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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_______________________________________
FORM 10-K
(Mark One)
 
 
x
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2016
or
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to            .
Commission file number 1-31443
HAWAIIAN HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
 
71-0879698
(I.R.S. employer
identification no.)
3375 Koapaka Street, Suite G-350
Honolulu, Hawai'i
(Address of principal executive offices)
 
96819
(Zip code)
Registrant's telephone number, including area code: (808) 835-3700
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Name of each exchange on which registered
Common Stock ($0.01 par value)
 
NASDAQ Stock Market, LLC
(NASDAQ Global Select Market)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes  x No   o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  o     No  x
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x  No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x     No  o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer  x
 
Accelerated filer  o
 
Non-accelerated filer  o
  (Do not check if a
smaller reporting company)
 
Smaller reporting company  o
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Rule Act 12b-2). Yes  o     No  x
The aggregate market value of the voting and non-voting common equity stock held by non-affiliates of the registrant was approximately $2.0 billion, computed by reference to the closing sale price of the Common Stock on the NASDAQ Global Select Market, on June 30, 2016, the last business day of the registrant's most recently completed second fiscal quarter.

As of February 10, 2017, 53,445,556 shares of Common Stock of the registrant were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement for the Annual Meeting of Stockholders to be held on May 10, 2017 will be incorporated by reference into Part III of this Form 10-K.
___________________________________________________________________________________________

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect our current views with respect to certain current and future events and financial performance. Such forward-looking statements include, without limitation: statements related to our financial statements and results of operations; any expectations of operating expenses, deferred revenue, interest rates, income taxes, deferred tax assets, valuation allowances or other financial items; expectations regarding our operating performance for the first quarter of 2017; statements concerning the tentative agreement with the Air Line Pilots Association, the scheduled ratification vote, and amounts expected to be payable under such agreement; statements regarding factors that may affect our operating results; statements regarding our goals, mission and areas of focus; statements regarding our working capital, and capital expenditures; statements related to funding our growth strategy and market opportunities; statements regarding the effect of fleet changes on our business, operations and cost structure; statements regarding our ability to pay taxes with working capital; estimates of fair value measurements; statements related to aircraft maintenance and repair; statements related to cash flow from operations and seasonality; estimates of required funding of and contributions to our defined benefit pension and disability plans; statements regarding our intention to consolidate and terminate certain pension plans, and the expected cost to settle certain plan obligations; statements and estimates regarding the availability, cost and effects of fuel prices on our business; statements regarding our wages and benefits and labor costs and agreements; statements regarding the status and effects of federal and state legislation and regulations promulgated by the FAA, DOT and other regulatory agencies; statements related to airport rent rates and landing fees; statements related to our lease of the cargo and maintenance hangar at the Honolulu International Airport, including estimated construction costs and service date; statements regarding aircraft rent expense; statements regarding our total capacity and yields on routes; statements regarding potential dilution of our securities; statements related to our frequent flyer program; statements related to our hedging program; statements concerning accounting principles, policies and estimates; statements regarding our net operating loss carryforwards; statements regarding our credit card holdback; statements regarding our debt or lease obligations and financing arrangements; statements regarding our financing needs; statements related to risk management, credit risks, and air traffic liability; statements related to future U.S. and global economic conditions or performance; statements related to changes in our fleet plan and related cash outlays; statements related to expected delivery of new aircraft and associated costs; statements related to the effects of any litigation on our operations or business; statements related to competition on our routes; statements related to continuous investments in technology and systems; and statements as to other matters that do not relate strictly to historical facts or statements of assumptions underlying any of the foregoing. Words such as "expects," "anticipates," "projects," "intends," "plans," "believes," "estimates," variations of such words, and similar expressions are also intended to identify such forward-looking statements. These forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties, and factors relating to our operations and business environment, all of which may cause our actual results to be materially different from any future results, expressed or implied, in these forward-looking statements.
Factors that could affect such forward-looking statements include, but are not limited to: our ability to accurately forecast quarterly and annual results; global economic volatility; macroeconomic developments; political developments; our dependence on the tourism industry; the price and availability of fuel; foreign currency exchange rate fluctuations; our competitive environment; fluctuations in demand for transportation in the markets in which we operate; maintenance of privacy and security of customer-related information and compliance with applicable federal and foreign privacy or data security regulations or standards; our dependence on technology and automated systems; our reliance on third-party contractors; satisfactory labor relations; our ability to attract and retain qualified personnel and key executives; successful implementation of growth strategy and cost reduction goals; adverse publicity; risks related to the airline industry; our ability to obtain and maintain adequate facilities and infrastructure; seasonal and cyclical volatility; the effect of applicable state, federal and foreign laws and regulations; increases in insurance costs or reductions in coverage; the limited number of suppliers for aircraft, aircraft engines and parts; our existing aircraft purchase agreements; delays in aircraft deliveries or other loss of fleet capacity; fluctuations in our share price; and our financial liquidity. The risks, uncertainties, and assumptions referred to above that could cause our results to differ materially from the results expressed or implied by such forward-looking statements include those discussed under the heading "Risk Factors" in Item 1A in this Annual Report on Form 10-K and the risks, uncertainties and assumptions discussed from time to time in our other public filings and public announcements. All forward-looking statements included in this document are based on information available to us as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date hereof.


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PART I
ITEM 1.    BUSINESS.
Overview
Hawaiian Holdings, Inc. (the Company, Holdings, we, us, and our) is a holding company incorporated in the State of Delaware. The Company's primary asset is our sole ownership of all issued and outstanding shares of common stock of Hawaiian Airlines, Inc. (Hawaiian). Hawaiian was originally incorporated in January 1929 under the laws of the Territory of Hawai'i and became our indirect wholly-owned subsidiary pursuant to a corporate restructuring that was consummated in August 2002. Hawaiian became a Delaware corporation and the Company's direct wholly-owned subsidiary concurrent with its reorganization and reacquisition by the Company in June 2005.
Our Business
We are engaged in the scheduled air transportation of passengers and cargo amongst the Hawaiian Islands (the Neighbor Island routes), between the Hawaiian Islands and certain cities in the United States (the North America routes), and between the Hawaiian Islands and the South Pacific, Australia, New Zealand and Asia (the International routes), collectively referred to as our Scheduled Operations. We offer non-stop service to Hawai'i from more U.S. gateway cities ( 11 ) than any other airline, and also provide approximately 160 daily flights between the Hawaiian Islands. In addition, we operate various charter flights.
We are the longest serving airline as well as the largest airline headquartered in the State of Hawai'i, and the 10th largest domestic airline in the United States based on revenue passenger miles (RPMs) reported by the Research and Innovative Technology Administration Bureau of Transportation Services as of October 2016 , the latest data available.
At December 31, 2016 , our fleet consisted of 20 Boeing 717-200 aircraft for the Neighbor Island routes, eight Boeing 767-300 aircraft, and 23 Airbus A330-200 aircraft for the North America, International, and charter routes. We also own three ATR42 aircraft for the "Ohana by Hawaiian" Neighbor Island service.
Our goal is to be the number one destination carrier serving Hawai'i. We are devoted to the travel needs of the residents of and visitors to Hawai'i and offer a unique travel experience. We are strongly rooted in the culture and people of Hawai'i and seek to provide quality service to our customers that exemplifies the spirit of Aloha.
Outlook
Our mission every year is to grow a profitable airline with a passion for excellence, our customers, our people and the spirit of Hawai'i. In 2017 , we will continue to focus on strengthening our competitive position in the markets that we serve primarily by continuing to mature the routes we launched over the past several years, improving our sales distribution channels, maintaining a disciplined approach in controlling our costs, and growing our offering of value-added products and services.
Flight Operations
Our flight operations are based in Honolulu, Hawai'i. At December 31, 2016 , we operated 218 scheduled flights with:
•
Daily service on our North America routes between the State of Hawai'i and Los Angeles, Oakland, Sacramento, San Diego, San Francisco, and San Jose, California; Las Vegas, Nevada; Phoenix, Arizona; Portland, Oregon; and Seattle, Washington; and scheduled service between the State of Hawai'i and New York City, New York.
•
Daily service on our Neighbor Island routes among the six major islands of the State of Hawai'i.
•
Daily service on our International routes between the State of Hawai'i and Sydney, Australia; and Tokyo and Osaka, Japan and scheduled service between the State of Hawai'i and Pago Pago, American Samoa; Papeete, Tahiti; Brisbane, Australia; Auckland, New Zealand; Sapporo, Japan; Seoul, South Korea; and Beijing, China.
•
Various ad hoc charters.
Fuel
Our operations and financial results are significantly affected by the availability and price of jet fuel. The following table sets forth statistics about our aircraft fuel consumption and cost.
Year
Gallons
consumed
 
Total cost,
including taxes
 
Average cost
per gallon
 
Percent of
operating expenses
 
(in thousands)
 
 
 
 
2016
244,118

 
$
344,322

 
$
1.41

 
16.8
%
2015
234,183

 
$
417,728

 
$
1.78

 
22.1
%
2014
230,199

 
$
678,253

 
$
2.95

 
32.8
%

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As illustrated by the table above, fuel costs constitute a significant portion of our operating expenses. We purchase aircraft fuel at prevailing market prices, and seek to manage economic risks associated with fluctuations in aircraft fuel prices by entering into derivative financial instruments such as heating oil swaps and crude oil call options.
Aircraft Maintenance
Our aircraft maintenance programs consist of a series of phased or continuous checks for each aircraft type. These checks are performed at specified intervals measured by calendar months, time flown, by the number of takeoffs and landings, or cycles operated. In addition, we perform inspections, repairs, and modifications of our aircraft in response to Federal Aviation Administration (FAA) directives. We perform checks ranging from "walk around" inspections before each flight's departure to major overhauls of the airframes which can take several weeks to complete. Aircraft engines are subject to phased maintenance programs designed to detect and remedy potential problems before they occur. The service lives of certain airframe and engine parts and components, which are time or cycle controlled, are replaced or refurbished prior to the expiration of their time or cycle limits. We have contracts with third parties to provide certain maintenance on our aircraft and aircraft engines.
Marketing and Ticket Distribution
We utilize various distribution channels including our website www.hawaiianairlines.com , primarily for our North America and Neighbor Island routes, and travel agencies and wholesale distributors for our International routes.
Our website is available in English, Japanese, Korean, and Chinese and offers our customers information on our flight schedules, information on our HawaiianMiles frequent flyer program, the ability to book reservations on our flights or connecting flights with any of our code-share partners, the status of our flights as well as the ability to purchase hotels, cars and vacation packages. We also distribute our fares through online travel agencies.
Frequent Flyer Program
The HawaiianMiles frequent flyer program was initiated in 1983 to encourage and develop customer loyalty. HawaiianMiles allows passengers to earn mileage credits by flying with us and our partner carriers. In addition, members earn mileage credits for patronage with our other program partners, including credit card issuers, hotels, car rental firms, and general merchants pursuant to our exchange partnership agreements. We also sell mileage credits to other companies participating in the program.
HawaiianMiles members have a choice of various awards based on accumulated mileage credits, with most of the awards being redeemed for free air travel on Hawaiian.
HawaiianMiles accounts with no activity (frequent flyer miles earned or redeemed) for 18 months automatically expire. The number of free travel awards used for travel on Hawaiian was approximately 585,000 in 2016 . The amount of free travel awards as a percentage of total revenue passengers was approximately 5% in 2016 . We believe displacement of revenue passengers is minimal due to our ability to manage frequent flyer seat inventory, and the relatively low ratio of free award usage to total revenue passengers.
Code-Share and Other Alliances
We have marketing alliances with other airlines that provide reciprocal frequent flyer mileage accrual and redemption privileges and code-shares on certain flights (one carrier placing its name and flight numbers, or code, on flights operated by the other carrier). These programs enhance our revenue opportunities by:
•
increasing value to our customers by providing easier access to more travel destinations and better mileage accrual/redemption opportunities;
•
gaining access to more connecting traffic from other airlines; and
•
providing members of our alliance partners' frequent flyer programs an opportunity to travel on our system while earning mileage credit in the alliance partners' programs.

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Our marketing alliances with other airlines as of December 31, 2016 were as follows:
 
Hawaiian Miles
Frequent Flyer
Agreement
 
Other Airline
Frequent Flyer
Agreement
 
Code-share—Hawaiian
Flight # on Flights
Operated by Other
Airline
 
Code-share—Other
Airline Flight # on
Flights Operated by
Hawaiian
Air China
No
 
No
 
Yes
 
Yes
All Nippon Airways
Yes
 
Yes
 
Yes
 
Yes
American Airlines
No
 
Yes
 
No
 
Yes
China Airlines
Yes
 
Yes
 
Yes
 
Yes
Delta Air Lines
No
 
Yes
 
No
 
Yes
JetBlue
Yes
 
Yes
 
Yes
 
Yes
Korean Air
Yes
 
Yes
 
Yes
 
Yes
Philippine Airlines
No
 
No
 
No
 
Yes
Turkish Airlines
No
 
No
 
No
 
Yes
United Airlines
No
 
Yes
 
No
 
Yes
Virgin America
Yes
 
Yes
 
Yes
 
No
Virgin Atlantic Airways
Yes
 
Yes
 
No
 
No
Virgin Australia
Yes
 
Yes
 
No
 
Yes
Although these programs and services increase our ability to be more competitive, they also increase our reliance on third parties.
Competition
The airline industry is extremely competitive. We believe that the principal competitive factors in the airline industry are:
•
Price;
•
Flight frequency and schedule;
•
On-time performance and reliability;
•
Name recognition;
•
Marketing affiliations;
•
Frequent flyer benefits;
•
Customer service;
•
Aircraft type; and
•
In-flight services.
Domestic —We face multiple competitors on our North America routes including major network carriers such as Alaska (ALK), American Airlines (AA), United Airlines (UA), and Delta Airlines (DL). Various charter companies also provide non scheduled service to Hawai'i, mostly under public charter arrangements. Our Neighbor Island competitors consist of regional carriers, which include Island Air, Mokulele Airlines, and a number of other "air taxi" companies.
International —Currently, we are the only provider of direct service between Honolulu and each of Sapporo, Japan; Pago Pago, American Samoa; and Papeete, Tahiti. However, we face multiple competitors from both domestic and foreign carriers on our other international routes.

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Employees
As of December 31, 2016 , we had 6,199 active employees, and approximately 83 % of our employees were covered by labor agreements with the following organized labor groups:
Employee Group
 
Represented by
 
Number of Employees
 
Agreement amendable on(*)
 
Flight deck crew members
 
Air Line Pilots Association (ALPA)
 
663

 
September 15, 2015
**
Cabin crew members
 
Association of Flight Attendants (AFA)
 
1,810

 
January 1, 2017
***
Maintenance and engineering personnel
 
International Association of Machinists and Aerospace Workers (IAM-M)
 
908

 
January 1, 2021
 
Clerical
 
IAM-C
 
1,712

 
January 1, 2021
 
Flight dispatch personnel
 
Transport Workers Union (TWU)
 
43

 
August 1, 2021
 
(*) Our relations with our labor organizations are governed by Title II of the Railway Labor Act of 1926, pursuant to which the collective bargaining agreements between us and these organizations do not expire but instead become amendable as of a certain date if either party wishes to modify the terms of the agreement.
(**) In February 2017, we reached a tentative agreement with the (ALPA). A ratification vote is set to occur in March 2017, however we can provide no assurances that the tentative agreement will be approved at that time. The tentative agreement is for a 63-month contract amendment which includes (amongst other various benefits) a pay adjustment and ratification bonus.
(***) As of January 2017, contract negotiations are ongoing with the AFA.
Seasonality
Hawai'i is a popular vacation destination for travelers. For that reason, our operations and financial results are subject to substantial seasonal and cyclical volatility, primarily due to leisure and holiday travel patterns. Demand levels are typically weaker in the first quarter of the year with stronger demand periods occurring during June, July, August, and December. We may adjust our pricing or the availability of particular fares to obtain an optimal passenger load factor depending on seasonal demand differences.
Customers
Our business is not dependent upon any single customer, or a few customers. The loss of any one customer would not have a material adverse effect on our business.
Regulation
Our business is subject to extensive and evolving international, federal, state and local laws and regulations. Many governmental agencies regularly examine our operations to monitor compliance with applicable laws and regulations. Governmental authorities can enforce compliance with applicable laws and regulations and obtain injunctions or impose civil or criminal penalties or modify, suspend, or revoke our operating certificates in case of violations.
Industry Regulations
We are subject to the regulatory jurisdiction of the U.S. Department of Transportation (DOT) and the Federal Aviation Administration (FAA). The DOT has jurisdiction over international routes and fares for some countries (based upon treaty relations with those countries), consumer protection policies including baggage liability, denied boarding compensation, and unfair competitive practices as set forth in the Airline Deregulation Act of 1978. The FAA has regulatory jurisdiction over flight operations, including equipment, ground facilities, security systems, maintenance, and other safety matters. Pursuant to these regulations, we have established, and the FAA has approved, a maintenance program for each type of aircraft we operate that provides for the ongoing maintenance of our aircraft, ranging from frequent routine inspections to major overhauls.
Maintenance Directives
The FAA approves all airline maintenance programs, including modifications to the programs. In addition, the FAA licenses the repair stations and mechanics that perform inspections, repairs and overhauls, as well as the inspectors who monitor the work.
The FAA frequently issues airworthiness directives in response to specific incidents or reports by operators or manufacturers, requiring operators of specified equipment types to perform prescribed inspections, repairs or modifications within stated time periods or numbers of cycles. In the last several years, the FAA has issued a number of maintenance directives and other regulations relating to, among other things, wiring requirements for aging aircraft, fuel tank flammability, cargo compartment

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fire detection/suppression systems, collision avoidance systems, airborne windshear avoidance systems, noise abatement, and increased inspection requirements.
Airport Security
The Aviation and Transportation Security Act (ATSA) mandates that the Transportation Security Administration (TSA) provide screening of all passengers and property, including mail, cargo, carry-on and checked baggage, and other articles that will be carried aboard a passenger aircraft. Under the ATSA, substantially all security screeners at airports are federal employees and airline and airport security is overseen and performed by federal employees, including security managers, law enforcement officers, and Federal Air Marshals. The ATSA also provides for increased security on flight decks of aircraft and requires Federal Air Marshals to be present on certain flights, improved airport perimeter access security, airline crew security training, enhanced security screening of passengers, baggage, cargo, mail, employees and vendors, enhanced training and qualifications of security screening personnel, provision of passenger data to U.S. Customs and Border Protection and enhanced background checks.
The TSA also has the authority to impose additional fees on the air carriers, if necessary, to cover additional federal aviation security costs.
Environmental and Employee Safety and Health
We are subject to various laws and regulations concerning environmental matters and employee safety and health in the U.S. and other countries in which we do business. Many aspects of airlines' operations are subject to increasingly stringent federal, state, local, and foreign laws protecting the environment. U.S. federal laws that have a particular impact on us include the Airport Noise and Capacity Act of 1990, the Clean Air Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Safe Drinking Water Act, and the Comprehensive Environmental Response, Compensation, and Liability Act. Certain of our operations are also subject to the oversight of the Occupational Safety and Health Administration (OSHA) concerning employee safety and health matters. The U.S. Environmental Protection Agency (EPA), OSHA, and other federal agencies have been authorized to promulgate regulations that affect our operations. In addition to these federal activities, states have been delegated certain authority under the aforementioned federal statutes. Many state and local governments have adopted environmental and employee safety and health laws and regulations, some of which are similar to or stricter than federal requirements, such as California.
The EPA is authorized to regulate aircraft emissions and has historically implemented emissions control standards previously adopted by the International Civil Aviation Organization. Our aircraft comply with the existing EPA standards as applicable by engine design date.
We seek to minimize the impact of carbon emissions from our operations through reductions in our fuel consumption and other efforts. We have reduced the fuel needs of our aircraft fleet through the retirement and replacement of certain elements of our fleet with newer, more fuel efficient aircraft. In addition, we have implemented fuel saving procedures in our flight and ground support operations that further reduce carbon emissions. In 2012, we earned the first-ever aviation based carbon credits through the reduction of carbon dioxide emissions with the use of an eco-friendly engine washing technology. We are also supporting initiatives to develop alternative fuels and efforts to modernize the air traffic control system in the U.S. as part of our efforts to reduce our emissions and minimize our impact on the environment.
Noise Abatement
Under the Airport Noise and Capacity Act, the DOT allows local airport authorities to implement procedures designed to abate special noise problems, provided such procedures do not unreasonably interfere with interstate and foreign commerce, or the national transportation system. Certain airports, including the major airports at Los Angeles, San Diego, San Francisco, and San Jose, California, Sydney, Australia, and Tokyo, Japan, have established airport restrictions to limit noise, including restrictions on aircraft types to be used and limits on the number of hourly or daily operations or the time of such operations. Local authorities at other airports could consider adopting similar noise restrictions. In some instances, these restrictions have caused curtailments in services or increases in operating costs, and such restrictions could limit our ability to expand our operations.
Civil Reserve Air Fleet Program
The U.S. Department of Defense regulates the Civil Reserve Air Fleet (CRAF) and government charters. We have elected to participate in the CRAF program by agreeing to make aircraft available to the federal government for use by the U.S. military under certain stages of readiness related to national emergencies. The program is a standby arrangement that allows the U.S. Department of Defense U.S. Transportation Command to call on as many as 12 contractually committed Hawaiian aircraft and crews to supplement military airlift capabilities. None of our aircraft are presently mobilized under this program.
Other Regulations

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The State of Hawai'i is uniquely dependent upon air transportation. The Hawai'i state legislature has enacted legislation that reflects and attempts to address its concerns. For example, House Bill 2250 HD1, Act 1 of the 2008 Special Session, establishes a statutory scheme for the regulation of Hawai'i neighbor island air carriers, provided that federal legislation is enacted to permit its implementation. The U.S. Congress has yet to enact legislation that would allow this proposed legislation to go into effect.
Additionally, several aspects of airline operations are subject to regulation or oversight by federal agencies other than the FAA and the DOT. Federal antitrust laws are enforced by the U.S. Department of Justice. The U.S. Postal Service has jurisdiction over certain aspects of the transportation of mail and related services provided by our cargo services. Labor relations in the air transportation industry are generally regulated under the Railway Labor Act. We and other airlines certificated prior to October 24, 1978 are also subject to preferential hiring rights granted by the Airline Deregulation Act to certain airline employees who have been furloughed or terminated (other than for cause). The Federal Communications Commission issues licenses and regulates the use of all communications frequencies assigned to us and other airlines. There is increased focus on consumer protection both on the federal and state level. We cannot always accurately predict the cost of such requirements on our operations.
Additional laws and regulations are proposed from time to time, which could significantly increase the cost of airline operations by imposing additional requirements or restrictions. U.S. law restricts the ownership of U.S. airlines to corporations where no more than 25% of the voting stock may be held by non-U.S. citizens and the airline must be under the actual control of U.S. citizens. The President and two thirds of the Board of Directors and other managing officers must also be U.S. citizens. Regulations also have been considered from time to time that would prohibit or restrict the ownership and/or transfer of airline routes or takeoff and landing slots and authorizations. Also, the award of international routes to U.S. carriers (and their retention) is regulated by treaties and related agreements between the U.S. and foreign governments, which are amended from time to time. We cannot predict what laws and regulations will be adopted or what changes to international air transportation treaties will be adopted, if any, or how we will be affected by those changes.
Business Segment Data
We operate in a single industry segment. All required financial segment information can be found in our consolidated financial statements.
Information about Geographic Revenue and Foreign Operations
Information concerning revenues by geographic area is set forth in Note 15 to our consolidated financial statements.
Available Information
General information about us, including the charters for the committees of our Board of Directors can be found at https://www.hawaiianairlines.com . Our annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, as well as any amendments and exhibits to those reports that we file with the Securities and Exchange Commission (SEC) are available free of charge through our website. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which can be found at http://www.sec.gov .
We also use the investor relations section of our website https://newsroom.hawaiianairlines.com/investor-relations and our website ( https://www.hawaiianairlines.com ), as a means of disclosing material information and for complying with our disclosure obligations under Regulation FD.
Information on our website is not incorporated into this Annual Report on Form 10-K or our other securities filings and is not a part of such filings.
ITEM 1A.    RISK FACTORS.
In addition to the risks identified elsewhere in this report, the following risk factors apply to our business, results of operations, and financial conditions.

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ECONOMIC RISKS
Our business is affected by global economic volatility.
Our business and results of operations are significantly impacted by general world-wide economic conditions. Demand for discretionary purchases including air travel and vacations to Hawai'i remains unpredictable. Deterioration in demand resulting from economic uncertainty or another recession may result in a reduction in our passenger traffic and/or increased competitive pressure on fares in the markets we serve, which would negatively impact our results of operations and financial condition. We cannot assure that we would be able to offset such revenue reductions by reducing our costs.
Our business is highly dependent on tourism to, from, and amongst the Hawaiian Islands and our financial results could suffer if there is a downturn in tourism levels.
Our principal base of operations is in Hawai'i and our revenue is linked primarily to the number of travelers (mainly tourists) to, from and amongst the Hawaiian Islands. Hawai'i tourism levels are affected by the political and economic climate in Hawai'i's main tourism markets, the availability of hotel accommodations, the popularity of Hawai'i as a tourist destination relative to other vacation destinations, and other global factors, including natural disasters, safety and security. From time to time, various events and industry specific problems such as labor strikes have had a negative impact on tourism in Hawai'i. The occurrence of natural disasters, such as earthquakes and tsunamis, in Hawai'i or other parts of the world could also have a material adverse effect on Hawai'i tourism. In addition, the potential or actual occurrence of terrorist attacks, wars, and the threat of other negative world events have had, and may in the future have, a material adverse effect on Hawai'i tourism. A decline in the level of Hawai'i passenger traffic could have a material adverse effect on our results of operations and financial condition.
Our business is highly dependent on the price and availability of fuel.
Our results and operations are heavily impacted by the price and availability of jet fuel. While we have benefited recently from lower fuel costs, fuel costs began to increase in the latter half of 2016 and we cannot assure that fuel costs will not increase further in the future. The cost and availability of jet fuel remains volatile and is subject to political, economic, and market factors that are generally outside of our control. Prices may be affected by many factors including, without limitation, the impact of political instability, crude oil production and refining capacity, unexpected changes in the availability of petroleum products due to disruptions to distribution systems or refineries, unpredicted increases in demand due to weather or the pace of global economic growth, inventory reserve levels of crude oil and other petroleum products, the relative fluctuation between the U.S. dollar and other major currencies, and the actions of speculators in commodity markets. Because of the effects of these factors on the price and availability of jet fuel, the cost and future availability of fuel cannot be predicted with any degree of certainty. Also, due to the competitive nature of the airline industry, there can be no assurance that we will be able to increase our fares or other fees to sufficiently offset any increase in fuel prices.
We enter into derivative agreements to protect against the volatility of fuel costs. There is no assurance that such agreements will protect us during unfavorable market conditions or that our counterparties will be able to perform under these hedge arrangements. Also, if fuel prices fall significantly below the levels in existence at the time we enter into our hedging contracts, we may be required to post a significant amount of cash collateral, which could have an impact on the level of our unrestricted cash and cash equivalents and adversely affect our liquidity.
Also, see Item 7A, Quantitative and Qualitative Disclosures About Market Risk , for further information regarding our exposure to the price of fuel.
Our business is exposed to foreign currency exchange rate fluctuations.
Our business is expanding internationally with an increasing percentage of our passenger revenue generated from our International routes. The fluctuation of the U.S. dollar relative to foreign currencies can significantly affect our results of operations and financial condition. To manage the effects of fluctuating exchange rates, we periodically enter into foreign currency forward contracts. There is no assurance that such agreements will protect us against foreign currency exchange rate fluctuations during unfavorable market conditions or that our counterparties will be able to perform under these hedge arrangements.


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COMPETITIVE ENVIRONMENT RISKS
We operate in an extremely competitive environment.
The airline industry is characterized by low profit margins, high fixed costs, and significant price competition. We compete with other airlines on all of our Domestic and International routes. The commencement of, or increase in, service on our routes by existing or new carriers could negatively impact our operating results. Many of our competitors on our North America and International routes are larger and have greater financial resources and brand recognition than we do. Aggressive marketing tactics or a prolonged fare war initiated by one or more of these competitors could adversely affect our financial resources and our ability to compete in these markets. Since airline markets have few natural barriers to entry, we also face the threat of new entrants in all of our markets.
Furthermore, large network carriers have significantly reduced their costs and adjusted their routes to compete with low-cost carriers (LCC) in their existing markets by diverting resources to long-haul markets such as Hawai'i, where LCC competition has been less severe. Additional capacity to Hawai'i, whether from network carriers or LCCs, could decrease our share of the markets in which we operate, could cause a decline in our yields, or both, which could have a material adverse effect on our results of operations and financial condition.
Airline bankruptcy restructuring, strategic combinations or industry consolidation could have an impact on our competitive environment.
Many of our competitors have dramatically reduced operating costs through a combination of bankruptcy restructuring, industry consolidation, and vendor and labor negotiations to increase market strength. Several domestic airlines were able to reduce labor costs, restructure debt and lease agreements, and implement other financial improvements through the bankruptcy process. In addition, certain of our competitors have merged (for example, the Alaska Airlines acquisition of Virgin America in December 2016) to create larger and more financially formidable airlines.
Through consolidation, carriers have the opportunity to achieve cost reductions by eliminating redundancy in their networks and operating structures. With reduced costs, these competitors are more capable of operating profitably in an environment of reduced fares and may, as a result, increase service in our primary markets or reduce fares to attract additional customers. Because airline customers are price sensitive, we cannot ensure that we will be able to attract a sufficient number of customers at sufficiently high fare levels to generate profitability, or that we will be able to reduce our operating costs sufficiently to remain competitive with other airlines.
The concentration of our business in Hawai'i, and between Hawai'i and the U.S. mainland, provides little diversification of our revenue.
During 2016 , approximately 74% of our passenger revenue was generated from air transportation between the Hawaiian Islands and the U.S. mainland and amongst the Hawaiian Islands. Many of our competitors, particularly major network carriers with whom we compete on our North America routes, enjoy greater geographical diversification of their revenue. A reduction in the level of demand for travel within Hawai'i, or to Hawai'i from the U.S. mainland, or an increase in the level of industry capacity on these routes, may reduce the revenue we are able to generate and adversely affect our financial results. As these routes account for a significantly higher proportion of our revenue than they do for many of our competitors, such a reduction would have a relatively greater adverse effect on our financial results.
Our business is affected by the competitive advantages held by network carriers in the North America market.
During 2016 , approximately 54% of our passenger revenue was generated from our North America routes. The majority of competition on our North America routes is from network carriers such as ALK, AA, DL, and UA, all of whom have a number of competitive advantages. Primarily, network carriers generate passenger traffic from and throughout the U.S. mainland, which enable them to attract higher customer traffic levels as compared to us.
In contrast, we lack a comparable direct network to feed passengers to our North America flights and are therefore more reliant on passenger demand in the specific cities we serve. We also rely on our code-share partner agreements (with jetBlue (JBLU), AA, etc.) to provide customers access to and from North America destinations currently unserved by us. Most network carriers operate from hubs, which can provide a built-in market of passengers depending on the economic strength of the hub city and the size of the customer group that frequent the airline. Our Honolulu and Maui hubs do not originate a large proportion of North American travel, nor do they have the population or potential customer franchise of a larger city to provide us with a

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built-in market. Passengers in the North America market, for the most part, do not originate in Honolulu, but on the U.S. mainland, making Honolulu primarily a destination rather than an origin of passenger traffic.
Our Neighbor Island routes are affected by increased capacity provided by our competitors.
During 2016 , approximately 24% of our passenger revenue was generated from our Neighbor Island routes. Although we enjoy a strong competitive position on our Neighbor Island routes, our competitors have increased capacity to Hawai'i either by introducing new routes or increasing the frequency of existing routes from North America to the Neighbor Islands. This additional capacity provided by our competitors has the effect of decreasing our share of traffic on our Neighbor Island routes, which could have a material adverse effect on our results of operations and financial condition.
Our International routes are affected by competition from domestic and foreign carriers.
During 2016 , approximately 22% of our passenger revenue was generated from our International routes. Our competitors on these routes include both domestic and foreign carriers. Both domestic and foreign competitors have a number of competitive advantages that may enable them to attract higher customer traffic levels as compared to us.
Many of our domestic competitors have joined airline alliances, which provide customers access to each participating airline's international network, allowing for convenience and connectivity to their destinations. These alliances formed by our domestic competitors have increased in recent years. In some instances our domestic competitors have been granted antitrust exemptions to form joint venture arrangements in certain geographies, further deepening their cooperation on certain routes. We currently do not participate in any world-wide airline alliances or joint ventures, which may negatively impact our market share and operations as capacity provided by our competitors increase. To mitigate this risk, we rely on code-share agreements with partner airlines to provide customers access to international destinations currently unserved by us.
Many of our foreign competitors are network carriers that benefit from network feed to support International routes on which we compete. In contrast, we lack a comparable direct network to feed passengers to our International flights, and are therefore more reliant on passenger demand in the specific destinations that we serve. Most network carriers operate from hubs, which can provide a built-in home base market of passengers. Passengers on our International routes, for the most part, do not originate in Hawai'i, but rather internationally, in these foreign carriers' home bases. We also rely on our code-share agreements and our relationships with travel agencies and wholesale distributors to provide customers access to and from International destinations currently unserved by us.
INFORMATION TECHNOLOGY AND THIRD-PARTY RISKS
If we do not maintain the privacy and security of customer-related information or fail to comply with applicable U.S. and foreign privacy or data security regulations or security standards imposed by our commercial partners, our reputation could be damaged, we could incur substantial additional costs, and we could become subject to litigation or regulatory penalties.
We receive, retain, and transmit personal information about our customers and we are subject to increasing legislative, regulatory and customer focus on privacy and data security. A number of our commercial partners, including credit card companies, have imposed data security standards that we are obligated to meet and these standards continue to evolve. We will continue our efforts to meet new and increasing privacy and security standards; however, it is possible that such new standards may prove difficult to meet, require us to expend additional resources, and result in the Company being unable to process credit card transactions if determined to be non-compliant. Additionally, any compromise of our technology systems could result in the loss, disclosure, misappropriation of or access to our customers’, employees’ or business partners’ information. Any such loss, disclosure, misappropriation or access could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information. Any significant data breach or our failure to comply with applicable U.S. and foreign privacy or data security regulations or security standards imposed by our commercial partners may adversely affect our reputation, business, results of operations and financial condition, and may require that we expend significant additional resources related to the security of information systems.
We are increasingly dependent on technology and automated systems to operate our business.
We depend heavily on technology and automated systems to effectively operate our business. These systems include flight operations systems, communications systems, airport systems, reservations systems, management and accounting systems, commercial websites, including www.hawaiianairlines.com , and other systems, all of which must be able to accommodate high traffic volumes, maintain secure information and provide accurate flight information, as well as process critical financial related transactions. Any substantial or repeated failures of these systems could negatively affect our customer service, compromise the

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security of customer information, result in the loss of important data, loss of revenue and increased costs, and generally harm our business. Like other companies, our systems may be vulnerable to disruptions due to events beyond our control, including natural disasters, power disruptions, software or equipment failures, terrorist attacks, cybersecurity threats, computer viruses and hackers. There can be no assurance that the measures we have taken to reduce the adverse effects of certain potential failures or disruptions are adequate to prevent or remedy disruptions of our systems. In addition, we will need to continuously make significant investments in technology to periodically upgrade and replace existing systems. If we are unable to make these investments or fail to successfully implement, upgrade or replace our systems, our business could be adversely impacted.
We are highly reliant on third-party contractors to provide certain facilities and services for our operations, and termination of our third-party agreements could have a potentially adverse effect on our financial results.
We have historically relied on outside vendors for a variety of services and functions critical to our business, including aircraft maintenance and parts, code-sharing, reservations, computer services including hosting and software maintenance, accounting, frequent flyer programs, passenger processing, ground facilities, baggage and cargo handling, personnel training, and the distribution and sale of airline seats. As part of our cost-control efforts, our reliance on outside vendors has increased and may continue to do so in the future.
The failure of any of our third-party service providers to adequately perform their service obligations, or other interruptions of services may reduce our revenues, increase expenses, and/or prevent us from operating our flights and providing other services to our customers. Our business and financial performance would be materially harmed if our customers believe that our services are unreliable or unsatisfactory.
LABOR RELATIONS AND RELATED COSTS RISKS
We are dependent on satisfactory labor relations.
Labor costs are a significant component of airline expenses and can substantially impact an airline's results of operations. A significant portion of our workforce is represented by labor unions. We may make strategic and operational decisions that require the consent of one or more of these labor unions, and these labor unions could demand additional wages, benefits or other consideration in return for their consent.
In addition, we have entered into collective bargaining agreements with our pilots, mechanical group employees, clerical group employees, flight attendants, and dispatchers. We cannot ensure that future agreements with our employees' labor unions will be on terms in line with our expectations or comparable to agreements entered into by our competitors, and any future agreements may increase our labor costs or otherwise adversely affect our business. We are currently in labor negotiations with our flight attendants union, AFA, whose contract became amendable January 1, 2017. If we are unable to reach an agreement with any unionized work group, we may be subject to future work interruptions and/or stoppages, which may hamper or halt operations. In addition, the threat of future work interruptions and/or stoppages may cause a decline in our passenger traffic, negatively impacting our results of operations and financial condition. In February 2017, we reached a tentative agreement with the Air Line Pilots Association (ALPA), covering our pilots. A ratification vote is set to occur in March 2017, however we can provide no assurances that the tentative agreement will be approved at that time (see Note 11 to the Notes to Consolidated Financial Statements for additional information).
Our operations may be adversely affected if we are unable to attract and retain qualified personnel and key executives, including our Chief Executive Officer.
We are dependent on the knowledge and expertise of our key executives, particularly Mark B. Dunkerley, our Chief Executive Officer. Attracting and retaining such personnel in the airline industry is highly competitive. We cannot be certain that we will be able to retain our Chief Executive Officer or other key executives or attract other qualified personnel in the future. Any inability to retain our key executives, or attract and retain additional qualified executives, could have a negative impact on our operations.
In addition, as we continue to expand our operations through the acquisition of new aircraft and introduction of service to new markets, it may be challenging to attract a sufficient number of qualified personnel including pilots, mechanics and other skilled labor. As we compete with other carriers for qualified personnel, we also face the challenge of attracting individuals who embrace our team-oriented, friendly and customer-driven corporate culture. Our inability to attract and retain qualified personnel who embrace our corporate culture could have a negative impact on our reputation and overall operations.
A higher than normal number of pilot retirements could adversely affect us.

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We currently have a large number of pilots eligible for retirement. Among other things, the extension of pilot careers facilitated by the FAA’s 2007 modification of the mandatory retirement age from age 60 to age 65 has now been fully implemented, resulting in large numbers of pilots in the industry approaching the revised mandatory retirement age. If pilot retirements were to exceed normal levels in the future, and we are not able to replace these pilots in a timely fashion, it may adversely affect our operations.
STRATEGY AND BRAND RISKS
Our failure to successfully implement our route and network strategy could harm our business.
Our route and network strategy (how we determine to deploy our fleet) includes initiatives to increase revenue, decrease costs, mature our network, and improve our distribution sales channels. It is critical that we execute upon our planned strategy in order for our business to attain economies of scale and to sustain or improve our results of operations. If we are unable to utilize and fill increased capacity provided by additional aircraft entering our fleet, hire and retain skilled personnel, or secure the required equipment and facilities in a cost-effective manner, we may be unable to successfully develop and grow our new and existing markets, which may adversely affect our business and operations.
We continue to strive toward aggressive cost-containment goals which are an important part of our business strategy to offer the best value to passengers through competitive fares while maintaining acceptable profit margins and return on capital. We believe a lower cost structure will better position us to fund our strategy and take advantage of market opportunities. If we are unable to adequately contain our non-fuel unit costs, our financial results may suffer.
Our reputation and financial results could be harmed in the event of adverse publicity, including the event of an aircraft accident or incident.
Our customer base is broad and our business activities have significant prominence, particularly in Hawai'i and other destinations we serve. Consequently, negative publicity resulting from real or perceived shortcomings in our customer service, employee relations, business conduct, or other events affecting our operations could negatively affect the public image of our company and the willingness of customers to purchase services from us, which could affect our financial results.
Additionally, we are exposed to potential losses that may be incurred in the event of an aircraft accident or incident. Any such accident or incident involving our aircraft or an aircraft operated by one of our code-share partners could involve not only the repair or replacement of a damaged aircraft and its consequential temporary or permanent loss of revenue, but also significant potential claims of injured passengers and others. We are required by the U.S. Department of Transportation (DOT) to carry liability insurance, and although we currently maintain liability insurance in amounts consistent with the industry, we cannot be assured that our insurance coverage will adequately cover us from all claims and we may be forced to bear substantial losses incurred with an accident. In addition, any aircraft accident or incident could cause a public perception that we are less safe or reliable than other airlines, which would harm our business.
AIRLINE INDUSTRY, REGULATION AND RELATED COSTS RISKS
The airline industry has substantial operating leverage and is affected by many conditions that are beyond its control, which could harm our financial condition and results of operations.
The airline industry has historically operated on low gross profit margins. Due to the substantial fixed costs associated with operating an airline, there is a disproportionate relationship between the cost of operating each flight and the number of passengers carried. However, the revenue generated from a particular flight is directly related to the number of passengers carried and the respective average fares applied. Accordingly, a decrease in the number of passengers carried would cause a corresponding decrease in revenue (if not offset by higher fares), and it may result in a disproportionately greater decrease in profits. Therefore, any general reduction in airline passenger traffic as a result of any of the following or other factors, which are largely outside of our control, could harm our business, financial condition, and results of operations:
•
decline in general economic conditions;
•
continued threat of terrorist attacks and conflicts overseas;
•
actual or threatened war and political instability;
•
increased security measures or breaches in security;

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•
adverse weather and natural disasters;
•
changes in consumer preferences, perceptions, or spending patterns;
•
increased costs related to security and safety measures;
•
increased fares as a result of increases in fuel costs;
•
outbreaks of contagious diseases or fear of contagion; and
•
congestion at airports and actual or potential disruptions in the air traffic control system.
Our results of operations may be volatile due to the conditions identified above. We cannot ensure that our financial resources will be sufficient to absorb the effects of any of these unexpected factors should they occur.
Our financial results and operations may be negatively affected by the State of Hawai'i's airport modernization plan.
The State of Hawai'i has begun to implement a modernization plan encompassing the airports we serve within the State. Our landing fees and airport rent rates have increased to fund the modernization program. Additionally, we expect the costs for our Neighbor Island operations to increase more than the costs related to our North America and International operations due to phased adjustments of the airport's funding mechanism. Therefore, costs related to the modernization program will have a greater impact on our operations as compared to our competitors, who do not have significant Neighbor Island operations. We can offer no assurance that we will be successful in offsetting these cost increases through other cost reductions or increases in our revenue and, therefore, can offer no assurance that our future financial results will not be negatively affected by them.
Our operations may be disrupted if we are unable to obtain and maintain adequate facilities and infrastructure at airports within the State of Hawai'i.
We must be able to maintain and/or obtain adequate gates, maintenance capacity, office space, operations areas, and ticketing facilities at the airports within the State of Hawai'i to be able to operate our existing and proposed flight schedules. Failure to maintain such facilities and infrastructure may adversely impact our operations and financial performance.
Our business is subject to substantial seasonal and cyclical volatility.
Our results of operations reflect the impact of seasonal volatility primarily due to passenger leisure and holiday travel patterns. As Hawai'i is a popular vacation destination, demand from North America, our largest source of visitors, is typically stronger during June, July, August and December and considerably weaker at other times of the year. Because of fluctuations in our results from seasonality, operating results for a historical period are not necessarily indicative of operating results for a future period and operating results for an interim period are not necessarily indicative of operating results for an entire year.
Terrorist attacks or international hostilities, or the fear of terrorist attacks or hostilities, even if not made directly on the airline industry, could negatively affect us and the airline industry.
Terrorist attacks, even if not made directly on the airline industry, or the fear of such attacks, hostilities or act of war, could adversely affect the airline industry, including us, and could result in a significant decrease in demand for air travel, increased security costs, increased insurance costs covering war-related risks, and increased flight operational loss due to cancellations and delays. Any future terrorist attacks or the implementation of additional security-related fees could have a material adverse effect on our business, financial condition and results of operations, and on the airline industry in general.
The airline industry is subject to extensive government regulation, new regulations, and taxes which could have an adverse effect on our financial condition and results of operations.
Airlines are subject to extensive regulatory requirements that result in significant costs. New, and modifications to existing, laws, regulations, taxes and airport rates, and charges imposed by domestic and foreign governments have been proposed from time to time that could significantly increase the cost of airline operations, restrict operations or reduce revenue. The FAA from time to time issues directives and other regulations relating to the maintenance and operation of aircraft that require significant expenditures. Some FAA requirements cover, among other things, retirement of older aircraft, security measures, collision avoidance systems, airborne windshear avoidance systems, noise abatement and other environmental concerns, commuter aircraft safety and increased inspections, and maintenance procedures to be conducted on older aircraft. A failure to be in

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compliance, or a modification, suspension or revocation of any of our DOT/FAA authorizations or certificates, would have a material adverse impact on our operations.
We cannot predict the impact that laws or regulations may have on our operations, nor can we ensure that laws or regulations enacted in the future will not adversely affect our business. Further, we cannot guarantee that we will be able to obtain or maintain necessary governmental approvals. Once obtained, operating permits are subject to modification and revocation by the issuing agencies. Compliance with these and any future regulatory requirements could require us to incur significant capital and operating expenditures.
In addition to extensive government regulations, the airline industry is dependent on certain services provided by government agencies (DOT, FAA, CBP, TSA, etc.). Furthermore, because of significantly higher security and other costs incurred by airports since September 11, 2001, many airports have significantly increased their rates and charges to airlines, including us, and may do so again in the future.
The airline industry is required to comply with various environmental laws and regulations, which could inhibit our ability to operate and could also have an adverse effect on our results of operations.
Many aspects of airlines' operations are subject to increasingly stringent federal, state, local, and foreign laws protecting the environment. U.S. federal laws that have a particular impact on us include the Airport Noise and Capacity Act of 1990, the Clean Air Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Safe Drinking Water Act, the Comprehensive Environmental Response Act and the Compensation and Liability Act. Compliance with these and other environmental laws and regulations can require significant expenditures, and violations can lead to significant fines and penalties. Governments globally are increasingly focusing on the environmental impact caused by the consumption of fossil fuels and as a result have proposed or enacted legislation which may increase the cost of providing airline service or restrict its provision. We expect the focus on environmental matters to increase.
Concern about climate change and greenhouse gases may result in additional regulation of aircraft emissions in the U.S. and abroad. In addition, other legislative or regulatory action to regulate greenhouse gas emissions is possible. At this time, we cannot predict whether any such legislation or regulation would apportion costs between one or more jurisdictions in which we operate flights. We are monitoring and evaluating the potential impact of such legislative and regulatory developments.
In addition to direct costs, such regulation may have a greater effect on the airline industry through increases in fuel costs. The impact to us and our industry from such actions is likely to be adverse and could be significant, particularly if regulators were to conclude that emissions from commercial aircraft cause significant harm to the atmosphere or have a greater impact on climate change than other industries.
Our operations may be adversely affected by our expansion into non-U.S. jurisdictions and the related laws and regulations to which we are subject.
The expansion of our operations into non-U.S. jurisdictions has expanded the scope of the laws and regulations to which we are subject, both domestically and internationally. Compliance with the laws and regulations of foreign jurisdictions and the restrictions on operations that these laws, regulations or other government actions may impose could significantly increase the cost of airline operations or reduce revenue. For example, a number of our destinations in Asia have been revising their privacy and consumer laws and regulations. Failure to comply with these evolving laws or regulations could result in significant penalties, criminal charges, costs to defend in a foreign jurisdiction, restrictions on operations and reputational damage. In addition, we operate flights on international routes regulated by treaties and related agreements between the U.S. and foreign governments, which are subject to change as they may be amended from time to time. Modifications of these arrangements could result in an inability to obtain or retain take-off or landing slots for our routes, route authorization and necessary facilities. Any limitations, additions or modifications to government treaties, agreements, regulations, laws or policies related to our international routes could have a material adverse impact on our financial position and results of operations.
We may be party to litigation or regulatory action in the normal course of business or otherwise, which could have an adverse effect on our operations and financial results.
From time to time, we are a party to or otherwise involved in legal or regulatory proceedings, claims, government inspections, investigations or other legal matters, both domestically and in foreign jurisdictions. Resolving or defending legal matters can take months or years. The duration of such matters can be unpredictable with many variables that we do not control including adverse party or government responses. Litigation and regulatory proceedings are subject to significant uncertainty and may be expensive, time-consuming and disruptive to our operations. In addition, an adverse resolution of a lawsuit, regulatory matter,

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investigation or other proceeding could have a material adverse effect on our financial condition and results of operations. We may be required to change or restrict our operations or be subject to injunctive relief, significant compensatory damages, punitive damages, penalties, fines or disgorgement of profits, none of which may be covered by insurance. We may have to pay out settlements that also may not be covered by insurance. There can be no assurance that any of these payments or actions will not be material. In addition, publicity of ongoing legal and regulatory matters may adversely affect our reputation.
Our insurance costs are susceptible to significant increases and further increases in insurance costs or reductions in coverage could have an adverse effect on our financial results.
We carry types and amounts of insurance customary in the airline industry, including coverage for general liability, passenger liability, property damage, aircraft loss or damage, baggage and cargo liability, and workers' compensation. We are required by the DOT to carry liability insurance on each of our aircraft. We currently maintain commercial airline insurance with a major group of independent insurers that regularly participate in world aviation insurance markets, including public liability insurance and coverage for losses resulting from the physical destruction or damage to our aircraft. However, there can be no assurance that the amount of such coverage will not change or that we will not bear substantial losses from accidents or damage to, or loss of, aircraft or other property due to other factors such as natural disasters. We could incur substantial claims resulting from an accident or damage to, or loss of, aircraft or other property due to other factors such as natural disasters in excess of related insurance coverage that could have a material adverse effect on our results of operations and financial condition.
FLEET AND FLEET-RELATED RISKS
We are dependent on a limited number of suppliers for aircraft, aircraft engines and parts.
We are dependent on a limited number of suppliers (e.g. Airbus, Boeing, Rolls Royce, etc.) for aircraft, aircraft engines, and aircraft-related items. As a result, we are vulnerable to any problems associated with the supply of those aircraft and parts which could result in increased parts and maintenance costs in future years.
Our agreements to purchase Airbus A330-200, Airbus A321neo aircraft, and A330-800neo aircraft represent significant future financial commitments and operating costs.
As of December 31, 2016 , we had the following firm order commitments and purchase rights for aircraft:
Aircraft Type
Firm
Orders
 
Purchase
Rights
 
Expected Delivery Dates
A330-200 aircraft
1

 
—

 
In 2017
A321neo aircraft
16

 
9

 
Between 2017 and 2020
A330-800neo aircraft
6

 
6

 
Between 2019 and 2021
We have made substantial pre-delivery payments for Airbus aircraft under existing purchase agreements and are required to continue these pre-delivery payments as well as make payments for the balance of the purchase price through delivery of each aircraft. These commitments substantially increase our future capital spending requirements and may require us to increase our level of debt in future years. There can be no assurance that we will be able to obtain such financing on favorable terms, or at all.
Delays in scheduled aircraft deliveries or other loss of fleet capacity may adversely impact our operations and financial results.
The success of our business depends on, among other things, the ability to effectively operate a certain number and type of aircraft. As noted above, we have contractual commitments to purchase and integrate additional Airbus aircraft into our fleet. If for any reason we are unable to secure deliveries of the Airbus aircraft on the contractually scheduled delivery dates and successfully introduce these aircraft into our fleet, then our business, operations, and financial performance could be negatively impacted. For example, we have been notified of anticipated delays of three months for the initial three A321neo deliveries, which were initially scheduled to be delivered in the third quarter of 2017. Delays in scheduled aircraft deliveries or our failure to integrate newly purchased Airbus aircraft into our fleet as planned may require us to utilize our existing fleet longer than expected. Such extensions may require us to operate existing aircraft beyond the point at which it is economically optimal to retire them, resulting in increased maintenance costs.

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We may never realize the full value of our long-lived assets, resulting in impairment and other related charges that may negatively impact our financial position and results of operations.
Economic and intrinsic triggers, which include extreme fuel price volatility, an uncertain economic and credit environment, unfavorable trends in historical or forecasted results of operations and cash flows, as well as other uncertainties, may cause us to record material impairments of our long-lived assets. For example, in the fourth quarter of 2016, based on fleet plan changes, we recorded a $ 49.4 million non-cash impairment charge relating to the planned early retirement of our owned fleet of Boeing 767-300 aircraft, engines, and related assets. We could be subject to similar impairment charges in the future that could have an adverse effect on our financial position and results of operations in future periods.
COMMON STOCK RISKS
Our share price is subject to fluctuations and stockholders could have difficulty trading shares.
The market price of our stock is influenced by many factors, many of which are outside of our control, and include the following:
•
operating results and financial condition;
•
changes in the competitive environment in which we operate;
•
fuel price volatility including the availability of fuel;
•
announcements concerning our competitors including bankruptcy filings, mergers, restructurings or acquisitions by other airlines;
•
increases or changes in government regulation;
•
general and industry specific market conditions;
•
changes in financial estimates or recommendations by securities analysts; and
•
sales of our common stock or other actions by investors with significant shareholdings.
In recent years the stock market has experienced volatile price and volume fluctuations that often have been unrelated to the operating performance of individual companies. These market fluctuations, as well as general economic conditions, may affect the price of our common stock.
In the past, securities class action litigation has often been instituted against a company following periods of volatility in the company's stock price. This type of litigation, if filed against us, could result in substantial costs and divert our management's attention and resources. In addition, the future sale of a substantial number of shares of common stock by us or by our existing stockholders may have an adverse impact on the market price of our common stock. There can be no assurance that the trading price of our common stock will remain at or near its current level.
Certain provisions of our certificate of incorporation and bylaws may delay or prevent a change of control, which could materially adversely affect the price of our common stock.
Our certificate of incorporation and bylaws contain provisions that may make it difficult to remove our Board of Directors and management, and may discourage or delay a change of control, which could materially and adversely affect the price of our common stock. These provisions include, among others:
•
the ability of our Board of Directors to issue, without further action by the stockholders, series of undesignated preferred stock , or rights to acquire preferred stock, that could dilute the interest of, or impair the voting power of, holders of our common stock or could also be used as a method of discouraging, delaying or preventing a change of control ;
•
advance notice procedures for stockholder proposals to be considered at stockholders’ meetings and for nominations of candidates for election to our Board of Directors;

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•
the ability of our Board of Directors to fill vacancies on the board;
•
a prohibition against stockholders taking action by written consent;
•
a prohibition against stockholders calling special meetings of stockholders; and
•
super-majority voting requirements to modify or amend specified provisions of our certificate of incorporation.
Our certificate of incorporation includes a provision limiting voting and ownership by non-U.S. citizens and our bylaws include a provision specifying an exclusive forum for stockholder disputes.
To comply with restrictions imposed by federal law on foreign ownership of U.S. airlines, our certificate of incorporation restricts voting of shares of our common stock by non-U.S. citizens. Our certificate of incorporation provides that the failure of non-U.S. citizens to register their shares on a separate stock record, which we refer to as the “foreign stock record,” would result in a suspension of their voting rights in the event that the aggregate foreign ownership of the outstanding common stock exceeds the foreign ownership restrictions imposed by federal law.

Our certificate of incorporation further provides that no shares of our common stock will be registered on the foreign stock record if the amount so registered would exceed the foreign ownership restrictions imposed by federal law. If it is determined that the amount registered in the foreign stock record exceeds the foreign ownership restrictions imposed by federal law, shares will be removed from the foreign stock record in reverse chronological order based on the date of registration therein, until the number of shares registered therein does not exceed the foreign ownership restrictions imposed by federal law. As of December 31, 2016, we believe we were in compliance with the foreign ownership rules.

Our bylaws provide that, unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware or, if such court lacks jurisdiction, any other state or federal court located in the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of us; (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers or other employees to us or our stockholders; (iii) any action asserting a claim against us or any of our directors, officers or other employees arising pursuant to any provision of the Delaware General Corporation Law or our certificate of incorporation or bylaws laws (as each may be amended or restated from time to time); or (iv) any action asserting a claim against us or any of our directors, officers or other employees governed by the internal affairs doctrine. Accordingly, stockholders may be limited in your ability to pursue legal actions, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. Accordingly, stockholders may be limited in their ability to pursue legal actions.
LIQUIDITY RISKS
See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations , for further information regarding our liquidity.
Our financial liquidity could be adversely affected by credit market conditions.
Our business requires access to capital markets to finance equipment purchases, including aircraft, and to provide liquidity in seasonal or cyclical periods of weaker revenue generation. In particular, we will face specific funding requirements with respect to our obligation under purchase agreements with Airbus to acquire new aircraft. We may finance these upcoming aircraft deliveries; however, the unpredictability of global credit market conditions may adversely affect the availability of financing or may result in unfavorable terms and conditions. We can offer no assurance that the financing we need will be available when required or that the economic terms on which it is available will not adversely affect our financial condition. If we cannot obtain financing or we cannot obtain financing on commercially reasonable terms, our business and financial condition will be adversely affected.
Our debt could adversely affect our liquidity and financial condition, and include covenants that impose restrictions on our financial and business operations.
As of December 31, 2016 , we had $482 million in outstanding debt. Our debt and related covenants could:
•
require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow for other operational purposes;

18
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•
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
•
limit, along with the financial and other restrictive covenants in the agreements governing our debt, our ability to borrow additional funds;
•
place us at a competitive disadvantage compared to other less leveraged competitors and competitors with debt agreements on more favorable terms than us; and
•
adversely affect our ability to secure additional financing in the future on acceptable terms or at all, which would impact our ability to fund our working capital, capital expenditures, acquisitions or other general purpose needs.
These agreements require us to meet certain covenants. If we breach any of these covenants we could be in a default under these facilities, which could cause our outstanding obligations under these facilities to accelerate and become due and payable immediately, and could also cause us to default under our other debt or lease obligations and lead to an acceleration of the obligations related to such other debt or lease obligations. The existence of such a default could also preclude us from borrowing funds under our credit facilities.
Our ability to comply with the provisions of financing agreements can be affected by events beyond our control and a default under any such financing agreements if not cured or waived, could have a material adverse effect on us. In the event our debt is accelerated, we may not have sufficient liquidity to repay these obligations or to refinance our debt obligations, resulting in a material adverse effect on our financial condition.
We are required to maintain reserves under our credit card processing agreements which could adversely affect our financial and business operations.
Under our bank-issued credit card processing agreements, certain proceeds from advance ticket sales is held back to serve as collateral to cover any possible chargebacks or other disputed charges that may occur. These holdbacks totaled $5.0 million as of December 31, 2016 . In the event of a material adverse change in our business, the holdback could incrementally increase to an amount up to 100% of the applicable credit card activity for all unflown flights, which would also cause an increase in the level of restricted cash. If we are unable to obtain a waiver, or otherwise mitigate the increase in restricted cash, it could adversely affect our liquidity and also cause a covenant violation under other debt or lease obligations and have a material adverse effect on our financial condition.
Our obligations for funding our defined benefit pension plans are significant and are affected by factors beyond our control.
We sponsor two defined benefit pension plans, as well as a separate plan to administer pilots' disability benefits. Currently, our minimum funding obligation for our pension plans is subject to temporary favorable rules that are scheduled to expire at the end of 2017. As of December 31, 2016 , the unfunded pension and disability obligation related to these plans was $174 million . The timing and amount of funding requirements depend upon a number of factors, including labor negotiations and changes to pension plan benefits as well as factors outside our control, such as the number and demographic profile of qualified retiring employees, asset returns, interest rates and changes in pension laws. These factors, along with the impact of results that can vary significantly from estimates, may significantly impact our funding requirements and have an adverse effect on our financial condition.
ITEM 1B.    UNRESOLVED STAFF COMMENTS.
None.
ITEM 2.    PROPERTIES.
Aircraft
The table below summarizes our total fleet as of December 31, 2015 , 2016 and anticipated in 2017 (based on existing agreements):

19

 
December 31, 2015
 
December 31, 2016
 
December 31, 2017
 
Seating Capacity (Per Aircraft)
 
Simple Average Age (In Years)
Aircraft Type
Leased (6)
 
Owned
 
Total
 
Leased (6)
 
Owned
 
Total
 
Leased (6)
 
Owned
 
Total
 
 
A330-200(1)
10

 
12

 
22

 
11

 
12

 
23

 
11

 
13

 
24

 
278 - 294
 
3.7
767-300(2)
4

 
4

 
8

 
4

 
4

 
8

 
3

 
4

 
7

 
252 - 264
 
17.8
717-200(3)
3

 
15

 
18

 
5

 
15

 
20

 
5

 
15

 
20

 
128
 
14.7
ATR turboprop(4)
—

 
6

 
6

 
—

 
6

 
6

 
—

 
6

 
6

 
48
 
18.0
A321-200(5)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
3

 
3

 
189
 
N/A
Total
17

 
37

 
54

 
20

 
37

 
57

 
19

 
41

 
60

 
 
 
 

(1)
During 2016 , we took delivery of and placed into service one Airbus A330-200 aircraft for service on our North America and International routes. The aircraft was financed through a six-year lease agreement. The increase in the number of owned aircraft in 2017 is due to the planned delivery of a Company-financed aircraft.

(2)
The decrease in the number of leased Boeing 767-300 from 2016 to 2017 is due to the planned retirement of an aircraft at the end of its lease term.

(3)
During 2016 , we took delivery of two Boeing 717-200 aircraft for service on our Neighbor Island routes. The aircraft were financed through six-year lease agreements.

(4)
The ATR turboprop aircraft are owned by Airline Contract Maintenance & Equipment, Inc., a wholly-owned subsidiary of the Company.

(5)
In the fourth quarter of 2017, we expect to take delivery of three Airbus A321-200 aircraft.

(6)
Leased aircraft include both aircraft under capital and operating leases. See Note 9 to the consolidated financial statements for further discussion regarding our aircraft leases.
At December 31, 2016 , we had firm aircraft orders as detailed below:
Delivery Year
A321neo Aircraft(1)
 
A330-800neo Aircraft(2)
 
A330-200 Aircraft(3)
 
Total
2017
3

 
—

 
1

 
4

2018
6

 
—

 
—

 
6

2019
6

 
2

 
—

 
8

2020
1

 
2

 
—

 
3

2021
—

 
2

 
—

 
2

2022
—

 
—

 
—

 
—

 
16

 
6

 
1

 
23


(1)
In 2013, Hawaiian executed a purchase agreement for the purchase of 16 new Airbus A321neo aircraft scheduled for delivery between 2017 and 2020. The Airbus A321neo narrow-body aircraft will be used to complement Hawaiian's existing fleet of wide-body aircraft for travel to and from the West Coast on its North America routes.

(2)
In 2014, Hawaiian entered into an amendment (the Purchase Agreement Amendment) to the Airbus A330/A350XWB Purchase Agreement to convert its order for six firm A350XWB-800 aircraft with an additional six purchase rights into an order for six firm A330-800neo aircraft with an additional six purchase rights. The Purchase Agreement Amendment provides for delivery, subject to certain flexibility rights, of six Airbus A330-800neo aircraft starting in 2019. These fuel efficient, long-range aircraft will complement our existing fleet of wide-body, twin aisle aircraft used for long-haul flying on our North America and International routes.

(3)
In 2016, Hawaiian executed a purchase agreement for the purchase of one new Airbus A330-200 aircraft scheduled for delivery in the fourth quarter of 2017.


20
Table of Contents

Hawaiian has purchase rights for an additional nine A321neo aircraft and six  A330-800neo aircraft and can utilize these rights subject to production availability. See Note 9 to the consolidated financial statements for additional information regarding our aircraft lease agreements.
Ground Facilities
Our principal terminal facilities, cargo facilities and hangar and maintenance facilities are located at the Honolulu International Airport (HNL). The majority of the facilities at HNL are leased on a month-to-month basis. We are also charged for the use of terminal facilities at the four major Neighbor Island airports owned by the State of Hawai'i. Some terminal facilities, including gates and holding rooms, are considered by the State of Hawai'i to be common areas and thus are not exclusively controlled by us. We also utilize other State of Hawai'i facilities, including station managers' offices, Premier Club lounges, and operations support space.    
The table below sets forth the airport locations we utilize pursuant to various agreements as of December 31, 2016 :
Name of Airport
Location
Phoenix Sky Harbor International Airport
 
Phoenix
 
Arizona
Los Angeles International Airport
 
Los Angeles
 
California
Oakland International Airport
 
Oakland
 
California
Sacramento International Airport
 
Sacramento
 
California
San Diego International Airport
 
San Diego
 
California
San Francisco International Airport
 
San Francisco
 
California
Norman Y. Mineta San Jose International Airport
 
San Jose
 
California
Hilo International Airport
 
Hilo
 
Hawai'i
Honolulu International Airport
 
Honolulu
 
Hawai'i
Kahului Airport
 
Kahului
 
Hawai'i
Kapalua Airport
 
Lahaina
 
Hawai'i
Kona International Airport
 
Kona
 
Hawai'i
Lana'i Airport
 
Lana'i
 
Hawai'i
Lihu'e Airport
 
Lihu'e
 
Hawai'i
Moloka'i Airport
 
Moloka'i
 
Hawai'i
McCarran International Airport
 
Las Vegas
 
Nevada
John F. Kennedy International Airport
 
New York
 
New York
Portland International Airport
 
Portland
 
Oregon
Seattle-Tacoma International Airport
 
Seattle
 
Washington
Pago Pago International Airport
 
Pago Pago
 
American Samoa
Brisbane International Airport
 
Brisbane
 
Australia
Sydney International Airport
 
Sydney
 
Australia
Beijing Capital International Airport
 
Beijing
 
China
Haneda International Airport
 
Tokyo
 
Japan
Kansai International Airport
 
Osaka
 
Japan
Narita International Airport
 
Tokyo
 
Japan
New Chitose International Airport
 
Sapporo
 
Japan
Auckland Airport
 
Auckland
 
New Zealand
Incheon International Airport
 
Seoul
 
South Korea
Faa'a International Airport
 
Papeete
 
Tahiti
Our corporate headquarters are located in leased premises adjacent to the Honolulu International Airport.

21
Table of Contents

ITEM 3.    LEGAL PROCEEDINGS.
We are subject to legal proceedings arising in the normal course of our operations. We do not anticipate that the disposition of any currently pending proceeding will have a material effect on our operations, business or financial condition.
ITEM 4.    MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Our common stock is traded on the NASDAQ Stock Market, LLC (NASDAQ) under the symbol "HA." The following table sets forth the range of high and low sales prices of our common stock as reported on the NASDAQ for the periods indicated.
 
High
 
Low
2016
 

 
 

Fourth Quarter
$
60.90

 
$
44.28

Third Quarter
49.87

 
37.40

Second Quarter
50.95

 
34.69

First Quarter
48.14

 
28.40

2015
 

 
 

Fourth Quarter
$
40.13

 
$
23.77

Third Quarter
26.00

 
19.87

Second Quarter
26.10

 
20.75

First Quarter
27.66

 
18.01

Holders
There were 844 stockholders of record of our common stock as of February 10, 2017, which does not reflect those shares held beneficially or those shares held in "street" name.
Dividends and Other Restrictions
We paid no dividends in 2016 or 2015 . We do not anticipate paying periodic cash dividends on our common stock for the foreseeable future. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."
United States law prohibits non-U.S. citizens from owning more than 25% of the voting interest of a U.S. air carrier or controlling a U.S. air carrier. Our certificate of incorporation prohibits the ownership or control of more than 25% (to be increased or decreased from time to time, as permitted under the laws of the U.S.) of our issued and outstanding voting capital stock by persons who are not "citizens of the U.S." As of December 31, 2016 , we believe we are in compliance with the law as it relates to voting stock held by non-U.S. citizens.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
On April 23, 2015, we announced that our Board of Directors approved a stock repurchase program under which we may purchase up to $100 million of our outstanding common stock over a two-year period ending on April 24, 2017 through the open market, established plans or privately negotiated transactions in accordance with applicable securities laws, rules and regulations. The stock repurchase program is subject to modification or termination at any time. We did not repurchase any shares of our common stock during the three months ended December 31, 2016 . As of December 31, 2016 , the Company has $46.0 million remaining to spend under the stock repurchase program.

22
Table of Contents

Stockholder Return Performance Graph
The following graph compares cumulative total stockholder return on our common stock, the S&P 500 Index and the AMEX Airline Index from January 1, 2012 to December 31, 2016 . The comparison assumes $100 was invested on January 1, 2012 in our common stock and each of the foregoing indices and assumes reinvestment of dividends before consideration of income taxes. We have paid no dividends on our common stock.
HA-12312016_CHARTX33888.JPG
The stock performance depicted in the graph above is not to be relied upon as indicative of future performance. The stock performance graph shall not be deemed to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate the same by reference, nor shall it be deemed to be "soliciting material" or to be "filed" with the SEC or subject to Regulations 14A or 14C or to the liabilities of Section 18 of the Exchange Act.

23
Table of Contents

ITEM 6.    SELECTED FINANCIAL DATA.
The Selected Financial Data should be read in conjunction with our accompanying audited consolidated financial statements and the notes related thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" below.
Hawaiian Holdings, Inc.
Selected Financial Data
 
Year ended December 31,
 
2016
 
2015
 
2014
 
2013
 
2012
 
(in thousands, except per share data)
Summary of Operations:
 

 
 

 
 

 
 

 
 

Operating revenue
$
2,450,580

 
$
2,317,467

 
$
2,314,879

 
$
2,155,865

 
$
1,962,353

Operating expenses
2,055,118

 
1,891,364

 
2,069,747

 
2,022,118

 
1,832,955

Operating income
395,462

 
426,103

 
245,132

 
133,747

 
129,398

Net Income
235,432

 
182,646

 
68,926

 
51,854

 
52,237

Net Income Per Common Stock Share:
 

 
 

 
 

 
 

 
 

Basic
$
4.40

 
$
3.38

 
$
1.29

 
$
1.00

 
$
1.04

Diluted
4.36

 
2.98

 
1.10

 
0.98

 
1.01

Balance Sheet Items as of December 31:
 

 
 

 
 

 
 

 
 

Total assets
$
2,708,601

 
$
2,509,710

 
$
2,602,528

 
$
2,164,261

 
$
1,865,824

Long-term debt, less discount, and capital lease obligations, excluding current maturities (a)
497,908

 
694,678

 
893,288

 
744,286

 
553,009



(a)
In 2016, we extinguished $140.5 million of existing debt under three secured financing agreements, which was originally scheduled to mature in 2022 and 2023. In 2015, we extinguished $123.9 million of existing debt under four secured financing agreements, which were originally scheduled to mature in 2018, 2023, and 2024. We also repurchased $70.8 million in principal of our Convertible Notes. In 2014, we received proceeds of $368.4 million in connection with the EETC financing for the purchase of five Airbus A330-200 aircraft. In 2013, we borrowed $132.0 million to finance a portion of the purchase price of two Airbus A330-200 aircraft, and received proceeds of $76.1 million in connection with the EETC financing for the purchase of one Airbus A330-200 aircraft. In 2012, we borrowed $133.0 million to finance a portion of the purchase price of two Airbus A330-200 aircraft and took delivery of three aircraft (two Boeing 717 aircraft and one Airbus A330-200 aircraft) under capital leases. See further discussion at Note 8 to the consolidated financial statements.

24
Table of Contents

ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Overview
The following Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the reader understand the Company and its operations. This discussion and analysis of our financial condition and results of operations contains forward-looking statements that involve risks and uncertainties. We have based these forward-looking statements on our current expectations and projections of future events. However, our actual results could differ materially from those discussed herein as a result of the risks that we face, including but not limited to those risks stated in the "Risk Factors" section of this report. See "Cautionary Note Regarding Forward-Looking Statements," above. In addition, the following discussion should be read in conjunction with the audited consolidated financial statements and the related notes thereto included elsewhere in this report.
Year in Review
2016 Financial Highlights
•
Operating income decreased to $395 million compared to $426 million in the prior-year period.

•
Pre-tax income grew to $379 million compared to $296 million in the prior-year period.

•
GAAP net income of $235 million or $4.36 per diluted share compared to $183 million or $2.98 per diluted share in the prior year period.

•
Adjusted net income of $280 million or $5.19 per diluted share compared to $189 million or $3.09 per share in the prior year period.

•
Unrestricted cash and cash equivalents and short-term investments of $610 million compared to $560 million in the prior year period.

•
Extinguished $141 million of debt instruments that were originally scheduled to mature in 2022 and 2023.
See "Non-GAAP Financial Measures" below for our reconciliation of non-GAAP measures.
Outlook
We expect our financial performance to remain strong in the first quarter of 2017, as compared to the first quarter of 2016.  We expect our passenger revenues to increase, coupled with expected increases in our aircraft fuel, wages and benefits, and rent expense which could potentially put pressure on our operating margins (as compared to 2016). We expect available seat miles during the first quarter of 2017 to increase by 2.5% to 4.5% from the same prior year period.  Despite the continued strengthening of the U.S. dollar, a decrease in fuel surcharges on our international routes, and an increase in industry capacity on our Neighbor Island routes, operating revenue per available seat mile could increase by up to 4.0% to 7.0% from the same prior year period.

The table below is a reconciliation of GAAP to non-GAAP CASM ex-fuel guidance for the first quarter of 2017.
 
 
Estimated three months ending March 31, 2017
 
 
(in thousands, except as otherwise indicated)
GAAP operating expenses
 
$
511,591

 
$
539,845

Less: aircraft fuel, including taxes and delivery
 
(100,235
)
 
(108,248
)
Adjusted operating expenses - excluding aircraft fuel
 
$
411,356

 
$
431,597

Available Seat Miles
 
4,477,298

 
4,564,660

CASM - GAAP
 

11.43
¢
 

11.83
¢
Less: aircraft fuel
 
(2.24
)
 
(2.37
)
CASM - excluding aircraft fuel
 

9.19
¢
 

9.46
¢


25
Table of Contents

Selected Consolidated Statistical Data
Below are the operating statistics we use to measure our operating performance.
 
Year ended December 31,
 
2016
 
2015
 
2014
 
(in thousands, except as otherwise indicated)
Scheduled Operations (a) :
 

 
 

 
 

Revenue passengers flown
11,044

 
10,665

 
10,191

Revenue passenger miles (RPM)
15,484,369

 
14,450,564

 
13,910,804

Available seat miles (ASM)
18,371,544

 
17,710,309

 
17,062,264

Passenger revenue per RPM (Yield)

13.86
¢
 

14.02
¢
 

14.70
¢
Passenger load factor (RPM/ASM)
84.3
%
 
81.6
%
 
81.5
%
Passenger revenue per ASM (PRASM)

11.68
¢
 

11.44
¢
 

11.99
¢
Total Operations (a) :
 

 
 

 
 

Revenue passengers flown
11,051

 
10,673

 
10,195

RPM
15,492,509

 
14,462,191

 
13,921,147

ASM
18,384,637

 
17,726,322

 
17,073,630

Operating revenue per ASM (RASM)

13.33
¢
 

13.07
¢
 

13.56
¢
Operating cost per ASM (CASM)

11.18
¢
 

10.67
¢
 

12.12
¢
CASM excluding aircraft fuel and special items (b)

8.71
¢
 

8.31
¢
 

8.15
¢
Aircraft fuel expense per ASM (c)

1.87
¢
 

2.36
¢
 

3.97
¢
Revenue block hours operated
179,254

 
173,546

 
166,362

Gallons of jet fuel consumed
244,118

 
234,183

 
230,199

Average cost per gallon of jet fuel (actual) (c)
$
1.41

 
$
1.78

 
$
2.95

(a)
Includes the operations of our contract carrier under a capacity purchase agreement. Total Operations includes both scheduled and chartered operations.
(b)
Represents adjusted unit costs, a non-GAAP measure. We believe this is a useful measure because it better reflects our controllable costs. See "Non-GAAP Financial Measures" below for our reconciliation of non-GAAP measures.
(c)
Includes applicable taxes and fees.
Operating Revenue
Our revenue is derived primarily from transporting passengers on our aircraft. Revenue is recognized when either the transportation is provided or when the related ticket expires unused. We measure capacity in terms of available seat miles, which represent the number of seats available for passengers multiplied by the number of miles the seats are flown. Yield, or the average amount one passenger pays to fly one mile, is calculated by dividing passenger revenue by RPMs. We strive to increase passenger revenue primarily by increasing our yield per flight or by filling a higher proportion of available seats, which produces higher operating revenue per available seat mile. Other revenue primarily consists of baggage fees, cargo revenue, incidental services revenue, ticket change and cancellation fees, marketing component related to the sale of frequent flyer miles, inflight revenue, contract services and charter services revenue.
Operating revenue was $2.45 billion , $2.32 billion and $2.31 billion for the years ended December 31, 2016 , 2015 and 2014 . The increase in operating revenue in 2016 from 2015 was driven primarily by an increase in passenger revenue and is discussed below:

26
Table of Contents

2016 vs. 2015
Passenger Revenue
Passenger revenue was $2.15 billion and $2.03 billion for the years ended December 31, 2016 and 2015 , respectively. Details of these changes are described in the table below:
 
Year Ended December 31, 2016 as compared to December 31, 2015
 
Change in scheduled passenger revenue
 
Change in
Yield
 
Change in
RPM
 
Change in
ASM
 
(in millions)
 
 
 
 
 
 
Domestic
$
104.2

 
0.1
 %
 
6.6
%
 
2.9
%
International
15.9

 
(4.7
)
 
8.6

 
5.6

Total scheduled
$
120.1

 
(1.1
)%
 
7.2
%
 
3.7
%
Domestic revenue increased by $104.2 million in 2016 , as compared to 2015 , primarily due to capacity, yield, and load factor increases on our North America routes; along with increases in capacity on our Neighbor Island routes.
International revenue increased by $15.9 million in 2016 , as compared to 2015 , due to increased capacity. The strengthening of the U.S. dollar combined with lower fuel surcharges resulted in decreased average fares for our International routes compared to the prior period. Increased capacity was driven by changes we made to our network in 2016, including the introduction of service of our route from Honolulu to Narita, Japan (July 2016) and expansion of service for the Kona to Haneda, Japan (December 2016) route.
Other Operating Revenue
Other operating revenue increased by $13.0 million , or 4.4% , in 2016 , as compared to 2015 , due to increased sale of miles and other revenue related to our co-branded credit card agreement and cancellation penalty revenue.
Operating Expenses
The largest components of our operating expenses are wages and benefits provided to our employees, aircraft fuel (including taxes and delivery) and aircraft maintenance materials and repairs. Increases (decreases) in operating expenses are detailed below.
 
Changes for the year ended December 31, 2016 as compared to December 31, 2015
 
$
 
%
 
(in thousands)
 
 
Operating expense:
 

 
 

Aircraft fuel, including taxes and delivery
$
(73,406
)
 
(17.6
)%
Wages and benefits
56,028

 
11.2

Aircraft rent
8,912

 
7.7

Maintenance materials and repairs
4,322

 
1.9

Aircraft and passenger servicing
9,427

 
8.0

Commissions and other selling
5,985

 
5.0

Depreciation and amortization
2,547

 
2.4

Other rentals and landing fees
13,032

 
13.7

Purchased services
14,436

 
17.6

Special charges
109,142

 
100.0

Other
13,329

 
11.7

Total
$
163,754

 
8.7
 %

27
Table of Contents

The price and availability of aircraft fuel is extremely volatile due to global economic and geopolitical factors that we can neither control nor accurately predict. The decreases in aircraft fuel expense are illustrated in the following table:
 
Year Ended December 31,
 
 
 
2016
 
2015
 
% Change
 
(in thousands, except per-gallon amounts)
 
 
Aircraft fuel expense, including taxes and delivery
$
344,322

 
$
417,728

 
(17.6
)%
Fuel gallons consumed
244,118

 
234,183

 
4.2
 %
Average fuel price per gallon, including taxes and delivery
$
1.41

 
$
1.78

 
(20.8
)%
The decrease in fuel expense from 2016 to 2015 is primarily due to the decrease in average fuel price per gallon, partially offset by increased fuel consumption due to an additional aircraft in the fleet (Airbus 330-200).
We believe economic fuel expense is the best measure of the effect of fuel prices on our business as it most closely approximates the net cash outflow associated with the purchase of fuel for our operations and is consistent with how management manages our business and assesses our operating performance. We define economic fuel expense as GAAP fuel expense plus (gains)/losses realized through actual cash (receipts)/payments received from or paid to hedge counterparties for fuel hedge derivative contracts settled in the period inclusive of costs related to hedging premiums.
Economic fuel expense is calculated as follows:
 
Year Ended December 31,
 
 
 
2016
 
2015
 
% Change
 
(in thousands, except per-gallon amounts)
 
 
Aircraft fuel expense, including taxes and delivery
$
344,322

 
$
417,728

 
(17.6
)%
Realized losses on settlement of fuel derivative contracts
27,572

 
60,946

 
(54.8
)%
Economic fuel expense
$
371,894

 
$
478,674

 
(22.3
)%
Fuel gallons consumed
244,118

 
234,183

 
4.2
 %
Economic fuel costs per gallon
$
1.52

 
$
2.04

 
(25.5
)%
See Item 7A, Quantitative and Qualitative Disclosures about Market Risk , for additional discussion of our jet fuel costs and related derivative program.
Wages and benefits expense increased by $56.0 million , or 11.2% , in 2016 as compared to 2015 , due to an overall headcount increase of 11.7% due to our growing capacity in 2016, increased pension and postretirement benefit expenses, and increased profit-sharing expenses resulting from our improved financial performance as compared to the prior period.
Other rentals and landing fees expense increased by $13.0 million , or 13.7% , in 2016 as compared to 2015 , primarily due to increased rates, passengers, and landing frequencies. Also, we incurred additional cost year over year for our station rent amounts.
Purchased services expense increased by $14.4 million , or 17.6% , in 2016 as compared to 2015 , due to an increase in outsourced web and third-party vendor reservation fees because of increased passenger counts.
In 2016, we incurred $109.1 million in special items. The $109.1 million is comprised of three components: (1) $49.4 million in impairment charges in connection with our owned Boeing 767-300 fleet and related assets, (2) $38.8 million related to retroactive bonuses included within a tentative agreement between us and ALPA as of February 2017 and profit sharing for other contract groups, and (3) $21.0 million related to the termination of our Boeing 767-300 maintenance contract.

The impairment analysis and ultimate charge was triggered by the decision in the fourth quarter of 2016 to early exit the Boeing 767-300 fleet in 2018. The early exit of the Boeing 767-300 fleet was made possible by our decision to acquire one Airbus A330 (to be delivered in 2017), lease two additional Airbus A321s (to be delivered in 2018 and in addition to our existing aircraft orders), and our ability to early terminate our long-term power by the hour maintenance contract for the Boeing 767-300 fleet. This fleet change allows us to streamline our fleet, simplify our operations, and potentially reduce our cost structure in the future. In order to assess whether there was an impairment of the Boeing 767-300 asset group, we compared the projected undiscounted cash flows of the fleet to the book value of the assets and determined the book value was in excess of the undiscounted cash flows. We estimated the fair value of the Boeing 767-300 fleet assets using third party pricing information and quotes from potential buyers of our owned aircraft, which resulted in a $49.4 million impairment charge. Our

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determination of fair value considered attributes specific to our Boeing 767-300 fleet and aircraft condition (e.g. age, maintenance requirements, cycles, etc.). The Boeing 767-300 asset group consists of both owned and leased aircraft. We expect to remove three leased Boeing 767-300 aircraft from service in 2018. At that time, these aircraft will have remaining lease payments of approximately $54.3 million . At the time each aircraft is removed from service, we will accrue for any remaining lease payments not mitigated through an arrangement with the lessor.
In February 2017, we reached a tentative agreement with the Air Line Pilots Association (ALPA), covering our pilots. A ratification vote is set to occur in March 2017, however, we can provide no assurances that the tentative agreement will be approved at that time. The tentative agreement is for a 63-month contract amendment which includes (amongst other various benefits) a pay adjustment and ratification bonus. As of December 31, 2016, we accrued $34.0 million related to past service (prior to January 1, 2017), which is expected to be payable upon ratification. The final amount paid may differ when a final agreement is reached and ratified.
Other expenses increased by $13.3 million , or 11.7% , in 2016 as compared to 2015 , primarily due to an increase in hotel expenses for our crew members, professional and technical fees, as well as personnel related expenses.
Nonoperating Expense
Net nonoperating expense decreased by $114.4 million in 2016 , as compared to 2015 due to reduced debt levels which resulted in a $19.1 million reduction in interest expense as compared to the prior year period. The decrease in net nonoperating expense was also due to gains on our fuel hedge portfolio of $20.1 million in 2016 compared to losses of $59.9 million in the prior year period.
2015 vs. 2014
Passenger Revenue
Passenger revenue was $2.03 billion and $2.05 billion for the years ended December 31, 2015 and 2014 , respectively. Details of these changes are described in the table below:
 
Year Ended December 31, 2015 as compared to December 31, 2014
 
Change in scheduled passenger revenue
 
Change in
Yield
 
Change in
RPM
 
Change in
ASM
 
(in millions)
 
 
 
 
 
 
Domestic
$
69.1

 
(2.7
)%
 
7.5
 %
 
8.9
 %
International
(88.5
)
 
(12.8
)
 
(4.0
)
 
(6.0
)
Total scheduled
$
(19.4
)
 
(4.6
)%
 
3.9
 %
 
3.8
 %
Domestic revenue increased by $69.1 million in 2015 , as compared to 2014 , primarily due to capacity increases on our North America routes, driven by the annualized impact of service introduced in 2014 and the introduction of a new cabin configuration to our fleet of Boeing 717-200 aircraft for our Neighbor Island routes.
International revenue decreased by $88.5 million in 2015 , as compared to 2014 , due to decreased yield and capacity. The continued strengthening of the U.S. dollar combined with lower fuel surcharges resulted in decreased average fares for our International routes compared to the prior period. Decreased capacity was driven by changes we made to our network in 2014, including the suspension of our route from Honolulu to Taipei, Taiwan (March 2014) and Honolulu to Fukuoka, Japan (June 2014).
Other Operating Revenue
Other operating revenue increased by $22.0 million , or 8.2% , in 2015 , as compared to 2014 , due to $11.2 million generated by increased sales of frequent flyer miles under our co-branded credit card agreement, as compared to the prior year period. Additionally, a 9.0% increase in the number of passengers flown on our North America routes resulted in a $7.5 million increase in ancillary revenue compared to the prior year period.

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Operating Expenses
Increases (decreases) in operating expenses are detailed below.
 
Changes for the year ended December 31, 2015 as compared to December 31, 2014
 
$
 
%
 
(in thousands)
 
 
Operating expense:
 

 
 

Aircraft fuel, including taxes and delivery
$
(260,525
)
 
(38.4
)%
Wages and benefits
52,060

 
11.6

Aircraft rent
9,231

 
8.7

Maintenance materials and repairs
(971
)
 
(0.4
)
Aircraft and passenger servicing
(5,331
)
 
(4.3
)
Commissions and other selling
(2,772
)
 
(2.3
)
Depreciation and amortization
9,207

 
9.6

Other rentals and landing fees
7,153

 
8.1

Purchased services
8,452

 
11.5

Other
5,113

 
4.7

Total
$
(178,383
)
 
(8.6
)%
Decreases in aircraft fuel expense are illustrated in the following table:
 
Year Ended December 31,
 
 
 
2015
 
2014
 
% Change
 
(in thousands, except per-gallon amounts)
 
 
Aircraft fuel expense, including taxes and delivery
$
417,728

 
$
678,253

 
(38.4
)%
Fuel gallons consumed
234,183

 
230,199

 
1.7
 %
Average fuel price per gallon, including taxes and delivery
$
1.78

 
$
2.95

 
(39.7
)%
The decrease in fuel expense from 2015 to 2014 is primarily due to a decrease in the average fuel price per gallon, partially offset by increased fuel consumption due to the additional aircraft in the fleet (three additional A330-200 offset by the return of two Boeing 767-300 aircraft at the end of their lease term).
Economic fuel expense is calculated as follows:
 
Year Ended December 31,
 
 
 
2015
 
2014
 
% Change
 
(in thousands, except per-gallon amounts)
 
 
Aircraft fuel expense, including taxes and delivery
$
417,728

 
$
678,253

 
(38.4
)%
Realized losses on settlement of fuel derivative contracts
60,946

 
20,365

 
199.3
 %
Economic fuel expense
$
478,674

 
$
698,618

 
(31.5
)%
Fuel gallons consumed
234,183

 
230,199

 
1.7
 %
Economic fuel costs per gallon
$
2.04

 
$
3.03

 
(32.7
)%
Wages and benefits expense increased by $52.1 million , or 11.6% , in 2015 , as compared to 2014 , due to increased pension and postretirement benefit expenses and increased profit-sharing expenses resulting from our improved financial performance as compared to the prior period.
Aircraft rent expense increased by $9.2 million , or 8.7% , in 2015 , as compared to 2014 , primarily due to the addition of three A330-200 aircraft under operating leases (one each in February 2015, May 2015, and October 2015), offset by the return of two Boeing 767-300 aircraft (one each in May 2015 and October 2015).
Depreciation and amortization expense increased by $9.2 million , or 9.6% , in 2015 , as compared to 2014 , primarily due to the annualized effect of owned aircraft added to the fleet in the prior year period.

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Other rentals and landing fees expense increased by $7.2 million , or 8.1% , in 2015 as compared to 2014 , primarily due to increased rates and landing frequencies.
Purchased services expense increased by $8.5 million , or 11.5% , in 2015 as compared to 2014 , due to costs incurred in connection with our turboprop operations and increased IT infrastructure costs.
Nonoperating Expense
Net nonoperating expense decreased by $1.3 million in 2015 , as compared to 2014 , primarily due to reduced debt levels which resulted in an $8.6 million reduction in interest expense as compared to the prior year period. Also our fuel hedge portfolio generated losses of $59.9 million in the current period compared to losses of $63.5 million in the prior year period. These reductions in nonoperating expense were partially offset by an $8.2 million increase in losses generated from the early extinguishment of long-term debt.
Income Tax Expense
We recorded income tax expense of $144.0 million , $113.0 million , and $44.5 million during the years ended December 31, 2016 , 2015 , and 2014 , respectively. In 2016 , 2015 , and 2014 , we had an effective tax rate of 38.0% , 38.2% , and 39.2% , respectively.
See Note 10 to the consolidated financial statements for further discussion.
Liquidity and Capital Resources
Our liquidity is dependent on the cash we generate from operating activities, our existing cash resources, and our debt financing arrangements. As of December 31, 2016 , we had $326.0 million in cash and cash equivalents and $284.1 million in short-term investments, representing an increase of $50.0 million from December 31, 2015 . As of December 31, 2016 and 2015 , our restricted cash balance of $5.0 million consisted of cash held as collateral by entities that process our credit card transactions for advanced ticket sales.
We have been able to generate sufficient funds from our operations to meet our working capital requirements and typically finance our aircraft through secured debt and lease financings. At December 31, 2016 , we had $556.8 million of debt and capital lease obligations, including $58.9 million classified as a current liability in the Consolidated Balance Sheets. As of December 31, 2016 , our current liabilities exceeded our current assets by approximately $31.9 million . However, approximately $482.5 million of our current liabilities are related to our advanced ticket sales and frequent flyer deferred revenue, both of which largely represent revenue to be recognized for travel within the next 12 months and not actual cash outlays. The deficit in working capital does not have an adverse impact to our cash flows, liquidity, or operations.
In December 2016, we amended and restated the existing credit agreement with Citigroup Global Markets Inc. by increasing the secured revolving credit facility (Revolving Credit Facility) from $175 million to $225 million. This Revolving Credit Facility will expire in December 2019. As of December 31, 2016 we had no outstanding borrowings under the Revolving Credit Facility.
Cash Flows
Net cash provided by operating activities was $417.4 million , $476.0 million , and $300.4 million in 2016 , 2015 , and 2014 , respectively. The decrease in 2016 was primarily due to: (1) a $66.1 million decrease in our deferred income tax expense as a result of becoming a cash taxpayer, (2) a $46.7 million net decrease in the change to unrealized gains/losses on our fuel derivative contracts, and (3) a $42.7 million net increase in pension and postretirement benefit contributions, partially offset by (4) an increase of $52.8 million in net income and (5) a $49.4 million increase relating to the impairment of our Boeing 767-300 assets. The increase in 2015 was primarily due to the increased net income before deferred income tax expense, which does not impact our cash flows because our net operating loss carryforwards were used to satisfy this income tax obligation.
Net cash used in investing activities was $154.1 million , $35.3 million , and $686.8 million for 2016 , 2015 , and 2014 , respectively. The increase in net cash used in 2016 was primarily due to a $69.9 million decrease in cash received compared to 2015, for purchase assignment and leaseback transactions, and engine credit payments received from the manufacturer. There was also an increase of $60.0 million in cash payments for property and equipment, including pre-delivery deposits for our Airbus A330-200 and Airbus A321neo fleet. The decrease in 2015 was due to acquisition of fewer aircraft during the year, which resulted in a $323.4 million reduction in capital expenditures. We also received $101.7 million from the purchase assignment and leaseback of three Airbus A330-200 aircraft during the year, and reduced our net purchases of investments by $240.2 million in 2015.

