UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
HAWAIIAN AIRLINES, INC.
(Name of Issuer)
CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
419849-104
(CUSIP Number)
_______________________
DAVID A. PERSING, ESQ.
885 THIRD AVENUE
34TH FLOOR
NEW YORK, NEW YORK 10022
TEL. NO.: (212) 888-5500
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
_______________________
JANUARY 31, 1996
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
statement because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ].
Page 1 of 56 Pages
<PAGE>
SCHEDULE 13D
CUSIP NO. 419849-104 Page 2 of 56 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Airline Investors Partnership, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES 18,181,818
BENEFICIALLY
OWNED BY EACH
REPORTING
PERSON
WITH
8 SHARED VOTING POWER
--
9 SOLE DISPOSITIVE POWER
18,181,818
10 SHARED DISPOSITIVE POWER
--
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
18,181,818
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
72.64%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
SCHEDULE 13D
CUSIP NO. 419849-104 Page 3 of 56 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
AIP General Partner, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES 18,181,818
BENEFICIALLY
OWNED BY EACH
REPORTING
PERSON
WITH
8 SHARED VOTING POWER
--
9 SOLE DISPOSITIVE POWER
18,181,818
10 SHARED DISPOSITIVE POWER
--
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
18,181,818
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
72.64%
14 TYPE OF REPORTING PERSON
CO
<PAGE>
SCHEDULE 13D
CUSIP NO. 419849-104 Page 4 of 56 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
John W. Adams
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP(A) [ ]
(B) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7 SOLE VOTING POWER
NUMBER OF
SHARES 18,181,818
BENEFICIALLY
OWNED BY EACH
REPORTING
PERSON
WITH
8 SHARED VOTING POWER
--
9 SOLE DISPOSITIVE POWER
18,181,818
10 SHARED DISPOSITIVE POWER
--
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
18,181,818
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
72.64%
14 TYPE OF REPORTING PERSON
IN
<PAGE>
SCHEDULE 13D
CUSIP NO. 419849-104 Page 5 of 56 Pages
AMENDMENT NO. 1 TO SCHEDULE 13D
This is Amendment No. 1 to the Schedule 13D filed by the
Reporting Parties with respect to the Class A Common Stock of Hawaiian
Airlines, Inc. (the "Company"), dated as of January 18, 1996 (the
"Original Schedule 13D").
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 is amended as follows:
Pursuant to the Stock Purchase Agreement, dated as of December
8, 1995 (the "Stock Purchase Agreement"), between Hawaiian Airlines, Inc.
(the "Company") and Airline Investors Partnership, L.P. ("AIP"), the
Company issued, and AIP purchased from the Company, an aggregate of
18,181,818 shares of Class A Common Stock (the "Class A Common Stock")
and 4 shares of Series B Special Preferred Stock (together with the Class
A Common Stock, the "Shares"), for an aggregate purchase price (the
"Purchase Price") of $20,000,004.40 paid in cash by AIP, upon the terms
and conditions set forth in the Stock Purchase Agreement (a copy of the
Stock Purchase Agreement is filed as an Exhibit to the Proxy Statement of
the Company, dated as of January 13, 1996, filed with the Securities and
Exchange Commission (the "Proxy Statement") and herein incorporated by
reference).
The Purchase Price was paid by AIP in the following manner: (i)
$3,000,000 of the Purchase Price was paid by the conversion of the
Secured Convertible Promissory Note, dated as of January 18, 1996 (the
"Note" a copy of which was filed as an Exhibit to the Original Schedule
13D), of the Company issued in favor of AIP into 2,727,272 shares of
Class A Common Stock in accordance with the Note and the Loan Agreement,
dated as of January 15, 1996 (the "Loan Agreement" a copy of which was
filed as an Exhibit to the Original Schedule 13D), between the Company
and AIP, (ii) an offset of the Purchase Price in the amount of
$10,685.00, representing all accrued but unpaid interest on the
outstanding principal amount under the Note, and (iii) a cash payment in
the amount of $16,989,319.40.
The funds used by AIP to pay the Purchase Price were obtained
from capital contributions to AIP made by its partners pursuant to their
capital commitments.
<PAGE>
SCHEDULE 13D
CUSIP NO. 419849-104 Page 6 of 56 Pages
ITEM 4. PURPOSE OF THE TRANSACTION.
Item 4 is amended as follows:
AIP has acquired the Shares for the purpose of making a
significant investment in the Company, obtaining the right to nominate a
simple majority of the Company's Board of Directors and exercising the
rights contained in the Stock Purchase Agreement, the Registration Rights
Agreement, dated as of January 31, 1996, between the Company and AIP, the
Rightsholders Agreement, dated as of January 31, 1996, between AMR
Corporation, Martin Anderson, Robert Midkiff, AIP and the Company, the
Stockholders Agreement, dated as of January 31, 1996, between the Air
Line Pilots Association, Hawaiian Master Executive Council, the
Association of Flight Attendants, the International Association of
Machinists, AIP and the Company (collectively, the "Agreements"), which
are attached as Exhibits hereto and herein incorporated by reference.
These Agreements contain, among other things, certain provisions which
relate to the acquisition and disposition of securities of the Company, a
change in the present Board of Directors and in the directors nomination
procedures, and a change in the Company's capitalization and are
described more fully in Item 6.
Except as set forth in the Proxy Statement and in Item 6, the
Reporting Parties have no intention, plan or proposal with respect to:
1. The acquisition by any person of additional securities of the issuer
or the disposition of securities of the issuer;
2. An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the issuer or any of its
subsidiaries;
3. A sale or transfer of a material amount of assets of the issuer or
any of its subsidiaries;
4. Any change in the present Board of Directors or management of the
issuer, including any plans or proposals to change the number or
term of directors or to fill any existing vacancies on the Board;
5. Any material change in the present capitalization or dividend policy
of the issuer;
<PAGE>
SCHEDULE 13D
CUSIP NO. 419849-104 Page 7 of 56 Pages
6. Any other material change in the issuer's business or corporate
structure;
7. Changes in the issuer's charter, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition of control
of the issuer by any person;
8. Causing a class of securities of the issuer to be delisted from a
national securities exchange or to cease to be authorized to be
quoted in an inter-dealer quotation system of a registered national
securities association;
9. A class of equity securities of the issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934; or
10. Any action similar to any of those enumerated above.
Each of the Reporting Parties, however, may, at any time and
from time to time, and reserves the right to, acquire additional
securities of the Company, dispose of any such securities of the Company
or formulate other plans or proposals regarding the Company or its
securities, to the extent deemed advisable by such Reporting Party in
light of its general investment policies, market conditions or other
factors.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 is amended as follows:
To the best of the Reporting Parties' knowledge based on the
Company's Proxy Statement and on the consummation of the transactions
contemplated by the Stock Purchase Agreement, the aggregate number of
shares of Class A Common Stock of the Company outstanding as of January
31, 1996 is 25,026,923 shares.
As of the close of business on January 31, 1996:
NAME OF REPORTING PARTY:
AIP
(a) Aggregate Number of Securities Owned 18,181,818
----------
<PAGE>
SCHEDULE 13D
CUSIP NO. 419849-104 Page 8 of 56 Pages
Percentage 72.64%
-----------
(b) 1. Sole power to vote or to direct
the vote 18,181,818
-----------
2. Shared power to vote or to direct
the vote --
-----------
3. Sole power to dispose or to direct
the disposition 18,181,818
-----------
4. Shared power to dispose of or to
direct the disposition --
-----------
(c) On January 31, 1996, AIP acquired 18,181,818 shares of
Class A Common Stock and 4 shares of Series B Special Preferred Stock
of the Company for a purchase price of $20,000,004.40 ($1.10 per share).
AIP GENERAL PARTNER
(a) Aggregate Number of Securities Owned 18,181,818
-----------
Percentage 72.64%
-----------
(b) 1. Sole power to vote or to direct
the vote 18,181,818
-----------
2. Shared power to vote or to direct
the vote --
-----------
3. Sole power to dispose or to direct
the disposition 18,181,818
-----------
4. Shared power to dispose of or to
direct the disposition --
-----------
JOHN W. ADAMS
(a) Aggregate Number of Securities Owned 18,181,818
-----------
Percentage 72.64%
-----------
(b) 1. Sole power to vote or to direct
the vote 18,181,818
-----------
2. Shared power to vote or to direct
the vote --
-----------
<PAGE>
SCHEDULE 13D
CUSIP NO. 419849-104 Page 9 of 56 Pages
3. Sole power to dispose or to direct
the disposition 18,181,818
-----------
4. Shared power to dispose of or to
direct the disposition --
-----------
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Item 6 is amended as follows:
There are no contracts, arrangements, understandings or
relationships (legal or otherwise) among the persons named in Item 2 and
between such persons and any person with respect to any security of the
Company, except the following:
1. AIP and the Company entered into a Stock Purchase Agreement, dated
as of December 8, 1995, and effective January 31, 1996, under which
AIP purchased 18,181,818 shares of Class A Common Stock and 4 shares
of Series B Special Preferred Stock of the Company for a Purchase
Price of $20,000,004.40 in cash ($1.10 per share). The 18,181,818
shares issued to AIP under this agreement include 2,727,272 shares
issued upon conversion of the Note as provided in the Loan Agreement
and the Note.
Under the Stock Purchase Agreement, AIP has agreed to use its best
efforts to cause the Company to make a Rights Offering of rights to
acquire Class A Common Stock as soon as practicable following the
closing of the Stock Purchase Agreement, on such terms and
conditions, and to such persons as the Board of Directors shall
determine at the time of the Rights Offering (which would not
include AIP (except possibly with respect to the rights not
exercised during the allotted time) but would include among others,
shareholders as of the Record Date who continue to hold shares until
the Rights Offering and holders of options granted under the
Company's 1994 Stock Option Plan). Each right will entitle its
holder to subscribe for one share of Class A Common Stock at a
purchase price representing a 30% discount from the Market Price (as
such term is defined by the Board of Directors of the Company at the
time) of the Class A Common Stock, subject to a minimum of $1.10 per
share. Under the Stockholders Agreement (as defined in
<PAGE>
SCHEDULE 13D
CUSIP NO. 419849-104 Page 10 of 56 Pages
paragraph 4 below), AIP has agreed to cause the Company to permit
certain employees of the Company to subscribe for one half of the
Class A Common Stock, up to 2,000,000 shares, that were not issued
upon the exercise of Rights granted in the Rights Offering during
the allotted time.
Under the Stock Purchase Agreement, AIP has agreed that it will not
transfer the Common Stock except pursuant to an effective
registration statement or an applicable exemption from registration
under the Securities Act of 1933, as amended (the "Securities Act").
