Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
By and Among
ALOHA AIRGROUP, INC.,
HAWAIIAN AIRLINES, INC.,
TURNWORKS ACQUISITION III, INC.
and
TURNWORKS, INC.
Dated as of December 19, 2001
TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGERS; DIRECTORS AND OFFICERS OF THE COMPANY
Section 1.01. The Mergers.......................................................................4
Section 1.02. Effective Time of the Mergers; Closing............................................4
Section 1.03. Organizational Documents..........................................................5
Section 1.04. Directors and Officers............................................................6
ARTICLE II
CONVERSION OF SECURITIES; ISSUANCE OF NEW SECURITIES;
EXCHANGE OF CERTIFICATES; DROP-DOWN
Section 2.01. Conversion of Securities; Issuance of New Securities..............................8
Section 2.02. Issuance of Special Preferred Stock..............................................10
Section 2.03. Exchange of Certificates.........................................................10
Section 2.04. Stock Transfer Books.............................................................13
Section 2.05. Stock Options; Pilots' Shares....................................................14
Section 2.06. Dissenting Shares................................................................15
Section 2.07. Limitation on Closing and Post-Closing Payments from Assets of A.................16
Section 2.08. Drop-Down........................................................................16
Section 2.09. Employee Fund....................................................................16
Section 2.10. Issuance of Shares to TW.........................................................16
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF B
Section 3.01. Organization and Qualification...................................................17
Section 3.02. Articles of Incorporation and Bylaws.............................................18
Section 3.03. Capitalization...................................................................18
Section 3.04. Authority Relative to this Agreement and the Ancillary Agreements................19
Section 3.05. No Conflict; Required Filings and Consents.......................................19
Section 3.06. Permits; Compliance..............................................................20
Section 3.07. SEC Filings; Financial Statements................................................20
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 3.08. Absence of Certain Changes or Events.............................................21
Section 3.09. Absence of Litigation............................................................21
Section 3.10. Employee Benefit Plans; Labor Matters............................................22
Section 3.11. Taxes............................................................................24
Section 3.12. Environmental Matters............................................................25
Section 3.13. Insurance........................................................................25
Section 3.14. Board Approval...................................................................25
Section 3.15. Vote Required....................................................................26
Section 3.16. Certain Agreements...............................................................26
Section 3.17. Registration Statement and Proxy Statement.......................................27
Section 3.18. Intellectual Property............................................................27
Section 3.19. Assets...........................................................................28
Section 3.20. Aircraft; Maintenance............................................................28
Section 3.21. Routes...........................................................................28
Section 3.22. Opinion of Financial Advisor.....................................................28
Section 3.23. Brokers; Expenses................................................................28
Section 3.24. Takeover Statutes................................................................29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF A
Section 4.01. Organization and Qualification; Subsidiaries.....................................29
Section 4.02. Articles of Incorporation and Bylaws.............................................30
Section 4.03. Capitalization...................................................................30
Section 4.04. Authority Relative to this Agreement and the Ancillary Agreements................31
Section 4.05. No Conflict; Required Filings and Consents.......................................32
Section 4.06. Permits; Compliance..............................................................32
Section 4.07. Financial Statements.............................................................33
Section 4.08. Absence of Certain Changes or Events.............................................33
Section 4.09. Absence of Litigation............................................................34
Section 4.10. Employee Benefit Plans; Labor Matters............................................34
ii
TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 4.11. Taxes............................................................................36
Section 4.12. Environmental Matters............................................................36
Section 4.13. Insurance........................................................................37
Section 4.14. Board Approval...................................................................37
Section 4.15. Vote Required....................................................................37
Section 4.16. Certain Agreements...............................................................37
Section 4.17. Registration Statement and Proxy Statement.......................................38
Section 4.18. Intellectual Property............................................................38
Section 4.19. Assets...........................................................................39
Section 4.20. Aircraft; Maintenance............................................................39
Section 4.21. Routes...........................................................................39
Section 4.22. Brokers; Expenses................................................................39
Section 4.23. Takeover Statutes................................................................39
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TW AND THE COMPANY
Section 5.01. Organization and Qualification; Operations.......................................40
Section 5.02. Organizational Documents.........................................................40
Section 5.03. Capitalization...................................................................41
Section 5.04. Authority Relative to this Agreement and the Ancillary Agreements................41
Section 5.05. No Conflict; Required Filing and Consent.........................................42
Section 5.06. Absence of Litigation............................................................43
Section 5.07. Registration Statement and Proxy Statement.......................................43
Section 5.08. Brokers..........................................................................44
Section 5.09. Taxes............................................................................44
Section 5.10. No Operations or Liabilities.....................................................44
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGERS
Section 6.01. Conduct of Business by B Pending the B Merger....................................44
Section 6.02. Conduct of Business by A Pending the A Merger....................................47
iii
TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 6.03. Conduct of Business by the Company, Newco A Sub and Newco B Sub Pending
the Mergers......................................................................48
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.01. Registration Statement; Trust Indenture Act Qualification........................49
Section 7.02. Stockholders' Meetings...........................................................51
Section 7.03. Access to Information; Confidentiality...........................................52
Section 7.04. No Solicitation..................................................................53
Section 7.05. Affiliate Letters................................................................54
Section 7.06. Further Action; Consents; Filings................................................55
Section 7.07. Notification Requirements........................................................56
Section 7.08. Plan of Reorganization...........................................................57
Section 7.09. Public Announcements.............................................................57
Section 7.10. Control of Other Party's Business................................................57
Section 7.11. Directors' and Officers' Indemnification.........................................57
Section 7.12. Conveyance Taxes.................................................................58
Section 7.13. Listing Application..............................................................58
Section 7.14. Takeover Statute.................................................................58
Section 7.15. Post-Effective Time Option Payments..............................................58
Section 7.16. Company Stock Incentive Plan.....................................................59
Section 7.17. Union Agreements.................................................................59
Section 7.18. Non-Employee Director Compensation...............................................59
Section 7.19. Director Flight Benefits.........................................................59
ARTICLE VIII
CONDITIONS TO THE MERGERS
Section 8.01. Conditions to the Obligations of Each Party......................................60
Section 8.02. Conditions to the Obligations of B...............................................62
Section 8.03. Conditions to the Obligations of A...............................................63
Section 8.04. Conditions to the Obligations of the Company.....................................64
iv
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.01. Termination......................................................................65
Section 9.02. Effect of Termination............................................................68
Section 9.03. Amendment........................................................................68
Section 9.04. Waiver...........................................................................68
Section 9.05. Expenses.........................................................................68
ARTICLE X
GENERAL PROVISIONS
Section 10.01. Non-Survival of Representations, Warranties and Agreements.......................70
Section 10.02. Notices..........................................................................70
Section 10.03. Certain Definitions..............................................................72
Section 10.04. Assignment; Binding Effect; Benefit..............................................73
Section 10.05. Incorporation of Exhibits........................................................73
Section 10.06. Specific Performance.............................................................73
Section 10.07. Governing Law; Jurisdiction; Waiver of Jury Trial................................74
Section 10.08. Headings.........................................................................74
Section 10.09. Counterparts.....................................................................74
Section 10.10. Entire Agreement.................................................................74
Section 10.11. Mutual Drafting..................................................................74
EXHIBITS
Exhibit A - Form of Stockholders Agreement......................................................A-1
Exhibit B - Form of Registration Rights Agreement...............................................B-1
Exhibit C - Form of Certificate of Incorporation of the Company.................................C-1
Exhibit D - Form of Bylaws of the Company.......................................................D-1
Exhibit E - Terms of Notes due 2008 of the Company..............................................E-1
Exhibit F - Form of Certificate of the Company (relating to tax opinion)........................F-1
Exhibit G - Form of Certificate of B (relating to tax opinion)..................................G-1
Exhibit H - Form of Certificate of A (relating to tax opinion)..................................H-1
v
Exhibit I - Form of Certificate of Limited Liability for Newco A LLC and Newco B LLC............I-1
Exhibit J - Form of Rule 145 Affiliate Letter...................................................J-1
Exhibit K - Form of Non-Competition Agreement...................................................K-1
Exhibit L - Form of Company Stock Incentive Plan................................................L-1
vi
Glossary of Defined Terms
DEFINITION LOCATION OF DEFINED TERM
A..............................................................Preamble
A Benefit Plans................................................Section 4.10(a)
A Class A Common Stock.........................................Section 2.01(a)
A Class B Common Stock.........................................Section 2.01(b)
A Common Stock.................................................Section 2.01(b)
A LLC Merger...................................................Recitals
A Disclosure Schedule..........................................Art. IV
A Dissenting Shares............................................Section 2.06(a)
A Exchange Ratio...............................................Section 2.01(b)
A Financial Statements.........................................Section 4.07(a)
A Intellectual Property........................................Section 4.18(a)
A Material Adverse Effect......................................Section 4.01(a)
A Material Contracts...........................................Section 4.16
A Merger.......................................................Recitals
A Option.......................................................Section 2.05(a)
A Pension Trust................................................Section 2.01(a)
A Permits......................................................Section 4.01(b)
A Principal Holders............................................Recitals
A Principal Holders Voting Agreement...........................Recitals
A Series A Preferred Stock.....................................Section 4.03
A Series B Preferred Stock.....................................Section 2.01(a)
A Series C Preferred Stock.....................................Section 2.01(a)
A Shares.......................................................Section 2.01(b)
A Stock Option Plan............................................Section 2.05(a)
A Stockholders' Meeting........................................Section 7.01(a)
A Corporation Merger...........................................Recitals
A Surviving Entity.............................................Section 1.01(a)
A Voting Trust.................................................Recitals
Advanced Amounts...............................................Section 9.05(d)
Advisory Agreements ...........................................Recitals
affiliate......................................................Section 10.03(a)
Affiliate......................................................Section 7.05(a)
Agreement......................................................Preamble
AMEX...........................................................Section 3.05(b)
ancillary agreements...........................................Section 10.03(b)
Articles of Merger.............................................Section 1.02(a)
B..............................................................Preamble
B 1994 Option Plan.............................................Section 2.05(b)
B 1996 Option Plans............................................Section 2.05(b)
B Benefit Plans................................................Section 3.10(a)
B Common Stock.................................................Section 2.01(c)
B Disclosure Schedule..........................................Art. III
B Dissenting Shares............................................Section 2.06(a)
vii
B Intellectual Property........................................Section 3.18(a)
B Material Adverse Effect......................................Section 3.01 (a)
B Material Contracts...........................................Section 3.16
B LLC Merger...................................................Recitals
B Merger.......................................................Recitals
B Option.......................................................Section 2.05(b)
B Option Plans.................................................Section 2.05(b)
B Parent Merger................................................Recitals
B Permits......................................................Section 3.01(b)
B Rights Agreement.............................................Section 3.14
B SEC Reports..................................................Section 3.07(a)
B Series A Preferred Stock.....................................Section 3.03
B Series B Special Preferred Stock.............................Section 2.01(c)
B Series C Special Preferred Stock.............................Section 2.01(c)
B Series D Special Preferred Stock.............................Section 2.01(c)
B Series E Special Preferred Stock.............................Section 2.01(c)
B Shares.......................................................Section 2.01(c)
B Share Average................................................Section 2.05(a)
B Special Preferred Stock......................................Section 2.01(c)
B Stockholders' Meeting........................................Section 7.01(a)
B Surviving Entity.............................................Section 1.01(b)
Blue Sky Laws..................................................Section 3.05(b)
Board .........................................................Section 1.04(a)
business day...................................................Section 10.03(c)
C..............................................................Recitals
C GP...........................................................Recitals
C, Inc.........................................................Recitals
C LLC..........................................................Recitals
C Merger.......................................................Recitals
C
Merger Agreement.............................................Recitals
C Voting Agreement.............................................Recitals
Cash-Out Amount................................................Section 3.10(n)
CEO Employment Agreement.......................................Recitals
Certificates...................................................Section 2.03(b)
Certificates of Merger ........................................Section 1.02(a)
Closing........................................................Section 1.02(b)
Closing Date...................................................Section 1.02(b)
Code...........................................................Recitals
committed......................................................Section 8.02(f)
Company........................................................Preamble
Company Awards.................................................Section 7.16
Company Common Stock...........................................Section 2.01(b)
Company Stock Incentive Plan...................................Section 7.16
Company System ................................................Section 7.19
Confidentiality Agreement......................................Section 7.03(a)
control........................................................Section 10.03(d)
viii
controlled by..................................................Section 10.03(d)
Converted Shares...............................................Section 2.03(b)
DGCL...........................................................Recitals
Dissenting Shares..............................................Section 2.06(a)
DLLCA..........................................................Recitals
DOT............................................................Section 3.01(b)
Drop-Down......................................................Recitals
Drop-Down Condition............................................Recitals
Effective Time.................................................Section 1.02(a)
Environmental Laws.............................................Section 3.12(a)
Environmental Permits..........................................Section 3.12(b)
ERISA..........................................................Section 3.10(a)
Exchange Act...................................................Section 3.05(b)
Exchange Agent.................................................Section 2.03(a)
Exchange Agent Agreement ......................................Section 2.03(a)
Expense Payment Agreement......................................Section 9.05(a)
FAA............................................................Section 3.01(b)
FCC............................................................Section 3.01(b)
Federal Aviation Act...........................................Section 3.01(b)
Flight Benefits................................................Section 7.19
Fractional Amounts.............................................Section 2.03(f)
Governmental Authority.........................................Section 3.05(b)
Hazardous Substances...........................................Section 3.12(a)
HBCA...........................................................Recitals
HSR Act........................................................Section 3.05(b)
Indemnified Parties............................................Section 7.10(a)
Indenture......................................................Section 2.01(c)
Intellectual Property..........................................Section 3.18(a)
IRS............................................................Section 3.10(a)
Joint Proxy Statement/Prospectus...............................Section 7.01(a)
knowledge......................................................Section 10.03(e)
known..........................................................Section 10.03(e)
Law............................................................Section 3.05(a)
Liens..........................................................Section 3.01(c)
Management Agreements..........................................Recitals
Mercer.........................................................Recitals
Mergers........................................................Recitals
Minimum Denomination...........................................Section 2.03(f)
New Company Subsidiaries.......................................Section 6.03(b)
Newco A Corporation............................................Recitals
Newco A LLC....................................................Recitals
Newco A Sub....................................................Recitals
Newco B Corporation............................................Recitals
Newco B LLC....................................................Recitals
Newco B Sub....................................................Recitals
Non-Employee Directors.........................................Section 7.18
ix
Notes .........................................................Section 2.01(c)
Order..........................................................Section 7.06(b)
person.........................................................Section 10.03(f)
Person.........................................................Section 3.11
Pilot Allocation Agreement.....................................Section 2.05(c)
PSE............................................................Section 3.05(b)
Registration Rights Agreement..................................Recitals
Registration Statement.........................................Section 7.01(a)
Representatives................................................Section 7.03(a)
restricted cash................................................Section 8.02(f)
Rule 145 Affiliate.............................................Section 2.04(b)
SEC............................................................Section 3.07(a)
Securities Act.................................................Section 2.04(b)
SMC............................................................Recitals
SMC/Xxxxx Advisory Agreement...................................Recitals
Special Committee..............................................Recitals
Spread Per Option Share........................................Section 2.05(a)
Stabilization Act..............................................Section 3.10(o)
Stockholders Agreement.........................................Recitals
Stockholders' Meetings.........................................Section 7.01(a)
subsidiaries...................................................Section 10.03(g)
subsidiary.....................................................Section 10.03(g)
Superior Proposal..............................................Section 7.04(a)
Takeover Proposal..............................................Section 7.04(a)
Tax............................................................Section 3.11
Taxing Authority...............................................Section 3.11
Tax Return(s) .................................................Section 3.11
Terminating A Breach...........................................Section 9.01(e)
Terminating B Breach...........................................Section 9.01(f)
Terminating TW/Company Breach..................................Section 9.01(g)
Trust Indenture Act............................................Section 2.01(c)
TW.............................................................Preamble
UATP...........................................................Section 7.19
under common control with......................................Section 10.03(d)
U.S. GAAP......................................................Section 3.07(b)
Voting Agreements..............................................Recitals
WARN...........................................................Section 3.05(b)
x
AGREEMENT AND PLAN OF
MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 19, 2001 (this
"AGREEMENT"), among Aloha Airgroup, Inc., a Hawaii corporation ("A"), Hawaiian
Airlines, Inc., a Hawaii corporation ("B"), TurnWorks Acquisition III, Inc., a
wholly-owned subsidiary of TurnWorks, Inc. and a
Delaware corporation (the
"COMPANY"), and TurnWorks, Inc., the sole stockholder of the Company and a Texas
corporation ("TW").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of each of A, B (based on
the unanimous recommendation of a special committee of independent directors of
B (the "SPECIAL COMMITTEE")), the Company and TW have each approved and adopted
this Agreement and the ancillary agreements (as defined below) to which it is a
party and the transactions contemplated by this Agreement and such ancillary
agreements, in each case after making a determination that this Agreement and
such transactions are advisable and fair to, and in the best interests of, such
company and its stockholders;
WHEREAS, TW, as sole stockholder of the Company, has approved and
adopted this Agreement and the ancillary agreements to which it is a party and
the transactions contemplated by this Agreement and such ancillary agreements;
WHEREAS, the Company, AIP General Partner, Inc., a
Delaware corporation
("C GP") (which is the sole general partner of Airline Investors Partnership,
L.P. ("C")), and AIP, Inc., a
Delaware corporation ("C, INC.") (which is the
sole limited partner of C), have entered into an Agreement and Plan of Merger
(the "C
MERGER AGREEMENT"), dated as of the date hereof, pursuant to which,
INTER ALIA, (a) prior to the effective time of the C Merger (as defined below),
(i) the stockholders of each of C GP and C, Inc. will form a
Delaware limited
liability company ("C LLC"), contribute all of the outstanding shares of capital
stock of C GP and C, Inc. to C LLC and become the sole holders of membership
interests of C LLC and (ii) as permitted by SECTION 4(a)(i)a) of the Designation
of the B Series B Special Preferred Stock (as defined below), C will transfer
the four shares of B Series B Special Preferred Stock (as defined below) that it
holds to C's affiliate, Xxxx X. Xxxxx; and (b) immediately prior to the
Effective Time (as defined below), (i) each of C GP and C, Inc. will be merged
with and into the Company, with the Company as the surviving corporation in each
such merger (such mergers, collectively, the "C MERGER"), (ii) pursuant to the C
Merger, C LLC will have its shares of C GP and C, Inc. converted into the right
to receive 18,181,818 shares of Company Common Stock (as defined below), Notes
(as defined below) with an aggregate principal amount of $36,363,636 (subject to
adjustment as provided in the C
Merger Agreement in respect of minimum
denominations of Notes) and $10,000,000 in cash in the aggregate and (iii) C
will cease to exist and the Company will become the direct holder of the shares
of capital stock of B held by C immediately prior to the C Merger;
WHEREAS, at the Effective Time, pursuant to the transactions
contemplated by this Agreement and on the terms and subject to the conditions
herein, INTER ALIA, (a) (i) A will, in accordance with the Hawaii Business
Corporation Act, as amended (the "HBCA") and the
Delaware Limited Liability
Company Act (the "DLLCA"), merge with and into a wholly-owned
subsidiary of the Company to be organized as a single-member
Delaware limited
liability company ("NEWCO A LLC"), with Newco A LLC as the surviving entity (the
"A LLC MERGER") or (ii) if, immediately prior to the Effective Time, (y) the A
LLC Merger or the B LLC Merger (as defined below) would not be permitted by
applicable Law (as defined below) or (z) if any of the conditions to Closing (as
defined below) in Article VIII would not be satisfied or waived if the A LLC
Merger or the B LLC Merger were to be effected but would be satisfied or waived
if the A Corporation Merger (as defined below) and the B Parent Merger (as
defined below) were to be effected (each such condition, a "DROP-DOWN
CONDITION"), A will, in accordance with the HBCA, and the
Delaware General
Corporation Law, as amended (the "DGCL"), merge with and into a wholly-owned
subsidiary of the Company to be organized as a
Delaware corporation ("NEWCO A
CORPORATION," it being understood that references herein to "NEWCO A SUB" shall
be deemed to refer to Newco A LLC (or, if any Drop-Down Condition is satisfied,
Newco A Corporation)), with Newco A Corporation as the surviving corporation
(the "A CORPORATION MERGER," it being understood that references herein to the
"A MERGER" shall be deemed to refer to the A LLC Merger (or, if any Drop-Down
Condition is satisfied, the A Corporation Merger)); (b) (i) B will, in
accordance with the HBCA and the DLLCA, merge with and into a wholly-owned
subsidiary of the Company to be organized as a single-member
Delaware limited
liability company ("NEWCO B LLC"), with Newco B LLC as the surviving entity (the
"B LLC MERGER") or (ii) if any Drop-Down Condition is satisfied, B will, in
accordance with the HBCA and the DGCL, merge with and into the Company, with the
Company as the surviving corporation (the "B PARENT MERGER" it being understood
that references herein to the "B MERGER" shall refer to the B LLC Merger (or, if
any Drop-Down Condition is satisfied, the B Parent Merger), and references
herein to the "MERGERS" shall refer collectively to the A Merger and the B
Merger, but not the C Merger); (c) the stockholders of A will have their shares
converted into the right to receive shares of capital stock of the Company; and
(d) the stockholders of B (other than the Company) will have their shares
converted into the right to receive shares of capital stock of the Company and
Notes (as defined below);
WHEREAS, if any Drop-Down Condition is satisfied, as soon as reasonably
practicable following the Effective Time (as defined below), the Company will
contribute to a wholly-owned subsidiary to be incorporated in
Delaware ("NEWCO B
CORPORATION," it being understood that references herein to "NEWCO B SUB" shall
be deemed to refer to Newco B LLC (or, if any Drop-Down Condition is satisfied,
Newco B Corporation)) all of the assets the Company holds as a result of the B
Parent Merger and will assign all of the rights and delegate all of the
obligations to which it succeeded as a result of the B Parent Merger to Newco B
Corporation (such transactions collectively, the "DROP-DOWN");
WHEREAS, for federal income tax purposes, it is intended that (i) each
of the A Merger, the B Merger and the C Merger shall separately qualify as a
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "CODE"), (ii) the Drop-Down, if it is effected, shall be a transfer
of property qualifying for tax-free treatment under Section 351 of the Code,
(iii) the stockholders of A and B will recognize no gain or loss for federal
income tax purposes on the receipt of shares as a result of the consummation of
the Mergers (except with respect to any cash or Notes received) and (iv) none of
the stockholders of A and B, the Company and TW will recognize any gain or loss
for federal income tax purposes as a result of the Drop-Down, if it is effected;
2
WHEREAS, certain principal stockholders of A (the "A PRINCIPAL
HOLDERS"), who collectively beneficially own shares of capital stock of A
representing in excess of 80% of the votes entitled to be cast at the A
Stockholders' Meeting (as defined below) have entered into a Voting Agreement
for the benefit of B and the Company (the "A PRINCIPAL HOLDERS VOTING
AGREEMENT"), and C, which beneficially owns shares of capital stock of B
representing approximately 53% of the votes entitled to be cast at the B
Stockholders' Meeting (as defined below), has entered into a Voting Agreement
for the benefit of A and the Company (the "C VOTING AGREEMENT" and, together
with the A Principal Holders Voting Agreement, the "VOTING AGREEMENTS") pursuant
to which the A Principal Holders and C have committed, INTER ALIA, on the terms
set forth in their respective Voting Agreements, to vote their shares of capital
stock of A and B, respectively, at the A Stockholders' Meeting and the B
Stockholders' Meeting, respectively, in favor of the adoption and approval of
this Agreement and the ancillary agreements and the transactions contemplated
hereby and thereby;
WHEREAS, a voting trust to be formed (which will hold the shares of
capital stock of A held by the A Principal Stockholders and by certain related
parties (the "A VOTING TRUST")), C LLC, TW and the Company will enter into a
Stockholders Agreement (the "STOCKHOLDERS AGREEMENT") in the form attached
hereto as EXHIBIT A and as a condition to the Closing, setting forth, INTER
ALIA, certain governance and other arrangements among such holders and the
Company, including with respect to the issuance of special preferred stock of
the Company;
WHEREAS, the A Voting Trust, C LLC, Xxxxx Management LLC ("SMC"), which
is an affiliate of C, TW and the Company will enter into a Registration Rights
Agreement (the "REGISTRATION RIGHTS AGREEMENT") in the form attached hereto as
EXHIBIT B and as a condition to the Closing;
WHEREAS, TW and the Company have entered into a Management Agreement
and a Stock Vesting Agreement (collectively, the "MANAGEMENT AGREEMENTS"), each
dated as of the date hereof, setting forth, INTER ALIA, certain management
arrangements and restrictions relating to certain shares of Company Common Stock
held by TW, which agreements shall become effective at the Effective Time;
WHEREAS, Xxxxxxx X. Xxxxxxxxx and the Company have entered into an
employment agreement (the "CEO EMPLOYMENT AGREEMENT"), dated as of the date
hereof, which shall become effective at the Effective Time;
WHEREAS, SMC, Xxxx X. Xxxxx and B have entered into an advisory
agreement (the "SMC/XXXXX ADVISORY AGREEMENT"), which shall be assumed by the
Company by operation of law at the Effective Time and pursuant to which, at the
Effective Time, the Company will issue one million shares of Company Common
Stock and Notes with an aggregate principal amount of $2 million, and pay $5
million in cash, to SMC and Xxxx X. Xxxxx, collectively, as consideration for
advisory services provided to B by SMC and Xxxx X. Xxxxx; and
WHEREAS, Mercer Management Consulting ("MERCER") and TW have each
entered into separate advisory agreements (together with the SMC/Xxxxx Advisory
Agreement,
3
the "ADVISORY AGREEMENTS"), with the Company pursuant to which the Company will
pay $1 million in cash to Mercer and $750,000 less any Advanced Amounts (as
defined below) to TW at the Effective Time as consideration for advisory
services.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, A, B, the Company and TW hereby agree as follows:
ARTICLE I
THE MERGERS; DIRECTORS AND OFFICERS OF THE COMPANY
SECTION 1.01. THE MERGERS. Upon the terms and subject to the conditions
set forth in this Agreement and in accordance with the HBCA and the DLLCA or the
DGCL, as applicable, at the Effective Time (as defined below):
(a) A shall be merged with and into Newco A Sub. Newco A Sub shall be
the surviving entity (the "A SURVIVING ENTITY") in the A Merger and shall
continue its existence as a limited liability company under the DLLCA (or, if
any Drop-Down Condition is satisfied, its corporate existence under the DGCL),
and the separate corporate existence of A shall cease. The effects and the
consequences of the A Merger shall be as set forth in this Agreement and the
HBCA and the DLLCA (or, if any Drop-Down condition is satisfied, the DGCL).
(b) B shall be merged with and into Newco B LLC (or, if any Drop-Down
Condition is satisfied, the Company). Newco B LLC (or, if any Drop-Down
Condition is satisfied, the Company) shall be the surviving entity (the "B
SURVIVING ENTITY") in the B Merger and shall continue its existence as a limited
liability company under the DLLCA (or, if any Drop-Down condition is satisfied,
its corporate existence under the DGCL), and the separate corporate existence of
B shall cease. The effects and the consequences of the B Merger shall be as set
forth in this Agreement, the HBCA and the DLLCA (or, if any Drop-Down Condition
is satisfied, the DGCL).
SECTION 1.02. EFFECTIVE TIME OF THE MERGERS; CLOSING. (a) Subject to
the conditions of this Agreement, the parties shall cause each of the Mergers to
be consummated simultaneously by filing (i) articles of merger with respect to
each such Merger complying with Section 414-315 of the HBCA with the Director of
the Department of Commerce and Consumer Affairs of the State of Hawaii (the
"ARTICLES OF MERGER") and (ii) certificates of merger (the "CERTIFICATES OF
MERGER") with respect to each such Merger complying with Section 18-209 of the
DLLCA (or, if any Drop-Down Condition is satisfied, SECTION 252(c) of the DGCL)
with the Secretary of State of the State of Delaware, in each case at the same
time on the Closing Date (as defined below). Each of the Mergers shall become
effective upon such filings or at such time thereafter as the parties shall
agree and as shall be provided in the Articles of Merger and the Certificates of
Merger (the "EFFECTIVE TIME"). Notwithstanding anything that may be to the
contrary in the foregoing, the parties shall cause the Articles of Merger and
the Certificates of Merger to specify the same Effective Time for the A Merger
and the B Merger.
4
(b) Subject to the terms and conditions of this Agreement, the closing
of the Mergers and all related transactions contemplated by this Agreement and
the ancillary agreements (the "CLOSING") shall take place at the offices of
Cleary, Gottlieb, Xxxxx & Xxxxxxxx in New York, New York at 10:00 A.M., local
time, as promptly as practicable (and in any event within three business days)
after the last of the conditions set forth in Article VIII hereof is fulfilled
or waived (other than those conditions that by their nature are to be satisfied
at the Closing, but subject to the fulfillment or waiver of those conditions at
the Closing), or at such other time and date and place as the parties shall
mutually agree. The date on which the Closing occurs is referred to herein as
the "CLOSING DATE".
(c) The Mergers shall have the effects set forth in the HBCA and the
DLLCA (or, if any Drop-Down Condition is satisfied, the DGCL), including without
limitation, in the case of both Mergers, SECTION 414-316 of the HBCA and Section
18-209 of the DLLCA (or, if any Drop-Down Condition is satisfied, SECTION 259 of
the DGCL). Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, (i) all the properties, rights, privileges,
immunities, powers and franchises of A and Newco A Sub shall vest in the A
Surviving Entity, and all debts, liabilities, obligations and duties of A and
Newco A Sub shall become the debts, liabilities, obligations and duties of the A
Surviving Entity, and (ii) all the properties, rights, privileges, immunities,
powers and franchises of B and Newco B LLC (or, if any Drop-Down Condition is
satisfied, the Company) shall vest in the B Surviving Entity, and all debts,
liabilities, obligations and duties of B and Newco B LLC (or, if any Drop-Down
Condition is satisfied, the Company) shall become the debts, liabilities,
obligations and duties of the B Surviving Entity.
SECTION 1.03. ORGANIZATIONAL DOCUMENTS. (a) TW shall cause (i) the
Certificate of Incorporation of the Company to be amended and restated to be in
the form set forth in EXHIBIT C hereto (including the change of the corporate
name to Aloha Holdings, Inc.) and (ii) the Bylaws of the Company to be amended
and restated to be in the form set forth in EXHIBIT D hereto, in each case as of
immediately prior to the effective time of the C Merger (unless any Drop-Down
Condition is satisfied, in which case such amendments and restatements shall be
effected by operation of law as part of the agreement and plan of the B Parent
Merger). As so amended and restated, the Certificate of Incorporation and the
Bylaws of the Company shall be the Certificate of Incorporation and Bylaws of
the Company until thereafter changed or amended either (A) as provided therein
or by the DGCL, in the case of such Certificate of Incorporation, or (B) as
provided therein, by the Certificate of Incorporation or by the DGCL, in the
case of such Bylaws.
(b) The Certificate of Limited Liability Company of Newco A Sub in
effect immediately prior to the Effective Time shall, by operation of law as a
result of the A LLC Merger, be amended and restated as of the Effective Time to
reflect the fact that the name of the A Surviving Entity, from and after the
Effective Time, shall be "Aloha Airgroup, LLC", and, as so amended and restated,
such Certificate of Limited Liability Company shall be the Certificate of
Limited Liability Company of the A Surviving Entity until amended in accordance
with such Certificate of Limited Liability Company or the DLLCA (or, if any
Drop-Down Condition is satisfied, the Certificate of Incorporation of Newco A
Sub in effect immediately prior to the Effective Time shall, by operation of law
as a result of the A Corporation Merger, be amended and restated as of the
Effective Time to reflect the fact that the name of the A Surviving Entity,
5
from and after the Effective Time, shall be "Aloha Airgroup, Inc.", and, as so
amended and restated, such Certificate of Incorporation shall be the Certificate
of Incorporation of the A Surviving Entity until amended in accordance with such
Certificate of Incorporation or the DGCL). If any Drop-Down Condition is not
satisfied, the Company will be the sole member of Newco A Sub, and, therefore,
Newco A Sub need not as of the Effective Time have an operating agreement; and,
if any Drop-Down Condition is satisfied, the Bylaws of Newco A Sub in effect
immediately prior to the Effective Time shall be the Bylaws of the A Surviving
Entity until amended in accordance with such Bylaws, such Certificate of
Incorporation or the DGCL.
(c) If any Drop-Down Condition is not satisfied, the Certificate of
Limited Liability Company of Newco B Sub in effect immediately prior to the
Effective Time shall, by operation of law as a result of the B LLC Merger, be
amended and restated as of the Effective Time to reflect the fact that the name
of the B Surviving Entity, from and after the Effective Time, shall be "Hawaiian
Airlines, LLC," and, as so amended and restated, such Certificate of Limited
Liability Company shall be the Certificate of Limited Liability Company of the B
Surviving Entity until amended in accordance with such Certificate of Limited
Liability Company or the DLLCA. If any Drop-Down Condition is not satisfied, the
Company will be the sole member of Newco B Sub, and, therefore, Newco B Sub need
not as of the Effective Time have an operating agreement.
(d) If any Drop-Down Condition is satisfied, the Company shall cause
the Certificate of Incorporation of Newco B Sub in effect immediately prior to
the Effective Time to be amended and restated as of the Effective Time to
reflect the fact that the name of Newco B Sub, from and after the Effective
Time, shall be "Hawaiian Airlines, Inc.", and, as so amended and restated, such
Certificate of Incorporation shall be the Certificate of Incorporation of Newco
B Sub until amended in accordance with such Certificate of Incorporation or the
DGCL.
SECTION 1.04. DIRECTORS AND OFFICERS. (a) Subject to SECTION 1.04(b),
the Board of Directors of the Company (the "BOARD") at the Effective Time
(whether or not any Drop-Down Condition is satisfied) shall be 11 persons,
consisting of (i) two individuals to be designated by the Company not less than
three business days prior to the initial filing date of the Registration
Statement by written notice to the A Principal Holders, C and B (one of whom, as
specified in such notice, shall be Xxxxxxx X. Xxxxxxxxx and he shall serve as
Chairman of the Board), (ii) three individuals to be designated by the A
Principal Holders not less than three business days prior to the initial filing
date of the Registration Statement by written notice to C, B and the Company
(one of whom, as specified in such notice, shall serve as Vice-Chairman of the
Board), (iii) three individuals to be designated by C not less than three
business days prior to the initial filing date of the Registration Statement by
written notice to the A Principal Holders, B and the Company and (iv) the three
individuals who immediately prior to the Effective Time serve on the Board of
Directors of B as designees of the Airline Pilots Association International, the
Association of Flight Attendants and the International Association of Machinists
and Aerospace Workers. Each such director shall hold office in accordance with
the Certificate of Incorporation and Bylaws of the Company, until his or her
death, resignation or removal or until his or her successor is duly elected and
qualified.
(b) Subject to the next sentence, the Company, the A Principal Holders
and C shall coordinate to assure that their eight designees to the Board as of
the Effective Time
6
pursuant to clauses (i), (ii) and (iii) of Section 1.04(a) include at least such
number of individuals who qualify as "independent directors", "outside
directors" and "non-employee directors" for purposes of the requirements under
AMEX (as defined below) rules, PSE (as defined below) rules, SECTION 162(m) of
the Code and Rule 16b-3 of the Exchange Act (as defined below), as applicable,
relating to members of the Audit Committee, "compensation committee" (within the
meaning of Section 162(m) of the Code) or a committee composed of 2 or more
non-employee directors (within the meaning of Rule 16b-3 of the Exchange Act) so
that such individuals may constitute an Audit Committee, "compensation
committee" (within the meaning of Section 162(m) of the Code) or a committee
composed of 2 or more non-employee directors (within the meaning of Rule 16b-3
of the Exchange Act) at the Effective Time with at least the minimum number of
"independent directors", "outside directors" or "non-employee directors"
required by AMEX rules, PSE rules, SECTION 162(m) or Rule 16b-3, as applicable.
Unless otherwise agreed by the parties, at least one of the designees of C to
the Board pursuant to SECTION 1.04(a)(iii) as of the Effective Time shall so
qualify as an "independent director", "outside director" and "non-employee
director".
(c) At the Effective Time, the officers of the Company (other than the
Chief Executive Officer, who shall be Xxxxxxx X. Xxxxxxxxx) shall be individuals
selected by TW and whom each of the A Principal Holders and C shall have
indicated, in a written notice delivered to the Company at least three business
days prior to the Closing Date, are reasonably acceptable to it. Each such
officer shall hold office in accordance with the Certificate of Incorporation
and Bylaws of the Company until his or her death, resignation or removal or
until his or her successor is duly elected or appointed and qualified.
(d) The officers of the Company at the Effective Time, who shall be
specified in accordance with Section 1.04(c), shall be the officers at the
Effective Time of Newco A Sub and Newco B Sub (or, if any Drop-Down Condition is
satisfied, the directors and officers of the Company at the Effective Time, who
shall be specified in accordance with Sections 1.04(a), 1.04(b) and 1.04(c),
shall be the directors and officers at the Effective Time of Newco A Sub and
Newco B Sub). Such officers (and, if any Drop-Down Condition is satisfied, such
directors) shall hold office in accordance with the Certificate of Limited
Liability Company of the A Surviving Entity or the B Surviving Entity, as the
case may be (or, if any Drop-Down Condition is satisfied, the Certificate of
Incorporation and the Bylaws of the A Surviving Entity and Newco B Corporation,
as the case may be), until his or her death, resignation or removal or until his
or her successor is duly elected or appointed and qualified.
(e) Prior to the Effective Time, the Company, A and B shall use
reasonable best efforts to take all such steps as may be required to cause the
transactions contemplated by this Agreement, including any acquisitions of
equity securities of the Company, by each individual who is or will be subject
to the reporting requirements of Section 16(a) of the Exchange Act with respect
to the Company, to be exempt under Rule 16b-3 promulgated under the Exchange
Act.
7
ARTICLE II
CONVERSION OF SECURITIES; ISSUANCE OF NEW SECURITIES;
EXCHANGE OF CERTIFICATES; DROP-DOWN
SECTION 2.01. CONVERSION OF SECURITIES; ISSUANCE OF NEW SECURITIES. (a)
On the Closing Date, but prior to the Effective Time:
(i) A shall cause each issued and outstanding share of Series
B 7% Convertible Cumulative Participating Preferred Stock, par value
$1.00 per share, of A ("A SERIES B PREFERRED STOCK") to be converted
into the maximum number of shares of Class A Common Stock, par value
$1.00 per share, of A ("A CLASS A COMMON STOCK") as expressly required
by SECTION 6.3(c)(9) of the Articles of Incorporation of A;
(ii) B shall purchase and accept from the Aloha Airlines, Inc.
Non-Pilots Pension Trust (the "A PENSION TRUST"), and the A Pension
Trust shall sell and deliver to B, each issued and outstanding share of
Series C 10% Exchangeable Preferred Stock, par value $.01 per share, of
A (the "A SERIES C PREFERRED STOCK") held by the A Pension Trust
against the payment by B of $10,000,000, plus the accrued but unpaid
dividends in respect of such shares, in immediately available U.S.
dollar funds, on the terms, and subject to the conditions, set forth in
the Stock Purchase Agreement, dated as of the date hereof, between B
and the A Pension Trust; and
(iii) B shall purchase and accept from certain of the A
Principal Holders, and such A Principal Holders shall sell and deliver
to B, for aggregate cash consideration equal to $5,000,000, each issued
and outstanding share of A Series C Preferred Stock held by such A
Principal Holders on the terms, and subject to the conditions, set
forth in the Stock Purchase Agreement, dated as of the date hereof,
between B and such A Principal Holders.
(b) At the Effective Time, by virtue of the A Merger and without any
action on the part of any holder of any capital stock or other equity interest
of A or Newco A Sub:
(i) each share of A Class A Common Stock and Class B Common
Stock, par value $1.00 per share, of A ("A CLASS B COMMON STOCK" and,
together with the A Class A Common Stock, the "A COMMON STOCK"), issued
and outstanding immediately prior to the Effective Time (other than any
shares of A Common Stock to be canceled pursuant to SECTION 2.01(b)(ii)
and each A Dissenting Share (as defined below)) shall be converted into
the right to receive a number of validly issued, fully paid and
nonassessable shares of Common Stock, par value $.0001 per share, of
the Company ("COMPANY COMMON STOCK") equal to the number (the "A
EXCHANGE RATIO") obtained by dividing (A) 19,555,458 (plus, if the
aggregate number of shares of B Common Stock issued between the date
hereof and the Closing Date pursuant to the exercise of B Options
exceeds 250,000, 14.58% of such aggregate number) by (B) the aggregate
number of shares of A Common Stock subject to conversion pursuant to
this Section 2.01(b)(i);
8
(ii) each share of capital stock of A (each, an "A SHARE"),
including, without limitation, A Class A Common Stock, A Class B Common
Stock and A Series C Preferred Stock, that is issued and outstanding
immediately prior to the Effective Time and owned by A, the Company, B
or any direct or indirect wholly-owned subsidiary of A, B or the
Company (other than shares in trust accounts, managed accounts,
custodial accounts and the like that are beneficially owned by third
parties) immediately prior to the Effective Time (including, without
limitation, the A Series C Preferred Stock purchased by B pursuant to
SECTION 2.01(a)(ii) and Section 2.01(a)(iii)) shall be cancelled and
extinguished without any conversion thereof and no payment shall be
made with respect thereto; and
(iii) the single membership interest of Newco A LLC (or, if
any Drop-Down Condition is satisfied, each share of common stock of
Newco A Corporation) issued and outstanding immediately prior to the A
Effective Time shall remain issued and outstanding and unchanged as
validly issued, fully paid and nonassessable securities of the A
Surviving Entity.
(c) At the Effective Time, by virtue of the B Merger without any action
on the part of any holder of capital stock or other equity interest of B or
either Newco B LLC or the Company, as the case may be:
(i) each share of Common Stock, par value $.01 per share, of
B, together with the rights associated with such shares pursuant to the
B Rights Agreement (as defined below) ("B COMMON STOCK"), issued and
outstanding immediately prior to the Effective Time (other than any
shares of B Common Stock to be canceled pursuant to SECTION
2.01(c)(iii) and each B Dissenting Share (as defined below)), shall be
converted into the right to receive one validly issued, fully paid and
nonassessable share of Company Common Stock and, subject to SECTION
2.03(f), $2.00 principal amount of a new issue of Notes due 2008 of
the Company (the "NOTES"), which shall contain, and be issued pursuant
to an indenture (the "INDENTURE") entered into containing, (A) terms
and conditions substantially as set forth in EXHIBIT E annexed hereto,
as it may be modified from time to time, after the date hereof but
prior to the mailing of the Joint Proxy Statement/ Prospectus, by the
mutual agreement of the Boards of Directors of each of A, B and the
Company and (B) such other terms and conditions as are customary for
indentures qualified under the Trust Indenture Act of 1939, as amended
(the "TRUST INDENTURE ACT");
(ii) each share of (A) Series B Special Preferred Stock, par
value $.01 per share, of B (the "B SERIES B SPECIAL PREFERRED STOCK"),
(B) Series C Special Preferred Stock, par value $.01 per share, of B
(the "B SERIES C SPECIAL PREFERRED STOCK"), (C) Series D Special
Preferred Stock, par value $.01 per share, of B (the "B SERIES D
SPECIAL PREFERRED STOCK") and (D) Series E Special Preferred Stock, par
value $.01, of B (the "B SERIES E SPECIAL PREFERRED STOCK" and,
collectively with the foregoing, the "B SPECIAL PREFERRED STOCK")
issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive one validly issued, fully paid and
nonassessable share of Company Common Stock and, subject to SECTION
2.03(f), $2.00 principal amount of
9
Notes, as expressly required by SECTION 7 of the Designation of the
B Special Preferred Stock;
(iii) each share of capital stock of B (each, a "B SHARE"),
including, without limitation, B Common Stock, B Series B Special
Preferred Stock, B Series C Special Preferred Stock, B Series D Special
Preferred Stock and B Series E Special Preferred Stock, that is issued
and outstanding immediately prior to the Effective Time and owned by B,
A or the Company or any direct or indirect wholly-owned subsidiary of
B, A or the Company (other than shares in trust accounts, managed
accounts, custodial accounts and the like that are beneficially owned
by third parties) immediately prior to the Effective Time (including,
without limitation, the B Common Stock held by the Company as a result
of the C Merger) shall be cancelled and extinguished without any
conversion thereof and no payment shall be made with respect thereto;
and
(iv) the single membership interest of Newco B LLC (or, if any
Drop-Down Condition is satisfied, each share of common stock of the
Company) issued and outstanding immediately prior to the B Effective
Time shall remain issued and outstanding and unchanged as validly
issued, fully paid and nonassessable securities of the B Surviving
Entity.
SECTION 2.02. ISSUANCE OF SPECIAL PREFERRED STOCK. Immediately
following the Effective Time, pursuant to the applicable collective bargaining
agreement which shall be assumed by the B Surviving Entity by operation of law
in the B Merger and be binding on the Company (regardless of whether any
Drop-Down Condition is satisfied) from and after the Effective Time, as
evidenced by instruments of assumption to be delivered to each union party
thereto immediately after the Effective Time, the Company shall issue (a) to the
Association of Flight Attendants one share of Series D Special Preferred Stock,
par value $.01 per share, of the Company, (b) to the International Association
of Machinists one share of Series E Special Preferred Stock, par value $.01 per
share, of the Company and (c) to the Hawaiian Master Executive Counsel c/o the
Air Line Pilots Association one share of Series F Special Preferred Stock, par
value $.01 per share, of the Company. The rights of such shares shall be as set
forth in the Certificate of Incorporation attached hereto as EXHIBIT C.
SECTION 2.03. EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT. As soon as
practicable after the Effective Time, the Company shall deposit with such bank
or trust company mutually agreeable to the Company, B and A (the "EXCHANGE
AGENT"), (i) certificates evidencing a sufficient number of shares of Company
Common Stock issuable pursuant to SECTION 2.01 and (ii) a sufficient number of
Notes with sufficient principal amounts issuable pursuant to SECTION 2.01, all
pursuant to an agreement to be entered into prior to the Effective Time between
the Company and the Exchange Agent (the "EXCHANGE AGENT AGREEMENT").
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective
Time, the Company shall cause the Exchange Agent to deliver to each holder of a
certificate or certificates that immediately prior to the Effective Time
evidenced outstanding A Shares or B Shares (the "CERTIFICATES") that were
converted (the "CONVERTED SHARES") into the right to receive shares of Company
Common Stock and, if applicable, cash and/or Notes pursuant to SECTION 2.01, (i)
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title
10
to the Certificates shall pass, only upon actual delivery of the Certificates to
the Exchange Agent) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing shares of Company
Common Stock and, if applicable, Notes. Upon surrender of a Certificate to the
Exchange Agent for cancellation (or to such other agent or agents as may be
appointed by the Company), together with a duly executed letter of transmittal
and such other documents as the Exchange Agent shall require, the holder of such
Certificate shall be entitled to receive in exchange therefor:
(A) in the case of holders of Certificates that immediately
prior to the Effective Time evidenced outstanding shares of A Common
Stock in book-entry or certificated form, (1) one or more shares of
Company Common Stock (which shall be in uncertificated book-entry form
unless a physical certificate is requested or the holder is a Rule 145
Affiliate (as defined below)) representing, in the aggregate, the whole
number of shares that such holder has the right to receive pursuant to
SECTION 2.01 (after taking into account all shares of A Common Stock
then held by such holder) and (2) a check in the amount equal to the
cash (which shall under no circumstances include any interest) that
such holder has the right to receive pursuant to the provisions of this
Article II in respect of dividends and other distributions pursuant to
SECTION 2.03(c); and
(B) in the case of holders of Certificates that immediately
prior to the Effective Time evidenced outstanding shares of B Common
Stock or shares of B Special Preferred Stock, in book-entry or
certificated form, (1) one or more shares of Company Common Stock
(which shall be in uncertificated book-entry form unless a physical
certificate is requested or the holder is a Rule 145 Affiliate)
representing, in the aggregate, the whole number of shares that such
holder has the right to receive pursuant to SECTION 2.01 (after taking
into account all shares of B Common Stock and B Special Preferred Stock
then held by such holder), (2) subject to SECTION 2.03(f), one or more
Notes (which shall be in uncertificated book-entry form unless a
physical note is requested or the holder is a Rule 145 Affiliate) with
an aggregate principal amount equal to the amount that such holder is
entitled to receive pursuant to SECTION 2.01, and (3) a check in the
amount equal to the cash (which shall under no circumstances include
any interest) that such holder has the right to receive pursuant to the
provisions of this Article II in respect of dividends and other
distributions pursuant to SECTION 2.03(c), cash in lieu of Fractional
Amounts pursuant to SECTION 2.03(f) and interest and other amounts
payable on the Notes pursuant to their terms.
Each Certificate surrendered pursuant to the previous sentence shall forthwith
be canceled. No interest shall accrue or be payable under this Section 2.03
except that interest shall accrue and be payable with respect to the Notes only
to the extent that the Notes, by their terms, specifically provide for the
accrual and payment of interest. No interest or other amount payable after the
Effective Time with respect to the Notes shall be paid to the holder of any
unsurrendered Certificate until the holder thereof surrenders such Certificate.
Until so surrendered and exchanged, each such Certificate shall, after the
Effective Time, be deemed to represent only the right to receive shares of
Company Common Stock, Notes and cash (each to the extent applicable), and until
such surrender or exchange, no such shares of Company Common Stock, Notes or
cash shall be delivered to the holder of such outstanding Certificate in respect
thereof. In the event of a transfer of ownership of Converted Shares that is not
registered in the transfer
11
records of A or B, as the case may be, a certificate evidencing the proper
number of shares of Company Common Stock, together with any dividends or other
distributions to which the holder of such Converted Shares is entitled pursuant
to SECTION 2.03(c), and Notes (to the extent applicable) with the proper
principal amount, together with cash in lieu of Fractional Amounts to which such
holder is entitled pursuant to SECTION 2.03(f), together with any interest or
other amounts payable to which such holder is entitled by their terms, may be
issued to a transferee if the Certificate evidencing such Converted Shares is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES OF COMPANY COMMON
STOCK. No dividends or other distributions declared or made after the Effective
Time with respect to shares of Company Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Company Common Stock evidenced thereby, until the
holder of such Certificate shall surrender such Certificate. Subject to the
effect of escheat, tax or other applicable Laws (as defined below), following
surrender of any such Certificate, there shall be paid to the holder of the
certificates evidencing shares of Company Common Stock issued in exchange
therefor, without interest, (i) the amount of dividends or other distributions
with a record date after the Effective Time and theretofore paid with respect to
such shares of Company Common Stock and (ii) at the appropriate payment date,
the amount of dividends or other distributions, with a record date after the
Effective Time but prior to surrender and a payment date occurring after
surrender, payable with respect to such shares of Company Common Stock.
(d) NO FURTHER RIGHTS IN CONVERTED SHARES. All shares of Company Common
Stock and, if applicable, Notes and cash issued and paid in exchange for
Converted Shares in accordance with the terms hereof (including any amounts paid
pursuant to SECTION 2.03(c) or 2.03(f)) shall be deemed to have been issued and
paid in full satisfaction of all rights pertaining to such Converted Shares.
(e) NO FRACTIONAL SHARES. No certificates or scrip evidencing
fractional shares of Company Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any other rights of a stockholder of the
Company. Any fractional share interest of Company Common Stock shall be rounded
up or down to the nearest whole share.
(f) NOTE DENOMINATIONS. Notwithstanding any other provision of this
Agreement, Notes shall be issued only in denominations of $2.00 (or, if $2.00
denominations are not commercially reasonable or otherwise practicable, the
lowest commercially reasonable and practicable denomination above $2.00) ($2.00
or, if applicable, such higher minimum denomination, the "MINIMUM DENOMINATION")
and integral multiples of the Minimum Denomination. Former holders of B Shares
who are otherwise entitled to receive Notes under this Article II will not be
entitled to receive Notes in principal amounts less than the Minimum
Denomination, or in principal amounts in excess of the Minimum Denomination (or
an integral multiple of the Minimum Denomination) but less than the next highest
integral multiple ("FRACTIONAL AMOUNTS") but, instead, will be entitled to
receive promptly from the Exchange Agent a cash payment (without any interest)
in lieu of Fractional Amounts representing each
12
such former holder's proportionate interest in the net proceeds from the sale by
the Exchange Agent on behalf of such former holders of the aggregate Fractional
Amounts pursuant to the terms of the Exchange Agent Agreement. Such sale shall
be made within ten days after the Effective Time. Such cash payments will be
made to each such former holder only upon proper surrender of such former
holder's Certificates, together with a properly completed and duly executed
transmittal form and any other required documents.
(g) TERMINATION OF EXCHANGE AGENT. Any certificates representing shares
of Company Common Stock deposited with the Exchange Agent pursuant to SECTION
2.03(a) and not exchanged within one year after the Effective Time pursuant to
this Section 2.03 shall be returned by the Exchange Agent to the Company, which
shall thereafter act as Exchange Agent. All funds and Notes, if any, held by the
Exchange Agent for payment or delivery to the holders of unsurrendered
Certificates and unclaimed at the end of one year from the Effective Time shall
be returned to the Company, after which time any holder of unsurrendered
Certificates shall look as a general creditor only to the Company for payment of
such funds or delivery of such Notes to which such holder may be due, subject to
applicable Law. All Notes so returned shall be cancelled by the Company pursuant
to the Indenture, without prejudice to any rights of any holder of unsurrendered
certificates.
(h) NO LIABILITY. The Company shall not be liable to any holder of A
Shares or B Shares for any such shares of Company Common Stock (or dividends or
distributions with respect thereto), Notes or cash delivered to a public
official pursuant to any abandoned property, escheat or similar Law.
(i) WITHHOLDING RIGHTS. The Company shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of A Shares or B Shares, such amounts as it is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign Tax Law. To the extent that amounts are so
withheld by the Company, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of A Shares or B Shares, as
the case may be, in respect of which such deduction and withholding was made by
the Company.
(j) LOST CERTIFICATES. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Company, the posting by such person of a bond in such reasonable amount as
the Company may direct as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will issue in exchange
for such lost, stolen or destroyed Certificate the shares of Company Common
Stock, together with any dividends or other distributions to which the holders
thereof are entitled pursuant to SECTION 2.03(c), and, if applicable, Notes,
together with cash in lieu of Fractional Amounts and interest and other amounts
payable in respect of the Notes pursuant to their terms deliverable in respect
thereof pursuant to this Agreement.
SECTION 2.04. STOCK TRANSFER BOOKS. (a) From and after the Effective
Time, the stock transfer books of A and B shall be closed and there shall be no
further registration of transfers of shares of capital stock of A or B
thereafter on the records of A or B, as the case may be. On or after the
Effective Time, any Certificates presented to the Exchange Agent or the
13
Company for any reason shall be converted into shares of Company Common Stock,
together with any dividends or other distributions payable to which the holders
thereof are entitled pursuant to SECTION 2.03(c), and, if applicable, Notes,
together with cash in lieu of Fractional Amounts and interest and other amounts
payable in respect of the Notes pursuant to their terms.
(b) Notwithstanding anything that may be to the contrary herein, with
respect to Certificates surrendered for exchange by any person constituting an
"affiliate" of A or B for purposes of Rule 145 under the Securities Act of 1933,
as amended (the "SECURITIES ACT," and any such person a "RULE 145 AFFILIATE"),
the Company Common Stock and, if applicable, Notes shall not be delivered until
the Company shall have received from such person an executed affiliate letter in
the form attached hereto as EXHIBIT J as provided in Section 7.05.
SECTION 2.05. STOCK OPTIONS; PILOTS' SHARES. (a) (i) Each option to
purchase A Common Stock (each, an "A OPTION") issued pursuant to A's 1992 Stock
Option Plan (the "A STOCK OPTION PLAN") or granted by A to any employee outside
the A Stock Option Plan, that is outstanding and unexercised immediately prior
to the Effective Time shall, as of such time, be cancelled in consideration for
a cash payment by B to the holder of such A Option equal to the product of (x)
the Spread Per Option Share (as defined below), multiplied by (y) the number of
shares of A Common Stock subject to such A Option, less applicable withholding
taxes. Such cash payment shall be made to the holders of the A Options no later
than 90 days after the Effective Time. For purposes of this Agreement: "SPREAD
PER OPTION SHARE" shall mean the EXCESS of (i) the PRODUCT of (A) the B Share
Average (as defined below) multiplied by (B) the A Exchange Ratio, OVER (ii) the
exercise price per share of A Common Stock subject to the A Option; and "B SHARE
AVERAGE" shall mean the average closing trading price per share of the B Common
Stock on the AMEX during the 30 calendar day period immediately preceding the
date of the Effective Time. A agrees to take all necessary action, including
obtaining any consents and any resolutions of the A Board of Directors or the A
Stock Option Plan committee, that may be necessary to effect the foregoing. From
and after the date of this Agreement, A shall not grant any additional options
to purchase shares of, or equity-based securities or rights with respect to, A
Common Stock or other capital stock under the A Stock Option Plan or otherwise.
