EXHIBIT 99.2
November 6, 1995
Hawaiian Airlines, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx X-000
Xxxxxxxx, Xxxxxx 00000
Ladies and Gentlemen:
Subject to the terms and conditions set forth herein, Airline
Investors Partnership, a Delaware partnership ("AIP"), intends to purchase, and
Hawaiian Airlines, Inc., a Hawaiian corporation (the "Company"), intends to
issue and sell at the Closing referred to below 18,181,818 shares of Class A
Common Stock of the Company ("Common Stock"). The Common Stock shall represent
at least 51% of the voting power of the capital stock of the Company on a Fully
Diluted Basis (as defined below).
For purposes hereof, the term "Fully Diluted Basis" shall take into
account (a) all Common Stock issued or to be issued pursuant to the Company's
Consolidated Plan of Reorganization, as amended (estimated at 9,400,000 shares)
(assuming that all shares of Class B Common Stock are converted to shares of
Class A Common Stock),(b) all outstanding options to purchase Class A Common
Stock (600,000 shares), (c) all outstanding warrants to purchase Common Stock
(989,011 shares), as adjusted by anti-dilution formulas taking into account the
issuance of the Common Stock to AIP, (d) all other stock, warrants and options
to be issued in the Company's proposed restructuring, and (e) the Common Stock
issued to AIP (assuming that any shares of Class B Common Stock are converted to
shares of Class A Common Stock).
1. Timing. The Company and AIP acknowledge that time is of the
------
essence in this transaction and agree to use all reasonable efforts, subject to
the terms and conditions set forth herein, to execute and deliver the Definitive
Agreements (as defined below) as promptly as possible, with a view towards
completing the transactions contemplated hereby at a closing (the "Closing") to
occur as promptly as
possible and, in any case, no later than January 31, 1996 (the "Closing Date").
2. Purchase Price. The purchase price to be paid by AIP for the
--------------
Common Stock shall be $20,000,000, in cash, and shall be paid to the Company on
the Closing Date. The proceeds from AIP's investment contemplated hereby shall
be used as the New Board (as defined below) shall determine.
3. Governance. From and after the Closing Date, the Board of
----------
Directors of the Company shall continue to be composed of 11 members, of which 6
will be new members nominated by AIP (the "New Board"). It is the desire of AIP
that the constituencies currently on the Board remain represented. Therefore,
AIP is looking to the Company to make appropriate suggestions as to which
current members of the Board of Directors of the Company (the "Board") should
remain as directors.
4. Process.
-------
(a) Subject to the terms and conditions hereof, AIP and the Company
shall use their reasonable efforts to negotiate the terms of definitive
agreements with respect to the investment contemplated hereby (the "Proposed
Investment"), and the Company, with AIP, shall use their reasonable efforts to
negotiate the terms of definitive agreements with the parties referred to in
paragraph 5(a)(i), (ii) and (iii) below, all within 30 days from the date hereof
(collectively, "Definitive Agreements").
(b) The Company shall provide AIP with any information reasonably
requested by AIP concerning the Company or any subsidiary of the Company and
shall grant representatives of AIP reasonable access to any key employees of the
Company or any subsidiary of the Company as promptly as practicable so that AIP
can conduct the due diligence investigations required in connection with the
Proposed Investment. In addition, the Company hereby authorizes AIP to contact
representatives of the Lenders, AA and the Unions (each as defined below) and
the Company hereby authorizes such representatives to cooperate with AIP and/or
its representatives and advisors in connection with AIP's due diligence
investigation. AIP will use its reasonable efforts to complete its due
diligence investigations of the Company as promptly as practicable. AIP intends
to complete its due diligence investigations within 30 days from the date
hereof, if information reasonably requested by AIP is provided with reasonable
promptness.
2
5. Conditions.
----------
(a) Conditions to Execution and Delivery of the Definitive Agreements.
-----------------------------------------------------------------
AIP's execution and delivery of the Definitive Agreements relating to the
Proposed Investment shall be subject to the following conditions, each of which
shall be fulfilled to the satisfaction of AIP on or prior to the date that AIP
executes and delivers such Definitive Agreements:
(i) The Company's creditors holding its outstanding secured and
unsecured indebtedness (the "Lenders") shall have consented, if required
(including the waiver of change of control or other conditions or covenants
contained in their loan agreements) to the consummation of the Proposed
Investment and to the Definitive Agreements referred to in Clauses (ii) and
(iii) below.
