Document:

Exhibit 10.4

 

 

EXECUTION VERSION

 

THE SECURITIES REPRESENTED HEREBY (THE “WARRANTS”) WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AS THE WARRANTS MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF.

 

	
 
    	
March 18,   2011
    

 

	
To:
    	
Hawaiian Holdings, Inc.
    
	
 
    	
3375   Koapaka Street, Suite G-350
    
	
 
    	
Honolulu,   Hawaii 96819
    
	
 
    	
 
    
	
From:
    	
JPMorgan Chase Bank, National Association
    
	
 
    	
P.O. Box   161
    
	
 
    	
60   Victoria Embankment
    
	
 
    	
London   EC4Y 0JP
    
	
 
    	
England
    
	
 
    	
 
    
	
Re:
    	
Base   Warrants
    

 

The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the Warrants issued by Hawaiian Holdings, Inc.  (“Company”) to JPMorgan Chase Bank, National Association (“Dealer”) as of the Trade Date specified below (the “Transaction”).  This letter agreement constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.  This Confirmation shall replace any previous agreements and serve as the final documentation for the Transaction.

 

The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc. (“ISDA”), are incorporated into this Confirmation. In the event of any inconsistency between the Equity Definitions and this Confirmation, this Confirmation shall govern.  The Transaction shall be deemed to be a Share Option Transaction within the meaning set forth in the Equity Definitions.

 

Each party is hereby advised, and each such party acknowledges, that the other party has engaged in, or refrained from engaging in, substantial financial transactions and has taken other material actions in reliance upon the parties’ entry into the Transaction to which this Confirmation relates on the terms and conditions set forth below.

 

1.             This Confirmation evidences a complete and binding agreement between Dealer and Company as to the terms of the Transaction to which this Confirmation relates.  This Confirmation shall supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master Agreement (the “Agreement”) as if Dealer and Company had executed an agreement in such form (but without any Schedule except for the election of the laws of the State of New York as the governing law (without reference to choice of law doctrine)) on the Trade Date.  In the event of any inconsistency between provisions of that Agreement and this Confirmation, this Confirmation will prevail for the purpose of the Transaction to which this Confirmation relates.  The parties hereby agree that no Transaction other than the Transaction to which this Confirmation relates shall be governed by the Agreement.

 

2.             The Transaction is a Warrant Transaction, which shall be considered a Share Option Transaction for purposes of the Equity Definitions.  The terms of the particular Transaction to which this Confirmation relates are as follows:

 

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

Registered as a branch in England & Wales branch No. BR000746

Registered Branch Office 125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services Authority

 

 

	
General Terms.
    	
 
    
	
 
    	
 
    
	
Trade   Date:
    	
March 18,   2011
    
	
 
    	
 
    
	
Effective   Date:
    	
The   third Exchange Business Day immediately prior to the Premium Payment Date, or   such other date as agreed to between the parties, subject to   Section 8(v) below.
    
	
 
    	
 
    
	
Warrants:
    	
Equity   call warrants, each giving the holder the right to purchase a number of   Shares equal to the Warrant Entitlement at a price per Share equal to the   Strike Price, subject to the terms set forth under the caption “Settlement   Terms” below.  For the purposes of the   Equity Definitions, each reference to a Warrant herein shall be deemed to be   a reference to a Call Option.
    
	
 
    	
 
    
	
Warrant   Style:
    	
European
    
	
 
    	
 
    
	
Seller:
    	
Company
    
	
 
    	
 
    
	
Buyer:
    	
Dealer
    
	
 
    	
 
    
	
Shares:
    	
The   common stock of Company, par value USD 0.01 per share (Exchange symbol “HA”)
    
	
 
    	
 
    
	
Number   of Warrants:
    	
3,806,190.  For the avoidance of doubt, the Number of   Warrants shall be reduced by any Warrants exercised or deemed exercised   hereunder.  In no event will the Number   of Warrants be less than zero.
    
	
 
    	
 
    
	
Warrant   Entitlement:
    	
One   Share per Warrant
    
	
 
    	
 
    
	
Maximum   Number of Shares:
    	
For   any day, 4,011,973 Shares, minus the   aggregate number of Shares delivered prior to such day pursuant to   (i) this Confirmation and (ii) any other substantially similar   confirmation for Warrants sold by Company to Dealer with a trade date within   13 days of the Trade Date and with expiration dates the same as the   Expiration Dates.
    
	
 
    	
 
    
	
 
    	
Notwithstanding   anything to the contrary in the Agreement, this Confirmation or the Equity   Definitions, in no event shall the Maximum Number of Shares be subject to   adjustment, except for any adjustment pursuant to the terms of this   Confirmation and the Equity Definitions in connection with stock splits or   similar changes to Company’s capitalization.
    
	
 
    	
 
    
	
Strike   Price:
    	
USD 10.00
    
	
 
    	
 
    
	
Premium:
    	
USD   4,155,863.20
    
	
 
    	
 
    
	
Premium   Payment Date:
    	
March 23,   2011
    
	
 
    	
 
    
	
Exchange:
    	
The   NASDAQ Global Market
    
	
 
    	
 
    
	
Related   Exchange(s):
    	
All   Exchanges; provided that   Section 1.26 of the Equity Definitions shall be amended to add the words   “United 
    

 

2

 

	
 
    	
States”   before the word “exchange” in the tenth line of such Section.
    
	
 
    	
 
    
	
Procedures for Exercise.
    	
 
    
	
 
    	
 
    
	
Expiration   Time:
    	
The   Valuation Time
    
	
 
    	
 
    
	
Expiration   Dates:
    	
Each   Scheduled Trading Day during the period from, and including, the First   Expiration Date to, but excluding, the 90th Scheduled Trading Day following   the First Expiration Date shall be an “Expiration Date” for a number of   Warrants equal to the Daily Number of Warrants on such date; provided that, notwithstanding anything   to the contrary in the Equity Definitions, if any such date is a Disrupted   Day, the Calculation Agent shall make reasonable adjustments, if applicable,   to the Daily Number of Warrants or shall reduce such Daily Number of Warrants   to zero for which such day shall be an Expiration Date and shall designate a Scheduled   Trading Day or a number of Scheduled Trading Days as the Expiration   Date(s) for the remaining Daily Number of Warrants or a portion thereof   for the originally scheduled Expiration Date; and provided  further   that if such Expiration Date has not occurred pursuant to this clause as of   the eighth Scheduled Trading Day following the last scheduled Expiration Date   under the Transaction, the Calculation Agent shall have the right to declare   such Scheduled Trading Day to be the final Expiration Date and the   Calculation Agent shall determine its good faith estimate of the fair market   value for the Shares as of the Valuation Time on that eighth Scheduled   Trading Day or on any subsequent Scheduled Trading Day, as the Calculation   Agent shall determine using commercially reasonable means.
    
	
 
    	
 
    
	
First   Expiration Date:
    	
June 14,   2016 (or if such day is not a Scheduled Trading Day, the next following   Scheduled Trading Day), subject to Market Disruption Event below.
    
	
 
    	
 
    
	
Daily   Number of Warrants:
    	
For   any Expiration Date, the Number of Warrants that have not expired or been   exercised as of such day, divided   by the remaining number of Expiration Dates (including such day), rounded   down to the nearest whole number, subject to adjustment pursuant to the   provisos to “Expiration Dates”.
    
	
 
    	
 
    
	
Automatic   Exercise:
    	
Applicable;   and means that for each Expiration Date, a number of Warrants equal to the   Daily Number of Warrants (as adjusted pursuant to the terms hereof) for such   Expiration Date will be deemed to be automatically exercised.  For the avoidance of doubt, Warrants are   not exercisable, and shall not be exercised or deemed exercised, other than   in accordance with the preceding sentence.
    

 

3

 

	
Market   Disruption Event:
    	
Section 6.3(a)(ii) of   the Equity Definitions is hereby amended by replacing clause (ii) in its   entirety with “(ii) an Exchange Disruption, or” and inserting   immediately following clause (iii) the phrase “; in each case that the   Calculation Agent determines is material.”
    
	
 
    	
 
    
	
Valuation Terms.
    	
 
    
	
 
    	
 
    
	
Valuation   Time:
    	
Scheduled   Closing Time; provided that if   the principal trading session is extended, the Calculation Agent shall   determine the Valuation Time in its reasonable discretion.
    
	
 
    	
 
    
	
Valuation   Date:
    	
Each   Exercise Date.
    
	
 
    	
 
    
	
Settlement Terms.
    	
 
    
	
 
    	
 
    
	
Settlement   Method Election:
    	
Applicable;   provided that Company may elect   Cash Settlement only if on or prior to the Settlement Method Election Date   (i) Company represents and warrants to Dealer in writing on the date of   such election that, as of such date, (A) Company is not aware of any   material nonpublic information concerning itself or the Shares,   (B) Company is electing Cash Settlement in good faith and not as part of   a plan or scheme to evade compliance with the federal securities laws and   (C) the assets of Company at their fair valuation exceed the liabilities   of Company (including contingent liabilities), the capital of Company is   adequate to conduct the business of Company, and Company has the ability to   pay its debts and obligations as such debts mature and does not intend to, or   does not believe that it will, incur debt beyond its ability to pay as such   debts mature; and (ii) any election of settlement method shall apply to   all Warrants. At any time prior to electing Cash Settlement, Company may,   without the consent of Dealer, amend this Confirmation by notice to Dealer to   eliminate Company’s right to elect Cash Settlement.
    
