EXHIBIT 10.3
CONFIDENTIAL
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. ("ACS")
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("EXECUTIVE")
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
POSITIONS & TITLES: President and Chief Executive Officer of ACS beginning
October 6, 2003 (the "Employment Date"). Executive will
also be elected to the Board of Directors of ACS (the
"Board") as well as to the Executive Committee of the
Board beginning on the Employment Date. Executive will
be offered the position of Chairman of the Board of
Directors as of January 1, 2004.
RESPONSIBILITIES: Executive shall be responsible for the general oversight
and management of ACS, including overall business
strategy, all operating units, operating plans and
financial performance.
REPORTING: Executive will report to the Board and will have all
other members of executive management of ACS reporting
to her.
LOCATION: Anchorage, Alaska
TERM: Through October 6, 2008.
SIGNING BONUS: $500,000 CASH BONUS/200,000 SHARES STOCK: (i) $150,000
cash signing bonus will be paid in cash on January 1,
2004, provided that Executive is employed by ACS in good
standing on that date. (ii) $350,000 cash signing bonus
will be paid in cash on October 7, 2003. (iii) Executive
will be granted 200,000 shares of ACS stock on the
Employment Date.
ANNUAL CASH
COMPENSATION: $1,000,000+: Base Salary of $500,000 ("Base Salary")
beginning on the Employment Date, plus a target annual
bonus of $500,000 based on achieving 100% of targeted
performance objectives. The actual bonus paid for any
fiscal year (see below) could range from zero to 200% of
Base Salary based on the achievement of performance
objectives determined by the Board or a designated
committee of the Board in consultation with Executive
for each fiscal year and subject to the terms of the
applicable annual bonus plan. Executive will have the
option to receive up to 50% of her annual bonus in ACS
stock based on the fair market value on the date of
bonus determination. Executive must be actively employed
by ACS and in good standing on the date ACS's auditors
approve the prior fiscal year's financial statements to
be eligible for a bonus in respect of such prior fiscal
year. Executive's bonus for 2003 will be $144,000
(subject to the prior sentence). For 2004 and each
subsequent fiscal year, the Board or a designated
committee of the Board will work with Executive to
approve an annual bonus program for the senior
management and other employees of ACS; provided,
however, that Executive's minimum bonus for any
subsequent fiscal year shall be $200,000.
EQUITY PACKAGE: 1,000,000 ACS STOCK OPTIONS with an exercise price equal
to the fair market value of ACS stock on the Employment
Date, and having a term of 10 years, to vest 20% per
year, i.e., 200,000 options for every 12 months of
employment (calculated from the Employment Date) or on a
Change of Control, whichever is earlier. Except as
provided below, vesting ceases and the term of unvested
options lapse upon termination of employment for any
reason. Vested options may be exercised for the
applicable period provided upon termination of
employment in the applicable plan.
RELOCATION EXPENSES: ACS will reimburse Executive for all reasonable and
documented relocation and moving expenses from Kansas
City to the Anchorage area (the "Relocation Expenses")
in accordance with the Company's relocation policy
provided to the Executive; provided, that the Executive
will receive reasonable temporary housing costs until
July 1, 2004. ACS will "gross up" the Executive for any
tax liability incurred with respect to such
reimbursement of relocation expenses.
ADDITIONAL BENEFITS: Executive will participate, beginning on the Employment
Date, in ACS's health and other benefit plans and
programs for senior executives and be covered under
ACS's D&O insurance and corporate indemnification
policies. Executive will be entitled to four (4) weeks
of paid vacation each calendar year (prorated for any
partial calendar years). ACS will reimburse Executive
for her reasonable legal and other professional fees
incurred in connection with the negotiation and
documentation of this Agreement, up to a maximum of
$10,000.