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Net cash used in financing activities was $218.8 million and $423.3 million for 2016 and 2015 , respectively, and net cash provided by financing activities was $227.1 million for 2014 . The decrease in cash used in 2016 was due to the lack of repurchases and payments for settlements of our convertible notes in 2016. The increase in cash used in financing activities in 2015 was due to the lack of long-term borrowings during the year, the early repayment of long-term debt, and the repurchase of convertible notes and common stock. This was partially offset by the net settlement of the convertible note call options and warrants.
Covenants under our Financing Arrangements
Under our bank-issued credit card processing agreements, certain proceeds from advance ticket sales may be held back to serve as collateral to cover any possible chargebacks or other disputed charges that may occur. These holdbacks, which are included in restricted cash in our Consolidated Balance Sheets totaled $5.0 million as of December 31, 2016 and 2015 .
In the event of a material adverse change in the business, the holdback could increase to an amount up to 100% of the applicable credit card activity for all unflown tickets, which would also result in an increase in the required level of restricted cash. If we are unable to obtain a waiver of, or otherwise mitigate the increase in the restriction of cash, it could have a material adverse impact on our operations.
Pension and Other Postretirement Benefit Plan Funding
As of December 31, 2016 , the excess of the projected benefit obligations over the fair value of plan assets was approximately $359.3 million . We contributed $57.8 million, $20.4 million, and $8.9 million to our defined benefit pension plans and disability plan during 2016 , 2015 , and 2014 , respectively. Future funding requirements for our defined benefit and other postretirement plans are dependent upon many factors such as interest rates, funded status, applicable regulatory requirements, and the level and timing of asset returns. In 2017 , we expect to contribute approximately $50.0 million to our defined benefit pension plans and disability plan.
In 2016, the Hawaiian Airlines, Inc. Pension Plan for Salaried Employees (Salaried Plan) was consolidated into the Hawaiian Airlines, Inc. Pension Plan for Employees Represented by the International Association of Machinists (IAM), which established the Hawaiian Airlines, Inc. Salaried & IAM Merged Pension Plan (the Merged Plan). At that time, the net liabilities of the Salaried Plan were transferred to the Merged Plan. The benefits under the Merged Plan have remained consistent with the prior plan documents. We, as plan sponsor, have submitted an application to the Department of Labor to settle the Merged Plan and expect to receive a response in 2017, at which time we intend to terminate the Merged Plan (if the application is approved by the Department of Labor). In 2017, we expect to spend approximately $17 million to $22 million to settle the plan obligations. As of December 31, 2016, there was no significant effect to the operation of the plans.
Off-Balance Sheet Arrangements
An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity under which a company has (i) made guarantees, (ii) retained a contingent interest in transferred assets, (iii) an obligation under derivative instruments classified as equity or (iv) any obligation arising out of a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to the company, or that engages in leasing, hedging or research and development arrangements with the company. We have no arrangements of the types described in the first three categories that we believe may have a current or future material effect on our financial condition, liquidity or results of operations. We do have obligations arising out of variable interests in unconsolidated entities related to certain aircraft leases. To the extent our leases and related guarantees are with a separate legal entity other than a governmental entity, we are not the primary beneficiary because the lease terms are consistent with market terms at the inception of the lease, and the lease does not include a residual value guarantee, fixed price purchase option, or similar feature.

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Contractual Obligations
Our estimated contractual obligations as of December 31, 2016 are summarized in the following table:
Contractual Obligations
Total
 
Less than 1 Year
 
1-3 Years
 
3-5 Years
 
More than 5 Years
 
(in thousands)
Debt and capital lease obligations(1)
$
703,585

 
$
89,730

 
$
192,341

 
$
119,008

 
$
302,506

Operating leases—aircraft and related equipment(2)
741,329

 
120,766

 
235,889

 
162,447

 
222,227

Operating leases—non-aircraft
139,170

 
5,223

 
13,624

 
13,065

 
107,258

Purchase commitments—capital(3)
1,565,362

 
240,884

 
888,912

 
386,582

 
48,984

Other commitments(4)
703,894

 
79,098

 
121,636

 
112,290

 
390,870

Projected employee benefit contributions(5)
75,050

 
50,000

 
25,050

 
—

 
—

Total contractual obligations
$
3,928,390

 
$
585,701

 
$
1,477,452

 
$
793,392

 
$
1,071,845

(1)
Amounts reflect capital lease obligations for one Airbus A330-200 aircraft, two Boeing 717-200 aircraft, one Airbus A330 flight simulator, and aircraft and IT related equipment.

(2)
Amounts reflect leases for ten Airbus A330-200 aircraft, four Boeing 767-300 aircraft, three Boeing 717-200 aircraft, three turboprop aircraft and aircraft-related equipment as of December 31, 2016 .

(3)
Amounts include our firm commitments for aircraft and aircraft related equipment.

(4)
Amounts include commitments for services provided by third-parties for aircraft maintenance for our Airbus fleet, capacity purchases, accounting, IT, reservations, and the estimated rental payments for the cargo and maintenance hangar (described below). Total contractual obligations do not include long-term contracts where the commitment is variable in nature (with no minimum guarantee), such as aircraft maintenance deposits due under operating leases and fees due under certain other agreements such as aircraft maintenance power-by-the-hour, computer reservation systems and credit card processing agreements, or when the agreements contain short-term cancellation provisions.

(5)
Amounts include our estimated contributions to our pension plans (based on actuarially determined estimates) and our pilots' disability plan. Amounts are subject to change based on numerous factors, including interest rate levels, the amount and timing of asset returns and the impact of future legislation. We are currently unable to estimate the projected contributions beyond 2019.
Capital Commitments
As of December 31, 2016 , we had the following capital commitments consisting of firm aircraft and engine orders and purchase rights:
Aircraft Type
Firm
Orders
 
Purchase
Rights
 
Expected Delivery Dates
A330-200 aircraft
1

 
—

 
In 2017
A321neo aircraft
16

 
9

 
Between 2017 and 2020
A330-800neo aircraft
6

 
6

 
Between 2019 and 2021
Pratt & Whitney spare engines:
 
 
 
 
 
A321neo spare engines
3

 
—

 
Between 2017 and 2019
Rolls-Royce spare engines:
 

 
 

 
 
A330-800neo spare engines
2

 
—

 
Between 2019 and 2020
Committed expenditures for these aircraft, engines, and related flight equipment are approximately $241 million in 2017 , $401 million in 2018 , $488 million in 2019 , $229 million in 2020 , $158 million in 2021 , and $49 million thereafter.
In order to complete the purchase of these aircraft and fund related costs, we may need to secure acceptable financing. We have backstop financing available from aircraft and engine manufacturers, subject to certain customary conditions. Financing may be necessary to satisfy our capital commitments for firm order aircraft and other related capital expenditures. We can provide no assurance that any financing not already in place for aircraft and spare engine deliveries will be available to us on acceptable terms when necessary or at all.

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In November 2016, we entered into a lease agreement with the Department of Transportation of the State of Hawai'i to lease a cargo and maintenance hangar at the Honolulu International Airport with a lease term of 35 years. The hangar is not fully completed and we have since taken responsibility for the remainder of the construction. We are obligated to fund the remaining construction costs needed to complete the hangar. While there is no minimum funding requirement, we estimate the cost to complete the hangar will be approximately $25.0 million to $35.0 million , which we expect to incur in 2017. In accordance with the applicable accounting guidance, specifically as it relates to our involvement in the construction of the hangar, we are considered the owner of the asset under construction and has recognized a $73.0 million asset, with a corresponding other liability, for the value of the construction previously completed.
We estimate that the hangar will be put into service in late 2017. At that time, we expect the lease to be considered a financing arrangement and a fixed asset of $73.0 million for the value of the construction previously completed plus any remaining amount spent by us and the $73.0 million liability will remain on our balance sheet. When construction is completed we will have on-going committed expenditures under the lease agreement consisting of ground rent (included in Operating leases - non-aircraft in the contractual obligations table above) and building rent and apron rent (included in Other commitments in the contractual obligations table above).
Non-GAAP Financial Measures
We believe the disclosure of non-GAAP financial measures is useful information to readers of our financial statements because:
•
We believe it is the basis by which we are evaluated by industry analysts and investors;
•
These measures are often used in management and board of directors decision making analysis;
•
It improves a reader's ability to compare our results to those of other airlines; and
•
It is consistent with how we present information in our quarterly earnings press releases.
See table below for reconciliation between GAAP consolidated net income to adjusted consolidated net income, including per share amounts (in thousands unless otherwise indicated). The adjustments are described below:
•
Changes in fair value of derivative contracts, net of tax, are based on market prices for open contracts as of the end of the reporting period. This line item includes the unrealized amounts of fuel and interest rate derivatives (not designated as hedges) that will settle in future periods and the reversal of prior period unrealized amounts. Excluding the impact of these derivative adjustments allows investors to better analyze our core operational performance and more readily compare our results to other airlines in the periods presented below.
•
Loss on extinguishment of debt, net of tax, is excluded to allow investors to better analyze our core operational performance and more readily compare our results to other airlines in the periods presented below.
•
The impairment and maintenance contract termination charges related to the early retirement of our fleet of Boeing 767-300 aircraft, engines, and related assets along with the retroactive bonuses and a proposed collective bargaining agreement payment are considered special items and are not expected to represent ongoing expenses to us. Excluding these special items allows investors to better analyze our core operational performance and more readily compare our results to other airlines in the periods presented below.
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
Net Income
 
Diluted Net Income Per Share
 
Net Income
 
Diluted Net Income Per Share
 
Net Income
 
Diluted Net Income Per Share
As reported—GAAP
$
235,432

 
$
4.36

 
$
182,646

 
$
2.98

 
$
68,926

 
$
1.10

Add: changes in fair value of derivative contracts
(47,678
)
 
(0.88
)
 
(1,015
)
 
(0.02
)
 
43,106

 
0.67

Add: loss on extinguishment of debt
10,473

 
0.19

 
12,058

 
0.20

 
2,617

 
0.04

Add: special items
 
 
 
 
 
 
 
 
 
 
 
  Impairment charge
49,361

 
0.92

 
—

 
—

 
—

 
—

  Termination charge
21,000

 
0.39

 
—

 
—

 
—

 
—

Retroactive bonuses and a proposed collective bargaining agreement payment
38,781

 
0.72

 
—

 
—

 
—

 
—

Tax effect of adjustments
(27,307
)
 
(0.51
)
 
(4,417
)
 
(0.07
)
 
(17,528
)
 
(0.29
)
Adjusted net income
$
280,062

 
$
5.19

 
$
189,272

 
$
3.09

 
$
97,121

 
$
1.52


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Operating Costs per Available Seat Mile (CASM)
Listed in the table below is our fuel costs per ASM and non-GAAP unit costs, excluding fuel. These amounts are included in CASM, but for internal purposes we consistently use cost metrics that exclude fuel and non-recurring items (if applicable) to measure and monitor its costs.
CASM and CASM, excluding fuel, are summarized in the table below:
 
Year Ended December 31,
 
2016
 
2015
 
2014
GAAP operating expenses
$
2,055,118

 
$
1,891,364

 
$
2,069,747

Less: aircraft fuel, including taxes and delivery
(344,322
)
 
(417,728
)
 
(678,253
)
 Less: special items
 
 
 
 
 
Impairment charge
(49,361
)
 
—

 
—

Termination charge
(21,000
)
 
—

 
—

Bonuses and a proposed collective bargaining agreement payment
(38,781
)
 
—

 
—

Adjusted operating expenses—excluding aircraft fuel and special items
$
1,601,654

 
$
1,473,636

 
$
1,391,494

Available Seat Miles
18,384,637

 
17,726,322

 
17,073,630

CASM—GAAP

11.18
¢
 

10.67
¢
 

12.12
¢
Less: aircraft fuel
(1.87
)
 
(2.36
)
 
(3.97
)
Less: special items
 
 
 
 
 
Impairment charge
(0.28
)
 
—

 
—

Termination charge
(0.11
)
 
—

 
—

Bonuses and a proposed collective bargaining agreement payment
(0.21
)
 
—

 
—

CASM—excluding aircraft fuel and special items

8.71
¢
 

8.31
¢
 

8.15
¢
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based upon financial statements that have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amount of assets and liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results could differ from those estimates. 
Critical accounting policies and estimates are defined as those accounting policies and accounting estimates that are reflective of significant judgments and uncertainties, and that potentially result in materially different results under different assumptions and conditions. Our most critical accounting policies and estimates are described below. See the summary of significant accounting policies included in Note 1 to the consolidated financial statements for additional discussion of the application of these estimates and other accounting policies.
Frequent Flyer Accounting
HawaiianMiles, Hawaiian's frequent flyer travel award program, provides a variety of awards to program members based on accumulated mileage. We utilize the incremental cost method of accounting for free travel awards earned by passengers issued from the HawaiianMiles program through flight activity. This method utilizes a number of estimates including the incremental cost per mile and breakage. We record a liability for the estimated incremental cost of providing travel awards that are expected to be redeemed on Hawaiian or the contractual rate of expected redemption on other airlines. We estimate the incremental cost of travel awards based on periodic studies of actual costs and apply these cost estimates to all issued miles, less an appropriate breakage factor for estimated miles that will not be redeemed. Incremental costs include the cost of fuel, meals and beverages, insurance and certain other passenger traffic-related costs, but does not include any costs for aircraft ownership and maintenance. The breakage factor is estimated based on an analysis of historical expirations.
We also sell mileage credits to companies participating in our frequent flyer program. These sales are accounted for as multiple-element arrangements, with one element representing the transportation that will ultimately be provided when the

35
Table of Contents

mileage credits are redeemed and the other elements consisting of marketing related activities that we conduct with the participating company.
In 2013, Hawaiian entered into a co-branded credit card agreement, which provides for the sale of frequent flyer miles to Barclays Bank Delaware (Barclays) which began in 2014. The agreement was a new multiple element arrangement subject to Accounting Standards Update 2009-13, Multiple Deliverable Revenue Arrangements — A consensus of the FASB Emerging Issues Task Force (ASU 2009-13), which was effective for new and materially modified revenue arrangements entered into by us after January 1, 2011.  ASU 2009-13 requires the allocation of the overall consideration received to each deliverable using the estimated selling price.  The objective of using estimated selling price based methodology is to determine the price at which we would transact a sale if the product or service were sold on a stand-alone basis.
The following four deliverables or elements were identified in the agreement: (i) travel miles; (ii) use of the Hawaiian brand and access to member lists; (iii) advertising elements; and (iv) other airline benefits including checked baggage services and travel discounts.  We determined the relative fair value of each element by estimating the selling prices of the deliverables by considering discounted cash flows using multiple inputs and assumptions, including: (1) the expected number of miles to be awarded and redeemed; (2) the estimated weighted average equivalent ticket value, adjusted by a fulfillment discount; (3) the estimated total annual cardholder spend; (4) an estimated royalty rate for the Hawaiian portfolio; and (5) the expected use of each of the airline benefits. The overall consideration received is allocated to the deliverables based on their relative selling prices.  The transportation element is deferred and recognized as passenger revenue over the period when the transportation is expected to be provided ( 23 months ).  The other elements are generally recognized as other revenue when earned.
Under the programs of certain participating companies, credits are accumulated in accounts maintained by the participating company, then transferred into a member's HawaiianMiles account for immediate redemption of free travel awards. For those transactions, revenue is recognized over the period during which the mileage is projected to be used for travel (four months).
On an annual basis, we review the deferral period and deferral rate for mileage credits sold to participating companies (except for miles sold under our co-branded credit card agreement), as well as the breakage rate assumption for free travel awards earned in connection with the purchase of passenger tickets. The cost components of the incremental cost assumption are reviewed on a quarterly basis.
Pension and Other Postretirement and Postemployment Benefits
The calculation of pension and other postretirement and postemployment benefit expenses and its corresponding liabilities require the use of significant assumptions, including the assumed discount rate, the expected long-term rate of return on plan assets, expected mortality rates of the plan participants, and the expected health care cost trend rate. Changes in these assumptions will impact the expense and liability amounts, and future actual experience may differ from these assumptions. The significant assumptions as of December 31, 2016 are as follows:
Pension:
 

 
 
Discount rate to determine projected benefit obligation
4.19
%
 
 
Expected return on plan assets
6.69
%
 
+
Postretirement:
 

 
 
Discount rate to determine projected benefit obligation
4.29
%
 
 
Expected return on plan assets
N/A

 
 
Expected health care cost trend rate:
 

 
 
Initial
7.75
%
 
 
Ultimate
4.75
%
 
 
Years to reach ultimate trend rate
6

 
 
Disability:
 

 
 
Discount rate to determine projected benefit obligation
4.24
%
 
 
Expected return on plan assets
5.37
%
 
+
N/A      Not Applicable
+
Expected return on plan assets used to determine the net periodic benefit expense for 2017 is 6.34% for the pension plans and 4.60% for the disability plan.
The expected long-term rate of return assumption is developed by evaluating input from the trustee managing the plans' assets, including the trustee's review of asset class return expectations by several consultants and economists, as well as long-term

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inflation assumptions. Our expected long-term rate of return on plan assets is based on a target allocation of assets, which is based on our goal of earning the highest rate of return while maintaining risk at acceptable levels. The Retirement Plan for Pilots of Hawaiian Airlines, Inc. and the Pilot's Voluntary Employee Beneficiary Association Disability and Survivor's Benefit Plan strive to have assets sufficiently diversified so that adverse or unexpected results from any one security class will not have an unduly detrimental impact on the entire portfolio. The Merged pension plan strives to have its assets align with the potential liability as of the expected settlement date. We believe that our long-term asset allocation on average will approximate the targeted allocation. We periodically review our actual asset allocation and rebalance the pension plan's investments to our targeted allocation when considered appropriate. Pension expense increases as the expected rate of return on plan assets decreases. Lowering the expected long-term rate of return will have the following effects on our estimated 2017 pension and disability benefit expense:
 
100 Basis Point Decrease
 
(in millions)
Increase in estimated 2017 pension expense
$
3.1

Increase in estimated 2017 disability benefit expense
0.2

We determine the appropriate discount rate for each of our plans based on current rates on high quality corporate bonds that would generate the cash flow necessary to pay plan benefits when due. The pension and other postretirement benefit liabilities and future expense both increase as the discount rate is reduced. Lowering the discount rate would have the following effects:
 
100 Basis Point Decrease
 
(in millions)
Increase in pension obligation as of December 31, 2016
$
57.9

Increase in other postretirement benefit obligation as of December 31, 2016
44.1

Increase in estimated 2017 pension expense
2.9

Increase in estimated 2017 other postretirement benefit expense
6.2

The health care cost trend rate is based upon an evaluation of our historical trends and experience taking into account current and expected market conditions. Changes in the assumed health care cost trend rate would have the following annual effects:
 
100 Basis Point Increase
 
(in millions)
Increase in other postretirement benefit obligation as of December 31, 2016
$
39.1

Increase in estimated 2017 other postretirement benefit expense
7.7

 
100 Basis Point Decrease
 
(in millions)
Decrease in other postretirement benefit obligation as of December 31, 2016
$
30.4

Decrease in estimated 2017 other postretirement benefit expense
4.3

Aircraft Maintenance and Repair Costs
On a quarterly basis we complete a forecast of maintenance costs for the next scheduled event on applicable leased aircraft and compare these estimates to our forecasted nonrefundable deposits to identify costs not expected to be recoverable. Any costs not expected to be recoverable are considered to be not substantially and contractually related to maintenance of the leased asset. Therefore, we bifurcate and expense the proportionate share that is estimated to not be recoverable from existing and future nonrefundable deposits. In determining whether it is probable that maintenance deposits will be used to fund the cost of the maintenance events, we conduct the following analysis:
•
We evaluate the aircraft's condition, including the airframe, the engines, the auxiliary power unit and the landing gear.
•
We then project future usage of the aircraft during the term of the lease based on our business and fleet plan.
•
We estimate the cost of performing the next scheduled maintenance event. These estimates are based on the experience of our maintenance personnel and available industry data, including historical fleet operating statistic reports published by the aircraft and engine manufacturers.

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Table of Contents

•
We compare the forecasted maintenance deposits to be paid at the time of the next scheduled maintenance event to the estimated cost of the next scheduled maintenance event. Those costs not expected to be recoverable are considered to be not substantially and contractually related to maintenance of the leased asset.
•
We prospectively account for any changes in estimates.
Our assessment of the recoverability of our maintenance deposits is subject to change in the event that key estimates and assumptions change over time. Those key estimates and assumptions include our fleet plan and the projected total cost and, to a lesser extent, anticipated timing of the major maintenance activities covered by the maintenance reserves.
Based on historical trends and future projections, including those published by the manufacturers of our aircraft and engines, we believe it is unlikely that future maintenance costs for our aircraft will decline to such an extent that the maintenance deposits currently recorded on our Consolidated Balance Sheets would not be used to fund the cost of future maintenance events and, therefore, not be recoverable.
Impairment of Long-Lived Assets and Finite-lived Intangible Assets
Long-lived assets used in operations, consisting principally of property and equipment and finite-lived intangible assets, are tested for impairment when events or changes in circumstances indicate, in management's judgment, that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amount. When testing for impairment management considers market trends, the expected useful lives of the assets, changes in economic conditions, recent transactions involving sales of similar assets and, if necessary, estimates of future undiscounted cash flows. To determine whether impairment exists for aircraft used in operations, assets are grouped at the fleet-type level (the lowest level for which there are identifiable cash flows) and future cash flows are estimated based on projections of capacity, passenger mile yield, fuel costs, labor costs and other relevant factors. If, at any time, management determines the net carrying value of an asset is not recoverable, the amount is reduced to its fair value during the period in which such determination is made. Any changes in the estimated useful lives of these assets will be accounted for prospectively.
The impairment analysis and ultimate charge was triggered by the decision in the fourth quarter of 2016 to exit the Boeing 767-300 fleet in 2018. The early exit of the Boeing 767-300 fleet was made possible by our decision to acquire one Airbus A330 (to be delivered in 2017), lease two additional Airbus A321s (to be delivered in 2018 and in addition to our existing aircraft orders), and our ability to early terminate our long-term power by the hour maintenance contract for the Boeing 767-300 fleet. This fleet change allows us to streamline our fleet, simplify our operations, and potentially reduce our cost structure in the future. In order to assess whether there was an impairment of the Boeing 767-300 asset group, we compared the projected undiscounted cash flows of the fleet to the book value of the assets and determined the book value was in excess of the undiscounted cash flows. We estimated the fair value of the Boeing 767-300 fleet assets using third party pricing information and quotes from potential buyers of our owned aircraft, which resulted in a $49.4 million impairment charge. Our determination of fair value considered attributes specific to our Boeing 767-300 fleet and aircraft condition (e.g. age, maintenance requirements, cycles, etc.). The Boeing 767-300 asset group consists of both owned and leased aircraft. We expect to remove three leased Boeing 767-300 aircraft from service in 2018. At that time, these aircraft will have remaining lease payments of approximately $54.3 million . At the time each aircraft is removed from service we will accrue for any remaining lease payments not mitigated through an arrangement with the lessor.
 

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ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are subject to certain market risks, including commodity price risk (i.e. jet fuel prices) and foreign currency risk. We have market-sensitive instruments in the form of financial derivatives used to offset Hawaiian's exposure to jet fuel price increases, and financial hedge instruments used to hedge Hawaiian's exposure to foreign currency exchange risk. The adverse effects of potential changes in these market risks are discussed below.
The sensitivity analyses presented do not consider the effects that such adverse changes may have on overall economic activity nor do they consider additional actions we might undertake to mitigate our exposure to such changes. Actual results may differ.
Aircraft Fuel Costs
Aircraft fuel costs constitute a significant portion of our operating expense. Fuel costs represented 17% of our operating expenses for the year ended December 31, 2016 . Approximately 70% of our fuel is based on Singapore jet fuel prices and 30% is based on U.S. West Coast jet fuel prices. Based on gallons expected to be consumed in 2017 , for every one cent increase in the cost of a gallon of jet fuel, our fuel expense would increase by approximately $2.5 million , excluding the results of our fuel hedge program.
We periodically enter into derivative financial instruments to manage our exposure to changes in the price of jet fuel. During 2016 , our fuel hedge portfolio primarily consisted of heating oil swaps and crude oil call options. Swaps provide for a settlement in our favor in the event the prices exceed a predetermined contractual level and are unfavorable in the event prices fall below a predetermined contractual level. With call options, we are hedged against spikes in crude oil prices, and during a period of decline in crude oil prices we only forfeit cash previously paid for hedge premiums.
As of December 31, 2016 , we hedged approximately 50% of our projected fuel requirements for 2017 with heating oil swaps and crude oil call options. As of December 31, 2016 , the fair value of these fuel derivative agreements reflected a net asset of $15.1 million that is recorded in other accrued liabilities in the Consolidated Balance Sheets.
We expect to continue our program of offsetting some of our exposure to future changes in the price of jet fuel with a combination of fixed forward pricing contracts, swaps, puts and other option-based structures.
We do not hold or issue derivative financial instruments for trading purposes.
Interest Rates
Our results of operations are affected by fluctuations in interest rates due to our interest income earned on our cash deposits. Our variable-rate debt agreements include the Revolving Credit Facility and secured loan agreements, the terms of which are discussed in Note 8 to our consolidated financial statements.
Changes in market interest rates have a direct and corresponding effect on our pre-tax earnings and cash flows associated with our interest-bearing cash accounts. Based on the balances of our cash and cash equivalents, restricted cash, and short-term investments as of December 31, 2016 , a change in interest rates is unlikely to have a material impact on our results of operations.
At December 31, 2016 , we had $570.6 million of fixed-rate debt including aircraft capital lease obligations, facility agreements for aircraft purchases, and the outstanding equipment notes related to the EETC financing. Market risk for fixed-rate long-term debt is estimated as the potential increase in fair value resulting from a hypothetical 10% decrease in market rates, and amounted to approximately $9.6 million as of December 31, 2016 .
Foreign Currency
We generate revenues and incur expenses in foreign currencies. Changes in foreign currency exchange rates impact our results of operations through changes in the dollar value of foreign currency-denominated operating revenues and expenses. Our most significant foreign currency exposures are the Japanese Yen and Australian Dollar. Based on expected 2017 revenues and expenses denominated in Japanese Yen and Australian Dollars, a 10% strengthening in value of the U.S. dollar, relative to the Japanese Yen and Australian Dollar, would result in a decrease in operating income of approximately $27.5 million and $17.1 million , respectively, which excludes the offset of the hedges discussed below. This potential impact to the results of our operation is driven by the inherent nature of our international operations, which requires us to accept a large volume of sales transactions denominated in foreign currencies while few expense transactions are settled in foreign currencies. This disparity is the primary factor in our exposure to foreign currency exchange rates.
As of December 31, 2016 , the fair value of our foreign currency forwards reflected a net asset of $8.9 million that is recorded in prepaid expenses and other, and $2.6 million recorded in long-term prepayments and other reflected in the Consolidated Balance Sheets.

39
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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO FINANCIAL STATEMENTS
 
Page
Hawaiian Holdings, Inc.
 

40
Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of Hawaiian Holdings, Inc.
We have audited the accompanying consolidated balance sheets of Hawaiian Holdings, Inc. as of December 31, 2016 and 2015 , and the related consolidated statements of operations, comprehensive income (loss), shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2016 . Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Hawaiian Holdings, Inc. at December 31, 2016 and 2015 , and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2016 , in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Hawaiian Holdings, Inc.'s internal control over financial reporting as of December 31, 2016 , based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 16, 2017 , expressed an unqualified opinion thereon.
/s/ ERNST & YOUNG LLP  
 
 

Honolulu, Hawai'i
February 16, 2017

41


Hawaiian Holdings, Inc.
Consolidated Statements of Operations
For the Years ended December 31, 2016 , 2015 and 2014
 
2016
 
2015
 
2014
 
(in thousands, except per share data)
Operating Revenue:
 

 
 

 
 

Passenger
$
2,145,742

 
$
2,025,610

 
$
2,045,052

Other
304,838

 
291,857

 
269,827

Total
2,450,580

 
2,317,467

 
2,314,879

Operating Expenses:
 
 
 

 
 

Wages and benefits
555,534

 
499,506

 
447,446

Aircraft fuel, including taxes and delivery
344,322

 
417,728

 
678,253

Aircraft rent
124,565

 
115,653

 
106,422

Maintenance materials and repairs
228,970

 
224,648

 
225,619

Aircraft and passenger servicing
126,876

 
117,449

 
122,780

Commissions and other selling
125,731

 
119,746

 
122,518

Depreciation and amortization
108,128

 
105,581

 
96,374

Other rentals and landing fees
108,087

 
95,055

 
87,902

Purchased services
96,274

 
81,838

 
73,386

Special items
109,142

 
—

 
—

Other
127,489

 
114,160

 
109,047

Total
2,055,118

 
1,891,364

 
2,069,747

Operating Income
395,462

 
426,103

 
245,132

Nonoperating Income (Expense):
 
 
 

 
 

Interest expense and amortization of debt discounts and issuance costs
(36,612
)
 
(55,678
)
 
(64,240
)
Interest income
4,007

 
2,811

 
1,684

Capitalized interest
2,651

 
3,261

 
8,024

Gains (losses) on fuel derivatives
20,106

 
(59,931
)
 
(63,471
)
Loss on extinguishment of debt
(10,473
)
 
(12,058
)
 
(3,885
)
Other, net
4,323

 
(8,820
)
 
(9,797
)
Total
(15,998
)
 
(130,415
)
 
(131,685
)
Income Before Income Taxes
379,464

 
295,688

 
113,447

Income tax expense
144,032

 
113,042

 
44,521

Net Income
$
235,432

 
$
182,646

 
$
68,926

Net Income Per Common Stock Share:
 
 
 

 
 

Basic
$
4.40

 
$
3.38

 
$
1.29

Diluted
$
4.36

 
$
2.98

 
$
1.10

Weighted Average Number of Common Stock Shares Outstanding:
 
 
 

 
 

Basic
53,502

 
54,031

 
53,591

Diluted
53,958

 
61,256

 
62,822

See accompanying Notes to Consolidated Financial Statements.


42
Table of Contents

Hawaiian Holdings, Inc.
Consolidated Statements of Comprehensive Income (Loss)
For the Years ended December 31, 2016 , 2015 and 2014
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
(in thousands)
Net Income
$
235,432

 
$
182,646

 
$
68,926

Other comprehensive income (loss), net:
 

 
 

 
 

Net change related to employee benefit plans, net of tax benefit of $3,588 for 2016, tax expense of $18,826 for 2015, and tax benefit of $50,968 for 2014
(6,337
)
 
31,655

 
(83,461
)
Net change in derivative instruments, net of tax expense of $1,290 for 2016, tax benefit of $4,866 for 2015, and tax expense of $2,188 for 2014
2,111

 
(8,002
)
 
3,589

Net change in available-for-sale investments, net of tax expense of $6 for 2016, and tax benefit of $72 and $154 for 2015 and 2014
10

 
(118
)
 
(254
)
Total other comprehensive income (loss)
(4,216
)
 
23,535

 
(80,126
)
Total Comprehensive Income (Loss)
$
231,216

 
$
206,181

 
$
(11,200
)
See accompanying Notes to Consolidated Financial Statements.

43
Table of Contents

Hawaiian Holdings, Inc.
Consolidated Balance Sheets
December 31, 2016 and 2015
 
2016
 
2015
 
(in thousands, except share data)
ASSETS
 
 
 

Current Assets:
 
 
 

Cash and cash equivalents
$
325,991

 
$
281,502

Restricted cash
5,000

 
5,000

Short-term investments
284,075

 
278,545

Accounts receivable, net
96,067

 
81,723

Spare parts and supplies, net
20,363

 
19,164

Prepaid expenses and other
66,740

 
75,050

Total
798,236

 
740,984

Property and equipment, net
 
 
 

Flight equipment
1,658,698

 
1,737,435

Pre-delivery deposits on flight equipment
117,762

 
21,467

Other property and equipment
332,338

 
226,350

 
2,108,798

 
1,985,252

Less accumulated depreciation and amortization
(454,231
)
 
(432,510
)
Total
1,654,567

 
1,552,742

Other Assets:
 
 
 

Long-term prepayments and other
132,724

 
70,873

Intangible assets, net
16,411

 
18,660

Goodwill
106,663

 
106,663

Total Assets
$
2,708,601

 
$
2,489,922

LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 

Current Liabilities:
 
 
 

Accounts payable
$
116,507

 
$
101,310

Air traffic liability
482,496

 
430,766

Other accrued liabilities
172,214

 
160,258

Current maturities of long-term debt, less discount, and capital lease obligations
58,899

 
74,441

Total
830,116

 
766,775

Long-Term Debt and Capital Lease Obligations
497,908

 
677,915

Other Liabilities and Deferred Credits:
 
 
 

Accumulated pension and other postretirement benefit obligations
355,968

 
372,700

Other liabilities and deferred credits
173,613

 
89,845

Deferred tax liability, net
170,543

 
136,625

Total
700,124

 
599,170

Commitments and Contingent Liabilities


 


Shareholders' Equity:
 
 
 

Special preferred stock, $0.01 par value per share, three shares issued and outstanding at December 31, 2016 and 2015
—

 
—

Common stock, $0.01 par value per share, 53,435,234 and 53,401,439 shares issued and outstanding as of December 31, 2016 and 2015, respectively
534

 
534

Capital in excess of par value
127,266

 
124,091

Accumulated income
656,146

 
420,714

Accumulated other comprehensive loss, net
(103,493
)
 
(99,277
)
Total
680,453

 
446,062

Total Liabilities and Shareholders' Equity
$
2,708,601

 
$
2,489,922

See accompanying Notes to Consolidated Financial Statements.

44
Table of Contents

Hawaiian Holdings, Inc.
Consolidated Statements of Shareholders' Equity
For the Years ended December 31, 2016 , 2015 and 2014
 
Common
Stock(*)
 
Special
Preferred
Stock(**)
 
Capital In Excess of Par Value
 
Accumulated Income
 
Accumulated Other Comprehensive Loss
 
Total
 
 
 
 
(in thousands)
 
 
 
 
Balance at December 31, 2013
$
524

 
$
—

 
$
269,884

 
$
169,142

 
$
(42,686
)
 
$
396,864

Net Income
—

 
—

 
—

 
68,926

 
—

 
68,926

Other comprehensive loss
—

 
—

 
—

 
—

 
(80,126
)
 
(80,126
)
Issuance of 2,032,486 shares of common stock related to stock awards
21

 
—

 
3,729

 
—

 
—

 
3,750

Share-based compensation expense
—

 
—

 
5,056

 
—

 
—

 
5,056

Excess tax benefits from stock issuance
—

 
—

 
387

 
—

 
—

 
387

Reacquisition of equity component of convertible notes
—

 
—

 
(27,624
)
 
—

 
—

 
(27,624
)
Balance at December 31, 2014
$
545

 
$
—

 
$
251,432

 
$
238,068

 
$
(122,812
)
 
$
367,233

Net Income
—

 
—

 
—

 
182,646

 
—

 
182,646

Other comprehensive income
—

 
—

 
—

 
—

 
23,535

 
23,535

Issuance of 660,271 shares of common stock related to stock awards, net of shares withheld for taxes
6

 
—

 
(5,489
)
 
—

 
—

 
(5,483
)
Repurchase and retirement of 1,714,400 shares common stock
(17
)
 
—

 
(40,120
)
 
—

 
—

 
(40,137
)
Share-based compensation expense
—

 
—

 
5,075

 
—

 
—

 
5,075

Excess tax benefits from stock issuance
—

 
—

 
373

 
—

 
—

 
373

Reacquisition of equity component of convertible notes
—

 
—

 
(109,301
)
 
—

 
—

 
(109,301
)
Settlement of convertible note call options
—

 
—

 
304,752

 
—

 
—

 
304,752

Settlement of convertible note warrants
—

 
—

 
(282,631
)
 
—

 
—

 
(282,631
)
Balance at December 31, 2015
$
534

 
$
—

 
$
124,091

 
$
420,714

 
$
(99,277
)
 
$
446,062

Net Income
—

 
—

 
—

 
235,432

 
—

 
235,432

Other comprehensive loss
—

 
—

 
—

 
—

 
(4,216
)
 
(4,216
)
Issuance of 412,857 shares of common stock related to stock awards, net of shares withheld for taxes
4

 
—

 
(7,589
)
 
—

 
—

 
(7,585
)
Repurchase and retirement of 379,062 shares common stock
(4
)
 
—

 
(13,759
)
 
—

 
—

 
(13,763
)
Share-based compensation expense
—

 
—

 
6,005

 
—

 
—

 
6,005

Excess tax benefits from stock issuance
—

 
—

 
19,656

 
—

 
—

 
19,656

Reacquisition of equity component of convertible notes
$
—

 
$
—

 
$
(1,138
)
 
$
—

 
$
—

 
(1,138
)
Balance at December 31, 2016
$
534

 
$
—

 
$
127,266

 
$
656,146

 
$
(103,493
)
 
680,453

(*)    Common Stock—$0.01 par value; 118,000,000 authorized as of December 31, 2016 and 2015 .
(**)    Special Preferred Stock—$0.01 par value; 2,000,000 shares authorized as of December 31, 2016 and 2015
See accompanying Notes to Consolidated Financial Statements.

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Table of Contents

Hawaiian Holdings, Inc.
Consolidated Statements of Cash Flows
For the Years ended December 31, 2016 , 2015 and 2014
 
2016
 
2015
 
2014
 
(in thousands)
Cash Flows From Operating Activities:
 
 
 

 
 

Net Income
$
235,432

 
$
182,646

 
$
68,926

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 

 
 

Amortization of intangible assets
2,322

 
2,640

 
2,640

Depreciation and amortization of property and equipment
107,041

 
104,176

 
94,969

Deferred income taxes, net
36,372

 
102,446

 
43,084

Excess tax benefit from equity awards
(19,656
)
 
—

 
—

Impairment of assets
49,361

 
—

 
—

Stock compensation
8,424

 
6,616

 
6,680

Loss on extinguishment of debt
10,473

 
12,058

 
3,885

Amortization of debt discounts and issuance costs
5,579

 
6,678

 
9,277

Pension and postretirement benefit cost, net
(26,742
)
 
15,973

 
9,535

Change in unrealized (gain) loss on fuel derivative contracts
(47,678
)
 
(1,015
)
 
43,107

Other, net
2,552

 
(2,245
)
 
(7,071
)
Changes in operating assets and liabilities:
 
 
 

 
 

Accounts receivable, net
(18,956
)
 
(1,850
)
 
(5,803
)
Spare parts and supplies, net
(5,259
)
 
(4,323
)
 
(1,436
)
Prepaid expenses and other current assets
(12,319
)
 
7,065

 
2,493

Accounts payable
12,305

 
44

 
7,473

Air traffic liability
51,730

 
6,430

 
15,250

Other assets and accrued liabilities, net
26,407

 
38,689

 
7,421

Net cash provided by operating activities
417,388

 
476,028

 
300,430

Cash Flows From Investing Activities:
 
 
 

 
 

Additions to property and equipment, including pre-delivery deposits, net
(178,838
)
 
(118,828
)
 
(442,229
)
Proceeds from purchase assignment and leaseback transactions
31,851

 
101,738

 
—

Net proceeds from disposition of equipment
16

 
3,669

 
16,953

Purchases of investments
(260,987
)
 
(257,448
)
 
(458,592
)
Sales of investments
253,855

 
236,062

 
197,046

Other
—

 
(500
)
 
—

Net cash used in investing activities
(154,103
)
 
(35,307
)
 
(686,822
)
Cash Flows From Financing Activities:
 
 
 

 
 

Long-term borrowings
—

 
—

 
368,430

Repayments of long-term debt and capital lease obligations
(214,025
)
 
(216,157
)
 
(115,246
)
Repurchases and conversion of convertible notes
(1,426
)
 
(184,645
)
 
(42,754
)
Repurchases of common stock
(13,763
)
 
(40,138
)
 
—

Proceeds from settlement of convertible note call options
—

 
304,752

 
—

Payment for settlement of convertible note warrants
—

 
(282,631
)
 
—

Debt issuance costs
(1,653
)
 
(572
)
 
(1,519
)
Change in cash collateral for EETC financing
—

 
1,566

 
14,434

Excess tax benefit from equity awards
19,656

 
—

 
—

Other
(7,585
)
 
(5,481
)
 
3,750

Net cash provided by (used in) financing activities
(218,796
)
 
(423,306
)
 
227,095

Net increase in cash and cash equivalents
44,489

 
17,415

 
(159,297
)
Cash and cash equivalents—Beginning of Year
281,502

 
264,087

 
423,384

Cash and cash equivalents—End of Year
$
325,991

 
$
281,502

 
$
264,087

   See accompanying Notes to Consolidated Financial Statements.

46
Table of Contents

Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Basis of Presentation
Hawaiian Holdings, Inc. (the Company, Holdings, we, us and our) and its direct wholly-owned subsidiary, Hawaiian Airlines, Inc. (Hawaiian), are incorporated in the State of Delaware. The Company's primary asset is its sole ownership of all issued and outstanding shares of common stock of Hawaiian.
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, including its principal subsidiary, Hawaiian, through which the Company conducts substantially all of its operations. All significant inter-company balances and transactions have been eliminated upon consolidation.
Certain prior period amounts were reclassified to conform to the current period presentation. None of these reclassifications had a material effect on the consolidated financial statements.
Cash Equivalents
Cash equivalents consist of short-term, highly liquid investments with an original maturity of three months or less at the date of purchase.
Restricted Cash
Restricted cash consists of cash held as collateral by institutions that process our credit card transactions for advanced ticket sales.
Spare Parts and Supplies
Spare parts and supplies are valued at average cost, and primarily consist of expendable parts for flight equipment and other supplies. An allowance for obsolescence of expendable parts is provided over the estimated useful lives of the related aircraft and engines for spare parts expected to be on hand at the date the aircraft are retired from service. These allowances are based on management's estimates and are subject to change.
Property, Equipment and Depreciation
Property and equipment are stated at cost and depreciated on a straight-line basis to their estimated residual values over the asset's estimated useful life. Depreciation begins when the asset is placed into service. Aircraft and related parts begin depreciating on the aircraft's first revenue flight.
Estimated useful lives and residual values of property and equipment are as follows:
Boeing 717-200 aircraft and engines
7 - 11 years, 7 - 34% residual value
Boeing 767-300 aircraft and engines (1)
1 - 2 years, 85% residual value (1)
Airbus A330-200 aircraft and engines
25 years, 10% residual value
ATR turboprop aircraft and engines
10 years, 15% residual value
Aircraft under capital leases
8 - 12 years, no residual value
Flight simulator under capital lease
10 years, no residual value
Major rotable parts
Average lease term or useful life for related aircraft, 10% - 15% residual value
Improvements to leased flight equipment
Shorter of lease term or useful life
Facility leasehold improvements
Shorter of lease term, including assumed lease renewals when renewal is economically compelled at key airports, or useful life
Furniture, fixtures and other equipment
3 - 7 years, no residual value
Capitalized software
3 - 7 years, no residual value
(1) In 2016, the Company made a determination to early retire its Boeing 767-300 fleet by the end of 2018. Useful lives and residual values have been adjusted accordingly to reflect this decision and match the retirement dates of the aircraft. See Note 11 for further discussion.

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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

Additions and modifications that significantly enhance the operating performance and/or extend the useful lives of property and equipment are capitalized and depreciated over the lesser of the remaining useful life of the asset or the remaining lease term, as applicable. Expenditures that do not improve or extend asset lives are charged to expense as incurred. Pre-delivery deposits are capitalized when paid.
Aircraft under capital leases are recorded at an amount equal to the present value of minimum lease payments utilizing the Company's incremental borrowing rate at lease inception and amortized on a straight-line basis over the lesser of the remaining useful life of the aircraft or the lease term. The amortization is recorded in depreciation and amortization expense on the Consolidated Statement of Operations. Accumulated amortization of aircraft and other capital leases was $56.1 million and $43.4 million as of December 31, 2016 and 2015 , respectively.
The Company capitalizes certain costs related to the acquisition and development of computer software and amortizes these costs using the straight-line method over the estimated useful life of the software. The net book value of computer software, which is included in Other property and equipment on the consolidated balance sheets, was $31.0 million and $31.7 million at December 31, 2016 and 2015 , respectively. The value of construction in progress, which is included in other property and equipment on the consolidated balance sheets, was $157.8 million and $35.7 million as of December 31, 2016 and 2015 , respectively. Amortization expense related to computer software was $9.7 million , $6.3 million and $5.5 million for the years ended December 31, 2016 , 2015 , and 2014 respectively.
Aircraft Maintenance and Repair Costs
Maintenance and repair costs for owned and leased flight equipment, including the overhaul of aircraft components, are charged to operating expenses as incurred. Engine overhaul costs covered by power-by-the-hour arrangements are paid and expensed as incurred or expensed on a straight-line basis and are based on the amount of hours flown per contract. Under the terms of these power-by-the-hour agreements, the Company pays a set dollar amount per engine hour flown on a monthly basis and the third-party vendor assumes the obligation to repair the engines at no additional cost, subject to certain specified exclusions.
Additionally, although the Company's aircraft lease agreements specifically provide that it is responsible for maintenance of the leased aircraft, the Company pays maintenance reserves to the aircraft lessors that are applied toward the cost of future maintenance events. These reserves are calculated based on a performance measure, such as flight hours, and are available for reimbursement to the Company upon the completion of the maintenance of the leased aircraft. However, reimbursements are limited to the available reserves associated with the specific maintenance activity for which the Company requests reimbursement.
Under certain aircraft lease agreements, the lessor is entitled to retain excess amounts on deposit at the expiration of the lease, if any; whereas at the expiration of certain other existing aircraft lease agreements any such excess amounts are returned to the Company, provided that it has fulfilled all of its obligations under the lease agreements. The maintenance reserves paid under the lease agreements do not transfer either the obligation to maintain the aircraft or the cost risk associated with the maintenance activities to the aircraft lessor. In addition, the Company maintains the right to select any third-party maintenance provider.
Maintenance reserve payments that are expected to be recovered from lessors are recorded as deposits in the Consolidated Balance Sheets as an asset until it is less than probable that any portion of the deposit is recoverable. In addition, payments of maintenance reserves that are not substantially and contractually related to the maintenance of the leased assets are expensed as incurred. Any costs that are substantially and contractually unrelated to the maintenance of the leased asset are considered to be unrecoverable. In order to properly account for the costs that are related to the maintenance of the leased asset, the Company bifurcates its maintenance reserves into two groups and expenses the proportionate share that is expected to be unrecoverable.
Goodwill and Indefinite-lived Intangible Assets
Goodwill and intangible assets with indefinite lives are not amortized, but are tested for impairment at least annually using a three-step process in accordance with Accounting Standard Codification (ASC) Intangibles—Goodwill and Other (ASC 350).
In the event that the Company determines that the values of goodwill or indefinite-lived intangible assets have become impaired, the Company will incur an accounting charge during the period in which such determination is made.
Impairment of Long-Lived Assets and Finite-lived Intangible Assets

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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

Long-lived assets used in operations, consisting principally of property and equipment and finite-lived intangible assets, are tested for impairment when events or changes in circumstances indicate, in management's judgment, that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amount. When testing for impairment management considers market trends, the expected useful lives of the assets, changes in economic conditions, recent transactions involving sales of similar assets and, if necessary, estimates of future undiscounted cash flows. To determine whether impairment exists for aircraft used in operations, assets are grouped at the fleet-type level (the lowest level for which there are identifiable cash flows) and future cash flows are estimated based on projections of capacity, passenger mile yield, fuel costs, labor costs and other relevant factors. If, at any time, management determines the net carrying value of an asset is not recoverable, the amount is reduced to its fair value during the period in which such determination is made. Any changes in the estimated useful lives of these assets will be accounted for prospectively. In 2016, it was determined that the Boeing 767-300 fleet and related assets were impaired. A $49.4 million impairment charge was recorded, see Note 11 for further details.
Operating Leases
The Company leases aircraft, engines, airport terminal facilities, office space, and other equipment under operating leases. Some of these lease agreements include escalation clauses and renewal options. For scheduled rent escalation clauses during the lease terms or for rental payments commencing at a date other than the date of initial occupancy, the Company records minimum rental expenses on a straight-line basis over the terms of the leases in the Consolidated Statements of Operations. When lease renewals are considered to be reasonably assured, the rental payments that will be due during the renewal periods are included in the determination of rent expense over the life of the lease. Rental expense for operating leases totaled $193.0 million , $174.9 million , and $160.7 million for the years ended December 31, 2016 , 2015 and 2014 , respectively.
Leased Aircraft Return Costs
Costs associated with the return of leased aircraft are accrued when it is probable that a payment will be made and that amount is reasonably estimable. Any accrual is based on the time remaining on the lease, planned aircraft usage, and the provisions included in the lease agreement, although the actual amount due to any lessor upon return will not be known with certainty until lease termination.
Revenue Recognition
Passenger revenue is recognized either when the transportation is provided or when tickets expire unused. The value of passenger tickets for future travel is included as air traffic liability.
Various taxes and fees assessed on the sale of tickets to end customers are collected by the Company as an agent and remitted to taxing authorities. These taxes and fees have been presented on a net basis in the accompanying Consolidated Statements of Operations and recorded as a liability until remitted to the appropriate taxing authority.
Other operating revenue includes checked baggage revenue, cargo revenue, ticket change and cancellation fees, charter revenue, ground handling fees, commissions and fees earned under certain joint marketing agreements with other companies, inflight revenue, and other incidental sales.
Ticket change and cancellation fees are recognized at the time the fees are assessed. All other revenue is recognized as revenue when the related goods and services are provided.
Frequent Flyer Program
HawaiianMiles, Hawaiian's frequent flyer travel award program provides a variety of awards to program members based on accumulated mileage. The Company utilizes the incremental cost method of accounting for free travel awards earned by passengers issued from the HawaiianMiles program through flight activity. The Company records a liability for the estimated incremental cost of providing travel awards that are expected to be redeemed on Hawaiian or the contractual rate of expected redemption on other airlines. The Company estimates the incremental cost of travel awards based on periodic studies of actual costs and applies these cost estimates to all issued miles, less an appropriate breakage factor for estimated miles that will not be redeemed. Incremental cost includes the costs of fuel, meals and beverages, insurance and certain other passenger traffic-related costs, but does not include any costs for aircraft ownership and maintenance. The breakage factor is estimated based on an analysis of historical expirations.

49
Table of Contents
Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

The Company also sells mileage credits to companies participating in our frequent flyer program. These sales are accounted for as multiple-element arrangements, with one element representing the travel that will ultimately be provided when the mileage credits are redeemed and the other consisting of marketing related activities that we conduct with the participating company.
In 2013, Hawaiian entered into a co-branded credit card agreement, which provides for the sale of frequent flyer miles to Barclays Bank Delaware (Barclays) which began in 2014. The agreement was a new multiple element arrangement subject to Accounting Standards Update 2009-13, Multiple Deliverable Revenue Arrangements — A consensus of the FASB Emerging Issues Task Force (ASU 2009-13), which was effective for new and materially modified revenue arrangements entered into by the Company after January 1, 2011.  ASU 2009-13 requires the allocation of the overall consideration received to each deliverable using the estimated selling price.  The objective of using estimated selling price based methodology is to determine the price at which the Company would transact a sale if the product or service were sold on a stand-alone basis.
The following four deliverables or elements were identified in the agreement: (i) travel miles; (ii) use of the Hawaiian brand and access to member lists; (iii) advertising elements; and (iv) other airline benefits including checked baggage services and travel discounts.  The Company determined the relative fair value of each element by estimating the selling prices of the deliverables by considering discounted cash flows using multiple inputs and assumptions, including: (1) the expected number of miles to be awarded and redeemed; (2) the estimated weighted average equivalent ticket value, adjusted by a fulfillment discount; (3) the estimated total annual cardholder spend; (4) an estimated royalty rate for the Hawaiian portfolio; and (5) the expected use of each of the airline benefits. The overall consideration received is allocated to the deliverables based on their relative selling prices.  The transportation element is deferred and recognized as passenger revenue over the period when the transportation is expected to be provided ( 23 months ).  The other elements will generally be recognized as other revenue when earned.

The Company's total frequent flyer liability for future award redemptions is reflected as components of Air traffic liability and Other liabilities and deferred credits within the Consolidated Balance Sheets as follows:
 
As of December 31,
 
2016
 
2015
 
(in thousands)
Air traffic liability
$
67,936

 
$
56,833

Other liabilities and deferred credits
18,461

 
18,054

Total frequent flyer liability
$
86,397

 
$
74,887

Under the programs of certain participating companies, credits are accumulated in accounts maintained by the participating company and then transferred into a member's HawaiianMiles account for immediate redemption of free travel awards. For those transactions, revenue is recognized over the period during which the mileage is projected to be used for travel ( four months ).
On an annual basis, the Company reviews the deferral period and deferral rate for mileage credits sold to participating companies, as well as the breakage rate assumption for free travel awards earned in connection with the purchase of passenger tickets. The Company's incremental cost assumption is reviewed on a quarterly basis.
Pension and Postretirement and Postemployment Benefits
The Company accounts for its defined benefit pension and other postretirement and postemployment plans in accordance with ASC 715, Compensation—Retirement Benefits (ASC 715), which requires companies to measure their plans' assets and obligations to determine the funded status at fiscal year-end, reflect the funded status in the statement of financial position as an asset or liability, and recognize changes in the funded status of the plans in comprehensive income during the year in which the changes occur. Pension and other postretirement and postemployment benefit expenses are recognized on an accrual basis over each employee's service periods. Pension expense is generally independent of funding decisions or requirements.
The Company uses the corridor approach in the valuation of its defined benefit pension and other postretirement and postemployment plans. The corridor approach defers all actuarial gains and losses resulting from variances between actual results and actuarial assumptions. These unrecognized actuarial gains and losses are amortized when the net gains and losses exceed 10% of the greater of the market-related value of plan assets or the projected benefit obligation at the beginning of the year. The amount in excess of the corridor is amortized over the average remaining service period to retirement date of active plan participants.

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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

Advertising Costs
Advertising costs are expensed when incurred. Advertising expense was $18.3 million , $17.6 million and $15.6 million for the years ended December 31, 2016 , 2015 , and 2014 , respectively.
Capitalized Interest
Interest is capitalized upon the payment of predelivery deposits for aircraft and engines, and is depreciated over the estimated useful life of the asset from service inception date.
Stock Compensation Plans
The Company has a stock compensation plan for it and its subsidiaries' officers, consultants and non-employee directors. The Company accounts for stock compensation awards under ASC 718, Compensation—Stock Compensation , which requires companies to measure the cost of employee services received in exchange for an award of equity instruments based on the fair value of such awards on the dates they are granted. The fair value of the awards are estimated using the following: (1) option-pricing models for grants of stock options or (2) fair value at the measurement date (usually the grant date) for awards of stock subject to time and / or performance-based vesting. The resultant cost is recognized as compensation expense over the period of time during which an employee is required to provide services to the Company (the service period) in exchange for the award, the service period generally being the vesting period of the award.
Financial Derivative Instruments
The Company uses derivatives to manage risks associated with certain assets and liabilities arising from the potential adverse impact of fluctuations in global aircraft fuel prices, interest rates and foreign currency exchange rates.
The following table summarizes the accounting treatment of the Company's derivative contracts:
 
 
 
 
 
 
Classification of Unrealized
Gains (Losses)
Derivative Type
 
Accounting Designation
 
Classification of Realized
Gains and Losses
 
Effective Portion
 
Ineffective Portion
Interest rate contracts
 
Designated as cash flow hedges
 
Interest expense and amortization of debt discounts and issuance costs
 
AOCI
 
Nonoperating income (expense)
Foreign currency exchange contracts
 
Designated as cash flow hedges
 
Passenger revenue
 
AOCI
 
Nonoperating income (expense)
Fuel hedge contracts
 
Not designated as hedges
 
Gains (losses) on fuel derivatives
 
Change in fair value is recorded in nonoperating income (expense)
Foreign currency exchange contracts
 
Not designated as hedges
 
Nonoperating income (expense), Other
 
Change in fair value is recorded in nonoperating income (expense)
If the Company terminates a derivative designated for hedge accounting under ASC 815, prior to its contractual settlement date, then the cumulative gain or loss recognized in AOCI at the termination date remains in AOCI until the forecasted transaction occurs. In a situation where it becomes probable that a hedged forecasted transaction will not occur, any gains and/or losses that have been recorded to AOCI would be required to be immediately reclassified into earnings. All cash flows associated with purchasing and settling derivatives are classified as operating cash flows in the Consolidated Statements of Cash Flows.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ significantly from those estimates.
Recently Adopted Accounting Pronouncements
In April 2015, the FASB issued Accounting Standards Update 2015-03, Simplifying the Presentation of Debt Issuance Costs (ASU 2015-03), requiring an entity to present its debt issuance costs on the balance sheet as a deduction from the carrying amount of the related debt liability instead of a deferred charge. It is effective for annual reporting periods beginning after December 15, 2015. The impact of ASU 2015-03 on the Company's consolidated balance sheet as of December 31, 2015

51
Table of Contents
Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

included a reclassification of unamortized debt issuance costs of $23.9 million from long-term prepayments and other to long-term debt.
Recently Issued Accounting Pronouncements
In November 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash, requiring restricted cash and restricted cash equivalents to be included with cash and cash equivalents on the statement of cash flows when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. The new standard clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (ASU 2016-09), requiring all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. ASU 2016-09 will also allow an employer to withhold more shares for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016. The Company does not expect the adoption of ASU 2016-09 to have a material impact on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (ASU 2016-02), requiring a lessee to recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018. ASU 2016-02 requires entities to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. Full retrospective application is prohibited. The Company is currently evaluating the effect that the provisions of ASU 2016-02 will have on its consolidated financial statements and related disclosures. The Company has determined that the new standard, once effective will have a significant effect on both its fixed asset and lease liability balances.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASU 2014-09), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. In July 2015, the FASB voted to defer the amendments in ASU 2014-09 by one year to December 15, 2017. The terms of ASU 2014-09 are effective for fiscal years, and interim periods within those fiscal years, beginning after the revised effective date, and allow for either full retrospective or modified retrospective adoption.
The Company is currently evaluating the overall effect that the provisions of ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has determined that the new standard, once effective, will affect frequent flyer, ticket breakage, and airline ticket change fee accounting. The standard will preclude the Company from applying the incremental cost method of accounting for free travel awards earned by passengers issued from the HawaiianMiles program through flight activity. The Company will instead be required to allocate consideration received between the ticket and miles earned by passengers and defer the value of the miles until redemption, resulting in a significant increase to deferred revenue liability on the balance sheet. Passenger revenue is currently recognized for unflown tickets when tickets expire unused. Under the new standard, the Company expects to estimate tickets that will expire unused and recognize revenue at the ticketed flight date. Fees for changing itineraries are currently recognized when received. The Company expects to defer the recognition of these fees until the related transportation is provided. Amounts currently classified in other revenue (e.g. bag and other ancillary fees) will be reclassified to passenger revenue. These changes could have a significant impact on the Company's financial statements. As of the date of this report, the Company intends to adopt the new revenue standard as of January 1, 2018 via the full-retrospective option.

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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

2. Accumulated Other Comprehensive Loss
Reclassifications out of accumulated other comprehensive loss by component is as follows:
 
 
Year ended December 31,
 
 
Details about accumulated other comprehensive loss components
 
2016
 
2015
 
2014
 
Affected line items in the statement where net income is presented
 
 
(in thousands)
 
 
Derivatives designated as hedging instruments under ASC 815
 
 
 
 

 
 
 
 
Foreign currency derivative gains (losses), net
 
$
196

 
$
(17,443
)
 
$
(9,943
)
 
Passenger revenue
Interest rate derivative losses, net
 
944

 
687

 
813

 
Interest expense
Total before tax
 
1,140

 
(16,756
)
 
(9,130
)
 
 
Tax expense (benefit)
 
(438
)
 
6,333

 
3,456

 
 
Total, net of tax
 
$
702

 
$
(10,423
)
 
$
(5,674
)
 
 
Amortization of defined benefit pension items
 
 
 
 

 
 
 
 
Actuarial loss
 
$
7,730

 
$
11,407

 
$
319

 
Wages and benefits
Prior service credit
 
227

 
227

 
226

 
Wages and benefits
Total before tax
 
7,957

 
11,634

 
545

 
 
Tax benefit
 
(3,048
)
 
(4,396
)
 
(206
)
 
 
Total, net of tax
 
$
4,909

 
$
7,238

 
$
339

 
 
Short-term investments
 
 
 
 
 
 
 
 
Realized gain on sales of investments, net
 
(108
)
 
(8
)
 
(22
)
 
Other nonoperating income
Total before tax
 
(108
)
 
(8
)
 
(22
)
 
 
Tax expense
 
41

 
3

 
8

 
 
Total, net of tax
 
(67
)
 
(5
)
 
(14
)
 
 
Total reclassifications for the period
 
$
5,544

 
$
(3,190
)
 
$
(5,349
)
 
 
A rollforward of the amounts included in accumulated other comprehensive loss, net of taxes, is as follows:
Year ended December 31, 2016
Interest
Rate
Derivative
 
Foreign
Currency
Derivatives
 
Defined
Benefit
Pension Items
 
Short-Term Investments
 
Total
 
(in thousands)
Beginning balance
$
81

 
$
4,879

 
$
(103,865
)
 
$
(372
)
 
$
(99,277
)
Other comprehensive income before reclassifications, net of tax
(668
)
 
2,077

 
(11,246
)
 
77

 
(9,760
)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax
587

 
115

 
4,909

 
(67
)
 
5,544

Net current-period other comprehensive income (loss), net of tax
(81
)
 
2,192

 
(6,337
)
 
10

 
(4,216
)
Ending balance
$
—

 
$
7,071

 
$
(110,202
)
 
$
(362
)
 
$
(103,493
)

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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

Year ended December 31, 2015
Interest
Rate
Derivative
 
Foreign
Currency
Derivatives
 
Defined
Benefit
Pension Items
 
Short-Term Investments
 
Total
 
(in thousands)
Beginning balance
$
254

 
$
12,708

 
$
(135,520
)
 
$
(254
)
 
$
(122,812
)
Other comprehensive income before reclassifications, net of tax
(595
)
 
3,016

 
24,417

 
(113
)
 
26,725

Amounts reclassified from accumulated other comprehensive income (loss), net of tax
422

 
(10,845
)
 
7,238

 
(5
)
 
(3,190
)
Net current-period other comprehensive income (loss), net of tax
(173
)
 
(7,829
)
 
31,655

 
(118
)
 
23,535

Ending balance
$
81

 
$
4,879

 
$
(103,865
)
 
$
(372
)
 
$
(99,277
)

3. Earnings Per Share
Basic earnings per share, which excludes dilution, is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
(in thousands, except for per share data)
Numerator:
 

 
 

 
 

Net Income
$
235,432

 
$
182,646

 
$
68,926

Denominator:
 

 
 

 
 

Weighted average common shares outstanding—Basic
53,502

 
54,031

 
53,591

Assumed exercise of stock options and awards
450

 
438

 
960

Assumed exercise of convertible note premium
6

 
1,245

 
4,910

Assumed conversion of warrants
—

 
5,542

 
3,361

Weighted average common shares outstanding—Diluted
53,958

 
61,256

 
62,822

Net Income Per Common Stock Share:
 

 
 

 
 

Basic
$
4.40

 
$
3.38

 
$
1.29

Diluted
$
4.36

 
$
2.98

 
$
1.10

The table below summarized those common stock equivalents that could potentially dilute basic earnings per share in the future but were excluded from the computation of diluted earnings per share because the instruments were antidilutive.
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
(in thousands)
Stock options
—

 
—

 
3

Deferred stock
—

 
—

 
—

Restricted stock
—

 
6

 
2

Warrants
—

 
—

 
—

Convertible Notes

During 2016, the Company settled the remaining $0.3 million of the convertible note outstanding. In 2015 and 2014, the Company repurchased and converted $70.8 million and $15.1 million in principal of the Convertible Notes, respectively.

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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

During the years ended December 31, 2016, 2015 , and 2014, the average share price of the Company’s common stock exceeded the conversion price of $7.88 per share. Therefore, shares related to the conversion premium of the Convertible Notes (for which share settlement is assumed for EPS purposes) are included in the Company's computation of diluted earnings per share for the period the related Notes were outstanding.

See Note 8 for further information over the Convertible Notes.

Convertible Note Call Options and Warrants

In March 2011, the Company entered into a convertible note transaction which included the sale of convertible notes, purchase of call options and sale of warrants. The call options and warrants were settled by the Company with its respective counterparties in 2015. The outstanding convertible notes matured on March 15, 2016.

For the years ended December 31, 2015 and 2014, the average share price of the Company's common stock exceeded the warrant strike price of $10.00 per share. Therefore, the impact of the assumed conversion of the warrants are included in the Company's computation of diluted earnings per share for the period they were outstanding.
Stock Repurchase Program
In April 2015, the Company's Board of Directors approved a stock repurchase program under which the Company may repurchase up to $100 million of its outstanding common stock over a two -year period through the open market, established plans or privately negotiated transactions in accordance with all applicable securities laws, rules and regulations. The stock repurchase program is subject to modification or termination at any time. In 2016, the Company spent $13.8 million to repurchase approximately 379,000 shares of the Company's common stock in open market transactions. In 2015, the Company spent $40.2 million to repurchase approximately 1.7 million shares of the Company's common stock in open market transactions. As of December 31, 2016 , the Company has $46.0 million remaining to spend under the stock repurchase program. See Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of this report for additional information on the stock repurchase program.

4. Short-Term Investments
 
Debt securities that are not classified as cash equivalents are classified as available-for-sale investments and are stated at fair value.  Realized gains and losses on sales of investments are reflected in nonoperating income (expense). Unrealized gains and losses on available-for-sale securities are reflected as a component of accumulated other comprehensive income/(loss).


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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

The following is a summary of short-term investments held as of December 31, 2016 and 2015 :
December 31, 2016
 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
 
 
(in thousands)
Corporate debt
 
$
171,139

 
$
84

 
$
(357
)
 
$
170,866

U.S. government and agency debt
 
53,916

 
8

 
(134
)
 
53,790

Municipal bonds
 
22,893

 
1

 
(144
)
 
22,750

Other fixed income securities
 
36,670

 
—

 
(1
)
 
36,669

Total short-term investments
 
$
284,618

 
$
93

 
$
(636
)
 
$
284,075


December 31, 2015
 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
 
 
(in thousands)
Corporate debt
 
$
167,066

 
$
13

 
$
(481
)
 
$
166,598

U.S. government and agency debt
 
62,376

 
9

 
(123
)
 
62,262

Municipal bonds
 
22,865

 
3

 
(12
)
 
22,856

Other fixed income securities
 
26,835

 
—

 
(6
)
 
26,829

Total short-term investments
 
$
279,142

 
$
25

 
$
(622
)
 
$
278,545

 
Contractual maturities of short-term investments as of December 31, 2016 are shown below. 
 
 
Under 1 Year
 
1 to 5 Years
 
Total
 
 
(in thousands)
Corporate debt
 
$
73,413

 
$
97,453

 
$
170,866

U.S. government and agency debt
 
25,791

 
27,999

 
53,790

Municipal bonds
 
10,371

 
12,379

 
22,750

Other fixed income securities
 
35,668

 
1,001

 
36,669

Total short-term investments
 
$
145,243

 
$
138,832

 
$
284,075

 
The Company classifies investments as current assets as these securities are available for use in its current operations.

5. Fair Value Measurements
ASC 820 defines fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1—Observable inputs such as quoted prices in active markets for identical assets or liabilities;
 
Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term for the assets or liabilities; and
 
Level 3—Unobservable inputs in which there is little or no market data and that are significant to the fair value of the assets or liabilities.

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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

The tables below present the Company's financial assets and liabilities measured at fair value on a recurring basis:
 
Fair Value Measurements as of December 31, 2016
 
Total
 
Level 1
 
Level 2
 
Level 3
 
(in thousands)
Cash equivalents
$
123,120

 
$
104,113

 
$
19,007

 
$
—

Restricted cash
5,000

 
5,000

 
—

 
—

Short-term investments
284,075

 
—

 
284,075

 
—

Fuel derivative contracts:
 

 
 

 
 

 
 

Crude oil call options
8,489

 
—

 
8,489

 
—

Heating oil swaps
6,601

 
—

 
6,601

 
—

Foreign currency derivatives
12,906

 
—

 
12,906

 
—

Total assets measured at fair value
$
440,191

 
$
109,113

 
$
331,078

 
$
—

Foreign currency derivatives
1,469

 
—

 
1,469

 
—

Total liabilities measured at fair value
$
1,469

 
$
—

 
$
1,469

 
$
—

 
Fair Value Measurements as of December 31, 2015
 
Total
 
Level 1
 
Level 2
 
Level 3
 
(in thousands)
Cash equivalents
$
67,242

 
$
63,225

 
$
4,017

 
$
—

Restricted cash
5,000

 
5,000

 
—

 
—

Short-term investments
278,545

 
—

 
278,545

 
—

Fuel derivative contracts:
 

 
 

 
 

 
 

Heating oil put options
1,060

 
—

 
1,060

 
—

Foreign currency derivatives
6,550

 
—

 
6,550

 
—

Total assets measured at fair value
$
358,397

 
$
68,225

 
$
290,172

 
$
—

Fuel derivative contracts:
 

 
 

 
 

 
 

Heating oil swaps
$
40,530

 
$
—

 
$
40,530

 
$
—

Foreign currency derivatives
1,049

 
—

 
1,049

 
—

Interest rate derivative
312

 
—

 
312

 
—

Total liabilities measured at fair value
$
41,891

 
$
—

 
$
41,891

 
$
—


Cash equivalents.  The Company’s Level 1 cash equivalents consist of money market securities and the Level 2 cash equivalents consist of U.S. agency bonds, mutual funds, and commercial paper.  The instruments classified as Level 2 are valued using quoted prices for similar assets in active markets.

Restricted cash .  The Company’s restricted cash consist of money market securities.
 
Short-term investments.  Short-term investments include U.S. and foreign government notes and bonds, U.S. agency bonds, variable rate corporate bonds, asset backed securities, foreign and domestic corporate bonds, municipal bonds, and commercial paper.  These instruments are valued using quoted prices for similar assets in active markets or other observable inputs.

Fuel derivative contracts.  The Company’s fuel derivative contracts consist of heating oil swaps and crude oil call options which are not traded on a public exchange. The fair value of these instruments are determined based on inputs available or derived from public markets including contractual terms, market prices, yield curves, fuel price curves and measures of volatility, among others.
 
Foreign currency derivatives.  The Company’s foreign currency derivatives consist of Japanese Yen and Australian Dollar forward contracts and are valued based primarily on data readily observable in public markets.

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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)


Interest rate derivative. The Company's interest rate derivative consists of an interest rate swap and is valued based primarily on data available or derived from public markets.
The table below presents the Company's debt (excluding obligations under capital leases) measured at fair value:
Fair Value of Debt
December 31, 2016
 
December 31, 2015
Carrying
Amount
 
Fair Value
 
Carrying
Amount
 
Fair Value
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
(in thousands)
 
(in thousands)
$
481,874

 
$
484,734

 
$
—

 
$
—

 
$
484,734

 
$
677,203

 
$
665,507

 
$
—

 
$
283

 
$
665,224

The fair value estimates of the Company's debt were based on either market prices or the discounted amount of future cash flows using the Company's current incremental rate of borrowing for similar obligations.
The carrying amounts of cash, other receivables, and accounts payable approximate fair value due to the short-term nature of these financial instruments.
During the fourth quarter of 2016, the Company recorded a $49.4 million impairment charge for its Boeing 767-300 fleet. To determine the fair value of the Boeing 767-300 fleet and related assets, the Company utilized quoted prices, assuming that the asset would be exchanged in an orderly transaction between market participants. The Company's determination of fair value considered attributes specific to its Boeing 767-300 fleet and aircraft condition (e.g. age, maintenance requirements, cycles, etc.), and is therefore considered a Level 3 measurement. See Note 11 for further details.

6. Financial Derivative Instruments
The Company uses derivatives to manage risks associated with certain assets and liabilities arising from the potential adverse impact of fluctuations in global fuel prices, interest rates and foreign currencies.
Fuel Risk Management
The Company's operations are inherently dependent upon the price and availability of aircraft fuel. To manage economic risks associated with fluctuations in aircraft fuel prices, the Company periodically enters into derivative financial instruments. The Company primarily used heating oil swaps and crude oil call options to hedge its aircraft fuel expense. As of December 31, 2016 , the Company had heating oil swaps and crude oil call options, which were not designated as hedges under ASC Topic 815, Derivatives and Hedging (ASC 815), for hedge accounting treatment. As a result, any changes in fair value of these derivative instruments are adjusted through other nonoperating income (expense) in the period of change.

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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

The following table reflects the amount of realized and unrealized gains and losses recorded as nonoperating income (expense) in the Consolidated Statements of Operations.
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
(in thousands)
Losses realized at settlement
$
(27,572
)
 
$
(60,946
)
 
$
(20,365
)
Reversal of prior period unrealized amounts
39,731

 
41,583

 
(2,331
)
Unrealized gains (losses) that will settle in future periods
7,947

 
(40,568
)
 
(40,775
)
Gains (losses) on fuel derivatives recorded as Nonoperating income (expense)
$
20,106

 
$
(59,931
)
 
$
(63,471
)
Foreign Currency Exchange Rate Risk Management
The Company is subject to foreign currency exchange rate risk due to revenues and expenses denominated in foreign currencies, with the primary exposures being the Japanese Yen and Australian Dollar. To manage exchange rate risk, the Company executes its international revenue and expense transactions in the same foreign currency to the extent practicable. The Company enters into foreign currency forward contracts to further manage the effects of fluctuating exchange rates. The effective portion of the gain or loss is reported as a component of AOCI and reclassified into earnings in the same period in which the related sales are recognized as passenger revenue. The effective portion of the foreign currency forward contracts represents the change in fair value of the hedge that offsets the change in the fair value of the hedged item. To the extent the change in the fair value of the hedge does not perfectly offset the change in the fair value of the hedged item, the ineffective portion of the hedge is immediately recognized as nonoperating income (expense).
The Company believes that its foreign currency forward contracts will continue to be effective in offsetting changes in cash flow attributable to the hedged risk. The Company expects to reclassify a net gain of approximately $8.5 million into earnings over the next 12 months from AOCI based on the values at December 31, 2016 .
The following tables present the gross fair value of asset and liability derivatives that are designated as hedging instruments under ASC 815 and derivatives that are not designated as hedging instruments under ASC 815, as well as the net derivative positions and location of the asset and liability balances within the Consolidated Balance Sheets.

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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

Derivative positions as of December 31, 2016
 
Balance Sheet
Location
 
Notional Amount
 
Final
Maturity
Date
 
Gross fair
value of
assets
 
Gross fair
value of
(liabilities)
 
Net
derivative
position
 
 
 
(in thousands)
 
 
 
(in thousands)
Derivatives designated as hedges
 
 
 
 
 
 
 

 
 

 
 

Foreign currency derivatives
Prepaid expenses and other
 
16,121,5000 Japanese Yen
41,917 Australian Dollars
 
December 2017
 
9,803

 
(1,349
)
 
8,454

 
Long-term prepayments and other
 
4,371,900 Japanese Yen
8,434 Australian Dollars
 
December 2018
 
2,632

 
(59
)
 
2,573

Derivatives not designated as hedges
 
 
 
 
 
 
 

 
 

 


Foreign currency derivatives
Prepaid expenses and other
 
879,050 Japanese Yen
5,802 Australian Dollars
 
March 2017
 
471

 
(61
)
 
410

Fuel derivative contracts
Prepaid expenses and other
 
17,850 gallons
 
December 2017
 
15,090

 
—

 
15,090

Derivative positions as of December 31, 2015
 
Balance Sheet
Location
 
Notional Amount
 
Final
Maturity
Date
 
Gross fair
value of
assets
 
Gross fair
value of
(liabilities)
 
Net
derivative
position
 
 
 
(in thousands)
 
 
 
(in thousands)
Derivatives designated as hedges
 
 
 
 
 
 
 

 
 

 
 

Interest rate derivative
Other accrued liabilities

$51,000 U.S. dollars
 
April 2023
 
$
—

 
$
(70
)
 
$
(70
)
 
Other liabilities and deferred credits(1)

 
 
 
 
—

 
(242
)
 
(242
)
Foreign currency derivatives
Prepaid expenses and other

7,594,750 Japanese Yen
44,917 Australian Dollars
 
December 2016
 
6,461

 
(525
)
 
5,936

 
Other liabilities and deferred credits

5,437,400 Japanese Yen
8,730 Australian Dollars
 
December 2017
 
78

 
(493
)
 
(415
)
Derivatives not designated as hedges
 

 
 
 
 
 

 
 

 
 

Foreign currency derivatives
Prepaid expenses and other

2,762,000 Japanese Yen
3,303 Australian Dollars
 
August 2016
 
11

 
—

 
11

 
Other liabilities and deferred credits

2,845 Australian Dollars
 
March 2017
 
—

 
(31
)
 
(31
)
Fuel derivative contracts
Other accrued liabilities

84,067 gallons
 
December 2016
 
1,060

 
(40,530
)
 
(39,470
)
__________________________________________________________
(1) Represents the noncurrent portion of the $51 million interest rate derivative with final maturity in April 2023.

The following table reflects the impact of cash flow hedges designated for hedge accounting treatment and their location within the Consolidated Statements of Comprehensive Income.
 
(Gain) Loss recognized in AOCI on derivatives (effective portion)
 
(Gain) Loss reclassified from AOCI into income (effective portion)
 
Gain recognized in nonoperating (income) expense (ineffective portion)
 
Year ended December 31,
 
Year ended December 31,
 
Year ended December 31,
 
2016
 
2015
 
2014
 
2016
 
2015
 
2014
 
2016
 
2015
 
2014
 
(in thousands)
Foreign currency derivatives
$
(3,350
)
 
$
(4,854
)
 
$
(17,295
)
 
$
196

 
$
(17,443
)
 
$
(9,943
)
 
$
—

 
$
—

 
$
—

Interest rate derivatives
923

 
182

 
1,249

 
944

 
687

 
813

 
—

 
—

 
—

Risk and Collateral
The financial derivative instruments expose the Company to possible credit loss in the event the counterparties to the agreements fail to meet their obligations. To manage such credit risks, the Company (1) selects its counterparties based on past experience and credit ratings, (2) limits its exposure to any single counterparty, and (3) periodically monitors the market

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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

position and credit rating of each counterparty. Credit risk is deemed to have a minimal impact on the fair value of the derivative instruments as cash collateral would be provided to or by the counterparties based on the current market exposure of the derivative.
The Company's agreements with its counterparties also require the posting of cash collateral in the event the aggregate value of the Company's positions exceeds certain exposure thresholds. The aggregate fair value of the Company's derivative instruments that contain credit-risk related contingent features that are in a net asset position was $26.5 million and a net liability position of $39.5 million as of December 31, 2016 and December 31, 2015 , respectively.
ASC 815 requires a reporting entity to elect a policy of whether to offset rights to reclaim cash collateral or obligations to return cash collateral against derivative assets and liabilities executed with the same counterparty under a master netting agreement, or present such amounts on a gross basis. The Company's accounting policy is to present its derivative assets and liabilities on a net basis, including any collateral posted with the counterparty. The Company had no collateral posted with its counterparties as of December 31, 2016 and December 31, 2015 .
The Company is also subject to market risk in the event these financial instruments become less valuable in the market. However, changes in the fair value of the derivative instruments will generally offset the change in the fair value of the hedged item, limiting the Company's overall exposure.
7. Intangible Assets
The following tables summarize the gross carrying values of intangible assets less accumulated amortization, and the useful lives assigned to each asset.
 
As of December 31, 2016
 
 
 
 
Gross carrying
value
 
Accumulated
amortization
 
Net book value
 
Approximate
useful life (years)
 
 
(in thousands)
 
 
 
Favorable aircraft maintenance contracts
$
8,740

 
$
(7,132
)
 
$
1,608

 
14
(*)  
Hawaiian Airlines trade name
13,000

 
—

 
13,000

 
Indefinite
 
Operating certificates
3,660

 
(3,475
)
 
185

 
12
 
Other
1,888

 
(270
)
 
1,618

 
3

Total intangible assets
$
27,288

 
$
(10,877
)
 
$
16,411

 
 
 
 
As of December 31, 2015
 
 
 
 
Gross carrying
value
 
Accumulated
amortization
 
Net book value
 
Approximate
useful life (years)
 
 
(in thousands)
 

 
Favorable aircraft maintenance contracts
$
18,200

 
$
(13,541
)
 
$
4,659

 
14
(*)  
Frequent flyer program—customer relations
12,200

 
(11,684
)
 
516

 
11
 
Hawaiian Airlines trade name
13,000

 
—

 
13,000

 
Indefinite
 
Operating certificates
3,660

 
(3,175
)
 
485

 
12
 
Total intangible assets
$
47,060

 
$
(28,400
)
 
$
18,660

 
 
 
_______________________________________________________________________________
(*)    Weighted average is based on the gross carrying values and estimated useful lives as of June 2, 2005 (the date Hawaiian emerged from bankruptcy).
Amortization expense related to the above intangible assets was $2.3 million , $2.6 million , and $2.6 million for the years ended December 31, 2016 , 2015 , and 2014 , respectively. Amortization of the favorable aircraft maintenance contracts are included in maintenance materials and repairs in the accompanying Consolidated Statements of Operations. The estimated future amortization expense as of December 31, 2016 for the intangible assets subject to amortization is as follows (in thousands):

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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

2017
$
1,723

2018
1,039

2019
649

 
$
3,411

8. Debt
Long-term debt (including capital lease obligations) net of unamortized discounts is outlined as follows:
 
2016
 
2015
 
(in thousands)
Class A EETC, fixed interest rate of 3.9%, semiannual principal and interest payments, remaining balance due at maturity in January 2026(1)
$
284,692

 
$
306,609

Class B EETC, fixed interest rate of 4.95%, semiannual principal and interest payments, remaining balance of due at maturity in January 2022(1)
100,159

 
108,014

Airbus A330-200 Aircraft Facility Agreements, interest rates ranging from 5.37%- 6.46%, quarterly principal and interest payments, maturing in 2023 - 2024(2) - these amounts were early extinguished during the first and second quarters of 2016
—

 
144,593

Boeing 717-200 Aircraft Facility Agreements, fixed interest rate of 8%, monthly principal and interest payments, remaining balance due at maturity in June 2019(2)
97,023

 
117,699

Five year 5% unsecured convertible notes, with interest only semiannual payments, remaining balance due at maturity in March 2016
—

 
289

Capital lease obligations (see Note 9)
88,729

 
94,941

Total debt and capital lease obligations
$
570,603

 
$
772,145

Less:
 

 
 

Unamortized debt discount, debt issuance costs and discount on convertible note
(13,796
)
 
(19,789
)
Current maturities
(58,899
)
 
(74,441
)
Long-Term Debt, less discount, and Capital Lease Obligations
$
497,908

 
$
677,915

_______________________________________________________________________________
(1) The equipment notes underlying these EETCs are the direct obligations of Hawaiian.

(2) Aircraft Facility Agreements are secured by aircraft

Enhanced Equipment Trust Certificates (EETC)

In 2013, Hawaiian consummated an EETC financing, whereby it created two pass-through trusts, each of which issued pass-through certificates. The proceeds of the issuance of the pass-through certificates were used to purchase equipment notes issued by the Company to fund a portion of the purchase price for six Airbus aircraft, all of which were delivered in 2013 and 2014. The equipment notes are secured by a lien on the aircraft, and the payment obligations of Hawaiian under the equipment notes will be fully and unconditionally guaranteed by the Company. The Company issued the equipment notes to the trusts as aircraft were delivered to Hawaiian. Hawaiian received all proceeds from the pass-through trusts by 2014 and recorded the debt obligation upon issuance of the equipment notes rather than upon the initial issuance of the pass-through certificates.

The Company evaluated whether the pass-through trusts formed are variable interest entities ("VIEs") required to be consolidated by the Company under applicable accounting guidance, and determined that the pass-through trusts are VIEs. The Company determined that it does not have a variable interest in the pass-through trusts. Neither the Company nor Hawaiian invested in or obtained a financial interest in the pass-through trusts. Rather, Hawaiian has an obligation to make interest and principal payments on it equipment notes held by the pass-through trusts, which are fully and unconditionally guaranteed by the Company. Neither the Company nor Hawaiian intends to have any voting or non-voting equity interest in the pass-through trusts or to absorb variability from the pass-through trusts. Based on this analysis, the Company determined that it is not required to consolidate the pass-through trusts.


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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

Convertible Notes

On March 2011, the Company issued $86.25 million principal amount of the Convertible Notes due March 2016. The Convertible Notes were issued at par and bore interest at a rate of 5.00% per annum. Interest was paid semiannually, in arrears, on March 15 and September 15 each year. The outstanding convertible notes matured on March 15, 2016.

During 2016, the Company settled the remaining $0.3 million of the convertible notes outstanding. During 2015, the Company repurchased and converted $70.8 million in principal of its Convertible Notes for $184.6 million . During 2014, the Company repurchased $15.1 million in principal of its Convertible Notes for $42.7 million . The cash consideration was allocated to the fair value of the liability component immediately before extinguishment and the remaining consideration was allocated to the equity component and recognized as a reduction of shareholders' equity. During 2015 and 2014, the repurchase and conversion of the Convertible Notes resulted in a loss on extinguishment of $7.4 million and $1.4 million , respectively, which is reflected in nonoperating income (expense) in the Consolidated Statement of Operations.

In connection with the issuance of the Convertible Notes, the Company entered into separate call option transactions and separate warrant transactions with certain financial investors to reduce the potential dilution of the Company's common stock and to offset potential payments by the Company to holders of the Convertible Notes in excess of the principal of the Convertible Notes upon conversion.

During the quarter ended December 31, 2015, the Company settled the call options and warrants with its respective counterparties and received net settlement proceeds of $22.1 million , which was recognized as an increase to shareholders' equity. Gross proceeds from the settlement of the call options of $304.8 million and gross payments for the settlement of the warrants of $282.6 million are reflected in the Consolidated Statements of Shareholders' Equity and Consolidated Statements of Cash Flows.

Amortization of the discount allocated to the debt component of the Convertible Notes for the years ended December 31, 2016 , 2015 and 2014 was $0.7 thousand , $0.7 million and $4.1 million , respectively, and interest expense for the years ended December 31, 2016 , 2015 , and 2014 was $3.2 thousand , $0.9 million and $4.3 million , respectively.

Debt Extinguishment

In 2016, Hawaiian extinguished $140.5 million of its existing debt under secured financing agreements, which were originally scheduled to mature in 2022 and 2023. This debt extinguishment resulted in a loss of $10.0 million , which is reflected in nonoperating income (expense) in the Consolidated Statement of Operations.

In 2015, Hawaiian extinguished $123.9 million of existing debt under four secured financing agreements, which were originally scheduled to mature in 2018, 2023 and 2024. This debt extinguishment resulted in a loss of $4.7 million , which is reflected in nonoperating income (expense) in the Consolidated Statement of Operations.

In 2014, Hawaiian extinguished $54.2 million of existing debt under a secured financing agreement, which was originally scheduled to mature in 2023. This debt extinguishment resulted in a loss of $2.3 million , which is reflected in nonoperating income (expense) in the Consolidated Statement of Operations.

Revolving Credit Facility

In December 2016, Hawaiian amended and restated the existing credit agreement with Citigroup Global Markets Inc. by increasing the secured revolving credit and letter to $225 million , maturing in December 2019 (Revolving Credit Facility). Hawaiian may, from time to time, grant liens on certain eligible account receivables, aircraft, spare engines, and ground support equipment, as well as cash and certain cash equivalents, in order to secure its outstanding obligations under the Revolving Credit Facility. Indebtedness under the Revolving Credit Facility will bear interest, at a per annum rate based on, at Hawaiian's option: (1) a variable rate equal to the London interbank offer rate plus a margin of 2.5% ; or (2) another rate based on certain market interest rates plus a margin of 1.5% . Hawaiian is also subject to compliance and liquidity covenants under the Revolving Credit Facility. As of December 31, 2016, the Company had no outstanding borrowing under the Revolving Credit Facility.


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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

Schedule of Maturities of Long-Term Debt

As of December 31, 2016 , the scheduled maturities of long-term debt are as follows (in thousands):
2017
$
48,801

2018
48,244

2019
72,927

2020
21,413

2021
49,060

Thereafter
241,429

 
$
481,874


9. Leases
As of December 31, 2016 , the Company had lease contracts for 20 of its 57 aircraft. Of the 20 lease contracts, 3 aircraft lease contracts were accounted for as capital leases, with the remaining 17 lease contracts accounted for as operating leases. These aircraft leases have remaining lease terms ranging from approximately 1 to 11 years .
During the year ended December 31, 2016, the Company took delivery of one Airbus A330-200 and two Boeing B717-200 aircraft under operating leases with lease terms of 6 years .
As of December 31, 2016 , the scheduled future minimum rental payments under capital leases and operating leases with non-cancellable basic terms of more than one year are as follows:
 
Capital Leases
 
Operating Leases
 
Aircraft
 
Other
 
Aircraft
 
Other
 
(in thousands)
2017
$
13,803

 
$
4,388

 
$
120,766

 
$
5,223

2018
13,803

 
4,489

 
118,017

 
6,958

2019
13,803

 
3,732

 
117,872

 
6,666

2020
10,473

 
1,703

 
97,717

 
6,495

2021
10,323

 
1,498

 
64,730

 
6,570

Thereafter
24,945

 
6,326

 
222,227

 
107,258

 
87,150

 
22,136

 
$
741,329

 
$
139,170

Less amounts representing interest
(14,869
)
 
(5,489
)
 
 

 
 

Present value of minimum capital lease payments
$
72,281

 
$
16,647

 
 

 
 



64
Table of Contents
Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

10. Income Taxes
The significant components of income tax expense are as follows:
 
Years Ended December 31,
 
2016
 
2015
 
2014
 
(in thousands)
Current
 

 
 

 
 

Federal
$
94,459

 
$
5,008

 
$
—

State
13,201

 
5,588

 
1,437

 
107,660

 
10,596

 
1,437

Deferred
 

 
 

 
 

Federal
$
32,334

 
$
94,457

 
$
38,865

State
4,038

 
7,989

 
4,219

 
36,372

 
102,446

 
43,084

Income tax expense
$
144,032

 
$
113,042

 
$
44,521

The income tax expense differed from amounts computed at the statutory federal income tax rate as follows:
 
Years Ended December 31,
 
2016
 
2015
 
2014
 
(in thousands)
Income tax expense computed at the statutory federal rate
$
132,813

 
$
103,491

 
$
39,707

Increase (decrease) resulting from:
 

 
 

 
 

State income taxes, net of federal tax effect
11,261

 
8,825

 
3,677

Nondeductible meals
1,100

 
915

 
925

Other
(1,142
)
 
(189
)
 
212

Income tax expense
$
144,032

 
$
113,042

 
$
44,521

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income (including the reversal of deferred tax liabilities) during the periods in which those deferred tax assets will become deductible. The Company's management assesses the realizability of its deferred tax assets, and records a valuation allowance when it is more likely than not that a portion, or all, of the deferred tax assets will not be realized.

65
Table of Contents
Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

The components of the Company's deferred tax assets and liabilities were as follows:
 
December 31,
 
2016
 
2015
 
(in thousands)
Deferred tax assets:
 

 
 

Accumulated pension and other postretirement benefits
$
136,066

 
$
142,188

Leases
8,323

 
9,266

Air traffic liability
13,366

 
13,401

Federal and state net operating loss carryforwards
2,115

 
38,279

Alternative minimum tax credit carryforwards
—

 
10,960

Accrued compensation
35,505

 
10,881

Other accrued assets
18,733

 
17,640

Fuel derivative contracts
2,705

 
15,032

Other assets
20,320

 
18,450

Total gross deferred tax assets
237,133

 
276,097

Less: Valuation allowance
(1,992
)
 
(3,912
)
Net deferred tax assets
$
235,141

 
$
272,185

Deferred tax liabilities:
 

 
 

Intangible assets
$
(5,601
)
 
$
(7,060
)
Plant and equipment, principally accelerated depreciation
(385,831
)
 
(390,441
)
Other liabilities
(14,252
)
 
(11,309
)
Total deferred tax liabilities
(405,684
)
 
(408,810
)
Net deferred tax liability
$
(170,543
)
 
$
(136,625
)
As of December 31, 2016 , the Company had available for state income tax purposes net operating loss carryforwards of $73.5 million . As of December 31, 2015 , the Company had available for federal and state income tax purposes net operating loss carryforwards of $288.2 million . The tax benefit of the net operating loss carryforwards as of December 31, 2016 was $2.1 million , substantially all of which has a valuation allowance.
During the year ended December 31, 2016 , the Company reduced its federal and state taxes payable by $19.7 million for the excess tax benefits from employee stock plan awards, which offset additional paid-in-capital.
In accordance with ASC 740, the Company reviews its uncertain tax positions on an ongoing basis. The Company may be required to adjust its liability as these matters are finalized, which could increase or decrease its income tax expense and effective income tax rates or result in an adjustment to the valuation allowance. The Company does not expect that the unrecognized tax benefit related to uncertain tax positions will significantly change within the next 12 months. The total amount of unrecognized tax benefits that, if recognized, would impact the Company's effective tax rate is $0.5 million .
The table below reconciles beginning and ending amounts of unrecognized tax benefits related to uncertain tax positions:
 
2016
 
2015
 
2014
 
(in thousands)
Balance at January 1
$
—

 
$
—

 
$
—

Increases related to prior year tax positions
2,830

 
—

 
—

Increases related to current year tax positions
499

 
—

 
—

Balance at December 31
$
3,329

 
$
—

 
$
—

The Company's policy is to include interest and penalties related to unrecognized tax benefits within the provision for income taxes. No interest or penalties related to these positions were accrued as of December 31, 2016 .

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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. The Company's federal and state income tax returns for tax years 2013 and beyond remain subject to examination by the Internal Revenue Service.
11. Special Items
In the fourth quarter of 2016, the Company incurred $109.1 million in special charges, see below for details:

 
Year Ended December 31,
 
2016
 
2015
 
2014
 
(in thousands)
Impairment charge in connection with its owned Boeing 767-300 fleet and related assets (1)
49,361

 
—

 
—

Bonuses and a proposed collective bargaining agreement payment (2)
38,781

 
—

 
—

Termination of Boeing 767-300 engine maintenance contract (3)
21,000

 
—

 
—

Total
109,142

 
—

 
—


(1) The impairment analysis and ultimate charge was triggered by the decision in the fourth quarter of 2016 to exit the Boeing 767-300 fleet in 2018. The early exit of the Boeing 767-300 fleet was made possible by the Company's decision to acquire one Airbus A330-200 (to be delivered in 2017), lease two additional Airbus A321neo's (to be delivered in 2018 and in addition to the Company's existing aircraft orders), and the Company's ability to early terminate our long-term power by the hour maintenance contract for the Boeing 767-300 fleet. This fleet change allows the Company to streamline the fleet, simplify operations, and potentially reduce costs in the future. In order to assess whether there was an impairment of the Boeing 767-300 asset group, the Company compared the projected undiscounted cash flows of the fleet to the book value of the assets and determined the book value was in excess of the undiscounted cash flows. The Company estimated the fair value of the Boeing 767-300 fleet assets using third party pricing information and quotes from potential buys of the owned aircraft, which resulted in a $49.4 million impairment charge ( $0.92 per diluted share). The Company's determination of fair value considered attributes specific to the Boeing 767-300 fleet and aircraft condition (e.g. age, maintenance requirements, cycles, etc.). The Company expects to remove three leased Boeing 767-300 aircraft from service in 2018. At that time, these aircraft will have remaining lease payments of approximately $54.3 million . At the time each aircraft is removed from service the Company will accrue for any remaining lease payments not mitigated through an arrangement with the lessor.

(2) In February 2017, the Company reached a tentative agreement with the Air Line Pilots Association (ALPA), covering the Company's pilots. A ratification vote is set to occur in March 2017, however the Company can provide no assurances that the tentative agreement will be approved at that time. The current tentative agreement is for a 63 -month contract amendment which includes (amongst other various benefits) a pay adjustment and ratification bonus. As of December 31, 2016, the Company accrued $34.0 million related to past service (prior to January 1, 2017), which is expected to be payable upon ratification. The final amount paid may differ when a final agreement is reached and ratified. The Company also elected to pay a $4.8 million profit sharing bonus payment to other labor groups related to prior period service.

