Document:

Exhibit 10.10

 

March 11, 2014

 

Mr. Eric K. Yeaman

1177 Bishop Street

Honolulu, HI 96813

 

Dear Eric:

 

This letter confirms our discussions regarding your employment with Hawaiian Telcom Holdco, Inc. and any of its subsidiaries and affiliates as may employ you from time to time (collectively, and together with any successor thereto, the “Company”).  You and the Company are parties to an Amended and Restated Employment Agreement dated as of April 5, 2010 that subsequently was amended by an amendment dated May 12, 2011 (as amended, the “Prior Agreement”).  The parties desire to amend and restate the Prior Agreement in its entirety, effective as of October 29, 2014, as set forth herein.  Notwithstanding anything herein to the contrary, you will be an at-will employee of the Company.

 

1.                                                        Position:  President and Chief Executive Officer

 

2.                                                        Base Salary:  $725,000 per year (the “Base Salary”), payable in accordance with the Company’s customary payroll practices.  Paydays are expected to be every other Friday (total of 26 pay days a year).  Your paycheck will be delivered to you or made available to you on such dates.  If a payday falls on a holiday or weekend, you may pick up your paycheck on the weekday immediately preceding the payday.

 

3.                                                        Annual Performance Award:  You will be eligible to participate in an annual performance compensation plan (“Performance Compensation Plan”) established by the Company’s Board of Directors (the “Board”) or Compensation Committee thereof, at a target level that is specified by the Compensation Committee (currently specified as 100% of your eligible salary) as it may be amended from time to time by the Board or Compensation Committee. The actual performance award, if any, shall be pursuant to the terms and conditions set forth in the Performance Compensation Plan and shall be payable at such time as performance awards are paid to other senior executive officers who participate therein. Payment of any annual performance award will be subject to your continued employment with the Company through the date the performance award is paid pursuant to the Performance Compensation Plan.

 

4.                                      Equity Award:  Subject to approval by the Board or the Compensation Committee, you will be eligible to receive equity awards from time to time pursuant to the Company’s 2010 Equity Incentive Plan with such terms and conditions as determined by the Board or the Compensation Committee, in its sole discretion.  It is expressly understood that your entitlement to participation in the 2010 Equity Incentive Plan is not a guarantee that the award referenced herein will attain any particular value in the future.

 

 

5.                                      Employee Benefits:   You will be eligible to participate in Company employee benefit plans and programs commensurate with your position and seniority. This currently includes five (5) weeks’ vacation for each completed twelve (12) month period of service with a maximum carryover of ten (10) weeks.  Please note that the Company reserves the right to change its benefits package at its sole discretion.

 

6.                                      Severance Benefits:  You will be eligible to participate and receive the severance benefits provided in the Company’s Executive Severance Plan, subject to all of the terms and conditions thereof. You hereby acknowledge and agree that the only severance benefits you are eligible to receive from the Company will be pursuant to the Executive Severance Plan and that you are not eligible to receive any severance benefits under the Prior Agreement.

 

7.                                      Certain Restrictions:  You must execute the Hawaiian Telcom Business Protection Agreement attached hereto as Exhibit A.  Additionally, you will be subject to the policies, practices and procedures maintained by the Company as set forth in the Company’s Code of Business Conduct, employee handbook and other Company policies, which may be modified from time to time.

 

8.                                      Arbitration:  You agree to sign the Arbitration Agreement attached hereto as Exhibit B.

 

9.                                      Interpretation and Severability:  The words of this letter will be interpreted according to their common meaning.  If any provision of this letter is deemed unenforceable for any reason, said provision will not affect the remaining terms of this letter and a court, upon motion by the Company, may amend said provision so as to render it valid and enforceable while providing to the Company the maximum protections permitted by law.  Hawaii law will govern the interpretation and enforcement of this letter.

 

If you agree with the terms of employment set forth in this letter, please indicate your understanding and agreement by executing in the space provided and returning this letter, complete with signed Exhibits A and B to me by March 13, 2014.  By executing in the space provided, you acknowledge that no promises, representations, understandings or agreements, either oral or in writing, were made with you that are inconsistent with the terms of this letter and that this letter will, in any event, supersede any such prior or contemporaneous promises, representations, understandings, or agreements, including the Prior Agreement.

 

[rest of page intentionally left blank]

 

 

I look forward to continuing to work with you in building, developing and integrating the Company into a strong business with a positive community presence.

