Exhibit 10.7

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”), effective as of April 1, 2002 (the
“Effective Date”), is entered into by and between H. Norman Davies, Jr.  (the
“Employee”) and Hawaiian Airlines, Inc., a Hawaii corporation (the “Company”).

 

The Company desires to establish its right to services of the Employee, in the
capacity described below, on the terms and conditions and subject to the rights
of termination hereinafter set forth, and the Employee is willing to accept such
employment on such terms and conditions.

 

In consideration of the mutual agreements hereinafter set forth, the Employee
and the Company have agreed and do hereby agree as follows:

 

1.             EMPLOYMENT AS EXECUTIVE VICE PRESIDENT - OPERATIONS.  The Company
does hereby employ, engage, and hire the Employee as Executive Vice
President-Operations and the Employee does hereby accept and agree to such
hiring, engagement, and employment. The Employee’s duties during the Employment
Period (defined below) shall be the executive, managerial and reporting duties
as are appropriate for an Executive Vice President- Operations and such other
duties as the Board of Directors of the Company and the Chairman of the Board or
the Chief Executive Officer – President of the Company shall from time to time
prescribe and as provided in the Bylaws of the Company. The Employee shall
report to the Chairman of the Board of the Company or to such other executive
officer as the Chairman shall designate.  The Employee shall devote full time,
energy and skill to the performance of Employee’s duties for the Company and for
the benefit of the Company, reasonable vacations authorized by the Chairman of
the Board and reasonable absences because of illness excepted.  Furthermore, the
Employee shall exercise due diligence and care in the performance of Employee’s
duties to the Company under this Agreement.

 

2.             TERM OF AGREEMENT.  The term of this Agreement (“Term”) shall
commence on the Effective Date and shall continue for a period of eighteen (18)
months; provided, however, that on the first day of each calendar month
commencing one month following the Effective Date, the Term shall be extended
one additional month unless either party shall have given written notice to the
other party that it does not wish to extend the Term.  The period of time
commencing on the Effective Date and ending on the expiration date of the Term,
or, if earlier, the date of termination of the Employee’s employment
(“Termination Date”) under this or any successor agreement shall be referred to
as the “Employment Period.”

 

3.             COMPENSATION.

 

(a)           BASE SALARY.  The Company shall pay the Employee, and the Employee
agrees to accept from the Company, in full payment of Employee’s services to the
Company, a base salary at the rate of TWO HUNDRED THOUSAND AND NO/100THS DOLLARS
($200,000.00) per year (“Base Salary”), payable in equal bimonthly installments
or at such other time or times as the Employee and the Company shall agree.  The
Employee’s Base Salary shall be reviewed at least annually by the Company and
may be increased as determined by the Company’s Compensation Committee and/or
the Board of Directors, or as delegated by them, in their sole and absolute
discretion.

 

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Employment Agreement

H. NORMAN DAVIES, JR.

 

 

(b)           STOCK OPTIONS.  Subject to action of the Compensation Committee of
the Company’s Board of Directors, Employee shall be eligible receive grants of
options to purchase shares of the Company’s stock pursuant to the Company’s 1996
Stock Incentive Plan, As Amended.  Any such options shall have a term of ten
years so long as the Employee remains as an employee with the Company, shall
vest ratably on each of the first four anniversaries of the grant date, and
shall be at an exercise price equal to the fair market value of the stock on the
grant date.

 

(c)           PERFORMANCE BONUS – BOARD OF DIRECTORS DISCRETION.  The Employee
shall be eligible to receive an annual performance bonus.  Any such bonus
awarded to the Employee shall be payable in the amount, in the manner, and at
the time determined by the Company’s Compensation Committee and/or the Board of
Directors, in their sole and absolute discretion.

 

4.             FRINGE BENEFITS.  The Employee shall be entitled to participate
in any benefit programs adopted from time to time by the Company for the benefit
of its executive employees, and the Employee shall be entitled to receive such
other fringe benefits as may be granted to Employee from time to time by the
Company’s Compensation Committee and/or the Board of Directors.

 

(a)           BENEFIT PLANS.  The Employee shall be entitled to participate in
any benefit plans relating to stock options, stock purchases, pension, thrift,
profit sharing, life and disability insurance, medical coverage, executive
medical and dental coverage, education, or other retirement or employee benefits
available to all other executive employees of the Company, subject to any
restrictions specified in such plans.