	
 
    	
 
    
	
Electing   Party:
    	
Company
    
	
 
    	
 
    
	
Settlement   Method Election Date:
    	
The   third Scheduled Trading Day immediately preceding the first Expiration Date
    
	
 
    	
 
    
	
Default   Settlement Method:
    	
Net   Share Settlement
    
	
 
    	
 
    
	
Net   Share Settlement:
    	
On   the relevant Settlement Date, Company shall deliver to Dealer a number of   Shares equal to the Share Delivery Quantity for such Settlement Date to the   account specified hereto free of payment through the Clearance System.
    
	
 
    	
 
    
	
Share   Delivery Quantity:
    	
For   any Settlement Date, a number of Shares, as calculated by the Calculation   Agent, equal to the Net Share Settlement Amount for such Settlement Date divided by the Settlement Price on the   Valuation Date in respect of such Settlement Date, rounded down to the   nearest whole number plus any   Fractional Share Amount; provided   that in no event shall the Share Delivery 
    

 

4

 

	
 
    	
Quantity   for any Settlement Date exceed the Maximum Number of Shares for such   Settlement Date.
    
	
 
    	
 
    
	
Net   Share Settlement Amount:
    	
For   any Settlement Date, an amount equal to the product of (i) the Number of   Warrants exercised or deemed exercised on the relevant Exercise Date, (ii) the Strike Price   Differential in respect of the relevant Valuation Date and (iii) the   Warrant Entitlement.
    
	
 
    	
 
    
	
Strike   Price Differential:
    	
Strike   Price Differential means in respect of each Valuation Date, an amount equal   to the greater of (a) the excess of the relevant Settlement Price over   the Strike Price and (b) zero.
    
	
 
    	
 
    
	
Cash   Settlement:
    	
For   any Exercise Date, the product of (i) the number of Warrants exercised   or deemed exercised on such Exercise Date, (ii) the Warrant Entitlement   and (iii) (A) the excess of the Settlement Price on the Valuation   Date occurring on such Exercise Date over the Strike Price (or, if there is   no such excess, zero).
    
	
 
    	
 
    
	
Settlement   Price:
    	
For   any Valuation Date, the per Share volume-weighted average price as displayed   under the heading “Bloomberg VWAP” on Bloomberg page HA.UQ   <equity> AQR (or any successor thereto) (“VWAP”) in respect of the period from the scheduled opening   time of the Exchange to the Scheduled Closing Time on such Valuation Date (or   if such volume-weighted average price is unavailable, the market value of one   Share on such Valuation Date, as determined by the Calculation Agent).   Notwithstanding the foregoing, if (i) any Expiration Date is a Disrupted   Day and (ii) the Calculation Agent determines that such Expiration Date   shall be an Expiration Date for fewer than the Daily Number of Warrants, as   described above, then the Settlement Price for the relevant Valuation Date   shall be the volume-weighted average price per Share on such Valuation Date   on the Exchange, as determined in a good faith reasonable manner by the   Calculation Agent based on such sources as it deems appropriate using a   volume-weighted methodology, for the portion of such Valuation Date for which   the Calculation Agent determines there is no Market Disruption Event.
    
	
 
    	
 
    
	
Settlement   Dates:
    	
As   determined pursuant to Section 9.4 of the Equity Definitions, subject to   Section 9(l)(i) hereof.
    
	
 
    	
 
    
	
Other   Applicable Provisions:
    	
The   provisions of Sections 9.1(c), 9.8, 9.9, 9.11, 9.12 and 10.5 of the Equity   Definitions will be applicable, except that all references in such provisions   to “Physically-settled” shall be read as references to “Net Share Settled.”   “Net Share Settled” in relation to any Warrant means that Net Share   Settlement is applicable to that Warrant.
    
	
 
    	
 
    
	
Representation   and Agreement:
    	
Notwithstanding   Section 9.11 of the Equity Definitions, the parties acknowledge that any   Shares delivered to Dealer may be, upon delivery, subject to restrictions and
    

 

5

 

	
 
    	
limitations   arising from Company’s status as issuer of the Shares under applicable   securities laws.
    
	
 
    	
 
    
	
3.             Additional   Terms applicable to the Transaction.
    	
 
    
	
 
    	
 
    
	
Adjustments   applicable to the Transaction:
    	
 
    
	
 
    	
 
    
	
Method   of Adjustment:
    	
Calculation   Agent Adjustment; provided that   the parties agree that open market Share repurchases at prevailing market   price or accelerated share repurchases, forward contracts or similar   transactions on customary terms (including without limitation any discount to   average VWAP prices) shall not be considered Potential Adjustment   Events.  For the avoidance of doubt, in   making any adjustments under the Equity Definitions, the Calculation Agent   may make adjustments, if any, to any one or more of the Strike Price, the   Number of Warrants, the Daily Number of Warrants and the Warrant   Entitlement.  Notwithstanding the   foregoing, any cash dividends or distributions on the Shares, whether or not   extraordinary, shall be governed by Section 9(f) of this   Confirmation in lieu of Article 10 or Section 11.2(c) of the   Equity Definitions.
    
	
 
    	
 
    
	
Extraordinary   Events applicable to the Transaction:
    	
 
    
	
 
    	
 
    
	
New   Shares:
    	
Section 12.1(i) of   the Equity Definitions is hereby amended (a) by deleting the text in clause   (i) thereof in its entirety (including the word “and” following clause   (i)) and replacing it with the phrase “publicly quoted, traded or listed (or whose   related depositary receipts are publicly quoted, traded or listed) on any of   the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ   Global Market or any other United States national securities exchange (or   their respective successors)” and (b) by inserting immediately prior to   the period the phrase “and (iii) of an entity or person organized under   the laws of the United States, any State thereof or the District of Columbia   that also becomes Company under the Transaction following such Merger Event   or Tender Offer”.
    
	
 
    	
 
    
	
Consequence   of Merger Events:
    	
 
    
	
 
    	
 
    
	
Merger   Event:
    	
Applicable;   provided that if an event   occurs that constitutes both a Merger Event under   Section 12.1(b) of the Equity Definitions and an Additional   Termination Event under Section 9(h)(ii)(B) of this Confirmation,   then (i) if such event does not result in Cancellation and Payment under   Section 12.2 of the Equity Definitions, Dealer may elect, in its   commercially reasonable judgment, whether the provisions of   Section 12.1(b) of the Equity Definitions or   Section 9(h)(ii)(B) will apply, and (ii) otherwise, the   provisions of Section 9(h)(ii)(B) will apply.
    
	
 
    	
 
    
	
Share-for-Share:
    	
Modified   Calculation Agent Adjustment
    

 

6

 

	
Share-for-Other:
    	
Cancellation   and Payment (Calculation Agent Determination)
    
	
 
    	
 
    
	
Share-for-Combined:
    	
Cancellation   and Payment (Calculation Agent Determination); provided that Dealer may elect, in its commercially   reasonable judgment, Component Adjustment (Calculation Agent Determination).
    
	
 
    	
 
    
	
Consequence   of Tender Offers:
    	
 
    
	
 
    	
 
    
	
Tender   Offer:
    	
Applicable;   provided that if an event   occurs that constitutes both a Tender Offer under   Section 12.1(d) of the Equity Definitions and Additional   Termination Event under Section 9(h)(ii)(A) of this Confirmation,   then (i) if such event does not result in Cancellation and Payment under   Section 12.3 of the Equity Definitions, Dealer may elect, in its   commercially reasonable judgment, whether the provisions of Section 12.3   of the Equity Definitions or Section 9(h)(ii)(A) will apply, and   (ii) otherwise, the provisions of Section 9(h)(ii)(A) will   apply; provided further that   for purposes of Section 12.3(d) of the Equity Definitions, only in   the case of a self-tender by Company references in the definition of Tender Offer   under the Equity Definitions to 10% shall be replaced with 20%.
    
	
 
    	
 
    
	
Share-for-Share:
    	
Modified   Calculation Agent Adjustment
    
	
 
    	
 
    
	
Share-for-Other:
    	
Modified   Calculation Agent Adjustment
    
	
 
    	
 
    
	
Share-for-Combined:
    	
Modified   Calculation Agent Adjustment
    
	
 
    	
 
    
	
Nationalization, Insolvency   or Delisting:
    	
Cancellation   and Payment (Calculation Agent Determination); provided that, in addition to the provisions of   Section 12.6(a)(iii) of the Equity Definitions, it will also   constitute a Delisting if the Exchange is located in the United States and   the Shares are not immediately re-listed, re-traded or re-quoted on any of   the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ   Global Market (or their respective successors); if the Shares are immediately   re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The   NASDAQ Global Select Market or The NASDAQ Global Market (or their respective   successors), such exchange or quotation system shall thereafter be deemed to   be the Exchange.
    
	
 
    	
 
    
	
Announcement   Event:
    	
If   an Announcement Date occurs in respect of a Merger Event or Tender Offer   (such occurrence, an “Announcement Event”),   then on the earliest of the Expiration Date, Early Termination Date or other   date of cancellation (the “Announcement   Event Adjustment Date”) in respect of each Warrant, the   Calculation Agent will determine the economic effect on such Warrant of the   Announcement Event (regardless of whether the Announcement Event actually   results in a Merger Event or Tender Offer, and taking into account such   factors as the Calculation Agent may determine, including, without   limitation, changes in volatility, expected
    

 

7

 

	
 
    	
dividends,   stock loan rate or liquidity relevant to the Shares or the Transaction   whether prior to or after the Announcement Event or for any period of time,   including, without limitation, the period from the Announcement Event to the   relevant Announcement Event Adjustment Date).    If the Calculation Agent determines that such economic effect on any   Warrant is material, then on the Announcement Event Adjustment Date for such   Warrant, the Calculation Agent may make such adjustment to the exercise,   settlement, payment or any other terms of such Warrant as the Calculation   Agent determines appropriate to account for such economic effect, which   adjustment shall be effective immediately prior to the exercise, termination   or cancellation of such Warrant, as the case may be.
    
