue | ( | ( | |||||||||||||||||||||
| Wholesale | |||||||||||||||||||||||
| Strategic | ( | ( | |||||||||||||||||||||
| Legacy | ( | ( | |||||||||||||||||||||
| Total Wholesale Revenue | ( | ( | |||||||||||||||||||||
| International and Other | |||||||||||||||||||||||
| Strategic | ( | ||||||||||||||||||||||
| Legacy | |||||||||||||||||||||||
| Total International and Other | ( | ||||||||||||||||||||||
| Business Revenue by Product Category | |||||||||||||||||||||||
| Strategic | ( | ( | |||||||||||||||||||||
| Legacy | ( | ( | |||||||||||||||||||||
| Total Business Revenue | ( | ( | |||||||||||||||||||||
| Mass Markets by Product Category | |||||||||||||||||||||||
| Fiber Broadband | ( | ||||||||||||||||||||||
| Other Broadband | ( | ( | |||||||||||||||||||||
| Voice and Other | ( | ( | |||||||||||||||||||||
| Total Mass Markets Revenue | ( | ( | |||||||||||||||||||||
| Total Revenue | $ | ( | ( | ||||||||||||||||||||
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| Three Months Ended September 30, 2025 | Nine Months Ended September 30, 2025 | ||||||||||||||||||||||
| Total Revenue | Adjustments for Non-ASC 606 Revenue (1) | Total Revenue from Contracts with Customers | Total Revenue | Adjustments for Non-ASC 606 Revenue (1) | Total Revenue from Contracts with Customers | ||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Sales Channel and Product Category | |||||||||||||||||||||||
| Large Enterprise | |||||||||||||||||||||||
| Strategic | $ | ( | ( | ||||||||||||||||||||
| Legacy | |||||||||||||||||||||||
| Total Large Enterprise Revenue | ( | ( | |||||||||||||||||||||
| Mid-Market Enterprise | |||||||||||||||||||||||
| Strategic | ( | ( | |||||||||||||||||||||
| Legacy | ( | ( | |||||||||||||||||||||
| Total Mid-Market Enterprise Revenue | ( | ( | |||||||||||||||||||||
| Public Sector | |||||||||||||||||||||||
| Strategic | ( | ( | |||||||||||||||||||||
| Legacy | |||||||||||||||||||||||
| Total Public Sector Revenue | ( | ( | |||||||||||||||||||||
| Wholesale | |||||||||||||||||||||||
| Strategic | ( | ( | |||||||||||||||||||||
| Legacy | ( | ( | |||||||||||||||||||||
| Total Wholesale Revenue | ( | ( | |||||||||||||||||||||
| International and Other | |||||||||||||||||||||||
| Strategic | ( | ( | |||||||||||||||||||||
| Legacy | |||||||||||||||||||||||
| Total International and Other | ( | ( | |||||||||||||||||||||
| Business Revenue by Product Category | |||||||||||||||||||||||
| Strategic | ( | ( | |||||||||||||||||||||
| Legacy | ( | ( | |||||||||||||||||||||
| Total Business Revenue | ( | ( | |||||||||||||||||||||
| Mass Markets by Product Category | |||||||||||||||||||||||
| Fiber Broadband | ( | ( | |||||||||||||||||||||
| Other Broadband | ( | ( | |||||||||||||||||||||
| Voice and Other | ( | ||||||||||||||||||||||
| Total Mass Markets Revenue | ( | ( | |||||||||||||||||||||
| Total Revenue | $ | ( | ( | ||||||||||||||||||||
(1)Includes regulatory revenue and lease revenue not within the scope of ASC 606.
Operating Lease Revenue
We lease various dark fiber and conduit, office facilities, colocation facilities, switching facilities, other network sites, and service equipment to third parties under operating leases. Lease and sublease income are included in operating revenue in the consolidated statements of operations.
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The following table provides details of our gross operating lease revenue:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
Operating lease revenue | $ | ||||||||||||||||||||||
| Percentage of operating revenue | % | % | % | % | |||||||||||||||||||
Customer Receivables and Contract Balances
The following table provides balances of customer receivables, contract assets, and contract liabilities, net of amounts classified as held for sale:
| September 30, 2026 | December 31, 2025 | ||||||||||
| (Dollars in millions) | |||||||||||
Customer receivables, net of allowance of $ | $ | ||||||||||
| Contract assets | |||||||||||
Contract liabilities(2) | |||||||||||
______________________________________________________________________
(1) As of December 31, 2025, this amount excluded $13 million of customer receivables, net associated with the disposal group classified as held for sale.
(2) As of December 31, 2025, this amount excluded $32 million of contract liabilities associated with the disposal group classified as held for sale.
Contract liabilities are included within Deferred revenue on our consolidated balance sheets and consist of consideration we have received from our customers or billed in advance of providing goods or services promised in the future. We defer recognizing this consideration as revenue until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation, and maintenance charges that are deferred and recognized over the actual or expected contract term, which typically ranges from to five years depending on the service.
During the three and nine months ended September 30, 2026, we recognized $55 million and $409 million of revenue that was included in contract liabilities of $647 million as of January 1, 2026, including contract liabilities that were classified as held for sale. During the three and nine months ended September 30, 2025, we recognized $60 million and $425 million of revenue that was included in contract liabilities of $733 million as of January 1, 2025.
Performance Obligations
As of September 30, 2026, we expect to recognize $6.1 billion of revenue in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied. As of September 30, 2026, the transaction price related to unsatisfied performance obligations that are expected to be recognized for the remainder of 2026, 2027, and thereafter was $940 million, $2.7 billion and $2.5 billion, respectively.
These amounts exclude:
•the value of unsatisfied performance obligations for contracts for which we recognize revenue in amounts for which we have the right to invoice for services performed (for example, uncommitted usage or non-recurring charges associated with professional or technical services to be completed); and
•contracts that are classified as leasing arrangements or government assistance that are not subject to ASC 606.
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Contract Costs
Acquisition Costs
•Includes commission fees paid to employees as a result of obtaining contracts.
•Amortized acquisition costs are included in Selling, general and administrative expenses in our consolidated statements of operations.
Fulfillment Costs
•Includes third-party and internal costs associated with the provision, installation, and activation of services to customers, including labor and materials consumed for these activities.
•Amortized fulfillment costs are included in Cost of services and products in our consolidated statements of operations.
We amortize deferred acquisition and fulfillment costs based on the transfer of services on a straight-line basis over the average contract life of ap proximately 50 months for Mass Markets customers and 38 months for Business customers.
The following tables provide changes in our contract acquisition costs and fulfillment costs:
| Three Months Ended September 30, 2026 | Nine Months Ended September 30, 2026 | ||||||||||||||||||||||
Acquisition Costs | Fulfillment Costs | Acquisition Costs | Fulfillment Costs | ||||||||||||||||||||
| (Dollars in millions) | (Dollars in millions) | ||||||||||||||||||||||
Beginning of period balance(1) | $ | ||||||||||||||||||||||
| Costs incurred | |||||||||||||||||||||||
| Amortization | ( | ( | ( | ( | |||||||||||||||||||
| Change in contract costs held for sale | ( | ||||||||||||||||||||||
End of period balance | $ | ||||||||||||||||||||||
______________________________________________________________________
(1) The beginning balance for the nine months ended September 30, 2026 excluded $24 million and $21 million of acquisition costs and fulfillment costs, respectively, associated with the disposal group classified as held for sale.
| Three Months Ended September 30, 2025 | Nine Months Ended September 30, 2025 | ||||||||||||||||||||||
| Acquisition Costs | Fulfillment Costs | Acquisition Costs | Fulfillment Costs | ||||||||||||||||||||
| (Dollars in millions) | (Dollars in millions) | ||||||||||||||||||||||
Beginning of period balance(1) | $ | ||||||||||||||||||||||
| Costs incurred | |||||||||||||||||||||||
| Amortization | ( | ( | ( | ( | |||||||||||||||||||
| Change in contract costs held for sale | ( | ( | |||||||||||||||||||||
End of period balance(2) | $ | ||||||||||||||||||||||
______________________________________________________________________
(1) The beginning balance for the three months ended September 30, 2025 excluded $14 million of fulfillment costs associated with the disposal group classified as held for sale.
(2) The ending balance for the three and nine months ended September 30, 2025 excluded $17 million of fulfillment costs associated with the disposal group classified as held for sale.
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We include deferred acquisition and fulfillment costs in Other current assets, net and Other assets, net on our consolidated balance sheets and assess them for impairment on a quarterly basis.
Note 5—Long-Term Debt and Credit Facilities
As of September 30, 2026, substantially all of our outstanding consolidated debt had been incurred by us or one of the following three subsidiaries, each of which has borrowed funds either on a standalone basis or as part of a separate restricted group with certain of its subsidiaries:
•Level 3 Financing, Inc. ("Level 3 Financing"), including its parent guarantor Level 3 Parent, LLC ("Level 3 Parent") and certain subsidiary guarantors;
•Qwest Corporation ("Qwest"); and
•Qwest Capital Funding, Inc., including its parent guarantor, Qwest Communications International Inc.
Each of these borrowers or borrowing groups has entered into a credit agreement with certain financial institutions or other institutional lenders or issued senior notes. Certain of these debt instruments are described further below or in Note 7—Long-Term Debt and Credit Facilities to the consolidated financial statements included in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2025.
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The following table reflects the consolidated long-term debt of Lumen Technologies, Inc. and its subsidiaries as of the dates indicated below, including unamortized premiums (discounts) and unamortized debt issuance costs:
Interest Rates(1) | Maturities(1) | September 30, 2026 | December 31, 2025 | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
Senior Secured Debt: (2) | |||||||||||||||||||||||
| Lumen Technologies, Inc. | |||||||||||||||||||||||
| Revolving Credit Facility | SOFR + | 2029 | |||||||||||||||||||||
Term Loan A(3) | N/A | N/A | |||||||||||||||||||||
Term Loan B-1(4) | N/A | N/A | |||||||||||||||||||||
Term Loan B-2(4) | N/A | N/A | |||||||||||||||||||||
Superpriority notes | N/A | N/A | |||||||||||||||||||||
| Subsidiaries | |||||||||||||||||||||||
| Level 3 Financing, Inc. | |||||||||||||||||||||||
Term Loan B-5(5) | SOFR + | 2032 | |||||||||||||||||||||
| First Lien notes | 2033 - 2034 | ||||||||||||||||||||||
Unsecured Senior Notes and Other Debt: | |||||||||||||||||||||||
| Lumen Technologies, Inc. | |||||||||||||||||||||||
Senior notes | 2028 - 2042 | ||||||||||||||||||||||
Subsidiaries | |||||||||||||||||||||||
| Level 3 Financing, Inc. | |||||||||||||||||||||||
Senior notes | 2028 - 2037 | ||||||||||||||||||||||
Second Lien notes (formerly secured) | 2029 - 2031 | ||||||||||||||||||||||
| Qwest Corporation | |||||||||||||||||||||||
Senior notes | 2030 - 2057 | ||||||||||||||||||||||
| Qwest Capital Funding, Inc. | |||||||||||||||||||||||
Senior notes | 2028 - 2031 | ||||||||||||||||||||||
| Finance lease and other obligations | Various | Various | |||||||||||||||||||||
| Unamortized premiums (discounts), net | ( | ||||||||||||||||||||||
| Unamortized debt issuance costs | ( | ( | |||||||||||||||||||||
| Total long-term debt | |||||||||||||||||||||||
| Less current maturities | ( | ( | |||||||||||||||||||||
| Long-term debt, excluding current maturities | $ | ||||||||||||||||||||||
______________________________________________________________________
(1)As of September 30, 2026. All references to "SOFR" refer to the Secured Overnight Financing Rate.
(2)The debt listed under the caption “Senior Secured Debt” was either secured by assets of the issuer, guaranteed on a secured or unsecured basis by certain affiliates of the issuer, or both.
(3)Lumen's Term Loan A had an interest rate of 9.916 % as of December 31, 2025.
(4)Lumen's Term Loan B-1 and B-2 each had an interest rate of 6.380
(5)Level 3 Financing's Term Loan B-5, formerly Term Loan B-4, had an interest rate of 6.436 % as of September 30, 2026. Level 3 Financing's Term Loan B-4 had an interest rate of 7.166 % as of December 31, 2025.
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Long-Term Debt Maturities
Set forth below is the aggregate principal amount of our long-term debt as of September 30, 2026 (excluding unamortized premiums (discounts), net, and unamortized debt issuance costs), maturing during the following years:
(Dollars in millions) | |||||
| 2026 (remaining three months) | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| 2031 and thereafter | |||||
| Total long-term debt | $ | ||||
2026 Debt Transactions
Repurchases of Debt Instruments - Third Quarter 2026
During the third quarter of 2026, we repurchased an immaterial amount of debt instruments on the open market. These repurchases related to the Qwest Corporation 6.500 % Notes due 2056 and 6.750 % Notes due 2057. These repurchases resulted in an immaterial gain which is included in our aggregate Net gain (loss) on early retirement of debt in Other income, net in our consolidated statement of operations for the three and nine months ended September 30, 2026.
Repurchases of Debt Instruments — Second Quarter 2026
In June 2026, we repurchased the following debt instruments on the open market. These repurchases resulted in an immaterial gain which is included in our aggregate Net gain (loss) on early retirement of debt in Other income, net in our consolidated statement of operations for the nine months ended September 30, 2026.
The following table sets forth the aggregate principal amount of each repurchase:
Debt | Principal Amount Repurchased | ||||
(Dollars in millions) | |||||
| Lumen Technologies, Inc. | |||||
| $ | |||||
| Level 3 Financing, Inc. | |||||
| Total | $ | ||||
Exchange Offers and Consent Solicitations — Second Quarter 2026
New Qwest Notes
On June 11, 2026, Lumen and its wholly‑owned subsidiary, Qwest, settled previously announced exchange offers (the “Exchange Offers”) pursuant to the Registration Statement on Form S‑4 filed with the Securities and Exchange Commission on April 16, 2026, as amended on May 20, 2026. In connection with the Exchange Offers, Qwest and Lumen also conducted consent solicitations (the “Consent Solicitations”) to amend the indentures governing certain outstanding Qwest notes (the “Old Qwest Notes”).
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Upon settlement of the Exchange Offers and Consent Solicitations, Qwest issued two new series of senior unsecured notes (collectively, the “New Qwest Notes”), fully and unconditionally guaranteed by Lumen. The New Qwest Notes were issued under an indenture dated June 11, 2026 (the “New Base Indenture”), as supplemented by a first supplemental indenture (the “New Supplemental Indenture”), among Qwest, Lumen (as guarantor), and U.S. Bank Trust Company, National Association, as trustee. The Company has determined that the Exchange Offers and Consent Solicitations, constituted a debt modification. In conjunction with the Exchange Offers and Consent Solicitations, we recorded $10 million of fees to Selling, general and administrative expense in our consolidated statements of operations for the nine months ended September 30, 2026.
The following table summarizes the key terms of the New Qwest Notes:
| Debt | Aggregate Principal Amount | |||||||||||||
| (Dollars in millions) | ||||||||||||||
| Qwest Corporation | ||||||||||||||
| $ | ||||||||||||||
Old Qwest Notes Indenture Amendments
In connection with the Consent Solicitations, Qwest entered into the eighteenth supplemental indenture and nineteenth supplemental indenture (the “Old Qwest Notes Supplemental Indentures”) with U.S. Bank Trust Company, National Association, as trustee, relating to its 6.500 % Notes due 2056 and 6.750 % Notes due 2057, respectively. These Old Qwest Notes Supplemental Indentures eliminate substantially all restrictive covenants contained in the original indentures governing the Old Qwest Notes.
The following table summarizes the remaining amount of the Old Qwest Notes:
Debt | Amount Remaining | ||||
| (Dollars in millions) | |||||
| Qwest Corporation | |||||
| $ | |||||
As part of simplifying its reporting obligations, Qwest delisted the Old Qwest Notes from the New York Stock Exchange ("NYSE") and deregistered the Old Qwest Notes under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). On April 30, 2026, Qwest filed a Notification of Removal from Listing on Form 25 with the SEC in connection with the delisting of the Old Qwest Notes from the NYSE, which became effective on May 11, 2026. On June 12, 2026, Qwest filed a Certification and Notice of Termination on Form 15 with the SEC to deregister the Old Qwest Notes and suspend Qwest’s reporting obligations under Sections 13 and 15(d) of the Exchange Act. Qwest has ceased filing reports with the SEC under the Exchange Act with respect to the New Qwest Notes, in reliance on Rule 12h-5 under the Exchange Act, subject to Lumen's periodic reports containing the disclosures required by Rule 13-01 of Regulation S-X. Effective October 6, 2026, the New Qwest Notes are listed on Nasdaq and are fully and unconditionally guaranteed by Lumen.
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Senior Notes Issuance and Senior Notes Tender Offers — Second Quarter 2026
On May 21, 2026, Level 3 Financing, Inc. issued $1.0 billion aggregate principal amount of its 7.500 % Senior Notes due 2037. Level 3 Financing, Inc. used the net proceeds from this offering primarily to fund the repurchase of its outstanding unsecured Senior notes.
The following table sets forth the aggregate principal amount of each series of unsecured Senior notes repurchased as part of this transaction:
Debt | Principal Amount Repurchased | ||||
(Dollars in millions) | |||||
Level 3 Financing, Inc. | |||||
| $ | |||||
| Total | $ | ||||
Third Credit Agreement Refinancing — Second Quarter 2026
On May 13, 2026, Level 3 Financing (i) refinanced all of the outstanding secured Term Loan B-4 facilities under its existing Credit Agreement, dated March 22, 2024 (as amended, restated, amended and restated or otherwise modified prior to such date, the "Existing Level 3 Credit Agreement"), by and among Level 3 Financing, as borrower, Level 3 Parent, as guarantor, Wilmington Trust, National Association, as administrative agent and collateral agent, and the lenders from time to time party thereto and (ii) entered into an amendment to the Existing Level 3 Credit Agreement (the Existing Level 3 Credit Agreement as amended, the “Level 3 Credit Agreement”; such transactions, collectively, “Third Credit Facilities Transactions”). This amendment revised the Existing Level 3 Credit Agreement to, among other things, reduce the pricing on Level 3 Financing’s term loan facility and make related changes to effect such repricing. Immediately following the Third Credit Facilities Transactions, Level 3 Financing had $2.4 billion of outstanding borrowings under its new secured Term Loan B-5 facility.
The Company determined that the Third Credit Facilities Transactions constituted a debt extinguishment and recorded a loss of $4 million, which is included in our aggregate Net gain (loss) on early retirement of debt in Other income, net in our consolidated statements of operations for the nine months ended September 30, 2026.
Supplemental Indentures and Lumen Parent Guarantee — Second Quarter 2026
On April 30, 2026, Lumen and certain of its subsidiaries entered into supplemental indentures (the “1L Supplemental Indentures”) relating to (i) the indenture, dated June 30, 2025, governing the 6.875 % first lien notes due 2033 issued by Level 3 Financing and (ii) the indenture, dated August 18, 2025, governing the 7.000 % first lien notes due 2034 issued by Level 3 Financing (collectively, the “1L Indentures”). Pursuant to the 1L Supplemental Indentures, Lumen provided unconditional guarantees on a senior unsecured basis of Level 3 Financing’s obligations under the 1L Indentures, in each case on the terms and conditions set forth in the 1L Indentures, subject to release as provided therein.
On April 30, 2026, Lumen also entered into a parent guarantee agreement pursuant to which Lumen provided an unconditional guarantee on a senior unsecured basis of Level 3 Financing’s obligations under the Existing Level 3 Credit Agreement.
The guarantees described above were entered into to simplify the reporting obligations of Lumen and its subsidiaries. As a result, Level 3 Parent will no longer file reports with the SEC and will instead satisfy its reporting obligations under the 1L Indentures, the indentures governing its senior unsecured notes, and the Level 3 Credit Agreement by furnishing Lumen’s Exchange Act filings. Lumen’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q will include certain summary financial information of Level 3 Parent on a consolidated basis.
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Revolving Credit Agreement — Second Quarter 2026
On April 14, 2026, Lumen Technologies, Inc. entered into the Revolving Credit Agreement (the “Lumen Credit Agreement”) providing for a revolving credit facility with commitments of $825 million. In connection with entry into the Lumen Credit Agreement, the revolving commitments outstanding under our Superpriority Revolving/Term A Credit Agreement were permanently reduced to zero and terminated.
Borrowings under the Lumen Credit Agreement bear interest at a rate equal to, at Lumen’s option, for the Lumen Credit Agreement, Term SOFR (subject to a 0.00 % floor) plus 2.75 % for Term SOFR loans or a base rate plus 1.75 % for base rate loans. The foregoing interest rates are subject to adjustment based on Lumen’s total net leverage ratio in accordance with the pricing grid in the Lumen Credit Agreement. Interest is payable at the end of each interest period. Lumen may prepay amounts outstanding under the Lumen Credit Agreement at any time without premium or penalty. The revolving credit facility established under the Lumen Credit Agreement matures on April 14, 2029 (subject to a springing maturity in certain circumstances). Under the Lumen Credit Agreement and commencing with the fiscal quarter ended June 30, 2026, Lumen may not permit (i) its maximum total net leverage ratio to exceed 5.25 to 1.00 as of the last day of each fiscal quarter or (ii) its interest coverage ratio as of the last day of any test period to be less than 2.00 to 1.00.
Lumen does not provide security under the Lumen Credit Agreement but certain of Lumen’s subsidiaries have provided or, in certain cases after receiving necessary regulatory approvals, will provide an unconditional guarantee of payment of Lumen’s obligations (such entities, the “Lumen Guarantors”) and certain of such guarantees will be secured by a lien on substantially all of the assets of the applicable Lumen Guarantors. Level 3 Parent, LLC, Level 3 Financing, and certain of Level 3’s subsidiaries have provided or, in certain cases after receiving necessary regulatory approvals, will provide an unconditional guarantee of payment of Lumen’s obligations under the Lumen Credit Agreement of up to $150 million, secured by a lien on substantially all of their assets (such entities, the “Level 3 Collateral Guarantors”). The guarantee by the Level 3 Collateral Guarantors may be reduced or terminated under certain circumstances. Qwest Corporation and certain of its subsidiaries will provide an unsecured guarantee of collection of Lumen’s obligations under the Lumen Credit Agreement.
Senior Notes Issuance and Second Lien Tender Offers — First Quarter 2026
On January 9, 2026, Level 3 Financing, Inc. issued an additional $650 million aggregate principal amount of its 8.500 % Senior Notes due 2036. Level 3 Financing, Inc. used the net proceeds from this offering primarily to fund the repurchase of its outstanding Second Lien notes.
The following table sets forth the aggregate principal amount of each series of Second Lien notes repurchased as part of this transaction:
Debt | Principal Amount Repurchased | ||||
(Dollars in millions) | |||||
Level 3 Financing, Inc. | |||||
| $ | |||||
| Total | $ | ||||
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Repurchases of Debt Instruments — First Quarter 2026
On February 2, 2026, we applied $4.8 billion of the proceeds from the Mass Markets Fiber-to-the-Home divestiture and cash on hand to fund the repurchase of the following debt:
Debt | Principal Amount Repurchased | ||||
(Dollars in millions) | |||||
Lumen Technologies, Inc. | |||||
| $ | |||||
Superpriority Term Loan A | |||||
Superpriority Term Loan B-1 | |||||
Superpriority Term Loan B-2 | |||||
| Total | $ | ||||
In March 2026, we repurchased the following debt instruments on the open market. These repurchases resulted in an immaterial loss which is included in our aggregate Net gain (loss) on early retirement of debt in Other income, net in our consolidated statement of operations for the nine months ended September 30, 2026.
The following table sets forth the aggregate principal amount of each repurchase:
Debt | Principal Amount Repurchased | ||||
(Dollars in millions) | |||||
Level 3 Financing, Inc. | |||||
| $ | |||||
Qwest Capital Funding, Inc. | |||||
| Total | $ | ||||
2025 Debt Transactions
For information on various debt transactions during 2025, see Note 7—Long-Term Debt and Credit Facilities in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2025.
Lumen Credit Agreements
As of September 30, 2026, no borrowings were outstanding under Lumen's $825 million revolving credit facility established by the Lumen Credit Agreement, which had $677 million of borrowing capacity available (net of undrawn letters of credit).
Level 3 Financing Credit Agreement
As of September 30, 2026, Level 3 Financing had $2.4 billion of non-amortizing secured Term Loan B-5 outstanding under the term loan facility established by the Level 3 Credit Agreement.
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Borrowings under the Term Loan B-5 facility bear interest at a rate equal to, at Level 3 Financing’s option, either (i) the base rate (which is the highest of (x) the overnight federal funds rate, plus 0.50 %, (y) the prime rate on such day, and (z) the one-month SOFR published on such date, plus 1.00 %), plus an applicable margin, or (ii) one-, three- or six-month SOFR, plus an applicable margin. The applicable margin for SOFR loans under the Term Loan B-5 is 2.75 % and the applicable margin for base rate loans under the Term Loan Facility is 1.75 %. The Term Loan B-5 is subject to a SOFR floor of 0.00 %.
Level 3 Financing may voluntarily prepay loans or reduce commitments under the Level 3 Credit Agreement, in whole or in part, subject to minimum amounts, with prior notice, but without premium or penalty. Level 3 Financing is required to prepay borrowings under the term loan facility with 100 % of the net cash proceeds of certain asset sales and 100 % of the net cash proceeds of certain debt issuances, in each case subject to certain exceptions.
Senior Notes of Lumen and its Subsidiaries
The Company’s consolidated indebtedness related to the senior notes of Lumen and its subsidiaries as of September 30, 2026 included:
•first lien secured notes issued by Level 3 Financing; and
•senior unsecured notes issued by Lumen, Level 3 Financing, Qwest, and Qwest Capital Funding, Inc. and second lien notes (unsecured) issued by Level 3 Financing.
All of these notes carry fixed interest rates and all principal is due on the notes’ respective maturity dates, which rates and maturity dates are summarized in the table above.
Except for a limited number of senior notes issued by Qwest Corporation, the issuer generally can redeem the notes, at its option, in whole or in part, (i) pursuant to a fixed schedule of pre-established redemption prices, (ii) pursuant to a “make whole” redemption price, or (iii) under certain other specified limited conditions.
Revolving Letters of Credit
We use various financial instruments in the normal course of business. These instruments include letters of credit, which are conditional commitments issued on our behalf in accordance with specified terms and conditions. Lumen may draw letters of credit under (i) an uncommitted $225 million revolving letter of credit facility and (ii) the Lumen Credit Agreement.
As of September 30, 2026, we had $150 million of undrawn letters of credit outstanding, (i) $148 million of which were issued under the Lumen Credit Agreement and (ii) $2 million of which were issued under a separate facility maintained by Lumen subsidiaries (the full amount of which is collateralized by cash that is reflected on our consolidated balance sheets as restricted cash within Other assets, net).
Certain Guarantees and Security Interests
Lumen Credit Agreement
Lumen does not provide security under the Lumen Credit Agreement but certain of Lumen’s subsidiaries have provided or, in certain cases after receiving necessary regulatory approvals, will provide an unconditional guarantee of payment of Lumen’s obligations (such entities, the “Lumen Guarantors”) and certain of such guarantees will be secured by a lien on substantially all of the assets of the applicable Lumen Guarantors. Level 3 Parent, LLC, Level 3 Financing, and certain of Level 3’s subsidiaries have provided or, in certain cases after receiving necessary regulatory approvals, will provide an unconditional guarantee of payment of Lumen’s obligations under the Lumen Credit Agreement of up to $150 million, secured by a lien on substantially all of their assets (such entities, the “Level 3 Collateral Guarantors”). The guarantee by the Level 3 Collateral Guarantors may be reduced or terminated under certain circumstances. Qwest Corporation and certain of its subsidiaries will provide an unsecured guarantee of collection of Lumen’s obligations under the Lumen Credit Agreement.
Level 3 Financing’s obligations under the Level 3 Credit Agreement are secured by a first priority lien on substantially all of its assets. In addition, the other Level 3 Collateral Guarantors have provided an unconditional
30
guarantee of Level 3 Financing’s obligations under the Level 3 Credit Agreement secured by a lien on substantially all of their assets.
Secured Senior Debt
Level 3 Financing’s obligations under its first lien notes are secured by a first priority lien on substantially all of its assets (subject, in certain cases, to receipt of necessary regulatory approvals), and are guaranteed by the other Level 3 Collateral Guarantors (or, for certain such guarantors, for certain notes, will be guaranteed upon the receipt of required regulatory approvals) on the same basis as the guarantees provided by such entities under the Level 3 Credit Agreement.
Lumen's reimbursement obligations under its outstanding letters of credit are secured by guarantees issued by certain of its subsidiaries.
Lumen also entered into a parent guarantee agreement pursuant to which Lumen provided an unconditional guarantee on a senior unsecured basis of Level 3 Financing’s obligations under the Existing Level 3 Credit Agreement.
Unsecured Senior Notes
Level 3 Financing's obligations under its unsecured notes are guaranteed on an unsecured basis by the same affiliated entities that guarantee the Level 3 Credit Agreement and secured notes. The senior unsecured notes issued by Qwest Capital Funding, Inc. are guaranteed by its parent, Qwest Communications International Inc.
Covenants
Lumen
Under the Lumen Credit Agreement, Lumen may not permit:
•its maximum total net leverage ratio to exceed 5.25 to 1.00 as of the last day of each fiscal quarter; or
•its interest coverage ratio as of the last day of any test period to be less than 2.00 to 1.00.
The Lumen Credit Agreement contains various representations and warranties and extensive affirmative and negative covenants. Such covenants include, among other things and subject to certain significant exceptions, restrictions on our ability to declare or pay dividends, repurchase stock, repay certain other indebtedness, create liens, incur additional indebtedness, make investments, engage in transactions with our affiliates, dispose of assets, and merge or consolidate with other persons.
Lumen’s senior unsecured notes were issued under four separate indentures. These indentures restrict Lumen’s ability to (i) incur, issue, or create liens upon its property and (ii) consolidate with or merge into, or transfer or lease all or substantially all of its assets to, any other party.
Under certain circumstances in connection with a “change of control” of Lumen, Lumen will be required to make an offer to repurchase substantially all of these senior notes at a price of 101 % of the principal amount redeemed, plus accrued and unpaid interest.
Level 3 Financing
The Level 3 Credit Agreement and Level 3 Financing's first lien notes, second lien (unsecured) notes, and unsecured notes contain various representations and extensive affirmative and negative covenants. Such covenants include, among other things and subject to certain significant exceptions, restrictions on their ability to declare or pay dividends, repay certain other indebtedness, create liens, incur additional indebtedness, make investments, dispose of assets, and merge or consolidate with other persons. Also, under certain circumstances in connection with a “change of control” of Level 3 Parent or Level 3 Financing, Level 3 Financing will be required to make an offer to repurchase each series of its outstanding senior notes at a price of 101 % of the principal amount redeemed, plus accrued and unpaid interest.
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Qwest Corporation and Qwest Capital Funding, Inc.
The senior notes of Qwest Corporation were issued under indentures dated April 15, 1990 and October 15, 1999. These indentures contain restrictions on the incurrence of liens and the consummation of certain transactions substantially similar to the above-described covenants in the indentures governing Lumen’s senior unsecured notes (but contain no mandatory repurchase provisions). The senior notes of Qwest Capital Funding, Inc. were issued under an indenture dated June 29, 1998 containing terms substantially similar to those set forth in Qwest Corporation's indentures.
Compliance
As of September 30, 2026, Lumen Technologies, Inc. believes it and its subsidiaries were in compliance with the provisions and financial covenants in their respective material debt agreements in all material respects.
Guarantees
Lumen does not guarantee the debt of any unaffiliated parties, but, as noted above, as of September 30, 2026, certain of its key subsidiaries have guaranteed on either a secured or unsecured basis (i) Lumen's debt outstanding under its credit agreements and unsecured senior notes issued by certain other subsidiaries and its $225 million letter of credit facility and (ii) the outstanding term loans, senior secured notes and senior unsecured notes issued by certain other subsidiaries. As further noted above, several of the subsidiaries guaranteeing these obligations have pledged substantially all of their assets to secure certain of their respective guarantees.
Note 6—Severance
Periodically, we reduce our workforce and accrue liabilities for the related severance costs. These workforce reductions result primarily from the progression or completion of our post-acquisition integration plans, increased competitive pressures, cost reduction initiatives, process improvements through automation, and reduced workloads due to reduced demand for certain services.
Changes in our accrued liabilities for severance expenses were as follows:
| Severance | |||||
| (Dollars in millions) | |||||
| Balance as of December 31, 2025 | $ | ||||
| Accrued to expense | |||||
| Payments, net | ( | ||||
| Balance as of September 30, 2026 | $ | ||||
Note 7—Employee Benefits
For detailed descriptions of the various defined benefit pension plans (qualified and non-qualified), post-retirement benefits plan, and defined contribution plan we sponsor, see Note 11—Employee Benefits to the consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2025.
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Net periodic benefit expense for the Lumen Combined Pension Plan (the "Combined Pension Plan" or the "Plan") includes the following components:
| Combined Pension Plan | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Service cost | $ | ||||||||||||||||||||||
| Interest cost | |||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | |||||||||||||||||||
| Settlement charges | |||||||||||||||||||||||
| Curtailment loss | |||||||||||||||||||||||
| Recognition of prior service credit | ( | ( | ( | ||||||||||||||||||||
| Recognition of actuarial loss | |||||||||||||||||||||||
| Net periodic pension expense | $ | ||||||||||||||||||||||
Net periodic benefit expense for our post-retirement benefit plan includes the following components:
Post-Retirement Benefit Plan | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Service cost | $ | ||||||||||||||||||||||
| Interest cost | |||||||||||||||||||||||
| Recognition of prior service credit | ( | ( | ( | ( | |||||||||||||||||||
| Recognition of actuarial gain | ( | ( | ( | ( | |||||||||||||||||||
| Curtailment gain | ( | ||||||||||||||||||||||
| Net periodic post-retirement benefit expense | $ | ||||||||||||||||||||||
Service costs for our pension and post-retirement benefit plan are included in the Cost of services and products (exclusive of depreciation and amortization) and Selling, general and administrative line items in our consolidated statements of operations and all other costs listed above are included in Other income, net in our consolidated statements of operations for the three and nine months ended September 30, 2026 and 2025.
In connection with the sale of our Mass Markets Fiber-to-the-Home business described in Note 2—Divestiture and Acquisition, the pension liability for certain employees and an immaterial amount of pension assets were transferred to a pension plan sponsored by the purchaser. This transaction triggered a settlement charge for the Combined Pension Plan of $9 million that was recognized as part of the gain on the sale of the business, within our operating income in our consolidated statement of operations for the nine months ended September 30, 2026. In addition, the transfer of employees as part of the sale and the related termination of other employees related to the sale resulted in a curtailment loss for the Combined Pension Plan of $5 million, including the recognition of $1 million in prior service costs and a curtailment gain of $10 million for our post-retirement benefit plan, including the recognition of $6 million of prior service credits. This net curtailment gain was also recognized as part of the gain on the sale of the business, reflected in our consolidated statement of operations as described above.
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Our Combined Pension Plan contains provisions that allow us, from time to time, to offer lump sum payment options to certain former employees in settlement of their future retirement benefits. We record an accounting settlement charge, consisting of the recognition of certain deferred costs of the pension plan associated with these lump sum payments, only if in the aggregate they exceed or are probable to exceed the sum of the annual service and interest costs for the plan’s net periodic pension benefit cost, which represents the settlement accounting threshold. The amount of any future non-cash settlement charges will be dependent on several factors, including the total amount of our future lump sum benefit payments.
Benefits paid by the Combined Pension Plan are paid through a trust that holds the Plan's assets. The amount of required contributions to the Combined Pension Plan in 2026 and beyond will depend on a variety of factors, most of which are beyond our control, including earnings on plan investments, prevailing interest rates, demographic experience, changes in plan benefits, and changes in funding laws and regulations. We made a voluntary contribution of $101 million to the trust for the Combined Pension Plan during the first quarter of 2026. Based on current laws and circumstances, we do not expect to be required to make any additional contributions in 2026.
Note 8—Loss Per Common Share
Basic and diluted loss per common share for the three and nine months ended September 30, 2026 and 2025 were calculated as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in millions, except per share amounts, shares in thousands) | |||||||||||||||||||||||
| Loss (numerator) | |||||||||||||||||||||||
| Net loss | $ | ( | ( | ( | ( | ||||||||||||||||||
| Net loss applicable to common stock for computing basic loss per common share | ( | ( | ( | ( | |||||||||||||||||||
| Net loss as adjusted for purposes of computing diluted loss per common share | ( | ( | ( | ( | |||||||||||||||||||
| Shares (denominator): | |||||||||||||||||||||||
| Weighted-average number of shares: | |||||||||||||||||||||||
| Outstanding during period | |||||||||||||||||||||||
| Non-vested restricted stock | ( | ( | ( | ( | |||||||||||||||||||
| Weighted average shares outstanding for computing basic loss per common share | |||||||||||||||||||||||
| Incremental common shares attributable to dilutive securities: | |||||||||||||||||||||||
| Shares issuable under convertible securities | |||||||||||||||||||||||
| Shares issuable under incentive compensation plans | |||||||||||||||||||||||
| Number of shares as adjusted for purposes of computing diluted loss per common share | |||||||||||||||||||||||
| Basic loss per common share | $ | ( | ( | ( | ( | ||||||||||||||||||
Diluted loss per common share(1) | $ | ( | ( | ( | ( | ||||||||||||||||||
______________________________________________________________________
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Our calculation of diluted loss per common share excludes non-vested restricted stock awards that are anti-dilutive based upon the terms of the award. Such shares were 3.9 million and 7.6 million for the three months ended September 30, 2026 and 2025, respectively, and 3.9 million and 14.7 million for the nine months ended September 30, 2026 and 2025, respectively.
Note 9—Fair Value of Financial Instruments
Our financial instruments consist of cash, cash equivalents, restricted cash, accounts receivable, accounts payable, long-term debt (excluding finance lease and other obligations), certain equity investments, and certain indemnification obligations. Due primarily to their short-term nature, the carrying amounts of our cash, cash equivalents, restricted cash, accounts receivable, and accounts payable approximate their fair values.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between independent and knowledgeable parties who are willing and able to transact for an asset or liability at the measurement date. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value and then we rank the estimated values based on the reliability of the inputs using the below-described fair value hierarchy.
We determined the fair values of our long-term debt, including the current portion, based on quoted market prices where available or, if not available, based on inputs other than quoted market prices in active markets that are either directly or indirectly observable such as discounted future cash flows using current market interest rates.
The three input levels in the hierarchy of fair value measurements are defined by the FASB generally as follows:
| Input Level | Description of Input | |||||||
| Level 1 | Observable inputs such as quoted market prices in active markets. | |||||||
| Level 2 | Inputs other than quoted prices in active markets that are either directly or indirectly observable. | |||||||
| Level 3 | Unobservable inputs in which little or no market data exists. | |||||||
The following table presents the carrying amounts and estimated fair values of our financial liabilities, as well as the input level used to determine the fair values indicated below:
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||
| Input Level | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||||||
Long-term debt, excluding finance lease and other obligations | 2 | $ | |||||||||||||||||||||||||||
Indemnifications related to the sale of the Latin American business(1) | 3 | ||||||||||||||||||||||||||||
Regulatory cost liability related to the sale of the Mass Markets Fiber-to-the-Home business(2) | 3 | ||||||||||||||||||||||||||||
______________________________________________________________________
(1)Nonrecurring fair value is measured as of August 1, 2022.
(2)Nonrecurring fair value is measured as of February 2, 2026.
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Note 10—Segment Information
Historically, we disclosed two reportable segments, Business and Mass Markets, based on customer-facing sales channels, reflecting how the business was managed and how we supported our customers. In connection with the sale of the Mass Markets Fiber‑to‑the‑Home business in 11 states to AT&T, which closed on February 2, 2026, our Chief Executive Officer, who serves as the Chief Operating Decision Maker ("CODM"), changed how the business is managed beginning in January 2026. The CODM now makes operating decisions and assesses performance and profitability on a consolidated basis and does not regularly review discrete financial information for individual business components.
As a result, we manage our business, make operating decisions, and evaluate financial performance based on one
Although our revenue is disaggregated by product and sales channel, which aligns with the customer markets in which the revenues are generated, we do not allocate significant operating expenses, assets, or debt to those sales channels. See Note 4—Revenue Recognition for additional information regarding revenue disaggregation.
