EXHIBIT 10.9
STRICTLY CONFIDENTIAL
ALASKA COMMUNICATIONS SYSTEMS
HOLDINGS, INC.
000 X. XXXXXX, XXXXX 000
XXXXXXXXX, XX 00000
April 8, 1999
Xx. Xxxx X. Xxxxxx
000 Xxxxxxxx Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Re: Employment Agreement
Dear Xx. Xxxxxx:
This letter agreement (this "Agreement") sets forth the terms and
conditions of your employment with Alaska Communications Systems Holdings, Inc.
("ACSHI" or the "Company"), a wholly-owned subsidiary of ALEC Holdings, Inc.
("Holdings"), effective as of the first to occur of the date of consummation of
(a) the transactions contemplated by the Purchase Agreement, by and among ALEC
Acquisition Sub Corp, which is a subsidiary of ACSHI, CenturyTel of the
Northwest, Inc. and CenturyTel Wireless, Inc., dated as of August 14, 1998 and
(b) the transactions contemplated by the Asset Purchase Agreement, by and among
Alaska Communications Systems, Inc. ("ACS") and the Municipality of Anchorage,
dated as of October 20, 1998 (the "Effective Date"), provided that, if neither
transaction is consummated, this Agreement shall be void ab initio.
1. Employment and Services. ACSHI hereby employs you as Vice President and
Controller, for the period beginning on the Effective Date and ending upon
termination pursuant to paragraph 4 (the "Employment Period"). During the
Employment Period, you shall render such services to the Company and its
affiliates and subsidiaries as the Board of Directors of ACSHI shall reasonably
designate from time to time, and you shall devote your best efforts and full
time and attention to the business of the Company.
2. Compensation. The Company shall pay you an annual base salary ("Annual
Base Salary") of $130,000 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.
In addition, you will be eligible to receive an annual bonus to be
awarded ninety (90) days after the end of each fiscal year, to be paid as soon
as practicable but not later than one
1
hundred twenty (120) days after the end of the fiscal year. In order to
determine the amount of such bonus, the Company, acting in good faith, shall
determine appropriate business targets for each fiscal year and your annual
bonus shall be based upon attainment of such targets. As a benchmark for such
bonuses, the Company agrees that if the Company attains the mutually determined
business targets, you shall receive a bonus equal to thirty percent (30%) 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.
The Company, acting in good faith, shall also establish milestones
and timeframes ("Implementation Timelines") for the successful installation of a
suite of finance and accounting systems for each of the transactions referenced
above, and for a subsequent consolidation of these systems, as set forth in
Schedule A attached hereto. You will be paid the bonus amount established for
each milestone pursuant to Schedule A after satisfying the acceptance criteria
associated with the Implementation Timelines within thirty (30) days following
acceptance by the Company.
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, such as life and disability insurance
plans and all other benefit plans (other than severance plans or arrangements)
generally available to the Company's executive officers, including relocation of
personal residence benefits and stock option plans, in accordance with the terms
of any such plans or policies as in effect from time to time during the
Employment Period. In addition, the Company will reimburse your reasonable
out-of-pocket expenses incurred in connection with the performance of your
services hereunder, in each case consistent with Company policy. In addition,
during the Employment Period, you shall be entitled to annual vacation of not
less than two (2) weeks.
In lieu of relocation benefits under the applicable policy, you may
elect to have company-paid housing provided in Anchorage, Alaska during the
Employment Period. The selection of such housing shall be subject to Company
approval and will be consistent with housing provided to others similarly
situated.
4. Termination and Severance. The Employment Period shall terminate on the
first to occur of (i) sixty (60) 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 sixty (60) day
period), (ii) thirty (30) days following written notice by you to the Company of
your resignation with Good Reason during the Employment Period or following a
Change in Control (it being understood that you will continue to perform your
services hereunder during such thirty (30) day period), (iii) your death or
Disability, (iv) a vote of the Board of ACSHI directing such termination for
Cause, (v) a vote of the Board of ACSHI directing such termination without
Cause, or (vi) the second anniversary of the Effective Date (the "Scheduled
Expiration Date"); provided, however, that if termination of employment has not
been
2
effected on or before the Scheduled Expiration Date, employment thereafter shall
continue at will ("At-Will Period").