 

(b)           TRAVEL BENEFITS.  Employee and Employee’s spouse shall be entitled
to travel benefits on Company flights (but not charter flights) at the PS2F/PS2Y
category. Employee’s eligible dependents shall be entitled to travel benefits on
Company flights (but not charter flights) at the PS2F/PS2Y category when
traveling with Employee and/or Employee’s spouse; when not traveling with
Employee and/or Employee’s spouse, eligible dependents shall be entitled to
travel benefits on Company flights (but not charter flights) at the SA1F/PS8Y
category.  Employee and Employee’s eligible dependents shall be entitled to
travel benefits on other airlines at the sole discretion of such airlines, at a
comparable level to that provided to other Company executive officers.

 

(c)           EXECUTIVE LONG-TERM DISABILITY INSURANCE PLAN.  Subject to the
applicable waiting periods, the Employee will be included in the Company’s
Executive Long-Term Disability Insurance Plan, as it may be modified from time
to time, at the Company’s expense.

 

(d)           BUSINESS EXPENSES.  The Company shall reimburse the Employee for
any and all necessary, customary, and usual expenses, properly receipted in
accordance with Company policies, incurred by the Employee on behalf of the
Company.

 

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(e)           RELOCATION ALLOWANCE.    If Employee resigns or is terminated
without cause, the Company will pay moving expenses, not to exceed $50,000, from
Hawaii to Employee’s next destination on the U.S. Mainland.  To the extent such
reimbursed expenses are taxable, the amounts paid hereunder will be grossed up
by the Company to make Employee whole for such expenditures.

 

5.             CONFIDENTIAL INFORMATION.  Employee recognizes that by reason of
Employee’s employment by and service to the Company, Employee will occupy a
position of trust with respect to business and technical information of a secret
or confidential nature which is the property of the Company which will be
imparted to Employee from time to time in the course of the performance of
Employee’s duties hereunder (the “Confidential Information”).  Employee
acknowledges that such information is a valuable and unique asset of the Company
and agrees that Employee shall not, during or after the Term of this Agreement,
use or disclose directly or indirectly any Confidential Information of the
Company to any person, except that Employee may use and disclose to authorized
personnel of the Company such Confidential Information as is reasonably
appropriate in the course of the performance of Employee’s duties hereunder. 
Confidential Information of the Company shall include all information and
knowledge of any nature and in any form relating to the Company including but
not limited to, business plans; development projects; computer software and
related documentation and materials; designs, practices, processes, methods,
know-how and other facts relating to the business of the Company; advertising,
promotions, financial matters, sales and profit figures, customers or customer
lists.  Confidential Information shall not include any information that is or
shall become publicly known through no fault of the Employee and any information
received in good faith from a third party who has the right to disclose such
information and who has not received such information, either directly or
indirectly, from the Company.

 

6.             TERMINATION OF EMPLOYEE’S EMPLOYMENT.

 

(a)           DEATH.  If the Employee dies while employed by the Company,
Employee’s employment shall immediately terminate.  The Company’s obligation to
pay the Employee’s Base Salary shall cease as of the date of the Employee’s
death.  Thereafter, the Employee’s beneficiaries or estate shall receive
benefits in accordance with the Company’s retirement, insurance, and other
applicable programs and plans then in effect.

 

(b)           DISABILITY.  If, as a result of the Employee’s mental or physical
incapacity, the Employee shall be unable to perform the services for the Company
contemplated by this Agreement in the manner in which Employee previously
performed them during an aggregate one hundred twenty (120) business days in any
consecutive seven (7) month period (“Disability”), the Employee’s employment may
be terminated by the Company for Disability.  During any period prior to such
termination during which the Employee is absent from the full-time performance
of Employee’s duties with the Company due to Disability, the Company shall
continue to pay the Employee the Base Salary at the rate in effect at the
commencement of such period of Disability.  Any such payments made to the
Employee shall be reduced by amounts received from disability insurance obtained
or provided by the Company, and by the amounts of any benefits payable to the
Employee, with respect to such period, under the Company’s Executive Long-Term
Disability Plan.  Subsequent to the termination provided for in this Section
7(b), the Employee’s benefits shall be determined under the Company’s retirement

 

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insurance, and other compensation programs then in effect in accordance with the
terms of such programs.

 

(c)           TERMINATION BY THE COMPANY FOR CAUSE.  The Company may terminate
the Employee’s employment under this Agreement for “Cause” at any time prior to
expiration of the Term of the Agreement, only upon the occurrence of any one or
more of the following events:

 

(i)            The material breach of this Agreement by the Employee, including
without limitation, repeated willful neglect of the Employee’s duties, the
Employee’s material lack of diligence and attention in performing services as
provided in this Agreement, or the Employee’s repeated willful failure to
implement or adhere to policies established by, or directives of, the Company’s
Board of Directors.

