Exhibit 10.1


 


AMENDMENT NO. 1 TO AMENDED AND
RESTATED

EMPLOYMENT AGREEMENT


 


This
AMENDMENT NO. 1 TO THE AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Amendment”)
is entered into, as of December 26, 2007, but with an effective date as of
November 8, 2007, by and between each of HAWAIIAN HOLDINGS, INC. and its
wholly owned subsidiary HAWAIIAN AIRLINES, INC. (which companies are
individually and collectively identified hereinafter as the “Company”) and MARK
B. DUNKERLEY (hereinafter the “Employee”).


 


WITNESSETH:


 


WHEREAS,
the Company and Employee entered into an Employment Agreement dated as of December 23,
2002, as amended and restated in its entirety by that certain Amended and
Restated Employment Agreement, dated as of August 18, 2005 (hereinafter
the “Employment Agreement”); and


 


WHEREAS,
the Company and Employee desire to amend the Employment Agreement on the terms
and subject to the conditions set forth herein.


 


NOW,
THEREFORE, the parties hereto agree as follows:


 


1.                                       Section 2
shall be amended and restated in its entirety to read as follows, effective as
of the date hereof:


 


“2.           TERM OF
AGREEMENT.  The term of
this Agreement (“Term”) shall commence on November 8, 2007 (the “Renewal
Effective Date”) and shall continue until the third anniversary of the Renewal
Effective Date.  The period of time
commencing on the Renewal Effective Date and ending on the expiration date of
the Term, or, if earlier, the date of termination of Employee’s employment (“Termination
Date”) under this Agreement shall be referred to as the “Employment Period.”  The Company agrees that it will discuss with
Employee at least twelve (12) months prior to the expiration date of the Term
(unless Employee’s employment has been terminated prior to such date), its
intentions with respect to any extension of its employment of Employee beyond
the Termination Date.”


 


2.                                       The
first sentence of Section 3(a) shall be amended and restated in its
entirety to read as follows, effective as of the Renewal Effective Date:


 


“a)           BASE SALARY.  The Company shall pay the Employee, and the
Employee agrees to accept from the Company as payment for his services to the
Company, a base salary at the rate of Five Hundred and Eighty Thousand Dollars
($580,000.00) per year (“Base Salary”), payable in equal semi-monthly
installments or at such other time or times as the Employee and the Company
shall agree, provided that in no event will such payment be made later than the
409A Limit as defined in Section 21(a) hereof.”


 

















 


3.                                       A
new sentence shall be added at the end of Section 3(b) which shall
read in its entirety as follows, effective as of the Renewal Effective Date,


 


“Any
performance/incentive bonus pursuant to this paragraph shall be paid no later
than the 409A Limit as defined in Section 21(a) hereof.


 


4.                                       Section 3(c) shall
be amended and restated in its entirety to read as follows, effective as of the
Renewal Effective Date:


 


“c)           STOCK INCENTIVE PLAN.  On the Renewal Effective Date, Employee
received a grant of options to purchase 225,000 shares (the “Extension Options”)
of the common stock, par value $0.01 per share, of HH.  The Extension Options have a five year
term.  The Extension Options are in
addition to any other Options granted in accordance with this Section 3(c).  All Extension Options will vest as follows: (i) one-third
(1/3) on the first anniversary of the Renewal Effective Date, (ii) one-third
(1/3) on the second anniversary of the Renewal Effective Date, (iii) one-third
(1/3) on the third anniversary of the Renewal Effective Date; and further
provided, however that in the event of a “change in control” (as defined in Section 10
below) or in accordance with Section 8 hereof, all outstanding Options
shall immediately become fully vested and exercisable and in the case of any
such “change in control,” such vesting shall be effective as of the moment
immediately prior thereto.  Furthermore,
the Employee has received prior to the Renewal Effective Date a grant of
options to purchase an additional 1,044,000 shares (the “Existing Options,” and
together with the Extension Options, the “Options”) of the common stock of HH,
300,000 of which were granted on June 10, 2005 and 744,000 of which were
granted during July 2005.  All
Existing Options have vested as of the Renewal Effective Date, other than
348,000 of such Options which shall vest on January 1, 2008.  In the event that HH shall distribute to the
holders of its common stock rights to acquire its common stock or makes any
offer solely to holders of its common stock to subscribe for or obtain common
stock or warrants, options, convertible securities or other instruments
convertible into, or exercisable for, common stock in each case that are (i) distributed
or offered solely to common stock holders generally at any time within three (3) years
of the Renewal Effective Date and (ii) entitle the common stockholders to
acquire common stock at a discount to, or at a price less than, the fair market
value (determined by reference to such value on the day preceding the public
announcement of any such distribution or offering) of common stock
(collectively, the “Rights”), then the Company shall also grant Employee
additional options to purchase shares of the common stock of HH (the 


