Exhibit 10.4

 

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.

SEPARATION AGREEMENT AND OFFICER’S RELEASE

 

This Separation Agreement and Officer’s Release (“Release”) is made and entered
into by and between Anand Vadapalli (referred to herein as “Executive”) and
Alaska Communications Systems Group, Inc. and its respective affiliates,
subsidiaries, and any related or parent company or entity of which they are a
part, including their successors and assigns (referred to herein as “the
Company” or “Alaska Communications”), each of which is also referred to in this
Release as a “party” or collectively with Executive as “the parties.”

 

RECITALS

 

A.     The Company has employed Executive as its President and Chief Executive
Officer since 2011.

 

B.     The terms of Executive’s employment with the Company are memorialized in
an Employment Agreement between Executive and the Company dated August 5, 2015,
as amended by the First Amendment thereto dated October 4, 2017 and the Second
Amendment thereto dated May 10, 2018; and were previously memorialized in an
Employment Agreement between Executive and the Company dated April 1, 2013 and
an Employment Agreement between Executive and the Company dated February 1, 2011
(collectively, the “Employment Agreements”).

 

C.      Executive and the Company have mutually agreed that the Employment
Agreements shall terminate and Executive’s employment with the Company shall end
subject to the terms and conditions set forth in this Release.

 

Now, therefore, the parties agree as follows:

 

AGREEMENT

 

1.     In consideration of the benefits provided for in Section 4 below,
Executive hereby knowingly and voluntarily waives, releases and forever
discharges the Company and all its past, present and future officers, directors,
stockholders, employees, independent contractors, agents, representatives,
attorneys, insurers, predecessors and successors in interest, (collectively, the
“Released Parties”) from any and all actual or potential claims, actions,
complaints, charges, demands, rights, suits, liabilities, arbitrations, causes
of action, damages, costs, expenses and compensation of any kind whatsoever,
except for any claims based on the Released Parties’ gross negligence or willful
misconduct, based on any other theory of recovery, whether for compensatory or
punitive damages or for equitable or other relief, which Executive ever may have
had, now has or may subsequently accrue against the Released Parties, whether
known, suspected or unknown to Executive, by reason of facts or circumstances
which have occurred on or prior to the date that Executive has signed this
Release, and which is in connection with, or in any way related to or arising
out of, Executive’s past or present employment or termination of employment with
the Company, (“Released Claims”); provided, that such Released Claims shall not
include any claims to enforce Executive’s rights (i) to indemnification pursuant
to this Release, applicable law or the Company’s Articles of Incorporation,
By-Laws or insurance for directors’ and officers’ liability or employment
practices insurance coverage; (ii) under any generally applicable employee
benefit plans; (iii) as a stockholder of the Company, or (iv) under this
Release. Notwithstanding the generality of the preceding sentence, such Released
Claims include, without limitation, and to the maximum extent permitted by law,
any and all claims under any federal, state or local laws or regulations, and
any claims based on tort, contract, breach of fiduciary duty, implied covenant
of good faith and fair dealing, violation of public policy, other common law
claims or derivative claims and any other theory of recovery or right of rehire,
and specifically includes all claims under any applicable employment laws,
including without limitation the Age Discrimination in Employment Act, the Older
Workers Benefit Protection Act, the Equal Pay Act, Title VII of the Civil Rights
Act of 1964, the Fair Labor Standards Act, the Americans with Disabilities Act,
the Reconstruction Era Civil Rights Act, the Civil Rights Act of 1991, the
Rehabilitation Act of 1973, the Family and Medical Leave Act of 1992, Executive
Order 11246, and all state or local laws regarding wage and hour, employment
discrimination or employment in general, all as amended.

