Document:

Exhibit
10.2

 

 

	
  To:

  	
   

  	
  Geoffrey Boyd

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  From:

  	
   

  	
  R. A. Smith

  	
  /s/ Rick Smith 3/8/00

  	
   

  
	
   

  	
   

  	
  Chief Operating Officer / Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  March 7, 2000

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Re:

  	
   

  	
  Outline of Employment Offer to Geoffrey Boyd

  	
   

  	
   

  
							

 

I am pleased to present the following outline of Advanced
Telecommunications, Inc. (ATI) offer to you for the position of Chief Financial
Officer.

 

1.                                      Annual
Direct Compensation

Annual Compensation will be $170,000 per year.

 

2.                                      Incentive
Compensation

You will be eligible for an annual performance
incentive pay package that could max out at 60% of your annual base pay.

 

Performance incentive targets and pay (Annual Direct
Compensation) will be assessed and granted quarterly and trued-up on completion
of the year-end audit, reviewed and approved by the ATI Board of Directors and
the CEO/COO. The levels of the performance incentive package are included
below:

 

	
  Base

  	
  30%

  
	
  Target

  	
  45%

  
	
  Premier

  	
  60%

  

 

3.                                      Relocation

ATI will provide a relocation package to the Executive
that is intended to allow the employee to remain neutral from a compensation
perspective. This package will include the following elements:

a)                                      Out
of pocket costs for home search (up to two family trips).

b)                                     All
real estate commissions paid to a third party for sale of the primary dwelling.

c)                                      Points
required to make interest rates equivalent to the current rate that the
Executives pays.

d)                                     Closing
costs on the said and purchase of primary dwelling.

e)                                      Temporary
living expenses until a residence is occupied in Minneapolis if necessary.

f)                                        Home
travel every week until Executive’s family is relocated.

g)                                     All
household moving expenses with a licensed national moving company.

 

· 730 Second Avenue South ·
Suite 1200 · Minneapolis, MN 55402 ·
Phone (612) 376-4400 · Fax (612) 376-4411

 

 

h)                                     One
(1) month salary for incidentals, decorating, etc.

i)                                         Reimbursement
for (health/dental/vision) benefits from your present employers COBRA in
Oklahoma until your family relocates to Minnesota.

 

4.                                      Severance

In the event your employment is terminated during your
first three years of employment by ATI without cause, you shall be paid a
severance payment equal to one years base salary.

 

Additionally, ATI will accelerate the vesting of your
options by one year, should the above event occur.

 

5.                                      Options

You will be granted 250,000 stock options at an
exercise price of $6.54 per share. The shares are vested and earned on your
anniversary as follows:

 

	
   

  	
   

  	
  Share
  Vesting

  	
   

  	
  Percent
  Vesting

  	
   

  
	
  Start Date

  	
   

  	
  50,000

  	
   

  	
  20

  	
  %

  
	
  1st
  Day of Year 2

  	
   

  	
  50,000

  	
   

  	
  20

  	
  %

  
	
  1st
  Day of Year 3

  	
   

  	
  50,000

  	
   

  	
  20

  	
  %

  
	
  1st
  Day of Year 4

  	
   

  	
  50,000

  	
   

  	
  20

  	
  %

  
	
  1st
  Day of Year 5

  	
   

  	
  50,000

  	
   

  	
  20

  	
  %

  
	
   

  	
   

  	
  250,000

  	
   

  	
  100

  	
  %

  

 

Should there be a change of control at ATI, all
options granted will immediately be earned and vested.

 

End of year values (net of exercise price) based on
various IPO prices are given as follows:

 

	
   

  	
   

  	
  $15

  	
   

  	
  $20

  	
   

  	
  $25

  	
   

  	
  $30

  	
   

  	
  $35

  	
   

  	
  $40

  	
   

  
	
  CFO Options
  Value

  	
   

  	
  $

  	
  2.1

  	
  M

  	
  $

  	
  3.4

  	
  M

  	
  $

  	
  4.6

  	
  M

  	
  $

  	
  5.9

  	
  M

  	
  $

  	
  7.1

  	
  M

  	
  $

  	
  8.4

  	
  M

  
																				

 

Your option value based on a $20 end of year IPO price
with four (4) years of additional growth is estimated below:

 

	
   

  	
   

  	
  10%

  	
   

  	
  20%

  	
   

  	
  30%

  	
   

  	
  40%

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CFO Options
  Value

  	
   

  	
  $

  	
  5.7

  	
  M

  	
  $

  	
  8.7

  	
  M

  	
  $

  	
  12.6

  	
  M

  	
  $

  	
  17.6

  	
  M

  	
   

  	
   

  	
   

  	
   

  
																		

 

Note/Important:           These estimates of the
value of the option grant do not imply any guaranteed value – but are based
solely on management’s/investor’s expectations and their internal forecasts.