	
 
    	
 
    
	
Announcement   Date:
    	
The   definition of “Announcement Date” in Section 12.1 of the Equity   Definitions is hereby amended by (i) replacing the words “a firm” with   the word “any” in the second and fourth lines thereof, (ii) replacing   the word “leads to the” with the words “, if completed, would lead to a” in   the third and the fifth lines thereof, (iii) replacing the words “voting   shares” with the word “Shares” in the fifth line thereof, and   (iv) inserting the words “by any entity” after the word “announcement”   in the second and the fourth lines thereof.
    
	
 
    	
 
    
	
Additional   Disruption Events:
    	
 
    
	
 
    	
 
    
	
Change   in Law:
    	
Applicable;   provided that   Section 12.9(a)(ii) of the Equity Definitions is hereby amended by   (i) replacing the phrase “the interpretation” in the third line thereof   with the phrase “or announcement or statement of the formal or informal   interpretation,” and (ii) immediately following the word “Transaction”   in clause (X) thereof, adding the phrase “in the manner contemplated by   Hedging Party on the Trade Date”; provided   further that Section 12.9(a)(ii)(X) of the Equity   Definitions is hereby amended by replacing the word “Shares” with the phrase   “Hedge Positions.”
    
	
 
    	
 
    
	
Failure   to Deliver:
    	
Not   Applicable
    
	
 
    	
 
    
	
Insolvency   Filing:
    	
Applicable
    
	
 
    	
 
    
	
Hedging   Disruption:
    	
Applicable;   provided that:
    
	
 
    	
 
    
	
 
    	
(i)
    	
Section 12.9(a)(v) of   the Equity Definitions is hereby amended by inserting the following two   phrases at the end of such Section:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
“For   the avoidance of doubt, the term “equity price risk” shall be deemed to   include, but shall not be limited to, stock price and volatility risk. And,   for the further avoidance of doubt, any such transactions or assets referred   to in phrases (A) or (B) above must be available on commercially   reasonable pricing terms.”; and
    

 

8

 

	
 
    	
(ii)
    	
Section 12.9(b)(iii) of   the Equity Definitions is hereby amended by inserting in the third line   thereof,  after the words “to terminate   the Transaction”, the words “or a portion of the Transaction affected by such   Hedging Disruption”.
    
	
 
    	
 
    
	
Increased   Cost of Hedging:
    	
Applicable
    
	
 
    	
 
    
	
Loss   of Stock Borrow:
    	
Applicable
    
	
 
    	
 
    
	
Maximum Stock Loan Rate:
    	
200   basis points
    
	
 
    	
 
    
	
Increased   Cost of Stock Borrow:
    	
Applicable
    
	
 
    	
 
    
	
Initial   Stock Loan Rate:
    	
50   basis points
    
	
 
    	
 
    
	
Hedging   Party:
    	
For   all applicable Additional Disruption Events, Dealer.
    
	
 
    	
 
    
	
Determining   Party:
    	
For   all applicable Extraordinary Events, Dealer.
    
	
 
    	
 
    
	
Non-Reliance:
    	
Applicable
    
	
 
    	
 
    
	
Agreements   and Acknowledgments
    	
 
    
	
Regarding   Hedging Activities:
    	
Applicable
    
	
 
    	
 
    
	
Additional   Acknowledgments:
    	
Applicable
    
	
 
    	
 
    
	
4.             Calculation   Agent.
    	
Dealer;   provided that all   determinations made by the Calculation Agent shall be made in good faith and   in a commercially reasonable manner. Following any calculation by the   Calculation Agent hereunder, upon a prior written request by Company, the   Calculation Agent will provide to Company by email to the email address   provided by Company in such prior written request a report (in a commonly   used file format for the storage and manipulation of financial data)   displaying in reasonable detail the basis for such calculation; provided, however, that in no event will   Dealer be obligated to share with Company any proprietary models used by it   or any other party.
    

 

	
5.             Account   Details.
    
	
 
    
	
(a)
    	
Account   for payments to Company:
    
	
 
    	
 
    
	
 
    	
To   be provided by Company.
    
	
 
    	
 
    
	
 
    	
Account   for delivery of Shares from Company:
    
	
 
    	
 
    
	
 
    	
To   be provided by Company.
    
	
 
    	
 
    
	
(b)
    	
Account   for payments to Dealer:
    
	
 
    	
 
    
	
 
    	
Bank:
    	
JPMorgan   Chase Bank, N.A.
    
	
 
    	
ABA#:
    	
021000021
    
	
 
    	
Acct   No.:
    	
099997979
    
	
 
    	
Beneficiary:
    	
JPMorgan   Chase Bank, N.A. New York
    
	
 
    	
Ref:
    	
Derivatives
    

 

9

 

	
 
    	
Account   for delivery of Shares to Dealer:
    
	
 
    	
 
    
	
 
    	
DTC   0060
    
	
 
    
	
6.             Offices.
    
	
 
    	
 
    
	
(a)
    	
The   Office of Company for the Transaction is: Inapplicable, Company is not a   Multibranch Party.
    
	
 
    	
 
    
	
(b)
    	
The   Office of Dealer for the Transaction is: London
    
	
 
    	
 
    
	
 
    	
JPMorgan   Chase Bank, National Association
    
	
 
    	
London   Branch
    
	
 
    	
P.O. Box   161
    
	
 
    	
60   Victoria Embankment
    
	
 
    	
London   EC4Y 0JP
    
	
 
    	
England
    
	
 
    	
 
    
	
7.             Notices.
    
	
 
    	
 
    
	
(a)
    	
Address   for notices or communications to Company:
    
	
 
    	
 
    
	
 
    	
Hawaiian   Holdings, Inc.
    
	
 
    	
3375   Koapaka Street, Suite G-350
    
	
 
    	
Honolulu,   Hawaii 96819
    
	
 
    	
Attention:
    	
Treasurer
    
	
 
    	
Telephone   No.:
    	
(808)   835-3700
    
	
 
    	
Facsimile   No.:
    	
(808)   835-3690
    
	
 
    	
 
    
	
 
    	
Address   for notices or communications to Dealer:
    
	
 
    	
 
    
	
 
    	
JPMorgan   Chase Bank, National Association
    
	
 
    	
4   New York Plaza, Floor 18
    
	
 
    	
New   York, NY 10004-2413
    
	
 
    	
Attention:
    	
Jason   M. Wood
    
	
 
    	
Telephone   No.:
    	
(415)   315-8783
    
	
 
    	
Facsimile   No.:
    	
(415)   226-0616
    

 

8.             Representations and Warranties of Company.

 

Company hereby represents and warrants to Dealer on the date hereof, on and as of the Premium Payment Date and, in the case of the representations in Section 8(f), at all times until termination of the Transaction, that:

 

(a)           Company is duly organized and validly existing and in good standing under the laws of its jurisdiction of incorporation.

 

(b)           Company has the corporate power and authority to execute and deliver this Confirmation and to perform its obligations hereunder; and all action required to be taken for the due and proper authorization, execution and delivery by it of this Confirmation and the consummation by it of the transactions contemplated hereby has been duly and validly taken.

 

(c)           This Confirmation has been duly authorized by Company and, when duly executed and delivered in accordance with its terms by each of the parties hereto, will constitute a valid and legally binding agreement of Company enforceable against Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally or by equitable principles relating to enforceability.

 

10

 

(d)           The execution, delivery and performance by Company of this Confirmation and the consummation of the transactions contemplated hereby will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of Company or any of its subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which Company or any of its subsidiaries is a party or by which Company or any of its subsidiaries is bound or to which any of the property or assets of Company or any of its subsidiaries is subject, (ii) result in any violation of the provisions of the charter or by-laws or similar organizational documents of Company or any of its subsidiaries or (iii) result in the violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority applicable to Company or any of its subsidiaries, except for such conflicts, breaches or violations in clauses (i) and (iii) above that would not have a material adverse effect on Company’s ability to perform its obligations under this Confirmation (“Material Adverse Effect”); provided that, in the case of clause (1) above, such representation and warranty is based on the assumption that any cash payment by Company upon any termination, cancellation or early unwind of the Transaction shall, at the time the cash payment is made, be made in compliance with the terms and conditions of that Amended and Restated Credit Agreement, entered into as of December 10, 2010, by and among the lenders party thereto, Wells Fargo Capital Finance, Inc., as agent, Company and Hawaiian Airlines, Inc., as amended by that certain Waiver, Extension and Amendment under Credit Agreement, dated as of January 24, 2011, and that certain Amendment Number Two to Amended and Restated Credit Agreement, dated as of March 16, 2011.

 

(e)           No consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or governmental or regulatory authority is required for the execution, delivery and performance by Company of this Confirmation and the consummation of the transactions contemplated hereby, except for (i) such consents, approvals, authorizations, orders and registrations or qualifications (“Consents”) as may be required under applicable state securities laws, (ii) as may be required and have been or will be obtained under the rules of The NASDAQ Stock Market in connection with the issuance of the Warrant Shares (as defined below) by Company, (iii) as contemplated by Section 9(l) of this Confirmation or (iv) where the failure to obtain or make any such Consents would not reasonably be expected to have a Material Adverse Effect.

 

(f)            A number of Shares equal to the Maximum Number of Shares (as defined below) (the “Warrant Shares”) have been reserved for issuance by all required corporate action of Company.  The Warrant Shares reserved for issuance upon exercise of the Warrants have been duly authorized and reserved and, when issued upon exercise of the Warrants in accordance with the terms of the Warrants, will be validly issued, fully paid and non-assessable, and the issuance of the Warrant Shares will not be subject to any preemptive or similar rights.