 

 

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2.           The Company will indemnify, defend, and hold harmless Executive
from and against any claims, causes of action, suits, liability, damages, and
costs (including reasonable attorney fees and costs of defense) for any actions
arising out of or relating to Executive’s employment with the Company, including
but not limited to any actions by any government or regulatory agency or actions
alleging employment law violations, so long as such actions do not arise from
Executive’s willful violation of law or Corporate Policy. Further, the Released
Parties hereby knowingly and voluntarily waive, release and forever discharge
Executive from any and all actual or potential claims, actions, complaints,
charges, demands, rights, suits, liabilities, arbitrations, causes of action,
damages, costs, expenses and compensation of any kind whatsoever, except for
claims based on Executive’s gross negligence or willful misconduct, based on any
other theory of recovery, whether for compensatory or punitive damages or for
equitable or other relief, which the Released Parties ever may have had, now
have or may subsequently accrue against Executive, whether known, suspected or
unknown to the Released Parties, by reason of facts or circumstances which have
occurred on or prior to the date that Company has signed this Release, and which
are in connection with or in any way related to or arising out of Company’s past
or present employment of Executive or termination of such employment.

 

3.     Executive hereby represents that he has not filed (or assigned to a third
party the right to file) any such Released Claim, nor will he in the future
file, or assign to any third party the right to file, any Released Claim against
the Company or the Released Parties arising out of or in any way related to or
connected with Executive’s employment or the termination of his employment with
the Company, to the maximum extent such Released Claims may be legally waived.

 

4.     Executive’s final day of employment and final day of service as a member
of the Company’s Board of Directors is June 30, 2019 (“Separation”). The
Employment Agreements are hereby terminated as of Separation, are superseded in
their entirety by this Release, and have no further force and effect. In
consideration for the agreements, promises and releases provided by Executive in
this Release, following the expiration of the seven-day revocation period which
is provided for in Section 18 of this Release, and only if such seven-day period
has expired without Executive revoking the Release, the Company agrees to
provide the following benefits:

 

 

(a)

Base pay, annual incentives, and other cash payments and the opportunity to vest
stock previously awarded in the future as set forth on the attached Exhibit A,
less all relevant taxes and other withholdings.

 

 

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(b)

If Executive timely and properly elects COBRA continuation health coverage under
the Company’s group health plan, Executive will receive continued coverage in
the health plan under COBRA through Company-provided premiums until the earliest
of: (i) December 31, 2019, or (ii) written notice from Executive to the Company
no later than the 15th day of each month that Executive has obtained other
health coverage. (Executive has an affirmative obligation to provide such notice
if alternative health coverage is obtained.) In addition, Executive is entitled
to continue COBRA coverage at his expense in accordance with law.

 

 

(c)

This Agreement shall be interpreted and applied in a manner compliant with the
requirements of Section 409A of the Internal Revenue Code.

 

5.   No additional payments shall be made, and Executive hereby specifically
waives any and all rights to additional compensation (including all other future
incentive compensation, bonuses, stock awards, stock vesting, payments for
relocation or COBRA medical insurance beyond that provided herein, and any other
payments or benefits, other than his base salary and employee benefits that are
generally available to Alaska Communications employees for the period he was
employed) that he might otherwise have had, whether under his Employment
Agreement, Award Agreement, any document he received from the Company, or any
other communication or promise from the Company, its officers, employees or the
Board of Directors.

 

6.   For up to 9 months following the Executive’s final day of service as
indicated in Section 4 of this Release, except in cases involving privately
arranged block trades, Executive agrees that his daily trading volume in the
public markets will not exceed ten percent (10%) of the average daily trading
volume during the prior month. For purposes of this agreement, the average daily
trading volume in the prior month shall be calculated by dividing the total
number of shares traded during the prior month by the number of trading days in
the prior month.

 

7.   Executive and the Company each understand that the foregoing payments and
consideration are received by Executive and paid by the Company in connection
with the parties’ resolution of all matters between them, including, but not
limited to, all matters relating to the employment relationship and the
termination of that relationship, and that neither this Release nor the
aforesaid payments and consideration are to be construed as an admission on the
part of any of either Executive or the Released Parties of any wrongdoing or
liability, nor are they to be admissible as evidence in any proceeding, other
than for enforcement of the provisions of this Release.

 

8.   Executive represents and warrants that no promise or inducement to enter
into this Release has been offered except as set forth expressly in this Release
and that this Release is executed without reliance on any other statement or
representation by Alaska Communications. This Release contains the entire
agreement between the parties with regard to the matters set forth in it and
shall be binding on and inure to the benefit of the successors and assigns of
the parties. This Release is the exclusive, final and complete agreement between
Executive and the Company, and the terms of this Release are contractual and not
merely a recital.

