EX-10.1






Alaska Communications Systems 2010 Officer Severance Policy




This 2010 Officer Severance Policy (“Severance Policy” or “Policy”) is a legally binding
policy of Alaska Communications Systems Holdings, Inc., a Delaware corporation, and its affiliates
and successors, which are referred to herein as “we,” “us,” “our,” “ACS” or the “company”.



This Policy grants you severance and change of control benefits in certain circumstances but, in
exchange, requires you to, among other things, agree not to compete with us or solicit employees
from us following termination of your employment with ACS. Thus, you should read this Policy
carefully. It will be strictly enforced.



Part 1: Availability of Severance Benefits




When do I become covered under this Policy?



You must be in the eligible ACS Officer (Vice President, Senior Vice President, Executive Vice
President, President, Chief Operating Officer, or Chief Executive Officer) position for a minimum
of six (6) continuous months before you become eligible to be covered under this Policy.



When do I receive severance benefits?



You may receive severance benefits if you are terminated “without cause” or resign for “good
reason.”



What if I am terminated “for cause”?



If you are terminated for cause, you receive no severance benefits under this Policy. You may be
entitled to any regular pay earned prior to termination, and we will include this amount in your
final check, minus any applicable deductions, but you will not be entitled to any severance
benefits under this Policy, nor will you be entitled to nor be deemed to have earned any cash or
other bonus or incentive compensation payments for your final year or partial year of employment,
nor to the vesting of any equity awards after you are terminated.



When can I be terminated “for cause”?



You can be terminated for cause if:




• You knowingly do something illegal, unethical or dishonest in your work, which
includes impropriety arising out of omissions (for example, a failure to report material
information);




• You are found guilty or plead guilty or “no-contest” to (i) any felony or (ii) any
misdemeanor that damages or embarrasses ACS;




• You breach a fiduciary duty you owe to us, our board, or our stockholders (even if
we are required to indemnify you for it);




• You breach an obligation or violate a provision applicable to you under our
corporate compliance or ethics policies; or




• You (i) demonstrate ineffectual performance or fail to perform with minimal
effectiveness in carrying out your assigned responsibilities, or you engage in conduct
harmful to the Company or you are negligent in carrying out your duties as an Officer of the
Company; (ii) you receive written warning (which can include a specific warning included in
your written performance review), and (iii) do not correct your performance within the
period set forth in the warning, which may be less than thirty (30) days. Where ACS has or
may suffer immediate and grave harm from your continuation in your position, you may be
removed from your position for cause without advance warning.



Below average performance in any of your critical responsibilities, or in all areas of your
assigned responsibilities, may constitute ineffectual performance under this Policy.



What if I resign?



If you resign, you receive no severance benefits under this Policy, unless you resign for “good
reason.” Specifically, you will not be entitled to any severance benefits under this Policy, nor
will you be entitled to nor be deemed to have earned any cash or other bonus or incentive
compensation payments for your final year or partial year of employment, nor to the vesting of any
equity awards after your resignation.



What is a “good reason”?



You have a good reason to resign if we do any of the following:




• Significantly reduce your base salary or target annual cash incentive payment
(unless we similarly reduce base salary or target annual cash incentive payment for
substantially all other officers at your level of responsibility who are covered by this
Policy);




• Significantly reduce your other benefits (unless the reduction applies to
substantially all other officers at your level of responsibility who are covered by this
Policy or substantially all full-time employees);




• Significantly reduce your title in the company, recognizing that ACS from time to
time may have a business need to modify your assigned responsibilities or reassign
employees reporting to you or to another Officer, which changes, in and of themselves, shall
not constitute good reason;




• Relocate your primary location of work more than 60 miles; or




• Significantly breach an obligation we owe to you under this Policy or any other
employment related agreement we enter into with you.



You must provide proper notice to receive severance benefits. The event that triggers your
resignation with good reason (“Triggering Event”) must have occurred within the last sixty (60)
days of when you provide notice of your intent to resign or it will no longer be considered good
reason to resign. You must give us at least thirty (30) days written notice of your intent to
resign for good reason. Your notice must specify your reason, and we may cure the matter during
that time, in which case you will no longer have good reason to resign. Therefore, to be valid,
your resignation for good reason must take effect no later than 90 days following a triggering
event.



Note: If you cannot work because you have a physical or mental disability, that is not “good
reason” to resign under this Policy. Please see below for more information.



