Document:

Production Agreement between Dataprose, Inc. and Hawaiian Telcom Communications

 Exhibit 10.24 
  

			
	

	  	PRODUCTION AGREEMENT
	  

  
 This Production Agreement (Agreement)
is made and entered into as of the 15th day of October, 2005 (Effective Date), by and between DataProse, Inc., a
California Corporation (DataProse), and Hawaiian Telcom Communications, Inc., organized under the laws of Delaware by and on behalf of itself and by and on behalf of and for the benefit of its wholly owned subsidiaries, Hawaiian Telcom, Inc. and
Hawaiian Telcom Services Company, Inc. (Client). In consideration of the mutual promises and benefits contained herein, the parties hereby agree as follows: 
  
 ARTICLE 1 SCOPE OF PRODUCTION AGREEMENT. During the term of this Agreement beginning upon the initial production run of a successfully converted customer
base into the Clients newly configured billing system, the Client agrees to furnish data and documentation and DataProse agrees to produce a minimum monthly quantity of 600,000 statements (“Minimum Commitment”), based upon the rates and
terms provided herein. In recognition that DataProse will incur substantial startup costs for this engagement, the pricing included is dependent on the number of transactions processed, and that DataProse has reserved both resources and production
time to process Client’s estimated transaction volume Client has agreed to (a) DataProse billing commencing March 1, 2006 whether or not production runs have commenced, and (b) pay DataProse a minimum monthly charge for any
monthly cycle that is less than the Minimum Commitment. As to (a), if the initial production run has not occurred by March 1, 2006, DataProse will bill $100,000 per month starting March 1, 2006 and on the first day of each month thereafter
until production runs commence. Such pre-production monthly charges may accumulate unpaid until a live production cycle is executed, at which time the accumulated unpaid billings will be amortized equally over the remaining months in 2006. As to
(b), in the event that the Client does not fulfill the Minimum Commitment for any month, then the Client shall pay to DataProse a Minimum Fee for that month’s production in an amount that shall be calculated based on Minimum Commitment and the
rates herein (rate at 600,000 statements per month is $.254 per statement). Professional/Technical Services and postage are not considered as part of the monthly minimum. It is understood that timely and adequate delivery of the Goods and Services
by DataProse is crucial to the success of Client’s business, and DataProse shall use its best efforts at all times to provide the support to Client reasonably necessary for Client to distribute timely and accurate billing statements. Client may
modify specifications for a particular application under Schedule 1.0 by furnishing revised specifications in writing to DataProse. If such modification increases the actual costs to DataProse of performing the required application, then DataProse
shall set forth in writing the basis for the increase in cost of performing the required application. Client shall then either confirm or cancel such modification. 
  
 ARTICLE 2 COMPENSATION. In full and complete compensation for all goods and/or services provided by DataProse hereunder,
Client agrees to pay DataProse according to the rates set forth in Schedule 1.0. DataProse will provide an invoice to Client after each production run consisting of the fees, as outlined in Schedule 1.0 and postage used. Invoices are due upon
receipt, and in any event, prior to the next production run, and will be considered past due if not paid within 30 days after received by Client. A monthly late charge will be assessed on statements not paid within thirty (30) days. The late
payment charge will be 1-1/2% per month applied to the invoice amount unpaid (30) thirty days after the invoice is received by Client. The prices charged by DataProse to Client for the services listed in Schedule 1.0 will not be increased
for a period of 12 months from the Effective Date of this Agreement (“Pricing Period”). All DataProse prices are subject to increase following this initial Pricing Period or any subsequent Pricing Period, and upon written notice to Client.
The rate of any price increase shall not exceed seven percent (7%) at the completion of any pricing period. In the event Client cancels the Agreement as allowed under the provisions of this Agreement, then all services rendered between the
cancellation notification date and the effective date of the cancellation, will be COD. 
  
 ARTICLE 3 TERM. The initial term of this Agreement shall commence upon the Effective Date, and shall continue for a period of not less than four (4) years, ending on the fourth anniversary of the initial production run in
2006, unless terminated earlier in accordance with provisions found elsewhere in this Agreement. This Agreement shall renew itself for successive one (1) year terms unless written notice of cancellation is received by one party from the other
at the end of the initial term or at the end of any succeeding one (1) year renewal term(s) by sending written notice of non-renewal to the other party no later than thirty (30) days before the expiration of the current term. During the
first 24 months of this Agreement, should DataProse fail to meet acceptable quality level of Goods and Services to Client, and DataProse has been given written notice of such problems and has failed to correct all problems described in such written
notice within ten (10) days of receipt of any such notice, Client shall have the right to terminate this Agreement with 30 days written notice. In the event of termination by Client, DataProse is entitled to payment of all services rendered,
including all pre-printed materials in inventory through the date of termination. After the first 24 months of this Agreement, if DataProse is meeting the predetermined service expectations then the Client’s ability to cancel with 30 days
notice shall expire and the normal termination process as outlined in Article 6 applies. 
  
 ARTICLE 4 EXPENSES. When Client has approved the amount of such costs and expenses in advance and in writing, Client will reimburse DataProse for costs and expenses associated with the performance of
services for Client, such as cost of travel, expenses associated with travel, freight, delivery service and other required supplies in connection with providing the DataProse services associated with this Agreement. 
  
 ARTICLE 5 POSTAGE. DataProse will require that Client maintain a permanent
postage deposit in connection with this agreement. Client shall deposit in advance with DataProse the initial sum specified on Schedule 2.0 as the permanent postage deposit. The amount required to be deposited with DataProse may be changed by
DataProse on a periodic basis due to changes in Client’s volume, postage usage, postal rates or payment history. Client will be notified in writing and in advance if the deposit is changed. Upon termination of this Agreement, DataProse shall
return the deposit amount to Client after payment for all Services and postage has been paid by the Client. If this Agreement is terminated due to default of Client, DataProse may apply any of Client’s funds it holds against any sum owed by
Client to DataProse upon termination of this Agreement. IF CLIENT FAILS TO MAINTAIN THE DEPOSIT AT THE ADJUSTED LEVELS, OR IF CLIENT FAILS TO MAINTAIN CURRENT STATUS OF ALL INVOICES AS DESCRIBED IN ARTICLE 2, DATAPROSE MAY IMMEDIATELY SUSPEND ITS
PERFORMANCE UNDER THIS AGREEMENT AND WILL HOLD CUSTOMER’S MAIL UNTIL THE DEPOSIT IS RECEIVED. 
  
