<PAGE>
As filed with the Securities and Exchange Commission on August 6, 1996
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
HAWAIIAN AIRLINES, INC.
(Exact Name of Registrant as Specified in Its Charter)
---------------------
HAWAII 99-0042880
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
---------------------
3375 Koapaka Street
Suite G350
Honolulu, Hawaii 96819
(Address of Principal Executive Offices) (Zip Code)
---------------------
HAWAIIAN AIRLINES, INC.
1996 STOCK INCENTIVE PLAN, AS AMENDED
(Full Title of the Plan)
---------------------
Rae A. Capps
Vice President, General Counsel and Corporate Secretary
3375 Koapaka Street
Suite G350
Honolulu, Hawaii 96819
(Name and Address of Agent For Service)
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(808) 835-3700
Telephone Number, Including Area Code, of Agent For Service
---------------------
WITH A COPY TO:
Joseph Salamunovich
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071
(213) 229-7388
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed Maximum Proposed Maximum Amount of
Title of Securities Amount to Offering Price Per Aggregate Registration
to be Registered be Registered Share Offering Price Fee
- --------------------------------------------------------------------------------------
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<S> <C> <C> <C> <C>
Common Stock 2,000,000 (1) $(2) $7,160,000.00(2) $2,469.00(2)
- --------------------------------------------------------------------------------------
Preferred Stock
Purchase Rights 2,000,000 (3) $ 0.00 $ 0.00 $ 0.00
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</TABLE>
(1) These shares are reserved for issuance pursuant to awards in the
Hawaiian Airlines, Inc. 1996 Stock Incentive Plan, as amended (the
"Plan"). Pursuant to Rule 416, also being registered are additional
shares of Common Stock as may become available under the Plan through
the operation of anti-dilution provisions.
(2) Estimated in accordance with Rule 457(h) and Rule 457(c) of the
Securities Act of 1933, as amended solely for the purpose of calculating
the registration fee, as follows: $1,625,000 with respect to 500,000
shares of Common Stock that are currently under option, based on the
price of $3.25 at which the options may be exercised; and $5,535,000
with respect to 1,500,000 shares of Common Stock, based on a price
of $3.69 per share, the average of the high and low trading
prices of the Common Stock of Hawaiian Airlines, Inc. (the
"Company") on the American Stock Exchange on August 5, 1996.
(3) These Preferred Stock Purchase Rights attach to each share of Common
Stock upon issuance.
<PAGE>
EXPLANATORY NOTE
This Registration Statement is being filed by Hawaiian Airlines,
Inc. ("Hawaiian" or the "Company") in order to register 2,000,000 shares
of Common Stock (the "Common Stock" or the "Securities") which have been
reserved for issuance under the Hawaiian Airlines, Inc. 1996 Stock
Incentive Plan, as amended (the "Plan") (including 2,000,000 Preferred
Stock Purchase Rights (the "Rights"), one of which attaches to each
share of Common Stock issued, pursuant to the Rights Agreement dated as
of December 23, 1994, as amended by and between the Company and Chemical
Trust Company of California, as Rights Agent). The additional shares of
Common Stock that may become available for purchase in accordance with
the provisions of the Plan in the event of certain changes in the
outstanding shares of Common Stock of Hawaiian, including, among other
things, stock dividends, stock splits, reverse stock splits,
reorganizations and recapitalizations, are also being registered.
The material which immediately follows constitutes a reoffer
prospectus, prepared on Form S-3, in accordance with General Instruction
C to Form S-8, to be used in connection with resales of Securities
acquired under the Plan by persons who may be considered affiliates of
Hawaiian, as defined in Rule 405 under the Securities Act of 1933, as
amended.
<PAGE>
REOFFER PROSPECTUS
HAWAIIAN AIRLINES, INC.
Common Stock
($.01 par value)
2,000,000 Shares
This Prospectus relates to 2,000,000 shares of Common Stock, par value
$.01 per share ("Common Stock" or the "Securities") (including 2,000,000
Preferred Stock Purchase Rights (the "Rights"), one of which attaches to each
share of Common Stock issued, pursuant to the Rights Agreement dated as of
December 23, 1994, as amended by and between the Company and Chemical Trust
Company of California, as Rights Agent), of Hawaiian Airlines, Inc., a
Hawaiian corporation ("Hawaiian" or the "Company") which have previously been
issued or may in the future be issued pursuant to awards granted under the
Hawaiian Airlines, Inc. 1996 Stock Incentive Plan, as amended (the "Plan")
to, and which may be offered for resale from time to time by, certain
employees of the Company named in "Selling Shareholders" and Annex 1 hereto
(the "Selling Shareholders").
The Company will not receive any of the proceeds from the sale of the
Common Stock offered hereby. The Company will pay all of the expenses
associated with this Prospectus. The Selling Shareholders will pay all
selling and other expenses, if any, associated with any sale of the
Securities.
See "Risk Factors" for certain considerations relevant to an investment
in the Securities.
The Common Stock is listed on the American Stock Exchange and the Pacific
Stock Exchange (Symbol: HA).
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
--------------------
The date of this Prospectus is August 6, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company has filed a Registration Statement on Form S-8 relating to
the Plan (the "Registration Statement") with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Securities covered by this
Prospectus. This Prospectus omits certain information and exhibits included
in the Registration Statement, a copy of which may be obtained upon payment
of a fee prescribed by the Commission or may be examined free of charge at
the principal office of the Commission in Washington, D.C.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other information
filed with the Commission by the Company can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the Commission
located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60606-2511
and at 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of
such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.
The Company's Common Stock is listed on the American Stock Exchange and
the Pacific Stock Exchange (Symbol: HA), and reports and information
concerning the Company can be inspected at such exchanges, 86 Trinity Place,
New York, New York 10006 and 301 Pine Street, San Francisco, California
94104, respectively.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the
Commission are by this reference incorporated in and made a part of this
Prospectus:
(1) The Company's Annual Report on Form l0-K for the fiscal year ended
December 31, 1995, including the Financial Statements and the Financial
Statement Schedule and the Reports of KPMG Peat Marwick LLP, Independent
Auditors filed April 1, 1996, as amended by Amendment No. 1 on Form 10-K/A
and Amendment No. 2 on Form 10-K/A;
(2) The Quarterly Report on Form 10-Q, filed May 15, 1996, for the period
ended March 31, 1996;
(3) The Current Report on Form 8-K filed January 10, 1996 (date of event
January 10, 1996);
(4) The Current Report on Form 8-K filed January 17, 1996 (date of event
January 15, 1996);
(5) The Current Report on Form 8-K filed January 23, 1996 (date of event
January 18, 1996);
(6) The Current Report on Form 8-K filed February 1, 1996 (date of event
January 30, 1996);
(7) The Current Report on Form 8-K filed February 2, 1996 (dated January
31, 1996);
(8) The Current Report on Form 8-K filed February 7, 1996 (dated February
2, 1996);
(9) The Registration Statement on Form S-2 filed May 30, 1996, as amended
by Amendment No. 1 filed July 12, 1996, as amended by Amendment No. 2 filed
July 19, 1996, as amended by Amendment No. 3 filed July 23, 1996, as amended
by Amendment No. 4 filed July 24, 1996, as amended by Amendment No. 5 filed
August 1, 1996 (Registration No. 333-04817);
(10) The Registration Statement on Form 8-A/A filed July 1, 1996; and
(11) All documents subsequently filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") after the date of this Prospectus and prior to the
filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then
remaining unsold.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such
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<PAGE>
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such documents or into this
Prospectus) will be provided without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon a written or
oral request to Hawaiian Airlines, Inc., Attention: Corporate Secretary,
3375 Koapaka St., Suite G350, Honolulu, Hawaii 96819, telephone number (808)
835-3700.
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS, IN
ADDITION TO THE OTHER INFORMATION CONTAINED IN AND INCORPORATED INTO THIS
PROSPECTUS, THE FOLLOWING INFORMATION BEFORE PURCHASING THE SECURITIES
OFFERED HEREBY. THE ORDER IN WHICH THESE CONSIDERATIONS ARE PRESENTED
SHOULD NOT BE INTERPRETED AS BEING INDICATIVE OF THEIR RELATIVE IMPORTANCE TO
PARTICULAR INVESTORS.
ABILITY OF COMPANY TO CONTINUE AS A GOING CONCERN
In 1995, the Company reported an operating loss and net loss for the
ninth consecutive year. The independent auditors' report with respect to the
Company's 1995 financial statements stated that the Company's recurring
losses from operations, working capital deficit and limited sources of
additional liquidity raise substantial doubt about the Company's ability to
continue as a going concern. The financial statements as of and for the year
ended December 31, 1995, were prepared on a going concern basis, which
assumes continuity of operations and realization of assets and liquidation of
liabilities in the ordinary course of business. The financial statements do
not include any adjustments relating to the recoverability and classification
of recorded asset amounts, or the amounts and classification of liabilities
that might be necessary as a result of the outcome of future uncertainties.
Management recognizes that the continuation of the Company as a going concern
is dependent upon the achievement of profitability, positive cash flow from
operations and the generation of adequate funds to meet its ongoing
obligations. In the first quarter of 1996, the Company increased its capital
resources through a $20 million equity infusion from Airline Investors
Partnership, L.P. (the "AIP Investment") and related agreements with American
Airlines, Inc. ("American") and the Company's labor unions. Nonetheless, at
March 31, 1996 the Company had a working capital deficit of $21.7 million.
