Exhibit
10.9


 


SERVICES
AGREEMENT


 


This SERVICES AGREEMENT
(the “Agreement”) dated as of December 1, 2008, is made by and between
Hawaiian Telcom Communications, Inc., a Delaware corporation, on behalf of
itself and its subsidiaries (collectively, “HT” or the “Debtors”) Zolfo Cooper
Management, LLC (“ZC”) a New Jersey limited liability corporation and Kevin
Nystrom (“Nystrom”), relating to Hawaiian Telcom and its subsidiaries.


 


Recitals:


 


WHEREAS, the parties
hereto desire to enter into this Agreement to set forth the basis on which ZC
will perform management services for the Debtors, all as set forth more fully
in this Agreement.


 


NOW, THEREFORE, in
consideration of the premises and covenants set forth herein, and intending to
be legally bound hereby, the parties to this Agreement hereby agree as follows:


 


1.             Engagement. 
The Debtors hereby engage ZC and Nystrom as an independent contractor to
the Debtors, and ZC and Nystrom hereby accepts such engagement, on the terms
and conditions set forth in this Agreement. 
The Debtors are hereby acquiring from ZC the services of Nystrom, and
additional individuals (the “Associate Directors”) as set forth below.  All compensation for the services and actions
of ZC, Nystrom and Associate Directors under this Agreement will be paid to ZC.


 


2.             Duties.


 


(a)           Subject to satisfaction of the
condition precedent set forth in Section 3 hereof, ZC will assign Nystrom
as the COO and Associate Directors to perform other services required of ZC
hereunder.


 


(b)           Nystrom will lead the restructuring
efforts as directed by the Board, the Executive Committee and Special
Committee, as may be appropriate and shall be authorized to make decisions with
respect to all aspects of the management and operation of the Debtors’
business, including without limitation organization and human resources,
marketing and sales, logistics, finance and administration and such other areas
as he may identify, in such manner as he deems necessary or appropriate in his
sole discretion in a manner consistent with the business judgment rule and
the provisions of local law and the United States Bankruptcy Code applicable to
the obligations of persons acting on behalf of corporations, subject only to
appropriate governance by the Board in accordance with the Debtors’ charters,
Bylaws, other governing documents (if any) (collectively the “Constitutive
Documents”) and applicable state law. 
ZC, Nystrom and Associate Directors (individually, a “Representative”
and collectively, the “Representatives”) shall not have any authority to make
decisions with respect to hiring or terminating officers, executing
transactions or otherwise committing the Debtors or its resources other than in
the ordinary course of business unless otherwise approved by the Board and, if
required, the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy



 


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Court”).  All
decisions of Nystrom shall be discussed to the extent Nystrom deems reasonably
appropriate with the member or members of the Debtors’ management that Nystrom,
in the exercise of his sole discretion, determines to be appropriate prior to
the implementation of such decisions and shall be implemented by the management
of the Debtors (other than ZC or the Representatives), and any dispute between
such management and Nystrom regarding the implementation of such decisions
shall be resolved definitively by the Board.


 


(c)           In undertaking to provide the
services set forth herein, ZC and Nystrom do not guarantee or otherwise provide
any assurances that it will succeed in restoring the Debtors’ operational and
financial health and stability and, except for the amount referenced in Section 4(b) hereof,
the Debtors’ obligation to provide the compensation specified under Section 4
hereof shall not be conditioned upon any particular results being obtained by
ZC and Nystrom.


 


(d)           Each Representative shall be
entitled, in performing his duties hereunder on behalf of ZC and Nystrom, to
rely on information disclosed or supplied to them without verification or
warranty of accuracy or validity.


 


(e)           ZC and Nystrom shall keep the Board,
the Debtors’ CEO, the Executive Committee and Special Committee, as applicable,
fully apprised of their findings, plans and activities, as appropriate.


 


(f)            The Debtors are hereby acquiring
from ZC approximately 75% of the working time and efforts of Nystrom.


 


3.             Term. 
The term of ZC’s and Nystrom’s engagement hereunder shall commence on
the date hereof and shall continue on a month to month basis until terminated
by either party at the end of any such month upon written notice to the other
party given at least ten days prior to the end of such month.