 ARTICLE 6 TERMINATION. Client or DataProse may terminate this Agreement for an event of default defined below if such default remains uncured (30) thirty days after written notice of the default has
been received from the party declaring the default. 
  

	 	(1)	Failure of Client to pay for all goods and/or services as provided in this Agreement. In addition to other remedies provided by this Agreement and pursuant to law, DataProse has the
right to withhold production and mailing of any further production cycles until Client’s account is brought current. 

  

	 	(2)	Any other breach by Client or DataProse of a term or condition of this Agreement. 

  

	 	(3)	Failure of DataProse to be SAS70 compliant. 

  
 If DataProse terminates this Agreement in accordance with Article 5 herein, or the Client terminates this Agreement for any reason other than those specified in Article 3
or Article 6 prior to satisfying its Minimum Commitment, the Client agrees that it shall be liable to DataProse for liquidated damages (“Liquidated Damages”) for its early termination, it being understood and agreed to by the parties that
the measure of actual damages noted would be difficult to determine. The Liquidated Damages shall be an amount equal to the product of (a) the Minimum Commitment or the average volume for the past 90 days, which ever is greater, and
(b) the sum of the number of months remaining in the current term of the Agreement and the number of months that any invoices remain unpaid by the Client. 
  

ARTICLE 7 FORCE MAJEURE. Neither party shall be responsible for delays or failures in performance resulting from acts or occurrences beyond the
reasonable control of such party, including, without limitation: fire, explosion, power failure, flood, earthquake or other act of God; war, revolution, civil commotion, terrorism, or acts of public enemies; any law, order, regulation, ordinance, or
requirement of any government or legal body or any representative of any such government or legal body; or labor unrest, including without limitation, strikes, slowdowns, picketing or boycotts. In such event, the party affected shall be excused from
such performance (other than any obligation to pay money) on a day-to-day basis to the extent of such interference (and the other party shall likewise be excused from performance of its obligations on a day-to-day basis to the extent such
party’s obligations relate to the performance so interfered with). 
  
 ARTICLE 8 CONFIDENTIALITY. DataProse agrees that any and all data, reports and documentation supplied by Client or its affiliates or third parties on Client’s behalf, which are confidential and which are clearly
designated as confidential, shall be, subject only to the disclosure required for the performance of DataProse’s obligations hereunder, held in strict confidence and shall not be disclosed or otherwise disseminated by DataProse without the
consent of Client. 
  
 ARTICLE 9 INDEMNIFICATION. Client agrees to
indemnify and hold DataProse harmless for any and all claims from any person, firm, or entity whatsoever that may arise in connection with Client’s supplying to DataProse the data, reports or other documentation necessary to perform its duties
under this Agreement, except that such indemnification shall not extend to any claims that result from action by DataProse, its officers, employees or agents or anyone acting on behalf of DataProse if such action is in violation of one or more terms
of this Agreement. 
  

			
	 	  	Page 1 of 5
		
	 	  	Client:                  DataProse:
                

			
	

	  	PRODUCTION AGREEMENT
	  

  
 DataProse shall indemnify, defend and
hold Client, its agents, employees, officers and directors harmless from and against any and all liability, damage, loss, claims, demands, actions, expenses, attorney’s fees, penalties, and/or fines including, but not limited to, any and all
damage, injury or death, of any kind or nature whatsoever to persons or property (collectively, “Loss”), only to the extent such loss arises out of or results from the negligence or willful misconduct of DataProse, its agents, employees,
subcontractors, or vendors. 
  
 ARTICLE 10 WARRANTIES. DataProse
shall provide all goods and/or services in a good and first class workmanlike manner in accordance with the terms specifically set forth in Schedule 1.0. The parties hereto agree that this Agreement is only for the production of goods and/or
services. 
  
 THIS WARRANTY CONSTITUTES THE ONLY WARRANTY WITH RESPECT TO THE
GOODS AND SERVICES TO BE PROVIDED TO CLIENT. THE STATED WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE WARRANTY OF MERCHANTABILITY AND THE WARRANTY OF FITNESS FOR
PARTICULAR PURPOSE. 
  
 ARTICLE 11 LIMITATION OF LIABILITY.
Notwithstanding any other provision of this Agreement the liability of DataProse with respect to any failure to provide the goods and/or services as required under this Agreement shall in each case be limited to the compensation paid to
DataProse for the defective goods or services. DATAPROSE IS NOT LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFIT OR INCOME, even if DataProse has been advised of the possibility of such loss or damage. This provision will not be
affected by DataProse’s failure to correct any defect or replace any defective work product to Client’s satisfaction. Client has accepted this restriction on its right to recover consequential damages as a part of its bargain with
DataProse. Client acknowledges what DataProse charges for its goods and services would be higher if DataProse were required to bear responsibility for Client’s damages. 
  
 ARTICLE 12 GOVERNING LAW AND JURISDICTION. This Agreement shall be governed and interpreted in accordance with the laws of the
state of California, without giving effect to the principles of choice of laws of such state. The parties each consent to the jurisdiction and venue of the Superior Court of Ventura County, Ventura, California, as to any matters initiated in state
court, and to the courts of the Central District of California for any matters initiated in federal court. 
  
 ARTICLE 13 SEVERABILITY. If a court or an arbitrator of competent jurisdiction holds any provision of this agreement to be illegal, unenforceable, or invalid in whole or in part for any reason, the
validity and enforceability of the remaining provisions, or portions of them, will not be affected. 
  
 ARTICLE 14 WAIVER; MODIFICATION OF AGREEMENT. No waiver, amendment or modification of any of the terms of this Agreement shall be valid unless in writing and signed by authorized representatives of both
parties hereto. Failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of such rights, nor shall a waiver by either party in one or more instances be construed as constituting a continuing waiver or as
a waiver in other instances. 
  
 ARTICLE 15 NOTICE. All notices must
be in writing and if not personally delivered, be sent by facsimile or by first class mail, or by electronic mail. Notices will be effective on the day when delivered, addressed to the other party at the address show in this Agreement. Either party
may change the address to which notices are to be sent by giving notice of such a change to the other party. Addresses for purpose of giving notice are as follows: 
  

			
	 If to DataProse:

	    	 If to Client:

	 DataProse, Inc.
	    	 Hawaiian Telcom Communication, Inc.

