EXHIBIT 10.2
[ACS LOGO]
September 14, 2003
Xx. Xxxxxxx X. Xxxxxxxx
000 X Xxxxxx
Xxxxxxxxx, XX 00000
Dear Xxxxxxx:
This letter agreement (the "Agreement") sets forth all of the terms and
conditions regarding your retirement from Alaska Communications Systems Group,
Inc. (the "Company"), and all of its affiliates, subject in all cases to your
continued compliance with the provisions of this Agreement and your
non-revocation of this Agreement. Reference is made to the Employment Agreement
dated May 3, 2001 between you and the Company, and its successors, governing the
terms and conditions of your employment (the "Employment Agreement").
1. Your retirement as President and Chief Executive Officer of the
Company and any of its affiliates shall be effective as of October
6, 2003 (the "Retirement Date"). You will remain on the Board of
Directors of the Company (the "Board"), and be the Chairman of the
Board of Directors until December 31, 2003 (the "Board Retirement
Date"), at which time you shall cease to be a member of the Board of
the Company and any of its affiliates. You agree to execute all
forms necessary to effectuate such retirements. Commencing upon the
Retirement Date, you will have no power or authority to incur any
debt, liability or obligation on behalf of the Company or any of its
affiliates, other than your general authority as a director through
the Board Retirement Date.
2. a. Subject to your execution, non-revocation and compliance with
this Agreement, the Company will provide you with (i) your
continued base salary through December 31, 2003 and (ii)
retirement benefits as set forth in Exhibit A; provided, that
you have not revoked this Agreement prior to such time. You
agree that all payments made to you pursuant to this Agreement
shall be subject to all applicable taxes and withholding.
b. You acknowledge that as of the Retirement Date you are vested
in Company stock options to purchase 1,248,056 shares of
Company stock (the "Vested Options") as set forth in Exhibit
B. The terms and conditions of the Option Plan and individual
stock option grants govern the exercisability, expiration and
other features of the Company's stock options and you should
refer to the Option Plan and individual stock option grants
for such terms and conditions; provided that the Vested
Options may be exercised by you
Xx. Xxxxxxx X. Xxxxxxxx
September 14, 2003
Page 2
through December 31, 2004. All Company stock options not
vested as of the Retirement Date shall be forfeited
immediately.
3. You acknowledge that as of the Retirement Date, except as provided
in this Agreement, you will not be entitled to any other payments,
benefits or perquisites from the Company or any of its affiliates
under the Employment Agreement or otherwise, including but not
limited to, salary, bonus, group health benefits (other than COBRA
rights) and Board compensation; provided, however, that you shall be
entitled to exercise, at your cost any conversion rights to which
you may be entitled under law with respect to life insurance
coverage. To the extent that you have any vested rights under any
Company welfare or benefit plan, or equity plan, your rights and
obligations shall be governed by the applicable terms of any such
plan based on your retirement of employment as of the Retirement
Date.
4. a. In consideration of the payments provided for herein, you on
behalf of yourself, your heirs, beneficiaries and assigns,
voluntarily, knowingly and willingly release and forever
discharge the Company, its subsidiaries, divisions, parents,
shareholders and affiliates (including, without limitation,
Fox Xxxxx & Company, LLC and its affiliates), and each of
their past and present directors, members, managers, officers,
employees, servants, divisions, owners, shareholders and
successors (all collectively referred to hereinafter for
purposes of this paragraph 4 as the "Company") from any and
all claims, charges, complaints, liens, demands, causes of
action, obligations, damages and liabilities (including legal
expenses) (all hereinafter referred to as "Claims"), known or
unknown, that you ever had, now have or may hereafter claim to
have against the Company as of the date of this Agreement,
including, without limitation, any Claims arising directly or
indirectly out of, or in any way connected with, based upon,
or related to, your employment and its retirement with the
Company, including any Claims, under local, state, or federal
law based on:
(i) claims of discrimination on the basis of race, age,
religion, sex, sexual harassment, sexual orientation,
national origin, marital status, or disability
(including, without limitations, the Federal Age
Discrimination in Employment Act, or the Age
Discrimination in Employment Act of 1967 (the "ADEA"));
(ii) infliction of any tort (including wrongful discharge);
(iii) breach of contract, whether actual or implied, written
or oral; and
(iv) any violation of any pension or welfare plans or any
other benefit plan or arrangement (including without
limitation, the Employee Retirement Income Security Act
of 1974).