2. AIP and the Company entered into a Registration Rights Agreement,
dated as of January 31, 1996 (the "Registration Rights Agreement")
(a copy of which is attached as Exhibit 1 hereto and which is
incorporated herein by reference) under which AIP and certain of its
transferees will be entitled to request the Company to use its best
efforts to register, at the earliest possible date, their shares of
Class A Common Stock (the "Shares") and certain shares issued with
respect to their Shares (such shares, "Registrable Securities") by
way of a dividend, stock split, recapitalization, merger,
consolidation or similar event, under the Securities Act.
Under the Registration Rights Agreement, the Company may not be
requested to (i) effect more than two registrations or (ii) effect a
registration within 6 months following the effectiveness of a
registration statement filed pursuant to the Registration Rights
Agreement, except when a majority of disinterested Directors
determines that such registration shall not have a material effect
on the market price of the Class A Common Stock. If the Company
proposes at any time to register any of its common stock on any Form
other than Forms S-4 or S-8, AIP and certain of its transferees will
have the opportunity to request the inclusion of their Registrable
Securities in the Company's registration, on a pro rata basis with
holders who have existing registration rights. The Company will pay
all expenses in connection with the registration.
The Company has generally agreed to use its best efforts to effect
such registration within 90 days after the end of the period within
which requests for registration may be given to the Company and to
<PAGE>
SCHEDULE 13D
CUSIP NO. 419849-104 Page 11 of 56 Pages
list all Registrable Securities covered by such registration
statement on any national securities exchange on which the
Class A Common Stock is then listed.
The Company has also agreed to enter into an underwriting agreement
on customary terms and to use its best efforts to arrange for the
underwriters to include requesting holders of Registrable Securities
in an underwritten offering. The underwriters in any such offering
will be selected by the holders of more than 50% of each class of
shares to be registered and shall be reasonably acceptable to the
Company.
The Company has the right to postpone for a reasonable period of
time (but not exceeding 90 days) the filing of any registration
statement otherwise required to be prepared and filed by it if it
determines in its reasonable judgment that such registration would
interfere with any financing, acquisition, corporate reorganization
or other material transaction involving the Company.
The Company has agreed to indemnify each seller of Registrable
Securities covered by a registration statement and each underwriter
in the offering or sale of such securities and their respective
directors, officers, partners, agents and affiliates against certain
liabilities under the Securities Act.
(All capitalized terms used in this paragraph 2 have the meaning set
forth in the Registration Rights Agreement).
3. AMR Corporation ("American"), Martin Anderson ("Anderson"), Robert
Midkiff ("Midkiff"), AIP (collectively the "Rightsholders") and the
Company entered into a Rightsholders Agreement, dated as of January
31, 1996 (the "Rightsholders Agreement") (a copy of which is
attached as Exhibit 2 hereto and which is herein incorporated by
reference), which, among other things, provides that notwithstanding
anything to the contrary in any registration rights agreement of any
Rightsholder with the Company, if such Rightsholder has incidental
registration rights pursuant to such Rightsholders' registration
rights agreement with the Company, such Rightsholder shall have the
right to request the Company to register its securities if the
Company proposes to register any of its Class A Common Stock under
the Securities Act upon certain terms and conditions set forth in
the Rightsholders Agreement.
<PAGE>
SCHEDULE 13D
CUSIP NO. 419849-104 Page 12 of 56 Pages
In addition, pursuant to the Rightsholders Agreement, Anderson and
Midkiff have agreed to waive certain anti-dilution protection
provided in their warrants to acquire Class A Common Stock that
would otherwise be triggered upon (i) the issuance of warrants to
American, (ii) the issuance of Class A Common Stock under the
American warrants, or (iii) the issuance of Class A Common Stock
pursuant to the Rights Offering.
The Rightsholders Agreement restricts the ability of Anderson,
Midkiff and American to transfer their respective warrants unless
the transferee thereof agrees to be bound by the terms of the
Rightsholders Agreement. (All capitalized terms in this paragraph
have the meaning set forth in the Rightsholders Agreement).
4. AIP, the Company, the Air Line Pilots Association ("ALPA"), Hawaiian
Master Executive Council ("Hawaiian MEC"), the Association of Flight
Attendants ("AFA"), the International Association of Machinists
("IAM" and, together with ALPA, Hawaiian MEC and AFA, the "Unions")
entered into a Stockholders Agreement, dated as of January 31, 1996
(the "Stockholders Agreement") (a copy of which is attached as
Exhibit 3 hereto and incorporated herein by reference).
Pursuant to the Stockholders Agreement, AIP agreed to vote its
shares in favor of the Directors nominated by the Unions standing
for election on the Board of Directors. AIP agreed to vote its
shares or to take other action at the shareholders' meeting against
any proposal to revise certain provisions of the Company's Amended
Articles and Amended Bylaws (the "Charter Documents") in a manner
which would be inconsistent with, or which would alter, the rights
of the Unions or the obligations of the Board of Directors under the
governance provisions of the Charter Documents (the "Governance
Provisions"). AIP further agreed not to take any action inconsistent
with the Governance Provisions and, in the event of a change in the
rights or powers of AIP as a stockholder, to take, at the Unions'
request, any action necessary to implement comparable changes to the
rights or powers of the Unions.
Pursuant to the Stockholders Agreement, AIP will make reasonable
efforts to ensure that at least one Employee Director serves on each
significant committee
<PAGE>
SCHEDULE 13D
CUSIP NO. 419849-104 Page 13 of 56 Pages
of the Board other than the Audit Committee,
including, if any, the Executive Committee, the Strategic Planning
Committee, and the Board Nominating Committee. (All capitalized
terms in this paragraph not otherwise herein defined have the
meaning set forth in the Stockholders Agreement).
5. As contemplated by, in the case of the amendment to the Company's
Amended Articles, and as required by, in the case of the amendment
of the Company's Bylaws, the Stock Purchase Agreement, at a Special
Meeting of the shareholders of the Company held on January 30, 1996,
the Company's stockholders approved amendments to the Amended
Articles of Incorporation ("Articles") and the Bylaws of the
Company.
The amendments to the Articles (i) increased the authorized number
of shares of Class A Common Stock from 40,000,000 to 60,000,000
shares, and (ii) deleted the restrictions to transfers of Class A
Common Stock contained in the Articles.
The Bylaws were amended to provide that:
(i) of the 11 members of the Board of Directors, one shall be
nominated by each of the Association of Flight Attendants, the Air
Line Pilots Association and the International Association of
Machinists, six shall be nominated by AIP, one shall be an outside
Director who is not employed by the Company, and is not affiliated
with the Company's labor unions and one shall be a senior management
official of the Company;
(ii) AIP's right to nominate six directors will continue so
long as it owns 35% of the outstanding Common Stock on a fully
diluted basis and will be reduced to five so long as it retains 25%
of such Common Stock, reduced to four so long as it retains 10% of
such Common Stock, and reduced to three so long as it retains 5% of
such Common Stock. Thereafter AIP will not have the right to
nominate any individuals to the Board unless it holds at least 5% of
such Common Stock within 365 days of the date on which its ownership
dropped below 5%. To the extent that Board members are not required
to be nominated by AIP because of the reduction in its stock
holdings, such Board members are to be outside directors.
6. John W. Adams was granted an irrevocable proxy pursuant to an
agreement, dated as of January 31, 1996 (the "Irrevocable Proxy
Agreement") (a copy of which is attached as Exhibit 4 hereto and
which is herein incorporated by reference), by a non-United States
entity that is a minority shareholder (the "Shareholder") of a Texas
corporation (the "Subject
<PAGE>
SCHEDULE 13D
CUSIP NO. 419849-104 Page 14 of 56 Pages
Company") that holds a 25% voting interest in the limited
partner of AIP. The Irrevocable Proxy Agreement
provides that John W. Adams has absolute authority and discretion to
vote the shares of the subject company with respect to all matters
related to the activities of the Company.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The Stock Purchase Agreement is contained in the Proxy Statement and
is herein incorporated by reference.
The Loan Agreement is filed as an Exhibit to the Original Schedule 13D
and is herein incorporated by reference.
Exhibit 1: Registration Rights Agreement
Exhibit 2: Rightsholders Agreement
Exhibit 3: Stockholders Agreement
Exhibit 4: Irrevocable Proxy Agreement
<PAGE>
SCHEDULE 13D
CUSIP NO. 419849-104 Page 15 of 56 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is
true, complete and correct.
February 5, 1996
AIRLINE INVESTORS PARTNERSHIP,L.P.
By AIP General Partner, Inc., its general partner
By: /S/ John W. Adams
-----------------------
John W. Adams
President
AIP GENERAL PARTNER, INC.
By: /S/ John W. Adams
-----------------------
John W. Adams
President
/S/ John W. Adams
------------------------
John W. Adams
REGISTRATION RIGHTS AGREEMENT
between
HAWAIIAN AIRLINES, INC.
and
AIRLINE INVESTORS PARTNERSHIP, L.P.
_______________________________________
Dated as of January 31, 1996
_______________________________________
<PAGE>
TABLE OF CONTENTS
PAGE
1. Background............................................1
2. Registration Under Securities Act, etc................1
2.1 Registration on Request..........................1
2.2 Incidental Registration..........................4
2.3 Registration Procedures..........................5
2.4 Underwritten Offerings...........................9
2.5 Preparation; Reasonable Investigation...........10
2.6 Limitations, Conditions and Qualifications to
Obligations under Registration Covenants........10
2.7 Indemnification.................................11
3. Definitions..........................................15
4. Rule 144 and Rule 144A...............................17
5. Amendments and Waivers...............................17
6. Nominees for Beneficial Owners.......................17
7. Notices..............................................18
8. Assignment...........................................18
9. Calculation of Percentage Interests in Registrable
Securities...........................................19
10. No Inconsistent Agreements...........................19
11. Remedies.............................................19
12. Severability.........................................19
13. Entire Agreement.....................................19
14. Headings.............................................20
15. Governing Law........................................20
16. Counterparts.........................................20
17. Termination..........................................20
<PAGE>
Page 1
REGISTRATION RIGHTS AGREEMENT, dated as of January 31, 1996,
between HAWAIIAN AIRLINES, INC., a Hawaii corporation (the "Company") and
AIRLINE INVESTORS PARTNERSHIP, L.P., a Delaware limited partnership (the
"Purchaser").