In the event of termination of the Employment Period pursuant to
clause (ii) or (v) above, the Company shall concurrently with such termination
make a lump-sum payment to you equal to the sum of (x) one times your Annual
Base Salary plus (y) in the event such termination occurs on or after December
31, 1999, one times the most recent annual bonus payment, if any, paid pursuant
to paragraph 2 hereof. In addition, you shall be entitled to reimbursement of
the cost of continuing your health insurance coverage under COBRA for the twelve
(12) month period following such a termination. 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. However, in the event you elect to resign effective
as of the Scheduled Expiration Date, after having given not less than thirty
(30) days written notice, or, if after you successfully meet the Implementation
Timelines set forth in paragraph 2, you resign upon ninety (90) days written
notice, you shall receive six (6) months of your Annual Base Salary; as well as
reimbursement for the cost of continuing your health insurance coverage under
COBRA for such period, in a lump sum within thirty (30) days after your
termination from employment. If you elect to relocate to the lower 48 states in
connection with such a voluntary resignation, or following a termination of
employment pursuant to clause (ii) or (v), the Company will provide for
relocation of personal and household goods, subject to applicable limits set
forth in the Company's relocation policy, and travel for you and your household
to your new residence in the lower 48 states.
For purpose of this agreement, the following definitions will apply:
(a) "Good Reason" shall mean: (i) the assignment of you by the Company to any
duties materially inconsistent with, or a material diminution of, your position,
including duties, title, offices, or responsibilities; or (ii) the transfer,
without your concurrence, of your principal place of employment to a geographic
location more than 100 miles from both your current personal residence and from
the location of your current principal place of employment (but shall not
include any transfer to Anchorage, Alaska); (b) "Cause" shall mean: (i) your
willful failure to comply with lawful directions of the Boards of the Company
after written notice; (ii) fraud, misappropriation or embezzlement by you; or
(iii) a material breach of this Agreement (other than due to physical or mental
illness) that is not cured within thirty (30) days after receiving written
notice from either the Board of the Company or of the Subsidiary of your
specific failure to perform your duties; (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; or (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 any plan for the liquidation or dissolution of
the Company; and (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 paragraph
1 because
3
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.
5. Confidential Information. You acknowledge that information obtained by
you while employed by the Company or any affiliate thereof (including as a
consultant to Fox Xxxxx & Company, LLC or as an employee of LEC Consulting
Corporation) 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, including, without limitation, the proposed
divestitures by GTE Corp. and US West, Inc. (a "Potential Transaction"),
considered, evaluated, reviewed or otherwise made known to Fox Xxxxx & Company,
LLC, the Company, its affiliates or subsidiaries, or you ("Confidential
Information") is the property of the Company. You shall not, without the prior
written consent of the Boards 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 Board of the Company or of the Subsidiary at any time, you shall
deliver to the respective Boards all documents containing Confidential
Information or 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 effective 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 local exchange or wireless telecommunications
services in the State of Alaska as of the effective date of termination of your
employment, or (ii) any enterprise which is engaged in the provision of local
exchange or wireless telecommunications services in competition with the Company
in any of the Company's service territories as of the effective date of
termination of your employment (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
4
attempt to solicit business from any customer or supplier of the Company or its
affiliates or subsidiaries. For purposes of this paragraph, a "customer" shall
mean an entity to which, as of the effective date of termination of your
employment, the Company provides products or services in the State of Alaska or
in any other service territory of the Company, and "business" is limited to the
provision of products and services within Alaska or such other service territory
of the Company.
c. Scope of Restriction. If, at the time of enforcement of this
paragraph 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.
8. Indemnification. 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, 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 receipt of any
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 and stock option plans set forth in
paragraph 3 hereof).
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. If any action at law or in equity is
commenced to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover reasonable attorney's fees, costs and
disbursements from the non-prevailing party, in addition to any other relief to
which the prevailing party may be entitled, as determined by the court.
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. 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
5
attempt to solicit business from any customer or supplier of the Company or its
affiliates or subsidiaries. For purposes of this paragraph, a "customer" shall
mean an entity to which, as of the effective date of termination of your
employment, the Company provides products or services in the State of Alaska or
in any other service territory of the Company, and "business" is limited to the
provision of products and services within Alaska or such other service territory
of the Company.
c. Scope of Restriction. If, at the time of enforcement of this
paragraph 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.