The Company continues to seek additional liquidity to improve its working
capital position through a proposed distribution of rights to purchase Common
Stock to its existing shareholders other than AIP, optionholders and
employees (the "Rights Offering") and to additional investors (the "Investor
Offering"). However, no assurance can be given that the Rights Offering and
Investor Offering will be successful or that the Company will be able to
generate net income in the future.
LIMITED LIQUIDITY AND CAPITAL RESOURCES; HIGH DEGREE OF FINANCIAL AND
OPERATING LEVERAGE
The Company emerged from bankruptcy in September 1994 with limited
capital resources. In January 1996, the Company was contemplating that it
might have to re-enter bankruptcy and halt operations if it could not
complete the $20 million AIP Investment, which was completed on January 31,
1996. Prior to the AIP Investment, the Company's liquidity was limited to
payment deferrals from existing creditors such as American and promotional
ticket sales. Although promotional ticket sales increase current liquidity,
they also increase air traffic liability, which can adversely affect yields
(fare levels) and revenues, as well as liquidity in future periods. Although
the AIP Investment and certain related transactions have substantially
increased the Company's capital resources, the Company is seeking additional
liquidity through the Rights Offering, the Investor Offering and other
sources in order to augment its current and foreseeable capital resources.
The Rights Offering and the Investor Offering are intended to raise a minimum
of $25 million of gross proceeds as part of the Company's on-going efforts to
improve its liquidity. However, there can be no assurances that the Rights
Offering and the Investor Offering will be successfully completed. If the
Company is unsuccessful in obtaining additional sources of liquidity, an
adverse change in events and circumstances could result in the Company being
unable to meet its financial obligations after it exhausts its current and
foreseeable capital resources. Although the Company currently has no
significant capital expenditure commitments, the Company plans to make
approximately $11.4 million of necessary capital expenditures in the ordinary
course of business in 1996 using internally generated funds and specific
project financing provided by the State of Hawaii. On April 29, 1996, the
Company's credit facility provided by CIT Group/Credit Finance, Inc. (the
"Credit Facility") was amended to increase the borrowing capacity thereunder
from $8.2 million to $15.0 million. As of April 30, 1996, the Company had
$7.3 million of borrowing capacity under the Credit Facility. The Company's
access to other sources of debt financing is limited because it does not have
any unencumbered assets. Moreover, there
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can be no assurances that the Company can achieve or sustain profitable
operations or, if necessary, that sufficient additional financing can be
obtained. See "Seasonality" below.
The degree to which the Company is leveraged could have adverse
consequences, including (i) the Company's ability to obtain additional
financing in the future for working capital, capital expenditures or other
purposes is limited, (ii) the Company's degree of leverage and related debt
service obligations, as well as its obligations under operating leases for
aircraft, may make it more vulnerable than some of its competitors in an
economic downturn, and (iii) the Company's financial position may restrict
its ability to pursue new business opportunities and limit its flexibility in
responding to changing business conditions.
As is characteristic of the airline industry, the Company is subject to a
high degree of financial and operating leverage. Due to high fixed costs,
the expenses of each flight do not vary proportionately with the number of
passengers carried, but the revenues generated from a particular flight are
directly related to the number of passengers carried. Accordingly, while a
decrease in the number of passengers carried would cause a corresponding
decrease in revenue (if not offset by higher fares), it may result in a
disproportionately greater decrease in profits and would adversely affect
liquidity.
COMPETITION
The Company faces substantial competition from other well-established
airlines that serve the same routes that the Company serves. The Company's
competitors on its Transpac routes, primarily United Airlines, Inc.
("United"), Delta Airlines, Inc. ("Delta") and Northwest Airlines, Inc.
("Northwest"), and to a lesser extent Continental Airlines, Inc.
("Continental") and American, are larger and have substantially greater name
recognition and resources than the Company. The Company believes that
Transpac competition is primarily based on fare levels, flight frequency,
on-time performance and reliability, name recognition, frequent flyer
programs, customer service and in-flight service. The Company also
experiences competition on its Transpac routes from various charter
operations. Charter carriers' competitive position is enhanced by
contractual relationships with tour operators. The Company's primary
competitor on its Interisland routes is Aloha Airlines, Inc. ("Aloha"), which
has the leading market share in the Interisland market and a marketing
relationship with United (including a code sharing arrangement and frequent
flyer program participation). The Company believes that Interisland
competition is primarily based on fare levels, flight frequency, on-time
performance and reliability, name recognition, frequent flyer programs,
customer service and aircraft type.
The Airline Deregulation Act of 1978, recodified into the Transportation
Act, has substantially eliminated government authority to regulate domestic
routes and fares, and has increased the ability of airlines to compete with
respect to destination, flight frequencies and fares. Airline profit levels
are highly sensitive to adverse changes in fuel costs, average yield and
passenger demand. The emergence in recent years of several new carriers,
typically with low cost structures, has further increased the competitive
pressures on U.S. airlines. The only significant barriers to entry in the
U.S. airline industry are government licensing, the limited availability of
flight slots, the need for capital and an increased number of competitors.
The commencement of service by new carriers on the Company's routes could
negatively impact the Company's operating results. Competing airlines have,
and may in the future, undercut the Company's fares and increased capacity on
routes beyond market demand in order to increase their market shares. Such
activity by other airlines could reduce fares or passenger traffic to levels
where the Company could not be both competitive and profitable. Due to its
smaller size and limited resources and liquidity, the Company may be less
able to withstand aggressive marketing tactics or a prolonged fare war
initiated by its competitors. Although the domestic airline industry has at
present abandoned deeply discounted general pricing structures, and fare
levels have continued to increase from 1992 levels, significant industry-wide
discounts could be reintroduced at any time. The introduction of broadly
available, deeply discounted fares by a major U.S. airline would result in
lower yields for the entire industry and could have a material adverse effect
on the Company's operating results.
Recent announcements of capacity increases to Hawaii by domestic carriers
may affect pricing levels on the Company's Transpac routes. Charter carriers
have increased capacity from secondary markets in the western portion of the
United States and United has scheduled an additional 9,000 seats per week
from Japan and the U.S. mainland, with the bulk of that capacity dedicated to
its San Francisco and Los Angeles routes. Subsequent announcements by United
of direct service from Los Angeles to Kona and Maui are believed to be in
addition to the 9,000 seats mentioned above. The increasing presence of
charter carriers and United's expanded capacity are examples of the
competitive pricing and capacity issues facing the Company in the future.
Management is not able to predict the impact of these competitive pressures
on the Company's operations.
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AIRLINE INDUSTRY CONDITIONS
The airline industry is a highly cyclical business with substantial
volatility. Airlines frequently experience short-term cash requirements
caused by both seasonal fluctuations in traffic, which often put a drain on
cash during off-peak periods, and other factors that are not necessarily
seasonal, including the extent and nature of price and other competition from
other airlines, changing levels of operations, national and international
events, fuel prices and general economic conditions, including inflation.
Because a substantial portion of airline travel is discretionary, the
industry tends to experience adverse financial results in general economic
downturns. Accordingly, airlines require substantial liquidity to sustain
continued operations under most conditions. See "Limited Liquidity and
Capital Resources; High Degree of Financial and Operating Leverage" above.
Since the commencement of deregulation in 1978, the U.S. airline industry
has become extremely competitive and volatile. Increased competition, rising
operational costs and pricing pressures have created financial difficulties
for most airlines leading to the U.S. airline industry having suffered
unprecedented losses in recent years. As a result, many airlines have been
acquired or forced to restructure (as was the case with the Company) or have
ceased operations. Although the industry produced a profit for 1995, no
assurance can be given that this performance can be sustained in the future.
The Company has had a net loss in each of 1995 and the preceding eight years.
DEPENDENCE ON HAWAIIAN TOURISM
Since the Company's operations are limited almost exclusively to flights
to, from and among, the Hawaiian Islands, the Company's profitability is
linked to the number of travelers to, from and among the Islands and a
material reduction in the number of such travelers would have a material
adverse effect on the Company's operations. Tourists constitute a majority
of the travelers to Hawaii. Because tourism levels are related to
discretionary income, the level of Hawaiian tourism is affected by the
strength of the economies in the areas from which tourists to Hawaii
typically originate. Hawaiian tourism is also dependent upon the popularity
of Hawaii as a tourist destination and negative events such as Hurricane
Iniki and the availability of other tourist destinations and opportunities
could reduce tourist interest in Hawaii. In addition, from time to time,
various events such as the Persian Gulf War and industry-specific problems
such as strikes have had a negative impact on tourism in Hawaii. After
reaching its peak in 1990, the Hawaii tourism industry experienced three
consecutive years of decline. Although tourist counts have shown year over
year improvements in 1994 and 1995, local economists do not expect Hawaii
tourism to return to pre-1991 levels until 1997. No assurance can be given
that the level of tourism traffic to Hawaii will in fact return to such
levels or that it will not decline in the future. A decline in the level of
Hawaii tourism traffic could have a material adverse effect on the Company's
operations.
Preliminary results from the Hawaii Visitors Bureau indicate that of the
total number of visitors to Hawaii in 1995, approximately 40% came from Asia,
most of whom came from Japan, and approximately 19% came from California. In
recent years Japan and California have experienced the worst recession each
region has experienced since the 1940s. As a result, the number of visitors
from Asia declined in 1992 and again 1993, and the number of visitors from
California declined in each of 1991, 1992 and 1993 and is still below the
peak number in 1990. A substantial decline in the number of visitors from
either Japan or California could have a material adverse effect on the
Company's operations.
SEASONALITY
The Company's results are sensitive to seasonal and cyclical volatility
primarily due to seasonal leisure and holiday travel. Traffic levels are
typically lowest in the first quarter of the year with strong travel periods
during June, July, August and December. Because certain of the Company's
costs do not vary significantly regardless of traffic levels, such
seasonality substantially affects the Company's profitability and liquidity.