The following tables present selected financial information with respect to our single operating segment:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Revenue | $ | ||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Cost of services and products related to network expenses | |||||||||||||||||||||||
| Headcount costs | |||||||||||||||||||||||
| Non-headcount costs | |||||||||||||||||||||||
| Net gain on sale of business | ( | ( | |||||||||||||||||||||
| Stock-based compensation | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Goodwill impairment | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
| Total operating (loss) income | ( | ( | ( | ||||||||||||||||||||
| Total other expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Income tax (benefit) expense | ( | ( | ( | ||||||||||||||||||||
| Net loss | $ | ( | ( | ( | ( | ||||||||||||||||||
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| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Revenue | $ | ||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Cost of services and products related to network expenses | |||||||||||||||||||||||
| Headcount costs | |||||||||||||||||||||||
| Non-headcount costs | |||||||||||||||||||||||
| Net gain on sale of business | ( | ( | |||||||||||||||||||||
Adjusted EBITDA | $ | ||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
Net loss | $ | ( | ( | ( | ( | ||||||||||||||||||
| Stock-based compensation | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Goodwill impairment | |||||||||||||||||||||||
| Total other expense, net | |||||||||||||||||||||||
| Income tax (benefit) expense | ( | ( | ( | ||||||||||||||||||||
Adjusted EBITDA | $ | ||||||||||||||||||||||
Note 11—Commitments, Contingencies and Other Items
We are subject to various claims, legal proceedings, and other contingent liabilities, including the matters described below, which individually or in the aggregate could materially affect our financial condition, future results of operations or cash flows.
We review our litigation accrual liabilities on a quarterly basis, but in accordance with applicable accounting guidelines only establish accrual liabilities when losses are deemed probable and reasonably estimable and only revise previously established accrual liabilities when warranted by changes in circumstances, in each case based on then-available information. As such, as of any given date we could have exposure to losses under proceedings as to which no liability has been accrued or as to which the accrued liability is inadequate. Subject to these limitations, as of September 30, 2026 and December 31, 2025, we had accrued $50 million and $71 million, respectively, in the aggregate for our litigation and non-income tax contingencies, which is included in Other current liabilities or Other liabilities on our consolidated balance sheets as of such dates. Although we quantify our exposure for certain matters below, we cannot at this time estimate the reasonably possible loss or range of loss, if any, in excess of our $50 million accrual as of September 30, 2026 due to the inherent uncertainties and speculative nature of contested proceedings. The establishment of an accrual does not mean that actual funds have been set aside to satisfy a given contingency. Thus, the resolution of a particular contingency for the amount accrued could have no effect on our results of operations but nonetheless could have an adverse effect on our cash flows.
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In this Note, a reference to a "putative" class action means a class has been alleged, but not certified, in that matter.
Principal Proceedings
Houser Shareholder Suit
Lumen and certain of its current and former officers and directors were named as defendants in a putative shareholder class action lawsuit filed on June 12, 2018 in the Boulder County District Court of the state of Colorado, captioned Houser et al. v. CenturyLink, et al. The original complaint asserted claims on behalf of a putative class of former Level 3 Communications, Inc. ("Level 3") shareholders who became CenturyLink, Inc. shareholders as a result of our acquisition of Level 3. It alleged that the proxy statement provided to the Level 3 shareholders failed to disclose various material information, including information about strategic revenue, customer loss rates, and customer account issues, among other items. The original complaint sought damages, costs and fees, rescission, rescissory damages, and other equitable relief. In May 2020, the court dismissed the original complaint. The plaintiffs appealed that decision, and in March 2022, the appellate court affirmed the district court's order in part and reversed it in part. It then remanded the case to the district court for further proceedings. The plaintiffs filed an amended complaint asserting the same claims and prayer for relief, and we filed a motion to dismiss. The court granted our motion to dismiss in May 2023 and the plaintiffs appealed that dismissal. In August 2024, the appellate court set aside the trial court's dismissal. In October 2024, we filed a petition with the Colorado Supreme Court. In April 2026, the Colorado Supreme Court affirmed the decision of the appellate court. The case has returned to the trial court for further proceedings. In August 2026, following remand, the district court granted in part and denied in part our motion to dismiss.
Lead-Sheathed Cable Litigation
Disclosure Litigation
On September 15, 2023, a purported shareholder of Lumen filed a putative class action complaint originally captioned Glauber, et al. v. Lumen Technologies (now captioned In re Lumen Technologies, Inc. Securities Litigation II, Case 3:23-cv-01290), in the U.S. District Court for the Western District of Louisiana. The complaint alleged that Lumen and certain of its current and former officers violated the federal securities laws by omitting or misstating material information related to Lumen’s responsibility for environmental degradation allegedly caused by the lead sheathing of certain telecommunications cables. The court appointed lead plaintiffs who filed an amended complaint, seeking money damages, attorneys’ fees and costs, and other relief. On March 31, 2025, the court granted Lumen's motion to dismiss plaintiffs' claims with prejudice. On April 30, 2025, the plaintiffs filed an appeal to the U.S. Court of Appeals for the Fifth Circuit. On January 30, 2026, the Fifth Circuit reversed on prejudice only and modified the dismissal to be without prejudice. On April 23, 2026, the plaintiffs filed a second amended complaint.
Derivative Litigation
On June 11, 2024, a purported shareholder of Lumen filed a shareholder derivative complaint on behalf of Lumen captioned Brown v. Johnson, et al., Case 3:24-cv-00798-TAD-KDM, in the U.S. District Court for the Western District of Louisiana. The complaint alleges claims for breach of fiduciary duty, violations of the federal securities laws, and other causes of action against current and former officers and directors of Lumen relating to placement or presence of lead-sheathed telecommunications cables. The complaint seeks damages, injunctive relief, and attorneys' fees. Substantially similar derivative cases have been filed as follows: (i) on August 9, 2024, Pourarian v. Johnson, et al., Case 3:24-cv-01071-TAD-KMM in the U.S. District Court for the Western District of Louisiana; (ii) on September 9, 2024, Capistrano v. Johnson, et al., Case 3:24-cv-01234-TAD-KMM in the U.S. District Court for the Western District of Louisiana; (iii) on September 16, 2024, Vogel v. Perry, et al., Case 2024-3360 in the 4th Judicial District Court for the Parish of Ouachita, State of Louisiana, subsequently removed on September 17, 2024 to the U.S. District Court for the Western District of Louisiana as Case 3:24-cv-01274-TAD-KMM; and (iv) on September 25, 2024, Murray v. Allen, et al., Case 3:24-cv-01320 in the U.S. District Court for the Western District of Louisiana. In April 2025, the court consolidated the Brown, Pourarian, Capistrano, and Murray actions and stayed the consolidated action pending further developments in In re Lumen Technologies, Inc. Securities Litigation II. In July 2025, the court similarly stayed the Vogel action.
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Environmental Litigation
Parish of St. Mary
On July 9, 2024, a putative class action complaint was filed in the 16th Judicial District Court for the Parish of St. Mary, State of Louisiana, Case 138575, asserting claims on behalf of all parishes, municipalities, and citizens owning real properties in the State of Louisiana that have been affected by lead-sheathed telecommunications cables installed by AT&T and Lumen or their predecessors. The complaint seeks damages and injunctive relief under Louisiana state law. The case was removed to the United States District Court Western District of Louisiana Lafayette Division, Case 6:24-CV-01001-RRS-DJA. On December 6, 2024, the plaintiffs voluntarily dismissed the class action complaint without prejudice. On December 13, 2024, St. Mary’s Parish along with other parishes, municipalities, and two individuals served a notice of intent to file citizen suit under the Louisiana Environmental Quality Act, asserting claims identical to the class action which the plaintiffs voluntarily dismissed. In April 2025, the Village of Parks (one of the municipalities which had served a notice of intent to file a citizen suit) served Lumen with a petition in an action captioned Village of Parks v. Lumen Technologies, Inc., Case 95026, in the 16th Judicial District Court for the Parish of St. Martin, State of Louisiana. The Village of Parks petition seeks damages and injunctive relief under Louisiana state law relating to the above-described allegations about lead-sheathed telecommunications cables.
Blum
On November 6, 2023, a putative class action complaint was filed in the 16th Judicial District Court for the Parish of St. Mary, State of Louisiana, Case 137935, asserting claims on behalf of all citizens owning real properties in the State of Louisiana that have been affected by lead-sheathed telecommunications cables installed by AT&T, BellSouth, Verizon, and Lumen or their predecessors. The complaint seeks damages and injunctive relief under Louisiana state law. The case has been removed to Federal Court in the United States District Court Western District of Louisiana Lafayette Division, Case 6:23-CV-01748. In December 2024, the plaintiffs filed an amended complaint and a motion for remand. In September 2025, the motion to remand was denied.
FCRA Litigation
In November 2014, a putative class action complaint captioned Bultemeyer v. CenturyLink, Inc. was filed in the United States District Court for the District of Arizona, Case CV-14-02530-PHX-SPL, alleging violations of the Fair Credit Reporting Act (the "FCRA"). In February 2017, the case was dismissed for lack of standing. The plaintiff appealed and the Ninth Circuit reversed and remanded. Class certification was contested and ultimately granted in 2023. The Ninth Circuit denied Lumen’s request to appeal the class certification ruling. A jury trial was conducted in September 2024. The jury found that CenturyLink willfully violated the FCRA and awarded each class member $500 for statutory damages and $2,000 for punitive damages. The district court denied Lumen’s post-trial motions for relief, and on October 16, 2024, Lumen filed an appeal to the U.S. Court of Appeals for the Ninth Circuit. On September 22, 2026, the Ninth Circuit reversed the jury verdict and ruled that Lumen was entitled to judgment as a matter of law. We have not accrued a contingent liability for this matter.
Latin American Tax Indemnification Claims
In connection with the 2022 divestiture of our Latin American business, the purchaser assumed responsibility for the Brazilian tax claims described in our prior periodic reports filed with the SEC. However, we agreed to indemnify the purchaser for amounts paid with respect to the Brazilian tax claims. The value of this indemnification and others associated with the Latin American business divestiture are included in the indemnification amount as disclosed in Note 9—Fair Value of Financial Instruments. In addition, there remain other pending proceedings in Brazil, Peru, and other Latin America countries, that, if upheld, could result in a reasonably possible loss of up to approximately $81 million in excess of the amount accrued as of September 30, 2026.
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Huawei Network Deployment Investigations
Lumen has received requests from the following federal agencies for information relating to the use of equipment manufactured by Huawei Technologies Company ("Huawei") in Lumen’s networks.
•DOJ. Lumen has received a civil investigative demand from the U.S. Department of Justice in the course of a False Claims Act investigation alleging that Lumen Technologies, Inc. and Lumen Technologies Government Solutions, Inc. failed to comply with certain specified requirements in federal contracts concerning their use of Huawei equipment.
•FCC. The Federal Communications Commission’s ("FCC") Enforcement Bureau issued a Letter of Inquiry to Lumen Technologies, Inc. regarding its written certifications to the FCC that Lumen has complied with FCC rules governing the use of resources derived from the High Cost Program, Lifeline Program, Rural Health Care Program, E-Rate Program, Emergency Broadband Benefit Program, and the Affordable Connectivity Program. Under these programs, federal funds may not be used to facilitate the deployment or maintenance of equipment or services provided by Huawei, a company the FCC has determined poses a national security threat to the integrity of U.S. communications networks or the communications supply chain.
•Team Telecom. The Committee for the Assessment of Foreign Participation in the United States Telecommunications Service Sector (comprised of the U.S. Attorney General, and the Secretaries of the Department of Homeland Security, and the Department of Defense), commonly referred to as Team Telecom, issued questions and requests for information relating to Lumen’s FCC licenses and its use of Huawei equipment.
Minnesota State Income Tax Appeal
In May 2025, the Minnesota Department of Revenue issued an order (the "Order") denying the Company's petition for a separate allocation or separate apportionment of the taxable gain resulting from the 2022 divestiture of a portion of our incumbent local exchange carrier ("ILEC") business and making other minor adjustments. The Order seeks to assess additional income tax, penalties, and interest for the 2021 and 2022 tax years. On August 4, 2025, Lumen filed an appeal of the Order disputing this assessment, which is captioned Lumen Technologies, Inc. v. Commissioner of Revenue, Docket No. 9744-R., in the Minnesota Tax Court. The Company previously established an uncertain tax position for this item.
Residential Promotional Offers
In November 2023, the Company was named in a putative class action complaint in the U.S. District Court for the District of Oregon regarding claims that certain alleged legacy promotional offers on residential services were misleading to some customers. The court has dismissed certain of the claims and has yet to rule on a pending motion for class certification. In addition, several state attorneys general have also initiated investigations into certain of those promotional programs. The Company has not recorded a liability in connection with these matters because any potential loss is not currently probable and reasonably estimable. Additionally, the Company is unable to reasonably estimate the range of loss, if any, that may result from these matters.
Other Proceedings, Disputes and Contingencies
From time to time, we are involved in other proceedings incidental to our business, including patent infringement allegations, regulatory hearings relating primarily to our rates or services, actions relating to employee claims, tax issues, or environmental law issues, grievance hearings before labor regulatory agencies, miscellaneous third-party tort actions, or commercial disputes.
We are currently defending several patent infringement lawsuits asserted against us by non-practicing entities which are seeking substantial recoveries. These cases have progressed to various stages and one or more may go to trial within the next twelve months if they are not otherwise resolved. Where applicable, we are seeking full or partial indemnification from our vendors and suppliers.
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We are subject to various foreign, federal, state, and local environmental protection and health and safety laws. From time to time, we are subject to judicial and administrative proceedings brought by various governmental authorities under these laws. Several such proceedings are currently pending, but none is reasonably expected to exceed $300,000 in fines and penalties. In addition, in the past we acquired companies that had installed lead-sheathed cables several decades earlier, or had operated certain manufacturing companies in the first part of the 1900s. Under applicable environmental laws, we could be named as a potentially responsible party for a share of the remediation of environmental conditions arising from the historical operations of our predecessors.
The outcomes of these other proceedings described under this heading are not predictable. However, based on current circumstances, we do not believe that the ultimate resolution of these other proceedings, after considering available defenses and any insurance coverage or indemnification rights, will have a material adverse effect on us.
The matters listed in this Note do not reflect all our contingencies. For additional information on our contingencies, see Note 17—Commitments, Contingencies and Other Items to the consolidated financial statements in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2025. The ultimate outcome of the above-described matters may differ materially from the outcomes anticipated, estimated, projected, or implied by us in certain of our statements appearing above in this Note, and proceedings we currently consider insignificant may ultimately affect us materially.
Note 12—Other Financial Information
Other Current Assets, Net
The following table presents details of other current assets, net reflected on our consolidated balance sheets:
| September 30, 2026 | December 31, 2025 | ||||||||||
| (Dollars in millions) | |||||||||||
| Prepaid expenses | $ | ||||||||||
| Income tax receivable | |||||||||||
| Materials, supplies and inventory | |||||||||||
| Contract assets | |||||||||||
| Contract acquisition costs | |||||||||||
| Contract fulfillment costs | |||||||||||
| Other | |||||||||||
Total other current assets, net(1) | $ | ||||||||||
______________________________________________________________________
Current Liabilities
Included in accounts payable as of September 30, 2026 and December 31, 2025 were $348 million and $463 million, respectively, associated with capital expenditures.
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Note 13—Accumulated Other Comprehensive Loss
Information Relating to 2026
The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheet by component:
| Pension Plans | Post-Retirement Benefit Plans | Foreign Currency Translation Adjustment and Other | Total | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | ( | ( | ( | |||||||||||||||||||
| Other comprehensive income before reclassifications | |||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | ( | ||||||||||||||||||||||
| Net current-period other comprehensive income (loss) | ( | ||||||||||||||||||||||
| Balance as of September 30, 2026 | $ | ( | ( | ( | |||||||||||||||||||
The tables below present further information about our reclassifications out of accumulated other comprehensive loss by component:
| Three Months Ended September 30, 2026 | Decrease (Increase) in Net Income | Affected Line Item in Consolidated Statement of Operations | ||||||||||||
| (Dollars in millions) | ||||||||||||||
Amortization of pension & post-retirement plans(1) | ||||||||||||||
| Net actuarial loss | $ | Other income, net | ||||||||||||
| Prior service credit | ( | Other income, net | ||||||||||||
| Total before tax | ||||||||||||||
| Income tax benefit | ( | Income tax (benefit) expense | ||||||||||||
| Net of tax | $ | |||||||||||||
| Nine Months Ended September 30, 2026 | Decrease (Increase) in Net Income | Affected Line Item in Consolidated Statement of Operations | ||||||||||||
| (Dollars in millions) | ||||||||||||||
Amortization of pension & post-retirement plans(1) | ||||||||||||||
| Net actuarial loss | $ | Other income, net | ||||||||||||
| Prior service credit | ( | Other income, net | ||||||||||||
| Total before tax | ||||||||||||||
| Income tax benefit | ( | Income tax expense (benefit) | ||||||||||||
| Net of tax | $ | |||||||||||||
________________________________________________________________________
(1)See Note 7—Employee Benefits for additional information on our net periodic benefit expense related to our pension and post-retirement plans.
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Information Relating to 2025
The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component:
| Pension Plans | Post-Retirement Benefit Plans | Foreign Currency Translation Adjustment and Other | Total | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | ( | ( | ( | |||||||||||||||||||
| Other comprehensive income before reclassifications | |||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | ( | ||||||||||||||||||||||
| Net current-period other comprehensive income (loss) | ( | ||||||||||||||||||||||
| Balance as of September 30, 2025 | $ | ( | ( | ( | |||||||||||||||||||
The tables below present further information about our reclassifications out of accumulated other comprehensive loss by component:
| Three Months Ended September 30, 2025 | Decrease (Increase) in Net Income | Affected Line Item in Consolidated Statement of Operations | ||||||||||||
| (Dollars in millions) | ||||||||||||||
Amortization of pension & post-retirement plans(1) | ||||||||||||||
| Net actuarial loss | $ | Other income, net | ||||||||||||
| Prior service credit | ( | Other income, net | ||||||||||||
| Total before tax | ||||||||||||||
| Income tax benefit | ( | Income tax (benefit) expense | ||||||||||||
| Net of tax | $ | |||||||||||||
| Nine Months Ended September 30, 2025 | Decrease (Increase) in Net Income | Affected Line Item in Consolidated Statement of Operations | ||||||||||||
| (Dollars in millions) | ||||||||||||||
Amortization of pension & post-retirement plans(1) | ||||||||||||||
| Net actuarial loss | $ | Other income, net | ||||||||||||
| Prior service credit | ( | Other income, net | ||||||||||||
| Total before tax | ||||||||||||||
| Income tax benefit | ( | Income tax expense (benefit) | ||||||||||||
| Net of tax | $ | |||||||||||||
________________________________________________________________________
(1)See Note 7—Employee Benefits for additional information on our net periodic benefit expense related to our pension and post-retirement plans.
Note 14—Labor Union Contracts
As of September 30, 2026, approximately 16 % of our employees were represented by the Communications Workers of America (CWA) or the International Brotherhood of Electrical Workers (IBEW). Approximately 3 % of our represented employees are subject to collective bargaining agreements that are scheduled to expire over the 12-month period ending September 30, 2027.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") provides an overview of our financial performance, liquidity, and the business environment in which we operate. This discussion is intended to help readers understand our results and key factors influencing our operations. The MD&A should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025 and with the consolidated financial statements and accompanying notes in Item 1 of Part I of this report. Unless otherwise indicated, all references to “Notes” in this section refer to the Notes to Consolidated Financial Statements in Item 1 of Part I of this report.
This section includes forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those expressed or implied. For a discussion of these risks and uncertainties, see (i) "Special Note Regarding Forward-Looking Statements" immediately prior to Item 1 of Part I of this report, (ii) "Risk Factors" in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2025 and in Part II, Item 1A in this report, and (iii) our other SEC filings.
Interim results are not necessarily indicative of results for the entire year, and actual results may differ materially from those expressed or implied.
OVERVIEW
We are a leading digital networking services company, empowering enterprise businesses to fuel growth in a multi-cloud, AI-first marketplace by connecting people, data, and applications quickly, securely, and effortlessly. We operate in a rapidly evolving landscape with growing demand for secure, high-speed connectivity. Our strategy focuses on growing and transforming our network and business to deliver next-generation solutions that meet these needs and build the backbone of the AI economy.
Products and Services
We categorize revenue from our operations within the products and services listed below based on the customers we serve.
•Business customers: Serves enterprise and wholesale customers through five distinct sales channels: Large Enterprise, Mid-Market Enterprise, Public Sector, Wholesale, and International and Other. Revenue is reported under two product categories: Strategic and Legacy.
•Mass Markets customers: Serves residential and small business customers. Revenue is reported under three product categories: Fiber Broadband, Other Broadband, and Voice and Other.
From time to time, we may change the categorization of our products and services. For additional information see Note 4—Revenue Recognition.
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Strategy
Our strategic goal is to be the trusted provider of network services and to digitally connect people, data, and applications quickly, securely, and effortlessly. To attain this goal, we strive to, among other things:
•deliver best in class physical infrastructure to meet network, transport, data, and computing needs;
•optimize and innovate the way locations, data centers, and clouds connect;
•limit, detect, and mitigate network and data security vulnerabilities;
•expand our product offerings and strengthen our digital self-service ordering platforms;
•create a more adaptive, programmable and integrated network;
•continue to monetize our network-related assets, principally through the sale of PCF solutions;
•expand our network capacity through our artificial intelligence ("AI") backbone initiative;
•manage our non-core business for cash flow; and
•strengthen our financial position and performance through our modernization and simplification initiatives, designed to lower costs and reduce debt.
These strategic initiatives are intended to support our efforts to build the backbone of the AI economy, cloudify and agentify telecom, and scale a programmable, partner‑driven connectivity platform for hyperscalers and enterprises.
2026 Divestiture and Acquisition
Mass Markets Fiber-to-the-Home Divestiture
On May 21, 2025, we entered into a definitive agreement to sell our Mass Markets Fiber-to-the-Home business in the Territory to AT&T (the "Mass Markets Fiber-to-the-Home divestiture"). On February 2, 2026, we completed the Mass Markets Fiber-to-the-Home divestiture in exchange for pre-tax cash proceeds of $5.72 billion, which are subject to working capital and other negotiated post-closing adjustments. In connection with the sale, we have entered into a transition services agreement under which we will provide to AT&T various support services and certain long-term agreements under which we and AT&T will provide to each other various network and other commercial services.
Alkira Acquisition
On July 1, 2026, our wholly owned subsidiary, Level 3 Communications, acquired Alkira for $485 million in cash, subject to customary adjustments.
For further information on this divestiture and acquisition, see Note 2—Divestiture and Acquisition.
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Stock Exchange Listing
On October 6, 2026, our common stock, no par value per share (the “Common Stock”), as well as the 6.500% Notes due 2051 and the 6.750% Notes due 2052 (the “Notes”) issued by Qwest Corporation, a wholly-owned subsidiary of the Company and guaranteed by the Company, began trading on The Nasdaq Stock Market LLC following our voluntary withdrawal from listing on the New York Stock Exchange at the close of trading on October 5, 2026.
The Common Stock continues to trade under the symbol “LUMN,” and the Notes continue to trade under the symbols “CTGG” and “CTHH.”
Current Business Environment and Macroeconomic Factors
The macroeconomic environment in which we operate remains dynamic and continues to affect our business. Key factors that have impacted us and our customers include:
•Revenue mix: Shifts in technology and economic conditions have driven us to continuously review our strategy. We expect to see continued reduction in legacy voice, broadband, and other legacy services, while fueling growth in our strategic products.
•Inflationary pressures and build costs: Rising costs for labor, materials, and energy have increased operating expenses and capital expenditures, particularly to support our continued network buildout and transformations.
•Supply constraints: Shortages of critical components and other materials have slowed certain network expansion efforts.
•Geopolitical instability: The conflict in the Middle East, including disruptions and heightened uncertainty regarding commercial transit through the Strait of Hormuz, has disrupted global shipping routes. While we have not experienced a direct material impact to date, prolonged instability could affect our supply chain, increase operating costs, and elevate risks to our network infrastructure. General geopolitical instability has also increased cybersecurity threats targeting telecommunications infrastructure.
•Customer behavior: Certain customers in the past have delayed purchasing decisions, and certain of our customers may delay future purchasing decisions, which has impacted and may impact sales cycles.
To date, we do not believe these factors have materially impacted our financial performance or position. However, ongoing economic and geopolitical uncertainty including risks arising from the conflict in the Middle East, tariffs, inflation, and supply constraints could increase costs, reduce revenues, delay network expansion, or disrupt service delivery, which could materially impact our results. If these conditions persist, our projected cash flows and market capitalization could decline. For further information relating to these matters, see “— Trends Impacting Our Operations” below and "Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2025.
We are actively managing these challenges through disciplined capital allocation, cost optimization, and strategic investments in network infrastructure. We believe these actions position us to navigate current macroeconomic conditions while pursuing long-term growth opportunities.
We expect continued demand for high-capacity, low-latency connectivity solutions, supported by enterprise digital transformation and government broadband programs. While macroeconomic uncertainty and competitive pressures present risks, we believe our transformation initiatives position us to deliver long-term value.
Trends Impacting Our Operations
Our operations are shaped by evolving technology, customer expectations, and market dynamics. Key trends that impact us, and will continue to impact us, include:
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•Automation and digital innovation: Growing demand for automated experiences and advanced technologies like AI and multi-cloud platforms requires ongoing investment in technology and infrastructure to enhance service quality and reduce costs.
•Legacy decline and margin pressure: Legacy wireline services continue to shrink necessitating cost optimization and pricing discipline.
•Globalization and network expansion amid cost pressures: Distributed business models drive demand for high-capacity, low-latency networks. We are expanding our network capacity to capture growth, while managing vendor cost increases and dis-synergies from recent divestitures.
•Monetizing network assets with execution risk: We aim to generate revenue through custom connectivity solutions, including PCF, by leveraging excess conduit and fiber assets. These opportunities can be significant but depend on market demand, regulatory conditions, and timely execution.
These and other developments and trends impacting our operations are discussed elsewhere in this Item 2.
RESULTS OF OPERATIONS
The following table summarizes the results of our consolidated operations:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in millions, except per share amounts) | |||||||||||||||||||||||
| Operating revenue | $ | 2,715 | 3,087 | 8,419 | 9,361 | ||||||||||||||||||
| Operating expenses | 2,882 | 3,203 | 8,072 | 9,973 | |||||||||||||||||||
| Operating (loss) income | (167) | (116) | 347 | (612) | |||||||||||||||||||
| Total other expense, net | (168) | (697) | (760) | (1,595) | |||||||||||||||||||
| Loss before income taxes | (335) | (813) | (413) | (2,207) | |||||||||||||||||||
| Income tax (benefit) expense | (70) | (192) | 253 | (470) | |||||||||||||||||||
| Net loss | $ | (265) | (621) | (666) | (1,737) | ||||||||||||||||||
| Basic loss per common share | $ | (0.26) | (0.62) | (0.66) | (1.75) | ||||||||||||||||||
| Diluted loss per common share | $ | (0.26) | (0.62) | (0.66) | (1.75) | ||||||||||||||||||
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Operating Revenue
The following table summarizes our consolidated operating revenue recorded under our revenue categories described in Note 4—Revenue Recognition:
| Three Months Ended September 30, | % Change | Nine Months Ended September 30, | % Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| (Dollars in millions) | (Dollars in millions) | ||||||||||||||||||||||||||||||||||
| Business Revenue: | |||||||||||||||||||||||||||||||||||
| Strategic | $ | 1,279 | 1,167 | 10 | % | 3,814 | 3,436 | 11 | % | ||||||||||||||||||||||||||
| Legacy | 1,067 | 1,289 | (17) | % | 3,420 | 4,034 | (15) | % | |||||||||||||||||||||||||||
| Total Business Revenue | 2,346 | 2,456 | (4) | % | 7,234 | 7,470 | (3) | % | |||||||||||||||||||||||||||
| Mass Markets Revenue | |||||||||||||||||||||||||||||||||||
| Fiber Broadband | 17 | 225 | (92) | % | 126 | 651 | (81) | % | |||||||||||||||||||||||||||
| Other Broadband | 179 | 230 | (22) | % | 576 | 732 | (21) | % | |||||||||||||||||||||||||||
| Voice and Other | 173 | 176 | (2) | % | 483 | 508 | (5) | % | |||||||||||||||||||||||||||
| Total Mass Markets Revenue | 369 | 631 | (42) | % | 1,185 | 1,891 | (37) | % | |||||||||||||||||||||||||||
| Total consolidated operating revenue | $ | 2,715 | 3,087 | (12) | % | 8,419 | 9,361 | (10) | % | ||||||||||||||||||||||||||
Operating revenue decreased $372 million and $942 million. The following were primary drivers within each revenue category:
•Strategic revenue increased $112 million and $378 million. This was primarily as a result of:
◦an increase of $59 million and $239 million in revenue from dark fiber and conduit; and
◦an increase of $12 million and $48 million from growth in IP services.
•Legacy revenue decreased $222 million and $614 million. This was primarily as a result of:
◦a decrease of $65 million and $215 million in VPN services; and
◦a decrease of $84 million and $238 million in voice services and private line services.
•Fiber Broadband revenue decreased $208 million and $525 million. This was primarily as a result of:
◦fewer Mass Markets subscribers as a result of our divestiture of the Mass Markets Fiber-to-the-Home business, as further described above.
•Other Broadband revenue decreased $51 million and $156 million. This was primarily as a result of:
◦fewer Mass Markets customers for our low speed copper-based broadband services.
•Voice and Other revenue decreased $3 million and $25 million. This was primarily as a result of:
◦a decrease of $90 million in voice revenue, for the nine month period, and offsetting increases of $46 million and $27 million, respectively, due to the withdrawal from the Rural Digital Opportunity Fund ("RDOF") program and the revenue related to support payments received under the Federal
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Communications Commission's Connect America Fund Phase II program, which lapsed on December 31, 2021.
Operating Expenses
The following table summarizes our operating expenses:
| Three Months Ended September 30, | % Change | Nine Months Ended September 30, | % Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| (Dollars in millions) | (Dollars in millions) | ||||||||||||||||||||||||||||||||||
| Cost of services and products (exclusive of depreciation and amortization) | $ | 1,432 | 1,700 | (16) | % | 4,282 | 5,011 | (15) | % | ||||||||||||||||||||||||||
| Selling, general and administrative | 784 | 829 | (5) | % | 2,357 | 2,259 | 4 | % | |||||||||||||||||||||||||||
| Net gain on sale of business | (4) | — | nm | (569) | — | nm | |||||||||||||||||||||||||||||
| Depreciation and amortization | 670 | 674 | (1) | % | 2,002 | 2,075 | (4) | % | |||||||||||||||||||||||||||
| Goodwill impairment | — | — | nm | — | 628 | nm | |||||||||||||||||||||||||||||
| Total operating expenses | $ | 2,882 | 3,203 | (10) | % | 8,072 | 9,973 | (19) | % | ||||||||||||||||||||||||||
_______________________________________________________________________________
nm Percentages greater than 200% and comparisons between positive and negative values or to/from zero values are considered not meaningful.
Cost of Services and Products (exclusive of depreciation and amortization)
Cost of services and products (exclusive of depreciation and amortization) decreased $268 million and $729 million. This was primarily as a result of:
•a decrease of $128 million and $418 million in network expense;
•a decrease of $188 million and $420 million in employee-related expenses; and
•an offsetting increase of $67 million and $119 million in professional fees.
Selling, General and Administrative
Selling, general and administrative expenses decreased $45 million and increased $98 million. This was primarily as a result of:
•for the three month period, a decrease of $85 million, $23 million and $14 million in professional fees, property and other tax expenses, and marketing and advertising expenses, respectively; and an offsetting increase of $64 million and $16 million in employee-related expenses and hardware and software expenses, respectively; and
•for the nine month period, an increase of $195 million and $72 million in employee-related expenses and hardware and software expenses, respectively; and an offsetting decrease of $60 million, $31 million, $17 million and $15 million in professional fees, marketing and advertising expenses, external commissions, property and other tax expenses, respectively.
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Net Gain on Sale of Business
For a discussion of the net gain on sale of business that we recognized during the nine months ended September 30, 2026, see Note 2—Divestiture and Acquisition.
Depreciation and Amortization
The following table details our depreciation and amortization expense:
| Three Months Ended September 30, | % Change | Nine Months Ended September 30, | % Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| (Dollars in millions) | (Dollars in millions) | ||||||||||||||||||||||||||||||||||
| Depreciation | $ | 406 | 423 | (4) | % | 1,239 | 1,324 | (6) | % | ||||||||||||||||||||||||||
| Amortization | 264 | 251 | 5 | % | 763 | 751 | 2 | % | |||||||||||||||||||||||||||
| Total depreciation and amortization | $ | 670 | 674 | (1) | % | 2,002 | 2,075 | (4) | % | ||||||||||||||||||||||||||
Depreciation decreased $17 million and $85 million. This was primarily as a result of:
•a decrease of $64 million, for the nine month period, due to the discontinuation of the depreciation of the tangible assets of our Mass Markets Fiber-to-the-Home business held for sale during the second quarter of 2025; and
•a decrease of $15 million and $12 million associated with the net decrease in depreciable assets.
Amortization increased $13 million and $12 million. This was primarily as a result of:
•an increase of $6 million for both periods due to intangibles acquired as part of the Alkira acquisition.
Goodwill Impairment
We are required to perform impairment tests related to our goodwill annually, which we perform as of October 31, or sooner if an indicator of impairment occurs. See Note 3—Goodwill and Intangible Assets for further details.
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Other Consolidated Results
The following table summarizes our total other expense, net and income tax (benefit) expense:
| Three Months Ended September 30, | % Change | Nine Months Ended September 30, | % Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| (Dollars in millions) | (Dollars in millions) | ||||||||||||||||||||||||||||||||||
| Interest expense | $ | (189) | (319) | (41) | % | (615) | (1,004) | (39) | % | ||||||||||||||||||||||||||
| Net gain (loss) on early retirement of debt | 1 | (395) | nm | (219) | (666) | (67) | % | ||||||||||||||||||||||||||||
| Other income, net | 20 | 17 | 18 | % | 74 | 75 | (1) | % | |||||||||||||||||||||||||||
| Total other expense, net | $ | (168) | (697) | (76) | % | (760) | (1,595) | (52) | % | ||||||||||||||||||||||||||
| Income tax (benefit) expense | $ | (70) | (192) | (64) | % | 253 | (470) | nm | |||||||||||||||||||||||||||
_______________________________________________________________________________
nm Percentages greater than 200% and comparisons between positive and negative values or to/from zero values are considered not meaningful.
Interest Expense
Interest expense decreased $130 million and $389 million. This was primarily as a result of:
•a decrease in average outstanding long-term debt of $5 billion and $3 billion.
Net Gain (Loss) on Early Retirement of Debt
For a discussion of certain transactions that resulted in the net gain (loss) on debt we recognized for the three and nine months ended September 30, 2026, see Note 5—Long-Term Debt and Credit Facilities. See Note 7—Long-Term Debt and Credit Facilities to the consolidated financial statements in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2025 for discussion of the 2025 transactions that resulted in the net loss on debt recognized for the three and nine months ended September 30, 2025.
Other Income, Net
Other income, net reflects certain items not directly related to our core operations, including:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Pension and post-retirement net periodic expense | $ | (26) | (46) | (76) | (138) | ||||||||||||||||||
| Foreign currency gain (loss) | 3 | (5) | (8) | 8 | |||||||||||||||||||
| Transition and separation services | 41 | 37 | 108 | 114 | |||||||||||||||||||
| Interest income | 11 | 18 | 59 | 59 | |||||||||||||||||||
| Other | (9) | 13 | (9) | 32 | |||||||||||||||||||
| Total other income, net | $ | 20 | 17 | 74 | 75 | ||||||||||||||||||
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Income Tax Expense
Our effective tax rate was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
Effective tax rate | 20.9 | % | 23.6 | % | (61.3) | % | 21.3 | % | |||||||||||||||
Our effective tax rate for the nine months ended September 30, 2026 was driven primarily by tax attributable to nondeductible goodwill from the Mass Markets Fiber-to-the-Home divestiture. Our effective tax rate for the nine months ended September 30, 2025 includes a $42 million unfavorable impact from our goodwill impairment.
LIQUIDITY AND CAPITAL RESOURCES
Overview of Sources and Uses of Cash
As a holding company, we rely on cash flows and capital resources from our subsidiaries to meet our parent-level liquidity needs. Access to subsidiary cash may be limited by debt terms, tax considerations, legal restrictions, or other limitations; see "— Debt Instruments and Financing Arrangements" below and Note 5—Long-Term Debt and Credit Facilities.
Our primary source of liquidity is cash from operating activities. We also use our revolving credit facilities as a source of liquidity for operating activities and our other cash requirements. In addition, our recently completed Mass Markets Fiber-to-the-Home divestiture, which closed February 2, 2026, generated significant cash proceeds, which were primarily used to pay down debt as described below, but also reduced our base of income-generating assets that generate our recurring cash from operating activities. Key uses of cash include operating expenses, capital expenditures, debt service, income taxes, share repurchases, pension contributions, and other benefit payments.
On July 1, 2026, our wholly owned subsidiary, Level 3 Communications, LLC, acquired Alkira, Inc. for aggregate cash consideration of $485 million, subject to customary adjustments. For additional information, see Note 2—Divestiture and Acquisition.
Key balances as of September 30, 2026 included:
•Cash and cash equivalents: $978 million
•Revolving credit availability (net of undrawn letters of credit): $677 million
•Total consolidated indebtedness: $13.3 billion
As of September 30, 2026, $92 million of our cash and cash equivalents was held outside the U.S. Certain subsidiary debt covenants may limit upstreaming of cash. We currently believe there are no material restrictions on our ability to repatriate cash and cash equivalents into the United States, and that we may do so without paying or accruing significant U.S. or foreign taxes. Other than excess foreign cash held in India, we do not currently intend to repatriate to the United States material amounts of our foreign cash and cash equivalents.
We regularly review liquidity and capital allocation strategies with senior management and the Board of Directors, adjusting as strategies and conditions change.
Based on current assumptions, we believe our liquidity sources — operating cash flows, available cash, and credit capacity — will be sufficient to fund liquidity requirements and strategic investments for at least the next 12 months. For additional information on risks that could affect liquidity, see “Risk Factors — Financial Risks” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2025.
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Cash Flow Activities
The following table summarizes our consolidated cash flow activities:
| Nine Months Ended September 30, | $ Change | ||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| (Dollars in millions) | |||||||||||||||||
| Net cash provided by operating activities | $ | 2,812 | 4,176 | (1,364) | |||||||||||||
| Net cash provided by (used in) investing activities | 1,803 | (2,669) | (4,472) | ||||||||||||||
| Net cash used in financing activities | (4,639) | (995) | 3,644 | ||||||||||||||
Operating Activities
Net cash provided by operating activities decreased $1.4 billion. This was primarily as a result of:
•lower cash allocated to operating activities received as part of the divestiture of our Mass Markets Fiber-to-the-Home business associated with the fair value of the contractual credits and commercial agreements described in Note 2—Divestiture and Acquisition;
•a reduction in advance payments under PCF agreements, partially offset by favorable working capital activity, primarily as a result of timing of payments and collections on payables and receivables; and
•an offsetting decrease in net loss adjusted for non-cash expenses and gains.
Cash provided by operating activities is subject to variability period over period as a result of timing differences, including with respect to the collection of receivables and payments of interest expense, accounts payable, and bonuses.
For additional information about our operating results, see "RESULTS OF OPERATIONS" above.
Investing Activities
Net cash provided by (used in) investing activities changed by $4.5 billion. This was primarily as a result of:
•an increase of $5.0 billion due to proceeds from the Mass Markets Fiber-to-the-Home divestiture discussed elsewhere herein.
Financing Activities
Net cash used in financing activities increased $3.6 billion. This was primarily as a result of:
•lower proceeds from issuance of long-term debt.
See Note 5—Long-Term Debt and Credit Facilities for additional information on our outstanding debt securities.
Short-term Liquidity
As of September 30, 2026, we held cash and cash equivalents of $978 million and had $677 million of borrowing capacity available under our $825 million revolving credit facility, net of undrawn letters of credit. These resources, together with cash generated from operating activities and any remaining proceeds from the Mass Markets Fiber-to-the-Home divestiture, which closed February 2, 2026, represent our primary sources of liquidity for the next 12 months.
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As of September 30, 2026, based on our current capital allocation objectives, we project expenditures for the next 12 months to include, among others, the following:
•Capital expenditures: $3.2 billion to $3.4 billion primarily for network modernization and fiber expansion.