Except as otherwise agreed to by the parties in this Agreement, A shall use
reasonable efforts to ensure that no person shall have any right under any stock
option plan (or any option granted thereunder) or other plan, program or
arrangement with respect to, including any right to acquire, any equity-based
securities or rights of A following the Effective Time.
(ii) As soon as practicable after the Effective Time, the
Company shall deliver to the holders of A Options appropriate notices
setting forth such holders' rights as described above.
(b) Each option to purchase B Common Stock (each a "B OPTION") issued
under B's 1996 Stock Incentive Plan, as amended, and B's 1996 Nonemployee
Director Stock Option Plan, as amended (collectively, the "B 1996 OPTION PLANS")
or granted by B to any employee outside of the B Option Plans (as defined below)
that is outstanding and unexercised as of the Effective Time shall, as of such
time, terminate without any further action on the part of any person. Each B
Option issued under B's 1994 Stock Option Plan, as amended (the "B 1994 OPTION
PLAN" and, together with the B 1996 Option Plans, the "B OPTION PLANS") that is
outstanding and unexercised immediately prior to the Effective Time shall, as of
such time, be
14
assumed by the Company in such a manner that it is converted into an option to
acquire, on similar terms and conditions as were applicable under the B 1994
Option Plan and the underlying option agreements (as modified by this Section
2.05), that number of shares of Company Common Stock equal to the number of
shares of B Common Stock subject to such B Option and an equal number of Notes,
each with a principal amount of $2.00 at an exercise price per share equal to
the exercise price per share for such B Option immediately prior to the
Effective Time, subject to adjustment in respect of Fractional Amounts. As soon
as reasonably practicable, the Company shall file a registration statement under
the Securities Act on Form S-8 with respect to the Company Common Stock subject
to such assumed options. From and after the date of this Agreement, B shall not
grant any additional options to purchase shares of, or other equity-based
securities or rights with respect to, B Common Stock or other capital stock
under the B Option Plans or otherwise. Except as otherwise agreed to by the
parties in this Agreement, B shall use reasonable efforts to ensure that no
person shall have any right under any stock option plan (or any option granted
thereunder) or other plan, program or arrangement with respect to, including any
right to acquire, any equity-based securities or rights of B following the B
Effective Time.
(c) As of and after the Effective Time, each pilot participant eligible
to receive a share of B Common Stock under B's Pilot 401(k) Plan and that
certain Stock Allocation Agreement, dated May, 2001 (collectively referred to
herein as the "PILOT ALLOCATION AGREEMENT") from the Stock Pool (as defined
under such Pilot Allocation Agreement), shall be eligible to receive one share
of Company Common Stock and one Note with a principal amount of $2.00, subject
to adjustment in respect of Fractional Amounts, and otherwise on the same terms
and conditions as were applicable, under the Pilot Allocation Agreement.
SECTION 2.06. DISSENTING SHARES. (a) Notwithstanding any provision of
this Agreement to the contrary, any shares of capital stock of A or B held by a
holder who has exercised dissenters' rights for such shares in accordance with
the HBCA and who, as of the Effective Time, has not effectively withdrawn or
lost such dissenters' rights ("A DISSENTING SHARES" or "B DISSENTING SHARES", as
the case may be, and collectively "DISSENTING SHARES"), shall not be converted
into or represent a right to receive Company Common Stock in the A Merger (in
the case of A Dissenting Shares) or Company Common Stock and Notes in the B
Merger (in the case of B Dissenting Shares), but the holder thereof shall only
be entitled to such rights as are granted by the HBCA.
(b) Notwithstanding the provisions of subsection (a), if any holder of
Dissenting Shares shall effectively withdraw or lose (through failure to perfect
or otherwise) his dissenters' rights, then, as of the later of the Effective
Time and the occurrence of such event, such holder's shares shall automatically
be converted into and represent only the right to receive shares of Company
Common Stock, together with any dividends or distributions payable pursuant to
SECTION 2.03(c), Notes (to the extent applicable) with the proper principal
amount and cash in lieu of Fractional Amounts pursuant to SECTION 2.03(f),
together with any interest or other amounts to which such holder is entitled by
their terms, in each case without interest thereon, upon surrender of the
certificate or certificates representing such Dissenting Shares.
(c) A shall give the Company and B, and B shall give the Company and A,
(i) prompt notice of any written demands for dissenters' rights received
pursuant to the HBCA, withdrawals of such demands, and any other instruments
served pursuant to the HBCA and
15
received thereby and (ii) the opportunity to participate in all negotiations and
proceedings with respect to such demands. Neither A nor B shall, except with the
prior written consent of the other and the Company, voluntarily make any payment
with respect to any such demands or offer to settle or settle any such demands.
SECTION 2.07. LIMITATION ON CLOSING AND POST-CLOSING PAYMENTS FROM
ASSETS OF A. The parties agree that all payments in connection with the Mergers
and the transactions contemplated hereby and by the ancillary agreements that
would otherwise be required to be made by A from its assets (including, without
limitation, payments in respect of severance, options issued by A, dissenting
shares and other matters) shall be made exclusively by B or the B Surviving
Entity from its assets to the extent such payments are required to be made on or
after the Closing Date.
SECTION 2.08. DROP-DOWN. If any Drop-Down Condition is satisfied, then,
as soon as reasonably practicable (and, in any event, not before the receipt of
all consents and approvals that, if not obtained in connection with the
Drop-Down, would have an adverse effect upon the assets, properties and rights
being transferred pursuant to the Drop-Down) following the Effective Time, the
Company will effect the Drop-Down pursuant to an assignment and assumption
agreement between the Company and Newco Sub B and such instruments of
conveyance, assignment and transfer as shall be necessary to effect the
Drop-Down.
SECTION 2.09. EMPLOYEE FUND. Promptly following the Effective Time, the
Company, as previously requested by Xxxxxxx X. Xxxxxxxxx, will establish, with a
$250,000 initial contribution by the Company, a fund for the benefit of
employees of the Company and its subsidiaries who are in need, which fund will
be managed by a board of employees initially selected by the Company who will
have sole discretion over the distribution of grants by such fund to employees
of the Company who apply for grants therefrom.
SECTION 2.10. ISSUANCE OF SHARES TO TW. Immediately following the
Effective Time, if the aggregate number of shares of B Common Stock issued
between the date hereof and the Closing Date pursuant to the exercise of B
Options exceeds 250,000, the Company shall issue to TW a certificate or
certificates in definitive form and registered in the name of TW representing an
additional number (rounded up or down to the nearest whole number) of shares of
Company Common Stock equal to 10.41% of such aggregate number. Such additional
shares of Company Common Stock shall be duly authorized on or prior to such
issuance and, when issued, shall be validly issued, fully paid and
non-assessable, shall be issued pursuant to an exemption from the registration
requirements of all applicable federal, state and foreign securities Laws and
shall be free and clear of all Liens (as defined below) (other than those
arising under applicable securities Laws and those arising under this Agreement
or any of the ancillary agreements).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF B
Except as set forth in the Disclosure Schedule delivered by B to A, the
Company and TW concurrently with the execution of this Agreement (the "B
DISCLOSURE SCHEDULE") or in the B SEC Reports (as defined below) that have been
filed with the SEC, and made publicly
16
available through XXXXX, after December 31, 2000 and prior to the date hereof, B
hereby represents and warrants to A, the Company and TW that:
SECTION 3.01. ORGANIZATION AND QUALIFICATION. (a) B is a corporation
duly organized under the laws of the Territory of Hawaii, and validly existing
and in good standing under the laws of the State of Hawaii. B is duly qualified
or licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except for such failures to be so qualified or licensed and
in good standing that would not, individually or in the aggregate, have a B
Material Adverse Effect. The term "B MATERIAL ADVERSE EFFECT" means any change
in or effect on the business of B that is materially adverse to the financial
condition, business or results of operations of B, since December 31, 2000,
except for any such changes or effects resulting from this Agreement, the
ancillary agreements or the transactions contemplated hereby or thereby or the
announcement hereof or thereof or relating to any agreement of the type
contemplated by SECTION 116 of the Aviation and Transportation Security Act,
PROVIDED that such agreement is reasonably acceptable to TW and approved by the
Secretary of the DOT (as defined below) under 49 U.S.C. ss. 41308(c) and
receives the prior written approval of the Company and A, and other than any
change or effect which adversely affects both B and A, such as any change or
effect arising out of general economic conditions unrelated to the business in
which B and A are engaged, or any change or effect which affects the airline
industry generally (including, but not limited to, a material change in the
price of fuel and changes resulting from the terrorist attacks against the
United States on September 11, 2001).
(b) B is a "citizen of the United States" (as defined in the Federal
Aviation Act of 1958, as amended, together with the aviation regulations of the
FAA (as defined below), as the same may be in effect from time to time (the
"FEDERAL AVIATION ACT")), and is an "air carrier" within the meaning of the
Federal Aviation Act operating pursuant to the terms of one or more certificates
of public convenience and necessity duly issued to it by the Department of
Transportation (the "DOT"), which certificates are in full force and effect and
are adequate for the conduct of the business that B is conducting. B possesses
all other certificates, licenses, permits, authorizations and approvals of
Governmental Authorities (including without limitation the Federal Aviation
Administration (the "FAA") and the Federal Communications Commission (the
"FCC")) necessary to own, lease and operate its properties and to conduct the
business that B is conducting (together with those certificates referred to in
the preceding sentence, the "B PERMITS"), except where the failure to possess
such B Permits would not, individually or in the aggregate, have a B Material
Adverse Effect.
(c) B has no subsidiaries. The B Disclosure Schedule lists all persons
in which B has any ownership, partnership, voting or joint venture interest. To
the knowledge of B, all the outstanding shares of capital stock of, or other
ownership interests in, each such other person (i) have been validly issued and
are fully paid and nonassessable and (ii) except for director qualifying shares,
are owned directly or indirectly by B, free and clear of all pledges, claims,
liens, charges, encumbrances and security interests of any kind or nature
whatsoever (collectively, "LIENS"), including, without limitation, in respect of
restrictions on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests.
17
SECTION 3.02. ARTICLES OF INCORPORATION AND BYLAWS. B has heretofore
made available to the Company and A a complete and correct copy of the Articles
of Incorporation and the Bylaws of B, each as amended. Such Articles of
Incorporation and Bylaws are in full force and effect. B is not in violation of
any of the provisions of its Articles of Incorporation or Bylaws.
SECTION 3.03. CAPITALIZATION. The authorized capital stock of B
consists of 60,000,000 shares of B Common Stock and 2,000,000 shares of
Preferred Stock, par value $.01 per share, which shares of Preferred Stock have
been divided into (a) 1,979,993 shares of Preferred Stock, (b) 20,000 shares of
Series A Junior Participating Cumulative Preferred Stock (the "B SERIES A
PREFERRED STOCK"), (c) four shares of B Series B Special Preferred Stock, (d)
one share of B Series C Special Preferred Stock, (e) one share of B Series D
Special Preferred Stock and (f) one share of B Series E Special Preferred Stock.
As of the close of business on December 18, 2001, (i) 34,150,809 shares of B
Common Stock, no shares of B Series A Junior Participating Cumulative Preferred
Stock, four shares of B Series B Special Preferred Stock, one share of B Series
C Special Preferred Stock, one share of B Series D Special Preferred Stock and
one share of B Series E Special Preferred Stock were issued and outstanding, all
of which are validly issued, fully paid and nonassessable, (ii) no shares of any
series or class of capital stock of B were owned by B or held in the treasury of
B, (iii) 4,457,500 shares of B Common Stock were reserved for future issuance
pursuant to the B Option Plans, options in respect of 3,033,000 shares of B
Common Stock were outstanding and options in respect of 1,778,000 shares of B
Common Stock were vested and exercisable at a weighted average exercise price of
$3.1526 per share. Except for these options granted pursuant to B Option Plans,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
B, or obligating B to issue, vote or sell any shares of capital stock of, or
other equity interests in, B. The B 1996 Option Plans require that, at the
Effective Time, each B Option issued under either of the B 1996 Option Plans
that is outstanding and unexercised immediately prior to the Effective Time
shall terminate without any further liability on the part of B or the B
Surviving Entity and without any further action on the part of any person. At
the Effective Time, (i) the B 1994 Option Plan requires that each B Option
issued under such B 1994 Option Plan that is outstanding and unexercised
immediately prior to the Effective Time convert and adjust as provided in
SECTION 2.05 hereof pursuant to the terms of such B 1994 Option Plan without any
further action on the part of any person and (ii) no more than 50,000 shares of
B Common Stock in the aggregate are, or will immediately prior to the B
Effective Time be, issuable upon the exercise of all B Options issued pursuant
to the B 1994 Option Plan that are outstanding and unexercised as of such time.
All B Shares subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. There are
no outstanding contractual obligations of B to repurchase, redeem or otherwise
acquire any shares of capital stock of B. Except for its ownership interests
described in the B Disclosure Schedule, B does not beneficially own directly or
indirectly and has not agreed to purchase or otherwise acquire, any of the
capital stock of, or any interest convertible into or exchangeable or
exercisable for, any of the capital stock of any corporation, partnership, joint
venture or other business association or entity. There are no material
outstanding contractual obligations of B to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
person. B is obligated to issue up to 1,685,380 shares
18
of B Common Stock pursuant to the Pilots Allocation Agreement, of which 518,910
have been issued as of the date hereof.
SECTION 3.04. AUTHORITY RELATIVE TO THIS AGREEMENT AND THE ANCILLARY
AGREEMENTS. B has all necessary corporate power and authority to execute and
deliver this Agreement and the ancillary agreements to which B is a party, and
subject (in the case of the consummation of the B Merger only) to obtaining the
required approval of the stockholders of B, to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the ancillary
agreements to which B is a party by B and the consummation by B of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of B are necessary to authorize this Agreement or any of the
ancillary agreements to which it is a party or to consummate the transactions
contemplated hereby or thereby (other than, with respect to the B Merger only,
the approval and adoption of this Agreement by the votes of the stockholders
described in Section 3.15 and the filing and recordation of the Articles of
Merger as required by the HBCA and the filing of any Certificate of Merger as
required by the DLLCA or the DGCL, as the case may be). Each of this Agreement
and the ancillary agreements to which B is a party has been duly and validly
executed and delivered by B and, assuming the due authorization, execution and
delivery by each of the other parties hereto and thereto, constitutes a legal,
valid and binding obligation of B, enforceable against B in accordance with its
terms.
SECTION 3.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement and the ancillary agreements to which B
is a party by B do not, and the performance of this Agreement and the ancillary
agreements to which B is a party by B and the consummation by B of the
transactions contemplated hereby and thereby will not, (i) conflict with or
violate the Articles of Incorporation or Bylaws of B, (ii) assuming that all
consents, approvals, authorizations, notifications and other actions identified
in Section 3.05(b) and the related section of the B Disclosure Schedule have
been obtained and all filings and obligations described in Section 3.05(b) have
been made or complied with, conflict with or violate any foreign or domestic
(federal, state or local) law, statute, ordinance, rule, regulation, order,
judgment or decree ("LAW") applicable to B or by which any property or asset of
B is bound or affected, or (iii) result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a Lien or other encumbrance on any
property or asset of B pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation, except, with respect to clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults, or other occurrences which would not,
individually or in the aggregate, have a B Material Adverse Effect, have a
material adverse effect on the ability of B to perform its obligations hereunder
or thereunder or materially impair or delay the consummation of the transactions
contemplated hereby or thereby.
(b) The execution and delivery of this Agreement and the ancillary
agreements to which B is a party by B do not, and the performance of this
Agreement and the ancillary agreements to which B is a party by B and the
consummation by B of the transactions contemplated hereby and thereby will not,
require any consent, approval, authorization or permit
19
of, or filing with or notification to, any United States (federal, state or
local) or foreign government or governmental, regulatory or administrative
authority, agency or commission ("GOVERNMENTAL AUTHORITY"), except (i) for
applicable requirements, if any, of the Securities Act, Securities Exchange Act
of 1934 (the "EXCHANGE ACT"), the Trust Indenture Act, state securities or "blue
sky" laws ("BLUE SKY LAWS"), the American Stock Exchange ("AMEX"), the Pacific
Stock Exchange ("PSE"), the notice requirements of the FCC, FAA and DOT, state
takeover laws, the Worker Adjustment and Retiring Notification Act or any
similar state law (collectively, "WARN"), the notice requirements of the Hawaii
Dislocated Workers Act, the pre-merger notification requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR ACT"), Hawaii antitrust and trade
regulation laws, and filing and recordation of the Articles of Merger as
required by the HBCA and the filing of any Certificate of Merger as required by
the DLLCA (or, if any Drop-Down Condition is satisfied, the DGCL) and (ii) where
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not, individually or in the aggregate,
have a B Material Adverse Effect, have a material adverse effect on the ability
of B to perform its obligations hereunder or thereunder or materially impair or
delay the consummation of the transactions contemplated hereby or thereby.
SECTION 3.06. PERMITS; COMPLIANCE. No suspension or cancellation of any
of the B Permits is pending or, to the actual knowledge of B, threatened, except
where the failure to have, or the suspension or cancellation of, any of the B
Permits would not, individually or in the aggregate, have a B Material Adverse
Effect. B is not in conflict with, or in default or violation of (a) any Law
applicable to B or by which any property or asset of B is bound or affected, (b)
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which B is a party or by
which B or any property or asset of B is bound or affected or (c) any B Permits,
except for any such conflicts, defaults or violations that would not,
individually or in the aggregate, have a B Material Adverse Effect.
SECTION 3.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) B has timely filed
or furnished all forms, reports and documents required to be filed or furnished
by it with or to the Securities and Exchange Commission (the "SEC") since
December 31, 2000 (collectively, the "B SEC REPORTS"). The B SEC Reports, as of
their respective dates, (i) complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
(ii) did not at the time they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(b) Each of the financial statements of B (including, in each case, any
notes thereto) contained in the B SEC Reports complies with all applicable
requirements of the SEC and was prepared in accordance with U.S. generally
accepted accounting principles ("U.S. GAAP") applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto) and each presented fairly, in all material respects, the financial
position and results of operations of B as at the respective dates thereof and
for the respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal and recurring audit
adjustments which were not and are not expected, individually or in the
aggregate, to have a B Material Adverse Effect).
20
(c) B has no known liability or obligation of any nature (whether
accrued, absolute, contingent, or otherwise) that would, individually or in the
aggregate, have a B Material Adverse Effect.
(d) B is not indebted to any director, officer, employee or agent of B
(except for amounts due as normal salaries and bonuses and payments due to
agents under contracts and in reimbursement of ordinary course expenses) and no
such person is indebted to B, and there have been no other transactions of the
type required to be disclosed pursuant to Items 402 and 404 of Regulation S-K
under the Exchange Act since December 31, 2000.
(e) B has no commitments, obligations or plans for capital expenditures
or otherwise involving cash payments in excess of an aggregate of $2,000,000
expected to be paid or become payable either within 12 months from the date
hereof or as a result of the Mergers, other than (i) pursuant to B Material
Contracts (as defined below), (ii) pursuant to SECTION 9.05 or (iii) other
payments pursuant to this Agreement and the ancillary agreements.
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
2000, except as contemplated by this Agreement or any of the ancillary
agreements to which it is a party, B has conducted its business only in the
ordinary course and in a manner consistent with past practice and, since such
date, there has not been (a) any B Material Adverse Effect or any event or
circumstance reasonably likely to result in a B Material Adverse Effect, (b) any
material change by B in its accounting (tax, financial or otherwise) methods,
principles or practices, (c) any revaluation by B of any material asset
(including, without limitation, any writing down of the value of inventory or
writing off of notes or accounts receivable), other than in the ordinary course
of business consistent with past practice, (d) any entry by B into any
commitment or transaction material to B or any amendment or modification to, or
waiver or relinquishment of any rights under, any B Permit or B Material
Contract, other than after the date hereof in the regular, usual and ordinary
course of business, (e) any declaration, setting aside or payment of any
dividend or distribution in respect of the B Shares or any redemption, purchase
or other acquisition of any of its securities, (f) any split, combination or
reclassification of any of the capital stock of B or any issuance, or the
authorization of any issuance, of any securities in respect of, in lieu of or in
substitution for shares of capital stock of B or (g) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan relating to any employee of B, or any other increase in
the compensation payable or to become payable to any officers or key employees
of B, except as required by any Law or existing agreement or plan.
SECTION 3.09. ABSENCE OF LITIGATION. There is no litigation, suit,
claim, action or proceeding pending or, to the knowledge of B, threatened in
writing against B, or any property or asset of B, before any court, arbitrator
or Governmental Authority, domestic or foreign, (i) seeking relief which, if
ordered, would, individually or in the aggregate, have a B Material Adverse
Effect or (ii) as of the date hereof, seeking relief which, if ordered, would
delay or prevent the consummation of any transaction contemplated hereby or by
any of the ancillary agreements. Neither B nor any property or asset of B is
subject to any continuing order of, consent decree, settlement agreement or
other similar written agreement with, or, to the
21
knowledge of B, continuing investigation by, any Governmental Authority, or any
order, writ, judgment, injunction, decree, determination or award of any
Governmental Authority or arbitrator having, individually or in the aggregate, a
B Material Adverse Effect.
SECTION 3.10. EMPLOYEE BENEFIT PLANS; LABOR MATTERS. (a) With respect
to each employee benefit plan, policy, commitment, program, arrangement and
contract (including, without limitation, any "employee benefit plan", as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), sponsored, maintained or contributed to, or to which there
is an obligation to contribute, by B, or with respect to which B could incur
liability under Title IV of ERISA, including, but not limited to, SECTION 4069,
4212(c) or 4204 of ERISA (the "B BENEFIT PLANS"), B has delivered or made
available to A and the Company a true and correct copy of (i) such B Benefit
Plan and all amendments thereto and the most recent summary plan description
related to each B Benefit Plan for which a summary plan description is required,
(ii) each trust agreement relating to such Benefit Plan, (iii) the most recent
annual report (Form 5500) filed with the Internal Revenue Service (the "IRS"),
(iv) the most recent actuarial report and/or financial statement, if any,
relating to any B Benefit Plan, (v) the most recent determination letter, if
any, issued by the IRS with respect to any B Benefit Plan qualified under
SECTION 401(a) of the Code, (vi) all material communications with any
Governmental Authority (including the Pension Benefit Guaranty Corporation and
the IRS) given or received within the last three years, and (vii) a description
of all unwritten B Benefit Plans, if any.
(b) To the knowledge of B, each B Benefit Plan has been administered in
all material respects in accordance with its terms and all contributions
required to be made under the terms of any of the B Benefit Plans as of the date
hereof have been timely made or have been reflected on the most recent balance
sheet filed or incorporated by reference in the B SEC Reports prior to the date
hereof. All of the B Benefit Plans are in compliance with all applicable
requirements of Law, including ERISA and the Code, except to the extent that any
such non-compliance would not have a B Material Adverse Effect.
(c) There are no pending actions, claims or lawsuits that have been
asserted regarding the B Benefit Plans directly or, to the knowledge of B,
against any fiduciary of any B Benefit Plan with respect to their operation
(other than routine benefit claims) which could result in liability.
(d) There is no B Benefit Plan that is a "multiemployer plan" (within
the meaning of Section 3(37) of ERISA).
(e) Each B Benefit Plan which is a "group health plan" (as defined in
SECTION 607(1) of ERISA) is in compliance with Section 601 et seq. of ERISA, the
Health Insurance Portability and Accountability Act and any other applicable
federal, state or local Law.
(f) B is not a party to any collective bargaining or other labor union
contract applicable to persons employed by B and is not negotiating any
collective bargaining agreements. As of the date hereof, there is no labor
dispute, strike or work stoppage against B pending or, to the knowledge of B,
threatened in writing which may interfere with the business activities of B,
except where such dispute, strike or work stoppage would not have a B Material
22
Adverse Effect. As of the date hereof, to the knowledge of B, none of B or its
representatives or employees, has committed any unfair labor practices in
connection with the operation of the business of B, and there is no charge or
complaint against B by the National Labor Relations Board or any comparable
federal or state agency pending or threatened in writing, except where such
unfair labor practice, charge or complaint would not have a B Material Adverse
Effect.
(g) B has delivered to A true and correct copies of (i) all employment
agreements with officers of B; (ii) all severance plans, agreements, programs
and policies of B with or relating to its employees; (iii) all plans, programs,
agreements and other arrangements intended to satisfy the performance-based
exception under Section 162(m) of the Code; and (iv) all plans, programs,
agreements and other arrangements of B with or relating to its employees which
contain change in control provisions.
(h) Except as required by Law, no B Benefit Plan provides, or has
liability with respect to, retiree medical or other retiree welfare benefits to
any person.
(i) B is not a party to any agreement or arrangement that would result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code (disregarding Section
280G(b)(4) of the Code).
(j) The consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee of B to severance pay,
unemployment compensation or any similar payment; (ii) accelerate the time of
payment or vesting of, or increase the amount of, any compensation due to any
current or former employee of B; (iii) reasonably be expected to result in any
"excess parachute payment" under Section 280G of the Code; or (iv) result in any
material liability to any present or former employee, including as a result of
WARN.
(k) B has no material liability, whether absolute or contingent,
including any material obligations under any B Benefit Plan, with respect to any
misclassification of any person as an independent contractor rather than as an
employee, or with respect to any employee leased from another employer.
(l) B has not entered into any transaction with any B Benefit Plan.
(m) SECTION 3.10(m) of the B Disclosure Schedule sets forth (i) a true
and correct list of all individuals who would be entitled to severance payments
pursuant to an individual agreement with B and the amount of cash severance
payments to which each such person would be entitled thereunder and (ii) with
respect to any formal or informal severance program, plan or arrangement of B
that does not involve an individual agreement between B and any individual, (A)
a brief written description of such program, plan or arrangement and (B) the
number of individuals entitled to severance benefits under such program, plan or
arrangement.
(n) SECTION 3.10(n) of the B Disclosure Schedule sets forth a true and
correct list of all persons who hold B Options, and sets forth, for each such
person, (i) the number of shares of B Common Stock underlying the B Options held
by such person as of the date hereof, (ii) the exercise price per share with
respect to each such B Option, (iii) the expiration date for such B Option, and
(iv) the Cash-Out Amount (as defined below) with respect to the B Options
(whether
23
or not vested) that are held by such person. For purposes of this Agreement,
"CASH-OUT AMOUNT" shall mean, with respect to each share of B Common Stock
underlying a B Option (whether or not vested), $4.00 minus the exercise price
per share of such B Option.
(o) To the knowledge of B based on a good faith interpretation of the
Air Transportation Safety and System Stabilization Act (the "STABILIZATION
ACT"), (i) except as set forth in Section 3.10(o) of the B Disclosure Schedule,
no B employee's or officer's "total compensation" (within the meaning of the
Stabilization Act) exceeded $300,000 in calendar year 2000 and (ii) with respect
to any persons so identified pursuant to clause (i), B has not made or promised
to make any payments or taken any action which may adversely affect the
Company's ability to obtain a Federal credit instrument under Section 101(a)(1)
of the Stabilization Act.
SECTION 3.11. TAXES. B (i) has prepared and timely filed all material
Tax Returns required to be filed by it, or requests for extensions to file such
Tax Returns have been timely filed, granted and have not expired; (ii) has paid
all Taxes required to be shown to be due on such Tax Returns; (iii) is not a
party to any Tax sharing agreement or arrangement; (iv) has withheld or
collected and paid over to the appropriate Taxing Authorities (or are properly
holding for such payment) all Taxes required by Law to be withheld or collected,
including but not limited to all employment and payroll Taxes; and (v) as of the
date hereof, has neither extended nor waived any applicable statute of
limitations with respect to Taxes and has not otherwise agreed to any extension
of time with respect to Tax assessment or deficiency. The most recent financial
statements filed with the SEC and publicly available prior to the date of this
Agreement reflect an adequate reserve for all Taxes payable by B for all Taxable
periods and portions thereof accrued through the date of such financial
statements. No material deficiencies for any Taxes have been proposed, asserted
or assessed by any Taxing Authority against B that are not adequately reserved
for in accordance with U.S. GAAP. There are no Liens for Taxes upon the assets
of B except for Taxes that are not yet due and payable. As used in this
Agreement, (i) the term "TAX" (including, with correlative meaning, the terms
"TAXES" and "TAXABLE") means, with respect to any Person (as defined below), (a)
all taxes, domestic or non-U.S., including without limitation any income (net,
gross or other, including recapture of any tax items such as investment tax
credits), alternative or add-on minimum tax, gross income, gross receipts,
gains, sales, use, leasing, lease, user, ad valorem, transfer, recording,
franchise, profits, property (real or personal, tangible or intangible), fuel,
license, withholding on amounts paid to or by such person, payroll, employment,
unemployment, social security, excise, severance, stamp, occupation, premium,
environmental or windfall profit tax, custom, duty, value added or other tax, or
other like assessment or charge of any kind whatsoever, together with any
interest, levies, assessments, charges, penalties, additions to tax or
additional amounts imposed by any Taxing Authority, (b) any joint or several
liability of such Person with any other Person for the payment of any amounts of
the type described in (a) of this definition, and (c) any liability of such
Person for the payment of any amounts of the type described in (a) as a result
of any express or implied obligation to indemnify any other Person; (ii) the
term "TAX RETURN(S)" means all returns, consolidated or otherwise, report or
statement (including without limitation informational returns), required to be
filed with any Taxing Authority; (iii) the term "TAXING AUTHORITY" means any
authority of competent jurisdiction responsible for the imposition of any Tax;
and (iv) the term "PERSON" means any corporation (including not-for-profit),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, or other entity of any kind or nature.
24
SECTION 3.12. ENVIRONMENTAL MATTERS. (a) For purposes of this
Agreement, the following terms shall have the following meanings: (i) "HAZARDOUS
SUBSTANCES" means (A) those substances defined in or regulated under the
following federal statutes and their state counterparts, as each may be amended
from time to time, and all regulations thereunder: the Hazardous Materials
Transportation Act, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the Clean
Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal
Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act; (B) petroleum
and petroleum products, including crude oil and any fractions thereof; (C)
natural gas, synthetic gas, and mixtures thereof; (D) radon; (E) asbestos; (F)
any other contaminant; and (G) any substance with respect to which a federal,
state or local agency requires environmental investigation, monitoring,
reporting or remediation; and (ii) "ENVIRONMENTAL LAWS" means any federal, state
or local Law relating to (A) releases or threatened releases of Hazardous
Substances or materials containing Hazardous Substances; (B) the manufacture,
handling, transport, use, treatment, storage or disposal of Hazardous Substances
or materials containing Hazardous Substances; (C) noise regulations or (D)
otherwise relating to pollution of the environment.
(b) To the knowledge of B, except as would not, individually or in the
aggregate, have a B Material Adverse Effect: (i) B is not in violation of any
Environmental Law; (ii) none of the properties owned, leased or operated
exclusively by B is contaminated with any Hazardous Substance; (iii) B is not
currently liable (as a result of an existing condition) to undertake
investigation or remediation, or to share the costs of investigation or
remediation, or to pay any other costs, with respect to any contamination under
Environmental Laws or relating to Hazardous Substances; (iv) B is not liable to
pay any amount or to undertake any action under any Environmental Law; (v) B has
all permits, licenses and other authorizations required under any Environmental
Law ("ENVIRONMENTAL PERMITS"); (vi) B is in compliance with its Environmental
Permits; (vii) there are no pending, or, to the knowledge of B, threatened
claims against B relating to any Environmental Law or Hazardous Substance; and
(viii) B has made available true and correct copies of any environmental reports
commissioned or received by it within the last five years to each of A and the
Company.
SECTION 3.13. INSURANCE. B has obtained and maintained in full force
and effect insurance with responsible and reputable insurance companies or
associations in such amounts, on such terms and covering such risks, including
fire, terrorism, war and other risks insured against by extended coverage, as to
the knowledge of B is customarily carried by reasonably prudent persons
conducting businesses or owning or leasing assets similar to those owned or
leased by B, and has maintained in full force and effect public liability
insurance, insurance against claims for personal injury or death or property
damage occurring in connection with the activities of B or any properties owned,
occupied or controlled by B, in such amount as is customarily carried by
reasonably prudent persons conducting businesses or owning assets similar to
those of B. The execution, delivery, performance and consummation of this
Agreement and the ancillary agreements will not affect the insurance coverage of
B.
SECTION 3.14. BOARD APPROVAL. The Board of Directors of B, acting on
the recommendation of the Special Committee, has, on December 18, 2001, (i)
approved and adopted this Agreement, the B Merger and the ancillary agreements
to which B is a party, (ii) determined that this Agreement, the B Merger and the
ancillary agreements to which B is a party
25
are in the best interests of B and its stockholders and that the terms of this
Agreement, the B Merger and the ancillary agreements to which B is a party are
advisable and fair to B and its stockholders, (iii) determined to recommend that
the stockholders of B approve and adopt this Agreement and the B Merger and (iv)
resolved to elect, to the extent permitted by Law, not to be subject to any
"moratorium", "control share acquisition", "business combination", "fair price"
or other form of anti-takeover laws and regulations of any jurisdiction
(including Sections 415-171 and 172 and Chapter 417E of the HBCA) that may
purport to be applicable to this Agreement or any ancillary agreement. In
addition, the Board of Directors of B has taken all necessary action under the
Rights Agreement, dated December 23, 1994, by and between B and ChaseMellon
Shareholder Services LLC, as successor to Chemical Trust Company of California,
as such agreement has been amended, restated, modified and supplemented from
time to time (the "B RIGHTS AGREEMENT") (including any amendment thereof) so
that (A) none of the execution, delivery or performance of this Agreement or any
of the ancillary agreements or the consummation of any of the transactions
contemplated hereby or thereby will cause (1) the rights issued pursuant to the
B Rights Agreement to become exercisable, (2) a Distribution Date to occur, (3)
Share Acquisition Date to occur, (4) a Section 11(a)(ii) Event to occur or (4) a
SECTION 13(a) Event to occur and (B) the execution, delivery and performance of
this Agreement and the ancillary agreements and the consummation of the
transactions contemplated hereby and thereby will be exempt from the B Rights
Agreement. B has furnished the other parties to this Agreement with a true and
correct copy of the resolutions of the Board of Directors of B that has the
effects specified in the preceding sentence.
SECTION 3.15. VOTE REQUIRED. The only vote of the holders of any class
or series of capital stock of B necessary to approve this Agreement, the
ancillary agreements to which B is a party, the B Merger and the other
transactions contemplated hereby and thereby is the affirmative vote of the
holders of at least 75% of the outstanding B Shares, voting together as a class,
to approve and adopt the B Merger as provided for in this Agreement. To the
knowledge of B, the stockholder approval described in Section 8.01(a)(ii) (a)
will, when obtained, comply with Section 414-264 of the HBCA and (b) assuming
the record date for the B Stockholders' Meeting were December 17, 2001, will not
require the affirmative vote of more than 77.5% of the outstanding shares of B
Common Stock and B Special Preferred Stock, voting together as a class.
SECTION 3.16. CERTAIN AGREEMENTS. All contracts listed or which would
be required to be listed as an exhibit to any of the B SEC Reports under the
rules and regulations of the SEC and any contracts that would be required to be
so listed but for the exception with respect to listing contracts made in the
ordinary course of business and all other material contracts that purport to
bind B or any of its properties or assets, including all contracts that are with
any union or that relate to indebtedness, board composition, governance or
control rights, the acquisition or disposition of aircraft or other material
assets or that constitute a capital or operating lease (the "B MATERIAL
CONTRACTS"), are valid and in full force and effect, and neither B nor, to B's
knowledge, any other party to any such contract has violated any provision of,
or committed or failed to perform any act which, with or without notice, lapse
of time, or both, would (a) constitute a default, (b) give rise to a right of
termination on the part of any other party thereto, (c) result in the
acceleration of any payments due or (d) give rise to the imposition of any fees,
penalties, payments or other charges that would not otherwise apply, under the
provisions of any such B Material Contract. Section 3.16 of the B Disclosure
Schedule sets forth a true and
26
correct list of the B Material Contracts, as amended, supplemented, waived or
otherwise modified, including, for each such B Material Contract, the date
thereof and the names of each of the parties thereto. B has heretofore made
available to the Company and A a complete and correct copy of each such B
Material Contract. Neither B nor, to the knowledge of B, any of its affiliates
has entered into any agreement or arrangement limiting or otherwise restricting
B or any of its affiliates or successors from engaging or competing in any line
of business or in any geographic area.
SECTION 3.17. REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied in writing by B for inclusion or incorporation by
reference in the Registration Statement (as defined below), including the Joint
Proxy Statement/Prospectus (as defined below) contained therein, will contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Registration Statement will comply (with respect to B) in all
material respects with the applicable provisions of the Securities Act, the
Exchange Act and the HBCA.
SECTION 3.18. INTELLECTUAL PROPERTY. (a) SECTION 3.18(a) of the B
Disclosure Schedule sets forth a true, correct and complete list of all material
specified in clause (i) or (iv) below that is registered, or pending
registration, with any Governmental Authority and all material Intellectual
Property specified in clause (ii) or (v) below, in each case that is owned by,
used by or licensed to B, specifying, as to each item, as applicable: (A) the
nature of the item, including the title; (B) the owner of the item; (C) the
jurisdictions in which the item is issued or registered or in which an
application for issuance or registration has been filed; and (D) the issuance,
registration or application numbers and dates. "INTELLECTUAL PROPERTY" means all
intellectual property in any jurisdiction, including: (i) all trademarks,
service marks, brand names, certification marks, trade dress, assumed names,
business names, trade names and other indications of origin (including, in each
case, the goodwill associated therewith), whether registered or unregistered;
(ii) any and all patent applications, and patents (including letters patent and
industrial designs), design registrations, and applications to register
industrial designs that issue, and any and all rights to any of the foregoing
anywhere in the world, including any provisionals, substitutions, extensions,
supplementary patent certificates, reissues, renewals, divisions,
continuations-in-part, continuations or other continued prosecution
applications, requests for continued examination, and other similar filings or
notices provided for under the laws of the United States, or of any other
country; (iii) trade secrets and other confidential or non-public business
information, including ideas, formulas, compositions, inventor's notes,
discoveries and improvements, know-how, manufacturing and production processes
and techniques, testing information, research and development information
(whether or not patentable), inventions, invention disclosures, unpatented blue
prints, drawings, specifications, designs, plans, proposals and technical data,
business and marketing plans, market surveys, market know-how and customer lists
and information; (iv) writings and other copyrightable works of authorship,
including computer programs, source code, object code and documentation (whether
or not released) databases and documentation therefor, and all copyrights and
any non-registered copyrights to any of the foregoing; (v) Internet protocol
addresses and networks, including domain names, e-mail addresses, world wide web
(www) and http addresses, network names, network addresses and services; (vi)
privacy and publicity rights; (vii) any similar intellectual property or
proprietary rights; and (viii) registrations of, and applications to register,
27
any of the foregoing with any Governmental Authority and any renewals or
extensions thereof and all other rights to any of the foregoing. "B INTELLECTUAL
PROPERTY" means the Intellectual Property that is owned by, used by or licensed
to B.
(b) To the knowledge of B, B owns the entire right, title and interest
in and to, or has a valid license to use, the B Intellectual Property
(including, without limitation, the right to use and, with respect to the
Intellectual Property owned by B, the right to license the same). There are no
pending, or to the knowledge of B, threatened in writing actions, claims or
proceedings of any nature affecting or relating to the B Intellectual Property.
There are no notices or claims currently pending or received by B that claim
infringement of or by any B Intellectual Property. There is, to the knowledge of
B, no reasonable basis upon which any claim may be asserted by or against B for
infringement or misappropriation of or by any B Intellectual Property. All
letters patent, registrations and certificates issued by any Governmental
Authority relating to the B Intellectual Property and all licenses and other
agreements pursuant to which B uses the B Intellectual Property are valid and
subsisting, have been properly maintained and neither B nor, to the knowledge of
B, any third party, is in default or violation thereunder. The Intellectual
Property owned or licensed by B constitutes all Intellectual Property necessary
to conduct the business as it is presently conducted.
SECTION 3.19. ASSETS. Except as would not, individually or in the
aggregate, have a B Material Adverse Effect, the assets, properties, rights and
contracts held by B are sufficient to permit B to conduct its business as
currently being conducted. All assets and property owned or leased by B are
owned free and clear of all Liens except for (i) those Taxes and general
assessments not in default and payable without penalty or interest and (ii)
those that do not materially adversely interfere with any present or planned use
of such property.
SECTION 3.20. AIRCRAFT; MAINTENANCE. Section 3.20 of the B Disclosure
Schedule sets forth a true, correct and complete list of all aircraft owned by B
and all lease, sublease or other agreements (including without limitation by
means of one or more capital leases) pursuant to which B operates aircraft,
including a description of the type and aircraft number of each such aircraft
and the date B placed such aircraft in service or proposes to place such
aircraft in service. Each such aircraft is in airworthy condition and is being
maintained according to applicable FAA and other applicable regulatory standards
and is owned free and clear of Liens.
SECTION 3.21. ROUTES. Section 3.21 of the B Disclosure Schedule sets
forth a true, correct and complete list of all flight routes flown by B.
SECTION 3.22. OPINION OF FINANCIAL ADVISOR. The Board of Directors of B
and the Special Committee have received the written opinion of Xxxxxx Xxxxxxx &
Co. Incorporated, in customary form, to the effect that, as of the date of this
Agreement, the consideration to be received by holders of B Common Stock (other
than C, TW, the Company and their respective affiliates) in the B Merger is fair
to such stockholders from a financial point of view, a copy of which opinion has
been delivered to the Company and A.
SECTION 3.23. BROKERS; EXPENSES. (a) No broker, finder or investment
banker (other than Xxxxxx Xxxxxxx & Co. Incorporated and SMC and Xxxx X. Xxxxx)
is entitled to any
28
brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
B. B has heretofore made available to the Company and A a complete and correct
copy of all agreements with Xxxxxx Xxxxxxx & Co. Incorporated pursuant to which
such persons would be entitled to any payment relating to such transactions.
(b) Except as contemplated by the SMC/Xxxxx Advisory Agreement, B has
not funded, reimbursed or otherwise paid for (and has not agreed, or otherwise
undertaken any obligation, to fund, reimburse or otherwise pay for) any fees,
costs, expenses or other charges to SMC or Xxxx X. Xxxxx (other than existing
salary and other regular, usual and ordinary course payments to Xxxx X. Xxxxx).
SECTION 3.24. TAKEOVER STATUTES. This Agreement, the ancillary
agreements and the transactions contemplated hereby and thereby have been
approved in writing by the board of directors of B to the extent necessary for
there to be no "Take-over offer" (as defined in Chapter 417E of the HBCA)
relating to B or its securities in connection herewith or therewith. As of the
date hereof, no "fair price," "moratorium," "control share acquisition" or other
form of anti-takeover statute or regulation (including, without limitation,
SECTION 415-171 and Section 415-172 and Chapter 417E of the HBCA) is applicable
to the B Merger or the other transactions contemplated by this Agreement or any
of the ancillary agreements.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF A
Except as set forth in the financial statements of A referred to in
SECTION 4.07(a) and except as set forth in the Disclosure Schedule (the "A
DISCLOSURE SCHEDULE"), in each case delivered by A to B, the Company and TW
concurrently with the execution of this Agreement, A hereby represents and
warrants to B, the Company and TW that:
SECTION 4.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (a) A is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Hawaii and each subsidiary of A is a corporation or other entity
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Each of A and its subsidiaries is duly qualified
or licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except for such failures to be so qualified or licensed and
in good standing that would not, individually or in the aggregate, have an A
Material Adverse Effect. The term "A MATERIAL ADVERSE EFFECT" means (i) any
change in or effect on the business of A and its subsidiaries that is materially
adverse to the financial condition, business or results of operations of A and
its subsidiaries taken as a whole, since December 31, 2000, except for any such
changes or effects resulting from this Agreement, the ancillary agreements or
the transactions contemplated hereby or thereby or the announcement hereof or
thereof or relating to any agreement of the type contemplated by SECTION 116 of
the Aviation and Transportation Security Act, PROVIDED that such agreement is
reasonably acceptable to TW and approved by the Secretary of the DOT under 49
U.S.C. ss. 41308(c) and receives the prior written approval of the Company and
A, and other than any change or effect which
29
adversely affects both A and B, such as any change or effect arising out of
general economic conditions not related to the business in which A and B are
engaged, or any change or effect which affects the airline industry generally
(including, but not limited to, a material change in the price of fuel and
changes resulting from the terrorist attacks against the United States on
September 11, 2001).
(b) Each of Aloha Airlines, Inc. and Aloha IslandAir, Inc. is a
"citizen of the United States" as defined in the Federal Aviation Act and is an
"air carrier" within the meaning of the Federal Aviation Act operating pursuant
to the terms of an exemption authority and (i) in the case of Aloha Airlines,
Inc., the certificate of public convenience and necessity duly issued to it by
the DOT and (ii) in the case of Aloha IslandAir, Inc., an air taxi operator
commuter air carrier registration, which certificates, registrations and
authorities are in full force and effect and are adequate for the conduct of the
businesses that each of such subsidiaries of A is conducting. Each of A and its
subsidiaries possesses all other certificates, licenses, permits, authorizations
and approvals of Governmental Authorities (including without limitation the FAA
and the FCC) necessary to own, lease and operate its properties and to conduct
the business that each of A and its subsidiaries is conducting (together with
those certificates referred to in the preceding sentence, the "A PERMITS"),
except where the failure to possess such A Permits would not, individually or in
the aggregate, have an A Material Adverse Effect.
(c) The A Disclosure Schedule lists all subsidiaries of A and all other
persons in which A has any ownership, partnership, voting or joint venture
interest. To the knowledge of A, all the outstanding shares of capital stock of,
or other ownership interests in, each such subsidiary (and, to the extent
beneficially owned by A, other person) (i) have been validly issued and are
fully paid and nonassessable and (ii) except for director qualifying shares, are
owned directly or indirectly by A, free and clear of all Liens, including,
without limitation, in respect of restrictions on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests.
SECTION 4.02. ARTICLES OF INCORPORATION AND BYLAWS. A has heretofore
made available to the Company and B a complete and correct copy of the Articles
of Incorporation and the Bylaws of A and the equivalent organizational documents
of its subsidiaries, each as amended if applicable. Such Articles of
Incorporation, Bylaws and equivalent organizational documents are in full force
and effect. Neither A nor any of its subsidiaries is in violation of any of the
provisions of its Articles of Incorporation or Bylaws or equivalent
organizational documents.
SECTION 4.03. CAPITALIZATION. The authorized capital stock of A
consists of (a) 22,483,750 shares of A Class A Common Stock, (b) 4,072,829
shares of A Class B Common Stock, (c) 111,726 shares of Series A 12% Redeemable
Cumulative Preferred Stock, face value $28.50 per share, of A (the "A SERIES A
PREFERRED STOCK"), (d) 20,000 shares of A Series B Preferred Stock and (e)
100,000 shares of A Series C Preferred Stock. As of the close of business on
December 18, 2001, (i) 4,442,991 shares of A Class A Common Stock, 2,927,174
shares of Class B Common Stock, no shares of A Series A Preferred Stock, 5,308
shares of A Series B Preferred Stock and 15,000 shares of A Series C Preferred
Stock were issued and outstanding, all of which are validly issued, fully paid
and nonassessable, (ii) no shares of any series or class of capital stock of A
were owned by A or held in the treasury of A or owned by
30
any subsidiaries of A and (iii) 483,680 shares of A Class A Common Stock were
reserved for future issuance pursuant to the A Stock Option Plan, options in
respect of 483,000 shares of A Class A Common Stock were outstanding and options
in respect of 403,000 shares of A Class A Common Stock were vested and
exercisable at a weighted average exercise price of $4.21 per share. Immediately
prior to the Effective Time on the Closing Date after the conversion of the A
Series B Preferred Stock in accordance with Section 2.01(a)(i), the issued and
outstanding shares of capital stock of A shall consist exclusively of: 5,524,496
shares of A Class A Common Stock, 2,927,174 shares of Class B Common Stock, no
shares of A Series A Preferred Stock, no shares of A Series B Preferred Stock
and 15,000 shares of A Series C Preferred Stock, all of which will be validly
issued, fully paid and nonassessable. Except for the options granted pursuant to
the A Stock Option Plan and the rights of holders of shares of A Series B
Preferred Stock to convert such shares into A Class A Common Stock, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of A or any
subsidiary of A or obligating A or any subsidiary of A to issue or sell any
shares of capital stock of, or other equity interests in, A or any subsidiary of
A. All A Shares subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and non-assessable. There
are no outstanding contractual obligations of A or any subsidiary of A to
repurchase, redeem or otherwise acquire any shares of capital stock of A or any
subsidiary of A. Except for its ownership interests in its subsidiaries
described in the A Disclosure Schedule, neither A nor any subsidiary of A
beneficially owns directly or indirectly or has agreed to purchase or otherwise
acquire, any of the capital stock of, or any interest convertible into or
exchangeable or exercisable for, any of the capital stock of any corporation,
partnership, joint venture or other business association or entity. There are no
material outstanding contractual obligations of A or any subsidiary of A to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any person.
SECTION 4.04. AUTHORITY RELATIVE TO THIS AGREEMENT AND THE ANCILLARY
AGREEMENTS. A has all necessary corporate power and authority to execute and
deliver this Agreement and the ancillary agreements to which A is a party,
subject (in the case of the consummation of the A Merger only) to obtaining the
required approval of the stockholders of A, to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the ancillary
agreements to which A is a party by A and the consummation by A of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of A are necessary to authorize this Agreement or any of the
ancillary agreements to which A is a party or to consummate the transactions
contemplated hereby or thereby (other than, with respect to the A Merger only,
the approval and adoption of this Agreement by the vote of the stockholders
described in Section 4.15 and the filing and recordation of the Articles of
Merger as required by the HBCA and the filing of any Certificate of Merger as
required by the DGCL or the DLLCA, as the case may be). Each of this Agreement
and the ancillary agreements to which A is a party has been duly and validly
executed and delivered by A and, assuming the due authorization, execution and
delivery by each of the other parties hereto, constitutes a legal, valid and
binding obligation of A, enforceable against A in accordance with its terms.
31
SECTION 4.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement and the ancillary agreements to which A
is a party by A do not, and the performance of this Agreement and the ancillary
agreements to which A is a party by A and the consummation by A of the
transactions contemplated hereby and thereby will not, (i) conflict with or
violate the Articles of Incorporation or Bylaws or equivalent organizational
documents of A or its subsidiaries, (ii) assuming that all consents, approvals,
authorizations, notifications and other actions identified in Section 4.05(b) of
the A Disclosure Schedule have been obtained and all filings and obligations
described in Section 4.05(b) have been made or complied with, conflict with or
violate any Law applicable to A or any of its subsidiaries or by which any
property or asset of A or any of its subsidiaries is bound or affected, or (iii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of a Lien or other encumbrance on any property or asset of A or any
of its subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation,
except, with respect to clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults, or other occurrences which would not,
individually or in the aggregate, have an A Material Adverse Effect, have a
material adverse effect on the ability of A to perform its obligations hereunder
or thereunder or materially impair or delay the consummation of the transactions
contemplated hereby or thereby.
(b) The execution and delivery of this Agreement and the ancillary
agreements to which A is a party by A do not, and the performance of this
Agreement and the ancillary agreements to which A is a party by A and the
consummation by A of the transactions contemplated hereby and thereby will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, except (i) for applicable
requirements, if any, of the Securities Act, the Exchange Act, Blue Sky Laws,
the notice requirements of the FCC, FAA and DOT, state takeover laws, WARN, the
notice requirements of the Hawaii Dislocated Workers Act, the pre-merger
notification requirements of the HSR Act, Hawaii antitrust and trade regulation
laws and filing and recordation of the Articles of Merger as required by the
HBCA and the filing of any Certificate of Merger as required by the DLLCA (or,
if any Drop-Down Condition is satisfied, the DGCL) and (ii) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not, individually or in the aggregate, have an A
Material Adverse Effect, have a material adverse effect on the ability of A to
perform its obligations hereunder or thereunder or materially impair or delay
the consummation of the transactions contemplated hereby or thereby.
SECTION 4.06. PERMITS; COMPLIANCE. No suspension or cancellation of any
of the A Permits is pending or, to the actual knowledge of A, threatened, except
where the failure to have, or the suspension or cancellation of, any of the A
Permits would not, individually or in the aggregate, have an A Material Adverse
Effect. Neither A nor any of its subsidiaries is in conflict with, or in default
or violation of, (a) any Law applicable to A or any of its subsidiaries or by
which any property or asset of A or any of its subsidiaries is bound or
affected, (b) any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which A or any
subsidiary of A is a party or by which A or any of its subsidiaries or any
property or asset of A or any of its subsidiaries is bound or affected or (c)
any
32
A Permits, except for any such defaults or violations that would not,
individually or in the aggregate, have an A Material Adverse Effect.
SECTION 4.07. FINANCIAL STATEMENTS. (a) A's audited consolidated
financial statements (including, in each case, any notes thereto) at and for the
years ended December 31, 2000, 1999 and 1998 and A's unaudited consolidated
financial statements (including, in each case, any notes thereto) at and for the
nine months ended September 30, 2001 (collectively, the "A FINANCIAL
STATEMENTS"), true and complete copies of which have been previously delivered
to B, have been prepared in accordance with U.S. GAAP applied on a consistent
basis throughout the periods indicated (except as may be indicated in the notes
thereto) and each presented fairly, in all material respects, the consolidated
financial position and results of operations of A and its subsidiaries as at the
respective dates thereof and for the respective periods indicated therein,
except as otherwise noted therein (subject, in the case of unaudited statements,
to normal and recurring audit adjustments which were not and are not expected,
individually or in the aggregate, to have an A Material Adverse Effect).
(b) A has no known liability or obligation of any nature (whether
accrued, absolute, contingent or otherwise) that would, individually or in the
aggregate, have an A Material Adverse Effect.
(c) A is not indebted to any director, officer, employee or agent of A
(except for amounts due as normal salaries and bonuses and payments due to
agents under contracts and in reimbursement of ordinary course expenses) and no
such person is indebted to A, and there have been no other transactions of the
type which would be required to be disclosed pursuant to Items 402 and 404 of
Regulation S-K under the Exchange Act since December 31, 2000, but for the fact
that neither A nor any subsidiary of A is subject to the Exchange Act and does
not file reports thereunder.
(d) A has no commitments, obligations or plans for capital expenditures
or otherwise involving cash payments in excess of an aggregate of $2,000,000
expected to be paid or to become payable either within 12 months from the date
hereof or as a result of the Mergers, other than (i) pursuant to A Material
Contracts (as defined below), (ii) pursuant to SECTION 9.05 or (iii) other
payments pursuant to this Agreement and the ancillary agreements.
SECTION 4.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
2000, except as contemplated by this Agreement or any of the ancillary
agreements to which it is a party, each of A and its subsidiaries has conducted
its business only in the ordinary course and in a manner consistent with past
practice and, since such date, there has not been (a) any A Material Adverse
Effect or any event or circumstance reasonably likely to result in an A Material
Adverse Effect, (b) any material change by A in its accounting (tax, financial
or otherwise) methods, principles or practices, (c) any revaluation by A or any
of its subsidiaries of any material asset (including, without limitation, any
writing down of the value of inventory or writing off of notes or accounts
receivable), other than in the ordinary course of business consistent with past
practice, (d) any entry by A or any of its subsidiaries into any commitment or
transaction material to A and its subsidiaries taken as a whole or any amendment
or modification to, or waiver or relinquishment of any rights under, any A
Permit or A Material Contract, other than after the date hereof in the regular,
usual and ordinary course of business, (e)
33
any declaration, setting aside or payment of any dividend or distribution in
respect of the A Shares or any redemption, purchase or other acquisition of any
of its securities, (f) any split, combination or reclassification of any of the
capital stock of A or any of its subsidiaries or any issuance, or the
authorization of any issuance, of any securities in respect of, in lieu of or in
substitution for shares of capital stock of A or any of its subsidiaries, or (g)
any increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan relating to any employee of A or of any subsidiary of A,
or any other increase in the compensation payable or to become payable to any
officers or key employees of A or any of its subsidiaries, except as required by
Law or any existing agreement or plan.
SECTION 4.09. ABSENCE OF LITIGATION. There is no litigation, suit,
claim, action or proceeding pending or, to the knowledge of A, threatened in
writing against A or any of its subsidiaries, or any property or asset of A or
any of its subsidiaries, before any court, arbitrator or Governmental Authority,
domestic or foreign, (i) seeking relief which, if ordered, would, individually
or in the aggregate, have an A Material Adverse Effect or (ii) as of the date
hereof, seeking relief which, if ordered, would delay or prevent the
consummation of any transaction contemplated hereby or by any of the ancillary
agreements. Neither A or any of its subsidiaries nor any property or asset of A
or any of its subsidiaries is subject to any continuing order of, consent
decree, settlement agreement or other similar written agreement with, or, to the
knowledge of A, continuing investigation by, any Governmental Authority, or any
order, writ, judgment, injunction, decree, determination or award of any
Governmental Authority or arbitrator having, individually or in the aggregate,
an A Material Adverse Effect.