 

(g)           Company is not and, after giving effect to the transactions contemplated hereby, will not be required to register as an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Securities and Exchange Commission thereunder.

 

(h)           Company is an “eligible contract participant” (as such term is defined in Section 1a(12) of the Commodity Exchange Act, as amended, other than a person that is an eligible contract participant under Section 1a(12)(C) of the Commodity Exchange Act).

 

(i)            Company and each of its affiliates is not, on the date hereof, in possession of any material non-public information with respect to Company or the Shares.

 

11

 

9.             Other Provisions.

 

(a)           Opinions.  Company shall deliver to Dealer an opinion of counsel, dated as of the Trade Date, with respect to due incorporation, existence and good standing of Company in Delaware, the due authorization, execution and delivery of this Confirmation, the matters set forth in Section 8(f) above, and the absence of conflict of the execution, delivery and performance of this Confirmation with any material agreement required to be filed as an exhibit to Company’s Annual Report on Form 10-K and Company’s constituent documents.

 

(b)           Repurchase Notices.  Company shall, on any day on which Company effects any repurchase of Shares, promptly give Dealer a written notice of such repurchase (a “Repurchase Notice”) on the Business Day following the date of such repurchase if following such repurchase, the number of outstanding Shares on such day, subject to any adjustments provided herein, is (i) less than 50 million (in the case of the first such notice) or (ii) thereafter more than 1 million less than the number of Shares included in the immediately preceding Repurchase Notice.  Company agrees to indemnify and hold harmless Dealer and its affiliates and their respective officers, directors, employees, affiliates, advisors, agents and controlling persons (each, an “Indemnified Person”) from and against any and all losses (including losses relating to Dealer’s hedging activities as a consequence of becoming, or of the risk of becoming, a Section 16 “insider”, including without limitation, any forbearance from hedging activities or cessation of hedging activities and any losses in connection therewith with respect to the Transaction), claims, damages, judgments, liabilities and expenses (including reasonable attorney’s fees), joint or several, which an Indemnified Person actually may become subject to, as a result of Company’s failure to provide Dealer with a Repurchase Notice on the day and in the manner specified in this paragraph.  If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against the Indemnified Person, such Indemnified Person shall promptly notify Company in writing, and Company, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others Company may designate in such proceeding and shall pay the reasonable out-of-pocket fees and expenses of such counsel related to such proceeding.  Company shall not be liable for any settlement of any proceeding effected without its written consent, such consent not to be unreasonably withheld, but if settled with such consent or if there be a final judgment for the plaintiff, Company agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment.  Company shall not, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is a party and indemnity has been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding on terms reasonably satisfactory to such Indemnified Person.  If the indemnification provided for in this paragraph is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then Company under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities.  The remedies provided for in this paragraph are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Person at law or in equity.  The indemnity and contribution agreements contained in this paragraph shall remain operative and in full force and effect regardless of the termination of the Transaction.

 

(c)           Regulation M.  Company is not on the Trade Date engaged in a distribution, as such term is used in Regulation M under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of any equity or equity-linked securities of Company, other than (i) a distribution meeting the requirements of the exception set forth in Rules 101(a), 101(b)(10), 102(a) and 102(b)(7) of Regulation M (the “Exclusions”).  Company shall not, until the second Scheduled Trading Day immediately following the Effective Date, engage in any such distribution (subject to the Exclusions) other than the distribution of USD 75,000,000 of 5.00% Convertible Senior Notes due 2016.

 

12

 

(d)           No Manipulation.  Company is not entering into the Transaction to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares) or otherwise in violation of the Exchange Act.

 

(e)           Transfer or Assignment.  Company may not transfer any of its rights or obligations under the Transaction without the prior written consent of Dealer.  Dealer may, without Company’s consent, transfer or assign all or any part of its rights or obligations under the Transaction at any time to any third party; provided that any such transfer or assignment shall be subject to the conditions that (I) following such transfer or assignment, the terms and conditions of the Agreement as so transferred or assigned (the “Transferred Agreement”) shall be substantially the same as the terms and conditions of the Agreement immediately prior to such transfer or assignment, (II) Company will not be required to pay to the transferee an amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) of the Transferred Agreement greater than the amount in respect of which Company would have been required to pay to Dealer under Section 2(d)(i)(4) in the absence of the transfer, (III) Company will not receive any payment under the Transferred Agreement from which an amount is required to be withheld or deducted for or on account of a Tax with respect to which no additional amount is required to be paid by the transferee under Section 2(d)(i)(4) of the Transferred Agreement (other than by reason of Section 2(d)(i)(4)(A) or (B) thereof), (IV) neither an Event of Default with respect to which Dealer is the Defaulting Party nor a Termination Event with respect to which Dealer is the sole Affected Party has occurred and is continuing at the time of the transfer, and neither an Event of Default nor a Termination Event shall occur as a result of the transfer, (V) each of Dealer and the transferee is a dealer in “notional principal contracts” within the meaning of Section 1.446-3(c)(4)(iii) of the U.S. Treasury Regulations and in other derivatives, and (VI) Dealer has used its good faith efforts to provide prior notice to Company of such transfer and the proposed date of such transfer, and shall provide written notice to Company reasonably promptly following such transfer.  In addition, if at any time (A) the Section 16 Percentage exceeds 7.5%, (B) the Warrant Equity Percentage exceeds 14.5%, or (C) the Share Amount exceeds the Applicable Share Limit (if any applies) (any such condition described in clauses (A), (B) or (C), an “Excess Ownership Position”), Dealer may, without Company’s consent, transfer or assign all or any part of its rights or obligations under the Transaction to any third party who is a dealer in “notional principal contracts” within the meaning of Section 1.446-3(c)(4)(iii) of the U.S. Treasury Regulations and in other derivatives. If at any time an Excess Ownership Positions exists, Dealer may designate any Exchange Business Day as an Early Termination Date with respect to all or a portion of the Transaction (the “Terminated Portion”) such that following such termination no Excess Ownership Position exists; provided that Dealer may only designate an Early Termination Date pursuant to this Section 9(e) if Dealer has used its good faith efforts to notify Company of the existence of such Excess Ownership Position, and Dealer is unable, acting in good faith and after using its commercially reasonable efforts, to effect a transfer or assignment of Warrants to a third party in accordance with this Section 9(e) on pricing terms reasonably acceptable to Dealer and within a time period reasonably acceptable to Dealer such that no Excess Ownership Position exists.  In the event that Dealer so designates an Early Termination Date with respect to a Terminated Portion, a payment shall be made pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Warrants equal to the number of Warrants underlying the Terminated Portion, (2) Company were the sole Affected Party with respect to such partial termination and (3) the Terminated Portion were the sole Affected Transaction (and, for the avoidance of doubt, the provisions of Section 9(k) shall apply to any amount that is payable by Company to Dealer pursuant to this sentence as if Company was not the Affected Party).  The “Section 16 Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and each person subject to aggregation of Shares with Dealer under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder directly or indirectly beneficially own (as defined under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder) and (B) the denominator of which is the number of Shares outstanding.  The “Warrant Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the sum of (1) the product

 

13

 

of the Number of Warrants and the Warrant Entitlement and (2) the aggregate number of Shares underlying any other warrants purchased by Dealer from Company, and (B) the denominator of which is the number of Shares outstanding.  The “Share Amount” as of any day is the number of Shares that Dealer and any person whose ownership position would be aggregated with that of Dealer (Dealer or any such person, a “Dealer Person”) under any insurance or other law, rule, regulation, regulatory order or organizational documents or contracts of Company that are, in each case, applicable to ownership of Shares (“Applicable Restrictions”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership under any Applicable Restriction, as determined by Dealer in its reasonable discretion.  The “Applicable Share Limit” means a number of Shares equal to (A) the minimum number of Shares that could give rise to reporting or registration obligations or other requirements (including obtaining prior approval from any person or entity) of a Dealer Person minus (B) 1% of the number of Shares outstanding.  Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities, or make or receive any payment in cash, to or from Company, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities, or make or receive such payment in cash, and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations.  Dealer shall be discharged of its obligations to Company only to the extent of any such performance.

 

(f)            Dividends.  If at any time during the period from and including the Effective Date, to and including the last Expiration Date, an ex-dividend date for a cash dividend occurs with respect to the Shares (an “Ex-Dividend Date”), then the Calculation Agent will adjust any of the Strike Price, Number of Warrants and/or Daily Number of Warrants to preserve the fair value of the Warrants to Dealer after taking into account such dividend.

 

(g)           Role of Agent.  Each party agrees and acknowledges that (i) J.P. Morgan Securities LLC, an affiliate of JPMorgan (“JPMS”), has acted solely as agent and not as principal with respect to the Transaction and (ii) JPMS has no obligation or liability, by way of guaranty, endorsement or otherwise, in any manner in respect of the Transaction (including, if applicable, in respect of the settlement thereof). Each party agrees it will look solely to the other party (or any guarantor in respect thereof) for performance of such other party’s obligations under the Transaction.

 

(h)           Additional Provisions.

 

(i)            Amendments to the Equity Definitions:

 

(A)          With respect to any Potential Adjustment Event, Section 11.2(a) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the words “a material”; and adding the phrase “or Warrants” at the end of the sentence.

 

(B)           Section 11.2(c) of the Equity Definitions is hereby amended by (x) replacing the words “a diluting or concentrative” with “a material”, (y) adding the phrase “or Warrants” after the words “the relevant Shares” in the same sentence and (z) deleting the phrase “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing it with the phrase “(provided that, solely in the case of Sections 11.2(e)(i), (ii)(A), (iv) and (v), no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares but, for the avoidance of doubt, solely in the case of Sections 11.2(e)(ii)(B) through (D), (iii), (vi) and (vii), adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares).”