•Debt service: $29 million of finance lease obligations.
We expect to fund these expenditures primarily through operating cash flows, supplemented by available cash and borrowing capacity as needed. Based on current assumptions, we believe our liquidity sources will be sufficient to fund liquidity requirements and strategic investments for at least the next 12 months.
For additional information on short-term liquidity needs, see “Future Contractual Obligations” below.
Long-term Liquidity
Beyond the next 12 months, we plan to refinance a substantial portion of maturing debt through future debt issuances, subject to market conditions and covenant restrictions. Our ability to access capital markets depends on our credit ratings and prevailing interest rates and market conditions, and we cannot assure favorable terms for future borrowings. We may also consider other sources of liquidity, such as equity offerings or asset dispositions, depending on market conditions.
For additional information on our credit ratings and factors that may affect our access to capital markets, see “— Future Debt Transactions” below.
For additional information on long-term liquidity needs, see “Future Contractual Obligations” below.
Impact of Strategic Transactions on Liquidity
Our liquidity and capital resources have been influenced by several strategic actions aimed at optimizing our financial position, enhancing flexibility, and supporting long-term transformation initiatives. Key actions include:
•Recent divestiture: The Mass Markets Fiber-to-the-Home divestiture, which closed February 2, 2026, generated significant cash proceeds to strengthen our financial position but is expected to reduce recurring operating cash flows. The Mass Markets Fiber-to-the-Home divestiture is also expected to reduce our Mass Markets fiber-related capital expenditures by approximately $1 billion annually. While this transaction is expected to reduce recurring revenue and operating cash flows, we believe it will sharpen our focus on enterprise. It has also delivered significant cash proceeds to strengthen our financial position.
•Recent acquisition: On July 1, 2026, our wholly owned subsidiary, Level 3 Communications, LLC, acquired Alkira, Inc. for aggregate cash consideration of $485 million, subject to customary adjustments. For additional information, see Note 2—Divestiture and Acquisition.
•PCF agreements: Advance payments under PCF agreements have historically increased operating cash flow and deferred revenue. These payments vary by quarter and are applied to fund network expansion and simplification projects, which increases capital expenditures. We expect to enter into additional agreements in the future to sell products and services as part of our PCF solutions but cannot provide any assurances as to whether and when we may enter into these additional agreements or the anticipated benefits thereof. See "Risk Factors" in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2025.
•Rural Digital Opportunity Fund ("RDOF") relinquishment: In January 2026, we paid $99 million for remittance of awards and associated fees related to the voluntary relinquishment of our RDOF awards. As a result, we will no longer receive funding through the RDOF program.
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We expect these and future transactions to influence cash flows, leverage, and investment capacity. While divestitures provide immediate liquidity and PCF agreements support network expansion, they also introduce variability in operating cash flows. We will continue to pursue opportunities aligned with our capital allocation priorities and market conditions.
Capital Expenditures
We regularly invest in capital projects to expand and improve services, enhance and modernize networks, fulfill contractual obligations, and strengthen our competitive position. Discretionary projects are evaluated based on strategic impact such as revenue growth, productivity, service levels, customer retention, and expected return on investment. Capital spending is influenced by demand, contractual and regulatory requirements, cash flow, and resource availability. We expect capital spending to be focused on:
•expanding our fiber network, including our other network capacity buildout plan;
•modernizing and enhancing network efficiency and reliability;
•developing new services; and
•replacing aging network assets.
These investments are intended to support the execution of our strategy discussed above and aim to improve service quality, drive innovation, and position us to meet future demand.
For additional details on our capital spending, see "Risk Factors" in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2025, as updated in Item 1A of Part II of this Quarterly Report on Form 10-Q, and “Cash Flow Activities — Investing Activities” and “Impact of Strategic Transactions on Liquidity,” above.
Debt Instruments and Financing Arrangements
Debt Instruments
We actively manage our capital structure through a series of transactions designed to enhance financial flexibility and optimize our debt profile to address upcoming maturities and support ongoing transformation initiatives.
Key debt balances as of September 30, 2026 included:
•Secured debt outstanding: $6.8 billion
•Unsecured debt outstanding: $6.3 billion
•Revolving credit availability (net of undrawn letters of credit): $677 million
For additional details on our debt and financing instruments and the debt activity below, see Note 5—Long-Term Debt and Credit Facilities.
Key 2026 Debt Activity, to date:
•Senior Notes Issuance and Second Lien Tender Offers — First Quarter 2026: Level 3 Financing, Inc. issued an additional $650 million of its 8.500% Senior Notes due 2036. Net proceeds from this offering were used to fund the repurchase of $607 million of its Second Lien notes, including:
◦$595 million 4.875% Second Lien Notes due 2029;
◦$8 million 4.500% Second Lien Notes due 2030; and
◦$4 million 3.875% Second Lien Notes due 2030.
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•Repurchases of Debt Instruments — First Quarter 2026: Lumen applied $4.8 billion of the pre-tax proceeds from the Mass Markets Fiber-to-the-Home divestiture, along with cash on hand, to complete the following transactions:
◦Redeem the following outstanding notes in full:
▪$331 million 4.125% Superpriority Senior Secured Notes due 2029;
▪$477 million 4.125% Superpriority Senior Secured Notes due 2030; and
▪$439 million 10.000% Secured Notes due 2032.
◦Repay all of the outstanding term loans due under our Superpriority Revolving/Term Loan A Credit Agreement; and
◦Repay all of the outstanding amounts due under our Superpriority Term B Credit Agreement in full satisfaction and discharge of its obligations thereunder.
•Revolving Credit Agreement — Second Quarter 2026: On April 14, 2026, we entered into the Revolving Credit Agreement (the “Lumen Credit Agreement”) providing for a revolving credit facility with commitments of $825 million. In connection with entry into the Lumen Credit Agreement, the revolving commitments outstanding under our Superpriority Revolving/Term A Credit Agreement were permanently reduced to zero and terminated. For additional information, see Note 5—Long-Term Debt and Credit Facilities.
•Supplemental Indentures and Lumen Parent Guarantee — Second Quarter 2026: On April 30, 2026, Lumen entered into supplemental indentures in connection with Level 3 Financing’s first lien notes due 2033 and 2034 and entered into a parent guarantee agreement with respect to the Existing Level 3 Credit Agreement. These arrangements provide for Lumen to unconditionally guarantee, on a senior unsecured basis and subject to release in accordance with their terms, certain obligations of Level 3 Financing and were implemented to simplify the reporting obligations of Level 3 Parent and its subsidiaries, including by permitting Level 3 Parent to satisfy certain reporting requirements under its debt agreements by furnishing Lumen’s Exchange Act reports. For additional information, see Note 5—Long-Term Debt and Credit Facilities.
•Third Credit Agreement Refinancing — Second Quarter 2026: Level 3 Financing, Inc. amended and repriced its Term Loan B‑4 credit facility, replacing its Term Loan B‑4 with its Term Loan B‑5, maintaining $2.4 billion outstanding immediately following the transactions.
•Senior Notes Issuance and Senior Notes Tender Offers — Second Quarter 2026: Level 3 Financing, Inc. issued $1.0 billion of 7.500% Senior Notes due 2037 and used the net proceeds from this offering primarily to fund the repurchase of its outstanding unsecured Senior notes, including:
◦$172 million 4.250% Senior Notes due 2028;
◦$292 million 3.625% Senior Notes due 2029; and
◦$302 million 3.750% Senior Notes due 2029.
•Exchange Offers and Consent Solicitations — Second Quarter 2026: On June 11, 2026, Qwest Corporation, a wholly‑owned subsidiary of Lumen Technologies, Inc., completed previously announced exchange offers and related consent solicitations. In connection with the settlement, Qwest issued $1.0 billion of new 6.500% Notes due 2051 and $382 million of new 6.750% Notes due 2052 (collectively, the “New Qwest Notes”). The New Qwest Notes are senior unsecured obligations of Qwest and are fully and unconditionally guaranteed by Lumen. In connection with the consent solicitations, Qwest entered into supplemental indentures relating to its 6.500% Notes due 2056 and 6.750% Notes due 2057, which eliminated substantially all restrictive covenants in the original indentures governing those series.
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•Repurchases of Debt Instruments — Second Quarter 2026: Lumen and Level 3 Financing, Inc. repurchased the following debt instruments:
◦Lumen Technologies, Inc.
▪$7 million 5.375% Senior Notes due 2029;
◦Level 3 Financing, Inc.
▪$3 million 3.750% Senior Notes due 2029; and
▪$4 million 4.000% Second Lien Notes due 2031.
•Repurchases of Debt Instruments - Third Quarter 2026: During the third quarter of 2026, we repurchased an immaterial amount of debt instruments on the open market related to the Qwest Corporation 6.500% Notes due 2056 and 6.750% Notes due 2057.
Liquidity and Credit Facilities Availability
As of September 30, 2026, we maintained $825 million of revolving credit facility capacity, with no amounts outstanding and $148 million in undrawn letters of credit.
As of September 30, 2026, we had $150 million undrawn letters of credit, including the aforementioned $148 million issued under our revolving credit facility, and $2 million issued under a separate facility maintained by certain Lumen subsidiaries, which is collateralized by cash.
In addition to indebtedness under their above-mentioned credit agreements, Lumen and Level 3 Financing are indebted under their respective outstanding senior notes, and certain of Lumen's other subsidiaries are indebted under their respective outstanding senior notes.
For detailed terms, maturities, covenants, and outstanding balances, see Note 5—Long-Term Debt and Credit Facilities and "— Other Matters" below.
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Future Debt Transactions
Subject to market conditions, we expect to continue issuing debt securities as needed to refinance maturing obligations, including subsidiary debt, consistent with our capital allocation strategies and covenants. Availability, interest rates, and other terms of new borrowings will depend on credit ratings and market conditions, among other factors.
As of the filing date of this report, credit ratings for our and our subsidiaries' senior secured and unsecured debt were:
| Borrower | Moody's Investors Service, Inc.(1) | Standard & Poor's | Fitch Ratings(1) | |||||||||||||||||
| Lumen Technologies, Inc.: | ||||||||||||||||||||
| Secured | B3/Caa1 | B+ | BB | |||||||||||||||||
Unsecured | Caa1 | B | BB | |||||||||||||||||
Level 3 Financing, Inc.: | ||||||||||||||||||||
| Secured | Ba3 | B+ | BB | |||||||||||||||||
Unsecured | B3 | B- | B- | |||||||||||||||||
| Qwest Corporation: | ||||||||||||||||||||
| Unsecured | Caa1 | B | BB | |||||||||||||||||
(1) In February 2026, both Moody’s and Fitch upgraded our Corporate Family Rating and Long-Term Issuer Default Rating to B2 and B, representing a one-notch and two-notch upgrade, respectively.
Future changes in these ratings could impact our access to capital and borrowing costs. We cannot be certain that we will be able to borrow additional funds on favorable terms, or at all. See "Risk Factors — Financial Risks" in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2025.
Income Tax Obligations
Net Operating Loss Carryforwards
As of December 31, 2025, we had $982 million of U.S. federal net operating loss carryforwards ("NOLs") that may be used to offset future federal taxable income. A portion of the NOLs are subject to annual usage limits under Section 382 of the Internal Revenue Code. We have a Section 382 Rights Agreement in place through late 2026 to help preserve our ability to use these NOLs. We expect to use substantially all remaining NOLs in future years, but we cannot assure you we will be able to utilize these federal NOLs as projected or at all.
See Note 15—Income Taxes, in Item 8 of Part II and "Risk Factors — Financial Risks — We may not be able to fully utilize our NOLs" in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2025.
Tax Law Changes
In July 2025, the U.S. enacted H.R. 1, also known as the One, Big Beautiful Bill Act, which permanently allows 100% bonus depreciation, immediate expensing for domestic R&D, and favorable changes to interest expense limitations. We filed a refund claim for approximately $400 million of 2025 federal estimated income taxes for which we received $420 million, including interest, during the nine months ended September 30, 2026. We do not expect these provisions to have a material impact on our 2026 effective tax rate but they are expected to significantly reduce our overall 2026 federal income tax liability.
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The Organization for Economic Co-operation and Development ("OECD") has issued Pillar Two model rules introducing a new global minimum corporate tax of 15% for tax years effective after December 31, 2023. While the U.S. has not adopted Pillar Two legislation, certain countries in which we operate have already adopted legislation to implement Pillar Two. On January 5, 2026, the OECD announced the Side-by-Side ("SbS") package, implemented as administrative guidance and modifying the operation of Pillar Two rules that would fully exempt U.S.-parented groups from the application of certain Pillar Two top-up taxes. The SbS package also extends the current Transitional Country-by-Country Reporting Safe Harbor by one year, through the end of fiscal year of 2027. The Pillar Two rules have increased our compliance requirements, but we do not expect them to materially impact our 2026 results. We continue to monitor evolving global and domestic tax legislation and administrative guidance.
Pension and Post-retirement Benefit Obligations
We maintain significant pension and post-retirement benefit plans that require ongoing cash outflows and may affect our liquidity and financial flexibility. These obligations are sensitive to market conditions and actuarial assumptions, and adverse changes could increase funding requirements and reduce cash available for other uses.
Funding and Contributions
Benefits paid by our qualified pension plan (the "Combined Pension Plan") are paid through a trust that holds the plan's assets. Based on current laws and circumstances, we do not expect required contributions in 2026.
We occasionally make voluntary contributions in excess of required amounts. During 2026, we made a voluntary contribution of $101 million to the Combined Pension Plan trust.
Any additional contributions could reduce available cash and impact liquidity.
Post-retirement Benefits
Substantially all post-retirement health care and life insurance benefits are unfunded, and benefits are paid directly by us with available cash. In 2026, we expect to pay $181 million of post-retirement benefits, net of participant contributions and direct subsidies.
For additional information on our expected future benefits payments for our post-retirement benefit plan, see Note 11—Employee Benefits, in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2025.
Future Contractual Obligations
For information regarding our estimated future contractual obligations, see the MD&A discussion included in Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2025.
Other Matters
Cash Management and Loan Arrangements
We have cash management and loan arrangements with a majority of our income-generating subsidiaries, in which a substantial portion of the aggregate cash of those subsidiaries is periodically advanced or loaned to us or our service company affiliate. Although we periodically repay these advances to fund the subsidiaries' cash requirements throughout the year, at any given point in time we may owe a substantial sum to our subsidiaries under these arrangements. In accordance with generally accepted accounting principles ("GAAP"), these arrangements are reflected in the balance sheets of our subsidiaries but are eliminated in consolidation and therefore not recognized on our consolidated balance sheets. For additional information, see "Risk Factors" in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2025.
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Legal Proceedings and Other Contingent Liabilities
Our network includes some residual lead-sheathed copper cables installed years ago that constitute a small portion of our network. Media coverage of potential health and environmental risks associated with these cables has resulted in regulatory inquiries and lawsuits, and could subject us to legislative or regulatory actions, removal costs, compliance costs, or penalties. As of September 30, 2026, we have not accrued for any such potential costs and will only accrue when such costs are probable and reasonably estimable. For additional information about related litigation and potential risks, see Note 11—Commitments, Contingencies and Other Items and the risk factor disclosures included under “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2025.
We are also involved in various other legal proceedings that could substantially impact our financial position. See Note 11—Commitments, Contingencies and Other Items for additional information.
Critical Accounting Estimates
Our consolidated financial statements included in Item 1 of Part I of this report have been prepared in accordance with U.S. GAAP. The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect our reported amounts of assets, liabilities, revenues and expenses. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
There have been no material changes to our critical accounting estimates as compared to those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
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SUMMARIZED FINANCIAL INFORMATION (UNAUDITED)
Level 3 Parent, LLC
Level 3 Parent, LLC, our wholly owned subsidiary, had the following results of operations, prior to consolidated Lumen to Level 3 Parent, LLC eliminations:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Level 3 Parent, LLC | |||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Operating revenue | $ | 1,572 | 1,569 | 4,786 | 4,702 | ||||||||||||||||||
| Operating revenue-affiliates | 83 | 72 | 241 | 212 | |||||||||||||||||||
| Total operating revenue | 1,655 | 1,641 | 5,027 | 4,914 | |||||||||||||||||||
| Cost of services and products (exclusive of depreciation and amortization) | 706 | 687 | 2,106 | 2,102 | |||||||||||||||||||
| Selling, general and administrative | 293 | 311 | 868 | 859 | |||||||||||||||||||
| Operating expenses - affiliates | 284 | 255 | 875 | 768 | |||||||||||||||||||
| Depreciation and amortization | 362 | 348 | 1,068 | 1,028 | |||||||||||||||||||
| Total operating expenses | 1,645 | 1,601 | 4,917 | 4,757 | |||||||||||||||||||
| OPERATING INCOME | 10 | 40 | 110 | 157 | |||||||||||||||||||
| Interest expense | (142) | (182) | (434) | (600) | |||||||||||||||||||
| Interest income - affiliate | 28 | 73 | 136 | 217 | |||||||||||||||||||
| Net gain (loss) on early retirement of debt | 1 | (396) | (70) | (666) | |||||||||||||||||||
| Other income, net | (8) | 10 | 3 | 49 | |||||||||||||||||||
| Total other expense, net | (121) | (495) | (365) | (1,000) | |||||||||||||||||||
| Income tax benefit | (28) | (119) | (65) | (221) | |||||||||||||||||||
| NET LOSS | $ | (83) | (336) | $ | (190) | (622) | |||||||||||||||||
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The following table presents summarized financial information reflected in our consolidated balance sheets, prior to consolidated Lumen to Level 3 Parent, LLC eliminations:
| September 30, 2026 | December 31, 2025 | ||||||||||
| Level 3 Parent, LLC | |||||||||||
| (Dollars in millions) | |||||||||||
| Cash and cash equivalents | $ | 451 | 380 | ||||||||
| Note receivable - affiliate | 1,468 | 2,668 | |||||||||
| Other current assets | 1,012 | 1,070 | |||||||||
Property, plant, and equipment, net of accumulated depreciation of $5,164 and $4,772 | 10,322 | 9,030 | |||||||||
| Goodwill | 268 | — | |||||||||
| Operating lease assets - affiliates | 94 | 159 | |||||||||
| Other noncurrent assets | 4,040 | 4,346 | |||||||||
| Total assets | $ | 17,655 | 17,653 | ||||||||
| Current maturities of long-term debt | $ | 28 | 36 | ||||||||
| Accounts payable - affiliates | 353 | 312 | |||||||||
| Current operating lease liabilities - affiliates | 47 | 80 | |||||||||
| Other current liabilities | 2,326 | 2,212 | |||||||||
| Long-term debt | 10,015 | 9,627 | |||||||||
Noncurrent deferred revenue | 7,439 | 6,054 | |||||||||
Noncurrent operating lease liabilities - affiliates | 45 | 76 | |||||||||
| Other noncurrent liabilities | 957 | 1,028 | |||||||||
| Total member’s deficit | (3,555) | (1,772) | |||||||||
| Total liabilities and member’s deficit | $ | 17,655 | 17,653 | ||||||||
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The following table presents summarized financial information reflected in our consolidated statements of cash flows, prior to consolidated Lumen to Level 3 Parent, LLC eliminations:
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Level 3 Parent, LLC | |||||||||||
| (Dollars in millions) | |||||||||||
| Net cash provided by operating activities | $ | 2,451 | 3,387 | ||||||||
| Capital expenditures | (1,713) | (1,268) | |||||||||
| Other investing activities, net | 748 | 7 | |||||||||
| Net cash provided by (used in) investing activities | (965) | (1,261) | |||||||||
| Net cash used in financing activities | (1,414) | (545) | |||||||||
| Net increase in cash, cash equivalents and restricted cash | $ | 72 | 1,581 | ||||||||
| Cash, cash equivalents and restricted cash at beginning of period | $ | 382 | 602 | ||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 454 | 2,183 | ||||||||
| Supplemental cash flow information: | |||||||||||
Interest paid (net of capitalized interest of $99 and $42) | $ | (413) | (595) | ||||||||
Qwest Corporation
Qwest Corporation is our wholly owned subsidiary and has six series of currently outstanding Senior Notes, two referred to as the Old Qwest Notes, two referred to as the New Qwest Notes, and two referred to as the Qwest Notes due 2030.
In connection with the registration, listing and issuance of the New Qwest Notes, which are fully and unconditionally guaranteed by us on an unsubordinated unsecured basis, we have presented below the accompanying summarized financial information pursuant to Rule 13-01 of Regulation S-X "Guarantors and issuers of guaranteed securities registered or being registered."
The following table presents summarized financial information specified in Rule 1-02(bb)(1) of Regulation S-X:
| Three Months Ended September 30, 2026 | Nine Months Ended September 30, 2026 | |||||||||||||
| Qwest Corporation | ||||||||||||||
| (Dollars in millions) | ||||||||||||||
| Operating revenue | $ | 578 | 1,785 | |||||||||||
Operating revenue - affiliates | 395 | 1,240 | ||||||||||||
| Operating expenses | 491 | 1,828 | ||||||||||||
Operating expenses - affiliates | 231 | 678 | ||||||||||||
OPERATING INCOME | 251 | 519 | ||||||||||||
| NET INCOME | 190 | 145 | ||||||||||||
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The following tables present summarized financial information reflected in our consolidated balance sheets:
| September 30, 2026 | December 31, 2025 | ||||||||||
| Qwest Corporation | |||||||||||
| (Dollars in millions) | |||||||||||
| Advances to affiliates | $ | 234 | 666 | ||||||||
Note receivable - affiliate | 1,538 | 937 | |||||||||
| Other current assets | 275 | 2,902 | |||||||||
| Other noncurrent assets | 11,140 | 11,315 | |||||||||
| Other current liabilities | 660 | 653 | |||||||||
Affiliate obligations, net | 366 | 399 | |||||||||
| Other noncurrent liabilities | 3,972 | 3,852 | |||||||||
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of September 30, 2026, we were exposed to market risk from changes in interest rates on our variable rate long-term debt obligations and fluctuations in certain foreign currencies.
Interest Rate Risk
Our management periodically reviews our exposure to interest rate fluctuations and implements strategies to manage the risk. From time to time, we have used derivative instruments to convert variable interest rates to fixed rates. We maintain policies and procedures governing risk assessment, approval, reporting, and monitoring of derivative activities. As of September 30, 2026, we did not hold or issue derivative financial instruments for trading or speculative purposes.
As of September 30, 2026, we had $2.4 billion aggregate principal amount of debt bearing unhedged floating interest rates based on the secured overnight financing rate ("SOFR"). A hypothetical increase of 100 basis points in SOFR relating to our unhedged floating rate debt would, among other things, increase our annual loss before income taxes by $24 million.
Foreign Currency Risk
We conduct a small portion of our business in currencies other than the U.S. dollar, the currency in which our consolidated financial statements are reported. Although we continue to evaluate strategies to mitigate risks related to fluctuations in currency exchange rates, we expect to continue recognizing gains or losses from international transactions. Accordingly, changes in foreign currency rates relative to the U.S. dollar could positively or negatively impact our operating results.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”)) designed to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. These include controls and procedures designed to ensure this information is accumulated and communicated to our senior leadership team, including our Chief Executive Officer and our President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our management, with the participation of our Chief Executive Officer and our President and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2026. Based on this evaluation, our Chief Executive Officer and our President and Chief Financial Officer concluded that, as of September 30, 2026, our disclosure controls and procedures were effective at a reasonable assurance level.
Inherent Limitations of Disclosure Controls and Procedures
The effectiveness of our or any system of disclosure controls and procedures is subject to certain limitations, including the exercise of judgment in designing, implementing, and evaluating the controls and procedures, the assumptions used in identifying the likelihood of future events and the inability to eliminate misconduct completely. As a result, there can be no assurance that our disclosure controls and procedures will detect all errors or fraud. By their nature, our or any system of disclosure controls and procedures can provide only reasonable assurance regarding management's control objectives.
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Changes in Internal Control Over Financial Reporting
During the three months ended September 30, 2026, the Company substantially completed the implementation of its enterprise resource planning (“ERP”) system. The Company expects to continue post‑implementation refinements to processes and controls during the remainder of 2026 and 2027. The ERP implementation included changes to transaction processing and financial reporting systems and controls over these new systems. In addition, in connection with the Alkira acquisition, the Company implemented certain internal controls over financial reporting related to the accounting for the acquisition and related disclosures. The Company will continue to monitor further changes during subsequent periods to evaluate the effectiveness of internal control over financial reporting.
Except for changes in controls related to the changes noted above, there have been no other changes in the Company’s internal control over financial reporting during the three months ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The information required under this Part II, Item 1 is set forth under the subheadings "Principal Proceedings" and "Other Proceedings, Disputes and Contingencies" in Note 11—Commitments, Contingencies and Other Items in Item 1 of Part I of this report and is incorporated herein by reference. The ultimate outcome of the matters described in Note 11 may differ materially from the outcomes anticipated, estimated, projected, or implied by us in certain of our statements appearing in such Note, and proceedings currently viewed as not significant by us may ultimately materially impact us. For more information, see “Risk Factors—Legal and Regulatory Risks—Our pending legal proceedings could have a material adverse impact on us” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2025.
ITEM 1A. RISK FACTORS
Our operations and financial results are subject to various risks and uncertainties, which could adversely affect our business, financial condition, results of operations, or prospects. We recommend that you carefully consider (i) the other information set forth elsewhere in this report and (ii) the risk factors discussed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2025. As of September 30, 2026, there have been no material changes from the risk factors previously disclosed in response to Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2025, except as set forth below.
Risks relating to the exchange offers and the consent solicitations, as described in Note 5—Long-Term Debt and Credit Facilities, are set forth in Lumen’s Registration Statement on Form S-4 (File No. 333-295091-01) and the related prospectus.
Our use of AI in our service offerings and internally subjects us to additional risks.
We integrate AI into customer-facing offerings such as NaaS, Lumen Connect, programmable connectivity, managed security and digital self-service, and we are deploying AI internally to modernize systems, automate network operations, enhance customer care and improve productivity. Separately, our AI backbone initiative is focused on expanding our network capacity to position Lumen as the infrastructure platform that enables AI-driven networking and data movement. Certain of the AI functionality that is integrated into our service offerings and that we use internally is developed and supplied by third parties, and we have developed certain of our own AI functionalities on top of large language models and other AI tools supplied by third parties. If AI-enabled features we offer our customers do not perform as expected, produce biased, insufficient, or harmful outputs, cause service degradation, or fail to keep pace with our competitors’ AI-native capabilities, we could lose customers and market share, damage our reputation, lose pricing power or be subject to litigation, contractual disputes and adverse regulatory consequences, even if the AI technology we used in our service offering was supplied by a third party and we had no control over its development, defects, functionality, vulnerabilities, or limitations.
Our internal use of AI also exposes us to the risk of inadvertent disclosure of confidential, proprietary, or customer data, including through the use of AI models or tools that are not appropriately restricted to our environment, reliance on inaccurate or “hallucinated” outputs in business and operational decisions, intellectual property contamination, and violations of evolving employment, privacy, and consumer protection laws, each of which may not be identified or mitigated by our AI governance framework, particularly given the pace and complexity of AI development. Because the AI we use internally and in our service offerings is, in part, supplied by third parties, we are also subject to the risk that our AI service or infrastructure providers limit, withdraw, reprice, or change the terms of these offerings, suffer a service disruption or outage, or their tools contain defects, security vulnerabilities, or infringing content, or become subject to export controls or other restrictions, any of which may cause our ability to deliver AI-enabled services and deploy AI internally to be materially impaired. We also use AI tools, including tools provided by third parties, to develop or assist with developing our own software code, and we may not be able to anticipate or detect security vulnerabilities in such AI-generated software code, which could expose us to cybersecurity risks. For these reasons, our use of AI could materially harm our business, operations, financial condition or reputation.
Rapid and Uncertain Developments in AI Technology, Regulation, and Market Dynamics May Increase Cybersecurity, Legal, Competitive, and Reputational Risks and Adversely Affect Our Business.
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AI is reshaping our external environment regardless of our own deployment: threat actors increasingly use AI to develop more sophisticated, scalable, and effective cyber‑attacks, social engineering, deepfakes, and fraud directed at our networks, employees, vendors, and customers, often times before patches become available or can be deployed; AI is subject to a rapidly evolving and fragmented patchwork of U.S. federal, state, and international laws and guidance, including the EU AI Act, which can impose significant penalties for breaches, and with which compliance is costly and uncertain across our jurisdictions and our customer segments; the EU Product Liability Directive also covers AI-enabled products and services, subjecting us to civil claims for AI-caused harms; a lack of comprehensive AI legislation in the U.S. subjects us to uncertainty as to whether and how existing state AI laws will apply; AI may enable competitors (including hyperscalers, satellite operators, and non‑traditional entrants) to bypass elements of the traditional network value chain, commoditize services on which we depend, or deliver AI‑native capabilities we cannot match; AI use by us or others may give rise to unsettled claims of copyright, patent, trademark or trade‑secret infringement, or invalidity; and despite certain providers agreeing to indemnify us against intellectual property ("IP") infringement claims, we may not be successful in recovering all or any of our losses, and the law is unsettled as to whether we can obtain, maintain, or enforce IP rights in our content, software code, or other outputs developed with AI; a slowdown or reversal in AI infrastructure investment or in AI-driven demand for network capacity and services could adversely affect our business and public, employee, investor, customer, and governmental scrutiny of AI (including ethics, bias, energy, and water consumption of AI data centers we serve, as well as labor impacts) could harm our reputation, stakeholder relationships, and talent pipeline. Because AI is simultaneously a strategic opportunity, a set of tools we deploy, a category of third‑party inputs we depend on, and an outside force reshaping our industry, these risks are interrelated and may compound one another, and the materialization of one or more could have a material adverse effect on our business, financial condition, results of operations, cash flows, reputation, and prospects.
Economic, political, and market conditions may adversely affect our business, financial condition, and results of operations.
Our business, financial condition, and operating results are affected by changes in general economic and political conditions, including interest rates, economic growth, recessions, or slowing growth, higher unemployment, changes or uncertainty in fiscal or monetary policy, tariffs and trade restrictions, fluctuations in global currencies, energy costs, rates of inflation (or concerns about deflation), supply chain disruptions, impacts of current geopolitical conflict or instability, such as the Ukraine-Russia, Israel-Hamas and Iran conflicts and any further escalations thereof, and other macroeconomic factors. Rising prices for goods, services, and labor due to inflation, including inflation resulting from higher tariffs, higher fuel costs, trade restrictions, and other economic disincentives to trade, could adversely impact our margins and growth. Weak economic and credit conditions may adversely affect our suppliers and other third-party partners, as well as our Business and government customers, some of which may file for bankruptcy, or may experience cash flow or liquidity problems, or may be unable to obtain or refinance credit such that they may no longer be able to operate. Any of these could adversely impact our business, financial condition and results of operations.
We may be unable to successfully identify, complete, integrate and realize the benefits of acquisitions or manage the associated risks, all of which could have a material adverse effect on our business, financial condition and results of operations.
We may opportunistically consider acquisitions or investments in order to, among other things, expand our products, services and technologies, and some of these acquisitions or investments may be material. There can be no assurance that we will successfully identify suitable candidates in the future for strategic transactions at acceptable prices or at all. Even if we do identify suitable candidates, we may not have sufficient capital resources or financing opportunities to finance potential acquisitions or be able to consummate any desired transactions. Financing acquisitions may require the incurrence of additional indebtedness, which may increase our interest expense and subject us to additional restrictive covenants, or the issuance of equity securities, which could be dilutive to our shareholders.
Failure to complete potential acquisitions in which we have invested time and resources whether as a result of failure to meet or waive closing conditions, receive necessary regulatory approvals, obtain financing (where applicable) or otherwise, could have a material adverse effect on our business, financial condition and results of operations.
Integration of acquired companies involves a number of risks and challenges, which may include, but are not limited to:
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•diversion of management’s attention from operating our business;
•retaining and developing our relationships with key clients and seeking new revenue opportunities;
•failing to retain key personnel of acquired companies, particularly to competitors, or facing resultant labor disputes, strikes or similar disruptions;
•facing legal and other risks and liabilities relating to the acquisition or the acquired entity’s historic operations, which may be unanticipated or undisclosed and for which we may not be indemnified fully or at all;
•integration of our operations, including networks, products, services and technologies;
•completion of post-acquisition activities, such as alignment of employee cultures, corporate and accounting policies, controls and procedures, employee transfers and moves, information systems integration, optimization of product and service offerings and the establishment of control over new operations;
•information systems and other platform integration, including, where applicable, effective disclosure controls and procedures and internal control over financial reporting for the combined company;
•difficulty comparing and integrating financial reporting due to differing financial and/or internal reporting systems;
•making any necessary modifications to internal control over financial reporting to comply with applicable rules and regulations; and
•possible tax costs or inefficiencies associated with integrating the operations of the combined company.
These and other factors could cause us to not fully or timely integrate acquired companies, including Alkira, into our business and to fail to realize the anticipated growth, financial and/or strategic benefits, including but not limited to anticipated revenues and synergies of the acquisition, or cause the costs of achieving these benefits and synergies to be higher than expected, any of which could have a material adverse effect on our business, financial condition and results of operations.
In addition, following the completion of acquisitions, we may be required to rely on the seller to provide administrative and other support, including financial reporting and internal control over financial reporting, and other transition services to the acquired business for a period of time. There can be no assurance that the seller will do so in a manner that is acceptable to us or at all.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table contains information about shares of our previously-issued common stock that we withheld from employees upon vesting of their restricted stock-based awards during the third quarter of 2026 to satisfy the related tax withholding obligations:
Total Number of Shares Purchased(1) | Average Price Paid Per Share | Total number of shares purchased as part of publicly announced plans or programs | Maximum number of shares that may yet be purchased under the plans or programs | ||||||||||||||||||||
| Period | |||||||||||||||||||||||
| July 1 - July 31, 2026 | 45,365 | $ | 6.76 | — | — | ||||||||||||||||||
| August 1 - August 31, 2026 | 37,822 | $ | 6.45 | — | — | ||||||||||||||||||
| September 1 - September 30, 2026 | 83,852 | $ | 6.37 | — | — | ||||||||||||||||||
| Total | 167,039 | ||||||||||||||||||||||
_______________________________________________________________________________
(1) Represents shares of common stock withheld by the Company to satisfy employee tax withholding obligations in connection with the vesting of restricted stock-based awards. These shares were not acquired pursuant to a publicly announced share repurchase plan or program.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
(a)None.
(b)None.
(c)During the quarter ended September 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted terminated
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ITEM 6. EXHIBITS
Exhibits filed or furnished as part of this report are listed below.
Exhibit No. | Description | Incorporated by Reference | Filed or Furnished | |||||||||||||||||
Filer and File No.(1) | Form | Date(2) | ||||||||||||||||||
3.1 | Registrant | 8-K Exhibit No. 3.1 | 5/27/2026 | |||||||||||||||||
3.2 | Filed | |||||||||||||||||||
| 10.1 | Filed | |||||||||||||||||||
| 10.2 | Filed | |||||||||||||||||||
| 22 | ||||||||||||||||||||
31.1 | Filed | |||||||||||||||||||
31.2 | Filed | |||||||||||||||||||
32.1 | Furnished | |||||||||||||||||||
32.2 | Furnished | |||||||||||||||||||
101 | Financial statements from the Quarterly Report on Form 10-Q of Lumen Technologies, Inc. for the period ended September 30, 2026, formatted in Inline XBRL: (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive Loss, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Total Stockholders' Deficit and (vi) the Notes to Consolidated Financial Statements. | Filed | ||||||||||||||||||
104 | Cover page formatted as Inline XBRL and contained in Exhibit 101. | Filed | ||||||||||||||||||
_______________________________________________________________________________
(1) For purposes of this column and when applicable, (i) "Registrant" means Lumen Technologies, Inc. (File No. 001-07784), formerly named CenturyLink, Inc., Century Tel, Inc. and Century Telephone Enterprises, Inc., (ii) “Qwest” means Qwest Corporation (File No. 001-03040), (iii) “Qwest Parent” means Qwest Communications International Inc. (File No. 001-15577), and (iv) “Level 3” means Level 3 Parent, LLC (File No. 001-35134), successor-in-interest to Level 3 Communications, Inc.
(2)Represents the date of filing the report.
(3)Exhibits 10.1 and 10.2 are management contracts or compensatory plans or arrangements.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on November 4, 2026.
| LUMEN TECHNOLOGIES, INC. | ||||||||
| By: | /s/ Donald Holt | |||||||
Donald Holt Chief Accounting Officer and Controller (Principal Accounting Officer and authorized officer) | ||||||||
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Exhibit 3.2
AMENDED AND RESTATED BYLAWS
of
LUMEN TECHNOLOGIES, INC.
(as amended and restated through February 18, 2026)
Table of Contents
Page
BYLAWS
(as amended and restated through February 18, 2026)
ARTICLE I.
OFFICERS
OFFICERS
Section 1.Required and Permitted Positions and Offices.
1.1Chairman, Vice Chairmen and Officers. The Board may elect a Chairman and one or more Vice Chairmen. Persons with or without executive responsibilities may be elected to these positions. The officers of the Corporation shall include a Chief Executive Officer; a President; a Secretary; and a Treasurer. The Board may elect such other officers as it may from time to time determine. An officer need not be a Director and any two or more of the offices may be held by one person, provided, however, that a person holding more than one office may not sign in more than one capacity any certificate or any instrument required to be signed by two officers. The duties of the required positions and offices of the Corporation and, to the extent filled, the permitted positions and offices of the Corporation are as follows:
A.Chairman of the Board (Chairman). The Board may elect from their own number a Chairman. The Chairman shall preside at all meetings of the Directors, ensure that all orders, policies and resolutions of the Board are carried out and perform such other duties as may be prescribed by the Board of Directors, these Bylaws or the Corporation’s Corporate Governance Guidelines.
B.Vice Chairman of the Board (Vice Chairman). The Board may from time to time elect from their own number one or more Vice Chairmen. Each Vice Chairman shall assist the Chairman and perform such other duties as may be assigned by the Board of Directors, these Bylaws, or, in the case of any Vice Chairman with executive responsibilities, the CEO. If the Chairman is not present at any meeting of the Directors, the Vice Chairman (or, if there are more than one, the Vice Chairman selected by a majority of the Directors present at such meeting) will preside at such meeting. Any Vice Chairman with executive responsibilities may be designated an Executive Vice Chairman.
C.Chief Executive Officer (CEO). The CEO, subject to the powers of the Chairman and the supervision of the Board of Directors, shall have general supervision, direction and control of the business and affairs of the Corporation. He may sign, execute and deliver in the name of the Corporation powers of attorney, contracts, bonds and other obligations and shall perform such other duties as may be prescribed from time to time by the Board of Directors or these Bylaws. The CEO shall have general supervision and direction of the officers of the Corporation and all such powers as may be reasonably incident to such responsibilities except where the supervision and direction of an officer is delegated expressly to another by the Board of Directors or these Bylaws. Without limiting the generality of the foregoing, the CEO shall establish the annual salaries of each non-executive officer of the Corporation, unless otherwise directed by the Board, and the annual salaries of each officer of the Corporation’s subsidiaries, unless otherwise directed by the respective boards of directors of such subsidiaries.
D.President. The President may sign, execute and deliver in the name of the Corporation powers of attorney, contracts, bonds, and other obligations and shall perform such other duties as may be prescribed from time to time by the Board of Directors, the CEO, the Articles of Incorporation, these Bylaws or applicable law.
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E.Chief Operating Officer (COO). The COO, subject to the powers of the CEO and the supervision of the Board of Directors, shall manage the day-to-day operations of the Corporation, shall perform such other duties as may be prescribed by the Board of Directors or the CEO, and shall have the general powers and duties usually vested in a corporation’s chief operating officer. Without limiting the generality of the foregoing, the COO shall supervise any other officer designated by the CEO and shall have all such powers as may be reasonably incident to such responsibilities. Unless otherwise provided by law or the Board of Directors, he may sign, execute and deliver in the name of the Corporation powers of attorney, contracts, and bonds.
F.Chief Financial Officer (CFO). The Chief Financial Officer shall be the principal financial officer of the Corporation. He shall manage the financial affairs of the Corporation and direct the activities of the Treasurer, Controller and other officers responsible for the Corporation’s finances. He shall be responsible for all internal and external financial reporting. Unless otherwise provided by law or the Board of Directors, he may sign, execute and deliver in the name of the Corporation powers of attorney, contracts, bonds, and other obligations, and shall perform such other duties as may be prescribed from time to time by the Board of Directors or by these Bylaws.