SEVERANCE: In the event ACS terminates Executive's employment for
reasons other than a Board determination of Cause (as
defined) or a termination for death or Disability
(Disability shall mean that for 180 days in any 365-day
period Executive is incapable of substantially
fulfilling the duties of her position because of
physical, mental or emotional incapacity resulting from
injury, sickness or disease)), or Executive terminates
her employment for Good Reason (as defined), Executive
shall be entitled to receive the following severance
benefits from ACS:
(i) $1,000,000 if termination occurs on or before
December 31, 2004;
(ii) $750,000 if termination occurs after December 31,
2004 and on or before December 31, 2005; or
(iii) $500,000 if termination occurs after December 31,
2005 and on or before October 6, 2008.
The Severance Amount shall be paid to Executive in
periodic installments equal to the periodic Base Salary
payments Executive was
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otherwise receiving from ACS prior to the termination
until the full Severance Amount is paid. Severance
Amount payments will and shall be subject to all
applicable tax and other withholdings. In addition,
Executive shall (i) receive any unpaid bonus from the
previously completed fiscal year, payable when bonuses
are paid to other senior executives of ACS for such
fiscal year, (ii) receive a pro rata bonus (of the
amount actually earned) for the year of termination,
payable when bonuses are paid to other senior executives
of ACS for such year, (iii) receive the signing bonus
(both cash and equity) described above, if the
termination occurs prior to the date on which such
signing bonus is paid, (iv) become fully vested in the
next 200,000 unvested option shares, (v) receive ACS
subsidized COBRA health insurance coverage reimbursed
for herself and her eligible dependents for the eighteen
(18) month period following such termination, and (vi)
be fully reimbursed (including any tax gross-up) on the
same basis as she was reimbursed for her relocation to
Anchorage, Alaska, for the costs of any relocation back
to the Lower 48 states if such relocation takes place
within twelve (12) months of the date of termination
(collectively with the Severance Amount, "Severance
Benefits"). Executive understands that her entitlement
to the Severance Benefits provided above is conditioned
upon Executive's execution, timely delivery and
non-revocation of a general release in favor of ACS and
its affiliates as well as Executive's compliance with
the provisions of the Agreement on Confidentiality,
Trade Secrets and Restrictive Covenants attached hereto
as Exhibit A ("Exhibit A") and her provision of
transition assistance as reasonably requested by the
Board. The Severance Amount due the Executive hereunder
shall be the only payment to which the Executive is
entitled, and the Executive shall not be eligible for
any severance payments under any other plan or
arrangement or any other damages. ACS may offset against
the Severance Payment any amounts then owed by
Executive. Executive understands that no Severance
Benefits (other than the relocation benefits described
in (vi) above) are payable if her employment terminates
at the close of business on October 6, 2008, because of
the expiration of the term. 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, in the event Executive is not in
compliance with the provisions of Exhibit A or Executive
has been terminated for Cause.
NO CONFLICTS: Executive represents and warrants that she is not a
party to any agreement or arrangement that would limit
in any manner her ability to perform her duties for ACS.