 

	
 
    	
Sincerely,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Richard A. Jalkut
    
	
 
    	
Richard   A. Jalkut
    
	
 
    	
Chairman   of the Board of Directors
    
	
 
    	
 
    
	
Understood,   accepted and agreed to on this 11th day of March, 2014
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/   Eric K. Yeaman
    	
 
    
	
Signature
    	
 
    
	
 
    	
 
    
	
Eric   K. Yeaman
    	
 
    
	
Print   Name — Eric K. Yeaman
    	
 
    

 

 

EXHIBIT A

 

HAWAIIAN TELCOM BUSINESS PROTECTION AGREEMENT

 

This Agreement is between Hawaiian Telcom Holdco, Inc. and any of its subsidiaries and affiliates as may employ me from time to time (“Company”) and Eric K. Yeaman (referred to herein as “I” or “my”).

 

1.                                      IN CONSIDERATION FOR MY EMPLOYMENT, I AGREE AS FOLLOWS:

 

1.1                               Safeguard of Confidential Information.

 

My relationship with the Company is intended to be one of trust and confidence.  I acknowledge that I may have access to Confidential Information (as defined below) about the Company.  During and following my employment with the Company, I will exercise the highest degree of care in safeguarding the Confidential Information against loss, theft or disclosure and comply with any and all Company policies related to such Confidential Information.  I will not use any Confidential Information for any purpose other than Company business.

 

1.2                               Confidential Information

 

“Confidential Information” means information related to any aspect of the Company’s business that is either not known by Company competitors or is proprietary information that has been developed using Company time and resources.

 

The following are more specific examples of Confidential Information:

 

·                                          marketing, sales, promotional, and training materials;

 

·                                          information about current and potential customer buying habits, needs or preferences;

 

·                                          contact information about decision-makers within companies that do business or that may do business with the Company and other customer specific information related to current or potential customer buying decisions;

 

·                                          Company personnel information, including compensation and bonus programs, Company personnel policies, forms and employee names, job descriptions, disciplinary notices or compensation and contact information;

 

·                                          forms, software or other information for tracking customer contacts;

 

	
 
    	
 
    	
 
    
	
 
    	
 
    	
Employee
    
	
 
    	
 
    	
Initials
    

 

 

·                                          market or product launches, capital expenditure forecasts or limitations, planned or forecasted network upgrades;

 

·                                          advertising materials and strategies;

 

·                                          Company vendor agreements;

 

·                                          distribution methods and strategies, compensation structures and advertising/promotional strategies;

 

·                                          any information constituting a “trade secret” within the meaning of the Hawaii Uniform Trade Secrets Act, Haw. Rev. Stat. chapter 482 B(1); and

 

·                                          internal documents relating to labor relations.

 

1.3                               Return of Company Property.

 

I understand that all Confidential Information is the exclusive property of the Company. I will promptly return all Confidential Information, including copies, notes or summaries thereof, to the Company in the event that my employment is terminated, for any reason.

 

1.4                               Non-competition, Solicitation, or Inducement of Customers or Employees

 

(A)                               During my employment and for twelve (12) months following termination for any reason [cumulatively referred to as the “Designated Period”] I will not: (i)  directly or indirectly compete with the Company’s business, products or services in the State of Hawaii nor (ii)  directly or indirectly make any contact or communication of any kind for the purpose of soliciting, inviting, inducing, encouraging or requesting any customer of the Company to: (a) transfer its business from the Company to me, my business or my new employer’s business; or (b) open a new account with me, my business or my new employer’s business; or (c) otherwise induce or encourage a Company customer to discontinue or reduce its business with the Company.

 

(1)  The Hawaii Uniform Trade Secrets Act defines “Trade Secret” as follows:

‘Trade Secret’ means information, including a formula, pattern, compilation, program device, method, technique, or process that:

(1)  Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use;  and

(2)  Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

[Haw. Rev. Stat. §482B-2]

 

 

(B)                               During the Designated Period, I will not solicit, induce or attempt to induce any employee into terminating his/her employment with the Company.

 

2.                                      NO OBLIGATIONS UNDER PRIOR, THIRD PARTY AGREEMENTS

 

I represent that:  (i) I am not obligated under any other agreement or understanding that would affect the Company’s rights or my performance or duties to the Company.  I further represent that I have provided to the Company complete and accurate copies of any non-solicitation, confidentiality, non-competition or similar agreement between me and any former employers that may be in effect.

 

3.                                      REMEDIES

 

3.1                               Injunctive Relief.

 

I agree that a breach of any of my promises in this Agreement would irreparably damage the Company.  Accordingly, I understand that the Company reserves the right to take prompt court action to stop any breach or threatened breach of this Agreement.