SECTION 4.10. EMPLOYEE BENEFIT PLANS; LABOR MATTERS. (a) With respect
to each employee benefit plan, policy, commitment, program, arrangement and
contract (including, without limitation, any employee benefit plan, as defined
in SECTION 3(3) of ERISA, sponsored, maintained or contributed to, or to which
there is an obligation to contribute, by A, or with respect to which A could
incur liability under Title IV of ERISA, including, but not limited to, SECTION
4069, 4212(c) or 4204 of ERISA (the "A BENEFIT PLANS"), A has delivered or made
available to B and the Company a true and correct copy of (i) the most recent
summary plan description related to each A Benefit Plan and all amendments
thereto for which a summary plan description is required, (ii) each trust
agreement relating to such Benefit Plan, (iii) the most recent annual report
(Form 5500) filed with the IRS, (iv) the most recent actuarial report and/or
financial statement, if any, relating to an A Benefit Plan, (v) the most recent
determination letter, if any, issued by the IRS with respect to any A Benefit
Plan qualified under SECTION 401(a) of the Code, (vi) all material
communications with any Governmental Authority (including the Pension Benefit
Guaranty Corporation and the IRS) given or received within the last three years,
and (vii) a description of all unwritten A Benefit Plans, if any.
(b) To the knowledge of A, each A Benefit Plan has been administered in
all material respects in accordance with its terms and all contributions
required to be made under the terms of any of the A Benefit Plans as of the date
hereof have been timely made or have been reflected on A's most recent
consolidated balance sheet. All of the A Benefit Plans are in compliance with
all applicable requirements of Law, including ERISA and the Code, except to the
extent that any such noncompliance would not have an A Material Adverse Effect.
34
(c) There are no pending actions, claims or lawsuits that have been
asserted regarding the A Benefit Plans directly or, to the knowledge of A,
against any fiduciary of any A Benefit Plan with respect to their operation
(other than routine benefit claims) which could result in liability.
(d) There is no A Benefit Plan that is a "multiemployer plan" (within
the meaning of SECTION 3(37) of ERISA).
(e) Each A Benefit Plan which is a "group health plan" (as defined in
SECTION 607(1) of ERISA) is in compliance with SECTION 601 et seq. of ERISA, the
Health Insurance Portability and Accountability Act and any other applicable
federal, state or local law.
(f) Neither A nor any subsidiary of A is a party to any collective
bargaining or other labor union contract applicable to persons employed by A or
any subsidiary of A and neither A nor any subsidiary of A is negotiating any
collective bargaining agreements. As of the date hereof, there is no labor
dispute, strike or work stoppage against A or any subsidiary of A pending or, to
the knowledge of A, threatened in writing which may interfere with the business
activities of A, except where such dispute, strike or work stoppage would not
have an A Material Adverse Effect. As of the date hereof, to the knowledge of A,
none of A or any subsidiary of A or their respective representatives or
employees, has committed any unfair labor practices in connection with the
operation of the business of A or any of its subsidiaries, and there is no
charge or complaint against A or any subsidiary of A by the National Labor
Relations Board or any comparable federal or state agency pending or threatened
in writing, except where such unfair labor practice, charge or complaint would
not have an A Material Adverse Effect.
(g) A has delivered to B true and correct copies of (i) all employment
agreements with officers of A and the subsidiaries of A; (ii) all severance
plans, agreements, programs and policies of A and the subsidiaries of A with or
relating to their employees; (iii) all plans, programs, agreements and other
arrangements intended to satisfy the performance-based exception under SECTION
162(m) of the Code; and (iv) all plans, programs, agreements and other
arrangements of A and the subsidiaries of A with or relating to their respective
employees which contain change in control provisions.
(h) Except as required by Law, no A Benefit Plan provides, or has
liability with respect to, retiree medical or other retiree welfare benefits to
any person.
(i) A is not a party to any agreement or arrangement that would result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of SECTION 280G of the Code (disregarding SECTION
280G(b)(4) of the Code).
(j) The consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee of A to severance pay,
unemployment compensation or any similar payment; (ii) accelerate the time of
payment or vesting of, or increase the amount of, any compensation due to any
current or former employee of A; (iii) reasonably be expected to result in any
"excess parachute payment" under SECTION 280G of the Code; or (iv) result in any
material liability to any present or former employee, including as a result of
WARN.
35
(k) A has no material liability, whether absolute or contingent,
including any material obligations under any A Benefit Plan, with respect to any
misclassification of any person as an independent contractor rather than as an
employee, or with respect to any employee leased from another employer.
(l) A has not entered into any transaction with any A Benefit Plan.
(m) In respect of all employees of A (other than A's current Chief
Executive Officer and A's current Chief Financial Officer), liabilities of A and
its subsidiaries in respect of any (i) severance payments and (ii) payments in
respect of the cancellation of outstanding A Options in accordance with SECTION
2.05 hereof, arising in connection with the consummation of the A Merger, shall
not exceed $1,300,000 in the aggregate.
(n) SECTION 4.10(n) of the A Disclosure Schedule sets forth (i) a true
and correct list of all individuals who would be entitled to severance payments
pursuant to an individual agreement with A or any of its subsidiaries and the
amount of cash severance payments to which each such person would be entitled
and (ii) with respect to any formal or informal severance program, plan or
arrangement of A or any of its subsidiaries that does not involve an individual
agreement between A or any of its subsidiaries and any individual, (A) a brief
written description of such program, plan or arrangement and (B) the number of
individuals entitled to severance benefits under such program, plan or
arrangement.
(o) To the knowledge of A based on a good faith interpretation of the
Stabilization Act, (i) except as set forth in SECTION 4.10(o) of the A
Disclosure Schedule, no A employee's or officer's total compensation (within the
meaning of the Stabilization Act) exceeded $300,000 in calendar year 2000 and
(ii) with respect to any persons so identified pursuant to clause (i), A has not
made or promised to make any payments or taken any action which may adversely
affect the Company's ability to obtain a Federal credit instrument under SECTION
101(a)(1) of the Stabilization Act.
SECTION 4.11. TAXES. Each of A and each subsidiary of A (i) has
prepared and timely filed all material Tax Returns required to be filed by any
of them, or requests for extensions to file such Tax Returns have been timely
filed, granted and have not expired; (ii) have paid all Taxes required to be
shown to be due on such Tax Returns; (iii) are not parties to any tax sharing
agreement or arrangement other than with each other; (iv) have withheld or
collected and paid over to the appropriate Taxing Authorities (or are properly
holding for such payment) all Taxes required by Law to be withheld or collected,
including but not limited to all employment and payroll Taxes; and (v) as of the
date hereof, have neither extended nor waived any applicable statute of
limitations with respect to Taxes and have not otherwise agreed to any extension
of time with respect to Tax assessment or deficiency. No material deficiencies
for any Taxes have been proposed, asserted or assessed by any Taxing Authority
against A or any subsidiary of A that are not adequately reserved for in
accordance with U.S. GAAP. There are no Liens for Taxes upon the assets of A
except for Taxes that are not yet due and payable.
SECTION 4.12. ENVIRONMENTAL MATTERS. To the knowledge of A, except as
would not, individually or in the aggregate, have an A Material Adverse Effect:
(i) neither A nor any of its subsidiaries is in violation of any Environmental
Law; (ii) none of the properties
36
owned, leased or operated exclusively by A or any of its subsidiaries is
contaminated with any Hazardous Substance; (iii) none of A or any of its
subsidiaries is currently liable (as a result of an existing condition) to
undertake investigation or remediation, or to share the costs of investigations
or remediation, or to pay any other costs, with respect to any contamination
under Environmental Laws or relating to Hazardous Substances; (iv) neither A nor
any of its subsidiaries is liable to pay any amount or to undertake any action
under any Environmental Law; (v) each of A and its subsidiaries has all
requisite Environmental Permits; (vi) each of A and its subsidiaries is in
compliance with its Environmental Permits; (vii) there are no pending, or, to
the knowledge of A, threatened claims against A or any of its subsidiaries
relating to any Environmental Law or Hazardous Substance; and (viii) each of A
and its subsidiaries has made available true and correct copies of any
environmental reports commissioned or received by it within the last five years
to each of B and the Company.
SECTION 4.13. INSURANCE. A has obtained and maintained in full force
and effect insurance with responsible and reputable insurance companies or
associations in such amounts, on such terms and covering such risks, including
fire, terrorism, war and other risks insured against by extended coverage, as to
the knowledge of A is customarily carried by reasonably prudent persons
conducting businesses or owning or leasing assets similar to those owned or
leased by A and its subsidiaries, and each has maintained in full force and
effect public liability insurance, insurance against claims for personal injury
or death or property damage occurring in connection with the activities of A or
any of its subsidiaries or any properties owned, occupied or controlled by A or
any of its subsidiaries, in such amount as is customarily carried by reasonably
prudent persons conducting businesses or owning assets similar to those of A and
its subsidiaries. The execution, delivery, performance and consummation of this
Agreement and the ancillary agreements will not affect the insurance coverage of
A and its subsidiaries.
SECTION 4.14. BOARD APPROVAL. The Board of Directors of A has, on
December 18, 2001, unanimously (i) approved this Agreement, the A Merger and the
ancillary agreements to which A is a party, (ii) determined that this Agreement,
the A Merger and the ancillary agreements to which A is a party are in the best
interests of A and its stockholders and that the terms of this Agreement, the A
Merger and the ancillary agreements to which A is a party are advisable and fair
to A and its stockholders, (iii) determined to recommend that the stockholders
of A approve and adopt this Agreement and the A
Merger Agreement and (iv)
resolved to elect, to the extent permitted by Law, not to be subject to any
"moratorium", "control share acquisition", "business combination", "fair price"
or other form of anti-takeover laws and regulations of any jurisdiction
(including SECTIONs 415-171 and 172 and Chapter 417E of the HBCA) that may
purport to be applicable to this Agreement or any ancillary agreement.
SECTION 4.15. VOTE REQUIRED. The only vote of the holders of any class
or series of capital stock of A necessary to approve this Agreement, the
ancillary agreements to which A is a party, the A Merger and the other
transactions contemplated hereby and thereby is the affirmative vote of the
holders of at least 75% of the outstanding A Shares, voting together as a class,
to approve and adopt the A Merger as provided for in this Agreement.
SECTION 4.16. CERTAIN AGREEMENTS. All contracts which would be required
to be listed as an exhibit to any SEC reports of A (if A were a reporting issuer
required to file such
37
reports) under the rules and regulations of the SEC and any contracts that would
be required to be so listed but for the fact that A is not a reporting issuer
and the exception with respect to listing contracts made in the ordinary course
of business and all other material contracts that purport to bind A, any of its
subsidiaries or any of their respective properties or assets, including all
contracts that are with any union or that relate to indebtedness, board
composition, governance or control rights, the acquisition or disposition of
aircraft or other material assets or that constitute a capital or operating
lease (the "A MATERIAL CONTRACTS"), are valid and in full force and effect, and
neither A nor, to A's knowledge, any other party to any such contract has
violated any provision of, or committed or failed to perform any act which, with
or without notice, lapse of time, or both, would (a) constitute a default, (b)
give rise to a right of termination on the part of any other party thereto, (c)
result in the acceleration of any payments due thereunder or (d) give rise to
the imposition of any fees, penalties, payments or other charges to A that would
not otherwise apply, under the provisions of any such A Material Contract.
SECTION 4.16 of the A Disclosure Schedule sets forth a true and correct list of
the A Material Contracts, as amended, supplemented, waived or otherwise
modified, including, for each such A Material Contract, the date thereof and the
names of each of the parties thereto. A has heretofore made available to the
Company and B a complete and correct copy of each such A Material Contract.
Neither A nor, to the knowledge of A, any of its affiliates has entered into any
agreement or arrangement limiting or otherwise restricting A or any of its
affiliates or successors from engaging or competing in any line of business or
in any geographic area.
SECTION 4.17. REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied in writing by A for inclusion or incorporation by
reference in the Registration Statement, including the Joint Proxy
Statement/Prospectus contained therein, will contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Registration
Statement will comply (with respect to A) in all material respects with the
applicable provisions of the Securities Act, the Exchange Act and the HCBA.
SECTION 4.18. INTELLECTUAL PROPERTY. (a) SECTION 4.18(a) of the A
Disclosure Schedule sets forth a true, correct and complete list of all material
Intellectual Property specified in clause (i) or (iv) of the definition of
Intellectual Property in SECTION 3.18 above that is registered, or pending
registration, with any Governmental Authority and all material Intellectual
Property specified in clause (ii) or (v) of such definition, in each case that
is owned by, used by or licensed to A or any subsidiary of A specifying, as to
each item, as applicable: (A) the nature of the item, including the title; (B)
the owner of the item; (C) the jurisdictions in which the item is issued or
registered or in which an application for issuance or registration has been
filed; and (D) the issuance, registration or application numbers and dates. "A
INTELLECTUAL PROPERTY" means the Intellectual Property that is owned by, used by
or licensed to A or any of its subsidiaries.
(b) To the knowledge of A, A or a subsidiary of A owns the entire
right, title and interest in and to, or has a valid license to use, the A
Intellectual Property (including, without limitation, the right to use and, with
respect to the Intellectual Property owned by A or a subsidiary of A, the right
to license the same). There are no pending, or to the knowledge of A, threatened
in writing, actions, claims or proceedings of any nature affecting or relating
to the A Intellectual Property. There are no notices or claims currently pending
or received by A that
38
claim infringement of or by any A Intellectual Property. There is, to the
knowledge of A, no reasonable basis upon which any claim may be asserted by or
against A or any subsidiary of A for infringement or misappropriation of or by
any A Intellectual Property. All letters patent, registrations and certificates
issued by any Governmental Authority relating to the Intellectual Property and
all licenses and other agreements pursuant to which A or any subsidiary of A
uses the A Intellectual Property are valid and subsisting, have been properly
maintained and none of A, any subsidiary of A or, to the knowledge of A, any
third party, is in default or violation thereunder. The Intellectual Property
owned or licensed by A and its subsidiaries constitutes all of the Intellectual
Property necessary to conduct the business as it is presently conducted.
SECTION 4.19. ASSETS. Except as would not, individually or in the
aggregate, have an A Material Adverse Effect, the assets, properties, rights and
contracts held by A and its subsidiaries are sufficient to permit A and its
subsidiaries to conduct its business as currently being conducted. All assets
and property owned or leased by A and its subsidiaries are owned free and clear
of all Liens except for (i) those Taxes and general assessments not in default
and payable without penalty or interest and (ii) those that do not materially
adversely interfere with any present or planned use of such property.
SECTION 4.20. AIRCRAFT; MAINTENANCE. SECTION 4.20 of the A Disclosure
Schedule sets forth a true, correct and complete list of all aircraft owned by A
and its subsidiaries and all lease, sublease or other agreements (including
without limitation by means of one or more capital leases) pursuant to which A
or any of its subsidiaries operates aircraft, including a description of the
type and aircraft number of each such aircraft and the date A or its subsidiary
placed such aircraft in service or proposes to place such aircraft in service.
Each such aircraft is in airworthy condition and is being maintained according
to applicable FAA regulatory standards and is owned free and clear of Liens.
SECTION 4.21. ROUTES. SECTION 4.21 of the A Disclosure Schedule sets
forth a true, correct and complete list of all flight routes flown by A and its
subsidiaries.
SECTION 4.22. BROKERS; EXPENSES. (a) No broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of A.
(b) A has not funded, reimbursed or otherwise paid for (and has not
agreed, or otherwise undertaken any obligation, to fund, reimburse or otherwise
pay for) any fees, costs, expenses or other charges to Xxxxxx in connection with
such transactions and all other obligations of A or any of its subsidiaries to
Xxxxxx are set forth in agreements provided by A to B and the Company.
SECTION 4.23. TAKEOVER STATUTES. This Agreement, the ancillary
agreements and the transactions contemplated hereby and thereby have been
approved in writing by the board of directors of A to the extent necessary for
there to be no "Take-over offer" (as defined in Chapter 417E of the HBCA)
relating to A or its securities in connection herewith or therewith. As of the
date hereof, no "fair price," "moratorium," "control share acquisition" or other
form of anti-takeover statute or regulation (including, without limitation,
SECTION 415-171 and SECTION 415-172 and
39
Chapter 417E of the HBCA) is applicable to the A Merger or the other
transactions contemplated by this Agreement or any of the ancillary agreements.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TW AND THE COMPANY
TW and the Company, jointly and severally, hereby represent and warrant
to A and B that:
SECTION 5.01. ORGANIZATION AND QUALIFICATION; OPERATIONS. Each of TW
and the Company is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation. As of the Closing
Date, each of the New Company Subsidiaries (as defined below) will be a Delaware
limited liability company or Delaware corporation, as applicable, that is duly
organized, validly existing and in good standing under the laws of the State of
Delaware. As of the Closing Date, each of the New Company Subsidiaries will have
been formed solely for the purpose of engaging in the transactions contemplated
hereby. The Company has not engaged in any business activities, has not
conducted any operations, has no assets, properties or rights and has no
liabilities or obligations (whether accrued, absolute, contingent, known or
unknown or otherwise), other than as expressly contemplated by this Agreement
and the ancillary agreements. As of the Closing Date, none of the New Company
Subsidiaries will have engaged in any business activities, will have conducted
any operations, will have any assets, properties or rights or will have any
liabilities or obligations (whether accrued, absolute, contingent, known or
unknown or otherwise), other than as expressly contemplated by this Agreement
and the ancillary agreements. Except for the New Company Subsidiaries, each of
which will be a direct, wholly-owned subsidiary of the Company, neither the
Company nor any subsidiary of the Company beneficially owns directly or
indirectly and, except as expressly contemplated by this Agreement or the
ancillary agreements, has agreed to purchase or otherwise acquire, any of the
capital stock of or other equity interest in, or any interest convertible into
or exchangeable or exercisable for, any of the capital stock or any other equity
interest in any corporation, partnership, joint venture or other business
association or entity. Except as expressly contemplated by this Agreement or the
ancillary agreements and except for investments in the New Company Subsidiaries
not to exceed $4,000 in the aggregate, there are no outstanding contractual
obligations of the Company or any subsidiary of the Company to provide funds to,
or make any investment (in the form of a loan, capital contribution or
otherwise) in, any person. Each of TW and the Company is a "citizen of the
United States" (as defined in the Federal Aviation Act) and, as of the Closing
Date, each the New Company Subsidiaries will be a "citizen of the United States"
(as defined in the Federal Aviation Act).
SECTION 5.02. ORGANIZATIONAL DOCUMENTS. The Company heretofore has made
available to A and B a complete and correct copy of the Certificate of
Incorporation and the Bylaws of the Company, and prior to the Closing Date will
have made available to A and B complete and correct copies of the equivalent
organizational documents of each of the New Company Subsidiaries. The
Certificate of Incorporation and Bylaws of the Company are each in full force
and effect and, as of the Closing Date, the equivalent organizational documents
of each of the New Company Subsidiaries will each be in full force and effect.
The Company is not (and, as of the Closing Date, none of the New Company
Subsidiaries will be) in violation of any
40
of the provisions of its Certificate of Incorporation or Bylaws or equivalent
organizational documents.
SECTION 5.03. CAPITALIZATION. (a) As of the date hereof, the authorized
capital stock of the Company consists of 87,301,151 shares of Company Common
Stock and no shares of Preferred Stock. Until immediately before the Effective
Time, 13,968,184 shares of Company Common Stock will be the only issued and
outstanding shares of capital stock of the Company and will be held exclusively
by TW or its permitted assign. Except as otherwise contemplated by this
Agreement and the ancillary agreements, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of the Company or any of its subsidiaries or
obligating the Company or any of its subsidiaries to issue, vote or sell any
shares of capital stock of, or other equity interests in, the Company or any of
its subsidiaries. Except as otherwise contemplated by this Agreement and the
ancillary agreements, there are no outstanding contractual obligations of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its subsidiaries.
(b) As of the Closing Date, all outstanding membership interests (or,
if applicable shares of the capital stock) of each of the New Company
Subsidiaries will have been duly authorized and validly issued, are fully paid
and non-assessable and are owned by the Company free and clear of any Lien.
SECTION 5.04. AUTHORITY RELATIVE TO THIS AGREEMENT AND THE ANCILLARY
AGREEMENTS. Each of TW and the Company has all necessary corporate power and
authority to execute and deliver this Agreement and the ancillary agreements to
which it is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. As of the Closing
Date, each of Newco A Sub and Newco B Sub (i) will have adopted and approved
this Agreement and the A Merger and the B Merger, as the case may be, by all
requisite action (required for a limited liability company or corporation, as
the case may be) and (ii) will have all necessary corporate power and authority
to execute and deliver the ancillary agreements to which it is a party, to
perform its obligations thereunder and to consummate the transactions
contemplated thereby. The execution and delivery of this Agreement and the
ancillary agreements to which it is a party by each of TW, the Company, Newco A
Sub and Newco B Sub and the consummation by TW, the Company, Newco A Sub and
Newco B Sub of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action, and no other corporate
proceedings on the part of TW or the Company, as the case may be, are necessary
to authorize this Agreement and the ancillary agreements to which it is a party
or to consummate the transactions contemplated hereby or thereby. As of the
Closing Date, the execution and delivery of the ancillary agreements to which it
is a party by each of Newco A Sub and Newco B Sub and the consummation by Newco
A Sub and Newco B Sub, respectively, of the transactions contemplated thereby
will have been duly and validly authorized by all necessary action, and no other
proceedings on the part of Newco A Sub or Newco B Sub, as the case may be, will
be necessary to authorize the ancillary agreements to which it is a party or to
consummate the transactions contemplated thereby. Each of this Agreement and the
ancillary agreements to which it is a party has been duly and validly executed
and delivered by each of TW and the Company and, assuming, in each case, the due
authorization, execution and delivery by each of
41
the other parties hereto and thereto, constitutes a legal, valid and binding
obligation of each of TW and the Company enforceable against TW and the Company
in accordance with its terms. As of the Closing Date, each of the ancillary
agreements to which it is a party will have been duly and validly executed and
delivered by each of Newco A Sub and Newco B Sub, and assuming, in each case,
the due authorization, execution and delivery by each of the other parties
thereto, will constitute a legal, valid and binding obligation of Newco A Sub
and Newco B Sub, as the case may be, enforceable against Newco A Sub and Newco B
Sub, as the case may be, in accordance with its terms.
SECTION 5.05. NO CONFLICT; REQUIRED FILING AND CONSENT. (a) The
execution and delivery of this Agreement and the ancillary agreements to which
it is a party by TW and the Company does not, and the performance of this
Agreement and the ancillary agreements to which it is a party by TW and the
Company, as the case may be, and the consummation of the transactions
contemplated hereby and thereby by Newco A Sub and Newco B Sub, will not, (i)
conflict with or violate the Certificate of Incorporation or Bylaws of TW or the
Company, as the case may be, (ii) assuming that all consents, approvals,
authorizations, notifications and other actions described in SECTION 5.05(b)
have been obtained and all filings and obligations described in SECTION 5.05(b)
have been made or complied with, conflict with or violate any Law applicable to
TW or the Company or by which any property or asset of TW or the Company is
bound or affected, or (iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a Lien or other encumbrance on any
property or asset of TW or the Company pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation, except, with respect to clauses (ii) and (iii), for
any such conflicts, violations, breaches, defaults, or other occurrences which
would not, individually or in the aggregate, have a material adverse effect on
the Company or TW or on the ability of TW, the Company, Newco A Sub or Newco B
Sub to perform its obligations hereunder or thereunder or materially impair or
delay the consummation of the transactions contemplated hereby or thereby. As of
the Closing Date, the execution and delivery of the ancillary agreements to
which it is a party by Newco A Sub and Newco B Sub will not, and the performance
of the ancillary agreements to which it is a party by Newco A Sub and Newco B
Sub, as the case may be, will not, (i) conflict with or violate the Certificate
of Limited Liability Company (or, if any Drop-Down Condition is satisfied, the
Certificate of Incorporation or Bylaws) of Newco A Sub or Newco B Sub, as the
case may be, (ii) assuming that all consents, approvals, authorizations,
notifications and other actions described in SECTION 5.05(b) have been obtained
and all filings and obligations described in SECTION 5.05(b) have been made or
complied with, conflict with or violate any Law applicable to Newco A Sub or
Newco B Sub or by which any property or asset of Newco A Sub or Newco B Sub is
bound or affected, or (iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a Lien or other encumbrance on any
property or asset of Newco A Sub or Newco B Sub pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation, except, with respect to clauses (ii) and (iii),
for any such conflicts, violations, breaches, defaults, or other occurrences
which would not, individually or in the aggregate, have a material adverse
effect on the Company, TW, Newco A Sub or Newco B Sub or on the ability of TW,
the Company, Newco A Sub or Newco B Sub to perform its obligations
42
hereunder or thereunder or materially impair or delay the consummation of the
transactions contemplated hereby or thereby.
(b) The execution and delivery of this Agreement and the ancillary
agreements to which it is a party by TW and the Company do not, and the
performance of this Agreement and the ancillary agreements to which it is a
party by TW and the Company will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Government
Authority, except (i) for applicable requirements, if any, of the Securities
Act, the Exchange Act, the Trust Indenture Act, Blue Sky Laws, WARN, the notice
requirements of the FCC, FAA and DOT, state takeover laws, the notice
requirements of the Hawaiian Dislocated Workers Act, the pre-merger notification
requirements of the HSR Act, Hawaiian antitrust and trade regulation laws and
filing and recordation of the Articles of Merger as required by the HBCA, the
filing of any Certificate of Merger as required by the DLLCA (or, if any
Drop-Down Condition is satisfied, the DGCL) and as disclosed in the A Disclosure
Schedule and the B Disclosure Schedule and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications would not, individually or in the aggregate, have a material
adverse effect on the Company or TW or on the ability of TW, the Company, Newco
A Sub or Newco B Sub to perform its obligations hereunder or thereunder or
materially impair or delay the consummation of the transactions contemplated
hereby or thereby. As of the Closing Date, the execution and delivery of the
ancillary agreements to which it is a party by Newco A Sub and Newco B Sub do
not, and the performance of the ancillary agreements to which it is a party by
Newco A Sub and Newco B Sub will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Government
Authority, except (i) for applicable requirements, if any, of the Securities
Act, the Exchange Act, the Trust Indenture Act, Blue Sky Laws, WARN, the notice
requirements of the FCC, FAA and DOT, state takeover laws, the notice
requirements of the Hawaiian Dislocated Workers Act, the pre-merger notification
requirements of the HSR Act, Hawaiian antitrust and trade regulation laws and
filing and recordation of the Articles of Merger as required by the HBCA, the
filing of any Certificate of Merger as required by the DLLCA (or, if any
Drop-Down Condition is satisfied, the DGCL) and as disclosed in the A Disclosure
Schedule and the B Disclosure Schedule and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications would not, individually or in the aggregate, have a material
adverse effect on the Company, TW, Newco A Sub or Newco B Sub or on the ability
of TW, the Company, Newco A Sub or Newco B Sub to perform its obligations
hereunder or thereunder or materially impair or delay the consummation of the
transactions contemplated hereby or thereby.
SECTION 5.06. ABSENCE OF LITIGATION. There is no litigation, suit,
claim, action or proceeding pending or, to the knowledge of the Company or TW,
threatened in writing against TW, the Company or any of their respective
subsidiaries, or any property or asset of TW, the Company or any of their
respective subsidiaries, before any court, arbitrator or Governmental Authority,
domestic or foreign, (i) seeking relief which, if ordered, would, individually
or in the aggregate, have a material adverse effect on the Company or TW or (ii)
as of the date hereof, seeking relief which, if ordered, would delay or prevent
the consummation of any transaction contemplated hereby or by any of the
ancillary agreements.
SECTION 5.07. REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied in writing by TW or the Company for inclusion or
incorporation by
43
reference in the Registration Statement, including the Joint Proxy
Statement/Prospectus contained therein, will contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Registration
Statement will comply (with respect to the Company) in all material respects
with the provisions of the Securities Act, the Exchange Act and the HBCA.
SECTION 5.08. BROKERS. No broker, finder or investment banker (other
than as provided in the Advisory Agreements) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of the Company.
SECTION 5.09. TAXES. The Company and its subsidiaries: (i) have
prepared and timely filed all material Tax Returns required to be filed by them,
or requests for extensions to file such Tax Returns have been timely filed,
granted and have not expired; (ii) have paid all Taxes required to be shown to
be due on such Tax Returns; (iii) are not parties to any Tax sharing agreement
or arrangement other than with each other; (iv) have withheld or collected and
paid over to the appropriate Taxing Authorities (or are properly holding for
such payment) all Taxes required by Law to be withheld or collected, including
but not limited to all employment and payroll Taxes; and (v) as of the date
hereof, have neither extended nor waived any applicable statute of limitations
with respect to Taxes and have not otherwise agreed to any extension of time
with respect to Tax assessment or deficiency. No material deficiencies for any
Taxes have been proposed, asserted or assessed by any Taxing Authority against
the Company that are not adequately reserved for in accordance with U.S. GAAP.
There are no Liens for Taxes upon the assets of the Company except for Taxes
that are not yet due and payable.
SECTION 5.10. NO OPERATIONS OR LIABILITIES. Except as expressly
contemplated or permitted by this Agreement or any ancillary agreement, each of
the Company and its subsidiaries has not (a) engaged in any business operations
or transactions, (b) entered into any contract or agreement or (c) incurred any
liabilities.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGERS
SECTION 6.01. CONDUCT OF BUSINESS BY B PENDING THE B MERGER. Prior to
the Effective Time (except as expressly contemplated, required or permitted by
this Agreement or any of the ancillary agreements, as set forth in SECTION 6.01
of the B Disclosure Schedule, or to the extent that the Company and A shall
otherwise consent in writing, which consent shall not be unreasonably withheld):
(a) ORDINARY COURSE. B shall carry on its business in the usual,
regular and ordinary course and shall use its reasonable efforts to (i) preserve
intact its present business organizations, (ii) keep available the services of
its present officers and employees, and (iii) preserve its relationships with
suppliers, tour wholesalers, travel agents, code share partners and others
having business dealings with it. Notwithstanding the foregoing, B may enter
into agreements of the type contemplated by SECTION 116 of the Aviation and
Transportation Security
44
Act, provided that such agreements are approved by the Secretary of the DOT
under 49 U.S.C. ss. 41308(c) and receive the prior written approval of the
Company and A.
(b) DIVIDENDS; CHANGES IN STOCK. B shall not (i) declare or pay any
dividends on or make other distributions in respect of any of its capital stock,
(ii) split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (iii) repurchase, redeem or
otherwise acquire any shares of capital stock.
(c) ISSUANCE OF SECURITIES. B shall not issue, deliver or sell, or
authorize or propose the issuance, delivery or sale of, any shares of its
capital stock of any class or any securities convertible into, or any rights,
warrants, calls, subscriptions or options to acquire, any such shares or
convertible securities, or any other ownership interest other than (i) the
issuance of up to 3,033,000 shares of B Common Stock upon the exercise of stock
options granted under the B Option Plans outstanding on the date of this
Agreement and in accordance with the present terms of such options and (ii) the
issuance of up to 1,166,470 shares of B Common Stock to B's Pilots' 401(k) Plan
in accordance with its obligations under the Pilot Allocation Agreement.
(d) GOVERNING DOCUMENTS. B shall not amend or propose to amend its
Articles of Incorporation or Bylaws.
(e) NO ACQUISITIONS. B shall not acquire or agree to acquire by merging
or consolidating with, or by purchasing a substantial equity interest in or
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof.
(f) NO DISPOSITIONS. B shall not sell, lease, encumber or otherwise
dispose of, or agree to sell, lease, encumber or otherwise dispose of, any of
its material assets other than (i) sales in the ordinary course of business
consistent with past practice and (ii) equipment and property no longer used in
the operation of its business.
(g) INDEBTEDNESS. B shall not incur any indebtedness for borrowed money
or guarantee any such indebtedness or issue or sell any debt securities or
warrants or rights to acquire any debt securities of B or its subsidiaries or
guarantee any debt securities of others, except for borrowings under B's
existing credit agreements and overnight borrowings to the extent in the usual,
regular and ordinary course of business.
(h) TAX AND ACCOUNTING MATTERS. B shall not (i) make any Tax election
that is inconsistent with past practices or settle or compromise any Tax
liability of B, (ii) change its fiscal year or (iii) except as required by U.S.
GAAP, change its methods of accounting in effect at December 31, 2000.
(i) MATERIAL CONTRACTS. B shall not modify amend or terminate any
material contract or agreement to which it is a party or waive, release or
assign any material rights or claims except in the usual, regular and ordinary
course of business. B shall not enter into any agreement or arrangement that
limits or otherwise restricts B or any of its respective affiliates or any
successor thereto, or that could, after the Closing, limit or restrict the
Company or any of its
45
affiliates or any successor thereto, from engaging or competing in any line of
business or in any geographic area.
(j) EMPLOYEE BENEFITS. B shall not (i) grant any increase in the
compensation or benefits payable or provided to any of its directors, officers
or employees, (ii) pay or agree to pay any pension, retirement allowance or
other employee benefit not required by any of the existing B Benefit Plans as in
effect on the date hereof to any director, officer or employee, (iii) enter into
any new or amend any existing employment, severance, retention or termination
agreement with any such director, officer or employee, (iv) except as may be
required to comply with applicable Law, adopt or become obligated under any
employee benefit plan, program or arrangement that was not both in existence on
the date hereof and disclosed in the B Disclosure Schedule or the B SEC Reports
prior to the date hereof or amend any such plan in existence on the date hereof
to enhance the benefits thereunder; (v) to the knowledge of B based on a good
faith interpretation of the Stabilization Act, take any action that may
adversely affect the Company's ability to obtain a Federal credit instrument
under the Stabilization Act; or (vi) make any payments to any individual in
respect of any severance obligations or in respect of the cancellation or
repurchase of any B Options held by any such person. Notwithstanding the
foregoing provisions of this clause (j), nothing herein shall prohibit B from
(A) taking actions required under any existing collective bargaining, employment
or other similar agreements or B Benefit Plans or any Law applicable thereto, to
which it is a party on the date of this Agreement and that are disclosed in the
B Disclosure Schedule or B SEC Reports prior to the date hereof, (B) paying any
individual listed on SECTION 6.01(j)(B) of the B Disclosure Schedule the
Cash-Out Amount (within the meaning set forth in SECTION 3.10(n) hereof) with
respect to each outstanding and unexercised B Option then held by such person,
in consideration for the cancellation of such B Options, in an amount not to
exceed the aggregate Cash-Out Amount set forth on SECTION 6.01(j)(B) of the
Disclosure Schedule opposite such person's name (PROVIDED that (1) such payment
shall be conditioned upon the execution and delivery of a written receipt by
such person to B of the consideration received for the cancellation of such B
Options, in a form prescribed by B that is reasonably satisfactory to A and the
Company, (2) no such payment shall be made if such payment may, to the knowledge
of B based on a good faith interpretation of the Stabilization Act, adversely
affect the Company's ability to obtain a U.S. federal credit instrument under
the Stabilization Act and (3) such payment and cancellation of B Options is made
by B in compliance with all applicable Laws, including applicable securities
Laws), (C) taking all necessary actions to notify individuals holding options
granted under the B 1996 Option Plans prior to such options' acceleration and
termination (such notice to include the method and timing for exercising such
options) under the terms of the B 1996 Option Plans, (D) as and to the extent
permitted by Law, providing additional or supplemental payments and/or benefits
with an aggregate net present value not to exceed $800,000, with a view to
minimizing any adverse effect on the Company's cash position, to the extent B
deems prudent in connection with keeping available services of the current B
officers and employees and otherwise as part of B's good business practice and
(E) making the payment described in SECTION 6.01(j)(E) of the B Disclosure
Schedule. Notwithstanding anything herein to the contrary, (i) in no event shall
the payments made by B pursuant to clause (B) of the preceding sentence of this
SECTION 6.01(j) exceed $1,049,545 in the aggregate and (ii) in no event shall
any payment pursuant to this SECTION 6.01(j) be made if such payment may, to the
knowledge of B based on a good faith interpretation of the Stabilization Act,
adversely affect the Company's ability to obtain a U.S. federal credit
instrument under the Stabilization Act.
46
SECTION 6.02. CONDUCT OF BUSINESS BY A PENDING THE A MERGER. Prior to
the Effective Time (except as expressly contemplated, required or permitted by
this Agreement or any of the ancillary agreements, as set forth in SECTION 6.02
of the A Disclosure Schedule, or to the extent that the Company and B shall
otherwise consent in writing, which consent shall not be unreasonably withheld):
(a) ORDINARY COURSE. A and its subsidiaries shall carry on their
business in the usual, regular and ordinary course and shall use their
reasonable efforts to (i) preserve intact their present business organizations,
(ii) keep available the services of their present officers and employees, and
(iii) preserve their relationships with suppliers, tour wholesalers, travel
agents, code share partners and others having business dealings with them.
Notwithstanding the foregoing, A and its subsidiaries may enter into agreements
of the type contemplated by SECTION 116 of the Aviation and Transportation
Security Act, provided that such agreements are approved by the Secretary of the
DOT under 49 U.S.C. ss. 41308(c) and receive the prior written approval of the
Company and B.
(b) DIVIDENDS; CHANGES IN STOCK. A shall not, and A shall not permit
any of its subsidiaries to (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (iii) repurchase, redeem or otherwise acquire
any shares of capital stock.
(c) ISSUANCE OF SECURITIES. A shall not, and it shall not permit any of
its subsidiaries to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any class or
any securities convertible into, or any rights, warrants, calls, subscriptions
or options to acquire, any such shares or convertible securities, or any other
ownership interest other than (i) the issuance of up to 483,000 shares of A
Common Stock upon the exercise of stock options, in accordance with the present
terms of such options, which options are outstanding as of the date hereof and
were granted under the A Stock Option Plan and (ii) issuances by any
wholly-owned subsidiary of A of its capital stock to A or another wholly-owned
subsidiary of A so long as A will, after such issuance, directly or indirectly
own 100% of the outstanding stock of the issuing wholly-owned subsidiary of A.
(d) GOVERNING DOCUMENTS. A shall not, and it shall not permit any of
its subsidiaries to, amend or propose to amend its Articles of Incorporation or
Bylaws or equivalent organizational documents.
(e) NO ACQUISITIONS. A shall not, and it shall not permit any of its
subsidiaries to, acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof.
(f) NO DISPOSITIONS. A shall not, and it shall not permit any of its
subsidiaries to, sell, lease, encumber or otherwise dispose of, or agree to
sell, lease, encumber or otherwise dispose of, any of its material assets other
than (i) sales in the ordinary course of business consistent with past practice,
(ii) equipment and property no longer used in the operation of its
47
business and (iii) assets related to operations designated as "discontinued
operations" in the A Disclosure Schedule.
(g) INDEBTEDNESS. A shall not, and it shall not permit any of its
subsidiaries to, incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of A or its subsidiaries or guarantee any debt
securities of others, except for borrowings under A's existing credit agreements
and overnight borrowings to the extent in the usual, regular and ordinary course
of business.
(h) TAX AND ACCOUNTING MATTERS. A shall not, and it shall not permit
any of its subsidiaries to, (i) make any Tax election that is inconsistent with
past practices or settle or compromise any Tax liability of A or any of its
subsidiaries, (ii) change its fiscal year or (iii) except as required by U.S.
GAAP, change its methods of accounting in effect at December 31, 2000.
(i) MATERIAL CONTRACTS. Neither A nor any of its subsidiaries shall
modify, amend or terminate any material contract or agreement to which it is a
party or waive, release or assign any material rights or claims except in the
usual, regular and ordinary course of business. A shall not, and shall not
permit any of its subsidiaries to, enter into any agreement or arrangement that
limits or otherwise restricts A or any of its subsidiaries or any of their
respective affiliates or any successor thereto or that could, after the Closing,
limit or restrict the Company or any of its affiliates or any successor thereto
from engaging or competing in any line of business or in any geographic area.
(j) EMPLOYEE BENEFITS. A shall not, and shall not permit any subsidiary
of A to, (i) grant any increase in the compensation or benefits payable or
provided to any of its directors, officers or employees, (ii) pay or agree to
pay any pension, retirement allowance or other employee benefit not required by
any of the existing A Benefit Plans as in effect on the date hereof to any
director, officer or employee, (iii) enter into any new or amend any existing
employment, severance, retention or termination agreement with any such
director, officer or employee, (iv) to the knowledge of A based on a good faith
interpretation of the Stabilization Act, take any action that may adversely
affect the Company's ability to obtain a Federal credit instrument under the
Stabilization Act, (v) except as may be required to comply with applicable law,
adopt or become obligated under any employee benefit plan, program or
arrangement that was not both in existence on the date hereof and disclosed in
the A Disclosure Schedule or amend any such plan in existence on the date hereof
to enhance the benefits thereunder or (vi) except as set forth herein, make any
payments to any individual in respect of severance obligations or in respect of
the cancellation of any A Options from any such person. Notwithstanding the
foregoing provisions of this clause (j), nothing herein shall prohibit A or any
subsidiary of A from taking actions required under any existing collective
bargaining, employment or other similar agreements or A Benefit Plans, or under
any Law applicable thereto, to which it is a party on the date of this Agreement
and that are disclosed in the A Disclosure Schedule.
SECTION 6.03. CONDUCT OF BUSINESS BY THE COMPANY, NEWCO A SUB AND NEWCO
B SUB PENDING THE MERGERS. (a) Prior to the Effective Time (except as expressly
48
contemplated, required or permitted by this Agreement or any ancillary
agreements or to the extent that A and B shall otherwise consent in writing,
which consent shall not be unreasonably withheld), the Company shall not (and
shall not permit Newco A Sub or Newco B Sub to) engage in any operations or
transactions or otherwise conduct any activities or enter into any contracts or
agreements. Notwithstanding the foregoing, the Company may issue such warrants,
options and other equity and equity-linked securities, and make such other
commitments, to any U.S. federal Governmental Authority in connection with
applications for U.S. federal loan guaranties and other benefits as the Board of
Directors of each of A, B and the Company may agree from time to time.
(b) As soon as reasonably practicable after the date hereof, the
Company shall (i) form (by filing with the Secretary of State of the State of
Delaware, a Certificate of Limited Liability Company in the form attached hereto
as EXHIBIT I) and become the sole member of each of two new Delaware limited
liability companies named "TurnWorks Acquisition III Sub C, LLC" and "TurnWorks
Acquisition III Sub D, LLC" (which shall be Newco A Sub and Newco B Sub, as the
case may be, unless a Drop-Down Condition is satisfied), all in compliance with
the DLLCA, (ii) form and become the sole stockholder of each of two new Delaware
corporations named "TurnWorks Acquisition III Sub A, Inc." and "TurnWorks
Acquisition III Sub B, Inc." (which shall be Newco A Sub and Newco B Sub, as the
case may be, if a Drop-Down Condition is satisfied), all in compliance with the
DGCL, and (iii) cause such newly-formed limited liability companies and
corporations (the "NEW COMPANY SUBSIDIARIES") to approve and adopt, in
accordance with the DLLCA and the DGCL, as applicable, this Agreement as an
agreement and plan of merger within the meaning of the DLLCA and the DGCL, as
applicable.
Article VII
ADDITIONAL AGREEMENTS
SECTION 7.01. REGISTRATION STATEMENT; TRUST INDENTURE ACT
QUALIFICATION. (a) As promptly as practicable after the execution of this
Agreement, (i) the Company, A and B shall prepare, and, with the cooperation of
A and B, the Company shall file with the SEC, a registration statement on Form
S-4 (together with all amendments thereto, the "REGISTRATION STATEMENT"), which
shall include a Joint Proxy Statement/Prospectus ("JOINT PROXY
STATEMENT/PROSPECTUS"), in connection with the registration under the Securities
Act of the shares of Company Common Stock and the Notes issuable to stockholders
of A and B in connection with the Mergers. The Joint Proxy Statement/Prospectus
shall satisfy (i) the prospectus delivery requirements under the Securities Act
applicable in connection with the issuance of securities to stockholders of A
and B in connection with the Mergers, (ii) the proxy rule requirements under the
Exchange Act applicable in connection with the meeting of B's stockholders (the
"B STOCKHOLDERS' MEETING") to be held to consider approval and adoption of the B
Merger as provided for in this Agreement and (iii) the notice requirements under
SECTIONs 414-125, 414-313(d) and 414-351(a) of the HBCA applicable in connection
with the B Stockholders' Meeting and the meeting of A's stockholders (the "A
STOCKHOLDERS' MEETING" and, together with the B Stockholders' Meeting, the
"STOCKHOLDERS' MEETINGS") to be held to consider approval and adoption of the A
Merger as provided for in this Agreement. The parties shall use all reasonable
efforts to have the Registration Statement declared effective by the SEC as
promptly as
49
practicable and to keep the Registration Statement effective as long as is
necessary to consummate the Mergers and the transactions contemplated hereby,
and, prior to the effective date of the Registration Statement, the Company, A
and B shall take all or any action required under any applicable federal or
state securities Laws in connection with the issuance of shares of Company
Common Stock and the Notes pursuant to the Mergers. Each of the Company, A and B
shall furnish all information concerning itself as the other parties may
reasonably request in connection with such actions and the preparation of the
Registration Statement. As promptly as practicable after the Registration
Statement shall have become effective, the Company shall mail the Joint Proxy
Statement/Prospectus to the stockholders of A and B.
(b) Subject to the application of SECTION 7.02, the Joint Proxy
Statement/Prospectus shall include (i) the recommendation of the Board of
Directors of B (based on the unanimous recommendation of the Special Committee)
to the stockholders of B in favor of approval and adoption of this Agreement and
(ii) the recommendation of the Board of Directors of A to the stockholders of A
in favor of approval and adoption of this Agreement.
(c) The Company shall advise the other parties, promptly after it
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed. Each of the Company, A
and B will advise the other parties, promptly after it receives notice thereof,
of the issuance of any stop order, the suspension of the qualification of the
Company Common Stock and the Notes issuable in connection with the Mergers for
offering or sale in any jurisdiction or any request by the SEC for amendment or
supplement of the Registration Statement or comments thereon and responses
thereto or requests by the SEC for additional information, irrespective of
whether such request, comments or responses are oral or written.
(d) Each of the Company, A and B will cause all documents that such
party is responsible for filing with the SEC in connection with the transactions
contemplated herein to comply as to form and substance in all material aspects
with the applicable requirements of the Securities Act and the rules and
regulations thereunder, the Exchange Act and the rules and regulations
thereunder, applicable Delaware Law and the applicable Hawaii Law and the rules
and regulations thereunder.
(e) If at any time prior to the Effective Time any event or
circumstance relating to the Company, A or B, or any of their respective
officers or directors, should be discovered by such party that should be set
forth in an amendment or a supplement to the Registration Statement, such party
shall promptly inform the other parties of such event or circumstance and, to
the extent required by Law, an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC and disseminated to the
stockholders of A and B.
(f) Each of the Company, A and B shall use its reasonable best efforts
to cause its accountants, counsel, advisors and other agents, and to cause its
and its affiliates' designees that are named in the Joint Proxy
Statement/Prospectus as persons who shall serve on the Board of Directors of the
Company as of the Effective Time, to deliver necessary or required documents and
instruments in connection with the Registration Statement, including opinions,
consents and certificates.
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(g) The Company shall, as promptly as practicable after receipt
thereof, provide the other parties copies of any written comments and advise the
other parties of any oral comments with respect to the Joint Proxy
Statement/Prospectus received from the SEC. The Company shall give the other
parties reasonable opportunity to review and comment on any filing (including
amendments and supplements) in connection with the Registration Statement before
so filed and will provide the other parties with a copy of each such filing.
Notwithstanding any other provision to the contrary, no amendment or supplement
(including by incorporation by reference) to the Joint Proxy
Statement/Prospectus or the Registration Statement shall be made without the
approval of each party, which approval shall not be unreasonably withheld or
delayed; PROVIDED that, with respect to documents filed by a party that are
incorporated by reference in the Registration Statement or Joint Proxy
Statement/Prospectus, this right of approval shall apply only with respect to
information relating to the other party or its business, financial condition or
results of operations.
(h) A shall use all reasonable efforts to cause to be delivered to the
Company and B a letter of PricewaterhouseCoopers, LLP, A's independent auditors,
one dated a date within two business days before the date on which the
Registration Statement shall become effective (and before the date on which each
posteffective amendment to the Registration Statement shall become effective)
and one dated the Closing Date, each addressed to the Company and B, in form and
substance reasonably satisfactory to the Company and B and customary in scope
and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement.
(i) B shall use all reasonable efforts to cause to be delivered to the
Company and A a letter of Ernst & Young LLP, B's independent auditors, one dated
a date within two business days before the date on which the Registration
Statement shall become effective (and before the date on which each
posteffective amendment to the Registration Statement shall become effective)
and one dated the Closing Date, each addressed to the Company and A, in form and
substance reasonably satisfactory to the Company and A and customary in scope
and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement.
(j) The Company shall enter into an indenture with a trustee pursuant
to which the Notes shall be issued and the parties shall use all reasonable
efforts to cause the indenture to be qualified under the Trust Indenture Act and
to cause all necessary filings with the SEC (including those by the trustee) to
be promptly made in this regard.
SECTION 7.02. STOCKHOLDERS' MEETINGS. Unless and until this Agreement
has been terminated as permitted by SECTION 9.01, A shall call and hold the A
Stockholders' Meeting and B shall call and hold the B Stockholders' Meeting as
promptly as practicable for the purpose of voting upon the approval of the A
Merger and the B Merger, respectively, this Agreement, the ancillary agreements
and the transactions contemplated hereby and thereby, and A and B shall use
their respective reasonable efforts to hold the Stockholders' Meetings on the
same day and as soon as practicable after the date on which the Registration
Statement becomes effective. Each of A and B shall, through its Board of
Directors, solicit from its stockholders votes or proxies in favor of the
approval and adoption of the Mergers as provided for in this Agreement and
recommend such approval and adoption and shall not withdraw or modify, or
propose to
51
withdraw or modify, in a manner adverse to the other parties, such
recommendation (or announce publicly its intention to do so); PROVIDED, HOWEVER,
that neither A nor B shall be obligated with respect to the foregoing provisions
of this sentence if (i) A or B, as the case may be, has complied with SECTION
7.04, (ii) an unsolicited bona fide written Superior Proposal is
then-outstanding, (iii) A or B, as the case may be, provides at least two full
business days' advance notice to the other parties to the effect that it is
proposing to take such action, together with the information specified in
SECTION 7.04(b), if applicable, and (iv) in the good faith judgment of the Board
of Directors of A or, in the case of B, both the Board of Directors of B and (if
appropriate) the Special Committee, as the case may be, taking into
consideration the advice of independent legal counsel of A or, in the case of B,
both independent legal counsel of B and (if appropriate) separate independent
legal counsel of the Special Committee, as the case may be, the making of, or
the failure to withdraw or modify, such recommendation would violate the
fiduciary duties of such Board of Directors of A or, in the case of B, both such
Board of Directors and the Special Committee, as the case may be, to the
stockholders of A or B, as the case may be, under applicable Law. Unless and
until this Agreement has been terminated as permitted by SECTION 9.01(b), each
of A and B shall submit this Agreement to its stockholders for approval and
adoption whether or not the Board of Directors of A or B (and, in the case of B,
if appropriate, the Special Committee), as the case may be, determines at any
time subsequent to the date hereof that this Agreement is no longer advisable
and recommends that the stockholders of A or B, as the case may be, reject it,
and notwithstanding any Takeover Proposal (as defined below).
SECTION 7.03. ACCESS TO INFORMATION; CONFIDENTIALITY. (a) Except as
required pursuant to any confidentiality agreement or similar agreement or
arrangement to which the Company, B or A or any of their respective subsidiaries
is a party or pursuant to applicable Law, from the date hereof to the Effective
Time, each of the Company, A and B shall provide to the other parties and their
respective officers, directors, employees, accountants, consultants, legal
counsel, financial advisors, agents and other representatives (collectively,
"REPRESENTATIVES"), upon reasonable notice, reasonable access at all reasonable
times to the officers, employees, agents, properties, offices and other
facilities of the other parties and their subsidiaries and to the books and
records thereof to the extent reasonably necessary to plan for post-consummation
coordination of the operations of the Company, A and B and to verify that all
representations and warranties made hereunder are true and correct. All
information obtained by A and B from the other shall be kept confidential
pursuant to the Confidentiality Agreement, dated September 19, 2001, between A
and B (the "CONFIDENTIALITY AGREEMENT"). Each of the parties agrees that (i) TW
and the Company shall have similar obligations to each of A and B as A and B
have to each other under the Confidentiality Agreement and (ii) A and B shall
have similar obligations to each of TW and the Company as A and B have to each
other under the Confidentiality Agreement.
(b) Each party shall comply with, and shall cause its Representatives
to comply with, all of its obligations under the Confidentiality Agreement, if
it is a party, and with the last sentence of SECTION 7.03(a).
(c) No investigations pursuant to this SECTION 7.03, and no knowledge
of information obtained in any such investigations prior to the date hereof or
the Closing Date (except as set forth in the A Disclosure Schedule or the B
Disclosure Schedule), shall affect or be
52
deemed to modify any representations or warranties hereunder. All information
obtained pursuant to this SECTION 7.03 shall be kept confidential in accordance
with the Confidentiality Agreement.
SECTION 7.04. NO SOLICITATION. (a) From the date hereof until the
earlier of the Effective Time or the date on which this Agreement is terminated
in accordance with the terms hereof, neither A nor B shall, and neither shall
permit any of its subsidiaries, its or its subsidiaries' Representatives or any
of the respective affiliates of the foregoing, to (i) solicit, initiate or
encourage the submission of, any Takeover Proposal; (ii) enter into any binding
or non-binding agreement with respect to any Takeover Proposal (other than a
confidentiality agreement to the extent information is permitted to be furnished
to any person pursuant to this SECTION 7.04(a)); (iii) participate in any
discussions or negotiations regarding, or furnish to any person any information
with respect to or in connection with, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Takeover Proposal; (iv) amend or grant any waiver or
release under any confidentiality, standstill or similar agreement, in each case
relating to a Takeover Proposal; or (v) with respect to B and except as
expressly contemplated by this Agreement with respect to the B Merger, amend or
grant any waiver or release or approve any transaction or redeem any rights
under the B Rights Agreement; PROVIDED, HOWEVER, that nothing contained in this
Agreement shall prevent A or B or their respective Boards of Directors from (i)
complying with Rules 14d-9 and 14e-2 under the Exchange Act or publicly
disclosing the existence of a Takeover Proposal to the extent required by
applicable Law or (ii) furnishing non-public information to, or entering into
discussions or negotiations with, any person or entity in connection with an
unsolicited bona fide written Takeover Proposal by such person or entity to the
Board of Directors of A or B, as the case may be, if (x) the failure to take
such action would, in the good faith judgment of the Board of Directors of A or,
in the case of B, both the Board of Directors of B and (if appropriate) the
Special Committee, as the case may be, taking into consideration the advice of
independent legal counsel of A or, in the case of B, both independent legal
counsel of B and (if appropriate) separate independent legal counsel of the
Special Committee, as the case may be, violate the fiduciary duties of the Board
of Directors of A or, in the case of B, both the Board of Directors of B and (if
appropriate) the Special Committee, as the case may be, to the stockholders of A
or B, as the case may be, under applicable Law, (y) (1) financing for such
Takeover Proposal, to the extent required, is either then committed and so
evidenced by binding written documentation or, in the good faith judgment
(taking into consideration the advice of a financial advisor of nationally
recognized standing) of such Board of Directors (and, in the case of B, (if
appropriate) the Special Committee), is reasonably capable of being obtained by
such person or entity within a reasonable time period, and (2) the Board of
Directors of A or, in the case of B, both the Board of Directors of B and (if
appropriate) the Special Committee, as the case may be, have determined in good
faith that (A) such Takeover Proposal, if accepted, would be reasonably likely
to be consummated taking into account all legal, financial, regulatory and other
aspects of the proposal and the person making the proposal and (B) after
consultation with and considering the advice of independent financial advisors
of national standing and after taking into account the strategic benefits to be
derived from the Mergers and the long term prospects of the Company in the event
the Mergers were consummated and after consideration of other matters it deems
relevant, would, if consummated, result in a transaction more favorable to the
stockholders of A or B, as the case may be, from a financial point of view than
the Mergers (a Takeover Proposal satisfying such criteria being a "SUPERIOR
PROPOSAL"), and (z) prior to furnishing such non-public
53
information to, or entering into discussions or negotiations with, such person
or entity, the Board of Directors of A or the Board of Directors of B, as the
case may be, receives from such person or entity an executed confidentiality
agreement with provisions not less favorable to A or B, as the case may be, than
those contained in the Confidentiality Agreement, and A or B, as the case may
be, provides at least two full business days' advance notice to the other
parties to this Agreement to the effect that it is proposing to take such
action, together with the information specified in SECTION 7.04(b). For purposes
of this Agreement, "TAKEOVER PROPOSAL" means any offer or proposal by any third
party (or binding or non-binding agreement by any third party with A or B with
respect to, or any public announcement or SEC filing by any third party that
indicates an intention to make, such an offer or proposal) (i) for a merger,
consolidation, share exchange, recapitalization or other business combination
involving A or any of its subsidiaries, or B or any of its subsidiaries or (ii)
to acquire in any manner (including by disposition or transfer), directly or
indirectly, a 10% or greater equity interest in, 10% or more of the voting
securities or capital stock of, or 10% or more of the assets of, A or any of its
subsidiaries, or B, other than the transactions contemplated by this Agreement
or any of the ancillary agreements.