(3) In connection with the decision to exit the Boeing 767-300 fleet, the Company negotiated a termination of its Boeing 767-300 maintenance agreement and recorded a $21.0 million charge related to the amount paid to terminate the contract.


67
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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

12. Employee Benefit Plans
Defined Benefit Plans
Hawaiian sponsors various defined benefit pension plans covering the Air Line Pilots Association (ALPA), International Association of Machinists and Aerospace Workers (AFL-CIO) (IAM) and other personnel (salaried, Transport Workers Union, Network Engineering Group). The plans for the IAM and other employees were frozen in September 1993. Effective January 1, 2008, benefit accruals for pilots under age 50 as of July 1, 2005 were frozen (with the exception of certain pilots who were both age 50 and older and participants of the plan on July 1, 2005) and Hawaiian began making contributions to an alternate defined contribution retirement program for its pilots. All of the pilots' accrued benefits under their defined benefit plan at the date of the freeze were preserved. In addition, Hawaiian sponsors four unfunded defined benefit postretirement medical and life insurance plans and a separate plan to administer the pilots' disability benefits.
In 2016, the Hawaiian Airlines, Inc. Pension Plan for Salaried Employees (Salaried Plan) was consolidated into the Hawaiian Airlines, Inc. Pension Plan for Employees Represented by the International Association of Machinists (IAM), which established the Hawaiian Airlines, Inc. Salaried & IAM Merged Pension Plan (the Merged Plan). At that time, the net liabilities of the Salaried Plan were transferred to the Merged Plan. The benefits under the Merged Plan have remained consistent with the prior plan documents. The Company (plan sponsor) has submitted an application to the Department of Labor to settle the Merged Plan and expects to receive a response in 2017, at which time the Company intends to terminate the Merged Plan (if the application is approved by the Department of Labor). In 2017, the Company expects to spend approximately $17.0 million to $22.0 million to settle the plan obligations. As of December 31, 2016 there was no significant effect to the operation of the plans.

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Table of Contents
Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

The following tables summarize changes to projected benefit obligations, plan assets, funded status and applicable amounts included in the Consolidated Balance Sheets:
 
2016
 
2015
 
Pension
 
Other
 
Pension
 
Other
 
(in thousands)
Change in benefit obligations
 

 
 

 
 

 
 

Benefit obligations, beginning of year
$
(445,619
)
 
$
(211,716
)
 
$
(480,211
)
 
$
(215,998
)
Service cost
(681
)
 
(13,618
)
 
(1,016
)
 
(15,335
)
Interest cost
(19,969
)
 
(10,227
)
 
(19,788
)
 
(9,930
)
Actuarial gains (losses)
(21,432
)
 
7,966

 
32,568

 
25,556

Benefits paid
24,007

 
4,217

 
22,828

 
4,051

less: federal subsidy on benefits paid
 N/A

 
(58
)
 
N/A

 
(60
)
Plan amendments
932

 
(880
)
 
—

 
—

Benefit obligation at end of year(a)
$
(462,762
)
 
$
(224,316
)
 
$
(445,619
)
 
$
(211,716
)
Change in plan assets
 

 
 

 
 

 
 

Fair value of assets, beginning of year
$
259,626

 
$
21,893

 
$
267,814

 
$
17,665

Actual return on plan assets
12,618

 
889

 
(52
)
 
(369
)
Employer contribution
54,745

 
6,186

 
14,692

 
8,648

Benefits paid
(24,007
)
 
(4,217
)
 
(22,828
)
 
(4,051
)
Fair value of assets at end of year
$
302,982

 
$
24,751

 
$
259,626

 
$
21,893

Unfunded status at December 31,
$
(159,780
)
 
$
(199,565
)
 
$
(185,993
)
 
$
(189,823
)
Amounts recognized in the statement of financial position consist of:
 

 
 

 
 

 
 

Current benefit liability
$
(25
)
 
$
(3,352
)
 
$
(21
)
 
$
(3,095
)
Noncurrent benefit liability
(159,755
)
 
(196,213
)
 
(185,972
)
 
(186,728
)
 
$
(159,780
)
 
$
(199,565
)
 
$
(185,993
)
 
$
(189,823
)
Amounts recognized in other comprehensive loss
 

 
 

 
 

 
 

Unamortized actuarial loss
$
140,205

 
$
15,593

 
$
122,172

 
$
23,475

Prior service cost (credit)
(980
)
 
2,626

 
(50
)
 
1,974

 
$
139,225

 
$
18,219

 
$
122,122

 
$
25,449

_______________________________________________________________________________
(a)
The accumulated pension benefit obligation as of December 31, 2016 and 2015 was $459.5 million and $440.9 million , respectively.

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Table of Contents
Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

The following table sets forth the net periodic benefit cost:
 
2016
 
2015
 
2014
 
Pension
 
Other
 
Pension
 
Other
 
Pension
 
Other
 
(in thousands)
Components of Net Periodic Benefit Cost
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
681

 
$
13,618

 
$
1,016

 
$
15,335

 
$
1,359

 
$
10,868

Interest cost
19,969

 
10,227

 
19,788

 
9,930

 
19,125

 
8,527

Expected return on plan assets
(16,746
)
 
(1,138
)
 
(17,753
)
 
(1,075
)
 
(18,337
)
 
(1,037
)
Recognized net actuarial loss (gain)
7,526

 
204

 
8,889

 
2,518

 
645

 
(326
)
Prior service cost (credit)
(2
)
 
229

 
(2
)
 
229

 
(2
)
 
229

Net periodic benefit cost
$
11,428

 
$
23,140

 
$
11,938

 
$
26,937

 
$
2,790

 
$
18,261

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Loss
 
 
 
 
 
 
 
 
 
 
 
Current year actuarial (gain) loss
$
25,559

 
$
(7,677
)
 
$
(14,762
)
 
$
(24,085
)
 
$
89,204

 
$
43,318

Current year prior service cost
(932
)
 
—

 
—

 
—

 
—

 
2,453

Amortization of actuarial gain (loss)
(7,526
)
 
(204
)
 
(8,889
)
 
(2,518
)
 
(645
)
 
326

Amortization of prior service credit (cost)
2

 
(229
)
 
2

 
(229
)
 
2

 
(229
)
Total recognized in other comprehensive loss
$
17,103

 
$
(8,110
)
 
$
(23,649
)
 
$
(26,832
)
 
$
88,561

 
$
45,868

Total recognized in net periodic benefit cost and other comprehensive loss
$
28,531

 
$
15,030

 
$
(11,711
)
 
$
105

 
$
91,351

 
$
64,129

The weighted average actuarial assumptions used to determine the net periodic benefit expense and the projected benefit obligation were as follows:
 
Pension
 
Postretirement
 
Disability
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
Discount rate to determine net periodic benefit expense
4.56
%
 
4.19
%
 
4.72
%
 
4.30
%
 
4.61
%
 
4.16
%
Discount rate to determine projected benefit obligation
4.19
%
 
4.56
%
 
4.29
%
 
4.72
%
 
4.24
%
 
4.61
%
Expected return on plan assets
6.69
%
 
6.89
%
 
N/A

 
N/A

 
5.37
%
 
5.40
%
Rate of compensation increase
Various +

 
Various+

 
N/A

 
N/A

 
Various+

 
Various+

Health care trend rate to determine net periodic benefit expense
N/A

 
N/A

 
8.25
%
 
7.50
%
 
N/A

 
N/A

Ultimate trend rate
N/A

 
N/A

 
4.75
%
 
4.75
%
 
N/A

 
N/A

Years to reach ultimate trend rate
N/A

 
N/A

 
7

 
4

 
N/A

 
N/A

Health care trend rate to determine projected benefit obligation
N/A

 
N/A

 
7.75
%
 
8.25
%
 
N/A

 
N/A

Ultimate trend rate
N/A

 
N/A

 
4.75
%
 
4.75
%
 
N/A

 
N/A

Years to reach ultimate trend rate
N/A

 
N/A

 
6

 
7

 
N/A

 
N/A

_______________________________________________________________________________
+
Differs for each pilot based on current fleet and seat position on the aircraft and seniority service. Expected negotiated salary increases in the next labor agreement, ranging from 12.6% to 35.2% for 2016 ( 5.0% to 21.0% for 2015), and expected changes in fleet and seat positions on the aircraft are included in the assumed rate of compensation increase of 4.0% to 9.3% for 2016 ( 2.0% to 6.8% for 2015 ).
++
Expected return on plan assets used to determine the net periodic benefit expense for 2017 is 6.34% for Pension and 4.60% for Disability.


70
Table of Contents
Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

A change in the assumed health care cost trend rates would have the following effects:
 
100 Basis
Point
Increase
 
100 Basis
Point
Decrease
 
(in thousands)
Effect on postretirement benefit obligation at December 31, 2016
$
39,063

 
$
(30,384
)
Effect on total service and interest cost for the year ended December 31, 2016
5,051

 
(3,799
)
Estimated amounts that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2017 are as follows:
 
Pension
 
Other
 
(in thousands)
Actuarial (gain) loss
$
9,062

 
$
(151
)
Amortization of prior service cost (credit)
(44
)
 
282

To be recognized in net periodic benefit cost from accumulated other comprehensive loss
$
9,018

 
$
131

Plan Assets
The Company develops the expected long-term rate of return assumption based on historical experience and by evaluating input from the trustee managing the plan's assets, including the trustee's review of asset class return expectations by several consultants and economists, as well as long-term inflation assumptions. The Company's expected long-term rate of return on plan assets is based on a target allocation of assets, which is based on the goal of earning the highest rate of return while maintaining risk at acceptable levels. The Retirement Plan for Pilots of Hawaiian Airlines, Inc. and the Pilot's Voluntary Employee Beneficiary Association Disability and Survivor's Benefit Plan (VEBA) strive to have assets sufficiently diversified so that adverse or unexpected results from any one security class will not have an unduly detrimental impact on the entire portfolio. The Merged Plan strives to have its assets align with the potential liability as of the expected settlement date. The actual allocation of the Company's pension and disability plan assets and the target allocation of assets by category at December 31, 2016 are as follows:
 
Asset Allocation for Pilots pension and VEBA Plans
 
2016
 
Target
Equity securities
59
%
 
60
%
Fixed income securities
36
%
 
35
%
Real estate investment trusts
5
%
 
5
%
 
100
%
 
100
%
 
 
 
 
 
Asset Allocation for Merged Plan
 
2016
 
Target
Fixed income securities
100
%
 
100
%

100
%
 
100
%

71
Table of Contents
Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

The table below presents the fair value of the Company's pension plan and other postretirement plan investments (excluding cash and receivables):
 
 
Fair Value Measurements as of December 31,
 
 
2016
 
2015
 
 
(in thousands)
Pension Plan Assets:
 
 

 
 

Equity index funds
 
$
147,440

 
$
154,670

Fixed income funds
 
140,454

 
88,979

Real estate investment fund
 
12,304

 
12,794

Insurance company pooled separate account
 
2,293

 
2,719

Total
 
$
302,491

 
$
259,162

Postretirement Assets:
 
 

 
 

Common collective trust fund
 
$
21,544

 
$
18,959

The fair value of the investments in the table above have been estimated using the net asset value per share, and in accordance with subtopic 820-10, Fair Value Measurement and Disclosures, are not required to be presented in the fair value hierarchy.
Equity index funds.     The investment objective of these funds are to obtain a reasonable rate of return while investing principally or entirely in foreign or domestic equity securities. There are currently no redemption restrictions on these investments.
Fixed income funds.     The investment objective of these funds are to obtain a reasonable rate of return while principally investing in foreign and domestic bonds, mortgage-backed securities, and asset-backed securities. There are currently no redemption restrictions on these investments.
Real estate investment fund.     The investment objective of this fund is to obtain a reasonable rate of return while principally investing in real estate investment trusts. There are currently no redemption restrictions on these investments.
Insurance Company Pooled Separate Account.     The investment objective of the Insurance Company Pooled Separate Account is to invest in short-term cash equivalent securities to provide a high current income consistent with the preservation of principal and liquidity.
Common collective trust (CCT).     The postretirement plan's CCT investment consists of a balanced profile fund and a conservative profile fund. These funds primarily invest in mutual funds and exchange-traded funds. The balanced profile fund is designed for participating trusts that seek substantial capital growth, place modest emphasis on short-term stability, have long-term investment objectives, and accept short-term volatility in the value of the fund's portfolio. The conservative profile fund is designed for participating trusts that place modest emphasis on capital growth, place moderate emphasis on short-term stability, have intermediate-to-long-term investment objectives, and accept moderate short-term volatility in the value of the fund's portfolio. There are currently no redemption restrictions on these investments.
Based on current legislation and current assumptions, the contribution that the Company expects (inclusive of the minimum required contribution) to make to Hawaiian's defined benefit pension plans and disability plan during 2017 is $50.0 million . The Company projects that Hawaiian's pension plans and other postretirement benefit plans will make the following benefit

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Table of Contents
Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

payments, which reflect expected future service, during the years ending December 31:
 
 
 
 
Other Benefits
 
 
Pension
Benefits
 
Gross
 
Expected
Federal Subsidy
 
 
(in thousands)
2017
 
$
25,098

 
$
5,093

 
$
(56
)
2018
 
26,455

 
5,902

 
(65
)
2019
 
27,569

 
6,620

 
(74
)
2020
 
28,398

 
7,444

 
(82
)
2021
 
28,952

 
8,357

 
(93
)
2022 - 2026
 
148,330

 
55,784

 
(650
)
 
 
$
284,802

 
$
89,200

 
$
(1,020
)
Defined Contribution Plans
The Company also sponsors separate defined contribution plans for its pilots, flight attendants and ground, and salaried personnel. Contributions to the Company's defined contribution plans were $31.6 million , $29.4 million and $27.3 million for the years ended December 31, 2016 , 2015 and 2014 , respectively.
13. Capital Stock and Share-based Compensation
Common Stock

The Company has one class of common stock issued and outstanding. Each share of common stock is entitled to one vote per share.

No dividends were paid by the Company during the years ended December 31, 2016 , 2015 or 2014 . Provisions in certain of the Company's aircraft lease agreements restrict the Company's ability to pay dividends.

Special Preferred Stock

The IAM, AFA, and ALPA each hold one share of Special Preferred Stock, which entitles each union to nominate one director to the Company's Board of Directors. In addition, each series of the Special Preferred Stock, unless otherwise specified: (i) ranks senior to the Company's common stock and ranks pari passu with each other series of Special Preferred Stock with respect to liquidation, dissolution and winding up of the Company and will be entitled to receive $0.01 per share before any payments are made, or assets distributed to holders of any stock ranking junior to the Special Preferred Stock; (ii) has no dividend rights unless a dividend is declared and paid on the Company's common stock, in which case the Special Preferred Stock would be entitled to receive a dividend in an amount per share equal to two times the dividend per share paid on the common stock; (iii) is entitled to one vote per share of such series and votes with the common stock as a single class on all matters submitted to holders of the Company's common stock; and (iv) automatically converts into the Company's common stock on a 1 :1 basis, at such time as such shares are transferred or such holders are no longer entitled to nominate a representative to the Company's Board of Directors pursuant to their respective collective bargaining agreements.

Share-Based Compensation

Total share-based compensation expense recognized by the Company under ASC 718 was $8.4 million , $6.6 million and $6.7 million for the years ended December 31, 2016 , 2015 and 2014 , respectively. As of December 31, 2016 , $5.7 million of share-based compensation expense related to unvested stock options and other stock awards (inclusive of $0.3 million for stock options and other stock awards granted to non-employee directors) is attributable to future performance and has not yet been recognized. The related expense will be recognized over a weighted average period of approximately 0.8  years.


73
Table of Contents
Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

Stock Options

The aggregate intrinsic value of stock options outstanding as of December 31, 2016 and 2015 was $1.0 million and $3.1 million , respectively. The aggregate intrinsic value of stock options exercisable as of December 31, 2016 and 2015 was $0.9 million and $3.0 million , respectively. The intrinsic value of stock options exercised during the years ended December 31, 2016 , 2015 and 2014 was $2.6 million , $5.9 million and $15.9 million , respectively.

Performance-Based Stock Awards

During 2016 , the Company granted performance-based stock awards covering 117,849 shares of common stock (the Target Award) with a maximum payout of 196,180 shares of common stock (the Maximum Award) to employees pursuant to the Company's 2015 Stock Incentive Plan. These awards vest over a period of one or three years. The Company valued the performance-based stock awards using grant date fair values equal to the Company's share price on the measurement date.
The following table summarizes information about performance-based stock awards:
 
Number of units
 
Weighted
average
grant date
fair value
Non-vested at January 1, 2014
1,142,592

 
$
5.88

Granted
348,009

 
10.04

Vested
(353,344
)
 
5.89

Forfeited
(133,628
)
 
6.89

Non-vested at December 31, 2014
1,003,629

 
$
7.19

Granted
183,827

 
19.01

Vested
(419,097
)
 
6.41

Forfeited
(89,617
)
 
9.76

Non-vested at December 31, 2015
678,742

 
$
10.53

Granted
117,849

 
33.94

Vested
(349,403
)
 
7.32

Forfeited
(24,891
)
 
13.45

Non-vested at December 31, 2016
422,297

 
$
14.00


The fair value of performance-based stock awards vested in the years ended December 31, 2016 , 2015 and 2014 was $11.3 million , $10.5 million and $4.9 million , respectively. Fair value of the awards are based on the stock price on date of vest.

Service-Based Stock Awards

During 2016 , the Company awarded 110,276 service-based stock awards to employees and non-employee directors, pursuant to the Company's 2015 Stock Incentive Plan. These stock awards vest over a period of one to three years and have a grant date fair value equal to the Company's share price on the measurement date.

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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

The following table summarizes information about outstanding service-based stock awards:
 
Number of units
 
Weighted
average
grant date
fair value
Non-vested at January 1, 2014
560,898

 
$
5.86

Granted
337,333

 
12.50

Vested
(376,408
)
 
7.04

Forfeited
(83,862
)
 
7.40

Non-vested at December 31, 2014
437,961

 
$
9.66

Granted
149,138

 
21.24

Vested
(224,268
)
 
9.01

Forfeited
(92,110
)
 
14.25

Non-vested at December 31, 2015
270,721

 
$
15.02

Granted
110,276

 
37.08

Vested
(169,218
)
 
16.32

Forfeited
(16,330
)
 
20.46

Non-vested at December 31, 2016
195,449

 
$
24.29


The fair value of service-based stock awards vested in 2016, 2015 and 2014 was $6.1 million , $4.6 million and $3.1 million , respectively. Fair value of the awards are based on the stock price on date of vest.

14. Commitments and Contingent Liabilities
Commitments

The Company has commitments with a third-party to provide aircraft maintenance services which include fixed payments as well as variable payments based on flight hours for the Company's Airbus fleet through 2027. The Company also has commitments with third-party service providers for reservations, IT, and accounting services through 2024. Committed capital and other expenditures include escalation and variable amounts based on estimated forecasts. The gross committed expenditures for upcoming aircraft deliveries and other commitments for the next five years and thereafter are detailed below:
 
Aircraft and aircraft related
 
Other
 
Total Committed
Expenditures
 
(in thousands)
2017
$
240,884

 
$
79,098

 
$
319,982

2018
400,762

 
63,839

 
464,601

2019
488,150

 
57,797

 
545,947

2020
228,867

 
57,316

 
286,183

2021
157,714

 
54,974

 
212,688

Thereafter
48,985

 
390,870

 
439,855

 
$
1,565,362

 
$
703,894

 
$
2,269,256

As of December 31, 2016 , we had the following capital commitments consisting of firm aircraft and engine orders and purchase rights:

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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

Aircraft Type
Firm
Orders
 
Purchase
Rights
 
Expected Delivery Dates
A330-200 aircraft
1

 
—

 
In 2017
A321neo aircraft
16

 
9

 
Between 2017 and 2020
A330-800neo aircraft
6

 
6

 
Between 2019 and 2021
Pratt & Whitney spare engines:
 
 
 
 
 
A321neo spare engines
3

 
—

 
Between 2017 and 2019
Rolls-Royce spare engines:
 

 
 

 
 
A330-800neo spare engines
2

 
—

 
Between 2019 and 2020
In order to complete the purchase of these aircraft and fund related costs, we may need to secure acceptable financing. We have backstop financing available from aircraft and engine manufacturers, subject to certain customary conditions. Financing may be necessary to satisfy our capital commitments for firm order aircraft and other related capital expenditures. We can provide no assurance that any financing not already in place for aircraft and spare engine deliveries will be available to us on acceptable terms when necessary or at all.
Maintenance Hangar
In November 2016, the Company entered into a lease agreement with the Department of Transportation of the State of Hawai'i to lease a cargo and maintenance hangar at the Honolulu International Airport with a lease term of 35 years. The hangar is not fully completed and the Company has since taken responsibility for the remainder of the construction. The Company is obligated to fund the remaining construction costs needed to complete the hangar. While there is no minimum funding requirement, the Company estimates the cost to complete the hangar will be approximately $25.0 million to $35.0 million , which the Company expects to incur in 2017. In accordance with the applicable accounting guidance, specifically as it relates to the Company's involvement in the construction of the hangar, the Company is considered the owner of the asset under construction and has recognized a $73.0 million asset, with a corresponding other liability, for the value of the construction previously completed.
The Company estimates that the hangar will be put into service in late 2017. At that time, the Company expects the lease to be considered a financing arrangement and a fixed asset of $73.0 million for the value of the construction previously completed plus any remaining amount spent by us and the $73.0 million liability will remain on the Company's balance sheet. The liability will be reduced as the Company makes rental payments under the agreement.
Litigation and Contingencies

The Company is subject to legal proceedings arising in the normal course of its operations. Management does not anticipate that the disposition of any currently pending proceeding will have a material effect on the Company's operations, business or financial condition.

General Guarantees and Indemnifications

In the normal course of business, the Company enters into numerous aircraft financing and real estate leasing arrangements that have various guarantees included in the contract. It is common in such lease transactions for the lessee to agree to indemnify the lessor and other related third-parties for tort liabilities that arise out of or relate to the lessee's use of the leased aircraft or occupancy of the leased premises. In some cases, this indemnity extends to related liabilities arising from the negligence of the indemnified parties, but usually excludes any liabilities caused by their gross negligence or willful misconduct. Additionally, the lessee typically indemnifies such parties for any environmental liability that arises out of or relates to its use of the real estate leased premises. The Company believes that it is insured (subject to deductibles) for most tort liabilities and related indemnities described above with respect to the aircraft and real estate that it leases. The Company cannot estimate the potential amount of future payments, if any, under the foregoing indemnities and agreements.

Credit Card Holdback

Under the Company's bank-issued credit card processing agreements, certain proceeds from advance ticket sales may be held back to serve as collateral to cover any possible chargebacks or other disputed charges that may occur. These holdbacks, which

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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

are included in restricted cash in the Company's Consolidated Balance Sheets, totaled $5.0 million at December 31, 2016 and 2015 .

In the event of a material adverse change in the business, the holdback could increase to an amount up to 100% of the applicable credit card air traffic liability, which would also cause an increase in the level of restricted cash.
Labor Negotiations
As of December 31, 2016 , approximately 83% of employees were represented by unions. Additionally, the collective bargaining agreement for the Association of Flight Attendants (AFA), which represents 29% of employees became amendable on January 1, 2017, the Company is currently in negotiations with the AFA. Also, the Company has reached tentative agreement with the ALPA as their collective bargaining agreement became amendable on September 15, 2015 (See Note 11 for further discussion). The Company can provide no assurance that a successful or timely resolution of these labor negotiations will be achieved.

15. Geographic Information
The Company's primary operations are that of its wholly-owned subsidiary, Hawaiian. Principally all operations of Hawaiian either originate and/or end in the State of Hawai'i. The management of such operations is based on a system-wide approach due to the interdependence of Hawaiian's route structure in its various markets. As Hawaiian offers only one significant line of business (i.e., air transportation), management has concluded that it has only one segment.
The Company's operating revenues by geographic region (as defined by the Department of Transportation, DOT) are summarized below:
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
(in thousands)
Domestic
$
1,906,840

 
$
1,775,355

 
$
1,683,487

Pacific
543,740

 
542,112

 
631,392

Total operating revenue
$
2,450,580

 
$
2,317,467

 
$
2,314,879

Hawaiian attributes operating revenue by geographic region based upon the origin and destination of each flight segment. Hawaiian's tangible assets consist primarily of flight equipment, which are mobile across geographic markets, and, therefore, have not been allocated to specific geographic regions.
16. Supplemental Cash Flow Information
Supplemental disclosures of cash flow information and non-cash investing and financing activities were as follows:
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
(in thousands)
Cash payments for interest (net of amounts capitalized)
$
29,751

 
$
45,519

 
$
42,242

Cash payments (refunds) for income taxes
92,934

 
4,664

 
(1,882
)
Investing and Financing Activities Not Affecting Cash:
 

 
 

 
 

Property and equipment acquired through a capital lease
6,092

 
2,791

 
—

Maintenance Hangar project  (see Note 14 for further discussion)
72,996

 
—

 
—


17. Condensed Consolidating Financial Information
The following condensed consolidating financial information is presented in accordance with Regulation S-X paragraph 210.3-10 because, in connection with the issuance by two pass-through trusts formed by Hawaiian (which is also referred to in this Note 17 as Subsidiary Issuer / Guarantor) of pass-through certificates, as discussed in Note 8 , the Company

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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

(which is also referred to in this Note 17 as Parent Issuer / Guarantor), is fully and unconditionally guaranteeing the payment obligations of Hawaiian, which is a 100% owned subsidiary of the Company, under equipment notes to be issued by Hawaiian to purchase new aircraft.

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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

Condensed consolidating financial statements are presented in the following tables:
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
Year Ended December 31, 2016
 
Parent Issuer /
Guarantor
 
Subsidiary
Issuer /
Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in thousands)
Operating Revenue
$
—

 
$
2,444,646

 
$
6,297

 
$
(363
)
 
$
2,450,580

Operating Expenses:
 

 
 

 
 

 
 

 
 

Aircraft fuel, including taxes and delivery
—

 
344,322

 
—

 
—

 
344,322

Wages and benefits
—

 
555,534

 
—

 
—

 
555,534

Aircraft rent
—

 
124,521

 
44

 
—

 
124,565

Maintenance materials and repairs
—

 
225,633

 
3,337

 
—

 
228,970

Aircraft and passenger servicing
—

 
126,876

 
—

 
—

 
126,876

Commissions and other selling
72

 
125,661

 
124

 
(126
)
 
125,731

Depreciation and amortization
—

 
104,689

 
3,439

 
—

 
108,128

Other rentals and landing fees
—

 
108,087

 
—

 
—

 
108,087

Purchased services
149

 
95,525

 
660

 
(60
)
 
96,274

Special Items
—

 
109,142

 
—

 
—

 
109,142

Other
5,300

 
121,104

 
1,262

 
(177
)
 
127,489

Total
5,521

 
2,041,094

 
8,866

 
(363
)
 
2,055,118

Operating Income (Loss)
(5,521
)
 
403,552

 
(2,569
)
 
—

 
395,462

Nonoperating Income (Expense):
 

 
 

 
 

 
 

 
 

Undistributed net income of subsidiaries
237,873

 
—

 
—

 
(237,873
)
 
—

Interest expense and amortization of debt discounts and issuance costs
117

 
(36,729
)
 
—

 
—

 
(36,612
)
Interest income
265

 
3,742

 
—

 
—

 
4,007

Capitalized interest
—

 
2,651

 
—

 
—

 
2,651

Gains on fuel derivatives
—

 
20,106

 
—

 
—

 
20,106

Loss on debt extinguishment
—

 
(10,473
)
 
—

 
—

 
(10,473
)
Other, net
—

 
4,323

 
—

 
—

 
4,323

Total
238,255

 
(16,380
)
 
—

 
(237,873
)
 
(15,998
)
Income (Loss) Before Income Taxes
232,734

 
387,172

 
(2,569
)
 
(237,873
)
 
379,464

Income tax expense (benefit)
(2,698
)
 
146,730

 
—

 
—

 
144,032

Net Income (Loss)
$
235,432

 
$
240,442

 
$
(2,569
)
 
$
(237,873
)
 
$
235,432

Comprehensive Income (Loss)
$
231,216

 
$
236,226

 
$
(2,569
)
 
$
(233,657
)
 
$
231,216


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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
Year Ended December 31, 2015
 
Parent Issuer /
Guarantor
 
Subsidiary
Issuer /
Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in thousands)
Operating Revenue
$
—

 
$
2,313,159

 
$
4,645

 
$
(337
)
 
$
2,317,467

Operating Expenses:
 

 
 

 
 

 
 

 
 

Aircraft fuel, including taxes and delivery
—

 
417,728

 
—

 
—

 
417,728

Wages and benefits
—

 
499,506

 
—

 
—

 
499,506

Aircraft rent
—

 
115,653

 
—

 
—

 
115,653

Maintenance materials and repairs
—

 
223,135

 
1,513

 
—

 
224,648

Aircraft and passenger servicing
—

 
117,449

 
—

 
—

 
117,449

Commissions and other selling
5

 
119,749

 
103

 
(111
)
 
119,746

Depreciation and amortization
—

 
102,586

 
2,995

 
—

 
105,581

Other rentals and landing fees
—

 
95,055

 
—

 
—

 
95,055

Purchased services
985

 
80,775

 
141

 
(63
)
 
81,838

Other
4,927

 
108,594

 
802

 
(163
)
 
114,160

Total
5,917

 
1,880,230

 
5,554

 
(337
)
 
1,891,364

Operating Income (Loss)
(5,917
)
 
432,929

 
(909
)
 
—

 
426,103

Nonoperating Income (Expense):
 

 
 

 
 

 
 

 
 

Undistributed net income of subsidiaries
191,959

 
—

 
—

 
(191,959
)
 
—

Interest expense and amortization of debt discounts and issuance costs
(1,733
)
 
(53,945
)
 
—

 
—

 
(55,678
)
Interest income
220

 
2,591

 
—

 
—

 
2,811

Capitalized interest
—

 
3,261

 
—

 
—

 
3,261

Losses on fuel derivatives
—

 
(59,931
)
 
—

 
—

 
(59,931
)
Loss on extinguishment of debt
(7,387
)
 
(4,671
)
 
 
 
 
 
(12,058
)
Other, net
—

 
(8,821
)
 
1

 
—

 
(8,820
)
Total
183,059

 
(121,516
)
 
1

 
(191,959
)
 
(130,415
)
Income (Loss) Before Income Taxes
177,142

 
311,413

 
(908
)
 
(191,959
)
 
295,688

Income tax expense (benefit)
(5,504
)
 
118,546

 
—

 
—

 
113,042

Net Income (Loss)
$
182,646

 
$
192,867

 
$
(908
)
 
$
(191,959
)
 
$
182,646

Comprehensive Income (Loss)
$
206,181

 
$
216,402

 
$
(908
)
 
$
(215,494
)
 
$
206,181



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Notes to Consolidated Financial Statements (Continued)

Condensed Consolidating Statements of Operations and Comprehensive Loss
Year Ended December 31, 2014
 
Parent Issuer /
Guarantor
 
Subsidiary
Issuer /
Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in thousands)
Operating Revenue
$
—

 
$
2,311,200

 
$
4,029

 
$
(350
)
 
$
2,314,879

Operating Expenses:
 

 
 

 
 

 
 

 
 

Aircraft fuel, including taxes and delivery
—

 
678,253

 
—

 
—

 
678,253

Wages and benefits
—

 
447,446

 
—

 
—

 
447,446

Aircraft rent
—

 
106,422

 
—

 
—

 
106,422

Maintenance materials and repairs
—

 
223,783

 
1,836

 
—

 
225,619

Aircraft and passenger servicing
—

 
122,780

 
—

 
—

 
122,780

Commissions and other selling
49

 
122,480

 
76

 
(87
)
 
122,518

Depreciation and amortization
—

 
94,146

 
2,228

 
—

 
96,374

Other rentals and landing fees
5

 
87,897

 
—

 
—

 
87,902

Purchased services
285

 
73,063

 
101

 
(63
)
 
73,386

Other
4,973

 
103,403

 
871

 
(200
)
 
109,047

Total
5,312

 
2,059,673

 
5,112

 
(350
)
 
2,069,747

Operating Income (Loss)
(5,312
)
 
251,527

 
(1,083
)
 
—

 
245,132

Nonoperating Income (Expense):
 

 
 

 
 

 
 

 
 

Undistributed net income of subsidiaries
78,702

 
—

 
—

 
(78,702
)
 
—

Interest expense and amortization of debt discounts and issuance costs
(8,894
)
 
(55,346
)
 
—

 
—

 
(64,240
)
Interest income
185

 
1,499

 
—

 
—

 
1,684

Capitalized interest
—

 
8,024

 
—

 
—

 
8,024

Losses on fuel derivatives
—

 
(63,471
)
 
—

 
—

 
(63,471
)
Loss on extinguishment of debt
(1,433
)
 
(2,452
)
 
—

 
—

 
(3,885
)
Other, net
—

 
(9,797
)
 
—

 
—

 
(9,797
)
Total
68,560

 
(121,543
)
 
—

 
(78,702
)
 
(131,685
)
Income (Loss) Before Income Taxes
63,248

 
129,984

 
(1,083
)
 
(78,702
)
 
113,447

Income tax expense (benefit)
(5,678
)
 
50,199

 
—

 
—

 
44,521

Net Income (Loss)
$
68,926

 
$
79,785

 
$
(1,083
)
 
$
(78,702
)
 
$
68,926

Comprehensive Loss
$
(11,200
)
 
$
(341
)
 
$
(1,083
)
 
$
1,424

 
$
(11,200
)

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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

Condensed Consolidating Balance Sheets
December 31, 2016
 
Parent Issuer /
Guarantor
 
Subsidiary
Issuer /
Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in thousands)
ASSETS
 

 
 

 
 

 
 

 
 

Current assets:
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
$
67,629

 
$
249,985

 
$
8,377

 
$
—

 
$
325,991

Restricted cash
—

 
5,000

 
—

 
—

 
5,000

Short-term investments
—

 
284,075

 
—

 


 
284,075

Accounts receivable, net
28

 
94,852

 
1,392

 
(205
)
 
96,067

Spare parts and supplies, net
—

 
20,363

 
—

 
—

 
20,363

Prepaid expenses and other
29

 
66,665

 
46

 
—

 
66,740

Total
67,686

 
720,940

 
9,815

 
(205
)
 
798,236

Property and equipment at cost
—

 
2,038,931

 
69,867

 
—

 
2,108,798

Less accumulated depreciation and amortization
—

 
(445,868
)
 
(8,363
)
 
—

 
(454,231
)
Property and equipment, net
—

 
1,593,063

 
61,504

 
—

 
1,654,567

Long-term prepayments and other
—

 
132,724

 
—

 
—

 
132,724

Deferred tax assets, net
28,757

 
—

 
—

 
(28,757
)
 
—

Goodwill and other intangible assets, net
—

 
121,456

 
1,618

 
—

 
123,074

Intercompany receivable
—

 
277,732

 
—

 
(277,732
)
 
—

Investment in consolidated subsidiaries
855,289

 
—

 


 
(855,289
)
 
—

TOTAL ASSETS
$
951,732

 
$
2,845,915

 
$
72,937

 
$
(1,161,983
)
 
$
2,708,601

LIABILITIES AND SHAREHOLDERS' EQUITY
 

 
 

 
 

 
 

 
 

Current liabilities:
 

 
 

 
 

 
 

 
 

Accounts payable
$
492

 
$
114,935

 
$
1,285

 
$
(205
)
 
$
116,507

Air traffic liability
—

 
478,109

 
4,387

 
—

 
482,496

Other accrued liabilities
4,088

 
167,864

 
262

 
—

 
172,214

Current maturities of long-term debt, less discount, and capital lease obligations
—

 
58,899

 
—

 
—

 
58,899

Total
4,580

 
819,807

 
5,934

 
(205
)
 
830,116

Long-term debt and capital lease obligations
—

 
497,908

 
—

 
—

 
497,908

Intercompany payable
266,699

 
—

 
11,033

 
(277,732
)
 
—

Other liabilities and deferred credits:
 

 
 

 
 

 
 

 
 

Accumulated pension and other postretirement benefit obligations. 
—

 
355,968

 
—

 
—

 
355,968

Other liabilities and deferred credits
—

 
172,783

 
830

 


 
173,613

Deferred tax liabilities, net
—

 
199,300

 
—

 
(28,757
)
 
170,543

Total
—

 
728,051

 
830

 
(28,757
)
 
700,124

Shareholders' equity
680,453

 
800,149

 
55,140

 
(855,289
)
 
680,453

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
951,732

 
$
2,845,915

 
$
72,937

 
$
(1,161,983
)
 
$
2,708,601


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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

Condensed Consolidating Balance Sheets
December 31, 2015
 
Parent Issuer /
Guarantor
 
Subsidiary
Issuer /
Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in thousands)
ASSETS
 

 
 

 
 

 
 

 
 

Current assets:
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
$
69,420

 
$
203,406

 
$
8,676

 
$
—

 
$
281,502

Restricted cash
—

 
5,000

 
—

 
—

 
5,000

Short-term investments
—

 
278,545

 
—

 
—

 
278,545

Accounts receivable, net
61

 
81,248

 
625

 
(211
)
 
81,723

Spare parts and supplies, net
—

 
19,164

 
—

 
—

 
19,164

Prepaid expenses and other
7

 
74,948

 
95

 
—

 
75,050

Total
69,488

 
662,311

 
9,396

 
(211
)
 
740,984

Property and equipment at cost
—

 
1,927,126

 
58,126

 
—

 
1,985,252

Less accumulated depreciation and amortization
—

 
(427,315
)
 
(5,195
)
 
—

 
(432,510
)
Property and equipment, net
—

 
1,499,811

 
52,931

 
—

 
1,552,742

Long-term prepayments and other
—

 
70,373

 
500

 
—

 
70,873

Deferred tax assets, net
26,059

 
—

 
—

 
(26,059
)
 
—

Goodwill and other intangible assets, net
—

 
125,323

 
—

 
—

 
125,323

Intercompany receivable
—

 
242,248

 
—

 
(242,248
)
 
—

Investment in consolidated subsidiaries
596,570

 
—

 
—

 
(596,570
)
 
—

TOTAL ASSETS
$
692,117

 
$
2,600,066

 
$
62,827

 
$
(865,088
)
 
$
2,489,922

LIABILITIES AND SHAREHOLDERS' EQUITY
 

 
 

 
 

 
 

 
 

Current liabilities:
 

 
 

 
 

 
 

 
 

Accounts payable
$
755

 
$
100,007

 
$
759

 
$
(211
)
 
$
101,310

Air traffic liability
—

 
427,302

 
3,464

 
—

 
430,766

Other accrued liabilities
530

 
159,583

 
145

 
—

 
160,258

Current maturities of long-term debt, less discount, and capital lease obligations
288

 
74,153

 
—

 
—

 
74,441

Total
1,573

 
761,045

 
4,368

 
(211
)
 
766,775

Long-term debt and capital lease obligations
—

 
677,915

 
—

 
—

 
677,915

Intercompany payable
242,248

 
—

 
—

 
(242,248
)
 
—

Other liabilities and deferred credits:
 

 
 

 
 

 
 

 
 

Accumulated pension and other postretirement benefit obligations. 
—

 
372,700

 
—

 
—

 
372,700

Other liabilities and deferred credits
2,234

 
86,861

 
750

 
—

 
89,845

Deferred tax liabilities, net
—

 
162,684

 
—

 
(26,059
)
 
136,625

Total
2,234

 
622,245

 
750

 
(26,059
)
 
599,170

Shareholders' equity
446,062

 
538,861

 
57,709

 
(596,570
)
 
446,062

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
692,117

 
$
2,600,066

 
$
62,827

 
$
(865,088
)
 
$
2,489,922



83
Table of Contents
Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

Condensed Consolidating Statements of Cash Flows
Year Ended December 31, 2016
 
Parent Issuer /
Guarantor
 
Subsidiary
Issuer /
Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in thousands)
Net Cash Provided By (Used In) Operating Activities:
$
(4,954
)
 
$
420,547

 
$
1,795

 
$
—

 
$
417,388

Cash Flows From Investing Activities:
 

 
 

 
 

 
 

 
 

Net payments to affiliates
—

 
(28,927
)
 
—

 
28,927

 
—

Additions to property and equipment, including pre-delivery deposits
—

 
(165,710
)
 
(13,128
)
 
—

 
(178,838
)
Proceeds from purchase assignment and leaseback transactions
—

 
31,851

 
—

 
—

 
31,851

Proceeds from disposition of property and equipment
—

 
15

 
1

 
—

 
16

Purchases of investments
—

 
(260,987
)
 
—

 
—

 
(260,987
)
Sales of investments
—

 
253,855

 
—

 
—

 
253,855

Other
—

 
—

 
—

 
—

 
—

Net cash provided by (used in) investing activities
—

 
(169,903
)
 
(13,127
)
 
28,927

 
(154,103
)
Cash Flows From Financing Activities:
 

 
 

 
 

 
 

 
 

Repayments of long-term debt and capital lease obligations
—

 
(214,025
)
 
—

 
—

 
(214,025
)
Repurchases and conversion of Convertible Notes
(1,426
)
 
—

 
—

 
—

 
(1,426
)
Repurchases of common stock
(13,763
)
 
—

 
—

 
—

 
(13,763
)
Debt issuance costs
—

 
(1,653
)
 
—

 
—

 
(1,653
)
Net payments from affiliates
17,894

 
—

 
11,033

 
(28,927
)
 
—

Excess tax benefit from equity awards
—

 
19,656

 
—

 
—

 
19,656

Other
458

 
(8,043
)
 
—

 


 
(7,585
)
Net cash provided by (used in) financing activities
3,163

 
(204,065
)
 
11,033

 
(28,927
)
 
(218,796
)
Net increase (decrease) in cash and cash equivalents
(1,791
)
 
46,579

 
(299
)
 
—

 
44,489

Cash and cash equivalents—Beginning of Period
69,420

 
203,406

 
8,676

 
—

 
281,502

Cash and cash equivalents—End of Period
$
67,629

 
$
249,985

 
$
8,377

 
$
—

 
$
325,991


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Table of Contents
Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

Condensed Consolidating Statements of Cash Flows
Year Ended December 31, 2015
 
Parent Issuer /
Guarantor
 
Subsidiary
Issuer /
Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in thousands)
Net Cash Provided By (Used In) Operating Activities:
$
(4,084
)
 
$
477,310

 
$
2,802

 
$
—

 
$
476,028

Cash Flows From Investing Activities:
 

 
 

 
 

 
 

 
 

Net payments to affiliates
(25,000
)
 
(220,538
)
 
—

 
245,538

 
—

Additions to property and equipment, including pre-delivery deposits
—

 
(95,252
)
 
(23,576
)
 
—

 
(118,828
)
Proceeds from purchase assignment and leaseback transactions
—

 
101,738

 
—

 
—

 
101,738

Proceeds from disposition of property and equipment
—

 
3,598

 
71

 
—

 
3,669

Purchases of investments
—

 
(257,448
)
 
—

 
—

 
(257,448
)
Sales of investments
—

 
236,062

 
—

 
—

 
236,062

Other
—

 
—

 
(500
)
 
—

 
(500
)
Net cash used in investing activities
(25,000
)
 
(231,840
)
 
(24,005
)
 
245,538

 
(35,307
)
Cash Flows From Financing Activities:
 

 
 

 
 

 
 

 
 

Repayments of long-term debt and capital lease obligations
—

 
(216,157
)
 
—

 
—

 
(216,157
)
Repurchases and conversion of Convertible Notes
(184,645
)
 
—

 
—

 
—

 
(184,645
)
Repurchases of common stock
(40,138
)
 
—

 
—

 
—

 
(40,138
)
Proceeds from settlement of convertible note call options
304,752

 
—

 
—

 
—

 
304,752

Payment for settlement of convertible note warrants
(282,631
)
 
—

 
—

 
—

 
(282,631
)
Debt issuance costs
—

 
(572
)
 
—

 
—

 
(572
)
Net payments from affiliates
220,538

 
—

 
25,000

 
(245,538
)
 
—

Change in cash collateral for EETC financing
—

 
1,566

 
—

 
—

 
1,566

Other
1,096

 
(6,577
)
 
—

 
—

 
(5,481
)
Net cash provided by (used in) financing activities
18,972

 
(221,740
)
 
25,000

 
(245,538
)
 
(423,306
)
Net increase (decrease) in cash and cash equivalents
(10,112
)
 
23,730

 
3,797

 
—

 
17,415

Cash and cash equivalents—Beginning of Period
79,532

 
179,676

 
4,879

 
—

 
264,087

Cash and cash equivalents—End of Period
$
69,420

 
$
203,406

 
$
8,676

 
$
—

 
$
281,502


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Table of Contents
Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

Condensed Consolidating Statements of Cash Flows
Year Ended December 31, 2014
 
Parent Issuer /
Guarantor
 
Subsidiary
Issuer /
Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in thousands)
Net Cash Provided By (Used In) Operating Activities:
$
(8,303
)
 
$
305,969

 
$
2,764

 
$
—

 
$
300,430

Cash Flows From Investing Activities:
 

 
 

 
 

 
 

 
 
Net payments from subsidiaries
38,791

 
—

 
—

 
(38,791
)
 
—

Additions to property and equipment, including pre-delivery deposits
—

 
(439,420
)
 
(2,809
)
 
—

 
(442,229
)
Net proceeds from disposition of equipment
—

 
16,953

 
—

 
—

 
16,953

Purchases of investments
—

 
(458,592
)
 
—

 
—

 
(458,592
)
Sales of investments
—

 
197,046

 
—

 
—

 
197,046

Net cash provided by (used in) investing activities
38,791

 
(684,013
)
 
(2,809
)
 
(38,791
)
 
(686,822
)
Cash Flows From Financing Activities:
 

 
 

 
 

 
 

 
 

Long-term borrowings
—

 
368,430

 
—

 
—

 
368,430

Repayments of long-term debt and capital lease obligations
—

 
(115,246
)
 
—

 
—

 
(115,246
)
Repurchases of convertible notes
(42,754
)
 
—

 
—

 
—

 
(42,754
)
Debt issuance costs
—

 
(1,519
)
 
—

 
—

 
(1,519
)
Net payments to parent company
—

 
(38,791
)
 
—

 
38,791

 
—

Change in cash collateral for EETC financing
—

 
14,434

 
—

 
—

 
14,434

Other
7,001

 
(3,251
)
 
—

 
—

 
3,750

Net cash provided by (used in) financing activities
(35,753
)
 
224,057

 
—

 
38,791

 
227,095

Net decrease in cash and cash equivalents
(5,265
)
 
(153,987
)
 
(45
)
 
—

 
(159,297
)
Cash and cash equivalents—Beginning of Period
84,797

 
333,663

 
4,924

 
—

 
423,384

Cash and cash equivalents—End of Period
$
79,532

 
$
179,676

 
$
4,879

 
$
—

 
$
264,087

Income Taxes
The income tax expense (benefit) is presented as if each entity that is part of the consolidated group files a separate return.

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Table of Contents
Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)

18. Supplemental Financial Information (unaudited)
Unaudited Quarterly Financial Information:
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
 
(in thousands, except per share data)
2016:
 

 
 

 
 

 
 

Operating revenue
$
551,180

 
$
594,590

 
$
671,837

 
$
632,973

Operating income
91,868

 
118,870

 
173,855

 
10,869

Nonoperating income (loss)
(8,764
)
 
9,770

 
(9,696
)
 
(7,308
)
Net income
51,466

 
79,570

 
102,454

 
1,942

Net Income Per Common Stock Share:
 

 
 

 
 

 
 

Basic
$
0.96

 
$
1.48

 
$
1.92

 
$
0.04

Diluted
0.95

 
1.48

 
1.91

 
0.04

2015:
 

 
 

 
 

 
 

Operating revenue
$
540,280

 
$
571,295

 
$
631,738

 
$
574,154

Operating income
71,164

 
91,416

 
154,677

 
108,846

Nonoperating loss
(29,165
)
 
(12,155
)
 
(41,695
)
 
(47,400
)
Net income
25,883

 
48,834

 
70,029

 
37,900

Net Income Per Common Stock Share:
 

 
 

 
 

 
 

Basic
$
0.47

 
$
0.89

 
$
1.30

 
$
0.71

Diluted
0.40

 
0.79

 
1.15

 
0.66

The Company's fourth quarter 2016 results include $109.1 million of special items consisting of a $ 49.4 million impairment charge in connection with its owned Boeing 767-300 fleet and related assets, a $38.8 million payment related to retroactive bonuses and a proposed collective bargaining agreement, and a 21.0 million charge related to the amount paid to terminate the Boeing 767-200 power by the hour engine maintenance contract. See Note 11 for additional information.
The sum of the quarterly net income (loss) per common stock share amounts does not equal the annual amount reported since per share amounts are computed independently for each quarter and for the full year based on respective weighted-average common shares outstanding and other dilutive potential common shares.
The Company's quarterly financial results are subject to seasonal fluctuations. Historically its second and third quarter financial results, which reflect periods of higher travel demand, are better than its first and fourth quarter financial results.
ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A.    CONTROLS AND PROCEDURES.
Management's Evaluation of Disclosure Controls and Procedures
Our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), performed an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were effective as of December 31, 2016 , and provide reasonable assurance that the information required to be disclosed by the Company in reports it files under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosure.
Management's Report on Internal Control over Financial Reporting

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Table of Contents

Our management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
Under the supervision and with the participation of our management, including our CEO and CFO, an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2016 was conducted. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013 framework). Based on their assessment, we concluded that, as of December 31, 2016 , the Company's internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. We reviewed the results of management's assessment with the Audit Committee of our Board of Directors.
The effectiveness of our internal control over financial reporting as of December 31, 2016 , has been audited by Ernst & Young LLP, the independent registered public accounting firm who also has audited our consolidated financial statements included in this Annual Report on Form 10-K. Ernst & Young's report on our internal control over financial reporting appears below.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2016 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our CEO and CFO, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.
Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

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Table of Contents

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Hawaiian Holdings, Inc.
We have audited Hawaiian Holdings, Inc.'s internal control over financial reporting as of December 31, 2016 , based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Hawaiian Holdings, Inc.'s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company's internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Hawaiian Holdings, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016 , based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Hawaiian Holdings, Inc. as of December 31, 2016 and 2015 and the related consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2016 of Hawaiian Holdings, Inc. and our report dated February 16, 2017 expressed an unqualified opinion thereon.
/s/ ERNST & YOUNG LLP  
 

Honolulu, Hawai'i
February 16, 2017

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Table of Contents

ITEM 9B.    OTHER INFORMATION.
None.
PART III
ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The information required by this item is incorporated herein by reference from our definitive proxy statement relating to our 2017 Annual Meeting of Stockholders.
ITEM 11.    EXECUTIVE COMPENSATION.
The information required by this item is incorporated herein by reference from our definitive proxy statement relating to our 2017 Annual Meeting of Stockholders.
ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The information required by this item is incorporated herein by reference from our definitive proxy statement relating to our 2017 Annual Meeting of Stockholders.
ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The information required by this item is incorporated herein by reference from our definitive proxy statement relating to our 2017 Annual Meeting of Stockholders.
ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The information required by this item is incorporated herein by reference from our definitive proxy statement relating to our 2017 Annual Meeting of Stockholders.
PART IV
ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a)
Financial Statements and Financial Statement Schedules:

(1) Financial Statements of Hawaiian Holdings, Inc.
i.    Report of Ernst & Young LLP, Independent Registered Public Accounting Firm.
ii.    Consolidated Statements of Operations for the Years ended December 31, 2016 , 2015 and 2014 .
iii.    Consolidated Statements of Comprehensive Income, December 31, 2016 , 2015 and 2014 .
iv.    Consolidated Balance Sheets, December 31, 2016 and 2015 .
v.    Consolidated Statements of Shareholders' Equity Years ended December 31, 2016 , 2015 and 2014 .
vi.    Consolidated Statements of Cash Flows for the Years ended December 31, 2016 , 2015 and 2014 .
vii.    Notes to Consolidated Financial Statements.
(2) Schedule of Valuation and Qualifying Accounts of Hawaiian Holdings, Inc.
The information required by Schedule I, "Condensed Financial Information of Registrant" has been provided in Note 16 to the consolidated financial statements. All other schedules have been omitted because they are not required.

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Table of Contents


(b) Exhibits:
3.1

Amended and Restated Certificate of Incorporation of Hawaiian Holdings, Inc. (filed as Exhibit 3.1 to the Form S-1, File No. 333-129503, filed by Hawaiian Holdings, Inc. on November 7, 2005).*
3.2

Amended and Restated By-Laws of Hawaiian Holdings, Inc. (filed as Exhibit 3.2 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 24, 2016).*
10.1

Form of Hawaiian Holdings, Inc. Stock Option Agreement for certain employees and executive officers (filed as Exhibit 10.14 to the Form 10-K filed by Hawaiian Holdings, Inc. on February 25, 2009).*+
10.2

Form of Hawaiian Holdings, Inc. Restricted Stock Agreement for certain employees and executive officers (filed as Exhibit 10.15 to the Form 10-K filed by Hawaiian Holdings, Inc. on February 25, 2009).*+
10.3

Form of Hawaiian Holdings, Inc. Restricted Stock Unit Award Agreement for certain employees and executive officers (filed as Exhibit 10.15.2 to the Form 10-K filed by Hawaiian Holdings, Inc. on February 11, 2011).*+
10.4

Form of Hawaiian Holdings, Inc. Performance-Based Restricted Stock Unit Award Agreement for certain employees and executive officers (filed as Exhibit 10.15.3 to the Form 10-K filed by Hawaiian Holdings,  Inc. on February 11, 2011).*+
10.5

Form of Hawaiian Holdings, Inc. Deferred Stock Unit Agreement for certain employees and executive officers (filed as Exhibit 10.16 to the Form 10-K filed by Hawaiian Holdings, Inc. on February 25, 2009).*+
10.6

Form of Hawaiian Holdings, Inc. Award Agreement for directors (filed as Exhibit 10.17 to the Form 10-K filed by Hawaiian Holdings, Inc. on February 25, 2009).*+
10.7

Hawaiian Holdings, Inc. 2005 Stock Incentive Plan (incorporated by reference to the Registrant’s Definitive Proxy Statement on Schedule 14A as filed with the Commission on March 26, 2010, File No. 001-31443).*+
10.8

Hawaiian Holdings, Inc. 2006 Management Incentive Plan (filed as Exhibit 10.1 to the Form 8-K filed by Hawaiian Holdings, Inc. on June 6, 2006).*+
10.9

Hawaiian Holdings, Inc. 2016 Management Incentive Plan. +
10.10

Hawaiian Holdings, Inc. Outside Director Compensation Policy. +
10.11

Type A Restricted Stock Unit Award Agreement, dated as of February 7, 2013, by and between Mark B. Dunkerley and Hawaiian Holdings, Inc. (filed as Exhibit 10.2 to form 10-Q filed by Hawaiian Holdings, Inc. on April 25, 2013).*+
10.12

Type B Restricted Stock Unit Award Agreement, dated as of February 7, 2013, by and between Mark B. Dunkerley and Hawaiian Holdings, Inc. (filed as Exhibit 10.3 to form 10-Q filed by Hawaiian Holdings, Inc. on April 25, 2013).*+
10.13

Hawaiian Holdings, Inc. 2015 Stock Incentive Plan (filed as Exhibit 10.1 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 12, 2015).*+
10.14

Form of Hawaiian Holdings, Inc. Restricted Stock Unit Agreement (filed as Exhibit 10.2 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 28, 2015).*+
10.15

Form of Hawaiian Holdings, Inc. Performance Restricted Stock Unit Agreement (filed as Exhibit 10.3 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 28, 2015).*+
10.16

Form of Hawaiian Holdings, Inc. Stock Option Agreement (filed as Exhibit 10.4 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 28, 2015).*+
10.17

Amended and Restated Mark B. Dunkerley Employment Agreement, dated as of December 24, 2016, by and between Mark B. Dunkerley and each of Hawaiian Holdings, Inc. and its wholly-owned subsidiary Hawaiian Airlines, Inc.+
10.18

Employment Agreement, dated as of November 18, 2005, between Hawaiian Airlines, Inc. and Peter R. Ingram (filed as Exhibit 10.24 to the Form 10-K filed by Hawaiian Holdings, Inc. on March 23, 2006).*+
10.18.1

First Amendment to Employment Agreement, dated as of November 2008, by and between Peter R. Ingram and Hawaiian Airlines, Inc. (filed as Exhibit 10.23 to the Form 10-K filed by Hawaiian Holdings, Inc. on February 26, 2009).*+
10.18.2

Second Amendment to Employment Agreement, dated as of April 6, 2009, by and between Peter R. Ingram and Hawaiian Airlines, Inc. (filed as Exhibit 10.1 to the Form 10-Q filed by Hawaiian Holdings,  Inc. on April 30, 2009).*+
10.19

Employment Agreement, dated as of July 11, 2005, between Hawaiian Airlines, Inc. and Barbara Falvey (filed as Exhibit 10.1 to the Form 10-Q filed by Hawaiian Holdings, Inc. on May 9, 2007).*+
10.19.1

First Amendment to Employment Agreement, dated as of April 6, 2009, between Hawaiian Airlines, Inc. and Barbara Falvey (filed as Exhibit 10.2 to the Form 10-Q filed by Hawaiian Holdings, Inc. on April 30, 2009).*+
10.20

Form of Hawaiian Holdings, Inc. Indemnification Agreement for directors and executive officers. +

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10.21

Form of Change in Control and Severance Agreement for executive officers. +
10.22

Airbus A330/A350XWB Purchase Agreement, dated as of January 31, 2008, between Airbus S.A.S. and Hawaiian Airlines, Inc. (filed as Exhibit 10.52 to the Form 10-K filed by Hawaiian Holdings, Inc. on March 3, 2008 in redacted form since confidential treatment has been granted for certain provisions thereof pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended).*‡
10.22.1

Amendment No. 1 to the Airbus A330/A350XWB Purchase Agreement dated as of January 31, 2008 between Airbus S.A.S. and Hawaiian Airlines, Inc. (filed as Exhibit 10.1 to the Form 10-Q filed by Hawaiian Holdings, Inc. on August 6, 2008 in redacted form since confidential treatment has been granted for certain provisions thereof pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended).*‡
10.22.2

Amendment No. 2 to the Airbus A330/A350XWB Purchase Agreement dated as of January 31, 2008 between Airbus S.A.S. and Hawaiian Airlines, Inc. (filed as Exhibit 10.2 to the Form 10-Q filed by Hawaiian Holdings, Inc. on April 27, 2010).*
10.22.3

Amendment No. 3 to the Airbus A330/A350XWB Purchase Agreement dated as of January 31, 2008 between Airbus S.A.S. and Hawaiian Airlines, Inc. (filed as Exhibit 10.3 to the Form 10-Q filed by Hawaiian Holdings, Inc. on April 27, 2010 in redacted form since confidential treatment has been granted for certain provisions thereof pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended).*‡
10.22.4

Amendment No. 4 to the Airbus A330/A350XWB Purchase Agreement dated as of January 31, 2008 between Airbus S.A.S. and Hawaiian Airlines, Inc. (filed as Exhibit 10.44.3 to the Form 10-K filed by Hawaiian Holdings, Inc. on February 11, 2011 in redacted form since confidential treatment has been granted for certain provisions thereof pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended).*‡
10.22.5

Amendment No. 5 to the Airbus A330/A350XWB Purchase Agreement dated as of January 31, 2008 between Airbus S.A.S. and Hawaiian Airlines, Inc. (filed as Exhibit 10.44.4 to the Form 10-K filed by Hawaiian Holdings, Inc. on February 11, 2011 in redacted form since confidential treatment has been granted for certain provisions thereof pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended).*‡
10.22.6

Amendment No. 6 to the Airbus A330/A350XWB Purchase Agreement dated as of January 31, 2008 between Airbus S.A.S. and Hawaiian Airlines, Inc. (filed as Exhibit 10.44.5 to the Form 10-K filed by Hawaiian Holdings, Inc. on February 9, 2012 in redacted form since confidential treatment has been granted for certain provisions thereof pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended).*‡
10.22.7

Amendment No. 7 to the Airbus A330/A350XWB Purchase Agreement dated as of January 31, 2008 between Airbus S.A.S. and Hawaiian Airlines, Inc. (filed as Exhibit 10.2 to the Form 10-Q filed by Hawaiian Holdings, Inc. on July 26, 2012 in redacted form since confidential treatment has been granted for certain provisions thereof pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended).*‡
10.22.8

Amendment No. 8 to the Airbus A330/A350XWB Purchase Agreement dated as of January 31, 2008 between Airbus S.A.S. and Hawaiian Airlines, Inc. (filed as Exhibit 10.36.8 to the Form 10-K filed by Hawaiian Holdings, Inc. on February 9, 2015 in redacted form since confidential treatment has been granted for certain provisions thereof pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended).*‡
10.22.9

Amendment No. 9 to the Airbus A330/A350XWB Purchase Agreement dated as of January 31, 2008 between Airbus S.A.S. and Hawaiian Airlines, Inc. (filed as Exhibit 10.36.9 to the Form 10-K filed by Hawaiian Holdings, Inc. on February 9, 2015 in redacted form since confidential treatment has been granted for certain provisions thereof pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended).*‡
10.22.10

Amended and Restated Letter Agreement No. 3 to the Airbus A330/A350XWB Purchase Agreement dated as of January 31, 2008 between Airbus S.A.S. and Hawaiian Airlines, Inc. (filed as Exhibit 10.44.5 to the Form 10-K filed by Hawaiian Holdings, Inc. on February 11, 2011 in redacted form since confidential treatment has been granted for certain provisions thereof pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended).*‡
10.23

Purchase Agreement, dated as of June 27, 2011, by and among Wells Fargo Bank Northwest, National Association, solely as owner trustee of trusts beneficially owned by BCC Equipment Leasing Corporation and MDFC Spring Company, and Hawaiian Airlines, Inc. (filed as Exhibit 10.2 to the Form 10-Q filed by Hawaiian Holdings, Inc. on July 27, 2011 in redacted form since confidential treatment has been granted for certain provisions thereof pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended).*‡

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10.24

Facility Agreement [Hawaiian 717-200 [55001]], dated as of June 27, 2011 by and between Hawaiian Airlines, Inc. and Boeing Capital Loan Corporation (filed as Exhibit 10.3 to the Form 10-Q/A filed by Hawaiian Holdings, Inc. on December 14, 2011 in redacted form since confidential treatment has been granted for certain provisions thereof pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended). Hawaiian Airlines,  Inc. also entered into Facility Agreement [Hawaiian 717-200 [55002]], dated as of June 27, 2011; Facility Agreement [Hawaiian 717-200 [55118]], dated as of June 27, 2011; Facility Agreement [Hawaiian 717-200 [55121]], dated as of June 27, 2011; Facility Agreement [Hawaiian 717-200 [55122]], dated as of June 27, 2011; Facility Agreement [Hawaiian 717-200 [55123]], dated as of June 27, 2011; Facility Agreement [Hawaiian 717-200 [55124]], dated as of June 27, 2011; Facility Agreement [Hawaiian 717-200 [55125]], dated as of June 27, 2011; Facility Agreement [Hawaiian 717-200 [55126]], dated as of June 27, 2011; Facility Agreement [Hawaiian 717-200 [55128]], dated as of June 27, 2011; Facility Agreement [Hawaiian 717-200 [55129]], dated as of June 27, 2011; Facility Agreement [Hawaiian 717-200 [55130]], dated as of June 27, 2011; Facility Agreement [Hawaiian 717-200 [55131]], dated as of June 27, 2011; Facility Agreement [Hawaiian 717-200 [55132]], dated as of June 27, 2011; and Facility Agreement [Hawaiian 717-200 [55151]], dated as of June 27, 2011, which facility agreements are substantially identical to Facility Agreement 55001, and pursuant to Regulation S-K Item 601, Instruction 2, these facility agreements were not filed.*‡
10.25

Lease Agreement 491HA, dated as of June 28, 2011, by and between Wells Fargo Bank Northwest, National Association, a national banking association organized under the laws of the United States of America, not in its individual capacity, but solely as owner trustee of a trust beneficially owned by BCC Equipment Leasing Corporation, and Hawaiian Airlines, Inc. (filed as Exhibit 10.5 to Form 10-Q/A filed by Hawaiian Holdings, Inc. on December 14, 2011 in redacted form since confidential treatment has been granted for certain provisions thereof pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended). Hawaiian Airlines, Inc. also entered into Lease Agreement 492HA, dated as of June 28, 2011; and Lease Agreement 493HA, dated as of June 28, 2011, which lease agreements are substantially identical to Lease Agreement 491HA, and pursuant to Regulation S-K Item 601, Instruction 2, these lease agreements were not filed.*‡
10.26

Contract Services Agreement, dated as of June 29, 2011, by and between Hawaiian Airlines, Inc. and Airline Contract Maintenance and Equipment, Inc. (filed as Exhibit 10.7 to the Form 10-Q filed by Hawaiian Holdings, Inc. on July 27, 2011 in redacted form since confidential treatment has been granted for certain provisions thereof pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended).*‡
10.27

Airbus A320 Family Purchase Agreement, dated as of March 18, 2013, between Airbus S.A.S. and Hawaiian Airlines, Inc. (filed as Exhibit 10.1 to Form 10-Q/A filed by Hawaiian Holdings, Inc. on October 17, 2013 in redacted form since confidential treatment has been granted for certain provisions thereof pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended).*‡
10.27.1

Amendment #1 to Airbus A320 Family Purchase Agreement, dated as of March 18, 2013, between Airbus S.A.S. and Hawaiian Airlines, Inc. (filed as Exhibit 10.62.1 to the Form 10-K filed by Hawaiian Holdings, Inc. on February 9, 2015).*
10.27.2

Amendment #2 to Airbus A320 Family Purchase Agreement, dated as of March 18, 2013, between Airbus S.A.S. and Hawaiian Airlines, Inc. (filed as Exhibit 10.62.2 to the Form 10-K filed by Hawaiian Holdings, Inc. on February 9, 2015 in redacted form since confidential treatment has been granted for certain provisions thereof pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended).*‡
10.28

Pass Through Trust Agreement, dated May 29, 2013, between Hawaiian Airlines, Inc. and Wilmington Trust, National Association, as trustee (filed as Exhibit 4.1to the Form 8-K filed by Hawaiian Holdings, Inc. on May 31, 2013).*
10.29

Trust Supplement No. 2013-1A-O, dated as of May 29, 2013, between Wilmington Trust, National Association, as Trustee, and Hawaiian Airlines, Inc. to Pass Through Trust Agreement, dated as of May 29, 2013 (filed as Exhibit 4.2 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 31, 2013).*
10.30

Trust Supplement No. 2013-1A-S, dated as of May 29, 2013, between Wilmington Trust, National Association, as Trustee, and Hawaiian Airlines, Inc. to Pass Through Trust Agreement, dated as of May 29, 2013 (filed as Exhibit 4.3 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 31, 2013).*
10.31

Trust Supplement No. 2013-1B-O, dated as of May 29, 2013, between Wilmington Trust, National Association, as Trustee, and Hawaiian Airlines, Inc. to Pass Through Trust Agreement, dated as of May 29, 2013 (filed as Exhibit 4.4 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 31, 2013).*
10.32

Trust Supplement No. 2013-1B-S, dated as of May 29, 2013, between Wilmington Trust, National Association, as Trustee, and Hawaiian Airlines, Inc. to Pass Through Trust Agreement, dated as of May 29, 2013 (filed as Exhibit 4.5 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 31, 2013).*
10.33

Revolving Credit Agreement (2013-1A), dated as of May 29, 2013, between Wilmington Trust, National Association, as subordination agent, as agent and trustee, and as borrower, and Natixis S.A., acting via its New York Branch, as liquidity provider (filed as Exhibit 4.6 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 31, 2013).*
10.34

Revolving Credit Agreement (2013-1B), dated as of May 29, 2013, between Wilmington Trust, National Association, as subordination agent, as agent and trustee, and as borrower, and Natixis S.A., acting via its New York Branch, as liquidity provider (filed as Exhibit 4.7 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 31, 2013).*

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10.35

Intercreditor Agreement, dated as of May 29, 2013, among Wilmington Trust, National Association, as trustee, Natixis S.A., acting via its New York Branch, as liquidity provider, and Wilmington Trust, National Association, as subordination agent and trustee (filed as Exhibit 4.8 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 31, 2013).*
10.36

Deposit Agreement (Class A), dated as of May 29, 2013, between Wells Fargo Bank Northwest, National Association, as escrow agent, and Natixis S.A., acting via its New York Branch, as depositary (filed as Exhibit 4.9 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 31, 2013).*
10.37

Deposit Agreement (Class B), dated as of May 29, 2013, between Wells Fargo Bank Northwest, National Association, as escrow agent, and Natixis S.A., acting via its New York Branch, as depositary (filed as Exhibit 4.10 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 31, 2013).*
10.38

Escrow and Paying Agent Agreement (Class A), dated as of May 29, 2013, among Wells Fargo Bank Northwest, National Association, as escrow agent, Citigroup Global Markets Inc., Goldman, Sachs & Co. and Morgan Stanley & Co. LLC, for themselves and on behalf of the several Underwriters of the Certificates, Wilmington Trust, National Association, as trustee, and Wilmington Trust, National Association, as paying agent (filed as Exhibit 4.11 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 31, 2013).*
10.39

Escrow and Paying Agent Agreement (Class B), dated as of May 29, 2013, among Wells Fargo Bank Northwest, National Association, as escrow agent, Citigroup Global Markets Inc., Goldman, Sachs & Co. and Morgan Stanley & Co. LLC, for themselves and on behalf of the several Underwriters of the Certificates, Wilmington Trust, National Association, as trustee, and Wilmington Trust, National Association, as paying agent (filed as Exhibit 4.12 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 31, 2013).*
10.40

Note Purchase Agreement, dated as of May 29, 2013, among Hawaiian Airlines, Inc., Wilmington Trust, National Association, as trustee, Wilmington Trust, National Association, as subordination agent, Wells Fargo Bank Northwest, National Association, as escrow agent, and Wilmington Trust, National Association, as paying agent (filed as the Exhibit 4.13 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 31, 2013).*
10.41

Form of Participation Agreement (Participation Agreement between Hawaiian Airlines, Inc. and Wilmington Trust, National Association, as mortgagee, subordination agent and trustee) (Exhibit B to Note Purchase Agreement) (filed as Exhibit 4.14 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 31, 2013).*
10.42

Form of Indenture (Trust Indenture and Mortgage between Hawaiian Airlines, Inc. and Wilmington Trust, National Association, as mortgagee and securities intermediary) (Exhibit C to Note Purchase Agreement) (filed Exhibit 4.15 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 31, 2013).*
10.43

Form of Hawaiian Airlines Pass Through Certificate, Series 2013-1A-O (filed as Exhibit 4.16 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 31, 2013).*
10.44

Form of Hawaiian Airlines Pass Through Certificate, Series 2013-1B-O (filed as Exhibit 4.17 to the Form 8-K filed by Hawaiian Holdings, Inc. on May 31, 2013).*
10.45

Lease Agreement, dated as of November 15, 2016 between Hawaiian Airlines, Inc. and the Department of Transportation of the State of Hawai'i.
12

Computation of ratio of earnings to fixed charges for the years ended December 31, 2016, 2015, 2014, 2013, and 2012.
21.1

List of Subsidiaries of Hawaiian Holdings, Inc.
23.1

Consent of Ernst & Young LLP.
31.1

Rule 13a-14(a) Certification of Chief Executive Officer.
31.2

Rule 13a-14(a) Certification of Chief Financial Officer.
32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS

XBRL Instance Document.
101.SCH

XBRL Taxonomy Extension Schema Document
101.CAL

XBRL Taxonomy Extension Valuation Linkbase Document.
101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB

XBRL Taxonomy Extension Label Linkbase Document.

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101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document.
+    These exhibits relate to management contracts or compensatory plans or arrangements.
*    Previously filed; incorporated herein by reference.
‡    Confidential treatment has been requested for a portion of this exhibit.

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Schedule II—Hawaiian Holdings, Inc.
Valuation and Qualifying Accounts
Years Ended December 31, 2016 , 2015 and 2014
COLUMN A
COLUMN B
 
COLUMN C
ADDITIONS
 
COLUMN D
 
COLUMN E
Description
Balance at Beginning of Year
 
(1)
Charged to Costs and Expenses
 
(2)
Charged to Other Accounts
 
Deductions
 
Balance at End of Year
 
(in thousands)
Allowance for Doubtful Accounts
 

 
 

 
 

 
 

 
 

2016
$
166

 
2,896

 
—

 
(3,028
)
(a)
$
34

2015
$
135

 
484

 
—

 
(453
)
(a)
$
166

2014
$
101

 
593

 
—

 
(559
)
(a)
$
135

Allowance for Obsolescence of Flight Equipment Expendable Parts and Supplies
 

 
 

 
 

 
 

 
 

2016
$
16,454

 
3,301

(b)
—

 
(2,397
)
(c)
$
17,358

2015
$
14,499

 
2,895

(b)
—

 
(940
)
(c)
$
16,454

2014
$
12,801

 
2,193

(b)
—

 
(495
)
(c)
$
14,499

Valuation Allowance on Deferred Tax Assets
 

 
 

 
 

 
 

 
 

2016
$
3,912

 
—


—

 
(1,920
)
(d)
$
1,992

2015
$
3,396

 
516


—

 
—

 
$
3,912

2014
$
2,923

 
473


—

 
—

 
$
3,396


_______________________________________________________________________________

(a)
Doubtful accounts written off, net of recoveries.
(b)
Obsolescence reserve for Hawaiian flight equipment expendable parts and supplies.
(c)
Spare parts and supplies written off against the allowance for obsolescence.
(d)
Re-classified to uncertain tax position.



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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
HAWAIIAN HOLDINGS, INC.
February 16, 2017
By
 
/s/ SHANNON L. OKINAKA
 
 
 
Shannon L. Okinaka
  Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on February 16, 2017 .
Signature
 
Title
 
 
 
/s/ MARK B. DUNKERLEY
 
President and Chief Executive Officer, and Director (Principal Executive Officer)
Mark B. Dunkerley
 
 
/s/ SHANNON L. OKINAKA
 
Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)
Shannon L. Okinaka
 
 
/s/ LAWRENCE S. HERSHFIELD
 
Chair of the Board of Directors
Lawrence S. Hershfield
 
 
/s/ DONALD J. CARTY
 
Director
Donald J. Carty
 
 
/s/ EARL E. FRY
 
Director
Earl E. Fry
 
 
/s/ JOSEPH GUERRIERI, JR.
 
Director
Joseph Guerrieri, Jr.
 
 
/s/ RANDALL L. JENSON
 
Director
Randall L. Jenson
 
 
/s/ CRYSTAL K. ROSE
 
Director
Crystal K. Rose
 
 
/s/ WILLIAM S. SWELBAR
 
Director
William S. Swelbar
 
 
/s/ DUANE E. WOERTH
 
Director
Duane E. Woerth
 
 
/s/ RICHARD N. ZWERN
 
Director
Richard N. Zwern
 
 


97

HAWAIIAN HOLDINGS, INC.
2016 Management Incentive Plan

1. BACKGROUND AND PURPOSE.

(a) The purpose of the Hawaiian Holdings, Inc. 2016 Management Incentive Plan (the “ Plan ”) is to allow Hawaiian Holdings, Inc. (the “ Company ”) to provide annual and long-term performance-based incentive compensation that satisfies the requirements for performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986 (the “ Code ”), to designated employees of the Company or an Affiliate, upon whom, in large measure, the sustained progress, growth and profitability of the Company depends.

(b) The Plan will become effective upon ratification by an affirmative vote of the holders of a majority of the shares of the Company’s common stock present in person or by proxy and entitled to vote at the 2016 Annual Meeting of Stockholders of the Company.

2. DEFINITIONS

(a) “ Actual Award ” means as to any Performance Period, the actual award (if any) payable to a Participant for the Performance Period. Each Actual Award is determined by the Payout Calculation Methodology for the Performance Period, subject to the Compensation Committee’s authority under Section 3.6 to eliminate or reduce the award otherwise determined by the Payout Calculation Methodology. To apply the Maximum Award limitation, the Actual Award will be deemed to have been determined on the last day of the applicable Performance Period, so that if there are multiple Performance Periods ending in a particular fiscal year of the Company, the Actual Awards may not regarding all such Performance Periods in the aggregate exceed the Maximum Award.

(b) “ Affiliate ” means any corporation or other entity (including, but not limited to, partnerships and joint ventures) controlled by the Company.

(c) “ Determination Date ” means the earlier of: (i) the 90th day of the Performance Period or (ii) the date as of which 25% of the Performance Period has elapsed. The Determination Date must be a date on which the outcome of the Payout Calculation is substantially uncertain.

(d) “ Disability ” means a permanent and total disability determined under uniform and nondiscriminatory standards adopted by the Compensation Committee from time to time.

(e) “ Maximum Award ” means as to any Participant for any fiscal year of the Company, $3,000,000.

(f) “ Participant ” means as to any Performance Period, an employee of the Company or an Affiliate selected by the Compensation Committee for participation in the Plan for that Performance Period.

(g) “ Payout Calculation Methodology ” means as to any Performance Goal, the methodology for calculating the maximum amount earned by performance against the Performance Goal.

(h) “ Performance Goals ” mean any one or more of the following objective performance criteria, applied to either the Company or, except regarding stockholder return metrics, to a region, business unit, affiliate or business segment, and measured either on an absolute basis, a per share basis or relative to a pre-established


target, to a previous period's results or to a designated comparison group, and, with respect to financial metrics, which may be determined under United States Generally Accepted Accounting Principles (“ GAAP ”), under accounting principles established by the International Accounting Standards Board (“ IASB Principles ”) or which may be adjusted when established to exclude any items otherwise includable under GAAP or under IASB Principles: (i) cash flow (including operating cash flow or free cash flow), (ii) revenue (on an absolute basis or adjusted for currency effects), (iii) gross margin, (iv) operating expenses or operating expenses as a percentage of revenue, (v) earnings (which may include earnings before interest and taxes, earnings before taxes, net earnings or EBITDA), (vi) earnings per share, (vii) stock price, (viii) return on equity, (ix) total stockholder return, (x) growth in stockholder value relative to the moving average of the S&P 500 Index, or another index, (xi) return on capital, (xii) return on assets or net assets, (xiii) return on investment, (xiv) economic value added, (xv) operating income or net operating income, (xvi) operating margin, (xvii) market share, (xviii) overhead or other expense reduction, (xix) credit rating, (xx) objective customer indicators, (xxi) improvements in productivity, (xxii) attainment of objective operating goals, (xxiii) objective employee metrics, (xxiv) return ratios, (xxv) objective qualitative milestones, or (xxvi) other objective financial or other metrics relating to the progress of the Company or to an Affiliate, division or department thereof.

(i) “ Performance Period ” means any fiscal year of the Company or such other period as determined by the Compensation Committee, in its sole discretion.

(j) “ Section 409A ” means Code Section 409A and any proposed, temporary, or final U.S. Treasury Regulations and U.S. Internal Revenue Service guidance, as each may be amended from time to time.

(k) “ Termination of Employment ” means a cessation of the employee-employer relationship between a Participant and the Company or an Affiliate for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability, retirement, or the disaffiliation of an Affiliate, but excluding any such termination where there is a simultaneous reemployment by the Company or an Affiliate.

3. ADMINISTRATION OF THE PLAN.

(a) General . The Plan will be administered by the Compensation Committee of the Board of Directors of the Company (the “ Compensation Committee ”).

(b) Powers of the Compensation Committee . Subject to the Plan, any limitations on delegations and applicable laws, the Compensation Committee will have the authority, in its sole discretion to make any determinations deemed necessary or advisable to administer the Plan including:

(i) to select the Participants,

(ii) to establish the length of the Performance Periods,

(iii) to establish Performance Goals for performance during each Performance Period,

(iv) to determine the Payout Calculation Methodology for each Performance Goal, and

(v) to make all determinations and take all other actions necessary or appropriate for the proper administration and operation of the Plan.

(c) Any determination by the Compensation Committee on any matter relating to the Plan shall be made in its sole discretion and need not be uniform among Participants. The Compensation Committee’s


interpretation of the Plan shall be final, conclusive and binding on all parties concerned, including the Company, its stockholders and any or all Participants.

4. ELIGIBILITY.
Actual Awards under the Plan may be paid to any Participant.

5. ACTUAL AWARDS.

(a) General . Actual Awards may be payable to each Participant because of the satisfaction of Performance Goals established with respect to a Performance Period that has a length determined by the Compensation Committee at the beginning of such Performance Period. A Participant may be eligible for Actual Awards for multiple and overlapping Performance Periods.

(b) Setting Award Criteria . No later than the Determination Date for each Performance Period, the Compensation Committee will, in writing,

(i) designate one or more Participants,

(ii) select the Performance Goals applicable to the Performance Period,

(iii) establish the Payout Calculation Methodology for such Performance Goals; and

(iv) establish a target bonus and Maximum Award for each Participant for each Performance Period.

(c) Performance Goals .

(i) Each Performance Goal may be expressed on an absolute and/or relative basis, may be based on, or otherwise employ, comparisons based on internal targets, the past performance of the Company and/or the past or current performance of other companies.

(ii) Evaluation of performance may include or exclude events or items as specified by the Compensation Committee including, without limitation, the following unusual or nonrecurring events: (i) asset write downs; (ii) litigation or claim judgments or settlements; (iii) the effect of changes in tax laws, accounting principles or other laws or provisions affecting reported results; (iv) any reorganization and restructuring programs; (v) extraordinary nonrecurring items as described in Financial Accounting Standards Board Accounting Standards Codification 225-20 “Extraordinary and Unusual Items” and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s Annual Report on Form 10-K for the applicable fiscal year; (vi) acquisitions or divestitures; and (vii) foreign exchange gains and losses.

(d) Actual Bonus Determination .

(i) As soon as practicable after the end of each Performance Period but before any Actual Award is paid, the Compensation Committee shall certify in writing (i) whether the Performance Goal(s) were attained and (ii) the result of the Payout Calculation Methodology for each Participant based upon the attainment of the Performance Goal(s).



(ii) The Compensation Committee may determine to pay a Participant an Actual Award equal to, but not over, the amount specified in the foregoing certification. The Compensation Committee may also reduce or eliminate the amount of any Actual Award of any Participant at any time prior to payment thereof, based on such criteria as it shall determine, including but not limited to individual merit and attainment of, or the failure to attain, specified personal goals established by the Compensation Committee.

(iii) Under no circumstance may the Compensation Committee

(1) increase the amount of Actual Award paid to a Participant under the Plan above the amount determined in Section 5(d)(i) based on the Payout Calculation Methodology,

(2) waive the attainment of one or more Performance Goals established by Compensation Committee, or

(3) otherwise exercise its discretion to cause any Actual Awards to fail to qualify as performance-based compensation under Section 162(m) of the Code.

(e) Payment . Following the Compensation Committee’s determination under Section 5(d) , Actual Awards shall be paid as promptly as is administratively practicable. Any Actual Award may be payable in cash or shares of the Company’s common stock (valued at the fair market value thereof on the date of payment) or a combination thereof, as determined by the Compensation Committee.

(f) Death, Disability, Termination of Employment

(i) If a Participant shall die or terminate employment due to Disability prior to the end of a Performance Period, the Participant (or if the participant’s death occurs, the Participant’s beneficiary)  may receive a pro-rata portion of the target award established for the Participant as determined by the Compensation Committee.

(ii) If a Participant’s employment with the Company is otherwise terminated during the Performance Period, the Participant shall not be entitled to payment of any Actual Award.

(g) Annual Maximum . The aggregate of all Actual Awards payable to a Participant under the Plan in any fiscal year of the Company may not exceed the Maximum Award, and any excess will be forfeited.

6. DILUTION AND OTHER ADJUSTMENTS.
If a Performance Goal is based on, or calculated with respect to, the Company’s common stock (such as increases in earnings per share, book value per share or other similar measures), then, if any corporate transaction occurs involving the Company (including, without limitation, any subdivision or combination or exchange of the outstanding shares of common stock, stock dividend, stock split, spin-off, split-off, recapitalization, capital reorganization, liquidation, reclassification of shares of common stock, merger, consolidation, extraordinary cash distribution, redemption, stock issuance, or sale, lease or transfer of substantially all of the assets of the Company), the Compensation Committee shall make or provide for such adjustments in such Performance Goal as the Compensation Committee may in good faith determine to be equitably required to prevent dilution or enlargement of any increase or decrease in the rights of Participants.

7. OTHER TERMS.


(a) No Effect on Employment or Service . Neither the Plan nor any award under the Plan will confer upon a Participant any right regarding continuing the Participant’s relationship as an employee of the Company or an Affiliate, nor will they interfere with the Participant’s right, or the Participant’s employer’s right, to terminate such relationship with or without cause, to the extent permitted by applicable laws.

(b) Forfeiture Events .

(i) All awards granted under the Plan will be subject to recoupment under any clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other Applicable Laws. In addition, the Compensation Committee may impose such other clawback, recovery or recoupment provisions in an award agreement as the Compensation Committee determines necessary or appropriate. Unless this Section 7(b) is specifically mentioned and waived in an award agreement or other document, no recovery of compensation under a clawback policy or otherwise will give a Participant the right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company or any Affiliate.

(ii) The Compensation Committee may specify when granting an award that the Participant’s rights, payments, and benefits with respect to an such award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of specified events, in addition to any otherwise applicable vesting or performance conditions of such award. Such events may include, but shall not be limited to, termination of such Participant’s employment for cause or any act by a Participant, whether before or after such Participant’s termination date that would constitute cause for termination of such Participant’s employment.

(iii) If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, any Participant who knowingly or through gross negligence engaged in the misconduct, or who knowingly or through gross negligence failed to prevent the misconduct, and any Participant who is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, shall reimburse the Company the amount of any payment in settlement of an awardearned or accrued under the Plan during the 12 month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever first occurred) of the financial document embodying such financial reporting requirement.

(c) Right to Actual Award . No officer or other person shall have any claim or right to receive any Actual Award payable under the Plan prior to the actual payment thereof, regardless of whether the Compensation Committee shall have certified any amount payable to any Participant.

(d) Taxes . The Company may deduct from all Actual Award payable any federal, state, local or foreign taxes required by law to be withheld regarding such payments.

(e) No Transfers or Assignments . No award under the Plan nor any rights or interests or shall be assigned, transferred, pledged, encumbered, or hypothecated to, or in favor of, or subject to any lien, obligation, or liability of a Participant to, any party (other than the Company or any Affiliate).

(f) Non-exclusivity of Plan . Nothing in the Plan shall be construed as limiting the authority of the Compensation Committee, the Board of Directors of the Company, the Company or any Affiliate to establish any other annual, long-term or other incentive plan or as limiting the authority of any of the foregoing to pay cash bonuses or other supplemental or additional incentive compensation to any persons employed by the Company


or any Affiliate, whether or not such person is a Participant in this Plan and regardless of how the amount of such bonus or compensation is determined.

(g) Section 409A . It is intended that all bonuses payable under this Plan will be exempt from the requirements of Section 409A under the “short-term deferral” exemption or will comply with the requirements of Section 409A so that none of the payments and benefits to be provided under this Plan will be subject to the additional tax imposed under Section 409A, and any ambiguities or ambiguous terms will be interpreted to so comply or be exempt. Each payment and benefit payable under this Plan is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

8. Amendment and Termination of the Plan .

(a) Amendment and Termination . The Board or Compensation Committee of the Board may amend, alter, suspend or terminate the Plan.

(b) Stockholder Approval . The Company will obtain stockholder approval of any Plan amendment to the extent necessary or desirable to comply with applicable laws.

(c) Consent of Participants Generally Required . Subject to Section 8(d), no amendment, alteration, suspension or termination of the Plan or an award under it will materially impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Compensation Committee, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Compensation Committee’s ability to exercise the powers granted to it regarding awards established under the Plan prior to such termination.

(d) Exceptions to Consent Requirement .

(i) A Participant’s rights will not be deemed to have been impaired by any amendment, alteration, suspension or termination if the Compensation Committee, in its sole discretion, determines that the amendment, alteration, suspension or termination does not materially impair the Participant’s rights, and

(ii) subject to any limitations of applicable laws, the Compensation Committee may amend the terms of any awards under the Plan without the affected Participant’s consent even if it does materially impair the Participant’s right if such amendment is done:

(1) in a manner permitted under the Plan;

(2) to avoid imposition of any additional tax or income recognition under Section 409A prior to actual payment to the Participant;

(3) to comply with other applicable laws; or

(4) as necessary based on rulings or guidance issued to ensure compliance with the requirements of Section 162(m) of the Code.

9. LAW GOVERNING.
The validity and construction of the Plan shall be governed by the laws of the State of Hawaii but without regard to the choice of law principles thereof.


HAWAIIAN HOLDINGS, INC.
OUTSIDE DIRECTOR COMPENSATION POLICY
Revised to be effective on May 17, 2016
Hawaiian Holdings, Inc. (the “ Company ”) believes that granting equity and cash compensation to members of its Board of Directors (the “ Board ,” and members of the Board, “ Directors ”) is a powerful tool to attract, retain and reward Directors who are not employees of the Company (“ Outside Directors ”). This Outside Director Compensation Policy (the “ Policy ”) formalizes the Company’s policy regarding grants of equity and cash compensation to its Outside Directors.
Unless otherwise defined in this Policy, capitalized terms used in this Policy will have the meaning given such term in the Company’s 2015 Stock Incentive Plan (the “ Plan ”). Each Outside Director will be solely responsible for any tax obligations incurred by such Outside Director because of the equity and cash payments such Outside Director receives under this Policy.
CASH COMPENSATION
Annual Cash Retainer
Each Outside Director will be paid an annual cash retainer of $60,000. The Chairman of the Board will be paid an additional cash retainer of $25,000. In addition, each Outside Director will be paid $1,500 for each Board meeting attended over 8 meetings ($750 if such excess meeting is by telephone). Cash compensation will be paid quarterly in arrears on a pro-rata basis.
Audit Committee
Annual compensation for Audit Committee members is:
Chairman of Committee:    $    24,000    Cash Annual Retainer
Committee Members    $    12,000    Cash Annual Retainer
There are no per meeting attendance fees for attending Audit Committee meetings. Cash amounts will be paid quarterly in arrears on a pro-rata basis.
Compensation Committee
Annual compensation for the Compensation Committee is:
Chairman of Committee:    $    13,000    Cash Annual Retainer
Committee Members    $    8,000    Cash Annual Retainer
There are no per meeting attendance fees for attending Compensation Committee meetings. Cash amounts will be paid quarterly in arrears on a pro-rata basis.
Governance and Nominating Committee
Compensation for the Governance and Nominating Committee is:
Chairman of Committee:    $    10,000    Cash Annual Retainer



Committee Members:    $    7,000    Cash Annual Retainer
There are no per meeting attendance fees for attending Governance and Nominating Committee meetings. Cash amounts will be paid quarterly in arrears on a pro-rata basis.
All cash compensation for an Outside Director who was not a Director on the date of the prior Annual Meeting will be prorated to reflect the portion of the year during which such Outside Director served.
EQUITY COMPENSATION
Outside Directors will be eligible to receive all types of Awards (except ISOs) under the Plan, including discretionary Awards not covered under this Policy. All grants of Awards to Outside Directors under this Policy will be automatic and nondiscretionary, except as otherwise provided, and will be made under the following provisions:
(a) Annual Awards . On the date of each annual meeting of stockholders (“ Annual Meeting ”) each Outside Director automatically will be granted Restricted Stock Units in a number equal to $80,000 divided by the Average Price (as defined below) with the number of Shares determined rounded to the nearest whole Share (an “ Annual Award ”); provided, however, that an Annual Award may not exceed any limitations set forth in the Plan.
(b) New Director Award . On the effective date of his or her appointment to the Board, each Outside Director who was not a Director on the date of the prior Annual Meeting automatically will be granted Restricted Stock Units in a number equal to the Annual Award granted at the prior Annual Meeting multiplied by a fraction with a numerator equal to 365 minus the number of days completed since the prior Annual Meeting and a denominator equal to 365, with the number of Shares determined rounded to the nearest whole Share (a “ New Director Award ”). A New Director Award may not exceed any limitations set forth in the Plan. For purposes of clarity, if an Outside Director is appointed to the Board at the Annual Meeting, such Outside Director will receive an Annual Award, and will not also receive a New Director Award.
(c) Average Price . For this Policy, “ Average Price ” means the trailing volume weighted average price of the Company’s Stock over the 30 consecutive trading days ending on the trading day prior to the date of grant, with the number of Shares determined rounded down to the nearest whole Share.
(d) Terms
(i)
Vesting Schedule . Subject to Section (ii), the following terms will apply:
1.
Annual Award . Each Annual Award will vest 100% on the day prior to the following year’s Annual Meeting, provided that the Outside Director continues to serve as a Service Provider through the vesting date.
2.
New Director Award . Each New Director Award will vest 100% on the day prior to the Annual Meeting to occur after its grant, provided that the Outside Director continues to serve as a Service Provider through the vesting date.
(ii)
In the event of a Change in Control, each Outside Director will fully vest in Awards of Restricted Stock Units and any stock options previously granted for service as an Outside Director (“ Options ”) and will have the right to exercise any Options as to all of the Shares underlying Options, including those Shares which would not otherwise be vested or exercisable.

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TRAVEL
Each Outside Director’s reasonable, customary and documented expenses will be reimbursed by the Company under the Board of Directors Business Travel and Expense Policy.
Each Director, and (a) his or her spouse, travel companion, or domestic partner, (b) his or her children through age 26, and (c) his or her parents ((a) through (c) collectively, “Travel Eligible Family Members”) are entitled to unlimited, free travel privileges on the Company’s non-chartered flights. Directors are also reimbursed for the taxes imposed on the first $30,000 of incremental cost on non-standby travel on the Company’s flights.
Following retirement from the Board after age 40 with at least 10 years of service as a Director, or after age 55 with at least five years of service as a Director, former Directors and their Travel Eligible Family Members will be eligible for unlimited, free travel on Company flights. The former Director will be responsible for all taxes on this benefit.
REVISIONS
The Compensation Committee in its discretion may revise this Policy.