See "Limited Liquidity and Capital Resources; High Degree of Financial and
Operating Leverage" above.
AIRCRAFT OPERATIONS
FUEL COSTS. Fuel costs, which represent a significant portion of the
Company's operating costs (approximately 16% for 1995), are volatile. For
example, the Company's average fuel cost per gallon (excluding taxes) in the
first quarter of 1996 was 9.7% higher than its average fuel cost in the first
quarter of 1995. Fuel prices are influenced by, among other factors,
economic and political factors and events throughout the world and applicable
fuel taxes, and the Company can neither predict nor control near- or
longer-term fuel prices. Significant changes in fuel costs would materially
affect the Company's operating results.
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Furthermore, changes in fuel prices may have a greater impact on the Company
than certain of its Transpac competitors with more modern, fuel efficient
aircraft. See "Reliance on Third Parties" below.
MAINTENANCE COSTS; AIRCRAFT AGE. Aircraft maintenance costs represent
another significant operating cost for the Company (approximately 17% for
1995) that will increase as the Company's aircraft increase in age. The
average age of the Company's DC-10 aircraft is 23 years and its DC-9 aircraft
is 18 years. The Company intends to replace some or all of its existing
aircraft with replacement aircraft in the next decade in order to reduce
maintenance costs and achieve other operating efficiencies, although no
assurance can be given that the Company will have the capital necessary to
replace such aircraft.
LEASED AIRCRAFT. The Company owns two DC-9-50 aircraft and leases eleven
DC-9-50s and nine DC-10-10s pursuant to leases that expire at various times
between 1996 and 2004. Two of the DC-10s are leased from American pursuant
to short-term leases, which can be terminated by American on 30 days notice.
In order to maintain its current operations, the Company will need to renew
its leases as they expire or purchase or lease replacement aircraft and, if
the Company decides to expand operations, the Company will need to purchase
or lease additional aircraft. There can be no assurance that lease renewals,
additional aircraft leases or aircraft purchases will be available on
favorable terms or that the Company will have sufficient capital resources to
lease or purchase additional aircraft.
LIMITED FLEET. The Company's fleet consists of 22 aircraft (including
one DC-10 being used on a temporary basis to permit the scheduled overhaul of
six of the other DC-10s during 1996). In the event one or more of the
Company's aircraft were to be out of service, the Company may have difficulty
completing its scheduled or chartered service. Any interruption of service
caused by the unavailability of aircraft due to unscheduled servicing or
repair or otherwise, or lack of availability of substitute aircraft, could
have a material adverse effect on the Company's service, reputation and
profitability. As is customary in the airline industry, the Company does not
have business interruption insurance.
RELIANCE ON THIRD PARTIES
The Company has entered into agreements with contractors, including
American, Northwest and certain other airlines, to provide certain facilities
and services required for its operations, including aircraft, reservations,
computer services, frequent flyer program, aircraft maintenance, passenger
processing, fuel, ground facilities, baggage and cargo handling and personnel
training. This reliance on third parties to provide services subjects the
Company to various risks, including the risk that such services could be
discontinued without adequate replacement services being available.
The Company leases all of its DC-10 aircraft from American. American
maintains these aircraft and the Company pays a minimum monthly charge for
maintenance services, monthly in arrears. During 1995, the Company incurred
in excess of $45 million of lease and maintenance expenses under the American
DC-10 aircraft leases. American has the right to terminate its obligation to
provide aircraft maintenance services on and after January 1, 1999, upon 180
days prior notice. If American terminated the maintenance arrangement, the
Company would have to seek an alternate source of maintenance service or
maintain its DC-10s itself, and no assurance can be given that the Company
would be able to do so on a basis that is as cost-effective as the American
maintenance arrangement.
The Company participates in American's AAdvantage-Registered Trademark-
frequent flyer program and SABRE-Registered Trademark- reservation system,
which make the Company more competitive. The Company's participation in the
AAdvantage-Registered Trademark- program expires in 1997, subject to renewal,
and its participation in SABRE-Registered Trademark- expires in 2001. The
Company's inability to continue in these programs or participate in
comparable programs offered by other airlines could have a material adverse
effect on the Company's operations.
The Company purchases almost all of its aviation fuel from Northwest
without mark-up pursuant to an agreement between the two companies, which
provides that, in case of shortages, Northwest will provide fuel to its own
fleet first and then a portion of the remaining fuel available will be
allocated between the Company and any other applicable airlines. The
agreement is renewed automatically on December 31 of each year unless
canceled by either of the parties with 90 days prior written notice. No
assurance can be given that the Company would be able to secure an adequate
supply of fuel from alternate sources if a fuel shortage were to cause the
supply from Northwest to be inadequate or if Northwest were to cancel the
agreement. The Company paid Northwest approximately $44.1 million, $43.9
million and $53.0 million for the fuel supplied under this agreement in 1993,
1994 and 1995, respectively.
Approximately 74% of the Company's ticket sales are currently made by
travel agents, including wholesalers. Travel agents generally have a choice
between one or more airlines when booking a customer's flight. Accordingly,
any effort by
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travel agencies to favor another airline or to disfavor the Company could
adversely affect the Company. Although management intends to continue to
offer an attractive and competitive product to travel agencies and to
maintain favorable relations with travel agencies, there can be no assurance
that travel agencies will not disfavor the Company or favor other airlines in
the future, either of which could have an adverse effect on the Company's
operations.
INSURANCE COVERAGE
The Company is exposed to potential losses that may be incurred in the
event of an aircraft accident. Any such accident could involve not only
repair or replacement of a damaged aircraft and its consequent temporary or
permanent loss of service, but also significant potential claims of injured
passengers and others. The Company is required by the U.S. Department of
Transportation (the "DOT") to carry liability insurance on each of its
aircraft. The Company currently maintains public liability insurance which
management believes is adequate and consistent with current industry
practice. However, there can be no assurance that the amount of such
coverage will not be changed or that the Company will not bear substantial
losses from accidents. Substantial claims resulting from an accident in
excess of related insurance coverage could have a material adverse effect on
the Company.
REGULATORY MATTERS; TICKET TAXES
As a certificated air carrier, Hawaiian Airlines is subject to the
regulatory jurisdiction of the DOT and the Federal Aviation Administration
(the "FAA"). To assure compliance with their regulations, the DOT and the
FAA require air carriers to obtain certain certificates, which may be
suspended or revoked for cause. The DOT has continuing jurisdiction to review
the fitness of air carriers to hold a certificate of public convenience and
necessity. It may review the carrier's fitness at any time and impose fines
or other sanctions for violations of the Transportation Act or DOT
regulations. The FAA also conducts safety audits and has the power to impose
fines and other sanctions for violations of aviation safety and security
regulations. Hawaiian Airlines, as are all airlines, is subject to
inspections by the FAA in the normal course of its business on an ongoing
basis. In the last several years, the FAA has issued to the airline industry
a number of maintenance directives and other regulations. The Company has
incurred and expects to continue to incur substantial expenditures for the
purpose of complying with these directives and regulations.
Additional laws and regulations have been proposed from time to time that
could significantly increase the cost of airline operations by, for instance,
imposing additional requirements or restrictions on operations. Laws and
regulations also have been considered from time to time that would prohibit
or restrict the ownership and/or transfer of airline routes or takeoff and
landing slots. Also, the award of international routes to U.S. carriers (and
their retention) is regulated by the DOT and treaties and related agreements
between the United States and foreign governments, which are amended from
time to time. The Company cannot predict what laws and regulations will be
adopted or what changes to international air transportation treaties will be
effected, if any, or how they will affect the Company.
Prior to 1996, the airline industry was subject to a 10% excise tax on
each ticket sold (other than Transpac flights), a 6.25% cargo excise tax and
a $6 international departure tax (including Transpac flights). Efforts are
underway to encourage the United States Congress to re-enact legislation
authorizing these excise taxes or to impose user fees in lieu of such taxes.
The Senate has approved a bill to reinstate the excise taxes, and it is
reported that House and Senate negotiators have agreed in principle to
reinstate the excise taxes. If these taxes are reinstated, the Company would
either have to absorb the excise taxes or user fees, which would adversely
affect operating results, or raise ticket prices and cargo transportation
fees in order to offset the excise taxes or user fees. If the Company were
to raise ticket prices and cargo transportation fees, there is no assurance
that the Company would be able to maintain such increases or that operating
results would not be adversely affected by the increases.
LABOR AGREEMENTS
The majority of Hawaiian Airlines' employees are covered by collective
bargaining agreements, which are not amendable until February 2000, with the
International Association of Machinists and Aerospace Workers ("IAM"), the
Air Line Pilots Association, International ("ALPA"), the Association of
Flight Attendants ("AFA"), the Transport Workers Union ("TWU") and the
Communications Section Employees Union. As a result of the unionization of
its employees, the Company's flexibility in dealing with its employees may be
restricted, thereby resulting in an increase in costs. In the event of work
stoppages or other labor difficulties, operations of the Company may be
hampered or halted, which could have a material adverse effect on the
reputation and operations of the Company.