Part 2: Standard Severance Benefits





Assuming I am entitled to them, what severance benefits do I receive?



If we terminate you without cause or you resign for good reason (and you sign a form of waiver
attached as Exhibit A) you will receive the following benefits:



Executive Officers (all Vice Presidents and the Chief Operating Officer who report directly
to the Chief Executive Officer (“CEO”) and/or President of the company, and/or the President and
CEO):




• We will pay, within thirty (30) days following your date of termination, a lump sum
payment equal to (2x) your annual base salary (unless you are resigning because of a
significant reduction in your base salary, in which case we will pay you the amount or your
annual base salary prior to its reduction); and




• For one (1) year after you leave the company, we will reimburse you for monthly
federal medical COBRA premiums you pay for continuing medical insurance coverage for you and
your family (less your standard employee contribution amount). We will reimburse you
promptly, but in no event later than February 15 of the year after the year in which the
expense was incurred. We will not reimburse you for any other insurance or benefits or for
COBRA premiums if and when you obtain replacement health care insurance from another
provider before one (1) year elapses.




o You must tell us if you receive replacement medical benefits. If you obtain other
health care coverage, you must promptly notify us, but in no event later than 30
days following the date on which you become aware that you will be receiving or have
received other health care benefits. You must return to us any payments for COBRA
coverage or other benefits to which you were not entitled. You must provide
adequate documentation of your payment of COBRA premiums in order to qualify for
reimbursement.




• You will not be eligible for any unvested equity compensation you have, including,
stock options, restricted stock, performance shares (or the like). .




• You will not be entitled to or deemed to have earned any cash or other bonus or
incentive compensation payments for your final year or partial year of employment.




• The Board or any committee of the Board may require you to return to the company of
any cash incentive or bonus payments, or any equity awards (or the value thereof), that were
provided to you on the basis of company or individual performance which is later discovered
to be based on intentional misconduct or unethical behavior that results in the company
having to file a material restatement of company financial results.




Other Company Officers (Vice Presidents who are not Executive Officers and do not report
directly to the CEO/President)




• We will pay, within thirty (30) days following your date of termination, a lump sum
payment equal to (1x) your annual base salary (unless you are resigning because of a
significant reduction in your base salary, in which case we will pay you the amount or your
annual base salary prior to its reduction); and




• For six (6) months after you leave the company, we will reimburse you for monthly
federal medical COBRA premiums you pay for continuing medical insurance coverage for you and
your family (less your standard employee contribution amount). We will reimburse you
promptly, but in no event later than February 15 of the year after the year in which the
expense was incurred. We will not reimburse you for any other insurance or benefits or for
COBRA insurance premiums if and when you obtain replacement health care insurance from
another provider before one (1) year elapses.




o You must tell us if you receive replacement medical benefits. If you obtain other
health care coverage, you must promptly notify us, but in no event later than 30
days following the date on which you become aware that you will be receiving or have
received other health care benefits. You must return to us any payments for COBRA
coverage or other benefits to which you were not entitled. You must provide
adequate documentation of your payment of COBRA premiums in order to qualify for
reimbursement.




• You will not be eligible for any unvested equity compensation you have, including,
stock options, restricted stock, performance shares (or the like).




• You will not be entitled to or deemed to have earned any cash or other bonus or
incentive compensation payments for your final year or partial year of employment.




• The Board or any committee of the Board may require you to return to the company of
any cash incentive or bonus payments, or any equity awards (or the value thereof), that were
provided to you on the basis of company or individual performance which is later discovered
to be based on intentional misconduct or unethical behavior that results in the company
having to file a material restatement of company financial results.



Part 3: Change of Control Severance Benefits




When do I become eligible for change of control severance benefits?



You are entitled to change of control severance benefits if you are terminated without cause or
resign for good reason within one (1) year after a change of control.



Assuming I am entitled to them, what change of control severance benefits do I receive?




• We or our successor company will pay you the standard severance benefits described
in Part 2 above. In addition, all of your equity compensation will vest immediately as of
the date of your termination by the company without cause or you resign with good reason
within one year after a change of control.



What is a change of control?