 

3.2                               Accrual and Payment of Commissions Conditioned on Compliance with Agreement.

 

Notwithstanding any agreement to the contrary, I agree that the accrual and payment of any commissions to me are conditioned on my compliance with this Agreement.  I authorize the Company to withhold any commissions where the Company forms a reasonable, good faith belief that I have breached this Agreement.  Under the above circumstances, said commissions may be held by the Company, pending a final determination by a court or arbitrator, as the case may be, as to whether I have violated this Agreement.  In the event of a final determination that I did not violate this Agreement, the Company will promptly pay over to me the commissions in dispute, including any interest earned thereon calculated at a rate of six percent per annum. In the event of a final determination that I violated this Agreement, any commissions withheld will become the exclusive property of the Company. This section 3.2 will constitute a written authorization for withholding of wages pursuant to Hawaii Revised Statutes section 388-6.

 

3.3                               Attorney Fees.

 

In the event of any breach of this Agreement, the prevailing party will be entitled to an award of all costs and attorneys’ fees reasonably incurred in defending or enforcing the prevailing party’s rights.  Attorney’s fees will not be limited by the amount of monetary relief received.

 

 

4.                                      EMPLOYMENT AT-WILL

 

I acknowledge and agree that this Agreement does not alter the employment at-will relationship.  I affirm that either I or the Company may terminate the employment relationship at any time, with or without notice, and with or without cause.  As a courtesy, however, to the extent feasible I will try to give the Company 30 days advance notice prior to a voluntary employment separation.

 

5.                                      ADDITIONAL TERMS

 

5.1                               Venue and Governing Law.

 

I agree that any claim in connection with this Agreement may only be filed in a court of competent jurisdiction in Honolulu, Hawaii.  Further, this Agreement will be interpreted in accordance with the laws of the State of Hawaii.

 

5.2                               Successors and Assigns.

 

This Agreement will inure to the benefit of the Company’s successors, purchasers, and assigns.

 

5.3                               Severability and Judicial Power to Conform Agreement to Law.

 

If any provision of this Agreement will be held invalid, its invalidity will not affect any other provision of this Agreement that can be given effect without the invalid provision.  Further, in the event that a Court determines that any part of this Agreement is unenforceable for any reason, the Court, upon motion by the Company, will be empowered to modify such term(s) to render the Agreement enforceable while according to the Company the maximum benefit and protection of its interests allowable by law.

 

6.                                      EMPLOYEE’S UNDERSTANDING

 

I acknowledge that (i) I have read each and every paragraph of this Agreement; (ii) I have had an opportunity to consult with legal counsel concerning the terms of this Agreement;  and (iii) that I fully understand this Agreement.  I also acknowledge that this Agreement does not supersede any other agreement(s) between me and the Company.

 

IT IS SO AGREED on this                    day of March, 2014.

 

	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Employee   Signature — Eric K. Yeaman
    	
 
    	
Date
    

 

 

EXHIBIT B

 

ARBITRATION AGREEMENT

 

In consideration for my employment with Hawaiian Telcom Holdco, Inc. and any of its subsidiaries and affiliates as may employ me from time to time, I agree that any legal claim that I may have arising out of or relating to my employment will be resolved through final and binding arbitration. The Arbitration Rules, Procedures and Protocols of Dispute Prevention & Resolution, Inc., (“DP&R”) located in Honolulu, Hawaii, as may be amended from time to time, will apply to this Arbitration Agreement. In the event of a dissolution of DP&R, the procedures established in the Hawaii Uniform Arbitration Act, as amended (Haw. Rev. Stat. Chapter 658A) will apply.  Notwithstanding any law to the contrary, nothing in this Agreement will empower an arbitrator to provide relief that would exceed that which a court or administrative agency could lawfully provide, according to the cause of action alleged.

 

	
Understood,   accepted and agreed to on this              day of March,   2014
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Signature
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Print   Name — Eric K. Yeaman
    	
 
    

 

	
 
    	
 
    	
 
    
	
 
    	
 
    	
Employee
    
	
 
    	
 
    	
InitialsExhibit 10.25

 

AMENDMENT TO RESTRICTED STOCK UNIT AGREEMENTS

 

This Amendment to Restricted Stock Unit Agreements entered into by and between Hawaiian Telcom Holdco, Inc. (the “Company”) and the Participant specified below (the “Amendment”) is effective as of March 10, 2014 and amends the restricted stock units granted to the Participant prior to 2013 and evidenced by a Restricted Stock Unit Agreement for Executives entered into by and between the Company and the Participant (the “RSU Agreement”).

