Exhibit 10.31
Employment
Agreement
This Employment Agreement (the
“ Agreement ”) dated as of December 14,
2004 and effective as of December 13, 2004 (the “
Effective Date ”), is made by and between Harvey A.
Plummer (the “ Executive ”) and Hawaiian Telcom
MergerSub, Inc. and any of its subsidiaries and affiliates as may
employ Executive from time to time (collectively, and together with
any successor thereto, the “ Company ”).
Notwithstanding anything herein to the contrary, this Agreement
shall be void and of no force and effect if within 20 days of the
Effective Date the Company or the Principal Stockholders are not,
acting reasonably and in good faith, satisfied with the results of
a background check on the Executive.
RECITALS
|
A.
|
It is the
desire of the Company to assure itself of the services of the
Executive by engaging the Executive to perform services under the
terms hereof.
|
|
B.
|
The Executive
desires to provide services to the Company on the terms herein
provided.
|
AGREEMENT
NOW, THEREFORE, in consideration of
the foregoing and of the respective covenants and agreements set
forth below the parties hereto agree as follows:
1. Certain Definitions.
|
|
(a)
|
“
Agreement of Merger ” shall mean the certain Agreement
of Merger by and among GTE Corporation, Verizon HoldCo LLC,
Paradise MergerSub Inc. and the Company dated May 21,
2004.
|
|
|
(b)
|
“
Annual Base Salary ” shall have the meaning set forth
in Section 3(a) .
|
|
|
(c)
|
“ Base
Case Performance Target ” for an applicable year shall
have the meaning set forth on Exhibit B .
|
|
|
(d)
|
“
Board ” shall mean the Board of Directors of the
Company.
|
|
|
(e)
|
The Company
shall have “ Cause ” to terminate the
Executive’s employment hereunder upon:
|
|
|
(i)
|
the
Executive’s failure to follow a legal order of the Board,
other than any such failure resulting from the Executive’s
Disability, and such failure is not remedied within 30 days after
receipt of written notice;
|
|
|
(ii)
|
Executive’s gross or willful misconduct to
the Company;
|
|
|
(iii)
|
Executive’s conviction of a felony or of a
crime involving material dishonesty or moral terpitude;
|
|
|
(iv)
|
Executive’s fraud or personal dishonesty
involving the Company’s assets; or
|
|
|
(v)
|
the
Executive’s unlawful use (including being under the
influence) or possession of illegal drugs on the Company’s
premises or while performing the Executive’s duties and
responsibilities under this Agreement.
|
|
|
(f)
|
“
Company ” shall have the meaning set forth in the
preamble hereto.
|
|
|
(g)
|
“
Compensation Committee ” means the Compensation
Committee of the Board.
|
|
|
(h)
|
“
Closing Date ” shall have the meaning set forth in the
Agreement of Merger.
|
|
|
(i)
|
“ Date
of Termination ” shall mean (i) if the
Executive’s employment is terminated by his death, the date
of his death; (ii) if the Executive’s employment is
terminated pursuant to Section 4(a)(ii) – (vi)
either the date indicated in the Notice of Termination or the
date specified by the Company pursuant to Section 4(b)
, whichever is earlier; (iii) if the Executive’s
employment is terminated pursuant to Section 4(a)(vii)
or Section 4(a)(viii) , the expiration of the
then-applicable Term.
|
|
|
(j)
|
“
Disability ” shall mean the absence of the Executive
from the Executive’s duties to the Company on a full-time
basis for a total of six months during any 12-month period as a
result of incapacity due to mental or physical illness which is
determined to be reasonably likely to extend beyond the completion
of the Term and which determination is made by a physician selected
by the Company and acceptable to the Executive or the
Executive’s legal representative (such agreement as to
acceptability not to be withheld unreasonably). A Disability shall
not be “incurred” hereunder until, at the earliest, the
last day of the sixth month of such absence.
|
|
|
(k)
|
“
Executive ” shall have the meaning set forth in the
preamble hereto.
|
|
|
(l)
|
“
Executive Bonus Plan ” shall have the meaning set
forth in Section 3(c) .
|
|
|
(m) (i)
|
The Executive
shall have “ Good Reason ” to resign his
employment upon the occurrence of any of the following:
|
(A) failure of the Company to
continue the Executive in the position of Senior Vice President,
Operations and Engineering;
(B) failure of the Principal
Stockholders to satisfy their requirements under the last sentence
of Section 3(b) of the Agreement;
(C) the Company’s material
breach of this Agreement;
2
(D) the relocation of the
Executive’s principal office, without his consent, to a
location that is in excess of 100 miles from Honolulu, Hawaii;
or
(E) failure of the Company to make
any payment or provide any benefit in accordance with this
Agreement.
|
|
(ii)
|
The Executive
may not resign his employment for Good Reason unless:
|
(A) the Executive provided the
Company with at least 30 days prior written notice of his intent to
resign for Good Reason; and
(B) the Company has not remedied the
alleged violation(s) within the 30-day period.