 


2

















 


“Additional Options”) on the date that is two business days after the
last day for the exercise of the Rights. 
The number of shares represented by the Additional Options shall equal (i) that
percentage which the number of shares of common stock purchasable or issuable
pursuant to the Rights bears to the number of outstanding shares of common
stock on the date the Rights are distributed or offered times (ii) the
number of shares of common stock subject to the unexercised Options.  One-third of the Additional Options shall
vest on each of the dates the Extension Options would vest (or to the extent
any of such Extension Options have already vested on the date the Additional
Options are granted, a pro rata portion of the Additional Options shall be
vested when the Additional Options are granted).  The exercise price per share of the Options
and of each of the Additional Options (collectively, the “Total Options”) shall
be equal to the fair market value, as defined in the applicable equity plan of
the Company, of the common stock of HH on the applicable grant date.  Employee and HH shall enter into separate
stock option agreements reflecting the terms of the Total Options, which shall
not conflict in any way with the terms set forth herein and shall include provisions
for equitable adjustment in the event of a stock split, stock dividend or other
similar event affecting the common stock of HH. 
The Company shall use its good faith efforts to ensure that a sufficient
number of options remain available for issuance under its approved stock option
plan of HH (the “Option Plan”).  The
Company represents and warrants to the Employee that (i) the Option Plan
and the grant of the Extension Options to the Employee complied on the Renewal
Effective Date with the requirements of Section 409A of the Internal Revenue
Code and the regulations promulgated thereunder (the “Code”) and (ii) for
purposes of Section 409A of the Code, the Extension Options were granted
on the Renewal Effective Date.  The
Company shall use its good faith efforts to register any shares of common stock
issuable upon exercise of the Total Options on Form S-8 (or any applicable
successor form) and to maintain such registration for as long as Employee holds
such shares or Total Options (as the case may be).”


 


5.                                       A
new section, Section 3(f) shall be added, which shall read in its
entirety as follows, effective as of the date hereof:


 


“f)           DEFERRED STOCK UNITS.  On the Renewal Effective Date, Employee
received a grant of 550,000 deferred stock units in HH (the “Deferred Stock
Units”).  Except as otherwise provided
for herein, the Deferred Stock Units will vest according to the schedule below
and will be distributed to Employee (any vested DSUs shall be distributed
without regard to whether Employee is then employed by HH or any of its
affiliates as of such Distribution Date) on the first Distribution Date in the
calendar year indicated 


 


3

















 


in such schedule, but in all cases no later than the last day of such
calendar year.  For purposes of this
Agreement, the term “Distribution Date” shall mean the first date on which
Employee is able to freely sell securities of HH or its affiliates and shall
not include any period during which Employee is unable to sell such securities
due to any so-called “black-out” period or otherwise:


 




	
  Deferred

  Stock Units

  	
   

  	
  Vesting Date

  	
   

  	
  Calendar Year of

  Distribution

  
	
  183,333

  	
   