 

In consideration of the Participant’s continued employment with the Company, and for other good and valuable consideration, the sufficiency of which the parties hereto acknowledge and agree to, the Company and Participant hereby agree as follows:

 

1.                                      Amendment.  Section 3(a)(ii) of the RSU Agreement is hereby amended and restated as follows:

 

“(ii)                Performance-Based RSUs.    An amount of RSUs equal to the Target PBRSUs (as defined below) multiplied by 1.5625 (the “Maximum Performance-Based RSUs” or “Maximum PBRSUs”) shall vest on the applicable Determination Date (as defined below) for each of the following calendar years: 2013, 2014 and, if the Grant Date was in 2012, 2015 (each, a “Performance Year”) in the amounts set forth in this Section 3(a)(ii) based upon the Company’s performance over one year for revenue and Adjusted EBITDA and over two years for total shareholder return of the Company in comparison to the NASDAQ Telecommunications Index (the “Index”), subject to the Participant’s continued employment with the Company or one of its Subsidiaries through each Determination Date, and provided further, in no event may the Participant vest in any of the performance-based RSUs (“PBRSUs”) pursuant to this Section 3(a)(ii) in the event Adjusted EBITDA for the applicable Performance Year is below Threshold (as shown in the table below).  “Target PBRSUs” shall mean twelve and one-half percent (12.5%) of the total RSUs subject to this Award. The Committee shall determine the extent to which the performance goals set forth herein are achieved and the total number of PBRSUs that will vest pursuant to this Section 3(a)(ii) in its sole and absolute discretion.  For purposes of clarity, in no event may the Participant vest in more than the Maximum PBRSUs pursuant to this Section 3(a)(ii).

 

On the Determination Date, an amount of PBRSUs shall vest equal to the product of A times B, where:

 

A = Total Base Percentage of Target PBRSUs Vested (as defined below); and

 

B = TSR Award Modifier (as defined below).

 

1

 

Notwithstanding the foregoing, the Committee in its sole discretion, after consideration of such factors as it deems appropriate, may reduce the number of PBRSUs that otherwise would vest pursuant to this Section 3(a)(ii).

 

For purposes of this Section 3(a)(ii), “Total Base Percentage of Target PBRSUs Vested” shall mean (1) Weighted % Vested from Revenue Performance, plus (2) Weighted % Vested from Adjusted EBITDA Performance, each of which shall be determined as follows:

 

Weighted % Vested from Revenue Performance

 

	
Measurement
    	
 
    	
Weighting
    	
 
    	
Factor
    	
 
    	
Amount
   ($ in mils)
    	
 
    	
Base % of
    Target
    PBRSUs
   Vested
    	
 
    
	
Performance   Year Revenue
    	
 
    	
40
    	
%
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Threshold
    	
 
    	
 
    	
 
    	
95
    	
%
    	
*
    	
 
    	
75
    	
%
    
	
Target 
    	
 
    	
 
    	
 
    	
100
    	
%
    	
*
    	
 
    	
100
    	
%
    
	
Maximum
    	
 
    	
 
    	
 
    	
105
    	
%
    	
*
    	
 
    	
125
    	
%
    

 

Weighted % Vested from Adjusted EBITDA Performance

 

	
Performance   Year Adjusted EBITDA
    	
 
    	
60
    	
%
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Threshold
    	
 
    	
 
    	
 
    	
95
    	
%
    	
*
    	
 
    	
75
    	
%
    
	
Target 
    	
 
    	
 
    	
 
    	
100
    	
%
    	
*
    	
 
    	
100
    	
%
    
	
Maximum
    	
 
    	
 
    	
 
    	
105
    	
%
    	
*
    	
 
    	
125
    	
%
    

 

* The Threshold, Target and Maximum Amounts for Revenue Performance and Adjusted EBITDA Performance for the applicable Performance Year shall equal the respective Threshold, Target and Maximum Amounts set for such Performance Year under the Company’s Performance Compensation Plan.

 

2

 

In the event of performance between Threshold and Target or between Target and Maximum, straight-line interpolation will determine the weighted percentages set forth above.  If performance is below Threshold, the applicable weighted percentage will equal zero percent (0%).  In no event may the Weighted % Vested from Revenue Performance or the Weighted % Vested from Adjusted EBITDA Performance exceed 125%.

