EXHIBIT 10.5
STRICTLY CONFIDENTIAL
ALEC HOLDINGS, INC.
100 W. 11TH STREET
VANCOUVER, WA 98660
March 12, 1999
Mr. Charles E. Robinson
29417 N.W. 11th Avenue
Ridgefield, Washington 98642
Re: Employment Agreement
Dear Mr. Robinson:
This letter agreement (this "Agreement") sets forth the terms and
conditions of your employment with ALEC Holdings, Inc. ("Holdings") and its
wholly-owned subsidiary, ALEC Acquisition Corporation ("the Subsidiary"),
effective as of the first to occur of the date of consummation of (a) the
transactions contemplated by the Purchase Agreement, by and among the
Subsidiary, CenturyTel of the Northwest, Inc. and CenturyTel Wireless, Inc.
("Century"), 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. For purposes of this Agreement, and
except where the term "Holdings" or "Subsidiary" is specifically used, Holdings
and the Subsidiary shall be collectively referred to as the "Company" and all
obligations of the Company as set forth herein shall be the joint and several
obligations of Holdings and the Subsidiary.
1. Employment and Services. Holdings hereby employs you as Chairman of the
Board, President and Chief Executive Officer of Holdings and Subsidiary hereby
employs you as Chairman of the Board, President and Chief Executive Officer of
Subsidiary, 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 Holdings and the
Subsidiary 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.
Holdings acknowledges that the Subsidiary has entered into a side letter, dated
August 14, 1998 with Century (the "Side Letter") and Holdings hereby affirms
that you shall not be required to undertake any obligations in connection with
acquisitions inconsistent with the restrictions of such Side Letter. Holdings
further agrees that you may provide consulting services to Century, as provided
in your Consulting Agreement, dated December 1, 1997; provided that you hereby
represent that the provision of such services shall not interfere with your
fulfillment of your obligations and duties hereunder.
March 12, 1999 Original Number 2 of 3
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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 $200,000. 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 paragraph 4, 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.
4. Termination and Severance. The Employment Period shall terminate on the
first to occur of (i) 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), (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 Holdings or the Subsidiary directing
such termination for Cause, (v) a vote of the Board of Holdings or the
Subsidiary directing such termination without Cause, or (vi) the third
anniversary or the Effective Date (the "Scheduled Expiration Date"); provided,
however,
March 12, 1999 Original Number 2 of 3
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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 (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) one times your most recent annual bonus payment paid pursuant to paragraph 2
hereof, and, notwithstanding anything to the contrary in the Holdings' 1999
Stock Incentive Plan or any other plan or agreement pursuant to which you have
been granted options to purchase shares of Holdings common stock, upon such
termination, such number of then-unvested options shall vest as are necessary to
vest at least one-third of all options granted to you on or following the
Effective Date. 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 that the Company shall give you
notice of its intention not to extend the Employment Period, you shall receive
twelve (12) months of your Annual Base Salary plus one times your most recent
annual bonus payment paid pursuant to paragraph 2 hereof, 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 of the expiration
of the then Employment Period.
For purposes 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
Holdings 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
l934, 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
March 12, 1999 Original Number 2 of 3
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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 Paine & 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 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 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 (provided that you shall give the Company prompt notice
prior to any such disclosure), 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 Holdings 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, without the prior written consent of
the Board of Holdings, 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 any state
in which (A) the Company, its affiliates or subsidiaries, or (B) any entity
which is a party to an acquisition agreement with the Company, its affiliates or
subsidiaries, is engaged in the provision of local exchange or wireless
telecommunications services, or (ii) any enterprise which is the subject of a
Potential Transaction made known to the Company, its affiliates or subsidiaries,
or you during or at any time prior to the termination of this Agreement, is
engaged in the provision of local exchange or wireless 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.
March 12,1999 Original Number 2 of 3
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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 paragraph 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 paragraph 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 employee benefits to be provided
pursuant to the terms of paragraph 4 hereof or of any employee benefit plans set
forth in paragraph 3 hereof). Notwithstanding anything contained herein to the
contrary, no termination or severance payments shall be made under this
Agreement or otherwise until such time as you have delivered an executed release
of claims and any applicable revocation periods under state or federal law have
expired.
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
March 12, 1999 Original Number 2 of 3
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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
29417 N.W. 11th Avenue
Ridgefield, Washington 98642
If to the Company: ALEC Holdings, Inc.
100 W. 11th Street
Vancouver, WA 98660
Attention: Secretary
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
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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 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,
ALEC HOLDINGS, INC.
By: /s/ Wesley E. Carson
------------------------------------
Name: Wesley E. Carson
Title: Executive Vice President
ALEC ACQUISITION CORPORATION
By: /s/ Wesley E. Carson
------------------------------------
Name: Wesley E. Carson
Title: Executive Vice President
Accepted and agreed to:
/s/ Charles E. Robinson
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Charles E. Robinson
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