 

14

 

(C)           Section 11.2(e)(vii) of the Equity Definitions is hereby amended by adding the phrase “or Warrants” at the end of the sentence.

 

(D)          Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to that Issuer.”

 

(E)           Section 12.9(b)(iv) of the Equity Definitions is hereby amended by:

 

(x)            deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in subsection (B); and

 

(y)           deleting the phrase “neither the Non-Hedging Party nor the Lending Party lends Shares in the amount of the Hedging Shares or” in the penultimate sentence.

 

(F)           Section 12.9(b)(v) of the Equity Definitions is hereby amended by:

 

(x)            adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and

 

(y)           (1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C) and (3) deleting the penultimate sentence in its entirety and replacing it with the sentence “The Hedging Party will determine the Cancellation Amount payable by one party to the other.”

 

(ii)           Notwithstanding anything to the contrary in this Confirmation, upon the occurrence of one of the following events, with respect to the Transaction, (1) Dealer shall have the right to designate such event an Additional Termination Event and designate an Early Termination Date pursuant to Section 6(b) of the Agreement, (2) Company shall be deemed the sole Affected Party with respect to such Additional Termination Event and (3) the Transaction shall be deemed the sole Affected Transaction:

 

(A)          A “person” or “group” (as those terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than Company, its subsidiaries or its and their employee benefit plans files a Schedule 13D or a Schedule TO, or any successor schedule, form or report under the Exchange Act disclosing, or Company otherwise becomes aware, that such person or group is or has become the “beneficial owner” (as that term is used in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the total outstanding voting power of all classes of the capital stock of Company entitled to vote generally in the election of its directors.

 

(B)           There occurs a sale, transfer, lease, conveyance or other disposition of all or substantially all of Company’s consolidated property or assets to any “person” or “group” (as those terms are used in Sections 13(d) and 14(d) of the Exchange Act), including any group acting for the purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act;

 

(C)           Company consolidates with, or merges with or into, another person or any person consolidates with, or merges with or into, Company, unless either (I) the

 

15

 

persons that “beneficially owned,” directly or indirectly, the shares of Company’s voting stock immediately prior to such consolidation or merger “beneficially own,” directly or indirectly, immediately after such consolidation or merger, shares of the surviving or continuing corporation’s voting stock representing at least a majority of the total outstanding voting power of all outstanding classes of voting stock of the surviving or continuing corporation in substantially the same proportion as such ownership immediately prior to such consolidation or merger; or (II) at least 90% of the consideration (other than cash payments for fractional shares or pursuant to statutory appraisal rights) in such consolidation or merger consists of common stock or depositary receipts in respect of common stock listed and traded or quoted on the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors) (or which will be so listed and traded or quoted when issued or exchanged in connection with such consolidation or merger).

 

(D)          Any of the following persons cease for any reason to constitute a majority of Company’s board of directors: (I) individuals who on the Effective Date constituted Company’s board of directors; and (II) any new directors whose election to Company’s board of directors or whose nomination for election by Company’s shareholders was approved by at least a majority of Company’s directors then still in office, or by a nominating committee thereof consisting of directors, either who were directors on the Effective Date or whose election or nomination for election was previously so approved.

 

(E)           Company is liquidated or dissolved or holders of its capital stock approve any plan or proposal for its liquidation or dissolution.

 

(F)           Dealer, despite using commercially reasonable efforts, is unable or reasonably determines, based on the advice of legal counsel, that it is impractical or illegal, to hedge its exposure with respect to the Transaction in the public market without registration under the Securities Act or as a result of any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer).

 

(G)           If on any day during the period from and including the Trade Date, to and including the final Expiration Date, (I) the Threshold Unwind Shares (as defined below) as of such day exceeds a number of Shares equal to 66% of the Maximum Number of Shares, or (II) Company makes a public announcement of any transaction or event that, in the reasonable opinion of Dealer would, upon consummation of such transaction or upon the occurrence of such event, as applicable, and after giving effect to any applicable adjustments hereunder, cause the Threshold Unwind Shares immediately following the consummation of such transaction or the occurrence of such event to exceed a number of Shares equal to 66% of the Maximum Number of Shares.  The “Threshold Unwind Shares” as of any day is a number of Shares equal to (1) the amount that would be payable pursuant to Section 6 of the Agreement (determined as of such day as if an Early Termination Date had been designated in respect of the Transaction and as if Company were the sole Affected Party and the Transaction were the sole Affected Transaction), divided by (2) the Settlement Price (determined as if such day were a Valuation Date).

 

(i)                                  [Reserved]

 

(j)            No Collateral or Setoff.  Notwithstanding any provision of the Agreement or any other agreement between the parties to the contrary, the obligations of Company hereunder are not secured by any collateral.  Obligations under the Transaction shall not be set off by Company against any other obligations of the parties, whether arising under the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise.  Any provision in the Agreement with respect to the satisfaction of Company’s payment obligations to the extent of

 

16

 

Dealer’s payment obligations to Company in the same currency and in the same Transaction (including, without limitation Section 2(c) thereof) shall not apply to Company and, for the avoidance of doubt, Company shall fully satisfy such payment obligations notwithstanding any payment obligation to Company by Dealer in the same currency and in the same Transaction. In calculating any amounts under Section 6(e) of the Agreement, notwithstanding anything to the contrary in the Agreement, (1) separate amounts shall be calculated as set forth in such Section 6(e) with respect to (a) the Transaction and (b) all other Transactions, and (2) such separate amounts shall be payable pursuant to Section 6(d)(ii) of the Agreement.  For the avoidance of doubt and notwithstanding anything to the contrary provided in this Section 9(i), in the event of bankruptcy or liquidation of either Company or Dealer, neither party shall have the right to set off any obligation that it may have to the other party under the Transaction against any obligation such other party may have to it, whether arising under the Agreement, this Confirmation or any other agreement between the parties hereto, by operation of law or otherwise.

 

(k)           Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events.

 

(i)            If, in respect of the Transaction, an amount is payable by Company to Dealer, (A) pursuant to Section 12.7 or Section 12.9 of the Equity Definitions or (B) pursuant to Section 6(d)(ii) of the Agreement (any such amount, a “Payment Obligation”), Company shall have the right, in its sole discretion, to satisfy the Payment Obligation by the Share Termination Alternative (as defined below) (except that Company shall not have the right to make such an election in the event of (I) a Nationalization, Insolvency, Merger Event or Tender Offer in which the consideration to be paid to holders of Shares consists solely of cash, (II) a Merger Event or Tender Offer that is within Company’s control, or (III) an Event of Default in which Company is the Defaulting Party or a Termination Event in which Company is the Affected Party, other than an Event of Default of the type described in Section 5(a)(iii), (v), (vi), (vii) or (viii) of the Agreement or a Termination Event of the type described in Section 5(b) of the Agreement, in each case that resulted from an event or events outside Company’s control (collectively, the “Share Termination Exceptions”)) and shall give irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 12:00 p.m. (New York City time) on the Merger Date, Tender Offer Date, Announcement Date (in the case of a Nationalization, Insolvency or Delisting), Early Termination Date or date of cancellation, as applicable; provided that if Company does not validly elect to satisfy the Payment Obligation by the Share Termination Alternative, Dealer shall have the right to require Company to satisfy its Payment Obligation by the Share Termination Alternative.

 

	
Share Termination   Alternative:
    	
If the Share   Termination Alternative is applicable in respect of any Payment Obligation,   Company shall deliver to Dealer the Share Termination Delivery Property on   the date (the “Share Termination Payment   Date”) on which the Payment Obligation would otherwise be due   pursuant to Section 12.7 or Section 12.9 of the Equity Definitions   or Section 6(d)(ii) of the Agreement, as applicable, subject to   Section 9(l)(i) below, in satisfaction, subject to   Section 9(l)(ii) below, of the Payment Obligation in the manner   reasonably requested by Dealer free of payment.
    
	
 
    	
 
    
	
Share Termination Delivery   Property:
    	
A number of Share   Termination Delivery Units, as calculated by the Calculation Agent, equal to   the Payment Obligation divided by the Share Termination Unit Price. The   Calculation Agent shall
    

 

17

 

	
 
    	
adjust the amount of   Share Termination Delivery Property by replacing any fractional portion of a   security therein with an amount of cash equal to the value of such fractional   security based on the values used to calculate the Share Termination Unit   Price.
    
	
 
    	
 
    
	
Share Termination Unit   Price:
    	
The value to Dealer of   property contained in one Share Termination Delivery Unit on the date such   Share Termination Delivery Units are to be delivered as Share Termination   Delivery Property, as determined by the Calculation Agent in its discretion   by commercially reasonable means. The Calculation Agent shall notify Company   of such Share Termination Unit Price at the time of notification of the   Payment Obligation. In the case of a Private Placement of Share Termination   Delivery Units that are Restricted Shares (as defined below), as set forth in   Section 9(l)(i) below, the Share Termination Unit Price shall be   determined by the discounted price applicable to such Share Termination   Delivery Units. In the case of a Registration Settlement of Share Termination   Delivery Units that are Restricted Shares (as defined below) as set forth in   Section 9(l)(ii) below, the Share Termination Unit Price shall be   the Settlement Price on the Merger Date, the Tender Offer Date, the Announcement   Date (in the case of a Nationalization, Insolvency or Delisting), the   date of cancellation or the Early Termination Date, as applicable.
    