	 1451 North Rice Avenue, Suite A
	    	 P.O. Box 2200

	 Oxnard, CA 93030
	    	 Honolulu, HI 96841

	 Attention: Chief Executive Officer
 Email: gcarter@dataprose.com
	    	 Matt Riley with a duplicate copy to General Counsel

  
 ARTICLE 16 ENTIRE AGREEMENT.
This Agreement and its exhibits constitute the final, complete, and exclusive statement of the terms of the agreement between the parties pertaining to the production of goods and services for Client by DataProse, and supercedes all prior and
contemporaneous understandings or agreements of the parties. No party has been induced to enter into this Agreement by, nor is any party relying on, any representation or warranty outside those expressly set forth in this Agreement. 
  
 ARTICLE 17 ATTORNEY FEES. In the event of any claim, dispute or controversy
arising out of or relating to this Agreement, including an action for declaratory relief, the prevailing party in such action or proceeding shall be entitled to recover its court costs and reasonable out-of-pocket expenses not limited to taxable
costs, including but not limited to phone calls, photocopies, expert witness, travel, etc., and reasonable attorney fees to be fixed by the court. Such recovery shall include court costs, out-of-pocket expenses and attorney fees on appeal, if any.
The court shall determine who is the prevailing party, whether or not the dispute or controversy proceeds to final judgment. If either party is reasonably required to incur such out-of-pocket expenses and attorney fees as a result of any claim
arising out of or concerning this Agreement or any right or obligation derived hereunder, then the prevailing party shall be entitled to recover such reasonable out-of-pocket expenses and attorney fees whether or not action is filed. 
  
 ARTICLE 18 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the successors and assigns of the parties hereto. The parties hereto execute this Agreement through their duly authorized officers, as of the day and year first written above. 
  

									
	 DATAPROSE, INC.:
	 	 	 	 CLIENT:

					
	By: 	 	 /s/ Glenn A. Carter
	 	 	 	By: 	 	 /s/ Daniel P. O’Brien

	 	 	 Glenn A. Carter, President
	 	 	 	 	 	 Daniel P. O’Brien, Chief Financial Officer

			
	Date: __________________________________________________	 	 	 	Date: __________________________________________________

  

			
	 	  	Page 2 of 5
		
	 	  	Client:                  DataProse:
                

			
	

	  	PRODUCTION AGREEMENT
	  

  
 Schedule 1.0 – Fees for
Goods & Services 
  

									
	Monthly Volume of Statements	  	0-700,000	  	700,001-800,000	  	800,000+	  	 
	Paper Bill (Includes: data processing & simplex, laser imaging, #10 double window envelope., #9 single window Reply envelope., folding, inserting, presorting and delivery to
USPS)	  	$0.11	  	$0.010	  	$0.09	  	Per Bill
	Statement Stock – Recommended order 6 month supply. Prices subject to change at time of order.	  	 	  	 	  	 	  	 
	24# white paper printed 2 colors front only, perforated. Quantity per order 4.8M (estimated at a 6 month supply. Orders to be confirmed with client and paid upon delivery.	  	$0.015	  	$0.014	  	$0.013	  	Per Sheet
	NCOALink – Automated address update service	  	$0.50	  	$0.50	  	$0.50	  	Per Address Correction
	NetBill Data import of standard data files into DataProse system. Bill presentation in standard PDF format, email notifications sent when bills are available online, security utilizing
SSL Secured Sockets Layer. Customer enrollment and login development, online bill payment facilitation utilizing HT payment gateway, 3 months storage of bills, hosting at DataProse web servers.	  	$0.02	  	$0.02	  	$0.02	  	Per Bill
	NetBill Setup	  	$25,000.00	  	$25,000.00	  	$25,000.00	  	Per Month
	 Other
	  	 	  	 	  	 	  	 
	Paper Bill set up	  	$5,000.00	  	$5,000.00	  	$5,000.00	  	 
	Additional Impressions	  	0.0275	  	0.02	  	0.0175	  	Per Impression
	Bill Suppression (data processing only – Group Y & Z)	  	$0.05	  	$0.05	  	$0.05	  	Per Bill
	Oversized Surcharge (8-99 page bills – Group C)	  	$0.17	  	$0.17	  	$0.17	  	Per Bill
	Oversized Surcharge (100+ page bills – Group D & E)	  	$3.00	  	$3.00	  	$3.00	  	Per Bill
	Additional Inserts	  	$0.001	  	$0.001	  	$0.001	  	Per Insert
	Special Overnight Handling	  	$7.00 + Shipping	  	$7.00 + Shipping	  	$7.00 + Shipping	  	Per Bill
	CD-DirectBill (Cover Page only mailed direct to customer with CD of complete bill)	  	$20.00	  	$20.00	  	$20.00	  	Per Bill
	Technical Services (including programming & insert/forms composition)	  	$200.00	  	$200.00	  	$200.00	  	Per Hour
	Freight, Courier & Air Delivery	  	Cost	  	Cost	  	Cost	  	Per Request
	Minimum Daily Processing/Production Fee	  	$500.00	  	$500.00	  	$500.00	  	Per Day

  
 Schedule 2.0 – Permanent
Postage Deposit 
  

						
	Permanent Postage Deposit (Based on one (1) months estimated volume – 700,000)	  	$	215,000	  	(1 mos. Volume * .309)

  
 Schedule 3.0 – Performance
Guarantee 
  
 DataProse will deliver clients bills within an average of
one (1) business day after the applicable Determination Date (as Defined herein). Such average time period will be determined by measuring the number of elapsed Business Days between each respective determination date and the date which a
majority amount of the Client’s bills were mailed for consecutive three (3) month period. The “Determination Date” is the date which data is received – either via electronic transmission or hard copy media (tape or disk) if
prior to 1:00 AM, Hawaii Time. If data is received after 1:00 AM, Hawaii Time, the Determination Date is the Business Day immediately following the date data is received. 
  

			
	 	  	Page 3 of 5
		
	 	  	Client:                  DataProse:
                

			
	

	  	PRODUCTION AGREEMENT
	  

  
 Schedule 4.0 – Glossary of
Terms 
  

			
		
	Impression	    	Laser Imaging of one side of one piece of paper. Each physical piece of paper can contain two (2) impressions.
		
	USPS	    	United States Postal Service
		
	Laser Imaging	    	The process where the application of dry toner (ink) is electro statically applied and bonded to a piece of paper.
		
	Simplex	    	Laser Imaging of one (1) side of a piece of paper only.
		
	Duplex	    	Laser Imaging of both (2) sides of a piece of paper.
		
	OE	    	Outer Envelope – This envelope is used as the carrier mechanism for all information contained in a package to be mailed.
		