We will treat any of the following as a change of control under this Policy:




• Any corporate transaction we enter into that results in our voting stockholders
owning less than fifty percent (50%) of the voting power of the new company;




• The election of an insurgent slate of directors comprising a new majority of our
board of directors (an “insurgent slate” means director candidates not nominated by the
incumbent board);




• Approval by our stockholders of a complete liquidation or dissolution of the
Company; or




• The sale of all or substantially all of our assets (including those of our
subsidiaries).



Change of control, in and of itself, shall not be deemed good reason for you to resign.



Part 4: Effect of Disability or Death on this Policy




When am I considered disabled or dead?




• You are considered “disabled” if you become physically or mentally incapacitated and
unlikely to work for at least six (6) consecutive months during any one (1) year period, not
limited to a calendar year. If we disagree about whether you are disabled, we will seek an
independent physician’s opinion.




• You are considered “dead” if you are dead or declared dead and likely to remain dead
for the next few days or so.



Am I entitled to severance benefits if I become disabled or die?



Your employment will be terminated without entitlement to severance benefits upon disability severe
enough to meet the definition of disabled under this Policy, or upon your death. However, if you
become disabled or die while our employee, we will pay you (or your estate) a partial annual cash
incentive payment based on your time of active work in the last performance year in which you
worked. You will not be entitled to or deemed to have earned any other cash incentive compensation
or bonus for your final year or partial year of employment, and you will not be eligible for any
unvested equity compensation you may have.



When would I receive this limited benefit?



You would receive your partial cash incentive award in accordance with the company’s normal
incentive compensation policy, including adjustments for company and individual performance, giving
you credit for the active work time you gave us in the last performance year in which you worked.



Part 5: Your Agreement Not to Compete with us or Solicit our Employees




When do I become obligated not to compete or solicit?



As you know, our business is highly competitive in nature. Thus, in order to receive any severance
payments described above under this Policy, you must (sign the waiver attached as Exhibit
A) which obligates you not to compete with us or solicit our employees for twelve (12) months
after you leave ACS.



How do I avoid competing with you?



To comply with your agreement not to compete you must not:




• solicit the business of any customer or prospective customer of ACS that you had any
contact with, even if brief, during the twelve (12) months before you leave ACS; or




• engage in, work for, or invest in any business that competes with ACS in any way.



How do I avoid soliciting from you?



To comply with your agreement not to solicit you must not:




• solicit or encourage any of our employees to resign from ACS; or




• hire anyone who was our employee at the time you left ACS or anyone else who left
ACS less than one year before you did.



Part 6: Agreement Not to Disparage Each Other




When do I become obligated to and benefit from this protection?



You must sign the waiver, attached as Exhibit A to this Policy, when you leave ACS for any
reason, whether you are eligible for severance benefits under this Agreement or not. Upon
execution of the waiver we become obligated not to disparage each other.



What must I do to fulfill my obligation not to disparage ACS?



You may not make any oral or written statement about ACS regarding our financial status, business,
compliance with laws, ethics, stockholders, partners, personnel, directors, officers, employees,
consultants, agents, services, business methods or otherwise, which is intended or reasonably
likely to disparage us or hurt our reputation.



What must ACS do to fulfill its obligation not to disparage me?



We may not issue any press release or make any disparaging public statement about you that is
likely to hurt your reputation.



Are there exceptions?



Yes. Each of us may:




• make any statement required to be made by law (including applicable securities
laws); in the event such a statement is legally required, each of us agrees to provide
notice promptly to the other of any statement required by law and to cooperate with each
other in order to enable the affected party to seek appropriate relief from the disclosure
obligation if such relief is available;




• make a public statement stating the fact that your employment has ended; or




• provide truthful testimony in any legal proceeding.



Part 7: Taxes




Are there any tax consequences under this Policy I need to be aware of?



Yes. We have designed this Policy to minimize our tax liabilities while preserving your potential
benefits to the extent practicable. You should, however, consult your tax advisor to review your
individual situation. Nothing in this Policy is tax advice and tax related discussion is included
only to show how we intend to handle possible tax liabilities.



Your tax liability is solely your responsibility. We will not reimburse you or make any “gross-up”
payment to cover any of your personal tax liability.



Is any benefit under this Policy “deferred compensation” subject to excise tax under Section 409A
of this internal revenue code?




• No; however, if you are a “specified employee” under Section 409A, then, we may be
required to delay payments that would otherwise be payable during the six (6) month period
immediately following your separation from service.



Is any benefit under this Policy a “golden parachute” that could be subject to excise tax?