	
 
    	
 
    
	
Share Termination   Delivery Unit:
    	
In the case of a   Termination Event, Event of Default Additional Disruption Event or Delisting,   one Share or, in the case of Nationalization, Insolvency, Tender Offer   or Merger Event, a unit consisting of the number or amount of each type of   property received by a holder of one Share (without consideration of any   requirement to pay cash or other consideration in lieu of fractional amounts   of any securities) in such Nationalization, Insolvency, Tender Offer or   Merger Event. If such Nationalization, Insolvency, Tender Offer or   Merger Event involves a choice of consideration to be received by holders,   such holder shall be deemed to have elected to receive the maximum possible   amount of cash.
    
	
 
    	
 
    
	
Failure to Deliver:
    	
Inapplicable
    
	
 
    	
 
    
	
Other applicable   provisions:
    	
If Share Termination   Alternative is applicable, the provisions of Sections 9.8, 9.9, 9.11, 9.12   and 10.5 (as modified above) of the Equity Definitions will be applicable,   except that all references in such provisions to “Physically-settled” shall   be read as references to “Share Termination Settled” and all references to   “Shares” shall be read as references to “Share Termination Delivery Units”.   “Share Termination Settled” in relation to the Transaction
    

 

18

 

	
 
    	
means that the Share   Termination Alternative is applicable to the Transaction.
    

 

(ii)           Notwithstanding anything to the contrary in this Confirmation, any Payment Obligation under this Confirmation shall, for all purposes, be calculated as if the Maximum Number of Shares were equal to two times the Number of Shares (without regard to the limitations on adjustment set forth in the second paragraph opposite the caption “Maximum Number of Shares” in Section 2) but any deliveries under Section 9(j)(i) shall be limited to the Maximum Number of Shares as defined in Section 2 hereof.

 

(iii)          Notwithstanding anything to the contrary in this Confirmation, if, in respect of the Transaction, an amount (a “Cash Payment Amount”) is payable by Company to Dealer, (A) pursuant to Section 12.7 or Section 12.9 of the Equity Definitions or (B) pursuant to Section 6(d)(ii) of the Agreement, in each case, pursuant to the Share Termination Exceptions, Dealer shall have the right, but not the obligation, to elect for the provisions set forth in Section 9(k)(i) and 9(k)(ii) to apply to such Cash Payment Amount as if (x) it were a Payment Obligation and (y) Dealer elected to require Company to satisfy its Payment Obligation by the Share Termination Alternative pursuant to the proviso in Section 9(k)(i).

 

(l)            Registration/Private Placement Procedures.  If, in the reasonable opinion of Dealer, based on the advice of legal counsel, following any delivery of Shares or Share Termination Delivery Property to Dealer hereunder, such Shares or Share Termination Delivery Property would be in the hands of Dealer subject to any applicable restrictions with respect to any registration or qualification requirement or prospectus delivery requirement for such Shares or Share Termination Delivery Property pursuant to any applicable federal or state securities law (including, without limitation, any such requirement arising under Section 5 of the Securities Act as a result of such Shares or Share Termination Delivery Property being “restricted securities”, as such term is defined in Rule 144 under the Securities Act, or as a result of the sale of such Shares or Share Termination Delivery Property being subject to paragraph (c) of Rule 145 under the Securities Act) (such Shares or Share Termination Delivery Property, “Restricted Shares”), then delivery of such Restricted Shares shall be effected pursuant to either clause (i) or (ii) below at the election of Company, unless Dealer waives the need for registration/private placement procedures set forth in (i) and (ii) below.  Notwithstanding the foregoing, solely in respect of any Daily Number of Warrants exercised or deemed exercised on any Expiration Date, Company shall elect, prior to the first Settlement Date for the First Expiration Date, a Private Placement Settlement or Registration Settlement for all deliveries of Restricted Shares for all such Expiration Dates which election shall be applicable to all Settlement Dates for such Warrants and the procedures in clause (i) or clause (ii) below shall apply for all such delivered Restricted Shares on an aggregate basis commencing after the final Settlement Date for such Warrants.  The Calculation Agent shall in good faith make commercially reasonable adjustments to settlement terms and provisions under this Confirmation to reflect a single Private Placement or Registration Settlement for such aggregate Restricted Shares delivered hereunder.

 

(i)            If Company elects to settle the Transaction pursuant to this clause (i) (a “Private Placement Settlement”), then delivery of Restricted Shares by Company shall be effected in customary private placement procedures with respect to such Restricted Shares reasonably acceptable to Dealer; provided that Company may not elect a Private Placement Settlement if, on the date of its election, it has taken, or caused to be taken, any action that would make unavailable either the exemption pursuant to Section 4(2) of the Securities Act for the sale by Company to Dealer (or any affiliate designated by Dealer) of the Restricted Shares or the exemption pursuant to Section 4(1) or Section 4(3) of the Securities Act for resales of the Restricted Shares by Dealer (or any such affiliate of Dealer).  The Private Placement Settlement of such Restricted Shares shall include customary representations, covenants, blue sky, if any, and other governmental filings and/or registrations, indemnities to Dealer, due diligence rights (for Dealer or any

 

19

 

designated buyer of the Restricted Shares by Dealer), opinions and certificates, and such other documentation as is customary for private placement agreements of companies of comparable size, maturity and line of business, all reasonably acceptable to Dealer.  In the case of a Private Placement Settlement, Dealer shall, subject to the execution by such recipients of customary confidentiality agreements acceptable to Company determine the appropriate discount to the Share Termination Unit Price (in the case of settlement of Share Termination Delivery Units pursuant to Section 9(k) above) or any Settlement Price (in the case of settlement of Shares pursuant to Section 2 above) applicable to such Restricted Shares in a commercially reasonable manner and appropriately adjust the number of such Restricted Shares to be delivered to Dealer hereunder.  Notwithstanding the Agreement or this Confirmation, the date of delivery of such Restricted Shares shall be the Exchange Business Day following notice by Dealer to Company, of such applicable discount and the number of Restricted Shares to be delivered pursuant to this clause (i).  For the avoidance of doubt, delivery of Restricted Shares shall be due as set forth in the previous sentence and not be due on the Share Termination Payment Date (in the case of settlement of Share Termination Delivery Units pursuant to Section 9(k) above) or on the Settlement Date for such Restricted Shares (in the case of settlement in Shares pursuant to Section 2 above).

 

(ii)           If Company elects to settle the Transaction pursuant to this clause (ii) (a “Registration Settlement”), then Company shall promptly (but in any event no later than the beginning of the Resale Period) file and use its commercially reasonable efforts to cause to become effective under the Securities Act a registration statement or supplement or amend an outstanding registration statement in form and substance reasonably satisfactory to Dealer, to cover the resale of such Restricted Shares in accordance with customary resale registration procedures, including covenants, conditions, representations, underwriting discounts (if applicable), commissions (if applicable), indemnities, due diligence rights, opinions and certificates, and such other documentation as is customary for equity resale underwriting agreements of companies of comparable size, maturity and line of business, all reasonably acceptable to Dealer, subject to the execution by such recipients of customary confidentiality agreements acceptable to Company.  If Dealer, in its reasonable discretion, is not satisfied with such procedures and documentation, Private Placement Settlement shall apply.  If Dealer is satisfied with such procedures and documentation, it shall sell the Restricted Shares pursuant to such registration statement during a period (the “Resale Period”) commencing on the Exchange Business Day following delivery of such Restricted Shares (which, for the avoidance of doubt, shall be (x) the Share Termination Payment Date in case of settlement in Share Termination Delivery Units pursuant to Section 9(k) above or (y) the Settlement Date in respect of the final Expiration Date for all Daily Number of Warrants) and ending on the earliest of (i) the Exchange Business Day on which Dealer completes the sale of all Restricted Shares or, in the case of settlement of Share Termination Delivery Units, a sufficient number of Restricted Shares so that the realized net proceeds of such sales equals or exceeds the Payment Obligation (as defined above), (ii) the date upon which all Restricted Shares have been sold or transferred pursuant to Rule 144 (or similar provisions then in force) or Rule 145(d)(2) (or any similar provision then in force) under the Securities Act and (iii) the date upon which all Restricted Shares may be sold or transferred by a non-affiliate pursuant to Rule 144 (or any similar provision then in force) or Rule 145(d)(2) (or any similar provision then in force) under the Securities Act.  If the Payment Obligation exceeds the realized net proceeds from such resale, Company shall transfer to Dealer by the open of the regular trading session on the Exchange on the Exchange Trading Day immediately following the last day of the Resale Period the amount of such excess (the “Additional Amount”) in cash or in a number of Shares (“Make-whole Shares”) in an amount that, based on the Settlement Price on the last day of the Resale Period (as if such day was the “Valuation Date” for purposes of computing such Settlement Price), has a dollar value equal to the Additional Amount.  The Resale Period shall continue to enable the sale of the Make-whole Shares.  If Company elects to pay the Additional Amount in

 

20

 

Shares, the requirements and provisions for Registration Settlement shall apply.  This provision shall be applied successively until the Additional Amount is equal to zero.  In no event shall Company deliver a number of Restricted Shares greater than the Maximum Number of Shares.

 

(iii)                               Without limiting the generality of the foregoing, Company agrees that any Restricted Shares delivered to Dealer, as purchaser of such Restricted Shares, (i) may be transferred by and among Dealer and its affiliates and Company shall effect such transfer without any further action by Dealer and (ii) after the period of 6 months from the Trade Date (or 1 year from the Trade Date if, at such time, informational requirements of Rule 144(c) are not satisfied with respect to Company) has elapsed after any Settlement Date for such Restricted Shares, Company shall promptly remove, or cause the transfer agent for such Restricted Shares to remove, any legends referring to any such restrictions or requirements from such Restricted Shares upon request by Dealer (or such affiliate of Dealer) to Company or such transfer agent, without any requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer).