	RE	    	Reply Envelope – This envelope is usually utilized by a customer to return information/payment requested by on organization.
		
	Presorting	    	The act of organizing mail according to the rules and regulations defined by the USPS in order to achieve lower postage rates and increase deliverability of mail.
		
	Business Day	    	Any day in which the USPS as well as the U.S. Federal Reserve are open for business.
		
	U.S. federal holiday	    	All Holidays as defined by the U.S. Federal Reserve.
		
	24x7	    	24 hours a day, 7 days a week.
		
	Additional Inserts	    	Any item requested to be placed into the mail container above and beyond (a) the bill and (b) the RE .
		
	Container	    	One complete piece of mail packaged into one OE.
		
	Electronic Transmission	    	The act of sending data via DataProse online utility, FTP or Modem
		
	Bill	    	Data and other information pertaining to one (1) account number and usually in reference to one customer
		
	Group	    	 The term used by DataProse to define how bills are gathered & produced in order to maximize production capabilities. These groups are defined as
follows:
 Group A – 1 ounce bills
 Group B – 2 ounce bills
 Group C – 8-99 page bills
 Group D – 100-499 page bills
 Group E – 500+ page bills
 Group I – International bills
 Group P – Pull bills (Pulled and returned to PM for further action)
 Group X – Hold bills (combined and sent back to client)
 Group Y – Online only bills (Suppress from print only)
 Group Z – Suppress
all

		
	Suppress or Suppression	    	The act of excluding records or bills (based on client defined criteria) that have been received in the input data stream received from the client

  

			
	 	  	Page 4 of 5
		
	 	  	Client:                  DataProse:
                

			
	

	  	PRODUCTION AGREEMENT
	  

  
 Schedule 5.0 – Service
Severity Levels 
  
 Client will identify the applicable Severity Level as
set forth and defined below to categorize each instance of a problem with the condition of the Goods and Services provided to Client by DataProse. DataProse will provide technical support to Client for each error or defect submitted by Client based
on the appropriate Severity Level as defined below. The Response time and Resolution time intervals shall begin when Client notifies DataProse of the problem. 
  

Response Timetable 
  

													
	Severity Level

	  	 Response

	  	 Restoration

	  	 Re-performance

	  	 Resolution

	  	 Status Reports

	  	 After Hours
 Support

							
	1	  	 30 minutes
	  	 2 Hours
	  	 2 Hours
	  	 4 Hours
	  	 Hourly
	  	 Yes

							
	2	  	 60 minutes
	  	 4 Hours
	  	 4 Hours
	  	 8 Hours
	  	 Every 4 Hours
	  	 No

							
	3	  	 2 hours
	  	 5 Days
	  	 5 Days
	  	 10 Days
	  	 Weekly
	  	 No

							
	4	  	 1 day
	  	 30 Days
	  	 30 Days
	  	 Future Release
	  	 Monthly
	  	 No

  
 “Severity Level One” means
the system is inoperative and Client’s inability to use any affected component, feature, network element or system (“System”) has a critical effect on Client’s operations. This condition is generally characterized by complete
System failure and requires immediate correction. Any condition that may impact human safety is also considered a Severity Level One. 
  
 “Severity Level Two” means the System is partially inoperative but still usable by Client. The inoperative portion of the System severely restricts
Client’s operations, but has a less critical effect than a Severity Level One condition. 
  
 “Severity Level Three” means the System is usable by Client, but with limited functionality. This condition is not critical and does not severely restrict overall Client operations. 
  
 “Severity Level Four” means the System is usable and a means of circumventing the
condition has been implemented. This condition does not materially affect Client’s operations. 
  
 “Response” means DataProse has contacted Client regarding a particular request for support. 
  
 “Restoration” means that DataProse has provided a software, feature, or component fix to temporarily correct the problem, or that DataProse has provided a
suitable workaround solution. In either event, additional work is required for Restoration of the affected System to a fully operational state. 
  
 “Re-performance” means the act of Resolution with respect to Goods and Services, which fail to comply with Client’s written specifications, beginning with
DataProse’s initiation of such Re-performance and ending with compliance. 
  
 “Resolution” means that a remedy to the problem has been provided and is in compliance with the applicable specification(s) set forth in Schedule 1. Corrections to problems requiring a software design change means either that a
final correction to the problem has been made generally available to Client or that DataProse has notified Client that the software cannot be repaired. 
  
 Schedule 6.0 – SAS70 Timeline 
  
 DataProse will meet the milestones of the SAS70 Audit as stated below: 
  

					
	 	  	 Milestone/Action

	  	 Date

			
	1	  	 Engage service/audit provider
	  	 Complete

			
	2	  	 Start preliminary audit of procedures
	  	 August 15, 2005

			
	3	  	 Identify audit controls, processes, and documentation requirements
	  	 August 31, 2005

			
	4	  	 Remedy deficiencies
	  	 October 1, 2005

			
	5	  	 Finalize process documentation
	  	 October 1, 2005

			
	6	  	 Commence Type II Audit
	  	 October 1, 2005

			
	7	  	 Audit Test
	  	 December 1, 2005

			
	9	  	 Collaborative Review and document preparation
	  	 January 1, 2006

			
	10	  	 Audit Completed and Final Certification
	  	 February 28, 2006

  

			
	 	  	Page 5 of 5
		
	 	  	Client:                  DataProse:Employment Agreement, effective as of October 1, 2004 - Michael S. Ruley

 Exhibit 10.27 
  
 Employment Agreement 
  

This Employment Agreement (the “Agreement”) dated as of October 1, 2004 (the “Effective Date”), is made by and
between Paradise HoldCo, Inc. (together with any successor thereto, the “Company”) and Michael S. Ruley (the “Executive”). Notwithstanding anything herein to the contrary, this Agreement shall be void and of no
force and effect if within 10 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 in the performance of duties that causes or is reasonably likely to cause damage to the Company; 

  

	 	(iii)	Executive’s conviction of a felony or crime involving material dishonesty or moral terpitude; 

	 	(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. 

  

	 	(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 Executive and
acceptable to the Company or the Company’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 Chief Executive Officer; 
  
 (B) a
material diminution in the nature or scope of the Executive’s responsibilities, duties or authority; 
  
 (C) failure of the Principal Stockholders to satisfy their requirements under the last sentence of Section 3(b) of the
Agreement; 
  

 2 

 (D) the Company’s material breach of this Agreement; 
  
 (E) 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 
  
 (F) 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)	“Interim Period” shall have the meaning set forth in Section 3(b). 

