Exhibit 10.14
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
000 XXXXXXXXX XXXXXX
XXXXXXXXX, XX 00000
February 18, 2004
Mr. Xxxxx Xxxxxx
00000 Xxxxxxxxxx Xxxxxx, Xx 0000
Xxxxxxxxx XX 00000-0000
Re: Employment Agreement
Dear Xx. Xxxxxx:
This letter agreement ("Agreement") sets forth the terms and
conditions of your employment with Alaska Communications Systems Holdings, Inc.
(hereinafter "ACS" or the "Company"), effective as of March 1, 2004 hereinafter,
the "Effective Date" or "the commencement of your employment with ACS").
1. EMPLOYMENT AND SERVICES. ACS hereby employs you as Sr. Vice
President, and Chief Financial Officer (hereinafter "Executive" or "you")
reporting directly to the Company's President and/or CEO for the period
beginning on the Effective Date and ending upon termination pursuant to Section
4 (the "Employment Period"). During the Employment Period, you shall render such
services to the Company and its affiliates and subsidiaries as the Boards of
Directors of Alaska Communications Systems Group, Inc. and Alaska Communications
Systems Holdings, Inc. and its subsidiaries (hereinafter "Boards of Directors")
shall reasonably designate from time to time, and you shall devote your best
efforts and full time and attention as an Executive Officer to the business of
the Company. Notwithstanding the foregoing, Executive may hold Board of Director
position(s) with other companies or not-for-profit organizations (whether or not
compensated) during his Employment Period, provided that such position(s) does
not interfere with his duties to the Company, or compete directly or indirectly
with the Company's business and Executive has the approval of ACS' Board or
Directors. "Executive Officer" for the purpose of this Agreement is defined as a
controlling officer with the authority and responsibility to direct areas of the
Company's business under the direction of and as assigned by the CEO, Boards of
Directors, or both. Authority extends to operational decision making and goal
setting for assigned responsibilities and accountabilities of the business as
required by and to support the company strategy and achievement of corporate
goals.
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2. COMPENSATION.
BASE SALARY. The Company shall pay Executive an annual base
salary ("Annual Base Salary") of $250,000 (Two Hundred fifty Thousand and 00/100
U.S. Dollars) during the first year of the Employment Period, subject to annual
review in each year of the Employment Period thereafter (for any partial year
during the Employment Period, the Annual Base Salary shall be prorated based on
the number of days during such year on which you are employed by the Company).
Your Annual Base Salary may be increased in years following the first year of
employment but may not be decreased. As used herein, the term "Annual Base
Salary" refers to the Annual Base Salary as so increased. Such Annual Base
Salary shall be payable in installments in accordance with the Company's regular
payroll practices.
ANNUAL BONUS. In addition, you will be eligible to receive an
annual bonus, which, for your first year of employment, will be prorated for the
time the Effective Date and the end of the 2004 fiscal year ("Annual Bonus").
The Annual Bonus will be paid as soon as practicable ninety (90) days after the
end of each fiscal year, but in no event later than one hundred twenty (120)
days after the end of the fiscal year.
You and the Company, acting in good faith, shall mutually
determine appropriate individual and Company business targets, with approval of
the Board of Directors or the Personnel and Compensation Committee of the Board,
for each fiscal year and your Annual Bonus shall be based upon 100% attainment
of such targets. If you and/or the Company attain the mutually determined
business targets, you shall receive a bonus equal to one hundred percent (100%)
of your Annual Base Salary as in effect with respect to any such fiscal year,
and in the event that the Company exceeds or does not exceed the business
targets, there shall be appropriate adjustments in the amount of your Annual
Bonus. The determination of appropriate business targets shall take place not
later than sixty (60) days subsequent to the commencement of the Company's
fiscal year, and all Business targets shall be provided in writing to you within
thirty (30) days of the Company's determination of said business targets.
SIGNING BONUS. In addition, the Company will pay Executive a
signing bonus in the amount of $75,000 (seventy-five thousand dollars) on June
30, 2004, provided Executive is employed by ACS in good standing on that date.