 

If the Private Placement Settlement or the Registration Settlement shall not be effected as set forth in clauses (i) or (ii), as applicable, then failure to effect such Private Placement Settlement or such Registration Settlement shall constitute an Event of Default with respect to which Company shall be the Defaulting Party.

 

(m)                               Limit on Beneficial Ownership.  Notwithstanding any other provisions hereof, Dealer may not exercise any Warrant hereunder or be entitled to take delivery of any Shares deliverable hereunder, and Automatic Exercise shall not apply with respect to any Warrant hereunder, to the extent (but only to the extent) that, after such receipt of any Shares upon the exercise of such Warrant or otherwise hereunder, (i) the Section 16 Percentage would exceed 7.5%, or (ii) the Share Amount would exceed the Applicable Share Limit.  Any purported delivery hereunder shall be void and have no effect to the extent (but only to the extent) that, after such delivery, (i) the Section 16 Percentage would exceed 7.5%, or (ii) the Share Amount would exceed the Applicable Share Limit. If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of this provision, Company’s obligation to make such delivery shall not be extinguished and Company shall make such delivery as promptly as practicable after, but in no event later than one Business Day after, Dealer gives notice to Company that, after such delivery, (i) the Section 16 Percentage would not exceed 7.5%, and (ii) the Share Amount would not exceed the Applicable Share Limit.

 

(n)                                 Share Deliveries. Company acknowledges and agrees that, to the extent the holder of this Warrant is not then an affiliate and has not been an affiliate for 90 days (it being understood that Dealer will not be considered an affiliate under this paragraph solely by reason of its receipt of Shares pursuant to the Transaction), and otherwise satisfies all holding period and other requirements of Rule 144 of the Securities Act applicable to it, any delivery of Shares or Share Termination Delivery Property hereunder at any time after 6 months from the Trade Date (or 1 year from the Trade Date if, at such time, informational requirements of Rule 144(c) are not satisfied with respect to Company) shall be eligible for resale under Rule 144 of the Securities Act and Company agrees to promptly remove, or cause the transfer agent for such Shares or Share Termination Delivery Property, to remove, any legends referring to any restrictions on resale under the Securities Act from the Shares or Share Termination Delivery Property.  Company further agrees that any delivery of Shares or Share Termination Delivery Property prior to the date that is 6 months from the Trade Date (or 1 year from the Trade Date if, at such time, informational requirements of Rule 144(c) are not satisfied with respect to Company), may be transferred by and among Dealer and its affiliates (in accordance with the provisions of applicable law) and Company shall effect such transfer without any further action by Dealer.  Notwithstanding anything to the contrary herein, Company agrees that any delivery of Shares or Share Termination Delivery

 

21

 

Property shall be effected by book-entry transfer through the facilities of DTC, or any successor depositary, if at the time of delivery, such class of Shares or class of Share Termination Delivery Property is in book-entry form at DTC or such successor depositary.  Notwithstanding anything to the contrary herein, to the extent the provisions of Rule 144 of the Securities Act or any successor rule are amended, or the applicable interpretation thereof by the Securities and Exchange Commission or any court change after the Trade Date, the agreements of Company herein shall be deemed modified to the extent necessary to comply with Rule 144 of the Securities Act, as in effect at the time of delivery of the relevant Shares or Share Termination Delivery Property.

 

(o)                                 Waiver of Jury Trial.  Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to the Transaction.  Each party (i) certifies that no representative, agent or attorney of the other party has represented, expressly or otherwise, that such other party would not, in the event of such a suit, action or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other party have been induced to enter into the Transaction, as applicable, by, among other things, the mutual waivers and certifications provided herein.

 

(p)                                 Tax Disclosure.  Effective from the date of commencement of discussions concerning the Transaction, Company and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Company relating to such tax treatment and tax structure.

 

(q)                                 Maximum Share Delivery.

 

(i)                                     Notwithstanding any other provision of this Confirmation, the Agreement or the Equity Definitions, in no event will Company at any time be required to deliver a number of Shares greater than the Maximum Number of Shares to Dealer in connection with the Transaction.

 

(ii)                                  In the event Company shall not have delivered to Dealer the full number of Shares or Restricted Shares otherwise deliverable by Company to Dealer pursuant to the terms of the Transaction because Company has insufficient authorized but unissued Shares (such deficit, the “Deficit Shares”), Company shall be continually obligated to deliver, from time to time, Shares or Restricted Shares, as the case may be, to Dealer until the full number of Deficit Shares have been delivered pursuant to this Section 9(q)(ii), when, and to the extent that, (A) Shares are repurchased, acquired or otherwise received by Company or any of its subsidiaries after the Trade Date (whether or not in exchange for cash, fair value or any other consideration), (B) authorized and unissued Shares reserved for issuance in respect of other transactions prior to such date that prior to the relevant date become no longer so reserved or (C) Company additionally authorizes any unissued Shares that are not reserved for other transactions; provided that in no event shall Company deliver any Shares or Restricted Shares to Dealer pursuant to this Section 9(q)(ii) to the extent that such delivery would cause the aggregate number of Shares and Restricted Shares delivered to Dealer to exceed the Maximum Number of Shares.  Company shall immediately notify Dealer of the occurrence of any of the foregoing events (including the number of Shares subject to clause (A), (B) or (C) and the corresponding number of Shares or Restricted Shares, as the case may be, to be delivered) and promptly deliver such Shares or Restricted Shares, as the case may be, thereafter.

 

(r)                                    Wall Street Transparency and Accountability Act.  In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“WSTAA”), the parties hereby agree that neither the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, shall limit or otherwise impair either party’s otherwise applicable rights to terminate, renegotiate, modify, amend or supplement this

 

22

 

Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, Increased Cost of Hedging, an Excess Ownership Position, or Illegality (as defined in the Agreement)).

 

(s)                                  Right to Extend.  Dealer may postpone, in whole or in part, any Expiration Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Daily Number of Warrants with respect to one or more Expiration Dates) if Dealer determines, in its commercially reasonable judgment, that such extension is reasonably necessary or appropriate to preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions or to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Issuer or an affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer.

 

(t)                                    Status of Claims in Bankruptcy.   Dealer acknowledges and agrees that this Confirmation is not intended to convey to Dealer rights against Company with respect to the Transaction that are senior to the claims of common stockholders of Company in any United States bankruptcy proceedings of Company; provided that nothing herein shall limit or shall be deemed to limit Dealer’s right to pursue remedies in the event of a breach by Company of its obligations and agreements with respect to the Transaction; provided, further, that nothing herein shall limit or shall be deemed to limit Dealer’s rights in respect of any transactions other than the Transaction.

 

(u)                                 Securities Contract; Swap Agreement.  The parties hereto intend for (i) the Transaction to be a “securities contract” and a “swap agreement” as defined in the Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”), and the parties hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code, (ii) a party’s right to liquidate the Transaction and to exercise any other remedies upon the occurrence of any Event of Default under the Agreement with respect to the other party to constitute a “contractual right” as described in the Bankruptcy Code, and (iii) each payment and delivery of cash, securities or other property hereunder to constitute a “margin payment” or “settlement payment” and a “transfer” as defined in the Bankruptcy Code.

 

(v)                                 Early Unwind. In the event the sale of the “Firm Notes” (as defined in the Underwriting Agreement) is not consummated with the Underwriter for any reason by 5:00 p.m. (New York City time) on the Premium Payment Date, or such later date as agreed upon by the parties (the Premium Payment Date or such later date the “Early Unwind Date”),  the Transaction shall automatically terminate (the “Early Unwind”),  on the Early Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and Company under the Transaction shall be cancelled and terminated and (ii) each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of the other party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date; provided that Company shall purchase from Dealer on the Early Unwind Date all Shares purchased by Dealer or one or more of its affiliates in connection with the Transaction at the then prevailing market price.  Each of Dealer and Company represent and acknowledge to the other that, subject to the proviso included in this Section 9(v), upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.

 

(w)                               Payment by Dealer. In the event that (i) an Early Termination Date occurs or is designated with respect to the Transaction as a result of a Termination Event or an Event of Default (other than an Event of Default arising under Section 5(a)(ii) or 5(a)(iv) of the Agreement) and, as a result, Dealer owes to Company an amount calculated under Section 6(e) of the Agreement, or (ii) Dealer

 

23

 

owes to Company, pursuant to Section 12.7 or Section 12.9 of the Equity Definitions, an amount calculated under Section 12.8 of the Equity Definitions, such amount shall be deemed to be zero.

 

(x)                                   Delivery or Receipt of Cash. For the avoidance of doubt, other than receipt of the Premium by Company, nothing in this Confirmation shall be interpreted as requiring Company to deliver or receive cash in respect of the settlement of the Transaction contemplated by this Confirmation, except in circumstances where the cash settlement thereof is within Company’s control (including, without limitation, where an Event of Default by Company has occurred under Section 5(a)(ii) or Section 5(a)(iv) of the Agreement, where Company elects to deliver or receive cash or fails timely to elect to deliver or receive Share Termination Delivery Property in respect of the settlement of such Transaction) or in those circumstances in which holders of the Shares would also receive cash.

 

24

 

Please confirm that the foregoing correctly sets forth the terms of our agreement by signing and returning this Confirmation to EDG Confirmation Group, J.P. Morgan Securities LLC, 277 Park Avenue, 11th Floor, New York, NY 10172-3401, or by fax to (212) 622 8519.