8. Indemnification. 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, 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 receipt of any
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 know 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 and stock option plans set forth in
paragraph 3 hereof).
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. If any action at law or in equity is
commenced to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover reasonable attorney's fees, costs and
disbursements from the non-prevailing party, in addition to any other relief to
which the prevailing party may be entitled, as determined by the court.
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. 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
5
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: Xx. Xxxx X. Xxxxxx
000 Xxxxxxxx Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
If to the Company: Alaska Communications Systems
000 X Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Vice President, Human
Resources
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," "Holdings" and the "Subsidiary" shall mean the Company,
Holdings and the Subsidiary as hereinbefore defined and any successors to their
businesses and/or assets as aforesaid which assume and agree to perform 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, including Schedules A and B attached
hereto, constitutes the entire Agreement between the parties hereto with respect
to the subject matter contemplated herein and supersedes all prior 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.
6
17. Counterparts. For the purpose of facilitating proving this Agreement,
and for other purposes, this Agreement may be executed simultaneously 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
HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
Accepted and agreed to:
/s/ Xxxx X. Xxxxxx
--------------------------
Xxxx X. Xxxxxx
7
Schedule A
Implementation Timelines
Systems to be Installed and Conditions for Acceptance Deadline Bonus Amount
----------------------------------------------------- -------- ------------
1. SAP Financial Suite for ATU 03/31/99 $10,000
o Complete transition of financial systems support from legacy ATU
environment (FMS) to SAP. FMS system is used only for backup, parallel
processing verifications, and/or incidental functionality.
2. ADP Payroll Processing for ACS/PTI Employees 06/30/99 $20,000
o An integrated time collection and payroll process which properly
accumulates time and attendance, calculates, prepares and timely produces
paychecks.
3. Platinum Financial Suite For PTI Properties 06/30/99 $20,000
o Complete transition of financial systems support from legacy CenturyTel
environment to Platinum SQL. CenturyTel systems are used only for backup,
parallel processing verifications, and/or incidental functionality.
4. Xxxxxxx Billing Platform for PTI Properties 08/31/99 $20,000
o Implemented in production such that customer service order processing is
performed, end user customer bills are rendered and payments are supplied
to the new system.
5. Consolidation of PTI and ATU Financial Systems 12/31/00 $40,000
Complete transition of ATU and PTI accounting and finance functions to a common
system.
6. Special Completion Bonus 12/31/99 $10,000
o Successful and timely completion of deliverables set forth in 1 through 4
above.
8
(a) The Company agrees to work with you in good faith to modify the dates
and/or description of the deliverables set forth above in the event your ability
to meet such dates and/or deliverables is significantly compromised as a result
of (i) conditions imposed by the Alaska Public Utilities Commission in
connection with required approvals to close the transactions, (ii) delayed
closing of one or both of the transactions, (iii) a failure on the part of the
Company to provide reasonable resources, or (iv) the failure of vendor to
deliver an acceptable product.
(b) Notwithstanding anything in paragraph 4 of this Employment Agreement
to the contrary, if prior to December 31, 1999 or such other date as may be
established for the Special Completion Bonus pursuant to paragraph (a) above,
you resign with Good Reason pursuant to clause (ii) or your employment is
terminated by a vote of the Board of ACSHI directing such termination without
Cause pursuant to clause (v), then you shall receive, in addition to any
severance due you under paragraph 4, a lump-sum payment in the gross amount of
$20,000. Such payment shall be made within thirty (30) days following your
separation from employment.
(c) In addition to any other bonus program or opportunity described in
this Employment Agreement, the Company shall pay to you, on or before January
31, 2000, a "stay" bonus in the gross amount of $60,000 if you remain
continuously employed with the Company from the Effective Date of the Employment
Period until December 31, 1999, or in the event your employment is terminated
prior to December 31, 1999 for the reasons set forth in subparagraph (b) of this
Schedule A.
9
Schedule B
This Schedule B to the Employment Agreement confirms the Company's
commitment with regard to your participation in the Company's stock option
incentive plan, as set forth in your offer letter dated November 19, 1998. You
shall receive a grant of options for 35,000 shares of common stock under the
plan. This grant of options is based on an assumed "strike price" of $6.00 per
share. The actual number of shares granted will be adjusted to reflect
approximately the same face value in the event the strike price is other than
$6.00 per share.
10