 


4.             Compensation.  ZC’s, Nystrom’s and Associate Directors’ compensation
hereunder shall consist of the following:


 


(a)           a monthly fee of $225,000 cash
payable to ZC in immediately available funds upon execution of this Agreement
and on the first day of each month thereafter throughout the term hereof
commencing on December 1, 2008;


 


(b)           In addition, the Debtors shall pay ZC
a restructuring fee (“Restructuring Fee”) of two million dollars ($2,000,000)
which shall be payable (i) fifty percent (50%), as definitive agreements
with respect to a restructuring plan are executed with binding consents to such
a plan by a sufficient number of creditors and/or bondholders to the plan and (ii) fifty
percent (50%), as the restructuring is consummated.  The Restructuring Fee will be reduced by
monthly fees incurred after January 1, 2009.


 


(c)           reimbursement of ZC’s, Nystrom’s and
Associate Directors’ reasonable out-of-pocket expenses including, but not
limited to, costs of travel, reproduction, legal counsel (including legal
counsel retained to draft and enforce this Agreement), any applicable state
sales or excise tax and other direct expenses.


 


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The Debtors shall
pay to ZC the compensation set forth in Sections 4(a) and 4(c) hereof
based upon the submission of monthly invoices by ZC setting forth the number of
hours each day expended by Representatives on behalf of the Debtors and a
detailed listing of the expenses sought to be reimbursed.  The compensation provided for in this
Agreement shall constitute full payment for the services to be rendered by ZC,
Nystrom and Associate Directors to the Debtors hereunder.


 


The Debtors
acknowledge and agree that the hours worked, the results achieved and the
ultimate benefit to the Debtors of the work performed in connection with this
engagement may be variable and that the Debtors and ZC and Nystrom have taken
this into account in setting the fees hereunder.  No fee payable to any other person or entity
by the Debtors or any other party shall affect any fee payable to ZC hereunder.


 


5.                                      Confidentiality.


 


(a)           The Debtors, including the Board,
shall treat any information received from Representatives as confidential and,
except as specified in this Section 5(a), will not publish, distribute or
otherwise disclose in any manner any information developed by or received from
Representatives without ZC and Nystrom’s or such Representative’s prior written
approval.  Such approval shall not be
required if either (i) the information sought is required to be disclosed
by an order binding on ZC and Nystrom or a Representative and issued by a court
having competent jurisdiction over ZC and Nystrom and such Representative and
such information is disclosed only pursuant to the terms of such order, (ii) disclosure
of such information is otherwise required by federal or state securities law, (iii) the
information is otherwise publicly available other than through disclosure by a
party in breach of a confidentiality obligation with respect thereto, or (iv) the
information was furnished pursuant to this engagement.


 


(b)           ZC, Nystrom, and each Representative
agrees to treat any information received from the Debtors or its
representatives with utmost confidentiality, and except as provided in this
letter, will not publish, distribute or disclose in any manner any information
developed by or received from the Debtors or its representatives without the
Debtors’ prior approval.  Such approval
shall not be unreasonably withheld.  The
Debtors’ approval is not needed if either (i) the information sought is
required to be disclosed by an order binding on ZC and Nystrom, issued by a court
having competent jurisdiction over ZC and Nystrom (unless such order specifies
that the information to be disclosed is to be placed under seal) and such
information is disclosed only pursuant to the terms of such order, or (ii) such
information is otherwise publicly available other than through disclosure by a
party in breach of a confidentiality obligation with respect thereto.


 


6.             Representations and Warranties.


 


As an inducement to ZC
and Nystrom to enter into this Agreement, the Debtors represents and warrants
to ZC and Nystrom as follows:


 


(a)           The Debtors are either corporations
or limited liability companies duly organized and validly existing under the
laws of the jurisdiction in which it was organized and has all requisite
corporate power to enter into this Agreement.


 


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(b)           Subject to receipt of the approval by
the Bankruptcy Court of the execution by the Debtors of this Agreement, neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein or therein nor compliance by the Debtors with
any of the provisions hereof or thereof will: (i) violate any order, writ,
injunction, decree, law, statute, rule or regulation applicable to it or (ii) require
the consent, approval, permission or other authorization of, or qualification
or notice to, any court, arbitrator or other tribunal or any governmental,
administrative, regulatory or self-regulatory agency or any other third party.