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2016 AMENDED AND RESTATED MARK B. DUNKERLEY EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”) is entered by and between MARK B. DUNKERLEY (“Employee”) and each of Hawaiian Holdings, Inc. (“HH”) and its wholly owned subsidiary Hawaiian Airlines, Inc. (“HA”); which companies are individually and collectively identified herein as the “Company”.
The parties hereto hereby amend and restate the employment agreement between and among Employee, HH and HA, as most recently amended effective November 15, 2012 (the “Prior Agreement”) and replace it in its entirety with this Agreement, effective January 1, 2017. The Company and Employee wish to continue their employer-employee relationship on the terms and conditions set out below.
In consideration of the mutual agreements hereinafter set forth, Employee and the Company have agreed and do hereby agree as follows:
1. Employment as President and Chief Executive Officer; Service as Director . The Company does hereby continue to employ Employee as President and Chief Executive Officer and Employee does hereby accept and agree to such continued employment. Employee’s duties during the Employment Period (defined below) shall be the executive, managerial and reporting duties required of a chief executive officer of a corporation and such other duties as the Board of Directors of the Company shall from time to time prescribe and as provided in the Bylaws of the Company, including but not limited to direct responsibility for and supervision of all aspects of the business and affairs of HH and HA. Employee shall report directly to the respective Board of Directors of each of HH and HA, as applicable, for the Employment Period. No other person or persons will occupy a position or have any authority with respect to the Company that is equal to or greater than the position and authority of Employee, other than the Board of Directors. Except for the internal auditor, all other persons who are employed by the Company will report directly or indirectly to Employee, and no other persons will report to the Board of Directors of HH or HA or any member of these Boards of Directors other than Employee. Employee shall devote his full time, energy, and skill to the performance of his duties for the Company and for the benefit of the Company, except for reasonable vacations authorized by the respective Board of Directors of HH and HA, as applicable, and reasonable absences because of illness. Employee shall be eligible for up to four (4) weeks of vacation annually, subject to requirements of operations and as duties may permit provided that unused vacation shall not be accrued and the Company shall not make payment to Employee for unutilized vacation. Furthermore, Employee shall exercise due diligence and care in the performance of his duties to the Company under this Agreement. During the Term, (i) HH shall cause Employee to be appointed to serve as a director of the Board of Directors of HA and (ii) the Board of Directors of HH shall nominate Employee for election to HH’s Board of Directors and HH shall use its good faith efforts to elect Employee to such position.
2. Term of Agreement . The term of this Agreement (“Initial Term”) shall commence on January 1, 2017 (the “Renewal Effective Date”) and shall continue until March 1, 2018. The period of time commencing on the Renewal Effective Date and ending on the expiration date of the Term, or, if earlier, the date of termination of Employee’s employment (“Termination Date”) under this Agreement shall be referred to as the “Employment Period.” Beginning on March 1, 2018, this Agreement will renew automatically for additional, 1 year terms (each, an “Additional Term”, and together with the Initial Term, the “Term”) unless either Party provides the other Parties with written notice of nonrenewal on or before September 30 of the calendar year prior to the date of automatic renewal. For the avoidance of doubt, neither the lapse of this Agreement by its terms nor non-renewal of this Agreement will by itself constitute termination of employment nor grounds for resignation for Good Reason.

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3.      Compensation .
a)      Base Salary . The Company shall pay Employee, and Employee agrees to accept from the Company as payment for his services to the Company, a base salary at the rate of $725,000 per year (“Base Salary”), payable in equal semi-monthly installments or at such other time or times as Employee and the Company shall agree, provided that in no event will such payment be made later than the 409A Limit as defined in Section 22(a) hereof. Employee’s Base Salary will be reviewed by the Compensation Committee of the Board at least annually beginning in February 2017 for possible increases.
b)      Performance/Incentive Bonus . Employee will be eligible to receive an annual performance/incentive bonus (with a pro rata adjustment for any partial year period caused by the Termination Date being other than December 31 of any year, subject to attainment of performance targets) of a target amount of one hundred and twenty-five percent (125%) and a maximum of two hundred percent (200%) of his annual salary. The bonus plan will be based upon achievement of goals set forth under the 2016 Management Incentive Plan (or its successor plan) and such goals shall be consistent with those set for other executive officers, and any annual performance/incentive bonus thereunder with respect to calendar years prior to 2017 shall be payable in accordance with the Prior Agreement and such 2016 Management Incentive Plan (or successor or other applicable plan). Employee and the Company may, but shall have no obligation to, agree that a portion of Employee’s performance/incentive bonus will be paid in shares of common stock of HH valued in a manner agreed upon by the parties. Any performance/incentive bonus pursuant to this paragraph shall be paid no later than the 409A Limit as defined in Section 22(a) hereof.
c)      Prior Equity Awards . Notwithstanding any provision of this Agreement to the contrary, the vesting (including accelerated vesting) and other terms of all equity awards granted to Employee before the Renewal Effective Date (the “Prior Equity Awards”) shall continue to be governed by the terms of the Prior Agreement and the applicable equity award agreements; provided, however, that any accelerated vesting pursuant to Employee’s termination shall be subject to the Release (as such term is defined herein) provisions of Section 8(f) of this Agreement.
d)      Fiscal 2017 Prior Equity Awards . During the first fiscal quarter of fiscal 2017 at approximately the same time as other management equity grants, Employee will be granted equity awards with a value of approximately $2,100,000 with the number of shares and types of awards determined in the manner consistent with Employee’s equity awards granted during fiscal 2016 and on the terms set forth in Section 3.f.
e)      401(k) Plan . Employee shall be eligible to participate in the Company’s 401(k) retirement plan with employer “match” contributions of 2% of Employee’s Base Salary or such greater percentage as may be generally made available to non-contract employees, in each case to the maximum allowable legal limit.
f)      Restricted Stock Unit Awards .
(i)      Prior to the Renewal Effective Date, Employee has been granted certain Type A Restricted Stock Units that vest only if the Company achieves pre-tax net profits, determined in accordance with U.S. generally accepted accounting principles, of at least an aggregate of one million dollars over any rolling two consecutive Company fiscal quarters in the period commencing with the first full Company fiscal quarter after the grant date and through the last full Company fiscal quarter ending during a limited period after the grant date ( the “Type A Restricted Stock Unit Performance Metric”). The outstanding Type A Restricted Stock Units will continue to be governed by their terms as set forth in the Prior Agreement and applicable plans and grant agreements. In addition, during the first fiscal quarter of fiscal 2017, Employee will be granted Type A Restricted Stock Units with a value of

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approximately $1,400,000 and the number of shares subject to, and other terms of, such Type A Restricted Stock Units determined in a manner consistent with the awards granted to Employee in fiscal 2016, together with any necessary conforming changes.
(ii)      Type A Restricted Stock Unit – Qualifying Change in Control . Notwithstanding any provision of this Agreement to the contrary, in the event of a Change in Control as defined in Sections 11(a), 11(b) (but substituting 50% for 40% in Sections 11(a) and (b)), 11(c) or 11(d) hereof occurs during the Term (a “Qualifying Change in Control”) while Employee remains employed by the Company (or within twenty-nine (29) days following Employee’s termination of employment pursuant to Section 7(c) or (d) of this Agreement), any unvested Type A Restricted Stock Unit shares shall be assumed or substituted by the acquirer for an equity award equivalent in all material respects to the Type A Restricted Stock Unit (an “Equivalent Type A Award”). In such event, the Type A Restricted Stock Unit Performance Metric shall be deemed satisfied (without need for certification by the Compensation Committee) and the Type A Restricted Stock Unit award shall remain subject to the remaining service-based vesting provisions, subject to accelerated vesting pursuant to Section 8 hereof. If any Type A Restricted Stock Unit shares required to be assumed or substituted for an Equivalent Type A Award are not so assumed or substituted, then such Type A Restricted Stock Unit shall become 100% vested upon such Qualifying Change in Control.
(iii)      Type B Restricted Stock Unit . Prior to the Renewal Effective Date, Employee has been granted certain Type B Restricted Stock Units that vest based upon the Company’s performance against performance metrics established for such Type B Restricted Stock Units, determined consistent with past practice, together with any necessary conforming changes (the “Type B Restricted Stock Unit Performance Metric”). The outstanding Type B Restricted Stock Units will continue to be governed by their terms as set forth in the Prior Agreement and applicable plans and grant agreements. In addition, during the first fiscal quarter of fiscal 2017, Employee will be granted Type B Restricted Stock Units with a value of approximately $700,000 and the number of shares subject to, and other terms of, such Type B Restricted Stock Units determined in a manner consistent with the awards granted to Employee in fiscal 2016, together with any necessary conforming changes.
(iv)      Type B Restricted Stock Unit – Qualifying Change in Control . Notwithstanding any provision of this Agreement to the contrary, in the event of a Change in Control as defined in Sections 11(a), 11(b) (but substituting 50% for 40% in Sections 11(a) and (b)), 11(c) or 11(d) hereof occurs during the Term (a “Qualifying Change in Control”) while Employee remains employed by the Company (or within twenty-nine (29) days following Employee’s termination of employment pursuant to Section 7(c) or (d) of this Agreement), any unvested Type B Restricted Stock Unit shares shall be assumed or substituted by the acquirer for an equity award equivalent in all material respects to the Type B Restricted Stock Unit (an “Equivalent Type B Award”). In such event, the Type B Restricted Stock Unit Performance Metric shall be deemed satisfied (without need for certification by the Compensation Committee) and the extent to which the Type B Restricted Stock Unit Performance Metric has been achieved shall be determined under the same methodology as outlined above (to be determined by the Compensation Committee immediately prior to the consummation of the Change in Control), but using a truncated Type B Restricted Stock Unit Performance Period commencing on the Renewal Effective Date and terminating on the date of the consummation of the Change in Control (including such date), subject to accelerated vesting pursuant to Section 8 hereof. Any remaining service based vesting requirements shall still apply, subject to accelerated vesting pursuant to Section 8 hereof. If any Type B Restricted Stock Unit shares required to be assumed or substituted for an Equivalent Type B Award are not so assumed or substituted, then such Type B Restricted Stock Unit shall become 100% vested with respect to any remaining service-based vesting, at the level of performance determined pursuant to the methodology specified in the second previous sentence, upon such Qualifying Change in Control.

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g)      Reservation of Shares . The Company shall use its good faith efforts to ensure that a sufficient number of shares remain available for issuance under a Company equity compensation plan for the issuance of the Type A Restricted Stock Units and Type B Restricted Stock Units issued hereunder. The Company shall use its good faith efforts to register any shares of Company common stock issuable pursuant to Type A Restricted Stock Units and Type B Restricted Stock Units on Form S-8 (or any applicable successor form).
h)      Net Withholding . The Type A Restricted Stock Unit and Type B Restricted Stock Unit and any future equity awards granted pursuant to Section 3(j) below shall provide that any minimum required tax withholding shall be addressed through a net issuance, whereby that number of shares with a fair market value equal to the minimum required withholding amount shall be retained by the Company in order to offset the Company’s obligation for tax withholding payment costs for Employee’s taxes.
i)      Substantial Risk of Forfeiture . For the avoidance of doubt, any Type A Unearned Performance-Based Full Value Awards (as defined in Section 8(a)(iv)(2)), all Type B Earned Performance-Based Full Value Awards (as defined in Section 8(a)(iv)(3)) and all Type B Unearned Performance-Based Full Value Awards (as defined in Section 8(a)(iv)(4)) shall be considered subject to a substantial risk of forfeiture until both the applicable Type A and Type B performance metrics are satisfied or deemed satisfied.
j)      Future Equity Awards . Employee shall be eligible for future equity awards beginning in 2017 in forms and amounts determined by the Compensation Committee in its discretion.
4.      Fringe Benefits . Employee shall be entitled to participate, at the Company’s expense, in any benefit programs adopted from time to time by the Company for the benefit of its executive employees and Employee shall be entitled to receive such other fringe benefits as may be granted to him from time to time by the Company’s Board of Directors. Any reimbursement pursuant to this Section 4 shall be paid as soon as practicable, provided that, to the extent required to comply with Section 409A of the Internal Revenue Code (the “Code”), such reimbursement shall be made on or before the last day of the calendar year following the calendar year in which the expense was incurred. While he is employed hereunder (unless otherwise noted), Employee shall be entitled to receive the following benefits:
a)      Benefit Plans . Employee shall be entitled to participate in any benefit plans relating to stock options, stock purchases, pension, thrift, profit sharing, life and disability insurance, medical coverage, executive medical coverage, education, or other retirement or employee benefits available to other executive employees of the Company, subject to any restrictions (including waiting periods) specified in such plans.
b)      Automobile . The Company shall provide Employee with an automobile allowance of $1,000 per month.
c)      Travel Benefits . Employee and Employee’s spouse or domestic partner shall be entitled to travel benefits on Company flights (but not charter flights) at the P1A/F1 category. Employee’s eligible dependents, if any, shall be entitled to travel benefits on Company flights (but not charter flights) at the P1A/F1 category when traveling with Employee and/or Employee’s spouse or domestic partner; when not traveling with Employee and/or Employee’s spouse or domestic partner, eligible dependents shall be entitled to travel benefits on Company transpacific flights (but not charter flights) at the S1A/F3 category and interisland flights at the S1A/F3 category. Employee and Employee’s spouse or domestic partner and eligible dependents shall be entitled to travel benefits on other airlines at the sole discretion of such airlines, at a comparable level to that provided to other Company executive officers. Upon Employee’s employment termination (other than for Cause, as defined herein, or pursuant to Employee’s death), subject to Employee’s signing and not revoking a release of claims in favor of the Company

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substantially in the form attached as Exhibit A to this Agreement (a “Release”), the lapse of any statutory period for revoking the Release, and such Release becoming effective in accordance with its terms within twenty-nine (29) days following the Termination Date, Employee and Employee’s spouse or domestic partner and eligible dependents shall receive, commencing on the Termination Date, for the duration of Employee’s life the Company travel benefits described above (but not the other travel benefits on other airlines) up to a maximum imputed taxable income, in the aggregate, of $25,000 per calendar year. The travel benefits provided pursuant to the preceding sentences of this Section 4(c) shall be provided on a basis that is no less beneficial than travel benefits provided as of the Renewal Effective Date, and no less beneficial when compared to the travel benefits enjoyed by any other employee of the Company or by any member of the Board of Directors, whichever is better (subject to the $25,000 annual limitation and the exclusion of travel benefits on other airlines for the post-termination Company travel benefits). Such lifetime travel benefits shall cease to be provided in the event Employee breaches his obligations under Sections 6 or 10 of this Agreement.
d)      Executive Long-Term Disability Insurance Plan . Employee will be included in the Company’s Executive Long-Term Disability Insurance Plan, as it may be modified from time to time, at the Company’s expense.
e)      Business Expenses . The Company shall reimburse Employee for any and all necessary, customary, and usual expenses, properly receipted in accordance with Company policies, incurred by Employee on behalf of the Company.
f)      Life Insurance . The Company shall pay the premium for term life insurance coverage of $300,000.
g)      Annual Physical . The Company shall reimburse Employee (or pay directly) for the reasonable costs of an annual executive full physical examination.
h)      Retiree Medical . Upon any termination of his employment hereunder, Employee shall be eligible to participate in the Company’s Executive Retiree Medical Plan on the same terms as apply to other Eligible Retirees (as such term is defined in such plan).
5.      Relocation . Upon Employee’s termination of service other than for Cause, then, subject to Employee (or his beneficiary) signing and not revoking a Release, the lapse of any statutory period for revoking the Release, and such Release becoming effective in accordance with its terms within twenty-nine (29) days following the Termination Date, the Company will reimburse Employee for eligible costs related with relocation from Hawaii (including eligible costs incurred on or after such employment termination but prior to the effectiveness of the Release), which will include but not be limited to the following items: (i) the reasonable out-of-pocket costs of moving his household goods and belongings from Hawaii, including packing, unpacking, shipping and insurance, (ii) the shipment of one automobile, and (iii) travel costs for Employee and his domestic partner directly related to Employee’s relocation from Hawaii (collectively referred to as the “Termination Expenses”). The Termination Expenses will be reimbursed up to a maximum of $50,000. Notwithstanding the foregoing in order to receive reimbursement of the Termination Expenses under this Section 5, such Termination Expense must be incurred on or before the end of the second calendar year following the calendar year in which Employee’s termination of employment occurs and reimbursement of such Termination Expense shall be made as soon as administratively feasible following submission of such expense but shall in any event be made on or before the end of the third calendar year following the calendar year in which Employee’s termination of employment occurs.
6.      Confidential Information . Employee recognizes that by reason of his employment by and service to the Company he will occupy a position of trust with respect to business and technical information of a secret or confidential nature which is the property of the Company which will be

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imparted to him from time to time in the course of the performance of his duties hereunder. Employee acknowledges that such information is a valuable and unique asset of the Company and agrees that he shall not, during or after the Term of this Agreement, use or disclose directly or indirectly any confidential information of the Company to any person, except that Employee may use and disclose to authorized personnel of the Company such confidential information as is reasonably appropriate in the course of the performance of his duties hereunder. Confidential information of the Company shall include all information and knowledge of any nature and in any form relating to the Company including but not limited to, business plans; development projects; computer software and related documentation and materials; designs, practices, processes, methods, know-how and other facts relating to the business of the Company; advertising, promotions, financial matters, sales and profit figures, customers or customer lists. Confidential information shall not include any information that is or shall become publicly known through no fault of Employee and any information received in good faith from a third party who has the right to disclose such information and who has not received such information, either directly or indirectly, from the Company.
7.      Termination of Employee’s Employment .
a)      Death; Disability . If Employee dies while employed by the Company, his employment shall immediately terminate. If, as a result of Employee’s mental or physical incapacity, Employee shall be unable to perform the services for the Company contemplated by this Agreement in the manner in which he previously performed them during an aggregate of one hundred twenty (120) business days in any consecutive seven (7) month period (“Disability”), Employee’s employment may be terminated by the Company for Disability. In the event of Disability or death, Employee or Employee’s beneficiaries, as the case may be, (i) shall continue to be paid the Base Salary through the Termination Date and a performance/incentive bonus, pro-rated to reflect the date of death or Disability, and subject to attaining the requisite performance milestones and payable at the same time as other participants, as determined in accordance with Section 3(b), and (ii) shall retain his vested equity compensation awards and other vested benefits and rights under the Company’s benefit plans in accordance with the terms of such plans and this Agreement. In the case of death, Employee’s beneficiaries or his estate shall receive benefits in accordance with the Company’s retirement, insurance and other applicable programs and plans then in effect, including the proceeds of the life insurance policy described under Section 4(f) above.
(i)      Any Type A Unearned Performance-Based Full Value Awards (as defined in Section 8(a)(iv)(2)) shall remain outstanding and shall be treated in the manner set forth in Section 8(a)(iv)(2) except that Employee shall not be 100% vested in the award as a result of termination of employment and shall only be entitled to payment of that portion of the award that has satisfied the service-based vesting requirements as of the Termination Date.
(ii)      Any Type B Earned Performance-Based Full Value Awards (as defined in Section 8(a)(iv)(3)) and Type B Unearned Performance-Based Full Value Awards (as defined in Section 8(a)(iv)(4)) shall remain outstanding and shall be earned and paid in the same manner as if Employee had remained employed for the entire performance period except that Employee shall only be entitled to payment of that portion of the award that has satisfied the service-based vesting requirements as of the Termination Date.
b)      Termination by the Company for Cause . The Company may terminate Employee’s employment under this Agreement for “Cause” (as defined herein) at any time prior to expiration of the Term, only upon the occurrence of any one or more of the following events:
(i)      The material breach by Employee of his obligations hereunder, after Employee has been given written notice specifying the breach and has been provided a thirty (30) day opportunity to cure. This includes, without limitation, willful neglect of Employee’s duties or Employee’s

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willful failure (other than any such failure resulting from the termination of Employee’s employment pursuant to his death, Disability, retirement or Good Reason, as provided elsewhere in this Agreement) to implement or adhere to policies established by, or directives of, the Company’s Board of Directors.
(ii)      Employee is convicted of, or pleads guilty or no contest to a felony, or written evidence is presented to the Board that Employee engaged in a crime that may have an adverse impact on the Company’s reputation and standing in the community.
(iii)      Employee commits fraud in connection with the business affairs of the Company, regardless of whether said conduct is designed to defraud the Company or others.
In the event of termination for Cause, the Company shall pay Employee any portion of Employee’s Base Salary accrued, but not paid, prior to the Termination Date. In the event of termination for Cause, the Company’s obligation to pay Employee’s Base Salary for any periods after the Termination Date shall cease as of the Termination Date, all of Employee’s equity compensation awards shall immediately cease vesting, and all of Employee’s benefits shall cease, except as otherwise required by law; provided that Employee shall retain his vested equity compensation awards and other vested benefits and rights under the Company’s benefit plans in accordance with the terms of such plans and this Agreement. For the avoidance of doubt, Employee shall be entitled to the benefits set forth in Section 7(a)(i) and (ii) above. If Employee’s employment is terminated for Cause, Employee’s employment may be terminated on written notice, effective immediately, unless otherwise expressly provided for in this Agreement.
c)      Termination by the Company without Cause . The Company shall have the right to terminate this Agreement prior to the expiration of the Term, at any time, without Cause. In the event the Company shall so elect to terminate this Agreement, Employee shall be eligible to receive compensation pursuant to the provisions of Section 8 hereof. For avoidance of doubt, the Company’s notice that it chooses to not renew this Agreement will not result in any compensation pursuant to the provisions of Section 8 hereof.
d)      Termination by Employee for Good Reason . Employee shall have the right to terminate this Agreement for “Good Reason” (as defined herein). For purposes of this Agreement, “Good Reason” shall mean the occurrence, without Employee’s prior written consent, of any one or more of the following events:
(i)      The assignment to Employee of any duties that are materially inconsistent with Employee’s duties as Chief Executive Officer, or that reflect a material reduction of his powers and responsibilities;
(ii)      Employee’s ceasing to report solely to the Board of Directors;
(iii)      A negative change to Employee’s title;
(iv)      The Company’s material breach of any of the provisions of this Agreement, or a material adverse change in the conditions of Employee’s employment (e.g., including, without limitation, a failure by the Company to provide Employee with incentive compensation and benefit plans that provide comparable benefits and amounts as such type of programs as are provided to other Company executive officers, etc.);
(v)      The relocation of the Company’s principal executive offices to a location outside of the Honolulu area or the Company’s requiring Employee to be based anywhere other than the Company’s principal executive offices, except for travel on Company business to an extent substantially consistent with Employee’s position and responsibilities;

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(vi)      Following a change in control (as defined in Section 11), Employee not remaining as the chief executive officer of a successor publicly-traded Company; or
(vii)      A failure by the Company to maintain Directors’ and Officers’ insurance as set forth in Section 20.
For avoidance of doubt, the Board’s decision to appoint a President of the Company or to increase the responsibilities of other officers of the Company as part of a succession planning process will not be an event that gives rise to Good Reason. Employee agrees to provide the Company thirty (30) days’ prior written notice of any termination for Good Reason within ninety (90) days’ of Employee becoming aware of the occurrence of any of the foregoing (except in the case of a termination pursuant to subparagraph (vi) hereof), during which 30-day period the Company shall have the right to cure the circumstances giving rise to the Good Reason stated in such notice. In the event of termination for Good Reason, Employee shall be eligible to receive compensation pursuant to the provisions of Section 8 hereof.
e)      Termination by Employee Without Good Reason . Employee shall have the right to terminate this Agreement without Good Reason. In the event of a resignation by Employee without Good Reason, the Company shall pay Employee any portion of Employee’s Base Salary accrued, but not paid, prior to the Termination Date, all of Employee’s equity compensation awards shall immediately cease vesting, and all of Employee’s benefits shall cease, except as otherwise required by law or as otherwise provided herein; provided that Employee shall retain his vested equity compensation awards and other vested benefits and rights under the Company’s benefit plans in accordance with the terms of such plans and this Agreement. For the avoidance of doubt, Employee shall be entitled to the benefits set forth in Section 7(a)(i) and (ii) above. Employee’s notice that he chooses to not renew this Agreement is not a resignation or termination of this Agreement without Good Reason.
f)      Additional Severance Payment . In addition to any severance payments otherwise described in Sections 7 or 8, if Employee remains employed with the Company through March 1, 2018 and if the Company achieves pre‐tax net profits, determined in accordance with U.S. generally accepted accounting principles, of at least an aggregate of one million dollars over any rolling two consecutive Company fiscal quarters in fiscal 2017, he will be entitled to receive a lump‐sum cash severance payment equal to $1,250,000 upon his termination of employment for any reason on or after March 1, 2018, subject to any delay required by the provisions of Section 22.
8.      Compensation Upon Termination by the Company Other than for Cause or By Employee for Good Reason .
a)      Compensation Upon Termination by the Company Other than for Cause or By Employee for Good Reason . If Employee’s employment shall be terminated (i) by act of the Company other than for Cause during the Term, or (ii) by Employee for Good Reason during the Term, then subject to Employee signing and not revoking a Release, the lapse of any statutory period for revoking the Release, and such Release becoming effective in accordance with its terms within twenty-nine (29) days following Employee’s Termination Date, the Company shall provide severance pay and benefits as follows:
(i)      Payment of Unpaid Base Salary, Performance/Incentive Bonus, and Additional Severance Payment . The Company shall immediately pay Employee any portion of Employee’s Base Salary accrued, but not paid, prior to the Termination Date, a performance/incentive bonus for such year, subject to attaining the requisite performance milestones and payable at the same time as other participants, as determined in accordance with Section 3(b), and a rating determined by the Compensation Committee consistent with its determination for other executives for all objectives that are intended to constitute performance-based compensation under Code Section 162(m). The Company

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shall immediately pay Employee the Additional Severance Payment described in Section 7(f), subject to attaining the requisite performance milestones set forth in such Section and payable when achievement of such performance milestone is certified by the Compensation Committee.
(ii)      Lump Sum Payment . Employee shall receive, on the twenty-ninth (29 th ) day following the Termination Date, or such later time as is required pursuant to Section 22 hereof, a lump sum cash severance payment in an amount equal to 3 times the amount of Employee’s total Base Salary and average annual bonus payment received during the 36 month period immediately prior to such termination, up to a maximum severance payment of $4,000,000.
(iii)      Continuation of Medical and Other Benefits . Throughout the Term of this Agreement from and after the Termination Date, the Company shall continue to provide Employee with (i) life insurance coverage and disability benefits as if Employee’s employment under the Agreement had not been terminated; provided that coverage (as distinct from benefits due to a disability incurred prior to the Termination Date) under the Company’s long term disability insurance will not be included as part of benefits provided after termination of employment, because the carrier limits provision of such to active employees and (ii) Travel Benefits set forth in Section 4(c), as if Employee’s employment under the Agreement had not been terminated. In lieu of subsidized COBRA, and payable whether or not Employee elects COBRA coverage, Employee will also receive continued payments of $3,000 per month through the end of the Term. If required by law or otherwise allowed by the relevant carrier, Employee will be afforded the opportunity to continue such benefits at Employee’s own cost after the benefits provided under this Section 8(c) have expired.
(iv)      Full-Value Award Vesting Acceleration .
(1)      Type A Restricted Stock Unit and Other Similar Full-Value Awards As To Which Only Service-Based Vesting Requirements Remain . The Type A Restricted Stock Unit and any future full-value awards subject to performance-based vesting similar to the Type A Restricted Stock Unit, in each case as to which the performance-based vesting metrics have been met or are deemed to have been met as of the Termination Date pursuant to the terms of this Agreement and/or the underlying equity agreement and as to which only service-based vesting requirements remain (all such awards are referred to herein as the “Type A Earned Performance-Based Full Value Awards”), shall be vested 100% as to the shares earned by virtue of satisfying or being deemed to satisfy the performance-based vesting metrics and shall be paid out on the twenty-ninth (29 th ) day following the Termination Date, or such later date as is required to avoid the imposition of additional taxes under Code Section 409A pursuant to Section 22 hereof. Notwithstanding the foregoing, in the event the twenty-ninth (29 th ) day following the Termination Date or such later date as is required to avoid the imposition of additional taxes under Code Section 409A is not a Distribution Date, the Type A Earned Performance-Based Full Value Awards shall be distributed on the first succeeding Distribution Date, but in no event later than the 409A Limit.
(2)      Type A Restricted Stock Unit and Other Similar Full-Value Awards As To Which Performance-Based Vesting Requirements Remain . The Type A Restricted Stock Unit and any future full-value awards subject to performance-based vesting similar to the Type A Restricted Stock Unit, in each case as to which the performance-based vesting metrics have not been met or deemed to have been met as of the Termination Date pursuant to the terms of this Agreement and/or the underlying equity agreement (all such awards are referred to herein as the “Type A Unearned Performance-Based Full Value Awards”) shall remain outstanding and if the applicable performance metric is satisfied by March 1, 2018 (or the last day of any Additional Term, if applicable), shall be vested 100% as to the shares earned by virtue of satisfying the performance-based vesting metrics. The vested shares subject to the Type A Unearned Performance-Based Full Value Awards shall be paid out on the twenty-ninth (29 th ) day following the Compensation Committee’s written certification thereof (which the

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Compensation Committee shall be obligated to certify within sixty (60) days following the achievement of the applicable performance metric), or such later date as is required to avoid the imposition of additional taxes under Code Section 409A pursuant to Section 22 hereof. Notwithstanding the foregoing, in the event the twenty-ninth (29 th ) day following the Compensation Committee certification or such later date as is required to avoid the imposition of additional taxes under Code Section 409A is not a Distribution Date, the Type A Unearned Performance-Based Full Value Awards shall be distributed on the first succeeding Distribution Date, but in no event later than the 409A Limit.
(3)      Type B Restricted Stock Unit and Other Similar Full-Value Awards As To Which the Performance-Period Has Not Ended but the Performance Metric Has Been Satisfied . The Type B Restricted Stock Unit and any future full-value awards subject to performance-based vesting similar to the Type B Restricted Stock Unit, in each case as to which the applicable performance period has not yet ended but for which the Type A Restricted Stock Unit Performance Metric or other similar performance metric has been certified by the Compensation Committee as satisfied or deemed to have been satisfied prior to the Termination Date pursuant to the terms of this Agreement and the underlying equity agreement (all such awards are referred to herein as the “Type B Earned Performance-Based Full Value Awards”), shall have their performance periods truncated to the Employee’s Termination Date, and Employee shall vest in 100% of the shares earned by virtue of the Company’s performance through the Termination Date relative to the performance metrics specified in this Agreement and/or the underlying equity agreement for the truncated performance period. Such awards shall be paid out on the twenty-ninth (29 th ) day following the Compensation Committee’s written certification (which the Compensation Committee shall be obligated to certify within sixty (60) days following the achievement of the applicable performance metric), or such later date as is required to avoid the imposition of additional taxes under Code Section 409A pursuant to Section 22 hereof. Notwithstanding the foregoing, in the event the twenty-ninth (29 th ) day following the Compensation Committee certification of the number of shares of Company common stock payable in respect of the Type B Earned Performance-Based Full Value Awards or such later date as is required to avoid the imposition of additional taxes under Code Section 409A is not a Distribution Date, the Type B Earned Performance-Based Full Value Awards shall be distributed on the first succeeding Distribution Date, but in no event later than the 409A Limit.
(4)      Type B Restricted Stock Unit and Other Similar Full-Value Awards As To Which the Performance-Period Has Not Ended and the Performance Metric Has Not been Satisfied . The Type B Restricted Stock Unit and any future full-value awards subject to performance-based vesting similar to the Type B Restricted Stock Unit, in each case as to which the applicable performance period has not yet ended and for which the Type A Restricted Stock Unit Performance Metric or other similar performance metric has not been certified by the Compensation Committee as satisfied prior to the Termination Date pursuant to the terms of this Agreement and/or the underlying equity agreement (all such awards are referred to herein as the “Type B Unearned Performance-Based Full Value Awards”), shall remain outstanding and if the Type B Restricted Stock Unit Performance Metric or other similar performance metric is satisfied by March 1, 2018 (or the last day of any Additional Term, if applicable), shall have their performance periods truncated to the Employee’s Termination Date, and Employee shall vest in 100% of the shares earned by virtue of the Company’s performance through the Termination Date relative to the performance metrics specified in this Agreement and/or the underlying equity agreement for the truncated performance period. Such awards shall be paid out on the twenty-ninth (29 th ) day following the Compensation Committee’s written certification of the satisfaction of the Type B Restricted Stock Unit Performance Metric or other similar performance metric and the number of shares of Company common stock payable in respect of the Type B Earned Performance-Based Full Value Awards (which the Compensation Committee shall be obligated to certify within sixty (60) days following the achievement of the Type B Restricted Stock Unit Performance Metric or other similar performance metric), or such later date as is required to avoid the imposition of additional taxes under Code Section 409A pursuant to Section 22 hereof. Notwithstanding the foregoing, in the event the twenty-

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ninth (29 th ) day following the Compensation Committee certification or such later date as is required to avoid the imposition of additional taxes under Code Section 409A is not a Distribution Date, the Type B Unearned Performance-Based Full Value Awards shall be distributed on the first succeeding Distribution Date, but in no event later than the 409A Limit.
b)      No Mitigation Required; No Other Entitlement to Benefits Under Agreement . Employee shall not be required in any way to mitigate the amount of any payment provided for in this Section 8, including, but not limited to, by seeking other employment, nor shall the amount of any payment provided for in this Section 8 be reduced by any compensation earned by Employee as the result of employment with another employer after the Termination Date, or otherwise. Except as set forth in this Section 8, following a termination governed by this Section 8, Employee shall not be entitled to any other compensation or benefits set forth in this Agreement, except as may be separately negotiated by the parties and approved by the Board of Directors of the Company in writing in conjunction with the termination of Employee’s employment under this Section 8 or as otherwise provided for in this Agreement.
c)      Release of Claims . Receipt of the severance payments and benefits specified in this Section 8 shall be contingent on Employee’s execution of a Release, and the lapse of any statutory period for revocation, and such release becoming effective in accordance with its terms within twenty-nine (29) days following the Termination Date. Any severance payment to which Employee otherwise would have been entitled during such twenty-nine (29) day period shall be paid by the Company in full arrears on the twenty-ninth (29 th ) day following Employee’s employment Termination Date or such later date as is required to avoid the imposition of additional taxes under Code Section 409A, together, with respect to any cash severance payments, with interest at the same rate as provided in Section 22(b).
9.      Code Section 280G .
a)      Best Results Treatment . If any payment or benefit Employee would receive pursuant to this Agreement or otherwise on or after the date that is one year following the Renewal Effective Date, including accelerated vesting of any equity compensation (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the Excise Tax, then such Payment shall be reduced to the Reduced Amount. The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in Employee’s receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following order: (A) cash payments that are not nonqualified deferred compensation subject to Section 409A of the Code and the Department of Treasury Regulations and other guidance promulgated thereunder (“Section 409A”) shall be reduced first and in reverse chronological order such that the cash payment owed on the latest date following the occurrence of the event triggering such Excise Tax will be the first cash payment to be reduced; (B) accelerated vesting of stock awards shall be cancelled/reduced next and in the reverse order of the date of grant for such stock awards (i.e., the vesting of the most recently granted stock awards will be reduced first), with full-value awards reversed before any stock option or stock appreciation rights are reduced; (C) employee benefits shall then be reduced in reverse chronological order such that the benefit owed on the latest date following the occurrence of the event triggering such Excise Tax will be the first benefit to be reduced; and (D) cash payments that are nonqualified deferred compensation subject to Section 409A shall be reduced last and in reverse chronological order such that the cash

11

payment owed on the latest date following the occurrence of the event triggering such Excise Tax will be the first cash payment to be reduced.
b)      280G Calculations . The Company shall appoint a nationally recognized accounting firm to make the determinations required under this Section 9 and perform the foregoing calculations. The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder.
The accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the Company and Employee within fifteen (15) calendar days after the date on which right to a Payment is triggered (if requested at that time by the Company or Employee) or such other time as requested by the Company or Employee. If the accounting firm determines that no Excise Tax is payable with respect to a Payment, either before or after the application of the Reduced Amount, it shall furnish the Company and Employee with an opinion reasonably acceptable to Employee that no Excise Tax will be imposed with respect to such Payment. Any good faith determinations of the accounting firm made hereunder shall be final, binding and conclusive upon the Company and Employee.
10.      Noncompetition, Etc. Provisions .
a)      Noncompetition . During the Term of this Agreement and for a period of twelve (12) months commencing on the Termination Date, Employee agrees and covenants that Employee shall not, directly or indirectly, undertake to become an employee, officer, partner, consultant or otherwise be connected with any entity for which, at such time or for the twelve (12) month period thereafter in excess of fifteen percent (15%) of its business is primarily directed at competition with the Company either within Hawaii or on routes to and from Hawaii serviced by the Company, provided, however, for sake of clarity, Employee shall not violate this provision if he is employed with overall responsibility for a business area (such as marketing) which includes oversight and responsibility for routes within Hawaii or on routes to and from Hawaii serviced by the Company. Employee acknowledges and agrees that any intentional and material breach of this non-competition provision shall entitle Employer to immediately terminate payments pursuant to Section 8 of this Agreement and lifetime travel benefits provided in Section 4(c) of this Agreement. If the Company ceases operations on a permanent basis or if the Company ceases to make payments to Employee pursuant to Section 8 hereof, the restrictions of this section shall immediately terminate.
b)      Nondisparagement . During the Term of this Agreement and for a period of twenty-four (24) months commencing on the Termination Date, each party agrees that it/he shall not make any statements that disparage or tend to disparage the other party, including, in the case of the Company, its products, services, officers, employees, advisers or other business contacts. Employee acknowledges and agrees that any intentional and material breach of this nondisparagement provision shall entitle the Company to immediately terminate payments pursuant to Section 8 of this Agreement and lifetime travel benefits provided in Section 4(c) of this Agreement, and if such disparagement is material and results in damage to the Company, the Company may also seek repayment of amounts previously paid to Employee pursuant to Section 8.
c)      Right to Company Materials . Employee agrees that all styles, designs, lists, materials, books, files, reports, correspondence, records, and other documents (“Company Materials”) used, prepared, or made available to Employee, shall be and shall remain the property of the Company. Upon the termination of employment or the expiration of this Agreement, all Company Materials shall be returned immediately to the Company, and Employee shall not make or retain any copies thereof.
d)      Antisolicitation . Employee promises and agrees that during the Term of this Agreement and for the twenty-four (24) month period commencing on the Termination Date, he will not

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influence or attempt to influence customers or suppliers of the Company or any of its present or future subsidiaries or affiliates, either directly or indirectly, to divert their business to any individual, partnership, firm, corporation or other entity then in competition with the Company, or any subsidiary or affiliate of the Company.
e)      Soliciting Employees . During the Term of this Agreement and for the twenty-four (24) month period commencing on the Termination Date, Employee promises and agrees that he will not directly or indirectly solicit any of the Company’s employees to work for any business, individual, partnership, firm, corporation, or other entity in which Employee has any relationship.
11.      Merger or Other Change in Control . For purposes of this Agreement, a “Change in Control” shall mean, with respect to the Company (the definition of which, for sake of clarity, means either or both of HA or HH), any of the following: (a) any person or persons acting together that would constitute a “group” for purposes of Section 13(d) of the Securities Exchange Act of 1934, beneficially own more than 40% of the total voting power of the stock of the Company entitled to vote for the board of directors of the Company (the “Voting Stock”) or economic interests in the Company, (b) the sale, transfer, assignment or other disposition (including by merger or consolidation) by the shareholders of HH, in one transaction or a series of related transactions, with the result that the beneficial owners of the Voting Stock of or economic interests in HH immediately prior to the transaction (or series) do not, immediately after such transaction (or series) beneficially own Voting Stock representing more than 40% of the voting power of all classes of Voting Stock of HH or any successor entity of HH or economic interests in HH representing more than 40% of the economic interests in HH or any Company or any successor entity of HH; (c) the sale or other transfer (in one or a series of transactions) of all or substantially all of the assets of the Company, (d) the dissolution or liquidation of the Company, or (e) a change in the composition of the Board, as a result of which, fewer than one-half of the incumbent directors (without including directors who are appointed as part of the union contract) are directors who either (i) had been directors, other than directors who are appointed as part of the union contract, of the Company on the Renewal Effective Date (the “Original Directors”); or (ii) were elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the aggregate of the Original Directors who were still in office at the time of the election or nomination or directors whose election or nomination was previously so approved.
12.      Notices . All notices and other communications under this Agreement shall be in writing and shall be given by facsimile (with confirmation of transmission), first class mail, certified or registered with return receipt requested, or national, reputable overnight courier and shall be deemed to have been duly given three (3) days after mailing or on the next business day following delivery by overnight courier or transmission of a facsimile to the respective persons named below:
If to HA:
Hawaiian Airlines, Inc.
c/o Ranch Capital, LLC
12730 High Bluff Drive, Suite 180
San Diego, California 92130
Attn: Chairman of the Board of Directors
with a copy to
Hawaiian Airlines, Inc.
3375 Koapaka Street, Suite G-350
Honolulu, HI 96819
Attn: General Counsel
If to HH:
Hawaiian Holdings, Inc.
c/o Ranch Capital, LLC
12730 High Bluff Drive, Suite 180

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San Diego, California 92130
Attn: Chairman of the Board of Directors
with a copy to
Hawaiian Holdings, Inc.
3375 Koapaka Street, Suite G-350
Honolulu, HI 96819
Attn: General Counsel
If to the Company, then to either HA or HH, as set forth above.
If to Employee:
Mark B. Dunkerley
at the last residential address known to the Company
with a copy to
Munger, Tolles & Olson
355 S. Grand Ave. 3500
Los Angeles, California 90071
Attn: Kevin Masuda
Tel: (213) 683-9287
Kevin.Masuda@mto.com
Either party may change such party’s address for notices by written notice duly given pursuant hereto.
13.      Arbitration Clause/Attorneys’ Fees . Any controversy or claim arising out of or relating to this Agreement shall be settled by expedited arbitration administered by the DRS, Inc. in Honolulu, Hawaii, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. In the event judicial or quasi-judicial determination is necessary of any dispute arising as to the parties’ rights and obligations hereunder, the Company and Employee shall each bear its/his respective attorneys’ fees and costs associated with such dispute. The Company shall reimburse Employee (or directly pay) for all reasonable attorneys’ fees and expenses incurred in connection with entering into and/or negotiating this Agreement, up to a maximum of $45,000. Any such reimbursement or direct payment payable under this Section 13 shall be made as soon as practicable after submission of such fee or expense by Employee for payment; provided however, that in no event shall reimbursement or direct payment be made later than the end of the year following the year in which Employee pays such fee or expense.
14.      Termination of Prior Agreements . Except as specifically provided herein (including, without limitation, Sections 3(b), 3(d) and 3(g)), this Agreement terminates and supersedes any and all prior agreements and understandings between the parties with respect to employment or with respect to the compensation of Employee by the Company from and after the Renewal Effective Date, including the Prior Agreement.
15.      Assignment; Successors . This Agreement is personal in its nature and neither of the parties hereto shall, without the consent of the other, assign or transfer this Agreement or any rights or obligations hereunder; provided that, in the event of the merger, consolidation, transfer or sale of all or substantially all of the assets of the Company with or to any other individual or entity, this Agreement shall, subject to the express provisions hereof, be binding upon and inure to the benefit of such successor and such successor shall discharge and perform all the promises, covenants, duties, and obligations of the Company hereunder.

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16.      Governing Law . This Agreement and the legal relations thus created between the parties hereto shall be governed by and construed under and in accordance with the laws of the State of Hawaii applied without regard to the choice of law principles thereof.
17.      Entire Agreement; Headings . This Agreement embodies the entire agreement of the parties respecting the matters within its scope and may be modified only in writing. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.
18.      Waiver; Modification . Failure to insist upon strict compliance with any of the terms, covenants, or conditions hereof shall not be deemed a waiver of such term, covenant, or condition, nor shall any waiver or relinquishment of, or failure to insist upon strict compliance with, any right or power hereunder at any one or more times be deemed a waiver or relinquishment of such right or power at any other time or times. This Agreement shall not be modified in any respect except by a writing executed by the party against whom such modification is charged.
19.      Severability . In the event that a court of competent jurisdiction determines that any portion of this Agreement is in violation of any statute or public policy, only the portions of this Agreement that violate such statute or public policy shall be stricken. All portions of this Agreement that do not violate any statute or public policy shall continue in full force and effect. Further, any court order striking any portion of is Agreement shall modify the stricken terms as narrowly as possible to give as much effect as possible to the intentions of the parties under this Agreement.
20.      Indemnification . The Company shall indemnify and hold Employee harmless to the maximum extent permitted by Section 145 of the Delaware General Corporation Law and the Restated Articles of Incorporation and Amended Bylaws of Hawaiian Airlines, Inc. and of Hawaiian Holdings, Inc. respectively. The Company will maintain an Errors and Omissions insurance policy during the term of this Agreement, which policy shall name Employee as an insured.
21.      Counterparts . This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
22.      Section 409A .
a)      General . This Agreement shall be interpreted, construed and administered in a manner that satisfies the requirements of Section 409A of the Code and the Department of Treasury Regulations and other guidance promulgated thereunder. It is the intent of this Agreement to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided under this Agreement will be subject to the additional tax imposed under Section 409A, and any ambiguities in this Agreement will be interpreted to so comply. The Company and Employee agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition under Section 409A prior to actual payment to Employee. All payments or distributions under this Agreement shall be made on the date or during the period specified herein for such payments, subject to Section 22(b) herein. To the extent no date or period is specified, a payment or distribution shall be made on or before the later of (i) the fifteenth day of the third month following the end of Employee’s first taxable year in which the right to such payment or distribution is no longer subject to a substantial risk of forfeiture or (ii) the fifteenth day of the third month following the end of the Company’s first taxable year in which the right to such payment or distribution is no longer subject to a substantial risk of forfeiture (the “409A Limit”), except as provided in Section 22(b) herein.

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b)      Specified Employee Delay . Each of the payments under this Agreement shall be considered a separate payment for the purposes of Section 409A. Notwithstanding any provision to the contrary in this Agreement, if (a) Employee is a “specified employee” within the meaning of Section 409A for the period in which the payment or benefits under this Agreement would otherwise commence and (b) any payment or benefit under this Agreement would otherwise subject Employee to any tax, interest or penalty imposed under Section 409A, if the payment or benefit would commence within six months of a termination of Employee’s employment with the Company (the “Deferred Compensation Separation Benefits”), then all such payments or benefits that would otherwise be paid during the first six months after Employee’s separation from service within the meaning of Section 409A shall be accumulated and shall be paid (together with, in the case of any cash payment, interest credited at the Applicable Federal Rate in effect as of the date of Employee’s separation from service) on the earlier of (1) the first day which is at least six (6) months after Employee’s separation from service within the meaning of Section 409A or (2) the date of Employee’s death (as applicable, the “Specified Employee Payment Date”).
c)      Separation from Service . Notwithstanding anything to the contrary in this Agreement, no Deferred Compensation Separation Benefits payable under this Agreement will be considered due or payable until and unless Employee has a “separation from service” within the meaning of Section 409A. Notwithstanding anything herein to the contrary, if Employee dies following his “separation from service” but prior to the six (6) month anniversary of the date of his “separation from service,” then any Deferred Compensation Separation Benefits delayed in accordance with this Section will be payable in a lump sum as soon as administratively practicable after the date of Employee’s death, but not later than ninety (90) days after the date of Employee’s death, and all other Deferred Compensation Separation Benefits will be payable in accordance with the payment schedule applicable to each payment or benefit.
23.      Withholding . The Company shall have the right to deduct and withhold from all amounts payable or benefits provided to Employee (whether pursuant to this Agreement or otherwise) all federal, state and local income and employment taxes the Company believes is required to be so deducted and withheld. In the event any compensation is paid or benefits are provided other than in cash, Employee shall make arrangements satisfactory to the Company for the payment to the Company of such income and employment taxes.
24.      Indemnity . From and after the Renewal Effective Date, the Company will indemnify, defend, protect and hold Employee (and his heirs and executors) harmless, from and against any and all costs, losses, liabilities, obligations, damages, lawsuits, deficiencies, claims, demands and expenses (including reasonable attorneys’ fees) arising out of, relating to or resulting in any way from any breach of any representation or warranty of the Company in this Agreement; provided, however, that this Section 24 shall not apply to any taxes incurred by Employee due to such breach or payments hereunder.

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IN WITNESS WHEREOF, the Company has caused this amended and restated Agreement to be executed by its duly authorized representatives, and Employee has hereunto signed this Agreement, on the dates set forth below.
EMPLOYEE
 
HAWAIIAN HOLDINGS, INC.
 
 
 
 
 
By:
/s/ Mark B. Dunkerley
 
By:
 /s/ Crystal Rose
 
 
 
 
 
Date:
12/24/2016
 
Name:
Crystal Rose
 
 
 
 
 
 
 
 
Title:
Director
 
 
 
 
 
 
 
 
Date:
12/23/2016
 
 
 
 
 
 
 
 
HAWAIIAN AIRLINES, INC.
 
 
 
 
 
 
 
 
By:
/s/ Crystal Rose
 
 
 
 
 
 
 
 
Name:
Crystal Rose
 
 
 
 
 
 
 
 
Title:
Director
 
 
 
 
 
 
 
 
Date:
12/23/2016



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EXHIBIT A
HAWAIIAN AIRLINES, INC./HAWAIIAN
HOLDINGS, INC./MARK B. DUNKERLEY
RELEASE OF CLAIMS
This Release of Claims (“Agreement”) is made between and among Hawaiian Airlines, Inc., Hawaiian Holdings, Inc. (the “Company”), and Mark B. Dunkerley (“Employee”).
WHEREAS, Employee has agreed to enter into a release of claims in favor of the Company upon certain events specified in the offer letter agreement by and between Company and Employee (the “Employment Agreement”).
NOW THEREFORE, in consideration of the mutual promises made herein, the Parties hereby agree as follows:
1. Termination . Employee’s employment from the Company terminated on ________________ (the “Termination Date”).
2.      Payment of Salary . Employee acknowledges and represents that the Company has paid all salary, wages, bonuses, accrued vacation, commissions and any and all other benefits due to Employee prior to the date on which Employee executed this Agreement.
3.      Release .
(a)      Employee irrevocably and unconditionally releases Employer, its parent corporation, successors, heirs, assigns, directors, shareholders, trustees, officers, employees, servants, agents (and former directors, shareholders, trustees, officers, employees, servants, and agents), attorneys, executors, administrators, insurers, subsidiaries and affiliated companies from any and all claims, charges, complaints, grievances, contracts, liabilities, obligations, demands, promises, reimbursements, causes of action, costs, debts, expenses, damages (including, but not limited to actual damages, compensatory damages, special damages, liquidated damages, and punitive damages) of any kind directly or indirectly, known or unknown, suspected or unsuspected, arising out of or related to (i) the employment of Employee by Employer, (ii) the termination of Employee’s employment or the circumstances leading up to Employee’s termination of employment, and (iii) any other act or occurrence pre-dating Employee’s execution of this Agreement.
(b)      Employee acknowledges and agrees that Employee has read this Agreement. Employee also acknowledges and agrees that Employee understands the terms of this Agreement. Employee further acknowledges and agrees that Employee is entering into this Agreement deliberately, knowingly, and voluntarily, with full knowledge of its significance, and with the express intention of effecting the legal consequences relating to the extinguishment of all obligations. Employee also acknowledges and agrees that Employer has advised Employee to seek the advice of Employee’s own attorney prior to executing this Agreement regarding the terms and conditions of this Agreement.
(c)      Employee understands that this Agreement releases Employer from all liability, past or present, arising out of or related to Employee’s employment, termination of employment and the circumstances leading up to Employee’s termination of employment, and any other act or occurrence pre-dating Employee’s execution of this Agreement, including, but not limited to, any rights or claims




pursuant to (i) the Age Discrimination Act of 1967 (“ADEA”) (29 U.S.C. § 626, et seq.), and any amendments thereto; (ii) the Civil Rights Act of 1964 (“Title VII”) (42 U.S.C. § 2000e, et seq.), and any amendments thereto; (iii) the Civil Rights Statutes (42 U.S.C. §§ 1981, 1981a, and 1988), and any amendments thereto; (iv) the Americans with Disabilities Act of 1990 (“ADA”) (42 U.S.C. § 12101, et seq.), and any amendments thereto; (v) the Employee Retirement Income Security Act (“ERISA”) (29 U.S.C. §1001 et seq.), and any amendments thereto; (vi) Hawaii’s Employment Practices Act (Haw. Rev. Stat. ch. 378), and any amendments thereto; (vii) all applicable state and federal wage and hour laws, and any amendments thereto; (viii) all claims based on common law sounding in tort, contract, implied contract, negligence and/or gross negligence, including, but not limited to promissory estoppel, quantum meruit, libel/slander, defamation, misrepresentation, emotional distress (negligent or intentional) fraud or deceit, unpaid wages, equitable claims, breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, wrongful discharge and/or termination, and violation of public policy; and (ix) any claim for attorneys’ fees or costs.
Employee understands that nothing contained in this Agreement shall prohibit Employee from (i) bringing any action to enforce the terms of this Agreement or severance and other benefits due pursuant to the Employment Agreement or to enforce his other vested benefits and rights under the Company’s benefit plans in accordance with the terms of such plans and the Employment Agreement; (ii) filing a timely charge or complaint with the Hawaii Civil Rights Commission (“HCRC”) or the Equal Employment Opportunity Commission (“EEOC”) regarding the validity of the Agreement; or (iii) filing a timely charge or complaint with the HCRC or the EEOC or participating in any investigation or proceeding conducted by the HCRC or the EEOC regarding any claim of employment discrimination. This release does not extend to any severance or other obligations due Employee under the Employment Agreement or to Employee’s vested rights and benefits under the Company’s benefit plans in accordance with the terms of such plans and the Employment Agreement. Nothing in this Agreement waives Employee’s rights to indemnification or any payments under any fiduciary insurance policy, if any, provided by any act or agreement of the Company, state or federal law or policy of insurance.
(d)      Employee acknowledges and understands that there is a risk that subsequent to the execution of this Agreement, Employee may incur or suffer loss, damages, or injuries that are in some way related to or arising out of Employee’s employment with Employer or the termination thereof, but that are unknown and unanticipated at the time this Agreement is signed. Accordingly, Employee hereby assumes these risks and that this Agreement shall apply to all such unknown or unanticipated claims.
(e)      Employee acknowledges and understands that Employee is not waiving any future rights or claims that might arise after the date this Agreement is signed by Employee.
(f)      Employee acknowledges and understands that Employer does not make nor has made any representations to force or induce Employee to sign this Agreement other than what is specifically provided for in this Agreement. Furthermore, Employee acknowledges and understands that Employee is under no obligation to sign this Agreement.
4.      Acknowledgment of Waiver of Claims under ADEA . Employee acknowledges that he is waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and voluntary. Employee and the Company agree that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the effective date of this Agreement. Employee acknowledges that the consideration given for this waiver and release Agreement is in addition to anything of value to which Employee was already entitled. Employee further acknowledges that he has been advised by this writing that (a) he should

A-2


 


consult with an attorney prior to executing this Agreement; (b) he has at least twenty-one (21) days within which to consider this Agreement; (c) he has seven (7) days following the execution of this Agreement by the parties to revoke the Agreement; (d) this Agreement shall not be effective until the revocation period has expired; and (e) nothing in this Agreement prevents or precludes Employee from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs for doing so, unless specifically authorized by federal law. Any revocation should be in writing and delivered to the Vice-President of Human Resources at the Company by close of business on the seventh day from the date that Employee signs this Agreement.
5.      No Pending or Future Lawsuits . Employee represents that he has no lawsuits, claims, or actions pending in his name, or on behalf of any other person or entity, against the Company or any other person or entity referred to herein. Employee also represents that he does not intend to bring any claims on his own behalf or on behalf of any other person or entity against the Company or any other person or entity referred to herein.
6.      No Cooperation . Employee agrees that he will not counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against the Company and/or any officer, director, employee, agent, representative, shareholder or attorney of the Company, unless under a subpoena or other court order to do so.
7.      Arbitration . The parties hereto agree that any and all disputes arising out of the terms of this Agreement, their interpretation, and any of the matters herein released, including any potential claims of harassment, discrimination or wrongful termination shall be subject to binding arbitration, to the extent permitted by law, as specified in the Employment Agreement.
8.      Effective Date . This Agreement is effective eight (8) days after it has been signed by all parties hereto.
9.      Voluntary Execution of Agreement . This Agreement is executed voluntarily and without any duress or undue influence on the part or behalf of the parties hereto, with the full intent of releasing all claims. The parties hereto acknowledge that:
(a)      They have read this Agreement;
(b)      They have been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of their own choice or that they have voluntarily declined to seek such counsel;
(c)      They understand the terms and consequences of this Agreement and of the releases it contains; and
(d)      They are fully aware of the legal and binding effect of this Agreement.
10.      Confidential Information and Trade Secrets . Employee agrees that, during Employee’s employment by Employer, Employee received and was privy to confidential information and trade secrets. Employee agrees that Employee shall hold in confidence and not disclose to any unauthorized person any knowledge or information of a confidential nature and any trade secret with respect to the business of Employer acquired and possessed by Employee and shall not disclose, publish, or make use

A-3


 


of the same without the prior express written consent of Employer. For avoidance of doubt, the restrictions of this paragraph are subject to the express exclusion for Protected Activity in the Company’s Code of Business Ethics and Conduct.
11.      Assignment . This Agreement is personal as to Employee and shall not be assignable by Employee.
12.      Modification . This Agreement may not be changed, altered, modified, or amended orally, but only by an instrument in writing signed by the party against whom enforcement of any change, alteration, modification, or amendment is sought.
13.      No Bar or Waiver . No delay or omission on the part of Employer or Employee in exercising any right under this Agreement shall operate as a waiver of such right or of any other right either may have. A waiver on one occasion shall not be construed as a bar to or waiver of any right on any future occasion.
14.      Headings . Paragraph headings are not to be considered part of this Agreement and are included solely for convenience and form no part of this Agreement or affect the interpretation thereof.
15.      Notices . All notices, requests, demand, and other communications hereunder shall be deemed to have been duly given if delivered by hand or mailed, certified or registered mail, with postage prepaid.
16.      Entire Agreement . This Agreement, the severance and post-termination obligation provisions of the Employment Agreement (e.g., Sections 7, 8 and 9 provisions), and Employee’s equity compensation agreements and other benefit plans contain the entire understanding of Employee and Employer, and fully supersede any and all prior agreements or understandings pertaining to the subject matter of this Agreement. Each of the parties hereto acknowledges that no party or agent of any party has made any promise, representation or warranty whatsoever, either expressed or implied, not contained in this Agreement concerning the subject matter hereof to induce any other party to execute this Agreement, and each of the parties hereto acknowledges that it has not executed this Agreement in reliance upon any such promises, representations or warranties not specifically contained in this Agreement.
17.      Binding Effect . This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and to the successors and assigns of Employer.
18.      Applicable Law . This Agreement is being delivered in and shall be construed and enforceable in accordance with the laws of the State of Hawaii.
19.      Miscellaneous . If any term, covenant, or agreement in this Agreement or any application thereof shall be held to be invalid or unenforceable, the remainder of this Agreement and any other application of such term, covenant, or agreement shall not be affected thereby. No party shall be deemed to be the drafter of this Agreement and this Agreement shall not be construed for or against any of the parties.

A-4


 


IN WITNESS THEREOF, parties hereto have executed this Agreement on the dates set forth below.
EMPLOYEE        HAWAIIAN HOLDINGS, INC.
By:              By:                 
Date:          Name:     
Title:             
Date:             
HAWAIIAN AIRLINES, INC.
By:                 
Name:     
Title:                 
Date:                 


A-5


 

HAWAIIAN HOLDINGS, INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this “ Agreement ”) is entered into, effective as of ________________, _____, by and between Hawaiian Holdings, Inc., a Delaware corporation (the “ Company ”), and ____________________ (“ Indemnitee ”).
WHEREAS , Indemnitee’s service to the Company substantially benefits the Company;
WHEREAS , individuals are reluctant to serve as directors or officers of corporations or in certain other capacities unless they are provided with adequate protection through insurance or indemnification against the risks of claims and actions against them arising out of such service;
WHEREAS , Indemnitee does not regard the protection currently provided by applicable law, the Company’s governing documents and any insurance as adequate under the present circumstances, and Indemnitee may not be willing to serve as a director or officer without additional protection;
WHEREAS , in order to induce Indemnitee to continue to provide services to the Company, it is reasonable, prudent and necessary for the Company to contractually obligate itself to indemnify, and to advance expenses on behalf of, Indemnitee as permitted by applicable law; and
WHEREAS , this Agreement is a supplement to and in furtherance of the indemnification provided in the Company’s certificate of incorporation and bylaws, and any resolutions adopted pursuant thereto, and this Agreement shall not be deemed a substitute therefor, nor shall this Agreement be deemed to limit, diminish or abrogate any rights of Indemnitee thereunder.
The parties therefore agree as follows:
1. Definitions.
(a)      A “ Change in Control ” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:
(i)      Acquisition of Stock by Third Party. Any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding securities;
(ii)      Change in Board Composition. During any one (1) year period (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Company’s board of directors, and any new directors (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 1(a)(i) , 1(a)(iii) or 1(a)(iv) ) whose election by the board of directors or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Company’s board of directors;
(iii)      Corporate Transactions. The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either

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by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;
(iv)      Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and
(v)      Other Events. Any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended, whether or not the Company is then subject to such reporting requirement.
For purposes of this Section 1(a) , the following terms shall have the following meanings:
(1)      “ Person ” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended; provided, however, that “ Person ” shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.
(2)      “ Beneficial Owner ” shall have the meaning given to such term in Rule 13d-3 under the Securities Exchange Act of 1934, as amended; provided, however, that “ Beneficial Owner ” shall exclude any Person otherwise becoming a Beneficial Owner by reason of (i) the stockholders of the Company approving a merger of the Company with another entity or (ii) the Company’s board of directors approving a sale of securities by the Company to such Person.
(b)      For purposes of this Agreement, references to the “ Company ” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.
(c)      “ Corporate Status ” describes the status of a person who is or was a director, trustee, general partner, managing member, officer, employee, agent or fiduciary of the Company or any other Enterprise.
(d)      “ DGCL ” means the General Corporation Law of the State of Delaware.
(e)      “ Disinterested Director ” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.
(f)      “ Enterprise ” means the Company and any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was

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serving at the request of the Company as a director, trustee, general partner, managing member, officer, employee, agent or fiduciary.
(g)      “ Expenses ” include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees and costs of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond or other appeal bond or their equivalent, and (ii) for purposes of Section 13(d) , Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
(h)      “ Independent Counsel ” means a law firm, or a partner or member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent (i) the Company or Indemnitee in any matter material to either such party (other than as Independent Counsel with respect to matters concerning Indemnitee under this Agreement, or other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “ Independent Counsel ” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
(i)      “ Proceeding ” means any threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative or investigative nature, including any appeal therefrom and including without limitation any such Proceeding pending as of the date of this Agreement, in which Indemnitee was, is or will be involved as a party, a potential party, a non-party witness or otherwise by reason of (i) the fact that Indemnitee is or was a director or officer of the Company, (ii) any action taken by Indemnitee or any action or inaction on Indemnitee’s part while acting as a director or officer of the Company, or (iii) the fact that Indemnitee is or was serving at the request of the Company as a director, trustee, general partner, managing member, officer, employee, agent or fiduciary of the Company or any other Enterprise, in each case whether or not serving in such capacity at the time any liability or Expense is incurred for which indemnification or advancement of expenses can be provided under this Agreement.
(j)      Reference to “ other enterprises ” shall include employee benefit plans; references to “ fines ” shall include any excise taxes assessed on a person with respect to any employee benefit plan; references to “ serving at the request of the Company ” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “ not opposed to the best interests of the Company ” as referred to in this Agreement.
2.      Indemnity in Third-Party Proceedings. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 2 if Indemnitee was, is, or is threatened to be made, a party to or

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a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 2 , Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal Proceeding, had no reasonable cause to believe that Indemnitee’s conduct was unlawful.
3.      Indemnity in Proceedings by or in the Right of the Company. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee was, is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3 , Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. No indemnification for Expenses shall be made under this Section 3 in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged by a court of competent jurisdiction to be liable to the Company, unless and only to the extent that the Delaware Court of Chancery or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for such expenses as the Delaware Court of Chancery or such other court shall deem proper.
4.      Indemnification for Expenses of a Party Who is Wholly or Partly Successful. To the extent that Indemnitee is a party to or a participant in and is successful (on the merits or otherwise) in defense of any Proceeding or any claim, issue or matter therein, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith. To the extent permitted by applicable law, if Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, in defense of one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with (a) each successfully resolved claim, issue or matter and (b) any claim, issue or matter related to any such successfully resolved claim, issuer or matter. For purposes of this section, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
5.      Indemnification for Expenses of a Witness. To the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, Indemnitee shall be indemnified to the extent permitted by applicable law against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.
6.      Additional Indemnification.
(a)      Notwithstanding any limitation in Sections 2 , 3 or 4 , the Company shall indemnify Indemnitee to the fullest extent permitted by applicable law if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with the Proceeding or any claim, issue or matter therein.

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(b)      For purposes of Section 6(a) , the meaning of the phrase “ to the fullest extent permitted by applicable law ” shall include, but not be limited to:
(i)      the fullest extent permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL; and
(ii)      the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers and directors.
7.      Partial Indemnification . If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the expenses, judgments, fines or penalties actually or reasonably incurred by Indemnitee in the investigation, defense, appeal or settlement of any civil or criminal action, suit or proceeding, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such expenses, judgments, fines or penalties to which Indemnitee is entitled.
8.      Exclusions. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any Proceeding (or any part of any Proceeding):
(a)      for which payment has actually been made to or on behalf of Indemnitee under any statute, insurance policy, indemnity provision, vote or otherwise, except with respect to any excess beyond the amount paid;
(b)      for an accounting or disgorgement of profits pursuant to Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of federal, state or local statutory law or common law, if Indemnitee is held liable therefor (including pursuant to any settlement arrangements);
(c)      for expenses incurred by Indemnitee with respect to any such action in which Indemnitee acted in bad faith or in a manner opposed to the best interests of the Company;
(d)      for any reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Securities Exchange Act of 1934, as amended (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act), if Indemnitee is held liable therefor (including pursuant to any settlement arrangements);
(e)      initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees, agents or other indemnitees, unless (i) the Company’s board of directors authorized the Proceeding (or the relevant part of the Proceeding) prior to its initiation, (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law, (iii) otherwise authorized in Section 13(d) or (iv) otherwise required by applicable law; or
(f)      if prohibited by applicable law.

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9.      Advancement of Expenses. The Company shall advance the Expenses incurred by Indemnitee in connection with any Proceeding, and such advancement shall be made as soon as reasonably practicable, but in any event no later than sixty (60) days, after the receipt by the Company of a written statement or statements requesting such advances from time to time (which shall include invoices received by Indemnitee in connection with such Expenses but, in the case of invoices in connection with legal services, any references to legal work performed or to expenditure made that would cause Indemnitee to waive any privilege accorded by applicable law shall not be included with the invoice). Advances shall be unsecured and interest free and made without regard to Indemnitee’s ability to repay such advances. Indemnitee hereby undertakes to repay any advance to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company. This Section 9 shall not apply to the extent advancement is prohibited by law and shall not apply to any Proceeding for which indemnity is not permitted under this Agreement, but shall apply to any Proceeding referenced in Section 8(b) , 8(c) or 8(d) prior to a determination that Indemnitee is not entitled to be indemnified by the Company. Notwithstanding the foregoing, no advance shall be made by the Company to Indemnitee in any Proceeding if a determination is reasonably and promptly made (i) by a majority vote of the directors who are not parties to such Proceeding, even though less than a quorum, or (ii) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors, or if such directors so direct, by Independent Counsel in a written opinion, that facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that Indemnitee acted in bad faith or in a manner that Indemnitee did not believe to be in or not opposed to the best interests of the Company.
10.      Procedures for Notification and Defense of Claim.
(a)      Notice to the Company. Indemnitee shall notify the Company in writing of any matter with respect to which Indemnitee intends to seek indemnification or advancement of Expenses as soon as reasonably practicable following the receipt by Indemnitee of notice thereof. The written notification to the Company shall include, in reasonable detail, a description of the nature of the Proceeding and the facts underlying the Proceeding. The failure by Indemnitee to notify the Company will not relieve the Company from any liability which it may have to Indemnitee hereunder or otherwise than under this Agreement, and any delay in so notifying the Company shall not constitute a waiver by Indemnitee of any rights, except to the extent that such failure or delay materially prejudices the Company.
(b)      Notice to Insurers. If, at the time of the receipt of a notice of a Proceeding pursuant to the terms hereof, the Company has directors’ and officers’ liability insurance in effect, the Company shall give prompt notice of the commencement of the Proceeding to the insurers, to the extent required, in accordance with the procedures set forth in the applicable policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, or reimburse the Company, as the case may be, all amounts payable as a result of such Proceeding in accordance with the terms of such policies; provided , however , that nothing in this subsection (b) shall relieve the Company of its obligations hereunder (or allow the Company to delay in its performance of its obligations hereunder) to provide indemnification for or advance any expenses with respect to any Proceeding referenced in Sections 2 or 3 , between the time that it so notifies its insurers and the time that its insurers actually pay any such amounts payable as a result of any such Proceeding to the Company.
(c)      Selection of Counsel. In the event the Company may be obligated to make any indemnity in connection with a Proceeding, the Company shall be entitled to assume the defense of such Proceeding at its own expense with counsel approved by Indemnitee, which approval shall not be unreasonably withheld, upon the delivery to Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee for any fees or expenses of separate counsel subsequently employed by or on behalf of Indemnitee with respect to the same Proceeding. Notwithstanding the Company’s assumption of the defense of any such

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Proceeding, the Company shall be obligated to pay the fees and expenses of Indemnitee’s counsel to the extent (i) the employment of counsel by Indemnitee is authorized by the Company, (ii) counsel for the Company or Indemnitee shall have reasonably concluded that there is a conflict of interest between the Company and Indemnitee in the conduct of any such defense such that Indemnitee needs to be separately represented, (iii) the fees and expenses are non-duplicative and reasonably incurred in connection with Indemnitee’s role in the Proceeding despite the Company’s assumption of the defense, (iv) the Company is not financially or legally able to perform its indemnification obligations or (v) the Company shall not have retained, or shall not continue to retain, such counsel to defend such Proceeding. Regardless of any provision in this Agreement, Indemnitee shall have the right to employ counsel in any Proceeding at Indemnitee’s personal expense. The Company shall not be entitled, without the consent of Indemnitee, to assume the defense of any claim brought by or in the right of the Company. Indemnitee agrees to consult with the Company and to consider in good faith the advisability and appropriateness of joint representation in the event that either the Company or other indemnitees in addition to Indemnitee require representation in connection with any Proceeding.
(d)      Cooperation by Indemnitee. Indemnitee shall give the Company such information and cooperation in connection with the Proceeding as may be reasonably appropriate.
(e)      Settlements. The Company shall not be liable to indemnify Indemnitee for any settlement of any Proceeding (or any part thereof) without the Company’s prior written consent, which shall not be unreasonably withheld.
(f)      Right to Settle Proceedings. The Company shall not settle any Proceeding (or any part thereof) without Indemnitee’s prior written consent, which shall not be unreasonably withheld.
11.      Procedures upon Application for Indemnification.
(a)      Notice. To obtain indemnification, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and as is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of the Proceeding. The Company shall, as soon as reasonably practicable after receipt of such a request for indemnification, advise the board of directors that Indemnitee has requested indemnification. Any delay in providing the request will not relieve the Company from its obligations under this Agreement.
(b)      Determination . Following a written request by Indemnitee for indemnification pursuant to Section 11(a) , a determination with respect to Indemnitee’s entitlement thereto shall be made in the specific case (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Company’s board of directors, a copy of which shall be delivered to Indemnitee or (ii) if a Change in Control shall not have occurred, if required by applicable law, (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the Company’s board of directors, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Company’s board of directors, (C) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Company’s board of directors, a copy of which shall be delivered to Indemnitee or (D) if so directed by the Company’s board of directors, by the stockholders of the Company. If it is determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within thirty (30) days after such determination. Indemnitee shall cooperate with the person, persons or entity making the determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information that is not privileged or otherwise protected from disclosure and that is reasonably available to Indemnitee and reasonably necessary to

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such determination. Any costs or expenses (including attorneys’ fees and disbursements) reasonably incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company, to the extent permitted by applicable law.
(c)      Disputes. In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 11(b) , the Independent Counsel shall be selected as provided in this Section 11(c) . If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Company’s board of directors, and the Company shall give written notice to Indemnitee advising him or her of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Company’s board of directors, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided , however , that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 1 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within twenty (20) days after the later of (i) submission by Indemnitee of a written request for indemnification pursuant to Section 11(a) hereof and (ii) the final disposition of the Proceeding, the parties have not agreed upon an Independent Counsel, either the Company or Indemnitee may petition a court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 11(b) hereof. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 13 of this Agreement, the Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).
(d)      The Company agrees to pay the reasonable fees and expenses of any Independent Counsel and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.
12.      Presumptions and Effect of Certain Proceedings.
(a)      In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall, to the fullest extent not prohibited by law, presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 11(a) of this Agreement, and the Company shall, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption in connection with the making by such person, persons or entity of any determination contrary to that presumption.
(b)      The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably

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believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
(c)      For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith to the extent Indemnitee relied in good faith on (i) the records or books of account of the Enterprise, including financial statements, (ii) information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, (iii) the advice of legal counsel for the Enterprise or its board of directors or counsel selected by any committee of the board of directors or (iv) information or records given or reports made to the Enterprise by an independent certified public accountant, an appraiser, investment banker or other expert selected with reasonable care by the Enterprise or its board of directors or any committee of the board of directors. The provisions of this Section 12(c) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.
(d)      Neither the knowledge, actions nor failure to act of any other director, officer, agent or employee of the Enterprise shall be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.
13.      Remedies of Indemnitee.
(a)      Subject to Section 13(f) , in the event that (i) a determination is made pursuant to Section 11 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 9 or 13(d) of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 11 of this Agreement within ninety (90) days after the later of the receipt by the Company of the request for indemnification or the final disposition of the Proceeding, (iv) payment of indemnification pursuant to this Agreement is not made (A) within thirty (30) days after a determination has been made that Indemnitee is entitled to indemnification or (B) with respect to indemnification pursuant to Sections 4 , 5 and 13(e) of this Agreement, within thirty (30) days after receipt by the Company of a written request therefor, or (v) the Company or any other person or entity takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, Indemnitee the benefits provided or intended to be provided to Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a court of competent jurisdiction of Indemnitee’s entitlement to such indemnification or advancement of Expenses. The Company shall not oppose Indemnitee’s right to seek any such adjudication in accordance with this Agreement.
(b)      As an alternative to Section 13(a) , Indemnitee, at Indemnitee’s option, may seek an award in binding arbitration with respect to Indemnitee’s entitlement to such indemnification or advancement of Expenses, to be conducted in Honolulu, Hawaii by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association (“AAA Rules”) and Delaware law, provided that if the AAA Rules conflict with Delaware law, Delaware law shall take precedence. The Company and Indemnitee shall each pay an equal share of the fees charged by the arbitrator and costs charged by AAA in connection with the arbitration, but shall each separately pay their respective attorneys’ fees and costs. The arbitrator shall consider and shall have the power to decide any motions brought by the Company or Indemnitee, including motions for summary judgment and/or adjudication, and motions to dismiss, prior to any arbitration hearing. The arbitrator shall issue a written decision on the merits, which shall identify the prevailing party in the arbitration. The Company and Indemnitee agree that any award rendered by the arbitrator may be entered as a final and binding judgment in any court having jurisdiction thereof. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration in accordance with this Agreement.

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(c)      Neither (i) the failure of the Company, its board of directors, any committee or subgroup of the board of directors, Independent Counsel or stockholders to have made a determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor (ii) an actual determination by the Company, its board of directors, any committee or subgroup of the board of directors, Independent Counsel or stockholders that Indemnitee has not met the applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has or has not met the applicable standard of conduct. In the event that a determination shall have been made pursuant to Section 11 of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 13 shall be conducted in all respects as a de novo trial, or arbitration, on the merits, and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 13 , the Company shall, to the fullest extent not prohibited by law, have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.
(d)      To the fullest extent not prohibited by law, the Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 13 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.
(e)      To the extent not prohibited by law, the Company shall indemnify Indemnitee against all Expenses that are incurred by Indemnitee in connection with any action for indemnification or advancement of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company to the extent Indemnitee is successful in such action, and, if requested by Indemnitee, shall (as soon as reasonably practicable, but in any event no later than sixty (60) days, after receipt by the Company of a written request therefor) advance such Expenses to Indemnitee, subject to the provisions of Section 9 .
(f)      Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification shall be required to be made prior to the final disposition of the Proceeding.
14.      Mutual Acknowledgement . Both the Company and Indemnitee acknowledge that in certain instances, Federal law or applicable public policy may prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise. Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s right under public policy to indemnify Indemnitee.
15.      Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amounts incurred by Indemnitee, whether for Expenses, judgments, fines or amounts paid or to be paid in settlement, in connection with any Proceeding under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the events and transactions giving rise to such Proceeding; and (ii) the relative fault of Indemnitee and the Company (and its other directors, officers, employees and agents) in connection with such events and transactions.
16.      Non-exclusivity. The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Company’s certificate of incorporation or bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. To the extent that a change in Delaware law,

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whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Company’s certificate of incorporation and bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change, subject to the restrictions expressly set forth herein or therein. Except as expressly set forth herein, no right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. Except as expressly set forth herein, the assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
17.      No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder (or for which advancement is provided hereunder) if and to the extent that Indemnitee has otherwise actually received payment for such amounts under any insurance policy, contract, agreement or otherwise.
18.      Insurance. The Company will make commercially reasonable efforts to obtain and maintain liability insurance applicable to directors, officers or fiduciaries in an amount determined by the Company’s board of directors; provided , however , that nothing in this Section 18 shall relieve the Company of its obligations hereunder (or allow the Company to delay in its performance of its obligations hereunder) to provide indemnification for or advance any expenses with respect to any claim. To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, trustees, general partners, managing members, officers, employees, agents or fiduciaries of the Company or any other Enterprise, Indemnitee shall be covered by such policy or policies to the same extent as the most favorably-insured persons under such policy or policies in a comparable position.
19.      Subrogation. In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
20.      Services to the Company. This Agreement shall not be deemed an employment contract between the Company (or any of its subsidiaries or any Enterprise) and Indemnitee.
21.      Duration. This Agreement shall continue until and terminate upon the later of (a) ten (10) years after the date that Indemnitee shall have ceased to serve as a director or officer of the Company or as a director, trustee, general partner, managing member, officer, employee, agent or fiduciary of any other Enterprise, as applicable; or (b) one year after the final termination of any Proceeding, including any appeal, then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 13 of this Agreement relating thereto.
22.      Successors. This Agreement shall be binding upon the Company and its successors and assigns, including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company, and shall inure to the benefit of Indemnitee and Indemnitee’s heirs, executors and administrators.
23.      Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company’s inability, pursuant to court order or other applicable law, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. If any provision or provisions of this Agreement shall be held to be invalid, illegal or

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unenforceable for any reason whatsoever: (i) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (ii) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (iii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.
24.      Enforcement. The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director or officer of the Company.
25.      Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided , however , that this Agreement is a supplement to and in furtherance of the Company’s certificate of incorporation and bylaws and applicable law.
26.      Modification and Waiver. No supplement, modification or amendment to this Agreement shall be binding unless executed in writing by the parties hereto. No amendment, alteration or repeal of this Agreement shall adversely affect any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in such Indemnitee’s Corporate Status prior to such amendment, alteration or repeal. No waiver of any of the provisions of this Agreement shall constitute or be deemed a waiver of any other provision of this Agreement nor shall any waiver constitute a continuing waiver.
27.      Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail or otherwise delivered by hand, messenger or courier service addressed:
(a)      if to Indemnitee, to Indemnitee’s address, facsimile number or electronic mail address as shown on the signature page of this Agreement or in the Company’s records, as may be updated in accordance with the provisions hereof; or
(b)      if to the Company, to the attention of the Chief Legal Officer of the Company at 3375 Koapaka Street, Suite G-350, Honolulu, HI 96819, or at such other current address as the Company shall have furnished to Indemnitee, with a copy (which shall not constitute notice) to Tony Jeffries, Wilson Sonsini Goodrich & Rosati, P.C., 650 Page Mill Road, Palo Alto, California 94304.
Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one business day after deposit with the courier), (ii) if sent via mail, at the earlier of its receipt or five (5) days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent via facsimile, upon confirmation of facsimile transfer or, if sent via electronic mail, upon confirmation of delivery when directed to the relevant electronic mail address, if sent

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during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day.
28.      Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 13(b) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Court of Chancery, and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court of Chancery for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) appoint, to the extent such party is not otherwise subject to service of process in the State of Delaware, The Corporation Trust Company, Wilmington, Delaware as its agent in the State of Delaware as such party’s agent for acceptance of legal process in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware, (iv) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court of Chancery, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court of Chancery has been brought in an improper or inconvenient forum.
29.      Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. This Agreement may also be executed and delivered by facsimile signature and in counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.
30.      Captions. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
( signature page follows )



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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Indemnification Agreement as of the date specified above.

HAWAIIAN HOLDINGS, INC.
By:         
Name:     
Title:     
Agreed to and accepted:
INDEMNITEE
Signature:     
Printed Name:     





CHANGE IN CONTROL AND SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL AND SEVERANCE AGREEMENT dated as of the last date signed below, (“Agreement”), by and between HAWAIIAN AIRLINES, INC., a Hawaii corporation (the “Company”), its parent corporation, HAWAIIAN HOLDINGS, INC., a Delaware corporation (“Holdings” and together with the Company and any subsidiaries and affiliate of Holdings, “Hawaiian”), and the individual named on the signature page (the “Executive”) (collectively, “the Parties”). This Agreement supersedes and replaces in their entirety any and all prior severance agreements by and between the Parties, including the severance provisions of any offer letter, severance agreement, employment agreement, and equity compensation agreements by and between the Executive and Hawaiian
It is possible that Hawaiian may from time to time receive acquisition proposals by other entities. The Compensation Committee of the Board of Directors of Holdings (the “Committee”) recognizes that consideration of any such proposals can be a distraction to the Executive and can cause the Executive to consider alternative employment opportunities. The Committee has determined that it is in the best interests of Hawaiian and its stockholders to assure that the Hawaiian will have the continued dedication and objectivity of the Executive, notwithstanding the possibility, prospect or occurrence of a “Change of Control” (as defined below).
The Committee believes that it is in the best interests of Hawaiian and its stockholders to provide the Executive with an incentive to continue his or her employment with the Company and any other entity that is part of Hawaiian (in either case, the “Employer”) and to motivate the Executive to maximize the value of Hawaiian upon a Change of Control for the benefit of its stockholders. The Committee believes that it is important to provide the Executive with certain benefits upon the Executive’s termination of employment following a Change of Control. These benefits will provide the Executive with enhanced financial security and incentive and encouragement to remain with the Company notwithstanding the possibility of a Change of Control.
This Agreement also consolidates the documentation of severance benefits to which the Executive may be entitled in the event of the Executive’s termination of employment with the Employer under specified circumstances not in connection with a Change of Control.
1. Term of Agreement . This Agreement will have an initial term of 3 years commencing on the Effective Date (the “Initial Term”). On the 3 rd anniversary of the Effective Date, this Agreement will begin to renew automatically for additional 1 year terms (each, an “Additional Term”) unless any Party provides the other Parties with written notice of nonrenewal at least 60 days prior to the date of automatic renewal. For the avoidance of doubt, neither the lapse of this Agreement by its terms nor non-renewal of this Agreement will by itself constitute termination of employment nor grounds for resignation for Good Reason. Notwithstanding the foregoing, if a Change of Control occurs (i) when there are fewer than 18 months remaining during the Initial Term or (ii) during an Additional Term, the term of this Agreement will extend automatically through the date that is 18 months following the date of the Change of Control. Furthermore, if during the term of this Agreement an initial occurrence of an act or omission by Hawaiian constituting the grounds for “Good Reason” in accordance with Section 8.D. has occurred (the “Initial Grounds”), and the expiration date of the Cure Period (as such term is used in Section 8.D.) with respect to such Initial Grounds could occur following the expiration of the Initial Term or the Additional Term then in effect, as applicable, the term of this Agreement will extend automatically through the date that is 30 days following the expiration of the Cure Period, but such extension of the term will only apply with respect to the Initial Grounds. If the Executive becomes entitled to the benefits under Section 3 of this Agreement, then the Agreement will not terminate until all of the obligations of the parties hereto with respect to this Agreement have been satisfied.
2.      Not an Employment Contract . Executive acknowledges that this Agreement does not constitute a contract of employment or impose on the Employer any obligation to retain the Executive as an Executive and that this Agreement does not prevent the Executive from terminating his employment. Executive understands and acknowledges that he is an employee-at-will and that either he or the Employer may terminate the employment relationship between them at any time and for any reason.

8361995_6.docx

3.      Severance Benefits Upon Termination .
A.      Accrued Rights . In addition to the benefits described below, the Executive will be entitled to receive payment for:
i.      Accrued Salary and Vacation. All salary and accrued vacation earned through the Termination Date, less applicable federal and state withholding.
ii.      Expense Reimbursement. Within 30 days of submission of proper expense reports by the Executive, Hawaiian shall reimburse the Executive for all expenses incurred by the Executive, consistent with past practices, in connection with the business of the Hawaiian prior to the Executive’s termination of employment.
iii.      Executive Benefits. Benefits, if any, under any 401(k) plan, nonqualified deferred compensation plan, stock purchase plan and other benefit plans or any entity that is part of Hawaiian under which the Executive may be entitled to benefits, payable pursuant to the terms of such plans.
B.      Involuntary Termination other than for Cause or Resignation for Good Reason During the Change of Control Period . In the event that, during the Change of Control Period, the Executive’s employment with Hawaiian terminates either by Hawaiian for a reason other than for Cause (as defined below), death or Disability or by the Executive for Good Reason, then Hawaiian shall provide to the Executive, as severance:
i.      a lump sum payment equal to the number of months of base salary indicated on the signature page,
ii.      a lump sum payment equal to a percentage of his or her target annual bonus indicated on the signature page,
iii.      in lieu of subsidized COBRA or other benefits, and payable whether or not the Executive elects COBRA coverage, continued payments of $3,000 per month for the number of months indicated on the signature page, and
iv.      100% of all equity awards granted to the Executive that are outstanding as of the later of (A) the Termination Date or (B) the Change of Control (the “Equity Awards”) will immediately vest and, if applicable, become exercisable. The Equity Awards will, to the extent applicable, remain exercisable following the Executive’s termination for the period prescribed in the related award agreements. If an outstanding Equity Award is to vest, or the amount of the Equity Award to vest is to be determined, based on the achievement of performance criteria, then the Equity Award will vest as to one hundred percent (100%) of the amount of the Equity Award assuming the performance criteria have been achieved at target levels for the relevant performance period(s), unless otherwise provided in the agreement relating to such performance based Equity Award. For the avoidance of doubt, in the event that the Qualifying Termination occurs prior to a Change of Control, any of the Executive’s then outstanding and unvested Equity Awards will remain outstanding and unvested until the earlier of (A) the date 3 months after the Qualifying Termination, or (B) a Change of Control, and if no Change of Control has occurred by the date 3 months after the Qualifying Termination, such unvested Equity Awards will be forfeited permanently and never will vest, and the Executive will have no further rights thereto.
C.      Involuntary Termination other than for Cause or Resignation for Good Reason OTHER THAN During the Change of Control Period . In the event that, outside the Change of Control Period, the Executive’s employment with the Employer terminates either by the Company for a reason other than for Cause, death or Disability or by the Executive for Good Reason, then the Employer shall provide to the Executive, as severance:
i.      a lump sum payment equal to the number of months of base salary indicated on the signature page,

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ii.      in lieu of subsidized COBRA or other benefits, and payable whether or not the Executive elects COBRA coverage, continued payments of $3,000 per month for the number of months indicated on the signature page, and
iii.      a pro-rated annual bonus for the year of termination. To determine the amount of the bonus that will be pro-rated, any portion of the annual bonus that would have been based on Executive’s performance will be deemed achieved at the target level and the remaining portion of the annual bonus will be based on actual performance against goals. The pro-rated annual bonus will be paid out at the same time as annual bonuses are paid to ongoing executives, but no later than March 15 of the year following the year in which the Executive’s employment terminates.
A.      Other Terminations of Employment . Except as required by applicable law, if the Executive’s employment with the Employer terminates (i) by reason of the Executive’s death, (ii) by reason of the Executive’s Disability, (iii) by the Company for Cause, or (iv) by the Executive voluntarily without Good Reason, then the Executive will be entitled to receive severance and any other benefits only as may then be established under the then-existing written severance and benefits plans and practices of the Company or pursuant to other written agreements with the Company.
B.      Death of the Executive . If the Executive dies before all payments or benefits the Executive is entitled to receive under the Agreement have been paid, such unpaid amounts will be paid to the Executive’s designated beneficiary, if living, or otherwise to the Executive’s personal representative in a lump-sum payment as soon as possible following the Executive’s death.
C.      Transfer Within Hawaiian . If the Executive is involuntarily transferred from one entity that is part of Hawaiian to another, such transfer will not be considered Good Reason or a termination without Cause.
4.      Release of Claims Agreement . The receipt of any severance payments or benefits pursuant to this Agreement is subject to the Executive signing and not revoking a release of claims in a form substantially similar to the release attached as Exhibit A and acceptable to the Company (the “Release”), which must become effective and irrevocable no later than the 60 th day following the termination of the Executive’s employment (the “Release Deadline”). If the Release does not become effective and irrevocable by the Release Deadline, the Executive will forfeit any right to severance payments or benefits under this Agreement. In no event will severance payments or benefits be paid or provided until the Release actually becomes effective and irrevocable. U pon the Release becoming effective, any severance payments or benefits under this Agreement otherwise payable to the Executive during the period from the Termination Date through the effective date of the Release will be payable in a lump sum without interest as soon as administratively practicable after the Release becomes effective and irrevocable but not later than 61 days following the Termination Date or, if later (i) if the Termination Date, on the date of the closing of the Change of Control or (ii) the date determinable under Section 5.A.ii. and all additional severance payments and benefits (if any) will be payable in accordance with the payment schedules applicable to each payment or benefit.
5.      Tax Matters
A.      Section 409A
i.      Separation from Service. It is intended that none of the severance payments under this Agreement will constitute Deferred Payments, but rather will be exempt from Section 409A as a payment that would fall within the “short-term deferral period” as described in Section 5.A.iii. or resulting from an involuntary separation from service as described in Section 5.A.iv. Notwithstanding anything to the contrary in this Agreement, no Deferred Payments (as defined in Section 5.A.ii.) will be paid or otherwise provided until the Executive has a “separation from service” within the meaning of Section 409A. Similarly, no severance payable to the Executive, if any, pursuant to this Agreement that otherwise would be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A 1(b)(9) will be payable until the Executive has a “separation from service” within the meaning of

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Section 409A. Subject to Section 5.A.ii., in the event that it is possible for the Release Deadline to occur in the calendar year immediately following the calendar year in which the termination of the Executive’s employment with the Employer occurs, then any Deferred Payments otherwise payable under this Agreement prior to the 60 th day following separation from service will be paid on the 60 th day following separation from service, and any subsequent Deferred Payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit under this Agreement.
ii.      Specified Employee. Notwithstanding anything to the contrary in this Agreement, if the Executive is a “specified employee” within the meaning of Section 409A at the time of the Executive’s termination (other than due to death), then the severance payable to the Executive, if any, pursuant to this Agreement, when considered together with any other severance payments or separation benefits that are considered deferred compensation under Section 409A (together, the “Deferred Payments”) that are payable within the first 6 months following the Executive’s termination of employment, will become payable on the first payroll date that occurs on or after the date 6 months and 1 day following the date of the Executive’s termination of employment. All subsequent Deferred Payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit under this Agreement. Notwithstanding anything herein to the contrary, if the Executive dies following his or her termination but prior to the 6 month anniversary of his or her termination, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of the Executive’s death and all other Deferred Payments will be payable in accordance with the payment schedule applicable to each payment or benefit. Each payment and benefit payable under this Agreement is intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations. In no event will the Executive have discretion to determine the taxable year of payment of any Deferred Payments.
iii.      Short-Term Deferral. Any amount paid under this Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations shall not constitute Deferred Payments for purposes of Section 5.A.ii. above.
iv.      Involuntary Separation. Any amount paid under this Agreement that qualifies as a payment made as a result of an involuntary separation from service pursuant to Treasury Regulations Section 1.409A-1(b)(9)(iii) that do not exceed the Section 409A Limit shall not constitute Deferred Payments for purposes of this Section 5.A.ii. above.
v.      Compliance with Section 409A. The foregoing provisions are intended to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities and ambiguous terms herein will be interpreted to so comply. For purposes of this Agreement, to the extent required to be exempt from or comply with Section 409A, references to termination of the Executive’s employment or similar phrases will be references to the Executive’s “separation from service” within the meaning of Section 409A. The Parties agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to the Executive under Section 409A.
B.      Responsibility for Taxes . Notwithstanding anything to the contrary in this Agreement, in no event will the Company or any other entity that is part of Hawaiian reimburse the Executive for any taxes imposed or other costs incurred as a result of Section 409A.
All payments made pursuant to this Agreement will be subject to withholding of applicable income, employment and other taxes. Hawaiian is authorized to withhold from any payments or benefits all federal, state, local and/or foreign taxes required to be withheld from such payments or benefits and make any other required payroll deductions. No entity that is part of Hawaiian will pay the Executive’s taxes arising from or relating to any payments or benefits under the Agreement.