 

	
 
    	
Yours   faithfully,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
J.P. MORGAN SECURITIES LLC,
   as agent for JPMorgan Chase Bank, National Association
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Jason M. Wood
    
	
 
    	
 
    	
Name:
    	
Jason   M. Wood
    
	
 
    	
 
    	
Title:
    	
Managing   Director
    

 

 

Accepted and confirmed as of the Trade Date:

 

	
HAWAIIAN HOLDINGS, INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Peter Ingram
    	
 
    
	
Name:
    	
Peter R. Ingram
    	
 
    
	
Title:
    	
Executive Vice President and Chief Financial   Officer
    	
 
    

 

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

Registered as a branch in England & Wales branch No. BR000746

Registered Branch Office 125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services AuthorityExhibit 10.1

 

UNITED STATES OF AMERICA
 BEFORE THE
 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
 WASHINGTON, D.C.

 

	
Written Agreement by and between 

 

TIDELANDS BANCSHARES, INC. 

Mount Pleasant, South Carolina 

 

and

 
    	
 
    	
 

 

Docket   No. 11-022-WA/RB-HC
    
	
FEDERAL RESERVE BANK OF RICHMOND 

Richmond, Virginia
    	
 
    	
 
    

 

WHEREAS, Tidelands Bancshares, Inc., Mount Pleasant, South Carolina (“Bancshares”), a registered bank holding company, owns and controls Tidelands Bank, Mount Pleasant, South Carolina (the “Bank”), a state-chartered nonmember bank, and various nonbank subsidiaries;

 

WHEREAS, it is the common goal of Bancshares and the Federal Reserve Bank of Richmond (the “Reserve Bank”) to maintain the financial soundness of Bancshares so that Bancshares may serve as a source of strength to the Bank;

 

WHEREAS, Bancshares and the Reserve Bank have mutually agreed to enter into this Written Agreement (the “Agreement”); and

 

WHEREAS, on March 4, 2011, the board of directors of Bancshares, at a duly constituted meeting, adopted a resolution authorizing and directing Larry W. Tarleton to enter into this Agreement on behalf of Bancshares, and consenting to compliance with each and every provision of this Agreement by Bancshares and its institution-affiliated parties, as

 

 

defined in sections 3(u) and 8(b)(3) of the Federal Deposit Insurance Act, as amended (the “FDI Act”) (12 U.S.C. §§ 1813(u) and 1818(b)(3)).

 

NOW, THEREFORE, Bancshares and the Reserve Bank agree as follows: 

 

Source of Strength

 

1.                                       The board of directors of Bancshares shall take appropriate steps to fully utilize Bancshares’ financial and managerial resources, pursuant to section 225.4 (a) of Regulation Y of the Board of Governors of the Federal Reserve System (the “Board of Governors”) (12 C.F.R. § 225.4(a)), to serve as a source of strength to the Bank, including, but not limited to, taking steps to ensure that the Bank complies with the Consent Order issued by the Federal Deposit Insurance Corporation (“FDIC”) on December 28, 2010, and any other supervisory action taken by the Bank’s federal or state regulator.

 

Dividends and Distributions

 

2.                                       (a)                                  Bancshares shall not declare or pay any dividends without the prior written approval of the Reserve Bank and the Director of the Division of Banking Supervision and Regulation of the Board of Governors (the “Director”).

 

(b)                                 Bancshares shall not directly or indirectly take dividends or any other form of payment representing a reduction in capital from the Bank without the prior written approval of the Reserve Bank.

 

(c)                                  Bancshares and its nonbank subsidiaries shall not make any distributions of interest, principal, or other sums on subordinated debentures or trust preferred securities without the prior written approval of the Reserve Bank and the Director.

 

(d)                                 All requests for prior approval shall be received by the Reserve Bank at least 30 days prior to the proposed dividend declaration date. All requests shall contain, at a

 

2

 

minimum, current and projected information on Bancshares’s capital, earnings, and cash flow; the Bank’s capital, asset quality, earnings, and allowance for loan and lease losses; and identification of the sources of funds for the proposed payment or distribution. For requests to declare or pay dividends, Bancshares must also demonstrate that the requested declaration or payment of dividends is consistent with the Board of Governors’ Policy Statement on the Payment of Cash Dividends by State Member Banks and Bank Holding Companies, dated November 14, 1985 (Federal Reserve Regulatory Service, 4-877 at page 4-323).

 

Capital Plan

 

3.                                       Within 60 days of this Agreement, Bancshares shall submit to the Reserve Bank an acceptable written plan to maintain sufficient capital at Bancshares on a consolidated basis. The plan shall, at a minimum, address, consider, and include:

 

(a)                             The consolidated organization’s and the Bank’s current and future capital requirements, including compliance with the Capital Adequacy Guidelines for Bank Holding Companies: Risk-Based Measure and Tier 1 Leverage Measure, Appendices A and D of Regulation Y of the Board of Governors (12 C.F.R. Part 225, App. A and D) and the applicable capital adequacy guidelines for the Bank issued by the Bank’s federal regulator;

 

(b)                            the adequacy of the Bank’s capital, taking into account the volume of classified credits, its risk profile, the adequacy of the allowance for loan and lease losses, current and projected asset growth, and projected earnings;

 

(c)                             the source and timing of additional funds necessary to fulfill the consolidated organization’s and the Bank’s future capital requirements;

 

(d)                            supervisory requests for additional capital at the Bank or the requirements of any supervisory action imposed on the Bank by its federal or state regulator; and

 

3

 

(e)                                  the requirements of section 225.4(a) of Regulation Y of the Board of Governors that Bancshares serve as a source of strength to the Bank.

 

4.                                       Bancshares shall notify the Reserve Bank, in writing, no more than 45 days after the end of any quarter in which any of Bancshares’s capital ratios fall below the approved plan’s minimum ratios. Together with the notification, Bancshares shall submit an acceptable written plan that details the steps that Bancshares will take to increase Bancshares’ capital ratios to or above the approved plan’s minimums.

 

Debt and Stock Redemption

 

5.                                       (a)                                  Bancshares and its nonbank subsidiaries shall not, directly or indirectly, incur, increase, or guarantee any debt without the prior written approval of the Reserve Bank. All requests for prior written approval shall contain, but not be limited to, a statement regarding the purpose of the debt, the terms of the debt, and the planned source(s) for debt repayment, and an analysis of the cash flow resources available to meet such debt repayment.

 

(b)                                 Bancshares shall not, directly or indirectly, purchase or redeem any shares of its stock without the prior written approval of the Reserve Bank.

 

Compliance with Laws and Regulations

 

6.                                       (a)                                  In appointing any new director or senior executive officer, or changing the responsibilities of any senior executive officer so that the officer would assume a different senior executive officer position, Bancshares shall comply with the notice provisions of section 32 of the FDI Act (12 U.S.C. § 1831i) and Subpart H of Regulation Y of the Board of Governors (12 C. F.R. §§ 225.71 et seq.).

 

4

 

(b)                                 Bancshares shall comply with the restrictions on indemnification and severance payments of section 18 (k) of the FDI Act (12 U.S.C. § 1828(k)) and Part 359 of the FDIC’s regulations (12 C.F.R. Part 359).

 

Approval and Implementation of Plans

 

7.                                       (a)                                  Bancshares shall submit written plans that are acceptable to the Reserve Bank within the applicable time periods set forth in paragraphs 3 and 4.

 

(b)                                 Within 10 days of approval by the Reserve Bank, Bancshares shall adopt the approved plans. Upon adoption, Bancshares shall promptly implement the approved plans, and thereafter fully comply with them.

 

(c)                                  During the term of this Agreement, the approved plans shall not be amended or rescinded without the prior written approval of the Reserve Bank.

 

Progress Reports

 

8.                                       Within 30 days after the end of each calendar quarter following the date of this Agreement, the board of directors shall submit to the Reserve Bank written progress reports detailing the form and manner of all actions taken to secure compliance with the provisions of this Agreement and the results thereof, and a parent company only balance sheet, income statement, and, as applicable, report of changes in stockholders’ equity.

 

5

 

Communications

 

9.                                  All communications regarding this Agreement shall be sent to:

 

(a)                                  A. Linwood Gill, III

Vice President

Federal Reserve Bank of Richmond

P.O. Box 27622

Richmond, Virginia 23261-7622

 

(b)                                 Mr. Robert E. Coffee, Jr.

President and CEO

Tidelands Bancshares, Inc.

P.O. Box 1087

Mount Pleasant, South Carolina 29465

 

Miscellaneous

 

10.                                 Notwithstanding any provision of this Agreement, the Reserve Bank may, in its sole discretion, grant written extensions of time to Bancshares to comply with any provision of this Agreement.

 

11.                                 The provisions of this Agreement shall be binding upon Bancshares and its institution-affiliated parties, in their capacities as such, and their successors and assigns.

 

12.                                 Each provision of this Agreement shall remain effective and enforceable until stayed, modified, terminated, or suspended in writing by the Reserve Bank.

 

13.                                 The provisions of this Agreement shall not bar, estop, or otherwise prevent the Board of Governors, the Reserve Bank, or any other federal or state agency from taking any other action affecting Bancshares, the Bank, the nonbank subsidiaries of Bancshares, or any of their current or former institution-affiliated parties and their successors and assigns.

 

6

 

14.                                 Pursuant to section 50 of the FDI Act (12 U.S.C. § 1831aa), this Agreement is enforceable by the Board of Governors under section 8 of the FDI Act (12 U.S.C. § 1818).

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the 18th day of March, 2011.

 

 

	
TIDELANDS BANCSHARES, INC.
    	
 
    	
FEDERAL RESERVE BANK OF RICHMOND
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Larry W. Tarleton
    	
 
    	
By:
    	
/s/ A. Linwood Gill, III
    
	
 
    	
Larry W. Tarleton
    	
 
    	
 
    	
A. Linwood Gill, III
    
	
 
    	
Acting Chairman
    	
 
    	
 
    	
Vice President
    

 

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00186-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00186-of-00352.parquet"}]]