  

	 	(o)	“Inventions” shall have the meaning set forth in Section 8. 

  

	 	(p)	“Notice of Termination” shall have the meaning set forth in Section 4(b). 

  

	 	(q)	“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. 

  

	 	(r)	“Principal Stockholders” shall mean Carlyle Partners III, L.P. a Delaware limited partnership and its affiliates. 

  

	 	(s)	“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. 

  

 3 

	 	(c)	Position and Duties. 

  
 (i) The Executive shall serve as Chief Executive Officer 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 Board. 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. 
  
 (ii) As of the Closing Date, the Principal Stockholders shall cause the Executive to be appointed or elected to the Board. During the Term, the Board shall propose the Executive for re-election to the Board and the
Principal Stockholders shall vote all of their shares of Common Stock in favor of such re-election. 
  

	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 $450,000 per annum, which shall be
paid in accordance with the customary payroll practices of the Company, subject to any increase as determined at least annually by the Compensation Committee in its sole discretion (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 (“Interim Period”), 

  
 (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, (B) a one-year term life insurance policy (“Life Insurance Policy”) that would pay the Executive’s beneficiary up to $1.35
million upon the death of the Executive and(C) a one-year accidental death and dismemberment insurance policy (“AD&D Policy”) that would pay the Executive’s beneficiary up to $3.150 million upon the death of the Executive,

  

 4 

 
provided, that the premiums for the AD&D Policy are less than the premiums for the Life Insurance Policy, and provided, further,
that such reimbursements under subsections (A), (B) and (C) 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. 
  
 The Principal Stockholders shall
make any payments described in this Section 3(b) that the Company is unable to make. 
  

	 	(c)	Bonuses. 

  

	 	(i)	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 $450,000 (“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 years ending December 31, 2004 and December 31, 2005, 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). With respect to the fiscal year
ending December 31, 2005, the Executive shall be eligible to receive a discretionary bonus based on the achievement of certain performance criteria which shall be mutually agreed on by the Board and the Executive. Notwithstanding anything
herein to the contrary, no bonus shall be paid if the Closing Date does not occur prior to the Outside Closing Date. 

  

	 	(ii)	Signing Bonus. The Executive shall receive a lump-sum bonus equal to $300,000 on January 1, 2005, provided that the Executive remains employed by the Company through
such date or his employment has been previously terminated without Cause pursuant to Section 4(a)(iv) or for Good Reason pursuant to Section 4(a)(v). 

  

	 	(iii)	 Closing Bonus. The Executive shall receive a lump-sum bonus equal to $450,000 on the Closing Date, provided that (A) the Executive remains employed by
the Company through such date or his employment has been 

  

 5 

	 	 
previously terminated without Cause pursuant to Section 4(a)(iv) or for Good Reason pursuant to Section 4(a)(v) and (B) on the
Closing Date as long as the Executive is employed by the Company on such date, the Executive invests the entire after-tax value of such bonus in shares of Common Stock (as defined below) at a per share cost equal to the per share cost paid by the
Principal Stockholders to acquire the Company. 

  

	 	(d)	Equity Participation. During the Term, the Executive shall be entitled to participate in the Stock Option Plan of the Company and on the Effective 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. 

  

	 	(f)	 Relocation Expenses. In accordance with the Company’s applicable relocation plans and policies which shall be reasonably developed by the Executive and
the Principal Stockholders, the Company shall reimburse Executive for any of the following expenses incurred by Executive in connection with his relocation from Houston, Texas to Hawaii to the full extent reasonable: (i) travel (including
without limitation up to two house hunting trips) and similar related moving expenses and costs of packing, unpacking and transporting personal effects of the Executive and his family, including transportation of the Executive’s automobiles,
from his current residence in Houston, Texas to Hawaii, and (ii) real estate broker commission fees on the sale of the Executive’s current Houston, Texas residence limited to 6% of such residence’s sales price, provided that the
Executive shall properly account for such expenses in accordance with the Company’s policies and procedures. In the event that the Executive’s employment shall terminate for any reason other than for Cause, the Company shall reimburse
Executive (or the Executive’s estate) for all such relocation expenses (as set forth and in accordance with this Section 3(f) including but not limited to up to a 6% real estate broker commission fee (“Hawaiian Broker
Fee”) paid by the Executive (or the Executive’s estate) on the sale of his Hawaiian residence) incurred by the Executive (or the Executive’s estate) due to his relocation back to the mainland United States at a location of his
choice, provided, that if the Executive shall 

  

 6 

	 	 
resign without Good Reason, then the Company shall not reimburse the Executive for the Hawaiian Broker Fee. With respect to any reimbursements paid to the
Executive under this Section 3(f) 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. 

  

	 	(g)	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 policy. 

  

	 	(h)	Personal Travel Expenses. During the Term, the Company shall reimburse the Executive for the reasonable cost of coach roundtrip airline tickets from Hawaii to the mainland
United States for the Executive and his spouse and children for up to three personal trips per year. 

  

	 	(i)	Housing Allowance. During the Term, the Company shall pay the Executive a housing allowance at the rate of up to $125,000 per year, pro-rated for partial years, subject to
applicable 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. In the event
the Executive is terminated for any reason other than Cause and as a result of such termination is forced to terminate a one-year term housing lease agreement prior to the expiration of the term of such agreement, the Company shall be solely
responsible for any early lease termination fees or costs, provided, however, that in no event shall such fees or costs exceed an amount equal to the total lease payments under the one-year term. 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. 

  

	 	(j)	Vacation. During the Term, the Executive shall be entitled to four 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 [eight] weeks.

  

 7 

	4.	Termination. 

  
 The Executive’s employment hereunder may be terminated by the Board or the Executive, as applicable, without any breach of this Agreement only under
the following circumstances: 
  

	 	(a)	Circumstances. 

  

	 	(i)	Death. The Executive’s employment hereunder shall terminate upon his death. 

  

	 	(ii)	Disability. If the Executive has incurred a Disability, the Board 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 receipt, the Executive shall not have returned to full-time performance of his duties. 

  

	 	(iii)	Termination for Cause. The Board may terminate the Executive’s employment for Cause. 

  

	 	(iv)	Termination without Cause. The Board 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 Board may give notice of non-extension to the Executive pursuant to Section 2(b). 

  

	 	(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 

  

 8 

	 	 
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 elected by the Company in its sole discretion. The failure by the Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of the Executive or the Company hereunder or preclude the Executive or the Company from asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights hereunder. 