 

(ii)           Conduct of a criminal nature that may have an adverse impact on
the Company’s reputation and standing in the community; or

 

(iii)          Fraudulent conduct in connection with the business affairs of the
Company, regardless of whether said conduct is designed to defraud the Company
or others.

 

In the event of termination for Cause, the Company’s obligation to pay the
Employee’s Base Salary shall cease as of the Termination Date.  If the
Employee’s employment is terminated for Cause, the Employee’s employment may be
terminated immediately without any advance written notice.

 

(d)           TERMINATION BY THE COMPANY WITHOUT CAUSE.  The Company shall have
the right to terminate this Agreement prior to the expiration of the Term, at
any time, without “Cause.”  In the event the Company shall so elect to terminate
this Agreement, the Employee shall receive compensation pursuant to the
provisions of Section 7 hereof.

 

(e)           TERMINATION BY THE EMPLOYEE.    The Employee shall have the right
to terminate this Agreement at any time upon thirty (30) days’ written notice.  
If the Employee terminates this Agreement upon thirty (30) days’ written notice
after June 7, 2003, the Employee shall receive compensation pursuant to the
provisions of Section 7 hereof.

 

7.             COMPENSATION UPON TERMINATION OR NON-RENEWAL BY THE COMPANY OTHER
THAN FOR CAUSE OR BY THE EMPLOYEE AFTER JUNE 7, 2003.  If the Employee’s
employment shall be terminated (i) by act of the Company other than for Cause or
(ii) by the Employee upon thirty (30) days’ written notice after June 7, 2003,
the Employee shall be entitled to the following benefits:

 

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(a)           PAYMENT OF UNPAID BASE SALARY.  The Company will immediately pay
the Employee any portion of the Employee’s Base Salary not paid prior to the
Termination Date.

 

(b)           CONTINUED PAYMENT OF BASE SALARY.  For the eighteen (18) month
period subsequent to the Termination Date, the Company shall pay to the
Employee, on a bimonthly basis an amount equal to all Base Salary that would
have been payable to the Employee pursuant to this Agreement had the Employee
continued to be employed for the eighteen  (18) months immediately following the
Termination Date (such Base Salary for such period being equal to the Employee’s
Base Salary in effect as of the Termination Date).

 

(c)           CONTINUATION OF FRINGE BENEFITS.  The Company shall continue to
provide the Employee with all Fringe Benefits set forth in Section 4 throughout
the remaining eighteen (18) month period subsequent to the Termination Date, as
if the Employee’s employment under the Agreement had not been terminated.  Such
Fringe Benefits to be provided to Employee during this period will be those
benefit plans offered during such period to other employees, provided that long
term disability insurance will not be so provided after termination because the
carrier limits provision of such to employees.  If required bylaw or otherwise
allowed by the relevant provider, Employee will be afforded the opportunity to
continue such benefits at his cost after the coverage ends under this
Agreement..

 

8.             NONCOMPETITION PROVISIONS.

 

(a)           NONCOMPETITION.    For a period of eighteen (18) months commencing
on the Termination Date, Employee agrees and covenants that he shall not,
directly or indirectly, undertake to become an employee, officer, partner,
consultant or otherwise be connected with any entity for which, at such time,
(i) in excess of 5% of its business is, or (ii) in which his specific duties and
responsibilities are, in direct competition with the Company either within
Hawaii or on routes to and from Hawaii serviced by the Company.    Employee
acknowledges and agrees that any breach of this non-competition provision shall
entitle Employer to immediately terminate payments pursuant to Section 7 of this
Agreement.

 

(b)           NONDISPARAGEMENT.    For a period of eighteen (18) months
commencing on the Termination Date, Employee agrees that he shall not make any
statements that disparage or tend to disparage the Company or its products,
services, officers, employees, advisers or other business contacts.   Employee
acknowledges and agrees that any breach of this non-disparagement provision
shall entitle Employer to immediately terminate payments pursuant to Section 7
of this Agreement.

 

(c)           RIGHT TO COMPANY MATERIALS.  The Employee agrees that all styles,
designs, lists, materials, books, files, reports correspondence, records, and
other documents (“Company Materials”) used, prepared, or made available to the
Employee, shall be and shall remain the property of the Company.  Upon the
termination of employment or the expiration of this Agreement, all Company
Materials shall be returned immediately to the Company, and the Employee shall
not make or retain any copies thereof.