 

 

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9.   Executive shall keep secret all “Confidential Information” of the Company,
and will not disclose any such Confidential Information, directly or indirectly,
under any circumstances or by any means, to anyone without the prior written
consent of the Company. “Confidential Information” for purposes of this Release
includes but is not limited to information about the Company’s customers or
potential customers, customer data, pricing and other terms and conditions under
which the Company deals with customers or other companies, pricing and other
information related to the actual or potential purchase or sale of Company
stock, assets or products, financial and securitization arrangements, research
materials, manuals, computer programs, systems, data, techniques, network maps,
technical information, trade secrets, services and product development
information, marketing plans and tactics, lists of suppliers and suppliers’
prices and other terms and conditions, the processes and practices of the
Company and any competitor companies, financial information, information
prepared for or generated by the Alaska Communications Board of Directors, wages
and salary information, labor agreements, personnel information, and any other
information designated by the Company as Confidential Information or that
Executive knows or should know is Confidential Information, including the
Confidential Information of third parties, information subject to non-disclosure
or confidentiality agreements, and all other proprietary information of the
Company, whether oral, written or in electronic format, including all
information defined in the Alaska Communications Corporate Compliance Program
Manual as “Proprietary Information.” Executive’s obligation under this Section
with respect to any specific item of Confidential Information ceases with
respect to that item when the Confidential Information becomes known publicly
through a source other than Executive’s disclosure (whether direct or indirect).

 

10.   For a period of 12 months after Executive’s final day of employment, as
indicated in section 4 of this Release, Executive will not, directly or
indirectly, be an officer or director of, or be employed by, own, manage,
operate, join, control or participate in the ownership, management, operation or
control of, any “Competitor” of Alaska Communications. A “Competitor” for
purposes of this Release shall include any person or entity which, directly
competes with Alaska Communications for business within the state of Alaska,
with such Alaska based business representing either: (i) a material portion of
such Competitor’s revenues; or (ii) a material focus of Executive’s anticipated
responsibilities with such Competitor. The 12-month restrictive period described
in this section shall begin running as of Executive’s final day of employment,
as indicated in section 4 of this Release, regardless of whether Executive
consults with, contracts with, or otherwise continues to provide services to the
Company following Executive’s final day of employment.

 

11.   For a period of 12 months after Executive’s final day of employment, as
indicated in section 4 of this Release, Executive shall not, directly or
indirectly: (i) solicit, influence, entice, or attempt to solicit, influence or
entice, any officer, employee, agent, contractor, consultant, partner, joint
venture, vendor, supplier or customer of Alaska Communications to terminate
employment or other arrangement with Alaska Communications or to cease a
business relationship with Alaska Communications; or (ii) solicit, influence,
entice or attempt to solicit, influence or entice any officer, employee, agent,
contractor, consultant, potential customer, distributor, partner, joint venture,
vender or supplier of Alaska Communications to do business with or in any way
become associated with any Competitor of Alaska Communications. The 12-month
restrictive period described in this section shall begin running as of
Executive’s final day of employment, as indicated in section 4 of this Release,
regardless of whether Executive consults with, contracts with, or otherwise
continues to provide services to the Company following Executive’s final day of
employment.

 

12.   As a condition of this Release, and subject to section 16 of this Release,
Executive agrees not to make any oral or written statement about the Company
relating to the Company’s business or business systems, networks, methods,
services, products, operations, finances, compliance with laws, or its present
or past shareholders, partners, directors, officers, employees, agents,
consultants, or other personnel, which is intended to or reasonably likely to
disparage or hurt the Company’s reputation. Subject to section 16, Executive
also agrees to refrain from assisting any other person or persons with
disparaging or harming the Company’s reputation, including without limitation,
the reputation of its officers, directors, or employees. The Company agrees
that, subject to section 16 of this Release, none of its officers, directors or
employees shall make any disparaging public statement, whether oral or written,
about Executive, his qualifications, or his work at the Company, that is
intended or reasonably likely to disparage or hurt Executive’s reputation.