  

	 	(c)	Company obligations upon termination. Subject to Section 5, upon termination of the Executive’s employment, the Executive (or the Executive’s estate)
shall be entitled to receive a lump sum equal to the Executive’s Annual Base Salary through the Date of Termination not theretofore paid, any bonus if declared or earned but not yet paid for a completed fiscal year, any expenses owed to the
Executive, any accrued vacation pay owed to the Executive, and any amount arising from the Executive’s participation in, or benefits under any employee benefit plans, programs or arrangements, which amounts shall be payable in accordance with
the terms and conditions of such employee benefit plans, programs or arrangements. 

  

	5.	Severance Payments. 

  

	 	(a)	Termination for Cause, Resignation without Good Reason or upon Non-extension by the Executive. If the Executive’s employment shall terminate pursuant to Sections
4(a)(iii) for Cause, Section 4(a)(vi) without Good Reason, or pursuant to Sections 4(a)(viii) due to Non-extension of the Agreement by the Executive, the Executive shall not be entitled to any severance payment or benefits (other
than as expressly provided for herein or under any benefit plan). 

  

	 	(b)	Termination upon death or Disability. If the Executive’s employment shall terminate pursuant to Sections 4(a)(i) due to the Executive’s death, or pursuant to
Section 4(a)(ii) due to the Executive’s Disability, the Company shall pay to the Executive (or the Executive’s estate): 

  

	 	(i)	within 30 days following the Date of Termination and otherwise in accordance with the Company’s regular payroll practice, an amount equal to the Annual Base Salary that the
Executive would have been entitled to receive if the Executive had continued his employment for a period of twelve months following the Date of Termination; and 

  

	 	(ii)	a prorated amount of the Executive’s annual bonus based on the Company’s year-to-date performance through the Date of Termination in relation to the performance targets
set forth in the Executive Bonus Plan (such amount to be determined in good faith by the Compensation Committee). 

  

 9 

	 	(c)	Termination without Cause or resignation for Good Reason after Six Months. If the Executive’s employment shall terminate following the six month anniversary of the
Closing Date without Cause pursuant to Section 4(a)(iv) or for Good Reason pursuant to Section 4(a)(v), the Company shall: 

  

	 	(i)	within 30 days following the Date of Termination and otherwise in accordance with the Company’s regular payroll practice, pay Executive a lump-sum amount equal to $900,000; and

  

	 	(ii)	continue coverage (at the Company’s expense) for the Executive and any dependents under all Company group health benefit plans in which the Executive and any dependents were
entitled to participate immediately prior to the Date of Termination (under the same terms as during employment) for (A) the Term or (B) twelve months, whichever is longer. 

  

	 	(d)	Termination upon Non-extension by the Company. If the Executive’s employment shall terminate pursuant to Sections 4(a)(vii) due to Non-extension of the Agreement
by the Company, the Company shall pay, within 30 days following the Date of Termination and otherwise in accordance with the Company’s regular payroll practice, a lump-sum amount equal to the Annual Base Salary that the Executive would have
been entitled to receive if the Executive had continued his employment for six months; and within thirty days after the Date of Termination, pay to the Executive a prorated amount of the Executive’s annual bonus based on the Company’s
year-to-date performance through the Date of Termination in relation to the performance targets set forth in the Executive Bonus Plan (such amount to be determined in good faith by the Compensation Committee). 

  

	 	(e)	Failure to Close or termination without Cause or resignation for Good Reason within Six Months. If (i) on or prior to the earlier to occur of (A) the six month
anniversary of the Closing Date or (B) the Outside Vesting Date, the Executive’s employment shall terminate without Cause pursuant to Section 4(a)(iv) or for Good Reason pursuant to Section 4(a)(v), or (ii) the
Executive’s employment shall terminate pursuant to Sections 4(a)(ix) due to the Closing Date not occurring prior to the Outside Closing Date, the Principal Stockholders shall, within thirty days after the Outside Closing Date, pay to the
Executive a lump sum equal to $500,000. 

  

	 	(f)	Survival. The expiration or termination of the Term shall not impair the rights or obligations of any party hereto, which shall have accrued prior to such expiration or
termination. 

  

	 	(g)	 Mitigation. The Executive shall have no duty to mitigate the amount of any payment provided for hereunder by seeking other employment, and any income 

  

 10 

	 	 
earned by the Executive from other employment or self-employment shall not be offset against any obligations of the Company to the Executive hereunder.

  

	6.	Competition. 

  

	 	(a)	The Executive shall not, at any time during the Term or during the 12-month period following the later of the expiration of the Term or the Date of Termination directly or
indirectly engage in, have any equity interest in, or manage or operate any person, firm, corporation, partnership or business (whether as director, officer, employee, agent, representative, partner, security holder, consultant or otherwise) that
engages in any business which competes with any telecommunication business of the Company or any entity owned by the Company whose financial results are material to the Company anywhere in the United States provided, however, that the
Executive shall be permitted to acquire a passive stock or equity interest in such a business provided the stock or other equity interest acquired is not more than five percent (5%) of the outstanding interest in such business. Nothing herein
shall prevent the Executive from engaging in any activity with, or holding any financial interest in, a non-competitive division, subsidiary or affiliate of an entity engaged in a business that competes with the Company. Notwithstanding anything
herein to the contrary, if the Executive’s employment shall terminate pursuant to Section 4(a)(ix) due to the Closing Date not occurring prior to the Outside Closing Date, the restrictions of this Section 6(a) shall only
apply during the Term, provided, however, that the foregoing shall in no way apply to or limit the restrictive period of any other covenants in this Agreement. 

  

	 	(b)	During the Term and during the term set forth in Section 6(a), the Executive will not, except in the performance of his duties for the Company, and will not knowingly
permit any of his affiliates to, directly or indirectly, recruit or otherwise solicit or induce any non-clerical employee, customer, subscriber or supplier of the Company to terminate its employment or arrangement with the Company, otherwise change
its relationship with the Company, or establish any relationship with the Executive or any of his affiliates for any business purpose that is prohibited by subsection (a) above. Nothing herein shall prevent the Executive from serving as a
reference. 

  

	 	(c)	In the event the terms of this Section 6 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period
of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as
to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action. 

  

 11 

	 	(d)	As used in this Section 6, the term “Company” shall include the Company, its parent and any of its direct or indirect subsidiaries whose financial results are
material to the Company. 