G.Chief Administrative Officer (CAO). The CAO, subject to the supervision of the Board of Directors, shall be in general and active charge of the administrative functions of the Corporation, shall perform such other duties as may be prescribed by the Board of Directors and shall have the general powers and duties usually vested in the chief administrative officer of a corporation. Without limiting the generality of the foregoing, the CAO shall oversee the development and implementation of the Corporation’s administrative policies.
H.Chief Technology Officer (CTO). The CTO, subject to the powers of the CEO, shall be responsible for the overall technology strategies of the Corporation, including, without limitation, (i) assisting with the development of new products or the improvement of existing products, (ii) designing or recommending the appropriate technological solutions to support the Corporation’s business, products, services and strategies, (iii) managing the Corporation’s general research and development activities, (iv) managing the Corporation’s development of intellectual property, and (v) performing all such other duties usually associated with a corporation’s chief technology officer or as may from time to time be assigned to the CTO by the Board of Directors or CEO.
I.Chief Information Officer (CIO). The CIO, subject to the powers of the CEO, shall be responsible for (i) identifying and addressing the Corporation’s information systems needs, (ii) identifying changes and trends in computer and systems technology that affect the Corporation and its operations, (iii) determining long-term corporate-wide information needs, (iv) developing overall strategy for information needs and systems development and (v) protecting corporate data, proprietary information and related intellectual property stored in the Corporation’s information systems.
J.General Counsel. The General Counsel shall be directly responsible for advising the Board of Directors, the Corporation, and its officers and employees in matters affecting the legal affairs of the Corporation. He shall determine the need for and, if necessary, select outside counsel to represent the Corporation and approve all fees in connection with their representation. He shall also have such other powers, duties and authority as may be prescribed to him from time to time by the CEO, the Board of Directors, or these Bylaws.
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K.Treasurer. As directed by the Chief Financial Officer, the Treasurer shall have general custody of all the funds and securities of the Corporation. He may sign, with the CEO, President, Chief Financial Officer or such other person or persons as may be specifically designated by the Board of Directors, all bills of exchange or promissory notes of the Corporation. He shall perform such other duties as may be prescribed from time to time by the Chief Financial Officer or these Bylaws.
L.Controller. As directed by the Chief Financial Officer, the Controller shall be responsible for the development and maintenance of the accounting systems used by the Corporation and its subsidiaries. The Controller shall be authorized to implement policies and procedures to ensure that the Corporation and its subsidiaries maintain internal accounting control systems designed to provide reasonable assurance that the accounting records accurately reflect business transactions and that such transactions are in accordance with management’s authorization. Additionally, as directed by the Chief Financial Officer, the Controller shall be responsible for internal and external financial reporting for the Corporation and its subsidiaries.
M.Assistant Treasurer. The Assistant Treasurer shall have such powers and perform such duties as may be assigned by the Treasurer. In the absence or disability of the Treasurer, the Assistant Treasurer shall perform the duties and exercise the powers of the Treasurer.
N.Secretary. The Secretary shall keep the minutes of all meetings of the shareholders, the Board of Directors and its committees or subcommittees. He shall cause notice to be given of meetings of shareholders, of the Board of Directors and of any committee or subcommittee of the Board. He shall have custody of the corporate seal and general charge of the records, documents and papers of the Corporation not pertaining to the duties vested in other officers, which shall at all reasonable times be open to the examination of any Director. He may sign or execute contracts with any other officer thereunto authorized in the name of the Corporation and affix the seal of Corporation thereto. He shall perform such other duties as may be prescribed from time to time by the Board of Directors, the Articles of Incorporation, these Bylaws or applicable law.
O.Assistant Secretaries. Each Assistant Secretary shall have powers and perform such duties as may be assigned by the Secretary. In the absence or disability of the Secretary, the Assistant Secretary with the longest tenure shall perform the duties and exercise the powers of the Secretary.
P.Executive Vice President(s). The Executive Vice President(s) shall, in addition to exercising such powers and performing such duties associated with any other office held thereby, assist the CEO in discharging the duties of that office in any manner requested, and shall perform any other duties as may be prescribed by the Board of Directors, by the CEO or by these Bylaws.
Q.Senior Vice President(s). The Senior Vice President(s) shall, in addition to exercising such powers and performing such duties associated with any other office held thereby, perform such duties as may be prescribed from time to time by the Board of Directors, by the CEO or by these Bylaws (or, with respect to any Senior Vice President(s) who report to some other executive officer, by such other executive officer).
R.Vice President(s). The Vice President(s) shall have such powers and perform such duties as may be assigned to them by the Board of Directors, the CEO, the President, or any Executive Vice President, Senior Vice President or other officer to
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whom they report. A Vice President may sign and execute contracts and other obligations pertaining to the regular course of his duties.
S.Assistant Vice President(s). The Assistant Vice President(s) shall have such powers and perform such duties as may be assigned to them by the Board of Directors, the CEO, the President or the officer to whom they report. An Assistant Vice President may sign and execute contracts and other obligations pertaining to the regular course of his duties.
1.2Executive Officer Group. The Board shall at least annually designate certain officers as executive officers of the Corporation.
Section 2.Election and Removal of Officers.
2.1Election. The officers shall be elected annually by the Board of Directors at its first meeting following the annual meeting of the shareholders and, at any time, the Board may remove any officer (with or without cause, and regardless of any contractual obligation to such officer) and fill a vacancy in any office (including a newly-created office), but any election to, removal from or appointment to fill a vacancy in any office, and the determination of the terms of employment thereof, shall require the affirmative votes of (a) a majority of the Directors then in office and (b) a majority of the Continuing Directors, voting as a separate group.
2.2Removal. In addition, the CEO is empowered in his sole discretion to remove or suspend any officer or other employee of the Corporation who (a) fails to respond satisfactorily to the Corporation respecting any inquiry by the Corporation for information to enable it to make any certification required by the Federal Communications Commission under the Anti-Drug Abuse Act of 1988, (b) is arrested or convicted of any offense concerning the distribution or possession of, or trafficking in, drugs or other controlled substances, or (c) the CEO believes to have been engaged in actions that could lead to such an arrest or conviction.
ARTICLE II.
BOARD OF DIRECTORS
BOARD OF DIRECTORS
Section 1.Powers.
All corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed by or under the direction, and subject to the oversight of, the Board, except as may be otherwise provided by law or the Articles of Incorporation.
Section 2.Organizational and Regular Meetings.
The Board of Directors shall hold an annual organizational meeting, without notice, immediately following the adjournment of the annual meeting of the shareholders and shall hold such number of regularly scheduled meetings throughout the year on such dates as shall be determined from time to time by the Board. The Secretary shall provide or cause to be provided not less than five days’ written notice (including electronic mail) to each Director of all regular meetings, which notice shall state the time and place of the meeting.
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Section 3.Special Meetings.
3.1Call of Special Meetings. Special meetings of the Board of Directors may be called by the Chairman or the CEO. A special meeting may also be called upon the written request of any two Directors (delivered to the Chairman, the CEO or the Secretary of the Corporation), if permitted by applicable law, or upon the request of such greater number of Directors as may be required by law.
3.2Notice. Notice of the time and place of special meetings of the Board of Directors will be given to each Director either by overnight mail mailed not less than 48 hours before the time of the meeting, by telephone or by other form of electronic transmission or communication not less than 12 hours before the time of the meeting, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate under exigent circumstances.
Section 4.Waiver of Notice.
Any Director may waive notice of a meeting by written waiver executed either before or after the meeting. Directors present at any regular or special meeting shall be deemed to have received due, or to have waived, notice thereof, provided that a Director who participates in a meeting shall not be deemed to have received or waived due notice if the Director objects to holding the meeting or transacting business thereat in the manner required by the LBCA.
Section 5.Quorum.
A majority of the authorized number of Directors as fixed by or pursuant to the Articles of Incorporation shall be necessary to constitute a quorum for the transaction of business, provided, however, that a minority of the Directors, in the absence of a quorum, may adjourn from time to time, but may not transact any business. Subject to the terms and conditions of the LBCA, if a quorum is present when the meeting convened, the Directors present may continue to do business until adjournment, notwithstanding the withdrawal of enough Directors to leave less than a quorum or the refusal of any Director present to vote.
Section 6.Notice of Adjournment.
Notice of the time and place of holding an adjourned meeting need not be given to absent Directors if the time and place is fixed at the meeting adjourned.
Section 7.Written Consents.
Anything to the contrary contained in these Bylaws notwithstanding, any action required or permitted to be taken by the Board of Directors may be taken without a meeting, if all members of the Board of Directors shall individually or collectively sign a consent describing such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board. Such action by written consent shall have the same force and effect as a unanimous vote of such Directors at a meeting.
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Section 8.Voting.
At all meetings of the Board, each Director present shall have one vote. At all meetings of the Board, all questions, the manner of deciding which is not otherwise specifically regulated by law, the Articles of Incorporation or these Bylaws, shall be determined by a majority of the Directors present at the meeting, provided, however, that (i) a quorum is present at the meeting, as determined pursuant to Section 5 of this Article, and (ii) any shares of other corporations owned by the Corporation shall be voted only pursuant to resolutions duly adopted upon the affirmative votes of (a) 80% of the Directors then in office and (b) a majority of the Continuing Directors, voting as a separate group.
Section 9.Use of Communications Equipment.
Meetings of the Board of Directors may be held by means of telephone conference calls, video conferencing communications or similar communications equipment, provided that all persons participating in the meeting can hear and communicate with each other.
Section 10.Indemnification.
10.1Definitions. As used in this Section 10:
(a)The term “Change of Control” shall mean (i) an acquisition by any person (within the meaning of Section 13(d)(3) or l4(d)(2) of the Securities Exchange Act of 1934, as amended) of beneficial ownership of 20% or more of the combined voting power of the Corporation's then outstanding voting securities; (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Corporation and any new director whose election by the Board of Directors or nomination for election by the Corporation's shareholders was approved by a vote of at least two-thirds 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, cease for any reason to constitute a majority thereof; or (iii) the consummation of a merger or consolidation involving the Corporation if either (x) the shareholders of the Corporation, immediately before such merger or consolidation, do not own, immediately following such merger or consolidation, more than 50% of the combined voting power of the outstanding voting securities of the entity paying cash or issuing stock in connection with the merger or consolidation or (y) the members of the Board of Directors of the Corporation immediately before such merger or consolidation do not constitute, immediately following the merger or consolidation, a majority of the members of the board of directors (or similar governing body) of the entity paying cash or issuing stock in connection with the merger or consolidation. Notwithstanding the foregoing, a Change of Control shall not be deemed to occur solely because 20% or more of the Corporation’s then outstanding voting securities is acquired by (l) a trustee or other fiduciary holding securities under one or more employee benefit plans maintained by the Corporation or any of its subsidiaries or (2) any entity that, immediately prior to such acquisition, is owned directly or indirectly by the shareholders of the Corporation in the same proportion as their ownership of shares in the Corporation immediately prior to such acquisition.
(b)The term “Claim” shall mean any threatened, pending or concluded claim, action, suit, or proceeding, including discovery, whether civil, criminal, administrative, arbitrative or investigative and whether made judicially or extra-judicially, or involving
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Indemnitee solely as a witness or person required to give evidence, or any separate issue or matter therein, as the context requires, but shall not include any action, suit or proceeding initiated by Indemnitee against the Corporation (other than to enforce the terms of this Section), or initiated by Indemnitee against any director or officer of the Corporation unless the Corporation has joined in or consented in writing to the initiation of such action, suit or proceeding.
(c)The term “Determining Body” shall mean (i) if there are two or more qualified directors (as defined in Section 1-140(18B) of the LBCA), all of the qualified directors (“Disinterested Directors”), or (ii) special legal counsel (A) selected by the Disinterested Directors or (B) if there are fewer than two Disinterested Directors selected by the Board of Directors (in which selection directors who do not qualify as Disinterested Directors may participate); provided, however, that following a Change of Control, with respect to all matters thereafter arising out of acts, omissions or events occurring prior to or after the Change of Control concerning the rights of Indemnitee to seek indemnification, such determination shall be made by special legal counsel selected by the Board of Directors in the manner described above in this Section 10.1(c) (which selection shall not be unreasonably delayed or withheld) from a panel of three counsel nominated by Indemnitee. Such counsel (“Special Counsel”) shall not have otherwise performed services for the Corporation, Indemnitee or their respective affiliates (other than services as special legal counsel in connection with similar matters) within the five years preceding its engagement. If Indemnitee fails to nominate Special Counsel within ten business days following written request by the Corporation, the Board of Directors shall select such counsel. Such counsel shall not be a person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Corporation or Indemnitee in an action to determine Indemnitee's rights under this Section 10, nor shall Special Counsel be any person who has been sanctioned or censured for ethical violations of applicable standards of professional conduct. The Corporation agrees to pay the reasonable fees and costs of the Special Counsel referred to above and to fully indemnify such Special Counsel against any and all expenses, claims, liabilities and damages arising out of or relating to this Section 10.1(c) or its engagement pursuant hereto. The Determining Body shall determine in accordance with Section 10.3 whether and to what extent Indemnitee is entitled to be indemnified under this Section and shall render a written opinion to the Corporation and to Indemnitee to such effect.
(d)The term “D&O Insurance” shall mean directors and officers liability insurance.
(e)The term "Disbursing Officer" shall mean, with respect to a Claim, the Chief Executive Officer of the Corporation or, if the Chief Executive Officer is a party to the Claim as to which advancement or indemnification is being sought, any officer who is not a party to the Claim and who is designated by the Chief Executive Officer, which designation shall be made promptly after the Corporation's receipt of Indemnitee's initial request for advancement or indemnification and communicated to Indemnitee.
(f)The term “Expenses” shall mean any reasonable expenses or costs (including, without limitation, attorney’s fees, fees of experts retained by attorneys, judgments, punitive or exemplary damages, fines and amounts paid in settlement) actually and reasonably incurred by Indemnitee with respect to a Claim, except that Expenses shall not include any amount paid in settlement of a Claim against Indemnitee (i) by or in the right of the Corporation, or (ii) that the Corporation has not approved, which approval will not be unreasonably delayed or withheld.
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(g)The term “Indemnitee” shall mean each Director and officer and each former Director and officer of the Corporation.
(h)The term “Section” or “Section 10” shall mean Article II, Section 10, of these Bylaws, in its entirety, unless the context otherwise provides.
(i)The term “Standard of Conduct” shall mean conduct by an Indemnitee with respect to which a Claim is asserted that was in good faith and that Indemnitee reasonably believed to be in, or (in the case of conduct other than in an official capacity) not opposed to, the best interest of the Corporation, and, in the case of a Claim that is a criminal action or proceeding, conduct that the Indemnitee had no reasonable cause to believe was unlawful. The termination of any Claim by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not meet the Standard of Conduct.
10.2Advancement of Expenses.
(a)Subject to Indemnitee’s furnishing the Corporation with (i) a written undertaking, in a form reasonably satisfactory to the Corporation, to repay such amount if it is ultimately determined that Indemnitee is not entitled under this Section 10 to indemnification therefor and (ii) a written affirmation meeting the requirements of LBCA Section 1-853(A)(1), the Corporation shall advance Expenses to Indemnitee in advance of the final disposition of any Claim involving Indemnitee; provided, however, that Indemnitee will return, without interest, any such advance that remains unspent immediately following resolution of the Claim to which the advance related, and provided further, that advances of such Expenses by the Corporation's D&O Insurance carrier shall be treated, for purposes of this Section 10.2(a), as advances by the Corporation. The written undertaking by Indemnitee must be an unlimited general obligation of Indemnitee but need not be secured and will be accepted by the Corporation without reference to the financial ability of Indemnitee to make repayment.
(b)Any request for advancement of Expenses shall be submitted by Indemnitee to the Disbursing Officer in writing and shall be accompanied by a written description of the Expenses for which advancement is requested. The Disbursing Officer shall, within 30 days after receipt of Indemnitee's request for advancement, advance such Expenses unsecured, interest-free and without regard to Indemnitee's ability to make repayment, provided that if the Disbursing Officer questions the reasonableness of any such request, that officer shall promptly advance to the Indemnitee the amount deemed by that officer to be reasonable and shall forward immediately to the Board of Directors a copy of the Indemnitee's request and of the Disbursing Officer’s response, together with a written description of that officer’s reasons for questioning the reasonableness of a portion of the advancement sought. The Board of Directors shall, within 30 days after receiving such a request from the Disbursing Officer, determine the reasonableness of the disputed Expenses and notify Indemnitee and the Disbursing Officer of its decision, which shall be final, subject to Indemnitee’s right under Section 10.4 to seek a judicial adjudication of Indemnitee’s rights. The determination shall be made, if there are two or more Disinterested Directors, by the majority vote of the Disinterested Directors, or otherwise by a majority vote of all directors including those who are not Disinterested Directors.
(c)Indemnitee's right to advancement under this Section 10.2 shall include the right to advancement of Expenses incurred by Indemnitee in a suit against the Corporation under Section 10.4 to enforce Indemnitee's rights under this Section. Such right of advancement shall, however, be subject to Indemnitee's obligation pursuant to
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Indemnitee’s undertaking described in Section 10.2(a) to repay such advances, to the extent provided in Section 10.4, if it is ultimately determined in the enforcement suit that Indemnitee is not entitled to indemnification for a Claim.
10.3Indemnity.
(a)The Corporation shall, in the manner provided in this Section, indemnify and hold harmless Indemnitee against Expenses incurred in connection with any Claim against Indemnitee (whether as a subject of or party to, or a proposed or threatened subject of or party to, the Claim) or in which Indemnitee is involved solely as a witness or person required to give evidence, by reason of Indemnitee’s position: (A) as a director or officer of the Corporation, (B) as a director or officer of any subsidiary of the Corporation or as a fiduciary with respect to any employee benefit plan of the Corporation, or (C) as a director, officer, employee or agent of another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other for profit or not for profit entity or enterprise, if such position is or was held at the request of the Corporation, regardless of when serving in any such position occurred, if (x) Indemnitee is successful in defense of the Claim on the merits or otherwise, as provided in Section 10.3(d), (y) Indemnitee has been found by the Determining Body to have met the Standard of Conduct or (z) Indemnitee has been determined in writing by Special Counsel to have engaged in conduct for which broader indemnification has been made permissible under the Articles of Incorporation for which liability has been eliminated under (or pursuant to) LBCA Section 1-832; provided that no indemnification shall be made in respect of any Claim by or in the right of the Corporation as to which Indemnitee shall have been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable on the basis of receiving a financial benefit to which the Indemnitee was not entitled unless, and only to the extent, a court shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such Expenses as the court shall deem proper, and provided further, that Expenses incurred in connection with a Claim for which Indemnitee has been reimbursed or indemnified by the Corporation’s D&O Insurance carrier shall be credited against the Corporation’s obligation under this Section 10.3(a) with respect to such Claim.
(b)Promptly upon becoming aware of the existence of any Claim with respect to which Indemnitee may seek indemnification hereunder, Indemnitee shall notify the Chief Executive Officer (or, if the Chief Executive Officer is the Indemnitee, the next ranking executive officer who is not an Indemnitee with respect to the Claim) of the existence of the Claim, who shall promptly advise the Board of Directors that establishing the Determining Body will be a matter presented at the next regularly scheduled meeting of the Board of Directors. Failure or delay by Indemnitee in giving such notice shall not excuse performance by the Corporation hereunder except to the extent that, the Corporation did not otherwise learn of the Claim and such failure or delay results in forfeiture by the Corporation of substantial defenses, rights or insurance coverage. After the Determining Body has been established, the Chief Executive Officer or that officer’s delegate shall inform Indemnitee thereof and Indemnitee shall promptly notify the Determining Body, to the extent requested by it, of all facts relevant to the Claim known to Indemnitee.
(c)Indemnitee shall be entitled to conduct the defense of the Claim and to make all decisions with respect thereto, with counsel of Indemnitee’s choice, provided that in the event the defense of the Claim has been assumed by the Corporation through its D&O Insurance carrier or otherwise, then (i) Indemnitee will be entitled to retain
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separate counsel from the Corporation’s Counsel (but not more than one law firm plus, if applicable, local counsel at the Corporation’s expense if, but only if, Indemnitee shall reasonably conclude that one or more legal defenses may be available to Indemnitee that are different from, or in addition to, those available to the Corporation or other defendants represented by the Corporation through its D&O Insurance carrier or otherwise, and (ii) the Corporation will not, without the prior written consent of Indemnitee, effect any settlement of the Claim unless such settlement (x) includes an unconditional release of Indemnitee from all liability that is the subject matter of such Claim, (y) does not impose penalties or post-settlement obligations on Indemnitee (except for customary confidentiality obligations), and (z) does not require payment by Indemnitee of money in settlement.
(d)To the extent (i) Indemnitee is successful on the merits or otherwise in defense of any Claim or (ii) Special Counsel has made the written determination described in clause (a)(z) of this Section 10.3, Indemnitee shall be indemnified against Expenses incurred by Indemnitee with respect to the Claim, regardless of whether Indemnitee has met the Standard of Conduct, and without the necessity of any determination by the Determining Body as to whether Indemnitee has met the Standard of Conduct. In the event Indemnitee is not entirely successful on the merits or otherwise in defense of any Claim, but is successful on the merits or otherwise in defense of any claim, issue or matter involved in the Claim, Indemnitee shall be indemnified for the portion of Indemnitee’s Expenses incurred in such successful defense that is determined by the Determining Body (or by Special Counsel in the case of a Claim described in clause (a)(z) of this Section 10.3) to be reasonably and properly allocable to the claims, issues, or matters as to which Indemnitee was successful.
(e)Except as otherwise provided in Section 10.3(d), the Corporation shall not indemnify any Indemnitee under Section 10.3(a) unless a determination has been made by the Determining Body (or by a court upon application or in a proceeding brought by Indemnitee under Section 10.4) with respect to a specific Claim that indemnification of Indemnitee is permissible because Indemnitee has met the Standard of Conduct. In the event settlement of a Claim to which Indemnitee is a party has been proposed (“Proposed Settlement”), the Determining Body shall, promptly after submission to it but prior to consummation of the Proposed Settlement, make a determination whether Indemnitee shall have met the Standard of Conduct. In the event such determination is adverse to Indemnitee, Indemnitee shall be entitled to reject the Proposed Settlement. In the event of final disposition of a Claim other than by settlement, the Determining Body shall, promptly after but not before such final disposition, make a determination whether Indemnitee has met the Standard of Conduct. In all cases, the determination shall be in writing and shall set forth in reasonable detail the basis and reasons therefor. The Determining Body shall, promptly after making such determination, provide a copy thereof to both the Disbursing Officer and Indemnitee and shall instruct the former either to (i) reimburse Indemnitee as soon as practicable for all Expenses, if any, to which Indemnitee has been so determined to be entitled and which have not previously been advanced to Indemnitee under Section 10.2 (or otherwise recovered by Indemnitee through an insurance or other arrangement provided by the Corporation), or (ii) seek reimbursement from Indemnitee (subject to Indemnitee's rights under Section 10.4) of all advancements that have been made pursuant to Section 10.2 as to which it has been so determined that Indemnitee is not entitled to be indemnified.
(f)Indemnitee shall cooperate with the Determining Body at the expense of the Corporation by providing to the Determining Body, upon reasonable advance request, any documentation or information that is not privileged or otherwise protected from
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disclosure and that is reasonably available to Indemnitee and reasonably necessary to enable the Determining Body to discharge its responsibilities under this Section 10.3.
(g)If the Determining Body makes a determination pursuant to Section 10.3(e) that Indemnitee is entitled to indemnification, the Corporation shall be bound by that determination in any judicial proceeding, absent a determination by a court that such indemnification contravenes applicable law.
(h)In making a determination under Section 10.3(e), the Determining Body shall presume that the Standard of Conduct has been met unless the contrary shall be established by a preponderance of the evidence.
(i)The Corporation and Indemnitee shall keep confidential, to the extent permitted by law and their fiduciary obligations, all facts and determinations provided pursuant to or arising out of the operation of this Section, and the Corporation and Indemnitee shall instruct their respective agents to do likewise.
10.4Enforcement.
(a)The rights provided by this Section 10 shall be enforceable by Indemnitee in any court of competent jurisdiction.
(b)If Indemnitee seeks a judicial adjudication of Indemnitee’s rights under, or to recover damages for breach of, this Section 10, Indemnitee shall be entitled to recover from the Corporation, and shall be indemnified by the Corporation against, any and all Expenses incurred by Indemnitee in connection with such proceeding, but only if Indemnitee prevails therein. If it shall be determined that Indemnitee is entitled to receive part but not all of the relief sought, then Indemnitee shall be entitled to be reimbursed for all Expenses incurred by Indemnitee in connection with such judicial adjudication if the indemnification amount to which Indemnitee is determined to be entitled exceeds 50% of the amount of Indemnitee’s claim. Otherwise, the reimbursement of Expenses incurred by Indemnitee in connection with such judicial adjudication shall be appropriately prorated.
(c)In any judicial adjudication described in this Section 10.4, it shall be presumed that Indemnitee is entitled to the advancement or reimbursement of Expenses sought with respect to any Claim unless the Corporation shall establish the contrary by a preponderance of the evidence.
10.5Saving Clause.
(a)If any provision of this Section 10 is determined by a court having jurisdiction over the matter to require the Corporation to do or refrain from doing any act that is in violation of applicable law, the court shall be empowered to modify or reform such provision so that, as modified or reformed, such provision provides the maximum indemnification permitted by law and such provision, as so modified or reformed, and the balance of this Section 10, shall be applied in accordance with their terms. Without limiting the generality of the foregoing, if any portion of this Section 10 shall be invalidated on any ground, the Corporation shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Section 10 that shall not have been invalidated and to the full extent permitted by law with respect to that portion that has been invalidated.
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(b)The terms and conditions of this Section 10 supersede and replace in their entirety, as of February 24, 2016, the terms and conditions of Section 10 of Article II of these Bylaws in effect prior to such date (the “Old Indemnification Bylaw”) under which the Corporation agreed to indemnify the Indemnitees with respect to certain matters in a manner generally similar to this Section 10. Each Indemnitee shall remain entitled after February 24, 2016 to all rights and remedies accrued or acquired under the Old Indemnification Bylaw prior to such date. In the event of any conflict between this Section 10 and the Old Indemnification Bylaw, this Section 10 shall control, except that, to the greatest extent permitted by applicable law, the Corporation shall treat all Indemnitee requests for advancement or indemnification made after such date based on Claims, acts, omissions, or conduct that occurred prior to such date in the manner most favorable to Indemnitee under either this Section 10 or the Old Indemnification Bylaw, as the case may be.
10.6Non-Exclusivity. The indemnification and payment of Expenses provided by or granted pursuant to this Section 10 shall not be deemed exclusive of any other rights to which Indemnitee is or may become entitled under any statute, article of incorporation, insurance policy, authorization of shareholders or directors, agreement or otherwise, including, without limitation, any rights authorized by the Determining Body in its discretion with respect to matters for which indemnification is permitted under LBCA Section 1-851.
10.7Subrogation. In the event of any payment under this Section 10, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee. Following receipt of indemnification payments hereunder, as further assurance, Indemnitee shall execute all papers reasonably required and, at the expense of the Corporation, take all action reasonably necessary to secure such subrogation rights, including execution of such documents as are reasonably necessary to enable the Corporation to bring suit to enforce such rights.
10.8Successors and Assigns.
(a)The Corporation shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all the business or assets of the Corporation, by agreement or other instrument in form and substance satisfactory to the Corporation, expressly to assume and agree to perform its obligations under this Section 10 in the same manner and to the same extent the Corporation would be required to perform if no such succession had taken place.
(b)Indemnitee’s right to advancement and indemnification of Expenses pursuant to this Section 10 shall continue regardless of the termination of Indemnitee’s status as a director or officer of the Corporation, and this Section 10 shall inure to the benefit of and be enforceable by Indemnitee’s personal or legal representatives, executors, administrators, spouses, heirs, assigns and other successors.
(c)The rights granted to each Indemnitee under this Section 10 are personal in nature and neither the Corporation nor any Indemnitee shall, without the prior written consent of the other, assign or delegate any rights or obligations under this Section 10 except as expressly provided in Sections 10.8(a) and 10.8(b).
(d)This Section 10 shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation, reorganization or otherwise to all or substantially all of the business or assets of the Corporation), permitted, assigns, spouses, heirs, executors, administrators and personal and legal representatives.
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10.910.9 Indemnification of Other Persons. The Corporation may indemnify any person not a Director or officer of the Corporation to the extent authorized by the Board of Directors or a committee of the Board expressly authorized by the Board of Directors.
Section 11.Certain Qualifications.
(a)No person shall be eligible for nomination, election or service as a Director of the Corporation who shall (i) in the opinion of the Board of Directors fail to respond satisfactorily to the Corporation respecting any inquiry of the Corporation for information to enable the Corporation to make any certification required by the Federal Communications Commission under the Anti-Drug Abuse Act of 1988 or to determine the eligibility of such persons under this subsection; (ii) have been arrested or convicted of any offense concerning the distribution or possession of, or trafficking in, drugs or other controlled substances, provided that in the case of an arrest the Board of Directors may in its discretion determine that notwithstanding such arrest such persons shall remain eligible under this subsection; or (iii) have engaged in actions that could lead to such an arrest or conviction and that the Board of Directors determines would make it unwise for such person to serve as a Director of the Corporation.
(b)No person shall be eligible for nomination, election or service as a Director of the Corporation if the Board of Directors determines that (i) he or she failed to furnish any notice, undertaking, questionnaire, agreement or other instrument required to be delivered under any subsection of Section 5 of Article IV of these Bylaws or otherwise reasonably requested by the Corporation, all of which shall be provided promptly and in no event more than five business days after it has been requested, or (ii) in connection with furnishing any such notice, undertaking, questionnaire, agreement or other instrument, he or she failed to provide information that was true, correct and complete in all material respects or made an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements made not misleading, including without limitation omitting to disclose any agreements, arrangements or understandings required to be disclosed in any such notice, undertaking, questionnaire, agreement or other instrument.
(c)Any person serving as a Director of the Corporation shall automatically cease to be a Director on such date as he or she ceases to have the qualifications set forth in this Section 11, and his or her position shall be considered vacant within the meaning of the Articles of Incorporation of the Corporation.
Section 12.Resignations.
A Director may resign at any time by providing written notice to the Board of Directors, the Chairman, the CEO or the Secretary.
ARTICLE III.
COMMITTEES
COMMITTEES
Section 1.Committees.
1.1Standing Committees. The Board of Directors shall maintain (i) any such committees as may be required by applicable law or applicable listing standards to which the Corporation is subject and (ii) any such other committees that the Board deems to be necessary or appropriate in connection with its managements of the business and affairs of the Corporation. Each such committee shall be comprised of such number of Directors as shall be set from time to
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time by the Board. Each such committee shall have such qualifications, powers and responsibilities as specified in any charter that may from time to time be adopted by such committee and approved by the Board of Directors, or as specified in any resolution duly adopted by the Board of Directors.
1.2Special Purpose Committees. The Board may authorize such ad hoc or other special purpose committees that they deem to be necessary or appropriate in connection with the Board’s management of the business and affairs of the Corporation.
1.3Subcommittees. As necessary or appropriate, each committee may organize a standing, ad hoc or special subcommittee for such purposes within the scope of its powers as it sees fit, and may delegate to such subcommittee any of its powers as may be necessary or appropriate to enable such subcommittee to discharge its duties and responsibilities. Any such subcommittee shall be composed solely of members of the committee, which shall appoint and replace such subcommittee members. Each subcommittee member shall hold office during the term designated by the committee, provided that such term shall automatically lapse if such member ceases to be a member of the committee or fails to meet any other qualifications that may be imposed by the committee.
Section 2.Appointment and Removal of Committee Members.
Subject to Section 5 below, Directors shall be appointed to or removed from a committee only upon the affirmative votes of:
1.A majority of the Directors then in office; and
2.A majority of the Continuing Directors, voting as a separate group.
Each member of a committee shall serve until his or her successor is duly appointed and qualified.
Section 3.Procedures for Committees.
Each committee or subcommittee may adopt such charters, procedures or regulations as it shall deem necessary for the proper conduct of its functions and the performance of its responsibilities, provided that such charters, procedures or regulations are consistent with (i) the Corporation’s Articles of Incorporation, Bylaws and Corporate Governance Guidelines, (ii) applicable laws, regulations and stock exchange listing standards, (iii) applicable provisions of any duly adopted benefit plan of the Corporation or its subsidiaries defining the rights or responsibilities of any such committee or subcommittee and (iv) any regulations or procedures prescribed for use by such committee by the Board of Directors or for use by such subcommittee by the committee that authorized its organization under Section 1.3 (collectively, the “Governing Standards”). Unless otherwise determined by a committee or subcommittee, each meeting thereof shall be convened pursuant to the notice requirements pertaining to meetings of the full Board. Each committee and subcommittee shall keep written minutes of its meetings.
Section 4.Meetings.
A committee or subcommittee may invite to its meetings other Directors, representatives of management, counsel or other persons whose pertinent advice or counsel is sought by the
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committee or subcommittees. A majority of the members of any committee or subcommittee shall constitute a quorum and action by a majority (or by any super-majority required by the Governing Standards) of a quorum at any meeting of a committee or subcommittee shall be deemed action by the committee or subcommittee. The committee or subcommittee may also take action without meeting if all members thereof consent in writing thereto. Meetings of a committee or subcommittee may be held by telephone conference calls, video conferencing equipment or similar communications equipment, provided each person participating may hear and be heard by all other meeting participants. Each committee shall make regular reports to the Board. All recommendations or actions of any committee or subcommittee shall be subject to approval or ratification by the full Board of Directors unless the committee or subcommittee possesses plenary power to act independently with respect to such matter and the submission of such matter to the full Board for action would be prohibited by, or contrary to the intent and purpose of, any Governing Standards.
Section 5.Authority to Fill Vacancies.
Any vacancy in any committee (including any vacancy resulting from an increase in the number of directors comprising the committee) shall be filled by the Board. If the Board fails to fill any such vacancy within 30 days of being advised thereof, the Nominating and Corporate Governance Committee shall, to the maximum extent permitted by law, have the power to fill the vacancy, in which case the new committee member shall serve on such committee until such time as the Board may elect to replace such new committee member.
ARTICLE IV.
SHAREHOLDERS’ MEETINGS
SHAREHOLDERS’ MEETINGS
Section 1.Manner of Holding Meetings.
Unless otherwise required by law or these Bylaws, all meetings of the shareholders shall be held in the manner designated by the Board of Directors, which may be (i) at the principal office of the Corporation, (ii) at such other place, within or without the State of Louisiana, as may be designated by the Board of Directors, (iii) solely by means of remote communications in accordance with applicable law or (iv) some combination of the foregoing. If and to the extent the Board of Directors elects to hold any meeting of the shareholders partially or wholly by means of remote communications, then each reference in the Articles of Incorporation or these Bylaws to attendance of shareholders in person shall be deemed to include attendance through such means in accordance with any rules governing such attendance established by the Corporation.
Section 2.Annual Meeting.
An annual meeting of the shareholders shall be held on the date and at the time as the Board of Directors shall designate for the purpose of electing Directors and for the transaction of such other business as may be properly brought before the meeting. If no annual shareholders’ meeting is held for a period of 18 months and directors are not elected by written consent in lieu of an annual meeting during that period, any shareholder may demand that the Secretary of the Corporation call such a meeting to be held in the manner specified under the LBCA.
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Section 3.Special Meetings.
Special meetings of the shareholders, for any purpose or purposes, may be called by the Board of Directors. Subject to the terms of any outstanding class or series of Preferred Stock that entitles the holders thereof to call special meetings, the holders of the requisite percentage of the Total Voting Power specified in the Articles of Incorporation shall be required to cause the Corporation to call a special meeting of shareholders pursuant to La. R.S. 12:1-702 (or any successor provision). Such requests of shareholders must state the specific purpose or purposes of the proposed special meeting, and the business to be brought before such meeting by the shareholders shall be limited to such purpose or purposes.
Section 4.Notice of Meetings.
Except as otherwise provided by law, the authorized person or persons calling a shareholders’ meeting shall cause written notice of the call of the meeting to be given to all shareholders of record entitled to vote at such meeting at least 10 days and not more than 60 days prior to the day fixed for the meeting. Notice of the annual meeting need not state the purpose or purposes thereof, unless action is to be taken at the meeting as to which notice is required by law, the Articles of Incorporation or these Bylaws. Notice of a special meeting shall state the purpose or purposes thereof, and the business conducted at any special meeting shall be limited to the purpose or purposes stated in the notice.
Section 5.Notice of Shareholder Nominations and Shareholder Business.
5.1Annual Meetings of Shareholders.
(a)Nominations of persons for election to the Board of Directors and the proposal of other business to be considered by the shareholders may be made at an annual meeting of shareholders only if properly brought before such meeting (i) pursuant to the Corporation’s notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors or any duly authorized committee thereof, (ii) otherwise by or at the direction of the Board of Directors or any duly authorized committee thereof, (iii) by any shareholder of the Corporation who (A) was a shareholder of record at the time of giving of notice provided for in this Section 5.1 and through the time of the annual meeting, (B) is entitled to vote at the meeting and (C) complies with the notice procedures set forth in this Section 5.1 as to such business or nomination, or (iv) by any shareholder (or group of shareholders) who meets the requirements of and complies with all of the procedures set forth in Section 5.3 of this Bylaw.
(b)Without qualification or limitation, subject to Section 5.4(c) of this Bylaw, for any nominations or any other business to be properly brought before an annual meeting by a shareholder pursuant to Section 5.1(a)(iii) of this Bylaw (i) the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation and complied in all respects with the applicable requirements of Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and all other applicable provisions of state or federal law and the rules or regulations promulgated thereunder (including Rule 14a-19 promulgated under the Exchange Act), and (ii) such other business must constitute a proper matter for shareholder action. To be timely, a shareholder’s notice shall be delivered to the Secretary of the Corporation at the principal executive office of the Corporation not earlier than the close of business on the 180th day
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and not later than the close of business on the 90th day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the shareholder to be timely must be so delivered not earlier than the close of business on the 180th day prior to the date of such annual meeting and not later than the close of business on the later of the 90th day prior to the date of such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation.