  	
  January 1, 2009

  	
   

  	
  2010

  
	
  183,333

  	
   

  	
  November 8, 2009

  	
   

  	
  2010

  
	
  183,334

  	
   

  	
  November 8, 2010

  	
   

  	
  2011

  






 


The Deferred Stock Units delivered to Employee on any Distribution Date
shall be made in shares of common stock of HH, par value $0.01 per share.  Employee and HH shall enter into a Deferred
Stock Unit agreement, effective as of the Renewal Effective Date, substantially
in the form as attached as Exhibit A hereto reflecting the terms of such
grant, which shall not conflict in any way with the terms set forth
herein.  Additionally, in the event of a “change
in control” (as defined in Section 10 below), all outstanding Deferred
Stock Units shall immediately become fully vested as of the date of such change
of control and shall be distributed to Employee as soon as practicable on the
first Distribution Date on or after such change of control, but in all cases no
later than the 409A Limit, provided, further that in the event such
Distribution Date occurs on the same date as the change in control, such
distribution shall be effective as of the moment immediately prior to the
change of control.  The Company shall use
its good faith efforts to ensure that a sufficient number of shares remain
available for issuance under applicable approved deferred stock unit plan(s) for
the issuance of the Deferred Stock Units. 
The Company shall use its good faith efforts to register any shares of
common stock issuable pursuant to Deferred Stock Units on Form S-8 (or any
applicable successor form) and to maintain such registration for as long as
Employee holds such shares.


 


6.                                       A
new section, Section 3(g) shall be added, which shall read in its
entirety as follows, effective as of the date hereof:


 


4

















 


“g)          RESTRICTED STOCK.  On the Renewal Effective Date, Employee
received a grant of 225,000 restricted shares of common stock of HH par value
$0.01 per share (the “Restricted Stock”). 
Subject to Employee’s continued employment, the Restricted Stock shall
vest, if at all, on the first Distribution Date on or after each of the
following dates: (i) with respect to one-third (1/3) of the Restricted
Stock (the “First Tranche”), the first anniversary of the Renewal Effective
Date; provided that the volume weighted average closing price of the common
stock of HH equals or exceeds $6.50 per share over any 20 day period (such 20
day volume weighted average closing price being referred to “Price Target”),
commencing on the Renewal Effective Date and ending on the first anniversary of
the Renewal Effective Date, (ii) with respect to an additional one-third
(1/3) of the Restricted Stock (the “Second Tranche”) and any shares in the
First Tranche that remain unvested, the second anniversary of the Renewal
Effective Date; provided that the Price Target equals or exceeds $6.50 per
share over any 20 day period commencing on the first anniversary of the Renewal
Effective Date and ending on the second anniversary of the Renewal Effective
Date and (iii) with respect to the final one-third (1/3) of the Restricted
Stock and any shares in the First Tranche and/or the Second Tranche that remain
unvested, the third anniversary of the Renewal Effective Date; provided that
the Price Target equals or exceeds $6.50 per share over any 20 day period
commencing on the second anniversary of the Renewal Effective Date and ending
on the third anniversary of the Renewal Effective Date.  If a “change in control” (as defined in Section 10
below) occurs prior to the third anniversary of the Renewal Effective Date, and
in consideration of such change in control there is consideration received by
shareholders of the Company that equals or exceeds $6.50 per share of the
common stock of HH, then all shares of the Restricted Stock shall fully vest on
the first Distribution Date on or after such change in control, and in the
event that such vesting occurs on the same date as the change of control, the
vesting shall be effective immediately prior to such change in control.  If Employee’s employment is terminated prior
to the third anniversary of the Renewal Effective Date (i) by act of the
Company other than for cause or (ii) by the Employee for good reason, and
in either such case, any Price Target  has been met
as of the date of such termination, then all shares of the Restricted Stock
shall fully vest as of such date.  Except
as otherwise provided in this Section 3(g), if the Employee’s employment
with the Company is terminated prior to satisfaction of a Price Target or a
Price Target is not met on or prior to the third anniversary of the Renewal
Effective Date, then any then unvested shares of the Restricted Stock shall be
forfeited with no further compensation due to Employee.  For the avoidance of doubt, the vesting
provisions of Section 8(d) shall not apply to the Restricted Stock.”