 


(c)           Subject to receipt of the approval by
the Bankruptcy Court of the execution by the Debtors of this Agreement, this
Agreement has been duly authorized, executed and delivered by the Debtors and
constitutes the legal, valid and binding agreement of the Debtors, enforceable
in accordance with its terms.


 


7.             Indemnification.


 


(a)           The Debtors shall indemnify and hold
harmless Nystrom and Associate Directors, ZC and its principals, , and other ZC employees, representatives or agents
(including counsel) (collectively, the “ZC Indemnitees”) from and against any
and all losses, claims, damages, liabilities, penalties, judgments, awards,
costs, fees, expenses and disbursements, including without limitation, the
reasonable costs, fees, expenses and disbursements, as and when incurred, of
investigating, preparing or defending any action, suit, proceeding or
investigation (whether or not in connection with proceedings or litigation in
which any ZC Indemnitee is a party)(any such amount being hereinafter sometimes
referred to as an “Indemnifiable Loss”), directly or indirectly caused by,
relating to, based upon, arising out of or in connection with this engagement
of ZC and Nystrom’s by the Debtors or the performance by Representatives of any
services rendered pursuant to such engagement, unless there is a final
non-appealable order of a Court of competent jurisdiction, at the trial level,
finding ZC Indemnitees directly liable for gross negligence or willful
misconduct.


 


(b)           If any ZC Indemnitee is required to
testify, prepare for and appear at a deposition or produce documents, at any
time after the expiration or termination of this Agreement at any
administrative or judicial proceeding relating to any services provided by ZC
and Nystrom hereunder, then ZC Indemnitees shall be entitled to be compensated
by the Debtors for ZC Indemnitee’s associated time charges at the regular
hourly rates in effect at the time and to be reimbursed for reasonable
out-of-pocket expenses, including counsel fees.


 


(c)           The Debtors have
furnished to ZC and Nystrom a true, correct and complete copy of the Fiduciary
Liability Insurance issued by Federal Insurance Company, Policy No. 6802-6242,
Directors and Officers and Employment Practices Liability Insurance issued by
National Union Insurance, Policy No. 4792639, Excess Directors and
Officers and Employment Practices Liability Insurance issued by 1) XL
Insurance, Policy No. ELU104555-08 and 2) Federal Insurance Company,
Policy No. 6802-6479, and Classic Side A issued by XL Specialty Insurance
Co. Policy No. ELU104553-08 (collectively the “Policies” and the “Insurers”).  The Debtors represent that the Policies are
in full force and effect and that no event has occurred that constitutes or,
with the passage of time or notice would constitute, an event of default
thereunder or that would otherwise give the Insurers any right to cancel such
Policies.  Promptly and in any


 


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event within two
business days of the Debtors approving this Agreement, the Debtors shall notify
the Insurers of the election of Nystrom as Chief Operating Officer  and of the appointment of any Associate Directors who
become an officer of the Debtors.  The
Debtors shall cause their insurance broker to send copies of all documentation
and other communications regarding the Policies, including without limitation
any renewal or cancellation thereof, to the attention of ZC and Nystrom, in the
manner set forth herein, and Nystrom and any Associate Directors who become
officers of the Debtors shall have all indemnities available to the officers of
the Debtors pursuant to the Debtors’ Constitutive Documents.  As long as the same can be done at a
commercially reasonable cost, the Debtors shall maintain directors and officers
liability insurance coverage, employment practices insurance coverage and
fiduciary liability insurance coverage comparable as to terms (including
without limitation the provisions or any similar provision regarding extension
of the discovery period thereunder) and amounts as that provided under the
Policies during the term of this Agreement, with any such replacement coverage
being obtained from an insurer with a rating from a nationally recognized
rating agency not lower than that of the Insurers.  Upon any cancellation or nonrenewal of the
Policies by the Insurer, as long as the same can be done at a commercially
reasonable cost, the Debtors shall exercise their rights under the applicable
clause of the Policies to extend the claim period for a one-year “discovery
period” and shall exercise such rights and pay the premium required thereunder
within the 30-day period specified therein. 
The Debtors shall use commercially reasonable efforts, in connection
with the next renewal of the Policies, to negotiate to extend the discovery
period set forth in the Policies from one to three years as long as the same
can be obtained at a commercially reasonable cost.