(c)To be in proper form and effective for purposes hereof, a shareholder’s notice (whether given pursuant to this Section 5.1 of this Bylaw in connection with an annual meeting or Section 5.2 of this Bylaw in connection with a special meeting) furnished to the Secretary of the Corporation must:
(i)set forth, as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (A) the name and address of such shareholder, as it appears on the Corporation’s books, of such beneficial owner, if any, of any of their respective affiliates and associates and of any others acting in concert with any of the foregoing (with any such affiliates, associates or others with whom they are acting in concert being hereinafter referred to as “associated parties”), (B)(1) the class or series and number of shares of the Corporation which are, directly or indirectly, owned beneficially and of record by such shareholder, any such beneficial owner, and any of their associated parties, (2) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, or any derivative or synthetic arrangement having the characteristics of a long position in any class or series of shares of the Corporation, or any contract, derivative, swap or other transaction or series of transactions designed to produce economic benefits and risks that correspond substantially to the ownership of any class or series of shares of the Corporation, including due to the fact that the value of such contract, derivative, swap or other transaction or series of transactions is determined by reference to the price, value or volatility of any class or series of shares of the Corporation, whether or not such instrument, contract or right shall be subject to settlement in the underlying class or series of shares of the Corporation, through the delivery of cash or other property, or otherwise, and without regard of whether such shareholder of record, the beneficial owner, if any, or any of their associated parties may have entered into transactions that hedge or mitigate the economic effect of such instrument, contract or right or any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation (any of the foregoing, a “Derivative Instrument”) directly or indirectly owned beneficially by such shareholder, the beneficial owner, if any, or any of their associated parties, (3) any proxy, contract, arrangement,
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understanding, or relationship pursuant to which such shareholder, any such beneficial owner or any of their associated parties has a right to vote any shares of any security of the Corporation, (4) any agreement, arrangement, understanding, relationship or otherwise, including any repurchase or similar so-called “stock borrowing” agreement or arrangement, engaged in, directly or indirectly, by such shareholder, the beneficial owner, if any, or any of their associated parties, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of any class or series of the shares of the Corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such shareholder, the beneficial owner, if any, or any of their associated parties with respect to any class or series of the shares of the Corporation, or which provides, directly or indirectly, the opportunity to profit or share in any profit derived from any decrease in the price or value of any class or series of the shares of the Corporation (any of the foregoing, “Short Interests”), (5) any rights to dividends on the shares of the Corporation owned beneficially by such shareholder, any such beneficial owner or any of their associated parties that are separated or separable from the underlying shares of the Corporation, (6) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership, limited liability company, or similar entity in which such shareholder, any such beneficial owner or any of their associated parties is a general partner, manager or managing member or, directly or indirectly, beneficially owns an interest in the general partner, manager or managing member of such general or limited partnership, limited liability company or similar entity, (7) any performance-related fees (other than an asset-based fee) that such shareholder, any such beneficial owner or any of their associated parties is entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, including without limitation any such interests held by immediate family members of such shareholder, any such beneficial owner or any sharing the same household, (8) any significant equity interests or any Derivative Instruments or Short Interests in any principal competitor of the Corporation held by such shareholder, the beneficial owner, if any, or any of their associated parties, (9) any direct or indirect interest of such shareholder, the beneficial owner, if any, or any of their associated parties in any contract with the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), (10) any direct or indirect material legal, economic or financial interest of such shareholder, any such beneficial owner or any of their associated parties in the outcome of any vote to be taken at the annual or special meeting of shareholders of the Corporation with respect to which the notice delivered under this Section 5 of these Bylaws relates, and (11) any other agreement, arrangement or understanding, whether or not such instrument or the rights conferred thereby are subject to settlement in underlying shares of capital stock of the Corporation, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the
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voting power of, such shareholder, any such beneficial owner or any of their associated parties, with respect to securities of the Corporation, (C) any other information relating to such shareholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act , and the rules and regulations promulgated thereunder, (D) a description of all agreements, arrangements and understandings (whether written or oral) with respect to the nomination or proposal between or among such shareholder, such beneficial owner, if any, or any of their associated parties, including, in the case of a nomination, any nominee, his or her respective affiliates and associates, and any others acting in concert with any of the foregoing, and (E) a written representation whether the shareholder, the beneficial owner, if any, or any of their associated parties intends or is part of a group which intends (1) to solicit proxies or votes in support of any proposed nominee in accordance with Rule 14a-19 promulgated under the Exchange Act, (2) with respect to any proposed business other than the nomination of one or more directors that the shareholder proposes to bring before the meeting, to deliver at its own cost a proxy statement or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal, or (3) otherwise to solicit proxies or votes from shareholders in support of any such proposal or nominees;
(ii)if the notice relates to any business other than a nomination of a director or directors that the shareholder proposes to bring before the meeting, set forth (A) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest of such shareholder, any such beneficial owner or any of their associated parties in such business, and (B) the text of any resolutions proposed for consideration and, if applicable, the text of any proposed additions, amendments or other changes to any document governing the internal affairs of the Corporation;
(iii)set forth, as to each person, if any, whom the shareholder proposes to nominate for election or reelection to the Board of Directors (A) all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder (including such person’s written consent to being named in any proxy statement (and form of proxy relating to the meeting at which Directors are to be elected) as a nominee and to serving as a Director if elected) and (B) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such shareholder and beneficial owner, if any, or any of their
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associated parties, on the one hand, and each proposed nominee, his or her respective affiliates and associates, or any others acting in concert with any of the foregoing, on the other hand, including without limitation all information that would be required to be disclosed pursuant to Item 404 of Regulation S-K promulgated under the federal securities laws if the shareholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, any affiliate or associate thereof or any other person acting in concert with any of the foregoing were the “registrant” for purposes of such item and the nominee were a director or executive officer of such registrant;
(iv)with respect to each nominee for election or reelection to the Board of Directors, include both a completed and duly executed questionnaire and a duly executed agreement, each as required by Section 5.4(d) of this Bylaw; and
(v)be corrected, updated, supplemented or recertified if and to the extent required under Section 5.4(f) of this Bylaw.
(d)Notwithstanding anything to the contrary in these Bylaws, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder with respect to the matters set forth in these Bylaws, and, unless otherwise required by law, (i) no shareholder providing notice of a nomination shall solicit proxies in support of director nominees other than the Corporation's nominees unless such shareholder has complied with Rule 14a-19 under the Exchange Act in connection with the solicitation of such proxies, including the provision to the Corporation of notices required thereunder in a timely manner, and (ii) if any such shareholder (A) provides notice pursuant to Rule 14a-19(b) under the Exchange Act and (B) fails to comply with the requirements of these Bylaws or either Rule 14a-19(a)(2) or Rule 14a-19(a)(3) under the Exchange Act, including the provision to the Corporation of any related notices required under Rule 14a-19 in a timely manner, or fails to timely provide reasonable evidence as determined by the Corporation sufficient to satisfy the Corporation that such shareholder has met the requirements of Rule 14a-19(a)(3) in accordance with the following sentence, then the Corporation shall disregard the nomination of each such proposed nominee, even if the Corporation has received proxies or votes for the shareholder’s nominees. If any shareholder provides notice pursuant to Rule 14a-19(b), such shareholder shall deliver to the Corporation, no later than five business days prior to the applicable meeting, reasonable evidence that it has met the requirements of Rule 14a-19.
5.2Special Meetings of Shareholders.
(a)At any special meeting of the shareholders duly convened in accordance with these Bylaws, only such business shall be conducted or considered as shall have been properly brought before the meeting pursuant to the Corporation’s notice of meeting. To be properly brought before a special meeting, proposals must be (i) specified in the Corporation’s notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors or any duly authorized committee thereof or furnished in accordance with La. R.S. 12:1-702 (or any successor provision) and Article VI(B) of the Articles of Incorporation or (ii) otherwise properly brought before the special meeting by or at the direction of the Board of Directors or any duly authorized committee thereof.
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(b)If the Board of Directors has determined that directors shall be elected at a special shareholder meeting, nominations of persons for election to the Board of Directors may be made at such special meeting of shareholders (i) by or at the direction of the Board of Directors or any duly authorized committee thereof or (ii) by any shareholder of the Corporation who (A) was a shareholder of record at the time of giving of notice provided for in this Bylaw and through the time of the special meeting, (B) is entitled to vote at the special meeting, and (C) timely furnishes a notice to the Corporation that contains all of the information required under, and is otherwise provided in full accordance with, Section 5.2(c) of this Bylaw.
(c)Subject to Section 5.4(c) of this Bylaw, in the event the Corporation calls a special meeting of shareholders for the purpose of electing one or more directors to the Board of Directors, any shareholder meeting the qualifications described in Section 5.2(b) of this Bylaw may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the shareholder’s notice required by Section 5.1(c) of this Bylaw with respect to any nomination (including the completed and signed questionnaire, representation and agreement required by Section 5.4(d) of this Bylaw) shall be delivered to the Secretary of the Corporation at the principal executive office of the Corporation not earlier than the close of business on the 120th day prior to the date of such special meeting and not later than the close of business on the later of the 90th day prior to the date of such special meeting or, if the first public announcement of the date of such special meeting is less than 100 days prior to the date of such special meeting, the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.
5.3Proxy Access Rights.
(a)Whenever the Corporation solicits proxies with respect to an election of directors at an annual meeting, the Corporation shall, subject to the terms and conditions of this Section 5.3, (i) include in its proxy statement for the annual meeting the name, together with the Required Information (as defined below), of any person nominated for election (each such person being hereinafter referred to as a “Shareholder Nominee”) to the Board of Directors by a shareholder that satisfies, or by a group of no more than ten shareholders that satisfy, the requirements of this Section 5.3 (such individual or group, including as the context requires each member thereof, being hereinafter referred to as the “Eligible Shareholder”) and all applicable laws, and who expressly elects at the time of providing the notice required by Section 5.3(g) of this Bylaw to have its nominee or nominees included in the Corporation’s proxy materials pursuant to this Section 5.3 and (ii) permit the Corporation’s shareholders to vote upon each such Shareholder Nominee, in addition to individuals nominated by the Board of Directors, in connection with such meeting. Such notice shall consist of a copy of Schedule 14N duly filed with the U.S. Securities and Exchange Commission in accordance with Rule 14a-18 promulgated under the Exchange Act and the information required to be delivered to the Corporation by this Section 5.3 (all such information collectively being hereinafter referred to as the “Section 5.3 Notice”), and such notice shall be delivered to the Corporation in accordance with the procedures and during the time period set forth in Section 5.3(g) of this Bylaw.
(b)For purposes of Section 5.3(a) of this Bylaw, the “Required Information” that the Corporation will include in its proxy statement is (i) the information concerning the Shareholder Nominee and the Eligible Shareholder that is required to be disclosed in the Corporation’s proxy statement by the regulations promulgated under the Exchange Act, by these Bylaws, by the Articles of Incorporation or by the Listing Standards (as
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defined below); and (ii) if the Eligible Shareholder so elects, a Statement (as defined below).
(c)The number of Shareholder Nominees (including Shareholder Nominees that were submitted by an Eligible Shareholder for inclusion in the Corporation’s proxy materials pursuant to this Section 5.3 but either are subsequently withdrawn or that the Board of Directors decides to nominate as Board of Director nominees) appearing in the Corporation’s proxy materials with respect to an annual meeting shall not exceed 20% of the number of directors in office as of the last day on which a Section 5.3 Notice of a nomination may be timely delivered pursuant to Section 5.3(g) of this Bylaw, or if such amount is not a whole number, the closest whole number below 20%. If for any reason one or more vacancies occur on the Board of Directors after the date referred to in the prior sentence but before the date of the annual meeting and the Board of Directors elects to reduce the size of the Board of Directors in connection therewith, the maximum number of Shareholder Nominees eligible for inclusion in the Corporation’s proxy materials pursuant to this Section 5.3 shall be calculated based on the number of directors in office as so reduced. In the event that the number of Shareholder Nominees submitted by Eligible Shareholders pursuant to this Section 5.3 exceeds this maximum number, each Eligible Shareholder will select one Shareholder Nominee for inclusion in the Corporation’s proxy materials until the maximum number is reached, selecting in order from the largest to the smallest of such shareholders based upon the number of shares of common stock of the Corporation each Eligible Shareholder disclosed as owned in the Section 5.3 Notice submitted to the Corporation hereunder. If the maximum number is not reached after each Eligible Shareholder has selected one Shareholder Nominee, this selection process will continue as many times as necessary, following the same order each time, until the maximum number is reached.
(d)In order to make a nomination pursuant to this Section 5.3, an Eligible Shareholder must have owned (as defined below) 3% or more of the Corporation’s outstanding common stock continuously for at least three years (the “Required Shares”) as of both the date the Section 5.3 Notice of the nomination is furnished in accordance with Section 5.3(g) of this Bylaw and the record date for determining shareholders entitled to vote at the annual meeting, and must continue to own the Required Shares through the applicable meeting date. To be in proper form and effective for purposes of this Section 5.3, a Section 5.3 Notice furnished to the Secretary of the Corporation must:
(i)set forth one or more written statements from the record holder of the shares (and from each intermediary through which the shares are or have been held during the requisite three-year holding period) verifying that, as of a date within seven calendar days prior to the date the Section 5.3 Notice is furnished, the Eligible Shareholder owns, and has owned continuously for the preceding three years, the Required Shares, and the Eligible Shareholder’s agreement to provide, within three business days after the record date for the annual meeting, written statements from the record holder and such intermediaries verifying the Eligible Shareholder’s continuous ownership of the Required Shares through the record date, along with a written statement that the Eligible Shareholder will continue to hold the Required Shares through the applicable meeting date and intends to continue to hold the Required Shares for at least one additional year thereafter;
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(ii)set forth the information required to be included in a shareholder’s notice of nomination pursuant to Section 5.1(c) of this Bylaw (excluding item (ii) thereof), together with the written consent of each Shareholder Nominee to be named in the Corporation’s proxy materials as a nominee and to serving as a Director if elected;
(iii)include a written representation (in the form provided by the Secretary of the Corporation upon written request) that the Eligible Shareholder (A) acquired the Required Shares in the ordinary course of business and not with the intent to change or influence control at the Corporation, and that neither the Eligible Shareholder nor the Shareholder Nominee or Shareholder Nominees being nominated thereby presently has such intent, (B) has not nominated and will not nominate for election to the Board of Directors at the annual meeting any person other than the Shareholder Nominee or Shareholder Nominees being nominated pursuant to this Section 5.3, (C) has not violated the proxy solicitation rules promulgated under the Exchange Act directly or indirectly in connection with furnishing, or preparing to furnish, the Section 5.3 Notice, (D) has not engaged and will not engage in, and has not and will not be a “participant” in another person’s “solicitation” within the meaning of Rule 14a-1(1) promulgated under the Exchange Act in support of the election of any individual as a Director at the annual meeting other than its Shareholder Nominee or Shareholder Nominees or a nominee of the Board of Directors, (E) will not distribute to any shareholder any form of proxy for the annual meeting other than the form distributed by the Corporation, and (F) has provided and will continue to provide information in connection with the nomination hereunder that is or will be true, correct and complete in all material respects, and does not and will not omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were or will be made, not misleading;
(iv)include a written undertaking (in the form provided by the Secretary of the Corporation upon written request) that the Eligible Shareholder agrees to (A) assume all liability stemming from any legal or regulatory violation arising out of the communications with shareholders of the Corporation by the Eligible Shareholder, its affiliates and associates, or their respective agents or representatives, either before or after the furnishing of the Section 5.3 Notice, or out of the information that the Eligible Shareholder has provided or will provide to the Corporation or filed or to be filed with the U.S. Securities and Exchange Commission, including an agreement to indemnify the Corporation and its agents and representatives in respect of any such liabilities, (B) comply with all other laws and regulations applicable to any solicitation in connection with the annual meeting, including without limitation Rule 14a-9 and Rule 14a-18 promulgated under the Exchange Act, and (C) provide to the Corporation promptly, and in no event more than five business days after it has been requested, such additional information as requested pursuant to this Section 5.3 or any other subsection of this Section 5 of these Bylaws; and
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(v)be corrected, updated, supplemented or recertified if and to the extent required under Section 5.4(f) of this Bylaw.
(e)Notwithstanding anything in these Bylaws to the contrary, the Corporation shall not be required to include, pursuant to this Section 5.3, any nominee information in its proxy materials (i) with respect to any meeting of shareholders for which the Secretary of the Corporation receives a notice that the Eligible Shareholder or any other shareholder of the Corporation has nominated one or more persons for election to the Board of Directors pursuant to the advance notice requirements set forth in Section 5.1 of this Bylaw, (ii) concerning any Shareholder Nominee who (A) is not independent under the Independence Standards (as defined below in Section 5.4(d) of this Bylaw), as determined in good faith by the Board of Directors or one or more of its committees, (B) provides any information to the Corporation or its shareholders required or requested pursuant to any subsection of this Section 5 of these Bylaws that is not accurate, truthful and complete in all material respects, or that otherwise contravenes any of the agreements or representations made by the Shareholder Nominee in connection with the nomination, (C) has been an officer or director of a competitor, as defined in Section 8 of the Clayton Antitrust Act of 1914, within the past three years, (D) is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses) or has been convicted in such a criminal proceeding within the past ten years or (E) is subject to any order of the type specified in Rule 506(d) of Regulation D promulgated under the Securities Act of 1933, as amended, or (iii) with respect to any request of any Eligible Shareholder who (A) provides any information to the Corporation or its shareholders required or requested pursuant to any subsection of this Section 5 of these Bylaws that is not accurate, truthful and complete in all material respects or (B) otherwise fails, or nominates any Shareholder Nominee who fails, to comply with its obligations pursuant to any subsection of this Section 5 of these Bylaws.
(f)The Eligible Shareholder may, at its option, provide to the Secretary of the Corporation, at the time the information required by this Section 5.3 is provided, a written statement for inclusion in the Corporation’s proxy statement for the annual meeting, not to exceed 500 words, in support of the Shareholder Nominee’s candidacy (the “Statement”). Notwithstanding anything to the contrary contained in this Section 5.3, the Corporation may omit from its proxy materials any information or Statement that it, in good faith, believes is materially false or misleading, omits to state any material fact, or would violate any applicable law or regulation.
(g)Notwithstanding the procedures set forth in Section 5.1 or 5.2 of this Bylaw, any Section 5.3 Notice, to be timely under this Section 5.3, must be received by the Secretary of the Corporation at the principal executive office of the Corporation within the time period applicable to notices of shareholder proposals made at annual meetings pursuant to Rule 14a-8 promulgated under the Exchange Act.
(h)For purposes of this Section 5.3, an Eligible Shareholder shall be deemed to “own” only those outstanding shares of common stock of the Corporation as to which the shareholder possesses both (i) the full voting and investment rights pertaining to the shares and (ii) the full economic interest in (including the opportunity for profit and risk of loss on) such shares; provided that the number of shares calculated in accordance with clauses (i) and (ii) shall not include any shares (x) sold by such shareholder or any of its affiliates in any transaction that has not been settled or closed, (y) borrowed by such shareholder or any of its affiliates for any purposes or purchased by such shareholder or any of its affiliates pursuant to an agreement to resell or (z) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar agreement
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entered into by such shareholder or any of its affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of shares of outstanding common stock of the Corporation, if, in any such case, such instrument or agreement has, or is intended to have, the purpose or effect of (1) reducing in any manner, to any extent or at any time in the future, such shareholder’s or affiliates’ full right to vote or direct the voting of any such shares or (2) hedging, offsetting or altering to any degree gain or loss arising from the full economic ownership of such shares by such shareholder or affiliate. For purposes of this Section 5.3, a shareholder shall “own” shares held in the name of a nominee or other intermediary so long as the shareholder retains the right to instruct how the shares are voted with respect to the election of directors and possesses the full economic interest in the shares. A shareholder’s ownership of shares shall be deemed to continue during any period in which the shareholder has delegated any voting power by means of a proxy, power of attorney or other instrument or arrangement which is revocable at any time by the shareholder. The terms “owned,” “owning” and other variations of the word “own” shall have correlative meanings. Whether outstanding shares of the common stock of the Corporation are “owned” for these purposes shall be determined in good faith by the Board of Directors.
(i)Whenever the Eligible Shareholder consists of a group of more than one shareholder, each provision in this Section 5.3 that requires the Eligible Shareholder to provide any written statements, representations, undertakings, agreements or other instruments or to meet any other conditions shall be deemed to require each shareholder that is a member of such group to provide such statements, representations, undertakings, agreements or other instruments and to meet such other conditions. No person may be a member of more than one group of persons constituting an Eligible Shareholder with respect to any annual meeting.
(j)Any Shareholder Nominee who is included in the Corporation’s proxy materials for a particular annual meeting of shareholders but either (i) withdraws from or becomes ineligible or unavailable for election at the annual meeting or (ii) does not receive at least 25% of the votes cast in favor of the Shareholder Nominee’s election will be ineligible to be a Shareholder Nominee pursuant to this Section 5.3 for the next two annual meetings.
(k)Except for a nomination made in accordance with Rule 14a-19 of the Exchange Act, this Section 5.3 provides the exclusive method for shareholders (including any beneficial owner) to include nominees for Director in the Corporation’s proxy materials.
5.4Other Related Provisions.
(a)Subject to Section 5.4(c) of this Bylaw, only such persons who are nominated in accordance with the procedures set forth in this Section 5 of these Bylaws shall be eligible to be elected at a meeting of shareholders to serve as Directors and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 5 of these Bylaws. Except as otherwise provided by law, the Articles of Incorporation or these Bylaws, the Chairman of the meeting shall have the power and duty (i) to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 5 of these Bylaws (including without limitation whether (A) the shareholder or beneficial owner, if any, on whose behalf the nomination or proposal is made solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies or
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votes in support of such shareholder’s nominee or proposal in compliance with such shareholder’s representation furnished pursuant to Section 5.1(c)(i)(E) of this Bylaw and (B) such shareholder, any such beneficial owner, and any such nominee has duly and timely furnished all information or agreements required to be furnished under this Section 5 of these Bylaws and complied with all undertakings, representations or commitments associated therewith) and (ii) if any proposed nomination or business is not in compliance with this Section 5 of these Bylaws, to declare that such defective proposal or nomination shall be disregarded, notwithstanding that proxies in respect of such vote may have been received by the Corporation.
(b)Notwithstanding the foregoing provisions of this Section 5 of these Bylaws, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder with respect to the matters set forth in this Section 5; provided, however, that any references in these Bylaws to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit the requirements applicable to nominations or proposals as to any other business to be considered pursuant to Section 5.1(a)(iii), Section 5.2(b)(ii) or Section 5.3 of this Bylaw.
(c)Except for proposals properly made in accordance with Rule 14a-8 promulgated under the Exchange Act and included in the notice of meeting duly given by or at the direction of the Board of Directors or any duly authorized committee thereof under this Section 5 of these Bylaws, compliance with Section 5.1(a)(iii), Section 5.2(b)(ii) and Section 5.3 shall be the exclusive means for a shareholder to bring matters before an annual meeting of shareholders or a special meeting of shareholders, respectively. Nothing in this Bylaw shall be deemed to affect any rights (i) of shareholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of Preferred Stock if and to the extent provided for under law, the Articles of Incorporation or these Bylaws. Except as otherwise expressly provided to the contrary in Rule 14a-8 or Rule 14a-19 promulgated under the Exchange Act or Section 5.3 of this Bylaw, nothing in these Bylaws shall be construed to permit any shareholder, or give any shareholder the right, to include or have disseminated or described in the Company’s proxy materials any director nominations or any other proposal.
(d)To be eligible to be a nominee for election or reelection as a Director of the Corporation, a person nominated by any shareholder must deliver (in accordance with the time periods prescribed for delivery of notice under the applicable subsection of this Section 5 of these Bylaws) to the Secretary of the Corporation at the principal executive office of the Corporation a fully completed and duly executed questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary of the Corporation upon written request) and a duly executed agreement (in the form provided by the Secretary of the Corporation upon written request) that such person (i) is not and will not become a party to (A) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a Director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been fully disclosed in writing to the Board of Directors or (B) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a Director of the Corporation, with such person’s fiduciary duties under applicable Louisiana law, (ii) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with
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such person’s candidacy, service or action as a Director that has not been fully disclosed in writing to the Board of Directors, (iii) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a Director of the Corporation, and will comply with all applicable publicly-disclosed corporate governance, conflict of interest, ethics, confidentiality, stock ownership and trading policies and guidelines of the Corporation, (iv) acknowledges that, if elected as a Director of the Corporation, such person will owe a fiduciary duty, under applicable Louisiana law, to the Corporation and its shareholders, (v) represents that all of the information that such person has provided and will provide is or will be true, correct and complete in all material respects, and does not and will not omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were or will be made, not misleading, (vi) meets, and will continue to meet, all qualifications to serve as a Director of the Corporation specified in Section 11 of Article II of these Bylaws or Article IV(F) of the Articles of Incorporation, and is otherwise in all respects eligible, and will continue to be eligible, to serve as a Director without contravening any of the additional qualifications established in Section 5.3(e)(ii) of this Bylaw and without causing the Corporation to be in violation of these Bylaws, the Articles of Incorporation, the Listing Standards (as defined below), or any other applicable state or federal law or regulation and (vii) will abide by the requirements of Section 8.3 of Article IV of these Bylaws. The Corporation may require any proposed nominee to furnish such other information (i) as may reasonably be requested by the Corporation to determine whether the Director would be independent under the Listing Standards, any applicable rules of the U.S. Securities and Exchange Commission, or any publicly-disclosed standards used by the Board of Directors in determining and disclosing the independence of the Corporation’s Directors (collectively, the “Independence Standards”), (ii) that could be material to a reasonable shareholder’s understanding of the independence, or lack thereof, of such nominee or (iii) that may reasonably be required to determine the eligibility of such nominee to serve as a Director of the Corporation.
(e)The right of any shareholder to make any nominations or proposals under any subsection of this Section 5 of these Bylaws is subject to the condition that the shareholder of record deliver (in accordance with the time limits prescribed for delivery of notice under the applicable subsection of this Section 5 of these Bylaws) to the Secretary of the Corporation at the principal executive office of the Corporation a written representation that either such record shareholder or the beneficial owner, if any, on whose behalf the nomination or proposal is being made intends to attend the applicable meeting of shareholders to address any questions regarding the nomination or proposal and, in the event of any nomination or proposal made pursuant to Section 5.1 or 5.2 of this Bylaw, to propose such action at the meeting and a written acknowledgement that, if such shareholder does not appear to present such proposed business at such meeting, the Corporation need not present such proposed business for a vote at such meeting notwithstanding that proxies in respect of such vote may have been received by the Corporation.
(f)Any notice or information furnished under any subsection of this Section 5 of these Bylaws (including any statement of intentions contained therein) shall be promptly corrected if the party furnishing it becomes aware of a material error, deficiency or change in circumstances. In addition, any party providing any notice or information under any subsection of Section 5 of these Bylaws must deliver to the Secretary of the Corporation at the principal executive office of the Corporation, not later than three business days after the record date for the meeting and three business days after the date that is ten business days prior to the meeting or any adjournment or postponement thereof, (A) any such written updates and supplements necessary to ensure
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that the notice or information previously provided or required to be provided shall be true and correct as of both such dates or (B) a written certification that no such updates or supplements are necessary and that the notice or information previously provided remains true and correct as of both such dates. Notwithstanding the foregoing, no update or supplement (including any notification as to a change in a shareholder’s intent to solicit proxies contemplated by Section 5) shall cure or affect (i) the accuracy (or inaccuracy) of any representations made by shareholder, any such beneficial owner or any of their associated parties or nominees or (ii) the validity (or invalidity) of any nomination or proposal that failed to comply with or is rendered invalid under this Section 5 or any other applicable provision of these Bylaws.
(g)For purposes of this Section 5 of these Bylaws, (i) “affiliate” and “associate” shall each have the respective meanings ascribed to them in Rule 405 promulgated under the Securities Act of 1933, as amended (including, when such terms are used in reference to any particular entity, all entities or natural persons that control such particular entity); provided, however, that with respect to any investment company (as defined in the Investment Company Act of 1940, as amended, whether or not exempt from registration thereunder), “affiliate” shall also include all other investment companies managed by the same investment adviser or any of its affiliates, (ii) “group” shall have the meaning ascribed to it in rules adopted by the U.S. Securities and Exchange Commission interpreting various provisions under Section 13 of the Exchange Act, (iii) “public announcement” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the U.S. Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder, and (iv) “Listing Standards” shall mean the rules and listing standards of the principal U.S. securities exchange upon which the Corporation’s common stock is listed. For purposes of this Section 5 of these Bylaws, any reference to delivery of notices or other written instruments to the Secretary of the Corporation at the principal office of the Corporation shall require such notice or other written instrument to be delivered by registered or certified mail, postage prepaid, to the Secretary at such office.
(h)In no event shall any adjournment, rescheduling or postponement of an annual or special meeting (including through a judicial stay) or the announcement thereof commence a new time period (or extend any time period) for the giving of any notice required under any subsection of this Section 5 of these Bylaws. In no event shall a shareholder be permitted to (i) change any person nominated to serve as a Director under any subsection of this Section 5 of these Bylaws after the end of the last day of the applicable notice period, even if the proposed nominee dies, is incapacitated, is disqualified for any reason (including failure to meet or to continue to meet any requirements imposed under any subsection of this Section 5 of these Bylaws), resigns or is otherwise unwilling or unable to serve for any other reason or (ii) nominate a number of nominees for election at an annual or special meeting of shareholders that exceeds the number of Directors to be elected at such annual or special meeting of shareholders.
(i)The Board of Directors or a committee thereof may adopt such rules or guidelines for applying the provisions of this Section 5 of these Bylaws as it determines are appropriate. To be considered duly furnished or delivered hereunder, any notice, undertaking, questionnaire, agreement or other instrument required to be provided under any subsection of this Section 5 of these Bylaws must (i) not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (ii) otherwise be furnished or delivered in a form reasonably satisfactory to the Board of Directors or one or more of its committees.
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Section 6.Quorum.
6.1 Establishment of Quorum.
(a)Except as otherwise provided by law, at all meetings of shareholders the presence, in person or by proxy, of the holders of a majority of the Total Voting Power shall constitute a quorum to organize the meeting. For purposes of determining the existence of a quorum to organize the meeting, shares of Voting Stock as to which the holders have voted or abstained from voting with respect to any matter considered at a meeting, or which are subject to Non-Votes (as defined in Section 6.3 below), shall be counted as present.
(b)With respect to each matter to be acted upon at any duly organized meeting of shareholders, the presence, in person or by proxy, of the holders of a majority of the Total Voting Power entitled to be cast on the matter shall constitute a quorum for action on that matter; provided, however, that this subsection shall not have the effect of reducing the vote required to approve any matter that may be established by law, the Articles of Incorporation or these Bylaws.
6.2Withdrawal. If a quorum is present or represented for purposes of organizing a duly convened meeting, such meeting may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum, or the refusal of any shareholders present to vote.
6.3Non-Votes. As used in these Bylaws, “Non-Votes” shall mean the number of votes as to which the record holder or proxy holder of shares of Capital Stock has been precluded from voting thereon (whether by law, by regulations of the Securities and Exchange Commission, by rules, bylaws or listing standards of any national securities exchange or other self-regulatory organization, or otherwise), including without limitation votes as to which brokers may not or do not exercise discretionary voting power under the rules of the New York Stock Exchange.
Section 7.Voting Power Present or Cast.
For purposes of determining the amount of Total Voting Power present or represented or the amount of Total Voting Power actually cast at any annual or special meeting of shareholders with respect to voting on any particular matter, shares as to which the holders have abstained from voting, and shares which are subject to Non-Votes, will not be treated as present, represented or cast.
Section 8.Voting Requirements.
8.1General Voting Standard. If a quorum exists under Section 6.1(b), action on any matter, other than the election of directors, brought to the shareholders for their consideration, adoption or consent will be approved if the votes cast favoring the action exceed the votes cast opposing the action, unless the question is one upon which, by express provision of law, the Articles of Incorporation or Subsection 8.2 below, a different vote is required, in which case such express provision shall govern and control the decision of such question.
8.2Majority Director Election Standard. Subject to the rights of the holders of any series of preferred stock and except as otherwise required by law or the Articles of Incorporation, each director to be elected by the shareholders must receive a majority of the votes cast with respect to the election of that director at any meeting for the election of directors at which a
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quorum is present, provided that if the number of nominees exceeds the number of directors to be elected in a contested election, the directors will be elected by a plurality of the shares represented in person or by proxy at the meeting and entitled to vote on the election of directors. For purposes of this section, (i) a “majority of votes cast” means that the number of votes cast “for” a director’s election exceeds the number of votes cast as “withheld” or “against” with respect to that director’s election and (ii) a “contested election” means that the number of persons properly nominated to serve as directors of the Corporation exceeds the number of directors to be elected.
8.3Resignation Offers. If a director nominee who is an incumbent director is not elected and no successor has been elected at the same meeting, the director must submit to the Board of Directors promptly after the certification of the election results a letter offering to resign from the Board of Directors (a “Resignation Offer”). The Nominating and Corporate Governance Committee will consider the Resignation Offer and will make a recommendation to the Board of Directors whether to accept the Resignation Offer, reject the Resignation Offer or take other action. The Board of Directors, taking into account the Nominating and Corporate Governance Committee’s recommendation and any other factors they deem relevant, will act on each Resignation Offer within 90 days from the date of the certification of the election results and will disclose promptly in a Form 8-K Report filed with the Securities and Exchange Commission its decision and the rationale therefor.
Section 9.Proxies.
9.1Execution of Proxies. At any meeting of the shareholders, every shareholder having the right to vote shall be entitled to vote in person or by proxy appointed by an instrument in writing subscribed by such shareholder and bearing a date not more than 11 months prior to the meeting, unless the instrument provides for a longer period. The person appointed as proxy need not be a shareholder of the Corporation. Any shareholder directly or indirectly soliciting proxies from other shareholders must use a proxy card color other than white, which is reserved for the exclusive use by the Board of Directors.
9.2Electronically Transmitted Proxies. A shareholder may authorize another person or persons to act for him as proxy by delivering or authorizing the delivery of any form of electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or similar agent duly authorized by the person who will be the holder of the proxy to receive such transmission; provided, however, that any such electronic transmission shall be submitted with information from which the Corporation may determine that the electronic transmission was authorized by the shareholder. If it is determined that such electronic transmissions are valid, the inspectors or other persons making that determination shall specify the information upon which they relied.
Section 10.Postponements, Adjournments, or Cancellations of Meetings.
10.1Postponements and Adjournments of Meetings. In accordance with the provisions of applicable law, the Board of Directors, acting by resolution, may postpone and reschedule any previously scheduled meeting of shareholders, whether annual or special. In addition, any meeting of shareholders, whether annual or special, may be adjourned from time to time either by the chairman of the meeting or by the shareholders upon attaining the vote specified in Section 8.1 of this Article IV. When a meeting is adjourned to another time or place, if any, notice need not be given of the adjourned meeting if the time and place, if any, thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 45 days or if after the adjournment a new record date is fixed
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for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting.
10.2Cancellations of Special Meetings. Unless provided otherwise by law or the Articles of Incorporation, any special meeting of the shareholders may be canceled, by resolution of the Board of Directors upon public notice given prior to the date previously scheduled for such special meeting or as otherwise permitted by the LBCA.
10.3Lack of Quorum. If a meeting cannot be organized because a quorum has not attended, those present may adjourn the meeting to such time and place as they may determine, subject, however, to the provisions of Section 10.1 hereof. In the case of any meeting called for the election of Directors, those who attend the second of such adjourned meetings, although less than a quorum as fixed in Section 6.1 of this Article, shall nevertheless constitute a quorum for the purpose of electing Directors.
Section 11.Written Consents.
Any action required or permitted to be taken at any annual or special meeting of shareholders may be taken only upon the vote of the shareholders, present in person or represented by duly authorized proxy, at an annual or special meeting duly noticed and called, as provided in these Bylaws, and may not be taken by a written consent of the shareholders pursuant to the LBCA.
Section 12.List of Shareholders.
In connection with every meeting of shareholders, a list of shareholders entitled to vote, arranged alphabetically and showing the number and class of shares held by each shareholder on the record date for the meeting, shall be produced for inspection on the request of any shareholder on the terms and conditions specified under the LBCA.
Section 13.Procedure at Shareholders’ Meetings.
13.1Presiding Officers. At every meeting of the shareholders the presiding chairman shall be the Chairman of the Board of Directors or, in the event of his or her absence or disability, the Chief Executive Officer or, in the event of his or her absence or disability, a chairman chosen by resolution of the Board of Directors. The Secretary or, in the event of his or her absence or disability, any Assistant Secretary or, in the absence of both, an appointee of the presiding chairman, shall act as secretary of the meeting.
13.2Conduct of Meeting. The Board of Directors may make such rules or regulations for the conduct of meetings of shareholders as it shall deem necessary, appropriate or convenient. Subject to any such rules and regulations, the chairman presiding at any meeting shall have the right and authority to prescribe rules, regulations and procedures for such meeting and to take all such actions as in the judgment of the chairman are appropriate for the proper conduct of such meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting, either of which may be changed at any meeting at which a quorum is present by the vote of the shareholders specified in Section 8.1 of this Article IV; (ii) rules and procedures for maintaining order at the meeting or the safety of those present; (iii) rules and procedures relating to the casting of ballots or the tabulation of voting at the meeting; (iv) limitations on attendance at or participation in the meeting, provided such limitations do not violate any applicable law; (v) restrictions on entry to the meeting after
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the commencement thereof; (vi) rules and procedures on who may address the meeting and when and how they may do so, including limitations on the time allotted to questions or comments of any particular participant or by all participants as a group and limitations on the matters that may be raised by participants; and (vii) other similar rules, procedures, limitations or restrictions designed to enhance the efficiency, productivity or civility of the meeting. The presiding chairman may interpret and apply any such rules, regulations, procedures, limitations or restrictions as he or she sees fit under the circumstances, in addition to changing the order of business at the meeting or making any other determinations that he or she deems appropriate for the proper conduct of the meeting. Unless and to the extent determined by the Board of Directors or the presiding chairman, meetings of shareholders shall not be required to be held in accordance with the rules of parliamentary procedure.
13.3Inspectors of Election. In connection with each meeting of shareholders, either the Board or the Chairman may appoint one or more inspectors, who need not be shareholders and who may be employees of the Corporation, to act at the meeting or any adjournment thereof and make a written report thereof. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his or her ability. The inspectors shall ascertain the number of shares outstanding and the voting power of each, determine the shares represented at the meeting and the validity of proxies and ballots, count all votes, determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and certify to the Corporation their determination of the number of shares represented at the meeting, and their count of all votes.
ARTICLE V.
CERTIFICATES OF STOCK
CERTIFICATES OF STOCK
Any certificates of stock issued by the Corporation shall be numbered, shall be entered into the books of the Corporation as they are issued, and shall be signed in the manner required by law by any two officers of the Corporation. The Corporation may elect to issue uncertificated shares of stock.
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ARTICLE VI.
REGISTERED SHAREHOLDERS
REGISTERED SHAREHOLDERS
Section 1.Record Date. For the purpose of determining shareholders entitled to notice of and to vote at a meeting, or to receive a dividend, or to receive or exercise subscription or other rights, or to participate in a reclassification of stock, or in order to make a determination of shareholders for any other proper purpose, the Board may fix in advance a record date for determination of shareholders for such purpose, such date to be not more than 70 days prior to the meeting or the date on which the action requiring the determination of shareholder is to be taken.
Section 2.Registered Shareholders. Except as otherwise provided by law, the Corporation, and its directors, officers, employees and agents may recognize and treat a person registered on the Corporation's records as the owner of shares, as the owner in fact thereof for all purposes, and as the person exclusively entitled to have and to exercise all rights and privileges incident to the ownership of such shares, and rights under this Section 2 shall not be affected by any actual or constructive notice that the Corporation, or any of its directors, officers, employees or agents, may have to the contrary.
ARTICLE VII.
LOSS OF CERTIFICATE
LOSS OF CERTIFICATE
Any person claiming a certificate of stock to be lost or destroyed shall make an affidavit or affirmation of that fact, and the Board of Directors, the General Counsel or the Secretary may, in his or its discretion, require the owner of the lost of destroyed certificate or his legal representative, to give the Corporation a bond, in such sum as the Board of Directors, the General Counsel or the Secretary may require, to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss or destruction of any such certificate. A new certificate of the same tenor and for the same number of shares as the one alleged to be lost or destroyed, may be issued without requiring any bond when, in the judgment of the Board of Directors, the General Counsel or the Secretary, it is proper to do so.
ARTICLE VIII.
CHECKS
CHECKS
All checks, drafts and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors or the executive officers may from time to time designate.
ARTICLE IX.
DIVIDENDS
DIVIDENDS
Dividends upon the capital stock of the Corporation, subject to the provisions of the Articles of Incorporation, if any, may be declared by the Board of Directors at any regular or special meetings, pursuant to law.
33
ARTICLE X.
NOTICES; DEFINITIONS; OTHER PROVISIONS
NOTICES; DEFINITIONS; OTHER PROVISIONS
Section 1.Form of Delivery. Except as otherwise provided in Section 2 or 3 of Article II, of these Bylaws, whenever under the provisions of law, the Articles of Incorporation or these Bylaws notice is required to be given to any shareholder or director, it shall not be construed to mean personal notice unless otherwise specifically provided by law, the Articles of Incorporation or these Bylaws, but such notice may be given by United States mail or through a recognized commercial overnight courier service, addressed to such shareholder or director at his address as it appears on the records of the Corporation, with postage or delivery fees thereon prepaid. Such notices shall be deemed to have been given at the time they are deposited in the United States mail or with such courier service.
Section 2.Waiver. Whenever any notice is required to be given by law, the Articles of Incorporation or these Bylaws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent thereto. In addition, notice shall be deemed to have been given to, or waived by, any shareholder or director who attends a meeting of shareholders or directors in person, or is represented at such meeting by proxy, unless such shareholder or director timely objects to the transaction of any business at the meeting in the manner required by the LBCA.
Section 3.Certain Definitions. The terms Capital Stock, Continuing Directors, Total Voting Power and Voting Stock shall have the meanings ascribed to them in the Articles of Incorporation; provided, however, that for purposes of Sections 3 and 6.1(a) of Article IV of these Bylaws, Total Voting Power shall mean the total number of votes that holders of Capital Stock are entitled to cast generally in the election of Directors. All references herein to the Articles of Incorporation shall mean, as of any particular date, the Corporation’s Articles of Incorporation, as amended or restated through such date. All references herein to the LBCA shall mean, as of any particular date, the Louisiana Business Corporation Act of 2014, as amended or restated through such date, or any successor statute. Any references herein to votes or other actions required by “law” shall mean statutory laws or regulations applicable to the Corporation. Any reference to any particular committee of the Board of Directors in existence on the date of these Bylaws shall mean such committee and any successor committee exercising substantially similar powers and responsibilities. All pronouns and variations thereof used in these Bylaws shall be deemed to refer to the masculine, feminine or neuter gender, singular or plural, as the identity of the person, persons, entity or entities referred to require.