  

	7.	Nondisclosure of Proprietary Information. 

  

	 	(a)	Except as required in the faithful performance of the Executive’s duties hereunder or pursuant to Section 7(c), the Executive shall, in perpetuity, maintain in
confidence and shall not directly, indirectly or otherwise, use, disseminate, disclose or publish, or use for his benefit or the benefit of any person, firm, corporation or other entity any confidential or proprietary information or trade secrets of
or relating to the Company, including, without limitation, information with respect to the Company’s operations, processes, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers,
marketing methods, costs, prices, contractual relationships, regulatory status, compensation paid to employees or other terms of employment, or deliver to any person, firm, corporation or other entity any document, record, notebook, computer program
or similar repository of or containing any such confidential or proprietary information or trade secrets. The parties hereby stipulate and agree that as between them the foregoing matters are important, material and confidential proprietary
information and trade secrets and affect the successful conduct of the businesses of the Company (and any successor or assignee of the Company). 

  

	 	(b)	Upon termination of the Executive’s employment with the Company for any reason, the Executive will promptly deliver to the Company all correspondence, drawings, manuals,
letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents concerning the Company’s customers, business plans, marketing strategies, products or processes that are in his possession, custody or
control. The Executive shall be permitted to retain his rolodex (and similar address and telephone directories). 

  

	 	(c)	The Executive may respond to a lawful and valid subpoena or other legal process but shall: (i) give the Company the earliest reasonably possible notice thereof, (ii) as
much reasonably in advance of the return date as possible, make available to the Company and its counsel the documents and other information sought, and (iii) reasonably assist (the “Assistance”) such counsel in resisting or
otherwise responding to such process. The Company shall reimburse the Executive for all reasonable expenses he incurs in providing such Assistance. Notwithstanding Section 7(a), the Executive may use or disclose information that is
public knowledge. 

  

	 	(d)	As used in this Section 7, the term “Company” shall include the Company, its parent and any of its direct or indirect subsidiaries. 

 

 12 

	8.	Inventions. 

  
 All rights to discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) directly related to the
Company’s business, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that the Executive may discover, invent or originate during the Term, either alone or with others and whether or not during working
hours or by the use of the facilities of the Company (“Inventions”), shall be the exclusive property of the Company. The Executive shall promptly disclose all Inventions to the Company, shall execute at the request of the Company
any assignments or other documents the Company may deem necessary to protect or perfect its rights therein, and shall assist the Company, at the Company’s expense, in obtaining, defending and enforcing the Company’s rights therein. The
Executive hereby appoints the Company as his attorney-in-fact to execute on his behalf any assignments or other documents deemed necessary by the Company to protect or perfect its rights to any Inventions. 
  

	9.	Non-Disparagement. 

  
 Except in a proceeding to enforce this Agreement, at any time during the Term or during the 12-month period following the later of the expiration of the
Term or the Date of Termination, each of the parties agrees that it will not disparage or denigrate to any person any aspect of his or its past relationship with the other, nor the character or reputation of the other or the other’s agents,
representatives, products, or operating methods, whether past, present, or future, and whether or not based on or with reference to their past relationship; provided, however, that this paragraph shall have no application to any
evidence or testimony request of either party hereto by any court or government agency. 
  

	10.	Injunctive Relief. 

  
 It is recognized and acknowledged by the Executive that a breach of the covenants contained in Sections 6, 7, 8 and 9 will cause irreparable damage
to Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, the Executive agrees that in the event of a breach of any of the
covenants contained in Sections 6, 7, 8 and 9, in addition to any other remedy which may be available at law or in equity, the Company will be entitled to specific performance and injunctive relief. 
  

	11.	Assignment and Successors. 

  
 The Company may assign its rights and obligations under this Agreement to any entity, including any successor to all or substantially all the assets of
the Company, by merger or otherwise, and may assign or encumber this Agreement and its rights hereunder as security for indebtedness of the Company and its affiliates, provided said successor entity assumes all of the obligations of the Company
hereunder. The Executive may not assign his rights or obligations under this Agreement to any individual or entity, except his estate upon his death. This Agreement shall be binding upon and inure to the benefit of the Company, the Executive and
their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable. 
  

 13 

	12.	Governing Law. 

  
 This Agreement shall be governed, construed, interpreted and enforced in accordance with the substantive laws of the state of New York, without reference
to the principles of conflicts of law of New York or any other jurisdiction, and where applicable, the laws of the United States. 
  

	13.	Notices. 

  
 Any notice, request, claim, demand, document and other communication hereunder to any party shall be effective upon receipt (or refusal of receipt) and
shall be in writing and delivered personally or sent by telex, telecopy, overnight courier service or certified or registered mail, postage prepaid, as follows: 
  

	 	(a)	If to the Company: 

  
 The Carlyle Group 
 1001 Pennsylvania Avenue,
N.W. 
 Suite 200 
 Washington,
D.C. 20004 
 Fax: (202) 347-1692 
 Attn: William E. Kennard 
  
 and a copy to: 

 
 Latham & Watkins LLP 
 885 Third Avenue 
 New York, New York 10022

 Fax: (212) 751-4864 
 Attn: Jed W. Brickner 
  

	 	(b)	If to the Executive: 

  
 Michael S. Ruley 
 5338 Fieldwood Drive

 Houston, Texas 77056 
  
 and a copy to: 
  
 Arent Fox PLLC 
 1050 Connecticut Avenue, N.W.

 Washington, D.C. 20036-5339 
 Fax: (202) 857-6395 
 Attn: Michael L. Stevens 
  
 or at any other address as any party shall have specified by notice in writing to the other party. 
  

 14 

	14.	Counterparts. 

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

	15.	Entire Agreement. 

  
 The terms of this Agreement and the other agreements and instruments contemplated hereby or referred to herein (collectively the “Related
Agreements”) are intended by the parties to be the final expression of their agreement with respect to the employment of the Executive by the Company and may not be contradicted by evidence of any prior or contemporaneous agreement. The
parties further intend that this Agreement and the Related Agreements shall constitute the complete and exclusive statement of their terms and that except as required by applicable law no extrinsic evidence whatsoever may be introduced in any
judicial, administrative, or other legal proceeding to vary the terms of this Agreement and the Related Agreements. 
  

	16.	Amendments; Waivers. 

  
 This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by the Executive and a duly authorized officer of
Company. By an instrument in writing similarly executed, the Executive or a duly authorized officer of the Company may waive compliance by the other party or parties with any provision of this Agreement that such other party was or is obligated to
comply with or perform, provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure. No failure to exercise and no delay in exercising any right, remedy, or power hereunder
preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity. 
  