|
|
(n)
|
“
Inventions ” shall have the meaning set forth in
Section 8 .
|
|
|
(o)
|
“
Notice of Termination ” shall have the meaning set
forth in Section 4(b) .
|
|
|
(p)
|
“
Outside Closing Date ” shall mean the later to occur
of (i) date of termination set forth in Section 10.1 of
the Agreement of Merger or (ii) a date selected by the
Principal Stockholders in their sole discretion.
|
|
|
(q)
|
“
Principal Stockholders ” shall mean Carlyle Partners
III, L.P. a Delaware limited partnership and its
affiliates.
|
|
|
(r)
|
“
Term ” shall have the meaning set forth in
Section 2(b) .
|
2. Employment.
|
|
(a)
|
The Company
shall employ the Executive and the Executive shall enter the employ
of the Company, for the period set forth in
Section 2(b) , in the position set forth in
Section 2(c) , and upon the other terms and conditions
herein provided.
|
|
|
(b)
|
The initial
term of employment under this Agreement (the “ Initial
Term ”) shall be for the period beginning on the
Effective Date of this Agreement and ending on the third
anniversary thereof, unless earlier terminated as provided in
Section 4 . The employment term hereunder shall
automatically be extended for successive one-year periods (“
Extension Terms ” and, collectively with the Initial
Term, the “ Term ”) unless either party gives
notice of non-extension to the other no later than 90 days prior to
the expiration of the then-applicable Term.
|
|
|
(c)
|
Position and Duties
. The Executive shall serve as
Senior Vice President, Operations and Engineering of the Company
and shall have the authorities duties and responsibilities
customarily commensurate with such position and such additional
customary responsibilities, duties and authority, as may from time
to time be reasonably assigned to the Executive by the Board. The
Executive shall report to the Chief Operations Officer, or if such
position does not exist, the Chief
|
3
|
|
Executive Officer. The Executive
shall devote his full working time, attention and efforts to the
business and affairs of the Company. The Executive agrees to
observe and comply with the Company’s rules and policies as
adopted by the Company from time to time. During the Term, it shall
not be a violation of this Agreement for the Executive to
(i) serve on industry trade, civic or charitable boards or
committees; (ii) deliver lectures or fulfill speaking
engagements; or (iii) manage personal investments, as long as
such activities do not materially interfere with the performance of
the Executive’s duties and responsibilities. The Executive
shall be permitted to serve on for-profit corporate boards of
directors and advisory committees if approved in advance by the
Board, which approval shall not unreasonably be
withheld.
|
3. Compensation and Related
Matters.
|
|
(a)
|
Annual Base
Salary . During the
portion of the Term which follows the Closing Date, the Executive
shall receive a base salary at a rate of $225,000 per annum, which
shall be paid in accordance with the customary payroll practices of
the Company, subject to any increase as determined in accordance
with the customary compensation practices or policies of the
Company (the “ Annual Base Salary ”). Annual
Base Salary may be increased, but not decreased, from time to time
by the Board.
|
|
|
(b)
|
Interim
Period . During the
period between the Effective Date and the Closing Date,
|
(i) Executive shall receive monthly
payments of a salary at the rate of his Annual Base
Salary;
(ii) Subject to the submission to
the Company by the Executive of appropriate documentation and/or
vouchers in accordance with the customary procedures of the Company
for reimbursement, the Company shall reimburse Executive for any
reasonable premiums paid in connection with the Executive’s
purchase of (A) health care insurance coverage (including an
election to receive COBRA continuation health care coverage from
his previous employer), and (B) a one-year term life insurance
policy that would pay the Executive’s beneficiary up to
$337,500 upon the death of the Executive, provided ,
however , that such reimbursements under subsections (A),
and (B) of this Section 3(b) shall cease once the
Executive becomes eligible for coverage under the Company’s
health and life insurance plans. Upon Executive becoming so
eligible, he shall cancel such policies and return the refunded
premium, if any, to the Company; and;
(iii) the Executive shall be
entitled to participate in The Carlyle Group’s long-term
disability insurance plan in a manner and level of benefit
consistent with his job title and duties in accordance with the
terms of such disability plan for any period prior to the Executive
becoming eligible for any long-term disability coverage under the
Company’s applicable long-term disability insurance
plan.
4
The Principal Stockholders shall
make any payments described in this Section 3(b) that
the Company is unable to make.
|
|
(c)
|
Annual
Performance Bonus .
During the Term, the Executive will participate in an annual
performance-based bonus plan (“ Executive Bonus Plan
”) established by the Compensation Committee at a target
level of $168,750 (“ Target Level ”). Such bonus
shall be payable at such time as bonuses are paid to other senior
executive officers who participate therein. Notwithstanding the
foregoing, with respect to each of the Company’s fiscal years
that ends during the Term other than the fiscal year ending
December 31, 2004, the amount of the Executive’s annual
bonus payable pursuant to such plan shall be determined as set
forth on Exhibit A . With respect to the fiscal year ending
December 31, 2004, the Executive shall not be entitled to an
annual performance bonus under this Section 3(c) .