(b) With respect to any Takeover Proposal as to which A or B proposes
to take any action permitted by clause (ii) of the proviso in SECTION 7.04(a)
above, A or B, as applicable, shall notify the other parties to this Agreement
of such Takeover Proposal immediately upon its decision to propose to take such
action, and shall provide the other parties with the material terms of such
Takeover Proposal and the identity of the person making it and all information
provided by it to such person in accordance with SECTION 7.04(a) to the extent
not previously delivered to the other parties, and shall thereafter convey to
the other parties, as promptly as practicable (but in no case later than 24
hours) after it becomes aware thereof, all material changes to such terms and
all additional information provided by it to such person to the extent not
previously delivered to the other parties. Subject to SECTION 7.04(a),
immediately after the execution and delivery of this Agreement, each of A and B
will (and, in the case of A, will cause each of its subsidiaries to), and will
cause its and its subsidiaries' Representatives to, cease and terminate all
existing activities, discussions and negotiations with any parties conducted
heretofore with respect to any possible Takeover Proposal.
(c) From the date hereof until the earlier of the Effective Time or the
date on which this Agreement is terminated in accordance with the terms hereof,
TW shall not, and shall not permit any of its subsidiaries, its or its
subsidiaries' Representatives or any of the respective affiliates of the
foregoing, to (i) solicit, initiate or encourage the submission of, any Takeover
Proposal; (ii) enter into any binding or non-binding agreement with respect to
any Takeover Proposal or (iii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to or in
connection with, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Takeover Proposal.
SECTION 7.05. AFFILIATE LETTERS. (a) Prior to the date the Registration
Statement becomes effective, B shall deliver to the Company and A a list of
names and addresses of those persons who were, in B's reasonable judgment, at
the record date for the B Stockholders' Meeting to approve the B Merger, Rule
145 Affiliates of B. B shall use its reasonable best efforts to deliver or cause
to be delivered to A prior to the Closing Date, an affiliate letter, in the form
attached as EXHIBIT J hereto, executed by each of the Rule 145
54
Affiliates of B identified in the foregoing list. The Company shall be entitled
to place legends as specified in such affiliate letters on the certificates
evidencing any Company Common Stock or Notes to be received by such Rule 145
Affiliates pursuant to the terms of this Agreement, and to issue appropriate
stop transfer instructions to the transfer agent for the Company Common Stock or
Notes, consistent with the terms of such affiliate letters. B has set forth in
SECTION 7.05(a) of the B Disclosure Schedule the names of those persons who, to
its knowledge, are currently Rule 145 Affiliates of B.
(b) Prior to the date the Registration Statement becomes effective, A
shall deliver to the Company and B a list of names and addresses of those
persons who were, in A's reasonable judgment, at the record date for the A
Stockholders' Meeting to approve the A Merger, Rule 145 Affiliates of A. A shall
use its reasonable best efforts to deliver or cause to be delivered to B, prior
to the Closing Date, an affiliate letter, in the form attached as EXHIBIT J
hereto, executed by each of the Rule 145 Affiliates of A identified in the
foregoing list. The Company shall be entitled to place legends as specified in
such affiliate letters on the certificates evidencing any Company Common Stock
to be received by such Rule 145 Affiliates pursuant to the terms of this
Agreement, and to issue appropriate stop transfer instructions to the transfer
agent for the Company Common Stock, consistent with the terms of such affiliate
letters. A shall set forth in SECTION 7.05(b) of the A Disclosure Schedule the
names of those persons who, to its knowledge, are currently Rule 145 Affiliates
of A.
SECTION 7.06. FURTHER ACTION; CONSENTS; FILINGS. (a) Upon the terms and
subject to the conditions hereof, each of the parties hereto shall use all
commercially reasonable efforts and shall cooperate fully with each other to (i)
take, or cause to be taken, all appropriate action, and do, or cause to be done,
and assist and cooperate with the other party in doing, all things necessary,
proper or advisable under applicable Law or otherwise to cause the satisfaction
of the conditions in Article VIII and to consummate and make effective, in the
most expeditious manner practicable, the Mergers and the other transactions
contemplated by this Agreement and the ancillary agreements (including, without
limitation, seeking to cause the condition set forth in SECTION 8.03(f) to be
satisfied within 60 days after the date hereof), (ii) obtain from Governmental
Authorities in the most expeditious manner practicable any consents, licenses,
permits, waivers, approvals, authorizations, clearances or orders required to be
obtained or made by the Company, A or B or any of their respective affiliates in
connection with the consummation of the Mergers and the other transactions
contemplated by this Agreement and the ancillary agreements, (iii) make as
promptly as possible all necessary filings, and thereafter make any other
required or advisable submissions, with respect to this Agreement and the
transactions contemplated hereby required under (A) the Securities Act, Exchange
Act, the Trust Indenture Act and the respective rules and regulations thereunder
and any other applicable federal or state securities Laws, (B) the HSR Act and
(C) any other applicable Law and (iv) obtain in the most expeditious manner
practicable the consent, approval or appropriate waiver, as the case may be, of
each person whose consent or approval is required in connection with the Mergers
or the consummation of the transactions contemplated by this Agreement or any of
the ancillary agreements, under all material agreements or instruments to which
A or any of its subsidiaries, in the case of A, and B is a party (including
those designated with an asterisk in the A Disclosure Schedule or the B
Disclosure Schedule, as applicable).
55
(b) Without limiting SECTION 7.06(a) and subject in all respects to
SECTIONs 7.06(c) and 7.06(d), each of the Company, A and B shall use all
reasonable efforts to avoid the entry of, or to have vacated, lifted, reversed
or overturned any decree, judgment, injunction, ruling or other order (whether
preliminary or permanent) or any other judicial, administrative or legislative
action or proceeding (an "ORDER") that would restrict, prevent or prohibit the
consummation of the A Merger, the B Merger or any of the other transactions
contemplated hereby or by any of the ancillary agreements on or before the date
defined in SECTION 9.01(b), including, without limitation, by pursuing all
available avenues of administrative and judicial appeal and all available
legislative action.
(c) Without limiting SECTION 7.06(a) and subject in all respects to
SECTION 7.06(d), each of the Company, A and B shall agree to divest, hold
separate, or otherwise take or commit to take any action that limits its freedom
of action with respect to, or its ability to retain, any of the businesses,
product lines or assets of A (or any of its subsidiaries) or B, as the case may
be, provided that any such action is conditioned upon the consummation of the
Mergers. A and B agree and acknowledge that, in connection with any filing or
submission required, action to be taken or commitment to be made by the Company,
A or B, or any of their respective subsidiaries to consummate the Mergers or
other transactions contemplated in this Agreement, neither A (or any of its
subsidiaries) nor B, as the case may be, without the prior written consent of
the Company, may divest any assets, commit to any divestiture of assets or
businesses of A (or any of its subsidiaries) or B, as the case may be, or take
any other action or commit to take any action that would limit the Company's,
A's or B's or any of their respective subsidiaries' freedom of action with
respect to, or their ability to retain, any of their businesses, product lines
or assets.
(d) Notwithstanding the foregoing paragraphs of this SECTION 7.06,
nothing in this Agreement shall require the Company, A or B to agree to the
sale, transfer, divestiture or other disposition of any assets (including any
lines of business) of the Company, A or B or any of their respective
subsidiaries or any of the other actions contemplated in SECTION 7.06(c) if the
Company, A or B concludes that the taking of such action or the making of any
commitments or the consequences thereof would be reasonably likely to have a
material adverse effect on the combined business that would have otherwise
resulted from the consummation of the Mergers (without taking into account the
effects of any agreement of the type contemplated by SECTION 116 of the Aviation
and Transportation Security Act, provided that such agreement is reasonably
acceptable to the parties hereto and approved by the Secretary of the DOT under
49 U.S.C. ss. 41308(c)). In addition, notwithstanding the foregoing paragraphs
of this SECTION 7.06, nothing in this Agreement shall require the Company, A or
B to contest any injunction (other than a temporary restraining order) issued by
a court of competent jurisdiction in a proceeding initiated by a Governmental
Authority.
SECTION 7.07. NOTIFICATION REQUIREMENTS. Each of the Company, TW, A and
B shall give prompt notice to the others of (i) any representation or warranty
made by it herein, in any ancillary agreement or in any other document or
instrument executed and delivered in connection herewith or therewith, that is
qualified as to materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (ii) the failure by it to comply with or
satisfy in any material respect any covenant, obligation or agreement to be
complied with or satisfied by it under this Agreement, any ancillary agreement
or any other document executed and delivered by
56
it in connection herewith or therewith, or (iii) any development that may render
any of the conditions in Article VIII incapable of being satisfied before the
date set forth in SECTION 9.01(b)(i); PROVIDED, HOWEVER, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
SECTION 7.08. PLAN OF REORGANIZATION. After due investigation, no party
hereto is aware of any fact or circumstance that would prevent either Merger
from qualifying as a reorganization within the meaning of SECTION 368(a) of the
Code. From and after the date hereof and until the Effective Time, each party
hereto shall use its reasonable best efforts to cause each Merger to qualify as
a reorganization under SECTION 368(a) of the Code and to obtain the opinions of
counsel referred to in SECTION 8.02(f), SECTION 8.03(f) and SECTION 8.04(g).
None of the parties hereto will knowingly take any actions or cause any actions
to be taken which could prevent either Merger from qualifying as a
reorganization under SECTION 368(a) of the Code. Following the Effective Time,
none of the parties shall knowingly take (or permit any of its affiliates to
take) any action or knowingly cause any action to be taken which would cause
either Merger to fail to qualify as a reorganization under SECTION 368(a) of the
Code.
SECTION 7.09. PUBLIC ANNOUNCEMENTS. The initial press release relating
to this Agreement, the ancillary agreements and the transactions contemplated
hereby and thereby shall be a joint press release issued by the parties.
Thereafter the Company shall manage all public announcements relating thereto,
and A and B shall not, unless otherwise required by applicable Law (including
requirements of stock exchanges and other similar regulatory bodies) after prior
notice to the other parties to the extent practicable, issue any press release,
advertisement or other public announcement, or otherwise make any public
statements with respect to this Agreement, any ancillary agreement or the
transactions contemplated hereby or thereby without the consent of the Company,
which consent shall not be unreasonably withheld or delayed.
SECTION 7.10. CONTROL OF OTHER PARTY'S BUSINESS. Nothing contained in
this Agreement shall give A, directly or indirectly, the right to control or
direct the Company's or B's operations prior to the Effective Time. Nothing
contained in this Agreement shall give B, directly or indirectly, the right to
control or direct the Company's or A's operations prior to the Effective Time.
Nothing contained in this Agreement shall give the Company or TW, directly or
indirectly, the right to control or direct A's or B's operations prior to the
Effective Time. Prior to the Effective Time, each of the Company, A and B shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over its operations.
SECTION 7.11. DIRECTORS' AND OFFICERS' INDEMNIFICATION. (a) The Company
agrees that all rights to exculpation and indemnification and advancement of
expenses for acts or omissions occurring prior to the Effective Time (including
for acts or omissions occurring in connection with the approval of this
Agreement and the ancillary agreements and the transactions contemplated hereby
and thereby) now existing in favor of the current or former directors or
officers (the "INDEMNIFIED PARTIES") of A or B or any of their subsidiaries as
provided in its articles of incorporation or by-laws or in any agreement in
effect as of the date hereof between A or B or any of their subsidiaries and any
of the Indemnified Parties shall survive the
57
Mergers and shall continue in full force and effect in accordance with their
terms for a period of six years following the Effective Time.
(b) For a period of six years after the Effective Time, the Company
shall cause to be maintained in effect the policies of directors' and officers'
liability and fiduciary liability insurance maintained by A or B for the benefit
of those persons who are covered by such policies at the Effective Time (or the
Company may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are, in the aggregate, no less
advantageous to the insured) with respect to matters occurring prior to the
Effective Time, to the extent that such liability insurance can be maintained at
a cost to the Company not greater than 150 percent of the aggregate annual
premium for the current directors' and officers' liability and fiduciary
liability insurance for A and B, as the case may be, as set forth in the A
Disclosure Schedule or the B Disclosure Schedule; PROVIDED that, if such
insurance cannot be so maintained or obtained at such costs, the Company shall
maintain or obtain as much of such insurance as can be so maintained or obtained
at a cost equal to 150 percent of the current annual premiums of A or B, as the
case may be, for such insurance.
SECTION 7.12. CONVEYANCE TAXES. The Company, B and A shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection with the transactions contemplated hereby that are required or
permitted to be filed on or before the Effective Time.
SECTION 7.13. LISTING APPLICATION. The Company and B shall promptly
prepare and submit to each of the AMEX and the PSE, or such other national
securities exchange as the Company, A and B shall determine, a listing
application covering the shares of Company Common Stock issuable in connection
with the Mergers and the shares of the Company Common Stock to be reserved for
issuance upon the exercise of the stock options under and in accordance with the
terms of the Company Stock Incentive Plan, and shall use their respective
reasonable efforts to obtain, prior to the Effective Time, approval for the
listing on such exchanges of such Company Common Stock, subject to official
notice of issuance, it being understood that such listing application may take
the form of a continuation or succession to B's listing application on the AMEX
and the PSE. The parties shall have no obligations with respect to any listing
of the Notes.
SECTION 7.14. TAKEOVER STATUTE. If any "fair price," "moratorium,"
"control share acquisition" or other form of anti-takeover statute or regulation
shall become applicable to the transactions contemplated hereby or by the
ancillary agreements, A and B and the members of the Board of Directors of each
of A and B shall grant such approvals and take such actions as are reasonably
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and to eliminate or
minimize the effects of such statute or regulation on the transactions
contemplated hereby or by the ancillary agreements.
SECTION 7.15. POST-EFFECTIVE TIME OPTION PAYMENTS. Upon the termination
of employment of any of the employees listed on SECTION 7.15 of the B Disclosure
Schedule after
58
the Effective Time and prior to the 180th day after the Effective Time, the
Company shall pay to such employee the Cash-Out Amount with respect to each
outstanding and unexercised B Option held by such employee immediately prior to
the Effective Time, which amount, in the aggregate, shall not exceed the amount
set forth in SECTION 7.15 of the B Disclosure Schedule opposite such employee's
name, PROVIDED FURTHER that no payment shall be made unless and until such
employee executes an agreement containing (i) a general release and waiver of
all claims such employee may have against the B Surviving Entity, the Company,
and their respective affiliates and any successors thereto in respect of such
employee's employment (or the termination thereof) with respect to B, the B
Surviving Entity, the Company, and their respective affiliates and any
successors thereto (but without prejudice to any severance payments to which
such employee is entitled pursuant to any existing agreement with any such
person), in a form prescribed by the Company, (ii) a three-year non-disclosure
provision in a form prescribed by the Company and (iii) non-competition
provisions substantially in the form of those attached hereto as EXHIBIT K.
SECTION 7.16. COMPANY STOCK INCENTIVE PLAN. Effective as of the
Effective Time, the Company shall adopt the Aloha Holdings, Inc. 2002 Company
Stock Incentive Plan substantially in the form attached hereto as EXHIBIT L (the
"COMPANY STOCK INCENTIVE PLAN"), pursuant to which the Company will be permitted
to grant options to purchase, and restricted shares of, Company Common Stock
("COMPANY AWARDS") to certain directors, key officers and employees of the
Company. As of the Effective Time, the Company shall take such actions as are
reasonably necessary to reserve the number of shares of Company Common Stock for
issuance under such Company Stock Incentive Plan that is equal to 10% of the
number of issued and outstanding shares of Company Common Stock on a fully
diluted basis as of the Effective Time after giving effect to the Mergers.
SECTION 7.17. UNION AGREEMENTS. From and after the Effective Time, the
B Surviving Entity shall be bound by and assume, and shall execute and deliver
any and all necessary or reasonably requested documentation to confirm and
evidence that it is so bound by and has so assumed, all obligations of A and B
under their respective agreements with the Airline Pilots Association
International, the Association of Flight Attendants, the Transport Workers Union
and the International Association of Machinists and Aerospace Workers.
SECTION 7.18. NON-EMPLOYEE DIRECTOR COMPENSATION. As of the Effective
Time, the members of the Board who are not employees of the Company or any of
its subsidiaries (the "NON-EMPLOYEE DIRECTORS") shall initially receive the
following as compensation for their services on the Board: (a) an annual fee of
$20,000, (b) an additional fee of $1,000 per meeting (not to exceed $4,000 per
year), (c) with respect to the chairman of the Board or any committee or
sub-committee thereof, an additional fee of $1,000 per meeting (not to exceed
$4,000 per year) and (d) stock options under and in accordance with the terms of
the Company Stock Incentive Plan, as determined by the Board or a committee
thereof after the Effective Time. The compensation arrangements of the
Non-Employee Directors may be established or amended by the Board or a committee
thereof from time to time, in accordance with the Company's Certificate of
Incorporation and Bylaws.
SECTION 7.19. DIRECTOR FLIGHT BENEFITS. In addition, as of the
Effective Time, each member of the Board, and each member of the Board of
Directors of A or B as of the date
59
hereof, will be granted flight benefits ("FLIGHT BENEFITS") on each airline
operated by the Company or any of its affiliates or any successor or successors
thereto (the "COMPANY SYSTEM"), which shall initially consist of (a) the highest
priority space available flight passes for such member and his or her spouse,
(b) a Universal Air Travel Plan ("UATP") card (or, in the event of
discontinuance of the UATP program, a similar charge card) permitting the
purchase of air travel through direct billing to the Company or any successor or
successors thereto in each member's name for charging on an annual basis up to
the applicable limit (as determined by the Company from time to time) with
respect to such year in value (valued identically to the calculation of imputed
income resulting from such flight benefits described below) of flights (in any
fare class) on the Company System for such member and his or her spouse, (c) a
highest category frequent flyer card for the Company System in such member's
name for use on the Company system and (d) a membership for such member and his
or her spouse in the Company's airport lounge club. The specific terms and
conditions of the Flight Benefits, including the policies and procedures
thereof, shall be determined by the Company, in its discretion, from time to
time, but in no event shall the Company limit the scope of the Flight Benefits
described above.
Article VIII
CONDITIONS TO THE MERGERS
SECTION 8.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The
obligations of each party to consummate the Mergers and the other transactions
contemplated hereby and by the ancillary agreements are subject to the
satisfaction on or prior to the Closing Date of the following conditions:
(a) this Agreement shall have been approved and adopted by (i) the
affirmative vote of the stockholders of each of B and A in accordance with the
HBCA and B's and A's Articles of Incorporation, respectively, and otherwise in
accordance with the applicable regulations of any applicable stock exchange or
other regulatory body and (ii) in the case of the B Stockholders' Meeting, the
affirmative vote of holders of at least a majority of "Qualified Shares", as
such term is used in SECTION 414-264 of the HBCA;
(b) the waiting period (and any extension thereof), if any, applicable
to the consummation of the Mergers under the HSR Act shall have expired or been
terminated;
(c) no Governmental Authority or court of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any law, rule,
regulation, executive order or Order which is then in effect and has the effect
of prohibiting consummation of the Mergers and no Governmental Authority shall
have instituted any judicial or administrative proceeding which continues to be
pending seeking any such result;
(d) the Registration Statement shall have been declared effective under
the Securities Act and the indenture pursuant to which the Notes are to be
issued shall have been qualified under the Trust Indenture Act, and no stop
order suspending the effectiveness of the Registration Statement or such
qualification shall be in effect and no proceedings for such purpose shall be
pending before or threatened by the SEC;
60
(e) the shares of Company Common Stock issuable in the Mergers pursuant
to Article II and such other shares to be reserved for issuance in connection
with the Mergers shall have been authorized for listing on the AMEX and PSE, or
such other national securities exchange as the Company, B and A shall determine,
subject only to official notice of issuance;
(f) the Company, A, B, Newco A Sub and Newco B Sub shall have received
all certifications and approvals from Governmental Authorities necessary to
permit the Company and its subsidiaries to continue to conduct the business of B
and A after the Effective Time except to the extent the failure to receive such
certification and approval would not have a material adverse effect on the
combined business that would have otherwise resulted from the consummation of
the Mergers;
(g) all authorizations, consents, orders or approvals of, or
declarations or filings with, or expiration of waiting periods imposed by, or
notifications to, any Governmental Authority required by Law in connection with
the execution, delivery and performance of this Agreement and the ancillary
agreements, shall have been obtained, filed, expired or given, except for
filings in connection with the Mergers and any other documents required to be
filed after the Effective Time and except where the failure to have obtained or
made any such consent, authorization, order, approval, filing or registration
would not have a material adverse effect on the combined business that would
have otherwise resulted from the consummation of the Mergers;
(h) all consents, approvals and waivers from non-Governmental Authority
third parties shall have been obtained except to the extent the failure to
receive such consents, approvals and waivers would not have a material adverse
effect on the combined business that would have otherwise resulted from the
consummation of the Mergers;
(i) each of the parties to the Stockholders Agreement and the
Registration Rights Agreement shall have executed and delivered such agreements
in the forms attached hereto as EXHIBIT A and EXHIBIT B, respectively;
(j) the closing conditions for the benefit of B set forth in the Stock
Purchase Agreements referred to in SECTIONs 2.01(a)(ii) and 2.01(a)(iii) hereof
shall have been satisfied or waived by B with the consent of A and TW;
(k) the closings under the Stock Purchase Agreements referred to in
SECTIONs 2.01(a)(ii) and 2.01(a)(iii) hereof shall have occurred;
(l) each of the conditions to closing for the benefit of the Company
set forth in the C
Merger Agreement shall have been satisfied or waived by the
Company with the consent of A and B;
(m) the C Merger shall have been consummated in accordance with the C
Merger Agreement; and
(n) each of the amendments to the employment agreements of A's current
Chief Executive Officer and A's current Chief Financial Officer dated as of the
date hereof shall have
61
become effective or all conditions precedent to such effectiveness shall have
been satisfied or waived.
SECTION 8.02. CONDITIONS TO THE OBLIGATIONS OF B. The obligations of B
to consummate the Mergers and the other transactions contemplated hereby and by
the ancillary agreements are subject to the satisfaction of the following
further conditions:
(a) each of the representations and warranties of A contained in this
Agreement or the ancillary agreements that is qualified as to materiality shall
be true and correct, and each that is not so qualified shall be true and correct
in all material respects, as of the Effective Time, as though made on and as of
the Effective Time (or, in the case of those representations and warranties
which address matters only as of a particular date, as of such date) and B shall
have received a certificate of the Chairman, President or Chief Financial
Officer of A to such effect;
(b) each of the representations and warranties of TW and the Company
contained in this Agreement or the ancillary agreements that is qualified as to
materiality shall be true and correct, and each that is not so qualified shall
be true and correct in all material respects, as of the Effective Time, as
though made on and as of the Effective Time (or, in the case of those
representations and warranties which address matters only as of a particular
date, as of such date), and B shall have received a certificate of the Chairman,
President or Chief Executive Officer of the Company to such effect;
(c) A shall have performed or complied in all material respects with
all agreements and covenants required by this Agreement or the ancillary
agreements to be performed or complied with by it on or prior to the Effective
Time, and B shall have received a certificate of the Chairman, President or
Chief Financial Officer of A to that effect;
(d) each of TW and the Company shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement
or the ancillary agreements to be performed or complied with by it on or prior
to the Effective Time, and B shall have received a certificate of the Chairman,
President or Chief Executive Officer of the Company to such effect;
(e) (i) B shall have received a written opinion from Xxxx, Weiss,
Rifkind, Xxxxxxx & Xxxxxxxx to the effect that each of the A Merger and the B
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of SECTION 368(a) of the Code, that no gain or loss will be
recognized by any of the Company, A or B as a result of such Mergers, and that
no gain or loss will be recognized by any of C GP, C Inc. or the Company as a
result of the C Merger; and (ii) if the Drop-Down is to be effected, B shall
have received a written opinion from Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx to
the effect that the Drop-Down will be treated for federal income tax purposes as
a tax-free transfer of property within the meaning of SECTION 351 of the Code in
which no gain or loss is recognized by either the Company or Newco B Corporation
by reason of the transfer; which opinions may rely upon such certificates of the
Company, B and A as are customary for such opinions, including certificates
substantially in the forms of EXHIBIT F, EXHIBIT G and EXHIBIT H; and
62
(f) as of the Effective Time, the Company and its subsidiaries (which
shall include A and B) shall have at least $80 million in cash and cash
equivalents (including, without limitation, all such amounts to be drawn down on
the Closing Date under committed lines of credit, but excluding, in all cases,
the proceeds of borrowings guaranteed by the U.S. federal government, expenses
of the transactions contemplated hereby that are payable at or after the Closing
and all other amounts of such cash that must be paid as a result of the
Closing), PROVIDED that at least $50 million of such amount constitutes
"unrestricted cash." As used in this Agreement, "UNRESTRICTED CASH" means all
cash and cash equivalents, other than cash withheld as a reserve against credit
card advances.
SECTION 8.03. CONDITIONS TO THE OBLIGATIONS OF A. The obligations of A
to consummate the Mergers and the other transactions contemplated hereby and by
the ancillary agreements are subject to the satisfaction of the following
further conditions:
(a) each of the representations and warranties of B contained in this
Agreement or the ancillary agreements that is qualified as to materiality shall
be true and correct, and each that is not so qualified shall be true and correct
in all material respects, as of the Effective Time as though made on and as of
the Effective Time (or, in the case of those representations and warranties
which address matters only as of a particular date, as of such date), and A
shall have received a certificate of the Chairman, President or Chief Financial
Officer of B to such effect;
(b) each of the representations and warranties of TW and the Company
contained in this Agreement or the ancillary agreements that is qualified as to
materiality shall be true and correct, and each that is not so qualified shall
be true and correct in all material respects, as of the Effective Time, as
though made on and as of the Effective Time (or, in the case of those
representations and warranties which address matters only as of a particular
date, as of such date), and A shall have received a certificate of the Chairman,
President or Chief Executive Officer of the Company to such effect;
(c) B shall have performed or complied in all material respects with
all agreements and covenants required by this Agreement or the ancillary
agreements to be performed or complied with by it on or prior to the Effective
Time, and A shall have received a certificate of the Chairman, President or
Chief Financial Officer of B to that effect;
(d) each of TW and the Company shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement
or the ancillary agreements to be performed or complied with by it on or prior
to the Effective Time, and A shall have received a certificate of the Chairman,
President or Chief Executive Officer of the Company to such effect;
(e) (i) A shall have received a written opinion from Shearman &
Sterling to the effect that each of the A Merger and the B Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of SECTION 368(a) of the Code, that no gain or loss will be recognized by any of
the Company, A or B as a result of such Mergers, and that no gain or loss will
be recognized by any of C GP, C Inc. or the Company as a result of the C Merger;
and (ii) if the Drop-Down is to be effected, A shall have received a written
opinion from Shearman & Sterling to the effect that the Drop-Down will be
treated for federal income tax purposes as a tax-
63
free transfer of property within the meaning of SECTION 351 of the Code in which
no gain or loss is recognized by either the Company or Newco B Corporation by
reason of the transfer; which opinions may rely upon such certificates of the
Company, B and A as are customary for such opinions, including certificates
substantially in the forms of EXHIBIT F, EXHIBIT G and EXHIBIT H;
(f) the personal guarantees issued by each A Principal Holder in
respect of indebtedness of A to First Hawaiian Bank shall have been released
subject only to the condition that the Mergers shall have been consummated; and
(g) as of the Effective Time, the Company and its subsidiaries (which
shall include A and B) shall have at least $80 million in cash and cash
equivalents (including, without limitation, all such amounts to be drawn down on
the Closing Date under committed lines of credit, but excluding, in all cases,
the proceeds of borrowings guaranteed by the U.S. federal government, expenses
of the transactions contemplated hereby that are payable at or after the Closing
and all other amounts of such cash that must be paid as a result of the
Closing), PROVIDED that at least $50 million of such amount constitutes
"unrestricted cash."
SECTION 8.04. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate the Mergers and the other transactions
contemplated hereby and by the ancillary agreements are subject to the
satisfaction of the following further conditions:
(a) each of the representations and warranties of A contained in this
Agreement or the ancillary agreements that is qualified as to materiality shall
be true and correct, and each that is not so qualified shall be true and correct
in all material respects, as of the Effective Time as though made on and as of
the Effective Time (or, in the case of those representations and warranties
which address matters only as of a particular date, as of such date), and the
Company shall have received a certificate of the Chairman, President or Chief
Financial Officer of A to such effect;
(b) each of the representations and warranties of B contained in this
Agreement or the ancillary agreements that is qualified as to materiality shall
be true and correct, and each that is not so qualified shall be true and correct
in all material respects, as of the Effective Time as though made on and as of
the Effective Time (or, in the case of those representations and warranties
which address matters only as of a particular date, as of such date), and the
Company shall have received a certificate of the Chairman, President or Chief
Financial Officer of B to such effect;
(c) A shall have performed or complied in all material respects with
all agreements and covenants required by this Agreement or the ancillary
agreements to be performed or complied with by it on or prior to the Effective
Time, and the Company shall have received a certificate of the Chairman,
President or Chief Financial Officer of A to that effect;
(d) B shall have performed or complied in all material respects with
all agreements and covenants required by this Agreement or the ancillary
agreements to be performed or complied with by it on or prior to the Effective
Time, and the Company shall have received a certificate of the Chairman,
President or Chief Financial Officer of B to that effect;
64
(e) (i) the Company shall have received a written opinion from each of
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx and Xxxxxxxx & Sterling, each to the
effect that each of the A Merger and the B Merger will be treated for federal
income tax purposes as a reorganization within the meaning of SECTION 368(a) of
the Code, and that no gain or loss will be recognized by any of C GP, C Inc. or
the Company as a result of the C Merger; and (ii) if the Drop-Down is to be
effected, the Company shall have received a written opinion from each of Xxxx,
Weiss, Rifkind, Xxxxxxx & Xxxxxxxx and Xxxxxxxx & Sterling to the effect that
the Drop-Down will be treated for federal income tax purposes as a tax-free
transfer of property within the meaning of SECTION 351 of the Code; which
opinions may rely upon such certificates of the Company, B and A as are
customary for such opinions, including certificates substantially in the forms
of EXHIBIT F, EXHIBIT G and EXHIBIT H; and
(f) As of the Effective Time, the Company and its subsidiaries (which
shall include A and B) shall have access to, or there shall be a high likelihood
that the Company and such subsidiaries shall have access to, at least $75
million of "liquidity" (as such term is used in the first sentence of
Instruction 5 to Paragraph 303(a) of Regulation S-K) that none of A, its
subsidiaries, B and its subsidiaries had access to on the date of this
Agreement. For the avoidance of doubt, sources of "liquidity" shall include
financings (whether they are debt or equity financings) and governmental and
other loan guarantees for the benefit of the Company or any of its subsidiaries.
Article IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. TERMINATION. This Agreement may be terminated and the
Mergers and the other transactions contemplated by this Agreement may be
abandoned at any time prior to the Effective Time and, except in the case of
SECTION 9.01(j) or (k), notwithstanding that any requisite approval and adoption
of this Agreement and the transactions contemplated hereby has been obtained
prior to such termination, as follows:
(a) by mutual written consent duly authorized by the Boards of
Directors of each of the Company, B and A;
(b) by the Company, B or A, by written notice to the other parties, if
either (i) the Effective Time shall not have occurred on or before the 120th day
after the date hereof; PROVIDED, HOWEVER, that the right to terminate this
Agreement under this SECTION 9.01(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such date;
or (ii) any Order permanently enjoining, restraining or otherwise prohibiting
the consummation of either the A Merger or the B Merger shall have become final
and nonappealable;
(c) by the Company, A or B, by written notice to the other parties, if
this Agreement shall fail to receive the requisite vote for approval at the B
Stockholders' Meeting as described in SECTION 8.01(a); PROVIDED, HOWEVER, that B
may not terminate this Agreement pursuant to this SECTION 9.01(c) if B has not
complied with its obligations
65
under SECTION 7.01, SECTION 7.02 or SECTION 7.04 or has otherwise breached in
any material respect its obligations under this Agreement in any manner that
could reasonably have caused the failure of the requisite stockholder approval
to be obtained at the B Stockholders' Meeting;
(d) by the Company, A or B, by written notice to the other party, if
this Agreement shall fail to receive the requisite vote for approval at the A
Stockholders' Meeting as described in SECTION 8.01(a); PROVIDED, HOWEVER, that A
may not terminate this Agreement pursuant to this SECTION 9.01(d) if A has not
complied with its obligations under SECTION 7.01, SECTION 7.02 or SECTION 7.04
or has otherwise breached in any material respect its obligations under this
Agreement in any manner that could reasonably have caused the failure of the
stockholder approval to be obtained at the A Stockholders' Meeting;
(e) by B or the Company, by written notice to the other and to A, if
there has been a breach of any representation, warranty, covenant or agreement
on the part of A set forth in this Agreement, or if any representation or
warranty of A shall have become untrue, in either case such that the conditions
set forth in SECTION 8.02(a) or SECTION 8.02(c) (in the case of a termination by
B under this SECTION 9.01(e)) or SECTION 8.04(a) or SECTION 8.04(c) (in the case
of a termination by the Company under this SECTION 9.01(e)) would not be
satisfied ("TERMINATING A BREACH"); PROVIDED, HOWEVER, that, if such Terminating
A Breach is curable by A within 30 days through the exercise of its best efforts
and for so long as A continues to exercise such best efforts, B and the Company
may not terminate this Agreement under this SECTION 9.01(e) during such 30-day
period (it being understood that (i) any breach of SECTION 7.02 or SECTION 7.04
shall be considered material for purposes of the cross-references to Article
VIII in this SECTION 9.01(e) and (ii) the 30-day cure period shall not be
available in the event of any such breach);
(f) by A or the Company, by written notice to the other and to B, if
there has been a breach of any representation, warranty, covenant or agreement
on the part of B set forth in this Agreement, or if any representation or
warranty of B shall have become untrue, in either case such that the conditions
set forth in SECTION 8.03(a) or SECTION 8.03(c) (in the case of a termination by
A under this SECTION 9.01(f)) or SECTION 8.04(b) or SECTION 8.04(d) (in the case
of a termination by the Company under this SECTION 9.01(f)) would not be
satisfied (a "TERMINATING B BREACH"); PROVIDED, HOWEVER, that, if such
Terminating B Breach is curable by B within 30 days through the exercise of its
best efforts and for so long as B continues to exercise such best efforts, A and
the Company may not terminate this Agreement under this SECTION 9.01(f) during
such 30-day period (it being understood that (i) any breach of SECTION 7.02 or
SECTION 7.04 shall be considered material for purposes of the cross-references
to Article VIII in this SECTION 9.01(f) and (ii) the 30-day cure period shall
not be available in the event of any such breach);
(g) by B or A, by written notice to the other and to TW and the
Company, if there has been a breach of any representation, warranty, covenant or
agreement on the part of TW or the Company set forth in this Agreement, or if
any representation or warranty of TW or the Company shall have become untrue, in
either case such that the conditions set forth in SECTION 8.02(b) or SECTION
8.02(d) (in the case of a termination by B under this SECTION 9.01(g)) or
SECTION 8.03(b) or SECTION 8.03(d) (in the case of a termination by A under this
SECTION 9.01(g)) would not be satisfied ("TERMINATING TW/COMPANY BREACH");
PROVIDED, HOWEVER, that, if such Terminating TW/Company Breach is curable by TW
or the Company within 30 days through the exercise of their respective best
efforts and for so long as TW or the Company (as applicable)
66
continues to exercise such best efforts, B and A may not terminate this
Agreement under this SECTION 9.01(g) during such 30-day period;
(h) by B or the Company, by written notice to the other and to A, if
(without regard to whether or not a breach of this Agreement has occurred) (i)
the Board of Directors of A shall not have recommended, or shall have resolved
not to recommend, or shall have adversely qualified, adversely modified or
withdrawn its recommendation to the stockholders of A to approve this Agreement
and the A Merger or its declaration that this Agreement or the A Merger is
advisable and fair to and in the best interest of A and its stockholders, or
shall have resolved to do any of the foregoing (even if permitted by SECTION
7.02), (ii) the Board of Directors of A shall have recommended to the
stockholders of A any Takeover Proposal involving A or shall have resolved to do
so or (iii) a tender offer or exchange offer for 10% or more of the outstanding
shares of capital stock of A is commenced, and the Board of Directors of A
fails, within 10 business days of such commencement, to recommend against
acceptance of such tender offer or exchange offer by its stockholders (including
by taking no position with respect to the acceptance of such tender offer or
exchange offer by its stockholders);
(i) by A or the Company, by written notice to the other and to B, if
(without regard to whether or not a breach of this Agreement has occurred) (i)
the Board of Directors of B shall not have recommended, or shall have resolved
not to recommend, or shall have adversely qualified, adversely modified or
withdrawn its recommendation to the stockholders of B to approve this Agreement
and the B Merger or its declaration that this Agreement or the B Merger is
advisable and fair to and in the best interest of B and its stockholders, or
shall have resolved to do any of the foregoing (even if permitted by SECTION
7.02), (ii) the Board of Directors of B shall have recommended to the
stockholders of B any Takeover Proposal involving B or shall have resolved to do
so or (iii) a tender offer or exchange offer for 10% or more of the outstanding
shares of capital stock of B is commenced, and the Board of Directors of B
fails, within 10 business days of such commencement, to recommend against
acceptance of such tender offer or exchange offer by its stockholders (including
by taking no position with respect to the acceptance of such tender offer or
exchange offer by its stockholders); or
(j) by B, by written notice to A and the Company and by payment in full
of the fee in accordance with SECTION 9.05(b) (it being understood that this
termination shall not be effective unless and until such fee has been paid in
accordance with SECTION 9.05(b)) at any time before the satisfaction of the
condition in SECTION 8.01(a) to the extent it pertains to the approval of the
stockholders of B if the Board of Directors of B and (if appropriate) the
Special Committee shall have elected to terminate this Agreement in order to
adopt, enter into and recommend a binding agreement that constitutes a Superior
Proposal, PROVIDED that (i) B has complied with all the terms of SECTIONs 7.02
and 7.04 and notified the Company and A in writing that it intends to terminate
this Agreement so that it may undertake such actions, attaching the most current
version of such agreement to such notice, and (ii) at least three business days
following such written notification by B to the Company and A of B's intention,
after taking into account any modifications to the transactions contemplated by
this Agreement that the Company and A have then proposed in writing and not
withdrawn, the Board of Directors of B and (if appropriate) the Special
Committee have determined that such agreement is and continues to be a Superior
Proposal.
67
The right of any party hereto to terminate this Agreement
pursuant to this SECTION 9.01 shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any party hereto,
any person controlling any such party or any of their respective officers or
directors, whether prior to or after the execution of this Agreement.
SECTION 9.02. EFFECT OF TERMINATION. Except as provided in SECTION
10.01, in the event of termination of this Agreement pursuant to SECTION 9.01,
this Agreement shall forthwith become void, there shall be no further liability
under this Agreement on the part of TW, the Company, A or B or any of their
respective officers or directors and all rights and obligations of each party
hereto shall cease, subject to the Confidentiality Agreement and SECTION
7.03(b), the remedies of the parties referred to in SECTION 9.05 and the terms
of the Expense Payment Agreement, but such termination shall be without
prejudice to claims arising from willful breaches of this Agreement or any of
the ancillary agreements before termination.
SECTION 9.03. AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; PROVIDED, HOWEVER, that, after the
approval and adoption of this Agreement and the transactions contemplated hereby
by the A stockholders and the B stockholders, no amendment may be made which by
law requires further approval by such stockholders. This Agreement may not be
amended except by an instrument in writing signed by the parties hereto.
SECTION 9.04. WAIVER. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any obligation or
other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed only by the party or parties to be bound thereby.
SECTION 9.05. EXPENSES. (a) Except as provided in this SECTION 9.05 and
the Expense Payment Agreement dated as of November, 2001 among A, B and TW (the
"EXPENSE PAYMENT AGREEMENT"), whether or not the Mergers and the other
transactions contemplated hereby are consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby including, without limitation, the fees and disbursements of counsel,
financial advisors and accountants, shall be paid by the party incurring such
costs and expenses; PROVIDED that all printing and mailing expenses and all
filing fees payable to Governmental Authorities (including, without limitation,
filing fees of any party to this Agreement, the C
Merger Agreement or the Voting
Agreements under the Securities Act, the Exchange Act and the HSR Act) and all
fees and expenses relating to the Registration Statement and the Joint Proxy
Statement/Prospectus shall be shared equally and exclusively by A and B. Each of
the parties to the Expense Payment Agreement that is a party to this Agreement
agrees to apprise the other parties thereto promptly of any expenses incurred by
such party that are reimbursable under the Expense Payment Agreement and to
cause such party's advisors, whose fees and expenses are covered by such
agreement, to submit promptly invoices to such party for fees and expenses.
(b) Notwithstanding any provision in this Agreement to the contrary, if
(i) (A) this Agreement is terminated by B pursuant to SECTION 9.01(b)(i), or by
the Company or A
68
pursuant to SECTION 9.01(f) and (B) a Takeover Proposal (or the intent to make a
Takeover Proposal), whether or not conditional, was publicly announced or made
to B or its Board of Directors or the Special Committee either publicly or
privately or to its stockholders generally at any time from and after the date
hereof and on or before the date of the event that gave rise to such
termination, (ii) this Agreement is terminated by B pursuant to SECTION 9.01(j)
or (iii) this Agreement is terminated by the Company or A pursuant to SECTION
9.01(i), then, in each case, B shall pay in cash (y) to A or its designee a fee
equal to THE GREATER OF (1) $2,000,000 and (2) THE LESSER OF (I) $3,000,000 and
(II) THE SUM of 50% of the amount for which A is responsible under the Expense
Payment Agreement AND 50% of the out-of-pocket costs incurred by A for legal
fees and expenses (other than those incurred pursuant to the Expense Payment
Agreement) in connection with this Agreement and the ancillary agreements and
the transactions contemplated hereby or thereby and (z) to the Company or its
designee $4,000,000 less such amount paid to A or its designee less any Advanced
Amounts, such payments to the Company and A to be made on the same date as such
termination.
(c) Notwithstanding any provision in this Agreement to the contrary, if
(i) (A) this Agreement is terminated by A pursuant to SECTION 9.01(b)(i), or by
the Company or B pursuant to SECTION 9.01(e) and (B) a Takeover Proposal (or the
intent to make a Takeover Proposal), whether or not conditional, was publicly
announced or made to A or its Board of Directors either publicly or privately or
to its stockholders generally at any time from and after the date hereof and on
or before the date of the event that gave rise to such termination or (ii) this
Agreement is terminated by the Company or B pursuant to SECTION 9.01(h), then,
in each case, A shall pay in cash (y) to B or its designee a fee equal to THE
GREATER OF (1) $2,000,000 and (2) THE LESSER OF (I) $3,000,000 and (II) THE SUM
OF 50% of the amount for which B is responsible under the Expense Payment
Agreement AND 50% of the out-of-pocket costs incurred by B for legal fees and
expenses (other than those incurred pursuant to the Expense Payment Agreement)
in connection with this Agreement and the ancillary agreements and the
transactions contemplated hereby or thereby and (z) to the Company or its
designee $4,000,000 less such amount paid to B or its designee less any Advanced
Amounts, such payment to be made on the same date as such termination.
(d) Each of A and B will pay to TW a fee of $100,000 per month (or the
pro rated portion thereof) during the period beginning on the date hereof and
ending on the Closing Date. Such fee shall be payable on the first day of each
calendar month for which it is due, except that the fee for the first calendar
month (or portion thereof) shall be due on the date hereof. The aggregate amount
of all such fees paid in cash under this SECTION 9.05(d) is referred to herein
as the "ADVANCED AMOUNTS."
(e) All payments under this SECTION 9.05 shall be made by wire transfer
of immediately available U.S. dollar funds to an account designated by the party
or parties to whom such payments are to be made.
(f) The parties acknowledge that that the agreements contained in
SECTION 9.05(b), SECTION 9.05(c), SECTION 9.05(d) and SECTION 9.05(e) are an
integral part of the transactions contemplated by this Agreement and that,
without these agreements, none of them would have entered into this Agreement;
accordingly, if any party fails to pay any amount when due pursuant SECTION
9.05(b), SECTION 9.05(c), SECTION 9.05(d) or SECTION 9.05(e) and, in order to
69
obtain such payment, any party entitled to receive any such payment brings a
suit or action which results in a judgment against the party that has so failed
to pay, then such party shall pay the party bringing any such suit or action its
costs and expenses (including attorneys' fees) in connection with such suit or
action.
Article X
GENERAL PROVISIONS
SECTION 10.01. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations, warranties and agreements in this Agreement and
in any certificate delivered pursuant hereto shall terminate at the Effective
Time or upon the termination of this Agreement pursuant to SECTION 9.01, as the
case may be, except that the agreements that by their terms contemplate
performance at or after the Effective Time shall survive the Effective Time and
those set forth in SECTION 7.03(b), SECTION 9.02 and SECTION 9.05 and this
Article X shall survive termination.
SECTION 10.02. NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon delivery) by delivery, by facsimile
transmission and by courier service (with proof of service), hand delivery or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this SECTION
10.02):
if to A:
Aloha Airgroup, Inc.
Xxx Xxxxxxxxxx Xxxxx, Xxxxx 000
000 Xxx Xxxxx
Xxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: President and Chief Executive Officer
with copies to:
Shearman & Sterling
Commerce Court West
000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Telecopier No.: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
70
and to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx Xxxx, Esq. and Xxxxx Xxxxxxxxxx, Esq.
if to B:
Hawaiian Airlines, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx X-000
Xxxxxxxx, XX 00000-0000
Telecopier No.: (000) 000-0000
Attention: General Counsel
with copies to:
Goodsill Xxxxxxxx Xxxxx & Xxxxxx
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attn: Xxxxx Xxxxx, Esq.
and to:
Xxxxxx Xxxx & Xxxxxxxx LLP
0000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxxx Xxxxx, Esq.
and to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
and to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx Xxxx, Esq. and Xxxxx Xxxxxxxxxx, Esq.
71
if to the Company:
TurnWorks Acquisition III, Inc.
0000 Xxxx Xxxxxxx Xx.
Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: President
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx Xxxx, Esq. and Xxxxx Xxxxxxxxxx, Esq.
if to TW:
TurnWorks, Inc.
0000 Xxxx Xxxxxxx Xx.
Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: President
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx Xxxx, Esq. and Xxxxx Xxxxxxxxxx, Esq.
SECTION 10.03. CERTAIN DEFINITIONS. For purposes of this Agreement, the
term:
(a) "AFFILIATE" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, such specified person;
(b) "ANCILLARY AGREEMENTS" means the C
Merger Agreement, the Voting
Agreements, the Stockholders Agreement, the Registration Rights Agreement, the
Management Agreements, the CEO Employment Agreement, the Advisory Agreements and
the Stock Purchase Agreements referred to in SECTIONs 2.01(a)(ii) and
2.01(a)(iii);
(c) "BUSINESS DAY" means any day on which the principal offices of the
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any
72
payment is due, any day on which banks are not required or authorized to close
in the City of New York;
(d) "CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise;
(e) "KNOWLEDGE" or "KNOWN" means, with respect to any matter in
question, the actual knowledge of (x) in the case of A or any subsidiary of A,
the persons listed in SECTION 10.03 of the A Disclosure Schedule, (y) in the
case of B or any subsidiary of B, the persons identified in SECTION 10.03 of the
B Disclosure Schedule and (z) in the case of the Company or TW, its President;
(f) "PERSON" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "PERSON" as
defined in SECTION 13(d)(3) of the Exchange Act), trust, association or entity
or government, political subdivision, agency or instrumentality of a government;
and
(g) "SUBSIDIARY" or "SUBSIDIARIES" of any person means any corporation,
partnership, joint venture or other legal entity of which such person (either
alone or through or together with any other subsidiary), owns, directly or
indirectly, more than 50% of the stock or other equity interests, the holders of
which are generally entitled to vote for the election of the Board of Directors
or other governing body of such corporation or other legal entity.
SECTION 10.04. ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
transferred by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties except that TW
may, upon prior written notice to the parties, transfer its rights and/or
obligations, in whole or in part, to one or more affiliates or immediate
relatives of any such affiliate or one or more affiliates of or trusts for the
benefit of any such affiliates or immediate relatives (it being understood that
no such transfer shall relieve TW of its obligations hereunder). Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, except for
SECTION 7.11, nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective
successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement. SECTION 7.11 may be enforced
by the beneficiaries thereof.
SECTION 10.05. INCORPORATION OF EXHIBITS. The B Disclosure Schedule,
the A Disclosure Schedule and all Exhibits attached hereto and referred to
herein are hereby incorporated herein and made a part hereof for all purposes as
if fully set forth herein.
SECTION 10.06. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement were
not performed in
73
accordance with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any other remedy at law
or equity.
SECTION 10.07. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Delaware applicable to contracts executed in and to be performed in
that State except, to the extent that provisions of the HBCA are mandatorily
applicable. Each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any Delaware state court located in the city of
Wilmington if any dispute arises under this Agreement, the ancillary agreements
or any transaction contemplated hereby or thereby, (ii) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court, (iii) agrees that it will not bring any action,
suit or proceeding relating to this Agreement, the ancillary agreements or any
transaction contemplated hereby or thereby in any court other than any such
court, (iv) waives any right to trial by jury with respect to any action, suit
or proceeding related to or arising out of this Agreement, the ancillary
agreements or any transaction contemplated hereby or thereby, (v) waives any
objection to the laying of venue of any action, suit or proceeding arising out
this Agreement, the ancillary agreements or any transaction contemplated hereby
or thereby in any such court, (vi) waives and agrees not to plead or claim that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum and (vii) agrees that a final judgment in any such
action, suit or proceeding in any such court shall be conclusive and may be
enforced in any other jurisdiction by suit on the judgment or in any other
manner provided by applicable law.
SECTION 10.08. HEADINGS. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 10.09. COUNTERPARTS. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 10.10. ENTIRE AGREEMENT. This Agreement (including the
Exhibits, the B Disclosure Schedule and the A Disclosure Schedule), the
ancillary agreements, the Expense Payment Agreement and the Confidentiality
Agreement, constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings
among the parties with respect thereto. No addition to or modification of any
provision of this Agreement shall be binding upon any party hereto unless made
in writing and signed by all parties hereto.
SECTION 10.11. MUTUAL DRAFTING. Each party hereto has participated in
the drafting of this Agreement, which each party acknowledges is the result of
extensive negotiations between the parties.
74
IN WITNESS WHEREOF, A, B, the Company and TW have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
ALOHA AIRGROUP, INC.
By /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President and CEO
By /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Executive Vice President,
Finance and CFO
HAWAIIAN AIRLINES, INC.
By /s/ Xxxx X. Xxxxx
-------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice Chairman and Chief
Executive Officer
By /s/ Xxxxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: Executive Vice President
and Chief Financial
Officer
TURNWORKS ACQUISITION III, INC.
By /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President
TURNWORKS, INC.
By /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President
75
FORM OF STOCKHOLDERS AGREEMENT
among
TURNWORKS ACQUISITION III, INC.,
TURNWORKS, INC.,
[AIP], LLC,
and
THE A VOTING TRUST FOR THE BENEFIT OF THE A PRINCIPAL STOCKHOLDERS
(as set forth on Schedule I hereto)
----------------------------------
Dated as of ___________, 2002
----------------------------------
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I CERTAIN TERMS; REPRESENTATIONS AND WARRANTIES........................................3
1.1 Certain Terms........................................................................3
1.2 Representations and Warranties.......................................................7
ARTICLE II CORPORATE GOVERNANCE.................................................................8
2.1 Board of Directors, Committees.......................................................8
2.2 Amendment of Charter Documents......................................................10
2.3 General Obligations.................................................................11
2.4 Stockholder Actions.................................................................11
2.5 Issuance of Special Preferred Stock.................................................11
ARTICLE III ADDITIONAL COVENANTS................................................................13
3.1 Non-Competition.....................................................................13
3.2 Transfer to Affiliates..............................................................14
ARTICLE IV MISCELLANEOUS.......................................................................15
4.1 Term................................................................................15
4.2 Notices.............................................................................15
4.3 Amendment and Waiver................................................................17
4.4 No Inconsistent Agreement...........................................................17
4.5 Enforcement.........................................................................17
4.6 Entire Agreement....................................................................18
4.7 Governing Law; Jurisdiction; Waiver of Trial by Jury................................18
4.8 Successors and Assigns; Third Party Beneficiaries...................................18
4.9 Counterparts........................................................................18
4.10 Headings............................................................................19
4.11 Construction........................................................................19
4.12 Number; Gender; Without Limitation; Interpretation of Certain Defined Terms.........19
4.13 No Partnership......................................................................19
4.14 No Voting Trust.....................................................................19
4.15 Stockholder Capacity................................................................19
i
Page
----
Schedule I..............................................................................................27
ii
EXHIBIT A
FORM OF
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "AGREEMENT") is entered into
as of [the Closing Date], 2002 by and among Aloha Holdings, Inc., a Delaware
corporation (the "COMPANY"), TurnWorks, Inc., a Texas corporation ("TW"), [AIP],
LLC, a Delaware limited liability company ("C"), and [O], [O], [O] and [O], as
voting trustees (the "A VOTING TRUSTEES") of [A Voting Trust], a Delaware and
Hawaii voting trust (the "A VOTING TRUST"), for and on behalf of the
stockholders set forth on Schedule I hereto (the "A PRINCIPAL STOCKHOLDERS")
each of whom is a beneficiary of the A Voting Trust. All references in this
Agreement to the "A Voting Trust" or to the "A Voting Trustees" shall constitute
references to the A Voting Trust or the A Voting Trustees, as the case may be,
acting for and on behalf of the A Principal Stockholders and without personal
liability.
WITNESSETH:
WHEREAS, pursuant to an Agreement and Plan of Merger (the "C
MERGER AGREEMENT"), dated as of December 19, 2001, by and among the Company, AIP
General Partner, Inc. ("C GP") and AIP Inc. ("C INC.") (a) prior to the date
hereof, the holders of capital stock of each of C GP and C Inc. formed C and
contributed all of the outstanding shares of capital stock of C GP and C Inc.,
respectively, to C in exchange for interests therein, and (b) at the C Effective
Time (as defined in the C Merger Agreement), and simultaneously with the
execution and delivery of this Agreement, each of C GP and C Inc. merged with
and into the Company, with the Company as the surviving corporation in such
merger (the "C MERGER"), as a result of which C became a stockholder of the
Company;
WHEREAS, pursuant to an Agreement and Plan of Merger (the "A/B
MERGER AGREEMENT"), dated as of December 19, 2001, by and among Aloha Airgroup,
Inc., a Hawaii corporation ("A"), Hawaiian Airlines, Inc., a Hawaii corporation
("B"), the Company and TW, at the A/B Effective Time (as defined herein), and
simultaneously with the execution and delivery of this Agreement, A merged with
and into Newco A Sub (as defined in the A/B Merger Agreement), with Newco A Sub
as the surviving entity, and B merged with and into [the Company] [Newco B LLC]
(as defined in the A/B Merger Agreement), with [the Company] [Newco B LLC] as
the surviving entity (such mergers, collectively, the "A/B MERGERS"), as a
result of which the stockholders of A and B own, together with TW, C and Xxxxx
Management Company LLC, all of the outstanding Common Stock.
WHEREAS, pursuant to the Voting Trust Agreement dated as of
[O], 2002 by and among the A Voting Trustees and the A Principal Stockholders
(the "A VOTING TRUST AGREEMENT"), the A Principal Stockholders have, upon the
terms and conditions
stated in such agreement, deposited all of their shares of capital stock (other
than shares of Series C 10% Exchangeable Preferred Stock) of Aloha Airgroup,
Inc. with the A Voting Trustees for the purpose of (i) vesting in the A Voting
Trustees the right to vote thereon for the term of the A Voting Trust Agreement
and (ii) appointing the A Voting Trustees as their true and lawful agents and
attorneys-in-fact to execute and deliver on their behalf, and perform certain of
their obligations under, certain agreements, including (without limitation) this
Agreement;
WHEREAS, pursuant to this Agreement, immediately after the
Effective Time, the Company will (i) issue and sell to TW two (2) shares of
Series A Special Preferred Stock, par value $.0001 per share, of the Company
(the "SERIES A SPECIAL PREFERRED STOCK"), (ii) issue and sell to the A Voting
Trust, for and on behalf of the A Principal Stockholders, three (3) shares of
Series B Special Preferred Stock, par value $.0001 per share, of the Company
(the "SERIES B SPECIAL PREFERRED STOCK"), and (iii) issue and sell to C three
(3) shares of Series C Special Preferred Stock, par value $.0001 per share, of
the Company (the "SERIES C SPECIAL PREFERRED Stock"), in each case, for the
purchase price of $1.00 per share;
WHEREAS, in accordance with their respective Collective
Bargaining Agreements (as defined herein), the Company will issue immediately
after the A/B Effective Time, upon the terms and subject to the conditions set
forth in the A/B Merger Agreement and this Agreement, (i) one (1) share of
Series D Special Preferred Stock, par value $.0001 per share, of the Company
(the "SERIES D SPECIAL PREFERRED STOCK") to the Air Line Pilots Association,
International, (ii) one (1) share of Series E Special Preferred Stock, par value
$.0001 per share, of the Company (the "SERIES E SPECIAL PREFERRED STOCK"), to
the Association of Flight Attendants, and (iii) one (1) share of Series F
Special Preferred Stock, par value $.0001 per share, of the Company (the "SERIES
F SPECIAL PREFERRED STOCK") to the International Association of Machinists and
Aerospace Workers;
WHEREAS, it is a condition to the consummation of the A/B
Mergers pursuant to the A/B Merger Agreement and the C Merger pursuant to the C
Merger Agreement that the parties hereto enter into this Agreement; and
WHEREAS, the parties believe that the A/B Mergers and the C
Merger and the terms set forth in this Agreement with respect to their ownership
of shares of Common Stock and Special Preferred Stock (as such terms are defined
herein) will xxxxxx conditions that promote the long-term best interests of the
Company;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
2
ARTICLE I
CERTAIN TERMS;
REPRESENTATIONS AND WARRANTIES
1.1 CERTAIN TERMS. (a) When used herein the following terms
shall have the meanings indicated:
"A" has the meaning set forth in the recitals to this
Agreement.