7
<PAGE>
CONTROL OF THE COMPANY
AIP owned 69% of the issued and outstanding Common Stock as of July 3,
1996 and through such ownership is able to control all actions to be taken by
the shareholders of the Company, except in the limited case where Hawaii law
requires shareholder action to be approved by 75% of the outstanding Common
Stock. John W. Adams, Chairman of the Board of Directors of the Company, is
an executive officer and the sole stockholder of the general partner of AIP
and thereby controls the voting of AIP's shares. After giving effect to the
issuance of approximately 16,500,000 shares of Common Stock pursuant to the
Plan of Reorganization, the exercise in full of the AMR Warrants and the
Reorganization Warrants, the exercise in full of the options outstanding
under the 1994 Stock Option Plan, as amended, the exercise in full of the
Rights and the consummation of the Investor Offering (including the issuance
of the additional standby shares therein), AIP would own approximately 42% of
the Common Stock. However, even at such time as sufficient shares of Common
Stock have been issued to cause AIP to hold less than 50% of the Common
Stock, its voting power would still be substantially greater than that of any
other existing shareholder. Pursuant to the Company's Amended Bylaws (the
"Bylaws"), until AIP ceases to own at least 35% of the Common Stock, it has
the right to nominate six of the 11 nominees to stand from time to time for
election as directors of the Company. If AIP's ownership of Common Stock
were to fall below 35%, its right to nominate directors would be reduced but
would not be eliminated until AIP's ownership was reduced below 5%.
Thereafter, AIP will not have the right to nominate individuals to the Board
unless it reacquires at least 5% of the Common Stock within 365 days.
In addition, ALPA, IAM and AFA have the right, pursuant to their
respective collective bargaining agreements and the Bylaws, to nominate three
of the remaining five nominees to stand from time to time for election as
directors, thereby leaving the Board of Directors with the authority to
nominate only two of the director nominees. AIP has agreed to vote its
shares of Common Stock in favor of the labor unions' nominees.
Of the two positions on the Board of Directors as to which AIP and the
labor unions do not have the right to nominate nominees, (i) one is required
to be an outside director, defined as one who is not employed by the Company
and is not affiliated with the Company's labor unions, AIP or American, and
(ii) the other is required to be a senior management official of the Company.
ANTITAKEOVER MATTERS
As a result of AIP's substantial ownership interest in the Common Stock,
it may be more difficult for a third party to acquire the Company. A
potential buyer would likely be deterred from any effort to acquire the
Company absent the consent of AIP or its participation in the transaction.
The Company is subject to Section 415-73 of the Hawaii Business
Corporation Act, which restricts mergers and consolidations. Subject to
certain exceptions, unless the Board of Directors and the holders of at least
75% of all the issued and outstanding voting stock of the Company approve a
merger or consolidation, Section 415-73 prohibits such a transaction.
The Company's Amended Articles of Incorporation (the "Articles of
Incorporation") and the Bylaws include a number of provisions that may have
the effect of discouraging persons from pursuing non-negotiated takeover
attempts. These provisions include (i) a restriction on action by written
consent of the shareholders, unless such consent is unanimous, (ii) a
prohibition on cumulative voting, (iii) certain qualifications for directors
and (iv) restrictions on the filling of vacancies of directors.
The Articles of Incorporation authorize the issuance of up to 2,000,000
shares of preferred stock by the Company with such preferences, rights and
restrictions as may be determined by the Board of Directors. Accordingly,
the Board of Directors may, without shareholder approval, issue preferred
stock with dividend, liquidation, conversion, voting or other rights that
could adversely affect the rights of holders of the Common Stock. The
issuance of shares of preferred stock may have the effect of rendering more
difficult or discouraging an acquisition of the Company or a change in
control of the Company.
The Company has in place a shareholders' rights plan, which provides
that, subject to certain discretion of the Board of Directors, in the event
that the Company is acquired in certain transactions or in the event of
certain acquisitions of the Company's common stock that would cause the
acquirer to own more than 10% of the outstanding common stock, the Company
(or the surviving corporation in a merger in which the Company was not the
survivor) would issue to the Company's shareholders, other than the acquirer,
additional shares of common stock of the Company (or the survivor) at a
discount, thereby substantially
8
<PAGE>
diluting the acquirer's interest. The AIP Investment was expressly excluded
from the application of the shareholders' rights plan through an amendment to
the plan adopted by the Board of Directors at the time of the AIP Investment.
DIVIDENDS
The Company has not paid cash dividends on its common stock in the last
several years and has no plans to do so in the foreseeable future. The
Company intends to retain its earnings, if any, to finance the development
and growth of its business. Moreover, the Company is prohibited from paying
dividends by the terms of the Credit Facility. The American Note limits the
Company's ability to pay dividends.
MARKET CONSIDERATIONS; VOLATILITY OF STOCK PRICE
Since the Company emerged from bankruptcy and the Common Stock
recommenced trading on the AMEX and the PSE in June 1995, the price range of
the Common Stock has varied widely and the price of the Common Stock may be
subject to significant fluctuation in the future.
RESALE RESTRICTIONS ON OPTIONS
The Options will be subject to a lock-up agreement and may not be
transferred during the 90-day period following the expiration date of the
Rights Offering.
EFFECT ON THE COMPANY'S NET OPERATING LOSS CARRYOVERS
The Company believes that substantially all of its net operating losses
("NOLs"), as computed for federal income tax purposes, are currently subject
to limitation under Section 382 of the Internal Revenue Code. In the event
an ownership change (as defined in Section 382) of the Company were to occur
in the future, the ability of the Company to utilize NOLs incurred prior to
that ownership change could be subject to additional limitations under
Section 382 an ownership change of the Company, which in turn could increase
the future tax liabilities of the Company.
THE BOARD OF DIRECTORS OF THE COMPANY DOES NOT MAKE ANY RECOMMENDATION TO
INVESTORS WITH RESPECT TO WHETHER AN OPTIONHOLDER SHOULD EXERCISE OPTIONS TO
PURCHASE SHARES OF THE COMMON STOCK PURSUANT TO THE PLAN.
THE COMPANY
The Company's principal executive offices are located at 3375 Koapaka St,
Suite G350, Honolulu, Hawaii 96819, and its telephone number is (808)
835-3700. Additional information regarding the Company is set forth in the
Company's Annual Report on Form 10-K, as amended by Amendment No. 1 on Form
10-K/A and Amendment No. 2 on Form 10-K/A for the fiscal year ended December
31, 1995 (which is incorporated herein by reference).
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Securities offered hereby.
SELLING SHAREHOLDERS
The table attached as Annex I hereto sets forth, as of July 15, 1996 or a
subsequent date if amended or supplemented: (a) the name of each Selling
Shareholder and his relationship to the Company during the last three years;
(b) the number of shares of Common Stock each Selling Shareholder
beneficially owned prior to this offering; (c) the number of Securities
offered pursuant to this Prospectus by each Selling Shareholder; and (d) the
amount and the percentage of the Company's Common Stock that would be owned
by each Selling Shareholder after completion of this offering. The
information contained in Annex I may be amended or supplemented from time to
time.
9
<PAGE>
PLAN OF DISTRIBUTION
Sales of the Securities offered hereby may be made on the American Stock
Exchange, the Pacific Stock Exchange, the over-the-counter market or
otherwise at prices and on terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. In addition, any
Securities covered by this Prospectus which qualify for sale pursuant to Rule
144 may be sold under Rule 144 rather than pursuant to this Prospectus. The
Company will not receive any part of the proceeds of the sales made
hereunder. All expenses associated with this Prospectus are being borne by
the Company, but all selling and other expenses incurred by a Selling
Shareholder will be borne by such shareholder.
The Securities may be (a) sold by delivering previously owned shares of
capital stock of the Company (including "pyramiding) or other property,
provided that the Company is not then prohibited from purchasing or acquiring
shares of its capital stock or such other property, (b), reducing the amount
of shares of Common Stock or other property otherwise issuable pursuant to an
Award, or (c) sold by delivering a promissory note, the terms and conditions
of which shall be determined by the Committee, (d) sold in a block trade in
which the broker or dealer so engaged will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction, (e) purchased by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this
Prospectus, (f) sold in an exchange distribution in accordance with the rules
of such exchange, and (g) sold in ordinary brokerage transactions and
transactions in which the broker solicits purchases. In effecting sales,
brokers or dealers engaged by the Selling Shareholders may arrange for other
brokers or dealers to participate. Certain Selling Shareholders also may,
from time to time, authorize underwriters acting as their agents to offer and
sell Securities upon such terms and conditions as shall be set forth in any
Prospectus Supplement. Underwriters, brokers or dealers will receive
commissions or discounts from Selling Shareholders in amounts to be
negotiated immediately prior to sale. Such underwriters, brokers or dealers
and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with
such sales and any discounts and commissions received by them and any profit
realized by them on the resale of the Securities may be deemed to be
underwriting discounts and commissions under the Securities Act.
There is no assurance that any of the Selling Shareholders will offer for
sale or sell any or all of the Securities covered by this Reoffer Prospectus.
INTEREST OF NAMED EXPERTS AND COUNSEL
The validity of the Common Stock has been passed upon for the Company by
Rae A. Capps, its Vice President, General Counsel and Corporate Secretary.
Ms. Capps owns no shares of Common Stock.
The financial statements and financial statement schedule of the Company
as of December 31, 1995 and 1994 and for the year ended December 31, 1995,
the period September 12, 1994 through December 31, 1994, the period January
1, 1994 through September 11, 1994, and the year ended December 31, 1993,
have been incorporated by reference herein and in the registration statement
in reliance upon the reports of KPMG Peat Marwick LLP, independent certified
public accountants, and incorporated by reference herein, upon the authority
of said firm as experts in accounting and auditing.
The reports of KPMG Peat Marwick LLP dated March 15, 1996 contain an
explanatory paragraph that states that the financial statements of the
Company as reorganized (the "Reorganized Company") reflect the impact of
adjustments to reflect the fair value of assets and liabilities under fresh
start accounting and, as a result, the financial statements of the
Reorganized Company are presented on a basis different than those of the
Company prior to reorganization.