EQUITY PACKAGE. The Company will grant Executive an option to
purchase 250,000 shares of Alaska Communications Systems Group, Inc. (ALSK)
common stock ("Option") under the Company's Stock Option Plan. The per share
exercise price of the Option will be equal to the fair market value of ALSK
common stock on the commencement date of your employment and having a term of 10
years. The Option shall vest at 20% (50,000 shares) per twelve-month period for
the five-year period, starting with the commencement of your employment with
ACS, or on a Change in Control, whichever is earlier. Vesting ceases and the
term of unvested options lapse upon termination of employment for any reason.
Upon termination of employment, vested options may be exercised for the maximum
applicable period provided for in the applicable plan.
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3. BENEFITS. During the Employment Period, you shall be entitled
to participate in the Company's fringe benefit plans, subject to and in
accordance with applicable eligibility requirements, including life and
disability insurance plans, vehicle allowance, relocation of personal residence
benefits, and all other benefit plans (other than severance plans or
arrangements) generally available to the Company's Executive Officers. With
respect to relocation of personal residence benefits upon termination of
Executive's employment, Section 4 herein will govern and such benefits will be
provided in the event that your work location is moved more than forty (40)
miles from the ACS Headquarters, as in place on the Effective Date of this
Agreement, and you elect to move within three (3) months of assignment of a new
work location.
ACS will reimburse Executive for his reasonable legal and other
professional fees incurred in connection with the negotiation and documentation
of this Agreement, up to a maximum of $5,000.
4. TERMINATION AND SEVERANCE. The Employment Period shall
terminate on the first to occur of:
a. ninety (90) days following written notice by you to the
Company of your resignation without Good Reason, (it being
understood that you will continue to perform your services
hereunder during such ninety (90) day period),
b. thirty (30) days following written notice by you to the
Company of your resignation with Good Reason during the
Employment Period, or in the event of Good Reason because of a
Change of Control, ninety (90) days following such Change in
Control (it being understood that you will continue to perform
your services hereunder during such ninety (90) day period),
c. your death or Disability,
d. a vote of the Boards of Directors of Alaska Communications
Systems Group, Inc., or Alaska Communications Systems
Holdings, Inc. or in the event the Agreement is assigned to a
subsidiary, the applicable Board of Directors, directing such
termination for Cause,
e. a vote of the Boards of Directors of Alaska Communications
Systems Group, Inc., or Alaska Communications Systems
Holdings, Inc. or in the event the Agreement is assigned to a
subsidiary, the applicable Board of Directors, directing such
termination without Cause,
f. the fifth anniversary of the Effective Date (the "Scheduled
Expiration Date"); provided, however, that the Scheduled
Expiration Date shall be automatically extended for successive
one-year periods unless, at least ninety (90) days prior to
the then-current Scheduled Expiration Date, either the Company
or you shall give written notice to the other of an intention
not to extend the Employment Period, or
g. the termination of Alaska Communications Systems Group, Inc.,
Alaska Communications Systems Holdings, Inc. or in the event
the Agreement is assigned to a subsidiary, the applicable
company's business operations.
In the event of termination of the Employment Period pursuant to the
above defined clause (b.), (e.), (g.), or pursuant to clause (f.) as a result of
the Company's notice to you of an intention not to extend the Employment Period,
you shall be entitled, on such date, to all of the
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following: (a) all accrued wages (including earned but unused vacation or PTO)
earned by you through the date of termination; (b) a lump-sum payment equal to
100% of your Annual Base Salary then in effect; (c) a lump-sum payment equal to
100% of your target Annual Bonus payment then in effect; (d) reimbursement for
the cost of continuing health insurance coverage for yourself and your family
under COBRA for the twelve (12) month period following such a termination. Stock
Options shall vest in accordance with ACS' Stock Option Plan and would be then
deemed immediately exercisable and remain exercisable for the duration of the
exercise period originally granted under ACS' Stock Option Plan.
In the event of termination of employment pursuant to the above defined
clause (b.), (c.), (e), (g.), or pursuant to clause (f.) as a result of either
the Company's or the Executive's notice of intention not to extend the
employment agreement, the Company shall provide personal travel for you, your
spouse and dependent family members and transport of household belongings to a
maximum of lump sum relocation allowance of $50,000, if you or, in the event of
your death, your spouse or dependent family members, elect to relocate to the
lower 48 states within six (6) months of such termination. In the event of
Executive's death, the lump-sum relocation benefit allowance contained in this
paragraph will be provided to Executive's spouse and dependent family members.