"A/B EFFECTIVE TIME" means the Effective Time, as defined in
the A/B Merger Agreement.
"A/B MERGER AGREEMENT" has the meaning set forth in the
recitals to this Agreement.
"A/B MERGERS" has the meaning set forth in the recitals to
this Agreement.
"A PRINCIPAL STOCKHOLDERS" means the Persons set forth on
Schedule I to this Agreement, each of whom has deposited all of its shares of
capital stock (other than shares of Series C 10% Exchangeable Preferred Stock)
of A with the A Voting Trustees for the purposes described in the recitals to
this Agreement.
"A VOTING TRUST" has the meaning set forth in the preamble to
this Agreement.
"A VOTING TRUSTEES" has the meaning set forth in the preamble
to this Agreement.
An "AFFILIATE" of, or a Person "AFFILIATED" with, a specified
Person, means a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Person specified. The term "CONTROL" (including the terms "CONTROLLING,"
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH") means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. For purposes of this definition, (i) any affiliate of TW
or immediate relative of such affiliate of TW, one or more affiliates of or
trusts for the benefit of any such affiliate or immediate relative, shall be
deemed to be an "AFFILIATE" of TW (ii) each beneficiary of the A Voting Trust
and each relative and affiliate of such beneficiary shall be deemed to be an
"AFFILIATE" of each other and of the A Voting Trust and (iii) the managing
member of C, as of [the Closing Date], or any affiliate of Xxxxx Management LLC,
as of [the Closing Date], who is a "citizen of the United States" as defined in
Section 102(a)(15) of the Transportation Act, or any affiliate of such managing
member, or any corporation, partnership or limited liability company controlled
by such managing member or such affiliate shall be deemed to be an "AFFILIATE"
of C.
3
"AGREEMENT" has the meaning set forth in the preamble to this
Agreement.
"AMEX" shall mean the American Stock Exchange.
"B" has the meaning set forth in the recitals to this
Agreement.
"BOARD OF DIRECTORS" means the Board of Directors of the
Company.
"C" has the meaning set forth in the preamble to this
Agreement.
"C GP" has the meaning set forth in the recitals to this
Agreement.
"C, INC." has the meaning set forth in the recitals to this
Agreement.
"C MERGER" has the meaning set forth in the recitals to this
Agreement.
"C MERGER AGREEMENT" has the meaning set forth in the recitals
to this Agreement.
"CHARTER DOCUMENTS" means the Certificate of Incorporation and
the By-laws of the Company, as in effect at the A/B Effective Time in
substantially the forms attached to the A/B Merger Agreement as Exhibits C and D
thereto, respectively, and as amended, supplemented or otherwise modified from
time to time.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"COLLECTIVE BARGAINING AGREEMENT" has the meaning set forth in
Section 2.1(a).
"COMMON STOCK" means the Common Stock or any other capital
stock of the Company into which such stock is reclassified or reconstituted.
"COMMON STOCK EQUIVALENTS" means any security or obligation
which is by its terms convertible into shares of Common Stock and any option,
warrant or other subscription or purchase right with respect to Common Stock.
"COMPANY" has the meaning set forth in the preamble to this
Agreement.
"CONTRACTUAL OBLIGATION" means, as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other instrument to
which such Person is a party or by which it or any of its property is bound.
"DIRECTOR" means a member of the Board of Directors.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
4
"GOVERNANCE PROVISIONS" has the meaning set forth in Section
2.3
"GOVERNMENTAL AUTHORITY" means the government of any nation,
state, city, locality or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"LIEN" means any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other) or preference,
priority, right or other security interest or preferential arrangement of any
kind or nature whatsoever (excluding preferred stock and equity related
preferences).
"ORDERS" has the meaning set forth in Section 1.2(c).
"OUTSIDE DIRECTOR" has the meaning set forth in Section
2.1(f).
"OUTSTANDING COMMON EQUITY INTEREST" means, at any time, the
issued and outstanding Common Stock at such time and shall not include in such
determination any Common Stock issuable upon exercise, conversion or exchange of
outstanding warrants, stock options or convertible stock, or other securities
exercisable, convertible or exchangeable into the Common Stock (as adjusted to
reflect prior stock splits, reclassifications and similar events).
"PARTY" means any party to this Agreement during the period in
which it is a party or, in the case of the A Principal Stockholders, during the
period in which it is a beneficiary of the A Voting Trust.
"PERSON" means any individual, corporation, partnership,
limited liability company, firm, joint venture, association, joint stock
company, trust, unincorporated organization, governmental body or other entity.
"PSE" shall mean the Pacific Stock Exchange.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date hereof, among the Company, C, TW, and the A
Voting Trust, as amended, supplemented or otherwise modified from time to time.
"REQUIREMENT OF LAW" means, as to any Person, any law,
statute, treaty, rule, regulation, right, privilege, qualification, license or
franchise or determination of an arbitrator or a court or other Governmental
Authority or stock exchange, in each case applicable or binding upon such Person
or any of its property or to which such Person or any of its property is subject
or pertaining to any or all of the transactions contemplated or referred to
herein.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
5
"SERIES A SPECIAL PREFERRED STOCK" has the meaning set forth
in the recitals to this Agreement.
"SERIES B SPECIAL PREFERRED STOCK" has the meaning set forth
in the recitals to this Agreement.
"SERIES C SPECIAL PREFERRED STOCK" has the meaning set forth
in the recitals to this Agreement.
"SERIES D SPECIAL PREFERRED STOCK" has the meaning set forth
in the recitals to this Agreement.
"SERIES E SPECIAL PREFERRED STOCK" has the meaning set forth
in the recitals to this Agreement.
"SERIES F SPECIAL PREFERRED STOCK" has the meaning set forth
in the recitals to this Agreement.
"SHARES" means all shares, whether now owned or hereafter
acquired, of Common Stock and Special Preferred Stock.
"SMC/XXXXX ADVISORY AGREEMENT" means the Advisory Agreement,
dated as of December 19, 2001 among Xxxxx Management LLC, Xxxx X. Xxxxx and B.
"SPECIAL PREFERRED STOCK" means the Series A Special Preferred
Stock, the Series B Special Stock, the Series C Special Preferred Stock, the
Series D Special Preferred Stock, the Series E Special Preferred Stock, the
Series F Special Preferred Stock and any other capital stock of the Company into
which such stock is reclassified or reconstituted.
"STOCKHOLDERS MEETING" means any regular or special meeting of
the stockholders of the Company.
"TRANSACTION DOCUMENTS" means the A/B Merger Agreement, the C
Merger Agreement, this Agreement, the Charter Documents, the Registration Rights
Agreement, the Voting Agreements, the SMC/Xxxxx Advisory Agreement and the other
agreements entered into on or prior to the date hereof in connection with the
A/B Mergers or the C Merger.
"TW" has the meaning set forth in the preamble to this
Agreement.
"UNIONS" means the following three unions representing certain
employees in the service of B: (i) the Air Line Pilots Association,
International; (ii) the Association of Flight Attendants; and (iii) the
International Association of Machinists and Aerospace Workers.
"VOTING AGREEMENTS" shall refer to each of: (i) the Voting
Agreement, dated as of December 19, 2001, among the A Principal Stockholders,
Hawaii Airlines,
6
Inc., and the Company; and (ii) the Voting Agreement, dated as of December 19,
2001, among Airline Investors Partnership, L.P., Aloha Airgroup, Inc. and the
Company.
1.2 REPRESENTATIONS AND WARRANTIES. Each Party represents and
warrants to each other Party that as of the date hereof:
(a) such Party has full power and authority to
execute, deliver and perform this Agreement and the Registration Rights
Agreement and the execution, delivery and performance by such Party of this
Agreement and the Registration Rights Agreement and the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action;
(b) this Agreement and the Registration Rights
Agreement have been duly and validly executed and delivered by such Party and
constitute the legal, valid and binding obligation of such Party, enforceable
against such Party in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity);
(c) the execution, delivery and performance by such
Party of this Agreement and the Registration Rights Agreement and the
transactions contemplated hereby and thereby (i) do not, if such Party is an
entity, contravene the terms of the organizational documents of such Party; (ii)
do not violate, conflict with or result in any breach, default or contravention
of (or with due notice or lapse of time or both would result in any breach,
default or contravention of), or the creation of any Lien under, any Contractual
Obligation of such Party or any Requirement of Law applicable to such Party; and
(iii) do not violate any judgment, injunction, writ, award, decree or order of
any nature (collectively, "ORDERS") of any Governmental Authority against, or
binding upon, such Party;
(d) such Party is not a party to any agreement or
arrangement with respect to the acquisition, disposition or voting of shares of
Common Stock, Common Stock Equivalents or Special Preferred Stock, other than as
contemplated by the Transaction Documents;
(e) no approval, consent, compliance, exemption,
authorization or other action by, or notice to, or filing with, any Governmental
Authority or any other Person, and no lapse of a waiting period under a
Requirement of Law, is necessary or required in connection with the execution,
delivery or performance by, or enforcement against, such Party of this Agreement
or the transactions contemplated hereby, other than as contemplated by the
Transaction Documents;
(f) neither such Party nor any of its Affiliates is a
beneficiary of any Contractual Obligation of B, A or the Company (other than
those obligations that
7
arise out of the Transaction Documents) that shall have any force or effect from
and after the A/B Effective Time;
(g) in the case of the A Voting Trust, the A Voting
Trust is a Hawaii voting trust pursuant to Section 415-34 of the Hawaii Business
Corporations Act and a Delaware voting trust pursuant to Section 218 of the
Delaware General Corporations Law. Pursuant to the A Voting Trust Agreement, the
A Principal Stockholders have agreed that they will, upon the terms and
conditions stated in such agreement, deposit all of their Outstanding Common
Equity Interest of the Company issued to them in the A Merger (together with all
Outstanding Common Equity Interest of the Company acquired, purchased or
otherwise obtained by the A Principal Stockholders in the future in connection
with any dividend, stock split, reverse stock split, recapitalization,
distribution, subdivision, reclassification, merger, consolidation, business
combination, offer or issuance) with the A Voting Trustees for the purpose of
(i) vesting in the A Voting Trustees the right to vote thereon for the term of
the A Voting Trust Agreement and (ii) appointing the A Voting Trustees as their
true and lawful agents and attorneys-in-fact to execute and deliver on their
behalf, and perform certain of their obligations under, certain agreements,
including (without limitation) this Agreement and the Registration Rights
Agreement. The Outstanding Common Equity Interest of the Company represented by
the A Voting Trust consists of the number of shares of Common Stock that were
issued in the A/B Merger upon the conversion of at least 90% of the outstanding
common stock of A. Pursuant to the terms of the A Voting Trust Agreement, there
shall be at all times four (4) Voting Trustees; and
(h) the managing member of C, as of the date hereof,
is Xxxx X. Xxxxx.
ARTICLE II
CORPORATE GOVERNANCE
2.1 BOARD OF DIRECTORS, COMMITTEES. (A) Subject to Section
2.1(g), the Parties shall take all action within their respective power,
including the voting of capital stock of the Company, as is necessary to cause
the Board of Directors at all times from and after the A/B Effective Time to
consist of 11 Directors, one of whom shall be a senior management official of
the Company, and, except as otherwise provided herein or in the Charter
Documents, to elect the Directors nominated as follows:
(i) Three (3) Directors nominated by C, one of whom
shall be an Outside Director;
(ii) Three (3) Directors nominated by the A Voting
Trust, one of whom the Parties agree to cause to be elected as the Vice
Chairman;
(iii) Two (2) Directors nominated by TW, one of whom
the Parties agree to cause to be elected as the Chairman; and
8
(iv) One (1) Director nominated by each of the three
Unions, so long as the collective bargaining agreement by and between such Union
and the Company, as amended, modified or supplemented from time to time,
pursuant to the Railway Labor Act, 45 U.S.C. Section 156, and the agreements
incorporated therein by reference (the "COLLECTIVE BARGAINING AGREEMENT"),
entitles such Union to nominate a Director.
(b) If in accordance with the Charter Documents the number of
Directors that may be nominated by TW, C or the A Voting Trust is reduced or any
of the Unions is no longer entitled to nominate a Director under its Collective
Bargaining Agreement, then the number of Directors nominated by such Party or
such Union whose nomination rights have been so reduced that the Parties shall
be obligated to elect pursuant to this Section 2.1 shall be reduced by the same
number. The Parties shall take all action within their respective power as is
necessary to cause one (1) Director nominated by such Party or such Union whose
nomination rights have been so reduced to be removed as a Director effective
immediately.
(c) All other Directors, if any, shall be nominated and
elected in accordance with the Charter Documents and applicable law, and this
Agreement shall not limit or otherwise restrict any Party's actions with respect
to the nomination or election of such Directors.
(d) The Board of Directors at all times from and after the A/B
Effective Time shall designate an executive committee, nominating committee,
audit committee and any other committee of the Board of Directors that the Board
of Directors deems necessary or desirable, which committees shall consist of one
(1) Director nominated by TW, one (1) Director nominated by C and one (1)
Director nominated by the A Voting Trust; PROVIDED THAT, the right of TW, C and
the A Voting Trust to designate a Director to any such committee of the Board of
Directors shall terminate at any time when any such Party (together with its
Affiliates who have agreed to be bound by the terms of this Agreement) owns a
number of shares of Common Stock that is less than 5% of the Outstanding Common
Equity Interest of the Company as of the close of business on the date hereof.
The Parties shall take all action within their respective power as is necessary
to cause at least one (1) Director nominated by the Unions to serve on each
significant committee of the Board of Directors (including, if any, the
executive committee, the strategic planning committee, the nominating committee
and other committees of comparable significance, but excluding the audit
committee in view of applicable AMEX rules).
(e) With respect to any Person nominated by a Party in
accordance with this Section 2.1 as a Director or a member of any committee of
the Board of Directors, if such Person is unable to serve, or once having
commenced to serve, resigns or is removed, such Party shall nominate a
replacement unless such Party is no longer entitled to make such nomination. The
Board of Directors shall appoint such replacement as promptly as practicable
(and in any event prior to the next Stockholders Meeting).
9
(f) The Parties shall take all action within their respective
power as is necessary to cause their nominees to the Board of Directors at all
times from and after the A/B Effective Time to include at least such number of
individuals who qualify as "independent directors", "outside directors" and
"non-employee directors" for purposes of the requirements under AMEX, PSE,
Section 162(m) of the Code and Rule 16b-3 of the Exchange Act, as applicable
(such Director referred to herein as an "OUTSIDE DIRECTOR"), relating to members
of the audit committee, "compensation committee" (within the meaning of 162(m)
of the Code) or a committee composed of two (2) or more non-employee directors
(within the meaning of Rule 16b-3 of the Exchange Act) so that such individuals
may constitute an audit committee, "compensation committee" (within the meaning
of 162(m) of the Code) or a committee composed of two (2) or more non-employee
directors (within the meaning of Rule 16b-3 of the Exchange Act) from and after
the A/B Effective Time with at least the minimum number of "independent
directors", "outside directors" or "non-employee directors" required by AMEX,
PSE, Section 162(m) or Rule 16b-3, as applicable.
(g) Notwithstanding anything herein to the contrary, if at any
time increasing the size of the Board of Directors to thirteen (13) Directors
would not (i) conflict with or violate the Charter Documents or the
organizational documents of any of the Parties, (ii) conflict with or violate
any foreign or domestic (federal, state or local) law, statute, ordinance, rule,
regulation, order, judgment or decree applicable to any of the Parties or by
which any property or asset of any of the Parties is bound or affected, or (iii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of a Lien or other encumbrance on any property or asset of any of
the Parties pursuant to, any Contractual Obligation of any of the Parties, then
the Parties shall take all action within their respective power as is necessary
to cause (A) TW to be issued one (1) additional share of Series A Special
Preferred Stock upon the terms and subject to the conditions set forth in
Sections 2.6, (B) the holders of the Series A Special Preferred Stock to have
the right to nominate three (3) Directors at any time such holder (together with
its Affiliates who have agreed to be bound by the terms of this Agreement) is
the holder of record of at least a number of shares of Common Stock greater than
15% of the Outstanding Common Equity Interest outstanding as of the close of
business on the date hereof, (C) the Parties to elect one (1) additional
Director nominated by TW, PROVIDED that TW is entitled to such additional
Director under the Charter Documents, (D) subject to Section 2.1(f), C to no
longer be obligated at any time thereafter to nominate an Outside Director, and
(E) the Parties to elect at all times one (1) Outside Director reasonably
acceptable to TW, the A Voting Trust and C, so long as each such Party (together
with its respective Affiliates who have agreed to be bound by the terms of this
Agreement) is a holder of a number of shares of Common Stock equal to at least
5% of the Outstanding Common Equity Interest as of the date hereof.
2.2 AMENDMENT OF CHARTER DOCUMENTS. Subject to Section 2.1(g),
TW, C and the A Principal Stockholders shall vote their Shares at any
Stockholders Meeting called for the purpose of revising the Charter Documents,
against any proposed
10
amendment to any Charter Document that would be inconsistent with, or alter the
rights of TW, C or the A Principal Stockholders or the Unions or the obligations
of the Board of Directors under, any of Part C of Article IV, Articles V, VI,
VII, VIII, IX or X of the Certificate of Incorporation included in Exhibit A
hereto or any of Sections 2.3, 2.13, 3.2, 3.4, 3.6, 3.9, 3.15, 3.16, 5.2 or 5.3
or Articles 4, 13 or 14 of the By-laws included in Exhibit B hereto
(collectively referred to as the "GOVERNANCE PROVISIONS"). Subject to Section
2.1(g), in the event the Board of Directors purports to amend or revise the
Charter Documents in any respect that would be inconsistent with, or alter the
rights of TW, C, the A Principal Stockholders or the Unions or the obligations
of the Board of Directors under, the Governance Provisions, then TW, C and the A
Principal Stockholders shall have the right to, or shall, if requested by any
Union, in each case, to the extent permitted by law, (a) seek a Stockholders
Meeting as soon as practicable, for the purpose of restoring the Governance
Provisions, (b) propose a stockholder resolution at such Stockholders Meeting to
restore the Governance Provisions, and (c) vote their Shares at any such
Stockholders Meeting in favor of such resolution to restore the Governance
Provisions.
2.3 GENERAL OBLIGATIONS. None of TW, C or the A Principal
Stockholders shall take any action inconsistent with the Governance Provisions.
In the event of any material change (by a new amendment or agreement) to the
terms or structure of the rights or powers of TW, C or the A Principal
Stockholders, as a stockholder or as a holder of a series of Special Preferred
Stock, under the Charter Documents or comparable corporate documentation
(including, without limitation, changes in the right of TW, C or the A Principal
Stockholders to nominate, designate, remove or replace Directors on the Board of
Directors), each shall have the right to, or shall, if requested by any Union,
in each case, to the extent permitted by law, take all action necessary to
implement comparable changes to the terms or structure of the rights or powers
of TW, C, the A Principal Stockholders or such Unions, as the case may be, under
the Charter Documents or comparable corporate documentation.
2.4 STOCKHOLDER ACTIONS. In order to effectuate the provisions
of this Article II, each of TW, C and the A Principal Stockholders hereby agrees
that when any action or vote is required to be taken pursuant to this Agreement,
it shall attend the Stockholders Meeting, in person or by proxy.
2.5 ISSUANCE OF SPECIAL PREFERRED STOCK.
(a) Subject to the terms and conditions set forth in this
Section 2.6, the Company agrees to issue and sell to each of the A Voting Trust
and C, and each of the A Voting Trust and C agrees to purchase from the Company,
immediately after the Effective Time, three (3) shares of Series B Special
Preferred Stock and Series C Special Preferred Stock, respectively, for the
purchase price of $1.00 per share. Subject to Section 2.1(g)(A) and to the terms
and conditions set forth herein, the Company agrees to issue and sell to TW, and
TW agrees to purchase from the Company, immediately after the Effective Time,
two (2) shares of Series A Special Preferred Stock, for the purchase price of
$1.00 per share. On the Closing Date, the Company shall deliver to the A Voting
11
Trust and C a certificate or certificates in definitive form and registered in
the name of each of the A Voting Trust and C, representing three (3) shares of
Series B Special Preferred Stock and Series C Special Preferred Stock,
respectively, against delivery by the A Voting Trust and C of the aggregate
purchase price payable thereby. On the Closing Date, the Company shall deliver
to TW a certificate or certificates in definitive form and registered in the
name of TW, representing two (2) shares of Series A Special Preferred Stock
against delivery by TW of the aggregate purchase price payable thereby.
(b) The shares of Series A Special Preferred Stock, Series B
Special Preferred Stock and Series C Special Preferred Stock shall be duly
authorized on or prior to the Closing Date, and when issued and sold to TW, C
and the A Voting Trust after payment therefor, shall be validly issued, fully
paid and non-assessable, shall be issued in compliance with the registration and
qualification requirements of all applicable federal, state and foreign
securities laws (or an exemption therefrom) and shall be free and clear of all
other Liens (other than those arising under applicable securities laws). The
shares of Common Stock issuable upon conversion of the shares of Series A
Special Preferred Stock, Series B Special Preferred Stock and Series C Special
Preferred Stock shall have been duly reserved for issuance on or prior to the
Closing Date upon conversion of the shares of Series A Special Preferred Stock,
Series B Special Preferred Stock and Series C Special Preferred Stock, as
applicable, and, when issued in compliance with the provisions of the Charter
Documents, shall be validly issued, fully paid and non-assessable and not
subject to any preemptive rights or similar rights that have not been satisfied
and shall be free and clear of all other Liens (other than those arising under
applicable securities laws).
(c) The shares of Series D Special Preferred Stock, Series E
Special Preferred Stock and Series F Special Preferred Stock shall be duly
authorized on or prior to the Closing Date, and when issued to the respective
Unions in accordance with the applicable Collective Bargaining Agreements, shall
be validly issued, fully paid and non-assessable, shall be issued in compliance
with the registration and qualification requirements of all applicable federal,
state and foreign securities laws (or an exemption therefrom) and shall be free
and clear of all other Liens (other than those arising under applicable
securities laws). The shares of Common Stock issuable upon conversion of the
shares of Series D Special Preferred Stock, Series E Special Preferred Stock and
Series F Special Preferred Stock shall have been duly reserved for issuance on
or prior to the Closing Date upon conversion of the shares of Series D Special
Preferred Stock, Series E Special Preferred Stock and Series F Special Preferred
Stock, as applicable, and, when issued in compliance with the provisions of the
Charter Documents, shall be validly issued, fully paid and non-assessable and
not subject to any preemptive rights or similar rights that have not been
satisfied and shall be free and clear of all other Liens (other than those
arising under applicable securities laws).
(d) Each of TW, C, the A Principal Stockholders and the A
Voting Trust acknowledges that the issuance of any shares of Special Preferred
Stock to such Person, and the issuance of any Common Stock to such Person upon
the conversion of any such shares of Special Preferred Stock, will not be
registered under the Securities
12
Act and, upon receipt by it, will constitute "restricted securities" with the
meaning of Rule 144(a)(3) under the Securities Act. Each of TW, C, the A
Principal Stockholders and the A Voting Trust agree that it will not offer to
sell or otherwise dispose of the Shares so acquired by it in violation of any of
the registration requirements of the Securities Act. Each of TW, C, the A
Principal Stockholders and the A Voting Trust represents and warrants that it is
an "accredited investor" as that term is defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.
(e) A copy of this Agreement shall be filed with the Secretary
of the Company and kept with the records of the Company. Each certificate
representing shares of Special Preferred Stock now held or hereafter acquired by
each of TW, C, the A Voting Trust and the Unions shall for as long as this
Agreement is effective bear a legend substantially in the following form:
THE SALE, ASSIGNMENT OR OTHER DISPOSITION (EACH A "TRANSFER")
AND VOTING OF ANY OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE RESTRICTED BY THE TERMS OF THE STOCKHOLDERS
AGREEMENT, DATED ______________ __, 2002, BY AND AMONG ALOHA
HOLDINGS, INC., TURNWORKS, INC., [AIP], LLC AND [THE A VOTING
TRUST], THE CERTIFICATE OF INCORPORATION AND THE BY-LAWS OF
ALOHA HOLDINGS, INC., COPIES OF WHICH MAY BE INSPECTED AT THE
COMPANY'S PRINCIPAL OFFICE. THE SECURITIES MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS OR PURSUANT TO THE
TERMS OF THE AFOREMENTIONED STOCKHOLDERS AGREEMENT,
CERTIFICATE OF INCORPORATION AND BY-LAWS.
ARTICLE III
ADDITIONAL COVENANTS
3.1 NON-COMPETITION. As of the date of this Agreement and
continuing until the later of the third anniversary of such date or the date on
which it no longer holds any shares of Special Preferred Stock, each of TW, C
and each of the A Principal Stockholders shall not, and shall cause their
respective Affiliates not to, without the prior written consent of the other
Parties, directly or indirectly, own an interest in, manage, operate, join,
control, lend money or render financial or other assistance to or participate in
or be connected with, as an officer, employee, partner, stockholder, creditor,
investor, consultant or otherwise, any individual partnership, firm, corporation
or other business organization or entity (collectively, an "ENTITY") that, at
such time, (a) is headquartered in Hawaii and is primarily engaged in the
business of passenger or freight
13
airline services or aircraft ground maintenance operations; (b) is an airline
that has Hawaii inter-island passenger or freight services that constitute a
material share of its overall airline business measured by passenger revenue
miles or freight pound miles; or (c) has 5% or more of the Hawaii inter-island
passenger or freight air traffic measured by passenger revenue miles or freight
pound miles and such Party or its Affiliates is serving directly as an officer,
employee, partner or consultant of such Entity's Hawaii operations, or otherwise
has significant duties or responsibilities involving such Entity's Hawaii
operations. For the avoidance of doubt, a senior management position at a parent
Entity for which the Hawaii operations are not a material part of such Entity on
a consolidated basis will not be limited by the foregoing provisions.
3.2 TRANSFER TO AFFILIATES. None of TW, C or any of the A
Principal Stockholders shall transfer any shares of Special Preferred Stock to
any of its Affiliates unless such Affiliate agrees in writing, as of the date of
such transfer, to be bound by the terms and conditions of this Agreement and
each other agreement with any holders of the Common Stock or the Special
Preferred Stock, in the same manner as TW, C or the A Principal Stockholders, as
the case may be. Any attempt to transfer any such shares of Special Preferred
Stock or any such rights in violation of the preceding sentence shall be null
and void AB INITIO and the Company agrees not to register any such transfer. If
any Affiliate transferee that receives any such shares of Special Preferred
Stock pursuant to a transfer permitted by this Section 3.2 ceases at any time to
be an Affiliate of TW, C or the A Principal Stockholders, as the case may be,
such transfer shall be null and void ab initio and the Company shall cancel the
registration of such transfer.
3.3 DIRECTOR COMPENSATION AND BENEFITS. The Parties shall take
all action within their respective power as is necessary to implement (a) the
"Flight Benefits" as described in the A/B Merger Agreement and any expansion of
the terms thereof that may be approved from time to time by TW, the A Principal
Stockholders and C, (b) the compensation levels for "Non-Employee Directors" as
described in the A/B Merger Agreement and (c) the "Company Stock Incentive Plan"
as described in the A/B Merger Agreement.
3.4 NOTICE AND REPORTING OF SHARES HELD. Each of TW, C and the
A Principal Stockholders shall (a) promptly notify the other Parties, to the
best of its knowledge, on the first date on which the number of shares of Common
Stock held by it (together with its Affiliates who have agreed to be bound by
the terms of this Agreement) is less than 15% of the Outstanding Common Equity
Interest of the Company as of the close of business on the date hereof, less
than 5% of the Outstanding Common Equity Interest of the Company as of the close
of business on the date hereof or less than 1% of the Outstanding Common Equity
Interest of the Company as of such date, and (b) use its reasonable efforts to
assist the Company in satisfying its reporting obligations under the Securities
Act and the Exchange Act with respect to such Party.
14
ARTICLE IV
MISCELLANEOUS
4.1 TERM. This Agreement shall terminate as to each of TW, C,
the A Voting Trust or each of the A Principal Stockholders at such time as TW,
C, the A Voting Trust or such A Principal Stockholder, respectively, shall no
longer have any rights to designate Directors pursuant to the Charter Documents.
4.2 NOTICES. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified mail, return receipt requested, telecopier, courier
service or personal delivery:
(a) if to the A Principal Stockholders or the A Voting Trust:
[ ]
with a copy to
Shearman & Sterling
Commerce Court West, Suite 4405
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
(b) if to C:
[AIP], LLC
c/o Smith Management Company
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx
Telecopy: (000) 000-0000
15
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
(c) if to TW:
TurnWorks, Inc.
0000 Xxxx Xxxxxxx Xx., Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxx, Esq. and
Xxxxx Xxxxxxxxxx, Esq.
Telecopy: (000) 000-0000
(d) if to the Company:
Aloha Holdings, Inc.
0000 Xxxx Xxxxxxx Xx.
Xxxxx 000
Xxx Xxxxxxxxx XX 00000
Attention: Chief Executive Officer
Telecopy: (000) 000-0000
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxx, Esq. and
Xxxxx Xxxxxxxxxx, Esq.
Telecopy: (000) 000-0000
(e) if to the Unions, to each of the following:
Air Line Pilots Association, International
000 Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Master Chairman, Hawaiian MEC
Telecopy: (000) 000-0000
16
and:
the Association of Flight Attendants
[Address 1]
[Address 2]
[City, State Zip]
Attention:
Telecopy:
and:
the International Association of Machinists
and Aerospace Workers
[Address 1]
[Address 2]
[City, State Zip]
Attention:
Telecopy:
All such notices, demands and other communications shall be
deemed to have been duly given when delivered by hand, if personally delivered;
when delivered by courier, if delivered by commercial courier service; five (5)
Business Days after being deposited in the mail, postage prepaid, if mailed; and
when receipt is mechanically acknowledged, if telecopied. Any Party may by
notice given in accordance with this Section 4.2 designate another address or
Person for receipt of notices hereunder.
4.3 AMENDMENT AND WAIVER. (A) No failure or delay on the part
of any Party in exercising any right, power or remedy hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Parties at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by any Party from the terms of any provision of
this Agreement, shall be effective (i) only if it is made or given in writing
and signed by each of TW, C, the A Voting Trust and each Union, and (ii) only in
the specific instance and for the specific purpose for which made or given.
4.4 NO INCONSISTENT AGREEMENT. None of TW, C or any of the A
Principal Stockholders shall enter into any stockholder agreement, voting
agreement or other agreement that is inconsistent with the terms of this
Agreement.
4.5 ENFORCEMENT. The Parties to this Agreement agree that
irreparable damage will occur in the event that any of the provisions of this
Agreement is not performed in accordance with its specific terms or is otherwise
breached and that
17
monetary damages will not constitute adequate compensation for any breach of
this Agreement. Accordingly, in addition to any other remedy available to any
Party at law or equity, the Parties shall, subject to Section 4.7, be entitled
to an injunction in any court of competent jurisdiction to prevent breaches of
this Agreement and to specifically enforce the terms and provisions of this
Agreement.
4.6 ENTIRE AGREEMENT. This Agreement, together with the
exhibits and schedules hereto, is intended by the Parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of such Parties in respect of the subject matter
contained herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein or therein. This
Agreement, together with the exhibits and schedules hereto, supersedes all prior
agreements and understandings between the Parties with respect to such subject
matter.
4.7 GOVERNING LAW; JURISDICTION; WAIVER OF TRIAL BY JURY. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Delaware applicable to contracts executed in and to be performed in
that State. Each of the Parties (i) consents to submit itself to the personal
jurisdiction of any Delaware state court located in the city of Wilmington if
any dispute arises under any of the Transaction Documents or any transaction
contemplated hereby or thereby, (ii) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, (iii) agrees that it will not bring any action, suit or proceeding
relating to any of the Transaction Documents or any transaction contemplated
thereby in any court other than any such court, (iv) waives any right to trial
by jury with respect to any action; suit or proceeding related to or arising out
of any of the Transaction Documents or any transaction contemplated thereby, (v)
waives any objection to the laying of venue of any action, suit or proceeding
arising out of any of the Transaction Documents or any transaction contemplated
thereby in any such court, (vi) waives and agrees not to plead or claim that any
such action, suit or proceeding brought in any such court has been brought in an
inconvenient forum and (vii) agrees that a final judgment in any such action,
suit or proceeding in any such court shall be conclusive and may be enforced in
any other jurisdiction by suit on the judgment or in any other manner provided
by applicable law.
4.8 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES. This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the Parties and their respective successors and permitted assigns. This
Agreement may not be assigned by without the prior written consent of the other
Parties. Except for the Unions, no Person other than the Parties and their
successors and permitted assigns is intended to be a beneficiary of this
Agreement.
4.9 COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the Parties in separate counterparts, each of which when
so executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.
18
4.10 HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
4.11 CONSTRUCTION. The Parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties, and no presumption or burden of proof
shall arise favoring or disfavoring a Party by virtue of the authorship of any
of the provisions of this Agreement.
4.12 NUMBER; GENDER; WITHOUT LIMITATION; INTERPRETATION OF
CERTAIN DEFINED TERMS. Pronouns, wherever used in this Agreement, and of
whatever gender, shall include Persons of every kind and character, and the
singular shall include the plural whenever and as often as may be appropriate.
Any reference herein to "INCLUDING" and words of similar import refer to
"including without limitation". Unless the context otherwise requires,
references to sections or subsections refer to sections or subsections of this
Agreement.
4.13 NO PARTNERSHIP. No term or provision of this Agreement
shall be construed to establish any relationship of partnership, agency or joint
venture between the Parties.
4.14 NO VOTING TRUST. No term or provision of this Agreement
shall be construed to establish a voting trust between the Parties.
4.15 STOCKHOLDER CAPACITY. Notwithstanding anything herein to
the contrary: (a) if any Affiliate of the Party is or becomes, during the term
hereof, a director or officer of the Company, no representation, warranty,
undertaking or agreement herein shall apply to such Affiliate in his or her
capacity as such a director or officer and (b) each Party has entered into this
Agreement solely in its capacity as a holder of Common Stock and/or Special
Preferred Stock, whether now owned or hereafter acquired pursuant to the
Transaction Documents or otherwise, and nothing herein shall limit or affect any
actions taken or omitted to be taken at any time by any of its Affiliates in his
or her capacity as an officer or director of the Company.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
19
IN WITNESS WHEREOF, the Parties have executed this
Stockholders Agreement as of the date first above written.
TURNWORKS, INC.
By:
-----------------------------------------
Name:
Title:
[AIP], LLC
By:
-----------------------------------------
Name:
Title:
[A VOTING TRUST], for and on
behalf of the A Principal
Stockholders, by its Voting
Trustees:
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
SCHEDULE I
A VOTING TRUSTEES AND A PRINCIPAL STOCKHOLDERS
[Information regarding four Trustees]
Han H. Xxxxx
Xxx X. Xxxxx
Xxxx Xxxx-To Xxxxx Revocable Living Trust dated 9/19/89, as amended Xxxxx
Xxxx-Xx Xxxxx Revocable Living Trust dated 9/19/89, as amended Xxxxx
Xxxx-Xxx Xxxxx Revocable Living Trust dated 9/19/89, as amended Xxxxxxx X.
Xxxxx Xxxxxxxx X. Xxxxx DHMP Services Inc.
Diamond Head Memorial Park
Aloha Securities & Investment Company
Ing Family Partnership
Xxxxxxx K.M. Ing Self Trusteed Trust
Xxxxx Ing Xxxxx Self Trusteed Trust
Xxxxxxx Ing
Sheridan Ing Generation Skipping Trust
Xxxxx Ing Xxxxx Self Trusteed Trust
Xxxxxx K.Y. Ing Self Trusteed Trust
Shandau Ing Self Trusteed Trust
Sheridan Ing Marital Trust
Xxxxxxxx X.X. Ing Irrevocable Life Insurance Trust
Sic Corp. Profit Sharing Plan For The Benefit of Xxxxx Ing
DHMP Service Inc. Pre Need Trust
Agreement of Trust by Han Xxxx Xxxxx dated 9/21/83
Han Xxxx Xxxxx 1992 Gift Trust Agreement dated 3/6/92
Xxxxxxx X. Xxxxx as Custodian for Xxxxxxx X.X. Xxxxx,
Xxxxxx X.X. Xxxxx and Xxxxx X.X. Xxxxx
Xxx X. Xxxxx as Custodian for Xxxxxxx X.X. Xxxxx,
Xxxxxx X.X. Xxxxx and Xxxxx X.X. Xxxxx
Xxxx Xxxx Xx Xxxxx Gift Trust dated 2/1/92
Xxxxx Xxxx Xx Xxxxx Gift Trust dated 2/1/92
Xxxxx Xxxx Xxx Xxxxx Gift Trust dated 2/1/92
Xxxxxxxxx Xxx Xxxxx Trust dated July 10, 1986, as amended
Non-exempt Marital Trust under Hung Wo Ching 27 Trust dated 5/1/78
Ching Perpetual Trust
S-I-1
REGISTRATION RIGHTS AGREEMENT
among
ALOHA HOLDINGS, INC.
TURNWORKS, INC.,
[_______], LLC
XXXXX MANAGEMENT LLC
and
[A VOTING TRUST]
---------------------------------------
Dated as of __________, 2002
---------------------------------------
TABLE OF CONTENTS
1. BACKGROUND..........................................................1
2. REGISTRATION UNDER SECURITIES ACT, ETC..............................1
2.1 Registration on Request....................................1
2.2 Incidental Registration....................................3
2.3 Registration Procedures....................................4
2.4 Underwritten Offerings.....................................7
2.5 Preparation; Reasonable Investigation......................8
2.6 Limitations, Conditions and Qualifications to Obligations
under Registration Covenants...............................8
2.7 Indemnification............................................9
3. DEFINITIONS........................................................12
4. RULE 144 AND RULE 144A.............................................14
5. AMENDMENTS AND WAIVERS.............................................14
6. NOMINEES FOR BENEFICIAL OWNERS.....................................14
7. NOTICES............................................................14
8. ASSIGNMENT.........................................................15
9. CALCULATION OF PERCENTAGE INTERESTS IN REGISTRABLE SECURITIES......15
10. NO INCONSISTENT AGREEMENTS.........................................15
11. REMEDIES...........................................................15
12. SEVERABILITY.......................................................15
13. ENTIRE AGREEMENT...................................................16
14. HEADINGS...........................................................16
15. GOVERNING LAW JURISDICTION; WAIVER OF TRIAL BY JURY................16
16. COUNTERPARTS.......................................................16
i
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EXHIBIT B
FORM OF REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is entered into as of
[the Closing Date], 2002, by and among Aloha Holdings, Inc., a Delaware
corporation (the "COMPANY"), TurnWorks, Inc., a Texas corporation ("TW"),
[_________], LLC, a Delaware limited liability Company ("C LLC"), Xxxxx
Management LLC, a New York limited liability company ("SMC") and a voting trust
for and on behalf of the stockholders of Aloha Airgroup, Inc., a Hawaii
corporation ("A"), set forth in EXHIBIT A hereto (the "A VOTING TRUST"). All
references in this Agreement to the "A VOTING TRUST" or to the "A VOTING
TRUSTEES" shall constitute references to the A Voting Trust or the A Voting
Trustees, as the case may be, acting for and on behalf of the A Principal
Stockholders and without personal liability. Capitalized terms used herein but
not otherwise defined shall have the meanings given them in the Merger Agreement
(as defined below).
The parties hereby agree as follows:
1. BACKGROUND. Each of A, Hawaiian Airlines, Inc., a Hawaii corporation
("B"), the Company and TW have - entered into an Agreement and Plan of Merger,
dated as of December 19, 2001 (as amended from time to time, the "MERGER
AGREEMENT"). The execution and delivery of this Agreement by the parties hereto
is a condition to the Closing under the Merger Agreement.
2. REGISTRATION UNDER SECURITIES ACT, ETC.
2.1 REGISTRATION ON REQUEST.
(a) REQUEST. At any time, and from time to time, upon the
written request of one or more holders (the "INITIATING HOLDERS") of Registrable
Securities that the Company effect the registration under the Securities Act of
all or part of such Initiating Holders' Registrable Securities, the Company will
promptly give written notice of such requested registration to all registered
holders of Registrable Securities, and thereupon the Company will use its best
efforts to effect, at the earliest possible date, the registration under the
Securities Act (including if specified in such written request, by means of (i)
a continuous offering pursuant to Rule 415 under the Securities Act (or any
similar rule that may be adopted by the Commission) either (A) on Form S-3, or
any successor form, if the Company is then eligible to use Form S-3 or such
successor form or (B) on Form S-1, or any successor form, or (ii) an
underwritten offering pursuant to Sections 2.1(e), 2.1(f) and 2.4), of
(i) the Registrable Securities which the Company has been
so requested to register by such Initiating Holders, and
(ii) all other Registrable Securities which the Company has
been requested to register by the holders thereof (such holders together with
the Initiating Holders hereinafter are referred to as the "SELLING HOLDERS") by
written request given to the Company within 30 days after the giving of such
written notice by the Company,
B-1
all to the extent necessary to permit the disposition of the Registrable
Securities and such shares of Company Common Stock and Notes so to be
registered.
(b) REGISTRATION OF OTHER SECURITIES. Whenever the Company shall
effect a registration pursuant to this Section 2.1, no securities other than
Registrable Securities shall be included among the securities covered by such
registration unless the Selling Holders of not less than 66-2/3% of all
Registrable Securities to be covered by such registration shall have consented
in writing to the inclusion of such other securities.
(c) REGISTRATION STATEMENT FORM. Registrations under this
Section 2.1 shall be on such appropriate registration form of the Commission as
shall be reasonably selected by the Company.
(d) EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to this Section 2.1 shall not be deemed to have been effected (i)
unless a registration statement with respect thereto has become effective and
remained effective in compliance with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by such
registration statement until such time as all of such Registrable Securities
have either ceased to be Registrable Securities or been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement (unless the failure to so
dispose of such Registrable Securities shall be caused solely by reason of a
failure on the part of the Selling Holders), PROVIDED that, except with respect
to any registration statement filed pursuant to Rule 415 under the Securities
Act, such period need not exceed 135 days; (ii) if, after it has become
effective, such registration statement is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court for any reason not attributable solely to the Selling Holders
and has not thereafter become effective; or (iii) if, the conditions to closing
specified in the underwriting agreement, if any, entered into in connection with
such registration are not satisfied or waived, other than solely by reason of a
failure on the part of the Selling Holders.
(e) SELECTION OF UNDERWRITERS. The underwriter or underwriters
of each underwritten offering of the Registrable Securities so to be registered
shall be selected by the Company, with the approval of the Executive Committee
of the Board of Directors of the Company.
(f) PRIORITY IN REQUESTED REGISTRATION OF UNDERWRITTEN OFFERING.
If the managing underwriter of any underwritten offering shall advise the
Company in writing (in which case the Company shall so advise each Selling
Holder of Registrable Securities requesting registration of such advice) that,
in its opinion, the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering within a
price range acceptable to the Selling Holders of 66-2/3% of the Registrable
Securities requested to be included in such registration, the Company, except as
provided in the following sentence, will include in such registration, to the
extent of the number and type which the Company is so advised can be sold in
such offering, Registrable Securities requested to be included in such
registration, PRO RATA (based on the number of Registrable Securities then held
by each of the Selling Holders, together with its Affiliates) among the Selling
Holders requesting such registration. Notwithstanding the foregoing, if the
total number of Registrable Securities
B-2
requested to be included in any registration cannot be included, holders of
Registrable Securities requesting registration thereof pursuant to Section 2.1,
representing not less than 50% of the Registrable Securities with respect to
which registration has been requested, shall have the right to withdraw the
request for registration by giving written notice to the Company within 20 days
after receipt of the notice from the managing underwriter described above by the
Company and, in the event of such withdrawal, such request shall not be counted
for purposes of the requests for registration to which holders of Registrable
Securities are entitled pursuant to Section 2.1 hereof. In connection with any
such registration to which this Section 2.1(f) is applicable, no securities
other than Registrable Securities of the Selling Holders shall be covered by
such registration.
(g) LIMITATIONS ON REGISTRATION REQUESTS. Notwithstanding
anything in this Section 2.1 to the contrary (other than Section 2.1(i)), in no
event will the Company be required to (i) effect more than two registrations per
Stockholder Group under this Section 2.1; or (ii) effect a registration pursuant
to this Section 2.1 within the six-month period occurring immediately subsequent
to the effectiveness (within the meaning of Section 2.1(d)) of a registration
statement filed pursuant to this Section 2.1, unless a majority of the
Disinterested Directors determines that effecting a second registration within
the six-month period would not have a material adverse effect on the market
price of the Company Common Stock or the Notes, if applicable. For purposes of
this Agreement, (i) TW, its Affiliates, immediate relatives of such Affiliates,
Affiliates of such immediate relatives and trusts for the benefit of such
immediate relatives (collectively, the "TW STOCKHOLDER GROUP"), (ii) C LLC, SMC
and their respective Affiliates, and (iii) the A Voting Trust shall each
constitute a separate "STOCKHOLDER GROUP".
(h) EXPENSES. The Company will pay all Registration Expenses in
connection with any registrations requested pursuant to this Section 2.1.
(i) CONVERSION OF MERGER S-4. If the A Voting Trust (or, if
available, C LLC or SMC) delivers a request to the Company pursuant to Section
2.1(a) referencing this Section 2.1(i) at least 10 business days before the
Closing Date, then the Company shall use its reasonable best efforts to convert,
after the Effective Time, the Registration Statement on Form S-4 relating to the
Mergers into a resale registration statement for use by such holders on the
terms and subject to the conditions otherwise applicable to a registration
requested under this Section 2.1. Delivery of such a request under this Section
2.1(i) shall not be counted for purposes of the requests of registration to
which holders of Registrable Securities are entitled pursuant to Section 2.1
hereof.
2.2 INCIDENTAL REGISTRATION.
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If the Company at any
time prior to the 10th anniversary of the Closing Date, proposes to register any
of its Company Common Stock under the Securities Act by registration on any form
other than Forms S-4 or S-8 (or successor forms), whether or not for sale for
its own account, it will each such time give prompt written notice to all
registered holders of Registrable Securities of its intention to do so and of
such holders' rights under this Section 2.2. Upon the written request of any
such holder (a "REQUESTING HOLDER") made as promptly as practicable and in any
event within 30 days after the receipt of any such notice from the Company (15
days if the Company states in such written
B-3
notice or gives telephonic or telecopied notice to all registered holders of
Registrable Securities, with written confirmation to follow promptly thereafter,
that (i) such registration will be on Form S-3 (or any successor form) and (ii)
such shorter period of time is required because of a planned filing date) (which
request shall specify the Registrable Securities intended to be disposed of by
such Requesting Holder), the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by the Requesting Holders thereof;
PROVIDED that, prior to the effective date of the registration statement filed
in connection with such registration, immediately upon notification to the
Company from the managing underwriter of the price at which such securities are
to be sold, if such price is below the price which any Requesting Holder shall
have indicated to be acceptable to such Requesting Holder, the Company shall so
advise such Requesting Holder of such price, and such Requesting Holder shall
then have the right to withdraw its request to have its Registrable Securities
included in such registration statement; PROVIDED FURTHER, HOWEVER, that, if, at
any time after giving written notice of its intention to register any securities
and prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to each Requesting
Holder of Registrable Securities and (x) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from any obligation of
the Company to pay the Registration Expenses in connection therewith), without
prejudice, however, to the rights of any holder or holders of Registrable
Securities entitled to do so to cause such registration to be effected as a
registration under Section 2.1, and (y) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable Securities,
for the same period as the delay in registering such other securities. No
registration effected under this Section 2.2 shall relieve the Company of its
obligation to effect any registration upon request under Section 2.1.
(b) PRIORITY IN INCIDENTAL REGISTRATIONS. If the managing underwriter
of any underwritten offering shall inform the Company by letter of its opinion
that the number or type of Registrable Securities requested to be included in
such registration would materially adversely affect such offering, and the
Company has so advised the Requesting Holders in writing, then the Company will
include in such registration, to the extent of the number and type which the
Company is so advised can be sold in (or during the time of) such offering,
first, all securities proposed by the Company to be sold for its own account,
and second, such Registrable Securities requested to be included in such
registration pursuant to this Agreement, PRO RATA (based on the number of
Registrable Securities requested to be included therein by each Requesting
Holder) among such Requesting Holders.
(c) EXPENSES. The Company will pay all Registration Expenses in
connection with any registration contemplated pursuant to this Section 2.2.
2.3 REGISTRATION PROCEDURES. If and at any time the Company is required to
use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 2.1 and 2.2, the Company will,
as expeditiously as possible:
(i) prepare and (within 90 days after the end of the period
within which requests for registration may be given to the Company) file with
the
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Commission the requisite registration statement to effect such registration and
thereafter use its best efforts to cause such registration statement to become
effective; PROVIDED, HOWEVER, that the Company may discontinue any registration
of its securities which are not Registrable Securities (and, under the
circumstances specified in Section 2.2(a), which are Registrable Securities) at
any time prior to the effective date of the registration statement relating
thereto;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective in accordance with Section 2.1(d)(i) hereof and to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement until such time
as all of such Registrable Securities have been disposed of in accordance
with the intended methods of disposition by the seller or sellers thereof set
forth in such registration statement; PROVIDED that, except with respect to
any such registration statement pursuant to Rule 415 under the Securities
Act, such period need not exceed 135 days;
(iii) furnish to each seller of Registrable Securities covered by
such registration statement, such number of conformed copies of such
registration statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, as such seller may reasonably request;
(iv) use its reasonable best efforts (x) to register or qualify
all Registrable Securities and other securities covered by such registration
statement under such other securities or blue sky laws of such States of the
United States of America where an exemption is not available and as the sellers
of Registrable Securities covered by such registration statement shall
reasonably request, (y) to keep such registration or qualification in effect for
so long as such registration statement remains in effect and (z) to take any
other action which may be reasonably necessary or advisable to enable such
sellers to consummate the disposition in such jurisdictions of the securities to
be sold by such sellers, except that the Company shall not for any such purpose
be required to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this subdivision
(iv) be obligated to be so qualified or to consent to general service of process
in any such jurisdiction;
(v) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or approved by such
other federal or state governmental agencies or authorities as may be necessary
in the reasonable opinion of counsel to the Company and counsel to the seller or
sellers of Registrable Securities to enable the seller or sellers thereof to
consummate the disposition of such Registrable Securities;
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(vi) furnish at the effective date of such registration statement
to each seller of Registrable Securities, and each such seller's underwriters,
if any, a signed counterpart of:
(x) an opinion of counsel for the Company, dated the
effective date of such registration statement and, if applicable, the date of
the closing under the underwriting agreement, and
(y) a "comfort" letter signed by the independent public
accountants who have certified the Company's financial statements included or
incorporated by reference in such registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' comfort letter, with respect to events subsequent to the date of
such financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities and, in the case of the accountants'
comfort letter, such other financial matters, and, in the case of the legal
opinion, such other legal matters, as the underwriters may reasonably request;
(vii) notify each seller of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, upon discovery that, or upon
the happening of any event as a result of which, the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, in the light of the
circumstances under which they were made, and at the request of any such seller
promptly prepare and furnish to it a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made;
(viii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first full
calendar month after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder;
(ix) provide and cause to be maintained a transfer agent and
registrar (which, in each case, may be the Company) for all Registrable
Securities covered by such registration statement from and after a date not
later than the effective date of such registration;
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(x) use its best efforts to list all Registrable Securities
(other than the Notes) covered by such registration statement on any national
securities exchange on which Registrable Securities of the same class covered by
such registration statement are then listed; and
(xi) if the Registrable Securities covered by such registration
statement constitute Notes, use all its reasonable efforts to maintain the
qualification of the indenture under the Trust Indenture Act.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities as the Company may from time
to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in subdivision (vii) of this
Section 2.3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii) of this
Section 2.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
2.4 UNDERWRITTEN OFFERINGS.
(a) REQUESTED UNDERWRITTEN OFFERINGS. If requested by the
underwriters for any underwritten offering by holders of Registrable Securities
pursuant to a registration requested under Section 2.1, the Company will enter
into an underwriting agreement with such underwriters for such offering, such
agreement to be reasonably satisfactory in substance and form to each such
holder and the underwriters and to contain such representations and warranties
by the Company and such other terms as are generally prevailing in agreements of
that type, including, without limitation, indemnities to the effect and to the
extent provided in Section 2.7 or such other indemnities as are customarily
received by underwriters in public offerings of similar securities. The holders
of the Registrable Securities proposed to be sold by such underwriters will
reasonably cooperate with the Company in the negotiation of the underwriting
agreement. Such holders of Registrable Securities to be sold by such
underwriters shall be parties to such underwriting agreement and may, at their
option, require that any or all of the representations and warranties by, and
the other agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. No
holder of Registrable Securities shall be required to make any representations
or warranties to or agreements with the Company other than representations,
warranties or agreements regarding such holder, such holder's Registrable
Securities and such holder's intended method of distribution or any other
representations required by applicable law.
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(b) INCIDENTAL UNDERWRITTEN OFFERINGS. If the Company proposes to
register any of its securities under the Securities Act as contemplated by
Section 2.2 and such securities are to be distributed by or through one or more
underwriters, the Company will, if requested by any Requesting Holder of
Registrable Securities, use its reasonable best efforts to arrange for such
underwriters to include all the Registrable Securities to be offered and sold by
such Requesting Holder among the securities of the Company to be distributed by
such underwriters, subject to the provisions of Section 2.2(b). The holders of
Registrable Securities to be distributed by such underwriters shall be parties
to the underwriting agreement between the Company and such underwriters and may,
at their option, require that any or all of the representations and warranties
by, and the other agreements on the part of, the Company to and for the benefit
of such underwriters shall also be made to and for the benefit of such holders
of Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. Any such
Requesting Holder of Registrable Securities shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than customary representations, warranties or agreements
regarding such Requesting Holder, such Requesting Holder's Registrable
Securities and such Requesting Holder's intended method of distribution or any
other representations required by applicable law.
2.5 PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities to be registered under such registration statement, their
underwriters, if any, and their respective counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such reasonable access to its
books and records and such opportunities to discuss the business of the Company
with its officers and the independent public accountants who have certified its
financial statements as shall be necessary, in the opinion of such holders' and
such underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
2.6 LIMITATIONS, CONDITIONS AND QUALIFICATIONS TO OBLIGATIONS UNDER
REGISTRATION COVENANTS.
(a) The Company shall be entitled to postpone or suspend, as the case
may be, for a reasonable period of time (but not exceeding an aggregate of 90
days in any rolling 180-day period from and after the Effective Time) the
filing, initial effectiveness and/or continued use of any registration statement
otherwise required to be prepared, filed and have declared and maintained as
effective by it pursuant to Section 2.1 if the Company determines, in its
reasonable judgment, that such filing, initial effectiveness or continued use
would interfere with any financing, acquisition, corporate reorganization or
other material transaction involving the Company or would require the inclusion
in such registration statement of financial statements that are unavailable to
the Company for reasons beyond the Company's control and promptly gives the
holders of Registrable Securities requesting registration thereof pursuant to
Section 2.1 written notice (which shall be kept strictly confidential) of such
determination, containing a general statement of the reasons for such
postponement and an approximation of the anticipated
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delay. In the event the Company exercises its rights under the preceding
sentence in respect of a registration statement that has already been filed, the
Selling Holders agree to suspend, immediately upon their receipt of the notice
referred to above, their use of the prospectus or preliminary prospectus
relating to the registration in connection with any sale or offer to sell
Registrable Securities and agree not to disclose to any other Person the fact
that the Company has exercised such rights or any related facts. The Company
shall immediately notify the holders upon the expiration of any period during
which it exercised its rights under this Section 2.6.
(b) If the Company shall postpone, pursuant to this Section 2.6, the
filing or initial effectiveness of a registration statement, holders of
Registrable Securities requesting registration thereof pursuant to Section 2.1,
representing not less than 50% of the Registrable Securities with respect to
which registration has been requested, shall have the right to withdraw the
request for registration by giving written notice to the Company within 30 days
after receipt of the notice of postponement and, in the event of such
withdrawal, such request shall not be counted for purposes of the requests for
registration to which holders of Registrable Securities are entitled pursuant to
Section 2.1 hereof.