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C.      Golden Parachute Limitation on Payments . In the event that the severance and other benefits provided for in this Agreement or otherwise payable to the Executive (collectively, the “Payments”) (i) constitute “parachute payments” within the meaning of Code Section 280G and (ii) but for this Section 5, would be subject to the excise tax imposed by Code Section 4999, then the Executive’s Payments will be either:
i.      delivered in full, or
ii.      delivered as to such lesser extent which would result in no portion of such Payments being subject to excise tax under Code Section 4999, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by the Executive on an after-tax basis, of the greatest amount of Payments, notwithstanding that all or some portion of such Payments may be taxable under Section 4999 of the Code. If a reduction in Payments constituting “parachute payments” is necessary so that Payments are delivered to a lesser extent, reduction will occur in the following order: (i) reduction of cash payments in reverse chronological order (that is, the cash payment owed on the latest date following the occurrence of the event triggering the excise tax will be the first cash payment to be reduced); (ii) cancellation of awards granted “contingent on a change in ownership or control” (within the meaning of Code Section 280G), (iii) cancellation of accelerated vesting of equity awards in the reverse order of date of grant of the awards (that is, the vesting of the most recently granted equity awards will be cancelled first); and (iv) reduction of the Executive benefits in reverse chronological order (that is, the benefit owed on the latest date following the occurrence of the event triggering the excise tax will be the first benefit to be reduced). If two or more equity awards are granted on the same date, each award will be reduced on a prorated basis. In no event shall the Executive have any discretion with respect to the ordering of payment reductions.
Unless the Company and the Executive otherwise agree in writing, any determination required under this Section 5 will be made in writing by a nationally recognized accounting or valuation firm selected by the Company (the “Accountants”), whose determination will be conclusive and binding upon the Executive and the Company for all purposes. For purposes of making the calculations required by this Section 5, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Code Sections 280G and 4999. The Company and the Executive will furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 5. Hawaiian will bear all costs for payment of the Accountants’ services in connection with any calculations contemplated by this Section 5.
6.      Sole Remedy; Non-Duplication of Benefits . The payment to the Executive of the amounts payable under Section 3 shall constitute the sole remedy of the Executive in the event the Executive’s employment with the Employer terminates. If (i) the Termination Date occurs prior to a Change of Control that qualifies the Executive for severance payments and benefits payable under Section 3.C. of the Agreement and (ii) a Change of Control occurs within the 3-month period following the Termination Date that qualifies the Executive for the severance payments and benefits payable on under Section 3.B. under this Agreement, then (i) the Executive will cease receiving any further payments or benefits under this Agreement and (ii) the severance payments and benefits otherwise payable under Section 3.B.i. through Section 3.B.iii. of this Agreement each will be offset by the corresponding payments or benefits already paid under Sections 3.C.i. through 3.C.iii., as applicable.
7.      Resignation . The termination of the Executive’s employment for any reason will also constitute, without any further required action by the Executive, the Executive’s voluntary resignation from all officer and/or director positions held at Hawaiian, and at the Board’s request, the Executive will execute any documents reasonably necessary to reflect such resignation.
8.      Definitions . For purposes of this Agreement:
A.      “Cause” means a good faith finding by Holdings of any of the following:

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i.      repeated neglect by the Executive of his employment duties or the Executive’s repeated material lack of diligence and attention in performing his employment duties;
ii.      the Executive’s fraudulent conduct in connection with the business affairs of Hawaiian, regardless of whether said conduct is designed to defraud Hawaiian or others;
iii.      the Executive’s conduct of a criminal nature that may have an adverse impact on the reputation of Hawaiian in the community or other conduct at any time or place which is materially detrimental to the reputation and/or goodwill of Hawaiian among its customers; or
iv.      the Executive’s repeated failure to follow applicable corporate compliance rules, practices, procedures and ethical guidelines of the Company or any other entity that is part of Hawaiian.
B.      “Change of Control” means a “Change in Control” within the meaning of the Hawaiian Holdings, Inc. 2015 Stock Plan as may hereinafter be amended.
C.      “Change of Control Period” means the period beginning on the date 3 months prior to the first Change of Control to occur following the Effective Date and ending on the date 18 months following such Change of Control.
D.      “Disability” means the Executive is either (i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment, which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) by reason of any medically determinable physical or mental impairment, which can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan maintained by any other entity that is part of Hawaiian and under which the Executive participates.
E.      “Good Reason” means the Executive’s termination of employment within 30 days following the expiration of any Cure Period (discussed below) following the occurrence, without the Executive’s express written consent, of one or more of the following:
i.      a material reduction by the Employer in the Executive’s annual total target cash compensation (other than pursuant to a reduction applying generally to employees of the same corporate rank);
ii.      the Executive’s relocation to principal offices that are either (i) not located on Oahu, Hawaii, or (ii) not within 40 miles of Honolulu, Hawaii; or
iii.      solely during the Change of Control Period, a material reduction in the Executive’s job, duties or responsibilities.
The Executive may not resign for Good Reason without first providing the Company with written notice within ninety (90) days of the event that the Executive believes constitutes “Good Reason” specifically identifying the acts or omissions constituting the grounds for Good Reason and a reasonable cure period of not less than 30 days following the date of such notice (such period, the “Cure Period”).
F.      “Section 409A” means Section 409A of the Code and any final regulations and guidance thereunder and any applicable state law equivalent, as each may be amended or promulgated from time to time.
G.      “Section 409A Limit” means 2 times the lesser of: (i) the Executive’s annualized compensation based upon the annual rate of pay paid to the Executive during the Executive’s taxable year preceding the Executive’s taxable year in which the termination of the Executive’s employment with the Company occurs, as determined under, and with such adjustments as are set forth in, Treasury Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with respect thereto; or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code for the year in which the termination of the Executive’s employment with the Employer occurs.

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H.      “Termination Date” means the Executive’s last day of employment.
9.      Miscellaneous .
A.      Notices . Any notices delivered under this Agreement shall be deemed duly delivered four (4) business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, or one business day after it is sent for next-business day delivery via a reputable nationwide overnight courier service, in each case to the address of the recipient set forth in the introductory paragraph hereto. Either party may change the address to which notices are to be delivered by giving notice of such change to the other party. All notices to the Company shall also be addressed to the attention of the President of the Company. All notices to Hawaiian shall also be addressed to the attention of the Chief Executive Officer of Holdings.
B.      Pronouns . Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa.
C.      Entire Agreement . This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement, including the severance provisions of any offer letter, severance agreement or employment agreement; provided, however, that any rights that the Executive has under the Company’s long-term disability plan shall not be superseded by this Agreement. It does not, however, modify any other standard benefits to which the Executive is entitled under Company policies.
D.      Amendment . This Agreement may be amended or modified only by a written instrument executed by the Parties.
E.      Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Hawaii. Any action, suit or other legal arising under or relating to any provision of this Agreement shall be commenced only in a court of the State of Hawaii (or, if appropriate, a federal court located within the State of Hawaii), and each Party consents to the jurisdiction of such a court. Each Party hereby irrevocably waive any right to a trial by jury in any action, suit or other legal proceeding arising under or relating to any provision of this Agreement.
F.      Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns, including any corporation with which or into which Hawaiian or the Company may be merged or which may succeed to its assets or business, provided, however, that the obligations of the Executive are personal and shall not be assigned by him or her.
G.      Waivers . No delay or omission by Hawaiian in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by Hawaiian on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion.
H.      Captions . The captions of the Sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any Section of this Agreement.
I.      Severability . In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby.
J.      No Duty to Mitigate . The Executive will not be required to mitigate the amount of any payment contemplated by this Agreement, nor will any such payment be reduced by any earnings that the Executive may receive from any other source.
K.      Waiver . No provision of this Agreement will be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Executive, by an authorized officer of

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the Company (other than the Executive), and by an authorized officer of Holdings (other than the Executive). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party will be considered a waiver of any other condition or provision or of the same condition or provision at another time.
L.      Severability . The invalidity or unenforceability of any provision or provisions of this Agreement will not affect the validity or enforceability of any other provision hereof, which will remain in full force and effect.
M.      Counterparts . This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.
THE EXECUTIVE ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS AGREEMENT AND UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.



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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year set forth below.

HAWAIIAN AIRLINES, INC .
By:         
Mark B. Dunkerley
Its President
Date: _________________, 2016

HAWAIIAN HOLDINGS, INC .
By:         
Mark B. Dunkerley
Its Chief Executive Officer
Date: _________________, 2016



        
[Executive Name]
[Title]
Date: _________________, 2016
Change of Control Period Benefits
[ ] Months of Base Salary
[ ] Percentage of Target Bonus
[ ] Months of Payments under Section 3.B.iii.

Non-Change of Control Period Benefits
[ ] Months of Base Salary
[ ] Months of Payments under Section 3.C.ii.

[Protected Benefits, if any]






HAWAIIAN AIRLINES, INC./HAWAIIAN HOLDINGS, INC.
RELEASE OF CLAIMS
This Release of Claims (“Agreement”) is made between and among Hawaiian Airlines, Inc., Hawaiian Holdings, Inc. (the “Company”), and _____________________ (“Executive”).
WHEREAS, Executive has agreed to enter into a release of claims in favor of the Company upon certain events specified in the Change in Control and Severance Agreement by and between Company and Executive.
NOW THEREFORE, in consideration of the mutual promises made herein, the Parties hereby agree as follows:
1.      Termination . Executive’s employment from the Company terminated on ________________ (the “Termination Date”).
2.      Payment of Salary . Executive acknowledges and represents that the Company has paid all salary, wages, bonuses, accrued vacation, commissions and any and all other benefits due to Executive prior to the date on which Executive executed this Agreement.
3.      Release .
A.      Executive irrevocably and unconditionally releases Employer, its parent corporation, successors, heirs, assigns, directors, shareholders, trustees, officers, employees, servants, agents (and former directors, shareholders, trustees, officers, employees, servants, and agents), attorneys, executors, administrators, insurers, subsidiaries and affiliated companies from any and all claims, charges, complaints, grievances, contracts, liabilities, obligations, demands, promises, reimbursements, causes of action, costs, debts, expenses, damages (including, but not limited to actual damages, compensatory damages, special damages, liquidated damages, and punitive damages) of any kind directly or indirectly, known or unknown, suspected or unsuspected, arising out of or related to (i) the employment of Executive by Employer, (ii) the termination of Executive’s employment or the circumstances leading up to Executive’s termination of employment, and (iii) any other act or occurrence pre-dating Executive’s execution of this Agreement.
B.      Executive acknowledges and agrees that Executive has read this Agreement. Executive also acknowledges and agrees that Executive understands the terms of this Agreement. Executive further acknowledges and agrees that Executive is entering into this Agreement deliberately, knowingly, and voluntarily, with full knowledge of its significance, and with the express intention of effecting the legal consequences relating to the extinguishment of all obligations. Executive also acknowledges and agrees that Employer has advised Executive to seek the advice of Executive’s own attorney prior to executing this Agreement regarding the terms and conditions of this Agreement.
C.      Executive understands that this Agreement releases Employer from all liability, past or present, arising out of or related to Executive’s employment, termination of employment and the circumstances leading up to Executive’s termination of employment, and any other act or occurrence pre-dating Executive’s execution of this Agreement, including, but not limited to, any rights or claims pursuant to (i) the Age Discrimination Act of 1967 (“ADEA”) (29 U.S.C. § 626, et seq.), and any amendments thereto; (ii) the Civil Rights Act of 1964 (“Title VII”) (42 U.S.C. § 2000e, et seq.), and any amendments thereto; (iii) the Civil Rights Statutes (42 U.S.C. §§ 1981, 1981a, and 1988), and any amendments thereto; (iv) the Americans with Disabilities Act of 1990 (“ADA”) (42 U.S.C. § 12101, et seq.), and any amendments thereto; (v) the Executive Retirement Income Security Act (“ERISA”) (29 U.S.C. §1001 et seq.), and any amendments thereto; (vi) Hawaii’s Employment Practices Act (Haw. Rev. Stat. ch. 378), and any amendments thereto; (vii) all applicable state and federal wage and hour laws, and any amendments thereto; (viii) all claims based on common law sounding in tort, contract, implied contract, negligence and/or gross negligence, including, but not limited to promissory estoppel, quantum meruit, libel/slander, defamation, misrepresentation,



emotional distress (negligent or intentional) fraud or deceit, unpaid wages, equitable claims, breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, wrongful discharge and/or termination, and violation of public policy; and (ix) any claim for attorneys’ fees or costs.
Executive understands that nothing contained in this Agreement shall prohibit Executive from (i) bringing any action to enforce the terms of this Agreement or severance benefits due pursuant to the Change in Control and Severance Agreement or to enforce his other vested benefits and rights under the Company’s benefit plans in accordance with the terms of such plans; (ii) filing a timely charge or complaint with the Hawaii Civil Rights Commission (“HCRC”) or the Equal Employment Opportunity Commission (“EEOC”) regarding the validity of this Agreement; or (iii) filing a timely charge or complaint with the HCRC or the EEOC or participating in any investigation or proceeding conducted by the HCRC or the EEOC regarding any claim of employment discrimination. This release does not extend to any severance obligations due Executive under the Change in Control and Severance Agreement or to Executive’s vested rights and benefits under the Company’s benefit plans in accordance with the terms of such plans and the Change in Control and Severance Agreement. Nothing in this Agreement waives Executive’s rights to indemnification or any payments under any fiduciary insurance policy, if any, provided by any act or agreement of the Company, state or federal law or policy of insurance.
D.      Executive acknowledges and understands that there is a risk that subsequent to the execution of this Agreement, Executive may incur or suffer loss, damages, or injuries that are in some way related to or arising out of Executive’s employment with Employer or the termination thereof, but that are unknown and unanticipated at the time this Agreement is signed. Accordingly, Executive hereby assumes these risks and that this Agreement shall apply to all such unknown or unanticipated claims.
E.      Executive acknowledges and understands that Executive is not waiving any future rights or claims that might arise after the date this Agreement is signed by Executive.
F.      Executive acknowledges and understands that Employer does not make nor has made any representations to force or induce Executive to sign this Agreement other than what is specifically provided for in this Agreement. Furthermore, Executive acknowledges and understands that Executive is under no obligation to sign this Agreement.
4.      Acknowledgment of Waiver of Claims under ADEA . Executive acknowledges that he is waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and voluntary. Executive and the Company agree that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the effective date of this Agreement. Executive acknowledges that the consideration given for this waiver and release Agreement is in addition to anything of value to which Executive was already entitled. Executive further acknowledges that he has been advised by this writing that (a) he should consult with an attorney prior to executing this Agreement; (b) he has at least twenty-one (21) days within which to consider this Agreement; (c) he has seven (7) days following the execution of this Agreement by the parties to revoke the Agreement; (d) this Agreement shall not be effective until the revocation period has expired; and (e) nothing in this Agreement prevents or precludes Executive from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs for doing so, unless specifically authorized by federal law. Any revocation should be in writing and delivered to the Vice-President of Human Resources at the Company by close of business on the seventh day from the date that Executive signs this Agreement.
5.      No Pending or Future Lawsuits . Executive represents that he has no lawsuits, claims, or actions pending in his name, or on behalf of any other person or entity, against the Company or any other person or entity referred to herein. Executive also represents that he does not intend to bring any claims on his own behalf or on behalf of any other person or entity against the Company or any other person or entity referred to herein.



6.      No Cooperation . Executive agrees that he will not counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against the Company and/or any officer, director, employee, agent, representative, shareholder or attorney of the Company, unless under a subpoena or other court order to do so.
7.      Effective Date . This Agreement is effective eight (8) days after it has been signed by all parties hereto.
8.      Voluntary Execution of Agreement . This Agreement is executed voluntarily and without any duress or undue influence on the part or behalf of the parties hereto, with the full intent of releasing all claims. The parties hereto acknowledge that:
A.      They have read this Agreement;
B.      They have been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of their own choice or that they have voluntarily declined to seek such counsel;
C.      They understand the terms and consequences of this Agreement and of the releases it contains; and
D.      They are fully aware of the legal and binding effect of this Agreement.
9.      Confidential Information and Trade Secrets . Executive agrees that, during Executive’s employment by Employer, Executive received and was privy to confidential information and trade secrets. Executive agrees that Executive shall hold in confidence and not disclose to any unauthorized person any knowledge or information of a confidential nature and any trade secret with respect to the business of Employer acquired and possessed by Executive and shall not disclose, publish, or make use of the same without the prior express written consent of Employer.
10.      Assignment . This Agreement is personal as to Executive and shall not be assignable by Executive.
11.      Modification . This Agreement may not be changed, altered, modified, or amended orally, but only by an instrument in writing signed by the party against whom enforcement of any change, alteration, modification, or amendment is sought.
12.      No Bar or Waiver . No delay or omission on the part of Employer or Executive in exercising any right under this Agreement shall operate as a waiver of such right or of any other right either may have. A waiver on one occasion shall not be construed as a bar to or waiver of any right on any future occasion.
13.      Headings . Paragraph headings are not to be considered part of this Agreement and are included solely for convenience and form no part of this Agreement or affect the interpretation thereof.
14.      Notices . All notices, requests, demand, and other communications hereunder shall be deemed to have been duly given if delivered by hand or mailed, certified or registered mail, with postage prepaid.
15.      Entire Agreement . This Agreement, the severance provisions of the Change in Control and Severance Agreement and Executive’s equity compensation agreements and other benefit plans contain the entire understanding of Executive and Employer, and fully supersede any and all prior agreements or understandings pertaining to the subject matter of this Agreement. Each of the parties hereto acknowledges that no party or agent of any party has made any promise, representation or warranty whatsoever, either expressed or implied, not contained in this Agreement concerning the subject matter hereof to induce any other party to execute this Agreement, and each of the parties hereto acknowledges that it has not executed this Agreement in reliance upon any such promises, representations or warranties not specifically contained in this Agreement. For avoidance of



doubt, the restrictions of this paragraph are subject to the express exclusion for Protected Activity in the Company’s Code of Business Ethics and Conduct.
16.      Binding Effect . This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and to the successors and assigns of Employer.
17.      Applicable Law . This Agreement is being delivered in and shall be construed and enforceable in accordance with the laws of the State of Hawaii.
18.      Miscellaneous . If any term, covenant, or agreement in this Agreement or any application thereof shall be held to be invalid or unenforceable, the remainder of this Agreement and any other application of such term, covenant, or agreement shall not be affected thereby. No party shall be deemed to be the drafter of this Agreement and this Agreement shall not be construed for or against any of the parties.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year set forth below.

HAWAIIAN AIRLINES, INC .
By:         
[Name]
[Title]
Date: _________________

HAWAIIAN HOLDINGS, INC .
By:         
[Name]
[Title]
Date: _________________



        
[Executive Name]
Date: _________________






STATE LEASE NO. DOT-A-16-0010




STATE OF HAWAII
DEPARTMENT OF TRANSPORTATION
AIRPORTS DIVISION








HAWAIIAN AIRLINES, INC.




CARGO AND MAINTENANCE HANGAR FACILITIES LEASE

HONOLULU INTERNATIONAL AIRPORT

ISLAND OF OAHU

STATE OF HAWAII


INDEX
TO
CARGO AND MAINTENANCE HANGAR FACILITIES LEASE
HAWAIIAN AIRLINES, INC.

Page

Article I. DEFINITIONS     2
Article II. PREMISES     5
Article III. USE OF PREMISES     6
Article IV. TERM     7
Article V. RENTAL     8
Article VI. REOPENING OF RENT     12
Article VII. LESSEE’S IMPROVEMENTS     13
Article VIII. GENERAL RIGHTS AND RESPONSIBILITIES OF LESSEE     26
Article IX. TAXES     28
Article X. PROHIBITED ACTS     28
Article XI. SIGNS     30
Article XII. INGRESS AND EGRESS     31
Article XIII. LIABILITY AND INDEMNITY     32
Article XIV. SURRENDER OF PREMISES     32
Article XV. COMPLIANCE WITH LAWS     33
Article XVI. RULES AND REGULATIONS     41
Article XVII. RIGHTS-OF-ENTRY RESERVED     41
Article XVIII. UTILITY SERVICES     42
Article XIX. INSURANCE     43
Article XX. TERMINATION BY STATE     50
Article XXI. WAIVER     54
Article XXII. [INTENTIONALLY OMITTED]     54
Article XXIII. TERMINATION BY LESSEE     54
Article XXIV. SUSPENSION OR ABATEMENT     55
Article XXV. SUBORDINATION OF LEASE     55
Article XXVI. CONDEMNATION     56
Article XXVII. PERFORMANCE BOND     59
Article XXVIII. LITIGATION     60
Article XXIX. LIENS     61
Article XXX. ASSIGNMENT AND SUBLETTING     62
Article XXXI. SUCCESSORS AND ASSIGNS     68
Article XXXII. NOTICES     68
Article XXXIII. INTERPRETATION OF LEASE     68
Article XXXIV. NO PARTNERSHIP     69
Article XXXV. FORCE MAJEURE     69
Article XXXVI. ENTIRE AGREEMENT     70
Article XXXVII. AMENDMENTS     70
Article XXXVIII. APPROACH PROTECTION     70
Article XXXIX. INVALID PROVISION-SEVERABILITY     70
Article XL. NON-LIABILITY OF INDIVIDUALS     71
Article XLI. RESERVATION OF MINERAL AND METALLIC RIGHTS     71
Article XLII. PREHISTORIC AND HISTORIC REMAINS     71
Article XLIII. NONDISCRIMINATION     71
Article XLIV. CIVIL RIGHTS PROVISION     72
Article XLV. [INTENTIONALLY OMITTED]     73
Article XLVI. BROKERS     73
Article XLVII. SURVIVAL OF OBLIGATIONS     73
Article XLVIII. QUIET ENJOYMENT     74
Article XLIX. NO ACCORD AND SATISFACTION     74
Article L. JOINT AND SEVERAL LIABILITY     74
Article LI. ESTOPPEL STATEMENTS     74
Article LII. AUTHORITY     75
Article LIII. CONSENTS     75
Article LIV. COUNTERPARTS     75
Article LV. GOVERNING LAW     75


LIST OF APPENDIXES / EXHIBITS
Appendix A    -    Development Standards for Leased Airport Property
Appendix B    -    Tenant Improvement Guidelines
Appendix C    -    Design and Construction Requirements
Appendix D    -    State’s Minimum Standards for Commercial Aeronautical Activities at                 Public     Airports
Appendix E    -    State’s Department of Transportation Assignment of Lease Evaluation                 Policy
Appendix F    -    State’s Department of Transportation Sublease Evaluation Policy

Exhibit A     -    Map of Honolulu International Airport
Exhibit B    -    Premises
Exhibit C-1    -    Ground Rent
Exhibit C-2    -    Building Rent – RIK and NEW
Exhibit C-3    -    Apron Rent
Exhibit D-1
-    State of Hawaii Airports System Hawaiian Airlines Replacement Facilities Rental Rate Methodology
Exhibit D-2
-    Elliot Street Cost Analysis
Exhibit E
-    Pre-Existing Leasehold Improvements – List of Incomplete and/or Deficient Work


CARGO AND MAINTENANCE HANGAR FACILITIES LEASE
THIS INDENTURE OF LEASE (this "Lease"), made and entered into this 1 st  day of November, 2016 (the "Commencement Date"), by and between the STATE OF HAWAII, DEPARTMENT OF TRANSPORTATION, by its Director of Transportation, hereinafter referred to as "STATE", and HAWAIIAN AIRLINES, INC., a Hawaii corporation, whose business address is 3375 Koapaka Street, Suite G350, Honolulu, Hawaii 96819, hereinafter referred to as "LESSEE";
RECITALS :
WHEREAS, the Department of Transportation, pursuant to Chapters 171, 261, 262, and 263 of the Hawaii Revised Statutes, is vested with certain control and jurisdiction over the operation of airports within the State of Hawaii, and more particularly that airport located in the City and County of Honolulu, Island of Oahu, State of Hawaii, known as Honolulu International Airport, shown and delineated on the map labeled Exhibit A , attached hereto and made a part hereof, and hereinafter referred to as the "Airport"; and
WHEREAS, STATE, pursuant to Section 261-7 and 171-59, Hawaii Revised Statutes, may lease airport property to LESSEE; and
WHEREAS, LESSEE is engaged in the transportation of persons, property, cargo, freight, and/or mail by air (hereinafter collectively referred to as "Air Transportation") and related activities permitted hereunder, at, to, and/or from the Airport; and
WHEREAS, LESSEE did enter into an Airport-Airline Lease No. DOT-A-62-0032 dated May 28, 1962 (the "Airport-Airline Lease"), with STATE at the Airport; and
WHEREAS, the Airport-Airline Lease conveys signatory status to LESSEE and LESSEE’s operations contribute to the statewide airport system; and
WHEREAS, LESSEE has committed, as a signatory carrier, to the $2.3 billion statewide Airport Modernization Program (the "Airport Modernization Program"); and
WHEREAS, due to ongoing Airport Modernization Program projects impacting aeronautical operational activities at the Airport, both the Airports Division and LESSEE have committed to relocate their operations from their respective existing maintenance and cargo building to a new location at the Airport; and
WHEREAS, in furtherance of the commitment of Airports Division and LESSEE to relocate their operations, the Airports Division proceeded to design and build a new integrated facility housing aircraft maintenance and repair facilities, cargo operations, loading docks, support office and customer service operations to serve as the new Hawaiian Airlines maintenance and cargo building; and
WHEREAS, to date STATE has completed approximately 85% of the new Hawaiian Airlines maintenance and cargo building which comprises the Pre-Existing Leasehold Improvements, but due to unanticipated and unique circumstances and in furtherance of the best interest of STATE, LESSEE is prepared, at LESSEE’s sole cost and expense, to assume and perform any and all remaining construction work to complete such new Hawaiian Airlines maintenance and cargo building (such new facility, as so completed by LESSEE, being the “New Facility”), and STATE has agreed, taking into account such unanticipated and unique circumstances, to have LESSEE perform all such remaining work necessary to complete the New Facility; and
WHEREAS, STATE AND LESSEE acknowledge and agree that it is an express condition of this Lease that LESSEE shall, with due diligence and at LESSEE’s sole cost and expense (except as expressly provided to the contrary herein), commence, and thereafter continue to prosecute, any and all remaining construction work within the Premises necessary to complete the New Facility Completion Improvements, in accordance with the approved PLANS (New Facility Completion), by no later than the Outside Date for Substantial Completion, all in accordance with the terms and provisions of this Lease, including Article VII. (LESSEE’S IMPROVEMENTS) hereof; and
WHEREAS, LESSEE desires to lease at or on the Airport, buildings, improvements, and land to operate and maintain its Air Transportation operation in such new Hawaiian Airlines maintenance and cargo building, and STATE is willing to lease the same to LESSEE upon the covenants, agreements, terms, and conditions hereinafter set forth; and
NOW, THEREFORE, for and in consideration of the promises, and of the mutual agreements, covenants, provisions, requirements, restrictions, terms, and conditions hereinafter contained to be kept and performed by STATE and LESSEE, respectively, and other valuable consideration, STATE and LESSEE DO HEREBY AGREE AS FOLLOWS:
Article I. DEFINITIONS
Unless the context indicates otherwise, as used herein, the term:
A.      " ADA " means the Americans with Disabilities Act, 42 U.S.C. Section 12101 et seq.
B.      " ADAAG " means United States Access Board’s ADA Accessibility Guidelines for Buildings and Facilities, Transportation Facilities, and Transportation Vehicles.
C.      " Administrator " means the Airports Administrator of the Airports Division, Department of Transportation, State of Hawaii or the Administrator’s designated representative.
D.      " AOA " means the Airport Operations Area.
E.      " CFR " means the Code of Federal Regulations.
F.      " County " means the City and County of Honolulu, State of Hawaii.
G.      " DCAB " means the Disability and Communication Access Board.
H.      " Department " means the State of Hawaii, Department of Transportation.
I.      " Director " means the Director of Transportation, State of Hawaii.
J.      " Environmental Laws " means all federal, state, and local laws of every nature including statutes, ordinances, rules, regulations, codes, notices, standards, directives of every kind, guidelines, permits, licenses, authorizations, approvals, interpretations of the foregoing by any court, legislative body, agency or official, judicial decisions, judicial and administrative orders, rulings or judgments, or rules of common law which currently are in effect or which may come into effect through enactment, issuance, promulgation, adoption or otherwise, which in any way pertain to, relate to, or have any relevance to the environment, health or safety. These environmental laws include, but are not limited to, regulations and orders of the federal Environmental Protection Agency, and of the State of Hawaii, Department of Health.
K.      " FAA " means the U. S. Federal Aviation Administration.
L.      " Fair Market Rental " means the value that a property would most probably command in the open market indicated by the current rents asked and paid for comparable space for uses similar to the current use of the Premises as of a given appraisal date. The appraisal shall consider all legal uses or activities permitted on the subject property within the context of relevant County zoning restrictions, the operation of the airport system as it applies to the allowable uses on the property and how such factors influence the value of the property when compared with similar spaces on and off the Airport.
M.      " Guests " means and includes licensees, permittees, contractors, subcontractors, sub-subcontractors, vendors, visitors, providers of utility services and other services servicing the Premises, customers, passengers, patrons, and invitees.
N.      " Hazardous Substance " means and shall include any chemical substance, radioactive materials, organic or inorganic material, controlled substance, object, condition, waste, living organism, or combination thereof which is, may be, or has been determined by state or federal authority under any environmental law to be hazardous to human health or safety or detrimental to the environment. This term shall include, but not be limited to, petroleum hydrocarbons, asbestos, radon, polychlorinated biphenyls (PCBs), methane, fuels of any kind, and other materials, or materials or substances that are, or may in the future be, regulated by State of Hawaii or federal authorities.
O.      " HRS " means Hawaii Revised Statutes, as amended.
P.      " Land Board " means the Board of Land and Natural Resources of the State of Hawaii.
Q.      " Leasehold Improvements " means and includes all improvements (including the New Facility Completion Improvements), buildings, building improvements, and other structures and fixed improvements affixed, attached, constructed, erected, installed, or placed in a permanent fashion to, at, in, on, over, or under the Premises by LESSEE during the period commencing from the Commencement Date through and until the expiration of the Term of this Lease, and includes walls, floors, roofing, interior finishing, doors, windows, ceilings, built‑in cabinets and shelving, counters, flooring material and carpeting glued, nailed or tacked down, all utility lines, conduits, piping, service panels, connections and receptacles, all lighting fixtures (bulbs included) attached to walls and ceilings, all sprinkler systems, landscaping, paved areas and curbing, concrete or rock walls and boxes, sewer and drain piping and culverts, central, split or package heating, ventilation and air conditioning systems, compressed air systems (except for the air compressor pump and air tank), fences and gates, and all other similar attachments, fixtures, and articles permanently affixed, or firmly embedded, or fastened to the Premises.
R.      " LESSEE " means the legal entity named in the first paragraph of this Lease.
S.      " New Facility " has the meaning set forth in the Recitals.
T.      " New Facility Completion Improvements " means and includes the remaining construction and installation of those improvements, buildings, building improvements, and other structures and fixed improvements necessary to be made by LESSEE to the Pre-Existing Leasehold Improvements at the Premises (including, without limitation, any and all corrective work necessary to address all Incomplete and/or Deficient Work, including the defective workmanship items specifically enumerated at Exhibit E attached hereto and made a part hereof), in each case, in accordance with the PLANS (New Facility Completion) and to the extent required to complete the New Facility in a manner suitable for the conduct of Lessee’s Permitted Uses at the Premises.
U.      " Outside Date for Substantial Completion " means October 31, 2017, which is the day immediately preceding the first anniversary of the Commencement Date.
V.      " Personal Property " means and consists of any kind of property that is temporary or movable property and not real property, and shall include but not be limited to any all trade fixtures, office and business furnishings, decorations, equipment and furniture, draperies, grease racks, piping, movable display cases and shelving, movable appliances and drinking fountains, communication instruments (including, without limitation, all telephone, radio, telegraph, computer, wireless, cellular, and television) and antenna, window air conditioning units, portable heaters, and other temporary or movable goods or chattels owned, purchased, or installed by LESSEE, and other similar articles or chattels not permanently affixed, or firmly embedded or attached, to the Premises and/or Leasehold Improvements situated thereon.
W.      " PLANS (New Facility Completion) " means the plans and specifications relating to LESSEE’s construction of the New Facility Completion Improvements, which plans and specifications are subject to the written approval of STATE prior to LESSEE’s commencement of construction of the New Facility Completion Improvements in the Premises.
X.      " Pre-Existing Leasehold Improvements " means and includes any and all buildings and other structures and fixed improvements, including all such facility-related improvements (including such improvements, in their “as-is” condition, constructed by DCK under the STATE/DCK GC Contract) and any and all: (1) exterior and interior walls; (2) floors; (3) roofing; (4) interior finishing; (5) doors; (6) windows; (7) ceilings; (8) built-in cabinets and shelves; (9) flooring material and carpeting glued, nailed or tacked down; (10) utility lines, conduits and piping; (11) electrical service panels, connections and receptacles; (12) lighting fixtures (including all light bulbs) attached to walls and ceilings; (13) sprinkler systems; (14) landscaping; (15) asphalt-paved and/or concrete-paved areas and curbing; (16) concrete or rock walls and boxes; (17) sewer and drain piping and culverts; (18) central, split or packaged heating, ventilation, and air condition systems; (19) compressed air systems (excluding all air compressor pumps and air tanks); (20) fences and gates; and (21) other similar attachments, fixtures, and articles permanently affixed or firmly embedded or fastened to the land and/or the buildings and other structures and improvements thereon, in all cases, in their "as-is" condition as existing as of the Commencement Date.
Y.      " STATE " means the State of Hawaii, acting by and through its Department of Transportation, any governmental department, agency, commission, or other subdivision thereof, as may succeed to the rights, duties, and powers of said Department.
Z.      " STATE/DCK GC CONTRACT " means that certain construction contract in respect of the project entitled " HNL TMP Relocate IIT Maintenance Facility, HNL TMP Support Facilities Site Prep – Elliott Street, and HNL TMP Relocate IIT Cargo Facilities " , State Project Nos. AO1125-14, AO1125-15 and AO1127-17 .
AA.      " STATE PLANS AND DRAWINGS " means those certain plans submitted and approved pursuant to the STATE/DCK GC CONTRACT and identified as “For Construction Submittal Drawings” dated March 29, 2013, including revised drawings list annexed thereto.
BB.      " TSA " means the U. S. Department of Homeland Security, Transportation Security Administration, or its successor agency.
ARTICLE II.      PREMISES
STATE, for the Term of this Lease, and for and in consideration of the rentals, fees, and other charges to be paid by LESSEE, as prescribed and set forth in Article V. (RENTAL) hereof, and upon the agreements, covenants, promises, provisions, requirements, restrictions, terms, and conditions as are hereinafter more particularly set forth, all on the part of LESSEE to be kept, observed, and performed, does hereby grant, demise and let unto LESSEE, and LESSEE does hereby lease and hire from STATE, the exclusive right to occupy and use that certain building, improvements and land areas situated at the Elliott Street Cargo and Maintenance area located on the West Side of the Airport, in its "as-is" condition as existing as of the Commencement Date hereof and as described hereinafter and shown on Exhibit B attached hereto and made a part hereof, said building, improvements and land areas hereinafter referred to as the "Premises".
As of the date hereof, the Premises, as shown and delineated on Exhibit B , consist of the following:

Building/Room No. 157-100 consisting of approximately 264,052 square feet;
Area/Space No. 004 107 consisting of approximately 466,717 square feet; and
Area/Space No. 538-120A consisting of approximately 189,285 square feet.

ARTICLE III.      USE OF PREMISES
LESSEE shall have the exclusive right to use the Premises for any purposes related to LESSEE’s Air Transportation operations and business (collectively, the “LESSEE’s Permitted Uses”), subject to the terms and conditions more particularly set forth herein, as follows:
A.      Airline Operations . The right to engage in activities relating to the ticketing, billing, manifesting, handling, loading and unloading items of Air Transportation; provided, however, that such activities shall not be conducted so as to constitute the use of the Premises as a substitute for normal passenger terminal building operations;
B.      Air Cargo . The right to load, unload, receive, and deliver items of Air Transportation, hereinafter referred to collectively as "Air Cargo", transported or to be transported on aircraft owned and/or operated by LESSEE, including the right to use the Premises for handling Air Cargo transported or to be transported on aircraft of operators other than LESSEE; provided, however, that LESSEE will not conduct a separate or related freight forwarding, express delivery, or courier business that occupies any area in the Premises or that operates only automotive vehicles or trucks in said freight business without the prior written approval of STATE;
C.      Aircraft Equipment . The right of LESSEE and maintenance personnel employed by LESSEE to repair, replace, maintain, condition, service, modify, manufacture and assemble aircraft equipment, accessories and component parts, and mobile aviation service equipment, which shall include, but not be limited to, electrical, hydraulic, pneumatic, structural, mechanical, and safety systems used in the field of aviation;
D.      Aircraft Repair and Maintenance . The right of LESSEE and maintenance personnel employed by LESSEE to maintain, repair, replace, service, modify, manufacture, assemble, and store property related to aviation (including, but not limited to, repair and replacement parts, supplies, and the like) owned and/or operated by LESSEE or any third-party carriers; provided, however, that such right shall not be construed as authorizing the conduct of any separate business by LESSEE, but shall permit LESSEE to perform such functions, if such functions are in support of or in supplement to LESSEE’s Air Transportation operations and business;
E.      Aviation Fuel . The right to service and store aviation lubricants and other aviation petroleum products with the strict exception of aviation fuel propellants, as is approved by STATE; provided, however, that LESSEE’s storage and handling of lubricants, new and used petroleum products (with the strict exception of aviation fuel propellants), and LESSEE’s operation and storage of any and all such items shall at all times be in conformity with applicable industrial and fire code standards and all applicable county, state, federal governmental rules, laws, and regulations relating to such storage, handling, and operation.
F.      Ground Service Equipment ("GSE") . The right to replace, repair, maintain, condition, service, modify, manufacture, and assemble GSE equipment, accessories and component parts, including:
4.      GSE Repair . The right to maintain, repair, replace, service, modify, manufacture, assemble, and store property related to GSE (including, but not limited to repair, and replacement parts, supplies, and the like) owned and/or operated by LESSEE or others; and
5.      GSE Fuel . The right to service and store GSE lubricants and other petroleum products, as is approved by STATE; provided, however, that LESSEE’s storage and handling of lubricants, new and used petroleum products, and LESSEE’s operation and storage of any and all such items shall at all times be in conformity with applicable industrial and fire code standards and all applicable county, state, federal governmental rules, laws, and regulations relating to such storage, handling, and operation.
G.      Parking . The right to park, or permit the parking of automobiles operated by LESSEE, its sublessees, tenants, officers, employees, agents and Guests. The parking located on the Premises shall be for the exclusive use of LESSEE, its sublessees, tenants, officers, employees, agents and Guests;
H.      Aircraft . The right to sell, lease, rent, park, store, and exchange (or otherwise dispose of or deal in) aircraft, aircraft components, aircraft parts, and aviation equipment;
I.      Testing . The right to test certain aircraft component parts and other equipment owned, serviced by, contracted through and/or operated by LESSEE. STATE however may prohibit LESSEE from testing certain equipment if testing of such equipment is detrimental to the operations of occupants of the Airport or properties adjacent or near to the Airport; provided, however, that STATE shall provide notice to LESSEE and a reasonable opportunity for LESSEE to cure any detrimental effect. Detrimental effects shall be deemed to include, but not be limited to, excessive jet or propeller wash, interference to electrical or electronic equipment, fumes from gas and liquids, and noise levels in excess of applicable governmental standards;
J.      Offices . The right to establish and maintain business and operations offices in connection with LESSEE’s Permitted Uses of the Premises, and administrative offices for LESSEE’s employees;
K.      Training . The right to train and educate persons in all phases of aviation and aeronautics which are part of LESSEE’s Air Transportation operations and business; provided, however, that the training and education of flight personnel shall be subject to the rules and regulations of the appropriate governmental agency having jurisdiction thereof; and
L.      Employee Services . The right to sell, dispense or otherwise provide goods and services to LESSEE’s employees in support of their employment and services, including, but not limited to an employees’ cafeteria-type installation, company apparel and company logo items, and the provision of facilities and services to LESSEE’s employees including, shower facilities, exercise equipment and credit union services.
ARTICLE IV.      TERM
LESSEE shall have the right to occupy and use the Premises for the purposes prescribed and set forth in Article III. (USE OF PREMISES) and Article VIII. (GENERAL RIGHTS AND RESPONSIBILITIES OF LESSEE) of this Lease, for a period of thirty-five (35) years, commencing on November 1, 2016 and ending on October 31, 2051, unless sooner terminated as provided herein (such period being, the "Term" or "Term of this Lease").
ARTICLE V.      RENTAL
A.      Rental Payments . LESSEE shall pay or remit to STATE, unless this Lease is sooner terminated as provided herein, without notice or demand, as and for rental for the use of the Premises and for the right, privilege, and authority of doing business at the Airport, for and during the Term of this Lease, free from any and all claims, deductions, and set offs against STATE, unless otherwise noted herein, and at such times and in such manner as hereinafter provided, the Ground Rent, the Building Rent, the Apron Rent, and any and all other fees, charges, and payments due under this Lease.
4.      Ground Rent . Ground Rent shall be payable commencing on the Commencement Date and thereafter during the Term of this Lease in accordance with the terms and provisions of Exhibit C-1 attached hereto and made a part hereof. Ground Rent shall be payable in monthly installments in advance equal to one-twelfth (1/12) of the applicable annual amount, commencing on the Commencement Date and on the first day of each and every calendar month of the Term thereafter; provided, however, if the Commencement Date is not the first day of any calendar month or the expiration of the Term of this Lease is not the last day of any calendar month, the monthly installment of Ground Rent for any such month shall be adjusted ratably in the same proportion that the number of days this Lease is in effect for such month bears to the total number of days in the such month.
5.      Building Rent; Building Rent Reduction Request for “Latent Defects” in Workmanship .
a.      Building Rent shall be payable commencing on the Commencement Date and thereafter during the Term of this Lease in accordance with the terms and provisions of Exhibit C-2 attached hereto and made a part hereof, but subject to Section V.A.2.b. Building Rent shall be payable in monthly installments in advance equal to one-twelfth (1/12) of the applicable annual amount, commencing on the Commencement Date and on the first day of each and every calendar month of the Term thereafter; provided, however, if the Commencement Date is not the first day of any calendar month or the expiration of the Term of this Lease is not the last day of any calendar month, the monthly installment of Building Rent for any such month shall be adjusted ratably in the same proportion that the number of days this Lease is in effect for such month bears to the total number of days in the such month.
a.      The parties acknowledge and agree that the mutually agreed rental amounts in respect of Building Rent (as more fully set forth at Exhibit C-2 ) has been calculated based in part upon the parties’ shared understanding as to a certain fixed amount of hard construction costs (exclusive of site preparation costs, soft costs and escalation and delay costs) incurred and paid for by STATE under the STATE/DCK GC Contract and the remaining costs (including the “contractor premium” costs being incurred by LESSEE in completing the New Facility Completion Improvements by virtue of LESSEE’s engaging a new general contractor to perform and complete the New Facility Completion Improvements) to be borne by LESSEE (at LESSEE’s sole cost and expense) necessary for LESSEE to achieve final completion (i.e., including any and all minor punch list items following New Facility Substantial Completion) of the New Facility Completion Improvements. Based on inspection(s) of the Premises conducted the satisfaction of each of LESSEE and STATE prior to the Commencement Date, STATE and LESSEE hereby acknowledge and agree that the cumulative list of Incomplete and/or Deficient Work items arising out of DCK’s construction of the Pre-Existing Leasehold Improvements, is more fully set forth at Exhibit E (and neither party is aware of any other defective workmanship items arising out of DCK’s construction of the Pre-Existing Leasehold Improvements as of the Commencement Date). Subsequent to LESSEE’s final completion of the New Facility Completion Improvements (including punch-list items), LESSEE shall have the one-time right to submit a rent reduction request solely in respect of the Building Rent set forth at Exhibit C-2 (the “Building Rent Reduction Request”) to STATE seeking a reduction in the amount of Building Rent, due to (i) the discovery by LESSEE (including its general contractor), subsequent to LESSEE’s commencement of construction in respect of the New Facility Completion Improvements, of any “latent defects” arising solely as a result of Incomplete and/or Deficient Work that neither party was aware of as of the Commencement Date and the construction costs actually incurred by LESSEE in causing the corrective work necessitated by such newly discovered “latent defects” to be performed; provided that in no event shall LESSEE be entitled to include, as part of its Building Rent Reduction Request, any additional costs for workmanship items for which the corresponding scope of corrective work is specifically enumerated at Exhibit E (excluding such additional costs to the extent necessitated by force majeure and/or unavoidable delays attributable solely to STATE) and (ii) any additional costs and expenses actually incurred by LESSEE in connection with the performance of the corrective work necessitated by such newly discovered “latent defects” and associated delay costs (if any), in all instances excluding any such costs that have been already accounted for by STATE and LESSEE in the mutually agreed rental amounts to be paid by LESSEE as Building Rent in accordance with Exhibit C-2 of this Lease as of the Commencement Date. As used herein, the term “Incomplete and/or Deficient Work” shall mean all work (including design, materials and equipment) that needs to be completed or corrected in order for the New Facility to be completed in a manner suitable for the conduct of Lessee’s Permitted Uses at the Premises and as may be otherwise required to conform to the requirements of the STATE PLANS AND DRAWINGS, all of which such work shall be reflected in the PLANS (New Facility Completion). The term “latent defects” shall mean Incomplete and/or Deficient Work that is subsurface, otherwise concealed, or are unknown physical conditions at the time of the inspection(s) of the Premises conducted by LESSEE and STATE prior to the Commencement Date.
b.      LESSEE acknowledges and agrees that the Building Rent Reduction Request shall be made in writing and delivered by LESSEE to STATE not later than sixty (60) days following New Facility Substantial Completion (the “Rent Reduction Deadline”) and shall contain any and all supporting documentation reasonably required by STATE; provided that LESSEE’s failure to submit its Building Rent Reduction Request prior to the Rent Reduction Deadline shall be deemed to constitute an irrevocable waiver of LESSEE’s right to seek a reduction in Building Rent hereunder.
c.      STATE and LESSEE hereby acknowledge and agree that with respect to the Building Rent Reduction Request submitted by LESSEE in accordance with the terms hereof, STATE shall be required to consult with LESSEE and the Airlines Committee of Hawaii (ACH), prior to STATE’S determination, which determination shall be made by STATE in STATE’S sole discretion, as to (i) the extent to which LESSEE shall be entitled to be granted any reduction in Building Rent under this Lease and (ii) the corresponding dollar amount (if any) that LESSEE shall be entitled to receive as a reduction in Building Rent. Subsequent to such consultation with LESSEE and ACH (and within sixty (60) days of STATE’s receipt of the Building Rent Reduction Request), STATE shall notify LESSEE in writing of STATE’s determination (in STATE’s sole discretion) of the dollar amount (if any) to be granted in favor of LESSEE as a reduction in Building Rent, and as applicable, the effective date of such STATE-determined reduction in Building Rent, in response to such Building Rent Reduction Request (such written notice, being “STATE’s Building Rent Reduction Determination”); provided that LESSEE hereby acknowledges and agrees that STATE, in STATE’s sole discretion, is the sole party entitled to grant any reduction in the amounts of any Building Rent under this Lease, and to the extent STATE has granted any such reduction in Building Rent amounts, the parties hereto shall execute and deliver a written amendment to this Lease which contains an updated Exhibit C-2 that gives effect to STATE’s Building Rent Reduction Determination. For the avoidance of doubt, STATE’s Building Rent Reduction Determination (irrespective of the outcome) in response to the Building Rent Reduction Request shall be final, conclusive and binding upon LESSEE in all respects.
d.      Building Rent hereunder has been calculated on a cost recovery basis, in the manner more fully described in (i) State of Hawaii Airports System Hawaiian Airlines Replacement Facilities Rental Rate Methodology annexed hereto at Exhibit D-1 and (ii) the Elliot Street Cost Analysis annexed hereto at Exhibit D-2 .
6.      Apron Rent . Apron Rent shall be payable commencing on the Commencement Date and thereafter during the Term of this Lease in accordance with the terms and provisions of Exhibit C-3 attached hereto and made a part hereof. Apron Rent shall be payable in monthly installments in advance equal to one-twelfth (1/12) of the applicable annual amount, commencing on the Commencement Date and on the first day of each and every calendar month of the Term thereafter; provided, however, if the Commencement Date is not the first day of any calendar month or the expiration of the Term of this Lease is not the last day of any calendar month, the monthly installment of Apron Rent for any such month shall be adjusted ratably in the same proportion that the number of days of this Lease is in effect for such month bears to the total number of days in such month.
B.      [Intentionally omitted.]
C.      General Payment Provisions .
4.      Time of Payment . The rental, fees, and other charges required herein shall be paid monthly, in advance, but not more than one year in advance, on the first day of each and every month of each and every year of the Term of this Lease.
5.      Place of Payment . All payments of money, including rental payments, required to be made by LESSEE to STATE hereunder, shall be made when due in legal tender of the United States of America, at STATE’s office at the Airport, or at such other place as STATE may designate in writing.
6.      Late Payment; Delinquent Accounts . Without prejudice to any other remedy available to STATE, LESSEE agrees, without further notice or demand, as follows:
a.      Interest Charges . In addition to any late or delinquent payment, LESSEE agrees to pay interest to STATE at the rate of twelve percent (12%) per annum, on the outstanding delinquent balance of each of LESSEE’s delinquent accounts; and
b.      Service Charge . To pay such other charge in respect of any late payments or delinquent accounts as may be prescribed by Hawaii Administrative Rules adopted by STATE.
7.      Delinquent Payment Defined . The term "delinquent payment", as used herein, means any payment of rental, fees, interest or service charges, and other charges or amounts payable by LESSEE to STATE, which are not paid when due, as prescribed in this Article V. (RENTAL).
8.      Accrued Rental, Fees, and Other Charges . The expiration or sooner termination of this Lease by the lapse of time, or otherwise, shall not relieve LESSEE of its obligation to pay any and all rental, fees, interest or service charges, and other charges or amounts accrued during a period in which this Lease is or was in effect, and which are unpaid at the time of any such expiration or termination.
9.      Pro Rata Payment . If this Lease terminates without fault of LESSEE on any day other than the last day of any calendar month, the applicable rents and other charges for said month shall be paid pro rata in the same proportion that the number of days this Lease is in effect for that month bears to the total number of days in that month.
D.      Additional Charges . In addition to the right of STATE to charge and collect upon demand interest and service charge fees as provided in Section V.C.3.a. (Interest Charges) and Section V.C.3.b. (Service Charge) or to terminate this Lease pursuant to Article XX. (TERMINATION BY STATE) hereof, STATE may levy on and collect from LESSEE a charge of TWO HUNDRED FIFTY AND NO/100 DOLLARS ($250.00) per day, paid in legal tender of the United States of America, for each and every day LESSEE is in violation of any of the agreements, covenants, promises, provisions, requirements, reservations, restrictions, stipulations, terms, or conditions of this Lease; provided, however, that there shall be no levy unless the violation(s) continues beyond the period specified in Article XX. (TERMINATION BY STATE) hereof, for remedial action(s); and provided further, that separate charges may be levied by STATE for violations of separate provisions by LESSEE even though the violation(s) may be concurrent. Payment of the additional charges by LESSEE shall be due and paid to STATE on demand and shall bear interest when not paid at the same rate and in the same manner as for unpaid rentals as prescribed and set forth in Section V.C.3.a. (Interest Charges).
E.      Return of Prepaid Rental . In the event this Lease is terminated prior to its expiration for any cause except LESSEE’s default, all unearned, prepaid rentals received by STATE from or on behalf of LESSEE hereunder shall be returned or refunded to LESSEE.
F.      Waiver of Rent. STATE agrees that the lease rents payable to STATE by LESSEE as set forth and prescribed by Section V.A.1. (including Exhibit C-1 ), Section V.A.2.a. (including Exhibit C-2 ) and Section V.A.3. (including Exhibit C-3) shall be waived from the Commencement Date of this Lease until October 31, 2017, which is the day immediately preceding the first anniversary of the Commencement Date, subject to Section VII.H. STATE hereby agrees that invoices in respect of Ground Rent, Building Rent and Apron Rent shall not be submitted by STATE to LESSEE, and LESSEE shall not be expected to pay such lease rents at any time during the one-year waiver of rent period hereunder, unless otherwise required pursuant to Section VII.H. This waiver of rent is in consideration of LESSEE making the required minimum investment amounts (in accordance with Section VII.H. (Minimum Investment in New Facility Completion Improvements) and achieving final completion of the New Facility Completion Improvements and for the additional amounts invested by LESSEE in other Leasehold Improvements.
ARTICLE VI.      REOPENING OF RENT
A.      Remaining Four (4) Five (5)-Year Periods . The Ground Rent for the five (5)-year periods beginning with the sixteenth (16 th ) year, the twenty-first (21 st ) year, the twenty-sixth (26 th ) year and the thirty-first (31 st ) year following the Commencement Date, shall be one hundred percent (100%) of the Fair Market Rental at the time of each reopening.
B.      Determination of Rent . Except as provided herein, the provisions in Chapter 658A, HRS, shall be followed. Consistent with the manner contemplated under Section 171-17(d), HRS, the parties hereby agree that the Fair Market Rental value at the time of each reopening shall be determined in the manner prescribed by this Section VI.B .
At least six (6) months prior to the time of reopening, the Fair Market Rental value shall be determined, at STATE’s election, by either (i) an employee of STATE who is qualified to appraise lands or (ii) an appraiser whose services shall be contracted for and paid by STATE (such employee or appraiser of STATE, being the “STATE’s Appraiser”), and LESSEE shall be promptly notified by certified mail, return receipt requested, of the Fair Market Rental value as determined by STATE’s Appraiser; provided, that should LESSEE fail to notify STATE by certified mail, return receipt requested within thirty (30) days after LESSEE’s receipt thereof that LESSEE disagrees with the Fair Market Rental value as determined by STATE’s Appraiser and that LESSEE has appointed its own appraiser to prepare an independent appraisal report, then the Fair Market Rental value as determined by STATE’s appraiser shall be deemed to have been accepted by LESSEE and shall be the Fair Market Rental value as of the date of reopening.

If, however, LESSEE has timely notified STATE of its disagreement with the Fair Market Rental value determined by STATE’s Appraiser and appointed LESSEE’s appraiser as stated hereinabove, then STATE’S Appraiser and LESSEE’s appraiser shall appoint an independent third appraiser and the Fair Market Rental value shall be determined by arbitration in accordance with Chapter 658A, HRS.

Notwithstanding the foregoing, prior to initiating the arbitration involving such independent third appraiser, each of STATE’s Appraiser and LESSEE’s appraiser shall review each other’s reports and make every effort to resolve whatever differences they may have. However, should differences still exist thirty (30) days after the exchange, STATE’s Appraiser and LESSEE’s appraiser shall within twenty (20) days thereafter appoint an independent third appraiser who shall also prepare an independent appraisal report based on the review of the two appraisal reports prepared and any other data said third appraiser deems relevant and appropriate. The third appraiser shall be furnished with the comparables used by STATE’s Appraiser and LESSEE’s appraiser without identification as to which comparables were used by each such appraiser. Copies of the third appraiser’s report shall be furnished to STATE’s Appraiser and LESSEE’s appraiser within thirty (30) days after the third appraiser’s appointment. Within seven (7) days after receiving the third appraisal report, all three shall meet and determine the Fair Market Rental value of the Premises. The Fair Market Rental value as determined by a majority of the appraisers shall be final and binding upon STATE and LESSEE, subject to vacation, modification or correction in accordance with the provisions of Sections 658A-19, 658A-20, 658A-22, 658A-23, and 658A-24, HRS.

LESSEE shall pay for its own appraiser, STATE shall pay for STATE’S Appraiser, and the cost of the services of the third appraiser shall be borne equally by STATE and LESSEE. Until the successful conclusion of the rental reopening and re-determination process as described herein, all appraisal reports shall be confidential and shall not become part of the public record of STATE; provided, however, following the successful conclusion of the reopening and re-determination process, the appraisal reports shall become part of the public record of STATE.

In the event that the appraisers are unable to determine the Fair Market Rental value before the reopening date, or by the foregoing prescribed time, whichever is later, LESSEE shall pay the Fair Market Rental as determined by STATE’s Appraiser for the reopening until the new rent is determined and thereafter the rental paid by LESSEE shall be subject to retroactive adjustments appropriate to reflect the Fair Market Rental determined as set forth hereinabove. The failure of LESSEE or LESSEE’s appraisers to comply with the procedures set forth above shall constitute a waiver of LESSEE’s right to contest the rent determined by STATE’s Appraiser for the reopening, and LESSEE shall pay said rent as determined by STATE’s Appraiser without any retroactive adjustments. Alternatively, STATE may treat such failure to comply as a breach of this Lease and may terminate this Lease pursuant to Article XX. (TERMINATION BY STATE) hereof .
ARTICLE VII.      LESSEE’S IMPROVEMENTS
A.      LESSEE’s Unconditional Obligation to Complete the New Facility . LESSEE covenants and agrees and it is an express condition of this Lease that LESSEE shall, at LESSEE’s sole cost and expense (except as expressly provided to the contrary herein), commence and thereafter continually prosecute, with due diligence, the remaining construction at the Premises of the New Facility Completion Improvements (including, without limitation, any and all corrective work necessary to address each of the defective workmanship items specifically enumerated at Exhibit E ), in such manner as may be required to achieve New Facility Substantial Completion (defined below) as promptly as practicable and in no event later than the Outside Date for Substantial Completion (subject to force majeure and unavoidable delays attributable solely to STATE). LESSEE acknowledges and understands that LESSEE’s conduct of its business operations at the Premises will not be further delayed in the event of a delay in achieving New Facility Substantial Completion beyond the Outside Date for Substantial Completion (unless due to force majeure or unavoidable delays attributable solely to STATE); provided that irrespective of the date (whether before or after the Outside Date for Substantial Completion) by which

LESSEE actually achieves New Facility Substantial Completion, LESSEE shall be obligated to commence, and thereafter continue to timely, pay any and all rents due and payable under this Lease in accordance with Article V. (RENTAL), including Section V.F. (Waiver of Rent). For purposes of the New Facility Completion Improvements, “New Facility Substantial Completion” shall be deemed to have occurred at such time as the New Facility Completion Improvements have been sufficiently completed, other than minor punch list items or items which will not materially and adversely affect the use or occupancy of the Premises for any of LESSEE’s Permitted Uses. Within ten (10) business days after LESSEE notifies STATE in writing that New Facility Substantial Completion has occurred, STATE and LESSEE shall conduct a joint inspection of the Premises and shall agree upon a written list of the “punch list” items identifying touch‑up work, minor repairs, and incomplete items necessary to complete the Premises in accordance with the PLANS (New Facility Completion) and to the extent required to complete the New Facility in a manner suitable for LESSEE’s conduct of its business operations at the Premises. As soon thereafter as reasonably practicable, LESSEE shall promptly commence work on the “punch list” items and shall diligently pursue such work to completion, subject to force majeure delay and unavoidable delays attributable solely to STATE. Promptly following the date on which LESSEE notifies STATE in writing that New Facility Substantial Completion has occurred, STATE and LESSEE shall execute a Confirmation of New Facility Substantial Completion in form mutually agreed between STATE and LESSEE.
B.      Acceptance of Premises . LESSEE has examined and knows of the condition of the Premises, including the Pre-Existing Leasehold Improvements, and takes the Premises, including the Pre-Existing Leasehold Improvements, "as is", in its existing form, content and state of condition without any representation by or on behalf of STATE, and LESSEE agrees that STATE shall not be liable for any latent, patent or other defects in, on, over or under the Premises, including the Pre-Existing Leasehold Improvements or easements and appurtenances thereto except as otherwise expressly provided in Section V.A.2. By executing this Lease, LESSEE is agreeing to release and discharge any claims, rights, and actions LESSEE may have with respect to the condition of the Premises, including the Pre-Existing Leasehold Improvements except as otherwise expressly provided in Section V.A.2. STATE makes no warranty, either express or implied, as to the condition of the Premises, including the Pre-Existing Leasehold Improvements, or that the Premises, including the Pre-Existing Leasehold Improvements, shall be suitable for LESSEE’s purposes or needs. From and after the Commencement Date hereof through the expiration of the Term hereof, except as otherwise expressly set forth herein, STATE shall not be required to perform any work or construct any improvements, furnish any services or facilities, perform any maintenance, or make any repairs or alterations or environmental remediation or clean-up in or to the Premises.
C.      LESSEE’s Construction of New Facility Completion Improvements .
4.      LESSEE’s Completion of New Facility . From and after the Commencement Date, STATE hereby authorizes LESSEE to access the Premises for the purpose of commencing design and pre-construction site preparation work related to construction of New Facility Completion Improvements therein; provided, however, that LESSEE shall not commence construction of New Facility Completion Improvements at the Premises except in accordance with the terms and conditions of this Lease, including STATE’s prior written approval.
5.      Requisite Approvals Prior to LESSEE’s Commencement of Construction . Prior to LESSEE’s commencement of construction of the New Facility Completion Improvements at the Premises (to the extent required), the PLANS (New Facility Completion) shall have been approved by any and all federal, state, municipal, and other governmental authorities, offices and departments having jurisdiction over the Premises, including, without limitation, the District Airport Engineer of the FAA.
6.      No representation by STATE . Neither STATE’s approval of the PLANS (New Facility Completion) nor any other action taken by STATE with respect thereto under the provisions of this Lease, shall constitute an opinion or representation by STATE as to the sufficiency of said PLANS (New Facility Completion), or such design standards as STATE shall have in effect from time to time, compliance with any laws, or ability of LESSEE to receive any permits from any department or agency of the State of Hawaii or other jurisdictions, nor impose any present or future liability or responsibility upon STATE. Approval shall not constitute approval of the State of Hawaii or its departments or agencies for any construction, extension, or renovation of any public utilities or public ways which may be necessary to service the Premises. In any case where more than one standard, code, regulation, or requirement applies to construction or the PLANS (New Facility Completion), the strictest shall control.
7.      Notice to STATE prior to Commencement of New Facility Completion Improvements . As promptly as practicable after the Commencement Date and subject to compliance with the other terms and provisions hereof, LESSEE shall notify STATE in advance of the date LESSEE will commence construction of New Facility Completion Improvements at the Premises and LESSEE’s proposed construction schedule with respect thereto.
Conditions applicable to Pending Contracts . Prior to the execution of any contracts for construction, engineering, or architectural services in connection with the New Facility Completion Improvements, LESSEE shall furnish to STATE the names of the person or entity whom LESSEE desires to employ and the proposed form of contract (including project schedule and detailed budget). STATE shall have the right to approve the architect, engineer, and general contractor, including any proposed contract for their services, which approval shall not be unreasonably withheld or delayed. Upon LESSEE’s request, STATE shall confer with LESSEE regarding any particular architect, engineer, or general contractor, or any proposed contract for their services, for which STATE’s approval has not been granted. LESSEE shall ensure that any of its proposed architect(s), engineer(s), and contractor(s) shall be licensed in the discipline being contracted for, experienced in design and construction of improvements comparable to those for which its services are being required by LESSEE, and airport‑related work, not be listed on any local, state, or federal non‑responsible bidders’ list, and not be debarred under any state or federal statute, regulation, or proceeding. Upon their execution, and prior to commencement of construction, LESSEE shall deliver to STATE copies of its contracts with the architect of record and engineer and the general contractor. LESSEE shall simultaneously deliver to STATE, in form mutually agreed between LESSEE and STATE, collateral assignments of said contracts, together with instruments executed by the architect, engineer, and by the general contractor under which each consents to the aforesaid assignment and agrees to continue to supply the same services to STATE or STATE’s designee provided by their respective contracts with LESSEE, in the event that (i) LESSEE fails to comply with any such requirements, (ii) STATE gives the architect, engineer, or the general contractor, or any of them, written notice within sixty (60) days after the occurrence of such failure, and (iii) at the time of STATE’s notice of such failure, STATE or STATE’s designee demands continuance of such services on the same terms contained in the respective contracts and expressly agrees to assume and be bound by such respective contracts; provided that STATE shall not be liable for or obligated to cure prior defaults of LESSEE.
8.      LESSEE to Timely Pay All Costs; Partial and Final Lien Waivers . Throughout LESSEE’s construction of the New Facility Completion Improvements, LESSEE shall pay all costs of the construction incurred by LESSEE when due, and shall require all contractors to deliver sworn statements of persons furnishing materials and labor before any payment is made and partial and final waivers of lien for all work for which payment is made, in order to prevent attachment of mechanic’s liens or other liens by reason of work, labor, services, or materials furnished with respect to the Premises.
9.      Insurance Coverage during Construction . During the course of construction of the New Facility Completion Improvements, LESSEE, at its sole expense, will carry or cause to be carried, the insurance required to be carried pursuant to Article XIX. (INSURANCE) hereof.
10.      STATE Inspection during Construction . During the course of LESSEE’s construction of the New Facility Completion Improvements, STATE, and its architects, engineers, agents, and employees on behalf of STATE with responsibilities relating to the Premises may enter upon and inspect the Premises for the purpose of verifying that the New Facility Completion Improvements are proceeding in accordance with the requirements of this Lease. With respect to any such entry and inspection on behalf of STATE, persons requiring entry shall present proper identification to LESSEE. No right of review or inspection shall make STATE responsible for work not completed in accordance with the PLANS (New Facility Completion) or applicable laws. LESSEE shall keep at the Premises all of the PLANS (New Facility Completion), shop drawings, and specifications relating to such construction, which STATE may examine at all reasonable times and, if required by STATE, LESSEE shall also furnish STATE with copies thereof.
11.      LESSEE Responsible for Work Performed . Any work performed at the direction of LESSEE, even though performed by contractors, subcontractors or sub-subcontractors, shall be the responsibility of LESSEE directing such work. During any construction by LESSEE, LESSEE shall be solely responsible for the support, maintenance, safety, and protection of the facilities of STATE resulting from such construction activities, and for the safety and protection of all persons or employees and of all property therein. All work shall be performed in accordance with (and all of the New Facility Completion Improvements, when completed, shall comply with) the PLANS (New Facility Completion), with such design standards as STATE shall have in effect from time to time, Airport and construction conditions in effect at the time of construction, and any other applicable federal, state, or local laws, and with the project requirements set forth herein.
D.      In General .
4.      As used in this Lease, the terms “LESSEE’s Plans” and “Leasehold Improvements ” shall be deemed to include the PLANS (New Facility Completion) and New Facility Completion Improvements, respectively, and to the extent required by STATE, LESSEE shall comply with the express terms and conditions set forth in this Article VII. (LESSEE’S IMPROVEMENTS) in connection with LESSEE’s construction of the New Facility Completion Improvements in accordance with the PLANS (New Facility Completion).
5.      LESSEE shall, at LESSEE’s sole cost and expense, prepare the land surface, to the extent applicable, of the Premises, construct, erect, and install buildings, structures, utility lines, and other improvements on the Premises for the purposes denoted in Article III. (USE OF PREMISES) herein, subject to all applicable easements and restrictions, if any, as shown and delineated on Exhibit B attached hereto and made a part hereof, and any and all other covenants, terms, and conditions that may be required or imposed by STATE. The construction, erection, and installation of (i) the New Facility Completion Improvements and (ii) any other Leasehold Improvements, in all cases, must receive STATE’s prior written approval and must meet or satisfy applicable County building standards and specifications, State of Hawaii, Department of Health and FAA rules and regulations.
E.      Environmental Report .
4.      The parties agree that with respect to the Pre-Existing Leasehold Improvements and the New Facility Completion Improvements, that certain Finding of No Significant Impact and Record of Decision, dated as of January 29, 2013, for the Proposed Airport Modernization Program at Honolulu International Airport located in Honolulu, Hawaii shall be deemed to satisfy the requirement that a Final Environmental Assessment or Final Environmental Impact Statement or other appropriate environmental report be otherwise provided by LESSEE to STATE. With respect to any subsequent LESSEE’s Leasehold Improvements, the required assessment, statement, or report shall be prepared by LESSEE or LESSEE’s agent and processed through appropriate governmental agencies, including the State of Hawaii, Department of Health, for STATE’s final written approval at LESSEE’s sole cost and expense.

5.      The parties agree that (i) the Final Environmental Assessment, Proposed Airport Modernization Program, Honolulu International Airport, City and County of Honolulu, Oahu, Hawaii, dated January 2013 and approved by FAA on January 28, 2013, (ii) the Final Phase I Environmental Site Assessment, Washpad and Elliott Street Hardstands, dated November 2009 covering the Land Areas (Area/Space No. 004-107) and (iii) the Final Phase I Environmental Site Assessment, Existing Aloha and Hawaiian Maintenance and Cargo Facilities dated November 2009 covering the Hardstands (538-120A and 538-120B) (collectively, the “Baseline Environmental Site Assessment”) shall collectively constitute the “Hazardous Substances Baseline” hereunder.
F.      Improvement Plans, Generally .
4.      LESSEE’s Plans . All designs, plans, drawings, specifications, cost
estimates, schedules, and timetables, together with a detailed plot plan and layout, for and relating to the construction and installation of (a) New Facility Completion Improvements and (b) any other LESSEE's Leasehold Improvements at, in, on, over, or under the Premises, shall hereinafter be referred to collectively as "LESSEE's Plans".