Except as otherwise set forth in this paragraph 4 or pursuant to the
terms of employee benefit plans in which you participate pursuant to paragraph
3, you shall not be entitled to any compensation or other payment from the
Company in connection with termination of your employment hereunder.
ACS may repurchase any ACS stock acquired through the exercise of stock
options or otherwise received by Executive at the lower of the price paid by
Executive, the price on the date of grant (in the case of any stock grant) or
the then fair market value of the stock, only if Executive is in material breach
of duties and responsibilities or Executive has been terminated for Cause.
Material breach is defined as a substantial failure on the part of the Executive
to perform, consistent with the definition of Executive Officer as provided in
Section 1 of this Agreement, or the duties and responsibilities as assigned by
the CEO, Boards of Directors, or both consistent with this Agreement. Executive
shall not be obligated for the value of shares sold prior to receiving notice of
ACS' demand to repurchase stock under the provisions of this Agreement.
For purpose of this agreement, the following definitions will apply:
(a) "Good Reason" shall be defined as, and shall be deemed to
exist, if any of the following conditions occur, provided that such
conditions persist for fifteen (15) business days after written notice
to the Board from the Employee and the Company has failed to cure: (i)
the Company, its successors or assigns decreases the Employee's Base
Salary; (ii) the Company, its successors or assigns makes a material,
adverse change in the Employee's title, authority, responsibilities or
duties, as measured against the Employee's title, authority,
responsibilities or duties immediately prior to such change (provided
that the Company or its successor may provide a position of equivalent
duties, responsibilities, and compensation); (iii) the Company, it's
successors or assigns requires
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the relocation of the Employee's work place to a location outside the
Anchorage, Alaska area (i.e., more than forty (40) miles away from
headquarters location at the execution of this document); (iv) the CFO
position no longer reports to the President and/or CEO of the Company;
(v) a Change in Control of the Company occurs, as defined below; (vi)
the Company, its successors or assigns materially breaches any
provision of this Employment Agreement; or (vii) the Company fails to
obtain the assumption of this Employment Agreement by any successor or
assign of the Company.
(b) "Cause" shall mean: (i) your knowing and willful refusal to
follow the lawful directives of the Board, CEO or President, (ii) a
knowing and willful material misrepresentation to the Board of the
Company, which is materially injurious to the Company; (iii) a
conviction or guilty plea to a felony or a misdemeanor involving fraud,
dishonesty, or moral turpitude; or (iv) knowing and willful disclosure
of the Company's confidential or proprietary information that causes
material harm to the Company. Provided, however, that in the event of a
potential "Cause" breach under prong (i) of this Section, the Board
shall be required to give Executive thirty (30) days' written notice of
Executive's specific failure to perform lawful directions, and
Executive shall have thirty (30) days to cure his performance.
(c) "Change in Control" shall mean: (i) the acquisition by any
person or group (as that term is used in Regulation 13D under the
Securities Exchange Act of 1934, as amended), other than Fox Xxxxx &
Company, LLC or any of its affiliates, of beneficial ownership of a
majority or more of the Company's outstanding voting securities; (ii)
any sale, lease, exchange or other transfer in one transaction or a
series of selected transactions, other than a transfer to an entity
which is majority controlled by Fox Xxxxx & Company, LLC or any
affiliate thereof or an entity with substantially the same equity
holders as immediately prior to such transfer, of all or substantially
all of the assets of the Company or its operating subsidiaries (taken
together), or (iii) any plan for the liquidation or dissolution of the
Company.
(d) "Disability" shall mean that, for a period of six (6)
consecutive months in any twelve (12) month period, you are incapable
of substantially fulfilling the duties of your positions as set forth
in Section 1 because of physical, mental or emotional incapacity
resulting from injury, sickness or disease. Any question as to the
existence or extent of the Disability upon which you and the Company
cannot agree shall be determined by a qualified, independent physician
selected by the Company. The determination of any such physician shall
be final and conclusive for all purposes; provided, however, that you
or your legal representatives shall have the right to present to such
physician such information as to such Disability as you or they may
deem appropriate, including the opinion of your personal physician.
(e) "Potential Transaction" shall mean any, merger, acquisition,
disposition, joint venture, partnership, strategic alliance, ownership,
partial ownership, lender or borrower relationship or relationship of
significant control or influence with any party.