(c) Any postponement or suspension by the Company pursuant to this
Section 2.6 shall be without prejudice to the rights of the holders under
Section 2.1(d).
2.7 INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company will, and hereby
does, indemnify and hold harmless, in the case of any registration statement
filed pursuant to Section 2.1 or 2.2, each seller of any Registrable Securities
covered by such registration statement and each other Person who participates as
an underwriter in the offering or sale of such securities and each other Person,
if any, who controls such seller or any such underwriter within the meaning of
the Securities Act or the Exchange Act, and their respective directors,
officers, partners, agents and affiliates, against any losses, claims, damages
or liabilities, joint or several, to which such seller or underwriter or any
such director, officer, partner, agent, affiliate or controlling person may
become subject under the Securities Act or otherwise, including, without
limitation, the reasonable fees and expenses of legal counsel, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Company will reimburse such seller or underwriter and each such director,
officer, partner, agent, affiliate and controlling Person for any reasonable
legal or any other expenses incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding; PROVIDED,
HOWEVER, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written
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information furnished to the Company by or on behalf of such seller or
underwriter, as the case may be, specifically stating that it is for use in the
preparation thereof; PROVIDED FURTHER that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon an untrue statement or alleged untrue
statement of any material fact contained in any such registration statement,
preliminary prospectus, final prospectus or summary prospectus contained therein
or any omission to state therein a material fact required to be stated therein
or necessary to make the statements therein in light of the circumstances in
which they were made not misleading in a prospectus or prospectus supplement, if
such untrue statement or omission is completely corrected in an amendment or
supplement to such prospectus or prospectus supplement, the seller of the
Registrable Securities has an obligation under the Securities Act to deliver a
prospectus or prospectus supplement in connection with such sale of Registrable
Securities and the seller of Registrable Securities thereafter fails to deliver
such prospectus or prospectus supplement as so amended or supplemented prior to
or concurrently with the sale of Registrable Securities to the person asserting
such loss, claim, damage or liability after the Company has furnished such
seller with a sufficient number of copies of the same. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of such seller or underwriter or any such director, officer, partner,
agent, affiliate or controlling person and shall survive the transfer of such
securities by such seller or underwriter.
(b) INDEMNIFICATION BY THE SELLERS. As a condition to including any
Registrable Securities in any registration statement, the Company shall have
received an undertaking reasonably satisfactory to it from the prospective
seller of such Registrable Securities, to indemnify and hold harmless (in the
same manner and to the same extent as set forth in Section 2.7(a)) the Company,
and each director of the Company, each officer of the Company and each other
Person, if any, who participates as an underwriter in the offering or sale of
such securities and each other Person who controls the Company or any such
underwriter within the meaning of the Securities Act or the Exchange Act, with
respect to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto,
if such statement or alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by such seller specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement; PROVIDED, HOWEVER, that
the liability of such indemnifying party under this Section 2.7(b) shall be
limited to the amount of proceeds received by such indemnifying party in the
offering giving rise to such liability. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling person and shall survive
the transfer of such securities by such seller.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in Section 2.7(a) or (b), such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action; PROVIDED,
HOWEVER, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under the
preceding
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subdivisions of this Section 2.7, except to the extent that the indemnifying
party is actually and materially prejudiced by such failure to give notice. In
case any such action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it may
wish, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party; PROVIDED FURTHER, HOWEVER, that any indemnified party
may, at its own expense, retain separate counsel to participate in, but not
control, such defense. Notwithstanding the foregoing, in any action or
proceeding in which both the Company and an indemnified party is, or is
reasonably likely to become, a party, such indemnified party shall have the
right to employ separate counsel at the Company's expense and to control its own
defense of such action or proceeding if, in the reasonable opinion of counsel to
such indemnified party, (a) there are or may be legal defenses available to such
indemnified party or to other indemnified parties that are different from or
additional to those available to the Company or (b) any conflict or potential
conflict exists between the Company and such indemnified party that would make
such separate representation advisable; PROVIDED, HOWEVER, that in no event
shall the Company be required to pay fees and expenses under this Section 2.7
for more than one firm of attorneys representing the indemnified parties
(together, if appropriate, with one firm of local counsel per jurisdiction) in
any one legal action or group of related legal actions. No indemnifying party
shall be liable for any settlement of any action or proceeding effected without
its written consent, which consent shall not be unreasonably withheld. No
indemnifying party shall, without the consent of the indemnified party, which
consent shall not be unreasonably withheld, consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability with respect to such claim or litigation or which
requires action other than the payment of money by the indemnifying party.
(d) CONTRIBUTION. If the indemnification provided for in this Section
2.7 shall for any reason be held by a court to be unavailable to an indemnified
party under Section 2.7(a) or (b) hereof in respect of any loss, claim, damage
or liability, or any action in respect thereof, then, in lieu of the amount paid
or payable under Section 2.7(a) or (b), the indemnified party and the
indemnifying party under Section 2.7(a) or (b) shall contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating the same), (i) in such
proportion as is appropriate to reflect the relative fault of the Company and
the prospective sellers of Registrable Securities covered by the registration
statement which resulted in such loss, claim, damage or liability, or action or
proceeding in respect thereof, with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action or proceeding in
respect thereof, as well as any other relevant equitable considerations or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as shall be appropriate to reflect the relative benefits
received by the Company and such prospective sellers from the offering of the
securities covered by such registration statement, provided that, for purposes
of this clause (ii), the relative benefits received by the prospective sellers
shall be deemed not to exceed the amount of proceeds received by such
prospective sellers. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. Such prospective sellers' obligations to contribute as
provided in this Section 2.7(d) are several in
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proportion to the relative value of their respective Registrable Securities
covered by such registration statement and not joint. In addition, no Person
shall be obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's consent, which
consent shall not be unreasonably withheld.
(e) OTHER INDEMNIFICATION. Indemnification and contribution similar
to that specified in the preceding subdivisions of this Section 2.7 (with
appropriate modifications) shall be given by the Company and each seller of
Registrable Securities with respect to any required registration or other
qualification of securities under any federal or state law or regulation of any
governmental authority other than the Securities Act.
(f) INDEMNIFICATION PAYMENTS. The indemnification and contribution
required by this Section 2.7 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
3. DEFINITIONS. As used herein, unless the context otherwise requires, the
following terms have the following respective meanings:
"AFFILIATE" of a specified Person means a Person who directly or indirectly
through one or more intermediaries controls, is controlled by, or is under
common control with, such specified Person or any immediate relative of such
specified Person or any Person controlled by such immediate relative or any
trust set up for such immediate relative's benefit.
"COMMISSION" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"DISINTERESTED DIRECTOR" means, with respect to any transaction or series
of related transactions, a member of the board of directors of the Company who
does not have any material direct or indirect financial interest in or with
respect to such transaction or series of related transactions.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or
any superseding Federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934, as amended, shall
include a reference to the comparable section, if any, of any such superseding
Federal statute.
"HOLDER" or "HOLDERS" mans any holder or holders of Registrable Securities
that is a member of a Stockholder Group.
"INITIATING HOLDER" is defined in Section 2.1(a).
"PERSON" means any individual, firm, corporation, partnership, limited
liability company or partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind and shall include any
successor (by merger or otherwise) of such entity.
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"REGISTRABLE SECURITIES" means any Notes or any equity securities of the
Company that are beneficially owned (within the meaning of Section 13d of the
Exchange Act), or in respect of which rights exist but have not yet vested, at
the Effective Time by or on behalf of any holder or any Affiliate thereof, and
any securities of the Company issued or issuable with respect thereto by way of
a dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise. As
to any particular Registrable Securities, once issued, such securities shall
cease to be Registrable Securities when (a) a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (b) they shall have been sold as permitted by
Rule 144 (or any successor provision) under the Securities Act, (c) they shall
have been otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them (without volume or method of sale
restrictions) shall not require registration of such distribution under the
Securities Act or (d) they shall have ceased to be outstanding. All references
to percentages of Registrable Securities shall be calculated pursuant to Section
9. Shares of Company Common Stock beneficially owned by the TW Stockholders
Group that are not permitted to be transferred outside the TW Stockholder Group
pursuant to the terms of the Stock Vesting Agreement dated as of the date hereof
between TW and the Company shall not constitute Registrable Securities so long
as such contractual restrictions on transfer remain in effect and shall cease to
be Registrable Securities in the event that such agreement requires such shares
to be forfeited to the Company.
"REGISTRATION EXPENSES" means all expenses incident to the Company's
performance of or compliance with Section 2, including, without limitation, all
registration and filing fees, all fees of the American Stock Exchange, other
national securities exchanges or the National Association of Securities Dealers,
Inc., all fees and expenses of complying with securities or blue sky laws, all
word processing, duplicating and printing expenses, messenger and delivery
expenses, the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of "comfort" letters and
legal opinions required by or incident to such performance and compliance, any
fees and disbursements of underwriters customarily paid by issuers or sellers of
securities (excluding any underwriting discounts or commissions with respect to
the Registrable Securities) and the reasonable fees and expenses of one counsel
to the Selling Holders (selected by Selling Holders representing at least a
majority of the Registrable Securities covered by such registration); PROVIDED,
HOWEVER, that in the event the Company shall determine, in accordance with
Section 2.2(a) or Section 2.6, not to register any securities with respect to
which it had given written notice of its intention to so register to holders of
Registrable Securities, all of the costs of the type (and subject to any
limitation to the extent) set forth in this definition and incurred by
Requesting Holders in connection with such registration on or prior to the date
the Company notifies the Requesting Holders of such determination shall be
deemed Registration Expenses.
"REQUESTING HOLDER" is defined in Section 2.2(a).
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
superseding Federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act of
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1933, as amended, shall include a reference to the comparable section, if any,
of any such superseding Federal statute.
"SELLING HOLDER" is defined in Section 2.1(a).
"STOCKHOLDER GROUP" is defined in Section 2.1(g).
"TW STOCKHOLDER GROUP" is defined in Section 2.1(g).
4. RULE 144 AND RULE 144A. The Company shall take all actions reasonably
necessary to enable holders of Registrable Securities to sell such securities
without registration under the Securities Act within the limitation of the
provisions of (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, (b) Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or (c) any similar rules or regulations hereafter
adopted by the Commission. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether it has complied with such requirements.
5. AMENDMENTS AND WAIVERS. This Agreement may be amended with the consent
of the Company and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company shall
have obtained the written consent to such amendment, action or omission to act,
of the holder or holders of at least a majority of the Registrable Securities
held by each Stockholder Group (consenting separately by Stockholder Group)
affected by such amendment, action or omission to act. Each holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any consent authorized by this Section 5, whether or not such Registrable
Securities shall have been marked to indicate such consent.
6. NOMINEES FOR BENEFICIAL OWNERS. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the holder of such Registrable Securities for purposes of
any request or other action by any holder or holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage of
shares of Registrable Securities held by any holder or holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
7. NOTICES. All notices, demands and other communications provided for or
permitted hereunder shall be made in writing and shall be by registered or
certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
(a) if to any holder of Registrable Securities, at the address that such
holder shall have furnished to the Company in writing in the manner set forth
herein, or, until any such holder so furnishes to the Company an address, then
to and at the address of the last holder of such Registrable Securities who has
furnished an address to the Company; or
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(b) if to the Company, addressed to it in the manner set forth in the
Merger Agreement, or at such other address as the Company shall have furnished
to each holder of Registrable Securities at the time outstanding in the manner
set forth herein.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered by a
courier, if delivered by overnight courier service; three business days after
being deposited in the mail, postage prepaid, if mailed; and when receipt is
acknowledged, if telecopied.
8. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and, with respect to the
Company, its respective successors and permitted assigns and, with respect to
TW, C LLC or any A Principal Stockholder, any holder of any Registrable
Securities, subject to the provisions respecting the minimum amount of
Registrable Securities required in order to be entitled to certain rights, or
take certain actions, contained herein. Except by operation of law, this
Agreement may not be assigned by the Company without the prior written consent
of the holders of a majority of the outstanding Registrable Securities held by
each Stockholder Group (consenting separately by Stockholder Group) at the time
such consent is requested.
9. CALCULATION OF PERCENTAGE INTERESTS IN REGISTRABLE SECURITIES. For
purposes of this Agreement, all references to a percentage of the Registrable
Securities shall be calculated based upon the number or principal amount of
Registrable Securities outstanding at the time such calculation is made.
10. NO INCONSISTENT AGREEMENTS. The Company will not hereafter enter into
any agreement with respect to its securities which is inconsistent with the
rights granted to the holders of Registrable Securities in this Agreement.
Without limiting the generality of the foregoing, the Company will not hereafter
enter into any agreement with respect to its securities which grants, or modify
any existing agreement with respect to its securities to grant, to any Person in
connection with any requested or incidental registration of such securities
equal or higher priority to the rights granted to the holders under Section 2 of
this Agreement.
11. REMEDIES. Each holder of Registrable Securities, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.
12. SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the holders
shall be enforceable to the fullest extent permitted by law.
B-15
13. ENTIRE AGREEMENT. This Agreement, together with the "ancillary
agreements" referred to in the Merger Agreement to which the parties hereto are
parties (including the exhibits and schedules thereto), is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement and such other agreements
(including the exhibits and schedules thereto) supersede all prior agreements
and understandings among the parties with respect to such subject matter.
14. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
15. GOVERNING LAW JURISDICTION; WAIVER OF TRIAL BY JURY. This Agreement
shall be governed by, and construed in accordance with, the laws of the State of
Delaware applicable to contracts executed in and to be performed in that State.
Each of the parties hereto (i) consents to submit itself to the personal
jurisdiction of any Delaware state court located in the city of Wilmington if
any dispute arises under this Agreement, the ancillary agreements or any
transaction contemplated hereby or thereby, (ii) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court, (iii) agrees that it will not bring any action, suit
or proceeding relating to this Agreement, the Merger Agreement and the other
ancillary agreements or any transaction contemplated hereby or thereby in any
court other than any such court, (iv) waives any right to trial by jury with
respect to any action; suit or proceeding related to or arising out of this
Agreement, the Merger Agreement and the other ancillary agreements or any
transaction contemplated hereby or thereby, (v) waives any objection to the
laying of venue of any action, suit or proceeding arising out this Agreement,
the Merger Agreement and the other ancillary agreements or any transaction
contemplated hereby or thereby in any such court, (vi) waives and agrees not to
plead or claim that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum and (vii) agrees that a final
judgment in any such action, suit or proceeding in any such court shall be
conclusive and may be enforced in any other jurisdiction by suit on the judgment
or in any other manner provided by applicable law.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed an original and all of which taken together
shall constitute one and the same instrument.
[The remainder of this page intentionally left blank.]
B-16
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their respective representatives
hereunto duly authorized as of the date first above written.
ALOHA HOLDINGS, INC.
By:
-----------------------------------
Name:
Title:
TURNWORKS, INC.
By:
-----------------------------------
Name:
Title:
[_____], LLC
By:
-----------------------------------
Name:
Title:
XXXXX MANAGEMENT LLC
By:
-----------------------------------
Name:
Title:
[A VOTING TRUST]
By:
-----------------------------------
Name:
Title:
B-17
EXHIBIT C
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
TURNWORKS ACQUISITION III, INC.
TURNWORKS ACQUISITION III, INC., a corporation organized and existing under
the laws of the State of Delaware, DOES HEREBY CERTIFY AS FOLLOWS:
1. The name of the corporation is TURNWORKS ACQUISITION III, INC. and it
was originally incorporated under the name "TURNWORKS ACQUISITION III, INC." The
original Certificate of Incorporation was filed with the Secretary of State of
the State of Delaware on December 14, 2001.
2. This Restated Certificate of Incorporation, having been duly adopted in
accordance with Sections 228, 242 and 245 of the General Corporation Law of the
State of Delaware (the "GENERAL CORPORATION LAW") and by the written consent of
the sole stockholder of TURNWORKS ACQUISITION III, INC., restates and further
amends the provisions of the Certificate of Incorporation as amended or
supplemented heretofore. As so restated and further amended, the Restated
Certificate of Incorporation (hereinafter, this "CERTIFICATE OF INCORPORATION")
reads as follows:
ARTICLE I
NAME
The name of the corporation is "ALOHA HOLDINGS, INC." (the "CORPORATION").
ARTICLE II
ADDRESS; REGISTERED OFFICE AND AGENT
The address of the Corporation's registered office is Corporation Trust
Center, 0000 Xxxxxx Xxxxxx, Xxxx xx Xxxxxxxxxx, Xxxxxx of New Castle, State of
Delaware; and the name of its registered agent at such address is CT Corporation
System.
2
ARTICLE III
PURPOSES
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law.
ARTICLE IV
CAPITAL STOCK
A. NUMBER OF SHARES; GENERAL PROVISIONS.
SECTION 1. NUMBER OF SHARES AUTHORIZED. The total number of shares of all
classes of stock that the Corporation shall be authorized to issue is two
hundred million (200,000,000) shares, consisting of fifty million (50,000,000)
shares of Preferred Stock, par value $.0001 per share (the "PREFERRED STOCK"),
and one hundred fifty million (150,000,000) shares of Common Stock, par value
$.0001 per share (the "COMMON STOCK").
SECTION 2. RESTRICTIONS ON FOREIGN OWNERSHIP OF VOTING STOCK. The ownership
or control of more than 25% of the issued and outstanding Voting Stock of the
Corporation by persons who are not "citizens of the United States" as defined in
Section 102(a)(15) of the Transportation Act (49 U.S.C. Section 4101, ET SEQ.,
the "TRANSPORTATION ACT") is prohibited; PROVIDED, HOWEVER, that such percentage
shall be deemed to be automatically increased or decreased from time to time to
that percentage of ownership which is then permissible by persons who are not
"citizens of the United States" under the Transportation Act or under any
successor or other law of the United States of America which provides for the
regulation of, or is otherwise applicable to, the Corporation or its
subsidiaries in their business activities. As used in the preceding sentence and
elsewhere in this Certificate of Incorporation, "Voting Stock" of the
Corporation means the Common Stock and any shares of Preferred Stock of the
Corporation entitled to vote on matters generally referred to the stockholders
for a vote.
B. PREFERRED STOCK.
Subject to the limitations of and in the manner provided by law, the Board
of Directors of the Corporation is hereby expressly authorized, by resolution or
resolutions thereof, to provide, out of the unissued shares of Preferred Stock,
for series of Preferred Stock and, with respect to each such series, to fix the
number of shares constituting such series and the designation of such series,
the voting powers (if any) of the shares of such series, and the preferences and
relative, participating, optional or other special rights, if any, and any
qualifications, limitations or restrictions thereof, of the shares of such
series. The powers, preferences and relative, participating, optional and other
special rights of each series of Preferred Stock, and the qualifications,
limitations or
3
restrictions thereof, if any, may differ from those of any and all other series
at any time outstanding.
C. DESIGNATION OF SPECIAL PREFERRED STOCK.
SECTION 1. DESIGNATION AND AMOUNT. Three (3) of the authorized shares of
Preferred Stock are hereby designated as "Series A Special Preferred Stock, par
value $.0001 per share" (the "SERIES A SPECIAL PREFERRED STOCK"), three (3) of
the authorized shares of Preferred Stock are hereby designated as "Series B
Special Preferred Stock, par value $.0001 per share" (the "SERIES B SPECIAL
PREFERRED STOCK"), three (3) of the authorized shares of Preferred Stock are
hereby designated as "Series C Special Preferred Stock, par value $.0001 per
share" (the "SERIES C SPECIAL PREFERRED STOCK"), one (1) of the authorized
shares of Preferred Stock are hereby designated as "Series D Special Preferred
Stock, par value $.0001 per share" (the "SERIES D SPECIAL PREFERRED STOCK"), one
(1) of the authorized shares of Preferred Stock are hereby designated as "Series
E Special Preferred Stock, par value $.0001 per share" (the "SERIES E SPECIAL
PREFERRED STOCK") and one (1) of the authorized shares of Preferred Stock are
hereby designated as "Series F Special Preferred Stock, par value $.0001 per
share" (the "SERIES F SPECIAL PREFERRED STOCK") (collectively, the "SPECIAL
PREFERRED STOCK").
SECTION 2. DIVIDENDS AND DISTRIBUTIONS. At any time that a dividend or
distribution is declared and paid with respect to Common Stock, a dividend shall
be paid on the Special Preferred Stock in an amount per share equal to twice the
dividend per share paid on the Common Stock, and, except as provided in Sections
6 and 7 hereof, the Special Preferred Stock shall not be entitled to receive any
other dividends or distributions thereon.
SECTION 3. VOTING RIGHTS.
(a) VOTING RIGHTS OF THE SPECIAL PREFERRED STOCK. The Special Preferred
Stock shall have the right to vote: (i) as required by the General Corporation
Law and (ii) together with the Common Stock as a single class with respect to
any matters submitted to the holders of shares of the Common Stock of the
Corporation. The holder of each share of Special Preferred Stock shall be
entitled to one vote for each share of Special Preferred Stock held by such
holder.
(b) NOTICE. So long as any shares of the Special Preferred Stock remain
outstanding, the Corporation will provide the holders of the Special Preferred
Stock with notice of each annual and special meeting of stockholders, including
without limitation any meeting at which matters on which the Special Preferred
Stock is entitled to vote, to the same extent as the holders of the Common
Stock.
(c) CONDITIONAL RIGHT TO ELECT DIRECTORS TO FILL VACANCIES.
(i) SERIES A SPECIAL PREFERRED STOCK. In the event of a vacancy or
vacancies on the Board of Directors of the Corporation or any committee thereof
caused by the removal, resignation or death of one or more directors whom the
holders of
4
the Series A Special Preferred Stock are entitled to identify to the Board of
Directors or the nominating committee thereof, as the case may be, for
nomination to the Board of Directors or such committee pursuant to the By-laws
of the Corporation, and unless such vacancy is filled by the Board of Directors
in accordance with Section 3.4 of the By-laws within thirty (30) days, such
vacancy or vacancies may be filled by the affirmative vote of a majority of the
holders of the Series A Special Preferred Stock at a special meeting of holders
of the Series A Special Preferred Stock called for such purpose, or by the
unanimous written consent in lieu of meeting of all holders of the Series A
Special Preferred Stock. Each director so elected shall hold office until the
expiration of the term of office of the director whom he or she has replaced or
until a successor is duly elected and qualified or until such director's death,
resignation or removal.
(ii) SERIES B SPECIAL PREFERRED STOCK. In the event of a vacancy or
vacancies on the Board of Directors of the Corporation or any committee thereof
caused by the removal, resignation or death of one or more directors whom the
holders of the Series B Special Preferred Stock are entitled to identify to the
Board of Directors or the nominating committee thereof, as the case may be, for
nomination to the Board of Directors or such committee pursuant to the By-laws
of the Corporation, and unless such vacancy is filled by the Board of Directors
in accordance with Section 3.4 of the By-laws within thirty (30) days, such
vacancy or vacancies may be filled by the affirmative vote of a majority of the
holders of the Series B Special Preferred Stock at a special meeting of holders
of the Series B Special Preferred Stock called for such purpose, or by the
unanimous written consent in lieu of meeting of all holders of the Series B
Special Preferred Stock. Each director so elected shall hold office until the
expiration of the term of office of the director whom he or she has replaced or
until a successor is duly elected and qualified or until such director's death,
resignation or removal.
(iii) SERIES C SPECIAL PREFERRED STOCK. In the event of a vacancy or
vacancies on the Board of Directors of the Corporation or any committee thereof
caused by the removal, resignation or death of one or more directors whom the
holders of the Series C Special Preferred Stock are entitled to identify to the
Board of Directors or the nominating committee thereof, as the case may be, for
nomination to the Board of Directors or such committee pursuant to the By-laws
of the Corporation, and unless such vacancy is filled by the Board of Directors
in accordance with Section 3.4 of the By-laws within thirty (30) days, such
vacancy or vacancies may be filled by the affirmative vote of a majority of the
holders of the Series C Special Preferred Stock at a special meeting of holders
of the Series C Special Preferred Stock called for such purpose, or by the
unanimous written consent in lieu of meeting of all holders of the Series C
Special Preferred Stock. Each director so elected shall hold office until the
expiration of the term of office of the director whom he or she has replaced or
until a successor is duly elected and qualified or until such director's death,
resignation or removal.
(iv) SERIES D SPECIAL PREFERRED STOCK. In the event of a vacancy on
the Board of Directors of the Corporation caused by the removal, resignation or
death of a director whom the holders of the Series D Special Preferred Stock are
entitled to identify to the Board of Directors or the nominating committee
thereof, as the case may be, for nomination to the Board of Directors pursuant
to the By-laws of the Corporation,
5
and unless such vacancy is filled by the Board of Directors in accordance with
Section 3.4 of the By-laws within thirty (30) days, such vacancy may be filled
by the affirmative vote of a majority of the holders of the Series D Special
Preferred Stock at a special meeting of holders of the Series D Special
Preferred Stock called for such purpose, or by the unanimous written consent in
lieu of meeting of all holders of the Series D Special Preferred Stock. Each
director so elected shall hold office until the expiration of the term of office
of the director whom he or she has replaced or until a successor is duly elected
and qualified or until such director's death, resignation or removal.
(v) SERIES E SPECIAL PREFERRED STOCK. In the event of a vacancy on
the Board of Directors of the Corporation caused by the removal, resignation or
death of a director whom the holders of the Series E Special Preferred Stock are
entitled to identify to the Board of Directors or the nominating committee
thereof, as the case may be, for nomination to the Board of Directors pursuant
to the By-laws of the Corporation, and unless such vacancy is filled by the
Board of Directors in accordance with Section 3.4 of the By-laws within thirty
(30) days, such vacancy may be filled by the affirmative vote of a majority of
the holders of the Series E Special Preferred Stock at a special meeting of
holders of the Series E Special Preferred Stock called for such purpose, or by
the unanimous written consent in lieu of meeting of all holders of the Series E
Special Preferred Stock. Each director so elected shall hold office until the
expiration of the term of office of the director whom he or she has replaced or
until a successor is duly elected and qualified or until such director's death,
resignation or removal.
(vi) SERIES F SPECIAL PREFERRED STOCK. In the event of a vacancy on
the Board of Directors of the Corporation caused by the removal, resignation or
death of a director whom the holders of the Series F Special Preferred Stock are
entitled to identify to the Board of Directors or the nominating committee
thereof, as the case may be, for nomination to the Board of Directors pursuant
to the By-laws of the Corporation, and unless such vacancy is filled by the
Board of Directors in accordance with Section 3.4 of the By-laws within thirty
(30) days, such vacancy may be filled by the affirmative vote of a majority of
the holders of the Series F Special Preferred Stock at a special meeting of
holders of the Series F Special Preferred Stock called for such purpose, or by
the unanimous written consent in lieu of meeting of all holders of the Series F
Special Preferred Stock. Each director so elected shall hold office until the
expiration of the term of office of the director whom he or she has replaced or
until a successor is duly elected and qualified or until such director's death,
resignation or removal.
(d) Except as otherwise expressly provided herein or otherwise expressly
required by law, the Special Preferred Stock shall not have any other voting
rights with respect to the affairs of the Corporation.
6
SECTION 4. CONVERSION.
(a) CONVERTIBLE INTO COMMON STOCK.
(i) SERIES A SPECIAL PREFERRED STOCK.
(A) TRANSFER. Each share of Series A Special Preferred Stock
shall be converted into one (1) share of Common Stock automatically upon the
sale, exchange, transfer, assignment, pledge or other disposition (collectively
referred to as a "TRANSFER") of such share to any person (a "TRANSFEREE") who is
not, or ceases to be at any time after the date of such Transfer, an Affiliate
(as defined below) of the initial holder of such share of Series A Special
Preferred Stock who has agreed to be bound by the Stockholders Agreement dated
as of ________ ___, 2002, among the Corporation, TurnWorks, Inc., [AIP], LLC and
the [A Voting Trust] (the "STOCKHOLDERS AGREEMENT"). As used in this Certificate
of Incorporation, "AFFILIATE" means, with respect to any specified Person (as
defined below), any other Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, the Person specified. As used in this Certificate of Incorporation, the
term "CONTROL" (including the terms "CONTROLLING," "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise. As
used in this Certificate of Incorporation, the term "PERSON" means any
individual, corporation, partnership, limited liability company, firm, joint
venture, association, joint stock company, trust, unincorporated organization,
governmental body or other entity. As used in this Section 4(a)(i), any
affiliate of the holder of shares of Series A Special Preferred Stock or
immediate relative of such affiliate of such holder, or one or more affiliates
of or trusts for the benefit of any such affiliate or immediate relative, shall
be deemed to be an "AFFILIATE" of such holder.
(B) LESS THAN 1%. Each share of Series A Special Preferred Stock
shall be immediately converted into one (1) share of Common Stock automatically
if the holder (together with all Affiliates of such holder who have agreed to be
bound by the Stockholders Agreement of Series A Special Preferred Stock is or
becomes at any time the holder of less than 1% of the "outstanding common equity
interest" of the stock of the Corporation at such time. "OUTSTANDING COMMON
EQUITY INTEREST" shall mean, at any time, the issued and outstanding Common
Stock at such time and shall not include in such determination any Common Stock
issuable upon exercise, conversion or exchange of outstanding warrants, stock
options, or convertible stock, or other securities exercisable, convertible or
exchangeable into Common Stock (as adjusted to reflect prior stock splits,
reclassifications and similar events).
(ii) SERIES B SPECIAL PREFERRED STOCK.
(A) TRANSFER. Each share of Series B Special Preferred Stock
shall be converted into one (1) share of Common Stock automatically upon
Transfer of such share to any Transferee who is not, or ceases to be at any time
after the date of such Transfer, an "Affiliate" of the initial holder of such
share of Series B Special
7
Preferred Stock who has agreed to be bound by the Stockholders Agreement. As
used in this Section 4(a)(ii), each beneficiary of the holder of shares of
Series B Special Preferred Stock, and each relative and affiliate of such
beneficiary shall be deemed to be an "AFFILIATE" of each other and of such
holder.
(B) LESS THAN 1%. Each share of Series B Special Preferred Stock
shall be immediately converted into one (1) share of Common Stock automatically
if the holder (together with all Affiliates of such holder who have agreed to be
bound by the Stockholders Agreement) of Series B Special Preferred Stock is or
becomes at any time the holder of less than 1% of the outstanding common equity
interest of the stock of the Corporation at such time.
(iii) SERIES C SPECIAL PREFERRED STOCK.
(A) TRANSFER. Each share of Series C Special Preferred Stock
shall be converted into one (1) share of Common Stock automatically upon
Transfer of such share to any Transferee who is not, or ceases to be at any time
after the date of such Transfer, an Affiliate of the initial holder of such
share of Series C Special Preferred Stock who has agreed to be bound by the
Stockholders Agreement. As used in this Section 4(a)(iii), the managing member
of the holder of Series C Special Preferred Stock, as of [the Closing Date], or
any affiliate of Xxxxx Management LLC, as of [the Closing Date], who is a
"citizen of the United States" as defined in Section 102(a)(15) of the
Transportation Act, or any affiliate of such managing member, or any
corporation, partnership or limited liability company controlled by such
managing member or such affiliate shall be deemed to be an "AFFILIATE" of such
holder.
(B) LESS THAN 1%. Each share of Series C Special Preferred Stock
shall be immediately converted into one (1) share of Common Stock automatically
if the holder (together with all Affiliates of such holder who have agreed to be
bound by the Stockholders Agreement) of Series C Special Preferred Stock is or
becomes at any time the holder of less than 1% of the outstanding common equity
interest of the stock of the Corporation; PROVIDED, HOWEVER, so long as the
holder (together with all Affiliates of such holder who have agreed to be bound
by the Stockholders Agreement) of Series C Special Preferred Stock is the holder
of at least 20% of the principal amount of 8% Notes due 2008 of the Corporation
(the "NOTES") issued pursuant to each of (i) the Agreement and Plan of Merger,
dated as of December 19, 2001, among the Corporation, Hawaiian Airlines, Inc.,
Aloha Airlines, Inc.. and TurnWorks, Inc. (the "A/B MERGER AGREEMENT") and (ii)
the Agreement and Plan of Merger, dated as of December 19, 2001, among AIP
General Partner, Inc., AIP, Inc. and the Corporation (the "C MERGER AGREEMENT"),
such shares of Series C Special Preferred Stock shall not convert into Common
Stock.
(iv) SERIES D SPECIAL PREFERRED STOCK. Each share of Series D Special
Preferred Stock shall be converted into one (1) share of Common Stock
automatically upon Transfer of such share to any Transferee. In addition to the
foregoing, each share of the Series D Special Preferred Stock shall be converted
into one share of Common Stock automatically if the collective bargaining
agreement by and
8
between the holders of such share and the Corporation is amended through
collective bargaining pursuant to the Railway Labor Act, 45 U.S.C. Section 156,
so that the collective bargaining agreement no longer entitles such holders to
nominate a representative on the Board of Directors.
(v) SERIES E SPECIAL PREFERRED STOCK. Each share of Series E Special
Preferred Stock shall be converted into one (1) share of Common Stock
automatically upon Transfer of such share to any Transferee. In addition to the
foregoing, each share of the Series E Special Preferred Stock shall be converted
into one share of Common Stock automatically if the collective bargaining
agreement by and between the holders of such share and the Corporation is
amended through collective bargaining pursuant to the Railway Labor Act, 45
U.S.C. Section 156, so that the collective bargaining agreement no longer
entitles such holders to nominate a representative on the Board of Directors.
(vi) SERIES F SPECIAL PREFERRED STOCK. Each share of Series F Special
Preferred Stock shall be converted into one (1) share of Common Stock
automatically upon Transfer of such share to any Transferee. In addition to the
foregoing, each share of the Series F Special Preferred Stock shall be converted
into one share of Common Stock automatically if the collective bargaining
agreement by and between the holders of such share and the Corporation is
amended through collective bargaining pursuant to the Railway Labor Act, 45
U.S.C. Section 156, so that the collective bargaining agreement no longer
entitles such holders to nominate a representative on the Board of Directors.
(b) TIME OF CONVERSION AND SURRENDER OF SHARES. Conversion of any share of
Special Preferred Stock shall be deemed to have been effected on the date (the
"CONVERSION DATE") that (i) in the case of the Series A Special Preferred Stock,
the Series B Special Preferred Stock and the Special Preferred Stock, (A) such
share is Transferred to a Transferee who is not, or at any time after such
Transfer ceases to be, an Affiliate of the Transferor (as applicable) or who is
an Affiliate of the Transferor (as applicable) but has not agreed to be bound by
the Stockholders Agreement or (B) the holder of such share is or becomes at any
time the holder of less than 1% of the outstanding common equity interest of the
stock of the Corporation at such time and (if applicable), the holder of less
than 20% of the principal amount of Notes issued pursuant to the A/B Merger
Agreement and the C Merger Agreement, and (ii) in the case of the Series D
Special Preferred Stock, the Series E Special Preferred Stock or the Series F
Special Preferred Stock, (A) such share is Transferred to a Transferee or (B)
the related collective bargaining agreement is amended so that such collective
bargaining agreement no longer entitles such holder to nominate a representative
on the Board of Directors. The holder of the converted share or shares of
Special Preferred Stock shall be deemed to have become a stockholder of record
of the Common Stock on the applicable Conversion Date. On the applicable
Conversion Date or as soon as practicable thereafter, any holder of a
certificate that, prior to conversion represented a share of Special Preferred
Stock must deliver such certificate to the Corporation during regular business
hours at the principal office of the Corporation or at such other place as may
be designated in writing delivered to the holder of such certificate by the
Corporation, duly endorsed for Transfer
9
to the Corporation (if required by it), accompanied by written notice
identifying such Transferee who is not an Affiliate (as applicable), Transferee
or other holder, as the case may be. As promptly as practicable thereafter, the
Corporation shall issue and deliver at such office to such Transferee who is not
an Affiliate (as applicable) or Transferee, a certificate for the shares of
Common Stock issuable upon conversion.
(c) ISSUANCE OF COMMON STOCK. All shares of Common Stock that may be
issued upon conversion of the Special Preferred Stock shall, upon issuance, be
validly issued, fully paid and nonassessable. The Corporation will pay any and
all documentary and other taxes that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of the Special Preferred Stock
pursuant hereto. The Corporation shall not, however, be required to pay any tax
that may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that in which the shares
of the Special Preferred Stock so converted were registered, and no such issue
or delivery shall be made unless and until the person requesting such transfer
has paid to the Corporation the amount of any such tax or has established to the
satisfaction of the Corporation that such tax has been paid.
(d) ADJUSTMENTS. The number of shares of Common Stock issuable upon the
conversion of each share of the Special Preferred Stock shall not be subject to
adjustment.
(e) REACQUIRED SHARES. Any shares of Special Preferred Stock purchased or
otherwise acquired by the Corporation in any manner whatsoever (including upon
conversion into Common Stock) shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of preferred stock, without designation as to
series, and may be reissued as part of any series of preferred stock
subsequently created by resolution or resolutions of the Board of Directors.
(f) LIQUIDATION, DISSOLUTION OR WINDING UP. Subject to the limitations of
and in the manner provided by law, in the event of the liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, the holders
of the Special Preferred Stock shall be entitled to receive, out of the assets
of the Corporation, whether such assets are capital or surplus of any nature,
$.0001 per share of Special Preferred Stock before any payment shall be made or
any assets distributed to the holders of the Common Stock or the holders of any
other class of stock junior in respect of liquidation rights to the Special
Preferred Stock; and the holders of the Special Preferred Stock shall not be
entitled to any further payments. If upon such liquidation, dissolution or
winding up, whether voluntary or involuntary, the assets of the Corporation or
proceeds thereof shall be insufficient to make the full liquidating payment of
$.0001 per share of the Special Preferred Stock and the full liquidating payment
due to any holder of Preferred Stock of any series ranking pari passu with the
Special Preferred Stock, then such assets and proceeds shall, subject to the
limitations of and in the manner provided by law, be distributed among the
holders of the Special Preferred Stock, ratably on a share for share basis in
accordance with the respective amounts which would be payable on all such series
of Preferred Stock, if all remaining liquidating amounts payable were paid in
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full and nothing shall be paid to the holders of any other class of stock junior
to the Special Preferred Stock. Neither a consolidation nor merger of the
Corporation with or into one or more corporations, nor a sale of all or a
substantial part of the assets of the Corporation, shall be deemed to be a
liquidation, dissolution or winding up within the meaning of this Section 6
unless such consolidation, merger or sale shall be in connection with a plan of
liquidation, dissolution or winding up of the business of the Corporation or
shall otherwise be deemed as such by law.
SECTION 5. CONSOLIDATION, MERGER, ETC. In the event that the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, or otherwise changed, then and in
each such event, all shares of Special Preferred Stock shall at the same time,
subject to the limitations of and in the manner provided by law, be similarly
exchanged or changed in an amount per share equal to the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged.
SECTION 6. NO REDEMPTION. The shares of Special Preferred Stock shall not
be redeemable. Notwithstanding the foregoing, the Corporation may acquire shares
of Special Preferred Stock in any other manner permitted by law or this
Certificate of Incorporation.
SECTION 7. RANK. With regard to rights to receive distributions upon
liquidation, dissolution or winding up of the Corporation, the Special Preferred
Stock shall rank (i) senior to the Common Stock of the Corporation, (ii) senior
to any series of Preferred Stock of the Corporation the terms of which
specifically provide that such series shall rank junior to the Special Preferred
Stock, (iii) junior to any series of Preferred Stock of the Corporation the
terms of which specifically provide that such series shall rank senior to the
Special Preferred Stock, and (iv) pari passu with each other and with any series
of Preferred Stock of the Corporation the terms of which do not specifically
provide that such series shall rank junior or senior to the Special Preferred
Stock.
SECTION 8. PREEMPTIVE RIGHTS. No holder of the shares of Special Preferred
Stock shall have any preemptive or preferential rights of subscription for or to
purchase any shares of any class of stock or other securities of the
Corporation, whether now or hereafter authorized, other than such right or
rights, if any, and upon such terms and at such prices as the Board of
Directors, in its discretion from time to time may determine. The Board of
Directors may issue shares of Special Preferred Stock or other securities
without offering the same in whole or in part to the stockholders of the
Corporation.
D. COMMON STOCK.
SECTION 1. Except as may otherwise be provided in this Certificate of
Incorporation (including, without limitation, Part C of this Article IV or any
certificate
11
filed with the Secretary of State of the State of Delaware establishing the
terms of a series of Preferred Stock in accordance with Part B of this Article
IV) or by applicable law, each holder of Common Stock, as such, shall be
entitled to one vote for each share of Common Stock held of record by such
holder on all matters on which stockholders generally are entitled to vote, and
no holder of any series of Preferred Stock, as such, shall be entitled to any
voting powers in respect thereof.
SECTION 2. Subject to applicable law and the rights, if any, of the holders
of any outstanding series of Preferred Stock, dividends may be declared and paid
on the Common Stock at such times and in such amounts as the Board of Directors
in its discretion shall determine.
SECTION 3. Upon the dissolution, liquidation or winding up of the
Corporation, subject to the rights, if any, of the holders of any outstanding
series of Preferred Stock, the holders of the Common Stock shall be entitled to
receive the assets of the Corporation available for distribution to its
stockholders ratably in proportion to the number of shares held by them.
ARTICLE V
DIRECTORS
SECTION 1. Except as otherwise fixed by or pursuant to the provisions of
Article IV of this Certificate of Incorporation relating to the rights of the
holders of any series of Preferred Stock, including the Special Preferred Stock,
the number of the directors of the Corporation shall be fixed from time to time
by or pursuant to the By-laws of the Corporation. Unless and except to the
extent that the By-laws of the Corporation shall so require, the election of
directors need not be by written ballot. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
SECTION 2. Subject to the rights of the holders of any series of Preferred
Stock, including the Special Preferred Stock, or Sections 3.4 or 3.6 of the
By-laws, any director may be removed from office with or without cause and only
by the affirmative vote of the holders of 80% of the combined voting power of
the then outstanding shares of Voting Stock, voting together as a single class,
PROVIDED THAT, except as provided in the next sentence, nominees of any series
of Special Preferred Stock may be removed with or without cause only by the
affirmative vote of a majority of the holders of such series at a special
meeting called for such purpose or by the unanimous written consent in lieu of
meeting of all holders of such series. In addition, upon any reduction in the
number of nominees that any holder of a series of Special Preferred Stock is
entitled to nominate to the Board pursuant to Section 3.2 of the By-laws, a
number of the nominees of such holder of any series of Special Preferred Stock
equal to the number so reduced shall be removed immediately from the Board, and
such holder of any series of Special Preferred Stock shall select which of its
nominees shall be so removed.
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ARTICLE VI
LIMITATION OF LIABILITY
SECTION 1. LIMITATION OF LIABILITY. No director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, provided that this provision shall
not eliminate or limit the liability of a director (a) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (b) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) under Section 174 of the General Corporation Law,
or (d) for any transaction from which the director derived any improper personal
benefits.
SECTION 2. AMENDMENT OR REPEAL. Any amendment, repeal or modification of
the foregoing provision shall not adversely affect any right or protection of a
director of the Corporation hereunder in respect of any act or omission
occurring prior to the time of such amendment, repeal or modification.
ARTICLE VII
INDEMNIFICATION
SECTION 1. RIGHT TO INDEMNIFICATION. The Corporation shall indemnify and
hold harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person (a "COVERED PERSON") who was or
is made or is threatened to be made a party or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "PROCEEDING"), by reason of the fact that he or she, or a
person for whom he or she is the legal representative, is or was a director or
officer of the Corporation or, while a director or officer of the Corporation,
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust, enterprise or nonprofit entity (an "OTHER ENTITY"), including service
with respect to employee benefit plans, against all liability and loss suffered
and expenses (including attorneys' fees) reasonably incurred by such Covered
Person. Notwithstanding the preceding sentence, except as otherwise provided in
Section 1 of this Article VII, the Corporation shall be required to indemnify a
Covered Person in connection with a Proceeding (or part thereof) commenced by
such Covered Person only if the commencement of such Proceeding (or part
thereof) by the Covered Person was authorized by the Board of Directors of the
Corporation.
SECTION 2. PREPAYMENT OF EXPENSES. The Corporation shall pay the expenses
(including attorneys' fees) incurred by a Covered Person in defending any
Proceeding in advance of its final disposition, PROVIDED, HOWEVER, that, to the
extent required by law, such payment of expenses in advance of the final
disposition of the Proceeding shall be made only upon receipt of an undertaking
by the Covered Person to
13
repay all amounts advanced if it should be ultimately determined that the
Covered Person is not entitled to be indemnified under this Article VII or
otherwise.
SECTION 3. CLAIMS. If a claim for indemnification or advancement of
expenses under this Article VIII is not paid in full within thirty (30) days
after a written claim therefor by the Covered Person has been received by the
Corporation, the Covered Person may file suit to recover the unpaid amount of
such claim and, if successful in whole or in part, shall be entitled to be paid
the expense of prosecuting such claim. In any such action the Corporation shall
have the burden of proving that the Covered Person is not entitled to the
requested indemnification or advancement of expenses under applicable law.
SECTION 4. NONEXCLUSIVITY OF RIGHTS. The rights conferred on any Covered
Person by this Article VII shall not be exclusive of any other rights which such
Covered Person may have or hereafter acquire under any statute, provision of
this Certificate of Incorporation, the By-laws, agreement, vote of stockholders
or disinterested directors or otherwise.
SECTION 5. OTHER SOURCES. The Corporation's obligation, if any, to
indemnify or to advance expenses to any Covered Person who was or is serving at
its request as a director, officer, employee or agent of an Other Entity shall
be reduced by any amount such Covered Person may collect as indemnification or
advancement of expenses from such Other Entity.
SECTION 6. AMENDMENT OR REPEAL. Any repeal or modification of the foregoing
provisions of this Article VII shall not adversely affect any right or
protection hereunder of any Covered Person in respect of any act or omission
occurring prior to the time of such repeal or modification.
SECTION 7. OTHER INDEMNIFICATION AND PREPAYMENT OF EXPENSES. This Article
VII shall not limit the right of the Corporation, to the extent and in the
manner permitted by law, to indemnify and to advance expenses to persons other
than Covered Persons when and as authorized by appropriate corporate action.
ARTICLE VIII
NO ACTION BY WRITTEN CONSENT
Subject to the rights of the holders of any series of Preferred Stock,
including the Special Preferred Stock, any action required or permitted to be
taken by the stockholders of the Corporation must be effected at a duly called
annual or special meeting of stockholders of the Corporation and may not be
effected by any consent in writing by such stockholders. Except as otherwise
required by law and subject to the rights of the holders of any series of
Preferred Stock, including the Special Preferred Stock, special meetings of
stockholders of the Corporation may be called only by the
14
Chairman of the Board of Directors or by the Board of Directors pursuant to a
resolution approved by a majority of the entire Board of Directors.
ARTICLE IX
ADOPTION, AMENDMENT AND/OR REPEAL OF BY-LAWS
In furtherance and not in limitation of the powers conferred upon it by
law, the Board of Directors is expressly authorized to adopt, repeal, alter or
amend the By-laws of the Corporation by the vote of a majority of the entire
Board of Directors; PROVIDED, HOWEVER, that any repeal, alteration or amendment
to the By-laws which would be inconsistent with Articles 4, 13 or 14 or Sections
2.3, 2.13, 3.2, 3.4, 3.6, 3.9, 3.15, 3.16, 5.2 or 5.3 of the By-laws of the
Corporation shall require the affirmative vote of a majority of the Entire
Board, which majority shall include at least one (1) Series A Nominated
Director, at least one (1) Series B Nominated Director and at least one (1)
Series C Nominated Director (so long as there are such Series A Nominated
Directors, Series B Nominated Directors and Series C Nominated Directors) and a
majority of the Series D Nominated Director, Series E Nominated Director and
Series F Nominated Director (so long as there are three (3) of such Nominated
Directors). In addition to any requirements of law and any other provision of
this Certificate of Incorporation or any resolution or resolutions of the Board
of Directors adopted pursuant to Article IV of this Certificate of Incorporation
(and notwithstanding the fact that a lesser percentage may be specified by law,
this Certificate of Incorporation or any such resolution or resolutions), the
affirmative vote of the holders of 80% or more of the combined voting power of
the then outstanding shares of Voting Stock, voting together as a single class,
shall be required for stockholders to adopt, amend, alter or repeal any
provision of the By-laws of the Corporation which would be inconsistent with
Articles 4, 13 or 14 or Sections 2.3, 2.13, 3.2, 3.4, 3.6, 3.9, 3.15, 3.16, 5.2
or 5.3 of the By-laws of the Corporation.
ARTICLE X
AMENDMENT AND/OR REPEAL
OF CERTIFICATE OF INCORPORATION
In addition to any requirements of law and any other provisions of this
Certificate of Incorporation or any resolution or resolutions of the Board of
Directors adopted pursuant to Article IV of this Certificate of Incorporation
(and notwithstanding the fact that a lesser percentage may be specified by law,
this Certificate of Incorporation or any such resolution or resolutions), the
affirmative vote of the holders of 80% or more of the combined voting power of
the then outstanding shares of Voting Stock, voting together as a single class,
shall be required to amend, alter or repeal, or adopt any provision inconsistent
with, this Article X, Part C of Article IV, or Articles V, VI, VII, VIII or IX
of this Certificate of Incorporation. Subject to the foregoing provisions of
this Article X, the Corporation reserves the right to amend, alter or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed
15
by statute, and all rights conferred upon stockholders herein are subject to
this reservation. Each Article and Section reference contained in this
Certificate of Incorporation shall be deemed to refer to any successor provision
of such Article or Section.
IN WITNESS WHEREOF, I, Xxxxxxx X. Xxxxxxxxx, Chairman of the Board of
Directors and Chief Executive Officer of TURNWORKS ACQUISITION III, INC., has
executed this Restated Certificate of Incorporation as of the __th day of
_________, 2002, and DO HEREBY CERTIFY under the penalties of perjury that the
facts stated in this Restated Certificate of Incorporation are true.
----------------------------------
Xxxxxxx X. Xxxxxxxxx
Chairman of the Board of Directors
and Chief Executive Officer
EXHIBIT D
AMENDED BY-LAWS
of
ALOHA HOLDINGS, INC.
(A Delaware Corporation)
------------------------
ARTICLE 1
DEFINITIONS
As used in these By-laws, unless the context otherwise requires, the term:
1.1 "1% THRESHOLD" means, as of any Measurement Date or any other specified
time, 1% of the Outstanding Common Equity Interest of the Corporation as of the
close of business on such Measurement Date or such other specified time.
1.2 "5% THRESHOLD" means, as of any Measurement Date or any other specified
time, [ ]1 shares of Common Stock, as adjusted to reflect stock splits,
reclassifications and similar events after [the Closing Date].
1.3 "15% THRESHOLD" means, as of any Measurement Date or any other
specified time, [ ]2 shares of Common Stock, as adjusted to reflect stock
splits, reclassifications and similar events after [the Closing Date].
1.4 "A/B MERGER AGREEMENT" means the Agreement and Plan of Merger, dated as
of December 19, 2001, among the Corporation, Hawaiian Airlines, Inc., Aloha
Airgroup, Inc. and TurnWorks, Inc.
1.5 "AFFILIATE" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person. The term "CONTROL"
(including the terms "CONTROLLING," "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH") means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting
--------
1 Will be 5% of the Outstanding Common Equity Interest of the Corporation as
of the close of business on [the Closing Date].
2 Will be 15% of the Outstanding Common Equity Interest of the Corporation as
of the close of business on [the Closing Date].
securities, by contract or otherwise. For purposes of this definition, (i) any
affiliate of the holders of shares of Series A Special Preferred Stock or
immediate relative of such affiliate of such holder, or one or more affiliates
of or trusts for the benefit of any such affiliate or immediate relative, shall
be deemed an "AFFILIATE" of such holder, (ii) each beneficiary of the holder of
shares of Series B Special Preferred Stock, and each relative and affiliate of
such beneficiary, shall be deemed an "AFFILIATE" of each other and of such
holder, and (iii) the managing member of the holder of Series C Special
Preferred Stock as of [the Closing Date], or any affiliate of Xxxxx Management
LLC, as of [the Closing Date], who is a "citizen of the United States" as
defined in Section 102(a)(15) of the Transportation Act, or any affiliate of
such managing member, or any corporation, partnership or limited liability
company controlled by such managing member or such affiliate, shall be deemed to
be an "AFFILIATE" of such holder.
1.6 "ASSISTANT SECRETARY" means an Assistant Secretary of the Corporation.
1.7 "ASSISTANT TREASURER" means an Assistant Treasurer of the Corporation.
1.8 "BOARD" means the Board of Directors of the Corporation.
1.9 "BY-LAWS" means the initial by-laws of the Corporation, as amended from
time to time.
1.10 "C MERGER AGREEMENT" means the Agreement and Plan of Merger, dated as
of December 19, 2001, among the Corporation, TurnWorks, Inc., AIP General
Partner Inc. and AIP, Inc.
1.11 "CERTIFICATE OF INCORPORATION" means the initial certificate of
incorporation of the Corporation, as amended, supplemented or restated from time
to time.
1.12 "CHAIRMAN" means the Chairman of the Board of Directors of the
Corporation.
1.13 "CHIEF EXECUTIVE OFFICER" means the Chief Executive Officer of the
Corporation.
1.14 "COMMON STOCK" means the Common Stock of the Corporation, par value
$0.0001 per share.
1.15 "CORPORATION" means Aloha Holdings, Inc.
1.16 "DIRECTORS" means directors of the Corporation.
1.17 "EFFECTIVE TIME" has the meaning set forth in the Merger Agreement.
2
1.18 "ENTIRE BOARD" means all directors of the Corporation then in office,
whether or not present at a meeting of the Board, but disregarding vacancies.
1.19 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time.
1.20 "FOREIGN STOCK RECORD" has the meaning set forth in Section 7.4 of
these By-laws.
1.21 "FOREIGNER" has the meaning set forth in Section 7.4 of these By-laws.
1.22 "GENERAL CORPORATION LAW" means the General Corporation Law of the
State of Delaware, as amended from time to time.
1.23 "MEASUREMENT DATE" has the meaning set forth in Section 3.2(a) of
these By-laws.
1.24 "NOMINATED DIRECTOR" means any or all of the Series A Nominated
Directors, the Series B Nominated Directors, the Series C Nominated Directors,
the Series D Nominated Director, the Series E Nominated Director and the Series
F Nominated Director.
1.25 "NOMINATING STOCKHOLDER" means any or all of the Series A Nominating
Stockholder, the Series B Nominating Stockholder, the Series C Nominating
Stockholder, the Series D Nominating Stockholder, the Series E Nominating
Stockholder or the Series F Nominating Stockholder.
1.26 "NOTES" means the 8% Notes due 2008 of the Corporation issued pursuant
to the A/B Merger Agreement and the C Merger Agreement.
1.27 "OTHER EQUITY" has the meaning set forth in Section 8.1 of these
By-laws.
1.28 "OUTSIDE DIRECTOR" means any Director who is not employed by, or
otherwise affiliated with (a) the Corporation (other than as a director or a
holder of less than 3% of outstanding Common Stock), (b) any Nominating
Stockholder, or (c) any of the Corporation's labor unions. For purposes of this
definition, "AFFILIATED" means any person or entity who is an "affiliate" as
defined in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act.
1.29 "OUTSTANDING COMMON EQUITY INTEREST" means, as of any time, the issued
and outstanding Common Stock as of such time and shall not include in such
determination any Common Stock issuable upon exercise, conversion or exchange of
outstanding warrants, stock options or convertible stock, or other securities
exercisable, convertible or exchangeable into the Common Stock.
3
1.30 "PERMITTED AFFILIATES" means, with respect to any holder of Series A
Special Preferred Stock, Series B Special Preferred Stock or Series C Special
Preferred Stock, any Person who is an Affiliate of such holder to whom such
holder has Transferred shares of Common Stock, Special Preferred Stock or Notes
and who has agreed to be bound by the terms and conditions of the Stockholders
Agreement.
1.31 "PERSON" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint stock company, trust,
unincorporated organization, governmental body or other entity.
1.32 "PRESIDENT" means the President of the Corporation.
1.33 "PROCEEDING" has the meaning set forth in Section 8.1 of these
By-laws.
1.34 "SECRETARY" means the Secretary of the Corporation.
1.35 "SERIES A NOMINATED DIRECTOR" has the meaning set forth in Section
3.2(a) of these By-laws.
1.36 "SERIES A NOMINATING STOCKHOLDER" has the meaning set forth in Section
3.2(a) of these By-laws.
1.37 "SERIES A SPECIAL PREFERRED STOCK" means the Series A Special
Preferred Stock of the Corporation, par value $.0001 per share.
1.38 "SERIES B NOMINATED DIRECTOR" has the meaning set forth in Section
3.2(b) of these By-laws.
1.39 "SERIES B NOMINATING STOCKHOLDER" has the meaning set forth in Section
3.2(b) of these By-laws.
1.40 "SERIES B SPECIAL PREFERRED STOCK" means the Series B Special
Preferred Stock of the Corporation, par value $.0001 per share.