Section 4.Certain Actions by the Board. To the extent any provision of Section 1, 2 or 3 of Article IV of these Bylaws requires the Board to take action in connection with calling an annual or special meeting of the shareholders or Section 1 of Article VI of these Bylaws permits the Board to fix a record date in connection with any such meeting, then such action may be authorized by either (i) an executive officer of the Corporation, provided such authorization is duly ratified by the Board prior to the convening of such meeting, or (ii) the Board.
Section 5.Signatures. To the extent the Articles of Incorporation or these Bylaws permit or require the Corporation or any of its Directors, officers or other representatives to execute an instrument, such instrument may be executed electronically to the maximum extent permitted by Louisiana law.
ARTICLE XI.
AMENDMENTS
AMENDMENTS
These Bylaws may only be altered, amended or repealed in the manner specified in the Articles of Incorporation.
* * * * *
•Amended in their entirety - May 23, 1995
34
•Amended Article I, Section I, Subsection 1.1(L), added new Subsection 1.1(O), and amended Subsection 1.2 - October 7, 1996
•Amended Article III, Section 1.1(B), Section 1 by adding new Subsection 1.3, Sections 3 and 4 amended in their entirety - November 21, 1996
•Amended Article I, Section I by adding, deleting, revising or renumbering various paragraphs of Subsection 1.1 and by revising Subsection 1.2 - October 7, 1998
•Amended Article I, Section 1 by adding or renumbering various paragraphs of Subsection 1.1 and by revising Subsection 1.2, and amended Article IV, Section 5, Subsections 5.2 and 5.7 in their entirety - November 19, 1998
•Amended Article I, Section I by adding Subsection 1.1(G), amending Subsection 1.2 and renumbering subsections - August 24, 1999
•Amended Article III, Section 1.1(D) - November 18, 1999
•Amended Article III in its entirety - February 25, 2003
•Amended Article I, Section 1.1(A, B and P) and Article II, Section 3.1 - August 26, 2003
•Amended Article I, Section 1.1 (A, B, D, G, H and N) and Section 1.2, added new Article I, Section 3, and amended Article II, Sections 2, 3.1, 3.2 and 10, Article III, Sections 1.1 and 5, Article IV, Sections 3, 6.1 and 13, Article V and Article VIII – July 1, 2009
•Amended Article IV, Section 8 by revising Subsection 8.1 and adding Subsections 8.2 and 8.3 – April 7, 2010
•Amended cover page and table of contents to reflect name change – November 4, 2010
•Amended Article I by revising Section 1.1 and deleting Section 3, and amended Article II, Section 2 and 11, Article III, Sections 3 and 5, Article IV, Sections 5, 10 and 13, and Articles V, X and XI – February 21, 2014
•Amended Article IV, Section 5, by adding new Subsection 5.3 and amending Subsections 5.1(a), 5.4(b) and 5.4(c) – effective as of May 28, 2014
•Amended Article I through IV, VI, X and XI in connection with the revision of Louisiana’s statutory corporate law – effective as of February 24, 2016
•Amended Article III, Section 1, primarily to update the description of committees – August 24, 2017
•Amended cover page to reflect name change, amended Articles I, II, III and IV to simplify and modernize their provisions and amended Article X principally by adding new Sections 4 and 5 – January 22, 2021
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•Amended Article II, Section 11, and Article IV, Sections 5 and 9.1 – May 17, 2023
•Amended Article IV, Sections 10.1 and 13.2 – February 18, 2026
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Exhibit 10.1
LUMEN EXECUTIVE SEVERANCE PLAN
Effective As Of October 22, 2026
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Exhibit 10.1
TABLE OF CONTENTS
Page
ARTICLE I PURPOSE OF THE PLAN 1
ARTICLE III ELIGIBILITY FOR SEVERANCE BENEFITS 11
ARTICLE V TIMING OF PAYMENT AND LIMITATION ON BENEFITS 16
ARTICLE VII PLAN ADMINISTRATION 22
ARTICLE IX CLAIMS PROCEDURES 25
ARTICLE XI GENERAL PLAN INFORMATION 30
EXHIBIT A PARTICIPATION AGREEMENT A-1
ARTICLE I
PURPOSE OF THE PLAN
Section 1.01 Purpose of the Plan. Lumen Technologies, Inc. (“Lumen”) has established the Lumen Executive Severance Plan, effective as of October 22, 2026 (the “Plan”), to provide severance benefits for the Company’s senior executives (excluding the Company’s chief executive officer) upon a Non-CIC Termination or a CIC Termination, as each term is defined herein, who otherwise satisfy the terms and conditions of the Plan. The Plan is intended to be an unfunded “top hat” plan under Sections 201(2), 301(a)(3) and Section 401(a)(1) of ERISA.
The Plan is administered by the Plan Administrator, with benefits provided in accordance with the provisions of this Plan document.
The legal rights and obligations of any individual shall be determined solely by the provisions of the Plan, as interpreted by the Plan Administrator in the exercise of its sole and absolute discretion, including whether an individual shall be an Eligible Employee. Nothing in the Plan shall be construed to give any individual or Employee any right to continue in the employment of the Company or a Subsidiary or Affiliate of the Company.
Section 1.02 Application of the Plan. The Plan supersedes any other plan, policy, program, or arrangement, including, but not limited to, benefits payable under the Lumen Severance Plan (known as the Lumen Executive Severance Plan prior to October 22, 2026), and provides
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Exhibit 10.1
severance benefits in the event of (i) a Non-CIC Termination of an Eligible Employee and (ii) a CIC Termination of an Eligible Employee that occurs on and after October 22, 2026 (the “Effective Date”). Notwithstanding any other provision hereof, there is intended to be no duplication of severance benefits to an Eligible Employee. If an Eligible Employee has any vested rights under another severance or change in control plan, policy, arrangement or contract for severance benefits following termination of employment, the amount of such benefits an Eligible Employee becomes entitled to shall be offset against any amounts owing under the Plan.
Section 1.03 Gender and Number.
Whenever used herein, the masculine pronoun shall include the feminine and the singular shall encompass the plural, and vice versa.
ARTICLE II
DEFINITIONS
The following words and phrases, when the initial letter of the term is capitalized, will have the meanings set forth in this Article II, unless a different meaning is plainly required by the context:
“Affiliate” (and variants thereof) means a person or entity that controls, or is controlled by, or is under common control with, another specified person or entity, either directly or indirectly.
“Base Salary” means an Eligible Employee’s annual rate of base pay, as reflected in the Company’s payroll or personnel records, in effect as of the Employee’s Termination Date.
“Board” means the Board of Directors of the Company.
“Cash Severance Benefit” means the Severance Benefit paid under Section 4.01 or 4.02 of the Plan.
“Cause” means
(a)prior to a Change in Control, the Employee’s: (i) failure to substantially comply with supervisor directives; (ii) willful misconduct; (iii) conduct that violates the Company’s ethics and compliance programs and policies, including its Code of Conduct, insider trading policies, policy against harassment, discrimination and retaliation and policy against the abuse of drugs and alcohol in the workplace; (iv) conduct that is injurious to the Company’s reputation, customer relationships, employees or finances; (v) act(s) that, if proven in a court of law, would constitute a felony, (vi) act(s) of dishonesty, fraud or moral turpitude; (vii) participation in the reporting of any information by the Company to the SEC that was impacted or influenced by the Employee’s knowing or intentional fraudulent or illegal conduct; or (viii) willful action that causes a material restatement of the Company’s financials. The Plan Administrator, in its sole discretion, shall determine whether the elements of Cause have been met, including whether the
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Exhibit 10.1
facts and circumstances indicate that the Employee’s actions constitute a violation of the Company’s ethics and compliance program and/or are injurious to the Company.
(b)On or after a Change in Control, the Employee’s (i) willful breach of the covenants under Article VI of the Plan; (ii) conviction of, or plea of guilty or nolo contendere to, a felony or other crime involving dishonesty or moral turpitude; (iii) workplace conduct resulting in the payment of civil monetary penalties or the incurrence of civil non-monetary penalties that will materially restrict or prevent the Employee from discharging the Employee’s obligations to the Company; (iv) habitual intoxication during working hours or habitual abuse of or addiction to a controlled substance; (v) material breach of the Company’s ethics and compliance programs and policies, insider trading policies, or any other Board-adopted policies applicable to management conduct; (vi) participation in the public reporting of any information contained in any report filed by the Company with the SEC that was impacted by the Employee’s knowing or intentional fraudulent or illegal conduct; or (vii) substantial, willful and repeated failure to perform duties as instructed by or on behalf of the Board in writing. The Employee’s employment shall not be deemed terminated for Cause unless the Company shall have delivered to the Employee a termination notice with a copy of a resolution adopted by the affirmative vote of not less than three-quarters of the entire Board at a meeting called partly or wholly for such purpose (after reasonable notice is provided to the Employee and the Employee has had an opportunity, with counsel, to be heard by the Board) finding that the Employee should be terminated for Cause and specifying in reasonable detail the grounds therefor. No action or inaction shall be deemed the basis for Cause unless the Employee is terminated therefor prior to the first anniversary of the date on which such action or omission is first known to the CEO.
“CEO” means the Chief Executive Officer of the Company as designated by the Board.
“Change in Control” means:
(a)the acquisition by any Person of Beneficial Ownership of 30% or more of the outstanding shares of the Company’s Common Stock, no par value per share (the “Common Stock”), or 30% or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors; provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change in Control
(i)any acquisition (other than a Business Combination which constitutes a Change in Control under subsection (c) below) of Common Stock directly from the Company;
(ii)any acquisition of Common Stock by the Company or its subsidiaries;
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Exhibit 10.1
(iii)any acquisition of Common Stock by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or
(iv)any acquisition of Common Stock by any entity pursuant to a Business Combination that does not constitute a Change in Control subsection (c) below; or
(b)individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board shall be considered a member of the Incumbent Board, unless such individual’s initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board; or
(c)consummation of a reorganization, share exchange, merger or consolidation (including any such transaction involving any direct or indirect subsidiary of the Company), or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”); provided, however, that in no such case shall any such transaction constitute a Change in Control if immediately following such Business Combination,
(i)the individuals and entities who were the Beneficial Owners of the Company’s outstanding Common Stock and the Company’s voting securities entitled to vote generally in the election of directors immediately prior to such Business Combination have direct or indirect Beneficial Ownership, respectively, of more than 50% of the then outstanding shares of Common Stock, and more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, of the Post-Transaction Company, and
(ii)except to the extent that such ownership existed prior to the Business Combination, no Person (excluding the Post-Transaction Company and any employee benefit plan or related trust of the Company, the Post-Transaction Company or any subsidiary of either corporation) Beneficially Owns, directly or indirectly, 20% or more of the then outstanding shares of common stock of the corporation resulting from such Business Combination or 20% or more of the combined voting power of the then outstanding voting securities of such corporation, and
(iii)at least a majority of the members of the board of directors of the Post-Transaction Company were members of the Incumbent Board at the time
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Exhibit 10.1
of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
(d)approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, in the event the Plan Administrator determines any amount payable in connection with a Change in Control constitutes deferred compensation subject to Section 409A of the Code, such Change in Control must also constitute a “change in control event” within the meaning of Section 409A of the Code.
For purposes of this definition of a Change in Control:
(1)“Beneficial Owner” (and variants thereof), with respect to a security, means a Person (as defined in subsection (2) below) who, directly or indirectly (through any contract, understanding, relationship or otherwise), has or shares (i) the power to vote, or direct the voting of, the security, or (ii) the power to dispose of, or direct the disposition of, the security.
(2)“Person” means a natural person or entity, and shall also mean the group or syndicate created when two or more Persons act as a syndicate or other group (including, without limitation, a partnership or limited partnership) for the purpose of acquiring, holding, or disposing of a security, except that “Person” shall not include an underwriter temporarily holding a security pursuant to an offering of the security.
“CIC Cash Severance Benefit” means an amount equal to two times the sum of the Eligible Employee’s (i) Base Salary as of the Termination Date and (ii) the average annual bonus earned for the completed three fiscal years immediately preceding the year of Termination (or, if less, the number of completed fiscal years immediately preceding the year of CIC Termination).
“CIC Good Reason Resignation” means any of the following events or conditions that occur during the Protective Period, but only if the Eligible Employee shall have provided written notice to the Company within 90 days of the initial existence or occurrence of such event or condition following a Change in Control and the Company shall have failed to cure such event or condition within 30-day Cure Period (as defined below) following receipt of such notice:
(a)Any failure of the Company to provide the Eligible Employee with a position, authority, duties and responsibilities at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 180-day period immediately preceding the Change in Control. The Eligible Employee’s position, authority, duties and responsibilities after a Change in Control shall not be considered commensurate in all material respects with the Eligible Employee’s position, authority, duties and responsibilities prior to a Change in Control unless after the Change in Control the Employee holds an equivalent position with, and exercises substantially equivalent authority, duties and responsibilities on behalf of, either the Post-Transaction Company or the Company.
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Exhibit 10.1
(b)The assignment to the Employee of any duties inconsistent in any material respect with the Employee’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any other action that results in a diminution in any material respect in such position, authority, duties or responsibilities.
(c)A reduction of the Employee’s Base Salary or Targeted Bonus Opportunity in effect as of the date of the Change in Control without the Eligible Employee’s consent.
(d)Any change or action by the Company or its Affiliates that is a failure in any material respect to comply with any of the provisions of the Plan.
(e)The relocation of the Eligible Employee’s principal work location such that (i) the driving distance from the work location of the new position to the current position held immediately prior to the change in job location is more than 35 miles and (ii) the increase in commuting distance from the Employee’s current home location to the Employer’s location (comparing current position location against the new position location) is more than 35 miles. If an Eligible Employee’s current position or new position is classified as “work at home” (i.e., with no assigned office at a Company facility), then the Employee’s home address will be deemed the Employee’s work location.
Notwithstanding the foregoing, the written notice of resignation shall not constitute a CIC Good Reason Resignation if the Company fully corrects the circumstances which gave rise to the Employee’s claim that there has been a CIC Good Reason Resignation within 30 days following receipt of written notice from the Eligible Employee (the “30-day Cure Period”). If the Company does not fully correct the circumstances that gave rise to the CIC Good Reason Resignation within the 30-day Cure Period, the Eligible Employee’s resignation shall be deemed to be a CIC Good Reason Resignation as long as the Eligible Employee terminates no later than two years following the expiration of the 30-day Cure Period or the Company’s notice that it does not intend to cure, whichever is earlier. For the avoidance of doubt, reference to the Company includes a Post-Transaction Company for purposes of a CIC Good Reason Resignation.
“CIC Termination” means an Involuntary Termination or CIC Good Reason Resignation during the Protective Period.
“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as codified in Code Section 4980B and Part 6 of Title I of ERISA and as amended by subsequent legislation.
“COBRA Subsidy Period” means (a) if the Eligible Employee incurs a Non-CIC Termination, 12 months and (b) if the Eligible Employee incurs a CIC Termination, 24 months.
“Code” means the Internal Revenue Code of 1986, as amended, and regulations thereunder.
“Committee” means the Human Resources and Compensation Committee of the Board.
“Company” means Lumen Technologies, Inc. and any successor to or assignee of (whether direct or indirect, by purchase, share exchange, merger, consolidation or otherwise) all or
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Exhibit 10.1
substantially all of the assets or business of the Company that assumes the Plan by operation of law or otherwise.
“Comparable Position” means a position offered by the Company or by another entity (e.g., an entity providing services to or purchasing assets from the Company) in connection with a reduction in headcount, an outsourcing to a vendor, a reorganization impacting two or more distinct business groups, a sale of distinct business groups, or a merger or acquisition other than a Change in Control, that is not a Non-Comparable Position.
“Effective Date” means October 22, 2026.
“Eligible Employee” means an Employee who (a) is (i) a Senior Vice-President or Executive Vice-President reporting directly to the CEO, (ii) an officer of the Company, other than the CEO, designated on an annual or other periodic basis as a Section 16 Officer of the Company, or (iii) an officer of the Company, other than the CEO, designated by the Committee as a Senior Officer (as such term is defined in such Committee’s charter) and (b) has entered into a Participation Agreement with the Company. The foregoing notwithstanding, an Employee who is otherwise an “Eligible Employee” shall not be eligible for Severance Benefits under the Plan if the Employee has signed and not revoked a binding contract or is covered by the provisions of a different severance plan or is a party to an individual employee agreement with the Company (including its predecessors) or a Subsidiary or Affiliate of the Company providing for severance benefits upon the Employee’s Termination.
“Employee” means an individual who is employed by the Company or a Subsidiary or Affiliate of the Company within the United States as a full-time salaried employee and excludes any individual who is working for the Company or a Subsidiary or Affiliate of the Company through a temporary service or on a leased basis or as an independent contractor or consultant.
“Equity Plan” means the Amended and Restated 2024 Equity Incentive Plan of Lumen Technologies, Inc. or a successor equity plan.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and regulations thereunder.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Involuntary Termination” means the Termination of an Eligible Employee’s employment by the Company (or Post-Transaction Company) for any reason other than Cause, Permanent Disability or death.
“Non-CIC Cash Severance Benefit” means an amount equal to 52 weeks of Total Targeted Cash Compensation.
“Non-CIC Good Reason Resignation” means that an Eligible Employee’s written notice to the Company, delivered within seven (7) calendar days of the offer to the Employee of a Non-Comparable Position, declining such offer and resigning employment as provided herein. The written notice of resignation shall not constitute a Non-CIC Good Reason Resignation if the
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Exhibit 10.1
Company fully corrects the event or circumstances giving rise to the Non-CIC Good Reason Resignation within the 30-day Cure Period (as defined in the definition of “CIC Good Reason Resignation”). If the Company does not fully correct the event or circumstances that gave rise to the Non-CIC Good Reason Resignation within the 30-day Cure Period, the Eligible Employee’s resignation shall be deemed to be a Non-CIC Good Reason Resignation as long as the Eligible Employee terminates no later than two years following the expiration of the 30-day Cure Period or the Company’s notice that it does not intend to cure, whichever is earlier.
“Non-CIC Termination” means an Involuntary Termination prior to a Change in Control or a Non-CIC Good Reason Resignation.
“Non-Comparable Position” means a position offered by the Company or by another entity (e.g., one providing services to or purchasing assets from the Company) in connection with a reduction in headcount, an outsourcing to a vendor, a reorganization impacting two or more distinct business groups, a sale of distinct business groups, or a merger or acquisition other than a Change in Control, and either of the following clause (a) or (b) applies:
(a)a relocation of the Eligible Employee’s principal work location such that (i) the driving distance from the work location of the new position to the current position held immediately prior to the change in job location is more than 35 miles and (ii) the increase in commuting distance from the Employee’s current home location to the Employee’s work location (comparing current position location against the new position location) is more than 35 miles. If an Eligible Employee’s current position or new position is classified as “work at home” (i.e., with no assigned office at a Company facility), then the Employee’s home address will be deemed the Employee’s work location.
(b)Total Targeted Cash Compensation is less than 90% of the Eligible Employee’s current Total Targeted Cash Compensation.
“Participation Agreement” means the written agreement and consent of an Eligible Employee to participate in the Plan, in the form attached to the Plan as Exhibit A, which includes the Eligible Employee’s acknowledgement of the Employee’s restrictive covenants, as applicable, with which all Eligible Employees must abide to be eligible to receive Severance Benefits under the Plan, which must be signed and returned to the Plan Administrator within thirty (30) days of receipt of the agreement.
“Permanent Disability” means a condition that would entitle the Eligible Employee to receive benefits under the long-term disability plan or policy applicable to the Company’s officers at the time because the Eligible Employee is totally disabled or partially disabled, as such terms are defined in the plan or policy then in effect. If the Company has no long-term disability plan in effect, a Permanent Disability shall occur if (i) the Eligible Employee is rendered incapable because of physical or mental illness of satisfactorily discharging the Employee’s duties and responsibilities to the Company for a period of 90 consecutive days, (ii) a duly qualified physician chosen by the Company and acceptable to the Employee or the Employee’s legal representatives so certifies in writing, and (iii) the Board determines that the Eligible Employee has become disabled.
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Exhibit 10.1
“Plan” means the Lumen Executive Severance Plan, as set forth herein and as it may be amended from time to time.
“Plan Administrator” means the Committee or another duly constituted committee of members of the Board, or any person to whom the Plan Administrator has delegated any authority or responsibility with respect to the Plan pursuant to Article VII of the Plan, but only to the extent of such delegation.
“Post-Transaction Company” means, unless a Change in Control results from a Business Combination (as defined in subsection (c) of the Change in Control definition), the Company after consummation of a Change in Control. If a Change in Control results from a Business Combination, then Post-Transaction Company means the corporation or other entity resulting from the Business Combination unless, as a result of such Business Combination, an ultimate parent entity controls such resulting entity, the Company or all or substantially all of the Company’s assets either directly or indirectly, in which case Post-Transaction Company means such ultimate parent entity.
“Protective Period” means the period commencing 3 months prior to the consummation date of a Change in Control and ending on the 24-month anniversary of the consummation date of the Change in Control.
“SEC” means the U.S. Securities and Exchange Commission.
“Separation and Release Agreement” means the agreement, in the form approved by the Company, in its sole discretion, required to be executed (without revocation) by the Eligible Employee as a condition to receive Non-CIC Termination Severance Benefits under the Plan, which includes among other terms a general release of the Company, its Affiliates and Subsidiaries (including the Subsidiary or Affiliate that employs the Employee), and other released parties from claims or causes of action through the date of signing and, as applicable, confidentiality, non-solicitation and other restrictive covenants. For the avoidance of doubt, the Separation and Release Agreement is required to receive CIC Termination Severance Benefits.
“Severance Benefits” means the severance amounts and benefits set forth in Article IV of the Plan.
“Severance Period” means 52 weeks.
“STI Program” means the Lumen Short-Term Incentive Plan-Annual or successor annual bonus plan or program of the Company.
“Subsidiary” means a U.S.-based entity in which the Company owns a majority economic or voting stake.
“Targeted Bonus Opportunity” means the targeted annual incentive opportunity under the Company’s STI Program.
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Exhibit 10.1
“Termination” or “Terminated” means a separation from service with the Company as defined in Treasury Regulation § 1.409A-1(h).
“Termination Date” means the date on which the active employment of the Eligible Employee is severed by reason of an Involuntary Termination, Voluntary Resignation, CIC Good Reason Resignation, Non-CIC Good Reason Resignation or Termination for Cause.
“Total Targeted Cash Compensation” means the Eligible Employee’s annual rate of Base Salary in effect on a specified date plus the Eligible Employee’s Targeted Bonus Opportunity.
“Voluntary Resignation” means any Termination by the Employee that is not by the Company other than Non-CIC Good Reason Resignation or CIC Good Reason Resignation.
ARTICLE III
ELIGIBILITY FOR SEVERANCE BENEFITS
Section 3.01 Eligibility.
(a)Eligibility for, and receipt of, any Severance Benefits under the Plan are expressly conditioned on the Eligible Employee’s
(i)if a Non-CIC Termination, execution of a Separation and Release Agreement without revocation within the time period specified in Section 5.01 and compliance with all the terms and conditions of the Separation and Release; and
(ii)compliance with all the terms and conditions of the restrictive covenants set forth in Article VI.
(b)If the Plan Administrator determines that the Eligible Employee has not fully complied with any of the terms of the Plan or, if applicable, the Separation and Release Agreement, the Plan Administrator, acting on behalf of the Company, may deny Severance Benefits not yet paid or discontinue the payment of the Eligible Employee’s Severance Benefits and may require the Eligible Employee to repay any portion of any Severance Benefits already received under the Plan, by providing written notice of such repayment obligation to the Eligible Employee. If the Plan Administrator notifies an Eligible Employee that repayment of all or any portion of the Severance Benefits received under the Plan is required, such amounts shall be repaid within 30 calendar days of the date the written notice is sent. Any remedy under this subsection (b) shall be in addition to, and not in place of, any other remedy, including injunctive relief, that the Company may pursue.
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Exhibit 10.1
ARTICLE IV
SEVERANCE BENEFITS
Section 4.01 Non-CIC Termination Cash Severance Benefit. An Eligible Employee who incurs a Non-CIC Termination shall, subject to the terms and conditions of the Plan and contingent upon the Eligible Employee timely executing a Separation and Release Agreement (without revocation), receive the Non-CIC Cash Severance Benefit paid in accordance with Article V.
Section 4.02 CIC Termination Cash Severance Benefit. An Eligible Employee who incurs a CIC Termination shall, subject to the terms and conditions of the Plan, receive the CIC Cash Severance Benefit, paid in accordance with Article V. The foregoing notwithstanding, if the Eligible Employee has a deferral election in effect with respect to any percentage of the annual bonus which would otherwise become payable with respect to the fiscal year in which termination occurs, then the CIC Cash Severance Benefit shall be reduced by an amount equal to the deferred amount which reduction amount shall be deferred in accordance with such election.
Section 4.03 Additional Severance Benefits. An Eligible Employee who incurs a Non-CIC Termination or a CIC Termination will receive the following additional Severance Benefits, subject to the terms of the Plan and, if a Non-CIC Termination, contingent upon the Eligible Employee timely executing a Separation and Release (without revocation):
(a)Employee Benefits. Medical (including prescription drug), vision and dental benefits for the Eligible Employee and the Eligible Employee’s dependents, if enrolled in the Company’s Health Care Plan at the time of Termination, will continue through the last day of the month in which the Termination occurs. Eligibility for life insurance coverage and short-term disability coverage and benefits end on the Termination Date; provided, however, in accordance with applicable laws and the respective plan documents, notice of any rights to continue, convert, or obtain replacement coverage will be provided to Eligible Employees.
(b)COBRA Continuation Coverage. Eligible Employees, and if applicable, their dependents, who participate in the Company’s Health Care Plan may elect under COBRA to continue coverage for a monthly charge beyond the date coverage would otherwise terminate, subject to the provisions of the applicable plans and COBRA (“COBRA Continuation Coverage”). Employees who wish to enroll in COBRA Continuation Coverage must return the COBRA enrollment forms within 60 days from receipt of the COBRA notification by the Company. Eligible Employees who elect COBRA Continuation Coverage following a Non-CIC Termination or a CIC Termination will be eligible for subsidized COBRA payments (“COBRA Subsidy”) during the COBRA Subsidy Period. The COBRA Subsidy means that the Eligible Employee will pay the same premium contribution rate for medical/prescription, vision and dental coverage during the COBRA Subsidy Period. The COBRA Subsidy will terminate upon the earliest of: (i) the date the
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Exhibit 10.1
Eligible Employee discontinues COBRA Continuation Coverage or otherwise becomes ineligible for COBRA Continuation Coverage, (ii) the date the Eligible Employee is eligible to enroll (regardless of whether the Eligible Employee actually enrolls) in medical coverage sponsored by a subsequent employer of the Eligible Employee, or (iii) the date the COBRA Subsidy Period expires. Notwithstanding the foregoing, if (1) any plan pursuant to which COBRA Continuation Coverage is provided is not, or ceases prior to the expiration of the continuation coverage period to be, exempt from the application of Code Section 409A under Treasury Regulation Section 1.409A-1(a)(5), (2) the Company is otherwise unable to continue to cover the Eligible Employee or the Eligible Employee’s dependents under its group health plans, or (3) the Company cannot provide COBRA Continuation Coverage without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then, in any such case, an amount equal to each remaining COBRA Subsidy shall thereafter be paid to the Eligible Employee in substantially equal monthly installments over the COBRA Subsidy Period (or remaining portion thereof). Following the expiration of the COBRA Subsidy Period, if the Eligible Employee is eligible to continue healthcare coverage in accordance with COBRA, such coverage will be at the Eligible Employee’s expense.
(c)Annual Bonus.
(i)Payment in Lieu of STI Program Payment for Non-CIC-Termination. If during the year of Termination the Eligible Employee who incurs a Non-CIC Termination has at least three (3) months of consecutive employment, in lieu of the annual incentive bonus that may be payable under the STI Program, the Company will pay the Eligible Employee, a lump sum cash payment (subject to withholding) equal to the Eligible Employee’s last applicable Targeted Bonus Opportunity for the year of Termination prorated for the portion of the year the Eligible Employee is employed from January 1 of the Termination year through the Eligible Employee’s Termination Date, adjusted by the Corporate Performance Factor (as defined in the STI Program), capped at 100%, multiplied by 0.90, to be paid following the Determination and Approval Period as defined in the STI Program. In addition, if the Company has not paid an Eligible Employee (or deferred in accordance with any effective deferral election by the Employee) the annual bonus earned under the STI Program for the completed fiscal year ending immediately prior to the fiscal year of a non-CIC Termination, the Eligible Employee will be paid the determined bonus amount in a lump sum cash payment (subject to withholding) at the same time as the Company pays the STI Program bonuses to active Employees participating in the STI Program in accordance with the terms of the STI Program.
(ii)Payment of STI Program Payment for CIC Termination. If the Termination of the Eligible Employee is a CIC Termination, then the Company shall pay to the Eligible Employee in a lump sum cash payment, as promptly as practicable but in no event later than sixty (60) days following the CIC Termination date, a pro rata annual performance bonus for the year of Termination. The
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Exhibit 10.1
prorated bonus shall be equal to the annual bonus the Eligible Employee would have earned under the STI Program for the entire fiscal year in which the Termination occurs, determined by the Board or the Committee (as applicable) in good faith based on performance results excluding the effects of the Change in Control (including without limitation excluding the effects of any non-recurring transaction costs or any changes in overhead, interest, tax, intercompany or other expenses arising out of such transaction), multiplied by a fraction, the numerator of which is the number of days elapsed in the fiscal year through the CIC Termination date and the denominator of which is 365, subject to any deferral election in effect for such fiscal year as provided in Section 4.02. If the applicable bonus performance period is shorter than a fiscal year, the foregoing provisions shall be applied by substituting the applicable performance period and number of days.
(d)Annual Bonus Payable Earned But Not Paid for Fiscal Year Prior to CIC Termination. If the Company has not paid an Eligible Employee (or deferred in accordance with any effective deferral election by the Employee) the annual bonus earned under the STI Program for the completed fiscal year ending immediately prior to the fiscal year of a CIC Termination, then the Company will pay the Eligible Employee a lump sum cash payment (subject to withholding) within five business days of the CIC Termination date, but in no event after the 15th day of the third month following the end of the fiscal year in which the CIC Termination occurs, equal to: (i) the amount determined by the Board or the Committee (as applicable), but not paid as of the CIC Termination date, or (ii) if not so determined, the greater of (x) the average of the annual bonuses paid to the Eligible Employee for the three fiscal years immediately preceding the year in which the Change in Control occurs (or, if less, the number of completed fiscal years preceding the year of CIC Termination) or (y) the annual bonus amount the Eligible Employee would have earned under the STI Program for such completed fiscal year, with deemed achievement of 100% for any applicable subjective goals or criteria, subject to any deferral election in effect for such fiscal year as provided in Section 4.02. Any payment under this subsection (d) calculated by reference to prior or target bonus amounts shall be payable notwithstanding any provision to the contrary set forth in the STI Program.
(e)Retirement Plans. The provisions of any applicable qualified and/or nonqualified defined contribution plan maintained by the Company pursuant to which the Eligible Employee participates shall control with respect to any recognition of service during the Severance Period and the eligibility for benefits before, during and after the Severance Period.
(f)Equity. The provisions of the Equity Plan and equity award agreements for any outstanding equity awards shall control with respect to the treatment of the Eligible Employee’s outstanding equity grants as of the Eligible Employee’s Termination Date.
(g)Outplacement Assistance. The Company, at its cost, shall provide to the Eligible Employee outplacement assistance by a reputable firm specializing in such services. Such assistance shall comply with the requirements of the duration rules of
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Exhibit 10.1
Treasury Regulation § 1.409A-1(b)(9)(v)(A). Any failure to execute a Separation and Release Agreement following a Non-CIC Termination within the time period set forth in Section 5.01 will result in the forfeiture of the Severance Benefits (if any), contingent upon execution of a Separation and Release Agreement (without revocation).
Section 4.04 Voluntary Resignation; Termination for Death or Permanent Disability. If the Eligible Employee’s employment terminates on account of the Eligible Employee’s (a) Voluntary Resignation, (b) death, or (c) Permanent Disability, then the Eligible Employee shall not be entitled to receive Severance Benefits under the Plan and shall be entitled only to those benefits (if any) as may be available under the Company’s Equity Plans and equity award agreements, other separation or severance plans, policies, or arrangements, and any other employee health, welfare, retirement or benefit plan.
Section 4.05 Termination for Cause; Subsequently Discovered Cause or Breach. If the Company terminates the Eligible Employee’s employment for Cause, the Eligible Employee shall not be entitled to receive Severance Benefits under the Plan. Notwithstanding any other provision of the Plan to the contrary, if the Plan Administrator determines at any time within two (2) years following an Employee’s Termination Date that the Eligible Employee engaged in conduct that constitutes Cause at any time prior to such Employee’s Termination Date, any Severance Benefits payable to the Eligible Employee shall immediately cease, and the Employee shall be required to return promptly upon notice from the Company any Severance Benefits paid to the Eligible Employee prior to such determination. Likewise, if the Plan Administrator determines at any time within two (2) years following an Eligible Employee’s Termination Date that the Employee has breached any covenant in Article VI of the Plan, any Severance Benefits payable to the Employee shall immediately cease and the Employee shall be required to return promptly upon notice from the Company any Severance Benefits paid to the Employee prior to such determination. The Company may, in its sole discretion, withhold paying Severance Benefits under the Plan pending resolution of an inquiry that could lead to a determination that Cause exists or that the Eligible Employee breached the covenants of Article VI.
Section 4.06 Deductions from Severance Benefits. The Plan Administrator reserves the right to make deductions in accordance with applicable law for any monies owed to the Company or a Subsidiary or Affiliate of the Company by the Eligible Employee or the value of Company property that the Eligible Employee has retained in the Employee’s possession, e.g., if an Employee (a) retained a company laptop or other property or (b) used a Company corporate credit card for unauthorized personal purchases. To the extent applicable, any such deduction from Severance Benefits shall be made in compliance with Code Section 409A. To the maximum extent allowed by applicable law, Eligible Employees are deemed, by their participation in the Plan and, if applicable, execution of a Separation and Release Agreement (which is a pre-condition to receipt of Non-CIC Termination Severance Benefits hereunder), to have consented in writing to such deductions.
Section 4.07 Repayment of Severance Benefits upon Subsequent Rehire. Employees rehired by the Company before the expiration of the period covered by their Severance Benefit will be required to repay all or part of the Severance Benefit upon rehire. The “Repayment Percentage” is obtained by dividing the number of days remaining in the Severance Period (i.e., the total
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Exhibit 10.1
number of days included in the Severance Benefit calculation minus the number of prior days in reduction in force status) by the total number of days included in the Severance Benefit calculation. The amount to be repaid is equal to the total Severance Benefit multiplied by the Repayment Percentage.
ARTICLE V
TIMING OF PAYMENT AND LIMITATION ON BENEFITS
Section 5.01 Timing and Method of Payment.
(a)Non-CIC Cash Severance Benefits. Except as otherwise provided in this Article, a Non-CIC Cash Severance Benefit shall be paid periodically, in prorated installments on a bi-weekly basis in accordance with the Company’s normal payroll cycle, less withholding for all applicable federal, state and local taxes and other applicable withholdings and deductions, over the Eligible Employee’s Severance Period. The first installment (including any retroactive installments) shall begin no later than 90 days after the Eligible Employee’s Termination Date, subject to the Eligible Employee’s execution of a Separation and Release Agreement and, if applicable, the expiration of any revocation period for such Separation and Release Agreement within such 90-day period.
(b)CIC Cash Severance Benefit. Except as otherwise provided in this Article, a CIC Severance Benefit shall be paid in a single lump sum cash payment, less withholding for all applicable federal, state and local taxes and other applicable withholdings and deductions, no later than 5 business days after the Eligible Employee’s Termination Date.
(c)General Rules. In the event of the Eligible Employee’s death after the Eligible Employee becomes entitled to Severance Benefits under the Plan, but prior to full payment of all Severance Benefits due to such Eligible Employee, any remaining Severance Benefits due to the Eligible Employee under Section 4.01 or Section 4.02 shall be paid to the Eligible Employee’s estate in a lump sum payment within 90 days following written notification of the Eligible Employee’s death. Interest will not be credited on any unpaid Severance Benefit due to an Eligible Employee. Payment(s) shall be made by direct deposit or by mailing to the last address provided by the Eligible Employee to the Company or such other reasonable method as determined by the Plan Administrator.
(d)Six-Month Delay for Specified Employees. To the extent that any portion of the Severance Benefit is subject to Code Section 409A, (i) the payment of that portion of the Severance Benefits shall be designed and administered to comply with Code Section 409A and the Treasury Regulations thereunder, and (ii) notwithstanding anything in the Plan to the contrary concerning the time of payment of that portion of the Severance Benefit, if the Employee is a “specified employee,” as defined in Treasury Regulation Section 1.409A-1(i) on the date of the Employee’s “separation from service”, as described in Code Section 409A, then to the extent any portion of such payment is paid
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Exhibit 10.1
upon or as a result of the Employee’s “separation from service” such amount shall be accumulated and not paid until the date that is six (6) months after the date of the Employee’s “separation from service” (or, if earlier than the end of the six (6) month period, the Employee’s date of death). Such accumulated amounts shall be paid in a single lump sum payment on such delayed payment date.
(e)Application of Code Section 409A. To the extent that the Company determines that any compensation or benefit payable under the Plan constitutes nonqualified deferred compensation within the meaning of Code Section 409A and the Treasury Regulations thereunder, the Plan, with respect to such compensation or benefit, will be construed and interpreted to comply with the requirements of Code Section 409A and the Treasury Regulations thereunder or one or more applicable exceptions thereto, in accordance with the statutory provisions of Code Section 409A and the Treasury Regulations and other interpretive guidance issued thereunder. Notwithstanding any provision of the Plan to the contrary:
(i)No Guaranty of Tax Liability. In no event does the Company guarantee any particular tax consequences, outcome or tax liability to Eligible Employees. No provision of the Plan shall be interpreted or construed to transfer any liability for failure to comply with the requirements of Code Section 409A from an Eligible Employee or any other individual to the Company.
(ii)Additional Actions Permitted. In the event the Company determines that any compensation or benefit payable hereunder may be subject to Code Section 409A, the Company (without any obligation to do so or obligation to indemnify any Eligible Employee for any failure to do so) may adopt, without the consent of any Eligible Employee, such amendments to the Plan or take any other actions that the Company in its sole discretion determines are necessary or appropriate for such compensation or benefit to either: (a) be exempt from Code Section 409A; or (b) comply with the requirements of Code Section 409A and the Treasury Regulations thereunder.
(iii)Actual Payment Date. Whenever a payment under the Plan specifies a payment period, the actual date of payment within such specified period shall be within the sole discretion of the Company, and no Eligible Employee shall have any right (directly or indirectly) to determine the year in which such payment is made.
(iv)Installments. Each installment payment payable hereunder shall be deemed to be a separate payment for purposes of Code Section 409A and the Treasury Regulations thereunder. With respect to compensation or benefits subject to Code Section 409A that are paid pursuant to the Company’s payroll schedule, in the event of any change in that payroll schedule after such compensation or benefits are no longer subject to a substantial risk of forfeiture, each installment or payment to be made to an Eligible Employee under the Plan shall be made according to such new payroll schedule in effect at the time of such payment, but in any event within thirty (30) days of the payroll date that would have
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Exhibit 10.1
applied pursuant to the payroll schedule in effect on the date that the compensation or benefits to such Employee were no longer subject to a substantial risk of forfeiture.
(v)Reimbursements. To the extent that any amounts payable hereunder are deemed to be reimbursements and other separation payments under Treasury Regulation §1.409A-1(b)(9)(v), they shall not be deemed to provide for the deferral of compensation governed by Code Section 409A. If they do constitute deferral of compensation governed by Code Section 409A, they shall be deemed to be reimbursements or in-kind benefits governed by Treasury Regulation § 1.409A-3(i)(1)(iv). If the previous sentence applies: (i) the amount of expenses eligible for reimbursement or in-kind benefits provided during the Employee’s taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits in any other taxable year, provided that the foregoing shall not be violated by any lifetime or annual limits contained in the Company’s group health plans; (ii) the reimbursement of an eligible expense must be made on or before the last day of the Eligible Employee’s taxable year following the taxable year in which the expense was incurred; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
(vi)Exceptions to Application of Section 409A. Application of the exceptions to Code Section 409A and the Treasury Regulations thereunder are additive, that is, the exceptions may be “stacked” and used in combination with other exceptions, including but not limited to the short-term deferral exception and the separation pay exception.