In addition, the reports of KPMG Peat Marwick LLP dated March 15, 1996
contain an explanatory paragraph that states that the Company's recurring
losses from operations, deficit working capital and limited sources of
additional liquidity raise substantial doubt about its ability to continue as
a going concern. The financial statements and financial statement schedules
do not include any adjustments that might result from the outcome of that
uncertainty.
10
<PAGE>
ANNEX I
<TABLE>
<CAPTION>
Shares to be Beneficially
Owned upon Completion of
Shares Beneficially Offering(1)(3)
Relationship to Company During Last Owned as of Shares Offered -------------------------
Selling Shareholder Three Years August 1, 1996(1) Hereby(2) Number Percent
- ------------------- ------------------------------------- ------------------ -------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Bruce R. Nobles President and Chief Executive Officer 604,351 300,000 304,351 *
since September 1993; Chairman of the
Board from September 1994 until
February 1996
John L. Garibaldi Executive Vice President and Chief 65,000 57,500 7,500 *
Financial Officer since May 1996
Michael McQuay Executive Vice President-Operations 51,000 50,000 1,000 *
and Chief Operating Officer since
June 1996
Clarence K. Lyman Vice President-Finance, Treasurer and 101,673 50,000 51,673 *
Assistant Corporate Secretary since
1991
Peter W. Jenkins Senior Vice President-Marketing and 80,000 40,000 40,000 *
Sales since April 1994
John P. Solomito Vice President-Customer Services 16,606 7,500 9,106 *
since February 1992
Alexander D. Jamile Vice President-Government and 16,673 7,500 9,173 *
Community Affairs since 1993; Vice
President-Administration/
Governmental and Community Affairs
from October 1992 to 1993
Glen L. Stewart Vice President-Transpacific and 17,047 7,500 9,547 *
Southpacific Marketing since August
1993; Senior Vice President-
Transpacific from 1991 to August 1993
Glenn G. Taniguchi Vice President-Schedule Planning and 16,115 7,500 8,615 *
Reservations since 1995; Staff Vice
President-Schedule Planning and
Reservations from 1991 to 1995
Michael P. Loo Staff Vice President-Controller since 16,673 7,500 9,173 *
August 1993
C.J. David Davies Senior Vice President-Finance and 132,678 65,000 67,678 *
Chief Financial Officer from 1993 to
May 1996
</TABLE>
__________________________
(1) Assumes that all options to acquire shares were granted on such date and
are exercisable immediately. Includes shares held by Hawaiian Airlines,
Inc. Employee Stock Plan, if any.
(2) Assumes that all options to acquire shares are exercisable immediately.
(3) Assumes that all outstanding options under the Plan are exercised and all
shares offered hereby are sold, that no additional shares will be acquired
and that no shares other than those offered hereby will be sold.
* Less than 1% of issued and outstanding shares of Common Stock.
A-1
<PAGE>
TABLE OF CONTENTS
Page
----
Risk Factors.......................................................... 3
The Company........................................................... 9
Use of Proceeds....................................................... 9
Selling Shareholders.................................................. 9
Plan of Distribution.................................................. 10
Interest of Named Experts and Counsel................................. 10
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents heretofore filed by the Company with the
Commission are by this reference incorporated in and made a part of this
Registration Statement:
(1) The Company's Annual Report on Form l0-K for the fiscal year ended
December 31, 1995, including the Financial Statements and the Financial
Statement Schedule and the Reports of KPMG Peat Marwick LLP, Independent
Auditors filed April 1, 1996, as amended by Amendment No. 1 on Form 10-K/A
and Amendment No. 2 on Form 10-K/A;
(2) The Quarterly Report on Form 10-Q, filed May 15, 1996, for the
period ended March 31, 1996;
(3) The Current Report on Form 8-K filed January 10, 1996 (date of event
January 10, 1996);
(4) The Current Report on Form 8-K filed January 17, 1996 (date of event
January 15, 1996);
(5) The Current Report on Form 8-K filed January 23, 1996 (date of event
January 18, 1996);
(6) The Current Report on Form 8-K filed February 1, 1996 (date of event
January 30, 1996);
(7) The Current Report on Form 8-K filed February 2, 1996 (dated January
31, 1996);
(8) The Current Report on Form 8-K filed February 7, 1996 (dated
February 2, 1996);
(9) The Registration Statement on Form S-2 filed May 30, 1996, as
amended by Amendment No. 1 thereto filed July 12, 1996, as amended by
Amendment No. 2 filed July 19, 1996, as amended by Amendment No. 3 filed July
23, 1996, as amended by Amendment No 4 filed July 24, 1996, as amended by
Amendment No. 5 filed August 1, 1996 (Registration No. 333-04817);
(10) The Registration Statement on Form 8-A/A filed July 1, 1996; and
(11) All documents subsequently filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") after the date of this Prospectus and prior to the
filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then
remaining unsold.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this
Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the Common Stock has been passed upon for the Company by
Rae A. Capps, its Vice President, General Counsel and Corporate Secretary.
Ms. Capps owns no shares of Common Stock.
II-1
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 415-5 of the Hawaii Business Corporation Act (the "Hawaii
Indemnification Statute") provides that a corporation may indemnify any
person who was or is a party to or is threatened to be made a party to any
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation), by reason of the fact
that the person was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation in such a
capacity with another enterprise (such person being hereinafter referred to
as the "Indemnitee"). The indemnity may cover expenses (including attorneys'
fees), judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such proceeding if the Indemnitee
acted in good faith and in a manner the Indemnitee reasonably believed to be
in, or not opposed to, the best interests of the corporation and, with
respect to any criminal action or proceedings, had no reasonable cause to
believe the Indemnitee's conduct was unlawful.
Section 415-48.5 of the Hawaii Business Corporation Act (the "HBCA")
provides that a corporation does not have the power to eliminate or limit the
personal liability of a director for (a) any breach of the director's duty of
loyalty to the corporation or its shareholders, (b) any act or omission of
the director not performed in good faith, or which involves intentional
misconduct or knowing violation of the law, or which constitutes a willful or
reckless disregard of the director's fiduciary duty, (c) the director's
willful or negligent violation of any provision of the HBCA regarding payment
of dividends or stock purchase or redemption, or (d) any transaction from
which the director received an improper benefit.
The Hawaii Indemnification Statute also provides that, in the case of an
action or suit by or on behalf of the corporation, the corporation has the
power to indemnify an Indemnitee against expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement
of such action or suit if the Indemnitee acted in good faith and in a manner
the Indemnitee reasonably believes to be in, or not opposed to, the best
interests of the corporation, except that no indemnification may be made in
respect to any claim, issue or matter as to which the Indemnitee had been
adjudged to be liable for negligence or misconduct in the performance of the
Indemnitee's duties to the corporation unless, and only to the extent that,
the court in which the action or suit was brought determines that, despite
the adjudication of liability, but in view of all circumstances of the case,
the Indemnitee is fairly and reasonably entitled to indemnity for such
expenses as such court deems proper. The provision does not, however,
expressly authorize the corporation to indemnify the Indemnitee against
judgments, fines and amounts paid in settlement arising out of a
shareholder's derivative action.
The Hawaii Indemnification Statute further provides that indemnification
is mandatory with respect to expenses incurred in connection with any action,
suit or proceeding, to the extent the Indemnitee is successful on the merits
or otherwise in defense of any such action or claim.
The Hawaii Indemnification Statute allows the payment by the corporation
of expenses incurred by an Indemnitee in advance of the final disposition of
an action, suit or proceeding if the Indemnitee provides an undertaking of
repayment. Additionally, it provides that the indemnity provided by the
statute is not exclusive of any other rights to which an Indemnitee may be
entitled under any bylaw, agreement, vote of shareholders or disinterested
directors or otherwise. It also provides that a corporation may purchase
insurance for officers or directors of the corporation.
Article VII of the Registrant's Amended Articles of Incorporation
incorporates the provisions of the Hawaii Indemnification Statute so as to
provide the indemnification of the Hawaii Indemnification Statute to officers
and directors of the Company. Article VII also provides that the indemnity
provided thereunder is nonexclusive of any other rights of indemnification to
which an Indemnitee may be entitled.
In addition, the Registrant has entered into indemnification agreements
with each of its directors and executive officers providing indemnification
to the fullest extent permitted by law. Furthermore, the Registrant has a
policy of directors' and officers' liability insurance which insures
directors and officers against the cost of defense, settlement or payment of
a judgment under certain circumstances.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
None.
II-2
<PAGE>
ITEM 8. EXHIBITS.
EXHIBIT NO. DESCRIPTION
----------- -----------
4.1 Rights Agreement dated December 23, 1994. (1)
4.2 Amendment No. 1 dated as of May 4, 1995 to Rights Agreement
dated as of December 23, 1994 by and between Hawaiian
Airlines, Inc. and Chemical Trust Company of California. (2)
4.3 Amendment No. 1 to 1994 Stock Option Plan dated as of May 4,
1995. (2)
4.4 Amendment No. 1 dated as of May 4, 1995 to Warrants Nos.
1-10. (2)
4.5 1994 Stock Option Plan. (3)
4.6 Rightsholders Agreement dated as of January 31, 1996, by and
among Hawaiian Airlines, Inc., Airline Investors Partnership,
L.P., AMR Corporation, Martin Anderson and Robert Midkiff.