The parties hereby agree as follows:
1. BACKGROUND. Pursuant to a Stock Purchase Agreement, dated
as of December 8, 1995, between the Company and the Purchaser (the
"Purchase Agreement"), the Purchaser has agreed to purchase from the
Company, and the Company has agreed to issue and sell to the Purchaser at
the Closing (as defined in the Purchase Agreement), 4 shares of Series B
Special Preferred Stock, par value $0.01 per share of the Company and an
aggregate of 18,181,818 shares (the "Shares") of the Company's Class A
Common Stock, par value $.01 per share. The Purchaser would not enter
into the Purchase Agreement unless this Registration Rights Agreement
were being simultaneously entered into by the Company. Capitalized terms
used herein but not otherwise defined shall have the meanings given them
in Section 3.
2. REGISTRATION UNDER SECURITIES ACT, ETC.
2.1 REGISTRATION ON REQUEST.
(a) REQUEST. At any time, or from time to time,
upon the written request of one or more holders (the "Initiating
Holders") of Registrable Securities that the Company effect the
registration under the Securities Act of all or part of such Initiating
Holders' Registrable Securities, the Company promptly will give written
notice of such requested registration to all registered holders of
Registrable Securities, and thereupon the Company will use its best
efforts to effect, at the earliest possible date, the registration under
the Securities Act, including by means of a shelf registration on Form
S-3 (or any successor form) pursuant to Rule 415 under the Securities Act
if so requested in such request (but only if the Company is then eligible
to use such a shelf registration and if Form S-3 (or such successor form)
is then available to the Company), of
(i) the Registrable Securities which the
Company has been so requested to register by such Initiating
Holders, and
(ii) all other Registrable Securities which the
Company has been requested to register by the holders thereof (such
holders together with the
<PAGE>
Page 2
Initiating Holders hereinafter are referred to as the "Selling
Holders") by written request given to the Company within 30 days
after the giving of such written notice by the Company,
all to the extent necessary to permit the disposition of the Registrable
Securities and such shares of Common Stock so to be registered.
(b) REGISTRATION OF OTHER SECURITIES. Whenever the
Company shall effect a registration pursuant to this Section 2.1, no
securities other than Registrable Securities shall be included among the
securities covered by such registration unless the Selling Holders of not
less than 66-2/3% of all Registrable Securities to be covered by such
registration shall have consented in writing to the inclusion of such
other securities.
(c) REGISTRATION STATEMENT FORM. Registrations under
this Section 2.1 shall be on such appropriate registration form of the
Commission as shall be reasonably selected by the Company.
(d) EFFECTIVE REGISTRATION STATEMENT. A
registration requested pursuant to this Section 2.1 shall not be deemed
to have been effected (i) unless a registration statement with respect
thereto has become effective and remained effective in compliance with
the provisions of the Securities Act with respect to the disposition of
all Registrable Securities covered by such registration statement until
such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such registration statement (unless the
failure to so dispose of such Registrable Securities shall be caused
solely by reason of a failure on the part of the Selling Holders),
PROVIDED, that except with respect to any registration statement filed
pursuant to Rule 415 under the Securities Act, such period need not
exceed 135 days; (ii) if after it has become effective, such registration
is interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for
any reason not attributable solely to the Selling Holders and has not
thereafter become effective; or (iii) if the conditions to closing
specified in the underwriting agreement, if any, entered into in
connection with such registration are not satisfied or waived, other than
solely by reason of a failure on the part of the Selling Holders.
(e) SELECTION OF UNDERWRITERS. The underwriter or
underwriters of each underwritten offering of the Registrable Securities
so to be registered shall be
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Page 3
selected by the Selling Holders of more than 50% of each
class of Registrable Securities to be included in such
registration and shall be reasonably acceptable to the Company.
(f) PRIORITY IN REQUESTED REGISTRATION. If the
managing underwriter of any underwritten offering shall advise the
Company in writing (and the Company shall so advise each Selling Holder
of Registrable Securities requesting registration of such advice) that,
in its opinion, the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering within
a price range acceptable to the Selling Holders of 66-2/3% of the
Registrable Securities requested to be included in such registration, the
Company, except as provided in the following sentence, will include in
such registration, to the extent of the number and type which the Company
is so advised can be sold in such offering, Registrable Securities
requested to be included in such registration, PRO RATA (based on the
number of Registrable Securities held by each of the Selling Holders)
among the Selling Holders requesting such registration. Notwithstanding
the foregoing, if the total number of Registrable Securities requested to
be included in any registration cannot be included, holders of
Registrable Securities requesting registration thereof pursuant to
Section 2.1, representing not less than 50% of the Registrable Securities
with respect to which registration has been requested, shall have the
right to withdraw the request for registration by giving written notice
to the Company within 20 days after receipt of the notice from the
managing underwriter described above by the Company and, in the event of
such withdrawal, such request shall not be counted for purposes of the
requests for registration to which holders of Registrable Securities are
entitled pursuant to Section 2.1 hereof. In connection with any such
registration to which this Section 2.1(f) is applicable, no securities
other than Registrable Securities shall be covered by such registration.
(g) LIMITATIONS ON REGISTRATION REQUESTS.
Notwithstanding anything in this Section 2.1 to the contrary, in no event
will the Company be required to (i) effect, in the aggregate, more than
two registrations pursuant to this Section 2.1; or (ii) effect a
registration pursuant to this Section 2.1 within the six-month period
occurring immediately subsequent to the effectiveness (within the meaning
of Section 2.1(d)) of a registration statement filed pursuant to this
Section 2.1, unless a majority of the Disinterested Directors determines
that effecting a second registration within the six-month period would
not have a material adverse effect on the market price of the Common
Stock.
<PAGE>
Page 4
(h) EXPENSES. The Company will pay all
Registration Expenses in connection with any registrations requested
pursuant to this Section 2.1.
2.2 INCIDENTAL REGISTRATION.
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If the
Company at any time prior to February 1, 2006, proposes to register any
of its Common Stock under the Securities Act by registration on any form
other than Forms S-4 or S-8 (or successor forms), whether or not for sale
for its own account, it will each such time give prompt written notice to
all registered holders of Registrable Securities of its intention to do
so and of such holders' rights under this Section 2.2. Upon the written
request of any such holder (a "Requesting Holder") made as promptly as
practicable and in any event within 30 days after the receipt of any such
notice from the Company (15 days if the Company states in such written
notice or gives telephonic or telecopied notice to all registered holders
of Registrable Securities, with written confirmation to follow promptly
thereafter, that (i) such registration will be on Form S-3 and (ii) such
shorter period of time is required because of a planned filing date)
(which request shall specify the Registrable Securities intended to be
disposed of by such Requesting Holder), the Company will use its best
efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to
register by the Requesting Holders thereof; PROVIDED, that prior to the
effective date of the registration statement filed in connection with
such registration, immediately upon notification to the Company from the
managing underwriter of the price at which such securities are to be
sold, if such price is below the price which any Requesting Holder shall
have indicated to be acceptable to such Requesting Holder, the Company
shall so advise such Requesting Holder of such price, and such Requesting
Holder shall then have the right to withdraw its request to have its
Registrable Securities included in such registration statement; PROVIDED,
FURTHER, HOWEVER, that if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of
the registration statement filed in connection with such registration,
the Company shall determine for any reason not to register or to delay
registration of such securities, the Company may, at its election, give
written notice of such determination to each Requesting Holder of
Registrable Securities and (x) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from any
obligation of the Company to pay the Registration Expenses in connection
therewith), without prejudice, how-
<PAGE>
Page 5
ever, to the rights of any holder or holders of Registrable
Securities entitled to do so to cause such registration to
be effected as a registration under Section 2.1, and (y) in the
case of a determination to delay registering, shall be permitted
to delay registering any Registrable Securities, for the same period as
the delay in registering such other securities. No registration effected
under this Section 2.2 shall relieve the Company of its obligation to
effect any registration upon request under Section 2.1.
(b) PRIORITY IN INCIDENTAL REGISTRATIONS. If the
managing underwriter of any underwritten offering shall inform the
Company by letter of its opinion that the number or type of Registrable
Securities requested to be included in such registration would materially
adversely affect such offering, and the Company has so advised the
Requesting Holders in writing, then the Company will include in such
registration, to the extent of the number and type which the Company is
so advised can be sold in (or during the time of) such offering, FIRST,
all securities proposed by the Company to be sold for its own account,
and SECOND, such Registrable Securities requested to be included in such
registration pursuant to this Agreement, PRO RATA (based on the number of
Registrable Securities requested to be included therein by each
Requesting Holder) among such Requesting Holders.
(c) EXPENSES. The Company will pay all Registration
Expenses in connection with any registration contemplated pursuant to
this Section 2.2.
2.3 REGISTRATION PROCEDURES. If and when-ever the
Company is required to use its best efforts to effect the registration of
any Registrable Securities under the Securities Act as provided in
Sections 2.1 and 2.2, the Company will, as expeditiously as possible:
(i) prepare and (within 90 days after the end of the
period within which requests for registra-
<PAGE>
Page 6
tion may be given to the Company) file with the Commission
the requisite registration statement to effect such
registration and thereafter use its best efforts to
cause such registration statement to become effective;
PROVIDED, HOWEVER, that the Company may discontinue any registration
of its securities which are not Registrable Securities (and, under
the circumstances specified in Section 2.2(a), Registrable
Securities) at any time prior to the effective date of the
registration statement relating thereto;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective in accordance with Section
2.1(d)(i) hereof and to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Securities
covered by such registration statement until such time as all of
such Registrable Securities have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof
set forth in such registration statement; PROVIDED, that except with
respect to any such registration statement filed pursuant to Rule
415 under the Securities Act, such period need not exceed 135 days;
(iii) furnish to each seller of Registrable Securities
covered by such registration statement, such number of conformed
copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such
number of copies of the prospectus contained in such registration
statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, in conformity with the requirements of the
Securities Act, and such other documents, as such seller may
reasonably request;
(iv) use its reasonable best efforts (x) to register
or qualify all Registrable Securities and other securities covered
by such registration statement under such other securities or blue
sky laws of such States of the United States of America where an
exemption is not available and as the sellers of Registrable
Securities covered by such registration statement shall reasonably
request, (y) to keep such registration or qualification in effect
for so long as such registration statement remains in effect and (z)
to take any other action which may be reasonably necessary or
advisable to enable such sellers to consummate the disposition in
such jurisdictions of the securities to be sold by such sellers,
except that the Company shall not for any such purpose be required
to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this
subdivision (iv) be obligated to be so qualified or to consent to
general service of process in any such jurisdiction;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered
with or approved by such
<PAGE>
Page 7
other federal or state governmental agencies or
authorities as may be necessary in the reasonable
opinion of counsel to the Company and counsel to the seller or
sellers of Registrable Securities to enable the seller or sellers
thereof to consummate the disposition of such Registrable
Securities;
(vi) furnish at the effective date of such
registration statement to each seller of Registrable Securities, and
each such seller's underwriters, if any, a signed counterpart of:
(x) an opinion of counsel for the Company,
dated the effective date of such registration statement and, if
applicable, the date of the closing under the underwriting
agreement, and
(y) a "comfort" letter signed by the
independent public accountants who have certified the Company's
financial statements included or incorporated by reference in
such registration statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in
the case of the accountants' comfort letter, with respect to events
subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in
accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities and, in the case of the
accountants' comfort letter, such other financial matters, and, in
the case of the legal opinion, such other legal matters, as the
underwriters may reasonably request;
(vii) notify each seller of Registrable Securities
covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities
Act, upon discovery that, or upon the happening of any event as a
result of which, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, in the light of the circumstances under which they were
made, and at the request of any such seller promptly prepare and
furnish to it a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such
<PAGE>
Page 8
prospectus shall not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light
of the circumstances under which they were made;
(viii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable
(but not more than eighteen months after the effective date of such
registration statement), an earnings statement covering the period
of at least twelve months beginning with the first full calendar
month after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 promulgated thereunder;
(ix) provide and cause to be maintained a transfer
agent and registrar (which, in each case, may be the Company) for
all Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such
registration; and
(x) use its best efforts to list all Registrable
Securities covered by such registration statement on any national
securities exchange on which Registrable Securities of the same
class covered by such registration statement are then listed and, if
no such Registrable Securities are so listed, on any national
securities exchange on which the Common Stock is then listed.