Xx. Xxxxxxx X. Xxxxxxxx
September 14, 2003
Page 3
b. You further represent that you have not, at any time up to and
including the date on which you sign this Agreement,
commenced, and will not in the future commence, to the full
extent permitted by law, any action or proceeding, or file any
charge or complaint, of any nature arising out of the matters
released by paragraph 4(a), and you waive to the full extent
permitted by law, any right to any monetary or equitable
relief in any proceeding that may relate to the matters
released by paragraph 4(a).
c. Notwithstanding the foregoing, nothing in this paragraph shall
prevent you from filing a charge with any federal, state or
local administrative agency, but you hereby agree not to
participate in, and waive your rights with respect to, any
monetary or other financial relief arising from any such
administrative proceeding (to the full extent permitted by
law).
d. You agree that in the event of a breach by you or your heirs
or assigns of any provision of this Agreement: (i) the Company
will be irreparably damaged and will have no adequate remedy
at law, and will be entitled to an injunction as a matter of
right from any court of competent jurisdiction restraining any
further breach of this Agreement; (ii) you will indemnify and
hold the Company harmless from and against any and all damages
or losses incurred by the Company (including reasonable
attorneys' fees and expenses) as a result of such breach; and
(iii) the Company's remaining obligations under this
Agreement, if any, shall immediately terminate. You further
agree that this Agreement may and shall be pleaded as a full
and complete defense to any action, suit or other proceeding
covered by the terms of this Agreement which is or may be
instituted, prosecuted or maintained by you, your heirs and
assigns. Notwithstanding the foregoing, you understand and
confirm that you are entering into this Agreement (with its
covenant not to xxx and waiver and release) voluntarily and
knowingly, and the covenant not to xxx shall not affect your
right to claim otherwise with respect to your rights under the
ADEA. In addition, you understand and confirm that provisions
(ii) and (iii) of the first sentence of this paragraph shall
not apply to any action challenging the validity of a waiver
or release in this Agreement of a claim under the ADEA.
e. As of the Board Retirement Date, you shall execute an
additional release (the Additional Release") of the Company
(as referred to in this paragraph 4) with respect to all
potential claims or actions you may have from the date hereof
through the Board Retirement Date. The Additional Release
shall be in a form substantially similar to this paragraph 4.
5. In consideration of the payments and benefits being provided to you
under this Agreement, you confirm and acknowledge your obligations
pursuant to Section 5 of the Employment Agreement (with respect to
confidentiality) and Section 6 of the Employment Agreement (with
respect to non-competition, and non-solicitation and related
matters, which obligations shall continue through December 31, 2004)
will
Xx. Xxxxxxx X. Xxxxxxxx
September 14, 2003
Page 4
continue to be governed by the terms of the Employment Agreement.
You agree that on or prior to the Board Retirement Date you will
return to the Company all property, files, and other Company
material in your possession in compliance with Section 5 of the
Employment Agreement. You agree not to disclose any proprietary,
trade secret, confidential, or other non-public information that you
have concerning the Company or its affiliates (or their respective
predecessors, directors, managers, officers, executives, employees,
partners, members, shareholders, investments or clients) in
compliance with Section 5 of the Employment Agreement. You
acknowledge and agree that (x) your breach of this Agreement
including without limitation, the provisions of this paragraph 5
(and Sections 5 and 6 of the Employment Agreement) will cause the
Company irreparable harm, which cannot be adequately compensated by
money damages, and (y) if the Company elected to prevent you from
breaching such provisions by obtaining an injunction against you,
there is a reasonable probability of the Company's eventual success
on the merits. You consent and agree that if you commit any such
breach or threaten to commit any breach, the Company shall be
entitled to temporary and permanent injunctive relief from a court
of competent jurisdiction, without posting any bond or other
security and without the necessity of proof of actual damage, in
addition to, and not in lieu of, such other remedies as may be
available to the company for such breach, including the recovery of
money damages.