Notwithstanding anything herein to the contrary, no bonus shall be
paid if the Closing Date does not occur prior to the Outside
Closing Date.
|
|
|
(d)
|
Equity
Participation . During
the Term, the Executive shall be entitled to participate in the
Stock Option Plan of the Company and on the Closing Date shall be
granted options to purchase a percentage of the Company’s
common stock (“ Common Stock ”) (such percentage
shall be calculated on the Closing Date in a manner agreed upon by
the parties and calculated prior to considering any dilution of
such stock) at an exercise price per share equal to the per share
cost paid by the Principal Stockholders to acquire the Company.
During the Executive’s employment with the Company,
one-quarter of such stock options shall become vested and
exercisable based on the passage of time and three-quarters shall
become vested and exercisable based on the Company’s
achievement of the performance targets set forth in Exhibit A to
the Stock Option Agreement. The grant of stock options shall be
governed by the terms of the Stock Option Plan to be adopted by the
Company and Stock Option Agreement substantially in the form
attached hereto as Exhibit C .
|
|
|
(e)
|
Benefits . The Executive shall be entitled to participate
in all employee benefit plans, programs and arrangements of the
Company which are applicable to the senior officers of the Company
at a level commensurate with the Executive’s
position.
|
|
|
(g)
|
Expenses . During the Term, the Company shall reimburse
the Executive for all reasonable travel and other business expenses
incurred by his in the performance of his duties to the Company in
accordance with the Company’s expense reimbursement
policy.
|
|
|
(h)
|
Housing Allowance
. During the Term, the Company shall
pay the Executive a reasonable housing allowance at a rate of up to
$4,000 per month, as determined based on the Company’s good
faith independent verification and analysis of the
Executive’s housing requirements and needs and subject to
applicable
|
5
|
|
withholding taxes. Such allowance
shall be paid in lump-sum or periodically, in accordance with the
Company’s policies and procedures and may be applied,
inter alia , to pay temporary lodging expenses in
Hawaii. With respect to any such allowance paid to the Executive
under this Section 3(i) which is taxable to the
Executive, the Executive shall be entitled to receive an additional
payment from the Company in an amount such that, after payment by
the Executive of all income taxes imposed on the housing allowance
and the additional payment, the Executive would retain an amount
equal to such housing allowance.
|
|
|
(i)
|
Vacation . During the Term, the Executive shall be
entitled to three weeks paid vacation each calendar year. Any
vacation shall be taken at the reasonable and mutual convenience of
the Company and the Executive. Paid vacation for a calendar year
that has not been taken by Executive during such calendar year
shall carry over to any subsequent period up to a maximum
accumulated six weeks.
|
4. Termination.
The Executive’s employment
hereunder may be terminated by the Company or the Executive, as
applicable, without any breach of this Agreement only under the
following circumstances:
|
|
(i)
|
Death . The Executive’s employment hereunder
shall terminate upon his death.
|
|
|
(ii)
|
Disability . If the Executive has incurred a Disability,
the Company may give the Executive written notice of its intention
to terminate the Executive’s employment. In that event, the
Executive’s employment with the Company shall terminate
effective on the 30 th day after receipt of such notice by
the Executive, provided that within the 30 days after such receipt,
the Executive shall not have returned to full-time performance of
his duties.
|
|
|
(iii)
|
Termination
for Cause . The Company
may terminate the Executive’s employment for
Cause.
|
|
|
(iv)
|
Termination
without Cause . The
Company may terminate the Executive’s employment without
Cause.
|
|
|
(v)
|
Resignation
for Good Reason . The
Executive may resign his employment for Good Reason.
|
|
|
(vi)
|
Resignation
without Good Reason . The
Executive may resign his employment without Good Reason.
|
|
|
(vii)
|
Non-extension of Term by the Company
. The Company may give notice of
non-extension to the Executive pursuant to Section 2(b)
.
|
6
|
|
(viii)
|
Non-extension of Term by the
Executive. The Executive
may give notice of non-extension to the Company pursuant to
Section 2(b) .
|
|
|
(ix)
|
Failure to
Close. The
Executive’s employment hereunder shall terminate in the event
that the Closing Date does not occur prior to the Outside Closing
Date.
|
|
|
(b)
|
Notice of
Termination . Any
termination of the Executive’s employment by the Company or
by the Executive under this Section 4 (other than
termination pursuant to paragraph (a)(i)and (a)(ix)) shall be
communicated by a written notice to the other party hereto
indicating the specific termination provision in this Agreement
relied upon, setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated, and
specifying a Date of Termination which, if submitted by the
Executive, shall be at least 30 days following the date of such
notice (a “ Notice of Termination ”) provided,
however, that the Company may, in its sole discretion, change the
Date of Termination to any date following the Company’s
receipt of the Notice of Termination. A Notice of Termination
submitted by the Company may provide for a Date of Termination on
the date the Executive receives the Notice of Termination, or any
date thereafter
|
|