The Company may require each seller of Registrable Securities as to which
any registration is being effected to furnish the Company such
information regarding such seller and the distribution of such securities
as the Company may from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the
Company of the happening of any event of the kind described in
subdivision (vii) of this Section 2.3, such holder will forthwith
discontinue such holder's disposition of Registrable Securities pursuant
to the registration statement relating to such Registrable Securities
until such holder's receipt of the copies of the supplemented or amended
prospectus contemplated by subdivision (vii) of this Section 2.3 and, if
so directed by the Company, will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then
<PAGE>
Page 9
in such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
2.4 UNDERWRITTEN OFFERINGS.
(a) REQUESTED UNDERWRITTEN OFFERINGS. If requested
by the underwriters for any underwritten offering by holders of
Registrable Securities pursuant to a registration requested under Section
2.1, the Company will enter into an underwriting agreement with such
underwriters for such offering, such agreement to be reasonably
satisfactory in substance and form to each such holder and the
underwriters and to contain such representations and warranties by the
Company and such other terms as are generally prevailing in agreements of
that type, including, without limitation, indemnities to the effect and
to the extent provided in Section 2.7 or such other indemnities as are
customarily received by underwriters in public offerings of similar
securities. The holders of the Registrable Securities proposed to be
sold by such underwriters will reasonably cooperate with the Company in
the negotiation of the underwriting agreement. Such holders of
Registrable Securities to be sold by such underwriters shall be parties
to such underwriting agreement and may, at their option, require that any
or all of the representations and warranties by, and the other agreements
on the part of, the Company to and for the benefit of such underwriters
shall also be made to and for the benefit of such holders of Registrable
Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such holders of Registrable
Securities. No holder of Registrable Securities shall be required to
make any representations or warranties to or agreements with the Company
other than representations, warranties or agreements regarding such
holder, such holder's Registrable Securities and such holder's intended
method of distribution or any other representations required by
applicable law.
(b) INCIDENTAL UNDERWRITTEN OFFERINGS. If the
Company proposes to register any of its securities under the Securities
Act as contemplated by Section 2.2 and such securities are to be
distributed by or through one or more underwriters, the Company will, if
requested by any Requesting Holder of Registrable Securities, use its
reasonable best efforts to arrange for such underwriters to include all
the Registrable Securities to be offered and sold by such Requesting
Holder among the securities of the Company to be distributed by such
underwriters, subject to the provisions of Section 2.2(b). The holders
of Registrable Securities to be distributed by such underwriters
<PAGE>
Page 10
shall be parties to the underwriting agreement between the Company and such
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also be
made to and for the benefit of such holders of Registrable Securities and
that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to
the obligations of such holders of Registrable Securities. Any such
Requesting Holder of Registrable Securities shall not be required to make
any representations or warranties to or agreements with the Company or
the underwriters other than representations, warranties or agreements
regarding such Requesting Holder, such Requesting Holder's Registrable
Securities and such Requesting Holder's intended method of distribution
or any other representations required by applicable law.
2.5 PREPARATION; REASONABLE INVESTIGATION. In connection
with the preparation and filing of each registration statement under the
Securities Act pursuant to this Agreement, the Company will give the
holders of Registrable Securities to be registered under such
registration statement, their underwriters, if any, and their respective
counsel the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with
the Commission, and each amendment thereof or supplement thereto, and
will give each of them such reasonable access to its books and records
and such opportunities to discuss the business of the Company with its
officers and the independent public accountants who have certified its
financial statements as shall be necessary, in the opinion of such
holders' and such underwriters' respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
2.6 LIMITATIONS, CONDITIONS AND QUALIFICATIONS TO
OBLIGATIONS UNDER REGISTRATION COVENANTS. The Company shall be entitled
to postpone for a reasonable period of time (but not exceeding 90 days)
the filing of any registration statement otherwise required to be
prepared and filed by it pursuant to Section 2.1 if the Company
determines, in its reasonable judgment, that such registration and
offering would interfere with any financing, acquisition, corporate
reorganization or other material transaction involving the Company and
promptly gives the holders of Registrable Securities requesting
registration thereof pursuant to Section 2.1 written notice of such
determination, containing a general statement of the reasons for such
postponement and an approximation of the anticipated delay. If the
Company shall so postpone the filing of a registra-
<PAGE>
Page 11
tion statement, holders of Registrable Securities requesting registration
thereof pursuant to Section 2.1, representing not less than 50% of the
Registrable Securities with respect to which registration has been requested,
shall have the right to withdraw the request for registration by giving written
notice to the Company within 30 days after receipt of the notice of
postponement and, in the event of such withdrawal, such request shall not
be counted for purposes of the requests for registration to which holders of
Registrable Securities are entitled pursuant to Section 2.1 hereof.
2.7 INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company
will, and hereby does, indemnify and hold harmless, in the case of any
registration statement filed pursuant to Section 2.1 or 2.2, each seller
of any Registrable Securities covered by such registration statement and
each other Person who participates as an underwriter in the offering or
sale of such securities and each other Person, if any, who controls such
seller or any such underwriter within the meaning of the Securities Act
or the Exchange Act, and their respective directors, officers, partners,
agents and affiliates, against any losses, claims, damages or
liabilities, joint or several, to which such seller or underwriter or any
such director, officer, partner, agent, affiliate or controlling person
may become subject under the Securities Act or otherwise, including,
without limitation, the reasonable fees and expenses of legal counsel,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which
such securities were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or
any amendment or supplement thereto, or any omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company
will reimburse such seller or underwriter and each such director,
officer, partner, agent, affiliate and controlling Person for any
reasonable legal or any other expenses incurred by them in connection
with investigating or defending any such loss, claim, liability, action
or proceeding; PROVIDED, HOWEVER, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage, liability
(or action or proceeding in respect thereof) or expense arises out of or
is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in such registration statement, any such preliminary
<PAGE>
Page 12
prospectus, final prospectus, summary prospectus, amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such seller or underwriter,
as the case may be, specifically stating that it is for use in the
preparation thereof; PROVIDED, FURTHER, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement
or alleged untrue statement of any material fact contained in any such
registration statement, preliminary prospectus, final prospectus or
summary prospectus contained therein or any omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances in which they were made
not misleading in a prospectus or prospectus supplement, if such untrue
statement or omission is completely corrected in an amendment or
supplement to such prospectus or prospectus supplement, the seller of the
Registrable Securities has an obligation under the Securities Act to
deliver a prospectus or prospectus supplement in connection with such
sale of Registrable Securities and the seller of Registrable Securities
thereafter fails to deliver such prospectus or prospectus supplement as
so amended or supplemented prior to or concurrently with the sale of
Registrable Securities to the person asserting such loss, claim, damage
or liability after the Company has furnished such seller with a
sufficient number of copies of the same. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on
behalf of such seller or underwriter or any such director, officer,
partner, agent, affiliate or controlling person and shall survive the
transfer of such securities by such seller or underwriter.
(b) INDEMNIFICATION BY THE SELLERS. As a condition
to including any Registrable Securities in any registration statement,
the Company shall have received an undertaking reasonably satisfactory to
it from the prospective seller of such Registrable Securities, to
indemnify and hold harmless (in the same manner and to the same extent as
set forth in Section 2.7(a)) the Company, and each director of the
Company, each officer of the Company and each other Person, if any, who
participates as an underwriter in the offering or sale of such securities
and each other Person who controls the Company or any such underwriter
within the meaning of the Securities Act or the Exchange Act, with
respect to any statement or alleged statement in or omission or alleged
omission from such registration statement, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement
or omission or alleged omission was made
<PAGE>
Page 13
in reliance upon and in conformity with written information furnished to the
Company by such seller specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement; PROVIDED, HOWEVER,
that the liability of such indemnifying party under this Section 2.7(b) shall
be limited to the amount of proceeds received by such indemnifying party in
the offering giving rise to such liability. Such indemnity shall remain
in full force and effect, regardless of any investigation made by or on
behalf of the Company or any such director, officer or controlling person
and shall survive the transfer of such securities by such seller.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt
by an indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in Section 2.7(a) or (b), such
indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the latter of the
commencement of such action; PROVIDED, HOWEVER, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of
this Section 2.7, except to the extent that the indemnifying party is
actually and materially prejudiced by such failure to give notice. In
case any such action shall be brought against any indemnified party and
it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the
extent that it may wish, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER,
that any indemnified party may, at its own expense, retain separate
counsel to participate in, but not control, such defense.
Notwithstanding the foregoing, in any action or proceeding in which both
the Company and an indemnified party is, or is reasonably likely to
become, a party, such indemnified party shall have the right to employ
separate counsel at the Company's expense and to control its own defense
of such action or proceeding if, in the reasonable opinion of counsel to
such indemnified party, (a) there are or may be legal defenses available
to such indemnified party or to other indemnified parties that are
different from or additional to those available to the Company or (b) any
conflict or potential conflict exists between the Company and such
indemnified party that would make such separate representation advisable;
PROVIDED, HOWEVER, that in no event shall the Company be required to pay
fees and expenses under this Section 2.7 for more than one firm of
attorneys representing the indemnified parties (together, if appropriate,
with one firm of local counsel per jurisdiction) in any one legal action
or group of
<PAGE>
Page 14
related legal actions. No indemnifying party shall be liable
for any settlement of any action or proceeding effected without its
written consent, which consent shall not be unreasonably withheld. No
indemnifying party shall, without the consent of the indemnified party,
which consent shall not be unreasonably withheld, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability with respect to
such claim or litigation or which requires action other than the payment
of money by the indemnifying party.