Section 5.02 Limitation on Benefits Under Section 280G.
(a)Notwithstanding anything set forth in the Plan to the contrary, if any payment or benefit, including the Severance Benefits, an Eligible Employee would receive from the Company (a “Payment”) would: (i) constitute a “parachute payment” within the meaning of Code Section 280G; and (ii) but for this sentence, be subject to the excise tax imposed by Code Section 4999 (the “Excise Tax”), then such Payment shall be reduced to the Reduced Amount. The “Reduced Amount” shall be either: (i) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax; or (ii) the largest portion, up to and including the total, of the Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Eligible Employee’s receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits (or a cancellation of the acceleration of vesting of stock options or equity awards) constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, such reduction and/or cancellation of acceleration shall occur in the order that provides the maximum economic benefit to the Eligible Employee. In the event that acceleration of vesting of a stock option or equity award is to be reduced, such acceleration of vesting
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Exhibit 10.1
also shall be canceled in the order that provides the maximum economic benefit to the Eligible Employee.
(b)The Company shall appoint a nationally-recognized accounting firm with appropriate subject matter expertise to make the determinations required under this Section 5.02.
(c)The Company shall bear all expenses with respect to the making of the determinations by such accounting firm required to be made under this Section 5.02. The accounting firm engaged to make the determinations under this Section 5.02 shall provide its calculations, together with detailed supporting documentation, to the Company and the Eligible Employee as soon as practicable after the date on which the Eligible Employee’s right to a Payment is triggered (if requested at that time by the Company or the Eligible Employee) or such other time as requested by the Company or the Eligible Employee. If the accounting firm determines that no Excise Tax is payable with respect to a Payment, either before or after the application of the Reduced Amount, it shall furnish the Company with an opinion reasonably acceptable to the Eligible Employee that no Excise Tax will be imposed with respect to such Payment. Any good faith determinations of the accounting firm made under this Section 5.02 shall be final, binding, and conclusive upon the Company and the Eligible Employee.
ARTICLE VI
RESTRICTIVE COVENANTS
Section 6.01 Code of Conduct. Each Eligible Employee shall adhere in all respects to the Company’s ethics and compliance program, Code of Conduct, Employee Handbook and/or other applicable policies, as they may from time to time be established, interpreted, amended or terminated.
Section 6.02 Proprietary Information.
(a)Each Eligible Employee shall acknowledge that, during the course of employment, the Eligible Employee has learned or will learn or develop Proprietary Information. Each Eligible Employee shall further acknowledge that unauthorized disclosure or use of such Proprietary Information, other than in discharge of the Eligible Employee’s duties, will cause the Company irreparable harm. Except in the course of the Eligible Employee’s employment with the Company, in pursuit of the business of the Company, or as otherwise required in employment with the Company or by applicable law, each Eligible Employee shall not, during the course of the Eligible Employee’s employment or at any time following termination of Eligible Employee’s employment, directly or indirectly, disclose, publish, communicate, or use on the Employee’s behalf or
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Exhibit 10.1
another’s behalf, any Proprietary Information. If during or after the Eligible Employee’s employment, the Eligible Employee has any questions about whether particular information is Proprietary Information, the Eligible Employee shall consult with the Company’s Chief Legal Officer or other representative designated by the Company.
(b)Each Eligible Employee shall also agree to promptly disclose to the Company any information, ideas, or inventions made or conceived by the Employee that results from or are suggested by services performed by the Eligible Employee for the Company, and to assign to the Company all rights pertaining to such information, ideas, or inventions. Knowledge or information of any kind disclosed by the Eligible Employee to the Company shall be deemed to have been disclosed without obligation on the part of the Company to hold the same in confidence, and the Company shall have the full right to use and disclose such knowledge and information without compensation to the Eligible Employee.
Section 6.03 Non-Solicitation of Employees and Customers. During an Eligible Employee’s employment with the Company and (i) if a Non-CIC Termination, the period following an Eligible Employee’s Termination Date set forth in the Separation and Release Agreement or (ii) if a CIC Termination, the 18-month period (or, if less, the period allowed by applicable law) (as applicable, the “Restrictive Period”), each Eligible Employee shall agree, to the maximum extent allowed under applicable law and as set forth in the Separation and Release Agreement, not to, directly or indirectly, solicit any employee, consultant, agent or customer of the Company or its Subsidiaries.
Section 6.04 No Adverse Actions. During the Restrictive Period, each Eligible Employee shall not, without the prior written consent of the Company, in any manner, solicit, request, advise or assist any other person to (a) undertake any action that would be reasonably likely, or is intended, to result in a reorganization, merger, share exchange, transfer of ownership of 50% or more of the outstanding voting securities of the Company, consolidation or sale or disposition of all or substantially all of the assets of the Company, or (b) seek to control or change the composition of the Board in any material manner.
Section 6.05 Return of Property. Each Eligible Employee shall, upon the Eligible Employee’s Termination Date, return to the Company all property of the Company in the Eligible Employee’s possession, including all notes, reports, sketches, plans, published memoranda, or other documents, whether in hard copy or in electronic form, created, developed, generated, received, or held by the Eligible Employee during the Eligible Employee’s employment, concerning or related to the Company’s business, whether or not containing or relating to Proprietary Information. Each Eligible Employee shall not remove, by e-mail, by file transfer, by removal of computer discs or hard drives, or by other means, any of the above property containing Proprietary Information, or reproductions or copies thereof, or any apparatus from the Company’s premises without the Company’s written consent.
Section 6.06 Non-Disparagement. Each Eligible Employee shall agree to refrain from making any statements about the Company, its Subsidiaries or their officers or directors that would
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Exhibit 10.1
disparage, or reflect unfavorably upon the image or reputation of the Company, its Subsidiaries or any such officer or director.
Section 6.07 Assistance with Claims.
(a)Each Eligible Employee shall agree, that, during and after the Eligible Employee’s employment by the Company, the Eligible Employee shall assist the Company, on a reasonable basis, in the defense of any claims or potential claims that may be made or threatened to be made against it in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative (“Proceeding”) and shall assist the Company in the prosecution of any claims that may be made by the Company in any Proceeding, to the extent that such claims may relate to the Eligible Employee’s services.
(b)Each Eligible Employee shall agree, unless precluded by law, to promptly inform the Company if the Eligible Employee is asked to participate (or otherwise become involved) in any Proceeding involving such claims or potential claims.
(c)Each Eligible Employee shall also agree, unless precluded by law, to promptly inform the Company if the Eligible Employee is asked to assist in any investigation (whether governmental or private) of the Company or its Subsidiaries (or its actions), regardless of whether a lawsuit has then been filed against the Company or its Subsidiaries with respect to such investigation.
Section 6.08 Reasonableness. In the event that any of the provisions of this Article should ever be adjudicated to exceed the time, geographic, service, or other limitations permitted by applicable law in any jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the maximum time, geographic, service, or other limitations permitted by applicable law.
Section 6.09 Equitable Relief.
(a)Each Eligible Employee shall acknowledge that the restrictions contained in this Article are reasonable and necessary to protect the legitimate interests of the Company, its Subsidiaries and its affiliates, that the Company would not have established the Plan in the absence of such restrictions, and that any violation of any provision of this Article will result in irreparable injury to the Company. Each Eligible Employee shall represent that the Employee’s experience and capabilities are such that the restrictions contained in this Article will not prevent the Eligible Employee from obtaining employment or otherwise earning a living at the same general level of economic benefit as is currently the case. Each Eligible Employee shall further represent and acknowledge that the Employee (i) has been advised by the Company to consult the Employee’s own legal counsel in respect of the Plan, and (ii) has had full opportunity, prior to agreeing to participate in the Plan, to review thoroughly the Plan with the Employee’s own legal counsel.
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Exhibit 10.1
(b)Each Eligible Employee shall agree that the Company shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages and without posting a bond or other security, as well as an equitable accounting of all earnings, profits and other benefits arising from any violation of this Article VI, which rights shall be cumulative and in addition to any other rights or remedies to which the Company may be entitled.
(c)Each Eligible Employee shall also irrevocably and unconditionally consent to the service of any process, pleadings, notices or other papers in a manner permitted by the notice provisions of Section 10.04.
Section 6.10 Survival of Provisions. The obligations contained in this Article VI shall survive the termination of each Eligible Employee’s employment with the Company and shall be fully enforceable, to the maximum extent allowed under applicable law, thereafter.
ARTICLE VII
PLAN ADMINISTRATOR
Section 7.01 Authority and Duties. The Lumen Plan Design Committee, through its delegated authority from the Board, established the Plan on behalf of the Company. The “Plan Sponsor” is the Company. The Committee, which approved the establishment of the Plan, shall serve as the Plan Administrator for purposes of ERISA and shall have primary responsibility for the operation and administration of the Plan. The Plan Administrator may, in its sole discretion and on such terms and conditions as it may provide, (i) delegate in writing to the Lumen Employee Benefits Committee or one or more officers of the Company all or any portion of its authority or responsibility with respect to the Plan, and (ii) act for the Company (in a non-fiduciary capacity) as to any matter pertaining to the Plan; provided, however, that any Plan amendment or termination or any other action that reasonably could be expected to increase materially the cost of the Plan must be approved by the Board or the Lumen Plan Design Committee . To the extent of such delegation, the delegate shall have all of the authority, discretion and powers of the Plan Administrator. It shall be the duty of the Plan Administrator to properly administer the Plan. The Plan Administrator shall have the full power, authority and discretion to construe, interpret and administer the Plan, to make factual determinations, to correct deficiencies therein, and to correct omissions. The Plan Administrator may adopt such rules and regulations and may make such decisions as it deems necessary or desirable for the proper administration of the Plan.
Section 7.02 Indemnification. The Plan Administrator shall be indemnified by the Company against personal liability from all losses, claims, costs or other liabilities arising from acts or omissions taken in good faith in the discharge of the Plan Administrator’s duties. In addition, officers and employees of the Company, and the members of the Board, shall be indemnified by
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Exhibit 10.1
the Company from all losses, claims, costs or other liabilities arising from their acts or omissions in connection with the administration, amendment or termination of the Plan, to the maximum extent permitted by applicable law. This indemnity will cover all such liabilities, including judgments, settlements and costs of defense. The Company will provide this indemnity from its own funds to the extent that insurance does not cover such liabilities. This indemnity is in addition to, and not in lieu of, any other indemnity provided to such person by the Company.
Section 7.03 Records, Reporting and Disclosure. The Plan Administrator shall keep a copy of all records relating to the payment of Severance Benefits to Eligible Employees and all other records necessary for the proper operation of the Plan. The Plan Administrator (or its delegate) shall prepare and file as required by law or regulation any reports, forms, and documents (except that the Company, as payor of the Severance Benefits, shall prepare and distribute to the proper recipients all forms relating to withholding of income or wage taxes, Social Security taxes, and other amounts that may be similarly reportable).
Section 7.04 Discretion. Any decisions, actions or interpretations to be made under the Plan by the Plan Administrator shall be made in its sole and absolute discretion, subject to the terms of the Plan and applicable law, and need not be uniformly applied; such decisions, actions or interpretations shall be final, binding and conclusive upon all parties, with respect to denied claims for Severance Benefits. Not in limitation to, but in amplification of, the foregoing and of the authority conferred upon the Plan Administrator, the Plan Sponsor specifically intends that the Plan Administrator and its duly authorized delegates have the greatest permissible discretion to construe the terms of the Plan and to determine all questions concerning eligibility, participation and benefits. The decisions by the Plan Administrator or any delegates shall be conclusive and binding, and any interpretation, determination or other action by them is intended to be subject to the most deferential standard of review. Such standard of review is not to be affected by any real or alleged conflict of interest on the part of the Plan Administrator or its delegates to resolve ambiguities or inconsistencies. All such authorizations, interpretations, determinations, decisions and settlements shall be final and binding for purposes of the Plan.
Section 7.05 Implementation of the Plan is Non-Fiduciary. The decision to implement the Plan and as to which Employees, if any, will be Eligible Employees, as well as all other management decisions, including but not limited to, offering ongoing employment, shall be determined by management as Plan Sponsor functions and not in any fiduciary capacity.
ARTICLE VIII
AMENDMENT AND TERMINATION
Section 8.01 Amendment and Termination. Except as otherwise provided in this Article VIII or in the Participation Agreement, the Plan may be amended or terminated, without prior notice, in
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Exhibit 10.1
whole or in part at any time by written approval of the Board or the Lumen Plan Design Committee; provided, however, that, without an Eligible Employee’s written approval or consent, no amendment or termination shall impair an Eligible Employee’s right to retain any amount paid to the Employee prior to the date of the amendment or termination (except as expressly provided herein) or cause the cessation of Severance Benefits after (i) an Eligible Employee has executed a Separation and Release Agreement (without revocation) as required under Article III if there has not been a Change in Control or (ii) the date a Change in Control occurs, as applicable. Amendment or termination of the Plan with respect to any Subsidiary of the Company shall not affect the rights of any Eligible Employee to any Plan benefit to which such Eligible Employee may have become irrevocably entitled under the Plan prior to the date such amendment or termination is adopted. On termination of the Plan, all rights to benefits end unless an Eligible Employee already has become entitled to such benefits. Any amendment or termination shall operate prospectively only and shall not impair an Eligible Employee’s right to retain any amount paid to the Employee prior to the date of the amendment or termination (except as expressly provided herein or in a Participation Agreement) or cause the cessation of Severance Benefits after (i) an Eligible Employee has executed a Separation and Release Agreement if there has not been a Change in Control or (ii) the date a Change in Control occurs, as applicable.
Section 8.02 Continuation of Plan. Subject to Section 8.01, the Plan shall continue and shall be binding on the Company and its successors until the Company and/or its successors have fully performed all of the Company’s obligations under the Plan with respect to all Eligible Employees covered under the Plan. In the event of an actual or contemplated Change in Control, the Company will require the Post-Transaction Company to unconditionally assume all of the obligations of the Company hereunder and to continue the Plan without amendment or termination, during the Protective Period. Failure of the Company to obtain an agreement from the Post-Transaction Company to assume such obligations shall constitute a CIC Good Reason Resignation event that will be deemed to have occurred on the date the Company advises the Eligible Employee of the Post-Transaction Company’s failure to agree to assume the obligations of the Plan.
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Exhibit 10.1
ARTICLE IX
CLAIMS PROCEDURES
Section 9.01 Claims. The Plan Administrator, in its sole discretion, shall determine eligibility for Severance Benefits and the amount of Severance Benefits, as well as the administration of Severance Benefits, in accordance with the terms of the Plan. An Eligible Employee or the Eligible Employee’s beneficiary (as applicable, the “claimant”) may contest such determinations by completing and filing with the Plan Administrator a written request for review in the manner specified by the Plan Administrator within 90 days following the Eligible Employee’s Termination Date. The claimant must send a written claim to the Plan Administrator at the Plan Administrator’s address set forth in Article XI of the Plan. Each such application must be supported by such information as the Plan Administrator deems relevant and appropriate. The claimant may not bring an action for any alleged wrongful denial of Plan benefits in a court of law unless the claims and appeals procedures described in this Article are exhausted and a final determination has been made by the Plan Administrator or its delegate. If the claimant challenges a decision by the Plan Administrator or its delegate, any review by a court of law will be limited to the facts, evidence and issues presented to the Plan Administrator during the claims procedure set forth in this Article. Facts and evidence that become known to the claimant after such individual has exhausted the claims procedure must be brought to the attention of the Plan Administrator for reconsideration. Issues not raised with the Plan Administrator will be deemed waived.
Section 9.02 Initial Claim. In the event that any claim under Section 9.01 is denied, in whole or in part, the claimant whose claim has been so denied shall be notified of such denial in writing by the Plan Administrator, or its delegate, within ninety (90) days after the receipt of the claim for benefits. This period may be extended an additional ninety (90) days if the Plan Administrator, or its delegate, determines such extension is necessary and the Plan Administrator, or its delegate, provides notice of the extension to the claimant prior to the end of the initial ninety (90) day period. The notice advising of the denial shall:
(i)specify the reason or reasons for denial:
(ii)make specific reference to the Plan provisions on which the determination was based;
(iii)describe any additional material or information necessary for the claimant to perfect the claim (explaining why such material or information is needed); and
(iv)describe the Plan’s review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under section 502(a) of ERISA following an adverse benefit determination on review.
Section 9.03 Appeals of Denied Administrative Claims. All appeals of denied claims shall be made by the following procedure:
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Exhibit 10.1
(a)A claimant whose claim has been denied shall file with the Plan Administrator a written notice of appeal of the denial. Such notice shall be filed within sixty (60) calendar days of receipt of notification by the Plan Administrator of the denial of a claim, shall be made in writing, and shall set forth all of the facts upon which the appeal is based. Appeals not timely filed shall be barred.
(b)The Plan Administrator shall consider the merits of the claimant’s written presentations, the merits of any facts or evidence in support of the denial of benefits, and such other facts and circumstances as the Plan Administrator shall deem relevant.
(c)The Plan Administrator shall render a determination upon the appealed claim which determination shall be accompanied by a written statement as to the reasons therefor. The determination shall be made to the claimant within sixty (60) days of the claimant’s request for review, unless the Plan Administrator determines that special circumstances require an extension of time for processing the claim. In such case, the Plan Administrator shall notify the claimant of the need for an extension of time to render its decision prior to the end of the initial sixty (60) day period, and the Plan Administrator shall have an additional sixty (60) day period to make its determination. The determination so rendered shall be binding upon all parties. If the determination is adverse to the claimant, the notice shall:
(i)provide the reason or reasons for denial;
(ii)make specific reference to the Plan provisions on which the determination was based;
(iii)state that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant’s claim for benefits; and
(iv)state that the claimant has the right to bring a civil action under section 502(a) of ERISA.
Section 9.04 Deadline to Bring a Plan Claim, Arbitration or Civil Suit.
(a)Claims regarding any benefit under the Plan must be submitted in writing within six (6) months of the earlier of:
(i)the date a claimant has reason to believe that the Plan has not been properly administered; or
(ii)the date that a claimant did not receive a benefit under the Plan to which the claimant believes the claimant was entitled.
(b)Plan claims and appeals procedures as explained above must be completely and timely exhausted by a claimant or Eligible Employee. A civil lawsuit,
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Exhibit 10.1
arbitration or other proceeding must be filed not later than one (1) year after the exhaustion of these internal Plan remedies as described in this Article.
ARTICLE X
MISCELLANEOUS
Section 10.01 Waiver of Jury Trial.
(a)THE COMPANY WAIVES, AND EACH EMPLOYEE UPON BECOMING AN ELIGIBLE EMPLOYEE IN THE PLAN SHALL WAIVE, HIS, HER OR ITS RIGHT TO A JURY TRIAL IN ANY COURT ACTION ARISING UNDER THE PLAN OR OTHERWISE AND WHETHER MADE BY CLAIM, COUNTER-CLAIM, THIRD-PARTY CLAIM OR OTHERWISE.
(b)If for any reason the jury waiver is held to be unenforceable, but only in that event, the Eligible Employee and the Company agree to binding arbitration for any dispute arising out of the Plan or any claim arising under any federal, state or local statutes, laws or regulations, pursuant to the arbitration terms set forth in the Eligible Employee’s Dispute Resolution Agreement.
(c)The agreement of the Eligible Employee to waive the Employee’s right to a jury trial will be binding on the Employee’s beneficiaries or assigns and will survive the termination of the Plan.
Section 10.02 Forum Selection. Except as the laws of the United States may otherwise require, any and all disputes relating to or arising under the Plan to enforce or interpret the Plan must be brought by civil action. Any court proceeding brought by the Employee or the Company to enforce rights or obligations related to or arising under any provision of the Plan (a “Claim”) must be brought in the United States District Court in Denver, Colorado or, if and only if another proceeding is pending between the Eligible Employee and the Company in another jurisdiction and a Claim would be related to such pending proceeding, in such other jurisdiction (as applicable, the “Court”). Each party agrees to personal jurisdiction in either venue. Each Eligible Employee, by virtue of the Employee’s participation in the Plan, irrevocably consents to the jurisdiction and venue in the Court and that any and all disputes shall be adjudicated solely by the Court, and further irrevocably waives any defense based on lack of venue, personal jurisdiction, forum non conveniens, transfer, priority doctrines, and any defense(s) of similar type or import except that, as noted in Section 10.01, if the Court refuses to enforce the jury waiver in Section 10.01, the case shall proceed in arbitration.
Section 10.03 Non-Alienation of Benefits. None of the payments, benefits or rights of any Eligible Employee shall be subject to any claim of any creditor of any Employee, and, in particular, to the fullest extent permitted by law, all such payments, benefits and rights shall be
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Exhibit 10.1
free from attachment, garnishment (if permitted under applicable law), trustee’s process, or any other legal or equitable process available to any creditor of such Employee. No Eligible Employee shall have the right to alienate, anticipate, commute, pledge, encumber or assign any of the benefits or payments that the Eligible Employee may expect to receive, contingently or otherwise, under the Plan, except for the designation of a beneficiary.
Section 10.04 Notices. All notices and other communications required hereunder shall be in writing and shall be delivered personally or mailed by registered or certified mail, return receipt requested, or by overnight express courier service. In the case of the Eligible Employee, mailed notices shall be addressed to the Employee’s home address most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to the Plan Administrator (provided in Article XI).
Section 10.05 No Mitigation. Eligible Employees shall not be required to mitigate the amount of any Severance Benefits provided for in the Plan by seeking other employment or otherwise, nor shall the amount of any Severance Benefits provided herein be reduced by any compensation earned by other employment or otherwise, except if the Eligible Employee is re-employed by the Company, in which case the Severance Benefits shall cease.
Section 10.06 Certain Pre-Change in Control Terminations. Notwithstanding any other provision of the Plan, an Eligible Employee’s employment shall be deemed to have been a CIC Termination due to an Involuntary Termination (and the Eligible Employee shall be entitled to receive the Severance Benefits for CIC Termination) if the Eligible Employee’s employment is terminated by the Company or a Subsidiary or Affiliate of the Company without Cause prior to a Change in Control (whether or not a Change in Control actually occurs) and such Termination (i) was at the request or direction of a third party who has taken steps designed to effect a Change in Control or otherwise arose in connection with or in anticipation of a Change in Control or (ii) occurred after discussions with a third party regarding a possible Change in Control commenced and such discussions produced (whether before or after such Termination) either a preliminary or definitive agreement with respect to such a Change in Control transaction or a public announcement of the pending Change in Control transaction.
Section 10.07 Legal Fees. In the event of a CIC Termination, the Company or Post-Transaction Company, as applicable, shall reimburse the Eligible Employee for all legal fees and other expenses which the Eligible Employee may reasonably incur as a result of any contest by the Company or the Post-Transaction Company of the validity or enforceability of, or liability under, any provision of the Plan, but only if, when and to the extent the Eligible Employee prevails with respect to such contest. With respect to a Termination other than a CIC Termination, the parties shall each bear their own legal fees and other expenses incurred in connection with the Plan.
Section 10.08 No Contract of Employment. Neither the establishment of the Plan, nor any modification thereof, nor the payment of any benefits shall be construed as giving any Eligible Employee or any person whosoever the right to be retained in the service of the Company or a Subsidiary or Affiliate of the Company, and all Eligible Employees shall remain “at-will employees” subject to discharge to the same extent as if the Plan had never been adopted.
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Exhibit 10.1
Section 10.09 Severability of Provisions. If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability will not affect any other provision of the Plan, and the Plan will be construed and enforced as if such provision had not been included.
Section 10.10 Unfunded Plan. The Plan shall not be funded. No Employee or Eligible Employee (or their dependents) shall have any right to, or interest in, any assets of the Company that may be applied by the Company to the payment of Severance Benefits. Payments of Severance Benefits under the Plan shall be paid from the Company’s general assets, in accordance with the terms of the Plan.
Section 10.11 Payments to Incompetent Persons. Any Severance Benefits payable to or for the benefit of a minor, an incompetent person or other person incapable of receipting therefor shall be deemed paid when paid to such person’s guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge the Company, the Plan Administrator and all other parties with respect thereto.
Section 10.12 Controlling Law. The Plan shall be construed and enforced according to the laws of the State of Colorado to the extent not superseded by Federal law and without reference to any conflicts of laws principles. Any provision of the Plan that is determined by a court to be in conflict with any applicable Federal or State laws shall be deemed amended by this paragraph to conform to the minimum requirements of such laws, except to the extent they are preempted by ERISA.
Section 10.13 Clerical Error. By participation in the Plan, each Eligible Employee agrees that any amount paid in error will be returned promptly to the Company and a payment error does not create a legally binding right to payment under the Plan. If a clerical error or other mistake occurs, however occurring, including but not limited to, by the Plan Administrator, its delegates, members of the Employee Benefits Group of the Company’s Human Resources Organization, vendors or an Eligible Employee, such clerical error or mistake does not and shall not create a right to a Benefit under the Plan. When an error is found, it will be corrected or adjusted appropriately as soon as practicable. Interest shall not be payable by the Plan, the Plan Administrator or any delegate with respect to a benefit corrected or adjusted.
Section 10.14 Exclusive Benefits. Unless otherwise provided for in an Eligible Employee’s Participation Agreement and except as provided below, the Severance Benefits, if any, provided under the Plan will be the exclusive benefits for an Eligible Employee related to the Employee’s Termination of employment with the Company and supersede and replace any severance and/or change in control benefits set forth in any offer letter, employment or severance agreement and/or other agreement between the Eligible Employee and the Company. The foregoing notwithstanding, the Plan does not supersede or otherwise modify or apply to an Eligible Employee’s equity awards granted under the Equity Plan and outstanding as of the Eligible Employee’s Termination Date and such outstanding equity awards shall continue to be governed by the terms and conditions of the Equity Plan and applicable equity award agreement(s).
Section 10.15 Headings. Headings in this Plan document are for purposes of reference only and will not limit or otherwise affect the meaning hereof.
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Exhibit 10.1
ARTICLE XI
GENERAL PLAN INFORMATION
Section 11.01 Plan Information.
Plan Year - The fiscal year of the Plan begins on January 1 and ends on December 31; provided, however, that the initial Plan Year begins on the Effective Date and ends on December 31, 2026.
Plan Type and Name – Lumen Executive Severance Plan, a “top hat” plan under ERISA.
Plan Funding and Administration – The Plan is an unfunded severance plan. All benefits are paid by the Company from its general assets.
Plan Sponsor – Lumen Technologies, Inc. is the Plan Sponsor. The address for the Plan Sponsor is:
Lumen Technologies, Inc.
100 CenturyLink Drive
Monroe, LA 71203-2041
Federal tax identification number is 72-0651161.
Plan Administrator – Human Resources and Compensation Committee of the Board of Directors of Lumen Technologies, Inc. is the Plan Administrator of the Plan. The address for the Plan Administrator is:
Human Resources and Compensation Committee
Plan Administrator – Lumen Executive Severance Plan
Lumen Technologies, Inc.
931 14th Street
Denver, CO 80202
Service of Legal Process - Legal Process may be served on the Company’s registered agent, CT Corporation System, at the following address:
CT Corporation System
3867 Plaza Tower Dr.
Baton Rouge, LA 70816
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Exhibit 10.1
Plan Administrator’s Discretion and Authority - The Company has delegated and reserved to the Plan Administrator the right to interpret and resolve any ambiguities in the Plan or any document relating to the Plan in its sole and absolute discretion. Participation in the Plan does not create a contract of employment.
Executed this 22nd day of October 2026, effective as of the Effective Date.
Lumen Technologies, Inc.
/s/ Marina Pearson__________________
Name: Marina Pearson
Title: Vice President, Benefits & Policy, Human Resources
& Member, Lumen Plan Design Committee
& Member, Lumen Plan Design Committee
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Exhibit 10.1
EXHIBIT A
PARTICIPATION AGREEMENT
[Attached]
Exhibit 10.1
Lumen Executive Severance Plan
Participation Agreement
Participation Agreement
Lumen Technologies, Inc. (the “Company”) is pleased to inform you that you are eligible to participate in the Company’s Executive Severance Plan (the “Plan”) as an Eligible Employee, effective [DATE].
A copy of the Plan was delivered to you with this Participation Agreement. Your participation in the Plan is subject to all of the terms and conditions of the Plan. The capitalized terms used but not defined herein will have the meanings ascribed to them in the Plan.
In order to become an Eligible Employee, you must complete and sign this Participation Agreement and return it to Denise Mabile no later than [DATE].
The Plan describes in detail certain circumstances under which you may become eligible for Severance Benefits, as described more fully in the Plan, if you experience an Involuntary Termination, a Non-CIC Good Reason Resignation or a CIC Good Reason Resignation, as each is defined in the Plan.
In order to receive any Severance Benefits for which you otherwise become eligible under the Plan due to a Non-CIC Termination, you must sign and deliver to the Company the Separation and Release Agreement, which must have become effective and irrevocable within the requisite period, and otherwise comply with the requirements under Article VI of the Plan.
The benefits, if any, provided under the Plan will be the exclusive Severance Benefit for a Participant related to his or her termination of employment with the Company and/or a Change in Control of the Company and will supersede and replace any Severance Benefits provided under any offer letter, employment or severance agreement and/or other agreement between you and the Company; provided, however, that treatment of any equity awards outstanding as of your Termination Date will be governed by the terms of the equity award agreements and Equity Plan.
For the avoidance of doubt, if as of the date of this Participation Agreement you are otherwise eligible to participate in any other Company severance and/or change in control plan, policy or agreement (whether or not subject to ERISA), your participation in the Plan will supersede such other plan, policy or agreement. To the extent you become eligible for severance benefits in a plan, policy or agreement after the date of this Participation Agreement, your benefits under the Plan will be offset by such future benefits. Notwithstanding the foregoing, any provision in your existing offer letter, employment agreement, and/or equity award agreement with the Company that provides for vesting of your outstanding equity awards upon your termination, will not be superseded by the Plan or this Participation Agreement, and will continue in full force and effect pursuant to its existing terms.
By your signature below, you and the Company agree that your participation in the Plan is governed by this Participation Agreement and the provisions of the Plan. Your signature below confirms that:
Exhibit 10.1
(1)You have received a copy of the Lumen Executive Severance Plan;
(2)You have carefully read this Participation Agreement and the Lumen Executive Severance Plan and you acknowledge and agree to its terms and conditions, including all restrictive covenants;
(3)You agree and consent to the termination effective as of [DATE] of any Change of Control Agreement you entered into with the Company that is currently in effect; and
(4)Decisions and determinations by the Plan Administrator under the Plan will be final and binding on you and your successors.
LUMEN TECHNOLOGIES, INC.
By:
Title:
ELIGIBLE EMPLOYEE
[NAME]
Attachment: Lumen Executive Severance Plan
Exhibit 10.2
CHANGE OF CONTROL AND SEVERANCE AGREEMENT
This CHANGE OF CONTROL AND SEVERANCE AGREEMENT (this “Agreement”) is entered into effective as of October 22, 2026 (the “Agreement Date”) by and between Lumen Technologies, Inc., a Louisiana corporation (the “Company”), and Kate Johnson (the “Employee”) and amends, restates and supersedes in its entirety that Change of Control Agreement effective as of November 7, 2022 (the “Original Effective Date”) between the Company and the Employee (the “Prior Agreement”).
W I T N E S S E T H:
WHEREAS, pursuant to an offer letter entered into between the Company and the Employee on the Original Effective Date (the “Offer Letter”), the Company and the Employee agreed that the Employee will be provided with certain change of control protections commensurate with her position as President and Chief Executive Officer of the Company;
WHEREAS, the Board of Directors of the Company (the “Board”) has determined that it is in the best interests of the Company and its shareholders to provide the benefits set forth in this Agreement to the Employee; and
WHEREAS, the Board believes that the benefits set forth herein are reasonably designed to retain the services of the Employee and to assure the full dedication of the Employee, free from personal distraction, in the event of an actual or pending termination of employment or change of control of the Company;
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
CERTAIN DEFINITIONS
1.1 Affiliate. “Affiliate” (and variants thereof) shall mean a Person that controls, or is controlled by, or is under common control with, another specified Person, either directly or indirectly.
1.2 Beneficial Owner. “Beneficial Owner” (and variants thereof), with respect to a security, shall mean a Person who, directly or indirectly (through any contract, understanding, relationship or otherwise), has or shares (i) the power to vote, or direct the voting of, the security, or (ii) the power to dispose of, or direct the disposition of, the security.
1.3 Business. “Business” shall mean, as of any particular date, the business of (i) providing local or long distance communication services (including CLEC’s, ILEC’s and international communication services providers with a presence in the United States), network access, Internet access, data, video and IPTV services, web development, hosting, cloud computing, web and managed hosting, content delivery network services, IT services, big data analytics, security; (ii) selling communications products in connection with providing such services or (iii) providing any other material services or selling any other material products then performed or sold by the Company or its Affiliates.
1.4 Cause. “Cause” shall mean the Employee’s (i) willful breach of Section 4.1 or 4.2 of this Agreement; (ii) conviction of, or plea of guilty or nolo contendere to, a felony or other crime involving dishonesty or moral turpitude; (iii) workplace conduct resulting in the payment of civil monetary penalties or the incurrence of civil non-monetary penalties that will materially restrict or prevent the Employee from discharging her obligations to the Company; (iv) habitual intoxication during working hours or habitual abuse of or addiction to a controlled substance; (v) material breach of the Company’s insider trading, corporate ethics and compliance policies and programs or any other Board-adopted policies applicable to
1
Exhibit 10.2
management conduct; (vi) participation in the public reporting of any information contained in any report filed by the Company with the Securities and Exchange Commission that was impacted by the Employee’s knowing or intentional fraudulent or illegal conduct; or (vii) substantial, willful and repeated failure to perform duties as instructed by or on behalf of the Board in writing.
The Employee’s employment shall not be deemed terminated for Cause unless the Company shall have delivered to the Employee a termination notice with a copy of a resolution adopted by the affirmative vote of not less than three-quarters of the entire Board at a meeting called partly or wholly for such purpose (after reasonable notice is provided to the Employee and the Employee has had an opportunity, with counsel, to be heard by the Board) finding that the Employee should be terminated for Cause and specifying in reasonable detail the grounds therefor.
No action or inaction shall be deemed the basis for Cause unless the Employee is terminated therefor prior to the first anniversary of the date on which such action or omission is first known to the Chairman of the Board or the Chair of any standing committee of the Board.
1.5 Change of Control. “Change of Control” shall mean:
(a) the acquisition by any Person of Beneficial Ownership of 30% or more of the outstanding shares of the Company’s Common Stock, $1.00 par value per share (the “Common Stock”), or 30% or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors; provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control:
(i)any acquisition (other than a Business Combination which constitutes a Change of Control under Section 1.5(c) hereof) of Common Stock directly from the Company,
(ii)any acquisition of Common Stock by the Company or its subsidiaries,
(iii)any acquisition of Common Stock by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or
(iv)any acquisition of Common Stock by any entity pursuant to a Business Combination that does not constitute a Change of Control under Section 1.5(c) hereof; or
(b) individuals who, as of the Agreement Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Agreement Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board shall be considered a member of the Incumbent Board, unless such individual’s initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board; or
(c) consummation of a reorganization, share exchange, merger or consolidation (including any such transaction involving any direct or indirect subsidiary of the Company), or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”); provided, however, that in no such case shall any such transaction constitute a Change of Control if immediately following such Business Combination,
2
Exhibit 10.2
(i)the individuals and entities who were the Beneficial Owners of the Company’s outstanding common stock and the Company’s voting securities entitled to vote generally in the election of directors immediately prior to such Business Combination have direct or indirect Beneficial Ownership, respectively, of more than 50% of the then outstanding shares of common stock, and more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, of the Post-Transaction Company (as defined in Section 1.13 hereof), and
(ii)except to the extent that such ownership existed prior to the Business Combination, no Person (excluding the Post-Transaction Company and any employee benefit plan or related trust of the Company, the Post-Transaction Company or any subsidiary of either corporation) Beneficially Owns, directly or indirectly, 20% or more of the then outstanding shares of common stock of the corporation resulting from such Business Combination or 20% or more of the combined voting power of the then outstanding voting securities of such corporation, and
(iii)at least a majority of the members of the board of directors of the Post-Transaction Company were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
(d) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
1.6 Code. “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
1.7 Confidential Information. “Confidential Information” shall mean any information, knowledge or data of any nature and in any form (including information that is electronically transmitted or stored on any form of magnetic or electronic storage media) that directly or indirectly relates to the past, current or prospective business of the Company and its Affiliates, whether generated by the Company, any of its Affiliates, or any of their respective employees, officers, directors, representatives, consultants, agents or independent contractors, and whether or not marked confidential, including without limitation information relating to operations, products, services, assets, liabilities, franchises, customers, financial condition, results of operations, finances, prospects, strategies, business plans, budgets, projections, pricing information, business acquisitions, joint ventures, processes, research and development ideas, trade secrets, supplier lists, supplier information, distribution and sales data, consultants’ reports, marketing strategies, proprietary computer software, and internal notes and memoranda relating to any of the foregoing; provided, however, that “Confidential Information” shall not include any information that (a) is or becomes generally available to the public other than as a result of a breach of this Agreement, or (b) is or becomes available to the Employee on a non-confidential basis from a source other than the Company, its Affiliates or their respective representatives, provided that such source is not known by the Employee to have violated any confidentiality agreement with the Company in connection with such disclosure.
1.8 Company. “Company” shall mean Lumen Technologies, Inc. and shall include any successor to or assignee of (whether direct or indirect, by purchase, share exchange, merger, consolidation or otherwise) all or substantially all of the assets or business of the Company that assumes and agrees to perform this Agreement by operation of law or otherwise.
1.9 Disability. “Disability” shall mean a condition that would entitle the Employee to receive benefits under the long-term disability insurance policy applicable to the Company’s officers at the time because the Employee is totally disabled or partially disabled, as such terms are defined in the policy then in effect. If the Company has no long-term disability plan in effect, “Disability” shall occur if (a) the Employee is
3
Exhibit 10.2
rendered incapable because of physical or mental illness of satisfactorily discharging her duties and responsibilities to the Company for a period of 90 consecutive days, (b) a duly qualified physician chosen by the Company and acceptable to the Employee or her legal representatives so certifies in writing, and (c) the Board determines that the Employee has become disabled.
1.10 Employment Term. “Employment Term” shall mean the period commencing on the date of a Change of Control and ending on the 24-month anniversary of such date.
1.11 Good Reason. “Good Reason” shall mean any of the following events or conditions described in this Section 1.11, but only if the Employee shall have provided written notice to the Company within 90 days of the initial existence or occurrence of such event or condition and the Company shall have failed to cure such event or condition within 30 days of its receipt of such notice:
(a)Any failure of the Company or its Affiliates to provide the Employee with a position, authority, duties and responsibilities at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 180-day period immediately preceding the Change of Control. The Employee’s position, authority, duties and responsibilities after a Change of Control shall not be considered commensurate in all material respects with the Employee’s position, authority, duties and responsibilities prior to a Change of Control unless after the Change of Control the Employee holds an equivalent position with, and exercises substantially equivalent authority, duties and responsibilities on behalf of, the Post-Transaction Company;
(b)The assignment to the Employee of any duties inconsistent in any material respect with the Employee’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 3.1(b) of this Agreement, or any other action that results in a diminution in any material respect in such position, authority, duties or responsibilities;
(c)A reduction of the Employee’s base salary in effect as of the date of the Change of Control without the Employee’s consent, except for across-the-board salary reductions similarly affecting all or substantially all similarly-situated officers of the Company and the Post-Transaction Company;
(d)Any change or action by the Company or its Affiliates that is a failure in any material respect to comply with any of the provisions of this Agreement; or
(e)Any directive requiring the Employee to be based at any office or location other than as provided in Section 3.1(b)(2) hereof or requiring the Employee to travel on business to a substantially greater extent than required immediately prior to the Change of Control.
1.12 Person. “Person” shall mean a natural person or entity, and shall also mean the group or syndicate created when two or more Persons act as a syndicate or other group (including, without limitation, a partnership or limited partnership) for the purpose of acquiring, holding, or disposing of a security, except that “Person” shall not include an underwriter temporarily holding a security pursuant to an offering of the security.