CERTAIN DEFINITIONS: For purposes of this Agreement, the following
definitions will apply: (a) "Cause" shall mean that the
Executive: (i) willfully fails to comply with lawful
directions of the Board (including compliance with
Exhibit B) after written notice from the Board, (ii)
willfully makes a material misrepresentation to the
Board, (iii) commits fraud, misappropriation or
embezzlement against ACS or engages in willful
misconduct materially adverse to ACS, (iv) is charged
with or convicted of (or pleads guilty or
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no contest to) a felony or other crime involving moral
turpitude; provided that if the Executive has been
terminated ostensibly for Cause because she has been
charged with a crime described above, and she is not
convicted of, or does not plead guilty or no contest to,
such crime or a lesser offense (based on the same
operative facts), such termination shall be deemed to be
a termination without Cause, or (v) commits a material
breach of this Agreement (other than due to physical or
mental illness) that is not cured, to the extent deemed
capable of cure by the Board in its reasonable
discretion, within thirty (30) days after receiving
written notice from the Board (for purposes of this
clause (a) (and the "Severance" paragraph above) "Board"
shall include the Executive Committee of the Board or
such other committee or Board members designated by the
Board); (b) "Good Reason" shall mean: (i) the assignment
of the Executive by the Company to any duties materially
inconsistent with, or a material diminution of, her
position, including duties, title, offices, or
responsibilities (except as required by applicable law
or regulation); (ii) the failure to offer Executive the
position of Chairman of the Board as of January 1, 2004;
or (iii) the transfer, without the Executive's
concurrence, of her principal place of employment to a
geographic location more than 100 miles from her
principal place of employment; (c) "Change of Control"
shall mean (i) the acquisition by any person or group
other than Fox ▇▇▇▇▇ & Company, LLC or any of its
affiliates of a majority or more of ACS' outstanding
voting securities or (ii) any sale, lease, exchange or
other transfer in one transaction or a series of related
transactions, other than to an entity that is majority
controlled by Fox ▇▇▇▇▇ & 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 ACS or its operating
subsidiaries, or any plan for the liquidation or
dissolution of ACS. (d) "Powers Reserved to the Board"
shall mean actions that require Board approval for
management to undertake as delineated in the attached
Exhibit B and as it is amended by the Board from time to
time.
MISCELLANEOUS: Executive's employment by ACS is "at will" and nothing
in this Executive Employment Agreement (including
Exhibit A attached hereto, the "Agreement") shall be
interpreted to imply otherwise. This Agreement is to be
governed by and construed in accordance with the laws of
the State of Delaware, without reference to principles
of conflict of laws. 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 in a major
metropolitan location (selected by the Board) in
proximity to ACS's then headquarters. Such arbitration
shall be conducted in accordance with the rules of the
Commercial Panel of the American Arbitration Association
(the "AAA") and not in accordance with the Employment
Dispute Resolution Rules of the AAA, and judgment on the
award rendered in such arbitration may be entered in any
court having jurisdiction. The arbitrator shall have no
authority to award punitive or exemplary damages and the
parties waive, to the full extent permitted by law, any
right to recover such damages in such arbitration.
Nothing in
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this Agreement shall restrict the right of ACS or its
affiliates to seek injunctive relief arising out of any
violation by the Executive of Exhibit A. 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 among ACS and Executive. This
Agreement may not be amended except in a writing
executed by Executive and the Chairman of the Board of
ACS (or other Board authorized designee). This Agreement
shall only be binding on ACS and Executive if and when
both ACS and Executive execute the Agreement by signing
below, or when both parties have executed the Agreement
in counterparts. Executive agrees to execute and abide
by the provisions of Exhibit A. For purposes of this
"Miscellaneous" paragraph and the general release
referred to in the "Severance" paragraph above, the term
"ACS" includes Alaska Communications Systems Group,
Inc., its subsidiaries, affiliates and related entities,
Fox ▇▇▇▇▇ & Company, LLC ("FPC"), its subsidiaries,
affiliates and related entities (including without
limitation Fox ▇▇▇▇▇ Capital, LLC, Fox ▇▇▇▇▇ Capital
Fund, L.P., Fox ▇▇▇▇▇ Capital Fund II GP, LLC, Fox ▇▇▇▇▇
Capital Fund II, L.P., and all persons and entities that
are partners, shareholders, members or agents of any
such related entities) (collectively, the "Related
Entities"), and all partners, members, directors,
employees, shareholders, affiliates and agents of ACS,
FPC or any other Related Entities. Absent any such other
agreements that shall be entered into, this Agreement
shall be binding. All payments hereunder shall be
subject to Executive satisfying all applicable
withholding requirements, and the Company may withhold
such amounts from any such payments.
IN WITNESS WHEREOF, the parties executed this Agreement as of September 14,
2003.
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
/S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ BY: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
CORPORATE SECRETARY
EXECUTED ON BEHALF OF THE ACS BOARD
OF DIRECTORS
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