(d) CONTRIBUTION. If the indemnification provided
for in this Section 2.7 shall for any reason be held by a court to be
unavailable to an indemnified party under Section 2.7(a) or (b) hereof in
respect of any loss, claim, damage or liability, or any action in respect
thereof, then, in lieu of the amount paid or payable under Section 2.7(a)
or (b), the indemnified party and the indemnifying party under Section
2.7(a) or (b) shall contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with investigating the same), (i) in such proportion as is
appropriate to reflect the relative fault of the Company and the
prospective sellers of Registrable Securities covered by the registration
statement which resulted in such loss, claim, damage or liability, or
action or proceeding in respect thereof, with respect to the statements
or omissions which resulted in such loss, claim, damage or liability, or
action or proceeding in respect thereof, as well as any other relevant
equitable considerations or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as shall be
appropriate to reflect the relative benefits received by the Company and
such prospective sellers from the offering of the securities covered by
such registration statement, PROVIDED, that for purposes of this clause
(ii), the relative benefits received by the prospective sellers shall be
deemed not to exceed the amount of proceeds received by such prospective
sellers. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. Such prospective sellers' obligations to contribute
as provided in this Section 2.7(d) are several in proportion to the
relative value of their respective Registrable Securities covered by such
registration statement and not joint. In addition, no Person shall be
obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's consent,
which consent shall not be unreasonably withheld.
<PAGE>
Page 15
(e) OTHER INDEMNIFICATION. Indemnification and
contribution similar to that specified in the preceding subdivisions of
this Section 2.7 (with appropriate modifications) shall be given by the
Company and each seller of Registrable Securities with respect to any
required registration or other qualification of securities under any
federal or state law or regulation of any governmental authority other
than the Securities Act.
(f) INDEMNIFICATION PAYMENTS. The indemnification
and contribution required by this Section 2.7 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage or
liability is incurred.
3. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"COMMISSION" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"COMMON STOCK" shall mean and include the Class A Common Stock,
par value $.01 per share, of the Company and each other class of capital
stock of the Company that does not have a preference over any other class
of capital stock of the Company as to dividends or upon liquidation,
dissolution or winding up of the Company and, in each case, shall include
any other class of capital stock of the Company into which such stock is
reclassified or reconstituted.
"DISINTERESTED DIRECTOR" means, with respect to any transaction
or series of related transactions, a member of the board of directors of
the Company who does not have any material direct or indirect financial
interest in or with respect to such transaction or series of related
transactions.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any superseding Federal statute, and the rules and
regulations promulgated thereunder, all as the same shall be in effect at
the time. Reference to a particular section of the Securities Exchange
Act of 1934, as amended, shall include a reference to the comparable
section, if any, of any such superseding Federal statute.
"INITIATING HOLDER" is defined in Section 2.1.
<PAGE>
Page 16
"PERSON" means any individual, firm, corporation, partnership,
limited liability company or partnership, trust, incorporated or
unincorporated association, joint venture, joint stock company,
government (or an agency or political subdivision thereof) or other
entity of any kind and shall include any successor (by merger or
otherwise) of such entity.
"REGISTRABLE SECURITIES" means any Shares and any Related
Registrable Securities. As to any particular Registrable Securities,
once issued, such securities shall cease to be Registrable Securities
when (a) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such
registration statement, (b) they shall have been sold as permitted by
Rule 144 (or any successor provision) under the Securities Act, (c) they
shall have been otherwise transferred, new certificates for them not
bearing a legend restricting further transfer shall have been delivered
by the Company and subsequent public distribution of them shall not
require registration of such distribution under the Securities Act or (d)
they shall have ceased to be outstanding. All references to percentages
of Registrable Securities shall be calculated pursuant to Section 9.
"REGISTRATION EXPENSES" means all expenses incident to the
Company's performance of or compliance with Section 2, including, without
limitation, all registration and filing fees, all fees of the American
Stock Exchange, other national securities exchanges or the National
Association of Securities Dealers, Inc., all fees and expenses of
complying with securities or blue sky laws, all word processing,
duplicating and printing expenses, messenger and delivery expenses, the
fees and disbursements of counsel for the Company and of its independent
public accountants, including the expenses of "comfort" letters required
by or incident to such performance and compliance, any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities (excluding any underwriting discounts or commissions with
respect to the Registrable Securities) and the reasonable fees and
expenses of one counsel to the Selling Holders (selected by Selling
Holders representing at least 50% of the Registrable Securities covered
by such registration); PROVIDED, HOWEVER, that in the event the Company
shall determine, in accordance with Section 2.2(a) or Section 2.6, not to
register any securities with respect to which it had given written notice
of its intention to so register to holders of Registrable Securities, all
of the costs of the type (and subject to any limitation to the extent)
set forth in this definition and incurred by Requesting Holders in
connection with such
<PAGE>
Page 17
registration on or prior to the date the Company notifies the Requesting
Holders of such determination shall be deemed Registration Expenses.
"RELATED REGISTRABLE SECURITIES" means with respect to the
Shares any securities of the Company issued or issuable with respect to
any of the Shares by way of a dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or
other reorganization or otherwise.
"REQUESTING HOLDER" is defined in Section 2.2.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any superseding Federal statute, and the rules and regulations
promulgated thereunder, all as the same shall be in effect at the time.
References to a particular section of the Securities Act of 1933, as
amended, shall include a reference to the comparable section, if any, of
any such superseding Federal statute.
"SELLING HOLDER" is defined in Section 2.1.
4. RULE 144 AND RULE 144A. The Company shall take all
actions reasonably necessary to enable holders of Registrable Securities
to sell such securities without registration under the Securities Act
within the limitation of the provisions of (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, (b) Rule
144A under the Securities Act, as such Rule may be amended from time to
time, or (c) any similar rules or regulations hereafter adopted by the
Commission. Upon the request of any holder of Registrable Securities,
the Company will deliver to such holder a written statement as to whether
it has complied with such requirements.
5. AMENDMENTS AND WAIVERS. This Agreement may be amended
with the consent of the Company and the Company may take any action
herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company shall have obtained the written
consent to such amendment, action or omission to act, of the holder or
holders of at least 66-2/3% of the Registrable Securities affected by
such amendment, action or omission to act. Each holder of any
Registrable Securities at the time or thereafter outstanding shall be
bound by any consent authorized by this Section 5, whether or not such
Registrable Securities shall have been marked to indicate such consent.
6. NOMINEES FOR BENEFICIAL OWNERS. In the event that any
Registrable Securities are held by a nominee for the beneficial owner
thereof, the beneficial owner thereof
<PAGE>
Page 18
may, at its election in writing delivered to the Company, be treated as the
holder of such Registrable Securities for purposes of any request or other
action by any holder or holders of Registrable Securities pursuant to this
Agreement or any determination of any number or percentage of shares of
Registrable Securities held by any holder or holders of Registrable Securities
contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances
reasonably satisfactory to it of such owner's beneficial ownership of
such Registrable Securities.
7. NOTICES. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be
by registered or certified first-class mail, return receipt requested,
telecopier, courier service or personal delivery:
(a) if to the Purchaser, addressed to it in the manner
set forth in the Purchase Agreement, or at such other address as it shall
have furnished to the Company in writing in the manner set forth herein;
(b) if to any other holder of Registrable Securities, at
the address that such holder shall have furnished to the Company in
writing in the manner set forth herein, or, until any such other holder
so furnishes to the Company an address, then to and at the address of the
last holder of such Registrable Securities who has furnished an address
to the Company; or
(c) if to the Company, addressed to it in the manner set
forth in the Purchase Agreement, or at such other address as the Company
shall have furnished to each holder of Registrable Securities at the time
outstanding in the manner set forth herein.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; when
delivered by a courier, if delivered by overnight courier service; three
business days after being deposited in the mail, postage prepaid, if
mailed; and when receipt is acknowledged, if telecopied.
8. ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and,
with respect to the Company, its respective successors and permitted
assigns and, with respect to the Purchaser, any holder of any Registrable
Securities, subject to the provisions respecting the minimum amount of
Registrable Securities required in order to be entitled to certain
rights, or take certain actions, contained herein.
<PAGE>
Page 19
Except by operation of law, this Agreement may not be assigned by the Company
without the prior written consent of the holders of 66-2/3% of the Registrable
Securities outstanding at the time such consent is requested.
9. CALCULATION OF PERCENTAGE INTERESTS IN REGISTRABLE
SECURITIES. For purposes of this Agreement, all references to a
percentage of the Registrable Securities shall be calculated based upon
the number of Registrable Securities outstanding at the time such
calculation is made.
10. NO INCONSISTENT AGREEMENTS. The Company will not
hereafter enter into any agreement with respect to its securities which
is inconsistent with the rights granted to the holders of Registrable
Securities in this Agreement. Without limiting the generality of the
foregoing, the Company will not hereafter enter into any agreement with
respect to its securities which grants, or modify any existing agreement
with respect to its securities to grant, to the holder of its securities
in connection with an incidental registration of such securities equal or
higher priority to the rights granted to the Purchaser under Section 2 of
this Agreement.
11. REMEDIES. Each holder of Registrable Securities, in
addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance
of its rights under this Agreement. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.
12. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions
contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the Purchaser shall be
enforceable to the fullest extent permitted by law.
13. ENTIRE AGREEMENT. This Agreement, together with the
Purchase Agreement (including the exhibits and schedules thereto), is
intended by the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter
contained herein and therein. There are no restrictions,
<PAGE>
Page 20
promises, warranties or undertakings, other than those set forth or referred
to herein and therein. This Agreement and the Purchase Agreement (including
the exhibits and schedules thereto) supersede all prior agreements and
understandings between the parties with respect to such subject matter.
14. HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
15. GOVERNING LAW. This Agreement has been negotiated,
executed and delivered in the State of New York and shall be governed by
and construed in accordance with the laws of the State of New York,
without regard to principles of conflicts of law.
16. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed an original
and all of which taken together shall constitute one and the same
instrument.
17. TERMINATION. Upon termination of the Purchase Agreement
in accordance with Section 9.1 thereof, this Agreement shall terminate
automatically.
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<PAGE>
Page 21
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their respective
representatives hereunto duly authorized as of the date first above
written.
HAWAIIAN AIRLINES, INC.