 


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7.                                       A
new sentence shall be added at the end of the first paragraph of Section 4,
which shall read in its entirety as follows, effective as of the date hereof:


 


“Any reimbursement pursuant to this Section 4 shall be paid as
soon as practicable, provided that, to the extent required to comply with Section 409A
of the Code, such reimbursement shall be made on or before the last day of the
calendar year following the calendar year in which the expense was incurred.”


 


8.                                       Section 5(a) shall
be deleted in its entirety, effective as of the date hereof.


 


9.                                       A
new sentence shall be added at the end of Section 5(b), which shall read
in its entirety as follows, effective as of the date hereof:


 


“Notwithstanding the foregoing in order to receive reimbursement of the
Termination Expenses under this Section 5(b), such Termination Expense
must be incurred on or before the end of the second calendar year following the
calendar year in which Employee’s termination of employment occurs and
reimbursement of such Termination Expense shall be made as soon as
administratively feasible following submission of such expense but shall in any
event be made on or before the end of the third calendar year following the
calendar year in which Employee’s termination of employment occurs.”


 


10.                                 Section 5(c) shall
be deleted in its entirety, effective as of the date hereof.


 


11.                                 The
lead-in language to Section 8 shall be amended and restated in its
entirety to read as follows, effective as of the date hereof:


 


“8.           COMPENSATION
UPON TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE OR BY THE EMPLOYEE FOR
GOOD REASON.  If the
Employee’s employment shall be terminated (i) by act of the Company other
than for cause during the Term, (ii) by the Employee for good reason
during the Term, or (iii) upon or after the expiration of the Term and the
Company has not offered Employee, at least six months prior to the expiration
of the Term, a new employment agreement on terms comparable in all material
respects to the then effective terms of the Agreement (including new grants of
equity comparable in all material respects to those made upon the Renewal
Effective Date), then Employee shall be entitled to the following benefits:”


 


12.                                 Section 8(b) shall
be amended and restated in its entirety to read as follows, effective as of the
date hereof:


 


6

















 


“b)          LUMP SUM PAYMENT.  Employee shall receive, no later than five (5) calendar
days after any Termination Date, a lump sum cash severance payment in an amount
equal to 3 times the amount of Employee’s total Base Salary and bonus payments
received during the 12 month period immediately prior to such termination, up
to a maximum severance payment of $2,500,000 (the “Cash Severance Amount”).”


 


13.                                 Section 8(c) shall
be amended and restated in its entirety to read as follows, effective as of the
date hereof:


 


“8(c)       CONTINUATION OF MEDICAL AND OTHER BENEFITS.  Throughout
the Term of this Agreement from and after the date of Termination, the Company
shall continue to provide Employee with (i) life insurance coverage,
disability benefits and medical benefits as if Employee’s employment under the
Agreement had not been terminated; provided that coverage (as distinct from
benefits due to disability) under the Company’s long term disability insurance
will not be included as part of benefits provided after termination of
employment, because the carrier limits provision of such to employees and (ii) Travel
Benefits set forth in Section 4(c), as if Employee’s employment under the
Agreement had not been terminated. With respect to any medical reimbursements
made to Employee under this Section, such reimbursement will be paid to
Employee as soon administratively feasible following submission of such
claim but shall in any event be made on or before the end of the calendar year
following the calendar year in which Employee’s such claim is incurred.  If required
by law or otherwise allowed by the relevant carrier, Employee will be afforded
the opportunity to continue such benefits at Employee’s own cost after the
benefits provided under this Section 8(c) have expired.”