 


8.             Limitations
on Liability.  The Debtors
agree that Nystrom, Associate
Directors, and ZC and its personnel will not be liable to the Debtors for any
claims, liabilities, or expenses relating to this engagement in excess of the
fees paid by them to ZC pursuant to this agreement, unless there is a final
non-appealable order of a court of competent jurisdiction, at the trial level,
finding ZC Indemnities directly
liable for gross negligence or willful misconduct.  In no event will the Debtors, ZC and Nystrom
or their personnel be liable for special, punitive or exemplary loss, damages
or expenses relating to this engagement. 
These limitations on liability provisions extend to the employees,
representatives, agents and counsel of ZC and Nystrom.


 


The limitation on liability and indemnification provisions contained in
this agreement shall survive the completion or termination of this agreement.


 


9.             Independent Contractor.  The parties intend that ZC, Nystrom and
Associate Directors shall render services hereunder as independent contractors,
and nothing herein shall be construed to be inconsistent with this relationship
or status.  Representatives shall not be
entitled to any benefits paid by the Debtors to its employees.  ZC shall be solely responsible for any tax
consequences applicable to Representatives by reason of this Agreement and the
relationship established hereunder, and the Debtors shall not be responsible
for the payment of any federal, state or local taxes or contributions imposed
under any employment insurance, social security, income tax or other tax law or
regulation with respect to Representatives’ performance of management services
hereunder.  The parties agree that,
subject to the terms and provisions of this Agreement, ZC and Nystrom may
perform any duties hereunder and set Representatives’ own work schedule without
day-to-day supervision by the Debtors.


 


10.          Offer of Employment. 
The Debtors agree to promptly notify ZC and Nystrom if they extends (or
solicits the possible interest in receiving) an offer of employment to an
employee 


 


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or principal of ZC and
agrees that it will pay ZC a cash fee, upon hiring, equal to 150% of the
aggregate first year’s annualized compensation, including any guaranteed or
target bonus, to be paid to ZC’s former principal or employee that the Debtors
hire at any time up to one year subsequent to the date of the final invoice
rendered by ZC and Nystrom with respect to this Agreement.


 


11.          Trial. 
Each party
agrees that neither it nor any of its assignees or successors shall (a) seek
a jury trial in any lawsuit, proceeding, counterclaim or any other action based
upon, or arising out of or in connection with the engagement of ZC and Nystrom
by the Debtors or any services rendered pursuant to such engagement, or (b) seek
to consolidate any such action with any other action in which a jury trial
cannot be or has not been waived.  The
provisions of this paragraph have been fully discussed by the Debtors, ZC and
Nystrom and these provisions shall be subject to no exceptions.  Neither party has agreed with or represented
to the other that the provisions of this section will not be fully enforced in
all instances.


 


12.          Jurisdiction.  Each party hereby irrevocably and unconditionally (a) submits
for itself and its property in any legal action or proceeding relating to the
engagement of ZC and Nystrom by the Debtors or any services rendered pursuant
to such engagement, to the non-exclusive general jurisdiction of the Bankruptcy
Courts of United States of America for the District of Delaware, and appellate
courts from any thereof; (b) consents that any such action or proceeding
may be brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same; (c) agrees that service of process
in any such action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to the respective party at their address set forth below or at
such other address of which ZC and Nystrom and the other parties shall have
been notified pursuant thereto; (d) agrees that nothing herein shall
affect the right to effect service of process in any other manner permitted by
law or shall limit the right to sue in any other jurisdiction; and (e) waives,
to the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding referred to in this subsection any
special, exemplary or punitive damages.


 


13.          Survival of Agreement. 
Except as provided in this Agreement, the obligations set forth under
the above captioned Confidentiality, Indemnification, Limitation on Liability,
Compensation, Offer of Employment, Trial, and Jurisdiction sections shall
survive the expiration, termination, or supersession of this agreement.