 

 

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13.   Executive shall not disclose the terms of his separation or this Release
to anyone other than immediate family, financial advisors (if any) or legal
counsel and must inform any immediate family, financial advisors, and legal
counsel to which this Release is disclosed that they are prohibited from
disclosing the terms of this Release to the same extent as Executive.

 

14.   The parties acknowledge that unquantifiable and irreparable harm may occur
as the result of violation or threatened violation of the terms of this Release;
therefore, this Release shall be enforceable by either party through injunctive
or other equitable relief proceedings before any court of competent
jurisdiction, without limiting the moving party’s remedies for monetary or other
damages; provided, that any such remedies or judicial proceedings shall not
excuse the non-moving party from the continued performance of all obligations
under this Release.

 

15.   Executive agrees to cooperate fully with the Company (i) in the transition
of his duties in response to reasonable requests for information about the
business or Executive’s involvement and participation therein, including
Executive’s contacts with specific customers and potential customers; (ii) in
the defense or prosecution of any claims or actions now in existence or which
may be brought against or by or on behalf of the Company which relate to events
or occurrences that transpired while Executive was employed by the Company; and
(iii) in connection with any investigation or review by any federal, state or
local regulatory, quasi-regulatory or self-governing authority (including,
without limitation, the Securities and Exchange Commission) as such
investigation or review relates to events or occurrences that transpired while
Executive was employed by the Company. Executive’s full cooperation shall
include, but not be limited to, being available to meet and speak with officers
or employees of the Company and/or its counsel at reasonable times and
locations, executing accurate and truthful documents, appearing at the Company’s
request as a witness at depositions, trials or other proceedings without the
necessity of a subpoena, and taking such other actions as may reasonably be
requested by the Company and/or its counsel to effectuate the foregoing.  In
requesting such services, the Company will consider other commitments that
Executive may have at the time of the request, and Executive’s availability and
obligations under this Section shall in all instances reasonably be subject to
Executive’s other commitments.  The Company agrees to reimburse Executive for
any reasonable, out-of-pocket travel, hotel and meal expenses incurred in
connection with Executive’s performance of obligations pursuant to this Section
for which Executive has obtained prior, written approval from the Company. The
Company shall reimburse Executive at a rate of $500/hour for any activities
performed pursuant to this Section beginning January 1, 2020. 

 

16.   Nothing in this Release is intended to or shall preclude either party from
providing testimony that such party reasonably and in good faith believes to be
truthful in response to a valid subpoena, court order, regulatory request or
other judicial, administrative or legal process or otherwise as required by
law.  Either party shall notify the other party in writing as promptly as
practicable after receiving any such request of the anticipated testimony and at
least ten days prior to providing such testimony (or, if such notice is not
possible under the circumstances, with as much prior notice as is possible) to
afford the other party a reasonable opportunity to challenge the subpoena, court
order or similar legal process.  Moreover, nothing in this Release shall be
construed or applied so as to limit any person from providing candid statements
that such party reasonably and in good faith believes to be truthful to any
governmental or regulatory body or any self-regulatory organization.

 

 

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17.   Executive represents and warrants that he is not aware of any actions or
omissions by any current or former officer, director, employee, agent,
consultant, or representative of the Company (including Executive) through the
date hereof that were or have been alleged to be (individually or in the
aggregate) materially harmful or detrimental to the Company, its business, or
its shareholders, including, without limitation, violations of any laws or
accounting policies or principles, the taking of unreasonable tax positions, or
the furnishing of inaccurate statements, invoices or other reports to any person
or entity.

 

18.   Executive has read this Release carefully, acknowledges that he has 21
days from the date of receipt of this Release to consider all of its terms, and
is hereby advised to consult with an attorney and any other advisors of his
choosing prior to executing this Release, and he has had ample opportunity to do
so. If Executive has signed this Release before the end of this 21 day period,
it is because he freely chose to do so after carefully considering its terms,
and Executive fully understands that by signing below he is forever voluntarily
giving up any right which he may have to sue or bring any other claims against
the Released Parties, including any rights and claims under the Age
Discrimination in Employment Act, the Older Workers Benefit Protection Act, and
any other discrimination laws, whether federal or state, to the fullest extent
permitted by law. He further understands that, under the law, Executive has a
period of seven days after signing this Release within which to revoke the
Release. To be effective, any such revocation of this Release must actually be
received by the General Counsel of the Company within the seven-day revocation
period.