By: /S/ Bruce R. Nobles
-------------------------------
Name: Bruce R. Nobles
Title: President
By: /S/ Rae A. Capps
-------------------------------
Name: Rae A. Capps
Title: Vice President
AIRLINE INVESTORS PARTNERSHIP, L.P.
By: AIP GENERAL PARTNER, INC., its general partner
By: /S/ John W. Adams
-------------------------------
Name: John W. Adams
Title: President
RIGHTSHOLDERS AGREEMENT
RIGHTSHOLDERS AGREEMENT, dated as of January 31, 1996 (this
"AGREEMENT"), by and among HAWAIIAN AIRLINES, INC., a Hawaii corporation
(the "COMPANY"), AIRLINE INVESTORS PARTNERSHIP, L.P., a Delaware limited
partnership ("AIP"), AMR Corporation, a Delaware Corporation ("AMR"),
MARTIN ANDERSON ("ANDERSON") and ROBERT MIDKIFF ("MIDKIFF" and, together
with AIP, AMR and Anderson, the "RIGHTSHOLDERS").
WHEREAS, the Company issued to Anderson Warrant Nos. 01 through 05,
each dated as of September 12, 1994 (the "ANDERSON WARRANTS"), pursuant
to which Anderson is entitled to acquire, on the terms and subject to the
conditions set forth therein, an aggregate of 494,505 shares (subject to
adjustment as set forth therein) of the Company's Class A Common Stock,
par value $0.01 per share (the "COMMON STOCK");
WHEREAS, the Company issued to Midkiff Warrant Nos. 06 through 10,
each dated as of September 12, 1994 (the "MIDKIFF WARRANTS"), pursuant to
which Midkiff is entitled to acquire, on the terms and subject to the
conditions set forth therein, an aggregate of 494,505 shares (subject to
adjustment as set forth therein) of Common Stock;
WHEREAS, the Company issued to AMR Warrant Nos. 11 and 12, each
dated as of January 31, 1996 (the "AMR WARRANTS" and, together with the
Anderson Warrants and the Midkiff Warrants, the "Warrants"), pursuant to
which AMR is entitled to acquire, on the terms and subject to the
conditions set forth therein, an aggregate of 1,897,946 shares (subject
to adjustment as set forth therein) of Common Stock;
WHEREAS, each of the Anderson Warrants, the Midkiff Warrants and the
AMR Warrants contains provisions pursuant to which the holder thereof has
the right (such rights, "REGISTRATION RIGHTS"), subject to the terms and
conditions set forth in the Warrants, to cause the Company to use its
best efforts to cause the shares of Common Stock issuable upon the
exercise of such Warrants to be registered under the Securities Act of
1933, as amended (the "SECURITIES ACT");
WHEREAS, the Company and AIP are parties to that certain
Registration Rights Agreement, dated as of January 31, 1996 (the
"REGISTRATION RIGHTS AGREEMENT"), pursuant to which the Company has
granted to AIP Registration Rights, subject to the terms and conditions
set forth in the Registration Rights Agreement, with respect to certain
shares of Common Stock owned by AIP;
<PAGE>
Page 2
WHEREAS, the Registration Rights of the holders of the Anderson
Warrants, the Midkiff Warrants and the AMR Warrants as set forth in such
Warrants, and the Registration Rights of AIP as set forth in the
Registration Rights Agreement are inconsistent;
WHEREAS, the parties hereto desire to correct the inconsistencies in
the several agreements, the Company desires to extend the time in which
Anderson and Midkiff may request a registration of the shares of Common
Stock issuable under the Anderson Warrants and the Midkiff Warrants;
WHEREAS, AIP and the Company entered into the Stock Purchase
Agreement, dated as of December 8, 1995 (the "STOCK PURCHASE AGREEMENT"),
pursuant to which AIP has agreed to purchase from the Company, and the
Company has agreed to issue and sell to AIP at the Closing (as defined in
the Stock Purchase Agreement), an aggregate of 18,181,818 shares of
Common Stock;
WHEREAS, it is a condition to AIP's purchase of the Common Stock
that Anderson and Midkiff agree to waive the application of the
antidilution provisions of the Anderson Warrants and the Midkiff
Warrants, respectively, with respect to certain specified transactions;
and
WHEREAS, Anderson and Midkiff are willing to waive such provisions
as herein provided.
NOW, THEREFORE, for good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree
as follows:
1. REGISTRATION RIGHTS. Notwithstanding anything to the
contrary in the Warrants or the Registration Rights Agreement:
1.1 INCIDENTAL REGISTRATION RIGHTS. (a) If the
Company at any time proposes to register any of its Common Stock under
the Securities Act by registration on any form other than Forms S-4 or S-
8 (or successor forms) and other than in connection with an exchange
offer or an offering of securities to the Company's existing security
holders, whether or not for sale for its own account, it will each such
time give prompt written notice to all Rightsholders of its intention to
do so and of such holders' rights, if any, under the Warrants or the
Registration Rights Agreement, as applicable.
(b) In the event that pursuant to the Warrants or the
Registration Rights Agreement, as the case
<PAGE>
Page 3
may be, a Rightsholder has incidental registration rights at the time the
notice referred to in clause (a) above is delivered, then such Rightsholder
shall have the right, in accordance with the terms and conditions and subject
to the procedures of the Warrant or the Registration Rights Agreement, as the
case may be, to cause the Company to use its best efforts to effect the
registration under the Securities Act of all securities which the Company
has been so requested to register by such Rightsholder.
1.2 PRIORITY IN INCIDENTAL AND DEMAND REGISTRATIONS.
If the managing underwriter of any underwritten offering shall inform the
Company by letter of its opinion that the number or type of securities
requested to be included in such registration would materially adversely
affect such offering, and the Company has so advised the Rightsholders
that have requested pursuant to rights granted in such Rightsholder's
Warrant or the Registration Rights Agreement, as the case may be, to have
securities registered in such offering, in writing, then the Company will
include in such registration, to the extent of the number and type which
the Company is so advised can be sold in (or during the time of) such
offering, FIRST, all securities proposed by the Company to be sold for
its own account, SECOND, all securities proposed to be sold for the
account of the Rightsholder (the "INITIATING RIGHTSHOLDER"), if any,
that, pursuant to rights granted in the Warrants or the Registration
Rights Agreement, as the case may be, initially requested the Company to
register such securities, and THIRD, such securities requested by
Rightsholders (other than the Initiating Rightsholder, if any) to be
included in such registration pursuant to rights granted in the Warrants
and/or the Registration Rights Agreement, as the case may be, PRO RATA
(based on the number of securities requested to be included therein by
each Rightsholder (other than the Initiating Rightsholder)) among such
Rightsholders.
2. WAIVER OF ANTI-DILUTION PROVISIONS. Each of Anderson and
Midkiff hereby agrees that notwihtstanding Sections 3 and 4 of the
Anderson Warrants and the Midkiff Warrants, supplementing Section 4(b) of
such Warrants, neither the Current Warrant Price (as defined in such
Warrants) nor the number of shares of Common Stock issuable upon exercise
of such Warrants shall be adjusted as a result of (i) the issuance of the
AMR Warrants, (ii) the issuance and sale of shares of Common Stock from
time to time upon the exercise, in whole or in part, of the AMR Warrants,
or (iii) the issuance and sale of shares of Common Equity (as defined in
such Warrants) in connection with an offering of rights to purchase
Common Stock in 1996.
<PAGE>
Page 4
3. EXTENSION OF DEMAND REGISTRATION. The Company hereby agrees
that Section 8 of each of the Anderson Warrants and the Midkiff Warrants
shall be amended to delete the date "December 31, 1997" in the fifth line
thereof and substitute in lieu thereof the date "December 31, 1998."
4. NO INCONSISTENT AGREEMENTS. The Company hereby agrees
that it will not hereafter enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the
Rightsholders hereunder, under the Warrants or under the Registration
Rights Agreement. Without limiting the generality of the foregoing, the
Company will not hereafter enter into any agreement with respect to its
securities which grants, or modify any existing agreement with respect to
its securities to grant, to the holder of its securities in connection
with a registration of such securities equal or higher priority to the
rights granted to the Rightsholders under this Agreement.
5. RESTRICTION ON TRANSFER OF WARRANTS. (a) Anderson, Midkiff
and AMR hereby agree that they shall not sell, give, assign or otherwise
dispose of (whether by operation of law or otherwise) (each a "TRANSFER")
any Warrants or any right, title or interest therein or thereto to any
Person unless such Person agrees in writing to be bound by this
Agreement. Any attempt to transfer any Warrants or any such rights in
violation of the preceding sentence shall be null and void AB INITIO.
6. WARRANT CERTIFICATE LEGEND. A copy of this Agreement
shall be filed with the Corporate Secretary of the Company and kept with
the records of the Company. Each Warrant now held or hereafter acquired
by Anderson, Midkiff and AMR shall for as long as this Agreement is
effective bear a legend substantially in the following form:
THE SALE, ASSIGNMENT OR OTHER DISPOSITION (EACH A "TRANSFER")
OF THIS WARRANT IS RESTRICTED BY THE TERMS OF THE RIGHTSHOLDERS
AGREEMENT, DATED AS OF JANUARY 31, 1996, BY AND AMONG THE
COMPANY, AIRLINE INVESTORS PARTNERSHIP, L.P. AND THE HOLDERS OF
WARRANTS OF THE COMPANY, A COPY OF WHICH MAY BE INSPECTED AT
THE COMPANY'S PRINCIPAL OFFICE. THE COMPANY WILL NOT REGISTER
ON THE BOOKS OF THE COMPANY OR OTHERWISE EFFECT THE TRANSFER OF
THIS WARRANT IF THE TRANSFER HAS NOT BEEN MADE IN COMPLIANCE
WITH THE RIGHTSHOLDERS AGREEMENT.
Anderson and Midkiff hereby agree that as soon as practicable
after the date hereof they shall present each
<PAGE>
Page 5
existing Warrant to the Corporate Secretary of the Company at the Company's
principal office for the purpose of having the legend set forth in this
Section 6 affixed thereto.
7. REPRESENTATIONS OF ANDERSON AND MIDKIFF.
7.1 Anderson hereby represents and warrants to the
other Rightsholders and the Company that he has neither Transferred nor
agreed to Transfer the Anderson Warrants or any of them, in whole or in
part, to any other person.
7.2 Midkiff hereby represents and warrants to the
other Rightsholders and the Company that he has neither Transferred nor
agreed to Transfer the Midkiff Warrants or any of them, in whole or in
part, to any other person.