 

6.                                      Other
Benefits

You will also be eligible for a complete range of
company benefits, including 401(k) (35% match on the first 6% contributed),
health club membership reimbursement (family reimbursement is $35.00 per
month), medical coverage, and company paid parking.

 

2

 

7.                                      Contingencies

This offer is contingent upon successful completion of
a physical examination, reference/background checks, and successful negotiation
out of any/all non-competes that you may have with your existing company.

 

Please indicate your acceptance below.

 

Geoff – I am looking forward to working with you.

 

	
  Accepted by:

  	
   

  	
  /s/ Geoffrey Boyd

  	
   

  	
  Date:

  	
   

  	
  3/8/00

  
	
   

  	
   

  	
  Geoffrey Boyd

  	
   

  	
   

  	
   

  	
   

  

 

3Exhibit 10.2.1

 

 

November 14, 2002

 

Geoffrey Boyd

Chief Financial Officer

Eschelon Telecom, Inc.

730 South Second Avenue

Suite 1200

Minneapolis, MN 55402-2456

 

 

Dear Mr. Boyd,

 

 

Your existing service agreement
expires on March, 2003 and we are extending the termination language in that
agreement for another two (2) years or through March, 2005.

 

In the event that your
employment with Eschelon Telecom, Inc. is terminated without cause anytime
before April 1st, 2005, the Company will continue your salary and
medical payments for a period for one (1) year beyond termination.  Additionally, Eschelon will accelerate the
vesting of options by one (1) year in such event.  The obligations imposed on you as an Officer of Eschelon Telecom,
Inc. with respect to confidentially, non-disclosure, and non-solicitation shall
continue notwithstanding the termination of the employment relationship between
the parties.

 

 

 

Accepted and Agreed:

 

 

	
  By:

  	
  /s/ Richard A. Smith

  	
   

  	
  /s/ Cliff D. Williams

  
	
   

  	
  Richard A. Smith

  	
   

  	
  Cliff D. Williams

  
	
   

  	
  President & Chief Operating Officer

  	
   

  	
  Chairman & Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Accepted and
  Agreed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Geoffrey M. Boyd

  	
   

  	
   

  
	
   

  	
  Geoffrey M. Boyd

  	
   

  	
   

  
	
   

  	
  Chief Financial Officer

  	
   

  	
   

  

 

· 730
Second Avenue South · Suite 1200 ·
Minneapolis, MN 55402 · Phone (612)
376-4400 · Fax (612) 376-4411Exhibit 10.3

 

CHANGE-IN-CONTROL
SEVERANCE PAY AGREEMENT

 

THIS AGREEMENT is made this 21st day of April, 1999, by and between
ADVANCED TELECOMMUNICATIONS, INC., a Minnesota corporation (the “Company”) and
DAVID A. KUNDE (the “Executive”).

 

RECITALS

 

A.                                   The
Executive is the Vice-President - Network Operations and Technology Planning,
of the Company as of the date of this Agreement.

 

B.                                     The
Board of Directors of the Company desires to retain the Executive in the employ
of the Company.

 

C.                                     The
Board of Director believes that it is essential to preserve and maintain the
stability and continuity of management of the Company by providing the
Executive with economic and other security from the uncertainty of risks
inherent in a potential sale or merger of the Company which might jeopardize
the Executive’s employment.

 

NOW THEREFORE, in consideration of the foregoing and of the mutual
promises of the parties hereto, the Company and the Executive agree as follows:

 

1.                                       Eligibility
for Severance Pay.  The Executive
shall be eligible to receive severance pay, in the amounts and at the times
described in paragraph 3, if:

 

(a)                                  the Executive’s
employment with the Company and all of its subsidiaries (if any) is terminated
within 24 months after there has been a “change in control,” as such term is
hereinafter defined; and

 

(b)                                 the Executive’s
termination of employment was not:

 

(i)                                     on account of the
Executive’s death;

 

(ii)                                  on account of a
physical or mental condition that entitles the Executive to benefits under any
long-term disability plan maintained by the Company or any of its subsidiaries,
as then in effect;

 

(iii)                               for conduct involving
willful misconduct (such as commission by the Executive of a felony or a common
law fraud against the Company) which is detrimental in a significant way to the
business of the Company or any of its subsidiaries; or

 

(iv)          on
account of the Executive’s voluntary resignation; provided, that a
resignation shall not be considered to be voluntary for the purposes of this
Agreement if it occurs under the circumstances described in paragraph 10(a), or
if, subsequent to the change in control, there has been: (1) a reduction in the
Executive’s base compensation; or (2) a change in the place in

 

 

which the Executive is required to perform his or her duties, if the
new place is more than 50 miles from the place Executive performed his services
immediately prior to the “change in control.”