 


14.          Conflicts.  ZC and Nystrom confirms that no employee of ZC and Nystrom has any
financial interest or business connection with the Debtors.  However, in the case of public companies, ZC
and Nystrom employees may own publicly traded shares and bonds.  Additionally, we have run an initial conflict
check through ZC’s relationship database, which is an Access computer database
containing names of individuals and entities that are present or recent former
clients of ZC (the “Database”).  ZC then reviewed those results,
which review was completed under the supervision of the in-house General
Counsel of ZC.  A summary of such
relationships is et forth in Schedule1 to the Affidavit.  Based upon the information presently
available, we are aware of no conflicts in connection with this
engagement.  It is understood and agreed that ZC and
Nystrom may accept the representation of other persons whose general business
interest may compete with Debtors’ interests or be adverse to Debtors’
interest, so long 


 


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as
there is no actual or direct conflict of interest.  The Debtors understand and agree that their
name will be added to ZC Database.


 


15.          Amendments. 
Any amendment to this Agreement shall be made in writing and signed by
the parties hereto.


 


16.          Enforceability. 
If any provision of this Agreement shall be invalid or unenforceable, in
whole or in part, then such provision shall be deemed to be modified or
restricted to the extent and in the manner necessary to render the same valid
and enforceable, or shall be deemed excised from this Agreement, as the case
may require, and this Agreement shall be construed and enforced to the maximum
extent permitted by law as if such provision had been originally incorporated
herein as so modified or restricted or as if such provision had not been
originally incorporated herein, as the case may be.


 


17.          Construction. 
This Agreement shall be construed and interpreted in accordance with the
internal laws of the State of New York.


 


18.        Notices.  All notices,
requests, consents and other communications hereunder to any party shall be
deemed to be sufficient if contained in a written instrument delivered in person
or duly sent by certified mail, postage prepaid; by an overnight delivery
service, charges prepaid; or by confirmed telecopy; addressed to such party at
the address set forth below or such other address as may hereafter be
designated in writing by the addressee to the addressor:


 


If to the Debtors:


 


Hawaiian Telcom
Communications, Inc.


c/o The Carlyle Group


520 Madison Avenue


New York, NY  10022


 


and


 


Hawaiian Telcom
Communications, Inc.


1177 Bishop Street


Honolulu, HI  96813


Attention:  President and Chief Executive Officer


 


If to ZC:


 


Zolfo Cooper Management, LLC


101 Eisenhower Parkway, 3rd Floor


Roseland, NJ 
07068


Attention:  Elizabeth S. Kardos


 


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If to Nystrom:


 


Zolfo Cooper Management, LLC


101 Eisenhower Parkway, 3rd Floor


Roseland, NJ 
07068


Attention:  Elizabeth S. Kardos


 


Any party may from
time to time change its address for the purpose of notices to that party by a
similar notice specifying a new address, but no such change shall be deemed to
have been given until it is actually received by the party sought to be charged
with its contents.


 


19.        Waivers.  No claim or
right arising out of a breach or default under this Agreement shall be
discharged in whole or in part by a waiver of that claim or right unless the
waiver is supported by consideration and is in writing and executed by the
aggrieved party hereto or his or its duly authorized agent.  A waiver by any party hereto of a breach or
default by the other party hereto of any provision of this Agreement shall not
be deemed a waiver of future compliance therewith, and such provisions shall
remain in full force and effect.


 


20.          Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all of which shall
together constitute one and the same instrument.


 


21.          Entire Agreement. This Agreement and the
other documents delivered pursuant hereto, if any, constitute the full and
entire understanding and agreement among the parties hereto with regard to the
subjects hereof and thereof and no party shall be liable or bound to any other
in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.


 


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IN WITNESS WHEREOF, this Agreement has been executed by the parties as
of the date first above written.


 


	
   

  	
  HAWAIIAN TELCOM
  COMMUNICATIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Eric K. Yeaman

  
	
   

  	
   

  	
  Title:CEO & President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ZOLFO COOPER
  MANAGEMENT, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Elizabeth S. Kardos

  
	
   

  	
   

  	
  Title:Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KEVIN NYSTROM

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Kevin Nystrom

  
	
   

  	
   

  	
  Kevin Nystrom

  
	
   

  	
   

  	
  Title: Senior Director

  



 


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