8. MISCELLANEOUS.
8.1 NOTICES. All notices or other communications
given or made hereunder shall be validly given or made if made in
accordance with the notice provisions of the relevant Warrant or the
Registration Rights Agreement, as the case may be.
8.2 AMENDMENT AND WAIVER.
(a) No failure or delay on the part of any party
hereto in exercising any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such
right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies provided
for herein are cumulative and are not exclusive of any remedies that may
be available to the parties hereto at law, in equity or otherwise.
(b) This Agreement may be amended, supplemented or
modified only with the written consent of all parties hereto.
8.3 ENTIRE AGREEMENT; NO EXPANSION OF RIGHTS. This
Agreement is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the
subject matter contained herein. Section 1 of this Agreement is not
intended to, and shall not, confer upon any Rightsholder any Registration
Rights that are not expressly contained in such Rightsholder's Warrants
or in the Registration Rights Agreement, as the case may be.
<PAGE>
Page 6
8.4 CONTINUING EFFECT OF AGREEMENTS. This Agreement
shall not constitute a waiver, amendment or modification of any other
provisions of the Warrants or the Registration Rights Agreement not
expressly referred to herein and shall not be construed as a waiver or
consent to any further or future action on the part of the Company or the
Rightsholders that would require a waiver or consent. Except as
expressly amended or modified herein, the provisions of the Warrants and
the provisions of the Registration Rights Agreement are and shall remain
in full force and effect.
8.5 TERM OF AGREEMENT. Section 1 of this Agreement shall
terminate and be of no further force or effect with respect to each
Rightsholder at the first date on which such Rightsholder shall no longer
have any Registration Rights. The remainder of this Agreement shall
terminate and be of no further force and effect at such time as no
Rightsholder owns any Warrants or shares of Common Stock.
8.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
8.7 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
parties hereto and with respect to the Company, its successors and
permitted assigns and, with respect to the Rightsholders, any transferee
of the Warrants as permitted hereunder and the holder of any securities
registrable pursuant to the AMR Warrants or the Registration Rights
Agreement. This Agreement may not be assigned by the Company without the
prior written consent of the other parties hereto.
8.8 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, and all
of which taken together shall constitute one and the same instrument.
[The remainder of this page intentionally left blank.]
<PAGE>
Page 7
IN WITNESS WHEREOF, the undersigned have executed, or have
cause to be executed, this Agreement on the date first written above.
/S/ Martin Anderson
--------------------------
Martin Anderson
/S/ Robert Midkiff
--------------------------
Robert Midkiff
AMR CORPORATION
By: /S/ Gerard G. Arpey
-------------------------
Name: Gerard G. Arpey
Title: Senior Vice President
Finance and Planning, CFO
AIRLINE INVESTORS PARTNERSHIP, L.P.
By: AIP GENERAL PARTNER, INC.,
Its General Partner
By: /S/ John W. Adams
---------------------------
Name: John W. Adams
Title: President
HAWAIIAN AIRLINES, INC.
By: /S/ Bruce R. Nobles
---------------------------
Name: Bruce R. Nobles
Title: President
By: /S/ Rae A. Capps
----------------------------
Name: Rae A. Capps
Title: Vice President
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated January 31, 1996 (this
"AGREEMENT"), by and among HAWAIIAN AIRLINES, INC., a Hawaii corporation
(the "COMPANY"), AIRLINE INVESTORS PARTNERSHIP, L.P., a Delaware limited
partnership ("AIP"), the AIR LINE PILOTS ASSOCIATION, HAWAIIAN MASTER
EXECUTIVE COUNCIL ("HAWAIIAN MEC"), the ASSOCIATION OF FLIGHT ATTENDANTS
("AFA") and the INTERNATIONAL ASSOCIATION OF MACHINISTS ("IAM" and,
together with the Hawaiian MEC and AFA, the "UNIONS").
WHEREAS, AIP and the Company entered into the Stock Purchase
Agreement, dated December 8, 1995 (the "STOCK PURCHASE AGREEMENT"),
pursuant to which AIP has agreed to purchase from the Company, and the
Company has agreed to issue and sell to AIP at the Closing (as defined in
the Stock Purchase Agreement), an aggregate of 18,181,818 shares, par
value $.01 per share, of Class A Common Stock of the Company (the "CLASS
A COMMON STOCK"), for an aggregate price of $20,000,000.
WHEREAS, as set forth in the Stock Purchase Agreement, it is a
condition to AIP's purchase of the Class A Common Stock that the Unions
enter into amended collective bargaining agreements (the "AMENDED
COLLECTIVE BARGAINING AGREEMENTS") carrying out the term sheets set forth
as Exhibit F to the Stock Purchase Agreement (the "TERM SHEETS").
NOW, THEREFORE, to induce the Unions to enter into the Amended
Collective Bargaining Agreements, and as required by the Term Sheets set
forth as Exhibit F to the Stock Purchase Agreement, and in consideration
of the same, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth below:
An "AFFILIATE" of, or a person "affiliated" with, a
specified Person, means a Person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, the Person specified. The term "control" (including the
terms "controlling," "controlled by" and "under common control with")
means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a person, whether through
the ownership of voting securities, by contract, or otherwise.
"AIP STOCKHOLDER" shall mean AIP or any "affiliate" of AIP
as defined in the Charter Documents.
<PAGE>
Page 2
"BOARD OF DIRECTORS" means the Board of Directors of the
Company.
"CHARTER DOCUMENTS" means the Amended Articles of
Incorporation and the Amended Bylaws of the Company as in effect on the
date hereof, copies of which are attached hereto as EXHIBITS A AND B,
respectively.
"COMMON STOCK" means the Class A Common Stock or any other
capital stock of the Company into which such stock is reclassified or
reconstituted.
"COMMON STOCK EQUIVALENTS" means any security or
obligation which is by its terms convertible into shares of Common Stock
and any option, warrant or other subscrip-tion or purchase right with
respect to Common Stock.
"PERSON" means any individual, corporation, partnership,
limited liability company, firm, joint venture, association, joint stock
company, trust, unincorporated organization, governmental body or other
entity.
"SERIES B SPECIAL PREFERRED STOCK," "SERIES C SPECIAL
PREFERRED STOCK," "SERIES D SPECIAL PREFERRED STOCK" and "SERIES E
SPECIAL PREFERRED STOCK" shall have the meanings assigned to such terms
in the Charter Documents.
"SHARES" means, with respect to the AIP Stockholder, all
shares, whether now owned or hereafter acquired, of Common Stock;
PROVIDED, for purposes of Section 2, Shares shall be deemed to include
Common Stock Equivalents.
"STOCKHOLDERS MEETING" shall mean any regular or special
meeting of the stockholders of the Company.
"WRITTEN CONSENT" shall mean any written consent executed
in lieu of a Stockholders Meeting.
2. RESTRICTION ON TRANSFER OF SHARES. The AIP Stockholder
agrees that it shall not sell, give, assign or otherwise dispose of
(whether by operation of law or otherwise) (each a "TRANSFER") any Shares
or any right, title or interest therein or thereto to any Person that is,
or is an Affiliate of, any Person that has been denied a Part 121
certificate by the Department of Transportation. Any attempt to transfer
any Shares or any such rights in violation of the preceding sentence
shall be null and void AB INITIO, and the Company agrees not to register
any such transfer.
<PAGE>
Page 3
3. CORPORATE GOVERNANCE.
3.1 ELECTION OF DIRECTORS. The AIP Stockholder shall
vote its Shares at any Stockholders Meeting called for the purpose of
filling positions on the Board of Directors, or in any Written Consent
executed for such purpose, in favor of the directors standing for
election and nominated by the holders of Series B Special Preferred
Stock, Series C Special Preferred Stock, Series D Special Preferred
Stock, and Series E Special Preferred Stock, respectively.
3.2 AMENDMENT OF CHARTER DOCUMENTS. The AIP
Stockholder shall vote its Shares at any Stockholders Meeting called for
the purpose of revising the Charter Documents, or in any Written Consent
executed for such purposes, against any proposed amendment to any Charter
Document that would be inconsistent with, or alter the rights of the
Unions or the obligations of the Board of Directors under, the
Designation of Special Preferred Stock included in Exhibit A hereto or
any of Sections 3.02, 3.09, 3.12 or 7.04 of the By-Laws included in
Exhibit B hereto (collectively referred to as the "Governance
Provisions"). In the event the Board of Directors purports to amend or
revise the Charter Documents in any respect that would be inconsistent
with, or alter the rights of the Unions or the obligations of the Board
of Directors under, the Governance Provisions, then the AIP Stockholder
shall, at the request of any Union and to the extent permitted by law,
(i) seek a Stockholders Meeting or stockholder action by Written Consent,
as soon as practicable, for the purpose of restoring the Governance
Provisions, (2) propose a stockholder resolution at such Stockholders
Meeting or action by Written consent to restore the Governance
Provisions, and (3) vote its shares at any Stockholders Meeting, or in
any Written Consent, in favor of such resolution to restore the
Governance Provisions.
3.3 BOARD COMMITTEE REPRESENTATION. The AIP
Stockholder shall make reasonable efforts to ensure that at least one
Employee Director serves on each significant committee of the Board other
than the Audit Committee (including, if any, the Executive Committee, the
Strategic Planning Committee, the Board Nominating Committee and other
committees of comparable significance).
3.4 GENERAL OBLIGATIONS. The AIP Stockholder shall not
take any action inconsistent with the Governance Provisions. In the
event of any material change to the terms or structure of the rights or
powers of the AIP Stockholder, as a stockholder or as a holder of the
Series B Special Preferred Stock, under the Charter Documents or
comparable corporate documentation (including, without
<PAGE>
Page 4
limitation, changes in the AIP Stockholder's right to nominate, designate,
remove or replace directors on the Board of Directors), the AIP Stockholder
shall, at the request of any Union and to the extent permitted by law, take
all action necessary to implement comparable changes to the terms or
structure of the rights or powers of such Union under the Charter
Documents or comparable corporate documentation.
3.5 STOCKHOLDER ACTIONS. In order to effectuate the
provisions of this Section 3, the AIP Stockholder hereby agrees that when
any action or vote is required to be taken pursuant to this Agreement,
such Stockholder shall attend the Stockholders Meeting, in person or by
proxy, or execute or cause to be executed a Written Consent to effectuate
such stockholder action, as appropriate.