	17.	No Inconsistent Actions. 

  
 The parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential
intent of this Agreement. Furthermore, it is the intent of the parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement. 
  

	18.	Construction. 

  
 This Agreement shall be deemed drafted equally by both the parties. Its language shall be construed as a whole and according to its fair meaning. Any
presumption or principle that the language is to be construed against any party shall not apply. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation. Any references to paragraphs,
subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary. Also, unless the context clearly indicates to the contrary, (a) the plural includes the singular and the singular
includes the plural; (b) “and” and “or” are each used both conjunctively and disjunctively; (c) “any,” “all,” “each,” or “every” means “any and all,” and “each and
every”; (d) “includes” and “including” are each “without limitation”; (e) “herein,” “hereof,” “hereunder” and other similar compounds of the 

  

 15 

 
word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (f) all pronouns and
any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require. 
  

	19.	Arbitration. 

  
 Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before an arbitrator
and in a location each mutually agreed on by the two parties in accordance with the employment rules of the American Arbitration Association then in effect. If the Company and the Executive are unable to agree in good faith on a location or an
arbitrator to conduct the arbitration, this Section 19 shall be void and of no force and effect. Judgment may be entered on the arbitration award in any court having jurisdiction, provided, however, that the Company shall
be entitled to seek a restraining order or injunction in any court of competent jurisdiction to prevent any continuation of any violation of the provisions of Sections 6, 7, 8 or 9 of the Agreement and the Executive hereby consents that such
restraining order or injunction may be granted without requiring the Company to post a bond. Only individuals who are (i) lawyers engaged in the practice of law; and (ii) on the AAA register of arbitrators shall be selected as an
arbitrator. Within 20 days of the closure of the arbitration record, the arbitrator shall prepare written findings of fact and conclusions of law. It is mutually agreed that the written decision of the arbitrator shall be valid, binding, final and
non-appealable, provided however, that the parties hereto agree that the arbitrator shall not be empowered to award punitive damages against any party to such arbitration. The arbitrator shall require the non-prevailing party to pay the
arbitrator’s full fees and expenses or, if in the arbitrator’s opinion there is no prevailing party, the arbitrator’s fees and expenses will be borne equally by the parties thereto. In the event action is brought to enforce the
provisions of this Agreement pursuant to this Section 19, the non-prevailing parties shall be required to pay the reasonable attorney’s fees and expenses of the prevailing parties to the extent determined to be appropriate by the
arbitrator, acting in its sole discretion. 
  

	20.	Validity; Enforcement. 

  
 If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this
Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added
automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. 
  

	21.	Withholding. 

  
 The Company shall be entitled to withhold from any amounts payable under this Agreement any federal, state, local or foreign withholding or other taxes or
charges which the 

  

 16 

 
Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of
withholding shall arise. 
  

	22.	Sole Employment Agreement. 

  
 The Executive acknowledges and agrees that he has taken all actions required under the terms of any prior employment in order to terminate that employment
and that the provisions contained in that employment agreement, if any, do not bind the Company. 
  

	23.	Indemnification and Insurance. 

  
 The Company shall indemnify the Executive to the fullest extent permitted by the laws of the State of New York, as in effect at the time of the subject
act or omission, and he will be entitled to the protection of any insurance policies the Company may elect to maintain generally for the benefit of its directors and senior executive officers against all costs, charges and expenses incurred or
sustained by him in connection with any action, suit or proceeding to which he may be made a party by reason of his being or having been a director, officer or employee the Company or any of its subsidiaries or his serving or having served any other
enterprise, plan or trust as a director, officer, employee or fiduciary at the request of the Company (other than any dispute, claim or controversy arising under or relating to this Agreement (except for this Section 23)). The provisions
of this Section 23 shall survive any termination of Executive’s employment or any termination of this Agreement. 
  

	24.	Legal & Accounting Fees. 

  
 The Company shall pay or reimburse the Executive for all reasonable legal and accounting fees incurred by him in connection with the negotiation of this
Agreement and any other agreements documenting his employment arrangement with the Company, up to a maximum of $20,000. The Company may, in its discretion, pay or reimburse the Executive for reasonable legal and accounting expenses in excess of
$20,000. 
  

	25.	Principal Stockholders’ Obligations. 

  
 Except as provided in Sections 3(b) and 5(e), the Principal Stockholders shall have no obligations under this Agreement. 
  

	26.	Employee Acknowledgement. 

  
 The Executive acknowledges that he has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any
representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on his own judgment. 
  

 17 

 IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written.

  

					
	COMPANY
		
	 By:
	 	/s/ William E. Kennard
	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	EXECUTIVE
		
	 By:
	 	/s/ Michael S. Ruley
	 	 	 Name:
	 	 
	 	 	 Address:
	 	 
	
	PRINCIPAL STOCKHOLDERS
		
	 By:
	 	/s/ William E. Kennard
	 	 	 Name:
	 	 
	 	 	 Address:
	 	 

 Exhibit A 
  
 ANNUAL BONUS SCHEDULE 
  

			
	 Base Case PERFORMANCE TARGET:

	  	 % of Target Level*:

	 Less than 90%
	  	0%
	 90% to 100%
	  	75% to 100%
	 100% or greater
	  	100%

  

	*	Target Level percentages between benchmarks shall be determined by means of linear interpolation.1 

	1	For example, if the Company achieves a Base Case equal to 94% of the Performance Target in a given year, then the bonus Target Level for such year shall be 85%
(i.e., the bonus Target Level shall be increased by 2.5% for each full percentage point that the Performance Target is in excess of the 90% (up to 100% Performance Target)). 

 Exhibit B 
  
 EXECUTIVE BONUS PLAN 
  
 ANNUAL BONUS PERFORMANCE TARGETS* 
  
 ($ Millions) 
  
 Year Ending December 31 
  

													
	 	  	2006

	  	2007

	  	2008

	  	2009

	 Base Case Performance
 Target - Revenue
	  	$	641	  	$	658	  	$	671	  	$	681
	 Base Case Performance
 Target - EBITDA
	  	$	271	  	$	278	  	$	286	  	$	293
	 Base Case Performance
 Target - Free Cash Flow
	  	$	71	  	$	84	  	$	103	  	$	116

  

	*	Targets and the financial models supporting such targets shall be subject to reasonable change and discussed with the Executive as reasonably necessary. 

 Exhibit C 
  
 [Form of Stock Option Agreement]

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