1.13 Post-Transaction Company. Unless a Change of Control results from a Business Combination (as defined in Section 1.5(c) hereof), “Post-Transaction Company” shall mean the Company after the Change of Control. If a Change of Control results from a Business Combination, “Post-Transaction Company” shall mean the corporation or other entity resulting from the Business Combination unless, as a result of such Business Combination, an ultimate parent entity controls such resulting entity, the Company or all or substantially all of the Company’s assets either directly or indirectly, in which case “Post-Transaction Company” shall mean such ultimate parent entity.
4
Exhibit 10.2
1.14 Specified Employee. “Specified Employee” shall mean the Employee if the Employee is a key employee under Treasury Regulations Section 1.409A-1(i) because of final and binding action taken by the Board, its Human Resources and Compensation Committee or such committee’s delegate, or by operation of law or such regulation.
ARTICLE II
NON-CHANGE OF CONTROL SEVERANCE BENEFITS
The terms and conditions of the Lumen Executive Severance Plan (as amended and/or restated and as hereafter may be further amended and/or restated, the “Severance Plan”) relating to a Non-CIC Termination (as defined in the Severance Plan) are hereby incorporated by reference as if the Employee was an Eligible Employee (as defined in the Severance Plan) for Non-CIC Termination related Severance Benefits (as defined in the Severance Plan); provided, however, that (i) the Employee’s Non-CIC Cash Severance Benefit (as defined in the Severance Plan) shall be equal to 104 weeks of Total Target Cash Compensation (as defined in the Severance Plan) and (ii) the Employee’s Severance Period (as defined in the Severance Plan) shall be equal to 104 weeks. For the avoidance of doubt, in the event the Employee experiences a Non-CIC Termination, the Employee shall be eligible to receive the Severance Benefits for a Non-CIC Termination set forth in the Severance Plan on the terms and conditions of the Severance Plan, as modified in accordance with the immediately preceding sentence.
ARTICLE III
CHANGE OF CONTROL BENEFITS
3.1 Terms of Employment after Change of Control.
(a)This Agreement shall commence on the Agreement Date and continue in effect through December 31, `; provided, however, that, commencing on January 1, 2027 and each January 1 thereafter, the term of this Agreement shall automatically be extended for one additional year unless, not later than June 30 of the preceding year, the Company or the Employee shall have given written notice that it does not wish to extend this Agreement; provided, further, that, notwithstanding any such non-extension notice by the Company, if a Change of Control of the Company shall have occurred during the original or extended term of this Agreement, this Agreement shall continue in effect through the 24-month anniversary of the Change of Control, subject to any earlier termination of the Employee’s status as an employee pursuant to this Agreement; provided, further, that in no event shall any termination of this Agreement result in any forfeiture of rights that accrued prior to the date of termination.
(b)During the Employment Term, the Company hereby agrees to continue the Employee in its employ, subject to the terms and conditions of this Agreement. During the Employment Term, (1) the Employee’s position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 180-day period immediately preceding the Change of Control and (2) the Employee’s services shall be performed during normal business hours remotely at the Employee’s residence or another work location selected by the Employee. The Employee’s position, authority, duties and responsibilities after a Change of Control shall not be considered commensurate in all material respects with the Employee’s position, authority, duties and responsibilities prior to a Change of Control unless after the Change of Control the Employee holds an equivalent position with, and exercises substantially equivalent authority, duties and responsibilities on behalf of, the Post-Transaction Company.
3.2 Compensation and Benefits. During the Employment Term, the Employee shall be entitled to the following compensation and benefits:
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Exhibit 10.2
(a) Base Salary. The Employee shall receive an annual base salary (“Base Salary”), which shall be paid in at least monthly installments. The Base Salary shall initially be equal to 12 times the highest monthly base salary that was paid or is payable to the Employee, including any base salary which has been earned but deferred by the Employee, by the Company and its Affiliates with respect to any month in the 12-month period ending with the month that immediately precedes the month in which the Change of Control occurs. During the Employment Term, the Employee’s Base Salary shall be reviewed at such time as the Company undertakes a salary review of her peer employees (but at least annually), and, to the extent that salary increases are granted to her peer employees of the Company (or have been granted during the immediately preceding 12-month period to her peer employees of any Affiliate of the Company), the Employee shall be granted a salary increase commensurate with any increase granted to her peer employees of the Company and its Affiliates. Any increase in Base Salary shall not serve to limit or reduce any other obligation to the Employee under this Agreement. Base Salary shall not be reduced during the Employment Term (whether or not any increase in Base Salary occurs) and, if any increase in Base Salary occurs, the term Base Salary as utilized in this Agreement shall refer to Base Salary as so increased from time to time.
(b) Annual Bonus. In addition to Base Salary, the Employee shall be awarded, for each fiscal year ending during the Employment Term, an annual cash bonus (the “Bonus”) in an amount at least equal to the average of the annual bonuses paid to the Employee with respect to the three fiscal years that immediately precede the year in which the Change of Control occurs under the Company’s annual bonus plan, or any comparable bonus under a successor plan; provided, however, that if the Company has never paid an annual bonus for a full year to the Employee, the Employee shall be awarded a Bonus in an amount at least equal to the target bonus for which the Employee is eligible for the fiscal year in which the Change of Control occurs, assuming achievement at the target level of the objective performance goals established with respect to such bonus and achievement of 100% of any subjective performance goals or criteria otherwise applicable with respect to such bonus. Each such Bonus shall be paid after the end of the fiscal year and no later than the 15th day of the third month of the fiscal year next following the fiscal year for which the Bonus is awarded, unless the Employee shall timely elect to defer the receipt of such Bonus pursuant to any deferred compensation plan sponsored by the Company. For purposes of determining the value of any annual bonuses paid to the Employee in any year preceding the year in which the Change of Control occurs, all cash and stock bonuses earned by the Employee shall be valued as of the date of the grant.
(c) Fringe Benefits. The Employee shall be entitled to fringe benefits commensurate with those provided to her peer employees of the Company and its Affiliates, but in no event shall such fringe benefits be less favorable than the most favorable of those provided by the Company and its Affiliates for the Employee at any time during the one-year period immediately preceding the Change of Control or, if more favorable to the Employee, those provided generally at any time after the Change of Control to her peer employees of the Company and its Affiliates.
(d) Expenses. The Employee shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Employee in accordance with the most favorable agreements, policies, practices and procedures of the Company and its Affiliates in effect for the Employee at any time during the one-year period immediately preceding the Change of Control or, if more favorable to the Employee, as in effect generally at any time thereafter with respect to her peer employees of the Company and its Affiliates.
(e) Benefit Plans. (i) The Employee shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to her peer employees of the Company and its Affiliates, but in no event shall such plans, practices, policies and programs provide the Employee with incentive opportunities (measured with respect to both regular and special incentive opportunities to the extent that any such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, less favorable than the most favorable of those provided by the Company
6
Exhibit 10.2
and its Affiliates for the Employee under any agreements, plans, practices, policies and programs as in effect at any time during the one-year period immediately preceding the Change of Control or, if more favorable to the Employee, those provided generally at any time after the Change of Control to her peer employees of the Company and its Affiliates.
(i) The Employee and her family shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its Affiliates (including, without limitation, medical, prescription drug, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to her peer employees of the Company and its Affiliates, but in no event shall such plans, practices, policies and programs provide the Employee and her family with benefits, in each case, less favorable than the most favorable of those agreements, plans, practices, policies and programs in effect for the Employee and her family at any time during the one-year period immediately preceding the Change of Control or, if more favorable to the Employee and her family, those provided generally at any time after the Change of Control to her peer employees of the Company and its Affiliates.
(ii) Without limiting the generality of the Company’s obligations under this subsection (e), the Company shall comply with all of its obligations under the benefit plans, practices, policies and programs of the Company and its Affiliates that arise in connection with a Change of Control of the Company, including without limitation all obligations that require the Company to (A) fully vest participants under the Company’s qualified or non-qualified retirement plans and (B) extend the benefits described in Section 3.5.
(f) Office and Support Staff. The Employee shall be entitled to an office or offices of a size and with furnishings and other appointments, and to secretarial and other assistance, commensurate with those provided to her peer employees of the Company and its Affiliates.
(g) Vacation. The Employee shall be entitled to paid vacation in accordance with the most favorable agreements, plans, policies, programs and practices of the Company and its Affiliates as in effect for the Employee at any time during the one-year period immediately preceding the Change of Control or, if more favorable to the Employee, as in effect generally at any time thereafter with respect to her peer employees of the Company and its Affiliates.
(h) Indemnification. If, in connection with any agreement related to a transaction that will result in a Change of Control of the Company, an undertaking is made to provide the Board with rights to indemnification from the Company (or from any other party to such agreement), the Employee shall, by virtue of this Agreement, be entitled to the same rights to indemnification as are provided to the Board pursuant to such agreement. Otherwise, the Employee shall be entitled to indemnification rights on terms no less favorable to the Employee than those available under any Company indemnification agreements or the articles of incorporation, bylaws or resolutions of the Company at any time after the Change of Control to her peer employees of the Company. Such indemnification rights shall be with respect to all claims, actions, suits or proceedings to which the Employee is or is threatened to be made a party that arise out of or are connected to her services at any time prior to the termination of her employment, without regard to whether such claims, actions, suits or proceedings are made, asserted or arise during or after the Employment Term.
(i) Directors and Officers Insurance. If, in connection with any agreement related to a transaction that will result a Change of Control of the Company, an undertaking is made to provide the Board with continued coverage following the Change of Control under one or more directors and officers liability insurance policies, then the Employee shall, by virtue of this Agreement, be entitled to the same rights to
7
Exhibit 10.2
continued coverage under such directors and officers liability insurance policies as are provided to the Board, and the Company shall take any steps necessary to give effect to this provision. Otherwise, the Company shall agree to cover the Employee under any directors and officers liability insurance policies as are provided generally at any time after the Change of Control to her peer employees of the Company.
3.3 Obligations upon Termination after a Change of Control.
(a)Termination by Company for Reasons other than Death, Disability or Cause or by the Employee for Good Reason. If, after a Change of Control and during the Employment Term, the Company or any of its Affiliates terminates the Employee’s employment, as defined in Treasury Regulations 1.409A-1(h)(1) (“Separation from Service”), other than for Cause, death or Disability, or the Employee terminates employment for Good Reason, subject to Section 3.3(d) and Section 3.6, if applicable:
(i)the Company shall pay to the Employee in a lump sum in cash within five business days of the date of termination an amount equal to two and one-half (2½) times the sum of (1) the amount of Base Salary in effect pursuant to Section 3.2(a) hereof at the date of termination plus (2) the Employee’s target annual bonus amount for the fiscal year in which the date of termination occurs; provided, however, that, if the Employee has in effect a deferral election with respect to any percentage of the annual bonus which would otherwise become payable with respect to the fiscal year in which termination occurs, such lump sum payment shall be reduced by an amount equal to such percentage times the bonus component of the lump sum payment (which reduction amount shall be deferred in accordance with such election);
(ii)the Company shall pay to the Employee in a lump sum in cash, as promptly as practicable but in no case later than the 15th day of the third month following the end of the fiscal year of the Company in which the termination occurs, a pro rata performance bonus, the amount of which shall be determined by multiplying the annual bonus that the Employee would have earned with respect to the entire fiscal year in which the termination occurs, assuming that the Employee had served for the entire fiscal year and calculated by the Company in good faith to exclude the effects of the Change of Control on the applicable performance metrics used to calculate such bonus (including without limitation excluding the effects of any non-recurring transaction costs or any changes in overhead, interest, tax, intercompany or other expenses arising out of such transaction), by the fraction obtained by dividing the number of days in such year through the date of termination by 365; provided, however, that, if the Employee has in effect a deferral election with respect to any percentage of the annual bonus which would otherwise become payable with respect to the fiscal year in which termination occurs, such lump sum payment shall be reduced by an amount equal to such percentage times the lump sum payment (which reduction amount shall be deferred in accordance with such election); and, further provided, that if the bonus performance period in effect at the date of termination is less than a year, then the foregoing paragraph will apply with respect to such shortened performance period and all references to an annual period or 365 days shall mean the applicable shortened period or shortened number of days to the extent the context requires;
(iii)if, at the date of termination, the Company shall not yet have paid to the Employee (or deferred in accordance with any effective deferral election by the Employee) an annual bonus with respect to a fully completed fiscal year, the Company shall pay to the Employee in a lump sum in cash within five business days of the date of termination but in no case after the 15th day of the third month following the end of the fiscal year of the Company in which the termination occurs, an amount determined as follows: (A) if the Board (acting directly or indirectly through any committee or subcommittee) shall have already determined the amount of such annual bonus, such amount shall be paid, and (B) if the Board shall not have already determined the amount of such
8
Exhibit 10.2
annual bonus, the amount to be paid shall be the greater of the amount provided under Section 3.2(b) hereof or the annual bonus that the Employee would have earned with respect to such completed fiscal year, based solely upon the actual level of achievement of the objective performance goals established with respect to such bonus and assuming the achievement of 100% of any subjective performance goals or criteria otherwise applicable with respect to such bonus; provided, however, that, if the Employee has in effect a deferral election with respect to any percentage of the annual bonus which would otherwise become payable with respect to such completed fiscal year, such lump sum payment shall be reduced by an amount equal to such percentage times the lump sum payment (which reduction amount shall be deferred in accordance with such election); provided, further, that any payment under this subsection (iii) (or any payment under any other provision of this Agreement calculated by reference to prior or target bonus amounts) shall be payable notwithstanding any provision to the contrary set forth in any bonus plan or program of the Company;
(iv)for a period of two years following the date of termination of employment, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy (the “Continuation Period”), the Company shall at its expense continue on behalf of the Employee and her dependents and beneficiaries the life insurance, disability, medical, dental and hospitalization benefits (including any benefit under any individual benefit arrangement that covers medical, dental or hospitalization expenses not otherwise covered under any general Company plan) provided (x) to the Employee at any time during the one-year period prior to the Change of Control or at any time thereafter or (y) to other similarly-situated employees who continue in the employ of the Company or its Affiliates during the Continuation Period. If the Employee is a Specified Employee governed by Section 3.3(d), to the extent that any benefits provided to the Employee under this Section 3.3(a)(iv) are taxable to the Employee, then, with the exception of medical insurance benefits, the value of the aggregate amount of such taxable benefits provided to the Employee pursuant to this Section 3.3(a)(iv) during the six-month period following the date of termination shall be limited to the amount specified by Section 402(g)(1)(B) of the Code for the year in which the termination occurred. The Employee shall pay the cost of any benefits that exceed the amount specified in the previous sentence during the six-month period following the date of termination, and shall be reimbursed in full by the Company during the seventh month after the date of termination. The coverage and benefits (including deductibles and costs) provided in this Section 3.3(a)(iv) during the Continuation Period shall be no less favorable to the Employee and her dependents and beneficiaries than the most favorable of such coverages and benefits during any of the periods referred to in clauses (x) or (y) above; provided, however, in the event of the Disability of the Employee during the Continuation Period, disability benefits shall, to the maximum extent possible, not be paid for the Continuation Period but shall instead commence immediately following the end of the Continuation Period. The Company’s obligation hereunder with respect to the foregoing benefits shall be limited to the extent that the Employee obtains any such benefits pursuant to a subsequent employer’s benefit plans, in which case the Company may reduce the coverage of any benefits it is required to provide the Employee hereunder as long as the aggregate coverages and benefits of the combined benefit plans is no less favorable to the Employee than the coverages and benefits required to be provided hereunder. At the end of the Continuation Period, the Employee shall have assigned to her, at no cost and with no apportionment of prepaid premiums, any assignable insurance owned by the Company that relates specifically to the Employee unless such assignment is inconsistent with the terms of any split dollar arrangement with the Employee. The Employee will be eligible for coverage under the Consolidated Omnibus Budget Reconciliation Act at the end of the Continuation Period or earlier cessation of the Company’s obligation under the foregoing provisions of this Section 3.3(a)(iv) (or, if the Employee shall not be so eligible for any reason, the Company will provide equivalent coverage);
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Exhibit 10.2
(v)the Company at its cost shall provide to the Employee outplacement assistance by a reputable firm specializing in such services for the period beginning with the termination of employment and ending one year later; and
(vi)the Company shall discharge its obligations under all other applicable sections of this Article III, including Sections 3.4, 3.5, 3.6 and 3.7.
To the extent that the amounts payable under Section 3.3(a)(iv), Section 3.3(a)(v), or Section 3.7 are deemed to be reimbursements and other separation payments under Treasury Regulations Section 1.409A-1(b)(9)(v), they shall not be deemed to provide for the deferral of compensation governed by Section 409A of the Code. If they do constitute deferral of compensation governed by Section 409A of the Code, they shall be deemed to be reimbursements or in-kind benefits governed by Treasury Regulations Section 1.409A-3(i)(1)(iv). If the previous sentence applies, (1) the amount of expenses eligible for reimbursement or in-kind benefits provided during the Employee’s taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits in any other taxable year, (2) the reimbursement of an eligible expense must be made on or before the last day of the Employee's taxable year following the taxable year in which the expense was incurred and (3) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
The payments and benefits provided in this Section 3.3(a) and under all of the Company’s employee benefit and compensation plans shall be without regard to any plan amendment made after any Change of Control that adversely affects in any manner the computation of payments and benefits due the Employee under such plan or the time or manner of payment of such payments and benefits, excluding plan amendments that the Company is required by law to implement. After a Change of Control no discretionary power of the Board or any committee thereof shall be used in a way (and no ambiguity in any such plan shall be construed in a way) which adversely affects in any manner any right or benefit of the Employee under any such plan.
(b)Death; Disability; Termination for Cause; or Voluntary Termination. If, after a Change of Control and during the Employment Term, the Employee’s status as an employee is terminated (1) by reason of the Employee’s death or Disability, (1) by the Company for Cause or (2) voluntarily by the Employee other than for Good Reason, this Agreement shall terminate without further obligation to the Employee or the Employee’s legal representatives (other than the timely payment or provision of those already accrued to the Employee, imposed by law or imposed pursuant to employee benefit or compensation plans, programs, practices, policies or agreements maintained by the Company or its Affiliates).
(c)Notice of Termination. Any termination by the Company for Cause or by reason of the Employee’s Disability, or by the Employee for Good Reason, shall be communicated by a Notice of Termination to the other party given in accordance with Section 5.2 of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (1) indicates the specific termination provision in this Agreement relied upon, (2) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employee’s employment under the provision so indicated and (3) if the effective date of the termination is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 30 days after the giving of such notice), provided that the effective date for any termination by reason of the Employee’s Disability shall be the 30th day after the giving of such notice, unless prior to such 30th day the Employee shall have resumed the full-time performance of her duties. The failure by the Employee or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause, Disability or Good Reason shall not waive any right of the Employee or the Company, respectively, hereunder or preclude the Employee or the Company, respectively, from asserting such fact or circumstance in enforcing the Employee’s or the Company’s rights hereunder.
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Exhibit 10.2
(d)Six-Month Delay for Specified Employees. Notwithstanding any other provision hereof, payments hereunder which constitute deferred compensation under Section 409A of the Code and the Treasury Regulations thereunder and which are not exempt from coverage by Section 409A of the Code and the Treasury Regulations thereunder shall commence, if Employee is then a Specified Employee and payment is triggered by her Separation from Service, on the first day of the seventh month following the date of the Specified Employee’s Separation from Service, or, if earlier, the date of death of the Specified Employee. On the first day of such seventh month or on the first day of the month following the earlier death of the Specified Employee, the Specified Employee or her estate or spouse, as the case may be, shall be paid in a lump sum the amount that the Specified Employee would have been paid hereunder over the preceding six months (or, if earlier, the months preceding the date of death) but for the fact that she was a Specified Employee. Nevertheless, for all other purposes of this Agreement, the payments shall be deemed to have commenced on the date they would have had the Employee not been a Specified Employee, and payment of any remaining benefits shall be made as otherwise scheduled hereunder.
3.4 Accrued Obligations and Other Benefits. It is the intent of this Agreement that upon termination of employment for any reason following a Change of Control the Employee or her legal representatives be entitled to receive promptly, and in addition to any other benefits specifically provided, (a) the Employee’s Base Salary through the date of termination to the extent not theretofore paid, (b) any accrued vacation pay, to the extent not theretofore paid, and (c) any other amounts or benefits required to be paid or provided or which the Employee or her legal representatives are entitled to receive under any plan, program, policy, practice or agreement of the Company.
3.5 Stock Options and Other Incentives. The foregoing benefits provided for in this Article III are intended to be in addition to the value or benefit of any stock options, restricted stock, restricted stock units, performance shares or similar awards, the exercisability, vesting or payment of which is accelerated or otherwise enhanced upon a Change of Control pursuant to the terms of any stock option, incentive or other similar plan or agreement heretofore or hereafter adopted by the Company or the Post-Transaction Company.
3.6 Conditional Payment Reductions.
(a) Notwithstanding any other contrary provisions in any plan, program or policy of the Company, if all or any portion of the benefits payable under this Agreement, either alone or together with other payments and benefits that the Employee receives or is entitled to receive from the Company, would constitute a “parachute payment” within the meaning of Section 280G of the Code, the Company shall reduce the Employee’s payments and benefits payable under this Agreement to the extent necessary so that no portion thereof shall be subject to the excise tax imposed by Section 4999 of the Code, but only if, by reason of such reduction, the net after-tax benefit shall exceed the net after-tax benefit if such reduction were not made. “Net after-tax benefit” for these purposes shall mean (i) the sum of the total amount payable to Employee under the Agreement, plus all other payments and benefits which Employee receives or is then entitled to receive from the Company that, alone or in combination with the payments and benefits payable under the Agreement, would constitute a “parachute payment” within the meaning of Section 280G of the Code (each such benefit hereinafter referred to as an “Additional Parachute Payment”), less (ii) the amount of federal income taxes payable with respect to the foregoing calculated at the maximum marginal income tax rate for each year in which the foregoing shall be paid to the Employee (based upon the rate in effect for such year as set forth in the Code at the time of the payment under the Agreement), less (iii) the amount of excise taxes imposed with respect to the payments and benefits described in clause (i) above by Section 4999 of the Code. The parachute payments reduced under this section shall be those that the Employee determines provide the Employee the best economic benefit and, to the extent any parachute payments are economically equivalent with each other, each shall be reduced pro rata; provided, however, that the Employee may elect to
11
Exhibit 10.2
have the non-cash payments and benefits due the Employee reduced or eliminated prior to any reduction of the cash payments due under this Agreement.
(b)All determinations required to be made under this Section 3.6 shall be made by the accounting firm that was the Company’s independent auditor prior to the Change of Control or any other third party mutually acceptable to the Employee and the Company (the “Accounting Firm”). The Accounting Firm shall provide detailed supporting calculations both to the Company and the Employee. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Absent manifest error, any determination by the Accounting Firm shall be binding upon the Company and the Employee.
(c)For purposes of determining whether and the extent to which any payments would constitute a “parachute payment” (i) no portion of any payments or benefits that the Employee shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of Section 280G(b) of the Code shall be taken into account, (ii) no portion of the payments shall be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Employee and selected by the Accounting Firm, does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the excise tax, no portion of such payments shall be taken into account which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the “base amount” (within the meaning set forth in Section 280G(b)(3) of the Code) allocable to such reasonable compensation, and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the payments shall be determined by the Accounting Firm in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
3.7 Legal Fees. The Company agrees to reimburse the Employee for all legal fees and other expenses which the Employee may reasonably incur as a result of any contest by the Company or the Post-Transaction Company of the validity or enforceability of, or liability under, any provision of this Agreement, but only if, when and to the extent the Employee prevails with respect to such contest.
3.8 Set-Off; Mitigation. After a Change of Control, the obligations of the Company and its Affiliates to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company or its Affiliates may have against the Employee or others, other than as expressly provided to the contrary in Section 3.3(a)(iv), Section 3.10 or Section 4.3. It is the intent of this Agreement that in no event shall the Employee be obligated to seek other employment or take any other action to mitigate the amounts or benefits payable to the Employee under any of the provisions of this Agreement.
3.9 Certain Pre-Change of Control Terminations. Notwithstanding any other provision of this Agreement, the Employee’s employment shall be deemed to have been terminated following a Change of Control by the Company without Cause (and the Employee shall be entitled to receive all payments and benefits associated therewith) if the Employee’s employment is terminated by the Company or any of its Affiliates without Cause prior to a Change of Control (whether or not a Change of Control actually occurs) and such termination (1) was at the request or direction of a third party who has taken steps designed to effect a Change of Control or otherwise arose in connection with or in anticipation of a Change of Control or (2) occurred after discussions with a third party regarding a possible Change of Control transaction commenced and such discussions produced (whether before or after such termination) either a preliminary or definitive agreement with respect to such a transaction or a public announcement of the pending transaction (whether or not a Change of Control actually occurs).
3.10 Other Severance Plans. If the Employee becomes entitled to receive severance benefits under this Article III, the Company shall not be required to pay the Employee any additional severance
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Exhibit 10.2
payment under any other severance or salary continuation policy, plan, agreement or arrangement maintained by the Company or its Affiliates unless such other policy, plan, agreement or arrangement expressly provides to the contrary.
ARTICLE IV
NON-DISCLOSURE, NON-SOLICITATION AND NON-DISPARAGEMENT
4.1 Non-disclosure of Confidential Information. The Employee acknowledges and agrees that in the course of the Employee’s employment the Employee has been in a position to have access to and develop Confidential Information and will continue to be in position to receive and develop Confidential Information during the Employee’s tenure as an employee of the Company or any of its Affiliates. As long as the Employee is an employee of the Company or any of its Affiliates, the Employee shall hold in a fiduciary capacity for the benefit of the Company all Confidential Information which the Employee obtained during the Employee’s employment (whether prior to or after the Agreement Date) and shall use such Confidential Information solely in the good faith performance of her duties for the Company and its Affiliates. If the employment of the Employee is terminated for any reason, then, commencing with the termination date and continuing until the fifth anniversary of such date, the Employee shall (a) not communicate, divulge or make available to any Person (other than the Company and its Affiliates) any such Confidential Information, except with the prior written consent of the Company or as may be required by law or legal process, and (b) deliver promptly to the Company upon its written request any Confidential Information in her possession, including any duplicates thereof and any notes or other records the Employee has prepared with respect thereto, provided that Employee need not deliver to the Company, and may retain, one copy of any personal diaries, calendars, or personal notes of correspondence. If the provisions of any applicable law or the order of any court would require the Employee to disclose or otherwise make available any Confidential Information to a governmental authority or to any other third party, the Employee shall give the Company, unless it is unlawful to do so, prompt prior written notice of such required disclosure and an opportunity to contest the requirement of such disclosure or apply for a protective order with respect to such Confidential Information by appropriate proceedings.
Notwithstanding the foregoing, and in accordance with 18 U.S.C. § 1833, nothing herein prohibits Employee (1) from disclosing Confidential Information (a) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney, and (b) solely for the purpose of reporting or investigating a suspected violation of law; or (2) from disclosing Confidential Information in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Disclosures to attorneys, made under seal, or pursuant to court order are also protected in certain circumstances under 18 U.S.C. § 1833. Further, nothing in this Agreement shall prohibit or is intended to restrict or impede the Employee from exercising the Employee’s rights under Washington’s Silenced No More Act or from disclosing or discussing (a) illegal acts of discrimination, harassment, retaliation, wage and hour violations, sexual assault, or other conduct recognized as being against a clear mandate of public policy occurring in the workplace, at work related events, between employees, or between an employer and an employee, whether on or off the employment premises, or (b) information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that the Employee has reason to believe is unlawful.
4.2 Non-solicitation and Non-disparagement.
(a) The Employee agrees that, during the term of this Agreement and for a period following the termination date of 18 months if the Employee’s employment is terminated by the Company or one of its Affiliates for Cause or by the Employee without Good Reason or one year if the Employee’s employment is terminated for any other reason (such period, the “Restricted Period”), the Employee will not,
13
Exhibit 10.2
directly or indirectly, in any capacity whatsoever, either on the Employee’s own behalf or on behalf of any other Person with whom the Employee may be employed or otherwise associated:
(i)contact any customer of the Company or its Affiliates, with which the Employee established or substantially developed a direct relationship with through the Employee’s work for the Company, to solicit, divert or entice away the business of such customer, or otherwise disrupt the relationship between such customer and the Company or its Affiliates;
(ii)make contact with any employee of the Company or its Affiliates for the purpose of soliciting such employee for hire, whether as an employee, independent contractor, consultant or otherwise, or otherwise disrupting such employee’s relationship with the Company or its Affiliates; or
(iii)make any statement or disclose any information to any customers, suppliers, lenders, lessors, licensees, other employees of the Company or its Affiliates or others that is defamatory or derogatory with respect to the business, operations, management or other employees of the Company or its Affiliates, or take any other action (excluding making truthful, non-defamatory statements in good faith that do not violate any other provision of this Agreement) that could reasonably be expected to injure the Company in its business relationships with any of the foregoing parties or result in any other detrimental effect on the Company or its Affiliates.
(b) For the avoidance of doubt, the Restricted Period applicable to the obligations set forth in Section 4.2(a)(ii) shall, in no event, be longer than eighteen months following the Employee’s termination of employment.
(c) The Employee agrees that: (i) the covenants and agreements set forth in this Article IV are reasonable in scope and duration, (ii) the Company would not have entered into this Agreement but for such covenants of the Employee, (iii) such covenants have been made as a result of arm-length bargaining in order to induce the Company to enter into this Agreement, and (iv) such covenants and agreements are reasonable and necessary for the protection of the Confidential Information, assets, goodwill and business of the Company. To the extent permitted by applicable law, the Employee covenants and agrees not to institute, maintain, prosecute or in any way aid in the institution, maintenance or prosecution of any lawsuit, action, claim, arbitration or other proceeding against the Company or any of its Affiliates with respect to the enforceability of the covenants contained in this Article IV.
4.3 Injunctive Relief; Forfeiture of Future Payments and Benefits; Other Remedies. The Employee acknowledges that a breach by the Employee of Sections 4.1 or 4.2 herein would cause immediate and irreparable harm to the Company for which an adequate monetary remedy does not exist; hence, the Employee agrees that, in the event of a breach or threatened breach by the Employee of the provisions of Sections 4.1 or 4.2 herein during or after the effective date of the Employee’s termination, the Company shall be entitled to injunctive relief restraining the Employee from such violation without the necessity of proof of actual damage or the posting of any bond, except as required by non-waivable, applicable law. Nothing herein, however, shall be construed as prohibiting the Company from pursuing any other remedy at law or in equity to which the Company may be entitled under applicable law in the event of a breach or threatened breach of this Agreement by the Employee, including without limitation the recovery of damages, costs or expenses, such as reasonable attorneys’ fees, incurred by the Company as a result of any such breach or threatened breach. In addition to the foregoing remedies, the Company shall have the right upon the occurrence of any breach of any non-disclosure, non-solicitation, and non-disparagement covenant contained in this Article IV, to cancel any unpaid severance payments, salary, bonus, commissions or reimbursements
14
Exhibit 10.2
otherwise outstanding at the termination date, including the suspension, reduction or elimination of payments and benefits under Article III. The Employee acknowledges that any such suspension, reduction or elimination of payments would not constitute, and should not be characterized as, liquidated damages.
4.4 Governing Law of this Article IV; Consent to Jurisdiction. Any dispute regarding the reasonableness of the covenants and agreements set forth in this Article IV or the scope and duration thereof or the remedies available to the Company upon any breach of such covenants and agreements, shall be governed by and interpreted in accordance with the laws of the State of Washington. The parties mutually agree that any such disputes shall be resolved in the United States District Court for the Western District of Washington or the King County Superior Court in Seattle, Washington. The parties agree that it is their mutual intent that the provisions of this Agreement be enforced to the fullest extent permitted under applicable law, whether now or hereafter in effect, and, to the extent permitted by applicable law, the parties waive any provision of applicable law that would render any provision of Article IV invalid or unenforceable.
ARTICLE V
MISCELLANEOUS
5.1 Binding Effect; Successors.
(a)This Agreement shall be binding upon and inure to the benefit of the Company and its successors or assigns, but the Company may assign this Agreement only (i) to an Affiliate or (ii) pursuant to a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Company and such assignee or transferee assumes the liabilities, obligations and duties of the Company under this Agreement, either contractually on the terms specified below or as a matter of law.
(b)This Agreement is personal to the Employee and shall not be assignable by the Employee without the consent of the Company (there being no obligation to give such consent) other than such rights or benefits as are transferred by will or the laws of descent and distribution, which shall inure to the benefit of the Employee’s legal representatives.
(c)The Company shall require any successor to or assignee of (whether direct or indirect, by purchase, share exchange, merger, consolidation or otherwise) all or substantially all of the assets or businesses of the Company (1) to assume unconditionally and expressly this Agreement and (2) to agree to perform or to cause to be performed all of the obligations under this Agreement in the same manner and to the same extent as would have been required of the Company had no assignment or succession occurred.
(d)The Company shall also require all entities that control or that after the transaction will control (directly or indirectly) the Company or any such successor or assignee to agree to cause to be performed all of the obligations under this Agreement.
(e)The obligations of the Company and the Employee which by their nature may require either partial or total performance after the expiration of the term of the Agreement shall survive such expiration.
15
Exhibit 10.2
5.2 Notices. All notices hereunder must be in writing and shall be deemed to have been given upon receipt of delivery by: (1) hand (against a receipt therefor), (2) certified or registered mail, postage prepaid, return receipt requested, (3) a nationally recognized overnight courier service or (4) telecopy transmission with confirmation of delivery. All such notices must be addressed as follows:
If to the Company, to:
Lumen Technologies, Inc.
931 14th Street
Denver, Colorado 80202
Attn: Chief Legal Officer
Denver, Colorado 80202
Attn: Chief Legal Officer
If to the Employee, to:
The last address that the Company has in its personal records for the Employee.
or such other address as to which any party hereto may have notified the other in writing.
5.3 Governing Law. This Agreement shall be construed and enforced in accordance with and governed by the internal laws of the State of Washington without regard to principles of conflict of laws.
5.4 Withholding. The Employee agrees that the Company has the right to withhold, from the amounts payable pursuant to this Agreement, all amounts required to be withheld under applicable income or employment tax laws, or as otherwise stated in documents granting rights that are affected by this Agreement.
5.5 Amendment and Compliance with Law. No provision of this Agreement may be modified or amended except by an instrument in writing signed by both parties. Notwithstanding any other provision of this Agreement, it is the intention of the parties to this Agreement that no payment or entitlement pursuant to this Agreement will give rise to any adverse tax consequences to the Employee under Section 409A of the Code and Treasury Regulations and other interpretive guidance issued thereunder, including those issued after the date hereof (collectively, “Section 409A”). This Agreement and any amendments hereto shall be interpreted and administered to that end and (i) to the maximum extent permitted by law, no effect shall be given to any provision herein, any amendment hereto or any action taken hereunder in a manner that reasonably could be expected to give rise to adverse tax consequences under Section 409A and (i) the parties shall take any corrective action reasonably within their control that are necessary to avoid such adverse tax consequences.
5.6 Severability. If any term or provision of this Agreement, or the application thereof to any person or circumstance, shall at any time or to any extent be invalid, illegal or unenforceable in any respect as written, the Employee and the Company intend for any court construing this Agreement to modify or limit such provision so as to render it valid and enforceable to the fullest extent allowed by law. Any such provision that is not susceptible of such reformation shall be ignored so as to not affect any other term or provision hereof, and the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid, illegal or unenforceable, shall not be affected thereby and shall be valid and enforced to the fullest extent permitted by law.
5.7 Waiver of Breach. Except as expressly provided herein to the contrary, the failure by any party to enforce any of its rights hereunder shall not be deemed to be a waiver of such rights, unless such waiver is an express written waiver. The waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach thereof.
16
Exhibit 10.2
5.8 Remedies Not Exclusive. No remedy specified herein shall be deemed to be such party’s exclusive remedy, and accordingly, in addition to all of the rights and remedies provided for in this Agreement, the parties shall have all other rights and remedies provided to them by applicable law, rule or regulation, including without limitation the right to claim interest with respect to any payment not timely made hereunder.
5.9 Company’s Reservation of Rights. The Employee acknowledges and understands that (1) the Employee is employed “at will” by either the Company or one of its Affiliates (the “ Employer”), (2) the Employee serves at the pleasure of the board of directors of the Employer, and (3) the Employer has the right at any time to terminate the Employee’s status as an employee, or to change or diminish her status during the Employment Term, subject to the rights of the Employee to claim the benefits conferred by this Agreement. Notwithstanding any other provisions of this Agreement to the contrary, this Agreement shall not entitle the Employee or her legal representatives to any severance or other benefits of any kind prior to a Change of Control or to any such benefits if Employee is not employed by the Company or one of its Affiliates on the date of a Change of Control, except in each case for those rights afforded under Section 3.9.
5.10 Non-exclusivity of Rights. Subject to Section 5.9, nothing in this Agreement shall prevent or limit the Employee’s continuing or future participation in any plan, program, policy or practice provided by the Company or any of its Affiliates and for which the Employee may qualify, nor shall anything herein limit or otherwise restrict such rights as the Employee may have under any contract or agreement with the Company or any of its Affiliates. For the avoidance of doubt, however, this Agreement amends, restates and supersedes the Prior Agreement in its entirety and the Employee shall not be eligible to participate in the Severance Plan except to the extent incorporated in this Agreement.
5.11 Demand for Benefits. Unless otherwise provided herein, the payment or payments due hereunder shall be paid to the Employee without the need for demand, and to a beneficiary upon the receipt of the beneficiary’s address and social security number. In all such cases, the Employee or beneficiary shall provide all required tax withholding information or forms upon the Company’s request. Nevertheless, the Employee or a Person claiming to be a beneficiary who claims entitlement to a benefit can file a claim for benefits hereunder with the Company. Unless otherwise provided herein, the Company shall accept or reject the claim within ten business days of its receipt. If the claim is denied, the Company shall give the reason for denial in a written notice that refers to the provision of this Agreement that forms the basis of the denial. If any additional information or material is necessary to perfect the claim, the Company will identify these items in writing and explain why such additional information is necessary.
5.12 Authority. The Company represents and warrants that (1) its execution and delivery of this Agreement has been duly authorized by the Board and (2) no other corporate proceedings are necessary to authorize the Company’s execution, delivery and performance of this Agreement.
5.13 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.
5.14 Interpretation. Any reference to any section of the Code or the Treasury Regulations shall be deemed to also refer to any successor provisions thereto.
5.15 The Employee’s Acknowledgment. The Employee represents to the Company that she has read and understands, and agrees to be bound by, each of the terms of this Agreement, including Article IV.
17
Exhibit 10.2
IN WITNESS WHEREOF, the Company and the Employee have caused this Agreement to be executed as of the Agreement Date.
LUMEN TECHNOLOGIES, INC.
By: /s/ Jennifer Hodges _____________________
Jennifer Hodges
Executive Vice President, Chief Legal Officer and Secretary
EMPLOYEE
/s/ Kate Johnson____________________________
Kate Johnson
Chief Executive Officer
Chief Executive Officer
18
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Kate Johnson, Chief Executive Officer, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Lumen Technologies, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 4, 2026 | /s/ Kate Johnson | |||||||
| Kate Johnson Chief Executive Officer | ||||||||
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Chris Stansbury, President and Chief Financial Officer, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Lumen Technologies, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| Date: November 4, 2026 | /s/ Chris Stansbury | |||||||
| Chris Stansbury President and Chief Financial Officer | ||||||||
Exhibit 32.1
Certification Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q for the quarter ended September 30, 2026 (the "Form 10-Q") of Lumen Technologies, Inc. ("Lumen Technologies"), as filed with the Securities and Exchange Commission on the date hereof, I, Kate Johnson, Chief Executive Officer of Lumen Technologies, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Lumen Technologies as of the dates and for the periods covered by such report.
A signed original of this statement has been provided to Lumen Technologies and will be retained by Lumen Technologies and furnished to the Securities and Exchange Commission or its staff upon request.
| Date: | November 4, 2026 | /s/ Kate Johnson | |||||||||
| Kate Johnson | |||||||||||
| Chief Executive Officer | |||||||||||
Exhibit 32.2
Certification Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q for the quarter ended September 30, 2026 (the "Form 10-Q") of Lumen Technologies, Inc. ("Lumen Technologies"), as filed with the Securities and Exchange Commission on the date hereof, I, Chris Stansbury, President and Chief Financial Officer of Lumen Technologies, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Lumen Technologies as of the dates and for the periods covered by such report.
A signed original of this statement has been provided to Lumen Technologies and will be retained by Lumen Technologies and furnished to the Securities and Exchange Commission or its staff upon request.
| Date: | November 4, 2026 | /s/ Chris Stansbury | |||||||||
| Chris Stansbury | |||||||||||
| President and Chief Financial Officer | |||||||||||