(4)
4.7 Amendment No. 2 to the Rights Agreement, as amended, dated as
of January 31, 1996 by and between Hawaiian Airlines, Inc.
and Chemical Trust Company of California. (4)
4.8 Amendment No. 2 to 1994 Stock Option Plan, as amended, dated
as of December 8, 1995. (4)
4.9 The Company agrees to provide the Securities and Exchange
Commission, upon request, copies of instruments defining the
rights of security holders of long-term debt of the Company.
5.1 Opinion of Rae A. Capps, Esq.
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Rae A. Capps, Esq. (included in Exhibit 5.1)
24.1 Power of Attorney (included on Signature Pages)
99.1 Hawaiian Airlines, Inc. 1996 Stock Incentive Plan.
99.2 Form of Hawaiian Airlines, Inc. Nonqualified Stock Option
Agreement
______________________________
(1) Previously filed with the Securities and Exchange Commission as an
exhibit to the Company's Current Report on Form 8-K as filed January 5, 1995
and incorporated herein by reference.
(2) Previously filed with the Securities and Exchange Commission as an
exhibit to the Company's Quarterly Report on Form 10-Q as filed August 14,
1995 and incorporated herein by reference.
II-3
<PAGE>
(3) Previously filed with the Securities and Exchange Commission as an
exhibit to the Company's Registration Statement on Form S-8 as filed November
15, 1995 and incorporated herein by reference.
(4) Previously filed with the Securities and Exchange Commission as an
exhibit to the Company's Annual Report on Form 10-K as filed April 1, 1996
and incorporated herein by reference.
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at the time shall be deemed to be the initial BONA FIDE offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City and County of Honolulu, State of
Hawaii, on this 6th day of August, 1996.
HAWAIIAN AIRLINES, INC.
By: /s/ Bruce R. Nobles
-------------------------------------
Bruce R. Nobles
Chairman of the Board,
President and Chief Executive Officer
II-5
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Bruce
R. Nobles, Rae A. Capps, John L. Garibaldi and Clarence K. Lyman his or her
true and lawful attorneys-in-fact and agents, each acting alone, with full
powers of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this registration
statement, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, each acting
alone, full powers and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he or she might, or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, each
acting alone, or his or her substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
/s/ Bruce R. Nobles Director, President and Chief August 6, 1996
- ------------------------- Executive Officer (Principal
(Bruce R. Nobles) Executive Officer)
/s/ John L. Garibaldi Executive Vice President and August 6, 1996
- ------------------------- Chief Financial Officer
(John L. Garibaldi) (Principal Accounting and
Financial Officer)
/s/ John W. Adams Director, Chairman of the Board August 6, 1996
- -------------------------
(John W. Adams)
/s/ Todd G. Cole Director August 6, 1996
- -------------------------
(Todd G. Cole)
/s/ Richard F. Conway Director August 6, 1996
- -------------------------
(Richard F. Conway)
/s/ Robert G. Coo Director August 6, 1996
- -------------------------
(Robert G. Coo)
/s/ Carol A. Fukunaga Director August 6, 1996
- -------------------------
(Carol A. Fukunaga)
/s/ William Boyce Lum Director August 6, 1996
- -------------------------
(William Boyce Lum)
/s/ Richard K. Matros Director August 6, 1996
- -------------------------
(Richard K. Matros)
/s/ Reno F. Morella Director August 6, 1996
- -------------------------
(Reno F. Morella)
/s/ Samson Poomaihealani Director August 6, 1996
- -------------------------
(Samson Poomaihealani)
/s/ Edward Z. Safady Director August 6, 1996
- -------------------------
(Edward Z. Safady)
II-6
<PAGE>
August 6, 1996
Hawaiian Airlines, Inc.
3375 Koapaka Street
Suite G350
Honolulu, HI 96819
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
I have acted as counsel for Hawaiian Airlines, Inc., a Hawaii
corporation (the "Company"), in connection with the registration of 2,000,000
shares of Common Stock (the "Common Stock") of the Company issuable under its
1996 Stock Incentive Plan, as amended (the "Plan"). In connection therewith,
I have examined, among other things, the Registration Statement on Form S-8
(the "Registration Statement") proposed to be filed by the Company with the
Securities and Exchange Commission on or about August 6, 1996. I have also
examined the proceedings and other actions taken by the Company in connection
with the authorization and reservation of the shares of Common Stock issuable
under the Plan and such other matters as I deemed necessary for purposes of
rendering this opinion.
Based upon the foregoing, and in reliance thereon, I am of the opinion
that the shares of Common Stock issuable under the Plan, when issued,
delivered and paid for in accordance with the Plan and the agreements
evidencing awards thereunder and in the manner described in the Registration
Statement, will be validly issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Rae A. Capps.
Rae A. Capps
RAC/hjh
<PAGE>
EXHIBIT 23.1
The Board of Directors
Hawaiian Airlines, Inc.:
We consent to incorporation by reference in the Registration Statement on
Form S-8 of Hawaiian Airlines, Inc., registering 2,000,000 shares of Common
Stock and 2,000,000 Preferred Stock Purchase Rights pursuant to the Hawaiian
Airlines, Inc. 1996 Stock Incentive Plan, of our reports dated March 15,
1996, relating to the balance sheets of Hawaiian Airlines, Inc. as of
December 31, 1995 and 1994, and the related statements of operations,
shareholders' equity (deficit) and cash flows for the year ended December 31,
1995, the period September 12, 1994 through December 31, 1994, the period
January 1, 1994 through September 11, 1994, and for the year ended
December 31, 1993, and relating to the financial statement schedule for the
three-year period ended December 31, 1995, which reports appear in the
December 31, 1995 annual report on Form 10-K of Hawaiian Airlines, Inc., and
to the reference to our firm under the heading "Experts" in the prospectus.
Our reports dated March 15, 1996, indicate that the financial statements of
the Reorganized Company reflect the impact of adjustments to reflect the fair
value of assets and liabilities under fresh start accounting and, as a
result, the financial statements of the Reorganized Company are presented on
a different basis than those of the Predecessor Company.
In addition, our reports dated March 15, 1996, contain an explanatory
paragraph that states that the Company's recurring losses from operations,
deficit working capital and limited sources of additional liquidity raise
substantial doubt about its ability to continue as a going concern. The
financial statements and financial statement schedule do not include any
adjustments that might result from the outcome of that uncertainty.
/s/ KPMG Peat Marwick LLP
Honolulu, Hawaii
August 6, 1996
<PAGE>
EXHIBIT 99.1
HAWAIIAN AIRLINES, INC.
1996 STOCK INCENTIVE PLAN, AS AMENDED
SECTION 1. PURPOSE OF PLAN
The purpose of this 1996 Stock Incentive Plan, as amended (this
"Plan") of Hawaiian Airlines, Inc., a Hawaii corporation (the "Company"), is
to enable the Company to attract, retain and motivate its employees by
providing for or increasing the proprietary interests of such employees in
the Company.
SECTION 2. PERSONS ELIGIBLE UNDER PLAN
Any person, including any director of the Company, who is an
employee of the Company (an "Employee") shall be eligible to be considered for
the grant of Awards (as hereinafter defined) hereunder. In addition, C.J.
David Davies shall be eligible to be considered for the grant of Awards
hereunder.
SECTION 3. AWARDS
(a) The Committee (as hereinafter defined), on behalf of the
Company, is authorized under this Plan to enter into any type of arrangement
with an Employee that is not inconsistent with the provisions of this Plan and
that, by its terms, involves or might involve the issuance of (i) shares of
Class A Common Stock, par value $.01 per share, of the Company ("Common Shares")
or (ii) a Derivative Security (as such term is defined in Rule 16a-1 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
such Rule may be amended from time to time) with an exercise or conversion
privilege at a price related to the Common Shares or with a value derived from
the value of the Common Shares. The entering into of any such arrangement is
referred to herein as the "grant" of an "Award." If the Company's Amended and
Restated Articles of Incorporation are amended to eliminate the Company's
Class B Common Stock and designate the Class A Common Stock as "Common
Stock", following such amendment all references herein to Class A Common
Stock shall be deemed to refer to Common Stock.
(b) Awards are not restricted to any specified form or structure
and may include, without limitation, sales or bonuses of stock, restricted
stock, stock options, reload stock options, stock purchase warrants, other
rights to acquire stock, securities convertible into or redeemable for stock,
stock appreciation rights, limited stock appreciation rights, phantom stock,
dividend equivalents, performance units or performance shares, and an Award may
consist of one such security or benefit, or two or more of them in tandem or in
the alternative.
<PAGE>
(c) Common Shares may be issued pursuant to an Award for any
lawful consideration as determined by the Committee, including, without
limitation, services rendered by the recipient of such Award.
(d) Subject to the provisions of this Plan, the Committee, in
its sole and absolute discretion, shall determine all of the terms and
conditions of each Award granted under this Plan, which terms and conditions may
include, among other things:
(i) a provision permitting the recipient of such Award,
including any recipient who is a director or officer of the Company, to pay
the purchase price of the Common Shares or other property issuable pursuant
to such Award, or such recipient's tax withholding obligation with respect
to such issuance, in whole or in part, by any one or more of the following:
(A) the delivery of previously owned shares of capital
stock of the Company (including "pyramiding") or other property,
provided that the Company is not then prohibited from purchasing or
acquiring shares of its capital stock or such other property,
(B) a reduction in the amount of Common Shares or
other property otherwise issuable pursuant to such Award, or
(C) the delivery of a promissory note, the terms and
conditions of which shall be determined by the Committee;
(ii) a provision conditioning or accelerating the receipt of
benefits pursuant to such Award, either automatically or in the discretion
of the Committee, upon the occurrence of specified events, including,
without limitation, a change of control of the Company, an acquisition of a
specified percentage of the voting power of the Company, the dissolution or
liquidation of the Company, a sale of substantially all of the property and
assets of the Company or an event of the type described in Section 7
hereof; or
(iii) a provision required in order for such Award to
qualify as an incentive stock option (an "Incentive Stock Option") under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
provided that the recipient of such Award is eligible under the Code to
receive an Incentive Stock Option.