 


14.                                 Section 8(d) shall
be amended and restated in its entirety to read as follows, effective as of the
Renewal Effective Date:


 


“d)          EQUITY.  Notwithstanding any provision in any
applicable Company equity plan or agreement (such as, but not limited to, those
relating to stock options, stock appreciation rights, restricted stock awards,
restricted stock unit awards, deferred stock units or stock purchases) to the
contrary (except with respect to the Restricted Stock, which shall be subject
to the provisions of Section 3(g)), all rights to such equity benefits
granted to Employee shall become immediately and fully vested, exercisable
and/or payable as of the applicable Termination Date, and with respect to
options or stock appreciation rights shall remain exercisable for a period
thereafter of one (1) year (but not beyond the term of the option or
rights); unless the Company in connection with a transaction terminates all
outstanding equity grants under an 


 


7

















 


applicable equity plan in exchange for a cash payment as provided in an
applicable equity plan of the Company or agreement thereunder and in compliance
with the requirements of Section 409A of the Code.  Notwithstanding the foregoing, in the event
that the applicable Termination Date is not a Distribution Date, the Deferred
Stock Units shall be distributed on the first succeeding Distribution Date,
but, subject to Section 21, in any event no later than 90 days after such
Termination Date.  Except with respect to
the Restricted Stock, the provisions of this Section 8(d) shall
supersede and control, insofar as concerns Employee, any such plans or
agreements of the Company referred to above as of the Renewal Effective Date.”


 


15.                                 Section 8(f) shall
be added, which shall read in its entirety as follows, effective as of the date
hereof:


 


“f)           CERTAIN OTHER
PAYMENTS.  In the event it is
determined that any payment or distribution (including benefits and
acceleration of vesting of the Options or Deferred Stock Units) which is made
by the Company to or for the benefit of the Employee (whether paid or payable
or distributed or distributable pursuant to the terms of the Agreement or
otherwise) would be subject to any excise tax, or any interest or penalties are
incurred by Employee with respect to any such excise tax pursuant to Sections
280G or 4999 of the Code, or any successor or like provision (or for the
payment of any tax pursuant to any applicable, like state tax provision) (the “Excise
Tax”), the Company shall make a payment (the “Special Reimbursement”) to or for
the benefit of Employee in an amount such that, after payment by Employee of
all federal, state and local taxes, including, without limitation, any tax
under Sections 280G or 4999 (and any interest and penalties imposed with
respect thereto) imposed on the Special Reimbursement, Employee retains an
amount of the Special Reimbursement sufficient to pay the Excise Tax imposed on
the Special Reimbursement.  The Special
Reimbursement shall be paid as soon as practicable after it is determined by
the Company or Employee and reviewed for accuracy by the Company’s certified
public accountants and paid by or on behalf of Employee; provided however that
the Special Reimbursement shall in no event be paid later than the date which
is two (2) weeks after the date upon which Employee pays such portion of
the Excise Tax on which such Special Reimbursement is payable under this
Section.”


 


16.                                 The
last sentence of Section 12 shall be amended and restated in its entirety
to read as follows, effective as of the date hereof:


 


8

















 


“The Company shall reimburse Employee for all reasonable attorneys’
fees and expenses incurred in connection with entering into and/or negotiating
the Amendment.  Any such reimbursement
payable under this Section 12 shall be made as soon as practicable after
submission of such fee or expense by Employee for payment; provided however,
that in no event shall reimbursement be made later the end of the year
following the year in which Employee pays such fee or expense.”


 


17.                                 Section 21
shall be amended and restated in its entirety to read as follows, effective as
of the date hereof:


 


“21.         SECTION 409A.