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5. CONFIDENTIAL INFORMATION. You acknowledge that information
obtained by you while employed by the Company concerning the business or affairs
of (i) the Company, its affiliates and subsidiaries or (ii) any enterprise which
is the subject of an actual or Potential Transaction, considered, evaluated,
reviewed or otherwise made known to you by the Company, its affiliates or
subsidiaries ("Confidential Information") is the property of the Company. You
shall not, without the prior written consent of the Company, disclose to any
person or use for your own account any Confidential Information except (i) in
the normal course of performance of your duties hereunder, (ii) to the extent
necessary to comply with applicable laws, or (iii) to the extent that such
information becomes generally known to and available for use by the public other
than as a result of your acts or omissions to act. Upon termination of your
employment or at the request of the Company at any time, you shall deliver to
the Company all documents containing Confidential Information as relating to the
business or affairs of the Company that you may then possess or have under your
control.
6. NON-COMPETITION; NON-SOLICITATION.
a. NON-COMPETITION. You acknowledge that you are and
will be in possession of Confidential Information and that your services are of
unique and great value to the Company. Accordingly, from the Effective Date
until the expiration of the period ending twelve (12) months from the date of
the termination of your employment with the Company or its affiliated companies
(the "Non-Compete Period"), you shall not directly or indirectly own, invest
(equity or debt) in, manage, control, participate in, consult with, advise,
render services to, or in any manner engage in, or be connected as an employee,
officer, partner, director, consultant or otherwise with, (i) any enterprise
engaged in the provision of telecommunications services in the state of Alaska,
or (ii) any enterprise which is the subject of a Potential Transaction in which
you are directly involved or have knowledge of during or at any time prior to
the termination of this Agreement, and that is engaged in the provision of
telecommunications services, (a "Competitive Business"). Nothing herein shall
prohibit you from being a passive owner of not more than one percent (1 %) of
any publicly traded class of capital stock of any entity engaged in a
Competitive Business.
b. NON-SOLICITATION. During the Non-Compete Period, you
shall not directly or indirectly induce or attempt to induce any employee of the
Company or its affiliates or subsidiaries to terminate, or in any way interfere
with, the relationship between the Company or its affiliates or subsidiaries and
any employee thereof, nor shall you directly or indirectly solicit or attempt to
solicit business from any customer or supplier of the Company or its affiliates
or subsidiaries.
c. SCOPE OF RESTRICTION. If, at the time of enforcement
of this Section 6, a court shall hold that the duration, scope or area
restrictions stated herein are unreasonable under circumstances then existing,
the parties hereto agree that the maximum duration, scope or area reasonable
under such circumstances shall be substituted for the stated duration, scope or
area.
7. SURVIVAL. Any termination of your employment or of this
Agreement shall have no effect on the continuing operation of Section 5 or 6 for
the periods specified therein.
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8. INDEMNIFICATION. The Company agrees to make Executive a
beneficial party to any indemnification agreement as may be applicable to the
Company's other officers and directors from time to time. The Employee will be
covered under the Company-provided Directors' and Officers' Liability Insurance
Policies, which protections shall be commensurate with the duties,
responsibilities and risks of the Vice President and Chief Financial Officer
position. The Company agrees to indemnify you and hold you harmless from any and
all claims arising from or relating to your status as an employee, officer,
Executive Officer, director or agent of the Company, its affiliates, or
subsidiaries, to the fullest extent permitted by Delaware law other than claims
arising from your gross negligence.
9. WAIVER OF CLAIMS. You agree as a condition to your full
receipt of termination or severance benefits pursuant to Section 4 hereof, you
will agree to waive, discharge and release any and all claims, demands and
causes of action, whether known or unknown, against the Company, its affiliates
and subsidiaries, and their respective current and former directors, officers,
employees, attorneys and agents arising out of, connected with or incidental to
your employment or other dealings with the Company, its affiliates or
subsidiaries, which you or anyone acting on your behalf might otherwise have had
or asserted and any claim to any compensation or benefits from your employment
with the Company or its affiliates (other than pursuant to the terms of this
Agreement or of any employee benefit plans set forth in Section 3 hereof)
provided, however, that in no event will you have to waive any claims you may
have under Section 8 above.