(ii) American Airlines ("AA") shall have agreed pursuant to a
Definitive Agreement, subject, if necessary, to the consummation of the
Proposed Investment, to the terms of the restructuring of its current
arrangements with the Company, provided that such terms are not
inconsistent with the assumptions used by the Company in connection with
its preparation of the projections contained in the Confidential Memorandum
(as defined below) (the "Projection Assumptions") or are otherwise
satisfactory to AIP and the Board.
(iii) The International Association of Machinists and Aerospace
Workers (AFL-CIO), the Air Line Pilots Association International, the
Association of Flight Attendants and the Transport Workers Union
(collectively, the "Unions") shall each have agreed pursuant to Definitive
Agreements, subject, if necessary, to the consummation of the Proposed
Investment, to modify and extend its respective collective bargaining
agreements so that, as so modified and extended, such agreements are not
inconsistent with the Projection Assumptions or are otherwise satisfactory
to AIP.
(iv) The preparation, execution and delivery by the Company, AIP
and other required parties of Definitive Agreements containing customary
representations, conditions and covenants, including, but not limited to, a
Closing condition that there be no Material
3
Adverse Change (as defined below) from the date of the Definitive
Agreements to the Closing Date.
(v) The satisfactory completion of a business review by AIP,
consisting of, among other things, confirmation of the information set
forth in the Confidential Memorandum, dated September 15, 1995, Parts I and
II (the "Confidential Memorandum").
(vi) Satisfactory completion of (a) a legal due diligence review
by counsel for AIP and (b) an environmental review by AIP and a consultant
of AIP's choice.
(vii) Except as disclosed in the Confidential Memorandum or in
other public documents, or otherwise in writing to AIP prior to the date
hereof, no material adverse change in the business, assets, properties,
financial condition or prospects of the Company shall have occurred from
June 30, 1995 until the date that Definitive Agreements are executed and
delivered by AIP ("Material Adverse Change"), and AIP shall be satisfied
that the Company will not be subject to any material adverse consequences
as a result of the transactions contemplated by the Definitive Agreements
resulting from any change of control provisions in any agreements of the
Company, any relationships between the Company and any other person, or
otherwise.
(b) Conditions to Closing. The Closing shall be subject to the
---------------------
following conditions, each of which shall be fulfilled to the reasonable
satisfaction of AIP on or prior to the Closing Date:
(i) The Company shall have executed a Registration Rights
Agreement in favor of AIP to provide, among other things, for two demand
rights to register (at the expense of the Company and with appropriate
Company indemnification agreements) the Common Stock under the Securities
Act of 1933, as amended, and the right to participate with the Company or
any other person that is selling Common Stock pursuant to a registered
offering within 10 years of the date of such agreement.
4
(ii) The Company shall have obtained waivers of all preemptive
and other such rights that will or may be triggered by the transactions
contemplated hereby, and the Company's existing Shareholder Rights Plan
shall be amended to permit the Proposed Investment without causing adverse
consequences to AIP as a result thereof.
(iii) The Lenders, AA and the Unions shall have executed
Definitive Agreements as described in paragraphs 5(a)(i)-(iii) above.
(iv) The Company shall have obtained all shareholder approvals of
the transactions contemplated hereby as may be required by any agreement,
stock exchange or applicable law.
(v) The Company shall have obtained, and/or cooperated with AIP
in obtaining, all necessary governmental consents and approvals, including
clearance under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended and Department of Transportation and all other regulatory
clearances.
6. Conduct by the Parties. From the date hereof until the
----------------------
Termination Date (as defined below), the Company shall not, nor shall the
Company permit any of its (or any of its subsidiary's) officers, directors,
employees, advisors, representatives or agents, directly or indirectly, to,
solicit, initiate or encourage the submission of any Investment Proposal (as
defined below), or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or can reasonably be expected to lead
to, an Investment Proposal. For purposes of this letter, "Investment Proposal"
means any proposal or offer (other than an offer by AIP) for a merger,
consolidation or other business combination involving the Company, or to acquire
in any manner, directly or indirectly, any substantial part of the business or
assets of, or any equity interest in, or any voting securities of the Company.
If the Company receives any Investment Proposal, the Company will advise AIP
immediately of the terms of the Investment Proposal and, if the Investment
Proposal is in writing, the Company will furnish AIP a true and complete copy
thereof.
Notwithstanding the foregoing, the Board or the Negotiating Committee
may, upon prior notice to AIP, furnish information to any person requesting such
information with a
5
view towards making an Investment Proposal and may negotiate and enter into an
agreement with such person if the Board or the Negotiating Committee (a) obtains
a confidentiality agreement with respect to such information, (b) reasonably
believes the person has the financial resources or access to such resources to
make and carry out an Investment Proposal and (c) is advised in writing by its
outside counsel that it is required to provide such information in order to
carry out its fiduciary duties under Hawaiian law.