 

2.                                       Change
in Control.  For the purposes of
this Agreement, a “change in control” shall be deemed to have occurred if:

 

(a)                                  there occurs any sale
or other disposition to a person unrelated to the Company or any of the holders
of its securities of (i) representing, after sale or disposition, more than 50%
of the outstanding voting securities of the Company as measured by voting power
on an as if converted basis or (ii) more than 50% of the aggregate assets of
the Company and its subsidiaries, in the single transaction or series of
transactions; or

 

(b)                                 the Company or any
combination of the Company and its subsidiaries aggregating more than fifty
percent (50%) of the consolidated assets of the Company and its wholly-owned
subsidiaries becomes a party to any merger or consolidation (excluding a merger
or consolidation where the Company or one of such subsidiaries is the surviving
corporation);

 

and in the case of either (a) or (b) above, Stolberg Partners, L.P. and
Stolberg, Meehan and Scano II, L.P. liquidate more than 50% of their aggregate
voting stock and voting stock equivalents of the Company as measured by the
total votes represented thereby.

 

3.                                       Certain
Change in Control and Severance Payments. 
The Executive shall receive:

 

(a)                                  a lump sum cash
payment, no later than 30 days after the date on which the Executive’s
employment terminates, in an amount equal to two times the Executive’s average
annual compensation (as defined below); and

 

(b)                                 continuation of
coverage under the Company’s group medical, group life, and group long-term
disability plans, if any, and under any individual policy or policies of life
insurance maintained by the Company, with the same rate of employer
contributions as for active employees, until the earlier to occur of:

 

(i)                                     the expiration of
24 months from the date on which the Executive’s employment terminates; or

 

(ii)                                  the date on which the
Executive obtains comparable coverage provided by a new employer.

 

(c)                                  a lump sum cash
payment, payable no later than 30 days after the date on which the Executive’s
employment terminates, in an amount equal to the sum of:

 

(i)            the
amount by which the fair market value of that number of shares of stock subject
to any stock option which is forfeited or which otherwise becomes
nonexercisable by the Executive by reason of the termination

 

2

 

of his or her employment (determined as of the date of such
termination) exceeds the option price for such shares; and

 

(ii)                                  such additional
amounts (or the fair market value of such additional property) in excess of the
amount determined pursuant to subparagraph (i) that would have been paid or
distributed to the Executive upon the exercise of any such forfeited stock
options, had such options been exercisable, and exercised, by the Executive as
of the date his or her employment terminated.

 

It is understood and agreed that this payment under this paragraph 3(c)
is to occur only to the extent the Executive is not entitled to exercise his
options after the termination of his or her employment under the provisions of
the Executive’s stock option agreements.

 

For purposes of this paragraph 3, the term “average annual
compensation” shall mean the average rate of annual salary payable to the
Executive for the calendar year in which the Executive’s employment terminates
and for the two immediately preceding calendar years, plus the average annual
bonus or incentive payments awarded to the Executive for the same three
calendar years; provided, that if bonus or incentive compensation awards
have not been determined for the calendar year in which the Executive’s
employment terminates prior to the date of such termination, such average shall
be determined using the bonuses or incentive payments awarded to the Executive
for the three calendar years immediately preceding the year in which the
Executive’s employment terminates; and provided  further, that if
the Executive has not been employed by the Company for two full calendar years
preceding the year in which the Executive’s employment terminates, “average
annual compensation” shall be based on the Executive’s average annual rate of
salary plus the average annual bonus or incentive payments determined as
described above, for the entire period of the Executive’s employment. The
Executive’s average annual compensation shall be determined prior to any
reduction for deferred compensation, “401(k)” plan contributions, and similar
items, and any reduction in the Executive’s rate of salary occurring within 24
months after a change in control shall be disregarded.  In addition, the insurance coverage provided
under this paragraph shall be governed by the insurance coverage provided to
such the Executive immediately prior to any reduction in such coverage
occurring within 24 months after any change in control.

 

4.                                       No
Funding of Severance Pay.  Nothing
herein contained shall require or be deemed to require the Company or a
subsidiary to segregate, earmark, or otherwise set aside any funds or other
assets to provide for any payments required to be made hereunder, and the
rights of the terminating Executive to severance pay hereunder shall be solely
those of a general, unsecured creditor of the Company.

 

5.                                       Death.  In the event of the Executive’s death, any
amount or benefit payable or distributable to the Executive pursuant to
paragraph 3(a), 3(b) and 3(c) shall be paid to the beneficiary designated by
the Executive for such purpose in the last written instrument, if any, received
by the Boards of Directors of the Company prior to the Executive’s death, or,
if no beneficiary has been designated, to the Executive’s estate.