Possibly. In the event that the severance and other benefits provided in this Policy are subject
to an excise tax under Section 280G of the Internal Revenue Code, then your benefits under this
Policy will be either (i) delivered in full or (ii) reduced so that so that any payment is limited
to 2.99 times your “base amount,” within the meaning of Section 280G(b)(3) of the Internal Revenue
Code, whichever of the foregoing amounts results in your receipt of the greatest amount of benefits
after tax.



Tax Note: You agree to cooperate in good faith with us in any valuation of these benefits that we
may need to make under Section 280G of the Internal Revenue Code.



You understand that determinations required to be made related to Section 280G will be made in
writing by KPMG LLP, or our then independent public accounting firm, and will be conclusive and
binding upon you and ACS. We will bear all costs reasonably incurred in connection with any such
calculations.



Part 8: Dispute Resolution




What if you don’t do what you promised to do under this Policy or we disagree with what you have
done?



We would ask disinterested members of our compensation and personnel committee to interpret, in
good faith and in accordance with best industry practices, the rights and obligations under this
Policy. This good faith interpretation of this Policy is binding on you and the company.



What if I disagree with the decision of the committee?



If you dispute a decision of the committee, you are entitled to seek relief in Alaska Superior
Court in Anchorage, Alaska, applying Alaska law. Further, you understand and agree that if you
breach certain of your obligations under this Policy; it would be difficult or impossible to
measure our damages in dollars. Therefore, to enforce this Policy, you agree that we have the
right to, without posting any bond, cease making any payments or providing any benefits required by
this Policy and obtain equitable relief in court in the event you breach your obligations. That
means we can ask the court to make you perform your obligations, obtain a temporary restraining
order against you, or obtain temporary or permanent injunction, or any other equitable remedy that
is available to us.



If it’s a genuine dispute, how will we handle attorneys’ fees?



Each party will be responsible for all of their own legal fees and costs.



Part 9: Miscellaneous




Anything else legal you want to tell me?




• You are and at all times remain an “at-will” employee with ACS. This Policy does
not change that.




• You agree that the Company may modify this policy in the future, at its sole
discretion, and thereby modify the terms and conditions of severance that apply to you in
the future.




• You agree that we will use the Alaska law to interpret and resolve disputes under
this Policy.




• This Policy contains our entire understanding of these matters. Neither of us may
rely on any other policies, promises, warranties (oral or written) that cover severance
benefits or policy.




• You will always retain your right to indemnification under this Policy under our
certificate of incorporation, or otherwise provided at law or pursuant to our by-laws. You
will continue to be covered by our insurance, including our directors’ and officers’
liability or employment practices insurance coverage for work you did at ACS.




• In this Policy you and ACS, from time to time, are required to notify each other of
things. Notices must be in writing and notice requirements will be treated as fulfilled if
delivered by hand or overnight courier service or three (3) days after it has been mailed by
United States registered mail, return receipt requested, postage prepaid, addressed to these
respective addresses (or to such other address that we may notify each other of in the
meantime using the same methods herein). Notice of change of address, however, is only
effective only upon actual receipt.



To us:

Alaska Communications Systems Holdings, Inc.

600 Telephone Avenue MS65

Anchorage, Alaska 99503

Copy to: General Counsel

To you:

Your most recent address in our personnel records.




Finally, this Policy supersedes all prior understandings (including oral agreements) between you
and ACS concerning severance matters. Nevertheless; this Policy may be amended, modified, changed,
or terminated by us in the future without prior notification or negotiation, and any such future
changes will be applicable to you.



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EXHIBIT A

FORM OF OFFICER’S RELEASE

(Non-Compete, non-disparagement & non-solicitation)