6. The Company hereby releases and discharges you from any and all
claims, known or unknown, that it ever had, now has or may claim to
have against you with respect to any matter occurring on or before
the date hereof, other than as a result of fraud, willful
misconduct, or illegal activity.
7. You agree to keep the existence and terms of this Agreement
completely confidential, except that you may disclose it under
confidential conditions to members of your immediate family, legal
counsel, or accountant, who in turn shall agree to keep such
existence and terms confidential. You further agree not to take any
action detrimental to the interests of the Company, or any action
that would likely cause harm to the Company, including, without
limitation, negatively comment on, disparage or call into question
the business operations or conduct of the Company or its affiliates
and their past or present shareholders, directors, owners,
executives, officers, employees, agents or consultants, including,
but not limited to, Fox Xxxxx & Company, LLC. Subject to your
execution and non-revocation of this Agreement, the Company agrees
to characterize the event described in this Agreement as a customary
retirement and you agree not to make any statements inconsistent
with the Company's press release regarding this event.
8. The terms described in this Agreement constitute the entire
agreement between you and the Company and may not be altered or
modified other than in a writing signed by you and the Company. No
promise, inducement or agreement not expressed herein has been made
to you in connection with this Agreement, and this
Xx. Xxxxxxx X. Xxxxxxxx
September 14, 2003
Page 5
Agreement supersedes all prior arrangements, communications,
commitments or obligations between yourself and the Company;
provided that the provisions of the Employment Agreement governing
your obligations post-retirement shall remain in full force
(including, without limitation, your obligations under Section 5 and
Section 6 thereof); and also provided that any controversy or claim
arising out of or relating to this letter agreement, or the breach
thereof, shall be settled by confidential arbitration in Delaware
before a panel of three (3) arbitrators experienced in the area of
the Company's business activities in an arbitration administered by
the American Arbitration Association under the rules of the
Commercial Panel (and not the National Rules for the Resolution of
Employment Disputes) and judgment on the award rendered in the
arbitration may be entered in any court having jurisdiction thereof;
and further provided that (i) the Company shall be entitled to seek
full injunctive and equitable relief in any court of competent
jurisdiction as a result of any alleged violation of the terms of
this Agreement, and (ii) any claim for arbitration must be initiated
by the claimant within ninety (90) days of the act or occurrence
giving rise to such claim. The administrative fees and expenses
shall be borne equally. All arbitration proceedings shall be
confidential.
9. This Agreement shall not become effective, and no payments shall be
due you hereunder, until such time as it is received by the Company
signed by you and the Revocation Period has expired without any
revocation by you of this Agreement; provided that the foregoing
shall not apply to your separation of employment from the Company
effective as of the Retirement Date and your resignation from the
Board effective as of the Board Retirement Date.
10. You agree that you will at all times cooperate and consult with and
provide all reasonable assistance to the Company and its affiliates
to ensure the smooth and orderly transition of your duties and
responsibilities. You agree further that at all times, you shall
consult with, and provide all reasonable assistance to the Company
and its auditors and counsel (x) with respect to any matters
involving the Company that may arise in the future and (y) with
respect to the investigation, defense, institution and/or
maintenance of potential and/or existing claims and/or litigations
related to matters in which you were involved or involving other
executives or employees (and/or former executives or employees) of
the Company or its affiliates, or of which you had knowledge, during
your employment (including, but not limited to your being reasonably
able to attend (i) meetings with the Company's attorneys, (ii)
depositions and (iii) court hearings and related matters). You shall
provide services required hereunder without charge for the first
forty (40) hours and thereafter be compensated by the Company at a
reasonable per diem fee; provided that in any case you will be
reimbursed for your reasonable out-of-pocket expenses.