(e) Notwithstanding any other provision of this Plan, no
Employee shall to be granted options for in excess of 300,000 shares of Class
A Common Stock during any 12-month period. This limitation is intended to
satisfy the requirements of Section 162(m) of the Code so that compensation
attributable to Awards hereunder qualify as performance-based compensation
under Section 162(m) of the Code. The limitation under this Section 3(e)
shall be subject to adjustment under Section 7 hereof, but only to the extent
permitted under Section 162(m) of the Code.
2
<PAGE>
SECTION 4. STOCK SUBJECT TO PLAN
(a) The aggregate number of Common Shares that may be issued
pursuant to all Incentive Stock Options granted under this Plan shall not
exceed 2,000,000, subject to adjustment as provided in Section 7 hereof;
provided, however, that adjustments pursuant to Section 7 shall be limited to
those that will not adversely affect the status of options as Incentive Stock
Options under Section 422 of the Code.
(b) The aggregate number of Common Shares issued and issuable
pursuant to all Awards (including Incentive Stock Options) granted under this
Plan shall not exceed 2,000,000 subject to adjustment as provided in Section 7
hereof.
(c) For purposes of Section 4(b) hereof, the aggregate number
of Common Shares issued and issuable pursuant to all Awards granted under
this Plan shall at any time be deemed to be equal to the sum of the following:
(i) the number of Common Shares that were issued prior to
such time pursuant to Awards granted under this Plan, other than Common
Shares that were subsequently reacquired by the Company pursuant to the
terms and conditions of such Awards and with respect to which the holder
thereof received no benefits of ownership such as dividends; plus
(ii) the number of Common Shares that were otherwise
issuable prior to such time pursuant to Awards granted under this Plan,
but that were withheld by the Company as payment of the purchase price of
the Common Shares issued pursuant to such Awards or as payment of the
recipient's tax withholding obligation with respect to such issuance; plus
(iii) the maximum number of Common Shares issuable at or
after such time pursuant to Awards granted under this Plan prior to such
time.
SECTION 5. DURATION OF PLAN
Awards shall not be granted under this Plan after April 30,
2006. Although Common Shares may be issued after April 30, 2006 pursuant to
Awards granted prior to such date, no Common Shares shall be issued under
this Plan after April 30, 2016.
SECTION 6. ADMINISTRATION OF PLAN
(a) This Plan shall be administered by a committee of the Board
(the "Committee") consisting of two or more directors, each of whom is a
"disinterested person"
3
<PAGE>
(as such term is defined in Rule 16b-3 promulgated under the Exchange Act, as
such Rule may be amended from time to time).
(b) Subject to the provisions of this Plan, the Committee shall
be authorized and empowered to do all things necessary or desirable in
connection with the administration of this Plan, including, without limitation,
the following:
(i) adopt, amend and rescind rules and regulations relating
to this Plan;
(ii) determine which persons are Employees and to which of
such Employees, if any, Awards shall be granted hereunder;
(iii) grant Awards to Employees and determine the terms
and conditions thereof, including the number of Common Shares issuable
pursuant thereto;
(iv) determine whether, and the extent to which, adjustments
are required pursuant to Section 7 hereof; and
(v) interpret and construe this Plan and the terms and
conditions of all Awards granted hereunder.
SECTION 7. ADJUSTMENTS
If the outstanding securities of the class then subject to this
Plan are increased, decreased or exchanged for or converted into cash,
property or a different number or kind of securities, or if cash, property or
securities are distributed in respect of such outstanding securities, in
either case as a result of a reorganization, merger, consolidation,
recapitalization, restructuring, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split or the like, or if substantially all of the property and assets
of the Company are sold, then, unless the terms of such transaction or this
Plan shall provide otherwise, the Committee shall make appropriate and
proportionate adjustments in (a) the number and type of shares or other
securities or cash or other property that may be acquired pursuant to
Incentive Stock Options and other Awards theretofore granted under this Plan,
(b) the maximum number and type of shares or other securities that may be
issued pursuant to Incentive Stock Options and other Awards thereafter
granted under this Plan as provided in Section 4 hereof, and (c) the maximum
number of Common Shares for which options may be granted during any one
calendar year, as provided in Section 3(e) hereof. Notwithstanding the
foregoing, no such adjustment shall be made in connection with a distribution
of rights to purchase shares of the Company's Common Stock if such
distribution is being made pursuant to Section 6.9 of that certain Stock
Purchase Agreement dated as of December 8, 1995 between the Company and
Airline Investors Partnership, L.P.
4
<PAGE>
SECTION 8. AMENDMENT AND TERMINATION OF PLAN
The Board may amend or terminate this Plan at any time and in
any manner, provided that no such amendment or termination shall deprive the
recipient of any Award or Nonemployee Director Option theretofore granted
under this Plan, without the consent of such recipient, of any of his or her
rights thereunder or with respect thereto.
SECTION 9. EFFECTIVE DATE OF PLAN
This Plan shall be effective as of May 1, 1996, the date upon
which it was approved by the Board; provided, however, that no Common Shares
may be issued under this Plan until it has been approved, directly or
indirectly, by the affirmative votes of the holders of a majority of the
outstanding voting securities of the Company at a meeting duly held in
accordance with the laws of the State of Hawaii.
5
<PAGE>
EXHIBIT 99.2
HAWAIIAN AIRLINES, INC.
EMPLOYEE NONQUALIFIED STOCK OPTION AGREEMENT
PURSUANT TO THE
1996 STOCK INCENTIVE PLAN
This Employee Nonqualified Stock Option Agreement (this "Agreement") is
made and entered into as of the Date of Grant indicated below by and between
Hawaiian Airlines, Inc., a Hawaii corporation (the "Company"), and the person
named below as Employee.
WHEREAS, Employee is an employee of the Company; and
WHEREAS, pursuant to the Company's 1996 Stock Incentive Plan (the
"Plan"), the committee of the Board of Directors of the Company administering
the Plan (the "Committee") has approved the grant to Employee of an option to
purchase shares of the Class A Common Stock, par value $.01 per share, of the
Company (the "Common Stock"), on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
1. GRANT OF OPTION; CERTAIN TERMS AND CONDITIONS. The Company hereby
grants to Employee, and Employee hereby accepts, as of the Date of Grant, an
option to purchase the number of shares of Common Stock indicated below (the
"Option Shares") at the Exercise Price per share indicated below, which
option shall expire at 5:00 o'clock p.m., Hawaii standard time, on the
Expiration Date indicated below and shall be subject to all of the terms and
conditions set forth in this Agreement (the "Option"). On each anniversary
of the Date of Grant, the Option shall become exercisable to purchase ("vest
with respect to") that number of Option Shares (rounded to the nearest whole
share) equal to the total number of Option Shares multiplied by the Annual
Vesting Rate indicated below.
Employee: _____________________
Date of Grant: ______________
Number of shares purchasable: ______________
Exercise Price per share: ______________
Expiration Date: ______________
Annual Vesting Rate: _____________%
<PAGE>
The Option is not intended to qualify as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended.
2. ACCELERATION OF VESTING AND TERMINATION OF OPTION.
(a) TERMINATION OF EMPLOYMENT.
(i) RETIREMENT. If Employee ceases to be employed by reason
of Employee's retirement in accordance with the Company's then-current
retirement policy ("Retirement"), then (A) the portion of the Option that
has not vested on or prior to the date of such Retirement shall terminate
on such date and (B) the remaining vested portion of the Option shall
terminate upon the earlier of the Expiration Date or the first
anniversary of the date of such Retirement.
(ii) DEATH OR PERMANENT DISABILITY. If Employee ceases to be
employed by reason of the death or Permanent Disability (as hereinafter
defined) of Employee, then (A) the portion of the Option that has not
vested on or prior to the date of such Termination of Employment shall
terminate on such date and (B) the remaining vested portion of the Option
shall terminate upon the earlier of the Expiration Date or the first
anniversary of the date of Employee's death or Permanent Disability.
"Permanent Disability" shall mean the inability to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or
which has lasted or can be expected to last for a continuous period of
not less than 12 months. Employee shall not be deemed to have a
Permanent Disability until proof of the existence thereof shall have been
furnished to the Board in such form and manner, and at such times, as the
Board may require. Any determination by the Board that Employee does or
does not have a Permanent Disability shall be final and binding upon the
Company and Employee.
(iii) TERMINATION FOR CAUSE. If Employee is terminated for
Cause, both the vested and unvested portions of the Option shall
terminate immediately. "Cause" shall mean Employee's (A) conviction by a
court of competent jurisdiction of a felony or serious misdemeanor
involving moral turpitude, (B) willful disregard of any written directive
of the Board that is not inconsistent with the Certificate of
Incorporation or Bylaws of the Company or applicable law, (C) breach of
his or her fiduciary duty involving personal profit, or (D) neglect of
his or her duties that has a material adverse effect on the Company.