In exchange for a portion of the benefits described in the attached Alaska Communications Systems
2010 Officer Severance Policy (the “Policy”), to which I agree I am not otherwise entitled,
I hereby release Alaska Communications Systems Group, Inc. (the “Company”), its respective
Affiliates, subsidiaries, predecessors, successors, assigns, officers, directors, employees,
agents, stockholders, attorneys, and insurers, past, present and future (the “Released Parties”)
from any and all claims of any kind which I may have had, now have or may have against the Released
Parties, whether known or unknown to me, by reason of facts which have occurred on or prior to the
date that I have signed this Release in connection with, or in any way related to or arising out
of, my employment or termination of employment with the Company; provided that such released claims
shall not include any claims to enforce my rights (i) under, or with respect to, the Policy, (ii)
to indemnification provided at law or pursuant to the Company’s (or an affiliate’s) By-Laws or
insurance or to directors’ and officers’ liability or employment practices insurance coverage,
(iii) under COBRA or my vested rights under benefit or incentive plans; or (iv) as a stockholder.
Notwithstanding the generality of the preceding sentence, such released claims include, without
limitation, any and all claims under federal, state or local laws pertaining to employment,
including the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, as
amended, 42 U.S.C. Section 2000e et seq., the Fair Labor Standards Act, as amended, 29 U.S.C.
Section 201 et seq., the Americans with Disabilities Act, as amended, 42 U.S.C. Section 12101 et
seq., the Reconstruction Era Civil Rights Act, as amended, 42 U.S.C. Section 1981 et seq., the
Rehabilitation Act of 1973, as amended, 29 U.S.C. Section 701 et seq., the Family and Medical Leave
Act of 1992, 29 U.S.C. Section 2601 et seq., and any and all state or local laws regarding
employment discrimination and/or federal, state or local laws of any type or description regarding
employment, including, but not limited to, any claims arising from or derivative of my employment
with the Company, as well as any and all claims under contract or tort law or otherwise.



I hereby represent that I have not filed, nor will I in the future file, any action, complaint,
charge, grievance or arbitration against the Company or the Released Parties arising out of or in
any way related to or connected with my employment with the Company, except to the extent the law
otherwise provides.




• I understand and agree that I must forever continue to keep confidential all
proprietary or confidential information which I learned while employed by the Company,
whether oral or written and as defined in the Corporate Compliance Program Manual
(“Proprietary Information”) and shall not make use of any such Proprietary Information on my
own behalf or on behalf of any other person or entity, except as specifically authorized by
the Policy.




• I expressly understand and agree that the Company’s obligations under this Release
and the Policy are in lieu of any and all other amounts to which I might be, am now or may
become entitled to receive from any of the Released Parties upon any claim whatsoever.




• I understand that I must not disclose the terms of this Release and the Policy to
anyone other than my immediate family, financial advisors (if any) and legal counsel and
that I must immediately inform my immediate family, financial advisors (if any) and legal
counsel that they are prohibited from disclosing the terms of this Release and the Policy.




• It is understood that I will not be in breach of the nondisclosure provisions of
this Release if I am required to disclose information pursuant to a valid subpoena or court
order, provided that I notify the Company (to the attention of the General Counsel of the
Company) as soon as practicable, but prior to the time in which I am required to disclose
information, that I have received the subpoena or court order which may require me to
disclose information protected by this Release. Notwithstanding the foregoing, I also may
disclose the terms of this Release to government taxing authorities and/or the SEC, if
required to do so.




• I agree that any violation or breach by me of my nondisclosure obligations, without
limiting the Company’s remedies, shall give rise on the part of the Company to a claim for
relief to recover from me, before a court of competent jurisdiction, any and all amounts
previously paid to or on behalf of me by the Company pursuant to this Policy, plus interest,
but shall not release me from the performance of my obligations under this Release.




• I will not apply for or otherwise seek employment with the Released Parties without
their written consent.




• I have read this Release carefully, acknowledge that I have been given at least
twenty-one (21) days to consider all of its terms, and have been advised to consult with an
attorney and any other advisors of my choice prior to executing this Release, and I have had
the opportunity to do so. I fully understand that by signing below I am forever voluntarily
giving up any right which I 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 and
any other discrimination laws, whether federal or state. I also understand that I have a
period of seven (7) days after signing this Release within which to revoke my Release, and
that neither the Company nor any other person is obligated to provide any benefits to me
pursuant to the Policy until eight (8) days have passed since my signing of this Release
without my signature having been revoked. I understand that any revocation of this Release
must actually be received by the General Counsel of the Company within the seven-day
revocation period.




• Finally, I have not been forced or pressured in any manner whatsoever to sign this
Release, and I agree to all of its terms voluntarily.




• I represent and acknowledge that no representation, statement, promise, inducement,
threat or suggestion has been made by any of the Released Parties or by any other individual
to influence me to sign this Release, except such statements as are expressly set forth
herein or in the Policy.



This Release is final and binding and may not be changed or modified except by a written agreement
signed by an authorized Officer of the company.



By: [Executive Signature]



Date:




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