5.      Properly Licensed . A properly licensed architect or engineer must prepare LESSEE’s Plans. Properly licensed contractors must construct, erect, and install the New Facility Completion Improvements and any other LESSEE’s Leasehold Improvements.
6.      Compliance with Development Standards . LESSEE shall obtain STATE’s prior written approval for LESSEE’s Plans and LESSEE’s Leasehold Improvements, in all cases, including all initial and subsequent construction, repair, refurbishment, or installation of improvements at, in, on, over, or under the Premises and all such improvements, except as otherwise stated herein or hereafter, must: (i) be of high quality; (ii) incorporate quality materials; (iii) be completed with first-class workmanship; (iv)  meet applicable County building codes, standards, and specifications; and except as otherwise stated herein, (v) adhere to and completely comply with and satisfy STATE’s (1) Development Standards for Leased Airport Property ( Appendix A ); and (2) Tenant Improvement Guidelines ( Appendix B ), hereinafter referred to collectively as the "Development Standards", all of which are attached hereto and hereby made a part hereof, including any and all subsequent amendments and other design development guidelines adopted by STATE.
7.      Plans Reviewed by DCAB . To ensure compliance with the requirements outlined in "Design and Construction Requirements as required under Hawaii Revised Statutes §103-50" ( Appendix C ), LESSEE shall obtain prior written approval for LESSEE’s Plans and LESSEE’s Leasehold Improvements, including all initial and subsequent construction, repair, refurbishment, or installment of improvements at, in, on, over, or under the Premises from DCAB.
8.      STATE’s Approval . STATE shall not unreasonably withhold or delay approval for LESSEE’s Plans. STATE may reasonably withhold such approval, including, without limitation, if, in the sole discretion of STATE, such construction, erection, or installation will be:
a.      Structurally Unsafe . Structurally unsound or unsafe or hazardous for human use or occupancy;
b.      Violation of Lease . Not in compliance with any requirement of this Lease;
c.      Building, Electrical, Plumbing, Health, or Fire Code Violations . Not in compliance with the building, electric, plumbing, health, and fire codes, regulations, standards, or specifications of the County or the State of Hawaii;
d.      Development Standards Violation . Not in compliance with the Development Standards, including STATE’s requirements relating to the development of facilities, which effectively and harmoniously matches the external architecture of other similar portions of the Airport at which the facilities will be constructed, erected, or installed;
e.      Violation of FAA Requirements . Not in compliance with any rule, regulation, or order of the FAA; or
f.      Violation of any other Federal Requirements . Not in compliance with any federal law, code, statute, rule, regulation, or order.
9.      STATE’s Disapproval . If STATE disapproves of LESSEE’s Plans, STATE shall give LESSEE written notice of STATE’s disapproval, which notice shall state the reason or reasons for STATE’s disapproval of such LESSEE’s Plans. LESSEE shall thereupon prepare and submit to STATE new or revised LESSEE Plans as shall reasonably satisfy STATE’s prior disapproval.
10.      Compliance with STATE’s Design Standards . Prior to submitting LESSEE’s Plans to STATE for the purpose of obtaining STATE’s written approval, such plans, drawings, and specifications must comply with, meet, or completely satisfy all of the following design standards:
a.      Structure . All construction, erection, and installation shall be structurally safe, sound, and non‑hazardous.
b.      Workmanship . All construction, erection, and installation shall be of new materials and first‑class workmanship.
c.      Material . LESSEE’s Leasehold Improvements and other improvements shall be constructed of prefabricated metal or concrete block or any similar fireproof material approved, in writing, by STATE, with concrete floors, for the storage or handling of flammable fluids, chemicals, or lubricants and aircraft servicing and maintenance.
d.      Setback . Building(s) shall be set back a minimum of ten (10) feet from property lines, unless otherwise approved, in writing, by STATE.
e.      Utility Lines . Utility lines shall be located above or underground.
f.      Grease Traps . Grease traps shall be provided to collect all spills of petroleum products.
g.      Drainage . Surface drainage from wash areas shall not be discharged outside the Premises.
h.      Security Fencing . In the event LESSEE is required to install additional security fencing mandated by federal or state laws, rules, or regulations, LESSEE shall complete the installation of said fencing with the required chain‑link fence, and where necessary for airport security purposes, with three (3) strands of barbed wire or with other security walls, barricades, and fencing that meet airport standards, all as approved, in writing, by STATE. Fences between the Premises and adjacent property shall be constructed, erected, or installed directly on the property lines, with all costs and expenses for such construction, erection, or installation shared equally by LESSEE and lessee of the adjacent property, if there is an adjoining lessee at the time LESSEE constructs, erects, or installs the required fencing. If there is no adjoining lessee, LESSEE shall be responsible for all costs and expenses for the installation of the security fencing. LESSEE’s failure to conform to security regulations may subject STATE to a monetary fine, as imposed or prescribed by a government agency. LESSEE shall reimburse STATE for any fines so paid by STATE, or at the sole discretion of STATE, STATE may assess LESSEE the fine and LESSEE shall be liable and shall assume responsibility to pay such fine directly to the citing government agency. Failure of LESSEE to reimburse STATE within thirty (30) days after STATE’s demand for reimbursement is made to LESSEE shall be cause for a charge by STATE and/or termination of this Lease as provided in Section V.D. (Additional Charges) and Article XX. (TERMINATION BY STATE), respectively, hereof.
i.      Height Limitations . All Leasehold Improvements, including all buildings and other improvements on the Premises, shall not exceed the airport height limitation prescribed by STATE or the FAA or cause a hazard to air safety, as prescribed and set forth in Article XXXVIII. (APPROACH PROTECTION) hereof or pursuant to any federal, state, or county law, statute, ordinance, rule, or regulation.
j.      Signs . Signs bearing LESSEE’s name or business name shall not exceed the allowable overall size set by County building codes and shall not be located higher than the top of LESSEE’s Leasehold Improvements. Illuminated, neon, or other similar signs are prohibited. Prior to the erection, installation, or placement of any sign by LESSEE, LESSEE must first obtain STATE’s written approval of each sign’s design, graphics, color, layout, and method of mounting.
k.      Easement . Structures or foundations comprising LESSEE’s Leasehold Improvements, including all buildings and other improvements on the Premises, shall not be built, constructed, erected, installed, or placed over any pipeline or other utility conduit easement or within any aircraft approach/takeoff clear zone or other setback area without LESSEE first obtaining STATE’s prior written approval.
l.      Landscaping . For the enhancement and beautification of the Premises, LESSEE shall landscape and maintain all open and unpaved areas of the Premises in conformance with the STATE PLANS AND DRAWINGS.
G.      Other Applicable Construction Program Provisions .
4.      STATE Approval of Leasehold Improvements . Prior to the commencement of any work, LESSEE shall obtain STATE’s written approval of LESSEE’s Plans covering the portion of the Premises upon which such work is to be done, and shall obtain all approvals, licenses and permits required by any governmental authority (whether federal, state, municipal or county). Any and all such LESSEE’s Plans shall employ optimum essentials of aesthetics, quality of materials and equipment, convenience, function, and design, shall be compatible in such respects with those of the Airport and the Development Standards.
Except as otherwise expressly permitted under Section VIII.B. hereof, LESSEE shall not install any antenna or aerial wires, or radio or television equipment, or any other type of telecommunication or other equipment, inside or outside of the Premises without the prior written approval of STATE and upon such terms and conditions that may be prescribed by STATE in each and every instance.
Neither the approval by STATE of LESSEE’s Plans, nor any other action taken by STATE with respect thereto under the provisions of this Lease, shall constitute an opinion or representation by STATE as to the sufficiency of LESSEE’s Plans, or such design standards as STATE shall have in effect from time to time, compliance with any laws, or ability of LESSEE to receive any approvals, licenses or permits from any department or agency of the State of Hawaii or other jurisdictions, nor impose any present or future liability or responsibility upon STATE. In any case where more than one standard, code, regulation, or requirement applies to construction of LESSEE’S Leasehold Improvements in accordance with the approved LESSEE’s Plans, the strictest shall control.
5.      Plans and Specifications . LESSEE shall, at its sole cost and expense, employ competent and properly licensed architects, engineers, and interior designers who will prepare any of LESSEE’s Plans, in all cases, including, without limitation, architectural, interior, exterior and engineering designs, detailed plans, specifications, and cost estimates of all Leasehold Improvements and Personal Property to be installed at, in, on, over, or under the Premises. LESSEE shall, at its sole cost and expense prior to the start of construction, obtain all necessary approvals, licenses and permits required by any governmental authority (whether federal, state, municipal, or county). LESSEE shall submit five (5) sets of LESSEE’s Plans for review and approval by STATE in accordance with a time schedule furnished by STATE.
All of LESSEE’s Plans shall be first submitted to STATE and DCAB for written approval before LESSEE awards, issues, or lets any and all contracts for the construction of the New Facility Completion Improvements or any other Leasehold Improvements (as applicable), to be installed at, in, on, over, or under the Premises. If STATE disapproves of LESSEE’s Plans, the provisions contained in Article VII.F.6. shall apply.
6.      Adherence to LESSEE’s Plans . No substantial change, addition, or alteration shall be made in the applicable LESSEE’s Plans so approved without first obtaining STATE’s approval in writing. No Leasehold Improvements or other improvements other than as contemplated herein shall be constructed, erected, installed, or placed at, in, on, over, or under the Premises without the prior written consent of STATE and any and all terms and conditions relating thereto imposed by STATE shall become terms and conditions hereof, as if they had been originally stated in this Lease.
7.      Future Work . After construction or installation and completion of the New Facility Completion Improvements in accordance with the approved PLANS (New Facility Completion), LESSEE shall not perform any construction work or otherwise make any structural alterations (including, without limitation, ceilings, walls, and floors) to any portion of the Premises without first obtaining STATE’s written consent; provided, however, that LESSEE may make nonstructural alterations which LESSEE deems necessary for the conduct of LESSEE’S Permitted Uses in accordance with Section VII.J.6. (Damage Repair); and provided, further that LESSEE reports to STATE such nonstructural alterations and submits to STATE the costs thereof.
8.      Governmental Approvals . LESSEE, at its sole cost and expense, shall also procure all governmental approvals, licenses and permits necessary for the construction, erection, installation, or placement of the Leasehold Improvements at, in, on, over, or under the Premises.
9.      Submittals Required Upon Completion . Upon completion of the construction, erection, installation, or placement of (i) the New Facility Completion Improvements and (ii) any other Leasehold Improvements, as the case may be, LESSEE shall, within thirty (30) days thereafter, at no cost or expense to STATE, furnish STATE:
a.      Certificate . A certificate certifying that the applicable Leasehold Improvements have been constructed, erected, installed, or placed in accordance with the approved LESSEE’s Plans and in strict compliance with all laws, statutes, and ordinances, and governmental rules, regulations, codes, directives and orders;
b.      As-Builts . Two complete sets of as‑built construction drawings, specifications and plans of the Leasehold Improvements, including, but not limited to, any architectural, mechanical, plumbing, and electrical drawings, plans and specifications, containing a separate stamp from LESSEE’s licensed architect or engineer after the date construction, including subsequent additions or alterations thereto, has been completed or accompanied by an attestation from both LESSEE and either LESSEE’s architect or engineer that such submitted drawings constitute true and accurate representations of the as‑built condition of the Leasehold Improvements, and one complete set in Computer Aided Design (CAD) format which complies with STATE’s current CAD standards. The construction as-built drawings must include any and all applicable governmental approval or permit numbers, the Leasehold Improvements constructed, erected, installed, or placed by LESSEE at, in, on, over, or under the Premises, and the location and details of construction or installation of all equipment, utility lines, and heating, ventilating, and air‑conditioning ducts and related appliances, if any, installed as part of the Leasehold Improvements. LESSEE shall keep said drawings current by updating the same in order to reflect thereon any changes or modifications which may be made in or to the Premises.
Failure by LESSEE to submit LESSEE’s Plans and/or complete its Leasehold Improvements, or tender such as‑built drawings, plans, and specifications and improvement costs within the prescribed times shall constitute a violation of this Lease and give STATE the right to assess a penalty and/or terminate this Lease pursuant to Section V.D. (Additional Charges) and Article XX. (TERMINATION BY STATE), respectively, hereof.
H.      Minimum Investment in New Facility Completion Improvements . LESSEE shall, on or before the Outside Date for Substantial Completion, have invested the sum of not less than TEN MILLION DOLLARS ($10,000,000)(such amount, the “Minimum Investment in New Facility Completion Improvements”) for performing and completing the New Facility Completion Improvements, and shall, no later than sixty (60) days after the Outside Date for Substantial Completion, submit to STATE an itemized statement of the “in-place” costs of the upgrades, improvements, and construction so completed. This requirement to report “in-place” costs of completed upgrades, improvements and construction shall also apply to any and all subsequent renovations, additions, or alterations made by LESSEE to the Premises, and LESSEE’s itemized cost statement shall be delivered to STATE no later than sixty (60) days after completion of such subsequent renovations, additions, or alterations.
The foregoing Minimum Investment in New Facility Completion Improvements is required in order for LESSEE to receive the one-year statutory waiver of rent as stated in Section V.F. (Waiver of Rent). Should LESSEE fail to have invested the Minimum Investment in New Facility Completion Improvements on or before the Outside Date for Substantial Completion, LESSEE acknowledges and agrees that STATE (in STATE’s sole discretion) shall have the right to deny waiver of rent and upon STATE’s notice of denial of the waiver of rent, LESSEE shall be obligated to immediately pay to STATE the full amount of any rent amount that might have otherwise been waived under Section V.F. (Waiver of Rent).
Failure by LESSEE to observe the deadlines for funding the Minimum Investment in New Facility Completion Improvements, and for reporting the “in-place” costs of the upgrades, improvements, and construction requirements of this Section VII.H. (Minimum Investment in New Facility Completion Improvements) shall also constitute a violation of this Lease and give STATE the right to assess a charge pursuant to Section V.D. (Additional Charges) hereof, in addition to the right to recover the full amount of any rent amount that might otherwise have been waived under Section V.F. (Waiver of Rent).
I.      Title .
4.      Leasehold Improvements . Subject to the provisions of Article XIV. (SURRENDER OF PREMISES) hereof, title to any and all of LESSEE’s Leasehold Improvements (including the New Facility Completion Improvements but excluding the Pre-Existing Leasehold Improvements), including fixed additions and trade fixtures, constructed, erected, installed, or placed by LESSEE, at LESSEE’s sole cost and expense, at, in, on, or over the Premises shall remain with LESSEE during the term of this Lease. Title to any and all of the Leasehold Improvements and the New Facility Completion Improvements at the expiration or sooner termination of this Lease shall vest automatically and without the need for any further documentation, and LESSEE shall cause such Leasehold Improvements and the New Facility Completion Improvements to be free and clear of any and all claims, liens, judgments, and encumbrances immediately prior to the expiration or sooner termination of this Lease. However, at least six (6) months prior to the expiration or earlier termination of this Lease, STATE shall inform LESSEE of any Leasehold Improvements (excluding the Pre-Existing Leasehold Improvements and the New Facility Completion Improvements) it will not take title to when this Lease expires or terminates. LESSEE shall remove any such Leasehold Improvements (excluding the Pre-Existing Leasehold Improvements and the New Facility Completion Improvements) within ninety (90) days after the expiration or sooner termination of this Lease. Should LESSEE fail to remove any of the identified Leasehold Improvements (excluding the Pre-Existing Leasehold Improvements and the New Facility Completion Improvements) that STATE will not take title to within ninety (90) days after this Lease expires or terminates, STATE may remove the same at the sole cost and expense of LESSEE. Title to any of the Leasehold Improvements not identified by LESSEE in accordance with this Section VII.J.1. (Leasehold Improvements) shall, at STATE’s sole option, vest in STATE.
5.      Personal Property . Subject to the provisions of Article XIV. (SURRENDER OF PREMISES) hereof, title to any and all Personal Property constructed, erected, installed, or placed by LESSEE, at LESSEE’s sole cost and expense, at, in, on, or over the Premises shall remain in LESSEE during the term of this Lease.
6.      [Intentionally omitted].
7.      Sale of Trade Fixture . If LESSEE expects to, contemplates, or could sell, transfer, or convey title to and interest in any trade fixture purchased by, used, and installed by LESSEE at LESSEE’s own expense upon the Premises, as part of any assignment of this Lease, it shall be LESSEE’s sole responsibility to submit to STATE evidence of the item and the purchase price paid by LESSEE for such trade fixture within thirty (30) days from said purchase. LESSEE’s failure to submit the necessary information and evidence to STATE within the prescribed time limit will discharge STATE from any obligation or duty to consider the adjusted depreciated cost of any said trade fixture, in a lease assignment or transfer pursuant to Article XXX. (ASSIGNMENT AND SUBLETTING) hereof.
J.      Maintenance and Repair .
4.      LESSEE’s General Obligations . LESSEE shall, at all times and at its sole cost and expense, properly upkeep and maintain in good repair and in a clean and orderly condition and appearance all portions of the Premises, including, without limitation: (a) all Pre-Existing Leasehold Improvements; (b) all Leasehold Improvements (including New Facility Completion Improvements); (c) all Personal Property; (d) all mechanical room equipment such as, but not limited to, heat exchanges, fans, controls and electric panels; (e) obstruction lights and similar devices, fire protection and safety equipment, and all other like equipment required by any law, statute, rule, regulation, order, or ordinance; (f) any of the following located in or on the Premises: fences, exterior and interior walls, windows, operating mechanisms of and attachments to windows and skylights, screens, roofs, foundations, steel work, columns, doors, partitions, floors, ceilings, fixtures, inside and outside paved and unpaved areas, landscaping, glass of every kind, and utility, mechanical, electrical and other systems; and (g) all areas within the Premises, particularly those adjacent to the entrances and exits, including keeping them free of obstructions. LESSEE shall take the same good care of the Premises (including the Pre-Existing Leasehold Improvements, the New Facility Completion Improvements and any other Leasehold Improvements) that would be taken by a reasonably prudent owner who desired to keep and maintain the same so that at the expiration or sooner termination of this Lease, the Premises will be in a condition similar to that which existed at the commencement of this Lease (or in the case of the New Facility Completion Improvements and any other Leasehold Improvements made during the Lease term, in as good condition as at the time of the construction or installation thereof), ordinary wear and tear excepted, which does not adversely affect the structural integrity of, or materially and adversely affect the efficient or proper utilization of, any part or portion of the Premises .
5.      Preventative Maintenance . To accomplish this requirement, LESSEE shall establish an adequate preventative maintenance program and the provisions of LESSEE’s program shall be subject to periodic review and approval by STATE.
6.      Maintenance . LESSEE’s maintenance and repair obligation hereunder shall include, without limitation, the interior and exterior cleaning of all windows, entrances, and exits of the Premises, including the extended surface areas adjacent and surrounding such entrances and exits, doors (exterior and interior), and the cleaning and repair of all floors, walls (exterior and interior), ceilings, roofs, lighting, decor, and Personal Property. Maintenance, repairs, replacements, and restoration done or made by LESSEE shall be in a quality and class not inferior to the original material and workmanship. LESSEE shall pay promptly the cost and expense of such maintenance, repairs, replacements, and restoration.
7.      Refurbishment . Refurbishing shall include, without limitation, all refinishing, repairs, replacement, redecorating, and painting necessary to keep and maintain the Premises in a first class condition.
8.      Failure to Comply . If LESSEE fails to properly perform and complete its maintenance, repair, and refurbishment obligation hereunder, particularly with respect to nonstructural repairs, replacement, redecorating, and painting, within a period of ten (10) days after LESSEE receives written notice from STATE of such failure by LESSEE (or such longer period as is reasonably necessary to perform the obligation so long as LESSEE has commenced performance thereof within said ten (10) day period and, thereafter, diligently and continually pursues the same to completion), STATE may, at its option, and in addition to all other remedies which may be available to STATE, repair, replace, rebuild, redecorate, or paint any portion of the Premises included in said notice from STATE to LESSEE, and the cost thereof, plus fifteen percent (15%) for administrative overhead, shall be paid by LESSEE to STATE upon demand from STATE.
9.      Damage Repair . LESSEE shall suffer no strip or waste of the Premises and shall repair, replace, rebuild, restore, and paint all or any part or portion of the Premises that may be damaged or destroyed by the acts or omissions of LESSEE (including LESSEE’s officers, employees, agents, contractors, invitees and other Guests). Any and all structural repairs, alterations, and additions to be made by LESSEE to, at, in, or on the Premises, and any and all other such work which is non‑structural and costs $1,000.00 or more, shall be subject to the requirements of Article VII. (LESSEE’S IMPROVEMENTS) herein and all such work must receive the prior written consent of STATE.
10.      Removal of Leasehold Improvements . LESSEE shall, upon notice from STATE in accordance with Section VII.I.1. hereof, promptly remove any and all Leasehold Improvements (excluding the Pre-Existing Leasehold Improvements and the New Facility Completion Improvements), or repair, replace, or restore any and all Pre-Existing Leasehold Improvements, New Facility Completion Improvements or Leasehold Improvements which may, by reason of use or negligence of LESSEE, become, in the opinion of STATE, unsound, unsafe, or hazardous, and in case of LESSEE’s failure to remove or repair, replace, or restore the same, STATE may remove or repair, replace, or restore such Pre-Existing Leasehold Improvements, New Facility Completion Improvements or Leasehold Improvements and other structures and facilities without liability to LESSEE or others for damages, and LESSEE shall pay the cost of such removal or repair, replacement or restoration as additional rent.
11.      Safety Equipment . LESSEE shall, at its sole cost and expense, provide and maintain all obstruction lights and similar devices, all fire protection and safety equipment, and all other equipment of every kind and nature required by any law, rule, order, ordinance, resolution, or regulation.
12.      STATE’s Security Fence . If STATE erects any security fence that connects to or runs along the Premises, LESSEE shall, at its sole cost and expense, maintain all portions of said security fence designated by STATE. LESSEE shall also maintain security in such a manner that unauthorized persons shall not have access to any secured or restricted areas of the Airport, including all airport operations areas through the Premises, and LESSEE’s officers, employees, agents, contractors, invitees, and other Guests, and any other party acting on behalf of or with the permission of LESSEE shall be under the control, supervision, or guidance of LESSEE when entering any such secured or restricted areas of the Airport, including all airport operations areas. LESSEE shall enter into any separate supplemental agreement required by STATE or TSA covering Airport security requirements. LESSEE’s failure to observe any Airport security requirement shall constitute a violation of this Lease and give STATE the right to assess a penalty and/or terminate this Lease pursuant to Section V.D. (Additional Charges) and Article XX. (TERMINATION BY STATE), respectively, hereof.
13.      Grease Traps . LESSEE shall keep clean at all times, and maintain, repair, and/or replace any and all grease traps in all drainage and sewage pipes and other utility lines at, in, on, over, or under the Premises.
14.      Sidewalks . LESSEE shall clean and maintain, and repair, if damaged by LESSEE, and/or LESSEE’s officers, employees, agents, contractors, invitees and/or other Guests, any and all sidewalks, or any part or portion thereof, fronting the Premises.
15.      Landscaping . LESSEE shall maintain and properly care for any and all landscaping at, in, on, or over the Premises and shall periodically (at least monthly) remove weeds and other noxious vegetation that may appear on the Premises and along the perimeter of the Premises. LESSEE shall also remove from the Premises, at the same time, any junk, litter, abandoned or damaged motor vehicles, trade fixtures, furnishings, furniture, equipment, and other Personal Property, excess material, leaking containers or other similar items or equipment, vehicle parts, and machinery that are unsightly, dangerous, in disrepair, unclean, or inoperative.
ARTICLE VIII.      GENERAL RIGHTS AND RESPONSIBILITIES OF LESSEE
LESSEE shall have the right with respect to the Premises herein to do or perform any of the following things upon the covenants, terms, and conditions set forth below:
A.      Commercial Aeronautical Activities . Unless otherwise stated herein, LESSEE shall have the right to perform commercial aeronautical activities; provided, however, that LESSEE shall comply with and conducts such activities in accordance with STATE’s Minimum Standards for Commercial Aeronautical Activities at Public Airports , Airports Division Procedure No. 4.9, dated May 3, 1990, attached hereto as Appendix D and hereby made a part hereof, including any and all amendments, changes, revisions, updates, or supplements made thereto and adopted by STATE after the Commencement Date.
B.      Communications, Equipment, and Rights-of-Way . LESSEE shall have the right to install, maintain and operate such aviation radio, communications, and meteorological and aerial navigation equipment and facilities, as LESSEE may deem necessary or convenient for LESSEE’s operation, subject to the prior written consent of STATE as to the location, manner of installation, and type thereof, which consent shall not be unreasonably withheld or delayed.
Such equipment and facilities may be located without additional charge or fee in or on any portion of the Premises, or, upon payment of the applicable rent for such additional area(s) and at such other location(s) at, in, or on the Airport, if any, as may be requested by LESSEE and consented to in writing by STATE.
In the event that STATE constructs or installs, or hereafter voluntarily and not at the request of LESSEE constructs or installs upon the Premises or elsewhere at the Airport, conduits, ducts, or other facilities and appurtenances and equipment for use in common by aircraft operators (including LESSEE) for the installation of wires, cables, pneumatic tubes, or similar communication connections, LESSEE may use such conduits, ducts or other facilities, appurtenances, and equipment for the purpose for which they are provided, if and to the extent that space therein is available, and subject to rules promulgated by STATE, upon payment of any rental, charge, or fee for the use of such conduits, ducts, facilities, appurtenances, and equipment, as STATE may prescribe; and provided that LESSEE shall pay the cost of pulling or installing its wires, cables, pneumatic tubes, or similar communication connections through such conduits, ducts, facilities, appurtenances, and equipment, and the cost of installing brackets or any incidental equipment or facilities not provided by STATE, and any other cost in connection with the aforesaid installations; and provided, further, that LESSEE shall be solely responsible for any damage to the ducts, conduits, facilities, appurtenances and equipment and to any other facilities installed therein caused by LESSEE’s acts or omissions or those of LESSEE’s officers, employees, agents, contractors, invitees, or other Guests.
LESSEE shall also have the right to use rights-of-way at locations hereafter designated, in writing, by STATE and with the prior written consent of STATE either for the exclusive use of LESSEE or for use in common with others. LESSEE, with the prior written consent of STATE, shall have the right to use conduits, ducts, pipes, wires, cables, or similar installations, and facilities (including, but not limited to, equipment and facilities related to or incidental to communications, controls, teletypes, telephones, interphone, and pneumatic tubes) between the places where such equipment and facilities have been installed in the Premises and the place where such equipment and facilities have been installed in space leased to LESSEE for its exclusive use elsewhere at the Airport.
LESSEE shall pay a reasonable rental for the use of such conduits, ducts, pipes, wires, cables, installations and facilities, easements, and rights-of-way.
C.      Architects, Contractors, and Builders . LESSEE shall have the right to employ such architects, contractors, or builders as LESSEE shall deem necessary or desirable in connection with the authorized construction, installation, alteration, modification, repair, or maintenance of any and all Pre-Existing Leasehold Improvements, New Facility Completion Improvements or Leasehold Improvements, at, in, on, over, or under the Premises; provided, however, that any such architects, contractors, or builders shall be properly licensed in the State of Hawaii and otherwise competent in their respective professions or trades.
D.      Other Activities . LESSEE shall also have the right to do and perform any of the things described in or authorized pursuant to Article III. (USE OF PREMISES) and this Article VIII. (GENERAL RIGHTS AND RESPONSIBILITIES OF LESSEE) hereof, utilizing any and all personnel, aircraft and aircraft parts, supplies, and services of LESSEE, for or with respect to any other person or business at the Airport, whether said person or business is engaged in Air Transportation or not.
ARTICLE IX.      TAXES
A.      Taxes and Assessments . LESSEE shall pay in full any and all taxes and assessments levied or assessed upon LESSEE or the Premises, including, but not limited to, Federal income taxes, State of Hawaii income and general excise taxes, and County real property taxes, in all cases, before the delinquent date thereof, and subject to the provisions of Section XX.A.11. (Failure to Pay Taxes) hereof, LESSEE shall indemnify, defend, keep, save, insure, and hold STATE and the Premises harmless against any and all attachments, claims, or liens related to or connected with such taxes, charges, or assessments and all expenses resulting therefrom, including reasonable attorney’s fees. LESSEE shall have the right to contest the amount or validity of any such tax, charge, and/or assessment by appropriate legal proceedings in LESSEE’s own name.
B.      Tax Clearances . LESSEE shall, upon demand by STATE, present evidence, such as tax clearances from the respective tax offices, to STATE, demonstrating LESSEE’s payment of all Federal, State of Hawaii and County taxes prior to the Commencement Date and for any other year or series of years during the term of this Lease.
ARTICLE X.      PROHIBITED ACTS
LESSEE shall not perform any service nor use the Premises for any purpose not enumerated in Article III. (USE OF PREMISES) or Article VIII. (GENERAL RIGHTS AND RESPONSIBILTIES OF LESSEE) hereof, or not authorized pursuant thereto.
A.      Nuisance . LESSEE shall commit no actionable nuisance or do or permit any act that results or may result in the creation or commission or maintenance of a nuisance at, on, in, or over the Premises. Further, LESSEE shall also not cause, produce, or permit to be caused or produced upon the Premises, or to emanate therefrom, any offensive sounds, or any noxious or objectionable smoke, gases, vapors, or odors.
B.      Illegal Acts . LESSEE shall not use the Premises, or any part or portion thereof, or permit the same to be used by any of LESSEE’s sublessees, tenants, officers, employees, agents, contractors, invitees, and/or other Guests for any illegal act or purpose.
C.      Discrimination . LESSEE shall not use the Premises in support of any policy, which discriminates against anyone based upon race, creed, color, national origin, sex, age, or a physical disability.
D.      Equal Treatment . LESSEE shall furnish services on a fair, equal, and nondiscriminatory basis to all parties and shall charge fair, reasonable, and nondiscriminatory prices for each unit or service; provided, however, that LESSEE may be allowed to make reasonable and nondiscriminatory discounts, rebates, or other similar types of price reduction to volume purchasers.
E.      Security . LESSEE shall not allow entry to the AOA of the Airport or any other secured or restricted areas of the Airport through the Premises by any unauthorized persons and ground vehicles.
F.      Lodging . The Premises may not be used as a hotel, motel, inn, hostel, bed and breakfast, temporary or legal residence or any similar boarding or lodging.
G.      Alcoholic Beverages . The consumption of alcoholic beverages by anyone at, in, or on the Premises is prohibited at all times.
H.      Interference . LESSEE shall not interfere with the effectiveness of, or access to utilities, air conditioning, elevators, or escalators (including facilities, structures, lines, equipment, conduits, and appurtenances, connected or appurtenant thereto) in or adjacent to the Premises, the free access and passage in and to the Premises or public areas adjacent thereto, or in the streets or sidewalks adjoining the Premises.
I.      Overload . LESSEE shall not overload any floor, or place loads upon any floor, wall, or ceiling of any building or other structure situated at, upon, or within the Premises that may endanger such building or other structure.
J.      Obstruction . LESSEE shall not obstruct any sidewalk, walkway, or passageway in front of, within, or adjacent to the Premises.
K.      Effect on Insurance . LESSEE shall not act or permit the doing of any act or thing upon the Premises that will either increase the premium rate of, be contrary to, or invalidate any fire, casualty, or liability insurance policies either required herein or carried by STATE, if any, covering the Premises, together with any and all buildings and other structures and improvements situated thereon. LESSEE shall, in connection herewith, obey, observe, and adhere to: (1) any and all present and future laws, statutes, orders, decisions, rules, and regulations of the State of Hawaii; (2) any and all present and future rules and regulations of STATE and the Airport; (3) any other governmental authority; and (4) any and all present and future requirements and directions of fire and other underwriters on applicable insurance policies of STATE and LESSEE, which may pertain or apply to the Premises and LESSEE’s use of and operation upon the Premises and Airport.
L.      Vending Machines . LESSEE shall not install, maintain, operate, or permit the installation, maintenance, or operation of any currency, coin, or token operated vending machine or device, for the purpose of vending or providing any product (including food and beverage items) or service (for the purposes hereof, amusement or entertainment shall be deemed a service) upon any part or portion of the Premises or the Airport without the prior written approval of STATE. Vending machines include, but are not limited to, newspaper racks, and any currency and coin-operated devices.
LESSEE shall further observe, comply with, and abide by that certain Settlement Agreement, dated July 28, 1993 (as amended by Amendment 1 (5-31-1995) and Amendment No. 2 (8-1-2012)), made by and between the Hawaii State Committee on Blind Vendors, the Hawaii Blind Vendors Association, Walter Ishikawa, Charlotte Kauhana, Esron Nihoa, Yoshiko Nishihara, Mirian Onomura, Clyde Ota, Alice Scharr, Warren Toyama, Filo Tu, and Jeanette Tu, the Department of Human Services, State of Hawaii, and the Department of Transportation, State of Hawaii, together with the attached Schedules and Exhibits, hereinafter referred to as the "Blind Vendors Agreement", which is hereby incorporated herein and made part of this Lease by this reference, affecting the installation and operation of other vending machines, which LESSEE may desire to have and use on the Premises or at the Airport.
M.      Promotional Medium Restriction . LESSEE shall not use any advertising or promotional medium that may be seen, heard, or otherwise experienced outside the Premises, such as searchlights, barkers, or loudspeakers.
N.      Distribution of Handbills . LESSEE shall not distribute handbills or promotional circulars to patrons of the Airport, or engage in any other advertising at, upon, or within the Airport (except as may be specifically permitted under this Lease).
O.      Recruitment . LESSEE shall not engage in any activity outside the Premises for the recruitment or solicitation of business.
P.      Injury to Reputation . LESSEE shall not act or permit acts to be done that will injure the reputation of STATE, the Airport, or the appearance of the Airport. LESSEE shall not, without the prior written consent of STATE, reference STATE or the Airport for any purpose other than the address of the business to be conducted by LESSEE at, in, on, or over the Premises, nor shall LESSEE do or permit anything in connection with LESSEE’s business operations or advertising which in the judgment of STATE may reflect unfavorably on STATE or the Airport, or confuse or mislead the public as to the relationship between STATE and LESSEE.
ARTICLE XI.      SIGNS
A.      STATE’s Approval . LESSEE shall not erect, construct, install, or place any signs or displays upon any part or portion of the Airport, except at, in, or upon the Premises, unless otherwise first approved in writing by STATE.
4.      LESSEE’s Cost . LESSEE shall have the right to erect, construct, install, place, maintain, and operate at, in, or upon the Premises, at LESSEE’s sole cost and expense, signs containing LESSEE’s name and its business.
5.      Conformity . Signs shall be substantially uniform in size, type, and location with those of other businesses and tenants at the Airport, and conform to STATE’s Signage and Graphics Manual. The number, general type, size, design, and location of such signs shall be subject to the prior written approval of STATE. The location and placement of approved signs by LESSEE are subject to change as deemed necessary by STATE. LESSEE shall, at its sole cost and expense, promptly remove, move, or relocate a sign upon receipt of a notice to do so by STATE.
6.      Submit Drawings . Prior to the erection, construction, or placing of any such signs or displays, LESSEE shall submit to STATE, for STATE’s review and approval in writing, drawings, sketches, design dimensions, type, and character of the proposed sign(s) or display(s). Any conditions (including a requirement that such sign(s) or display(s) be multilingual), restrictions, or limitations imposed by STATE, as part of STATE’s written approval, shall become conditions on the use of such sign(s) and display(s) as if specifically set forth at length herein.
B.      Removal of Signs . Upon the expiration or the sooner termination of this Lease, LESSEE, if requested by STATE, shall: (1) remove, obliterate, or paint out any and all signs, posters, and similar devices, and any and all displays installed, placed, or affixed by LESSEE at, in, or upon the Premises; and (2) restore any and all wall or surface areas to which signs, posters, and similar devices, and any and all displays which may have been attached or affixed, all to the satisfaction of STATE. If LESSEE fails to so remove, obliterate, or paint out each and every sign, poster, piece of advertising, display, or similar device in a manner satisfactory to STATE after being so requested by STATE, STATE may perform such removal work, and LESSEE shall immediately pay to or reimburse STATE for any and all costs and expenses so incurred by STATE, upon demand from STATE.
Nothing contained in this Article XI. (SIGNS) shall limit nor is construed to limit, the effect of the covenants and provisions of Article XIV. (SURRENDER OF PREMISES) hereof.
ARTICLE XII.      INGRESS AND EGRESS
A.      Reasonable Access . LESSEE and LESSEE’s officers, employees, agents, contractors, invitees, and other Guests, in common with others, shall have the nonexclusive right of ingress to and egress from the Premises and such other parts or portions of the Airport area to or from which such persons shall reasonably require ingress or egress, in such manner, upon such terms, and at such locations as STATE may from time to time designate; provided, however, that the aforementioned right of ingress and egress, as it applies to the suppliers of any flammable fuel or other such products or materials, shall be subject to the prior written permission of STATE.
B.      Subject to Rules . The privilege of ingress and egress at the Airport shall be subject to the rules and regulations of STATE, now in effect or which may hereafter be adopted or amended, for the safe and efficient operation of the Airport.
C.      Right to Alter Access . STATE may, at any time, temporarily or permanently, close, consent to close, or request the closing of any roadway and any other area at the Airport, presently or hereafter used as such, so long as a reasonable alternative means of ingress and egress remains available to LESSEE.
D.      LESSEE’s Release . LESSEE hereby releases and discharges STATE and STATE’s successors and assigns, of and from any and all claims, demands, causes of action, liabilities, losses, damages, costs, and expenses, including attorneys’ fees and other legal or court costs, and demands therefor, which LESSEE may now, or at any time hereafter, have against STATE and STATE’s successors and assigns, arising or alleged to have arisen out of the closing of any street, roadway, sidewalk, walkway, or access area or other area, whether within or outside the Airport. The foregoing shall not serve to release or discharge STATE from its obligation to provide LESSEE with a reasonable means of ingress and egress to the Premises in accordance with Section XII.A .
E.      No Rent Relief . LESSEE in entering into this Lease with STATE recognizes STATE’s right and responsibility to provide convenient and efficient public access and thoroughfare and, therefore, acknowledges STATE’s right to adjust, amend, alter, or otherwise revise pedestrian and vehicular traffic patterns in the best interest of the operation of the Airport as determined by STATE. LESSEE shall have no claim for any rebate or adjustment of rents or fees owed to STATE for any changes that may arise as a result of STATE’s adjustment or revision to pedestrian and vehicular traffic routes on the Airport.
ARTICLE XIII.      LIABILITY AND INDEMNITY
A.      Assumption of Liability . The use of the Airport and the Premises by LESSEE and LESSEE’s officers, employees, agents, contractors, invitees, and other Guests, in common with others, shall be at their sole risk.
B.      Indemnity . STATE shall not be liable for and LESSEE shall protect , defend, save, hold harmless and indemnify STATE, STATE’s officers, employees, agents, other Guests and STATE’s successors and assigns, and State of Hawaii’s directors, officers, agents, elected officials, boards (including the Land Board), and employees, from and against any and all claims, demands, suits, actions, causes of action, judgments, liabilities, losses, damages, costs and expenses, including, without limitation, costs of suits and fees directly related thereto and reasonable attorney’s fees, claimed by anyone by reason of actual or alleged injury to or death of persons, including, but not limited to, actual or alleged work-related injuries or death suffered by employees of LESSEE , or actual or alleged damage to or destruction of property, including, but not limited to, property of LESSEE, sustained in, on, over, under, or about the Premises or the Airport, as a result of or related to LESSEE’s use and occupancy of the Premises or use of any other portions of the Airport or any act or omission of LESSEE or LESSEE’s agents, officers, employees, contractors, invitees, and other Guests .
This provision shall not be construed to be a limitation of any other indemnity by LESSEE as may be contained in Section XV.B.6. (LESSEE’s Indemnification), or Section XV.C.13. (Release and Indemnity), or Article XXVIII. (LITIGATION), or anywhere else within this Lease.
C.      LESSEE’s Release . LESSEE does hereby release, without limitation, STATE and STATE’s officers, employees, agents, and other Guests and STATE’s successors and assigns, and State of Hawaii’s directors, officers, elected officials, boards (including the Land Board), employees, and agents from any and all actions, causes of action, claims, damages, demands, judgments, liabilities, losses, suits, costs, and expenses, including attorneys’ fees and other legal or court costs, and demands therefor, that may arise during the term of this Lease from damage to or destruction of LESSEE’s property that is not the result of, or caused by the sole negligence of STATE or STATE’s officers, employees, agents, contractors, invitees, and other Guests and STATE’s successors and assigns, and State of Hawaii’s directors, officers, elected officials, boards (including the Land Board), employees, and agents.
ARTICLE XIV.      SURRENDER OF PREMISES
A.      In General . LESSEE shall yield and deliver peaceably to STATE possession of the Premises on the date of the expiration or sooner termination of this Lease, promptly and in the same condition as of the Commencement Date, or in the case of any Leasehold Improvements installed subsequent to the Commencement Date, as at the time of the installation or construction of such Leasehold Improvements, excepting reasonable wear arising from the use of the Premises to the extent permitted elsewhere in this Lease and damage resulting from causes over which LESSEE had no control. The Premises shall be clean and clear of any and all trash, debris, abandoned items, trade fixtures, equipment, appliances, furniture, junk and other similar and like items. All gates, doors and locks shall be secured and the keys turned in to STATE.
LESSEE shall have the right at any time during this Lease to remove, and if so directed by STATE shall remove from the Premises, on or before the expiration or sooner termination of this Lease, all of LESSEE’s Personal Property, any Leasehold Improvements (excluding the Pre-Existing Improvements and subsequent to the New Facility Substantial Completion, the New Facility Completion Improvements) deemed by STATE to be non-conforming or unauthorized, such removal to be completed in such a manner as to cause no damage to the Premises or to the Airport, and in the event of any such damage, LESSEE agrees, at its sole cost and expense, to repair the same.
LESSEE shall remove all its Personal Property, including but not limited to facilities for waste oil or other substances, and hazardous and toxic materials, on and below ground, within thirty (30) days after the expiration or sooner termination of this Lease and as further described in Section XV.C. (Compliance with Environmental Matters) hereof. If LESSEE fails or neglects to so properly remove, STATE, at its sole option in any combination or selection, may either: (1) remove and dispose of the same and charge the cost of such removal and disposal to LESSEE, which cost LESSEE hereby agrees to pay; (2) consider the same to be abandoned and take title thereto; or (3) give LESSEE additional time as may be needed under the circumstances, not to exceed thirty (30) days, and charge LESSEE the proportionate rental fee, based upon the then current rental values at the Airport for the thirty (30) day period, which rental fee LESSEE hereby agrees to pay.
B.      Hold Over . In the event LESSEE shall, with the consent of STATE and Land Board, if required, hold over and remain in possession of the Premises after the expiration or sooner termination of this Lease, such hold over shall not be deemed a renewal or extension of this Lease but shall create only a tenancy from month-to-month on the same terms, conditions, and covenants in effect immediately prior to the commencement of such holding over, including LESSEE’s payment of the rentals and fees existing immediately prior to the holding over, except that: (1) payment shall be due and payable in advance on the first day of each month; and (2) STATE may, upon thirty (30) day’s advance written notice, after the hold over commences, amend and increase the rentals and fees payable by LESSEE to the comparable charges at, in, or on the Airport at that time for comparable facilities.
C.      Environmental Compliance prior to LESSEE’s Surrender . LESSEE shall observe, comply with, and completely satisfy all of the Environmental/Hazardous Substances requirements prescribed and set forth in Section XV.C. (Compliance with Environmental Matters) hereof, prior to returning the Premises to the control and jurisdiction of STATE.
ARTICLE XV.      COMPLIANCE WITH LAWS
A.      In General . LESSEE and LESSEE’s officers, employees, agents, contractors, invitees, and other Guests shall, at all times during and throughout the term of this Lease and with respect to all phases of its performance under this Lease, fully and completely observe, comply with, and satisfy all applicable laws, statutes, codes, ordinances, orders, rules, and regulations of all governmental authorities, including, without limitation, the United States of America, the State of Hawaii, and the County, and any political subdivision, or agency, authority, or commission thereof, which may have jurisdiction to pass laws, statutes, codes, or ordinances, or make and enforce orders, rules, and regulations with respect to: (1) the Premises and the Airport; (2) all phases of LESSEE’s conduct of its business operations; (3) LESSEE’s maintenance and repair of the Premises; and (4) LESSEE’s performance under this Lease.
LESSEE shall also: (1) obtain and keep current all licenses and permits required by any governmental authority (whether federal, state, municipal, or county) for the conduct of LESSEE’s business operations at, in, on, or over the Premises and at the Airport; and (2) promptly pay when due, any and all required rentals and other fees and charges.
Notwithstanding the foregoing covenants, provisions, and requirements, LESSEE shall have the right, in its own name, to contest, in good faith, the validity or applicability of any law, statute, code, ordinance, order, decree, rule, or regulation of any governmental body or agency pertaining to the Premises and LESSEE’s conduct of its business operations thereon. The fact that LESSEE may, in connection with such contest, refrain from complying with such law, statute, code, ordinance, order, decree, rule, or regulation, shall not affect in any way LESSEE’s obligation to: (1) refrain from subjecting any part or portion of the Premises to forfeiture or loss; and (2) pay the required rentals and other fees and charges prescribed and set forth in Article V. (RENTAL) hereof.
B.      Compliance with Americans with Disabilities Act .
4.      LESSEE’s Warranty . LESSEE agrees that it shall conduct its business operations, and occupy or use the Premises in accordance with: (a) ADA, including, without limitation, modifying LESSEE’s policies, practices, and procedures, and providing auxiliary aids and services to disabled persons; and (b) the ADAAG.
5.      Accessible Services . LESSEE acknowledges that, pursuant to the ADA, programs, services, and other activities provided by a public entity, whether directly or through a contractor, must be accessible to the disabled public. LESSEE shall provide the services or conduct its business operations as specified in this Lease in a manner that complies with the ADA and any and all other applicable Federal, State of Hawaii, and local disability rights legislation. LESSEE agrees not to discriminate against disabled persons in the provision of services, benefits, or activities provided under this Lease and further agree that any violation of this prohibition on the part of LESSEE, and LESSEE’s officers, employees, agents, contractors, invitees, other Guests, and successors and assigns shall constitute a material breach of this Lease.
6.      LESSEE’s Alterations . With respect to all work required to be performed by LESSEE in preparing the Premises for LESSEE’s occupancy and use, including, without limitation, the construction, installation, renovation or refurbishment of any and all Leasehold Improvements at, in, on, over, or under the Premises, LESSEE agrees to complete such work in full compliance with the ADA and ADAAG. Upon STATE’s request, LESSEE shall provide STATE with evidence reasonably satisfactory to STATE that all such work by LESSEE was completed in compliance with the ADA and ADAAG. LESSEE further agrees that any and all such future alterations, renovations, and improvements made by LESSEE to the Premises shall comply with the ADA and ADAAG.
7.      ADA Audit . LESSEE shall conduct and complete, at LESSEE’s sole cost and expense, an audit as required under the ADA identifying and describing the architectural barriers to disabled access which must or should be removed, which audit shall be subject to STATE’s review and approval. LESSEE agrees to remove, at LESSEE’s sole cost and expense, all such barriers identified and described in the audit approved by STATE; provided that any architectural barriers to disabled access that exist within the Pre-Existing Leasehold Improvements, as may be identified in the ADA audit approved by State, shall be deemed to constitute a “latent defect” for purposes of LESSEE’s Building Rent Reduction Request.
8.      Notice . STATE and LESSEE agree to promptly give written notice to the other within three (3) business days of receipt of any and all notices which STATE or LESSEE receives alleging ADA violations.
9.      LESSEE’s Indemnification . LESSEE shall indemnify, defend, keep, save, and hold STATE and STATE’s officers, employees, agents, and other Guests and STATE’s successors and assigns, and State of Hawaii’s directors, officers, elected officials, boards (including the Land Board), employees, and agents, harmless from and against any and all actions, causes of action, claims, demands, suits, judgments, liabilities, losses, damages, costs, and expenses, including any and all attorneys’ fees and demands therefor, resulting or arising from LESSEE’s failure to observe, comply with, and completely satisfy LESSEE’s obligations hereunder with respect to the ADA and the ADAAG.
This provision shall not be construed to be a limitation of any other indemnity by LESSEE as may be contained in Section XIII.B. (Indemnity), or Section XV.C.13. (Release and Indemnity), or Article XXVIII. (LITIGATION), or anywhere else within this Lease.
C.      Compliance with Environmental Matters .
4.      Compliance with Environmental Laws . LESSEE agrees, at its sole expense and cost, to comply with all environmental laws applicable to its occupancy, activities, operations, and use of the Premises. This duty shall survive the expiration or termination of this Lease which means that LESSEE’s duty to comply with environmental laws shall include complying with all environmental laws that may apply, or be determined to apply, to the occupancy and activities of LESSEE on the Premises after the expiration or termination of this Lease; provided however, nothing in this Section XV.C.1. (Compliance with Environmental Matters) shall cause LESSEE to be responsible for compliance connected actions or inactions of other persons or entities or for facts or circumstances that arise after expiration or termination of this Lease, or compliance in respect of Hazardous Substances at or below the Hazardous Substances Baseline described below. Failure of LESSEE to comply with any environmental laws shall constitute a violation of this Lease and gives STATE the right to assess a penalty and/or terminate this Lease, pursuant to Section V.D. (Additional Charges) and Article XX. (TERMINATION BY STATE) and take any other action at law or in equity it deems appropriate.
5.      Hazardous Substances . LESSEE shall not use treat, dispose, discharge, release, generate, create, or otherwise handle any Hazardous Substance, or allow the same by any of its officers, employees, agents, contractors, invitees, other Guests, or successors and assigns, on, in, over, under, or about the Premises without first obtaining the written consent of STATE, which consent may be withheld by STATE at its sole discretion, and comply with all environmental laws, including giving all required notices, reporting to, and obtaining licenses and permits required by any government authority (whether federal, state, municipal, or county), from all appropriate authorities, and complying with all provisions of this Lease.
6.      Notice to STATE . LESSEE shall keep STATE fully informed at all times regarding all matters related to any environmental laws affecting LESSEE or the Premises. This duty shall include, but not be limited to, providing STATE with a current and complete list and accounting of all Hazardous Substances of every kind which are present on, in, over, under, or about the Premises, together with evidence that LESSEE has in effect all required and appropriate permits, licenses, registrations, approvals and other consents that may be required by any federal, state or county authority under any authority or environmental laws. LESSEE shall provide said list and accounting on or before the Commencement Date and shall update said list and accounting whenever any Hazardous Substance not accounted for by LESSEE is present on or about the Premises by any means. LESSEE shall also provide immediate written notice of any investigation, enforcement action, compliance order, or order of any type, or any other legal action, initiated, issued, or any indication of an intent to do so, communicated in any way to LESSEE by any federal, state or county authority or individual that relates in any way to any environmental law or any Hazardous Substance. This written notice to STATE shall include copies of all written communications from any federal, state or county agency or authority, including copies of all correspondence, claims, complaints, warnings, reports, technical data and any other documents received or obtained by LESSEE. At least thirty (30) days prior to termination of this Lease, or termination of the possession of the Premises by LESSEE, whichever occurs first, LESSEE shall provide STATE with written evidence satisfactory to STATE that LESSEE has fully complied with all environmental laws, including any orders issued by any governmental authority that relate to the Premises.
7.      Disposal/Removal . Except for the possession and handling of Hazardous Substances for which LESSEE is exempt, and those Hazardous Substances for which LESSEE has obtained all currently required permits to store or use certain Hazardous Substances on the Premises, including written permission from STATE, LESSEE shall cause any Hazardous Substances to be removed and transported from the Premises for disposal solely by duly licensed Hazardous Substances transporters to duly licensed facilities for final disposal, as required by all applicable environmental laws. LESSEE shall provide STATE with copies of documentary proof including manifests, receipts, or bills of lading, which reflect that, said Hazardous Substances have been properly removed and disposed of in accordance with all environmental laws.
8.      Environmental Investigations and Assessments . LESSEE, at its sole cost and expense, shall cause to be conducted such investigations and assessments of the Premises to determine the presence of any Hazardous Substance on, in, or under the Premises as may be directed from time to time by STATE, in its sole discretion, or by any federal, state or county agency or authority. The extent and number of any environmental investigations and assessments, including all testing and analyses incident thereto, shall be determined by STATE or the federal, state or county agency or authority directing said investigations and assessments to be conducted. LESSEE shall retain a competent, certified and qualified person or entity that is satisfactory to STATE or governmental authority, as the case may be, to conduct said investigations, assessments, testing and analysis incident thereto. LESSEE shall direct said person or entity conducting those assessments, investigations, tests and analyses to provide STATE or governmental authority, if so requested, with testable portions of all samples of any soils, water, ground water or other material that may be obtained for testing and provide to STATE and governmental authority with the written results of all assessments, investigations, tests and analyses on said samples upon completion of said testing.
9.      Hazardous Substances Baseline for Premises . See Section VII.E. in respect of the Baseline Environmental Site Assessment that the parties have agreed establishes and constitutes the Hazardous Substances Baseline hereunder. At the expiration or sooner termination of this Lease, STATE will hold LESSEE responsible only for the clean-up, decontamination, remediation, or removal of any and all Hazardous Substances at levels in excess of the Hazardous Substances Baseline. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, AT ALL TIMES DURING THE LEASE TERM AND AT ALL TIMES AFTER EXPIRATION OR TERMINATION OF THE LEASE, THE STATE AND NOT LESSEE SHALL BE RESPONSIBLE FOR THE CLEAN-UP, DECONTAMINATION, REMEDIATION, OR REMOVAL OF ANY AND ALL HAZARDOUS SUBSTANCES AT LEVELS AT OR BELOW THE HAZARDOUS SUBSTANCES BASELINE.
10.      Closure Report . Immediately prior to the expiration or sooner termination of this Lease, LESSEE shall, at LESSEE’s sole cost and expense, conduct, and prepare a thorough Environmental Site Assessment Closure Report that shall be prepared, handled, and certified for LESSEE by a qualified, professional firm or person(s) acceptable to STATE and experienced in environmental investigation, clean-up and remediation matters relating to Hazardous Substances. LESSEE shall submit the name, address, and qualifications of the qualified firm or person(s), together with a scope of work, to STATE for STATE’s prior written approval, which approval shall be at STATE’s sole discretion. The Environmental Site Assessment Closure Report shall be subject to STATE’s prior written approval, and shall contain a study and evaluation of, measurements taken at, and assessment of the impact and presence of any and all Hazardous Substances, at, in, on, over or under the Premises at the Airport, and the escape, disposal, discharge, spillage, and release of Hazardous Substances therefrom, caused or permitted by LESSEE. This report shall be delivered to STATE at least forty-five (45) business days prior to the expiration or sooner termination of this Lease.
11.      No Waiver; LESSEE’s Liability and Obligation and Duty to Perform . The conduct, preparation, and delivery of any environmental site assessment report including any baseline report and Environmental Site Assessment Closure Report, as required by the preceding Section XV.C.7. (Closure Report), shall not waive or diminish LESSEE’s liability, obligation, and duty to perform, at LESSEE’s sole cost and expense, any and all environmental clean-up, decontamination, detoxification, remediation, or removal work due to the escape, disposal, discharge, spillage, or release of Hazardous Substances caused or permitted by LESSEE during the conduct or preparation of such reports or the conduct of LESSEE’s business operations at, in, on, or over the Premises at the Airport up to the day of expiration or sooner termination of this Lease.
12.      Remediation .    In the event that any Hazardous Substance is used, stored, treated, disposed on the Premises, handled, discharged, released, or determined to be present on the Premises, LESSEE shall, at its sole expense and cost remediate the Premises of any Hazardous Substance, and dispose/remove said Hazardous Substance, except for Hazardous Substances at or below the Hazardous Substances Baseline in accordance with Section XV.C.4. (Disposal/Removal) herein. This duty to remediate includes strict compliance with all environmental laws, as well as any directives by STATE to LESSEE to remediate Hazardous Substance. This duty to remediate shall include replacement of any materials, such as soils, so removed with material that is satisfactory to STATE and all other governmental authorities, as the case may be. LESSEE shall be responsible for remediation and restoration of the Premises to the extent it is necessary to remediate and restore the Premises to the condition of the Premises and levels of any contamination or Hazardous Substances that existed on the Premises at the Commencement Date of this Lease, as shown by the Hazardous Substances Baseline.
13.      Restoration and Surrender of Premises . LESSEE hereby agrees to timely surrender the Premises upon termination of this Lease and, prior thereto, shall restore the Premises, including the soil, water, ground water and structures on, in, or under the Premises to the same condition as the Premises existed at the Commencement Date, as determined by STATE, reasonable wear and tear excepted. Said surrender and restoration shall be at the sole cost and expense of LESSEE. This duty to restore the Premises includes remediation as described in Section XV.C.9. (Remediation). This duty also includes, but is not limited to, the removal of all pipes, pipelines, tanks, and containers of any kind that LESSEE has installed or erected on the Premises. In the event LESSEE does not timely restore the Premises to a satisfactory condition, as determined by STATE, LESSEE understands and agrees that STATE may exercise its rights under Section XV.C.12. (STATE’s Right to Act) and until such time as the restoration is complete to the satisfaction of STATE, LESSEE shall be liable for lease rent in the same manner and amount as if this Lease had continued in effect during the period of restoration, as well as any other damages and costs that STATE may have incurred, including penalties, fines and assessments related to the Premises which may be imposed on STATE or LESSEE by any governmental authority.
14.      Tanks, Pipelines, Inspections and Repairs . Unless STATE agrees in writing prior to their installation, all pipes, pipelines, tanks, containers or conduits of any kind that may at any time have contained, or may have been intended to contain, Hazardous Substances of any type (hereafter referred to as a "Facility"), that LESSEE intends to install on the Premises must be installed above ground level in such manner that allows for periodic inspection and maintenance of the Facility for purposes of determining the existence of leaks and discharges from, and deterioration of any kind to, and that allows repair of, the Facility. LESSEE shall provide STATE with prior notice of LESSEE’s intent to install a Facility to allow STATE ample time, as determined by STATE, to inspect the plans for installation of such a Facility. Said Facility shall not be installed unless and until the Facility, and its manner of installation, is approved by STATE. Prior to the commencement of any work at the Premises, LESSEE shall submit to STATE a contingency plan to control and remedy any spill, discharge or leak from any Facility on the Premises during the term of this Lease, which plan shall include the cleanup of all Hazardous Substances that may be spilled, discharged or leaked, to the satisfaction of STATE. LESSEE shall also submit to STATE a plan for LESSEE to conduct, or have conducted, regular inspections of all Facilities on or about the Premises for the purpose of prevention of any leak, discharge or spill from said Facilities. Said contingency plan and inspection plan are subject to the approval of STATE. LESSEE shall timely obtain and maintain in effect all required permits, licenses and approvals for such Facilities from any governmental authority. Failure to submit said plans, to comply with said plans, or obtain and maintain all required permits, licenses or approvals shall constitute a violation of this Lease, giving STATE the right to terminate this Lease pursuant to Article XX. (TERMINATION BY STATE) hereof, take possession of the Premises, and pursue any other remedy available to STATE.
15.      STATE’s Right to Act . In the event LESSEE fails for any reason to comply with any of its duties under this Lease or under any environmental laws within the time set for doing so, or within a reasonable time as determined by STATE, STATE shall have the right, but not the obligation, in its sole discretion, to perform those duties, or cause them to be performed. LESSEE hereby grants access to the Premises at all reasonable hours to STATE, its agents and anyone designated by STATE, in order to perform said acts and duties. Any cost, expense or liability of any type that may be incurred by STATE in performing said acts or duties shall be the sole responsibility of LESSEE and LESSEE hereby agrees to pay for those costs and expenses and indemnify, defend and hold harmless STATE, STATE’s officers, employees, agents and other Guests and STATE’s successors and assigns, and State of Hawaii’s directors, officers, elected officials, boards (including the Land Board), employees, and agents, for any liability incurred. This obligation shall extend to any costs and expenses incident to enforcement of STATE’s right to act, including litigation costs, attorneys’ fees and the costs and fees for collection of said cost, expense or liability.
16.      Release and Indemnity . LESSEE hereby agrees to release STATE, STATE’s officers, employees, agents, and other Guests and STATE’s successors and assigns, and State of Hawaii’s directors, officers, employees, agents, elected officials, and boards (including the Land Board), from liability of any kind, including, but not limited to, any liability for alleged or actual damages, penalties, fines, judgments or assessments that may be imposed or obtained by any person, agency or governmental authority against LESSEE or STATE by reason of any Hazardous Substance that may be present by whatever means on, in, over, under, about, or emanating from the Premises. LESSEE hereby agrees to indemnify, defend with counsel acceptable to STATE, insure and hold harmless STATE, STATE’s officers, employees, agents, and other Guests and STATE’s successors and assigns, and State of Hawaii’s directors, officers, employees, agents, elected officials, and boards (including the Land Board), from any liability that may arise in connection with, or by reason of, any alleged or actual occurrence involving any Hazardous Substance that may be connected to, or related in any way with, LESSEE’s operations, the Premises, STATE’s ownership of the Premises, or this Lease, including the presence or alleged presence of any Hazardous Substance in, on, over, under, about, or emanating from the Premises except for Hazardous Substances at or below the Hazardous Substances Baseline. The parties understand and agree that the intent of this indemnification agreement includes, but is not limited by, those agreements authorized by 42 U.S.C. Section 9607(e) (1), as amended, and any successor section thereof.
LESSEE agrees to indemnify, defend and hold harmless STATE from any fines or penalties, assessed pursuant to any federal or state laws or regulations against STATE as an owner or operator of a Facility or of the Premises, for LESSEE’s failure to have, maintain, or comply with any permit or plans due to LESSEE’s storage of oil or petroleum, including the Spill Prevention Control and Countermeasure Plan or a Facility Response Plan, if required under 40 CFR Part 112, the Clean Water Act, or any other federal or state laws or regulations.
This indemnity provision shall not be construed to be a limitation of any other indemnity by LESSEE as may be contained in Section XIII.B. (Indemnity), or Section XV.B.6. (LESSEE’s Indemnification), or Article XXVIII. (LITIGATION), or anywhere else within this Lease.
17.      Spill Prevention, Control and Countermeasure . In accordance with the Federal Water Pollution Control Act, also known as the Clean Water Act, 33 U.S.C. Section 1251, et seq.; and Title 40, CFR, Part 112 often referred to as the Spill Prevention, Control and Countermeasure (hereafter "SPCC") Plan regulation, LESSEE agrees at its sole expense and cost to comply with and completely satisfy SPCC rules now or hereafter adopted, amended, or published, throughout the entire term of this Lease. If LESSEE stores oil, or petroleum products or by-products in any quantity of less than 1,320 gallons, but has in or on the Premises, at least one or more storage containers or tanks equal to or larger than 55 gallons capacity, LESSEE is required to prepare and implement a written plan which conforms to the SPCC Plan requirements under the portion of the SPCC rules dealing with periodic testing of oil storage containers, providing secondary containment, training of oil handling personnel to prevent the discharge of oil, providing security around oil storage facilities, and maintaining all records pertaining to such matters.
18.      National Pollutant Discharge Elimination System . In accordance with the Federal Water Pollution Control Act, also known as the Clean Water Act, 33 U.S.C. Section 1251, et seq.; and the requirements contained in the National Pollutant Discharge Elimination System (hereafter "NPDES") regulations found in the Hawaii Administrative Rules 11-55 and the Appendices thereto, as amended, LESSEE shall obtain a Notice of General Permit Coverage by applying for general permit coverage and shall comply with and completely satisfy all of the NPDES regulations governing general permits and consolidated permits, if applicable, now or hereafter adopted, amended or published throughout the entire Term of this Lease.
19.      Burden of Proof . In all instances covered in this Section XV.C. (Compliance with Environmental Matters), LESSEE accepts the burden of establishing that it is not responsible for the existence of Hazardous Substances on the Premises. If LESSEE cannot establish that it is not responsible for the existence of Hazardous Substances on the Premises, LESSEE shall be deemed responsible for the existence of the Hazardous Substance; provided however, that the Hazardous Substances Baseline shall constitute prima facie evidence of STATE’s responsibility for Hazardous Substances at or below the Hazardous Substances Baseline.
D.      Airport Security . In addition to the Airport security requirements prescribed in Section VII.F.7.h. (Security Fencing), Section VII.J.9. (STATE’s Security Fence), and Section X.E. (Security), LESSEE shall observe, comply with, and completely satisfy all of the security requirements for the Airport, and any and all applicable security access procedures, rules, and regulations prescribed by STATE, TSA, or other Federal Agency. LESSEE accepts liability and responsibility for failing to prohibit unauthorized persons and vehicles from entering any restricted operations area of the Airport through the Premises.
4.      Security Agreements . LESSEE shall enter into security agreements with STATE that may be required by the FAA for Airport security purposes, and said agreements shall become part of this Lease, and the agreements, covenants, promises, provisions, requirements, terms, and conditions contained herein, although executed separately.
5.      LESSEE to Maintain Security . LESSEE shall also maintain security in such a manner that unauthorized persons shall not have access to any secure or restricted airport operations area through any part(s) or portion(s) of the Premises. Agents, other Guests, or any other party acting with the permission or consent of LESSEE, shall be under the control, supervision, or guidance of LESSEE when entering any secure or restricted airport operations area. LESSEE shall enter into any separate supplemental agreement required by STATE or TSA or other Federal Agency that covers Airport security requirements to ensure the protection of the Airport.
6.      Failure to Prevent Violations . LESSEE accepts liability and responsibility for: (a) LESSEE’s failure to observe, comply with, and completely satisfy any and all Airport security requirements and applicable security access procedures, rules, or regulations prescribed by STATE or TSA or other Federal Agency; (b) LESSEE’s failure to prohibit unauthorized persons and vehicles from entering the Airport’s restricted airport operations area through any part(s) or portion(s) of the Premises; and (c) any and all reimbursements to STATE wherein STATE has made direct payments to any citing authority of any fines or penalties for any and all Airport security violations by LESSEE and LESSEE’s officers, employees, agents, contractor, invitees, or other Guests. Failure on the part of LESSEE to observe, comply with, and completely satisfy this security requirement shall give STATE cause to assess a charge and/or terminate this Lease pursuant to Section V.D. (Additional Charges) and Article XX. (TERMINATION BY STATE), respectively, hereof.
E.      Airport Fire . LESSEE shall observe, comply with, and completely satisfy all County, State of Hawaii, and Federal fire codes, and shall be solely responsible for and pay any fines or penalties levied for any and all fire code violations. LESSEE shall also, at its sole cost and expense, provide and install connections and hook-ups to the Airport alarm system, when STATE establishes such a system. STATE’s alarm system shall serve as a secondary fire alarm monitoring and indication system. LESSEE, and LESSEE’s officers, employees, agents, representatives, and sublessees, are solely responsible for the primary notification and alarm to the appropriate Fire Department Station in case of fire on the Premises.
ARTICLE XVI.      RULES AND REGULATIONS
LESSEE shall observe, comply with, satisfy, and obey all rules and regulations of STATE at the Airport, that are now in effect or which may from time to time during the period commencing from the Commencement Date through and until the expiration of the Term of this Lease be reasonably amended, prescribed, or imposed by STATE for the conduct and operations of LESSEE at, in, or on the Airport. LESSEE acknowledges that it is familiar with the rules and regulations of STATE presently in effect at the Airport.
ARTICLE XVII.      RIGHTS-OF-ENTRY RESERVED
A.      Inspection . STATE, STATE’s officers, employees, agents, and other Guests and STATE’s successors and assigns, and State of Hawaii’s directors, officers, employees, agents, elected officials, and contractors, shall have the right at all reasonable times to enter upon the Premises for the purpose of inspecting the same, for observing the performance by LESSEE of its obligations under this Lease and to serve or post or keep posted notices provided by any law, statute, rule or regulations of the State of Hawaii which STATE deems to be for the protection of STATE or the Premises, and for any act which STATE may be obligated to have the right to do under this Lease or otherwise.
B.      Maintain Systems . STATE, and its officers, employees, agents, representatives and contractors and furnishers of utilities and other services, shall have the right on its own behalf, or for the benefit of LESSEE or others at the Airport, to maintain existing and future utility, mechanical, electrical, and other systems and to enter upon said Premises at all reasonable times to make such repairs, replacements or alterations as may, in the opinion of STATE, be necessary or desirable and, from time to time, to construct or install over, in, on, about or under the Premises, new systems or parts thereof, and to use the Premises for access to other parts of the airport not otherwise conveniently accessible; provided, however, that such entry and said work shall in no event unreasonably disrupt or interfere with the operations of LESSEE.
C.      No Obligation to Construct or Repair . Nothing in this Article XVII. (RIGHTS-OF-ENTRY RESERVED) herein, shall impose or shall be construed to impose upon STATE any obligation to construct or maintain, or to make repairs, replacements, additions, or alterations to the Premises, nor shall STATE’s entry upon the Premises, or any part(s) or portion(s) thereof, create any liability for any failure to do so.
D.      Showing the Premises . At any time upon reasonable advance notice to LESSEE, STATE, its officers, employees, agents, and invitees, or any person acting for on behalf of STATE, whether or not accompanied by interested parties, shall have the right to enter upon the Premises, or any portion thereof, during ordinary business hours (except in the case of an emergency or risk of life situation) for the purposes of exhibiting and viewing all parts of the same, provided STATE does not unreasonably interfere with the operations of LESSEE.
E.      No Abatement . No abatement of the required rentals and other fees and charges payable to STATE shall be claimed by or allowed to LESSEE by reason of the exercise by STATE of any or all of the rights contained in this Article XVII. (RIGHTS-OF-ENTRY RESERVED); provided, however, that other than for emergency purposes, nothing contained in this Article XVII. (RIGHTS-OF-ENTRY RESERVED) shall permit or be construed to permit STATE to exercise any right of access or entry for any of the purposes denoted in this Article XVII. (RIGHTS-OF-ENTRY RESERVED), except at reasonable times and in such a manner as to not unreasonably interfere with, or hinder LESSEE’s occupancy, use, and/or enjoyment of the Premises.
ARTICLE XVIII.      UTILITY SERVICES
A.      Utility Services to Premises . LESSEE shall be responsible for all necessary excavation for, and the construction, installation, operation, and maintenance of, all mains, pipes, conduits, cables, wiring, and other equipment required to provide utility services in a manner adequate to supply LESSEE’s needs therefor, and LESSEE shall have the right and duty to make connection for such utility services from the sources provided or identified by STATE and utility companies.
B.      Utility Costs . During and throughout the term of this Lease, LESSEE shall be solely responsible for the payment of all costs related to providing electricity, potable water, sanitary sewage disposal, telephone services, and other public or nonpublic utility services to the Premises, which utility service costs shall include, but not be limited to: meter and utility service deposits, installation fees, and any and all utility service fees and charges, regardless of whether or not such utility services are provided by STATE or by utility service corporations. LESSEE, where applicable, shall pay directly to the utility company or companies or other supplier(s), all charges for such utility service or services.
C.      No Liability for Interruption of Utility Services .
4.      LESSEE not Relieved . No failure, delay, or interruption in any utility service or services, whether or not such services are supplied by STATE or others, shall relieve or be construed to relieve LESSEE of any of its obligations hereunder, or shall be construed to be an eviction of LESSEE, or shall constitute grounds for any diminution or abatement of the fees and charges provided for herein, or grounds for any claim by LESSEE against STATE for damages (consequential or otherwise), unless first approved, in writing, by STATE.
5.      Waiver of Damages . LESSEE hereby expressly waives any and all claims against STATE for damages arising or resulting from any failure, delay, or interruption in any utility service or services (including, without limitation, electric, gas, potable and non-potable water, plumbing, sanitary sewage disposal, telephone, telecommunications, heat, ventilation, air conditioning, etc.), or for the failure or interruption of any public or passenger conveniences. LESSEE’s waiver of STATE’s liability for uninterrupted utility services shall extend to any failure, delay, or interruption to electric service caused by power spikes or surges, severe climatic, or weather conditions, including, but not limited to, high winds, rainstorms, hurricanes, and other climatic or weather phenomena, or other acts of nature, such as earthquakes and seismic waves (tsunami) affecting the Premises and equipment operated and/or maintained by LESSEE.
6.      Damage Repair . If any damage to any electricity, water, sewer, telephone, or telecommunication service line or facility, or any other utility service line or utility service connection is caused by LESSEE, and/or LESSEE’s officers, employees, agents, contractors, invitees, or other Guests, LESSEE shall, at its sole cost and expense, be responsible for the repair, restoration, or replacement of such utility service line or utility service connection.
ARTICLE XIX.      INSURANCE
A.      In General .
4.      LESSEE’s Cost . LESSEE shall procure, at its sole cost and expense, and keep in effect at all times during the term of this Lease, the types and minimum amounts of insurance coverage specified herein.
5.      No Limitation . LESSEE’s procurement and maintenance of insurance, or the delivery of certified copies of policies, or the delivery of Certificates of Insurance or other written evidence of insurance in form and substance acceptable to STATE shall not be construed as a limitation of any kind on LESSEE’s obligations to indemnify, defend, insure, and hold harmless, as may be found under Section XV.C.13. (Release and Indemnity), or Section XV.B.6. (LESSEE’s Indemnification), or Article XXVIII. (LITIGATION), or anywhere else within this Lease.
6.      Form of Policies .
a.      Form and Substance . All insurance required to be furnished by LESSEE hereunder shall be pursuant to policies in form and substance satisfactory to STATE and issued by companies in good standing with the Insurance Division of the Department of Commerce and Consumer Affairs, of sound and adequate Financial Strength Rating and Financial Size Category, licensed and authorized to transact insurance business in the State of Hawaii on an admitted or non-admitted basis, all to the satisfaction of STATE. STATE may, upon reasonable notice and reasonable grounds, increase or change the insurance required hereunder, in which event LESSEE shall comply with the increases or changes within thirty (30) days of written notice of said increase or changes.
b.      Required Provision . All insurance, policies shall:
(1)      Additional Insured . Name STATE, STATE’s officers, employees, agents and other Guests, and STATE’s successors and assigns, and State of Hawaii’s directors, officers, agents, elected officials, and boards (including the Land Board), and employees, Additional Insured, except with respect to Workers’ Compensation and Employers’ Liability.
(2)      Severability of Interest . Apply separately to each insured against whom claim is made or suit is brought, except with respect to the Limits of Insurance.
(3)      Waiver of Subrogation . Contain a waiver of subrogation in favor of STATE, STATE’s officers, employees, agents, and other Guests, and STATE’s successors and assigns, and State of Hawaii’s directors, officers, agents, elected officials, and boards (including the Land Board), and employees.
c.      All Insurance . All insurance shall:
(1)      Primary . Be primary, not in excess of or pro rata and non-contributing as to and with any other insurance held or maintained by STATE.
(2)      No Premiums . Not require STATE to pay any premiums.
(3)      No Partnership . The inclusion of STATE, STATE’s officers, employees, agents, and other Guests, and STATE’s successors and assigns, and State of Hawaii’s directors, officers, agents, elected officials and boards (including the Land Board), as Additional Insured, is not intended to, and shall not, make them or any of them, a partner or joint venture with LESSEE in the operation of the cargo and maintenance hangar facilities in, on, over, under, or about the Premises and LESSEE’s conduct of its business operations, including related functions performed by or on behalf of LESSEE at the Airport.
(4)      Deductibles . Any insurance required hereunder may provide for deductibles or self-insured retentions, which are reasonable and prudent in relation to the soundness of LESSEE’s financial condition, at the sole discretion of STATE.
(5)      Failure to Obtain . Any lapse in, or failure by LESSEE to procure, maintain, and keep in full force and effect such insurance, as is required under this Lease, at any time during and throughout the term of this Lease, shall be a material breach of this Lease and shall give STATE the right to assess additional charges and/or terminate this Lease pursuant to Section V.D. (Additional Charges) and Article XX. (TERMINATION BY STATE), respectively, hereof. LESSEE shall notify STATE, in writing, at least thirty (30) days prior to any cancellation, material change, or nonrenewal of any insurance policy required under this Lease. Should STATE or any of its insurers expend any such funds which would have been or should have been covered by insurance as is required under this Lease, LESSEE agrees to reimburse for such funds and to indemnify, defend and hold harmless STATE and its insurers.
d.      Subrogation . STATE agrees to release LESSEE from STATE’s claim for loss or damage caused by fire or other casualty covered by property insurance policies, to the extent of any payment received by STATE from the insurers. This release includes also a waiver of subrogation by STATE’s insurer of any right of action against LESSEE in the event of such loss or damage and payment therefor to STATE. Said waiver of subrogation is conditional upon acceptance of such waiver by STATE’s insurers affected thereby. Evidence of such waiver shall be in writing.
e.      Proof of Insurance . LESSEE shall provide proof of all specified insurance and related requirements to STATE by delivering certified copies of all the policies or Certificates of Insurance in form and substance acceptable to STATE, or by other written evidence of insurance acceptable to STATE. The documents evidencing all specified types and minimum amounts of insurance coverage shall be submitted to STATE, prior to LESSEE’s occupancy and use of the Premises. Each policy, Certificate of Insurance, or other written evidence of insurance shall contain the applicable policy number(s), the inclusive dates of policy coverage and the insurance carrier’s name, an original signature of an authorized representative of said carrier and shall provide that such insurance will not be subject to cancellation, material change, or non-renewal, except after written notice to STATE at least sixty (60) days prior to the effective date thereof. STATE reserves the right to have submitted to it, upon request, all pertinent information about the agent and carrier providing such insurance.
f.      Interim Review . LESSEE agrees that the types and minimum amounts of insurance coverage specified by STATE herein may be reviewed for adequacy from time to time, throughout the term of this Lease by STATE who may, thereafter, upon thirty (30) days written notice, require LESSEE to modify the types and minimum amounts of insurance coverage based upon the nature of LESSEE’s operations and what a reasonable and prudent owner thereof would typically procure and maintain.
B.      Construction . Before commencing construction of any initial or subsequent work on LESSEE’s Leasehold Improvements (including the New Facility Completion Improvements and any work on the Pre-Existing Leasehold Improvements) or the construction or installation of other improvements at, in, on, over, or under the Premises, or any part(s) or portion(s) thereof, LESSEE shall require all contractors and subcontractors to procure, at no cost or expense to STATE, and keep in effect at all times during the period of construction and installation, the types and minimum amounts of insurance coverage specified, subject to the same general provisions contained in Section XIX.A. (In General) above, to protect both STATE and LESSEE. LESSEE’s contractors and subcontractors are subject to the same insurance requirements of LESSEE, unless otherwise specified herein. If LESSEE or LESSEE’s contractors or sub-contractors desire additional coverage, LESSEE and LESSEE’s contractors and sub-contractors are responsible for the procurement and cost of such additional coverage. STATE retains the right to modify the types and minimum amounts of insurance required of LESSEE’s contractors and subcontractors, upon thirty (30) days written notice to LESSEE, based upon the nature of LESSEE’s operations and what a reasonable and prudent owner thereof would typically procure and maintain.
The types and minimum amounts of insurance for LESSEE’s contractors and sub-contractors are as follows:
4.      Commercial General Liability ("Occurrence Form") . Minimum limits of $1,000,000.00 Each Occurrence (Bodily Injury and Property Damage Combined) and $2,000,000.00 General Aggregate (if applicable), covering Bodily Injury, Property Damage, and Personal/Advertising Injury (subject to a Personal/Advertising Injury Aggregate of at least $1,000,000,00) arising out of contractor’s or sub-contractor’s Premises, Operations, Products, and Completed Operations. The policy shall include Contractual Liability for Bodily Injury and Property Damage obligations assumed in the contract or agreement between LESSEE and LESSEE’s contractor or sub-contractor, Broad Form Property Damage, coverage for explosion, collapse, and underground hazards "XCU", and Fire Damage Legal Liability (Damage to Rented Premises) of not less than $50,000.00 Each Occurrence.
5.      Automobile Liability . Hawaii No-Fault Automobile Liability insurance, covering any auto (all owned, hired, and non-owned autos), with minimum limits as follows:
a.      If operating exclusively outside of the restricted AOA of the Airport, then a Combined Single Limit not less than $1,000,000.00 Each Accident (Bodily Injury and Property Damage Combined); or
b.      If entering and operating within the restricted AOA of the Airport at any time, then a Combined Single Limit not less than $5,000,000.00 Each Accident (Bodily Injury and Property Damage Combined).
6.      Workers’ Compensation and Employers’ Liability . Workers’ Compensation coverage meeting the statutory requirements of the State of Hawaii and any other state in which employees are hired or work is performed, and including Employers’ Liability coverage with minimum limits of $1,000,000.00 for Each Accident, Disease-Each Employee, and Disease Policy Limit, or as otherwise required by applicable federal and State of Hawaii laws.
7.      Builder’s Risk . LESSEE or LESSEE’s contractors shall procure property insurance written on a builder’s risk "all risk" or equivalent policy form, including insurance against the perils of fire (with extended coverage) and risks of physical loss or damage including but not limited to theft, vandalism, malicious mischief, collapse, earthquake, flood, windstorm, testing and startup. Coverage shall also apply to temporary buildings and debris removal, and demolition occasioned by enforcement of any applicable building codes or similar legal requirements. The amount of insurance shall be no less than the initial contract sum, plus the value of subsequent contract modifications and the cost of materials supplied or installed by others, comprising the total value for the entire project at the site on a Replacement Cost basis, including reasonable compensation for architect’s, engineer’s, and similar consultant’s services and expenses. This property insurance shall include coverage for portions of the project when stored off site or in transit. Such property insurance shall be maintained until the project is completed or until no person or entity has an insurable interest in the property other than LESSEE and STATE, whichever is later. This insurance shall include the insurable interests of STATE, LESSEE, and LESSEE’s Contractors, Sub-Contractors, and Sub-subcontractors in the project, as their interest may appear. If this property insurance includes deductible provisions, LESSEE shall pay all deductibles or costs not covered because of such deductible provisions.
8.      Professional Liability . When any architects, engineers, construction managers, or other professional consultants are hired by LESSEE or LESSEE’s contractors or sub-contractors, Professional Liability Insurance covering their errors and omissions shall be maintained with limits of at least $1,000,000.00 Each Occurrence, and including contractual liability. If or when such policies are renewed or replaced, any policy retroactive date on the renewal or replacement policy must coincide with, or precede the date work started under the contract for professional services. Any claims-made policy which is not renewed or replaced must have an extended reporting period of at least two (2) years.
C.      Operation . LESSEE shall, at its sole cost and expense, procure, maintain, and keep in full force and effect during and throughout the term of this Lease, the types and minimum amounts of insurance coverage specified, to protect both STATE and LESSEE, subject to the same general provisions contained in Section XIX.A. (In General) above.
4.      Commercial General Liability ("Occurrence Form") .
a.      Landside Operations . Minimum limits of $1,000,000.00 Each Occurrence (Bodily Injury and Property Damage Combined) and $2,000,000.00 General Aggregate (if applicable), covering Bodily Injury, Property Damage, and Personal/Advertising Injury (subject to a Personal/Advertising Injury Aggregate of at least $1,000,000,00) arising out of LESSEE’s Premises, Operations, Products, and Completed Operations. The policy shall include Contractual Liability for Bodily Injury and Property Damage obligations assumed in this Lease, Broad Form Property Damage, coverage for explosion, collapse, and underground hazards "XCU", and Fire Damage Legal Liability (Damage to Rented Premises) of not less than $100,000.00 Each Occurrence.
b.      Airside Operations . Minimum limits of $5,000,000.00 Each Occurrence (Bodily Injury and Property Damage Combined) and $10,000,000.00 General Aggregate (if applicable), covering Bodily Injury, Property Damage, and Personal/Advertising Injury (subject to a Personal/Advertising Injury Aggregate of at least $5,000,000,00) arising out of LESSEE’S Premises, Operations, Products, and Completed Operations. The policy shall include Contractual Liability for Bodily Injury and Property Damage obligations assumed in this Lease, Broad Form Property Damage, coverage for explosion, collapse, and underground hazards "XCU", and Fire Damage Legal Liability (Damage to Rented Premises) of not less than $100,000.00 Each Occurrence. The policy shall also include coverage for bodily injury and property damage claims directly or indirectly, occasioned by, happening through, or in consequence of pollution or contamination of LESSEE’s products, including but not limited to fuel, propellants, lubricants, and other petroleum products.
5.      Aircraft Accident Liability .
a.      Direct Air Carrier, including Commuter Operator .
(1)      Third-party aircraft accident liability coverage for bodily injury to or death of persons, including nonemployee cargo attendants, other than passengers, and for damage to property, with minimum limits no less than the generally accepted amounts of coverage carried by other certificated air carriers using the Airport for similar commercial passenger and/or cargo airline service, but in no event less than $300,000.00 for any one person in any one occurrence, and a total of $20,000,000.00 per involved aircraft for each occurrence, except that for aircraft of not more than sixty (60) seats or 18,000 pounds maximum payload capacity, the carrier or operator need only maintain coverage of $2,000,000.00 per involved aircraft for each occurrence.
(2)      Any such carrier providing air transportation for passengers shall, in addition to the coverage required in paragraph 2.b.(1) above, maintain aircraft accident liability insurance coverage for bodily injury to or death of aircraft passengers, with minimum limits no less than the generally accepted amounts of coverage carried by other certificated air carriers using the Airport for similar commercial passenger and/or cargo airline service, but in no event less than limits of $300,000.00 for any one passenger, and a total per involved aircraft for each occurrence of $300,000.00 multiplied by seventy-five percent (75%) of the number of passenger seats installed in the aircraft.
6.      Hangarkeeper’s Liability . Minimum limits equal to the maximum estimated value of any aircraft that may be in the care, custody and control of LESSEE, or serviced, handled, or repaired by LESSEE at any given time, but in no event less than $1,000,000.00 Any One Aircraft and $1,000,000.00 Any One Occurrence.
7.      Workers’ Compensation and Employer’s Liability . Workers’ Compensation coverage meeting the statutory requirements of the State of Hawaii and any other state in which employees are hired or work is performed, and including Employers’ Liability coverage with minimum limits of $1,000,000.00 for Each Accident, Disease-Each Employee, and Disease Policy Limit, or as otherwise required by applicable federal and State of Hawaii laws.
8.      Pollution Liability . Minimum limit of $1,000,000 covering bodily injury, property damage (including damage to natural resources), legal expenses, and LESSEE’s obligations to clean-up and/or remediate first- and third-party environmental liabilities or claims resulting from any pollution condition or conditions associated with or arising out of the Premises or LESSEE’s operations. Notwithstanding any provisions contained in Article XIX. (INSURANCE), including but not limited to paragraph A.3.b.(4) (Notification) and A.3.e. (Proof of Insurance), the Pollution Liability Insurance must be for a specific term during which said policy shall irrevocably remain in effect.
9.      Buildings and Business Personal Property .
a.      LESSEE shall insure all buildings, structures, completed additions, including fixtures, machinery, and equipment which are a permanent part of buildings, and all other Leasehold Improvements (collectively, the “Buildings”), whether owned by STATE or LESSEE, and LESSEE’s Business Personal Property, including but not limited to furniture, fixtures, supplies, computers, other contents, mobile equipment (if not covered by other insurance), and Personal Property of others (other than aircraft) in LESSEE’s care, custody, and control (collectively, the “Business Personal Property”), in all cases, in, on, over, under, or about the Premises, as would be procured and maintained by a reasonable and prudent owner engaged in businesses and operating facilities similar to those contemplated by this Lease, protecting against Causes of Loss - Broad Form (or equivalent), including but not limited to the perils of fire, lightning, explosion, windstorm (including hurricane), smoke, aircraft or vehicles, riot or civil commotion, vandalism, sprinkler leakage, sinkhole collapse, volcanic action, falling objects, and accidental water damage, on a replacement cost basis. STATE shall be included as a Loss Payee, as their interest may appear. Coverage shall also apply to debris removal, and demolition occasioned by enforcement of any applicable building codes or similar legal requirements.
b.      Subject to LESSEE’s exercise of its right to terminate this Lease pursuant to Section XIX.C.6.c. , damage to or destruction to all or any portion of the Buildings and Business Personal Property in, on, over, under, or about the Premises by fire or any other cause so as to prevent the continued use thereof shall not terminate this Agreement or cause any abatement of or reduction in the rental and other payments to be made by LESSEE hereunder, or otherwise alter the obligations of LESSEE as set forth herein, and in the event that the whole or a part of any of the Buildings is damaged or destroyed, LESSEE shall be obligated to rebuild, replace, repair or restore all such Buildings, at LESSEE’s sole cost and expense, to a condition comparable to the Buildings in their then-existing condition immediately prior to such casualty, and in no event shall LESSEE be entitled to any reimbursement from STATE to cover any of LESSEE’s excess costs over and above net insurance proceeds obtained by LESSEE relating to such casualty.
c.      Notwithstanding the foregoing, if at the time of such casualty there remains less than five (5) years of the Term of this Lease, and if the cost of reinstatement of the Buildings destroyed or damaged by said casualty exceeds thirty-five percent (35%) of the then-replacement cost of the Buildings situated on the Premises immediately prior to such casualty, all as estimated by an architect chosen by STATE (such casualty, a “Major Casualty”), then LESSEE may elect to terminate this Lease by written notice given to STATE within sixty (60) days of the occurrence of the applicable Major Casualty (or such longer period if said architect chosen by STATE has not yet provided the aforesaid estimate). Any termination pursuant to LESSEE’s election to terminate this Lease must be made strictly in accordance with this Section XIX.C.6.c. and shall become effective sixty (60) days after receipt by STATE of written notice thereof, and LESSEE shall remove the improvements damaged by said Major Casualty and the debris resulting therefrom and restore the land and remaining improvements to good and orderly condition within said sixty (60) day period (or such longer period if reasonably necessary given the degree of damage caused by said Major Casualty). In the event LESSEE elects to terminate this Lease as expressly permitted by this Section XIX.C.6.c. as a result of a Major Casualty, STATE shall repay to LESSEE any rental or other sums paid in advance and not earned or accrued as of the effective date of such termination, and in such case there shall first be deducted from any insurance proceeds such amount as necessary to pay the cost of removing the improvements damaged by said Major Casualty and all debris resulting from such Major Casualty and of restoring the Premises to as good and orderly condition as feasible (with LESSEE bearing the sole obligation to make up any deficiency), and any remaining proceeds shall be paid to STATE.
10.      [Intentionally omitted].
11.      Automobile Liability . Hawaii No-Fault Automobile Liability insurance, covering any auto (all owned, hired, and non-owned autos), with minimum limits as follows:
a.      If operating exclusively outside of the restricted AOA of the Airport, then a Combined Single Limit not less than $1,000,000.00 Each Accident (Bodily Injury and Property Damage Combined); or
b.      If entering and operating within the restricted AOA of the Airport at any time, then a Combined Single Limit not less than $5,000,000.00 Each Accident (Bodily Injury and Property Damage Combined).
ARTICLE XX.      TERMINATION BY STATE
A.      Events of Breach or Violation . LESSEE shall be in breach or violation of this Lease and STATE shall have the right to terminate this Lease if any one or more of the following events shall occur:
4.      Transfer of Interest . When, without the prior written approval or consent of STATE, any interest of LESSEE under this Lease is transferred or assigned, whether voluntarily or involuntarily, by reason of assignment, sublease or otherwise, stock transfer, operation of law, or death, to any other individual, limited or general partnership, joint venture, firm, company, corporation, limited liability company, or any other entity; or
5.      Ownership Change . When the ownership of LESSEE, without the prior written approval or consent of STATE, is changed by inter vivos stock transfer to one or more individuals or entities who are not stockholders at the inception of this Lease, or if LESSEE is a partnership, whether limited or general, by the introduction of a new partner or partners, whether limited or general, who was not a partner or who were not partners at the inception of this Lease; or
6.      Partnership Dissolution . If LESSEE is a partnership of any type and the partnership is dissolved as a result of any act or omission of its partners or any of them, or by operation of law, or the order or decree of any court having jurisdiction, or for any other reason whatsoever; or
7.      Receivership . When, by or pursuant to, or under authority of any legislative act, resolution, or rule, or any order or decree of any court or governmental board, agency, or officer having jurisdiction, a receiver, trustee, or liquidator shall take possession of all or substantially all of the property of LESSEE, and such possession or control shall continue in effect for a period of at least fifteen (15) consecutive days, without being contested by LESSEE in good faith by proper legal proceedings within said fifteen (15) day period; or
8.      Abandonment . When LESSEE: (a) voluntarily abandons, deserts, or vacates the Premises; or (b) discontinues conduct of its business operations at, in, on, or over the Premises; or
9.      Prevented from Use . After exhausting or abandoning any right of further appeal, LESSEE shall be prevented for a period of at least ninety (90) consecutive days by the action of any governmental agency from using the Premises, regardless of the fault of LESSEE; or
10.      Suspension . The happening of any act which results in the suspension or revocation of the rights, powers, licenses, permits, or authorities necessary for LESSEE’s conduct of its business operations at, in, on, or over the Premises authorized herein for a period exceeding thirty (30) consecutive days; or
11.      Successor Corporation . LESSEE becomes, without the prior written approval of STATE, a successor or merged corporation in a merger, a constituent corporation in a consolidation or a corporation in dissolution; or
12.      Attachment . When any attachment, judgment, lien, or encumbrance is filed against LESSEE’s interest in the Premises because of any act or omission of LESSEE, and said attachment, judgment, lien, or encumbrance is not discharged or contested by LESSEE in good faith by proper legal proceedings within thirty (30) days; or
13.      Failure to Pay Rent . When LESSEE fails to duly and punctually pay the rentals (including Building Rent and Apron Rent, irrespective of whether LESSEE has timely achieved New Facility Substantial Completion or is otherwise conducting its Air Transportation operations and business at the Premises) and other fees and charges required under this Lease, including any interest, service charges, or late fees, or to make any other payment required under this Lease when due to STATE or for failure to make payments within five (5) business days after LESSEE’s receipt of a written notice from STATE demanding such payment or payments; or
14.      Failure to Pay Taxes . When LESSEE fails to duly and punctually make payments due to any agency of the State of Hawaii or any political subdivision or county of the State of Hawaii, including, but not limited to, payments for any permit, license or lease, general excise taxes, workers’ compensation payments, unemployment taxes, real property taxes, etc., and such payments are not made within thirty (30) days after their due dates; or
15.      Failure to Perform . When LESSEE fails to keep, perform, and/or observe each and every other agreement, promise, covenant, term, or condition set forth in this Lease, on LESSEE’s part to be kept, performed, and/or observed, and such failure shall continue for a period of more than sixty (60) consecutive days after LESSEE’s receipt of a written notice from STATE of such breach or violation by personal service or registered mail or certified mail to LESSEE, except where fulfillment of LESSEE’s obligation requires activity over a period of time, and LESSEE begins to perform whatever may be required for fulfillment within ten (10) days after receipt of said written notice and continues such performance, showing improvement or correction, without interruption except for causes beyond LESSEE’s control; or
16.      General Assignment . LESSEE makes a general assignment for the benefit of creditors, or files a petition or answer seeking an arrangement for its reorganization, or the readjustment of its indebtedness under any law or statute of the United States, or any law or statute of the State of Hawaii, or consents to the appointment of a receiver, trustee, or liquidator of all or substantially all of LESSEE’s property or LESSEE’s property located at, in, on, over, or under the Premises; or
17.      Lien . Any lien is filed against or affecting the Premises, or any part(s) or portion(s) thereof, because of any act or omission of LESSEE and such lien is not removed or enjoined or a bond for satisfaction of such lien is not posted within thirty (30) days.
B.      Default and Termination . In the event of any breach or violation due to the occurrence of any of the events enumerated in Section XX.A. (Events of Breach or Violation) herein, STATE may, after the giving of a written Notice of Default in accordance with Section 171-20, HRS, pursue any available remedy, legal or equitable, it may have against LESSEE.
If LESSEE fails to correct the violation(s) contained in the Notice of Default to the satisfaction of STATE, STATE may, without prejudice to any other remedy, elect to:
4.      Additional Charge . Assess a charge of Two Hundred Fifty and No/100 Dollars ($250.00) per day, as prescribed and set forth in Section V.D. (Additional Charges) hereof; and
5.      Termination Letter . Concurrent with or subsequent to the assessment of such additional charges, subject to Section 171-21, HRS, proceed to terminate this Lease by providing a written Letter of Termination and Notice to Vacate to LESSEE.
If this Lease is terminated by STATE because of default, LESSEE will not be allowed to enter into any other lease, or contract offered by the State of Hawaii for a period of five (5) years following the date of termination, as prescribed and set forth under Section 171-13, HRS.
C.      Right of Re-entry . STATE shall have, as an additional remedy upon the giving of a written Letter of Termination and Notice to Vacate, as provided in Section XX.B. (Default and Termination) herein, the right to re-enter the Premises and every part or portion thereof, respectively, demised under this Lease upon the effective date of termination without further notice of any kind, and may regain and resume possession either with or without the institution of summary or any other legal proceedings or otherwise. Such re-entry, or regaining or resumption of possession, however, shall not in any manner affect, alter, or diminish any of the obligations of LESSEE under this Lease, and shall in no event constitute an acceptance of surrender.
D.      LESSEE’s Rights Cease . Upon such termination by STATE, all rights, powers, and privileges of LESSEE granted hereunder shall cease. Unless otherwise stated herein, LESSEE shall immediately vacate the Premises occupied and/or used by it under this Lease, and LESSEE shall have no claim of any kind whatsoever against STATE, by reason of such termination, or by reason of any act by STATE incidental or related thereto. In the event of the exercise by STATE of such option to terminate, LESSEE shall have no right to or claim upon the Leasehold Improvements, or the value thereof, which may have been previously constructed, installed, erected, or placed by LESSEE at, in, on, over, or under the Premises. STATE may also remove or store any of LESSEE’s Personal Property located thereon or therein, at LESSEE’s sole cost and expense, without STATE being liable to LESSEE for damage or loss thereby sustained by LESSEE.
E.      Waiver of Redemption and Damage . LESSEE waives, releases, and discharges any and all claims it may now or hereafter have relating to STATE’s exercise of its rights under this Lease to re-enter and regain and resume possession of the Premises and to remove LESSEE, the Leasehold Improvements, and LESSEE’s Personal Property from the Premises and store or dispose of any of LESSEE’s property, including LESSEE’s Personal Property.
LESSEE hereby waives any and all rights of redemption granted by or under any present or future law or statute in the event it is dispossessed for any cause, or in the event STATE obtains or retains possession of the Premises in any lawful manner. LESSEE agrees that in the event the manner or method employed by STATE in re-entering or regaining possession of the Premises gives rise to a cause of action in LESSEE in forcible entry and detainer under the laws of the State of Hawaii, the total amount of damages to which LESSEE shall be entitled in any such action shall be the sum of ONE AND NO/100 DOLLAR ($1.00), and LESSEE agrees that this provision may be filed in any such action as its stipulation fixing the amount of damages to which it is entitled.
F.      Additional Rights of STATE . STATE, upon termination of this Lease, or upon re-entry, regaining, or resumption of possession of the Premises, may occupy the Premises and shall have the right to permit any person, firm, corporation, or entity to enter upon the Premises and use the same. Such occupation by others may be of only a part of the Premises, or the whole thereof, or a part thereof together with other space(s), and for a period of time the same as or different from the balance of the term remaining hereunder as if no termination, re-entry, regaining, or resumption of possession had taken place, and on terms and conditions the same as or different from those prescribed and set forth in this Lease. STATE shall also have the right to repair or to make such structural or other changes in and to the Premises as are necessary in its judgment to maintain the suitability thereof for uses and purposes similar to those granted under this Lease without affecting, altering, or diminishing the obligations of LESSEE hereunder.
G.      Termination before Commencement of New Facility Completion Improvements . If any of the events enumerated in Section XX.A. (Events of Breach or Violation) herein shall occur prior to commencement of LESSEE’S work with respect to New Facility Completion Improvements, LESSEE shall not be entitled to enter into possession of the Premises, or any part(s) or portion(s) thereof, respectively, and STATE, upon the occurrence of any such event, or at any time thereafter during the continuance thereof, by twenty-four (24) hours' notice, may cancel or terminate the interest of LESSEE under this Lease, such cancellation or termination to be effective upon the date specified in such notice.
ARTICLE XXI.      WAIVER
A.      No Waiver by STATE . No acceptance by STATE of rentals and other fees and charges, or other payments in whole or in part, for any period or periods after a default of any of the agreements, covenants, obligations, promises, provisions, requirements, restrictions, stipulations, terms, or conditions hereof to be performed, kept, or observed by LESSEE, shall be deemed a waiver of any right on the part of STATE to terminate this Lease for any like or other or succeeding breach or default.
B.      No Implied Waiver . No failure by either STATE or LESSEE to insist upon the strict performance of the other party under this Lease or to exercise any right, power, or remedy consequent upon a breach thereof, shall constitute a waiver of any such breach or of such covenant, term, or condition. A waiver or assent by STATE, express or implied, of any breach or default of LESSEE, in the performance of any of the agreements, covenants, obligations, promises, provisions, requirements, restrictions, stipulations, terms, or conditions of this Lease shall not be deemed or considered to be a waiver of any other or succeeding breach or default. No express written waiver of any default or the performance of any agreement, covenant, obligation, promise, provision, requirement, restriction, stipulation, term, or conditions hereof, shall affect any other default or performance, or cover any other period of time, other than default, performance or period of time specified in such express waiver.
C.      Cumulative Remedies . The rights, powers, privileges, options, and remedies of STATE contained in this Lease shall be construed to be cumulative, and no one of them shall be deemed to be exclusive of the other, or exclusive of any right, power, privilege, option, or remedy provided by law.
ARTICLE XXII.      [INTENTIONALLY OMITTED]
ARTICLE XXIII.      TERMINATION BY LESSEE
If any one of the following events shall occur, LESSEE may terminate this Lease, in its entirety, subsequent to the Commencement Date, to wit:
4.      Abandonment . The permanent abandonment of the Airport as a terminal for the transport by air of persons, property, cargo, and/or mail.
5.      Assumption . The lawful assumption by the United States Government, or any authorized agency thereof, of the operation, control or use of the Airport, or any substantial part or parts thereof, in such a manner as to substantially restrict LESSEE from conducting its business operations thereat for a period of at least sixty (60) consecutive days.
6.      Injunction . The issuance by any court of competent jurisdiction of an injunction in any way preventing or restraining the use of the Airport for the purposes authorized under this Lease, and the injunction remaining in force for a period of at least sixty (60) consecutive days.
7.      Breach . The breach by STATE of, or its failure to perform, any of the covenants or agreements contained in this Lease, and either the failure of STATE to remedy such breach for a period of sixty (60) days after receipt of a written notice from LESSEE of the existence of such breach, or, if fulfillment of STATE’s obligations requires activity over a period of time, the failure of STATE within said sixty (60) day period to act in good faith to commence the required activity and to continue the same thereafter except for causes beyond STATE’s control, and upon LESSEE’s termination of this Lease pursuant this Section XXIII.4.0. , STATE shall pay to LESSEE the then-unamortized cost of the New Facility Completion Improvements and any other authorized Leasehold Improvements built, constructed, erected, installed, or placed at, in, on, over, or under the Premises by LESSEE, from the effective date of termination of this Lease, amortized on a straight-line basis over the 35-year Term of this Lease.
ARTICLE XXIV.      SUSPENSION OR ABATEMENT
Upon the occurrence or maturity of any of the termination events contained in Article XXIII. (TERMINATION BY LESSEE) hereof, LESSEE may, in lieu of termination and upon prompt written notice to STATE, either suspend this Lease, or in the alternative, request a just abatement of such portion of the rental obligations of LESSEE, as may be mutually agreed upon, in writing, by and between STATE and LESSEE, such suspension or abatement to be effective from the time of the receipt of such written notice until there is a cessation of the occurrence or activity giving rise to the initial right to terminate this Lease.
ARTICLE XXV.      SUBORDINATION OF LEASE
A.      Joint-Use . This Lease shall be subordinate in all respects to the provisions of any existing or future agreements between STATE and the United States Government, or any agency thereof, relative to the aircraft operating areas of the Airport, the execution of which has been or may be required as a condition precedent to the expenditure of federal funds for the development of the Airport. In the event of any such inconsistency between such agreement(s) and the occupancy by LESSEE of the Premises, and/or its use thereof, pursuant to Article III. (USE OF PREMISES) hereof, this Lease or the particular terms and conditions affected thereby shall be suspended or terminated without STATE being liable for any damages.
This Lease shall be subordinate in all respects to the provisions of any existing or future Joint-Use Agreement between STATE and the United States Navy, the United States Army, and/or the United States Air Force. In the event of any such inconsistency described in the preceding section between this Lease and any existing or future Joint-Use Agreement, this Lease or the particular terms and conditions affected thereby shall be suspended or terminated without STATE being liable for any damages.
B.      National Emergency . During times of war, whether declared by Congress or not, or national emergency, STATE shall have the right to enter into any agreement with the United States Government for any military use of part or all of the landing area, the publicly-owned air navigation facilities, and all other areas and facilities of the Airport. In the event any such agreement is executed, the provisions of this Lease, insofar as they are inconsistent with the provisions of the agreement with the United States Government, shall be suspended without STATE being liable for any damages.
C.      Rights of LESSEE . Nothing in this Article XXV. (SUBORDINATION OF LEASE) herein contained shall detract from or limit, nor be construed to detract from or limit, the rights of LESSEE set forth in Article XXIII. (TERMINATION BY LESSEE) and Article XXIV. (Suspension or Abatement) hereof, to seek damages or compensation from other than STATE in the event of the execution of any such agreement described above, the terms of which are or may be inconsistent with the rights of LESSEE under this Lease.
ARTICLE XXVI.      CONDEMNATION
A.      Definitions . For purposes of this Article XXVI. (CONDEMNATION), the following capitalized terms shall have the following meanings:
4.      " Award " means all compensation, sums or value paid, awarded, or received for a Taking, whether pursuant to judgment, agreement, settlement, or otherwise.
5.      " Date of Taking " means the earlier of: (a) the date upon which title to the portion(s) of the Premises taken passes to and vests in the condemner; and (b) the date on which LESSEE is dispossessed.
6.      " Taking " means a taking or damaging, including severance damage, by eminent domain, inverse condemnation or for any public or quasi-public use under applicable laws. A Taking may occur pursuant to the recording of a final order of condemnation, or by voluntary sale or conveyance in lieu of condemnation, or in settlement of a condemnation action.
B.      General . If during the period commencing from the Commencement Date through and until the expiration of the Term of this Lease, any Taking of all or any part or portion of the Premises or any interest in this Lease occurs, the rights and obligations of the parties hereunder shall be determined pursuant to this Article XXVI. (CONDEMNATION). STATE and LESSEE intend that the provisions hereof govern fully in the event of a Taking.
C.      Total Taking; Automatic Termination . If a total Taking of the Premises occurs (all of the Premises are included in the Taking) then this Lease shall terminate as of the Date of Taking.
D.      Partial Taking; Election to Terminate .
4.      Entire Termination . If a Taking of any portion (but less than all) of the Premises occurs, then this Lease shall terminate in its entirety if all of the following exist: (a) the partial Taking renders the remaining portion of the Premises untenable or unsuitable for continued use by LESSEE for the conduct of LESSEE’s business operations; (b) the condition rendering the Premises untenable or unsuitable either is not curable or is curable, but STATE is unwilling or unable to cure such condition; and (c) STATE elects to terminate.
5.      Material Portion Taken . If a partial Taking of a material portion of the Premises occurs, STATE shall have the right to terminate this Lease in its entirety.
6.      Notice of Election . STATE’s election to terminate this Lease pursuant to this Article XXVI. (CONDEMNATION) shall be exercised by STATE giving notice to LESSEE on or before the date that is one hundred twenty (120) days after the Date of Taking, and thereafter this Lease shall terminate on the thirtieth (30 th ) consecutive day after such notice is given.
E.      Award . Upon termination of this Lease pursuant to a Total Taking under Section XXVI.C. (Total Taking; Automatic Termination) or an election under this Section XXVI.D. (Partial Taking; Election to Terminate) herein, then:
4.      LESSEE .
a.      Rent . LESSEE’s obligation to pay all rentals and other fees and charges required under this Lease shall continue up until the date of termination and thereafter shall cease.
b.      Surviving Obligations . LESSEE shall continue to be obligated to perform and comply with all obligations that are intended to survive the termination of this Lease, including, without limitation, those obligations set forth in Article XLVII. (SURVIVAL OF OBLIGATIONS) hereof.
c.      Leasehold Improvements . LESSEE shall be entitled to recover from the condemning authority, the unamortized value of the Leasehold Improvements built, constructed, erected, installed, or placed at, in, on, over, or under the Premises by LESSEE in the ratio that the unexpired term of this Lease, on the Date of Taking bears to the unexpired term of this Lease on the date the Leasehold Improvements were completed by LESSEE.
d.      No Claim against STATE . LESSEE shall have no claim against STATE or others for: (i) compensation or indemnity for LESSEE’s leasehold interest; and (ii) compensation and damages payable for or on account of land (including access and easement rights) or improvements thereon, except as provided in Section XXVI.E.1.c. (Leasehold Improvements) herein.
e.      Separate Claim against Condemning Authority . LESSEE may make a separate claim for compensation from the condemning authority for LESSEE’s relocation expenses, or the interruption of, or damage to LESSEE’s business operations, or damage to LESSEE’s Personal Property. If the condemning authority or a court of competent jurisdiction concurs that said claim exists and is justified, LESSEE may receive any Award made specifically to LESSEE for such claim.
5.      STATE . STATE shall be entitled to the entire Award in connection with the Taking (including any portion of the Award made for the value of the leasehold estate created by this Lease), except for the unamortized value of the Leasehold Improvements, as set forth in Section XXVI.E.1.c. (Leasehold Improvements) herein.
F.      Partial Taking; Continuation of Lease . If a Partial Taking of the Premises occurs and this Lease is not terminated in its entirety under Section XXVI.D. (Partial Taking; Election to Terminate) herein, then this Lease shall terminate as to the portion(s) of the Premises so taken, but shall remain in full force and effect as to the portion(s) of the Premises not taken, and the rights and obligations of STATE and LESSEE shall be modified as follows:
4.      Rent Reduction . If the Taking causes any portion(s) of the Premises to become unusable for the conduct of LESSEE’s business operations at, in, on, or over the Premises, as authorized under this Lease, the rent shall be reduced by a factor comprising the square footage of the space comprising the Taking, multiplied by the applicable rate based on the rates and charges established by STATE.
5.      Leasehold Improvements . LESSEE shall be entitled to recover from the condemning authority, the unamortized value of the Leasehold Improvements built, constructed, erected, installed, or placed at, in, on, over, or under the Premises by LESSEE in the ratio that the unexpired term of this Lease on the Date of Taking bears to the unexpired term of this Lease on the date the Leasehold Improvements were completed by LESSEE.
6.      No Claim against STATE . LESSEE shall have no claim against STATE or others for: (i) compensation or indemnity for LESSEE’s leasehold interest; and (ii) compensation and damages payable for or on account of land (including access and easement rights) or Leasehold Improvements, except as provided in Section XXVI.F.2. (Leasehold Improvements) herein.
7.      Separate Claim against Condemning Authority . LESSEE may make a separate claim for compensation against the condemning authority for the interruption of or damage to LESSEE’s business operations or damage to LESSEE’s Personal Property. If the condemning authority or a court of competent jurisdiction concurs that said claim exists and is justified, LESSEE may receive any Award made specifically to LESSEE for such claim.
8.      STATE’s Award . STATE shall be entitled to the entire Award in connection with the Taking (including any portion(s) of the Award made for the value of the leasehold estate created by this Lease), except for the unamortized value of the Leasehold Improvements as set forth in Section XXVI.F.2. (Leasehold Improvements) herein.
9.      Prompt Use . Any portion of the Award received by LESSEE shall be used promptly by LESSEE to the extent necessary to restore or replace the Leasehold Improvements, in, at, on, or over the remaining Premises, in accordance with plans, specifications, drawings, cost estimates, and schedules first approved, in writing, by STATE.
10.      Continuing Obligation . Nothing herein shall be construed to excuse LESSEE from LESSEE’s full performance of all covenants, agreements, promises, obligations, stipulations, terms, and conditions under this Lease as to the part(s) or portion(s) of the Premises not part of the Taking and LESSEE shall remain responsible for paying to STATE all rents and other fees and charges required under this Lease.
G.      Temporary Takings . Notwithstanding anything to contrary in this Article XXVI. (CONDEMNATION), if a Taking occurs with respect to all or any part or portion of the Premises for a limited period of time not in excess of one hundred eighty (180) consecutive days, this Lease shall remain unaffected thereby, and LESSEE shall continue to pay the rents and other fees and charges required under this Lease and to perform all of the covenants, agreements, obligations, stipulations, terms, and conditions of this Lease.
LESSEE may make a separate claim for compensation from the condemning authority for LESSEE’s relocation expenses, or the interruption of, or damage to LESSEE’s business operations, or damage to LESSEE’s Personal Property. If the condemning authority or a court of competent jurisdiction concurs that said claim exists and is justified, LESSEE may receive any award made specifically to LESSEE for such claim.
ARTICLE XXVII.      PERFORMANCE BOND
A.      Requirements . Prior to commencement of any work with respect to any of LESSEE’S Leasehold Improvements (including the New Facility Completion Improvements), and throughout the term of this Lease and including not less than ninety (90) days after the expiration or sooner termination of this Lease, LESSEE shall deliver to STATE, and keep and maintain in force and effect at all times a performance bond or cash or cash equivalent security deposit (including a letter of credit) acceptable to STATE, in accordance with the covenants, terms, and conditions specified in this Article XXVII. (PERFORMANCE BOND) herein, and in an amount equal to three (3) months’ rental then in effect (the "Performance Bond"). Except for a cash or cash equivalent security deposit (including a letter of credit), the Performance Bond must:
4.      Authorized Surety . Be executed by a surety company authorized to do business under the laws of the State of Hawaii (the "Surety");
5.      STATE Approval . Meet with the written approval of STATE, including, without limitation, meeting the requirement that the Surety, to STATE’s sole satisfaction, has the financial capability to fully perform and complete the Surety’s obligations under the Performance Bond;
6.      STATE’s Attorney Approval . Be in a form approved by an authorized representative of the Department of the Attorney General of the State of Hawaii;
7.      Guarantee Full Performance . Guarantee to STATE that LESSEE shall fully and completely observe, comply with, perform, and completely satisfy all of the covenants, agreements, promises, provisions, duties, responsibilities, obligations, requirements, restrictions, stipulations, terms, and conditions prescribed and set forth in this Lease;
8.      LESSEE’s Cost . Be procured, maintained, and kept in effect at LESSEE’s sole cost and expense;
9.      STATE AS “CO-OBLIGEE” . Name STATE as co-obligee; and
10.      Guarantee LESSEE’s Contractual Obligation . Guarantee all of LESSEE’s contractual obligations during and throughout the term of this Lease, which are not otherwise covered by valid and collectible insurance; provided that suits or actions thereon by STATE, or anyone else entitled to do so may be commenced within the applicable period of limitation for contract claims unless otherwise specifically provided.
B.      Surety . If STATE, in its sole discretion, permits LESSEE to obtain the Performance Bond from a surety or sureties other than a surety company authorized to do business under the laws of the State of Hawaii, such surety or sureties must meet the requirements of all applicable State of Hawaii laws, statutes, rules, and regulations, including Section 102-12, HRS.
C.      Replacement Bond . If STATE should receive a notice that the Performance Bond has been or will be canceled, LESSEE shall provide STATE with a replacement Performance Bond providing the coverage required herein from the effective date and time of the expiration or cancellation of the Performance Bond so that there is no period of time wherein an adequate Performance Bond does not cover this Lease, as provided for herein. Such a replacement Performance Bond must meet all of the requirements set forth in this Article XXVII. (PERFORMANCE BOND) and be forwarded to and received by STATE at least thirty (30) days prior to the effective date and time that the preceding bond will expire or be canceled.
D.      Lease Default . In the event that a replacement Performance Bond or another Performance Bond in the required amount and meeting the required terms is not received by STATE prior to the effective date and time of the bond cancellation or expiration, as stated, LESSEE shall be deemed in default of this Lease, regardless of whether or not a notice of breach or default or time to correct breach or default has been provided to LESSEE by STATE, and the full value shown on the face of the Performance Bond and the additional charge of $250.00 per day for each day that there is no bond coverage shall be immediately payable by LESSEE to STATE as liquidated damages.
E.      Any Lapse . Any lapse in keeping the Performance Bond in full force and effect, in the required sum or in accordance with the terms required herein, shall be a default of this Lease and shall give STATE the right to assess an additional charge and/or terminate this Lease pursuant to Section V.D. (Additional Charges) and Article XX. (TERMINATION BY STATE), respectively, herein.
ARTICLE XXVIII.      LITIGATION
A.      LESSEE Responsible . If STATE is made a party to any litigation commenced by or against LESSEE arising out of LESSEE’s occupancy or use of the Premises, or attributable to the construction, installation, occupancy, or use of the Leasehold Improvements, or LESSEE’s Personal Property (other than condemnation proceedings), LESSEE shall indemnify, defend, keep, save, and hold STATE and STATE’s officers, employees, agents, and other Guests, and STATE’s successors and assigns, and State of Hawaii’s directors, officers, elected officials, boards (including the Land Board), employees, agents, and other Guests harmless, from and against any and all suits, judgments, injunctions, decisions, orders, liabilities, losses, damages, costs, and expenses arising out of or related to any such litigation, including, without limitation, paying any and all costs, charges, and reasonable attorneys’ fees incurred or imposed on STATE in connection with such litigation. In any action by STATE for recovery of any sum due under this Lease, or to enforce any of the agreements, covenants, obligations, promises, stipulations, terms, or conditions contained in this Lease, STATE shall be entitled to recover any and all costs, fees, charges, and reasonable attorneys’ fees incurred or imposed on STATE in connection with such actions. Notwithstanding the foregoing or any other provision in this Lease to the contrary, LESSEE shall not be liable for, nor shall LESSEE be obligated to indemnify, defend, keep, save, and hold STATE and STATE’s officers, employees, agents, and other Guests, and STATE’s successors and assigns, and State of Hawaii’s directors, officers, elected officials, boards (including the Land Board), employees, agents, and other Guests harmless from and against, any and all suits, judgments, injunctions, decisions, orders, liabilities, losses, damages, costs, and expenses arising out of or related to any litigation or threatened litigation by or on behalf of DCK or any contractors, subcontractors, sub‑subcontractors or materialmen used by DCK or STATE under the STATE/DCK GC Contract to construct the new Hawaiian Airlines maintenance and cargo building which comprises the Pre‑Existing Leasehold Improvements.
This provision shall not be construed to be a limitation of any other indemnity by LESSEE, including but not limited to, Section XIII.B. (Indemnity), or Section XV.B.6. (LESSEE’s Indemnification), or Section XV.C.13. (Release and Indemnity), or any other indemnity found within this Lease.
B.      Attorneys’ Fees . For purposes of this Lease, reasonable attorneys’ fees shall be based on the fees regularly charged by private attorneys, with the equivalent number of years of experience in the subject matter area of law for which STATE’s attorneys’ services were rendered.
C.      Prompt Notice . Each party shall give prompt written notice to the other party of any claim or suit instituted against it that may affect the other party.
D.      Waiver of Claims . LESSEE hereby waives any claim against STATE and STATE’s officers, employees, agents, other Guests, and STATE’s successors and assigns, and State of Hawaii’s directors, officers, employees, agents, elected officials, and boards (including the Land Board), for loss of revenue, loss of opportunity, and loss of anticipated profits caused by any suit or proceedings directly or indirectly attacking the validity of this Lease, or any part or portion hereof, or by any judgment or award in any suit or proceedings declaring this Lease null, void, or voidable or delaying the same, or any part or portion hereof, from being carried out.
ARTICLE XXIX.      LIENS
A.      STATE’s Lien . STATE shall have a lien upon all LESSEE’s Personal Property upon the Premises, for the purpose of securing to STATE the payment of all sums, including rentals and other fees and charges, which may be due from LESSEE under this Lease. In the event that past-due rentals and other fees and charges are not paid by LESSEE within five (5) days after a notice of default is given by STATE to LESSEE, STATE may take possession of and sell such portion of LESSEE’s Personal Property as may be sufficient to pay the delinquent rentals and other fees and charges owed by LESSEE to STATE. A sale of LESSEE’s Personal Property pursuant to this Article XXIX. (LIENS) herein may be made either publicly or privately, upon the notice given to LESSEE as herein provided.
B.      Other Liens Prohibited . LESSEE shall not commit or suffer any act or neglect whereby the Premises, or any part(s) or portion(s) thereof, including any portion of the Airport, or the Leasehold Improvements, thereupon or therein, or the estate or interest of LESSEE in the same, at any time during the term of this Lease shall become subject to any attachment, lien, charge, or encumbrance whatsoever. LESSEE shall indemnify, defend, keep, save, and hold STATE harmless, and if or when appropriate or necessary, insure STATE, from and against any and all attachments, liens, charges, and encumbrances, and any and all actions, suits, judgments, and orders relating thereto, and any and all costs, fees, charges, and expenses, including reasonable attorneys’ fees resulting therefrom, it being expressly understood that LESSEE shall have no authority, express or implied, to create any attachment, lien, charge, or encumbrance upon or affecting the Premises, or any part(s) or portion(s) thereof, except as otherwise authorized, in writing, by STATE under this Lease.
This provision shall not be construed to be a limitation of any other indemnity by LESSEE, including but not limited to, Section XIII.B. (Indemnity), or Section XV.B.6. (LESSEE’s Indemnification), or Section XV.C.13. (Release and Indemnity), or any other indemnity found within this Lease.
ARTICLE XXX.      ASSIGNMENT AND SUBLETTING
A.      Assignment or Other Transfers .
4.      Assignment . LESSEE shall not assign, encumber, or otherwise transfer, whether voluntary or involuntary or by operation of law, the Premises, or any part(s) or portion(s) thereof, or any interest herein, or permit any other person to occupy or use the Premises, except by way of devise, bequest, or intestate succession, without STATE’s prior written consent, which consent may be granted or denied in STATE’s sole discretion. Any such transfer or assignment made without STATE’s consent shall constitute a default under this Lease and shall be voidable at STATE’s election. With prior written approval of STATE, and the prior approval of Land Board, such assignment and transfer of this Lease, or any interest therein, may be made in accordance with current industry standards, as determined by the Land Board, pursuant to Section 171-36, HRS; provided further , that prior to the written approval of STATE of any assignment of this Lease, STATE shall have the right to review and approve, in writing, the consideration paid by the Assignee, and may condition its consent to the assignment of this Lease on payment by LESSEE of a premium in accordance with STATE’s Department of Transportation Assignment of Lease Evaluation Policy , attached hereto, made a part hereof, and incorporated herein by reference as Appendix E (the "Assignment Policy"). The premium on subsequent assignments shall also be based on the Assignment Policy.
5.      Changes in LESSEE .
a.      Controlling Interest . The merger of LESSEE with any other entity or the transfer of any controlling ownership interest in LESSEE, or the assignment or transfer of a substantial portion of the assets of LESSEE, whether or not located on the Premises, shall constitute an assignment. Without limiting the generality of the foregoing, if LESSEE is a partnership, a withdrawal or change, voluntary, involuntary or by operation of law of the partner or partners owning fifty-one percent (51%) or more of the partnership, or the dissolution of the partnership, or the sale or transfer of at least fifty-one percent (51%) of the value of the assets of LESSEE, shall be deemed an assignment. If LESSEE is a corporation or limited liability company, any dissolution, merger, consolidation, or other reorganization of LESSEE or the sale or other transfer of a controlling percentage of the capital stock or membership interests of LESSEE or the sale or transfer of at least fifty-one percent (51%) of the value of the assets of LESSEE, shall be deemed an assignment. The phrase "controlling percentage" means the ownership of, and the right to vote, stock, or interests possessing at least twenty percent (20%) (or a percentage less than twenty percent (20%) if such percentage represents a controlling interest in LESSEE) of the total combined voting power of all classes of LESSEE’s capital stock or interests issued, outstanding, and entitled to vote for the election of directors.
b.      Sale of Assets . The sale of all or substantially all of the assets of LESSEE, or the transfer of all or substantially all of its Leasehold Improvements at, in, on, over, or under the Premises, shall be deemed to constitute an "assignment" for purposes of this Lease which requires the prior approval of STATE in accordance with this Article XXX. (ASSIGNMENT AND SUBLETTING) herein.
6.      STATE’s Approval Required for Each Assignment . The consent of STATE to any one assignment shall not constitute a waiver of STATE’s right to approve subsequent assignments, nor shall consent of STATE to any one assignment relieve or release any party previously liable as LESSEE from any obligation under this Lease. The acceptance by STATE of the payment of rents and other fees and charges following an assignment shall not constitute consent to any other assignment, and STATE’s consent shall be evidenced only in writing.
7.      No Release . In no event shall STATE’s consent to an assignment or transfer be deemed to be a release of LESSEE as the primary obligor hereunder. Nor shall the acceptance of rents and other fees and charges by STATE constitute a release or waiver of STATE’s rights against LESSEE, or consent to any assignment or transfer, nor shall any other act of STATE in relation to said Assignee be so construed.
8.      Void if not Properly Approved . Any transfer or assignment made in violation of the foregoing provision shall be void. Any attempted assignment, or any subleasing of the whole or any part(s) or portion(s) of the Premises, or any other transaction which violates Section XXX.A. (Assignment and Other Transfers) or Section XXX.B. (Subletting) herein shall be void and shall confer no right, title, or interest in or to this Lease, or right of occupancy or use of the whole or any part(s) or portion(s) of the Premises, upon any such purported assignee, sublessee, successor, or purchaser. STATE shall further have the right to terminate this Lease pursuant to Article XX. (TERMINATION BY STATE) hereof and to enforce such other remedies as are provided in this Lease.
B.      Subletting .
4.      STATE’s Approval . LESSEE shall not rent or sublet the whole or any portion of the Premises without the prior written approval of STATE. Unless authorized by law, STATE shall deny consent to any uses not specified as allowable under this Lease. STATE may review and approve the rent to be charged to the proposed sublessee and revise the rent and rent structure charged to the proposed sublessee by LESSEE (STATE may also include such other terms and conditions as STATE may deem appropriate, prior to STATE’s approval of the proposed sublease); provided, further, that the rent payable by LESSEE to STATE may not be revised downward.
If the proposed sublessee pays LESSEE any consideration other than said rent, whether by cash, credit or otherwise, or the term of the proposed sublease is for substantially the same term as this Lease or if it otherwise appears to STATE that the proposed sublease is actually an assignment, STATE may treat the proposed sublease as an assignment under Section XXX.A. (Assignment and Other Transfers) herein. STATE’s Department of Transportation Sublease Evaluation Policy , attached hereto, made a part hereof, and incorporated herein by reference as Appendix F (hereinafter referred to as the "Sublease Policy"), shall be applicable to LESSEE pursuant to this Section XXX.B. (Subletting). If it appears to STATE that the proposed sublease is actually a combination of an assignment and a sublease, then STATE may treat the proposed sublease as both an assignment and a sublease and apply the applicable portions of Section XXX.A. (Assignment and Other Transfers) and Section XXX.B. (Subletting), respectively.
5.      LESSEE Proposal . Prior to negotiating a sublease agreement, LESSEE must submit to STATE a sublease proposal for STATE’s prior written approval, which approval may be granted or withheld in STATE’s sole discretion.
6.      Sublease Form . Promptly after STATE has approved a sublease proposal, LESSEE must use diligent, good faith efforts to negotiate a sublease agreement with the proposed sublessee. LESSEE shall ensure that all of the terms and conditions contained in a sublease agreement between LESSEE and LESSEE’s tenant conform to and are consistent with the terms and conditions contained in the sublease proposal (submitted to STATE pursuant to Section XXX.B.2. (LESSEE Proposal) herein) approved by STATE. If LESSEE wishes to vary from the business terms and conditions set forth in the sublease proposal approved by STATE, then LESSEE must submit a new sublease proposal for STATE’s prior written approval.
7.      Sublease Agreement . Promptly after LESSEE and the proposed sublessee have agreed on a form of sublease agreement that incorporates the business terms and conditions set forth in the sublease proposal approved by STATE, LESSEE must submit the sublease agreement to STATE for approval. STATE agrees that it will not unreasonably withhold its approval of the proposed sublease agreement if the proposed sublease agreement: (a) accurately incorporates the business terms and conditions approved by STATE; (b) conforms to and is consistent in all respects to the terms and conditions of the sublease proposal approved by STATE; and (c) is expressly subject to the terms and conditions of STATE’s consent. Otherwise, STATE may withhold its approval in STATE’s sole discretion.
8.      STATE’s Consent . If STATE approves a sublease agreement, STATE’s consent shall include, without limitation, the following conditions:
a.      No Other Transfer . Other than the sublease agreement, no other transfer is being permitted.
b.      No Change . The sublease agreement shall not change, modify, waive, or amend any of the terms and conditions of this Lease.
c.      Conflict . If there is a conflict between this Lease and the sublease agreement, the Lease shall control.
d.      No Waiver . STATE’s consent shall not be construed to be a waiver of any of STATE’s rights under this Lease.
e.      STATE Reservation . STATE reserves all of its rights under this Lease and does not incur any additional liability by consenting to the sublease agreement.
f.      No Release . STATE’s consent to the sublease agreement shall not release LESSEE from any of LESSEE’s responsibilities, obligations, liabilities, and claims arising under or out of this Lease.
g.      Priority of Lease . This Lease shall have priority over the sublease agreement, which shall be subordinate in all respects to this Lease.
h.      Compliance with Conditions . LESSEE and the sublessee shall represent and warrant that each shall comply with all conditions that may be imposed by the Land Board or STATE in connection with STATE’s consent to the sublease agreement.
i.      Other Conditions . LESSEE and the sublessee shall comply with such other terms and conditions as may be imposed or prescribed by STATE relating to STATE’s consent to the sublease agreement, including, without limitation, conditions relating to governing law (Hawaii), resident appointment, rights of holders of security interest, notice to STATE, extension notices, recordation, use restrictions, STATE’s prior approval, compliance with laws, STATE remedies (including the payment of rent, fees, and other charges directly to STATE in the event of LESSEE’s default), and any changes to STATE’s assignment or sublease evaluation policies.
9.      Delivery to STATE . If STATE approves a sublease agreement, LESSEE and the proposed sublessee must deliver an original, fully-executed counterpart original sublease agreement to STATE in the form approved by STATE within fourteen (14) business days of receipt of STATE’s written approval. If an original, fully-executed counterpart sublease agreement in the form approved by STATE is not delivered to STATE within the fourteen (14) business days’ time frame, then LESSEE must submit the proposed sublease agreement again for STATE’s approval. If STATE rejects a proposed sublease agreement, then LESSEE may not enter into the sublease agreement.
10.      No Impairment . Each and every covenant, condition or obligation imposed upon LESSEE by this Lease and each and every right, remedy, or benefit afforded STATE by this Lease will not be impaired or diminished as a result of any sublease agreement.
11.      Excessive Sublease Rent . No sublessee shall be obligated to pay to LESSEE, and LESSEE shall not be permitted to charge any rent, percentage rent, bonus rent, key money, administration fee, or the like, which exceeds, in the aggregate, the total sums that LESSEE pays to STATE under this Lease for the portion of the Premises subleased by the sublessee under its sublease agreement (the "Sandwich Profit"). If, notwithstanding the foregoing prohibition, LESSEE receives any Sandwich Profit, LESSEE shall pay the same to STATE.
12.      Rents Assigned . LESSEE assigns to STATE all rent and other payments due from any and all sublessees under any and all sublease agreements; provided, however, LESSEE is hereby granted a license to collect rents and other payments due from sublessees under their sublease agreements until the occurrence of a breach or violation of this Lease by LESSEE in accordance with Section XX.A. (Events of Breach or Violation), regardless of whether or not a notice of that default has been given to LESSEE. At any time, STATE may notify a sublessee of this assignment and upon such notice, the sublessee will pay its rent and other payments directly to STATE. STATE will credit LESSEE with any rent received by STATE under such assignment, but the acceptance of any payment on account of rent from any sublessee as a result of a breach or violation of this Lease in accordance with Section XX.A. (Events of Breach or Violation), will in no manner whatsoever serve to release LESSEE from any liability under this Lease. No payment of rent or any other payment by a sublessee directly to STATE or other acceptance of such payments by STATE, regardless of the circumstances or reasons therefor, will in any manner whatsoever be deemed an attornment by the sublessees to STATE in the absence of a specific written agreement signed by STATE to such an effect.
13.      Reports . LESSEE must, at LESSEE’s sole cost and expense, prepare and submit the following reports and statements, the forms of which will be subject to the reasonable approval of STATE:
a.      Monthly Report . On or before the tenth (10 th ) day of each calendar month, a detailed report with supporting evidence as may be requested by STATE, summarizing the following activities for the preceding calendar month: (1) rents, fees, charges, and all other sums received by LESSEE from each sublessee during that month; (2) sublease agreements executed; and (3) current and projected vacancies, and indicating all rights respecting such space pursuant to existing subleases, including, without limitation, rights or options to extend the term or expand, or rights of first negotiation or first refusal.
b.      Annual Report . On or before the thirtieth (30 th ) day after the end of each calendar year, an annual report summarizing the subleasing activities for the preceding calendar year, and the total rents, fees, charges, and all other sums received by LESSEE from each sublessee during that year.
c.      Other Reports . Such other reports and such other information concerning the operation and subleasing of the Premises as STATE may from time to time reasonably request.
C.      Violation .
4.      Lease Termination . Any attempt by LESSEE to assign, transfer, hypothecate, mortgage, or encumber LESSEE’s interest or rights under this Lease, or any attempt by LESSEE to sublease the Premises, or any part or portion thereof, without first obtaining STATE’s written consent, shall be deemed a violation of this Article XXX. (Assignment and Subletting). Any such attempted action or transaction on the part of LESSEE shall be null and void, and shall not confer any right, title, or interest in or to this Lease, or right of occupancy or use of the whole or any part or portion of the Premises, upon any such purported assignee, mortgagee, encumbrancer, pledgee, sublessee, successor, or purchaser. STATE shall further have the right to terminate this Lease and enforce such other remedies as are provided in Section V.D. (Additional Charges) and Article XX. (TERMINATION BY STATE), respectively, herein.
5.      Assignor or Transferor . If the transferor or LESSEE defaults in the performance of any of the covenants, agreements, obligations, stipulations, terms, or conditions of this Lease, STATE may proceed directly against LESSEE, the transferor or each transferor if there has been more than one assignment, encumbrance, or transfer (hereinafter referred to collectively as the "Transfer") without the necessity of exhausting remedies against LESSEE. STATE may consent to subsequent Transfers or amendments or modifications to this Lease with transferees, without notifying the transferor (or if there has been more than one Transfer, then each transferor) and without obtaining its or their consent thereto and such action shall not relieve any transferor of liability under this Lease, as amended; provided, however, if such amendments or modifications to this Lease provide for any further increase or expansion of the liability of LESSEE, then LESSEE shall not be liable for such incremental, further increased or extended liability unless expressly approved in writing by LESSEE.
D.      Procedure and Conditions .
4.      Procedure . LESSEE must provide, in writing, to STATE the following:
a.      The name and address of the proposed assignee or transferee;
b.      The nature of the proposed business to be operated by the assignee or transferee on the Premises;
c.      The terms and conditions of the proposed assignment or transfer; and
d.      Reasonable financial information so that STATE can evaluate the proposed assignee or transferee under this Article XXX. (ASSIGNMENT AND SUBLETTING) herein.
5.      Conditions . Transfers by LESSEE are also subject to:
a.      The covenants, agreements, obligations, stipulations, terms, and conditions of this Lease;
b.      The term of any assignment or other Transfer agreement shall not extend beyond this Lease term;
c.      LESSEE shall remain liable for all Lease obligations;
d.      Consent to one Transfer does not waive the consent requirement for any future Transfers;
e.      Payments to STATE of all premiums, Sandwich Profit, or other sums or amounts which LESSEE may be required to pay under this Article XXX. (ASSIGNMENT AND SUBLETTING) herein; and
f.      All other terms and conditions that may be imposed or prescribed by STATE.
ARTICLE XXXI.      SUCCESSORS AND ASSIGNS
Each and all of the expressions, phrases, terms, conditions, provisions, stipulations, promises, covenants, agreements, requirements, and obligations of this Lease shall, whenever applicable, extend to and bind and inure to the benefit of STATE and LESSEE, and the legal representatives, successors, and permitted assigns of either or both of them.
ARTICLE XXXII.      NOTICES
Except as otherwise specifically provided in this Lease, any notice, consent, request, demand, or other correspondence given under this Lease shall be in writing and given by delivering the notice in person or by commercial courier, or by sending it by first-class mail, certified mail, return receipt requested, or overnight courier, return receipt requested, with postage prepaid; to: (a) LESSEE at the address provided on Page 1 of this Lease; or (b) STATE at the following address: State of Hawaii, Department of Transportation, Airports Division, Honolulu International Airport, Inter-Island Terminal Building, 400 Rodgers Boulevard, Suite 700, Honolulu, Hawaii 968l9-1880; or (c) such other address as either LESSEE or STATE may designate, in writing, as its new address for such purpose by notice given to the other in accordance with this Article XXXII. (NOTICES) herein. Any notice hereunder shall be deemed to have been given and received and effective two (2) days after the date when it is mailed, if sent by first-class, certified mail, or one (1) day after the date when it is mailed if sent by overnight courier, or upon the date personal delivery is made.
ARTICLE XXXIII.      INTERPRETATION OF LEASE
A.      Headings . The headings and captions preceding the articles and sections of this Lease and in the table of contents have been inserted for convenience of reference only and such captions shall in no way define or limit the scope or intent of any provision of this Lease.
B.      Not against Drafter . This Lease has been negotiated at arm’s length and between persons sophisticated and knowledgeable in the matters dealt with herein and shall be interpreted to achieve the intents and purposes of the parties, without any presumption against the party responsible for drafting any part of this Lease. The language hereof, and in all parts of this Lease shall, in all cases, be construed simply according to its fair meaning, and not strictly for or against either STATE or LESSEE.
C.      Fair Meaning . Provisions in this Lease relating to number of days shall be calendar days unless specified to be business days. Use of the word "including" shall mean "including, without limitation". References to statutes, sections, ordinances, or regulations are to be construed as including all statutory, ordinance, or regulatory provisions consolidating, amending, replacing, succeeding, or supplementing the statute, section, ordinance, or regulation.
D.      Gender and Number . Whenever the singular number is used in this Lease and when required by the context, the same includes the plural, the plural includes the singular, and the masculine gender includes the feminine and neuter genders, and the word "person" shall include corporation, limited liability company, partnership, firm, and association.
ARTICLE XXXIV.      NO PARTNERSHIP
It is expressly understood and agreed by and between STATE and LESSEE, that STATE shall in no way be, nor for any purpose become or be construed to become a partner of LESSEE in the conduct of LESSEE’s business operations, or otherwise, or a joint venture or a member of a joint enterprise with LESSEE, and STATE does not assume responsibility for LESSEE’s conduct or performance under this Lease. STATE and LESSEE acknowledge and agree that there are no third-party beneficiaries to this Lease.
ARTICLE XXXV.      FORCE MAJEURE
A.      STATE’s Obligations . STATE shall not be liable for any failure, delay, or interruption in performing its obligations hereunder due to causes or conditions beyond its control, including (but without limitation thereto) strikes, boycotts, picketing, slow-downs, work stoppages, or labor troubles of any other type, whether affecting STATE and/or STATE’s contractors or subcontractors.
STATE shall be under no obligation to supply any service or services, if and to the extent, and during any period that the supplying of any such service or services, or the use of any component necessary therefor, shall be prohibited by any federal, state, or municipal law, rule, regulation, requirement, order, or direction, and if STATE deems it in the public interest to comply therewith, even though such law, rule, regulation, requirement, order, or direction may not be mandatory on STATE as a public agency.
B.      Rentals Remain Payable . Unless and only to the extent otherwise specified in this Lease, no abatement, diminution, or reduction of the rentals and other fees and charges payable by LESSEE to STATE shall be claimed by or allowed to LESSEE for any inconvenience, interruption, cessation, or loss of business or other loss caused, directly or indirectly, by any present or future laws, rules, requirements, orders, directions, ordinances, or regulations of the United States of America, or of the State of Hawaii, or of the County, or of any other county, municipal, governmental, or lawful authority whatsoever; or by priorities , rationing, curtailment, or shortage of labor or materials, or by war, or any matter or thing resulting therefrom, or by strikes, boycotts, labor disputes, embargoes, acts of God, acts of the public enemy, acts of superior governmental authority, weather conditions, floods, riots, rebellion, sabotage, or by any other cause or causes beyond the control of STATE, nor shall this Lease be affected by any such causes.
C.      LESSEE Enforcement . Nothing contained in this Article XXXV. (FORCE MAJEURE), shall preclude nor be construed to preclude the enforcement by LESSEE of any of its rights contained in Article XXIII. (TERMINATION BY LESSEE) and Article XXIV. (SUSPENSION OR ABATEMENT) hereof.
ARTICLE XXXVI.      ENTIRE AGREEMENT
The parties intend that this Lease (including all of the exhibits and appendices which are made a part of this Lease) shall be the final expression of their entire agreement with respect to the subject matter hereof and may not be contradicted by evidence of any prior or contemporaneous written or oral agreements or understandings. The parties intend that this Lease shall constitute the complete and exclusive statement of its covenants, agreements, obligations, stipulations, terms, and conditions, and that no extrinsic evidence whatsoever (including prior drafts hereof and changes therefrom) may be introduced in any judicial, administrative, or other legal proceeding, including this Lease.
ARTICLE XXXVII.      AMENDMENTS
Neither this Lease, nor any of the covenants, terms, and conditions contained herein may be varied, changed, modified, or revised by any oral agreement or representation, or otherwise, except by an instrument, in writing, of subsequent date hereto, executed by both parties by their respective officer(s) or other duly authorized person(s).
ARTICLE XXXVIII.      APPROACH PROTECTION
STATE reserves the right to take such action as may be necessary to protect the aerial approaches of the Airport against obstruction, in accordance with applicable standards or requirements, together with the right to prevent LESSEE or any other person, from erecting or permitting to be erected, any building or other structure on the Airport which would conflict with such standards or requirements, or which, at the discretion of STATE, would limit the usefulness of the Airport or constitute a hazard to aircraft.
LESSEE shall, upon being notified that any of its proposed construction may affect the safety or navigable airspaces and operating aircraft on and around the Airport, prepare and submit to the appropriate office of the FAA the necessary notice and documents as required by Federal Aviation Regulation Title 14, CFR Part 77. This notice to the FAA must be submitted at least thirty (30) days prior to the date of the proposed construction or the date that an application for a building permit with the appropriate agency of the County is filed, whichever is earlier.
Should LESSEE be notified by STATE that LESSEE’s improvements pose a hazard to the navigation of operating aircraft at the Airport, then LESSEE shall make changes to the improvements to remove the hazard. Failure by LESSEE to make said changes to the improvements will be a violation of this Article XXXVIII. (APPROACH PROTECTION), and give STATE the right to assess a charge and/or terminate this Lease pursuant to Section V.D. (Additional Charges), and Article XX. (TERMINATION BY STATE), respectively, hereof.
ARTICLE XXXIX.      INVALID PROVISION-SEVERABILITY
If any provision of this Lease or the application thereof to any person, entity, or circumstance shall, to any extent, be deemed invalid or unenforceable by a court of competent jurisdiction, the remainder of this Lease, or the application of such provision to persons, entities, or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each other provision of this Lease shall be valid and be enforceable to the full extent permitted by law.
ARTICLE XL.      NON-LIABILITY OF INDIVIDUALS
Neither STATE, the Director, nor any elected official, agent, director, officer, employee, nor any person acting for or on behalf of State, shall be charged personally by LESSEE, or be held personally liable or personally responsible to LESSEE, under any covenant, provision, term, or condition of this Lease, or because of its execution or attempted execution, or because of any breach, or attempted or alleged breach, thereof.
ARTICLE XLI.      RESERVATION OF MINERAL AND METALLIC RIGHTS
STATE reserves the right, on its own behalf or through persons authorized by it, with respect to all minerals, as hereinafter defined, at, in, on, over, or under the Premises to: (1) prospect for, mine, and remove such minerals; and (2) occupy and/or use so much of the vacant, unoccupied or unused surface of the Premises as may be required for all purposes reasonably related to the mining and removal of such minerals by any means whatsoever, including strip mining; provided, however, that the same is done in a manner that does not unreasonably burden LESSEE’s use of the Premises or the operation of LESSEE’s business at the Premises.
"Minerals" as used herein shall mean and include any and all oil, gas, coal, phosphate, sodium, sulfur, iron, titanium, gold, silver, bauxite, bauxitic clay, disapore, boehmite, laterite, gibbsite, alumina, all ores of aluminum, and without limitation thereon, all other mineral substances and ore deposits, whether solid, gaseous, or liquid, including geothermal resources, at, in, on, over, or under the Premises; provided, however, that the word "minerals" shall not mean and include any of the foregoing substances and deposits when used in road or building construction in furtherance of LESSEE’s permitted activities at, in, on, over, or under the Premises, and not for sale to others.
ARTICLE XLII.      PREHISTORIC AND HISTORIC REMAINS
Any and all prehistoric and historic remains found at, in, on, over, or under the Premises shall be and remain the property of STATE, and shall not be disturbed or removed by LESSEE, and/or LESSEE’s successors in interest, assigns, officers, employees, agents, contractors, invitees, and other Guests, without the express written approval of STATE.
Upon discovery of any prehistoric or historic remains, LESSEE shall immediately stop and cease any further disturbance of the remains and surrounding portion(s) of the Premises containing the remains, and promptly notify STATE of such discovery.
ARTICLE XLIII.      NONDISCRIMINATION
A.      Construction . LESSEE, for itself, its personal representatives, successors in interest, and assigns, as a part of the consideration hereof, does hereby covenant and agree, as a covenant running with the Premises, that in the event facilities are constructed, maintained, or otherwise operated on the Premises described in this Lease for a purpose for which a United States Department of Transportation program or activity is extended or for another purpose involving the provision of similar services or benefits, LESSEE shall maintain and operate such facilities and services in compliance with all other requirements imposed by or pursuant to Title 49, CFR, U.S. Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally-assisted programs of the U.S. Department of Transportation, Effectuation of Title VI of the Civil Rights Act of 1964, and as said Federal Regulations may be amended.
B.      Operation . LESSEE, for itself, its personal representatives, successors in interest, and assigns, as a part of the consideration hereof, does hereby further covenant and agree:
4.      That no person on the grounds of race, creed, color, national origin, sex, age, or a disability, as defined in the ADA, shall be denied the benefits of, or be otherwise subjected to discrimination in the use of said facilities and services;
5.      That in the construction of any improvements at, in, on, over, or under the Premises, and the furnishing of services thereon, no person on the grounds of race, creed, color, national origin, sex, age, or a disability, as defined in the ADA, shall be denied the benefits of, or otherwise be subjected to discrimination;
6.      This Lease is subject to the requirements of the U. S. Department of Transportation’s regulations, Title 49, CFR Parts 23 and 26;
7.      That LESSEE shall not discriminate against any business owner because of race, creed, color, national origin, sex, age, or disability, as defined in the ADA, in connection with the conduct LESSEE’s business operations on the Premises and at the Airport or in connection with the award and performance of any lease agreement covered by Title 49, CFR Parts 23 and 26;
8.      That LESSEE shall use the Premises and conduct LESSEE’s business operations thereon and at the Airport in compliance with all other requirements imposed by or pursuant to Title 49, CFR, U.S. Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally-assisted programs of the U.S. Department of Transportation, Effectuation of Title VI of the Civil Rights Act of 1964, and as said Federal Regulations may be amended; and
9.      That LESSEE will include the foregoing statements in any subsequent lease or other agreements it enters and cause those businesses to similarly include the statements in further agreements.
C.      Breach . In the event of breach of any of the foregoing nondiscrimination covenants, STATE may terminate this Lease pursuant to Article XX. (TERMINATION BY STATE) hereof and re-enter and repossess the Premises, together with all Leasehold Improvements and LESSEE’s Personal Property thereon, and hold the same as if this Lease had never been made or issued.
ARTICLE XLIV.      CIVIL RIGHTS PROVISION
LESSEE assures that it will undertake an affirmative action program as required by Title 14, CFR Part 152, Subpart E and Effectuate Title VI of the Civil Rights Act of 1964, and as said regulation may be administered upon the Airport by the FAA, to insure that no person shall on the grounds of race, creed, color, national origin, sex, or a disability, as defined in the Americans with Disabilities Act of 1990, be excluded from participating in any employment activities covered by Title 14, CFR Part 152, Subpart E and Title VI of the Civil Rights Act of 1964. LESSEE assures that no person shall be excluded on these grounds from participating in or receiving the services or benefits of any program or activity covered by this subpart. LESSEE assures that it will require that its covered sub-organizations provide assurances to STATE that they similarly will undertake affirmative action programs, and that they will require assurances from their sub-organizations, as required by Title 14, CFR Part 152, Subpart E and Title VI of the Civil Rights Act of 1964, to the same effect.
ARTICLE XLV.      [INTENTIONALLY OMITTED]
ARTICLE XLVI.      BROKERS
LESSEE warrants and represents to STATE that LESSEE has not had any contact or dealings regarding the leasing of the Premises, or any communication in connection therewith, through any licensed real estate broker or other person who could claim a right to a commission or finder’s fee in connection with this Lease. In the event that any broker or finder perfects a claim for a commission or finder’s fee based upon any such contact, dealings, or communication, LESSEE shall be solely responsible for such commission or fee, and shall indemnify, defend, save, and hold STATE harmless from and against any and all actions, causes of action, claims, demands, suits, judgments, liabilities, losses, damages, costs, and expenses, including reasonable attorneys’ fees and demands therefor, arising or resulting from LESSEE’s dealings and interactions with any broker, finder, or person who could claim a right to a commission or finder’s fee. The provisions of this Article XLVI. (BROKERS) shall survive any expiration or sooner termination of this Lease.
This provision shall not be construed to be a limitation of any other indemnity by LESSEE, including but not limited to, Section XIII.B. (Indemnity), or Section XV.B.6. (LESSEE’s Indemnification), or Section XV.C.13. (Release and Indemnity), or any other indemnity found within this Lease.
ARTICLE XLVII.      SURVIVAL OF OBLIGATIONS
A.      STATE’s Right to Enforce . Termination of this Lease, whether by expiration or sooner termination, shall not affect the right of STATE to enforce any or all indemnities and representations and warranties given or made by LESSEE to STATE under this Lease, nor shall it affect any provision of this Lease that expressly states it shall survive termination hereof, including, without limitation, Article XIII. (LIABILITY AND INDEMNITY), Section XV.C. (Compliance with Environmental Matters), Article XXVI. (CONDEMNATION), Article XXVII. (PERFORMANCE BOND), Article XXVIII. (Litigation), Article XXIX. (LIENS), and Article XLVI. (BROKERS). LESSEE specifically acknowledges and agrees that, with respect to each of LESSEE’s indemnities contained in this Lease, LESSEE has an immediate and independent obligation to defend STATE from any claim which actually or potentially falls within the indemnity provision, even if such allegation is or may be groundless, fraudulent, or false, which obligation arises at the time such claim is tendered to LESSEE by STATE.
B.      Accrued Obligations . LESSEE’s obligation to make payments to STATE with respect to the accrued rents and other fees and charges (including those which have not yet been billed) and to make repairs (including those relating to the return of the Premises to STATE) which are accrued at the expiration or earlier termination of this Lease shall, survive the expiration or earlier termination of this Lease.
ARTICLE XLVIII.      QUIET ENJOYMENT
LESSEE, upon paying all of the rents and other fees and charges required under this Lease, and observing, complying with, performing, and completely satisfying the agreements, covenants, obligations, promises, provisions, requirements, stipulations, terms, and conditions hereof, shall peaceably and quietly have, hold, and enjoy the Premises, together with all Leasehold Improvements and appurtenances, during the period commencing from the Commencement Date through and until the expiration of the Term of this Lease as against all persons or entities claiming by and through STATE. LESSEE expressly acknowledges that LESSEE’s right to quiet possession of the Premises does not preclude STATE’s right to make changes and additions to the Airport, including the Premises, and to do work at, in, on, over, or under the Premises as permitted by this Lease, including, without limitation, STATE’s right to relocate LESSEE, to the extent permitted by this Lease.
ARTICLE XLIX.      NO ACCORD AND SATISFACTION
A.      LESSEE’s Instructions Void . The payment by LESSEE or the receipt by STATE of a lesser amount than the annual rental prescribed and set forth in this Lease may be, at STATE’s sole option, credited or applied to the payment of: (1) first, any interest charges, service charges, and/or late fees; and (2) second, any annual rental (beginning with earliest owing or accrued annual rental), notwithstanding any instructions by or on behalf of LESSEE to the contrary, which instructions (including any endorsement or statement on any check, or any letter accompanying any such check or payment) shall be null and void, and STATE may accept such check or payment without prejudice to STATE’s right to recover the outstanding receivable balance of such accrued annual rentals, interest charges, service charges, and/or late fees, or to pursue any other remedy available in this Lease or at law.
B.      Acceptance Does Not Invalidate Notice . STATE may accept any partial payment from LESSEE without invalidating any contractual notice given or required to be given herein pursuant to applicable law.
ARTICLE L.      JOINT AND SEVERAL LIABILITY
The obligations, covenants, promises, liabilities, warranties, and representations of LESSEE under this Lease shall be joint and several, by and among any and all entities and persons comprising LESSEE.
ARTICLE LI.      ESTOPPEL STATEMENTS
A.      Delivery of Estoppel Statement by LESSEE . Within ten (10) business days after request therefor by STATE, LESSEE shall deliver, in recordable form, an estoppel statement certifying that this Lease is in full force and effect, the date of LESSEE’s most recent payment of rental, and that LESSEE has no defenses or offsets outstanding, or stating those defenses or offsets claimed by LESSEE, and any other information reasonably requested by STATE.
B.      Failure of LESSEE to Deliver Estoppel Statement . If LESSEE fails to deliver the requested estoppel statement to STATE within the specified period, the following shall be deemed conclusive: (1) this Lease is in full force and effect, without modification; (2) there are no uncured defaults in STATE’s performance under this Lease, and LESSEE has no right of offset, counterclaim, or deduction against the rentals payable under this Lease; and (3) no more than one year’s rental has been paid in advance by LESSEE. Such conclusions shall be binding upon LESSEE. Notwithstanding these conclusions, LESSEE’s failure to deliver the requested estoppel statement shall constitute a breach of this Lease.
ARTICLE LII.      AUTHORITY
If LESSEE executes as a corporation, a limited liability company, a joint venture, or a partnership, each of the persons executing this Lease on behalf of LESSEE does hereby covenant and warrant that LESSEE is a duly authorized and existing entity, that LESSEE has and is duly qualified to do business under the laws of the State of Hawaii, that LESSEE has full right and authority to enter into this Lease, and that each and all of the persons executing this Lease for and on behalf of LESSEE are authorized to do so. Upon STATE’s request, LESSEE shall provide STATE with evidence reasonably satisfactory to STATE confirming the foregoing representations and warranties.
ARTICLE LIII.      CONSENTS
In situations where STATE’s consent cannot be unreasonably withheld, if it is legally adjudicated that STATE unreasonably withheld its consent or approval, LESSEE’s sole and exclusive remedy is to seek specific performance, and in no event will STATE be liable for any monetary damages. All consents or approvals by STATE shall be in writing.
ARTICLE LIV.      COUNTERPARTS
This Lease may be executed in counterparts, each of which shall be deemed an original, and said counterparts shall together constitute one and the same document, binding all of the parties hereto, notwithstanding all of the parties are not signatory to the original or the same counterpart. For all purposes, including, without limitation, recordation, filing, and delivery of this Lease, duplicate unexecuted pages of the counterparts may be discarded, and the remaining pages assembled as one document.
ARTICLE LV.      GOVERNING LAW
This Lease shall be governed by, interpreted, and construed in accordance with the laws of the State of Hawaii.