 


a)             GENERAL.
This Agreement shall be interpreted, construed and administered in a manner
that satisfies the requirements of Section 409A of the Code and the
Department of Treasury Regulations and other guidance promulgated
thereunder.  All payments or
distributions under this Agreement shall be made on the date or during the
period specified herein for such payments, subject to Section 21(b) herein.  To the extent no date or period is specified,
a payment or distribution shall be made on or before the later of (i) the
fifteenth day of the third month following the end of Employee’s first taxable
year in which the right to such payment or distribution is no longer subject to
a substantial risk of forfeiture or (ii) the fifteenth day of the third
month following the end of the Company’s first taxable year in which the right
to such payment or distribution is no longer subject to a substantial risk of
forfeiture (the “409A Limit”), except as provided in Section 21(b) herein.


 


b)            SPECIFIED
EMPLOYEE DELAY.  Each of the payments
under this Agreement shall be considered a separate payment for the purposes of
Section 409A of the Code and the Department of Treasury Regulations and
other guidance promulgated thereunder. 
Notwithstanding any provision to the contrary in this Agreement, if (a) Employee
is a “specified employee” within the meaning of Code Section 409A for the
period in which the payment or benefits under this Agreement would otherwise
commence and (b) any payment or benefit under this Agreement would
otherwise subject Employee to any tax, interest or penalty imposed under Section 409A
of the Code or the Department of Treasury Regulations or other guidance
promulgated thereunder, if the payment or benefit would commence within six
months of a termination of Employee’s employment with the Company, then all
such payments or benefits that would otherwise be paid during the first six
months after Employee’s separation from service within the meaning of Code Section 409A
shall be accumulated and shall be paid (together with, in the case of any cash
payment, interest credited at the Applicable Federal Rate in effect as of the
date of Employee’s separation from service) on the earlier of (1) the
first day which is at least six (6) months after Employee’s separation
from service within the meaning of Code Section 409A or (2) the date
of Employee’s death (as applicable, the “Specified Employee Payment Date”).  Notwithstanding the foregoing, if the
Specified Employee Payment Date is not a Distribution Date, any Deferred Stock
Units that would otherwise be distributed on such date pursuant to this Section 21(b) will
be distributed on the first succeeding Distribution Date, but in all cases no
later than 90 days after the Specified Employee Payment Date.”


 


9

















 


18.                                 A
new Section 23 shall be added to the Employment Agreement and shall read
as follows, effective as of the date hereof:


 


“23.         INDEMNITY.
From and after the Renewal Effective
Date, the Company will indemnify, defend, protect and hold Employee (and his
heirs and executors) harmless, from and against any and all costs, losses, taxes
(including any taxes attributable to the receipt of any payments pursuant to
this indemnity), liabilities, obligations, damages, lawsuits, deficiencies,
claims, demands and expenses (including reasonable attorneys’ fees) arising out
of, relating to or resulting in any way from any breach of any representation
or warranty of the Company in this Agreement.”


 


19.                                 Exhibit A
shall be added to the Employment Agreement, which shall read in its entirety
substantially as is set forth in Annex A to this Amendment, effective as of the
Renewal Effective Date.


 


20.                                 Except
as specifically provided in and modified by this Amendment, the Employment
Agreement is in all other respects hereby ratified and confirmed and references
to the Employment Agreement shall be deemed to refer to the Employment
Agreement as modified by this Amendment.


 


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IN
WITNESS WHEREOF, the undersigned have executed this Amendment as of the date
first above written, but with an effective date as of November 8, 2007.


 


 


	
   

  	
  HAWAIIAN
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas B. Fargo

  	
   

  
	
   

  	
   

  	
  Name: Thomas B. Fargo

  
	
   

  	
   

  	
  Title: Chairman,
  Compensation Committee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HAWAIIAN AIRLINES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas B. Fargo

  	
   

  
	
   

  	
   

  	
  Name: Thomas B. Fargo

  
	
   

  	
   

  	
  Title: Chairman, Compensation
  Committee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Mark B. Dunkerley

  	
   

  
	
   

  	
  MARK B. DUNKERLEY