Exhibit
10.1
Employment
Agreement
This Employment Agreement (the
“ Agreement” ) dated as of March 28, 2007 and
effective as of May 14, 2007 (the “ Effective
Date”) , is made by and between Paul H. Sunu (the “
Executive” ) and Hawaiian Telcom Communications, 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 is not, acting reasonably and in good faith, satisfied with
the results of a background check on the Executive.
RECITALS
A.
The Company desires to engage the
Executive to perform services pursuant to the terms and conditions
of this Agreement.
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 covenants set forth below, the parties
agree as follows:
1.
Certain Definitions .
(a)
“ Annual Base Salary
” shall have the meaning set forth in Section 3(a)
.
(b)
“Board” shall mean the
Board of Directors of the Company.
(c)
“ Cause ” to
terminate the Executive’s employment shall include any
of the following facts or circumstances:
(i)
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 in the performance of duties that causes or is
reasonably likely to cause damage to the Company;
(iii)
Executive’s conviction of
felony or crime involving material dishonesty or moral
turpitude;
(iv)
Executive’s fraud or, other
than with respect to a de minimis amount, 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.
Prior to a termination pursuant to
Section 4(a) (iii) , the Company shall conduct a reasonable
investigation to determine, based on information reasonably
available to the Company, whether Cause for termination
exists.
(d)
“ Company ” shall
have the meaning set forth in the preamble.
(e)
“ Compensation
Committee ” means the Compensation Committee of the
Board.
(f)
“ 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.
(g)
“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 l2-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.
(h)
“ Executive ”
shall have the meaning set forth in the preamble.
(i)
The Executive shall have
“Good Reason ” to resign his employment upon
the occurrence of any of the following:
1.
failure of the Company to continue
the Executive in the position of Senior Vice President and Chief
Financial Officer;
2.
the Company’s material breach
of this Agreement;
3.
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
4.
failure of the Company to make any
payment or provide any benefit in accordance with this
Agreement.
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(j) The Executive
may not resign his employment for Good Reason unless:
1.
the Executive provides the Company
with at least 30 days prior written notice of his intent to resign
for Good Reason; and
2.
the Company does not remedy the
alleged violation(s) within the 30-day period.
(k) “ Inventions
” shall have the meaning set forth in Section 6(d)
.
(l) “ Non-Union Bonus
Plan ” shall have the meaning set forth in Section (3)
(b) .
(m) “ Notice of
Termination ” shall have the meaning set forth in
Section 4 (b)
(n)” 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 there of, unless earlier
terminated as provided in Section 4 . The employment term
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.
Notwithstanding the foregoing, Executive will be an employee
at-will of the Company. The Company may terminate
Executive’s employment at any time for any lawful reason, at
its discretion. Likewise, Executive may terminate his
employment with the Company at any time for any reason by giving
the Company 30-days advance written notice.
(c)
Position and Duties.
The Executive shall serve as Senior
Vice President & Chief Financial Officer of the Company and
shall have the authorities, duties and responsibilities customarily
commensurate with such position and such additional
responsibilities, duties and authority, as may from time to time be
reasonably assigned to the Executive by the Chief Executive Officer
or his designee. The Executive shall report to the Chief Executive
Officer. The Executive shall devote his full working time,
attention and efforts to the business and affairs of the Company.
The Executive will be knowledgeable of 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
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advance by the Board, which approval
shall not unreasonably be withheld. In addition, Executive shall be
permitted to fulfill obligations under the terms and conditions of
his services agreement as previously disclosed to the Company as
long as it does not interfere with Executive’s duties or
responsibilities.
3.
Compensation and Related Matters .
(a)
Annual Base Salary
. During the Term, the Executive
shall receive a base salary at a rate of $312,000 per annum, which
shall be paid 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. Paydays are
expected to be every other Friday (normally 26 pay days a
year). Executive’s paycheck shall be delivered to
Executive or made available to Executive on such dates. If a
payday falls on a holiday or weekend, Executive may pick up his
paycheck on the weekday immediately preceding the
payday.