 

6.             Rights in the
Event of Dispute.  If a claim or
dispute arises concerning the rights of the Executive or a beneficiary to
benefits under this Agreement, regardless of the party by

 

3

 

whom such claim or dispute is initiated, the prevailing party in such
dispute shall be entitled to recover its legal expenses, including reasonable
attorneys’ fees, court costs, and ordinary and necessary out-of-pocket costs of
attorneys incurred in connection with the bringing, prosecuting, defending,
litigating, negotiating, or settling such claim or dispute; provided,
that:

 

(a)                                  the prevailing party
obtains a judgment in its favor from a court of competent jurisdiction from
which no appeal may be taken, whether because the time to do so has expired or
otherwise; and provided  further, that

 

(b)                                 in the case of any
claim or dispute initiated by the Executive, such claim shall be made, or
notice of such dispute given, with specific reference to the provisions of this
Agreement, to the Board of Directors of the Company within one year after the
occurrence of the event giving rise to such claim or dispute.

 

7.                                       Amendment.  This Agreement may not be amended or
modified except by a written instrument signed by both parties as of a date
contemporaneous herewith or subsequent hereto.

 

8.                                       No
Obligation to Mitigate Damages.  In
the event the Executive becomes eligible to receive benefits hereunder the
Executive shall have no obligation to seek other employment in an effort to
mitigate damages.  To the extent the
Executive shall accept other employment after the termination of his or her
employment, the compensation and benefits received from such employment shall
not reduce any compensation and benefits due under this Agreement, except as
provided in paragraph 3(b).

 

9.                                       Other
Benefits.  The benefits provided
under this Agreement shall, except to the extent otherwise specifically
provided herein, be in addition to, and not in derogation or diminution of, any
benefits that the Executive or the Executive’s beneficiary may be entitled to
receive under any other plan or program now or hereafter maintained by the
Company or by any of its subsidiaries.

 

10.                                 Successors.

 

(a)           The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the
business and/or assets of the Company, to expressly assume and agree to perform
the Company’s obligations under this Agreement in the same manner and to the
same extent that the Company would be required to perform them if no such
succession had taken place unless, in the opinion of legal counsel mutually
acceptable to the Company and the Executive, such obligations have been assumed
by the successor as a matter of law. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession (unless the
foregoing opinion is rendered to the Executive) shall entitle the Executive to
terminate his or her employment and to receive the payments provided for in
paragraph 3 above; provided that Executive has given notice of such failure to
the Company after such effectiveness and such agreement is not so assumed
within ten (10) days after the Company’s receipt of such notice.  As used in this Agreement, “Company” shall
mean the Company, as presently constituted, and any successor to its business

 

4

 

and/or assets which executes and delivers the agreement provided for in
this paragraph 10 or which otherwise becomes bound by all the terms and
provisions of this Agreement as a matter of law.

 

(b)                                 The Executive’s rights
under this Agreement shall inure to the benefit of, and shall be enforceable
by, the Executive’s legal representative or other successors in interest, but
shall not otherwise be assignable or transferable.

 

11.                                 Notices.  Any notices referred to herein shall be in
writing and shall be sufficient if delivered in person or sent by U.S.
registered or certified mail to the Executive at his or her address on file
with the Company (or to such other address as the Executive shall specify by
notice), or to the Company at 730 Second Avenue South, Suite 1200, Minneapolis,
Minnesota 55402 Attn: Chief Executive Officer.

 

12.                                 Waiver.  Any waiver of any breach of any of the
provisions of this Agreement shall not operate as a waiver of any other breach
of such provisions or any other provisions, nor shall any failure to enforce
any provision of this Agreement operate as a waiver of any party’s right to
enforce such provision or any other provision.

 

13.                                 Severability.  If any provision of this Agreement or the
application thereof is held invalid or unenforceable by a court of competent
jurisdiction, the invalidity or unenforceability thereof shall not affect any
other provisions or applications of this Agreement which can be given effect
without the invalid or unenforceable provision or application.

 

14.                                 Governing
Law.  The validity, interpretation,
construction, and performance of this Agreement shall be governed by the laws
of the State of Minnesota, except to the extent superseded by applicable
federal law.

 

15.                                 Headings.  The headings and paragraph designations of
this Agreement are included solely for convenience of reference and shall in no
event be construed to affect or modify any provisions of this Agreement.

 

16.                                 Gender
and Number.  In this Agreement where
the context admits, words in any gender shall include the other genders, words
in the plural shall include the singular, and words in the singular shall
include the plural.

 

5

 

The parties hereto have executed this Agreement as of the day and year
first above written.

 

	
   

  	
  COMPANY:

  	
  ADVANCED TELECOMMUNICATIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Richard A. Smith

  	
   

  
	
   

  	
   

  	
  Richard A. Smith

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ David A. Kunde

  	
   

  
	
   

  	
   

  	
  David A. Kunde

  

 

6

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