 

 

 

 

 
 
Airports Division Procedures Created 09/10/2003 Airports Division Department of Transportation State of Hawaii Procedure No. 7.6 DEVELOPMENT STANDARDS FOR LEASED AIRPORT PROPERTY Approved by Owen Miyamoto Effective Date: 01/15/1995 7.6.01 PURPOSE The purpose of this procedure is to establish a standard that shall be followed by lessees in the development of leased property (in construction of improvements). 7.6.02 POLICY It is the policy of the Airports Division that the development of leased airport property shall be aesthetically compatible with existing and planned airport facilities and accomplished in accordance with the applicable rules and procedures of the Department and all other applicable laws, ordinances, rules and regulations of federal, state and county agencies. 7.6.03 APPLICABILITY This procedure applies to persons who lease airport property. 7.6.04 PROCEDURES A. Definitions 1. "Airport" means the areas of land or water set aside by Executive Order of the Governor of the State of Hawaii for public airport purposes. 2. "Buildings" means the main portion of each structure including all projections, extensions, additions, changes, garages, outside platforms and docks, carports, canopies, eaves, and porches. Paving, ground cover, fences, signs and landscaping are specifically excluded from the definition. 3. "Building site" means the land included in the lease agreement. 4. "Corner building site" means a building site which has two or more lease boundary lines abutting a street. 5. "Department" means the Department of Transportation of the State of Hawaii. 6. "Director" means the Director of the Department. 7. "Improvements" means all buildings, structures, and facilities including paving, fencing, signs, and landscaping constructed, installed, or placed on, under, or above any building site by or on the account of a lessee. 8. "Landscaping" means all aesthetic improvement of building sites through the use of lawns, ground cover, trees, and shrubs, as well as walls, screenings, terraces, fountains, pools, and other water arrangements. 9. "Land use plan" means the most recent plan for the future development of airport adopted by the Department, wherein various segments of airport land are reserved for specified uses. 10. "Lease boundary line" means each of the perimeter lines of each building site as leased to each lessee. 11. "Lessee" means any person, firm, corporation, or other entity who has a lease with the Department 1 APPENDIX A

 
for a building site. 12. "Segment" means one of the areas of the airport designated for particular uses (general aviation commercial, general aviation noncommercial, etc.) on the land use plan. 13. "Setback area" means the minimum required area situated between a lease boundary line and a setback line. a. "Front setback area" means the area between the street on which a building site abuts and the front setback line and extends from the side lease boundary line to side lease boundary line. On a corner building site, the front setback area shall apply to each lease boundary line abutting a street, unless otherwise specified in this procedure. b. "Side setback area" means the area between the side lease boundary line and the side setback line and extends from the front setback line to the rear lease boundary line. c. "Rear setback area" means the area between the rear lease boundary line and the rear setback line and extends from side setback line to side setback line. 14. "Setback line" means a line of a building site lying parallel to each lease boundary line and separated from it by the distance required to provide the minimum setback area. 15. "Site coverage" means the portion of the total building site area that may be covered by buildings. 16. "Site width" means the diameter of the largest circle which can be inscribed within the lease boundary lines of a building site. 17. "Street" means the paved portion of a right-of-way maintained by the Department for vehicular access to the building site and used as a thoroughfare by the public. 18. "Taxiway" means a Department-maintained aircraft taxiway, apron, ramp or any other right-of-way for aircraft whose edge is the edge of the right-of-way for all purposes of these standards. B. Performance Standards For All Segments 1. General. No part of the airport or any improvement on it shall be used or allowed to be used at any time for the manufacture, storage, distribution, serving, or sale of any product or the furnishing of any service, in a manner which is unreasonably noxious or offensive or which is an unreasonable annoyance or nuisance to others at the airport because of odors, fumes, smoke, noise, glare, vibration, soot, or dust. No activity which may be dangerous to public health and safety, increases the fire insurance rating for adjoining or adjacent property, or is illegal shall be permitted. 2. Noise. a. The sound pressure levels generated on a building site shall comply with the applicable Hawaii Administrative Rules of the State Department of Health--except for the authorized operation of motor vehicles, aircraft or other transportation equipment: (1) To, from and on a building site. (2) On the public area of the airport. b. The testing of aircraft engines shall be conducted in noise-suppressing test cells so that sound levels do not exceed the levels referenced above. 3. Air Pollution. Atmosphere emissions produced by motor vehicles or aircraft--except for those produced by the authorized operation of motor vehicle and aircraft to, from and on a building site--shall comply with the applicable standards established by the State Department of Health or any other governmental agency. 4. Heat or Glare. Any operation producing intense glare or heat shall be performed within an enclosed or screened area in such manner that the glare or heat emitted will not be perceptible without 2 APPENDIX A

 
instruments at any lease boundary line of a building site. 5. Waste Disposal. All disposal of storm and sanitary sewage and industrial waste shall be in accordance with all applicable laws, rules or regulations of the Departmental and county, state and federal agencies. 6. Electronic and Radio Interference. No tenants shall construct facilities capable of reflecting radio signals or producing electrical, electronic, or radio emissions which will interfere with, obstruct, or adversely affect the operation of air navigation aids and airport radio communications. 7. Stormwater Pollution Prevention. the tenant shall: a. Use all reasonable methods to minimize pollution from fuel spills and use of hazardous materials or hazardous waste; b. Develop a waste minimization plan and coordinate it with the appropriate Airports District Manager; and c. Develop a Stormwater Pollution Prevention Plan under the guidelines of Airports Division SWPPP and have it approved by the Airports District Manager. C. Building Site Development Standards for all Segments 1. Permitted Uses. The uses permitted shall be those defined in the lease for the building site. 2. Automobile and Truck Parking and Loading Requirements a. Paved off-street parking areas sufficient for all the automobiles and trucks of employees, tenants, and customers and other vehicles used in the conduct of a lessee's business shall be provided on each building site. Parking on the streets and at public areas on airport property shall be permitted only in areas and times specifically designated and posted by the Department. b. Parking in the front setback area shall not exceed 60% of the required minimum front setback area, and shall be appropriately screened from view by landscaping. Parking and maneuvering space shall be provided in accordance with accepted traffic engineering standards. c. Buildings shall be designed and placed upon each building site so that motor vehicles of maximum length permitted by the State of Hawaii at the time of construction of each building may be maneuvered and loaded or unloaded off the street. On-street vehicle maneuvering or loading shall not be permitted. d. On the side of a building facing a street, no truck loading door or loading dock shall be nearer than fifty (50) feet to the lease boundary line. Loading facilities shall be constructed so that no part of the longest legal loading vehicle being loaded or unloaded at any loading dock, loading door, or loading area will extend beyond the lease boundary line. 3. Aircraft Parking and Servicing a. Except for permitted parking and servicing of aircraft on designated areas of the airport, provisions for parking aircraft belonging to tenants and their patrons, invitees, employees, and others shall be on the building sites. b. Whenever hangar doors open onto a lease boundary line abutting a taxiway, they shall be set back a distance which in the opinion of the Department shall provide sufficient clearance for the holding, maneuvering, and parking of aircraft as incidental to the ingress and egress of aircraft from the hangars. No holding, maneuvering, stopping, or parking of aircraft off a building site for purpose of hangaring, parking, or storing of aircraft shall be permitted. c. All aircraft parked or left unattended on any building site shall be entirely within the lease 3 APPENDIX A

 
boundary lines. 4. Building and Construction Materials. a. Any building material which has been approved by the Department and which complies with applicable building codes may be used. b. All aircraft taxiways and parking areas on the building site shall be paved with materials of sufficient strength to accommodate the heaviest aircraft anticipated to be parked on the building site, or of sufficient strength to accommodate aircraft with gross ramp weights of at least 12,500 pounds, whichever is the greater. c. Any connection from a driveway or sidewalk on a building site to the paved surface of an abutting street shall be constructed in accordance with the applicable standards of the Highways Division of the Department. Any connection from a taxiway or apron on a building site to the paved surface of an abutting public use taxiway shall be either: (1) For a distance of twenty-five feet from the connection and of the same material and strength as the taxiway to which it is connected; or (2) Painted in accordance with standards established by the Department to indicate that the connection is non-loading bearing. d. All ventilating fans, cooling towers, equipment, etc. placed on roofs of buildings shall be screened from view or enclosed in a manner that is architecturally compatible with the main portion of the building structure. e. Accessory buildings, enclosures, and fences shall be consistent in design and quality of materials with the buildings they serve. 5. Building Heights. All building heights shall conform to the rules and regulations of the Department and the Federal Aviation Administration. 6. Dust Control. All ground areas not covered by buildings shall be landscaped or paved, properly drained and graded, and maintained in good condition free of weeds, trash, and other debris. 7. Illumination. The design and location of exterior lighting shall be subject to the approval of the Department and shall comply with the requirements of the Federal Aviation Administration and other governmental agencies having applicable jurisdiction with respect to height, type, and placement of lighting standards as they may affect the safety of flight operations into, from, and around airport. 8. Landscaping. a. All areas not paved or covered by buildings shall be landscaped in accordance with plans approved by the Department. In addition to trees, ground cover, and gardens, landscaping shall include, where appropriate, the use of walls, screenings, terraces, fountains, pools, and other water arrangements. b. Such landscaping, as approved by the Department, shall be installed within a period not to exceed ninety (90) days after the notice of completion of the initial building. Hose bibs or sprinkler systems shall be provided to serve all landscaped areas. c. Plans, specifications, and inspections for landscaping shall be accomplished by a professional landscape architect registered in the State of Hawaii and shall require the written approval of the Department prior to installation. d. Plant material shall consist of a balanced mixture of trees shrubs and ground cover. e. All trees shall at all times be limited to a height of thirty-five (35) feet above the curb line. 4 APPENDIX A

 
f. A continuous greenbelt shall be required to be maintained on all building sites abutting streets; the greenbelt shall consist of grass lawns, ground cover, trees, shrubs, or any combination thereof as approved by Department. The greenbelt requirement shall be included in the minimum landscaping requirement for the building sites as set forth in this procedure. g. Any unpaved area between the lease boundary line and the edge of the curb of the abutting street shall be landscaped and maintained to the satisfaction of the Department by the lessee of the building site. 9. Power, Telephone, Utilities, and Sewer. No electric power line, water pipe, gas pipe, sewer pipe, or drainage pipe (other than roof leaders) shall be installed or maintained upon any building site above the surface of the ground, except for meter connections which shall be screened or enclosed in a manner approved by the Department. 10. Setbacks. All front setback areas or side setback areas facing a street, with the exception of driveways, sidewalks, other walkways, and any parking, shall be used exclusively for the planting and growing of trees, shrubs, lawns and other ground cover, or material as approved by the Department. If landscaping is not properly maintained by the lessee, the Department may undertake such maintenance as it deems necessary with the resulting expense charged to the lessee. 11. Signs and Advertising. All signs on the airport shall comply with Airports Division Procedure 7.7 "Environmental Preservation Guidelines." 12. Hedges and Fences. a. Except as otherwise specified in this procedure, no hedge or fence shall be grown, constructed, or maintained on any lease boundary line or lines or in any setback area or an area which abuts a street. b. No hedge or fence shall be grown, constructed, or maintained on or adjacent to any street setback line that exceeds six (6) feet in height or elsewhere within setback lines that exceeds ten (10) feet in height, without the prior written approval of the Department. c. Fences shall be constructed and gates installed and controlled where necessary to restrict access from the street to the aircraft operations area; the design and placement of the fences and gates shall be subject to the written approval of the Department prior to installation. 13. Outside Storage a. No vehicle, equipment, material, supply, or product shall be stored or permitted to remain on any building site outside a permanent building unless such storage is suitably shielded from public view by an appropriate screen compatible in design with the permanent structure; the screen shall require the written approval of the Department prior to installation. b. No aviation fuel shall be stored, except as approved by the Department, on any building site other than on aviation fuel storage areas reserved by the Department for such use, and in accordance with a valid written contract with the Department. c. Activities that involve the dismantling of aircraft or the storage of salvaged aircraft, aircraft engines, air-frames, parts, or accessories shall comply with the provisions of this procedure for storage. Aircraft stored at the airport without a current airworthiness certificate (except for purposes of relicensing) may, at the discretion of the Department, be declared salvage aircraft and shall thereupon be treated as a salvaged aircraft for the purposes specified above. D. Design and Construction of Improvements for All Segments. 1. General. No improvements of any kind shall be erected, altered, placed, assembled, or permitted 5 APPENDIX A

 
to remain on a building site unless and until plans showing their type of use, location, size, and architectural and engineering design have been approved in writing by the Department. 2. Plans Required. All plans for improvements shall be prepared by registered architects or engineers and shall include: a. Topographic, grading, drainage, and utility plans showing one (1) foot contours and spot elevators referenced to airport datum and a plot plan at a scale not smaller than one (1) inch equals one hundred (100) feet and showing the relationship of the proposed improvements on the building site to the improvements on the adjacent sites and to the utilities, streets, and taxiways. b. Preliminary plans and specifications of all proposed improvements in sufficient detail to determine compliance with these standards. The plans and specifications may be manufacturer's standard plans if sufficient. Plans shall be a suitable scale, but in no event smaller than 1/16-inch to the foot. c. Ground cover plans (including landscaping) which incorporate, at a minimum, the Department's general landscaping and paving requirements. d. An accurate architectural perspective of the proposed improvements, including the proposed exterior color schemes, style, materials, and design, working, and placement of all signs proposed. e. Any other plans, specifications, or design features requested by the Department. 3. Approval of Plans. a. Approval of plans and specifications for compliance with this procedure and for aesthetics shall be at the discretion of the Department . b. Approval of plans and specifications may be withheld because of failure to comply with this procedure. 4. Plans for Alterations to Improvements. All plans for alterations to the building site either for the construction of additional improvements or for alterations to existing improvements which are visible from the exterior of any building or which affect the structural system of any building or change any grade or landscaping, shall be prepared, submitted, and approved under the applicable provisions of this procedure. 5. Issuance of Building and Related Permits. Prior to obtaining necessary building and other related permits, lessees shall obtain written approval from the Department stating that the uses and plans for the lessee's building site have been approved by the Department as being in full compliance with this procedure. E. Special Requirements for Airline Maintenance Hangar Area. 1. Permitted Uses. Any use which involves the operation of a facility for the maintenance and overhaul of air carrier aircraft, engines, parts, accessories, and equipment. The sale of aviation services and the offering of any services, or repairs of any type to the general public shall be specifically prohibited. Permitted activities shall include, but not be limited to, the following: a. The loading and unloading of aircraft. b. The maintaining, storing, and servicing of aircraft, which shall include overhauling, rebuilding, repairing, inspecting and licensing, and the purchasing and selling of parts, equipment, and accessories. c. The right of sale, disposal, and exchange of aircraft, aircraft parts and accessories therefor, and aviation equipment of every description as incident to the conduct of maintaining and overhauling air carrier aircraft, but not as distributor or as a dealer of same. 6 APPENDIX A

 
d. The training of lessee's personnel but not members of the general public in any art, science, craft, or skill pertaining directly or indirectly to aircraft. e. The operation of offices and facilities incident to the conduct of lessee's business. 2. Building Site Requirements. a. On-line Maintenance Hangar: (1) Minimum Site Area . . . . . . . . . . . . . . . . . . . . . . . . 2 acres (2) Maximum Site Coverage . . . . . . . . . . . . . . . . . . . 30% (3) Minimum Landscaping Coverage . . . . . . . . . . . 5% b. Airline Maintenance Base: (1) Minimum Site Area . . . . . . . . . . . . . . . . . . . . . . . . 5 acres (2) Maximum Site Coverage . . . . . . . . . . . . . . . . . . . 30% (3) Minimum Landscaping Coverage . . . . . . . . . . . 5% 3. Setback Requirements. a. Front Setback Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 ft. minimum b. Side Setback Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 ft minimum on each side c. Rear Setback Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 ft minimum 4. Other Requirements. Engine runups shall be confined to soundproof test cell blocks or equivalent mobile suppressors. F. Special Requirements for Cargo Mail Area. 1. Permitted Uses. Any use which involves the operation of a facility for the handling and storage of air cargo and mail shall include, but not be limited to, the following: a. The loading and unloading of aircraft. b. The receiving, delivering, dispatching, processing, handling and storing of air cargo, express, mail, and other property. 2. Building Site Requirements. a. Minimum Site Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 acre b. Maximum Site Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . 50% c. Minimum Landscaping Coverage . . . . . . . . . . . . . . . . . . . 5% 3. Setback Requirements. a. Front Setback Line . . . . . . . . . . . . . . . . . . . 2 5 ft. minimum b. Side Setback Line . . . . . . . . . . . . . . . . . . . .10 ft. minimum on each side c. Rear Setback Line . . . . . . . . . . . . . . . . . . . 10 ft. minimum 7 APPENDIX A

 
G. Special Requirements for Aviation Support Area. 1. Permitted Uses. Any use which involves the operation of a facility to support the authorized businesses and services of others holding valid leases, contracts, or permits in the terminal complex shall include, but not be limited to, the following: a. Inflight kitchens or catering services. b. Airport employee cafeteria. c. Offices and storage areas. d. Ground transportation maintenance and storage areas. e. Communications and meteorological facilities. f. Airline training schools. 2. Building Site Requirements. a. Minimum Site Area . . . . . . . . . . . . . . . . . . . . . . . . 1 acre b. Maximum Site Coverage . . . . . . . . . . . . . . . . . . . 50% c. Minimum Landscaping Coverage . . . . . . . . . . . 5% 3. Setback Requirements. a. Front Setback Line . . . . . . . . . . . . . . . . . . . . . . . . 15 ft minimum b. Side Setback Line . . . . . . . . . . . . . . . . . . . . . . . . 10 ft minimum on each side c. Rear Setback . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 ft minimum H. Special Requirements for General Aviation Commercial Fixed Base Operator Area. 1. Permitted Uses. Any business or service involving the sale of general aviation commercial services to the general public shall include, but not be limited to, the following as authorized in the lease from the Department to the lessee: a. Aircraft servicing, repair, maintenance and storage. b. Sales of new and used aircraft and aircraft parts, accessories, equipment, and materials at retail and wholesale prices. c. Storage and vending of aircraft fuels, lubricants, and propellants. d. Aerial photography, survey, and mapmaking services. e. Air taxi, ambulance, and sightseeing services. f. Nonscheduled, sightseeing, and charter services for the transportation of passengers, freight, cargo, and mail. g. Flight schools--unless the Department has prohibited flight school activity at the airport and has provided adequate alternate landing facilities for this activity. h. Offices, services, and retail activities complementary to the uses set forth above. 2. Building Site Requirements. a. Minimum Site Area . . . . . . . . . . . . . . . . . . . . . . . . . . 2 acres 8 APPENDIX A

 
b. Maximum Site Coverage . . . . . . . . . . . . . . . . . . . . . 30% c. Minimum Site Coverage . . . . . . . . . . . . . . . . . . . . . . 5% d. Minimum Improvements: (1) Aircraft shop and maintenance hangar . . . . . . . . . . 10,000 sq. ft. (2) Office administration building . . . . . . . . . . . . . . . . . . . .1,000 sq. ft. (3) Paved apron area with access to hangar . . . . . . . . 40,000 sq. ft. e. Minimum Landscaping Coverage . . . . . . . . . . . . . . 5% 3. Setback Requirements. a. Front Setback Line . . . . . . . . . . . . . . . . . . . . . . . . . . 25 ft. minimum b. Side Setback Line . . . . . . . . . . . . . . . . . . . . . . . . . . .10 ft. minimum on each side c. Rear Setback Line . . . . . . . . . . . . . . . . . . . . . . . . . . 10 ft. minimum I. Special Requirements for General Aviation Non-Commerical Area. 1. Permitted Uses. Any industrial, corporate, or business lessee that desires to hangar or accommodate one or more aircraft it owns or operates solely in connection with the internal conduct of its business for the transporting, not for hiring, of lessee's personnel, patrons, materials, and products shall be permitted to engage in certain activities including the following: a. The loading and unloading of aircraft. b. The maintaining, storing, and servicing of aircraft owned or operated and hangared by each such lessee on its building site by its own full-time employees. c. The right of sale, disposal, and exchange of aircraft and their parts and accessories and of aviation equipment as directly incident to the conduct of maintaining and overhauling aircraft owned or operated and hangared by the lessee, by not as a regular business activity, or as a distributor or as a dealer of same. d. The training of the lessee's personnel but not members of the general public in any art, science, craft, or skill pertaining directly or indirectly to aircraft owned or operated and hangared by the lessee. e. The operation of offices and facilities incidental to the operation of the lessee's business. 2. Prohibited Uses. No use of noncommercial general aviation areas shall be permitted which, in the opinion of the Department will directly or indirectly compete with, impair, or restrict commercial aviation activities in the commercial aviation areas defined in subsection 7.6.04 H above. 3. Building Site Requirements. a. Minimum Site Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000 sq. ft. b. Minimum Site Width . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 ft. c. Maximum Site Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60% d. Minimum Landscaping Coverage . . . . . . . . . . . . . . . . . . . . 5% 4. Setback Requirements. 9 APPENDIX A

 
a. Front Setback Line . . . . . . . . . . . . . . . . . . . 25 ft. b. Side Setback Line . . . . . . . . . . . . . . . . . . . .10 ft. minimum on each side c. Rear Setback Line . . . . . . . . . . . . . . . . . . . 10 ft. minimum J. Special Requirements for Fuel Farm Area. 1. Permitted Uses. The maintenance and operation of bulk storage facilities for gasoline, oil, grease, lubricants, and other fuels necessary for the operation of aircraft. 2. Prohibited Uses. No use of the fuel farm area shall be permitted which in the opinion of the Department will directly or indirectly compete with, impair, and restrict general aviation commercial activities as defined in this procedure. No aviation fuel or propellant may be purchased, stored, sold, or handled in these areas except by an aviation fuel vendor or user authorized under written contract by the Department to provide such fueling service at the airport. The servicing of aircraft in this area shall be specifically excluded. 3. Building Site Requirements. a. Minimum Site Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 acres b. Minimum Landscaping Coverage . . . . . . . . . . . . . . . . . . . . . A minimum of two (2) feet inside the fencing abutting or facing a public right-of-way 4. Setback Requirements. As specified by the State Fire Marshall, or other governing agency. 5. Other Requirements. a. In addition to the requirements in this procedure, the installation of improvements in the fuel farm area shall be subject to the requirements of county, state and federal agencies. b. Each building site shall be completely enclosed by fences, with gate installed where necessary for access. Fences shall be installed on the lease boundary lines, except on the side of the building site that faces the common-use service road. The fence line shall be consistent with existing fencing, and its location shall be subject to the prior written approval of the Department. The design of fences and gates shall be subject to the written approval of the Department prior to installation. c. All ground areas not covered by fuel storage facilities, paving, or landscaping shall be covered only with gravel the installation and specification of which shall be subject to the written approval of the Department prior to installation. K. General Provisions. 1. Conformance of Existing Improvements. All existing buildings and improvements on the airport shall be exempt from the provisions of this procedure for the duration of their present leasehold terms; provided, however, that no changes, alterations, or extentions shall be made to any existing improvements except in accordance with this procedure. 2. Continuity of Procedure. a. This procedure shall apply to all development of airports operated by the Department. b. This procedure may be revised as required by the Department to retain flexibility to permit the adoption of new techniques, materials, criteria, etc. 3. Variances. a. The provisions of this procedure and any request for variances from them are to be 10 APPENDIX A

 
interpreted, administered and enforced by the Director. b. Any tenant or prospective tenant may request a variance. c. Requests for variances shall be made in writing to the Director. d. The Director shall either approve or disapprove requests for variance within thirty days from filing. (1) If approved, the variance shall be issued immediately. (2) If disapproved, the Director shall provide a written statement setting forth the reasons for disapproval. 11 APPENDIX A

 
APPENDIX B - TIG APPENDIX B – TENANT IMPROVEMENT GUIDELINES May be reviewed and downloaded from the address below: http://hidot.hawaii.gov/airports/doing-business/other/tenant-improvement-guidelines

 
APPENDIX C

 
APPENDIX C

 
Airports Division Procedures Created 07/10/2003 Airports Division Department of Transportation State of Hawaii Procedure No. 4.9 MINIMUM STANDARDS FOR COMMERCIAL AERONAUTICAL ACTIVITIES AT PUBLIC AIRPORTS Approved by Owen Miyamoto Effective Date: 05/03/1990 4.9.01 PURPOSE The purpose of this procedure is to establish minimum standards for conducting commercial aeronautical activities at public airports. 4.9.02 POLICY It is the policy of the Airports Division to: A. Require all commercial aeronautical activities to be conducted in accordance with the terms and conditions of a lease that includes the minimum standards established by this procedure. B. Operate airports and their facilities for the benefit of the public. C. Make airports available for commercial aeronautical activities on a fair and reasonable basis without unjust discrimination as long as the activities are conducted in a safe, legal and responsible manner consistent with applicable federal, state and county laws, rules and regulations. 4.9.03 APPLICABILITY This procedure shall apply to commercial aviation operators, Districts and Property Management Staff. Air carriers are exempt from this procedure. 4.9.04 PROCEDURES A. Definitions Unless the context clearly indicates otherwise, as used in this procedure: 1. "Air carrier" means a scheduled air carrier which is a lessee of the department under an airport-airline lease. 2. "Aeronautical activity" means any activity which involves, makes possible or is required for the operations of aircraft, or which contributes to or is required for the safety of such operations. a. The following are examples of aeronautical activities: (1) Pilot training (2) Aircraft rental and sightseeing (3) Aerial photography (4) Crop dusting (5) Aerial surveying (6) Aircraft sales and services (7) Sale of aviation petroleum products (8) Repair and maintenance of aircraft (9) Sale of aircraft parts. b. The following examples are not considered to be aeronautical activities: 1 APPENDIX D

 
(1) Ground transportation (taxis, car rentals) (2) Restaurants (3) Barber shops (4) Auto parking lots. 3. "Airport" means an area of land or water which is used or intended to be used for aircraft landing and takeoff, including facilities on it. (As used in this procedure, the term "airport" refers to public airports owned or operated by the State of Hawaii). 4. "Commercial aeronautical activity" means an aeronautical activity conducted for the purpose of securing earnings, income, compensation or profit. 5. Commercial aviation operator" means a person engaging in a commercial aeronautical activity at an airport. 6. "Department" means the State Department of Transportation. 7. "Lease" means a written agreement which conveys real property from the department to a commercial aviation operator, for a specified term and for a specified rent. (As used in this procedure, the term "lease" also includes other written agreements such as permits). 8. "Minimum standards" means the qualifications established by the department as the minimum requirements to be met as a condition for the right to conduct commercial aeronautical activities at airports. 9. "Person" means any individual, firm, partnership, corporation, trust, association, company, joint venture, or any other legal entity. I0. "State" means the State of Hawaii. B. Commercial Aviation Operator 1. The services provided by commercial aviation operators (hereinafter referred to as "operator") at airports include, but are not limited to, the following: a. Aircraft line services: (1) Fueling, lubricating and miscellaneous service (2) Ramp parking and tie down (3) Crew and passenger lounge facilities (4) Public restrooms, telephone and automobile parking (5) Loading, unloading and towing (6) Hangar storage (7) Cargo handling, receiving and storage facilities; and (8) Flight kitchens. b. Flight instruction and training. c. General aircraft airframe and engine repair, maintenance and overhaul (may also include sale of aircraft parts). d. New and used aircraft sales or rental. e. Specialized aircraft flying services. f. Specialized commercial flying services. 2. The department reserves the right to restrict any operator activitiy which is not in the best interest of the airport. 3. If written permission is obtained from the department, a prospective operator may become a tenant of an operator under a sublease arrangement approved by the department. 2 APPENDIX D

 
C. Prequalification Requirements The prospective operator shall submit, in written form, to the department, at the time of his application, the following information and, thereafter, such additional information as may be requested by the department. 1. Intended Scope of Activities As a prerequisite to the granting of a lease for operating at the airport, the prospective operator shall submit a detailed description of the scope of the intended operation, and the means and methods to be employed to accomplish the contemplated operating standards and requirements, in order to provide high-quality service to the aviation and general public at the airport, including, but not limited to, the following: a. The name, address and telephone number of the applicant. b. The requested or proposed date for commencement of the activity and the term of conducting, the same. c. The services to be offered. d. The amount, size and location of land to be leased. e. The size and position of the building space to be constructed or leased. f. The number of aircraft to be provided (as applicable). g. The number of persons to be employed (including the names and qualifications of each person). h. The hours of proposed operation. i. The type of insurance coverages to be maintained. 2. Financial Responsibility and Capability The prospective operator must provide a statement, satisfactory to the department, in evidence of his financial responsibility, from an area bank or trust company or from such other source that may be acceptable to the department and readily verified through normal banking channels. The prospective operator must also demonstrate financial capability to initiate operations and for the construction of improvements and appurtenances that may be required commensurate with the concept of the proposed operation, and shall also indicate his ability to provide working capital to start and maintain the contemplated operations. 3. Experience The prospective operator shall furnish the department with a verifiable statement of his past experience in the specified aviation services to be supplied by him on the airport, together with an operating plan detailing how he will provide the specified services. 4. Bond The prospective operator shall post a performance bond in the amount equal to the annual rental established and agreed upon, for conducting the services to be provided. Cash may be posted in lieu of performance bond. D. Lease Requirements Prior to the commencement of operations, the prospective operator shall be required to enter into a lease with the department. The lease will recite the terms and conditions under which he will operate his business on the airport, including, but not limited to, the following: the term of the lease; fees and charges; the rights, privileges and obligations of the respective parties; and other relevant covenants. It should be understood, 3 APPENDIX D

 
therefore, that neither the conditions therein contained nor those set forth in these minimum standards and requirements represent a complete recitation of the provisions to be included in the lease. Such contract provisions, however, will neither change nor modify the minimum standards and requirements, not be inconsistent therewith. 1. Rates and Charges Minimum rental rates shall be established by the department and approved by the state Board of Land and Natural Resources. 2. Site Development Standards All improvements to airport property by the lessee shall be accomplished in accordance with Airports Division Procedure No. 7.6 "Development Standards for Leased Airport Property" (hereinafter referred to as "Procedure No. 7.6"). 3. Personnel a. The operator shall have in his employ, and on duty during operating hours, trained personnel in such numbers as are required to meet the minimum standards and requirements set forth, in an efficient manner, for each commercial aeronautical activity being performed. The operator shall also provide a responsible person in the office to supervise the operations in authority to represent and act for and on behalf of, the operator during all business hours. b. All personnel hereinafter required to hold Federal Aviation Administration (FAA) certificates and rating shall maintain such certificates and ratings. 4. Maintenance a. The department shall have responsibility for : (1) Maintenance of pavement constructed by the department outside the leased area. (2) Utility line maintenance outside the operator's leased area. b. The operator shall be responsible for: (1) Maintenance of pavement constructed by the operator. (2) Maintenance of the operator's building and utility costs. (3) Removal of the operator's trash (4) Grass mowing and landscape maintenance within the operator's leased area. 5. Insurance a. The operator shall have all the types of insurance (with the specified minimum liability limits) set forth below that apply to the commercial aeronautical activity or activities conducted by the operator. (1) Aircraft liability (a) Bodily injury (i) $100,000 each person (ii) $300,000 each accident (b) Passenger liability (each passenger, each accident): $300,000 4 APPENDIX D

 
(c) Property damage (each accident): $100,000 (2) Comprehensive general liability (a) Bodily injury (i) $100,000 each person (ii) $500,000 each accident (b) Property damage (each accident): $250,000 (3) Hangar keeper's liability (each accident): $500,000. (4) Student and renter's liability (each accident).: $300,000. (5) Comprehensive automobile liability (each accident) Bodily injury and property damage (a) $5,000,000 at Honolulu International Airport. (b) $1,000,000 at other airports. (6) Worker's compensation as required by applicable law and employer's liability of $10,000. b. All insurance which the operator is required to carry and keep in force shall include the state as additional-named insured. The operator shall furnish evidence of his compliance with this requirement to the department with proper certification that such insurance is in force and will furnish additional certification as evidence of changes in insurance not less than thirty days prior to any such change. The applicable insurance coverages shall be in force during the period of any construction of the operator's facilities and/or prior to his entry upon the airport for the conduct of his business. c. The operator shall also furnish evidence of his compliance with Hawaii Revised Statutes with respect to Worker's Compensation and Unemployment Insurance as applicable. d. The operator shall also at his expense procure .and maintain such fire, extended coverage, vandalism and malicious mischief insurance upon the leasehold improvements, trade fixtures, equipment, furniture and furnishings of the operator in or on the premises as would be procured and maintained by a reasonable and prudent owner thereof. e. The operator shall furnish to the department upon the commencement of the lease and prior to occupancy of the premises, a certificate showing said insurance policies being issued to the operator and to be then in force, and shall furnish a like certificate upon each renewal thereof. f. Any of the indemnity or casualty insurance coverages provided for herein may include provision for a deductible amount of $1,000 per loss or such higher deductible amount as may be agreed upon, in writing, by the department and the operator. g. Any operator who is self-insured shall furnish evidence of such self-insurance from the state Department of Commerce and Consumer Affairs, Insurance Division and shall hold the department and assigns harmless in the event of any claims or litigation arising out of its operation on the airport. 6. Motor Vehicles on the Airport The operator will control to a reasonable extent the transportation of pilots and passengers of transient aircraft (using operator's facilities and services and in the conduct of the operator's 5 APPENDIX D

 
business) to and from the operator's office to the operator's aircraft apron tie-down areas. The operator performing this service with motor vehicles driven on the Airport Operations Area shall do so only in strict accordance with applicable Hawaii Administrative Rules, Airports Division procedures, and federal, state and county laws, ordinances, codes, or other similar regulatory measures now in existence or as may be hereinafter modified or amended. The operator shall procure and maintain, for any motor vehicle operated on his leased airport property, all required insurance. 7. General Lease Clauses No operator may conduct any commercial activity on the airport without a fully executed lease. All lease agreements shall contain the following assurances: a. Non-discrimination The lessee, for itself, its personal representatives, successors in interest, and assigns, as a part of the consideration hereof, does hereby covenant and agree (in the case of deeds and leases add "as a covenant running with the land") to operate the premises leased for the benefit of the public, and: (1) No person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of said facilities. (2) That in the construction of any improvements on, over, or under such land and the furnishing of services thereon, no person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits of, or otherwise be subjected to discrimination. (3) That the lessee shall use the premises in compliance with all other requirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, "Nondiscrimination in Federally assisted programs of the Department of Transportation--Effectuation of Title VI of the Civil Rights Act of 1964", as said Regulations may be amended. (4) That said service will be furnished on a fair, equal, and not unjustly discriminatory basis to all users thereof. (5) That fair, reasonable, and not unjustly discriminatory prices for each unit or service will be charged; provided, that the contractor may be allowed to make reasonable and nondiscriminatory discounts, rebates, or other similar types of price reductions to volume purchasers. b. Quality of Service The lessee shall provide airport patrons safe, responsible and adequate service in a prompt and courteous manner. c. Aircraft service by owner or operator or aircraft. It is clearly understood and agreed by the lessee that no right or privilege has been granted which wou!d operate to prevent any person, firm or corporation operating aircraft on the airport from performing any services on its own aircraft with its own regular employees (including, but not limited to, maintenance and repair) that it may choose to perform. d. Non-exclusive rights. It is understood and agreed that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right. 6 APPENDIX D

 
e. Subordination. The lease shall be subordinate to the provisions of any existing or future agreement between the lessor and the United States, relative to the operation or maintenance of the airport, the execution of which has been or may be required as a condition precedent to the expenditure of federal funds for the development of the airport. This subordination includes, but is not limited to, the right of the lessor, during times of war or national emergency, to lease the landing area, or any part thereof, to the United States Government for military or naval use, and if any such lease is executed, the provisions of this instrument, insofar as they are inconsistent with the provisions of the lease to the Government, shall be suspended. f. Airport obstructions. (1) The lessor reserves the right to take any action it considers necessary to protect the aerial approaches of the airport against obstructions, together with the right to prevent the lessee from erecting or permitting to be erected, any building or other structure on or adjacent to the airport which, in the opinion of the lessor, would limit the usefulness of the airport or constitute a hazard to aircraft. (2) The lessee shall, upon approval by the lessor and prior to any construction of any nature within the boundaries of the airport, prepare and submit to the appropriate office of the Federal Aviation Administration, one executed set (four copies) of FAA Form 7460-1, "Notice of Proposed Construction or Alteration", as required by Federal Aviation Regulation Part 77. This notice must be submitted at least thirty days prior to the date of the proposed construction or the date that an application for a construction permit is filed, whichever is earlier. A copy will be supplied to the Airports Administrator, State of Hawaii, Department of Transportation, Airports Division, Honolulu International Airport, Honolulu, Hawaii 96819. g. Lessor's rights (1) The lessor reserves the right, but shall not be obligated to the lessee, to maintain and keep in repair the landing area of the airport and all publicly-owned facilities of the airport, together with the right to direct and control all activities of the lessee in this regard. (2) In the event of breach of any of the above nondiscrimination convenants, the lessor shall have the right to terminate the lease and to re-enter and repossess said land and the facilities thereon, and hold the same as if said lease had never been made or issued. (3) The lessor reserves the right to further develop or improve the landing area of the airport as it sees fit, and without unreasonable interference or hindrance. If the physical development of the airport requires the relocation of lessee-owned facilities, the lessor agrees to provide a comparable location without any unreasonable interruption to the lessee's activities, and agrees to relocate all lessee-owned buildings or provide similar facilities for the lessee at no cost to the operator. h. Compliance with laws, etc. The lessee shall at all times comply with the applicable Hawaii Administrative Rules, Airports Division Procedures, and federal state, and county laws, ordinances, codes, and other regulatory measures now in existence or, as may be hereafter modified or amended, applicable to the specific type of operation contemplated by him. The lessee shall procure and maintain during the term of the agreement all licenses, permits, and other similar authorizations required for the conduct of his business operations. i. Idemnity 7 APPENDIX D

 
The lessee shall hold the State, the Airports District Manager and all other airport personnel, and the officers, agents and employees of the lessor harmless from any and all suits, claims, demands, actions, and/or causes of action of any kind or nature in any way arising out of, or resulting from his tenancy and activities, and shall pay all expenses in defending any claims against the State and the lessor. j. Right of entry The lessor may enter upon the premises leased to the lessee at any reasonable time, and for any purpose necessary, incidental to, or connected with, the performance of the lessee's obligations under the agreement or in the exercise of its legitimate functions. k. No-sham affidavit All terms and conditions with respect to the lease are expressly contained herein, and the lessee agrees that no representative or agent of the lessor has made any representation or promise with respect to this lease not expressly contained herein. l. Termination Upon the expiration or other termination of any agreement, the lessee's rights to the premises, facilities, other rights, licensed services and privileges granted in the agreement shall cease, and the lessor shall, upon such expiration or termination, immediately and peacefully surrender such. m. Assignment All covenants, stipulations and provisions in the agreement to be entered into shall extend to and bind the legal representatives, successors and assigns. 8. Subleases No lessee shall be afforded the right to sublease or assign an agreement or any portion thereof, between himself and the lessor except upon the express written permission of the lesssor. Regarding this permission, the overriding concern of the lessor shall be that the commercial aeronautical activities performed by the lessee, seeking the permission to assign his agreement, will not conceivably be interrupted, abrogated, compromised or diminished in order that good quality services be maintained in the public interest. 9. Airport Security The lessee shall be responsible for maintaining security of the Airport Operations Area by controlling access through the leased premises where such access would allow entry to the AOA. The lessee shall comply with all applicable provisions of the Federal Aviation Regulations and Hawaii Administrative Rules concerning airport security. 10. Disposal of Waste The lessee shall provide for the adequate and sanitary handling and disposal, away from the airport of his trash, waste and other materials, including but not limited to used oil, solvents and other waste. The stacking or storage of crates, boxes, barrels, pallets and other materials, equipment or vehicles, shall not be permitted within the leased premises. Aircraft washing shall be permitted only at locations designated by the department. E. Commercial Aviation Operator Guidelines The following guidelines are for determining the minimum level of services that shall be provided by operators holding a lease with the department. 1. Aircraft line services a. Fueling and lubricating oil sales and service: 8 APPENDIX D

 
(1) The operator shall demonstrate, to the satisfaction of the department, that satisfactory arrangements or agreements have been made, with a reputable aviation fuel and lubricant distributor who will provide the operator with an enforceable agreement to purchase fuel and oil in such quantities as are necessary to meet the requirements set forth herein. (a) The operator shall: (i) Provide a minimum-sized facility which as suitable space and a convenient location and which meets the applicable standards and requirements specified in Procedure No. 7.6. (ii) Provide fueling and lubricating sale, and into-plane delivery of aviation fuels, lubricants, and other related petroleum products seven days a week. (iii) Maintain an adequate inventory of generally accepted grades of aviation fuel, engine oil and lubricants. (iv) Provide a mobile fuel dispensing equipment with reliable metering devices which are subject to inspection by the State Department of Agriculture, Measurement Standards Division. (v) Be capable of servicing in an efficient and safe manner all types of general aviation aircraft. (b) The operator shall have metered filter-equipped dispensers, fixed or mobile, for dispensing aviation fuel from storage tanks having a minimum capacity of 2,000 gallons each. Mobile dispensing trucks shall have a total of 300 gallons capacity for each grade or type of fuel. Separate dispensing pumps for each grade or type of fuel are required. (c) In conducting refueling operations, the operator shall install and use adequate electrical grounding facilities at fueling locations to eliminate the hazards of static electricity and shall provide approved types of fire extinguishers or other equipment commensurate with the hazard involved with fueling, defueling, and servicing aircraft. All operator fueling services and systems shall be subject to inspection for fire and other hazards by the Airports District Manager and the appropriate state and local fire agencies. The operator shall meet all applicable fire codes and federal, state, and local laws, statutes, ordinances, rules and regulations pertaining to fire safety. All stationary fuel storage tanks shall be installed underground. (d) Only non-contaminated fuel shall be pumped into the aircraft serviced. Fuel delivered shall be free of microscopic organisms, water or other contaminants. Quality control of the fuel is the responsibility of the operator. The operator shall maintain current fuel reports on file and available for auditing at any time by the department or the Federal Aviation Administration. Fueling service by the operator shall be in full compliance with good safety practices, including proper fire protection and electrical grounding of aircraft during fueling operations. (2) The operator shall provide for servicing of aircraft, such as cleaning of the interior and exterior of aircraft, repairing and inflating aircraft tires, servicing oleo struts, changing engine oil, washing aircraft and aircraft windows and recharging or energizing discharged aircraft batteries and starters. b. Ramp parking and tie-down: operator ramp assistance, including the parking, tie-down and storage of only functioning aircraft within the operator's leased area. 9 APPENDIX D

 
(1) Adequate tie-down facilities and equipment, including ropes, or other types of restraining devices and wheel chocks for a minimum of 10 typical aircraft will be provided. (2) The operator shall provide properly trained line personnel on duty during daylight hours of every calendar day. (3) Equipment for starting and towing aircraft and fire extinguishers shall be provided by the operator. c. Crew and passenger lounge facilities: conveniently located, lounge, or waiting rooms, for passengers and crews shall be provided. d. Public restrooms and a telephone: restrooms will be conveniently located, and ventilated and accessible to the passengers and crews, and will be maintained in a clean and sanitary manner. At least one working telephone will be provided for public use. e. Loading, unloading and towing: the operator shall provide adequate loading, unloading and towing equipment to safely and efficiently move aircraft and store them in times of all reasonably expected weather conditions. f. Hangar storage: the operator shall provide, or lease from the department, suitable hard-surfaced hangar storage facilities. 2. Flight instruction and training A flight training operator is a person engaged in instructing student pilots in dual and solo flight training, in fixed and/or rotary wing aircraft, and provides such related ground school instruction as is necessary preparatory to taking a written examination and flight check ride; services and facilities which shall be provided include: a. A minimum-sized facility which has sufficient classroom space to adequately conduct flight instruction and training, and which meets the applicable standards and requirements specified in Procedure No. 7.6. b. At least one FAA certified flight instructor to instruct student pilots in dual and solo flight in fixed and/or rotary wing aircraft. c. Such related ground school instruction as is necessary, preparatory to a student taking a written examination and flight check ride for a private pilot's license or appropriate rating from the FAA. d. The ability for such training to meet the continuing requirements for certification by the FAA to conduct such training in a manner that meets all Federal Aviation Regulations, and amendments thereto, for basic ground schools and for primary flying school. e. The flight training operator shall have on a full-time basis, currently FAA certified pilots and instructors in sufficient numbers (never less than one) to meet the demands of the number of students expected to be engaged in such flight training. An operator must be able to satisfactorily demonstrate that he has had experience in flight training. f. The operator shall own or have on lease, in writing, at least one certified aircraft equipped for flight instruction. g. Adequate facilities for storing, parking, servicing and repairing the aircraft in flight training. 3. General aircraft airframe and engine repair, maintenance and overhaul An aircraft airframe and engine maintenance and repair operator is a person engaged in a business capable of providing one or a combination of FAA approved airframe, power plant and accessory overhaul and repair services on general aviation aircraft; the operation must be an FAA certified repair station meeting the requirements of Federal Aviation Regulations Part 145. This 10 APPENDIX D

 
category of commercial aeronautical activities may also include the sale of aircraft parts and accessories. Activities which shall be provided include: a. A facility that meets the applicable standards and requirements specified in Procedure No. 7.6. b. Sufficient hangar space to house any aircraft upon which airframe or engine repairs are being performed. c. Suitable inside and outside storage space for aircraft before and after repair and maintenance have been accomplished. d. Adequate shop space to house the equipment and adequate equipment and machine tools, jacks, lifts and testing equipment to perform overhauls as required for FAA certification and repair of parts not needing replacement on general aviation aircraft. e. At least one FAA certified airframe and power plant mechanic available during eight hours of the day, five days per week; all mechanics shall be certified in accordance with Federal Aviation Regulations Part 65. 4. New and used aircraft sales or rental An aircraft sales operator is a person engaged in the sale of new and/or used aircraft through franchises, or licenses dealership or distributorship (either on a retail or wholesale basis) of an aircraft manufacturer or otherwise; and provides such repair, services, and parts as necessary to meet any guarantee or warranty on new and/or used aircraft sold or rented by him. Services and facilities which shall be provided include: a. Suitable sales and office facilities for conducting sale and rental activities; these and other required facilities must meet the applicable standards and requirements specified in Procedure No. 7.6. b. Hangar storage space for at least one aircraft to be used for sales or rentals. c. For rental, at least on airworthy aircraft properly maintained and certificated. d. For sales activity of a new aircraft, a sales or distributorship franchise from a recognized aircraft manufacturer of new aircraft and at least one demonstrator model of such aircraft. e. Adequate facilities for servicing and repairing the aircraft. f. An FAA certified pilot capable of demonstrating new aircraft for sale or for checking out other pilots in rental aircraft. He shall be available for eight hours during the working day. g. The minimum stock of readily expendable spare parts, or adequate arrangements for securing spare parts required for the type of aircraft and models sold. h. Current up-to-date specifications and price lists for types and models of new aircraft sold. i.. Proper checklists and operating manuals on all aircraft rented and aircraft sold. 5. Specialized aircraft repair service A specialized aircraft repair services operator is a person engaged in a business capable of providing a shop, or a combination of FAA certificated shops for the repair of aircraft radios, propellers, instuments, and accessories for general aviation aircraft. This category shall include the sale of new and/or used aircraft radios, propellers, instruments and accessories, and the painting of aircraft but such are not exclusive rights. 6. Specialized commercial flying services 11 APPENDIX D

 
a. A specialized commercial flying services operator is a person engaged in air transportation for hire for the purpose of providing the use of aircraft for the activities listed below: (1) Nonstop sightseeing flights that begin and end at the same airport within a 25-mile radius of the airport. (2) Crop-dusting, seeding, spraying, bird chasing, fish spotting, etc. (3) Aerial photography or survey. (4) Fire fighting. (5) Power line or pipeline patrol. (6) Any other operations specifically excluded from Part 135 of the Federal Aviation Regulations. b. In the case of crop-dusting or aerial application, the operator shall demonstrate that he will make suitable arrangements to have such space available in his leased area for safe loading and unloading and storage and contaminant of noxious chemical materials. The operator shall provide a paged area having a single drainage outlet for all aircraft loading or unloading. This area must be built and operated in full compliance with the Environmental Protection Agency regulations governing such activities. The operator shall also provide for the safe storage and contaminant of all chemical materials. Such facilities will be in a location on the airport which will provide the greatest safeguard to the public. Aircraft washing and spray tank flushing must be accomplished on a 50' x 50' washdown pad which drains into a 25' x 30' PVC lined evaporation pond located no closer than 450' from the nearest well with no overflow into drainage ditches. The pond will be fenced with a man-proof fence. Tank service water hydrants will be equipped with a check valve to prevent possible "back-siphonage." F. Responsibilities 1. The Districts shall be responsible for: a. Receiving, reviewing and processing applications for leases. b. Negotiating leases with assistance from AIR-PM. c. Ensuring operators are in compliance with terms and conditions of their leases. 2. The Property Management (AIR-PM) staff shall be responsible for preparing and processing lease documents in accordance with the provisions of this procedure and other applicable Airports Division procedures. 12 APPENDIX D

 
ANNEX I-1 DEPARTMENT OF TRANSPORTATION ASSIGNMENT OF LEASE AND PREMIUM EVALUATION POLICY ANNEX I Reference Chapter 171-36(a)(5), Hawaii Revised Statutes (HRS) g133No lease shall be transferable or assignable, except by devise, bequest, or intestate succession; provided that with the approval of the board of land and natural resources, the assignment and transfer of a lease or unit thereof may be made in accordance with industry standards, as determined by the board; provided further that prior to the approval of any assignment of lease, the board shall have the right to review and approve the consideration to be paid by the assignee and may condition its consent to the assignment of the lease on payment by the lessee of a premium based on the amount by which the consideration for the assignment, whether by cash, credit, or otherwise, exceeds the depreciated cost of improvements and trade fixtures being transferred to the assignee; provided further that with respect to state agricultural leases, in the event of foreclosure or sale, the premium, if any, shall be assessed only after the encumbrances of record and any other advances made by the holder of a security interest are paid;g133 Prior Approval Any assignment of lease of Department of Transportation (DOT) property must have the prior written approval of DOT. Prior to giving its consent to an assignment, DOT must receive (i) the name, legal composition and address of any proposed assignee, (ii) a complete copy of the proposed assignment and purchase agreement, including the total consideration to be paid by the assignee for the assignment whether by cash, credit or otherwise, and (iii) the best available financial statements of the proposed assignee or any other such statements acceptable to the appropriate division, which statements shall be no older than one year prior to the date of the purchase agreement and audited or certified as correct by a financial officer of the proposed assignee. A consent to assignment by DOT shall not release the lessee (assignor) of any obligation to performed by the lessee or liability for acts or occurrences related to or resulting from the lessee’s use or occupancy of the DOT property whether occurring before or after such consent unless the particular division is convinced that the assignee’s financial responsibility is equal to or greater than the assignor. No assignment of lease of DOT property shall be entered into until the Attorney General’s Office (LEG) has first reviewed the proposed assignment and purchase agreement and the Director of Transportation (DIR) and the Board of Land and Natural Resources (Land Board) have given their approval. Such an assignment shall be entertained only if it meets one of the criteria set forth in Section 171-36(a)(5), HRS, except that the prerequisite stated in Section 171-36(a)(5)(A), HRS, shall be inapplicable to any DOT property. Qualifications of Assignee If qualification was required of a lessee as a pre-condition of the lease, the prospective assignee must also be qualified to assume the lease. If a qualification questionnaire was required to be submitted by a lessee or concessionaire as a precondition of the lease or concession contract, the assignor shall submit a qualification questionnaire filled out by the prospective assignee in order that the appropriate division can evaluate whether the assignee has the required experience and background to assume the lease or concession contract. APPENDIX E

 
ANNEX I-2 Consideration to be Paid Prior to review by LEG and approval by DIR and the Land Board, the lessee (assignor) must present the appropriate division with a written copy of the proposed purchase which includes the total consideration to be paid by the assignee whether by cash, credit or otherwise and any other cost data that the particular division may require. Adjustment of Rental In those leases wherein the DOT has the right to revise the rent of the demised premises upon an assignment, the lessee (assignor) shall also be required to present its cost data so that the appropriate division may review and analyze that information to determine whether the rent for the premises should be increased. The analysis shall accompany the request for review by LEG and the Land Board submittal. Payment to DOT All leases shall have an assignment clause that provides that the DOT shall receive from the lessee (assignor) a premium based on the amount by which the net consideration paid for the assignment, whether by cash, credit or otherwise exceeds the adjusted depreciated cost of improvements, renovations and trade fixtures being transferred to the assignee. The Engineering News-Record Construction Cost Index (CCI) (available at www.enr.com) and the Consumer Price Index for All Urban Consumers (CPI-U) (available at ttp://stats.bls.gov/cpihome.htm) will be applied to determine the adjusted depreciated costs. The value of the lessee’s/assignor’s inventory of merchandise should be deducted from the gross consideration paid to determine the net consideration. Intangibles such as goodwill, business name recognition, etc., are not deductible. (See Schedule A.) To encourage long-term occupancy and discourage speculation, the premium for an assignment of a lease issued or awarded under Chapter 102 or 171, HRS, shall be the percentage of the excess payment (the selling price less the unamortized purchase price less the adjusted depreciated cost of all improvements, renovations and trade fixtures constructed or installed by the assignor) determined under Schedule A hereto, unless otherwise specifically provided in the lease, in accordance with the following schedule: Years Percentage 1 – 5 50% 6 – 10 45% 11 – 15 40% 16 – 20 35% 21 – 25 30% 26 – 30 25% 31 – 35 20% 36 – 40 15% 41 – 45 10% 46 – 50 5% 51 – 55 0% The premium on subsequent assignments shall also be the percentage of the excess payment in accordance with the above schedule. For the purposes of the foregoing formula, the unamortized purchase price on subsequent assignments is the purchase price paid by the assignor when the lease was assigned to assignor less amortization on a straight line basis over the term of the lease remaining at the time of the assignment to assignor. APPENDIX E

 
ANNEX I-3 In addition to other remedies available to DOT under the lease, including, without limitation, the payment to DOT of the amount of the performance bond posted by lessee, DOT may, if the lessee has not performed lease covenants to improve or use the property for its specific uses, impose a surcharge of at least ten percent (10%) of the greater of the minimum guaranteed annual rental or the percentage rental for the year in which the lessee fails to so perform, provided the minimum guaranteed annual rental shall be no less than the minimum guaranteed annual rental for the second year of the lease term. The lessee may also be required to pay an amount equal to the minimum guaranteed annual rental for the second year of the lease term. Depreciation of improvements, renovations and trade fixtures will be determined on a straight line basis. The whole term of improvements or renovations shall be defined as the period beginning with the date the construction of the improvements or renovations are completed until the termination date of the lease. Depreciation of trade fixtures will be determined in the same manner and shall be based upon the anticipated life of the trade fixture. (See Schedules B and C) All lessees shall be required to furnish the appropriate divisions with the actual costs of construction of all improvements and renovations within thirty (30) days after their completion as well as the purchase price and other costs of all fixtures acquired for the lessee’s operations on, related to or connected with the premises, within thirty (30) days after such costs are incurred. Lessees shall be required to furnish evidence satisfactory to the divisions of the actual costs including, without limitation, furnishing copies of construction contracts, receipts and/or purchase agreements. Lessees shall also be required to furnish the appropriate division with an inventory of all equipment and personal property placed on the premises. The appropriate division shall maintain records of all costs incurred by the lessee for construction of improvements and renovations as well as installation of trade fixtures, equipment and personal property submitted by the lessee and shall include with said records, a copy of the Engineering News- Record Construction Cost Index (CCI) and Consumer Price Index for All Urban Consumers (CPI-U), as published by the U.S. Department of Labor’s Bureau of Labor Statistics, for the year and month that construction and/or installation are completed. In cases where the lessee has constructed or directed the construction of its own improvements, the lessee may be given the option of paying for an appraiser to determine the valuation of the improvements constructed, provided that the .appraiser shall be selected by DOT. If the lessee is a partnership, limited liability partnership, joint venture, limited liability company or corporation, the sale or transfer of twenty percent (20%) (or a percentage of less than twenty percent (20%) if such percentage represents a controlling interest in the lessee) or more of ownership interest or stocks by dissolution, merger or any other means must be reported to DOT and shall be deemed an assignment subject to the payment of a premium in accordance with the above schedule. However, transfers will not include (i) transfers of ownership among the lessee’s shareholders when such transfers involve less than fifty percent (50%) of the ownership interest or (ii) transfers of ownership to persons who are not shareholders of the lessee at the time of the transfer, but who become both shareholders and employees of the lessee, and the transfer is of less than fifty percent (50%) of the ownership interest. Qualifying Leases All leases entered into after July 1, 2004 are subject to the payment of a premium percentage in accordance with the above schedule. The above policy does not apply to leases entered into between May 24, 1989 and June 30, 2004 unless consideration is paid by the lessee to amend the lease to incorporate the above policy. The terms of any existing lease that has been let through public auction cannot be amended. For all leases entered into or assigned prior to May 24, 1989, the assessment of an assignment premium shall only apply to those leases wherein it has been determined by the Office of the Attorney General that the assessment of the assignment premium is applicable. APPENDIX E

 
ANNEX I-4 SCHEDULE A. Assignment of Lease Calculations 1. Subtract the amount, if any, attributable to inventory from the gross consideration for the assignment to obtain the net consideration. 2. Calculate the Adjusted Depreciated Cost of Improvements and Renovations (see Schedule B). 3. Calculate the Adjusted Depreciated Cost of Trade Fixtures (see Schedule C). 4. Determine the amount, if any, by which the net consideration for the assignment, whether by cash, credit, or otherwise, exceeds the adjusted depreciated cost of improvements, renovations and trade fixtures being transferred to the assignee by subtracting the amounts derived in Steps 2 and 3 above from the net consideration. 5. Then multiply the excess amount, if any, determined in Step 4 above, by the appropriate premium percentage. 6. The result is the premium due DOT. Example A lease is being assigned 57 months after completion of the improvements at a gross consideration of $650,000, $50,000 of which is attributable to inventory. The initial cost of the improvements was $500,000 while the current year/month CCI and base year/month CCI are 121.1 and 102.3, respectively. The whole term for the improvements is 408 months. For the trade fixtures, the initial cost was $1,510 with the current year/month CPI-U and base year/month CPI-U being 118.1 and 104.6, respectively. The total life expectancy is 96 months. 1. Gross Consideration: $650,000 Inventory: $ 50,000 Net Consideration: $600,000 2. Adj Cost Imp/Ren: $591,887 Depreciation: - 82,690 Adj Dep Cost Imp/Ren: (509,197) 3. Adj Cost Trade Fixtures: 1,705 Depreciation: - 1,012 Adj Dep Cost Trade Fixtures: ( 693) 4. Excess: $ 90,100 5. Appropriate Premium Percentage: x (e.g.) 50% 6. Premium Due DOT: $ 45,055 APPENDIX E

 
ANNEX I-5 SCHEDULE B. Adjusted Depreciated Cost of Improvements and Renovations 1. Adjusted Cost of Improvements and Renovations Multiply the actual cost of the improvements and renovations, if any, by the most recent year/month Engineering News-Record Construction Cost Index (CCI) and divide the result by the CCI of the year/month construction was completed (base year/month) to get the adjusted cost of improvements and renovations. 2. Depreciation Determine the depreciation percentage on a straight-line basis by dividing the expired term of the improvements and renovations by the whole term of the improvements and renovations, the whole term being the period beginning on the date the improvements and renovations are completed until the expiration date of the lease. Multiply the adjusted cost of the improvements and renovations by the depreciation percentage to determine the depreciation. 3. Adjusted Depreciated Cost of Improvements and Renovations Subtract the depreciation from the adjusted cost of improvements and renovations. The balance is the adjusted depreciated cost of improvements and renovations. Example $500,000 121.1 102.3 57 mos. Actual cost: CCI (most recent): CCI (base): Expired term: Whole term: 408 mos. 1. Adjusted Cost of Improvements and Renovations: Actual Cost x CCI (most recent) / CCI (base) $500,000 x 121.1/102.3 = $591,887 2. Depreciation: $591,887/408 mos. x 57 mos. = $82,690 3. Adjusted Depreciated Cost of Improvements and Renovations: $591,887 - $82,690 = $509,197 APPENDIX E

 
ANNEX I-6 SCHEDULE C. Adjusted Depreciated Cost of Trade Fixtures 1. Adjusted Cost of Trade Fixture Multiply the actual cost of the trade fixture by the most recent year/month Consumer Price Index for All Urban Consumers (CPI-U)* and divide the result by the CPI-U of the year/month in which the purchase was made (base year/month). 2. Depreciation Determine the depreciation percentage on a straight-line basis by dividing the expired term of the trade fixture by its anticipated life. Multiply the adjusted cost of the trade fixture by the depreciation percentage to determine the depreciation. 3. Adjusted Depreciation Cost of Trade Fixtures Subtract the depreciation from the adjusted cost of the trade fixture. The balance is the adjusted depreciated cost of the trade fixture. *As published by the U.S. Department of Labor, Bureau of Labor Statistics Refrigerator Example Actual cost: $1510 CPI (most recent): 118.1 CPI (base): 104.6 expired term: 57 mos. Whole term: 96 mos. (Anticipated life) 1. Adjusted Cost of Trade Fixture: Actual Cost x CPI-U (most recent) / CPI-U (base) $1510 x 118.1/104.6 = $1705 2. Depreciation: $1705 x 57 mos/96mos. = $1012 3. Adjusted Depreciated Cost of Trade Fixture: $1705 - $1012 = $693 Should the State decide to consent to the sublease but limit the amount of rental charged to the sublessee, the maximum allowable sublease income may be determined by applying the following mathematical equation: M - T - R(M - T) - E = 0 whereby, APPENDIX E

 
ANNEX I-7 M = maximum allowable sublease income T = general excise tax R = rate for management and vacancy loss (10%) E = total allowances excluding management and general excise tax* *when applicable Solving for M: M = E + T - RT 1-R Effect of Termination or Involuntary Assignment In the event that a lease or sublease becomes available to a new lessee or sublessee as a result of the involuntary termination of the lease or sublease by foreclosure of the lien of any mortgagee’s interest in the leased or subleased premises (whether by court order or otherwise), the purchaser/assignee thereof and the interest so acquired shall not be subject to the requirements of this DOT Sublease Evaluation Policy. Subsequent subleases shall be subject to the requirements of this DOT Sublease Evaluation Policy APPENDIX E

 
ANNEX II-1 Department of Transportation SUBLEASE EVALUATION POLICY ANNEX II Reference Chapter 171-36(a)(6), Hawaii Revised Statutes “The lessee shall not sublet the whole or any part of the demised premises except with the approval of the board; provided that prior to the approval, the board shall have the right to review and approve the rent to be charged to the sublessee; provided further that in the case where the lessee is required to pay rent based on a percentage of its gross receipts, the receipts of the sublease shall be included as part of the lessee’s gross receipts; provided further that the board shall have the right to review and, if necessary, revise the rent of the demised premises based upon the rental rate charged to the sublessee including the percentage rent, if applicable, and provided that the rent downward,…” (Amended 1992) Purpose The purpose of the sublease evaluation policy is to discourage and dampen speculation. The basic rationale or philosophy behind the sublease evaluation policy is that the State, as mandated by statutes, should not allow anyone to make excessive “sandwich profits” from the use of State-owned land and will monitor it by participating in the distribution of such profits. The State does recognize the sublessor’s right to earn a fair return for its investment. When the State determines that “sandwich profits” are being realized, the State may take such action as it deems necessary, including, without limitation: (1) limiting the amount of rent charged to the sublessee; or (2) receiving thirty percent (30%) of the “sandwich profit” from the sublessor while permitting the sublessor to retain the remaining seventy percent (70%). The State may reevaluate the “sandwich profit” on an annual basis Procedure At the time the lessee requests approval of a sublease, the lessee shall submit any and all information the DOT deems necessary to properly analyze the proposed sublease, including, without limitation, the proposed sublease document, floor plans of the leased premises and the premises to be subleased, plans for any and all proposed improvements, estimated operating and other costs, total investment of the lessee, the proposed payments to DOT for permitting the sublease and any other financial information. As part of its analysis of the proposed sublease, the State will consider: a. data found in the real estate market; including, without limitation, data relating to what other investors are experiencing for similar/comparable investments, and b. those allowances and operating expenses that are properly attributable to the sub-leased premises. APPENDIX F

 
ANNEX II-2 To qualify as properly attributable to the subleased premises and therefore eligible for deduction from the effective sublease income (gross annual sublease income minus the general excise taxes paid and/or payable), such allowances (including, without limitation, reserves for replacement of limited life items) and operating expenses must be reasonable, legitimate, adequately justified by the lessee and approved by the State. The operating expenses are to be prorated on an annual basis. Operating expenses are the periodic expenditures necessary to maintain the real property and continue the production of the effective gross income and include, but are not limited to the following: 1. Fixed Expenses - Fixed Expenses are operating expenses that generally do not vary with occupancy and have to be paid whether the property is occupied or vacant (i.e., real estate taxes, building insurance costs, etc.). 2. Variable Expenses - Variable Expenses arc operating expenses that generally vary with the level of occupancy or the extent of services provided (i.e., utilities, painting, repair, maintenance, etc.). 3. Reserve for Replacement Allowances - Reserve for Replacement Allowances provides for the periodic replacement of building components that wear out more rapidly than the building itself and must be replaced periodically during the buildings economic life (i.e., roofing, carpeting, sidewalks, driveways, parking areas, etc.). 4. Lease Rental -The lease rental amount shall be the proportionate share of the total lease rent attributable to the subleased premises, based on the proportion the subleased area bears to the entire leased premises. The Fixed Expenses, Variable Expenses and the Reserve for Replacement Allowances shall be prorated based on the proportion the leasable area of the subleased premises bears to the total leasable area of the building. (For a detailed explanation on allowable operating expenses, please refer to Chapter 19, “Income Estimates,” The Appraisal of Real Estate, Ninth Edition or such later edition, as applicable, prepared by the Textbook Revision Committee of the American Institute of Real Estate Appraisers.) A reasonable return on the sublessor’s investment which includes recapture of the sublessor’s investment and some amount of profit is allowed. The allowance is the result of multiplying the sublessor’s total investment in the subleased area by the Investment Return Rate. The “Investment Return Rate” used in this DOT Sublease Evaluation Policy will be the sum of the following rates: a. Treasury bonds rate. The interest rate for thirty (30) year Treasury bonds in effect at the time the proposed sublease is being evaluated, as listed in the Wall Street Journal, or if not available, such similar publication as mutually agreed upon by the lessor and the lessee; b. Capital recapture rate. The annual percentage rate which would enable the lessee to recover the lessee’s investment in the improvements constructed on the leased premises over the term of the lease (hereinafter the “capital recapture rate”). For example, if the lease term is twenty-five (25) years, the capital recapture rate shall be four percent (4%) per year; and c. Premium rate. A premium rate of two percent (2%). APPENDIX F

 
ANNEX II-3 The existing DOT lease rent attributable to the subleased area is also subtracted from the sublease income. Any balance remaining is the sandwich profit. If the State selects the option to approve the sublease rental, then the sandwich profit will be paid to DOT. Should the State decide to consent to the sublease but limit the amount of rental charged to the sublessee, the maximum allowable sublease income may be determined by applying the following mathematical equation: M - T - R(M - T) - E = 0 whereby, M = maximum allowable sublease income T = general excise tax R = rate for management and vacancy loss (10%) E = total allowances excluding management and general excise tax* *when applicable Solving for M: M = E + T - RT 1-R Effect of Termination or Involuntary Assignment In the event that a lease or sublease becomes available to a new lessee or sublessee as a result of the involuntary termination of the lease or sublease by foreclosure of the lien of any mortgagee’s interest in the leased or subleased premises (whether by court order or otherwise), the purchaser/assignee thereof and the interest so acquired shall not be subject to the requirements of this DOT Sublease Evaluation Policy. Subsequent subleases shall be subject to the requirements of this DOT Sublease Evaluation Policy APPENDIX F

 
ANNEX II-4 Format COMPUTATION SHEET DOT Lease No. , , Sublessor, sublease to , Sublessee Gross Annual Sublease Income (Including general excise tax and common areas maintenance charges) $ XX,XXX Less general excise tax - X,XXX Effective Income $ XX,XXX Less Allowances: Management and vacancy loss (Eff. Inc. x 10%) $X,XXX Investment return* (Total Inv. x __%) X,XXX Fixed Expenses* (e.g., real property taxes, building insurance costs, etc.) X,XXX Variable Expense* (e.g., utilities, painting, repair, maintenance, etc.) X,XXX Reserve for Replacement Allowances* (e.g., roofing, carpeting, sidewalks, driveways, parking areas, etc.) X,XXX DOT Lease No. _________________ rental (proportionate share of the lease rent for the leased premises attributable to the subleased area based on the proportion the subleased area bears to the entire leased premises) X,XXX Total Allowances: - X,XXX SANDWICH PROFIT $ X,XXX *Prorated based an the proportion the leasable area of the subleased premises bears to the total leasable area of the building. APPENDIX F

 
AUGUST 2016

 
B HAWAIIAN AIRLINES, INC. DOT-A-16-0010

 
Exhibit C-1-1 121332908 EXHIBIT C-1 Ground Rent LESSEE shall pay to STATE, unless the Lease is sooner terminated as provided herein, without notice or demand, as and for rental for the use of the Premises and for the right, privilege, and authority of doing business at the Airport, for and during the Term of this Lease, free from any and all claims, deductions, and set offs against STATE, unless otherwise noted herein, and at such times and in such manner as hereinafter provided, the amounts provided herein and set forth below (subject to Section V.F. (Waiver of Rent)): A. Annual Ground Rental for the First Five (5)-Year Period: For the first five (5) years of the Term of the Lease, beginning upon the Commencement Date hereof, LESSEE shall pay to STATE an annual ground rental in the sum of TWO MILLION ONE HUNDRED SIXTY-FOUR THOUSAND EIGHT HUNDRED SIX AND 60/100 DOLLARS ($2,164,806.60), based upon a ground rental rate of THREE AND 30/100 DOLLARS ($3.30) per square foot, per annum, for the Premises, and payable, in advance, in monthly installments of ONE HUNDRED EIGHTY THOUSAND FOUR HUNDRED AND 55/100 DOLLARS ($180,400.55). B. Annual Ground Rental for the Second Five (5)-Year Period: For the second five (5) year period, beginning upon the first day of the sixth (6th) year of the Term of the Lease, LESSEE shall pay to STATE an annual ground rental in the sum of TWO MILLION FOUR HUNDRED EIGHTY-NINE THOUSAND FIVE HUNDRED TWENTY-SEVEN AND 59/100 DOLLARS ($2,489,527.59), based upon the product of 115% and the annual rental for the fifth (5th) year of the Lease term ($[2,164,806.60]) and payable, in advance, in monthly installments of TWO HUNDRED SEVEN THOUSAND FOUR HUNDRED SIXTY AND 63/100 DOLLARS ($207,460.63). C. Annual Ground Rental for the Third Five (5)-Year Period: For the third five (5) year period, beginning upon the first day of the eleventh (11th) year of the Term of the Lease, LESSEE shall pay to STATE an annual ground rental in the sum of TWO MILLION EIGHT HUNDRED SIXTY-TWO THOUSAND NINE HUNDRED FIFTY-SIX AND 73/100 DOLLARS ($2,862,956.73), based upon the product of 115% and the annual rental for the fifth (5th) year of the Lease term ($2,489,527.59) and payable, in advance, in monthly installments of TWO HUNDRED THIRTY-EIGHT THOUSAND FIVE HUNDRED SEVENTY-NINE AND 73/100 DOLLARS ($238,579.73). D. Reopening of Annual Rental for the Fourth Five (5)-Year Period. For the fourth five (5) year period, beginning upon the first day of the sixteenth (16th) year of the Term of the Lease, the annual ground rental shall be determined separately when due in accordance with Article VI. (REOPENING OF RENT) herein. E. Reopening of Annual Rental for the Fifth Five (5)-Year Period. For the fifth five (5) year period, beginning upon the first day of the twenty-first (21st) year of the Term of the Lease, the annual ground rental shall be determined separately when due in accordance with Article VI. (REOPENING OF RENT) herein.

