EXHIBIT 10.5
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
510 L Street, SUITE 500
ANCHORAGE, AK 99501
May 3, 2001
Mr. Charles E. Robinson
510 L Street, Suite 802
Anchorage, Alaska 99501
Re: Employment Agreement
Dear Mr. Robinson:
This letter agreement ("Agreement") sets forth the terms and conditions
of your employment with Alaska Communication Systems Group, Inc. ("ACS" or the
"Company"), effective as of May 15, 2001 (the "Effective Date"). This Agreement
supersedes the terms of the employment agreement between you and ALEC Holdings,
Inc. dated March 12, 1999, which employment agreement is hereby terminated.
1. EMPLOYMENT AND SERVICES. Holdings hereby employs you as Chairman of
the Board and Chief Executive Officer of ACS, 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 Boards of
Directors of ACS 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. However, you shall not be required to undertake any obligations in
connection with acquisitions that would be inconsistent with restrictions set
forth in the side letter with Century Telephone, Inc. dated August 14, 1998.
2. COMPENSATION. The Company shall pay you an annual base salary
("Annual Base Salary") of $500,000 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 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 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. In no event, however, shall your annual bonus
be less than fifty percent (50%) of the target bonus amount. 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.
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 to the extent such relocation request would
otherwise constitute Good Reason within the meaning of Section 4, in accordance
with the terms of any such plans or policies as in effect from time to time
during the Employment Period.
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 ninety (90) days following a 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 Board of Holdings or the Subsidiary directing such
termination for Cause,
(e) a vote of the Board of Holdings or the Subsidiary directing such
termination without Cause, or
(f) the second 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.
In the event of termination of the Employment Period pursuant to clause
(b) or (e) above, or pursuant to clause (f) as a result of the Company's notice
to you of an intention not to extend the Employment Period, the Company shall
concurrently with such termination make a lump-sum payment to you equal to the
sum of one times your Annual Base Salary plus one times your target annual bonus
payment, established pursuant to Section 2 hereof. You shall also be reimbursed
for the cost of continuing your health insurance coverage under COBRA for the
eighteen (18) month period following such a termination. In addition, in the
event you relocate to the Lower 48 states during the 12 months following your
termination, 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.
Except as otherwise set forth in this paragraph 4 and the Addendum
attached hereto, 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.
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; (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 Paine &
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 Paine & 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 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 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 Fox Paine & 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 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 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 telecommunications services in the state of Alaska,
or (ii) any enterprise which is the subject of a Potential Transaction made
known to the Company, or you during or at any time prior to the termination of
this Agreement, 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
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 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.
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 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. Charles E. Robinson
510 L Street, Suite 802
Anchorage, Alaska 99501
If to the Company: Alaska Communication Systems Group, Inc.
510 L Street, Suite 500
Anchorage, Alaska 99501
Attention: President & CAO
with a copy to: Fox Paine & Company, LLC
950 Tower Lane
Suite 1950
Foster City, CA 94404
Attention: W. Dexter Paine
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 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.
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 COMMUNICATION SYSTEMS GROUP, INC.
By: /s/ Wesley E. Carson
---------------------------------------
Name: Wesley E. Carson
Title: President & CAO
Accepted and agreed to:
/s/ Charles E. Robinson
- -----------------------------
Charles E. Robinson
ADDENDUM
This Addendum to the Employment Agreement between Charles E. Robinson
and Alaska Communications Systems Group, Inc., dated May 3, 2001, sets forth
additional terms relative to the benefits to which you may be eligible to
receive upon your termination from employment.
1. USE OF CORPORATE AIRCRAFT. For a period of eighteen (18) months
following your termination from employment for any reason other than for cause,
pursuant to paragraph 4, clause (d) of the Employment Agreement, you shall be
accorded reasonable use of the Company's corporate aircraft, consistent with
your past practices. Past practices shall include frequency and duration of use,
as well as the types of levels of expenses associated with usage.
Notwithstanding the foregoing, such uses shall be subject to the continued lease
ownership of the current or comparable aircraft, and to the availability of the
aircraft. Corporate use of the aircraft for business purposes shall take
priority over your personal use.
2. USE OF OREGON PROPERTY. With respect to the leased property located
near Dufur, Oregon ("Oregon Property"), and currently used for management
retreats, you shall have the following rights:
(a) For a period of thirty-six (36) months following your
termination from employment for any reason other than the cause,
pursuant to paragraph 4, clause (d) of the Employment Agreement,
you shall be accorded reasonable use of the Oregon Property,
consistent with your past practices. Past practices shall
include frequency and duration of use, as well as the types and
levels of expenses associated with the usage. Notwithstanding
the foregoing, such usage shall be subject to the continued
lease of the Oregon Property, and to the availability of the
property. Corporate use of the Oregon Property for business
purposes shall take priority over your personal use.
(b) In the event the Company wishes to terminate the current lease
arrangement for the Oregon Property, you shall be provided for
first opportunity to assume the lease, subject to the terms and
conditions for the lease document. The Company shall provide you
not less than thirty (30) days written notice of any such
intention to terminate and offer you the right to assume the
lease.
(c) The Company will assign to you the lease for the Oregon
Property, at your election and upon not less than thirty (30)
days written notice from you requesting such assignment. Any
future payment required under the lease as of the date of
assignment and thereafter shall be your responsibility.
In Witness Whereof, the undersigned have caused this Addendum to be
executed this 3rd day of May, 2001.
/s/ Charles E. Robinson /s/ Wesley E. Carson
--------------------------- -------------------------------
Charles E. Robinson Alaska Communications Systems,
Group, Inc.
By: Wesley E. Carson