7. Publicity. Except as required by law, regulation or stock
---------
exchange requirements, neither of the parties hereto shall, without the consent
of the other, make any public announcement or issue any press release with
respect to the transactions contemplated by this letter of intent. In no event
will either party make any public announcement or issue any press release
without consulting with the other party, to the extent possible, as to the
content of such public announcement or press release, and in no event will
either party make any public announcement or issue any press release concerning
the identity of the other party to the Proposed Investment without the prior
agreement of the other party.
8. Termination. This letter of intent may be terminated at any time
-----------
by any party hereto for any reason whatsoever upon written notice to the other
party. In addition, this letter of intent shall terminate automatically on
December 8, 1995 (the "Termination Date"), or such other later date as the
parties may agree, if the Definitive Agreements shall not have been executed by
such date. Upon any such termination, any obligations under this letter of
intent will terminate and no party shall have any liability whatsoever to any
other party except as provided in the next sentence. Notwithstanding any
termination of this letter of intent, paragraphs 7, 8, 9 and 10 shall remain in
full force and effect, and no party shall be relieved of liability for any
breach of any such paragraph.
9. Expenses. If this letter of intent is terminated (other than a
--------
termination initiated by AIP prior to the Termination Date) and whether or not
Definitive Agreements are executed, the Company agrees to pay all of the
Transaction Expenses (as defined below) up to a maximum of $400,000.
"Transaction Expenses" shall mean the documented out-of-pocket expenses of AIP
(including, without limitation, all fees and expenses of the advisors of AIP
(including, without limitation, its lawyers, accountants and consultants) but
excluding internal salaries and overhead), whether or not incurred prior to the
date hereof, arising out of, relating to or incidental to the discussion,
evaluation, negotiation and documentation of the
6
transactions contemplated hereby, including, without limitation, this letter of
intent, and shall mean and include, with respect to fees of professionals based
on hourly rates, such fees to the extent they are based on the standard hourly
rates of such professionals.
10. Termination Fees. In addition to the Transaction Expenses
----------------
payable by the Company in accordance with paragraph 9 above, (a) if this letter
of intent is terminated (other than a termination initiated by AIP) prior to the
Termination Date or the Definitive Agreements are not executed and delivered by
the Company, then, if within one year of the date hereof, the Company
consummates a transaction or series of transactions involving the issuance and
sale by the Company of equity securities for aggregate consideration in excess
of $10,000,000 or otherwise causes a change of control of the Company with any
person other than AIP, then the Company shall pay to AIP a termination fee, in
the maximum amount of $750,000, equal to 5% of the aggregate consideration
received by the Company in any such transaction within the first six months of
the date hereof and 2-1/2% of such consideration received within the next
following six months; and (b) if this letter of intent is terminated by the
Company, the Company shall pay to AIP a termination fee of $250,000.
11. Enforceability. Except for this paragraph and paragraphs 7, 8,
--------------
9, and 10, this letter is not intended to be, and does not constitute, a binding
or enforceable agreement, but is merely a statement of intention to facilitate
the negotiation and preparation of the Definitive Agreements.
12. Assignment. AIP may assign this agreement to a limited
----------
partnership, corporation or other limited liability company, of which Xxxx Xxxxx
is the general partner or chief executive officer.
13. Rights Offering. AIP agrees that if the Closing takes place, the
---------------
Company shall make a rights offering at the Closing or as soon thereafter as
practicable, as the New Board shall determine, to all shareholders (other than
AIP) and the holders of options under the Employee Stock Option Plan, which will
have such terms and conditions as the New Board shall determine, but including
the following:
(a) One Right per share of Common Stock;
(b) Exercisable for twenty (20) days at a discount equal to at least
30% of the Market Price for the Common Stock measured
7
over an agreed upon period of time prior to the exercise date, subject to a
minimum price of $1.10 per share (the same amount being paid by AIP).
As a condition of such rights offering, the holders of outstanding warrants
shall agree to waive any anti-dilution protection as a result of such issuance.
If the foregoing is in accordance with your understanding, please sign
the attached copy of this letter and return it to the undersigned.
Sincerely yours,
AIRLINE INVESTORS PARTNERSHIP
(a Delaware partnership)
By: /s/ Xxxx Xxxxx
---------------------------
Xxxx Xxxxx, Partner
ACCEPTED AND AGREED TO:
HAWAIIAN AIRLINES, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------
8