4. STOCK CERTIFICATE LEGEND. A copy of this Agreement shall
be filed with the Secretary of the Company and kept with the records of
the Company. Each certificate representing Shares now held or hereafter
acquired by the AIP Stockholder shall for as long as this Agreement is
effective bear a legend substantially in the following form:
THE SALE, ASSIGNMENT OR OTHER DISPOSITION (EACH A "TRANSFER")
AND VOTING OF ANY OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE RESTRICTED BY THE TERMS OF THE STOCKHOLDERS
AGREEMENT, DATED JANUARY 31, 1996, BY AND AMONG THE COMPANY,
AIRLINE INVESTORS PARTNERSHIP, L.P. AND CERTAIN UNIONS, A COPY
OF WHICH MAY BE INSPECTED AT THE COMPANY'S PRINCIPAL OFFICE.
THE COMPANY WILL NOT REGISTER THE TRANSFER OF SUCH SECURITIES
ON THE BOOKS OF THE COMPANY IF THE TRANSFER HAS NOT BEEN MADE
IN COMPLIANCE WITH THE STOCKHOLDERS AGREEMENT.
5. MISCELLANEOUS.
5.1 NOTICES. All notices or other communications
given or made hereunder shall be validly given or made if in writing and
delivered by facsimile transmission or in Person at, mailed by registered
or certified mail, return receipt requested, postage prepaid, or sent by
a reputable overnight courier to, the following addresses (and shall be
deemed effective at the time of receipt thereof).
<PAGE>
Page 5
(a) if to the Hawaiian MEC:
Air Line Pilots Association,
Hawaiian Master Executive Council
535 Herndon Parkway
Herndon, Virginia 22070-1169
Attention: Master Chairman, Hawaiian MEC
Telecopy: (703) 689-4290
with a copy to:
Cohen, Weiss and Simon
330 West 42nd Street
New York, New York 10036
Attention: Stephen Presser
Telecopy: (212) 239-9012
(b) if to the AFA:
Association of Flight Attendants
1625 Massachusetts Avenue, N.W.
Washington, D.C. 20036
Attention: President, Hawaiian MEC
and David Borer
Telecopy: (202) 939-5385
(c) if to the IAM:
International Association of Machinists,
District 141
1449 South Beretania Street
Honolulu, HI 96814
Attention: Sam Poomaihealani and
Floyd Baptiste
Telecopy: (808) 836-0144
(d) if to the AIP Stockholder:
Airline Investors Partnership, L.P.
885 Third Avenue
34th Floor
New York, New York 10022
Attention: John Adams and Richard Conway
Telecopy: (212) 751-9501
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Judith R. Thoyer, Esq.
Telecopy: (212) 757-3990
<PAGE>
Page 6
(e) if to the Company:
Hawaiian Airlines, Inc.
3376 Koapaka Street
Honolulu, Hawaii 96819
Attention: General Counsel
Telecopy: (808) 835-3690
with a copy to:
Gibson, Dunn & Crutcher
333 South Grand Avenue
Los Angeles, CA 90071-3197
Attention: Ronald S. Beard, Esq.
Telecopy: (213) 229-7520
or to such other address as the party to whom notice is to be given may
have previously furnished notice in writing to the other in the manner
set forth above.
5.2 AMENDMENT AND WAIVER.
(a) No failure or delay on the part of any party
hereto in exercising any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such
right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies provided
for herein are cumulative and are not exclusive of any remedies that may
be available to the parties hereto at law, in equity or otherwise.
(b) This Agreement may be amended, supplemented or
modified only with the written consent of the AIP Stockholder and the
Unions.
5.3 NO INCONSISTENT AGREEMENT. The AIP Stockholder shall
not enter into any stockholder agreement, voting agreement or other
agreement that is inconsistent with the terms of this Agreement.
5.4 ENFORCEMENT. The parties to this Agreement agree
that the irreparable damage will occur in the event that any of the
provisions of this Agreement is not performed in accordance with its
specific terms or is otherwise breached and that monetary damages will
not constitute adequate compensation for any breach of this Agreement.
Accordingly, in addition to any other remedy available to any party at
law or equity, the parties shall be entitled to an injunction or
injunctions in any court of competent jurisdiction to prevent breaches of
this Agreement
<PAGE>
Page 7
to specifically enforce the terms and provisions of this Agreement.
5.5 SEVERABILITY. If any provision of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal, or
unenforceable in any respect for any reason, the validity, legality or
enforceability of such provision in every other respect and of each
remaining provision of the Agreement shall not be impaired thereby in any
respect. The parties specifically intend that all of the rights of the
Unions under this Agreement shall be enforceable to the fullest extent
permitted by law.
5.6 ENTIRE AGREEMENT. This Agreement, together with the
exhibits hereto, is intended by the AIP Stockholder and the Unions as a
final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of such parties
hereto in respect of the subject matter contained herein and therein.
There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein or therein. This Agreement,
together with the exhibits hereto, supersede all prior agreements and
understandings between the AIP Stockholder and the Unions with respect to
such subject matter.
5.7 TERM OF AGREEMENT. This Agreement shall terminate at
such time as the AIP Stockholder shall no longer have any right to
designate directors pursuant to the Charter Documents.
5.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF EXCEPT TO
THE EXTENT INTERNAL CORPORATE LAWS OF THE COMPANY'S STATE OF
INCORPORATION SHALL APPLY.
5.9 TRANSFER TO AFFILIATES. An AIP Stockholder shall not
transfer any Shares to any Affiliate of AIP or an AIP Stockholder (an
"AIP AFFILIATE") unless the AIP Affiliate agrees in writing to be bound
by the terms and conditions of this Agreement in the same manner as AIP.
5.10 SUCCESSORS AND ASSIGNS. This agreement shall be
binding on any successor that acquires all or substantially all of AIP or
any AIP Affiliate that maintains beneficial or record ownership of any
Shares (an "AIP Successor"), and the AIP Stockholder shall not adopt or
permit any agreement or arrangement that results in an AIP Successor
unless the AIP Successor agrees in writing to be bound by the terms and
conditions of this Agreement in the
<PAGE>
Page 8
same manner as AIP. This Agreement is not assignable except in connection
with a transfer of Shares by AIP to an "affiliate," as defined in the
Charter Documents.
5.11 NOTICE OF TRANSFER. The AIP Stockholder shall
provide the Company and the Unions with reasonable notice prior to
transferring record or beneficial ownership of Shares to any Affiliate,
Substantial Purchaser or AIP Successor. For this purpose, a "Substantial
Purchaser" shall mean a transferee (or group of transferees acting in
concert) which acquires 10% or more of the Shares.
5.12 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, and all
of which taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed, or have
cause to be executed, this Agreement on the date first written above.
AIR LINE PILOTS ASSOCIATION,
HAWAIIAN MASTER EXECUTIVE COUNCIL
By: /S/ Reno F. Morella
----------------------------
Reno F. Morella
Chairman, Hawaiian MEC
ASSOCIATION OF FLIGHT ATTENDANTS
By: /S/ Patricia Friend
-----------------------------
Name: Patricia Friend
Title: International President
<PAGE>
Page 9
INTERNATIONAL ASSOCIATION OF MACHINISTS
By: /S/ Ken Thiede
-----------------------------
Name: Ken Thiede
Title: President
AIRLINE INVESTORS PARTNERSHIP, L.P.
By: AIP GENERAL PARTNER, INC.,
Its General Partner
By: /S/ John W. Adams
------------------------------
Name: John W. Adams
Title: President
HAWAIIAN AIRLINES, INC.
By: /S/ Bruce R. Nobles
-------------------------------
Name: Bruce R. Nobles
Title: Chairman of the Board, President
and CEO
(Solely with respect to Sections 2 and 4 hereof)
IRREVOCABLE PROXY
Airline Investors Partnership, L.P. ("AIP") and Hawaiian
Airlines, Inc. (the "COMPANY") have entered into a Stock Purchase
Agreement, dated as of December 8, 1995 (the "STOCK PURCHASE AGREEMENT"),
pursuant to which, among other things, AIP has agreed to purchase from
the Company, subject to the terms and conditions set forth therein, (i)
18,181,818 shares of the Company's Class A Common Stock, par value $.01
per share (the "COMMON STOCK") and (ii) four shares of the Company's
Series B Special Preferred Stock (the "PREFERRED STOCK"). The Common
Stock will represent in excess of 25% of the capital stock of the Company
entitled to vote. Capitalized terms used herein and not otherwise
defined herein shall have the meanings given them in the Stock Purchase
Agreement.
The Company is subject to the foreign ownership restrictions of
the Transportation Act and the rules and regulations of the Department of
Transportation and the Federal Aviation Administration promulgated
thereunder (the "FOREIGN OWNERSHIP REGULATIONS").
Durham Investments Limited, an Isle of Jersey company
("DURHAM"), owns approximately 49.5% of the common equity (the "COMMON
EQUITY") of Pengo Industries, Inc., a Texas corporation ("PENGO"), which,
in turn, owns 25% of the Class A Common Stock of AIP, Inc., the sole
limited partner of AIP.
In order to ensure that, in conformity with the Foreign
Ownership Regulations, under all circumstances a United States citizen
will ultimately direct the voting of the shares of the Company held by
AIP in connection with actions of the Company, AIP is requiring Durham,
and Durham will agree as provided herein, to grant an irrevocable proxy
to John W. Adams ("ADAMS") to vote the Common Equity under the
circumstances described herein.
NOW, THEREFORE, in consideration of the premises, Durham
hereby agrees as follows:
1. Durham hereby appoints Adams its proxy to represent and
vote the Common Equity held of record by Durham on the record date for
determining the stockholders of Pengo eligible to vote on the matter at
issue (the "RECORD DATE"), for and in the name, place and stead of
Durham, at all regular, special or other meetings of the holders of
Pengo's Common Equity, and at any adjournment of such meetings, and to
act by consent in lieu of a meeting,
<PAGE>
Page 2
or otherwise, solely with respect to the activities of the Company at all
times this Proxy is in effect.
2. Durham acknowledges and agrees that this Proxy is
irrevocable and is coupled with an interest. This Proxy shall be
effective as of the date that AIP acquires any shares of Common Stock and
shall remain in effect until the earliest to occur of (i) AIP no longer
owning any shares of common stock of the Company entitled to vote, and
(ii) the date on which neither Pengo nor Durham owns an interest,
directly or indirectly, in the Company.
3. This Proxy may not be sold, assigned or otherwise
transferred by Adams. If any portion of the Common Equity held by Durham
is sold, assigned or otherwise transferred to any person that is a United
States citizen, (i) the transferee of such Common Equity shall not be
bound by this Proxy, and (ii) Adams shall have no voting rights
whatsoever with respect to any shares so sold, assigned or transferred.
4. THIS PROXY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
IN WITNESS WHEREOF, the undersigned has executed this Proxy as
of this ____ day of January, 1996.
DURHAM INVESTMENTS LIMITED
By: /S/ M.L. Sinel
------------------------------
Name: M.L. Sinel
Title: Director