(iv) OTHER TERMINATION. If Employee is terminated without
Cause, then (A) the portion of the Option that has not vested on or prior
to the date of such termination of employment shall terminate on such
date and (B) the remaining vested portion of the Option shall terminate
upon the earlier of the Expiration Date or the 90th day following the
date of such termination of employment; provided, however, that if
Employee is terminated without Cause within one year after a Change of
Control, then (x) the portion of the Option that has not vested on or
prior to the date on which Employee is terminated shall fully vest as of
such date and (y) the Option shall
2
<PAGE>
terminate upon the earlier of the Expiration Date or the 90th day
following the date on which Employee is terminated. A "Change of
Control" shall mean the first to occur of the following:
(1) the date upon which the directors of the Company who
were nominated by the Board for election as directors cease to
constitute a majority of the directors of the Company;
(2) the consummation of a reorganization, merger or
consolidation of the Company (other than a reorganization, merger
or consolidation the sole purpose of which is to change the
Company's domicile solely within the United States) (a) as a result
of which the outstanding securities of the class then subject to
the Option are exchanged for or converted into cash, property
and/or securities not issued by the Company and (b) the terms of
which provide that the Option shall continue in effect thereafter;
or
(3) the date of the first public announcement that any
person or entity, together with all Affiliates and Associates (as
such capitalized terms are defined in Rule 12b-2 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of such person or entity, shall have become the Beneficial
Owner (as defined in Rule 13d-3 promulgated under the Exchange Act)
of voting securities of the Company representing more than 50% of
the voting power of the Company (a "50% Shareholder"); provided,
however, that the term "50% Shareholder" shall not include (a) the
Company, (b) any employee benefit plan of the Company, (c) any
entity holding voting securities of the Company for or pursuant to
the terms of any such plan, or (d) any person or entity if the
transaction that resulted in such person or entity becoming a 50%
Shareholder was approved in advance by the Board.
(b) DEATH FOLLOWING TERMINATION OF EMPLOYMENT. Notwithstanding
anything to the contrary in this Agreement, if Employee shall die at any time
after the termination of his or her employment and prior to the date on which
the Option is terminated pursuant to Section 2(a), then the vested portion of
the Option shall terminate on the earlier of the Expiration Date or the first
anniversary of the date of Optionee's death.
(c) ACCELERATION OF OPTION OF OPTION BY COMMITTEE. The Committee, in
its sole discretion, may accelerate the exercisability of the Option at any
time and for any reason.
(d) OTHER EVENTS CAUSING ACCELERATION AND TERMINATION OF OPTION.
Notwithstanding anything to the contrary in this Agreement, the Option shall
become fully exercisable immediately prior to, and shall terminate upon, the
consummation of any of the following events:
(i) the dissolution or liquidation of the Company;
3
<PAGE>
(ii) a reorganization, merger or consolidation of the Company (other
than a reorganization, merger or consolidation the sole purpose of which
is to change the Company's domicile solely within the United States) the
consummation of which results in the outstanding securities of any class
then subject to the Option being exchanged for or converted into cash,
property and/or a different kind of securities, unless such
reorganization, merger or consolidation shall have been affirmatively
recommended to the shareholders of the Company by the Board and the terms
of such reorganization, merger or consolidation shall provide that the
Option shall continue in effect thereafter on terms substantially similar
to those under the Plan; or
(iii) a sale of all or substantially all of the property and assets
of the Company, unless the terms of such sale shall provide otherwise.
3. ADJUSTMENTS. In the event that the outstanding securities of the
class then subject to the Option are increased, decreased or exchanged for or
converted into cash, property and/or a different number or kind of
securities, or cash, property and/or securities are distributed in respect of
such outstanding securities, in either case as a result of a reorganization,
merger, consolidation, recapitalization, restructuring, reclassification,
dividend (other than a regular, quarterly cash dividend) or other
distribution, stock split, reverse stock split or the like, or in the event
that substantially all of the property and assets of the Company are sold,
then, unless such event shall cause the Option to terminate pursuant to
Section 2(d) hereof, the Committee shall, in accordance with the provisions
of the Plan, make appropriate and proportionate adjustments in the number and
type of shares or other securities or cash or other property that may
thereafter be acquired upon the exercise of the Option; provided, however,
that any such adjustments in the Option shall be made without changing the
aggregate Exercise Price of the then unexercised portion of the Option.
4. EXERCISE. The Option shall be exercisable during Employee's
lifetime only by Employee or by his or her guardian or legal representative,
and after Employee's death only by the person or entity entitled to do so
under Employee's last will and testament or applicable intestate law. The
Option may only be exercised by the delivery to the Company of a written
notice of such exercise (the "Exercise Notice"), which notice shall specify
the number of Option Shares to be purchased (the "Purchased Shares") and the
aggregate Exercise Price for such shares, together with payment in full of
such aggregate Exercise Price in cash or by check payable to the Company;
provided, however, that payment of such aggregate Exercise Price may instead
be made, in whole or in part, by one or more of the following means:
(a) by the delivery to the Company of a promissory note in a form and
amount satisfactory to the Committee, provided that the principal amount
of such note shall not exceed the excess of such aggregate Exercise Price
over and above the aggregate par value of the Purchased Shares; or
(b) by (i) the delivery to the Company of a certificate or
certificates representing shares of Common Stock, duly endorsed or
accompanied by a duly
4
<PAGE>
executed stock powers, which delivery effectively transfers to the
Company good and valid title to such shares, free and clear of any
pledge, commitment, lien, claim or other encumbrance (such shares to be
valued on the basis of the aggregate Fair Market Value (as defined in the
Plan) thereof on the date of such exercise) and/or (ii) "pyramiding" of
shares issuable upon exercise of the Option, provided that the Company is
not then prohibited from purchasing or acquiring such shares of Common
Stock.
5. PAYMENT OF WITHHOLDING TAXES. If the Company becomes obligated to
withhold an amount on account of any tax imposed as a result of the exercise
of the Option, including, without limitation, any federal, state, local or
other income tax, or any F.I.C.A., state disability insurance tax or other
employment tax (the "Withholding Liability"), then Employee shall, on the
date of exercise and as a condition to the issuance of the Option Shares, pay
the Withholding Liability to the Company in cash or by check payable to the
Company. Employee hereby consents to the Company withholding the full amount
of the Withholding Liability from any compensation or other amounts otherwise
payable to Employee if Employee does not pay the Withholding Liability to the
Company on the date of exercise of the Option, and Employee agrees that the
withholding and payment of any such amount by the Company to the relevant
taxing authority shall constitute full satisfaction of the Company's
obligation to pay such compensation or other amounts to Employee.
6. NOTICES. All notices and other communications required or permitted
to be given pursuant to this Agreement shall be in writing and shall be
deemed given if delivered personally or five days after mailing by certified
or registered mail, postage prepaid, return receipt requested, to the Company
at 3375 Koapaka Street, Suite G-350, Honolulu, Hawaii 96819, Attention:
Corporate Secretary, or to Employee at the address set forth beneath his or
her signature on the signature page hereto, or at such other addresses as
they may designate by written notice in the manner aforesaid.
7. STOCK EXCHANGE REQUIREMENTS; APPLICABLE LAWS. Notwithstanding
anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of
such shares, shall be issued or delivered if (a) such shares have not been
admitted to listing upon official notice of issuance on each stock exchange
upon which shares of that class are then listed or (b) in the opinion of
counsel to the Company, such issuance or delivery would cause the Company to
be in violation of or to incur liability under any federal, state or other
securities law, or any requirement of any stock exchange listing agreement to
which the Company is a party, or any other requirement of law or of any
administrative or regulatory body having jurisdiction over the Company.
8. NONTRANSFERABILITY. Neither the Option nor any interest therein may
be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner other than by will or the laws of descent and
distribution.
5
<PAGE>
9. PLAN. The Option is granted pursuant to the Plan, as in effect on
the Date of Grant, and is subject to all the terms and conditions of the
Plan, as the same may be amended from time to time; provided, however, that
no such amendment shall deprive Employee, without his or her consent, of the
Option or of any of Employee's rights under this Agreement. The
interpretation and construction by the Committee of the Plan, this Agreement,
the Option and such rules and regulations as may be adopted by the Committee
for the purpose of administering the Plan shall be final and binding upon
Employee. Until the Option shall expire, terminate or be exercised in full,
the Company shall, upon written request therefor, send a copy of the Plan, in
its then-current form, to Employee or any other person or entity then
entitled to exercise the Option.
10. SHAREHOLDER RIGHTS. No person or entity shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of any Option
Shares until the Option shall have been duly exercised to purchase such
Option Shares in accordance with the provisions of this Agreement.
11. EMPLOYMENT RIGHTS. No provision of this Agreement or of the Option
granted hereunder shall (a) confer upon Employee any right to continue in the
employ of the Company, (b) affect the right of the Company to terminate the
employment of Employee, with or without cause, or (c) confer upon Employee
any right to participate in any employee welfare or benefit plan or other
program of the Company other than the Plan. EMPLOYEE HEREBY ACKNOWLEDGES AND
AGREES THAT THE COMPANY MAY TERMINATE THE EMPLOYMENT OF EMPLOYEE AT ANY TIME
AND FOR ANY REASON, OR FOR NO REASON, UNLESS EMPLOYEE AND THE COMPANY ARE
PARTIES TO A WRITTEN EMPLOYMENT AGREEMENT THAT EXPRESSLY PROVIDES OTHERWISE.
6
<PAGE>
12. GOVERNING LAW. This Agreement and the Option granted hereunder
shall be governed by and construed and enforced in accordance with the laws
of the State of Hawaii.
IN WITNESS WHEREOF, the Company and Employee have duly executed this
Agreement as of the Date of Grant.
HAWAIIAN AIRLINES, INC.
By:________________________________
Title:
EMPLOYEE:
__________________________________
Signature
__________________________________
Street Address
__________________________________
City, State and Zip Code
__________________________________
Social Security Number
7