11. You have reviewed the terms of this Agreement and you confirm that
you have had the opportunity to confer with an attorney of your own
choosing with respect to the
Xx. Xxxxxxx X. Xxxxxxxx
September 14, 2003
Page 6
terms of this Agreement and in fact. You acknowledge that you have
entered into this Agreement freely and voluntarily.
12. You acknowledge that you were advised that you could take up to
twenty-one (21) days from the date this Agreement was given to you
to review this Agreement and decide whether you would enter into
this Agreement. To the extent that you have elected to enter into
this Agreement prior to such time, you have done so voluntarily, and
have knowingly waived such twenty-one (21) day review period.
13. You may revoke this Agreement for a period of seven (7) calendar
days after its execution (the "Revocation Period"), by delivery of a
notarized written notice of revocation (the "Revocation Notice")
prior to 5:00 p.m. on the last day comprising the Revocation Period
to Fox Xxxxx & Company, LLC, 000 Xxxxx Xxxx, Xxxxx 0000, Xxxxxx
Xxxx, Xxxxxxxxxx 00000, Attn: Xxxx Xxxxx. This Agreement shall be
become irrevocable automatically upon the expiration of the
Revocation Period if you do not revoke it in the aforesaid manner;
provided that the foregoing shall not apply to your separation of
employment from the Company, which shall be effective as of the
Retirement Date, or to your retirement from the Board, which shall
be effective as of the Board Retirement Date.
14. This Agreement shall be construed and enforced pursuant to the laws
of the State of Delaware. If the above sets forth our agreement as
you understand it and consent to it, please so signify by executing
the enclosed copy of this Agreement and returning it to me.
15. In the event that any one or more of the provisions of this
Agreement shall be deemed illegal or unenforceable for any reason,
such provision or other portion thereof shall be modified or deleted
in such manner as to make this Agreement, as modified, legal and
enforceable to the fullest extent permitted under applicable law.
Xx. Xxxxxxx X. Xxxxxxxx
September 14, 2003
Page 7
16. Your execution of this Agreement shall not alter any rights you
currently may have to indemnification or directors' and officers'
insurance with the Company.
Very truly yours,
ALASKA COMMUNICATIONS SYSTEMS
GROUP, INC.
By: /s/ Xxxxxxx Xxxxxxxxx
---------------------
Xxxxxxx X Xxxxxxxxx, Corporate Secretary
Executed on behalf of ACS Board of Directors
Agreed to and accepted:
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Xxxxxxx X. Xxxxxxxx
Date executed: September 14, 2003
EXHIBIT A
SUMMARY OF SEVERANCE BENEFITS
- The Company shall pay to you a lump sum amount equal to $1,000,000 on the
Retirement Date. The Company shall also pay you your 2003 annual bonus (as
determined by the Board of Directors) when 2003 annual bonuses are paid to
other senior executives of the Company, in an amount not less than
$250,000.
- You shall also be reimbursed for the cost of continuing your health
insurance coverage under COBRA for the eighteen (18) month period
following the Retirement Date. In addition, in the event you relocate to
the Lower 48 states during the 12 months following the Board Retirement
Date, you shall be entitled to receive relocation benefits in accordance
with the executive relocation benefits policy in effect as of the date of
this Agreement.
- The severance benefits set forth in the first Addendum to the Employment
Agreement.
- An additional bonus payment of $250,000, if the Company's TPA with the
State of Alaska is successfully renegotiated before December 31, 2003, or
if all material disentanglement issues are resolved by October 6, 2003, as
determined by the Board in its sole discretion.
- The Company agrees to repurchase from you and you agree to sell to the
Company 266,788 shares of Company common stock held by you as of the date
of this Agreement, at a repurchase price per share equal to the highest
average closing price of the common stock during any 5-consecutive day
trading period in January, 2004. You will deliver such shares to the
Company on January 2, 2004, and the Company will make the repurchase
payments to you in equal quarterly installments commencing on March 31,
2004.