 

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(d)           ANTI-SOLICITATION.  The Employee promises and agrees that during
the term of this Agreement Employee will not influence or attempt to influence
customers or suppliers of the Company or any of its present or future
subsidiaries or affiliates, either directly or indirectly, to divert their
business to any individual, partnership, firm, corporation or other entity then
in competition with the business of the Company or any subsidiary or affiliate
of the Company.

 

(e)           SOLICITING EMPLOYEES.  During the term of this Agreement and for
the eighteen (18) month period commencing on the Termination Date, the Employee
promises and agrees that Employee will not directly or indirectly solicit any of
the Company’s employees to work for any business, individual, partnership, firm,
corporation, or other entity then in competition with the business of the
Company or any subsidiary or affiliate of the Company.

 

9.             NOTICES.  All notices, requests, demands and other communications
hereunder shall be in writing and shall be effective upon receipt. All notices
shall be given or served personally or sent by facsimile or first class mail,
postage prepaid, addressed as follows:

 

If to the Company:

Hawaiian Airlines, Inc.

 

Attn:  General Counsel

 

3375 Koapaka Street, Suite G-350

 

Honolulu, Hawaii  96819

 

Phone:  808/835-3610

 

Fax:       808/835-3690

 

 

If to the Employee:

H. Norman Davies, Jr.

 

7171 Makaa St.

 

Honolulu, Hawaii 96825

 

Phone:  808-396-1950

 

or to such other address which the party receiving the notice has notified the
party giving the notice in the manner aforesaid.

 

10.           ATTORNEYS’ FEES.  In the event judicial or quasi-judicial
determination is necessary of any dispute arising as to the parties’ rights and
obligations hereunder, the Company and the Employee shall bear their respective
attorneys’ fees and costs associated with such dispute.

 

11.           TERMINATION OF PRIOR AGREEMENTS.  This Agreement terminates and
supersedes any and all prior agreements and understandings between the parties
with respect to employment or with respect to the compensation of the Employee
by the Company from and after the Effective Date, including that Employment
Agreement dated October 13, 1997 and the amendments thereto between Employee and
the Company.

 

12.           ASSIGNMENT; SUCCESSORS.  This Agreement is personal in its nature
and neither of the parties hereto shall, without the consent of the other,
assign or transfer this Agreement or any rights or obligations hereunder;
provided that, in the event of the merger, consolidation, transfer, or sale of
all or substantially all of the assets of the Company with or to any other
individual or entity, this Agreement shall, subject to the provisions hereof, be
binding upon, and inure to the benefit of such successor and such successor
shall discharge and perform all the promises, covenants, duties, and obligations
of the Company hereunder.

 

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13.           GOVERNING LAW.  This Agreement and the legal relations thus
created between the parties hereto shall be governed by and construed under and
in accordance with the laws of the State of Hawaii.

 

14.           ENTIRE AGREEMENT;  HEADINGS.   This Agreement embodies the entire
agreement of the parties respecting the matters within its scope and may be
modified only in writing.   Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.

 

15.           WAIVER:  MODIFICATION.  Failure to insist upon strict compliance
with any of the terms, covenants, or conditions hereof shall not be deemed a
waiver of such term, covenant, or condition, nor shall any waiver or
relinquishment of, or failure to insist upon strict compliance with, any right
or power hereunder at any one or more times be deemed a waiver or relinquishment
of such right or power at any other time or times.  This Agreement shall not be
modified in any respect except by a writing executed by each party hereto.

 

16.           SEVERABILITY.  In the event that a court of competent jurisdiction
determines that any portion of this Agreement is in violation of any statute or
public policy, only the portions of this Agreement that violate such statute or
public policy shall be stricken.  All portions of this Agreement that do not
violate any statute or public policy shall continue in full force and effect. 
Further, any court order striking any portion of this Agreement shall modify the
stricken terms as narrowly as possible to give as much effect as possible to the
intentions of the parties under this Agreement.

 

17.           INDEMNIFICATION.  The Company shall indemnify and hold the
Employee harmless to the maximum extent permitted by the appropriate provisions
of the statutes of the State of Hawaii and the Restated Articles of
Incorporation of the Company, as such may be amended.

 

18.           COUNTERPARTS.  This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officers, and the Employee has hereunto signed this Agreement,
as of the date first above written.

 

 

EMPLOYEE:

HAWAIIAN AIRLINES, INC.

 

 

 

 

By:

 

 

By:

 

 

 

H. Norman Davies, Jr.

 

John W. Adams

 

 

 

Its Chairman of the Board,
Chief Executive Officer and
President

 

 

 

 

 

 

 

 

 

 

BY:

 

 

 

 

Lyn Flanigan Anzai

 

 

Its Vice President, General Counsel
And Corporate Secretary

 

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