1.41 "SERIES C NOMINATED DIRECTOR" has the meaning set forth in Section
3.2(c) of these By-laws.
1.42 "SERIES C NOMINATING STOCKHOLDER" has the meaning set forth in Section
3.2(c) of these By-laws.
1.43 "SERIES C SPECIAL PREFERRED STOCK" means the Series C Special
Preferred Stock of the Corporation, par value $.0001 per share.
1.44 "SERIES D NOMINATED DIRECTOR" has the meaning set forth in Section
3.2(d) of these By-laws.
4
1.45 "SERIES D NOMINATING STOCKHOLDER" has the meaning set forth in Section
3.2(d) of these By-laws.
1.46 "SERIES D SPECIAL PREFERRED STOCK" means the Series D Special
Preferred Stock of the Corporation, par value $.0001 per share.
1.47 "SERIES E NOMINATED DIRECTOR" has the meaning set forth in Section
3.2(e) of these By-laws.
1.48 "SERIES E NOMINATING STOCKHOLDER" has the meaning set forth in Section
3.2(e) of these By-laws.
1.49 "SERIES E SPECIAL PREFERRED STOCK" means the Series E Special
Preferred Stock of the Corporation, par value $.0001 per share.
1.50 "SERIES F NOMINATED DIRECTOR" has the meaning set forth in Section
3.2(f) of these By-laws.
1.51 "SERIES F NOMINATING STOCKHOLDER" has the meaning set forth in Section
3.2(f) of these By-laws.
1.52 "SERIES F SPECIAL PREFERRED STOCK" means the Series F Special
Preferred Stock of the Corporation, par value $.0001 per share.
1.53 "SPECIAL PREFERRED STOCK" means collectively the Series A Special
Preferred Stock, the Series B Special Preferred Stock, the Series C Special
Preferred Stock, the Series D Special Preferred Stock, the Series E Special
Preferred Stock and the Series F Special Preferred Stock
1.54 "STOCKHOLDERS" means the holders of Common Stock and the holders of
each series of Special Preferred Stock.
1.55 "STOCKHOLDER AGREEMENT" means the Stockholders Agreement, dated as of
________ ___, 2002, among the Corporation, TurnWorks, Inc., [the A Voting Trust]
and [AIP], LLC, as amended, supplemented or otherwise modified from time to
time.
1.56 "TRANSFER" means to sell, exchange, transfer, assign, pledge or
otherwise dispose of anything to any Person, and the terms "TRANSFEROR" and
"TRANSFEREE" shall have correlative meanings.
1.57 "TREASURER" means the Treasurer of the Corporation.
1.58 "VICE PRESIDENT" means a Vice President of the Corporation.
1.59 "VOTING STOCK" has the meaning set forth in Section 7.4 of these
By-laws.
5
ARTICLE 2
STOCKHOLDERS
2.1 PLACE OF MEETINGS. Every meeting of Stockholders may be held at such
place, within or without the State of Delaware, as may be designated by
resolution of the Board from time to time.
2.2 ANNUAL MEETING. If required by applicable law, a meeting of
Stockholders shall be held annually for the election of Directors and the
transaction of other business at such hour and on such business day or as may be
designated by resolution of the Board from time to time.
2.3 SPECIAL MEETINGS. Unless otherwise prescribed by applicable law,
special meetings of Stockholders may only be called as expressly provided in the
Certificate of Incorporation. Business transacted at any special meeting of
Stockholders shall be limited to the purpose stated in the notice thereof.
2.4 FIXING RECORD DATE. For the purpose of (i) determining the Stockholders
entitled (A) to notice of or to vote at any meeting of Stockholders or any
adjournment thereof, or (B) to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or (ii) any other lawful
action, the Board may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date was adopted by the Board
and which record date, unless otherwise required by applicable law, shall not be
(x) in the case of clause (i)(A) above, more than sixty (60) nor less than ten
(10) days before the date of such meeting, and (y) in the case of clause (i)(B)
or (ii) above, more than sixty (60) days prior to such action. If no such record
date is fixed:
(a) the record date for determining Stockholders entitled to notice of or
to vote at a meeting of Stockholders shall be at the close of business
on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding
the day on which the meeting is held; and
(b) the record date for determining Stockholders for any purpose other
than those specified in Section 2.5(a) shall be at the close of
business on the day on which the Board adopts the resolution relating
thereto.
When a determination of Stockholders entitled to notice of or to vote at any
meeting of Stockholders has been made as provided in this Section 2.4, such
determination shall apply to any adjournment thereof unless the Board fixes a
new record date for the adjourned meeting. Delivery made to the Corporation's
registered office in accordance with Section 2.4(b) shall be by hand or by
certified or registered mail, return receipt requested.
6
2.5 NOTICE OF MEETINGS OF STOCKHOLDERS. Whenever under the provisions of
applicable law, the Certificate of Incorporation or these By-laws, Stockholders
are required or permitted to take any action at a meeting, written notice shall
be given stating the place, date and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is called. Unless
otherwise provided by applicable law, the Certificate of Incorporation or these
By-laws, notice of any meeting shall be given, not less than ten (10) nor more
than sixty (60) days before the date of the meeting, to each Stockholder
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
given when deposited in the United States mail, with postage prepaid, directed
to the Stockholder at his or her address as it appears on the records of the
Corporation. An affidavit of the Secretary or an Assistant Secretary or of the
transfer agent of the Corporation that the notice required by this Section 2.5
has been given shall, in the absence of fraud, be prima facie evidence of the
facts stated therein. When a meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken, and at the
adjourned meeting any business may be transacted that might have been transacted
at the meeting as originally called. If, however, the adjournment is for more
than thirty (30) days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each Stockholder of record entitled to vote at the meeting.
2.6 WAIVERS OF NOTICE. Whenever the giving of any notice to Stockholders is
required by applicable law, the Certificate of Incorporation or these By-laws, a
waiver thereof, given by the person entitled to said notice, whether before or
after the event as to which such notice is required, shall be deemed equivalent
to notice. Attendance by a Stockholder at a meeting shall constitute a waiver of
notice of such meeting except when the Stockholder attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business on the ground that the meeting has not been lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Stockholders need be specified in any
waiver of notice unless so required by applicable law, the Certificate of
Incorporation or these By-laws.
2.7 LIST OF STOCKHOLDERS. The Secretary shall prepare and make, at least
ten (10) days before every meeting of Stockholders, a complete list of the
Stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each Stockholder and the number of shares registered
in the name of each Stockholder. Such list shall be open to the examination of
any Stockholder, the Stockholder's agent, or attorney, at the Stockholder's
expense, for any purpose germane to the meeting, for a period of at least ten
(10) days prior to the meeting, during ordinary business hours at the principal
place of business of the Corporation, or on a reasonably accessible electronic
network as provided by applicable law. If the meeting is to be held at a place,
the list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any Stockholder who is
present. If the meeting is held solely by means of remote communication, the
list shall also be open for examination as provided by applicable law. Upon the
willful neglect or refusal of the Directors to produce such a list at any
meeting for the election of Directors, they
7
shall be ineligible for election to any office at such meeting. The stock ledger
shall be the only evidence as to who are the Stockholders entitled to examine
the stock ledger, the list of Stockholders or the books of the Corporation, or
to vote in person or by proxy at any meeting of Stockholders.
2.8 QUORUM OF STOCKHOLDERS; ADJOURNMENT. Except as otherwise provided by
applicable law, the Certificate of Incorporation or these By-laws, at each
meeting of Stockholders, the presence in person or proxy of the holders of a
majority of all outstanding shares of stock entitled to vote at the meeting of
Stockholders shall constitute a quorum for the transaction of any business at
such meeting. In the absence of a quorum, holders of a majority of the shares of
stock present in person or represented by proxy at any meeting of Stockholders,
including an adjourned meeting, whether or not a quorum is present, may adjourn
such meeting to another time and place. Shares of its own stock belonging to the
Corporation or to another corporation, if a majority of the shares entitled to
vote in the election of directors of such other corporation is held, directly or
indirectly, by the Corporation, shall neither be entitled to vote nor be counted
for quorum purposes; PROVIDED, HOWEVER, that the foregoing shall not limit the
right of the Corporation to vote stock, including but not limited to its own
stock, held by it in a fiduciary capacity.
2.9 VOTING; PROXIES. Unless otherwise provided in the Certificate of
Incorporation, every Stockholder entitled to vote at every meeting of
Stockholders shall be entitled to one vote for each share of stock held by such
Stockholder which has voting power upon the matter in question. If the
Certificate of Incorporation provides for more or less than one vote for any
share on any matter, each reference in the By-laws or the General Corporation
Law to a majority or other proportion of stock shall refer to such majority or
other proportion of the votes of such stock. The provisions of Sections 212 and
217 of the General Corporation Law shall apply in determining whether any shares
of capital stock may be voted and the persons, if any, entitled to vote such
shares; but the Corporation shall be protected in assuming that the persons in
whose names shares of capital stock stand on the stock ledger of the Corporation
are entitled to vote such shares. At any meeting of Stockholders (at which a
quorum was present to organize the meeting), all matters, except as otherwise
provided by applicable law, pursuant to any regulation applicable to the
Corporation or its securities or by the Certificate of Incorporation or by these
By-laws, shall be decided by the affirmative vote of a majority in voting power
of shares present in person or represented by proxy and entitled to vote
thereon. At all meetings of Stockholders for the election of Directors, a
plurality of the votes cast shall be sufficient to elect such Directors. Except
as otherwise provided by the Certificate of Incorporation, each Stockholder
entitled to vote at a meeting of Stockholders or to express consent or dissent
to corporate action in writing without a meeting may authorize another person or
persons to act for such Stockholder by proxy. The validity and enforceability of
any proxy shall be determined in accordance with Section 212 of the General
Corporation Law. A Stockholder may revoke any proxy that is not irrevocable by
attending the meeting and voting in person or by delivering to the Secretary an
instrument in writing revoking the proxy or by delivering a proxy in accordance
with applicable law bearing a later date to the Secretary.
8
2.10 VOTING PROCEDURES AND INSPECTORS OF ELECTION AT MEETINGS OF
STOCKHOLDERS. The Board, in advance of any meeting of Stockholders, may and
shall if required by applicable law, appoint one or more inspectors to act at
the meeting and make a written report thereof. The Board may designate one or
more persons as alternate inspectors to replace any inspector who fails to act.
If no inspector or alternate is able to act at a meeting, the person presiding
at the meeting may, and shall if required by applicable law, appoint, one or
more inspectors to act at the meeting. Each inspector, before entering upon the
discharge of his or her duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the
best of his or her ability. The inspectors shall (a) ascertain the number of
shares outstanding and the voting power of each, (b) determine the shares
represented at the meeting and the validity of proxies and ballots, (c) count
all votes and ballots, (d) determine and retain for a reasonable period a record
of the disposition of any challenges made to any determination by the
inspectors, and (e) certify their determination of the number of shares
represented at the meeting and their count of all votes and ballots. The
inspectors may appoint or retain other persons or entities to assist the
inspectors in the performance of their duties. Unless otherwise provided by the
Board, the date and time of the opening and the closing of the polls for each
matter upon which the Stockholders will vote at a meeting shall be determined by
the person presiding at the meeting and shall be announced at the meeting. No
ballot, proxies or votes, or any revocation thereof or change thereto, shall be
accepted by the inspectors after the closing of the polls unless the Court of
Chancery of the State of Delaware upon application by a Stockholder shall
determine otherwise. In determining the validity and counting of proxies and
ballots cast at any meeting of Stockholders, the inspectors may consider such
information as is permitted by applicable law. No person who is a candidate for
office at an election may serve as an inspector at such election.
2.11 CONDUCT OF MEETINGS; ORGANIZATION. The Board may adopt by resolution
such rules and regulations for the conduct of the meeting of Stockholders as it
shall deem appropriate. At each meeting of Stockholders, the Chairman, or if
there is no Chairman or if there be one and the Chairman is absent, the Chief
Executive Officer, or if there is no Chief Executive Officer or if there be one
and the Chief Executive Officer is absent, the President, or if there is no
President or if there be one and the President is absent, a Vice President, and
in case more than one Vice President shall be present, that Vice President
designated by the Board (or in the absence of any such designation, the most
senior Vice President, based on age, present), shall preside over the meeting.
Except to the extent inconsistent with such rules and regulations as adopted by
the Board, the person presiding over any meeting of Stockholders shall have the
right and authority to convene and to adjourn the meeting, to prescribe such
rules, regulations and procedures and to do all such acts as, in the judgment of
such person, as appropriate for the proper conduct of the meeting. Such rules,
regulations or procedures, whether adopted by the Board or prescribed by the
presiding officer of the meeting, may include, without limitation, the
following: (i) the establishment of an agenda or order of business for the
meeting; (ii) rules and procedures for maintaining order at the meeting and the
safety of those present; (iii) limitations on attendance at or participation in
the meeting to Stockholders of record of the Corporation, their duly authorized
and constituted proxies or such other persons as the person presiding over the
meeting shall determine; (iv)
9
restrictions on entry to the meeting after the time fixed for the commencement
thereof; and (v) limitations on the time allotted to questions or comments by
participants. The presiding officer at any meeting of Stockholders, in addition
to making any other determinations that may be appropriate to the conduct of the
meeting, shall, if the facts warrant, determine and declare to the meeting that
a matter or business was not properly brought before the meeting and if such
presiding officer should so determine, such person shall so declare to the
meeting and any such matter or business not properly brought before the meeting
shall not be transacted or considered. Unless and to the extent determined by
the Board or the person presiding over the meeting, meetings of Stockholders
shall not be required to be held in accordance with the rules of parliamentary
procedure. The Secretary, or in his or her absence, one of the Assistant
Secretaries, shall act as secretary of the meeting. In case none of the officers
above designated to act as the person presiding over the meeting or as secretary
of the meeting, respectively, shall be present, a person presiding over the
meeting or a secretary of the meeting, as the case may be, shall be designated
by the Board, and in case the Board has not so acted, in the case of the
designation of a person to act as secretary of the meeting, designated by the
person presiding over the meeting.
2.12 ORDER OF BUSINESS. The order of business at all meetings of
Stockholders shall be as determined by the person presiding over the meeting.
2.13 NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS.
(a) ANNUAL MEETINGS OF STOCKHOLDERS. (i) Nominations of persons
for election to the Board and the proposal of business to be
considered by the Stockholders may be made at an annual meeting of
Stockholders only (A) pursuant to the Corporation's notice of meeting
(or any supplement thereto), (B) by or at the direction of the Board
or (C) by any Stockholder of the Corporation who was a Stockholder of
record of the Corporation at the time the notice provided for in this
Section 2.13 is delivered to the Secretary, who is entitled to vote at
the meeting and who complies with the notice procedures set forth in
this Section 2.13.
(ii) For nominations or other business to be properly brought
before an annual meeting by a Stockholder pursuant to clause (C) of
paragraph (a)(i) of this Section 2.13, such Stockholder must have
given timely notice thereof in writing to the Secretary and any such
proposed business other than the nominations of persons for election
to the Board must constitute a proper matter for Stockholder action.
To be timely, a Stockholder's notice shall be delivered to the
Secretary at the principal executive offices of the Corporation not
later than the close of business on the ninetieth (90th) day nor
earlier than the close of business on the one hundred twentieth
(120th) day prior to the first anniversary of the preceding year's
annual meeting (PROVIDED, HOWEVER, that in the event that the date of
the annual meeting is more than thirty (30) days before or more than
seventy (70) days after such anniversary date, notice by such
Stockholder must be so delivered not earlier than the close of
business on the one hundred twentieth (120th) day prior to such annual
meeting and not later than the
10
close of business on the later of the ninetieth (90th) day prior to
such annual meeting or the tenth (10th) day following the day on which
public announcement of the date of such meeting is first made by the
Corporation). In no event shall the public announcement of an
adjournment or postponement of an annual meeting commence a new time
period (or extend any time period) for the giving of a Stockholder's
notice as described above. Such Stockholder's notice shall set forth:
(A) as to each person whom such Stockholder proposes to nominate for
election as a Director (I) all information relating to such person
that is required to be disclosed in solicitations of proxies for
election of Directors in an election contest, or is otherwise
required, in each case pursuant to and in accordance with Regulation
14A under the Exchange Act and (II) such person's written consent to
being named in the proxy statement as a nominee and to serving as a
director if elected; (B) as to any other business that such
Stockholder proposes to bring before the meeting, a brief description
of the business desired to be brought before the meeting, the text of
the proposal or business (including the text of any resolutions
proposed for consideration and in the event that such business
includes a proposal to amend the By-laws, the language of the proposed
amendment), the reasons for conducting such business at the meeting
and any material interest in such business of such Stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and
(C) as to the Stockholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made (I) the
name and address of such Stockholder, as they appear on the
Corporation's books, and of such beneficial owner, (II) the class and
number of shares of capital stock of the Corporation which are owned
beneficially and of record by such Stockholder and such beneficial
owner, (III) a representation that such Stockholder is a holder of
record of stock of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to propose
such business or nomination, and (IV) a representation whether such
Stockholder or the beneficial owner, if any, intends or is part of a
group which intends (x) to deliver a proxy statement and/or form of
proxy to holders of at least the percentage of the Corporation's
outstanding capital stock required to approve or adopt the proposal or
elect the nominee and/or (y) otherwise to solicit proxies from
Stockholders in support of such proposal or nomination. The foregoing
notice requirements shall be deemed satisfied by a Stockholder if the
Stockholder has notified the Corporation of his or her intention to
present a proposal at an annual meeting in compliance with Rule 14a-8
(or any successor thereof) promulgated under the Exchange Act and such
Stockholder's proposal has been included in a proxy statement that has
been prepared by the Corporation to solicit proxies for such annual
meeting. The Corporation may require any proposed nominee to furnish
such other information as it may reasonably require to determine the
eligibility of such proposed nominee to serve as a Director of the
Corporation.
(iii) Notwithstanding anything in the second sentence of
paragraph (a)(ii) of this Section 2.13 to the contrary, in the event
that the number of Directors to be elected to the Board at an annual
meeting is increased and there is no public announcement by the
Corporation naming the nominees for the
11
additional directorships at least one hundred (100) days prior to the
first anniversary of the preceding year's annual meeting, a
Stockholder's notice required by this Section 2.13 shall also be
considered timely, but only with respect to nominees for the
additional directorships, if it shall be delivered to the Secretary at
the principal executive offices of the Corporation not later than the
close of business on the tenth (10th) day following the day on which
such public announcement is first made by the Corporation.
(b) SPECIAL MEETINGS OF STOCKHOLDERS. Only such business shall be
conducted at a special meeting of Stockholders as shall have been
brought before the meeting pursuant to the Corporation's notice of
meeting. Nominations of persons for election to the Board may be made
at a special meeting of Stockholders at which Directors are to be
elected pursuant to the Corporation's notice of meeting (i) by or at
the direction of the Board or (ii) provided that the Board has
determined that Directors shall be elected at such meeting, by any
Stockholder of the Corporation who is a Stockholder of record at the
time the notice provided for in this Section 2.13 is delivered to the
Secretary, who is entitled to vote at the meeting and upon such
election and who complies with the notice procedures set forth in this
Section 2.13. Except as otherwise expressly provided in the
Certificate of Incorporation, in the event the Corporation calls a
special meeting of Stockholders for the purpose of electing one or
more Directors to the Board, any such Stockholder entitled to vote in
such election of Directors may nominate a person or persons (as the
case may be) for election to such position(s) as specified in the
Corporation's notice of meeting, if such Stockholder's notice required
by paragraph (a)(ii) of this Section 2.13 shall be delivered to the
Secretary at the principal executive offices of the Corporation not
earlier than the close of business on the one hundred twentieth
(120th) day prior to such special meeting and not later than the close
of business on the later of the ninetieth (90th) day prior to such
special meeting or the tenth (10th) day following the day on which
public announcement is first made of the date of the special meeting
and of the nominees proposed by the Board to be elected at such
meeting. In no event shall the public announcement of an adjournment
or postponement of a special meeting commence a new time period (or
extend any time period) for the giving of a Stockholder's notice as
described above.
(c) GENERAL. (i) Only such persons who are nominated in
accordance with the procedures set forth in this Section 2.13 shall be
eligible to be elected at an annual or special meeting of Stockholders
of the Corporation to serve as Directors and only such business shall
be conducted at a meeting of Stockholders as shall have been brought
before the meeting in accordance with the procedures set forth in this
Section 2.13. Except as otherwise provided by law, the chairman of the
meeting shall have the power and duty (A) to determine whether a
nomination or any business proposed to be brought before the meeting
was made or proposed, as the case may be, in accordance with the
procedures set forth in this Section 2.13 (including whether the
Stockholder or beneficial owner, if any, on whose behalf the
nomination or proposal is made solicited (or is part of a group which
solicited) or did not so solicit, as the case may be, proxies in
12
support of such Stockholder's nominee or proposal in compliance with
such Stockholder's representation as required by clause (a)(ii)(C)(IV)
of this Section 2.13 and (B) if any proposed nomination or business
was not made or proposed in compliance with this Section 2.13, to
declare that such nomination shall be disregarded or that such
proposed business shall not be transacted. Notwithstanding the
foregoing provisions of this Section 2.13, if the Stockholder (or a
qualified representative of the Stockholder) does not appear at the
annual or special meeting of Stockholders of the Corporation to
present a nomination or business, such nomination shall be disregarded
and such proposed business shall not be transacted, notwithstanding
that proxies in respect of such vote may have been received by the
Corporation.
(ii) For purposes of this Section 2.13, "PUBLIC ANNOUNCEMENT"
shall include disclosure in a press release reported by the Dow Xxxxx
News Service, Associated Press or comparable national news service or
in a document publicly filed by the Corporation with the Securities
and Exchange Commission pursuant to Section 13, 14 or 15(d) of the
Exchange Act.
(iii) Notwithstanding the foregoing provisions of this Section
2.13, a Stockholder shall also comply with all applicable requirements
of the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth in this Section 2.13. Nothing in this
Section 2.13 shall be deemed to affect any rights (A) of Stockholders
to request inclusion of proposals in the Corporation's proxy statement
pursuant to Rule 14a-8 under the Exchange Act or (B) of the holders of
any series of Preferred Stock to elect directors pursuant to any
applicable provisions of the Certificate of Incorporation and Sections
3.2 and 3.4 of these By-laws.
ARTICLE 3
DIRECTORS
3.1 GENERAL POWERS. Except as otherwise provided in the Certificate of
Incorporation, the business and affairs of the Corporation shall be managed by
or under the direction of the Board. The Board may adopt such rules and
regulations, not inconsistent with the Certificate of Incorporation or these
By-laws or applicable law, as it may deem proper for the conduct of its meetings
and the management of the Corporation.
3.2 NUMBER; QUALIFICATION; TERM OF OFFICE. The Board shall consist of
eleven (11) members. The Board shall appoint a Chairman of the Board and a Vice
Chairman of the Board (which position shall not be an officer of the
Corporation). Directors need not be Stockholders. Each Director shall hold
office until a successor is duly elected and qualified or until the Director's
death, resignation or removal. The qualifications of directors shall be as set
forth in clauses (a) through (g) of this Section 3.2.
13
(a) On any date that there is a holder of record of one (1) or more
shares of Series A Special Preferred Stock (the "SERIES A NOMINATING
STOCKHOLDER") and the Series A Nominating Stockholder (together with its
Permitted Affiliates) is on such date (the "MEASUREMENT DATE"), and at all
times since [the Closing Date] has been, the holder of a number of shares
of Common Stock equal to at least the 5% Threshold, notwithstanding the
fact that the Series A Nominating Stockholder may be the holder of a number
of shares of Common Stock equal to less than the 1% Threshold, two (2)
Directors (the "SERIES A NOMINATED DIRECTORS") shall have been identified
to the Board by the Series A Nominating Stockholder for nomination to the
Board. If the Series A Nominating Stockholder (together with its Permitted
Affiliates) is on the Measurement Date, and at all times since [the Closing
Date] has been, the holder of a number of shares of Common Stock equal to
at least the 1% Threshold but less than the 5% Threshold, one (1) Series A
Nominated Director shall have been identified to the Board by the Series A
Nominating Stockholder for nomination to the Board and one (1) Outside
Director shall have been nominated by the Board. If the Series A Nominating
Stockholder (together with its Permitted Affiliates) is on the Measurement
Date, or at any time since [the Closing Date] has been, the holder of a
number of shares of Common Stock less than the 1% Threshold, no Series A
Nominated Directors shall have been identified to the Board by the Series A
Nominating Stockholder for nomination to the Board and two (2) Outside
Directors shall have been nominated by the Board. The two directors
designated to the Board pursuant to Section 1.04(a)(i) of the A/B Merger
Agreement shall be treated as Series A Nominated Directors for purposes of
these By-laws and the Certificate of Incorporation.
(b) On any date that there is a holder of record of one (1) or more
shares of Series B Special Preferred Stock (the "SERIES B NOMINATING
STOCKHOLDER") and the Series B Nominating Stockholder (together with its
Permitted Affiliates) is on the Measurement Date, and at all times since
[the Closing Date] has been, the holder of a number of shares of Common
Stock equal to at least the 15% Threshold, three (3) Directors (the "SERIES
B NOMINATED DIRECTORS") shall have been identified to the Board by the
Series B Nominating Stockholder for nomination to the Board. If the Series
B Nominating Stockholder (together with its Permitted Affiliates) is on the
Measurement Date, and at all times since [the Closing Date] has been, the
holder of a number of shares of Common Stock equal to at least the 5%
Threshold but less than the 15% Threshold, notwithstanding the fact that
the Series B Nominating Stockholder may be the holder of a number of shares
of Common Stock equal to less than the 1% Threshold, two (2) Series B
Nominated Directors shall have been identified to the Board by the Series B
Nominating Stockholder for nomination to the Board and one (1) Director who
is an Outside Director shall have been nominated by the Board. If the
Series B Nominating Stockholder is on the Measurement Date, and at all
times since [the Closing Date] has been (together with its Permitted
Affiliates), the holder of a number of shares of Common Stock equal to at
least the 1% Threshold but less than the 5% Threshold, one (1) Series B
Nominated Director shall have been identified to the Board by the Series B
14
Nominating Stockholder for nomination to the Board and two (2) Outside
Directors shall have been nominated by the Board. If the Series B
Nominating Stockholder (together with its Permitted Affiliates) is on the
Measurement Date, or at any time since [the Closing Date] has been, the
holder of a number of shares of Common Stock equal to less than the 1%
Threshold, no Series B Nominated Directors shall have been identified to
the Board by the Series B Nominating Stockholder for nomination to the
Board and three (3) Outside Directors shall have been nominated by the
Board. The three directors designated to the Board pursuant to Section
1.04(a)(ii) of the A/B Merger Agreement shall be treated as Series B
Nominated Directors for purposes of these By-laws and the Certificate of
Incorporation.
(c) On any date that there is a holder of record of one (1) or more
shares of Series C Special Preferred Stock (the "SERIES C NOMINATING
STOCKHOLDER") and the Series C Nominating Stockholder (together with its
Permitted Affiliates) is on the Measurement Date, and at all times since
[the Closing Date] has been, the holder of a number of shares of Common
Stock equal to at least the 15% Threshold, three (3) Directors (the "SERIES
C NOMINATED DIRECTORS") shall have been identified to the Board by the
Series C Nominating Stockholder for nomination to the Board. If the Series
C Nominating Stockholder (together with its Permitted Affiliates) is on the
Measurement Date, and at all times since [the Closing Date] has been, the
holder of a number of shares of Common Stock equal to at least the 5%
Threshold but less than the 15% Threshold, notwithstanding the fact that
the Series C Nominating Stockholder may be the holder of a number of shares
of Common Stock equal to less than the 1% Threshold, two (2) Series C
Nominated Directors shall have been identified to the Board by the Series C
Nominating Stockholder for nomination to the Board and one (1) Outside
Director shall have been nominated by the Board. If the Series C Nominating
Stockholder (together with its Permitted Affiliates) is on the Measurement
Date, and at all times since [the Closing Date] has been, the holder of a
number of shares of Common Stock equal to at least the 1% Threshold but
less than the 5% Threshold, one (1) Series C Nominated Director shall have
been identified to the Board by the Series C Nominating Stockholder for
nomination to the Board and two (2) Outside Directors shall have been
nominated by the Board. If the Series C Nominating Stockholder (together
with its Permitted Affiliates) is on the Measurement Date, or at any time
since [the Closing Date] has been, the holder of a number of shares of
Common Stock equal to less than the 1% Threshold, no Series C Nominated
Directors shall have been identified to the Board by the Series C Nominated
Stockholder for nomination to the Board and three (3) Outside Directors
shall have been nominated by the Board, except if on the Measurement Date,
and at all times since [the Closing Date], the Series C Nominating
Stockholder (together with its Permitted Affiliates) holds at least $[ ](3)
principal amount of Notes, in which case one (1) Series C Nominated
Director shall have been identified to the Board by the Series C Nominating
-----------
3 20% of principal amount of original issuance.
15
Stockholder and two (2) Outside Directors shall have been nominated by the
Board. The three directors designated to the Board pursuant to Section
1.04(a)(iii) of the A/B Merger Agreement shall be treated as Series C
Nominated Directors for purposes of these By-laws and the Certificate of
Incorporation.
(d) At any time there is a holder of record of one (1) share of Series
D Special Preferred Stock, one (1) Director (the "SERIES D NOMINATED
DIRECTOR") shall have been identified to the Board by such holder (the
"SERIES D NOMINATING STOCKHOLDER") for nomination to the Board.
(e) At any time there is a holder of record of one (1) share of Series
E Special Preferred Stock, one (1) Director (the "SERIES E NOMINATED
DIRECTOR") shall have been identified to the Board by such holder (the
"SERIES E NOMINATING STOCKHOLDER") for nomination to the Board.
(f) At any time there is a holder of record of one (1) share of Series
F Special Preferred Stock, one (1) Director (the "SERIES F NOMINATED
DIRECTOR") shall have been identified to the Board by such holder (the
"SERIES F NOMINATING STOCKHOLDER") for nomination to the Board.
(g) At all times, at least one (1) Outside Director and one (1) senior
management official from the Corporation shall have been nominated to the
Board.
3.3 ELECTION. Directors shall, except as otherwise required by statute or
by the Certificate of Incorporation, be elected by a plurality of the votes cast
at a meeting of Stockholders by the holders of shares entitled to vote in the
election.
3.4 NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Unless otherwise provided by
applicable law or the Certificate of Incorporation, any newly created
Directorships resulting from an increase in the number of Directors and
vacancies occurring in the Board for any reason, may be filled by the
affirmative vote of a majority of the Board, upon the recommendation of the
remaining members of the nominating committee of the Board or by a sole
remaining Director, or may be elected by a plurality of the votes cast by the
holders of shares entitled to vote in the election at a meeting of Stockholders.
Notwithstanding the foregoing, but subject to the provisions of Section 3.2 of
these By-laws: (a) so long as there is a Series A Nominating Stockholder, the
Board may fill a Series A Nominated Director vacancy only with a person
nominated to the Board by such Series A Nominating Stockholder (which person
will thereafter be deemed a Series A Nominated Director); (b) so long as there
is a Series B Nominating Stockholder, the Board may fill a Series B Nominated
Director vacancy only with a person nominated to the Board by such Series B
Nominated Director (which person will thereafter be deemed a Series B Nominated
Director); (c) so long as there is a Series C Nominating Stockholder, the Board
may fill a Series C Nominated Director vacancy only with a person nominated to
the Board by the Series C Nominating Stockholder (which person will thereafter
be deemed a Series C Nominated Director); (d) so long as there is a holder of
Series D Special Preferred Stock, the Board may fill a Series D Nominated
16
Director vacancy only with a person nominated to the Board by such holder (which
person will thereafter be deemed a Series D Nominated Director); (e) so long as
there is a holder of Series E Special Preferred Stock, the Board may fill a
Series E Nominated Director vacancy only with a person nominated to the Board by
such holder (which person will thereafter be deemed a Series E Nominated
Director); and (f) so long as there is a holder of Series F Special Preferred
Stock, the Board may fill a Series F Nominated Director vacancy only with a
person nominated to the Board by such holder (which person will thereafter be
deemed a Series F Nominated Director). If a vacancy is not filled as provided in
the preceding sentence within thirty (30) days, such vacancy may be filled by
(i) the affirmative vote of the holders of a majority of the Series A Special
Preferred Stock given at a special meeting of the holders of Series A Special
Preferred Stock called for such purpose, or by the unanimous written consent in
lieu of a meeting of all holders of the Series A Special Preferred Stock, in the
case of a vacancy of a Series A Nominated Director, (ii) the affirmative vote of
the holders of a majority of the Series B Special Preferred Stock given at a
special meeting of the holders of Series B Special Preferred Stock called for
such purpose, or by the unanimous written consent in lieu of a meeting of all
holders of the Series B Special Preferred Stock, in the case of a vacancy of a
Series B Nominated Director, (iii) the affirmative vote of the holders of a
majority of the Series C Special Preferred Stock given at a special meeting of
the holders of Series C Special Preferred Stock called for such purpose, or by
the unanimous written consent in lieu of a meeting of all holders of the Series
C Special Preferred Stock, in the case of a vacancy of a Series C Nominated
Director, (iv) the affirmative vote of the holders of a majority of the Series D
Special Preferred Stock given at a special meeting of the holders of Series D
Special Preferred Stock called for such purpose, or by the unanimous written
consent in lieu of a meeting of all holders of the Series D Special Preferred
Stock, in the case of a vacancy of a Series D Nominated Director, (v) the
affirmative vote of the holders of a majority of the Series E Special Preferred
Stock given at a special meeting of the holders of Series E Special Preferred
Stock called for such purpose, or by the unanimous written consent in lieu of a
meeting of all holders of the Series E Special Preferred Stock, in the case of a
vacancy of a Series E Nominated Director, and (vi) the affirmative vote of the
holders of a majority of the Series F Special Preferred Stock given at a special
meeting of the holders of Series F Special Preferred Stock called for such
purpose, or by the unanimous written consent in lieu of a meeting of all holders
of the Series F Special Preferred Stock, in the case of a vacancy of a Series F
Nominated Director. A Director so elected shall be elected to hold office until
the expiration of the term of office of the Director whom he or she has replaced
or until a successor is elected and qualified, or until the Director's earlier
death, resignation or removal.
3.5 RESIGNATION. Subject to the provisions of Section 3.4 of these By-laws,
any Director may resign at any time by notice given in writing or by electronic
transmission to the Corporation. Any resignation pursuant to this Section 3.5
shall take effect at the time therein specified, and, unless otherwise specified
in such resignation, the acceptance of such resignation shall not be necessary
to make it effective.
3.6 REMOVAL. Subject to the provisions of Section 141(k) of the General
Corporation Law and Section 3.4 of these By-laws, any or all of the Directors
may be removed with or without cause by vote of the holders of 80% of the shares
then
17
entitled to vote at an election of Directors; PROVIDED, that, except as provided
in the next sentence, any Nominated Director may be removed with or without
cause only by the affirmative vote of a majority of the holders of the relevant
Series of Special Preferred Stock at a special meeting called for such purpose
or by the unanimous written consent in lieu of meeting of all holders of such
series. In addition, upon any reduction in the number of Nominated Directors a
Nominating Stockholder is entitled to nominate to the Board pursuant to Section
3.2 of these By-laws, a number of Nominated Directors nominated by such
Nominating Stockholder equal to the number so reduced shall be removed
immediately from the Board, and such Nominating Stockholder shall select which
of its Nominated Directors shall be so removed.
3.7 COMPENSATION. Each Director, in consideration of his or her service as
such, shall be entitled to receive from the Corporation such amount per annum or
such fees for attendance at Directors' meetings, or both, as the Board may from
time to time determine, together with reimbursement for the reasonable
out-of-pocket expenses, if any, incurred by such Director in connection with the
performance of his or her duties. Each Director who shall serve as a member of
any committee of Directors in consideration of serving as such shall be entitled
to such additional amount per annum or such fees for attendance at committee
meetings, or both, as the Board may from time to time determine, together with
reimbursement for the reasonable out-of-pocket expenses, if any, incurred by
such Director in the performance of his or her duties. Nothing contained in this
Section 3.7 shall preclude any Director from serving the Corporation or its
subsidiaries in any other capacity and receiving proper compensation therefor.
3.8 REGULAR MEETINGS. Regular meetings of the Board may be held without
notice at such times and at such places as may be determined from time to time
by resolution of the Board.
3.9 SPECIAL MEETINGS. Special meetings of the Board may be held at such
times and at such places whenever called by the Chairman, the Chief Executive
Officer or by any three or more Directors then serving as Directors on at least
24 hours' notice to each Director given by one of the means specified in Section
3.12 hereof other than by mail, or on at least one (1) business days' notice if
given by mail. Special meetings of the Board shall be called by the Chairman or
the Chief Executive Officer in like manner and on like notice on the written
request of any three or more of the Directors then serving. If necessary under
the Certificate of Incorporation or Section 3.4 of these By-laws, special
meetings of the Board shall be held whenever called by (a) the Series A
Nominating Stockholder to fill the vacancy of a Series A Nominated Director, (b)
the Series B Nominating Stockholder to fill the vacancy of a Series B Nominated
Director, (c) the Series C Nominating Stockholder to fill the vacancy of a
Series C Nominated Director, (d) the holder of the Series D Special Preferred
Stock to fill the vacancy of the Series D Nominated Director, (e) the holder of
the Series E Special Preferred Stock to fill the vacancy of the Series E
Nominated Director and (f) the holder of the Series F Special Preferred Stock to
fill the vacancy of the Series F Nominated Director.
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3.10 TELEPHONE MEETINGS. Directors or members of any committee designated
by the Board may participate in a meeting of the Board or of such committee by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this Section 3.10 shall constitute
presence in person at such meeting.
3.11 ADJOURNED MEETINGS. A majority of the Directors present at any meeting
of the Board, including an adjourned meeting, whether or not a quorum is
present, may adjourn such meeting to another time and place. At least 24 hours'
notice of any adjourned meeting of the Board shall be given to each Director
whether or not present at the time of the adjournment, if such notice shall be
given by one of the means specified in Section 3.12 hereof other than by mail,
or at least three (3) days' notice if by mail. Any business may be transacted at
an adjourned meeting that might have been transacted at the meeting as
originally called.
3.12 NOTICE PROCEDURE. Subject to Sections 3.9 and 3.15 hereof, whenever,
under applicable law, the Certificate of Incorporation or these By-laws, notice
is required to be given to any Director, such notice shall be deemed given
effectively if given in person or by telephone, by mail addressed to such
Director at such Director's address as it appears on the records of the
Corporation, with postage thereon prepaid, or by telegram, telecopy or other
means of electronic transmission.
3.13 WAIVER OF NOTICE. Whenever the giving of any notice to Directors is
required by applicable law, the Certificate of Incorporation or these By-laws, a
waiver thereof, given by the Director entitled to said notice, whether before or
after the event as to which such notice is required, shall be deemed equivalent
to notice. Attendance by a Director at a meeting shall constitute a waiver of
notice of such meeting except when the Director attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business on the ground that the meeting has not been lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Directors or a committee of Directors
need be specified in any waiver of notice unless so required by applicable law,
the Certificate of Incorporation or these By-laws.
3.14 ORGANIZATION. At each meeting of the Board, the Chairman, or if there
is no Chairman or if there be one and the Chairman is absent, the Chief
Executive Officer, or if there is no Chief Executive Officer or if there be one
and the Chief Executive Officer is absent, the President, or in the absence of
the President, a chairman chosen by a majority of the Directors present, shall
preside. The Secretary shall act as secretary at each meeting of the Board. In
case the Secretary shall be absent from any meeting of the Board, an Assistant
Secretary shall perform the duties of secretary at such meeting; and in the
absence from any such meeting of the Secretary and all Assistant Secretaries,
the person presiding at the meeting may appoint any person to act as secretary
of the meeting.
3.15 QUORUM OF DIRECTORS. Except as provided in Section 3.11 with respect
to adjourning meetings and Section 3.4 with respect to filling vacancies, the
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presence in person of a majority of the Entire Board, which, so long as there is
a Series A Nominating Stockholder, a Series B Nominating Stockholder or a Series
C Nominating Stockholder, must include at least one (1) Series A Nominated
Director, Series B Nominated Director and Series C Nominated Director,
respectively, shall be necessary and sufficient to constitute a quorum for the
transaction of business at any meeting of the Board.
3.16 ACTION BY MAJORITY VOTE. Except as otherwise expressly required by
applicable law, the Certificate of Incorporation or these By-laws, the act of a
majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board; PROVIDED, HOWEVER, that if any of the Series A
Nominating Stockholder, the Series B Nominating Stockholder and the Series C
Nominating Stockholder has at any time only one (1) Series A Nominated Director,
Series B Nominated Director and Series C Nominated Director, respectively, the
affirmative vote of such Series A Nominated Director, Series B Nominated
Director and Series C Nominated Director, as the case may be, shall no longer be
required to obtain a majority vote of the Board with respect to Sections 5.2,
5.3 and Article 13 of these By-laws.
3.17 ACTION WITHOUT MEETING. Unless otherwise restricted by the Certificate
of Incorporation or these By-laws, any action required or permitted to be taken
at any meeting of the Board or of any committee thereof may be taken without a
meeting if all Directors or members of such committee, as the case may be,
consent thereto in writing or by electronic transmission, and the writing or
writings or electronic transmission or transmissions are filed with the minutes
of proceedings of the Board or committee.
ARTICLE 4
COMMITTEES OF THE BOARD
The Board may, by resolution, designate one or more committees, including
without limitation an executive committee, an audit committee and a nominating
committee, with each such committee consisting of one or more of the Directors
of the Corporation; PROVIDED, that, each such committee shall consist of (a) one
(1) Series A Nominated Director so long as the Series A Nominating Stockholder
(together with its Permitted Affiliates) is on the Measurement Date, and at all
times since [the Closing Date] has been, the holder of a number of shares of
Common Stock equal to at least the 5% Threshold, notwithstanding the fact that
the Series A Nominating Stockholder may be the holder of a number of shares of
Common Stock equal to less than the 1% Threshold, (b) one (1) Series B Nominated
Director so long as the Series B Nominating Stockholder (together with its
Permitted Affiliates) is on the Measurement Date, and at all times since [the
Closing Date] has been, the holder of a number of shares of Common Stock equal
to at least the 5% Threshold, notwithstanding the fact that the Series B
Nominating Stockholder may be the holder of a number of shares of Common Stock
equal to less than the 1% Threshold, and (c) one (1) Series C Nominated Director
so long as the Series C Nominating Stockholder (together with its Permitted
Affiliates) is on the Measurement Date, and at all times since [the Closing
Date] has been, the holder
20
of a number of shares of Common Stock equal to at least the 5% Threshold,
notwithstanding the fact that the Series C Nominating Stockholder may be the
holder of a number of shares of Common Stock equal to less than the 1%
Threshold. The Board may designate one or more Directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of such committee. If a member of a committee shall be absent from any meeting,
or disqualified from voting thereat, the remaining member or members present and
not disqualified from voting, whether or not such member or members constitute a
quorum, may, by a unanimous vote, appoint another member of the Board to act at
the meeting in the place of any such absent or disqualified member; PROVIDED,
that the member so appointed shall be (x) a Series A Nominated Director if the
member so absent or disqualified is a Series A Nominated Director, (y) a Series
B Nominated Director if the member so absent or disqualified is a Series B
Nominated Director, and (z) a Series C Nominated Director if the member so
absent or disqualified is a Series C Nominated Director. Any such committee, to
the extent permitted by applicable law and to the extent provided in the
resolution of the Board designating such committee, shall have and may exercise
all the powers and authority of the Board in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
impressed on all papers that may require it. Unless otherwise specified in the
resolution of the Board designating a committee, at all meetings of such
committee a majority of the total number of members of the committee shall
constitute a quorum for the transaction of business, and the vote of a majority
of the members of the committee present at any meeting at which there is a
quorum shall be the act of the committee. Each committee shall keep regular
minutes of its meetings. Unless the Board otherwise provides, each committee
designated by the Board may make, alter and repeal rules for the conduct of its
business. In the absence of such rules each committee shall conduct its business
in the same manner as the Board conducts its business pursuant to Article 3 of
these By-laws.
ARTICLE 5
OFFICERS
5.1 POSITIONS. The officers of the Corporation shall be a Chief Executive
Officer, a President, a Secretary, a Treasurer and such other officers as the
Board may appoint, including a Chairman, Chief Financial Officer, Chief
Operating Officer, one or more Vice Presidents and one or more Assistant
Secretaries and Assistant Treasurers, who shall exercise such powers and perform
such duties as shall be determined from time to time by resolution of the Board.
The Board may elect one or more Vice Presidents as Executive Vice Presidents and
may use descriptive words or phrases to designate the standing, seniority or
areas of special competence of the Vice Presidents elected or appointed by it.
Any number of offices may be held by the same person unless the Certificate of
Incorporation or these By-laws otherwise provide.
5.2 APPOINTMENT. The Chief Executive Officer of the Corporation shall be
chosen by the Board, and the Chief Operating Officer, the Chief Financial
Officer and any Executive Vice President shall be recommended by the Chief
Executive
21
Officer to the Board and subject to approval by the Board, which approval must
include the affirmative vote of at least one (1) Series A Nominated Director (so
long as there is at least one (1) Series A Nominated Director), one (1) Series B
Nominated Director (so long as there is at least one (1) Series B Nominated
Director) and at least one (1) Series C Nominated Director (so long as there is
at least one (1) Series C Nominated Director). All other officers of the
Corporation may be appointed by the Chief Executive Officer, except for the
Treasurer and Secretary, each of whom shall be recommended by the Chief
Executive Officer and whose appointment shall be subject to approval of the
Board by a majority vote in accordance with Section 3.16 of these By-laws.
5.3 COMPENSATION. The compensation of the Chief Executive Officer, the
Chief Operating Officer, the Chief Financial Officer and any Executive Vice
President shall be fixed by the Board, which action shall include the
affirmative vote of at least one (1) Series A Nominated Director (so long as
there is at least one (1) Series A Nominated Director), one (1) Series B
Nominated Director (so long as there is at least one (1) Series B Nominated
Director) and at least one (1) Series C Nominated Director (so long as there is
at least one (1) Series C Nominated Director). The compensation of all other
officers of the Corporation shall be fixed by the Chief Executive Officer at
levels determined in advance by the Board. No officer shall be prevented from
receiving a salary or other compensation by reason of the fact that the officer
is also a Director.
5.4 TERM OF OFFICE. Each officer of the Corporation shall hold office for
the term for which he or she is elected and until such officer's successor is
chosen and qualifies or until such officer's earlier death, resignation or
removal. Any officer may resign at any time upon written notice to the
Corporation. Such resignation shall take effect at the date of receipt of such
notice or at such later time as is therein specified, and, unless otherwise
specified, the acceptance of such resignation shall not be necessary to make it
effective. The resignation of an officer shall be without prejudice to the
contract rights of the Corporation, if any. Any officer elected or appointed by
the Board may be removed at any time, with or without cause, by the Board. Any
vacancy occurring in any office of the Corporation shall be filled by the Board.
The removal of an officer without cause shall be without prejudice to the
officer's contract rights, if any. The election or appointment of an officer
shall not of itself create contract rights.
5.5 FIDELITY BONDS. The Corporation may secure the fidelity of any or all
of its officers or agents by bond or otherwise.
5.6 CHAIRMAN. The Chairman, if one shall have been appointed, shall preside
at all meetings of the Board and shall exercise such powers and perform such
other duties as shall be determined from time to time by the Board.
5.7 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be the chief
executive officer of the Corporation and shall have general supervision over the
business of the Corporation, subject, however, to the control of the Board and
of any duly authorized committee of Directors. The Chief Executive Officer shall
preside at all meetings of the Stockholders and at all meetings of the Board at
which the Chairman is not present. The Chief Executive Officer may sign and
execute in the name of the
22
Corporation deeds, mortgages, bonds, contracts and other instruments except in
cases in which the signing and execution thereof shall be expressly delegated by
the Board or by these By-laws to some other officer or agent of the Corporation
or shall be required by applicable law otherwise to be signed or executed and,
in general, the Chief Executive Officer shall perform all duties incident to the
office of Chief Executive Officer of a corporation and such other duties as may
from time to time be assigned to the Chief Executive Officer by the Board.
5.9 PRESIDENT. The President shall have all powers of the Chief Executive
Officer to the extent not exercised by the Chief Executive Officer. The
President shall preside at all meetings of the Stockholders and at all meetings
of the Board at which neither the Chairman nor the Chief Executive Officer (if
there be any) is present. The President may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts and other instruments except in
cases in which the signing and execution thereof shall be expressly delegated by
the Board or by these By-laws to some other officer or agent of the Corporation
or shall be required by applicable law otherwise to be signed or executed and,
in general, the President shall perform all duties incident to the office of
President of a corporation and such other duties as may from time to time be
assigned to the President by the Board or the Chief Executive Officer.
5.8 CHIEF OPERATING OFFICER. The Chief Operating Officer shall perform such
senior duties in connection with the operations of the Corporation as the Board
or the Chief Executive Officer shall from time to time determine. The Chief
Operating Officer may sign and execute in the name of the Corporation deeds,
mortgages, bonds, contracts and other instruments, except in cases in which the
signing and execution thereof shall be expressly delegated by the Board or these
By-laws to some other officer or agent of the Corporation, or shall be required
by applicable law otherwise to be signed or executed, and the Chief Operating
Officer shall, when requested, counsel with and advise the other officers of the
Corporation and shall perform such other duties as he may agree with the Chief
Executive Officer or as the Board may from time to time determine.
5.9 CHIEF FINANCIAL OFFICER. The Chief Financial Officer of the
Corporation, if one shall have been elected, shall perform all the powers and
duties of the office of the chief financial officer and in general have overall
supervision of the financial operations of the Corporation. The Chief Financial
Officer may sign and execute in the name of the Corporation deeds, mortgages,
bonds, contracts or other instruments, except in cases in which the signing and
execution thereof shall be expressly delegated by the Board or these By-laws to
some other officer or agent of the Corporation, or shall be required by
applicable law otherwise to be signed or executed, and the Chief Financial
Officer shall, when requested, counsel with and advise the other officers of the
Corporation and shall perform such other duties as he may agree with the Chief
Executive Officer or as the Board may from time to time determine.
5.10 VICE PRESIDENTS. At the request of the Chief Executive Officer, or, in
the Chief Executive Officer's absence, at the request of the Board, the Vice
Presidents
23
shall (in such order as may be designated by the Board, or, in the absence of
any such designation, in order of seniority based on age) perform all of the
duties of the President and, in so performing, shall have all the powers of, and
be subject to all restrictions upon, the President. Any Vice President may sign
and execute in the name of the Corporation deeds, mortgages, bonds, contracts or
other instruments, except in cases in which the signing and execution thereof
shall be expressly delegated by the Board or by these By-laws to some other
officer or agent of the Corporation, or shall be required by applicable law
otherwise to be signed or executed, and each Vice President shall perform such
other duties as from time to time may be assigned to such Vice President by the
Board or by the Chief Executive Officer.
5.11 SECRETARY. The Secretary shall attend all meetings of the Board and of
the Stockholders and shall record all the proceedings of the meetings of the
Board and of the stockholders in a book to be kept for that purpose, and shall
perform like duties for committees of the Board, when required. The Secretary
shall give, or cause to be given, notice of all special meetings of the Board
and of the stockholders and shall perform such other duties as may be prescribed
by the Board or by the Chief Executive Officer, under whose supervision the
Secretary shall be. The Secretary shall have custody of the corporate seal of
the Corporation, and the Secretary, or an Assistant Secretary, shall have
authority to impress the same on any instrument requiring it, and when so
impressed the seal may be attested by the signature of the Secretary or by the
signature of such Assistant Secretary. The Board may give general authority to
any other officer to impress the seal of the Corporation and to attest the same
by such officer's signature. The Secretary or an Assistant Secretary may also
attest all instruments signed by the Chief Executive Officer, the President, the
Chief Operating Officer, the Chief Financial Officer or any Vice President. The
Secretary shall have charge of all the books, records and papers of the
Corporation relating to its organization and management, shall see that the
reports, statements and other documents required by applicable law are properly
kept and filed and, in general, shall perform all duties incident to the office
of Secretary of a corporation and such other duties as may from time to time be
assigned to the Secretary by the Board or by the Chief Executive Officer.
5.12 TREASURER. The Treasurer shall have charge and custody of, and be
responsible for, all funds, securities and notes of the Corporation; receive and
give receipts for moneys due and payable to the Corporation from any sources
whatsoever; deposit all such moneys and valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the
Board; against proper vouchers, cause such funds to be disbursed by checks or
drafts on the authorized depositories of the Corporation signed in such manner
as shall be determined by the Board and be responsible for the accuracy of the
amounts of all moneys so disbursed; regularly enter or cause to be entered in
books or other records maintained for the purpose full and adequate account of
all moneys received or paid for the account of the Corporation; have the right
to require from time to time reports or statements giving such information as
the Treasurer may desire with respect to any and all financial transactions of
the Corporation from the officers or agents transacting the same; render to the
Chief Executive Officer or the Board, whenever the Chief Executive Officer or
the Board shall require the Treasurer so to do, an account of the financial
condition of the Corporation
24
and of all financial transactions of the Corporation; exhibit at all reasonable
times the records and books of account to any of the Directors upon application
at the office of the Corporation where such records and books are kept; disburse
the funds of the Corporation as ordered by the Board; and, in general, perform
all duties incident to the office of Treasurer of a corporation and such other
duties as may from time to time be assigned to the Treasurer by the Board or the
Chief Executive Officer.
5.13 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant Secretaries
and Assistant Treasurers shall perform such duties as shall be assigned to them
by the Secretary or by the Treasurer, respectively, or by the Board or by the
Chief Executive Officer.
ARTICLE 6
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
6.1 EXECUTION OF CONTRACTS. The Board, except as otherwise provided in
these By-laws, may prospectively or retroactively authorize any officer or
officers, employee or employees or agent or agents, in the name and on behalf of
the Corporation, to enter into any contract or execute and deliver any
instrument, and any such authority may be general or confined to specific
instances, or otherwise limited.
6.2 LOANS. The Board may prospectively or retroactively authorize the Chief
Executive Officer or any other officer, employee or agent of the Corporation to
effect loans and advances at any time for the Corporation from any bank, trust
company or other institution, or from any firm, corporation or individual, and
for such loans and advances the person so authorized may make, execute and
deliver promissory notes, bonds or other certificates or evidences of
indebtedness of the Corporation, and, when authorized by the Board so to do, may
pledge and hypothecate or transfer any securities or other property of the
Corporation as security for any such loans or advances. Such authority conferred
by the Board may be general or confined to specific instances, or otherwise
limited.
6.3 CHECKS, DRAFTS, ETC. All checks, drafts and other orders for the
payment of money out of the funds of the Corporation and all evidences of
indebtedness of the Corporation shall be signed on behalf of the Corporation in
such manner as shall from time to time be determined by resolution of the Board.
6.4 DEPOSITS. The funds of the Corporation not otherwise employed shall be
deposited from time to time to the order of the Corporation with such banks,
trust companies, investment banking firms, financial institutions or other
depositories as the Board may select or as may be selected by an officer,
employee or agent of the Corporation to whom such power to select may from time
to time be delegated by the Board.
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ARTICLE 7
STOCK CERTIFICATES
7.1 CERTIFICATES REPRESENTING SHARES. The shares of capital stock of the
Corporation shall be represented by certificates in such form (consistent with
the provisions of Section 158 of the General Corporation Law) as shall be
approved by the Board. Such certificates shall be signed by the Chairman, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer or a Vice President and by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer, and may be impressed with
the seal of the Corporation or a facsimile thereof. The signatures upon a
certificate may be facsimiles. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon any certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, such certificate may, unless otherwise ordered by the
Board, be issued by the Corporation with the same effect as if such person were
such officer, transfer agent or registrar at the date of issue.
7.2 TRANSFER AND REGISTRY AGENTS. The Corporation may from time to time
maintain one or more transfer offices or agents and registry offices or agents
at such place or places as may be determined from time to time by the Board.
7.3 LOST, STOLEN OR DESTROYED CERTIFICATES. The Corporation may issue a new
certificate of stock in the place of any certificate theretofore issued by it,
alleged to have been lost, stolen or destroyed, and the Corporation may require
the owner of the lost, stolen or destroyed certificate, or his legal
representative, to give the Corporation a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate.