 

19.   Executive represents and acknowledges that he has not been threatened,
coerced, or pressured in any manner, nor is he under duress from any source
whatsoever, to sign this Release, and he agrees to all of its terms and has
executed the Release freely, voluntarily and with full knowledge of its
contents.

 

20.   Each provision of this Release is intended to be severable. In the event a
court or governmental agency of competent jurisdiction determines that any term
or provision contained in this Release is illegal, invalid or unenforceable,
such provision shall be severed from the remainder of the Release and shall not
affect the other terms and provisions, which shall remain in full force and
effect.

 

21.   Protected Rights. It is understood and agreed by the undersigned that
nothing contained in this Release limits Executive’s ability to file a charge or
complaint with any federal, state or local governmental agency or commission
(“Government Agencies”). It is further understood that this Release does not
limit Executive’s ability to communicate with any Government Agencies or
otherwise participate in any investigation or proceeding that may be conducted
by any Government Agency, including providing documents or other information,
without notice to the Alaska Communications. This Release does not limit
Executive’s right to receive an award for information provided to any Government
Agencies.

 

22.   It is understood and agreed by the undersigned that this Release shall be
governed by and interpreted in accordance with the laws of the State of Alaska.

 

 

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IN WITNESS WHEREOF, the parties have executed this Release as of the dates
stated below.

 

 

 

 

 

Anand Vadapalli

Alaska Communications Systems Group, Inc.

                   

By /s/ Anand Vadapalli         

By /s/ David Karp                

Anand Vadapalli

David Karp

 

Chairman of the Board    

June 12, 2019                       

June 12, 2019____________

Date

Date

 

 

 

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EXHIBIT A: COMPENSATION SCHEDULE

 

 

Component

Negotiated Value

Payment / Vesting Requirements

Base Pay

$210,412.09

Paid in equal biweekly installments through 12/31/2019

Annual Incentive

$447,120.00

Paid at Separation

Existing Unvested Equity Awards

 

See Note Below

2017 RSU - Tranche 3 of 3

83,340 units

Vests in March 2020

2017 PSU - Tranche 1 of 1

274,146 units

Eligible for vesting with same performance factors and at same time as other
executives in 2020

2018 RSU - Tranche 2 of 3

43,763 units

Vests in March 2020

2018 RSU - Tranche 3 of 3

43,764 units

Vests in March 2021

2018 PSU - Tranche 1 of 3

230,021 units

Eligible for vesting with same performance factors and at same time as other
executives on or before July 20, 2019

2018 PSU - Tranche 2 of 3

209,873 units

Eligible for vesting with same performance factors and at same time as other
executives on or before July 20, 2020

2018 PSU - Tranche 3 of 3

202,483 units

Eligible for vesting with same performance factors and at same time as other
executives on or before July 20, 2021

2018 Restricted Cash
- Tranche 2 of 3

$78,948.56

Vests in March 2020

2018 Restricted Cash
- Tranche 3 of 3

$78,948.56

Vests in March 2021

2018 Performance Cash
- Trance 1 of 1

$320,393.66

Eligible for vesting with same performance factors and at same time as other
executives in 2021

2019 Long Term Award Equivalency

$855,089.64

Paid at Separation

 

 

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Note:

 

The parties intend for the restricted and performance stock units (RSU and PSU)
listed above as "Existing Unvested Equity Awards" to vest on schedule as if
Executive remained employed by the Company, subject to any applicable
performance-based criteria, despite the termination of Executive's employment.
Should any applicable award agreement for an "Existing Unvested Equity Award"
provide that Executive is ineligible for vesting as a result of the termination
of Executive's employment, such agreement is hereby amended to allow for vesting
following termination of employment and as is otherwise necessary to effectuate
the parties' intent under this Release.

 

Notwithstanding the foregoing, if the Company enters into a change of control
transaction such as an acquisition of the Company, any unvested portion of the
"Existing Unvested Equity Awards" listed above as of the date of the definitive
agreements for such a transaction shall vest in its entirety upon closing of
such transaction.