10. GOVERNING LAW. This Agreement and all questions concerning the
construction, validity and interpretation of this Agreement shall be governed by
and determined in accordance with the internal law, and not the law of
conflicts, of the State of Delaware. All disputes between ACS and Executive
(whether contractual or otherwise, including, without limitation, disputes
relating to or arising under or by reason of this Agreement or the other
agreements referred to herein) must be resolved by binding confidential
arbitration held within thirty (30) miles of Executive's place of residence in
Alaska, the specific location to be mutually agreed-upon. Such arbitration shall
be conducted in accordance with the JAMS Employment Arbitration Rules and
Procedures of and judgment on the award rendered in such arbitration may be
entered in any court having jurisdiction. Nothing in this Agreement shall
restrict the right of ACS or its affiliates to seek injunctive relief arising
out of any violation by the Executive of this Agreement. This Agreement is
intended by ACS and Executive to be a binding and completely integrated
agreement superseding all prior and contemporaneous promises, representations,
offers, contracts and agreements between ACS and Executive. This Agreement may
not be amended except in writing executed by Executive and the Chairman of the
Boards of ACS (or other Boards' authorized designee). This Agreement shall only
be binding on ACS and Executive if and when both parties have executed the
Agreement in counterparts.
11. NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given, if mailed, by
registered or certified mail, return receipt requested, or, if by other means,
when received by the other party at the address set forth herein, or such other
address as may hereafter be furnished to the other party by like notice.
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Notice or communication hereunder shall be deemed to have been received on the
date delivered to or received at the premises of the addressee if delivered
other than by mail, and in the case of mail, upon the depositing of the same in
the United States mail as above stated (as evidenced, in the case of registered
or certified mail, by the date noted on the return receipt.) Notices shall be
addressed as follows:
If to the Executive: Mr. Xxxxx Xxxxxx
00000 Xxxxxxxxxx Xxxxxx, Xx 0000
Xxxxxxxxx XX 00000-0000
(or such home address as Executive
later provides)
If to the Company: Alaska Communications Systems
Group, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxx 00000
Attention: President & CEO
with a copy to: Fox Xxxxx & Company, LLC
000 Xxxxx Xxxx
Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: W. Xxxxxx Xxxxx
12. SEPARABILITY CLAUSE. Any part, provision, representation or
warranty of this Agreement, which is prohibited, or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.
13. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF AGREEMENT. This
Agreement shall bind and inure to the benefit of and be enforceable by the
parties hereto and the respective successors and assigns of the parties hereto.
As used in this Agreement, "Company," and "ACS" shall mean the Company, and ACS
as hereinbefore defined and any subsidiaries and successors to their businesses
and/or assets which assume this Agreement by operation of law, or otherwise.
This Agreement is personal to you and without the prior written consent of the
Company shall not be assignable by you otherwise than by will or the laws of
descent and distribution.
14. WAIVER. The failure of any party to insist upon strict
performance of a covenant hereunder or of any obligation hereunder, irrespective
of the length of time for which such failure continues, shall not be a waiver of
such party's right to demand strict compliance in the future. No consent or
waiver, express or implied, to or of any breach or default in the performance of
any obligation hereunder, shall constitute a consent or waiver to or of any
other breach or default in the performance of the same or any other obligation
hereunder. No term or provision of the Agreement may be waived unless such
waiver is in writing and signed by the party against whom such waiver is sought
to be enforced.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire
Agreement between the parties hereto with respect to the subject matter
contemplated herein and supersedes all prior
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agreements, whether written or oral, between the parties, relating to the
subject matter hereof. This Agreement shall not be modified except in writing
executed by all parties hereto.
16. CAPTIONS. Titles or captions of paragraphs contained in this
Agreement are inserted only as a matter of convenience and for reference, and in
no way define, limit, extend or describe the scope of this Agreement or the
intent of any provision hereof.
17. COUNTERPARTS. For the purpose of facilitating the execution of
this Agreement, and for other purposes, this Agreement may be executed in any
number of counterparts. Each counterpart shall be deemed to be an original, and
all such counterparts shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have caused their names to
be signed hereto by their respective officers thereunto duly authorized as of
the date first above written.
Please execute the extra copy of this letter Agreement in the
space below and return it to the undersigned at the address set forth above to
confirm your understanding and acceptance of the agreements contained herein.
Very truly yours,
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
BY: /s/ Xxxxx Xxxxxxxxx
-------------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President & CEO
Accepted and agreed to:
/s/ Xxxxx Xxxxxx
-----------------------
Xxxxx Xxxxxx
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