7.4 FOREIGN STOCK RECORD. A transfer of shares of voting stock of the
Corporation to a Foreigner shall not be valid, except between the parties to the
transfer, until the transfer shall have been recorded on the Foreign Stock
Record of the Corporation as provided in this Section 7.4. The "FOREIGN STOCK
RECORD" shall mean a record maintained by the Secretary which shall record the
date of a transfer to a Foreigner, the parties to the transfer and the number
and description of the shares of voting stock transferred to a Foreigner. At no
time shall ownership or control of shares representing more than 25% of the
Corporation's voting stock be registered on the Foreign Stock Record. If at any
time the Corporation shall determine that shares of voting stock are owned or
controlled by Foreigners who are not registered on the Foreign Stock Record, the
registration of such shares shall, subject to the limitation in the preceding
sentence, be made in chronological order in the Foreign Stock Record, based on
the date of the Corporation's finding of ownership or control of such shares by
a Foreigner. If at any time the Corporation shall determine that the number of
shares of voting stock registered on the Foreign Stock Record exceeds 25% of the
total number of shares of voting stock, sufficient shares shall be removed from
the Foreign Stock Record in reverse chronological order so that the number of
shares of voting stock registered on
26
the Foreign Stock Record does not exceed 25% of the total number of shares of
voting stock. At no time shall shares of voting stock known by the Corporation
to be owned or controlled by Foreigners and not registered on the Foreign Stock
Record be entitled to vote until so registered. All shares of voting stock known
to the Corporation to be owned by Foreigners as of the date of the adoption of
this Section 7.8 shall be registered on the Foreign Stock Record. The shares
registered on the Foreign Stock Record pursuant to the preceding sentence have
chronological priority over any subsequent request for the registration of
additional shares of voting stock on the Foreign Stock Record. As used in this
Section 7.4, "FOREIGNER" means any person who is not a Citizen of the United
States as defined in Section 102(a)(15) of the Transportation Act, and "VOTING
STOCK" means collectively the Corporation's common stock and any future shares
of stock of the Corporation entitled to vote on matters generally referred to
the stockholders for a vote.
ARTICLE 8
INDEMNIFICATION
8.1 RIGHT TO INDEMNIFICATION. The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person (a "COVERED PERSON") who is or
was made, or is threatened to be made a party or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative ("PROCEEDING"), by reason of the fact that he or she, or a person
for whom he or she is the legal representative, is or was a director or officer
of the Corporation, or, while a director or officer of the Corporation, is or
was serving at the request of the Corporation as a director, officer, employee
or agent of another corporation or of a partnership, joint venture, trust,
enterprise or nonprofit entity (an "OTHER ENTITY"), including service with
respect to employee benefit plans, against all liability and loss suffered and
expenses (including attorneys' fees) reasonably incurred by such Covered Person.
Notwithstanding the preceding sentence, except as otherwise provided in Section
8.3, the Corporation shall be required to indemnify a Covered Person in
connection with a Proceeding (or part thereof) commenced by such Covered Person
only if the commencement of such Proceeding (or part thereof) by the Covered
Person was authorized by the Board.
8.2 PREPAYMENT OF EXPENSES. The Corporation shall pay the expenses
(including attorneys' fees) incurred by a Covered Person defending any
Proceeding in advance of its final disposition; PROVIDED, HOWEVER, that, to the
extent required by law, such payment of expenses in advance of the final
disposition of a Proceeding shall be made only upon receipt of an undertaking by
the Covered Person to repay all amounts advanced if it should be ultimately
determined that the Covered Person is not entitled to be indemnified under this
Article 8 or otherwise.
8.3 CLAIMS. If a claim for indemnification or advancement of expenses under
this Article 8 is not paid in full within thirty (30) days after a written claim
therefor by the Covered Person has been received by the Corporation, the Covered
Person may file suit to recover the unpaid amount of such claim and, if
successful in whole or in part, shall be entitled to be paid the expense of
prosecuting such claim. In any such action the
27
Corporation shall have the burden of proving that the Covered Person is not
entitled to the requested indemnification or advancement of expenses under
applicable law.
8.4 NONEXCLUSIVITY OF RIGHTS. The rights conferred on any Covered Person by
this Article 8 shall not be exclusive of any other rights which such Covered
Person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, these By-laws, agreement, vote of Stockholders or
disinterested directors or otherwise.
8.5 OTHER SOURCES. The Corporation's obligation, if any, to indemnify or to
advance expenses to any Covered Person who was or is serving at its request as a
director, officer, employee or agent of an Other Entity shall be reduced by any
amount such Covered Person may collect as indemnification or advancement of
expenses from such Other Entity.
8.6 AMENDMENT OR REPEAL. Any repeal or modification of the foregoing
provisions of this Article 8 shall not adversely affect any right or protection
hereunder of any Covered Person in respect of any act or omission occurring
prior to the time of such repeal or modification.
8.7 OTHER INDEMNIFICATION AND PREPAYMENT OF EXPENSES. This Article 8 shall
not limit the right of the Corporation, to the extent and in the manner
permitted by law, to indemnify and to advance expenses to persons other than
Covered Persons when and as authorized by appropriate corporate action.
ARTICLE 9
BOOKS AND RECORDS
9.1 BOOKS AND RECORDS. There shall be kept at the principal office of the
Corporation correct and complete records and books of account recording the
financial transactions of the Corporation and minutes of the proceedings of the
Stockholders, the Board and any committee of the Board. The Corporation shall
keep at its principal office, or at the office of the transfer agent or
registrar of the Corporation, a record containing the names and addresses of all
Stockholders, the number and class of shares held by each and the dates when
they respectively became the owners of record thereof.
9.2 FORM OF RECORDS. Any records maintained by the Corporation in the
regular course of its business, including its stock ledger, books of account,
and minute books, may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, microphotographs, or any other information storage device,
provided that the records so kept can be converted into clearly legible written
form within a reasonable time. The Corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same.
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ARTICLE 10
SEAL
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
ARTICLE 11
FISCAL YEAR
The fiscal year of the Corporation shall be determined by resolution of the
Board.
ARTICLE 12
PROXIES AND CONSENTS
Unless otherwise provided by resolution of the Board, the Chairman, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, any Vice President, the Secretary or the Treasurer, or any
one of them, may execute and deliver on behalf of the Corporation proxies
respecting any and all shares or other ownership interests of any Other Entity
owned by the Corporation appointing such person or persons as the officer
executing the same shall deem proper to represent and vote the shares or other
ownership interests so owned at any and all meetings of holders of shares or
other ownership interests, whether general or special, and/or to execute and
deliver consents respecting such shares or other ownership interests; or any of
the aforesaid officers may attend any meeting of the holders of shares or other
ownership interests of such Other Entity and thereat vote or exercise any or all
other powers of the Corporation as the holder of such shares or other ownership
interests.
ARTICLE 13
TRANSACTIONS WITH AFFILIATES
The Corporation shall not, and shall not permit any of its subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend, modify or supplement any transaction, contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, the
holder of any shares of Series A Special Preferred Stock, Series B Special
Preferred Stock or Series C Special Preferred Stock or any of their respective
Affiliates (each an "INTERESTED PARTY"), except with the prior approval of all
members of the executive committee of the Board of Directors (which shall
exclude the vote of any Nominated Director of any Interested Party serving on
such executive committee), or, if such unanimous approval cannot be obtained,
then by the
29
prior approval of a majority of the Entire Board, which majority must include at
least one (1) Series A Nominated Director (so long as there are any Series A
Nominated Directors), at least one (1) Series B Nominated Director (so long as
there are any Series B Nominated Directors) and at least one (1) Series C
Nominated Director (so long as there are any Series C Nominated Directors);
PROVIDED, that such approval of the majority of the Board shall exclude the vote
of any Nominated Director of any Interested Party.
ARTICLE 14
AMENDMENTS
These By-laws may be repealed, altered or amended and new By-laws may be
adopted by a majority of the Entire Board at any meeting thereof; PROVIDED,
HOWEVER, that any repeal, alteration or amendment to the By-laws which would be
inconsistent with this Article 14, Sections 2.3, 2.13, 3.2, 3.4, 3.6, 3.9, 3.15,
3.16, 5.2 or 5.3 or Articles 4 or 13 of these By-laws shall require the
affirmative vote of a majority of the Entire Board, which majority must include
at least one (1) Series A Nominated Director (so long as there are any Series A
Nominated Directors), at least (1) Series B Nominated Director (so long as there
are any Series B Nominated Directors) and at least (1) Series C Nominated
Director (so long as there are any Series C Nominated Directors) and at least
two (2) of the Series D Nominated Director, Series E Nominated Director and
Series F Nominated Director (so long as there are three (3) of such Nominated
Directors). The Stockholders shall have the power to amend, alter or repeal any
provision of these By-laws only to the extent and in the manner provided in the
Certificate of Incorporation. Each Article and Section reference contained in
these By-laws shall be deemed to refer to any successor provision of such
Article or Section.
30
EXHIBIT E
SENIOR NOTES DUE 2008
SUMMARY OF TERMS AND CONDITIONS
ISSUER: The Company
TYPE AND AMOUNT OF NOTES: Senior notes (the "Senior Notes"); $2.00
principal amount per B Share
MATURITY: Six Years.
INTEREST RATE: 8% per annum. Interest will be payable
in cash semi-annually in arrears.
OPTIONAL REDEMPTION: Subject to clauses 1 and 2 of the
Prepayment provisions below, the Issuer
may at any time, in whole or in part,
redeem the outstanding Senior Notes,
without payment of any premium, penalty
or interest thereon.
MANDATORY REDEMPTION: A mandatory payment equal to one-sixth
of the original principal amount of the
Senior Notes will commence on
____________ __, 2005 [the third
anniversary of closing] and mandatory
payments equal to one-sixth of the
original principal amount will be made
semi-annually thereafter until maturity
or earlier payment of the Senior Notes
in full ("Regular Payment Schedule").
After the date, if any, prior to the
30-month anniversary of closing upon
which TurnWorks, Inc. or its Permitted
Transferees (as defined herein) is no
longer the Beneficial Owner of at least
50% of the shares (vested or unvested)
of Common Stock of the Issuer
beneficially owned by TurnWorks, Inc. or
its Permitted Transferees as of the date
of original issuance of the Senior Notes
(excluding the impact of transfers to
Airline Investors Partnership, L.P. or
its successors ("AIP") or its affiliates
and any subsequent issuances or stock
splits or similar adjustments to the
Common Stock) (the "Sale Date"), a
mandatory payment equal to one-sixth of
the original principal amount of the
Senior Notes will commence on the date
that is six months after the Sale Date
and mandatory payments equal to
one-sixth of the original principal
amount of the Senior Notes will be made
semi-annually thereafter until maturity
or earlier payment of the Senior
Notes in full. The payment schedule
after a Sale Date, if applicable, shall
be in lieu of the Regular Payment
Schedule.
As used herein, "Permitted Transferees"
shall mean Xxxx Xxxxxxxxx, other
affiliates of TurnWorks, Inc., immediate
relatives of Xxxx Xxxxxxxxx or any such
affiliate, and affiliates of or trusts for
the benefit of any such affiliates or
immediate relatives.
PREPAYMENT: The Issuer will prepay the Senior Notes
as described below, provided that the
following guidelines are met:
1. No prepayment will be required if the
Issuer's debt that is guaranteed
through the Federal Government Loan
Program ("Federal Guaranteed Debt")
(or if such Federal Guaranteed Debt
is not available, Other Debt (as
defined below)), requires priority
prepayment or contains options,
warrants or any other instrument
causing equity dilution if not
repaid. As used herein, "Other Debt"
means indebtedness substituted for
all or part of the Federal Guaranteed
Debt proposed to be obtained to meet
the liquidity conditions of the
Issuer prior to the closing of the
Mergers, but only if such
substitution is approved prior to
such closing by the Board of
Directors of each of A and B.
2. If the Issuer's Bank Debt (as defined
herein) requires prepayment, the
Senior Notes will be prepaid pro rata
with such Bank Debt according to the
formula described below.
Subject to contractual or legal
restrictions (including, without
limitation, the restrictions referred to
in clauses 1 and 2 above), after , 2003
[first anniversary date of Closing] the
Issuer will be required to redeem the
Senior Notes at par (plus accrued
interest) on a semi-annual basis in an
amount equal to the sum of (i) the
Issuer's Available Cash (as defined
below) on any Measurement Date (as
defined below) and (ii) any amounts of
Available Cash that would have been
required to be applied to redeem Senior
Notes on any prior Measurement Date that
were not so applied because of
contractual or legal restrictions. As
used herein, "Available Cash" means, as
of any Measurement Date, 50% of the
average daily cash and cash equivalents
(as
2
defined in accordance with generally
accepted accounting principles) of the
Issuer for the six months period ending
on such Measurement Date in excess of
the sum of (a) $150,000,000 plus (b) an
amount equal to the Available Cash used
for any prepayments on any prior
Measurement Dates ("Utilized Available
Cash"). As used herein, "Measurement
Date" means the first anniversary date
of the closing and the last day of each
successive six-month period after such
first anniversary.
CHANGE OF CONTROL: The Issuer will be required to redeem
all outstanding Senior Notes at par
(plus accrued interest) upon the
occurrence of a Change of Control. As
used herein, "Change of Control" means
the occurrence of any of the following:
(i) the sale, lease, transfer,
conveyance or other disposition (other
than by way of merger or consolidation),
in one or a series of related
transactions, of all or substantially
all of the assets of the Issuer and its
Restricted Subsidiaries (as defined)
taken as a whole to any "person" (as
such term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934, as
amended) other than AIP, the A Principal
Shareholders or TurnWorks, Inc. or their
Related Parties (as defined)
(collectively, the "Principals"), (ii)
the adoption of a plan relating to the
liquidation or dissolution of the Issuer
and (iii) the consummation of any
transaction (including, without
limitation, any merger or consolidation)
the result of which is that any "person"
(as defined above), other than one or
more of the Principals and its Related
Parties, becomes the Beneficial Owner
(as defined) of more than 40% of the
Common Stock of the Issuer.
RANKING: The Senior Notes will rank PARI PASSU
with the Issuer's other senior
indebtedness, including the Issuer's
bank debt and receivables financing
("Bank Debt"); provided that the Senior
Notes will be subordinated, to the
extent required, to any Federal
Guaranteed Debt or the Other Debt, but
only if the Issuer's Bank Debt is
similarly subordinated.
AFFIRMATIVE COVENANTS: Standard public indenture covenants, to
include: the Issuer will duly pay
principal of and interest on, and
payments for, the Senior Notes; the
Issuer will maintain an office or agency
in New York for presentation and
surrender of the Senior Notes; the
Issuer will deposit with a paying agent
on or before each due date of principal
and/or interest, a sum sufficient to pay
such amount
3
becoming due; and the Issuer will do all
things to preserve (i) its corporate
existence and (ii) its material rights
and franchises, subject to customary
exceptions.
NEGATIVE COVENANTS: (i) No additional debt that is PARI
PASSU with, or senior to, the
Senior Notes, except for up to $20
million of additional Bank Debt,
any Federal Guaranteed Debt, the
Other Debt or capital lease
obligations of the Issuer or
guarantees by the Issuer of capital
lease obligations of the Issuer's
subsidiaries.
(ii) No dividends or repurchase of shares.
(iii)No investments in any business that
is not directly related to the
operations of the airlines.
(iv) No investments in, or acquisitions
of, any other airline.
(v) No capital expenditures in excess of
$25,000,000 per year (other than (i)
payments under capital leases and (ii)
capital expenditures required by New
Directives (as defined herein)). As used
herein, "New Directives" shall mean
airworthiness directives of the federal
aviation authorities that are announced
after the Capex Budget (as defined
herein) for a particular year is
approved by the Board of Directors of
the Issuer. As used herein, "Capex
Budget" shall mean the capital
expenditure budget for the Issuer and
shall include capital expenditures for
all airworthiness directives announced
prior to the preparation of such budget.
(vi) No payment of accounts payable
except if consistent with prudent
business practices (to obtain a
discount or other benefit) or in the
ordinary course of business and
generally consistent with past
practice.
As to the covenants referred to in
clauses (ii) through (v), there will be
cumulative "basket" applicable
collectively to all such covenants to
permit, as applicable, dividends,
investments and capital expenditures.
The basket shall be determined as of a
Measurement Date and shall be the sum of
(a) Utilized Available Cash plus (b) any
Available Cash being used for prepayment
on such Measurement Date, minus (c)
amounts already applied against the
basket.
4
EVENTS OF DEFAULT: Events of Default will include (i) failure
to pay principal when due, (ii) failure
to make mandatory payments when due,
(iii) failure to pay interest when due
and such default continues for five (5)
days, (iv) failure to comply with the
negative covenants, (v) failure to
comply with the affirmative covenants
within thirty (30) days after notice,
(vi) acceleration of the Bank Debt or
the Other Debt, and (vii) certain events
of bankruptcy involving the Issuer.
GUARANTIES: The Senior Notes will be guaranteed by
subsidiaries of the Issuer on a PARI
PASSU basis with the Bank Debt.
REGISTRATION: The Senior Notes be sold pursuant to the
registration statement relating to the
Mergers.
AMENDMENTS: The Indenture relating to the Senior Notes
and the Senior Notes may be amended or
waived with the approval of holders of a
majority in principal amount of the
outstanding Senior Notes (including
holders that are affiliates of the
Issuer).
GOVERNING LAW: State of New York.
5
EXHIBIT l
FORM OF COMPANY STOCK INCENTIVE PLAN
ALOHA HOLDINGS, INC. 2002 STOCK INCENTIVE PLAN
Effective as of __________, 2002
1. PURPOSE OF THE PLAN
This Aloha Holdings, Inc. 2002 Stock Incentive Plan is intended to be a
broadly-based plan that promotes the interests of the Company and its
stockholders by providing the key employees, consultants and directors of the
Company and its Affiliates with an appropriate incentive to encourage them to
continue to provide services to the Company or Affiliate and to improve the
growth and profitability of the Company.
2. DEFINITIONS
As used in this Plan, the following capitalized terms shall have the
following meanings:
(a) "AFFILIATE" shall mean, with respect to any Person, any other
Person that, directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with the first
Person.
(b) "AWARD" shall mean an Option or a share of Restricted Stock
granted to a Participant pursuant to the terms of the Plan.
(c) "AWARD AGREEMENT" shall mean a Stock Option Grant Agreement or
Restricted Stock Agreement, as applicable, in such form as the Committee
shall from time to time approve.
(d) "BOARD" shall mean the Board of Directors of the Company.
(e) "CAUSE" shall mean, when used in connection with the termination
of a Participant's Engagement, the termination of the Participant's
Engagement by the Company or any Affiliate which Engages such Participant
on account of (i) the failure of the
L-1
Participant to substantially to perform his duties hereunder (other than
any such failure due to the Participant's physical or mental illness) or
the Participant performing such duties in a materially unsatisfactory
manner as determined in the reasonable judgment of the Board; (ii) the
Participant's dishonesty, gross negligence in the performance of his duties
hereunder or engaging in willful misconduct, which in the case of any such
gross negligence, has caused or is reasonably expected to result in direct
or indirect material injury, monetarily or otherwise, to the Company or any
of its Affiliates; (iii) a breach by a Participant of the Participant's
duty of loyalty to the Company and its Affiliates in contemplation of the
Participant's termination of Engagement, such as the Participant's
solicitation of customers or employees of the Company or an Affiliate prior
to the termination of such Participant's Engagement, (iv) the Participant's
unauthorized removal from the premises of the Company or Affiliate of any
document (in any medium or form) relating to the Company or an Affiliate or
the customers of the Company or an Affiliate, (v) the indictment of the
Participant for any felony or other serious crime involving moral
turpitude, or (vi) a material breach by the Participant of his obligations
under his employment or consulting agreement, if any, with the Company or
any of its Affiliates; PROVIDED, HOWEVER, that if, on the date of
determination, the Participant is a party to an effective employment or
consulting agreement or Award Agreement that contains a different
definition of the term "Cause," the definition in such agreement shall
control. Any rights the Company or an Affiliate may have hereunder in
respect of the events giving rise to Cause shall be in addition to the
rights the Company or Affiliate may have under any other agreement with the
Participant or at law or in equity. If, subsequent to a Participant's
termination of Engagement, it is discovered that such Participant's
Engagement could have been terminated for Cause, the Participant's
Engagement shall, at the election of the Committee, in its sole discretion,
be deemed to have been terminated for Cause retroactively to the date the
events giving rise to Cause occurred.
(f) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(g) "COMMISSION" shall mean the U.S. Securities and Exchange
Commission.
(h) "COMMITTEE" shall mean a committee of the Board consisting solely
of two or more directors, at least two of whom qualify as a "non-employee
director" within the meaning of Rule 16b-3 under the Exchange Act and an
"outside director" within the meaning of Treasury Regulation Section
1.162-27(e)(3), or in the absence of such committee, the Board.
(i) "COMMON STOCK" shall mean the shares of common stock of the
Company, par value $0.01 per share.
(j) "COMPANY" shall mean Aloha Holdings, Inc., a corporation organized
under the laws of Delaware.
(k) "DIRECTOR" shall mean any member of the Board.
(l) "DISABILITY" shall mean, with respect to any Participant, that, as
a result of incapacity due to a physical or mental illness, such
Participant is, or is reasonably likely to become, unable to perform his
duties for more than six (6) months or six (6) months in the aggregate
during any twelve (12) month period. Notwithstanding the foregoing, if, as
of the date of determination, the Participant is party to an effective
employment or consulting agreement or Award Agreement that contains a
different definition of the term "Disability" (or any derivation of such
term), the definition in such agreement shall control.
L-3
(m) "ELIGIBLE PERSON" shall mean any employee, consultant or Director
who, in the judgment of the Committee, should be eligible to participate in
this Plan due to the services they perform on behalf of the Company or an
Affiliate.
(n) "ENGAGEMENT" shall mean the provision of services to the Company
or any Affiliate, and shall include, without limitation, (i) employment
with the Company or any Affiliate, (ii) the provision of services as a
consultant for the Company or (iii) any Affiliate and the provision of
services as a Director. The terms "ENGAGES" and "ENGAGED" shall have
correlative meanings.
(o) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(p) "EXERCISE DATE" shall have the meaning set forth in Section 5.9
herein.
(q) "EXERCISE NOTICE" shall have the meaning set forth in Section 5.9
herein.
(r) "EXERCISE PRICE" shall mean the price that the Participant must
pay under an Option for each share of Common Stock as determined by the
Committee for each Option grant and specified in the Stock Option Grant
Agreement.
(s) "FAIR MARKET VALUE" shall mean, as of any date, the closing price
of the share of Common Stock, as reported on the American Stock Exchange
for such date or such national securities exchange as may be designated by
the Board or, if Common Stock was not traded on such date, on the next
preceding day on which Common Stock was traded.
(t) "GRANT DATE" shall mean the Grant Date as defined in Section 5.3
or Section 6.2 herein, as applicable.
(u) NON-QUALIFIED STOCK OPTION" shall mean an Option that is not an
"incentive stock option" within the meaning of Section 422 of the Code.
L-4
(v) "OPTION" shall mean the option to purchase Common Stock granted to
any Participant under the Plan. Each Option granted hereunder shall be a
Non-Qualified Stock Option and shall be identified as such in the Stock
Option Grant Agreement by which it is evidenced.
(w) "OPTION SPREAD" shall mean, with respect to an Option, the excess,
if any, of the Fair Market Value of a share of Common Stock as of the
applicable Valuation Date over the Exercise Price.
(x) "PARTICIPANT" shall mean an Eligible Person to whom a grant of an
Award under the Plan has been made, and, where applicable, shall include
Permitted Transferees.
(y) "PERMITTED TRANSFEREE" shall have the meaning set forth in Section
5.5.
(z) "PERSON" means an individual, partnership, corporation, limited
liability company, unincorporated organization, trust or joint venture, or
a governmental agency or political subdivision thereof.
(aa) "PLAN" means the Aloha Holdings, Inc. 2002 Stock Incentive Plan,
as may be amended from time to time.
(bb) "RESTRICTED STOCK" shall mean a share of Common Stock which is
granted to a Participant pursuant to Section 7 hereof and which is subject
to the restrictions set forth in Section 7.2(b) hereof for so long as such
restrictions continue to apply to such share.
(cc) "RESTRICTED STOCK AGREEMENT" shall mean shall mean the separate
written agreement entered into by each Participant and the Company
evidencing the grant of share of Restricted Stock pursuant to the Plan (a
sample of which is attached hereto as Exhibit B).
(dd) "RETIREMENT" shall mean the termination of a Participant's
Engagement with the Company or any Affiliate other than by reason of
Disability, death or termination by the
L-6
Company for Cause on or after the attainment of age 55, or such other
retirement date as may be approved by the Committee for purposes of this
Plan and specified in the applicable Award Agreement.
(ee) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
(ff) "STOCK OPTION GRANT AGREEMENT" shall mean the separate written
agreement entered into by each Participant and the Company evidencing the
grant of each Option pursuant to the Plan (a sample of which is attached
hereto as Exhibit A).
(gg) "TRANSFER" shall mean any transfer, sale, assignment, gift,
testamentary transfer, pledge, hypothecation or other disposition of any
interest. "TRANSFEREE" and "TRANSFEROR" shall have correlative meanings.
(hh) "VALUATION DATE" shall mean the trading date immediately
preceding the date of the relevant transaction.
(ii) "VESTING DATE" shall mean, in the case of an Option, the date an
Option becomes exercisable pursuant to Section 5.4 herein and, in the case
of Restricted Stock, the date a share of Restricted Stock vests pursuant to
Section 7.2(b) herein. The terms "VESTED," "VEST" or "VESTS" shall have
correlative meanings.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. In the absence of a
Committee, the Board shall function as the Committee for all purposes under the
Plan, and to the extent that the Board so acts, references in this Plan to the
Committee shall refer to the Board as applicable. In addition, the Committee, in
its discretion, may delegate its authority to grants Awards to a director or an
officer or committee of officers of the Company, subject to reasonable limits
and guidelines established by the Committee at the time of such delegation.
L-6
3.1 POWERS OF THE COMMITTEE. In addition to the other powers granted to the
Committee under this Plan, the Committee shall have the discretionary power: (a)
to determine to which of the Eligible Persons grants of Awards shall be made;
(b) to determine whether a grant of an Award will consist of an Option,
Restricted Stock or any combination thereof; (c) to determine the time or times
when grants shall be made and to determine the number of shares of Common Stock
subject to each Award; (d) to prescribe the form of any Award Agreement
evidencing an Award and make any amendment or modification to any Award
Agreement consistent with the terms of this Plan; (e) to determine the terms and
conditions applicable to each Award (which need not be identical); (f) to adopt,
amend and rescind such rules and regulations as, in its opinion, may be
advisable for the administration of this Plan; (g) to construe and interpret
this Plan, such rules and regulations and the instruments evidencing the Awards;
and (h) to make all other determinations necessary or advisable for the
administration of this Plan.
3.2 DETERMINATIONS OF THE COMMITTEE. Any grant of an Award, determination,
prescription or other act of the Committee made in good faith shall be final and
conclusively binding upon all persons.
3.3 INDEMNIFICATION OF THE COMMITTEE. No member of the Committee or the
Board shall be liable for any action or determination made in good faith with
respect to this Plan or any Award. To the full extent permitted by law, the
Company shall indemnify and hold harmless each person made or threatened to be
made a party to any civil or criminal action or proceeding by reason of the fact
that such person, or such person's testator or intestate, is or was a member of
the Committee.
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3.4 INCONSISTENT TERMS. In the event of a conflict between the terms of
this Plan and the terms of any Award Agreement, the terms of this Plan shall
govern.
4. SHARES SUBJECT TO THIS PLAN
Subject to adjustment as provided in this Section 4 and Section 8 hereof,
the maximum number of shares of Common Stock available for grant under this Plan
shall be 7,128,092. To the extent that any Award granted under this Plan
terminates, expires or is canceled without having been exercised, the shares
covered by such Award shall again be available for grant under this Plan.
5. OPTIONS
5.1 IDENTIFICATION OF OPTIONS. The Options granted under this Plan shall be
clearly identified in the Stock Option Grant Agreement as Non-Qualified Stock
Options.
5.2 EXERCISE PRICE. The Exercise Price of any Option granted under this
Plan shall be such price as the Committee shall determine (which shall not be
less than the Fair Market Value of a share of Common Stock on the Grant Date for
such Options) and which shall be specified in the Stock Option Grant Agreement;
PROVIDED, HOWEVER, that such price may not be less than the minimum price
required by law.
5.3 GRANT DATE. The Grant Date of the Options shall be the date designated
by the Committee and specified in the Stock Option Grant Agreement as of the
date the Option is granted.
5.4 VESTING DATE OF OPTIONS. Each Stock Option Grant Agreement shall
indicate the date or conditions, including the achievement of certain
performance objectives, under which such Option shall become exercisable.
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5.5 LIMITATION ON TRANSFER. During the lifetime of a Participant, each
Option shall be exercisable only by such Participant unless the Participant
obtains written consent from the Company to Transfer such Option to a specified
Transferee (a "PERMITTED TRANSFEREE") or the Participant's Stock Option Grant
Agreement provides otherwise.
5.6 CONDITION PRECEDENT TO TRANSFER OF ANY OPTION. It shall be a condition
precedent to any Transfer of any Option by any Participant that the Transferee,
if not already a Participant in the Plan, shall agree prior to the Transfer in
writing with the Company to be bound by the terms of the Plan and the Stock
Option Grant Agreement as if he had been an original signatory thereto.
5.7 EFFECT OF VOID TRANSFERS. In the event of any purported Transfer of any
Options in violation of the provisions of the Plan, such purported Transfer
shall, to the extent permitted by applicable law, be void and of no effect.
5.8 EXERCISE OF OPTIONS. A Participant may exercise any or all of his
Vested Options by serving an Exercise Notice on the Company as provided in
Section 5.9 hereto.
5.9 METHOD OF EXERCISE. Unless otherwise determined by the Committee, the
Option shall be exercised by delivery of written notice to the Company's
principal office (the "EXERCISE NOTICE"), to the attention of its Secretary, no
less than five business days in advance of the effective date of the proposed
exercise (the "EXERCISE DATE"). Such notice shall (a) specify the number of
shares of Common Stock with respect to which the Option is being exercised, the
Grant Date of such Option and the Exercise Date, (b) be signed by the
Participant and (c) if the Option is being exercised by the Participant's
Permitted Transferee(s), such Permitted Transferee(s) shall indicate in writing
that they agree to and shall be bound by this Plan and Stock Option Grant
Agreement as if they had been original signatories thereto. The Exercise
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Notice shall include (i) payment in cash for an amount equal to the Exercise
Price multiplied by the number of shares of Common Stock specified in such
Exercise Notice, or (ii) if approved in advance by the Committee, a certificate
representing the number of shares of Common Stock with a Fair Market Value equal
to the Exercise Price (provided the Participant has owned such shares at least
six months prior to the Exercise Date) multiplied by the number of shares of
Common Stock specified in such Exercise Notice or a combination of cash and
certificates or any other method otherwise approved by the Committee.
5.10 CERTIFICATES OF SHARES. Upon the exercise of the Options in accordance
with Section 5.9, certificates of shares of Common Stock shall be issued in the
name of the Participant and delivered to such Participant as soon as practicable
following the Exercise Date or such shares shall be held in the name of the
Participant in bank entry form by a broker/dealer designated by the Participant
or the Company.
5.11 TERMINATION OF OPTIONS. The Committee may, at any time, in its
absolute discretion, without amendment to this Plan or any relevant Stock Option
Grant Agreement, terminate the Options then outstanding, whether or not
exercisable, PROVIDED, HOWEVER, that the Company, in full consideration of such
termination, shall pay (a) with respect to any Option, or portion thereof, then
outstanding, an amount equal to the Option Spread determined as of the Valuation
Date coincident with or next succeeding the date of termination. Such payment
shall be made as soon as practicable after the payment amounts are determined,
PROVIDED, HOWEVER, that the Company shall have the option to make payments to
the Participants by issuing a note to the Participant bearing a reasonable rate
of interest as determined by the Committee in its absolute discretion.
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5.12 RIGHTS AS STOCKHOLDER. Except as otherwise expressly provided herein,
the Participants shall not have any rights as stockholders with respect to any
shares of Common Stock covered by or relating to the Options granted pursuant to
this Plan until the date such Options Vest and the Participants become the
registered owners of such shares. Except as otherwise expressly provided in
Section 8 hereof, no adjustment to the Options shall be made for dividends or
other rights for which the record date occurs prior to the date such Option
becomes Vested and a stock certificate is issued.
6. RESTRICTED STOCK GRANTS
6.1 GRANT OF RESTRICTED STOCK. The Committee may grant shares of Restricted
Stock pursuant to this Plan. Each grant of shares of Restricted Stock shall be
evidenced by a Restricted Stock Agreement containing such conditions, terms and
conditions as the Committee deems appropriate, provided that such restrictions,
terms and conditions are not inconsistent with this Section 6.
6.2 GRANT DATE. The Grant Date of a share of Restricted Stock shall be the
date designated by the Committee and specified in the Restricted Stock Agreement
as the date the share of Restricted Stock is granted.
6.3 VESTING DATE OF RESTRICTED STOCK. Each Restricted Stock Agreement shall
indicate the date or conditions, including the achievement of certain
performance objectives, under which such shares of Restricted Stock shall become
Vested.
6.4 LIMITATION OF TRANSFER OF RESTRICTED STOCK PRIOR TO VESTING. Prior to
the date the shares of Restricted Stock become Vested, each share of Restricted
Stock shall not be Transferable under any circumstances and no transfer of a
Participant's rights with respect to such share, whether voluntary or
involuntary, by operation of law or otherwise, shall vest in the
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Transferee with any interest or right in or with respect to such share, but
immediately upon any attempt to Transfer such rights, such share, and all of the
rights related thereto, shall be cancelled and shall be forfeited by the
Participant and the Transfer shall be of no force or effect.
6.5 ISSUANCE OF CERTIFICATES FOR RESTRICTED STOCK.
(a) ISSUANCE OF CERTIFICATES ISSUED PRIOR TO VESTING. Reasonably promptly
after the receipt by the Company of the Restricted Stock Agreement executed by
the Participant with respect to the shares of Restricted Stock granted by the
Restricted Stock Agreement, the Company shall cause to be issued stock
certificates, registered in the name of the Participant, evidencing the Common
Stock granted by the Restricted Stock Agreement. Each certificate shall contain
such legends as the Committee deems appropriate. The Committee may require that
the certificate evidencing such share be held in custody by the Company until
such share of Restricted Stock becomes Vested, and that, as a condition of any
Award of Restricted Stock, the Committee may require that the Participant
deliver to the Company a stock power, endorsed in blank, relating to the Common
Stock covered by such Award.
(b) ISSUANCE OF CERTIFICATES ISSUED AFTER VESTING. Reasonably promptly
after any such shares of Restricted Stock Vests pursuant to Section 6.3 hereof,
the Company shall cause to be issued and delivered to the Participant new
certificates evidencing such Common Stock, containing such legends as the
Committee deems appropriate or such shares may be held in the Participant's name
in book entry form by a broker/dealer designated by the Participant or the
Company.
6.6 TERMINATION OF RESTRICTED STOCK. The Committee may, at any time, in its
absolute discretion, terminate any Award of shares of Restricted Stock then
outstanding, whether Vested or not, PROVIDED, HOWEVER, that the Company, in full
consideration of such termination shall pay
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with respect to each share of Restricted Stock, whether or not Vested on the
date of such termination, an amount equal to the Fair Market Value determined as
of the Valuation Date coincident with or next succeeding the date of
termination. Such payment shall be made as soon as practicable after the payment
amounts are determined, PROVIDED, HOWEVER, that the Company shall have the
option to make payments to the Participants by issuing a note to the Participant
bearing a reasonable rate of interest as determined by the Committee in its
absolute discretion.
6.7 RIGHTS AS SHAREHOLDERS.
(a) DIVIDENDS. Unless otherwise provided in the Restricted Stock Award
Agreement, ordinary and routine dividends paid in cash with respect to shares of
Restricted Stock that are outstanding as of the relevant record date for such
dividends shall be distributed to the participant at such time and in the manner
paid to holders of Common Stock. Stock dividends issued with respect to shares
covered by the Restricted Stock Award shall be treated as additional shares
under the Restricted Stock Award and shall be subject to the same restrictions
and terms and conditions that apply to the shares with respect to which such
dividends are issued.
(b) VOTING. The Participant shall be entitled to vote the Restricted Stock,
or in the case of Restricted Stock held in custody by the Company, direct the
Company as to the manner as to which the Restricted Stock shall be voted.
7. TERMINATION OF ENGAGEMENT.
(a) EXPIRATION OF OPTIONS. With respect to each Participant, such
Participant's Options, or portion thereof, which have not become exercisable or
Vested in accordance with the terms of this Plan shall expire on the date such
Participant's Engagement is terminated for any reason unless otherwise specified
in the applicable Stock Option Grant Agreement. With respect to each
Participant, each Participant's Option(s), or any portion thereof, which has
become
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exercisable on the date such Participant's Engagement is terminated shall expire
on the earlier of (i) the commencement of business on the date the Participant's
Engagement is terminated for Cause; (ii) 60 days after the date the
Participant's Engagement is terminated for any reason other than Cause, death or
Disability; (iii) one year after the date of the Participant's Engagement is
terminated by reason of the Participant's death; (iv) one year after the date
the Participant's Engagement is terminated by reason of Disability or
Retirement, provided, however, that if during such one year period following the
termination of the Participant's Engagement by reason of Disability or
Retirement the Participant dies, the Participant's legal representative or
beneficiary may exercise the Participant's Option(s), or any portion thereof,
which have become exercisable on the date of the Participant's Engagement is
terminated for a period of one year from the date of the Participant's death; or
(v) the 10th anniversary of the Grant Date for such Option(s). Notwithstanding
the foregoing, the Committee may specify in the Stock Option Grant Agreement a
different expiration date or period for any Option granted hereunder, and such
expiration date or period shall supersede the foregoing expiration period.
(b) EXPIRATION OF RESTRICTED STOCK. With respect to each Participant, such
Participant's shares of Restricted Stock which have not become Vested on the
date such Participant's Engagement is terminated for any reason shall be
forfeited unless otherwise specified in the Restricted Stock Agreement.
8. ADJUSTMENT UPON CHANGES IN COMPANY STOCK
(a) INCREASE OR DECREASE IN ISSUED SHARES WITHOUT CONSIDERATION. Subject to
any required action by the stockholders of the Company, in the event of any
increase or decrease in the number of issued shares of Common Stock resulting
from a subdivision or consolidation of shares of Common Stock or the payment of
an extraordinary stock dividend (but only on the
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shares of Common Stock), or any other increase or decrease in the number of such
shares effected without receipt of consideration by the Company, the Committee
shall, make such adjustments with respect to the number and class of shares of
Common Stock subject to the Awards, the exercise price per share of Common
Stock, in the case of Options, or any other changes as the Committee may
consider appropriate to prevent the enlargement or dilution of rights.
(b) CERTAIN MERGERS. Subject to any required action by the stockholders of
the Company, in the event that the Company shall be the surviving corporation in
any merger or consolidation (except a merger or consolidation as a result of
which the holders of shares of Common Stock receive securities of another
corporation), the Awards outstanding on the date of such merger or consolidation
shall pertain to and apply to the securities that a holder of the number of
shares of Common Stock subject to any such Award would have received in such
merger or consolidation (it being understood that if, in connection with such
transaction, the stockholders of the Company retain their shares of Common Stock
and are not entitled to any additional or other consideration, the Awards shall
not be affected by such transaction).
(c) CERTAIN OTHER TRANSACTIONS. In the event of (i) a dissolution or
liquidation of the Company, (ii) a sale of all or substantially all of the
Company's assets, (iii) a merger or consolidation involving the Company in which
the Company is not the surviving corporation or (iv) a merger or consolidation
involving the Company in which the Company is the surviving corporation but the
holders of shares of Common Stock receive securities of another corporation
and/or other property, including cash, the Committee shall, in its absolute
discretion, have the power to take any action the Committee deems appropriate,
including, without limitation, to:
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(A) provide for the exchange of any Award outstanding immediately prior to
such event (whether or not then exercisable) for an award with respect to, as
appropriate, some or all of the property for which the stock underlying such
Award is exchanged and, incident thereto, make an equitable adjustment, as
determined by the Committee, in the exercise price of the Options, if
applicable, or the number of shares or amount of property subject to the Award
or, if appropriate, provide for a cash payment to the Participants in partial
consideration for the exchange of the Awards as the Committee may consider
appropriate to prevent dilution or enlargement of rights;
(B) cancel, effective immediately prior to the occurrence of such event,
any Award outstanding immediately prior to such event (whether or not then
exercisable or Vested), and in full consideration of such cancellation, pay to
the Participant to whom such Award was granted an amount in cash, for each share
of Common Stock subject to such Award, equal to (i) with respect to an Option,
the excess of (1) the value, as determined by the Committee in its absolute
discretion, of securities and property (including cash) received by the holder
of a share of Common Stock as a result of such event over (2) the Exercise Price
of such Option; or (ii) with respect to Restricted Stock, the value, as
determined by the Committee, in its absolute discretion, of the securities and
property (including cash) received by the holder of a share of Common Stock as a
result of such event; or
(C) provide for any combination of (A) or (B).
(d) OTHER CHANGES. In the event of any change in the capitalization of the
Company or a corporate change other than those specifically referred to in
Sections 8(a), (b) or (c) hereof, the Committee shall have the power to take
such action as the Committee, in its sole discretion, may consider appropriate
to prevent dilution or enlargement of rights, including, without
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limitation, to make such adjustments in the number and class of shares subject
to Awards outstanding on the date on which such change occurs and, if
applicable, in the per-share exercise price of each such Option.
(e) NO OTHER RIGHTS. Except as expressly provided in this Plan or the Award
Agreements evidencing the Awards, the Participants shall not have any rights by
reason of (i) any subdivision or consolidation of shares of Common Stock or
shares of stock of any class, (ii) the payment of any dividend, any increase or
decrease in the number of shares of Common Stock, or (iii) shares of stock of
any class or any dissolution, liquidation, merger or consolidation of the
Company or any other corporation. Except as expressly provided in this Plan or
the Award Agreements evidencing the Awards, no issuance by the Company of shares
of Common Stock or shares of stock of any class, or securities convertible into
shares of Common Stock or shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number of shares
of Common Stock subject to an Award or, if applicable, the exercise price of any
Option.
9. WITHHOLDING TAXES
9.1 CASH REMITTANCE. Whenever shares of Common Stock are to be issued upon
the exercise of an Option or when shares of Restricted Stock Vest, the Company
shall have the right to require the Participant to remit to the Company in cash
an amount sufficient to satisfy federal, state, local and foreign withholding
tax requirements, if any, attributable to such exercise, grant or lapse prior to
the delivery of any certificate or certificates for such shares or the
effectiveness of the lapse of such restrictions. Without limitation on the
foregoing, the Company shall have the right to require the Participant to remit
to the Company or any of its Affiliates in cash an amount sufficient to satisfy
any applicable tax liability, including, without limitation, that
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if the Company or any of its Affiliates is liable to account for or deduct any
tax, national insurance or other fiscal impositions or duties payable as a
result of the exercise of the Option or the issue or transfer of shares of
Common Stock from the salary or other earnings of the Participant in any
relevant payment period and such salary or earnings are insufficient to meet the
liability of the Company or any of its Affiliates, then the Company shall have
the right to require the Participant to remit to the Company or any of its
Affiliates in cash an amount sufficient to satisfy this liability.
9.2 STOCK REMITTANCE. At the election of the Participant, subject to the
approval of the Committee, when shares of Common Stock are to be issued upon the
exercise of an Option or when shares of Restricted Stock Vest, the Participant
may tender to the Company a number of shares of Common Stock owned by the
Participant having a Fair Market Value at the tender date determined by the
Committee to be sufficient to satisfy the federal, state and local withholding
tax requirements, if any, attributable to such exercise or grant but not greater
than such withholding obligations. Such election shall satisfy the Participant's
obligations under Section 9.1 hereof, if any.
9.3 STOCK WITHHOLDING. At the election of the Participant, subject to the
approval of the Committee, when shares of Common Stock are to be issued upon the
exercise of an Option or the grant of Restricted Stock, the Company shall
withhold a number of such shares having a Fair Market Value at the exercise date
determined by the Committee to be sufficient to satisfy the federal, state and
local withholding tax requirements, if any, attributable to such exercise or
grant but not greater than such withholding obligations. Such election shall
satisfy the Participant's obligations under Section 9.1 hereof, if any.
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10. SECURITIES MATTERS
10.1 REGISTRATION. The Company shall be under no obligation to effect the
registration pursuant to the Securities Act of any shares of Common Stock to be
issued hereunder or to effect similar compliance under any state laws.
Notwithstanding anything hereof to the contrary, the Company shall not be
obligated to cause to be issued or delivered any certificates evidencing shares
of Common Stock pursuant to this Plan unless and until the Company is advised by
its counsel that the issuance and delivery of such certificates is in compliance
with all applicable laws, regulations of governmental authority and the
requirements of any securities exchange on which shares of Common Stock are
traded. The Committee may require, as a condition to the issuance and delivery
of certificates evidencing shares of Common Stock pursuant to the terms hereof,
that the recipient of such shares make such covenants, agreements and
representations, and that such certificates bear such legends, as the Committee
deems necessary or advisable.
10.2 EFFECTIVENESS OF OPTION EXERCISE. With respect to an Option, the
exercise of such Option granted hereunder shall only be effective at such time
as counsel to the Company shall have determined that the issuance and delivery
of shares of Common Stock pursuant to such exercise is in compliance with all
applicable laws, regulations of governmental authority and the requirements of
any securities exchange on which shares of Common Stock are traded. The Company
may, in its sole discretion, defer the effectiveness of an exercise of an Option
hereunder or the issuance or transfer of shares of Common Stock pursuant to any
Award pending or to ensure compliance under federal or state securities laws.
The Company shall inform the Participant in writing of its decision to defer the
effectiveness of the exercise of an Option or the issuance or transfer of shares
of Common Stock pursuant to any Award. During the period that
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the effectiveness of the exercise of an Option has been deferred, the
Participant may, by written notice, withdraw such exercise and obtain the refund
of any amount paid with respect thereto.
11. EFFECTIVE DATE; PLAN TERM; AMENDMENT OF THIS PLAN; TERMINATION OF THIS PLAN
11.1 EFFECTIVE DATE. The effective date of this Plan shall be [________],
2002.
11.2 PLAN TERM. The Committee shall not grant any Awards under this Plan on
or after the tenth anniversary of the date this Plan was adopted. All Awards
which remain outstanding after such date shall continue to be governed by the
Plan and the function of the Committee will be limited to supervising the
administration of Awards previously granted.
11.3 AMENDMENT OF THIS PLAN. The Committee may, in its absolute discretion,
from time to time revise or amend this Plan, PROVIDED, HOWEVER, that any such
amendment shall not impair or adversely affect the Participants' rights under
this Plan or any outstanding Award without such Participant's written consent.
11.4 TERMINATION OF THIS PLAN. The Committee may at any time, in its
absolute discretion, suspend or terminate this Plan. No awards may be granted
during any suspension of the Plan or after the Plan has been terminated. The
termination of the Plan shall not affect any Awards previously granted. After
the Plan terminates, the function of the Committee will be limited to
supervising the administration of Awards previously granted.
12. MISCELLANEOUS
12.2 NO SPECIAL RIGHTS. Nothing contained in this Plan shall confer upon
the Participants any right with respect to the continuation of their Engagement
or interfere in any way with the right of the Company or an Affiliate, subject
to the terms of any separate employment agreements to the contrary, at any time
to terminate such Engagement or to increase
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or decrease the compensation of the Participants from the rate in existence at
the time of the grant of any Award.
12.3 RIGHT OF OFFSET. If a Participant becomes entitled to a distribution
of benefits under this Plan, and if at such time the Participant has any
outstanding debt, obligation, or other liability representing an amount owing to
the Company or any of its Affiliates, the Company, upon a determination by the
Committee, and to the extent permitted by applicable law, may offset such amount
so owing against the amount of benefits otherwise distributable. Such
determination shall be made by the Committee.
12.4 NO OBLIGATION TO EXERCISE AN OPTION. The grant to the Participants of
the Options shall impose no obligation upon the Participants to exercise such
Options.
12.5 NOTICES. All notices and other communications hereunder shall be in
writing and shall be given and shall be deemed to have been duly given if
delivered in person, by cable, telegram, telex or facsimile transmission, to the
parties as follows:
If to the Participant:
To the address shown on the Award Agreement.
If to the Company:
Attention: [____________]
or to such other address as any party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
12.6 DESCRIPTIVE HEADINGS. The headings in this Plan are for convenience of
reference only and shall not limit or otherwise affect the meaning of the terms
contained herein.
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12.7 GENDER. All references herein to the masculine gender shall include
the feminine.
12.8 SEVERABILITY. In the event that any one or more of the provisions,
subdivisions, words, clauses, phrases or sentences contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, subdivision, word, clause, phrase or
sentence in every other respect and of the remaining provisions, subdivisions,
words, clauses, phrases or sentences hereof shall not in any way be impaired, it
being intended that all rights, powers and privileges of the Company and
Participants shall be enforceable to the fullest extent permitted by law.
12.9 GOVERNING LAW. This Plan shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware, without regard
to the provisions governing conflict of laws.
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EXHIBIT A
STOCK OPTION GRANT AGREEMENT
THIS AGREEMENT, made as of this ____ day of _________ 200_ between Aloha
Holdings, Inc. (the "COMPANY") and ___________ (the "PARTICIPANT"). --------
-----------
WHEREAS, the Company has adopted and maintains the Aloha Holdings, Inc.
2002 Stock Incentive Plan (the "PLAN") to promote the interests of the Company
and its stockholders by providing the Company's key employees, consultants and
directors with an appropriate incentive to encourage them to continue to provide
services to the Company and to improve the growth and profitability of the
Company;
WHEREAS, the Plan provides for the grant to Participants in the Plan of
Non-Qualified Stock Options to purchase shares of Common Stock of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows:
1. GRANT OF OPTIONS. Pursuant to, and subject to, the terms and conditions
set forth herein and in the Plan, the Company hereby grants to the Participant a
NON-QUALIFIED STOCK OPTION (the "OPTION") ------ with respect to ______ shares
of Common Stock of the Company.
2. GRANT DATE. The Grant Date of the Option hereby granted is as of ______,
____.
3. INCORPORATION OF PLAN. All terms, conditions and restrictions of the
Plan are incorporated herein and made part hereof as if stated herein. If there
is any conflict between the terms and conditions of the Plan and this Agreement,
the terms and conditions of the Plan, as interpreted by the Committee, shall
govern. All capitalized terms used herein shall have the meaning given to such
terms in the Plan.
4. EXERCISE PRICE. The exercise price of each share underlying the Option
hereby granted is $___________.
5. VESTING DATE. The Option shall become exercisable in the following
manner and on the following dates (the "VESTING DATE(S)"): [_________] shares of
Common Stock underlying the Option shall become vested
[_________________________] PROVIDED, HOWEVER, that the Participant continues to
be Engaged by the Company or any of its Affiliates on each Vesting Date.
6. EXPIRATION DATE. Subject to the provisions of the Plan, with respect to
the Option or any portion thereof which has not become exercisable, the Option
shall expire on the date the Participant's Engagement is terminated for any
reason, and with respect to any Option or any portion thereof which has become
exercisable, the Option shall expire on the earlier of: (i) the commencement of
business on the date the Participant's Engagement is terminated for
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Cause; (ii) 60 days after the date the Participant's Engagement is terminated
for any reason other than Cause, death or Disability; (iii) one year after the
date of the Participant's Engagement is terminated by reason of the
Participant's death; (iv) one year after the date the Participant's Engagement
is terminated by reason of Disability or Retirement, provided, however, that if
during such one year period following the termination of the Participant's
Engagement by reason of Disability or Retirement the Participant dies, the
Participant's legal representative or beneficiary may exercise the Participant's
Option(s), or any portion thereof, which have become exercisable on the date of
the Participant's Engagement is terminated for a period of one year from the
date of the Participant's death; or (v) the 10th anniversary of the Grant Date.
7. DELAYS OR OMISSIONS. No delay or omission to exercise any right, power
or remedy accruing to any party hereto upon any breach or default of any party
under this Agreement, shall impair any such right, power or remedy of such party
nor shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver on the part
of any party or any provisions or conditions of this Agreement, shall be in
writing and shall be effective only to the extent specifically set forth in such
writing.
8. LIMITATION ON TRANSFER. During the lifetime of the Participant, the
Option shall be exercisable only by the Participant. The Option shall not be
assignable or transferable other than by will or by the laws of descent and
distribution. Notwithstanding the foregoing, the Participant may request
authorization from the Committee to assign his rights with respect to the Option
granted herein to a trust or custodianship, the beneficiaries of which may
include only the Participant, the Participant's spouse or the Participant's
lineal descendants (by blood or adoption), and, if the Committee grants such
authorization, the Participant may assign his rights accordingly. In the event
of any such assignment, such trust or custodianship shall be subject to all the
restrictions, obligations, and responsibilities as apply to the Participant
under the Plan and this Stock Option Grant Agreement and shall be entitled to
all the rights of the Participant under the Plan.
9. INTEGRATION. This Agreement, and the other documents referred to herein
or delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to its subject matter. There are no
restrictions, agreements, promises, representations, warranties, covenants or
undertakings with respect to the subject matter hereof other than those
expressly set forth herein. This Agreement, including without limitation the
Plan, supersedes all prior agreements and understandings between the parties
with respect to its subject matter.
10. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
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11. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware, without regard to
the provisions governing conflict of laws.
12. PARTICIPANT ACKNOWLEDGMENT. The Participant hereby acknowledges receipt
of a copy of the Plan. The Participant hereby acknowledges that all decisions,
determinations and interpretations of the Committee in respect of the Plan, this
Agreement and the Option shall be final and conclusive.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its duly authorized officer and said Participant has hereunto signed
this Agreement on his own behalf, thereby representing that he has carefully
read and understands this Agreement and the Plan as of the day and year first
written above.
Aloha Holdings, Inc.
-----------------------------
By:
Title:
-----------------------------
Participant
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EXHIBIT B
RESTRICTED STOCK AGREEMENT
THIS AGREEMENT, made as of this ____ day of _________ 200_ between Aloha
Holdings, Inc. (the "COMPANY") and ___________ (the "PARTICIPANT").
WHEREAS, the Company has adopted and maintains the Aloha Holdings, Inc.
2002 Stock Incentive Plan (the "PLAN") to promote the interests of the Company
and its stockholders by providing the Company's key employees and others with an
appropriate incentive to encourage them to continue to provide services to the
Company and to improve the growth and profitability of the Company;
WHEREAS, the Plan provides for the grant to Participants in the Plan of a
share of Restricted Stock of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows:
1. GRANT OF RESTRICTED STOCK. Pursuant to, and subject to, the terms
and conditions set forth herein and in the Plan, the Company hereby grants to
the Participant an Award of Restricted Stock (the "RESTRICTED STOCK") with
respect to ______ shares of Common Stock of the Company.
2. GRANT DATE. The Grant Date of the Restricted Stock hereby granted is as
of ______,
3. INCORPORATION OF PLAN. All terms, conditions and restrictions of the
Plan are incorporated herein and made part hereof as if stated herein. If there
is any conflict between the terms and conditions of the Plan and this Agreement,
the terms and conditions of the Plan, as interpreted by the Committee, shall
govern. All capitalized terms used herein shall have the meaning given to such
terms in the Plan.
4. VESTING DATE. The Restricted Stock shall Vest in the following manner
and on the following vesting dates (the "VESTING DATE(S)"): [_________] shares
of Common Stock underlying the Award of Restricted Stock shall become vested
[_________________________]; PROVIDED, HOWEVER, that the Participant is Engaged
by the Company or any of its Affiliates on each such Vesting Date.
5. EXPIRATION DATE. Subject to the provisions of the Plan, with respect to
the shares of Restricted Stock which have not become Vested, the Award of
Restricted Stock shall expire on the date the Participant's Engagement is
terminated for any reason.
6. DELAYS OR OMISSIONS. No delay or omission to exercise any right, power
or remedy accruing to any party hereto upon any breach or default of any party
under this Agreement, shall impair any such right, power or remedy of such party
nor shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar
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breach or default thereafter occurring nor shall any waiver of any single breach
or default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party or any provisions or
conditions of this Agreement, shall be in writing and shall be effective only to
the extent specifically set forth in such writing.
7. LIMITATION ON TRANSFER. Prior to the Vesting Date(s) of a share of
Restricted Stock, each share of Restricted Stock shall not be Transferable under
any circumstances and no transfer of a Participant's rights with respect to such
share, whether voluntary or involuntary, by operation of law or otherwise, shall
vest in the Transferee with any interest or right in or with respect to such
share, but immediately upon any attempt to Transfer such rights, such share, and
all of the rights related thereto, shall be cancelled and shall be forfeited by
the Participant and the Transfer shall be of no force or effect.
8. INTEGRATION. This Agreement, and the other documents referred to herein
or delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to its subject matter. There are no
restrictions, agreements, promises, representations, warranties, covenants or
undertakings with respect to the subject matter hereof other than those
expressly set forth herein. This Agreement, including without limitation the
Plan, supersedes all prior agreements and understandings between the parties
with respect to its subject matter.
9. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
10. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware, without regard to
the provisions governing conflict of laws.
11. PARTICIPANT ACKNOWLEDGMENT. The Participant hereby acknowledges receipt
of a copy of the Plan. The Participant hereby acknowledges that all decisions,
determinations and interpretations of the Committee in respect of the Plan, this
Agreement and the Option shall be final and conclusive.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its duly authorized officer and said Participant has hereunto signed
this Agreement on his own behalf, thereby representing that he has carefully
read and understands this Agreement and the Plan as of the day and year first
written above.
Aloha Holdings, Inc.
-----------------------------
By:
Title:
-----------------------------
Participant
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