(b)
Annual Performance
Bonus . During the Term,
the Executive will participate in an annual performance-based bonus
plan ( “Non-Union Bonus Plan” ) established by
the Compensation Committee at a target level of 75% of Annual Base
Salary ( “Target Level”) . Such bonus shall be
payable at such time as bonuses are paid to other senior executive
officers who participate therein. The amount of the
Executive’s annual bonus payable pursuant to such plan shall
be determined with respect to each of the Company’s fiscal
years that ends during the Term. The 2007 financial targets
are set forth in Exhibit A .
(c)
Equity Participation . During the Term, the
Executive shall be entitled to participate in the Stock Option Plan
of the Company and shall be granted an option to purchase a
percentage of the common stock of Hawaiian Telcom Holdco, Inc. (
“Common Stock” ) The Executive shall receive an
option covering that number of shares as would produce a pre-tax
target option value of $4,000,000.00 [four million dollars] at such
specified future date as is determined by the Company, if as of
that date an investment in Hawaiian Telcom Holdco, Inc. achieved a
specified rate of return as determined by the Company. The
grant of stock options shall be governed by the terms of the Stock
Option Plan and Stock Option Agreement (similar to the form
attached as Exhibit A ). It is expressly understood
that the Executive’s entitlement to participation in the
Stock Option Plan is not a guarantee that the Option referenced
herein shall attain any particular value in the future.
(d)
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.
(e)
Relocation Expenses
. In accordance with the
Company’s applicable relocation plans and policies, the
Company shall reimburse the Executive for any of the
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following expenses reasonably
incurred by the Executive in connection with his move from North
Carolina to Hawaii: travel (including without limitation up
to two house hunting trips) and similar related moving expenses and
costs of packing, unpacking and transporting the personal effects
of the Executive and his family, including transportation of up to
two automobiles, from the Executive’s current residence in
North Carolina to Hawaii. As a departure from policy, the
Executive shall have 18 months to complete his relocation to
Hawaii. In the event that the Executive’s employment
shall terminate for any reason other than Cause prior to the second
anniversary of the Effective Date, the Company shall reimburse the
Executive for all relocation expenses (as set forth and in
accordance with this paragraph) incurred by the Executive due to
the Executive’s relocation, provided said relocation is to
North Carolina. With respect to any reimbursements paid to the
Executive under this paragraph which are 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 reimbursements and the
additional payment, the Executive would retain an amount equal to
such reimbursements.
(f)
Expenses . During the Term, the Company shall reimburse
the Executive for all reasonable travel and other business expenses
incurred by him in the performance of his duties to the Company in
accordance with the Company’s expense reimbursement and
travel policies.
(g)
Housing Allowance . During the Term, the Company
shall pay the Executive a reasonable housing allowance at a rate of
$5,250 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 withholding taxes. Such allowance shall be paid
periodically, in accordance with the Company’s policies and
procedures and may be applied to pay temporary lodging expenses in
Hawaii. With respect to any such allowance paid to the
Executive under this Section 3 (g) 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.
(h)
Personal Travel Expenses.
During the Term, the Company shall reimburse the Executive for the
reasonable cost of business class roundtrip airline tickets from
Hawaii to the mainland United States for the Executive and his
spouse for up to two personal trips per year.
(h)
Vacation . During the Term, the Executive shall be
entitled to no less than three weeks paid vacation for each
completed 12 month period of service. Any vacation shall be
taken at the reasonable and mutual convenience of the Company and
the Executive. Paid vacation that has not been taken by Executive
during the twelve month period following the period in which it is
earned shall carry over to any subsequent period up to a maximum
accumulated six weeks. Vacation will
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be accrued depending on month of
hire for the first year of employment per the Company vacation
policy.
4.
Termination .
The Executive’s employment may
be terminated by the Company or the Executive, as applicable,
without any breach of this Agreement under the following
circumstances:
(a)
Circumstances
.
(i)
Death . The Executive’s employment 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 30th day after receipt of such notice by
the Executive, provided that within the 30 days after
such