 

For purposes of this Section 3(a)(ii), “TSR Award Modifier” shall have the meaning set forth below based on the Company’s TSR relative performance which shall be equal to the Company TSR, minus the Index TSR (each, as defined below), multiplied by 100%:

 

 

	
Level
    	
 
    	
TSR Relative Performance
   (Company TSR
   minus
   Index TSR)
    	
 
    	
TSR Award
   Modifier
    	
 
    
	
High
    	
 
    	
+15% and higher
    	
 
    	
125
    	
%
    
	
Target
    	
 
    	
0%
    	
 
    	
100
    	
%
    
	
Low
    	
 
    	
-15% and lower
    	
 
    	
75
    	
%
    

 

In the event of TSR relative performance between levels, straight-line interpolation will determine the TSR Award Modifier. The TSR Award Modifier shall never exceed 125% or go below 75%.

 

For purposes of this Section 3(a)(ii), “TSR” shall mean the aggregate total shareholder return on Shares over a two-year period ending on December 31st of the Performance Year (the “TSR Performance Period”) against the total shareholder return over the same two-year period for the Index.  TSR shall be calculated for the Company and Index using:

 

·                  A beginning price for the Shares and the Index equal to the trading volume weighted average price over the first 5 trading days in the year prior to the Performance Year (“Beginning Price”), and

 

·                  An ending price for the Shares and the Index equal to the trading volume weighted average price over the last 5 trading days in the Performance Year, and accounting for the reinvestment of dividends over this period (“Ending Price”).

 

TSR shall be calculated for the Company and the Index as follows:

 

Company TSR = (Share Ending Price/Share Beginning Price) — 1

 

Index TSR = (Index Ending Price/ Index Beginning Price) — 1

 

The “Determination Date” for each Performance Year shall be March 12th of the year following the Performance Year or, if later, the date in the year

 

3

 

following the Performance Year on which the Committee determines the Total Base Percentage of PBRSUs Vested, the TSR Award Modifier and the total number of RSUs that will be eligible to vest pursuant to this Section 3(a)(ii), if any; provided, however, with respect to each Performance Year, the Determination Date shall not be later than the earlier of (i) thirty (30) days following the completion of the Company’s final audited financial statement for such Performance Year, and (ii) April 30 of the year following such Performance Year.

 

EXAMPLE:  Executive has 2,000 Target PBRSUs. The FY2013 Revenue and FY2013 Adjusted  EBITDA both equal or exceed their respective Maximum levels, and the Company TSR outperforms the Index TSR by more than 15%.  Accordingly, on the Determination Date for the 2013 Performance Year, the following amount of PBRSUs would vest, as follows:

 

	
No. of
   Target
   PBRSUs
    	
 
    	
Total Base
   Percentage
   of Target
   PBRSUs
   Vested
    	
 
    	
TSR
   Award
   Modifier
    	
 
    	
 
    	
 
    	
 
    
	
2,000
    	
x
    	
125%
    	
x
    	
125%
    	
=
    	
3,125
    	
 
    	
(rounded   down to nearest whole share)
    

 

The Shares delivered in respect of PBRSUs that vest pursuant to this Section 3(a)(ii) shall be non-transferable, provided such transfer restrictions shall lapse in equal installments on each of the first three (3) annual anniversaries of the date on which such PBRSUs became vested, except as provided in Sections 3(b) and 3(c) below.

 

Any determinations made pursuant to this Section 3(a)(ii) by the Committee shall be made in the sole and absolute discretion of the Committee and shall be conclusive and binding on the parties for all purposes.”

 

2.              Full Force and Effect.  To the extent not expressly amended hereby, the RSU Agreement remains in full force and effect.

 

3.              Entire Agreement; Governing Law.  This Amendment, together with the RSU Agreement (to the extent not amended hereby), represents the entire agreement of the parties and shall supersede any and all prior or contemporaneous contracts, arrangements or understandings between the parties with respect to the RSU Agreement.  This Amendment may be amended at any time only by mutual written agreement of the parties hereto.  This Amendment will be governed by the laws of the State of Hawaii (with the exception of its conflict of law provisions).

 

4.              Counterparts.  This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which, together, shall constitute one instrument.

 

4

 

IN WITNESS WHEREOF, each of the parties has executed this Amendment, in the case of the Company, by its duly authorized officer, as of the date set forth below

 

	
 
    	
Participant
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Hawaiian   Telcom Holdco, Inc.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Its
    

 

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