 
Exhibit C-1-2 121332908 F. Reopening of Annual Rental for the Sixth Five (5)-Year Period. For the sixth five (5) year period, beginning upon the first day of the twenty-sixth (26th) year of the Lease term, the annual ground rental shall be determined separately when due in accordance with Article VI. (REOPENING OF RENT) herein. G. Reopening of Annual Rental for the Seventh Five (5)-Year Period. For the seventh five (5) year period, beginning upon the first day of the thirty-first (31st) year of the Term of the Lease, the annual ground rental shall be determined separately when due in accordance with Article VI. (REOPENING OF RENT) herein.

 
Exhibit C-2-1 121332908 EXHIBIT C-2 Building Rent – RIK and NEW Building Rent to be paid by LESSEE from and after the Commencement Date (subject to Section V.F. (Waiver of Rent)) has been calculated based on a total value of $46,319,896 for the building (including the Pre-Existing Leasehold Improvements and the New Facility Completion Improvements) and shall be comprised of the sum of the rental amounts in respect of (i) Building (RIK) Rental (on a subsidized basis for the initial seventeen and a half (17.5) years of the Term of this Lease) and (ii) Building (NEW) Rental (on a full cost recovery basis from the Commencement Date), as more fully set forth below: Building (RIK) Rental: LEASE YEAR (commencing as of the Commencement Date) ANNUAL BUILDING (RIK) RENTAL (PER SQ. FT. OF PREMISES) ANNUAL BUILDING (RIK) RENTAL Year One $0.00 $0 Year Two $0.86 $137,506 Year Three $1.72 $275,011 Year Four $2.58 $412,517 Year Five $3.44 $550,023 Year Six $4.30 $687,529 Year Seven $5.16 $825,034 Year Eight $6.02 $962,540 Year Nine $6.89 $1,100,046 Year Ten $7.75 $1,237,551 Year Eleven $8.61 $1,375,057 Year Twelve $9.47 $1,512,563 Year Thirteen $10.33 $1,650,069 Year Fourteen $11.19 $1,787,574 Year Fifteen $12.05 $1,925,080 Year Sixteen $12.91 $2,062,586

 
Exhibit C-2-2 121332908 Year Seventeen $13.77 $2,200,091 Year Eighteen $13.77 for months one to six; $14.63 for months seven to 12 $2,268,844, payable in the following monthly installments:  $183,340.92 for each month during the First Half of Year Seventeen; and  $194,799.75 for each month during the Second Half of Year Seventeen Year Nineteen $14.63 $2,337,597 Year Twenty $14.63 $2,337,597 Year Twenty-One $14.63 $2,337,597 Year Twenty-Two $14.63 $2,337,597 Year Twenty-Three $14.63 $2,337,597 Year Twenty-Tour $14.63 $2,337,597 Year Twenty-Five $14.63 $2,337,597 Year Twenty-Six $14.63 $2,337,597 Year Twenty-Seven $14.63 $2,337,597 Year Twenty-Eight $14.63 $2,337,597 Year Twenty-Nine $14.63 $2,337,597 Year Thirty $14.63 $2,337,597 Year Thirty-One $0 $0 Year Thirty-Two $0 $0 Year Thirty-Three $0 $0 Year Thirty-Four $0 $0 Year Thirty-Five $0 $0

 
Exhibit C-2-3 121332908 Building (NEW) Rental: LEASE YEAR (commencing as of the Commencement Date) ANNUAL BUILDING (NEW) RENTAL (PER SQ. FT. OF PREMISES) ANNUAL BUILDING (NEW) RENTAL Year One through Five, inclusive $14.63 $1,525,897 Year Six through Ten, inclusive $14.63 $1,525,897 Year Eleven through Fifteen, inclusive $14.63 $1,525,897 Year Sixteen through Twenty, inclusive $14.63 $1,525,897 Year Twenty-One through Twenty-Five, inclusive $14.63 $1,525,897 Year Twenty-Six through Thirty, inclusive $14.63 $1,525,897 Year Thirty-One through Thirty-Five, inclusive $0 $0

 
Exhibit C-3 121332908 EXHIBIT C-3 Apron Rent Apron Rent to be paid by LESSEE from and after the Commencement Date, as more fully set forth below: LEASE YEAR (commencing as of the Commencement Date) ANNUAL APRON RENTAL (PER SQ. FT. OF PREMISES) ANNUAL APRON RENTAL Year One through Five, inclusive $3.71 $701,671 Year Six through Ten, inclusive $3.71 $701,671 Year Eleven through Fifteen, inclusive $3.71 $701,671 Year Sixteen through Twenty, inclusive $3.71 $701,671 Year Twenty-One through Twenty-Five, inclusive $3.71 $701,671 Year Twenty-Six through Thirty, inclusive $3.71 $701,671 Year Thirty-One through Thirty-Five, inclusive $0 $0

 
Exhibit D-1-1 EXHIBIT D-1 State of Hawaii Airports System Hawaiian Airlines Replacement Facilities Rental Rate Methodology Building Rent Cost Recovery Formula The new building rent for turnkey replacement facilities will be based upon a cost recovery formula as described below. 1. Replacement Cost will be determined by the actual costs incurred to construct the replacement facility. Costs for site preparation, planning, design and program management shall be considered terminal modernization program costs allocated to the terminal cost center. 2. Net Replacement Cost for tenant-owned buildings will be determined by subtracting the appraised value of the existing facility from Replacement Cost. Net Replacement Cost for State-owned buildings will be equal to Replacement Cost. 3. Net Replacement Cost will be amortized over 30 years at the coupon rate for bond proceeds used to fund the improvements that are equivalent to the Annual Debt Service. 4. Annual Operating Expenses will be equal to the State cost of maintaining State-owned facilities and will be equal to zero for tenant-maintained facilities. 5. The Annual Cost Recovery Rental Rate per square foot per year shall be computed by dividing the sum of Annual Debt Service and annual Operating Expenses, if applicable, by rentable square footage of the replacement facility. 6. The Annual Cost Recovery Rental Rate per square foot per year shall be phased in over a Transition Period. The Transition Period shall be equal to the lease term (in years) for the replacement facility divided by 2. Those tenants with leases that expire after the date of beneficial occupancy of the replacement facility shall execute a letter of intent or new lease for the replacement facility prior to the beginning of construction of the replacement facility or there shall be no Transition Period upon expiration of the current lease. 7. The Adjustment Factor during the Transition Period will be equal to 2 divided by the lease term in years multiplied by the number of years from the effective date of the lease. 8. The Existing Lease Rental Rate shall be the cost per square foot being charged to the tenant immediately prior to the date of beneficial occupancy of the replacement facility. 9. The Annual Cost Recovery Rental Rate per square foot per year during the Transition Period will be computed by first multiplying the difference in the Annual Cost Recovery Rental Rate and the Existing Lease Rental Rate by the Adjustment Factor and then adding the Existing Lease Rental Rate.

 
Exhibit D-1-2 Building Rent Computation and Adjustments  Building Rent Computation – The building rent computation will be based upon the DOT-A’s total costs to construct the building, exclusive of site preparation costs, soft costs, and escalation and delay costs. DOT-A’s total building costs will be designated as 1) replacement-in-kind, or 2) new, based upon the percentage of the square footage of the old facilities versus the new facilities; 60.5 percent is considered replacement-in- kind, and 39.5 percent new. o Replacement-in-kind – Building rent will be determined based upon the cost methodology above and applying the coupon rate for bond proceeds that were used to fund the improvements and amortized over a 30-year period. In addition, based upon a 35-year lease, the following adjustment factors will be utilized to determine the building rent for the initial 17.5 years of the lease, with the subsidy decreasing in a straight-line pattern over that period. Year 1 0.00% Year 11 58.82% Year 2 5.88% Year 12 64.71% Year 3 11.76% Year 13 70.59% Year 4 17.65% Year 14 76.47% Year 5 23.53% Year 15 82.35% Year 6 29.41% Year 16 88.24% Year 7 35.29% Year 17 94.12% Year 8 41.18% Year 18 (1/2 year) 97.06% Year 9 47.06% Remainder of lease term 100.00% Year 10 52.94% o New – Building rent for the new portion of the facility will be full cost recovery from the first day of the lease. Building rent will be determined based upon the cost methodology above and applying the coupon rate for bond proceeds that were used to fund the improvements and amortized over a 30-year period.  Adjustments to the Building Rent Computation (Prior to Lease Execution) – Due to the unique circumstances of this project, the following adjustments to the Building Rent Computation shall occur. o Defective/Unacceptable Workmanship – Costs to correct defective/unacceptable workmanship not in accordance with the approved

 
Exhibit D-1-3 construction documents (which includes all approved change orders at the time DCK’s contract was terminated) under the DCK contract will be credited to reduce the amount of the construction costs utilized to calculate the Building Rent. o New Contractor Premium – If HA’s contracted price to complete the project in accordance with the approved construction documents (which includes all approved change orders at the time DCK’s contract was terminated) exceeds the amount remaining to be expended in the DOT-A’s budget ($8,003,730), the difference will be credited to reduce the amount of the construction costs utilized to calculate the Building Rent. HA must submit credit requests with supporting documentation to the DOT-A and the final amount credited will be solely determined by the DOT-A after consultation with HA and the Airlines Committee of Hawaii (ACH).  Adjustments to the Building Rent Computation (Post Lease Execution) – Due to the fact that the costs to mitigate the items below are unknown at this time, adjustments to the Building Rent, if necessary, must be addressed after the commencement of the lease. The DOT-A and HA agree that the following items could result in further adjustments to the Building Rent. o Defective/Unacceptable Workmanship (Identified Post-Construction Commencement) – Although the majority of defective/unacceptable workmanship issues have been identified, it is likely that additional issues related to defective/unacceptable workmanship will be identified once HA’s contractor commences work and until construction is completed. o Additional Design Costs – Design costs incurred by HA for design work not completed as well as design work necessary to correct deficiencies. o Warranties – The DCK contract included the installation of various systems, fixtures and equipment. It is likely that all of these items included warranties for a certain period of time. However, due to the termination of the DCK contract, it is unclear at this time if any of the warranties will be honored. If warranties are not honored for the original warranty term commencing with HA’s date of beneficial occupancy, HA will receive rent credits for costs that are reasonably incurred by HA to repair/replace components that would otherwise have been covered by a manufacturer’s warranty. HA must submit a credit request with supporting documentation to the DOT-A; final amount credited will be solely determined by the DOT-A after consulting with HA and the ACH. First Year Building Rent Computation  First Year Building Rent – Building Rent for the first year of this Lease will be computed as follows. Total Building Costs Incurred by DOT-A $56,473,310 Deduct: Defective/Unacceptable Workmanship (to be validated) ($7,000,000)

 
Exhibit D-1-4 New Contractor Premium (to be validated) ($3,153,414) Net Building Costs $46,319,896 Net Building Costs are allocated as follows: Replacement-in-kind (60.5 percent) $28,025,737 New (39.5 percent) $18,294,159 Annual Debt Service on the Net Building Costs is computed as follows: Replacement-in-kind $2,337,597 New $1,525,897 Annual Debt Service/Building Rent for Year 1 is computed as follows: Replacement-in-kind $2,337,597 Adjustment Factor (Year 1) 0.00% Replacement-in-kind rent $0 New $1,525,897 Adjustment Factor (Year 1) 100.00% New rent $1,525,897 Total Building Rent for Year 1: Replacement-in-kind $0 New $1,525,897 Total $1,525,897 Additional Building Rent Adjustments Prior to Lease Execution: o DOT-A’s Contracted Price (RIK Benefit) – Assuming DCK completed the project in accordance with the DOT-A’s contract, the methodology to recover the building costs for “replacement-in-kind” and “new” facilities would be applied to determine HA’s building rental rates. Based upon the DOT-A’s contracted price with DCK for the approved construction documents (which include all approved change orders at the time DCK’s contract was terminated), less the amount DOT-A disbursed to DCK through September 30, 2015, $8,003,730 would have been expended by the DOT-A to complete the Building. Accordingly, based upon the square footage of the existing facilities in comparison to the new facility, 60.5 percent is replacement-in-kind and 39.5 percent new; thus $4,842,637 is considered replacement-in-kind and $3,161,093 new. The annual debt service on $4,842,637 is $403,919. Since HA will contract to complete the project and enter into a 35-year lease, HA will be credited for the amount of the replacement-in-kind subsidy for the initial 17.5 years of the lease. The amounts will be based upon the coupon rate for bond proceeds that were used to fund the improvements, amortized over a 30- year period, and applying the respective adjustment factors below to determine the annual credits over the initial 17.5 years of the lease.

 
Exhibit D-1-5 Year 1 100.00% Year 10 47.06% Year 2 94.12% Year 11 41.18% Year 3 88.24% Year 12 35.29% Year 4 82.35% Year 13 29.41% Year 5 76.47% Year 14 23.53% Year 6 70.59% Year 15 17.65% Year 7 64.71% Year 16 11.76% Year 8 58.82% Year 17 5.88% Year 9 52.94% Year 18 (1/2 year) 2.94% Rent credits due to HA are as follows: Year 1 $403,919 Year 10 $190,080 Year 2 $380,159 Year 11 $166,320 Year 3 $356,399 Year 12 $142,560 Year 4 $332,639 Year 13 $118,800 Year 5 $308,879 Year 14 $95,040 Year 6 $285,119 Year 15 $71,280 Year 7 $261,359 Year 16 $47,520 Year 8 $237,600 Year 17 $23,760 Year 9 $213,840 Year 18 (1/2 year) $11,880 Additional Building Rent Adjustments Post Lease Execution: o Defective/Unacceptable Workmanship (Identified Post-Construction Commencement) – Although the majority of defective/unacceptable workmanship issues have been identified, it is likely that additional issues related to defective/unacceptable workmanship will be identified once HA’s contractor commences work and until construction is completed. o Additional Design Costs – Design costs incurred by HA for design work not completed as well as design work necessary to correct deficiencies.

 
Exhibit D-1-6 o Warranties – The DCK contract included the installation of various systems, fixtures and equipment. It is likely that all of these items included warranties for a certain period of time. However, due to the termination of the DCK contract, it is unclear at this time if any of the warranties will be honored. If warranties are not honored for the original warranty term commencing with HA’s date of beneficial occupancy, HA will receive rent credits for costs that are reasonably incurred by HA to repair/replace components that would otherwise have been covered by a manufacturer’s warranty. HA must submit a credit request with supporting documentation to the DOT-A; final amount credited will be solely determined by the DOT-A after consulting with HA and the ACH.

 
Annual Cost Square Feet Existing Lease New Lease Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Ground (RIK) 371,649 453,412 1,226,442 1,226,442 1,226,442 1,226,442 1,226,442 1,410,408 1,410,408 1,410,408 1,410,408 1,410,408 1,621,969 1,621,969 1,621,969 1,621,969 1,621,969 1,865,265 1,865,265 Ground (New) 284,353 938,365 938,365 938,365 938,365 938,365 1,079,120 1,079,120 1,079,120 1,079,120 1,079,120 1,240,988 1,240,988 1,240,988 1,240,988 1,240,988 1,427,136 1,427,136 Apron (New) 701,671 701,671 701,671 701,671 701,671 701,671 701,671 701,671 701,671 701,671 701,671 701,671 701,671 701,671 701,671 701,671 701,671 Building (RIK) 159,764 0 137,506 275,011 412,517 550,023 687,529 825,034 962,540 1,100,046 1,237,551 1,375,057 1,512,563 1,650,069 1,787,574 1,925,080 2,062,586 2,200,091 Building (New) 104,288 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 Subtotal 453,412 4,392,374 4,529,879 4,667,385 4,804,891 4,942,397 5,404,623 5,542,129 5,679,635 5,817,140 5,954,646 6,465,581 6,603,087 6,740,592 6,878,098 7,015,604 7,582,553 7,720,059 Less: RIK benefit if DOT-A completed facility 0 (403,919) (380,159) (356,399) (332,639) (308,879) (285,119) (261,359) (237,600) (213,840) (190,080) (166,320) (142,560) (118,800) (95,040) (71,280) (47,520) (23,760) Less: Year 1 rent abatement 0 (3,988,454) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total 453,412 0 4,149,720 4,310,986 4,472,251 4,633,517 5,119,504 5,280,769 5,442,035 5,603,301 5,764,566 6,299,261 6,460,527 6,621,793 6,783,058 6,944,324 7,535,033 7,696,299 Rates Annual Cost Recovery Rate on RIK (Adjusted) $0.00 $0.86 $1.72 $2.58 $3.44 $4.30 $5.16 $6.02 $6.89 $7.75 $8.61 $9.47 $10.33 $11.19 $12.05 $12.91 $13.77 Current Ground Rental Rate (psfpa) $1.22 Appraisal Ground Rental Rate (psfpa) (1) $3.30 $3.30 $3.30 $3.30 $3.30 $3.80 $3.80 $3.80 $3.80 $3.80 $4.36 $4.36 $4.36 $4.36 $4.36 $5.02 $5.02 Annual Cost New Lease (Cont'd) Year 18 Year 19 Year 20 Year 21 Year 22 Year 23 Year 24 Year 25 Year 26 Year 27 Year 28 Year 29 Year 30 Year 31 Year 32 Year 33 Year 34 Year 35 Ground (RIK) 1,865,265 1,865,265 1,865,265 2,145,054 2,145,054 2,145,054 2,145,054 2,145,054 2,466,812 2,466,812 2,466,812 2,466,812 2,466,812 2,836,834 2,836,834 2,836,834 2,836,834 2,836,834 Ground Phase I (New) 1,427,136 1,427,136 1,427,136 1,641,206 1,641,206 1,641,206 1,641,206 1,641,206 1,887,387 1,887,387 1,887,387 1,887,387 1,887,387 2,170,495 2,170,495 2,170,495 2,170,495 2,170,495 Apron Phase I (New) 701,671 701,671 701,671 701,671 701,671 701,671 701,671 701,671 701,671 701,671 701,671 701,671 701,671 0 0 0 0 0 Building (RIK) 2,268,844 2,337,597 2,337,597 2,337,597 2,337,597 2,337,597 2,337,597 2,337,597 2,337,597 2,337,597 2,337,597 2,337,597 2,337,597 0 0 0 0 0 Building (New) 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 1,525,897 0 0 0 0 0 Subtotal 7,788,812 7,857,564 7,857,564 8,351,424 8,351,424 8,351,424 8,351,424 8,351,424 8,919,364 8,919,364 8,919,364 8,919,364 8,919,364 5,007,329 5,007,329 5,007,329 5,007,329 5,007,329 Less: RIK benefit if DOT-A completed facility (11,880) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total 7,776,932 7,857,564 7,857,564 8,351,424 8,351,424 8,351,424 8,351,424 8,351,424 8,919,364 8,919,364 8,919,364 8,919,364 8,919,364 5,007,329 5,007,329 5,007,329 5,007,329 5,007,329 Rates Annual Cost Recovery Rate on RIK (Adjusted) $14.20 $14.63 $14.63 $14.63 $14.63 $14.63 $14.63 $14.63 $14.63 $14.63 $14.63 $14.63 $14.63 $14.63 $14.63 $14.63 $14.63 $14.63 Current Ground Rental Rate (psfpa) Appraisal Ground Rental Rate (psfpa) (1) $5.02 $5.02 $5.02 $5.77 $5.77 $5.77 $5.77 $5.77 $6.64 $6.64 $6.64 $6.64 $6.64 $7.63 $7.63 $7.63 $7.63 $7.63 (1) $3.30 years one to five, with a 15% increase to $3.80 for years six to 10, and an additional 15% increase to $4.36 for years 11 to 15. Ground rent for years 16 to 20, 21 to 25, 26 to 30 and 31 to 35 will be based upon rent reopeners established by appraisal. For this analysis, 15% increases in years 16, 21, 26 and 31 are assumed with the projected rental rates shown in italics. Bond Sizing RIK New Apron HA Funded Amount if Bond Funded Sources of Funds Par amount $33,899,131 $22,128,092 $10,175,416 $5,857,515 Less interest income: Construction 280,257 182,942 84,124 48,426 Capitalized interest 35,594 23,234 10,684 6,150 Debt service reserve 46,752 30,518 14,033 8,078 Total sources of funds $34,261,734 $22,364,786 $10,284,257 $5,920,170 Uses of Funds Project costs $28,025,737 $18,294,159 $8,412,414 $4,842,637 Capitalized interest account 3,559,409 2,323,450 1,068,419 615,039 Debt service reserve 2,337,597 1,525,897 701,671 403,919 Issuance costs 338,991 221,281 101,754 58,575 Total uses of funds $34,261,734 $22,364,786 $10,284,257 $5,920,170 Assumptions Coupon Rate: 5.25% 5.25% 5.25% 5.25% Investment Rate: 1.00% 1.00% 1.00% 1.00% Financing costs 1.00% 1.00% 1.00% 1.00% Bond Term in Years: 30 30 30 30 Capitalized Interest Period in Years: 2 2 2 2 Assumptions Hawaiian Airlines RIK Credit for Self-Funded Construction Amount Planned to be Bond Funded By DOT-A RIK Component HA-funded construction cost initially esimated to be bond-funded $8,003,730 Amount from DOT-A Construction Cost (Total Project) $46,319,896 Replacement Cost / SF $175 Construction Cost (RIK) $28,025,737 Original total program pro rata share RIK Value $28,025,737 Appraisal Value $0 Construction Cost (Total Project) $46,319,896 Original total program pro rata share Cost Recovery Value $28,025,737 Annual Cost Recovery Rate $2,337,597 RIK Share of Total 60.50% Replacement in kind percent of total budget Annual Cost Recovery Rate/SF $14.63 Lease Term 35 HA amount attributable to RIK $4,842,637 RIK percentage multiplied by HA amount Transition Period 17.5 Annual Debt Service on HA RIK Amount $403,919 See bond sizing above Ground Rent Component Existing Ground Rental Rate $1.22 HA Credit Appraisal Ground Rental Rate $3.75 Year 1 $403,919 Volume Discount Factor 88% Year 2 $380,159 Escalation @ 15% Every 5 years 15% Year 3 $356,399 Year 4 $332,639 New Component Year 5 $308,879 New Value $18,294,159 Year 6 $285,119 Tenant Cost $18,294,159 Year 7 $261,359 Annual New Cost $1,525,897 Year 8 $237,600 Year 9 $213,840 Year 10 $190,080 Year 11 $166,320 Year 12 $142,560 Year 13 $118,800 Year 14 $95,040 Year 15 $71,280 Year 16 $47,520 Year 17 $23,760 Year 18 $11,880 Year 19 $0 Year 20 $0 EXHIBIT D-2 Lease Cost Analysis - HA Maintenance Complex and Air Cargo Facility for Fiscal Years Ending June 30

 
 
Se ct o r R o o m N o . Se ri es SECTOR A - FIRST FLOOR CIRCULATION C104 Circulation Install bottom edge of walls and install base X Circulation Complete finish hardware for Door 106B and AOA entry requirements X X Circulation Complete work at junction box above Door C106B X Circulation Confirm the data outlet adjacent to Door C106B, along Line 28.2 X X X A Data outlet in a corridor? Circulation Complete installations for security cameras overhead X BREAK ROOM C105 Break Room Touch up bottom of gyp board walls and install rubber base throughout X Break Room Install countertop with backsplash along South wall. Install sink and fittings X Break Room Install sink, flanges at cabinet X Break Room Repair tear on insulation over chilled water pipng X X Break Room Repair/replace pucker valance at rooler shades - typical X X X Break Room Install permanent expansion joint at gap between CMU and storefront X X X X Break Room Complete caulking at bottom of storefront. X X Break Room Patch around outlet plate at CMU - typical X Break Room Complete installations of comm cable into overhead trays X Break Room Confirm adequate protection between dissimilar metals X X X Piping, conduit, etc. Break Room Paint cover plate at junction box to match the others X Mustard wall Break Room Paint cover plate at junction box to match the others X Rusty color wall Service Center Lobby Complete installation of walk-off entry mat Door C106A X Service Center Lobby Complete finish hardware at storefront doors and frames C103A X X X X Conflicting hardware Service Center Lobby Confirm top of curb finish detail - incomplete work X X X X Service Center Lobby Door bumper needs to be installed on wall. Wall to be fixed. Blocking in wall to accept bumber? X X X X Service Center Lobby Install the service counter millwork and complete flooring installation X X Service Center Lobby Complete flooring and base work at the Southeast corner at CMU wall X X Service Center Lobby Inspect for damaged tile after paper is removed X X Service Center Lobby Repair holes and tears and ductwork insulation X X Service Center Lobby Confirm CATV/power outlet height at TV bracket is correct on the South wall X X X Provisions for the FIDS? In the right location? Service Center Lobby Confirm CATV/power outlet height at TV bracket is correct on the North wall X X X Provisions for the FIDS? In the right location? Service Center Lobby Seal penetration in acoustical decking X X X The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. A-C104-01 A-C104-02 A-C104-03 A-C104-04 A-C104-05 A-C106-08 A-C106-09 A-C106-10 A-C106-11 A-C106-03 A-C106-04 A-C106-05 A-C106-06 A-C106-07 A-C105-01 A-C105-10 A-C105-11 A-C105-12 SERVICE CENTER LOBBY C106 A-C106-01 A-C106-02 N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk A-C105-02 A-C105-03 A-C105-04 A-C105-05 A-C105-06 A-C105-07 A-C105-08 A-C105-09 HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 1 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Service Center Lobby Complete conduit installations into top of west storefront frame X X Service Center Lobby Complete security camera install on the exterior of Door C106A X Service Center Lobby Exterior decking at roof should be painted per specs X X X X Restroom Install cover for junction box access on West wall tile X X Restroom Are the ceiling penetrations for the damper controls? X X Restroom Patch, grout around the tile and flange on North wall X X X Restroom Patch/repair chip in grout line above outlet - under the sink X X Restroom Installation of mirror at wainscot with 3/4" gap at top not acceptable X X X X X Restroom Confirm placement of outlet for controls. A GFI outlet? Conflict with toilet? X X X Restroom Clean and touch up scuffs in the room - typical X X Restroom Install rubber bumpers on doors, adjust as needed for good door operation X X Restroom Complete metal siding installation at exterior South wall or Restroom X X X ? Conflicts with Storefront? Junction box? Restroom - outside walkway Need touch-up at grounding weld at canopy column X Trucker Service Center Paint surface mounted conduit along South wall X X Yellow wall Trucker Service Center Seal penetration through wall and patch/paint. X X Yellow wall Trucker Service Center Install millwork and counters and complete electrical work X X Trucker Service Center Install millwork and counters and complete electrical work X X Trucker Service Center Install millwork and countertops X Trucker Service Center Complete installation at large conduit from floor X Trucker Service Center Rubber bumpers at hollow metal frames X Trucker Service Center Complete finish hardware at doors X Trucker Service Center Fill/seal gap at acoustical ceiling deck, top of East wall X X X Trucker Service Center Clean and address the Ospho damage on the aluminum framing at the windows X X Trucker Service Center Confirm top of curb finish detail - incomplete work X X X X Trucker Service Center Inspect for damaged tile after paper is removed X X Trucker Service Center Repair grout in Southeast corner of CMU wall X X Trucker Service Center Repair cracking grout line at CMU wall - appears wider at the top X X Trucker Service Center Exterior canopy column needs paint touch up at grounding weld X X X Trucker Service Center Exterior canopy to be painted per the specs X X Will not take any credits A-C106-12 A-C130-06 A-C130-07 A-C130-08 A-C130-09 RESTROOM C107 TRUCKER SERVICE CENTER C130 A-C107-01 A-C107-02 A-C107-03 A-C107-04 A-C107-05 A-C107-06 A-C107-07 A-C107-08 A-C130-01 A-C130-02 A-C130-03 A-C130-04 A-C130-05 A-C130-16 A-C130-14 A-C130-15 A-C106-13 A-C106-14 A-C107-09 A-C107-10 A-C130-10 A-C130-11 A-C130-12 A-C130-13 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 2 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Exterior Walkway Exterior canopy column needs touch up at base of the grounding weld X X X Exterior Walkway Cracks at column and on walkway need to be addressed and worked on X X X Circulation Confirm end of base tile in corridor at GL 18 and no further X X X Confirm with HA Circulation Complete installation of 3 junction boxes near top of East wall X Circulation Complete installation of cable in trays over Door S116B. Need electrical provision for motorized door X X X X Circulation Clean/grind floor in Corridor before sealing X Circulation Touch up paint in areas where CMU was patched X X Circulation Consider rework of exposed coduit at gyp board wall - West side, 2 locations X X X X Circulation Remove masking tape from copper line on East wall X Circulation Complete electrical install thru metal deck and seal, and paint X X X Circulation Consider relocating pipe support out of West wall? Patch and repaint X X Confirm with HA Circulation Install motorized roll-up Door S100B X X X X Circulation Paint surface mounted conduits located above Door S100 X X Circulation Overhead electrical conduits to be painted to match existing X X Circulation Electrical conduit near GL 25 needs to be painted X X Circulation Install motorized roll-up door S101B into Supply Loading dock and the head height delineators X X X X Circulation Gyp board over roll-up Door S101B appears to be crooked X X Circulation Finish PA speaker install between GL 25 to 27 X Circulation Install motorized roll-up Door S117B with head height delineators X X X X Design of delineators Circulation Paint junction box on West wall to match X Circulation Cap existing conduit at West wall, or finish up electrical work X X Circulation Install security camera facing at Door 100A and paint conduit X X Circulation Take care of ant infestation at Door C100A X X Circulation Install walk-off mat at Door C100A X Circulation Complete installation at cable tray near Door C100A X Paint new conduit Circulation Complete work at new JB near Door C100A, finish paint X Circulation Patch holes in CMU above Door C100B and repaint X X Circulation Install vertical expansion joint between CMU walls, North of Elevator 2 X X Circulation Paint surface mounted conduit above Elevator 2 and touch up blue wall X X A-S100-13 A-S100-14 A-S100-15 A-S100-22 SUPPLY S100 - Exterior Walkway, with Circulation S100 DOCKS S101 A-S100-01 A-S100-02 A-S100-03 A-S100-04 A-S100-05 A-S100-16 A-S100-17 A-S100-18 A-S100-19 A-S100-20 A-S100-21 A-S100-09 A-S100-10 A-S100-12 CIRCULATION S100 - Main Corridor inside A-S100-23 A-S100-24 A-S100-25 A-S100-26 A-S100-27 A-S100-28 A-S100-29 A-S100-06 A-S100-07 A-S100-08 A-S100-11 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 3 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Supply Loading Docks Install yellow impact barriers at dock X X X Conflicts with outlets and access panel Supply Loading Docks Conduits and piping to be adjusted for motorized door install and head height delineators X X X Got supports to hold up the doors? Supply Loading Docks Finish electrical installations under roof canopy. Paint underside of canopy and framing X X Supply Loading Docks Adjust conduits and piping to maximize head height clearance. Install the head height delineators X X X Supply Loading Docks Is Rite Hite fan the right kind? X X X Hung too low, confirm with HA Supply Loading Docks Complete electrical installations at South wall, patch penetrations, paint the underside of metal decking X X Supply Loading Docks Paint all walls and ceiling X Supply Loading Docks Complete installation of dock levellers, paint bollards X X X Any electrical to dock levellers? Supply Loading Docks Inspect and assess cracks at floor slab. Clean/grind floor and apply sealer X X X Circulation Complete wiring installations and finish hardware at Door S101G X X Circulation Repair damage and touch up paint on hollow metal door S101G X X X Circulation Complete all electrical provisions above Door S101G X Circulation Clean and seal concrete floors throughout Circulation corridor and finish base X X Circulation Finish pentrations through CMU wall for cable trays and conduits X X To meet code. Above Door S101G Circulation Touch up paint throughout corridor walls X Circulation Complete lighting controls and programming X Circulation Install Base protection along bottom of walls throughout X Sealed floors not acceptable; does not looked cleaned and ground Circulation Check cable tray installation and make straight X X X It's crooked Circulation Complete millwork installation and countertops. Electrical in the right locations? Finish base work X X Sealed floors not acceptable; not cleaned. Sealed? Verify outlet locations with HA Circulation Complete counter work and finish install all plumbing work X Circulation Relocate outlets from behind/inside cabinets X X X X Confirm with Hawaiian Airlines Circulation Relocate outlets from behind/inside cabinets X X X X Confirm with Hawaiian Airlines Circulation Finish installations and paint around access panel on East wall X X Circulation Straighten/align EXIT sign on North end of corridor S102 X X Circulation Finish work at cable trays and remove the trash items X X X Backer rods? Leads Office Touch up paint throughout room X Leads Office Finish cabinet work and then the base work against walls and toe kick X X Leads Office Confirm outlet locations before millwork goes in, or outlets through grommets at countertop? X X X X Confirm with HA LEADS OFFICE S103 A-S103-01 A-S103-02 A-S103-03 A-S102-10 A-S102-11 A-S102-12 A-S102-13 A-S102-14 A-S102-15 A-S102-16 A-S101-01 A-S101-02 CIRCULATION S102 - inside Receiving and Shipping offices A-S101-07 A-S102-01 A-S102-02 A-S102-03 A-S102-04 A-S102-05 A-S102-06 A-S102-07 A-S101-08 A-S101-09 A-S101-03 A-S101-04 A-S102-08 A-S102-09 A-S101-05 A-S101-06 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 4 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Leads Office Outlet at window sill, how to handle with base? X X Leads Office Power outlet in conflict with millwork installation along South wall X X X X X Leads Office Complete millwork and countertop work in room X Leads Office Complete cabling to cable tray from conduits X X Messy, not done Leads Office Repair cracking edge around storefront window frame at West wall X X Roller shades installed? Leads Office Penetrations at cable tray and conduits incomplete X X Leads Office Repair conduit penetration at North wall near ductwork X Messy Leads Office At exterior wall/walkway, confirm piping is correct material. Rusting around siding is showing X X Shipping Docks Finish millwork install, finish cut paint and install floor base X Shipping Docks Confirm right locatuion of power and data outlets before installing millwork X X X X Shipping Docks Finish paint south east corner of room where there are two different paint colors X Shipping Docks Touch up paint around power outlets - typical at South wall X X Shipping Docks Patch and fill around receptacle at CMU wall X X X Gap, overcut Shipping Docks Confirm right locatuion of power and data outlets before installing millwork X X X X Shipping Docks Confirm all millwork ready to install, then countertop X Shipping Docks Confirm outlet locations before millwork goes in, or outlets through grommets at countertop? X X X X Shipping Docks Complete wiring in ceiling for security cameras X Shipping Docks Patch and fill overcut at gyp board over Door S104 X X Shipping Docks Rubber bumpers at Door S104 - typical throughout X Shipping Docks Complet wiring at door frames and grout fill, Door S104 X Shipping Docks Repair damage insulation above Door S104 X X X Shipping Docks Loading Dock Cable Tray Height near rear roll-up door X X Addendum #2 (04-26-16) Air/Land Services Finish electrical work on East wall. Work counter and service window not installed X X Air/Land Services Finish painting theoughout room X Air/Land Services Caulk gap between hollow metal frame and wall at Door S105, South side X X X Air/Land Services Complete wiring installations in door frame S105 and grout fill X Air/Land Services Finish countertop and service window X X Air/Land Services Repair cracking edge around storefront window at West wall X X Air/Land Services Finish paint around conduit penetrations at South wall X X Air/Land Services Patch conduit penetration through North wall X X Air/Land Services Complete electrical work at junction box in ceiling space X Air/Land Services Inspect tile floor after protective paper is removed X Air/Land Services Complete/terminate/cap conduits in East CMU wall (high up) X X SHIPPING DOCKS S104 AIR/LAND SERVICES S105 - Vestibule A-S105-08 A-S105-02 A-S105-03 A-S105-04 A-S104-01 A-S104-02 A-S104-03 A-S104-04 A-S104-05 A-S104-06 A-S104-07 A-S104-08 A-S104-09 A-S103-04 A-S103-05 A-S103-06 A-S103-07 A-S103-08 A-S105-07 A-S104-14 A-S103-11 A-S104-13 A-S103-09 A-S104-10 A-S104-11 A-S104-12 A-S105-11 A-S105-05 A-S105-06 A-S103-10 A-S105-01 A-S105-10 A-S105-09 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 5 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Air/Land Services Clean/grind floor and seal and nstall base X Air/Land Services Patch pipe penetrations through exterior siding, on the onside X X X Restroom Complete painting throughout room X Restroom Finish toilet accessories install X Sitting on the floor Restroom Install toilet paper dispenser X Sitting on the floor Restroom Install cover for junction box on West side wall X Restroom Mirror with 3/4" gap on top is questionable X X X Typical at all restrooms Restroom Install rubber bumpers at hollow meta door frames X Typical throughout Restroom Need door closer? X X X Restroom Inspect tile floor after protection paper is removed; seems uneven X X Restroom Complete work under sink and install access plate/panel X X X Looks like a fix Restroom Complete painting and door closer at door X Restroom Gap at top of paper towel dispenser unacceptable X X X Some restrooms have tile borders Restroom Mirror with 3/4" gap on top is questionable X X X Typical at all restrooms Restroom Blades on vent at ceiling may be bent or damaged; needs repair or replacement X X Restroom Finish toilet accessories install X Sitting on the floor Receiving Complete electrical provisions on tile floor Southwest side before installing millwork X X Partially buried Receiving Complete electrical provisions on tile floor Northwest side before installing millwork X X Partially buried Receiving Complete electrical provisions on tile floor Northeast side before installing millwork X X Partially buried Receiving Complete electrical provisions on tile floor Southeast side before installing millwork X X Partially buried Receiving Finish supply service window and millwork and countertops X X X Service window not ordered yet Receiving Confirm power and data outlet on walls before millwork goes in X X X X Receiving Install base after all the millwork goes in X Receiving Complete base work and then shelving X Wall outlets behind shelving???? Receiving Rust appearing on the pipe into the insulated portion; not sealed X X X Receiving Patch and repair tears in duct insulation X X Receiving Seal electrical conduit penetration at South wall X X Receiving Seal penetrations of piping through ceiling metal decking X X Receiving Seal duct penetrations through ceiling metal decking X X Incomplete Receiving Seal conduit penetrations above service window X Receiving Patch gap around electrical receptacle - typical X X X A-S108-13 A-S108-14 A-S108-15 A-S108-06 A-S108-07 A-S108-08 A-S108-09 A-S108-10 A-S108-11 A-S105-12 A-S105-13 A-S108-12 RESTROOM S106 A-S106-01 A-S106-02 A-S106-03 A-S106-04 A-S106-05 A-S106-06 A-S106-07 A-S106-08 A-S107-01 A-S107-02 A-S107-03 A-S107-04 RESTROOM S107 RECEIVING S108 A-S107-05 A-S107-06 A-S108-01 A-S108-02 A-S108-03 A-S108-04 A-S108-05 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 6 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Receiving Patch gaps around fire alarm device on North wall X X Receiving Confirm junction boxes are painted correctly; Northeast corner X Receiving Complete or terminate conduit stubout at CMU wall above Door S112B X X Finish work or cap Receiving Repair duct insulation due to JB being too close; need separation X X Service Center Finish service window and countertops X Window not ordered yet Service Center Complete install of Door S108C, hardware and rubber bumpers X X Service Center Inspect tile floor after removing protective paper; ALL tile floor grout joints have not been sealed X X Service Center Touch up paint at CMU repairs X X Service Center Fire sprinkler head hole oversized and bigger than excutcheon X X X Break/Conference Room Finish up base work at flooring X Break/Conference Room Touch up paint throughout X Install whiteboards Break/Conference Room Install lighting fixtures X Break/Conference Room Install rubber bumpers at door frames - typical X Break/Conference Room Install threshold at Door S110 X X X Break/Conference Room Confirm metal strap at duct near valve X For what? Break/Conference Room Overflow pipe close to wall and insulation is squashed - make good. Gyp board not installed X X X Break/Conference Room Complete cabling and wiring work above the cable tray X File Room Verify any millwork or countertops, finish all base along the walls X X File Room Touch up paint throughout the room X File Room Install the shelving in this room X File Room With the pipe chase, confirm all the shelves and cabinets will fit X X File Room Insulated pipe so tight against wall gyp board not installled X X X File Room Patch electrical conduit penetration on South wall X X File Room Patch electrical conduit penetration on North wall X X File Room Confirm purpose of metal straps near top of South wall X File Room Seal penetration in ceiling through acoustical decking X File Room Remove trash and debris from cable tray X X File Room Paint JB cover to match exisiting areas X Manager's Office Clean up and confirm ant eradication in NW corner X X SERVICE CENTER S109 - at Circulation S100 BREAK/CONFERENCE ROOM S110 FILE ROOM S111 - between GL 23 and 24 A-S108-16 A-S108-19 A-S109-01 A-S111-10 A-S111-11 A-S111A-01 A-S111-01 A-S109-02 A-S111-02 A-S111-03 A-S111-04 A-S111-05 A-S111-06 A-S110-04 A-S110-05 A-S110-06 A-S110-07 A-S110-08 A-S111-07 A-S111-08 A-S111-09 A-S108-17 A-S110-02 A-S110-03 A-S109-03 A-S109-04 A-S109-05 A-S110-01 MANAGER'S OFFICE S111A A-S108-18 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 7 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Manager's Office Install millwork and countertops and finish base at millwork and flooring X X Manager's Office Install millwork and countertops and finish base at millwork and flooring X X Manager's Office At North wall, conflicts with millwork and outlets. X X X Manager's Office At West wall, conflicts with millwork and outlets. X X X Manager's Office At South wall, conflicts with millwork and outlets. X X X Manager's Office Storefront window frame cracking in NW corner. Touch up paint at this wall. Clean glass and install roller shade X X X Manager's Office Insulated pipe so tight against West wall gyp boad not installed X X X Manager's Office Patch tear in duct work installation X Manager's Office Complete cabling and wiring installations above cable tray X Manager's Office Seal conduit penetration on South wall X X Tool Room Patch CMU around fire alarm device on South side X Tool Room Install threshold at Door 112B X X X Tool Room Complete door hardware and grout frames solid X Tool Room Repair TAB hole in duct and insulation X X Tool Room Consider moving motion sensor for better coverage X X Tool Room Complete door hardware and grout frames solid X X Door S112A Tool Room Install door silencers at Doors S112A and S112B X Tool Room Cap conduit at CMU wall if not to be used X Tool Room Patch around JB above Door S112B X X Tool Room Confirm mounting of JB above Doors 112A and S112B X X Should be labeled Tool Room Conduit at East wall for? Cap if not to be used X X Tool Room Patch unused penetrations near top of West wall X X Tool Room Fix unfinished edge at ductwork register near East wall X X Tool Room JB and plate on East wall for? X Tool Room Remove unused surface conduit wall anchors (3) on East Wall X X Tool Room Remove unused surface mount conduit hangers on North wall X X Tool Room Re-do voids at the CMU grout joints, repaint X X Tool Room Clean/grind and seal concrete floor slab X X Tool Room Confirm 4" conduit or drain on floor and complet work X X Circulation Complete millwork and countertop at South wall, install white board X Circulation Confirm power and data outlets and millwork and furniture in the eastside space, South wall X X Circulation Complete finish hardware install, car readers and grouting jambs X X Circulation Confirm junction box at ceiling which sticks out 4" from wall X X What for? Why? A-S111A-11 A-S112-01 A-S112-02 A-S111A-02 A-S111A-03 A-S111A-04 A-S111A-05 A-S111A-06 A-S111A-07 A-S111A-08 A-S113-02 A-S113-03 A-S113-04 A-S111A-09 A-S111A-10 A-S112-15 A-S112-16 A-S112-17 A-S112-18 A-S112-19 TOOL ROOM S112 CIRCULATION S113 - at Grid 22/B A-S113-01 A-S112-05 A-S112-06 A-S112-07 A-S112-08 A-S112-09 A-S112-10 A-S112-11 A-S112-12 A-S112-13 A-S112-14 A-S112-03 A-S112-04 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 8 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Circulation Install chain link fencing and gate at GL A.5 and post penetration in slab X X Circulation Install power to roll up door S113B. Head height delineators to be noted due to conduits and ductwork X X X X Circulation Repair caulking around door frame and repaint if needed X X Parts Quarantine Finish installing shelving at North wall X Parts Quarantine Confirm use of 2 conduits at CMU wall, if not used, cap X X Parts Quarantine Fire alarm device is behind shelving; needs to be relocated X X X X Parts Quarantine Seal all penetrations through the floor decking near Door S113B X X Parts Quarantine Install chain link fencing along West edge of space X Parts Quarantine Paint junction box cover plate white to match existing X Parts Quarantine Repair TAB hole in duct near West side of room X X Consignment Parts Fire alarm device conflicts with shelving - may need to be relocated X X X X Consignment Parts Complete wiring at three (3) JB's on East wall X X Consignment Parts Confirm use of unattached metal strap above HVAC duct X X Use or remove Consignment Parts Install sliding Gates S115A and S115B in Southwest corner X Consignment Parts Install chain link fencing along North and West sides of room X Consignment Parts Confirm fencing is not interfered with AHU-6. Head height delineators were to be installed also X X X X Consignment Parts Complete electrical provisions at JB at AHU-6 location X Open Storage Complete installation of Stanley Vidmar cabinets and mezzanine deck X Open Storage Install vertical conveyor for parts lift X Open Storage Confirm JB on South wall. For what? X Open Storage Remove unused conduit wall anchor, patch puka and paint X X Open Storage Furred in header above Door S116C appears to be incomplete. Decking over exterior CMU walls to be sealed and tight. X X X Open Storage Termination of exterior building wrap is visible at Door S116C X X Open Storage Complete installations at junction box adjacent to Door S116C X X Open Storage Complete cabling installation above ductwoork near Door S116C X Open Storage Clean up and corfirm ant infestation is eradicated at Door S116C X X Open Storage Inspect and assess crack in concrete slab in Southeast corner of room X X A-S113-05 A-S113-06 A-S113-07 A-S116-09 A-S116-10 A-S116-03 A-S116-04 A-S116-05 A-S116-06 A-S116-07 A-S115-07 A-S116-01 A-S116-02 A-S114-01 A-S114-02 A-S114-03 A-S114-04 A-S114-05 A-S114-06 A-S114-07 A-S115-01 A-S115-02 A-S115-03 A-S115-04 A-S115-05 A-S115-06 A-S116-08 PARTS QUARANTINE S114 CONSIGNMENT PARTS S115 OPEN STORAGE S116 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 9 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Open Storage Complete cabling installations into cable tray through South wall X X Open Storage Confirm light fixtures as located; lighting obscured by ductwork X X X X Open Storage Patch and paint previous holes for switch panel on South wall X X Open Storage Complete electrical installation on West wall - not a blank plate X X X Open Storage Complete installation of mobile storage system X Open Storage Fix unfinished edges at duct register - typical throughout room X X X Open Storage Repaint steel column at Grid 20/AB X X Open Storage Complete wiring installations near Grid Line 21/AB X Open Storage Complete wiring installation above cable tray - typical X Open Storage Confirm all junction box plates are painted white - typical X Open Storage Install remaining shelvesing in Northeast corner of room X Open Storage Complete storefront Door S116C X X X X Storefront door locksets not like the rest of the project Open Storage Finish junction box work above Door S116D X Open Storage Confirm if conduits at North wall are to be used, if not, cap X X Open Storage Complete wiring at Door S116A X X Open Storage Provide power to roll-up Door S116B X Open Storage Confirm thermostat location is not in conflict with shelving unit X X Stair S5 Install stairs once the cabinets and grated floor in X Stair S5 Confirm the shop drawings on the new configuration X X X Confirm with HA again Flat Roofs Line 27 to 28, roof does not drain to gutter X X X Flat Roofs Puddling at side of exhaust fan TEF-5 X X X Flat Roofs Supply roof Line A4 from AA to AB does not drain to gutter X X X Flat Roofs Puddling at Line 22 from A to AB X X X Flat Roofs Standing water Line 18 from A to AB X X X Flat Roofs Standing water Line 18 from A to AA X X X Flat Roofs Low roof, does not drain, Line 16 over Courtyard X X X Flat Roofs Standing water at low roof at middle downspout, and at high roof entire Line AA to AB doesn't drain; all at Line A2 X X X Over Breakroom and canopy Flat Roofs Low roof Line AD from 13 to 14, standing water X X X Flat Roofs Standing water low roof Line AD from 13 to 14 X X X Flat Roofs Low roof Line AD at 12, does not drain to gutter X X X Flat Roofs Standing water low roof Line AD at 11 X X X Flat Roofs High roof, Line AC to AD edge does not drain to gutter X X X Flat Roofs Please confirm finish and preservation for exposed galvanized flashing X X X X X Addendum #2 (04-26-16) SECTOR A - VISIBLE FLAT ROOFS A-Roof-10 A-Roof-11 A-Roof-12 A-Roof-13 A-Roof-07 A-Roof-08 A-Roof-09 A-Roof-04 A-Roof-06 A-Roof-05 A-S116-24 A-S116-25 A-S116-26 A-S116-27 A-S5-01 A-S5-02 A-Roof-01 A-Roof-02 A-Roof-03 A-S116-11 A-S116-17 A-S116-18 A-S116-19 A-S116-20 A-S116-21 A-S116-12 A-S116-13 A-S116-14 A-S116-15 A-S116-16 STAIR S5 - Supply Storage up to Mezzanine grating floor A-S116-22 A-S116-23 A-Roof-14 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 10 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Main Entry Lobby Clean up, finish electrical provisions X Main Entry Lobby Why are there so many blank plates and junction boxes on the Lobby wall? X X X What to do? Main Entry Lobby Finish glass display case work - both sides X Main Entry Lobby Finish all glass installation and trim for the aluminum framing X Main Entry Lobby Finish fire alarm pull box work once the glass is installed X Main Entry Lobby Drywall to be patched of all the overcuts; this is over the main storefront X X X Bug holes Main Entry Lobby Before storefront goes up, the wiring for the card readers are not resolved X X X X Main Entry Lobby The wiring for the card readers are not resolved. The floor needs to be patched when wiring resolved and finish the tile floor and base. X X X X Main Entry Lobby Puka in the North wall for new work? If not, patch and paint X X Main Entry Lobby At the North side glass display case, how is the HVAC damper control going to be accessed? X X X X Don't cut the cabinet! Main Entry Lobby Overcuts at the penetrations to be sealed - West side corner in main Lobby X X Main Entry Lobby Window storefront to be finished when the problems get resolved in 'how to finish' wiring X X Main Entry Lobby Cane detection guardrail to be installed at bottom of Stair S1. Tile floor needs to be done X Mechanical Inside walls to be painted X Mechanical Underside of metal decking (ceiling) to be painted X Mechanical After painting, install the rubber base. Have the floors been sealed? X X Storage Room Threshold at floor between linoleum and concrete slab? X X X X Storage Room Caulk the gap at drywall and slab before the rubber base is installed X X Storage Room Complete electrical work in Storage X Janitor Entry door into Janitor's, threshold? X X X Janitor Walls to be painted X Janitor Clean and caulk the floor slab sawcuts and seal floor. Caulking around mop sink. X X Janitor Complete door installation and rubber bumpers X Typical Janitor Finish around the fire alarm device X X STORAGE CS102 SECTOR B - FIRST FLOOR JANITOR CS103 B-CS101-01 B-CS101-02 MECHANICAL CS101 LOBBY CS100 B-CS102-01 B-CS102-02 B-CS102-03 B-CS103-01 B-CS103-02 B-CS103-03 B-CS103-04 B-CS103-05 B-CS100-01 B-CS100-02 B-CS100-03 B-CS100-04 B-CS100-13 B-CS101-03 B-CS100-05 B-CS100-06 B-CS100-07 B-CS100-08 B-CS100-09 B-CS100-10 B-CS100-11 B-CS100-12 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 11 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Vending/Entry Paint overspray, complete final coat of paint X Vending/Entry Complete installation of floor sink, clean floor slab X X Vending/Entry Fix bottom of drywall edges, clean floors, caulk joints, stain slab and install base X X Vending/Entry Mud the drywall screws before installing rubber base X X Vending/Entry Entry Door CS104 missing the brushes at the door edge? X X X Big gap not acceptable Vending/Entry Entry door, finish painting and cut the edges X Recycling Bins Entry into Recycling needs to be finished with the wrap around stainless steel guards X X Recycling Bins Bottom of drywall to floor to be caulked before rubber base is installed X X Bug houses. Recycling Bins Bottom of drywall to floor to be caulked before rubber base is installed, floor cleaned and joints caulked X X Break Room Complete work at conduit or cap; above Door CS105 X Break Room Patch puka at outlet plate - typical X X X Break Room Patch the gap of drywall to slab before base is installed X X X Bug houses Break Room Repair the tears and rips on the duct work insulation X X At several areas Break Room Touch up paint on the dirty conduit - mauka Diamond Head ceiling corner X Break Room Patch the void at the ceiling decking sitting on angle iron and WF beam. X X Break Room Install remaining glass panels at Window U1 North side; clean all the frames and glass X Break Room Repair the tears and rips on the duct work insulation X X At several areas Break Room Clean and caulk all slab joints before concrete stain X Break Room Complete installation of storefront Door CS106B - south wall X Break Room Complete the fix at the window curbs before base is installed X X Break Room Complete storefront door CS106A and TV mount with bracket X X Materials all in Break Room floor Break Room Aluminum fencing in Courtyard not installed X X X Addendum #2 (04-26-16) Food Prep Paint overspray, need final coat X X Food Prep Finish work at ceiling access panel X Food Prep Install millwork, sink and appliances X Food Prep Wall to floor joint at slab, clean and seal before millwork goes in X X VENDING CS104 RECYCLING CS105 BREAK ROOM CS106 B-CS106-10 B-CS106-11 B-CS106-12 B-CS107-01 B-CS107-02 B-CS107-03 B-CS107-04 FOOD PREP CS107 B-CS104-06 B-CS105-01 B-CS105-02 B-CS105-03 B-CS106-01 B-CS106-02 B-CS106-03 B-CS104-02 B-CS104-03 B-CS106-04 B-CS106-05 B-CS106-06 B-CS106-07 B-CS106-08 B-CS106-09 B-CS104-04 B-CS104-05 B-CS104-01 B-CS106-13 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 12 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Electrical Clean door and repaint X Electrical Cap unused conduit instead of just taping X X Electrical Unmask the smoke detector X Circulation Door jamb and wall need finish paint and cut at corners X Circulation Paint overspray X X Circulation Clean/grind floor and seal X Circulation Finish electrical work and install cover, apparatus X Circulation Finish wall work and repaint. Install base X Circulation Finish wall work and repaint. Install base. Caulk slab joint cuts X Circulation Cap holes in window frame H10A. Window shade? X X X Circulation Finish up storefront door CS105. Threshold? Clean floor and stain concrete X X Comm Room Remove tape from bottom of jambs. Clean and seal floor, caulk floor joints. Rubber base needs to be installed X X Comm Room Touch up paint and door frame X Comm Room Cap the conduits not being used. Finish up drywall and install rubber base X X Comm Room Cap the conduits not being used. Install rubber base X X Comm Room Remove all the blue tape to show 'Dricon' plywood X Too late to paint plywood Comm Room Finish the electrical work and install cover at raceway X Comm Room Wrong jamb? Missing lockset? X X X Comm Room Install Emergency Power for AC in Comm. Rooms - per Spec X X X Addendum #2 (04-26-16) Women's Restroom Missing fixtures/sensors for toilets on East Wall X X X Floors are to be tiled; contract work Women's Restroom Missing toilet partitions and accessories X Women's Restroom Missing paper towel dispenser and sanitary napkin dispenser X Women's Restroom Missing sinks, mirrors, sensors, soap dispenser X Women's Restroom Fire sprinkler head hole larger than escutcheon X X Women's Restroom Unfinished drywall edges at ceiling for access panel X Women's Restroom Ceiling paint touch up X X Women's Restroom Drywall repair at corner, North entrance X X Storage No grout on base tile X Storage Missing door silencers (rubber bumpers) X Storage Wall paint finish coat X Storage Junction box or wall switch, or motion sensor? X X B-CS112-01 B-CS112-02 B-CS112-03 B-CS112-04 B-CS111-07 B-CS111-01 B-CS111-02 B-CS111-08 STORAGE CS112 B-CS111-05 B-CS111-06 CIRCULATION CS109 COMM ROOM CS110 B-CS109-08 ELECTRICAL ROOM CS 108 B-CS110-08 B-CS108-01 B-CS108-02 B-CS108-03 B-CS109-01 B-CS109-02 B-CS109-03 B-CS109-04 B-CS109-05 B-CS109-06 B-CS109-07 B-CS110-01 B-CS110-02 B-CS110-03 B-CS110-04 B-CS110-05 B-CS110-06 B-CS110-07 WOMEN'S RESTROOM CS111 B-CS111-03 B-CS111-04 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 13 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Men's Restroom Sinks and all sink accessories not installed X Men's Restroom Ceiling access panels are incomplete X Men's Restroom Toilet accessories not installed - paper towel dispenser and bin X Men's Restroom Confirm electrical has been corrected, complete tile work, install toilet partitions and bathroom fixtures and accessories. X X Men's Restroom Confirm electrical has been corrected, complete tile work, install toilet partitions and bathroom fixtures and accessories. X X Men's Restroom Floor drains require adjusting to accept tiled floor X X X All floors are supposed to be tiled Men's Restroom Complete wiring for the fixture sensors X X Men's Restroom Confirm sensor wiring is complete, replace backer board, tile and finish paint. Install urinals and screens. X X X Men's Restroom Complete A/C work and ceiling access panel X Men's Restroom Touch up painting throughout X Men's Restroom Touch up painting throughout - typical and clean up fire alarm device X X Men's Restroom Touch up painting throughout X Men's Restroom Rubber bumpers missing at all hollow metal door jambs X Men's Restroom Clean up/finish up junction box; abandoned? X X X X What is it for? Men's Restroom Floors are to be tiled; drains need to be adjusted X X X X X Women's Shower East wall wainscot is approximately 1-1/2" higher than West wall base X X X X Floor is to be tiled Women's Shower Unfinished tile edge. Obstruction for lockers at tile base X X X Women's Shower Missing soap dish typical of all stalls X Women's Shower General grout joint quality throughout - shallow, voids, cracks X X X Women's Shower ADA stall - finish bench, grab bars, etc. X X Women's Shower Touch up paint throughout X X Men's Shower Room Typical throughout all shower stalls - missing soap dish and other shower accessories X Men's Shower Room Typical throughout all showers - missing shower accessories, curtain rods and curtains X Men's Shower Room A core-through hole in CMU Grid Line B is for what? X X X Men's Shower Room Shower drain covers have grout all over - needs cleaning X X X Grout went into drain lines? Men's Shower Room Floor drains need to be adjusted to accept tiled floor X X X X Men's Shower Room Light above handicap shower stall to be completed XB-CS115-06 B-CS113-12 B-CS113-13 B-CS113-14 B-CS113-15 MEN'S SHOWER ROOM CS115 B-CS115-01 B-CS115-02 B-CS115-03 B-CS115-04 B-CS114-04 B-CS114-05 B-CS113-08 B-CS113-09 B-CS113-10 B-CS113-11 B-CS113-01 B-CS113-02 B-CS113-03 B-CS113-04 B-CS113-05 B-CS113-06 B-CS113-07 MEN'S RESTROOM CS113 B-CS114-01 B-CS114-06 WOMEN'S SHOWER CS114 B-CS114-02 B-CS114-03 B-CS115-05 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 14 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Women's Locker Room South door frame (CS116) is not grouted X Women's Locker Room Light switch missing X Motion sensor switch? Women's Locker Room Chip in tile behind outlet cover plate - near South entry X X Women's Locker Room Repair plaster and touch up paint around fire alarm audio/visual X X Women's Locker Room West wall unfinished drywall - unpainted patch in SW corner X X Women's Locker Room Touch up paint throughout (General Item) X X Women's Locker Room Paint overspray at south wall X X Women's Locker Room Repair duct installation - need plastic plugs to cover test ports X X X Women's Locker Room Straighten misaligned EXIT sign X X Women's Locker Room Tile floor throughout (General Item) X X X It is not an epoxy floor; TILE Women's Locker Room Crack in drywall (West wall) X X Women's Locker Room Fire extinguisher cabinet missing X Women's Locker Room Coiled wires in ceiling with no termination point X Women's Locker Room Stubout conduit with pull string above cable tray X Women's Locker Room Ceiling penetration unsealed X Women's Locker Room Fire sprinkler head obstructed by Comm cables within 3-inches X X X Women's Locker Room Chipped tile under outlet cover plate on North wall X X Women's Locker Room Excess threaded rod below cable tray X X Dangerous condition Women's Locker Room Install State provided lockers. Confirm with HA for final location X Addendum #2 (04-26-16) Men's Lockers Door frames all missing rubber bumpers- typical throughout X Men's Lockers Walls need final coat of paint and cutting of colors - at Dr CS117 X Men's Lockers Walls need final coat of paint and cutting of colors - at Dr CS117 X Men's Lockers Walls need final coat of paint and cutting of colors - at fire alarm device X Men's Lockers Light at Locker Rm entry did not open; is there a motion detector? X X X No light switch on the wall Men's Lockers Locker Room floor is to be tiled X X X X Men's Lockers Repair tears and rips in duct insulation throughout X X Men's Lockers Review lighting scheme; there are only 3 light fixtures in Locker Room which appears to be inadequate X X Men's Lockers Finish paint wall and cut corners - typical throughout space X X Men's Lockers Fill holes at CMU joints and refinish painting at Grid Line B X X Men's Lockers A/C thermostat is near the corner; verify new layout of Lockers. FA strobe light covered by Lockers? X X X Verify with Hawaiian Airlines Men's Lockers Repaint walls to clean up paint overspray - North side wall X X Men's Lockers Floor drains to be adjusted to accept tiled floors X X X X Men's Lockers Edge of wainscot not finished and not acceptable X X X B-CS116-19 B-CS117-02 B-CS116-16 B-CS116-17 B-CS116-13 B-CS116-14 B-CS116-15 B-CS116-06 B-CS116-07 B-CS116-08 B-CS116-09 B-CS116-10 B-CS116-18 B-CS117-01 B-CS116-11 B-CS116-01 B-CS116-02 B-CS116-03 B-CS116-04 B-CS116-05 WOMEN'S LOCKER ROOM CS116 B-CS116-12 B-CS117-09 B-CS117-10 B-CS117-11 B-CS117-12 B-CS117-13 B-CS117-03 B-CS117-04 B-CS117-05 B-CS117-06 B-CS117-07 B-CS117-08 MEN'S LOCKER ROOM CS117 B-CS117-14 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 15 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Men's Lockers Space below I-beams to be finished; some are, some not X X X Men's Lockers Painting required in areas with drywall fixes X X Men's Lockers Install State provided lockers. Confirm with HA for final location X Addendum #2 (04-26-16) Storage Inside of closet not finished painted X X Light and switch all pau Storage Bottom of drywall on uneven floor with gaps X X X 'Rat holes' Storage Bottom of drywall damage (door side) and needs re-finishing X X Storage Corners where drywall meets CMU needs to be finished better X X Storage All conduit wall penetrations to be patched X X Typical in this closet Storage All conduit wall penetrations to be patched X X Storage Finish paint room and remove masking tape from smoke detector X X Storage Walls need painting X X Circulation Walls need paint touch up X X Circulation Duct insulation between Locker Rm entry needs to be fixed X X Circulation Light fixtures not installed at the Circulation Hallway X Circulation South side CMU wall dirty; repaint? Need entry mat installed X X X Circulation Clean and seal slab before installing entry mat X X Circulation Closure at underside of metal decking inconsistent X X X Looks bad Circulation Blue wall next to stairs dirty/oversprayed, not cut X Circulation At main entry doors, junction boxes need painting, EXIT sign not installed, empty conduit for what? X Circulation Touch up tape joints on duct installation and seal penetration at wall opening X X X Mechanical Testing and remove covers for thermometers X Mechanical Door frame needs touch up paint and finish the electrical switches for light X Mechanical Door frame flush bolts not installed - top and bottom X Mechanical Room Confirm design of rated walls X X Addendum #2 (04-26-16) Circulation Finish patching CMU walls and repaint - typical X Circulation Portions of decking and walls to be painted. Remove all plastic masking X X Circulation Some of the conduits need to match all the painted ones X Circulation Remove masking when painting and cleaning are done. All glass and aluminum frames need cleaning - typical X X Circulation The remaining CMU walls need painting X B-CS117-17 CIRCULATION FS122 B-CS122-02 B-CS122-03 B-CS122-04 B-CS122-05 B-CS118-01 B-CS118-06 B-CS118-07 B-CS118-08 B-CS117-15 B-CS117-16 B-CS118-02 B-CS118-03 B-CS118-04 B-CS118-05 B-CS122-01 CIRCULATION CS119 STORAGE CS118 B-CS119-01 B-CS119-07 B-CS119-08 B-CS119-09 B-CS119-02 B-CS119-03 B-CS119-04 B-CS119-05 B-CS119-06 B-CS120-03 MECHANICAL CS120 B-CS120-01 B-CS120-02 B-CS120-04 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 16 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Circulation All the piping and conduits need to be cleaned of dust and debris - typical X Circulation Need threshold going into First Aid, flooring and sealing needs to be completed X X X Clean and seal Main Corridor first Circulation Finish all chips and cracks at CMU columns and walls, and repaint X X Typical Circulation Finish the end of the insulation at the diffuser near Vending entrance X X X Circulation Grid 12.5, the skylight is not done - flashing or TPO still showing X X X Circulation Chips and fixes on CMU to be completed and repainted. Cove base with spacers showing not acceptable X X X X Is cove base the right thing? Circulation Cuts and gaps at the acoustical decking not consistent - caulk or patch X X Typical Circulation Finish the gap above the I-beam, caulk or patch the gaps X X Typical Circulation Repair the cracked and deteriorated taping at the pipe insulation X X X Circulation After all piping and conduit work finish at Grid 15, opening in wall to be sealed X X Code issue Circulation At the cove base, the spacers and gaps not acceptable. Floor to be cleaned and sealed X X X X Circulation All of the columns to have corner guards X X General Note #2 on floor plans Circulation Complete all wiring and cover plates at ceiling X Circulation Complete all patching on walls and repaint X X Typical Circulation Pentrations at ceiling to be sealed X X X Circulation Finish all the wiring or cap the 'future use ones' -should be labeled X X Circulation Finish around the bottom of the skylights; some areas caulked and some areas incomplete X X X Circulation Timeclocks not installed X X X Addendum #2 (04-26-16) First Aid Complete vinyl floor and wall base installation X First Aid Gyp board walls and ceiling paint touch up X First Aid Complete CMU wall prep prior to finishing painting X X X First Aid Complete finish hardware installation at door, bumpers X First Aid No electrical in room X Due to rework in adjacent room Infirmary Complete vinyl floor and wall base installation X Infirmary Complete door hardware and install bumpers at frame X Infirmary Touch up painting as needed, finish electrical provisions and install light fixtures X X Audio Complete vinyl floor and wall base installation X B-CS122-20 B-CS122-21 B-CS122-06 B-CS122-07 B-CS122-08 B-CS122-09 B-CS122-10 B-CS122-11 B-CS122-12 B-CS122-13 B-CS122-14 B-CS122-15 B-CS122-16 B-CS122-17 B-CS122-18 B-CS122-19 B-CS122-22 B-CS132-01 FIRST AID CS132 B-CS133-01 INFIRMARY CS133 B-CS133-02 B-CS133-03 B-CS132-02 B-CS132-03 B-CS132-04 B-CS132-05 AUDIO CS134 in First Aid Office B-CS134-01 B-CS122-23 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 17 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Audio Door lite missing, and screws at frame. Complete finish hardware X Audio Complete drywall work and finish painting throughout X Audio Complete drywall work and finish painting throughout X Audio Complete electrical provisions in room X Restroom Tile floor is totally unacceptable X X X Also, doesn't drain to drain Restroom Complete grouting of wainscot, toilet accessories and complete electrical junction box work X Restroom Complete installation of plumbing fixtures and electrical provisions for fixtures X Restroom Complete electrical work so lighting will work X Restroom Complete finish hardware, door bumpers at jambs X Restroom Complete painting and cutting of colors at walls and ceiling X Mechanical Hollow metal door frame not cement grouted X X Mechanical Caulk expansion joint void in slab edge. Check rest of perimeter of slab for other areas X X X Mechanical Gyp board wall moldy due to condensation dripping in wall. Open wall to confirm insulation not moldy X X X Need to be done! Mechanical Spray foam installed to stop moisture at duct insulation; needs to be removed and corret fire stopping to be installed X X X Wall insulation to be checked to confirm mold has not started to grow from the condensation Mechanical Remove insulation at electrical conduits and install approve fire stopping X X X Mechanical Install approved fire stopping at electrical conduits X X X Mechanical Complete painting at walls and ceiling X X Mechanical Check ducts for TAB test ports, install plugs and re-insulate X X X Mechanical Secure chill water piping; sways and shakes when system is turned on X X Mechanical Close gaps in wall with approved fire stopping. Finish paint walls X X Mechanical Clean off all dust from insulation on ducts and repair tears and rips X X Mechanical Complete electrical system for lights, switches and outlets X Elevator Equipment Room Complete firestop caulking of pipes, ducts at wall and ceiling penetrations. Finish all electrical work. X Elevator Equipment Room Complete painting of electrical conduits. Install fire extinguisher cabinet X X Elevator Equipment Room Complete caulking around electrical boxe and paint X X Elevator Equipment Room What's the hole for in the CMU wall? Patch and paint if not needed. Paint the new electrical conduits. X X B-CS136-08 B-CS135-05 B-CS135-06 B-CS136-01 B-CS136-02 B-CS136-03 B-CS136-05 B-CS136-06 B-CS136-07 RESTROOM CS135 INSIDE First Aid MECHANICAL CS136 B-CS134-04 B-CS134-05 B-CS134-02 B-CS134-03 B-CS136-09 B-CS136-10 B-CS136-11 B-CS136-04 ELEVATOR EQUIPMENT ROOM CS137 B-CS136-12 B-CS135-01 B-CS135-02 B-CS135-03 B-CS135-04 B-CS137-01 B-CS137-02 B-CS137-03 B-CS137-04 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 18 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Elevator Equipment Room Complete electrical requirements and communication system. X Elevator Equipment Room Complete door hardware install and rubber bumpers X Elevator Equipment Room Complete patch work at fire sprinkler line and paint wall X Lobby Complete gyp board touch up and repaint wall X Lobby Check for blemishes on wall, fix and repaint X Lobby Complete storfront installation X X Card reader? Lobby Seal all wall penetrations. Finish electrical work and install acoustical tile ceiling X X Lobby Caulk void in finish at storefront frame X X Lobby Touch up blemishes on CMU wall and repaint; Southwest X X Lobby Patch wall at electrical outlet X X 'Rat hole' Lobby Void at storefront sill to wall corner - fill in the void? X X X Lobby Complete installation of tile floor X Lobby Clean and complete floor prep and install finished floor X Dirty and dusty Lobby Complete test and balancing at HVAC ducts; patch insulation and repaint X X Lobby Complete electrical and communication work X VP Office Complete door hardware installation and check operations X X VP Office CMU touch up work, patch voids and chips in tile and mortar. Electrical plates not flush to wall, complete installation of electrical apparatus and light fixtures X X VP Office Walls and corners, cracks in mortar joints, patch and repaint X X X VP Office Touch up CMU wall and remove concrete splatter from surface and repaint X X VP Office Patch duct insulation, complete TAB and install test port plugs X X VP Office Patch CMU wall, clean splatter, caulk all voids, repaint X X VP Office Clean floor, caulk slab joints and complete finish floor and base installation X X VP Office Complete electrical and comm provisions and fire caulk wall penetrations as required X X VP Office Re-finish around duct work penetration and repaint X X X Messy VP Office Complete installing electrical provisions and light fixtures. Paint duct insulaion to match the existing X President Office Complete finish hardware install, caulk all voids, repaint X President Office Remove concrete splatter at wall and repaint X X President Office Complete painting on walls X Typical President Office Complete conduit work at ceiling and wall and paint X X President Office Patch insulation at ductwork and pentration through wall X X LOBBY CU100 - Hawaiian Airlines Credit Union B-CU101-02 B-CU101-03 B-CU101-04 B-CU101-05 B-CU101-06 B-CU101-07 B-CU102-02 B-CU102-03 B-CU102-04 B-CU102-05 B-CU100-04 B-CU100-05 B-CU100-06 B-CU100-07 B-CU100-08 B-CU100-09 B-CU100-10 B-CU100-11 B-CU100-12 B-CU101-01 B-CU101-08 B-CU101-09 B-CU101-10 B-CU102-01 VP OFFICE CU101 - Credit Union PRESIDENT OFFICE CU102 - Credit Union B-CS137-05 B-CS137-06 B-CS137-07 B-CU100-02 B-CU100-03 B-CU100-01 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 19 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le President Office Fixed damaged insulation at round ductwork X X President Office Clean and fix the caulking at the winow frame, grout the corner at curb and CMU wall. Finish clean floor, install floor and base. Install roller shades X X X Reception and Open Office Finish up painting, ceiling grid and acoustical tile work X Reception and Open Office Finish up storefront door assembly, teller counter millwork, work counter and countertops X Reception and Open Office Finish of the window sill is messy. Caulk the aluminum frame to finish walls. Cleaning throughout X X X Reception and Open Office Finish up window pane install, tile floor and base. Walls to be touched up - paint. X X Reception and Open Office Complete wiring of light fixtures, paint the new conduits and junction box X Reception and Open Office Complete ceiling work, install light fixtures and ceiling tiles. Finish paint X Reception and Open Office Corner at GL A at 11.1 has gap between curb and wall; how is base to be finished. Clean floors and install carpeting X X X X X Reception and Open Office Fix all the chips and cracks at the CMU wall and repaint/touch up X X Reception and Open Office Patch around the receptacle - West wall X X X Reception and Open Office Patch the TAB pukas in the duct and repaint X X Reception and Open Office Finish speaker work at ceiling and finish wire light fixtures X File Room HVAC damper adjustment bolts needs to be cleaned and finished X X File Room Finish painting walls X X File Room Adjust electrical plates to sit flush to wall - typical X X Walls needs painting, protect finish plates File Room Complete electrical provisions at ceiling X File Room Complete painting and finish floors and base X X Typical Circulation Complete round duct wall penetrations and patch insulation, repaint X X Circulation Complete supply air duct insulation and fix the gaps around the register X X Circulation Complete gyp board wall fixes and finish paint wall X X Circulation Complete light fixture installation and comm provisions X X After painting! Circulation Clean the concrete floor and the finish flooring and base X X Restroom Rework tile at door frames as tile protrudes further than the frame X X X B-CU106-05 FILE ROOM CU105 CIRCULATION CU106 B-CU102-06 B-CU102-07 B-CU105-02 B-CU105-03 B-CU103/4-09 B-CU106-04 B-CU107-01 B-CU105-04 B-CU106-02 B-CU106-03 B-CU103/4-01 B-CU103/4-08 RESTROOM CU107 RECEPTION CU103 and OPEN OFFICE CU 104 B-CU103/4-10 B-CU103/4-11 B-CU105-01 B-CU105-05 B-CU106-01 B-CU103/4-02 B-CU103/4-03 B-CU103/4-04 B-CU103/4-05 B-CU103/4-06 B-CU103/4-07 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 20 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Restroom Complete electrical provisions, finish plates, light fixtures, plumbing fixtures and sensors and toilet accessories X Restroom Complete plumbing fixture and toilet accessories and mirrors X X Finish paint first! Restroom Complete gyp board touch ups and finish paint X Restroom HVAC adjustment bolts at ceiling need to be cleaned and finished X Cubicle Complete finish hardware and fix door - binds on frame X X X Cubicle Complete electrical provisions X Cubicle Touch up walls and finish paint X Cubicle Complete flooring and finish work and base X Cubicle Fix damaged door, install all finish hardware X Cubicle Touch up walls and paint X Cubicle Complete electrical provisions after finish painting X Cubicle Finish the slab patch, finish floor and base X X Breakroom Complete installation of door hardware X Breakroom Complete TAB operations for A/C work, patch duct holes, and paint X X Breakroom Complete drywall blemishes and finish painting X Breakroom Complete installing electrical provisions - lights X Breakroom Complete finish floor prep and installation X Breakroom Patch floor cleanout, finish painting, install millwork and countertop and plumbing fixtures X Breakroom Install wall bumber to catch swinging door X X Credit Union Breakroom Duct Installation to half window X X Head height; acceptable to HA?. Addendum #2 (04-26-16) Copy/Work Room Complete touch up of walls and finish paint X X Copy/Work Room Finish painting walls and ceiling and complete electrical provisions X Copy/Work Room Complete the cleaning of floor and finsh floor and base X X Stair No. 2 Clean paint drip drywall mud from stair treads, make clean and seal to see the concrete gray X X X Stair No. 2 Clean barrier rail to underside of stair and finish or cover the plate and bolts X X X Void in the floor at tile cutout Stair No. 2 Finish or cover plate and bolts for the landing support. X X X Sits below the finish floor tileB-S2-03 BREAKROOM CU110 B-CU110-07 B-CU108-01 B-CU108-02 B-CU108-03 B-CU108-04 B-CU110-01 B-CU110-02 B-CU110-03 B-CU110-04 B-CU110-05 B-CU107-05 B-CU107-03 B-CU109-02 B-CU109-03 B-CU109-04 B-CU107-02 B-CU107-04 B-S2-01 B-S2-02 B-CU110-06 COPY/WORK ROOM CU111 SAFE CU108 - Cubicle SAFE CU109 - Cubicle B-CU111-01 B-CU109-01 STAIR S2 B-CU111-02 B-CU111-03 B-CU110-08 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 21 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Stair No. 2 Clean paint drip drywall mud from stair treads, make clean and seal to see the concrete gray X X X Stair No. 2 Blue wall has overspray and needs finish coat of paint X Stair No. 2 Blue wall has overspray and needs finish coat of paint X Stair No. 2 Clean South CMU at top of landing of concrete splatter or efflourescence - repaint X X Stair No. 2 Clean South CMU at top of landing of concrete splatter or efflourescence - repaint X X Stair No. 2 At second floor line. Drywall sitting on top of beam and is not finished X X X Too many gaps Stair No. 2 At second floor landing, clean slab and seal X Stair No. 2 Work above storefront incomplete X X Stair No. 2 At North wall - repaint X X Stair No. 2 At ceiling level, penetrations through wall needs to be sealed X X Stair No. 2 Clean fire alarm pull box of tape, touch up grout line with puka X Stair No. 2 Finish hardware for door needs to be completed X Stair No. 2 Second floor landing jamb and header different paint colors - blue or white? X X Stair No. 2 Clean storefront frame of sticky tape residue X X Stair No. 2 Speaker not installed at top of stair/ceiling X Circulation Underside of acoustic deck needs finish painting X Circulation Install all corner guard at walls, CMU X General Note #2 on floor plans Circulation Walls needs block filler and finish paint X Circulation Water fountain not installed, finish wall painting X Circulation Floor requires cleaning/grinding and sealer applied X Circulation Expansion joint incomplete at Circulation side of wall X Circulation Data and Comm cabling incomplete at cable tray X Circulation Wiring devices incomplete at East wall X Circulation Floor requires cleaning/grinding before sealer X Circulation Walls need block filler and finish paint X Circulation Underside of metal decking is to be painted X Circulation Cable penetration through walls needs firestop bags X Circulation Sawcut joints to be cleaned and caulked before floor sealing X X Circulation Floor beneath Stair S4 needs cleaning/grinding and sealing X Circulation Corners guards at all corners - after painting X A typical requirement Facility Repair Man door FS142B touch door and frame X B-S2-04 B-S2-05 B-S2-06 B-S2-07 B-S2-08 B-S2-09 B-S2-10 B-S2-11 C-FS141-02 C-FS141-03 CIRCULATION FS141 B-S2-17 B-S2-18 C-FS142-01 SECTOR C - FIRST FLOOR FACILITY REPAIR FS142 B-S2-12 B-S2-13 B-S2-14 B-S2-15 B-S2-16 C-FS100-01 C-FS100-02 C-FS100-03 C-FS100-04 C-FS100-05 C-FS100-06 C-FS100-07 C-FS100-08 C-FS141-04 C-FS141-05 C-FS141-06 C-FS141-07 CIRCULATION FS100 - Main Corridor C-FS141-01 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 22 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Facility Repair Overhead coiling door FS142C not installed X X X X Need electrical provisions Facility Repair Floor will require cleaning/grinding and then sealed X Facility Repair Fan is mounted too low and will interfere with Mezzanine operations X X X X X Facility Repair Lights mounted too low and will interfere with Mezzanine operations X X X X X Facility Repair Seal penetrations for sink. Install millwork and countertop X Facility Repair Touch up East wall junction box X X Facility Repair Touch up South wall receptacle X Puka at wall Facility Repair South wall missing device X Facility Repair Door FS142A touch up door and frame, door light missing screws X X Facility Repair Caulk 2 sides CMU to tube steel column at North wall X X X X Facility Repair Touch up North fire alarm device X X Facility Repair Complete electrical installation at floor X X Conduit sheared off? Facility Repair Touch up around JB and wall cover plate at Stair 9 X X X Facility Repair Repair flashing at clearstory louvers X X X Facility Repair Repair flashing at clearstory louvers X X X Facility Repair Seal pipe penetrations in West wall X Facility Repair Seal pipe pentrations in West wall X Facility Repair Repair Dust Collector Ducts in GSE shop area X X Addendum #2 (04-26-16) Facility Repair Chain link cages not installed X Addendum #2 (04-26-16) Office Install millwork and then finish base X Office Data cabling incomplete X X Conflict with millwork? Office Unmask light at ceiling X Office Door FS143 touch up door and frame, install bumpers X Office Unmask fire alarm and touch up perimeter X X X gaps, puka Loading/High Bay Storage Flash, caulk top of louvers X X X X X Loading/High Bay Storage Web joist installed to remain open? Code issue? X X X X How to finish? Loading/High Bay Storage All door frames not grouted. Holes in frames to be patched X X X Loading/High Bay Storage Touch up, repair penetration at South wall X X Loading/High Bay Storage Touch up door and frame - Typical X X Doors may need adjusting Loading/High Bay Storage Device missing on the West wall X Loading/High Bay Storage Touch up base of walls - typical X Loading/High Bay Storage Saw cuts in floor need cleaning and caulking, floor to be sealed X X Loading/High Bay Storage Floor requires cleaning/grinding before sealing X X X Need to remove all the tire marks Loading/High Bay Storage Center and right louver has a damaged frame X X Loading/High Bay Storage Touch up caulk/paint at louvers - typical. Louver has big separation at left corner X X X Loading/High Bay Storage Overhead coiling door FS149D not installed with electrical provisions. Metal decking and header not painted yet X X X C-FS142-19 C-FS143-03 C-FS143-04 C-FS149-04 C-FS149-05 C-FS149-11 C-FS149-12 OFFICE FS143 LOADING/HIGH BAY STORAGE FS149 C-FS149-03 C-FS142-17 C-FS142-18 C-FS142-15 C-FS142-16 C-FS142-04 C-FS142-10 C-FS142-11 C-FS142-12 C-FS142-13 C-FS142-14 C-FS143-01 C-FS143-02 C-FS143-05 C-FS149-01 C-FS149-02 C-FS149-06 C-FS149-07 C-FS149-08 C-FS149-09 C-FS149-10 C-FS142-03 C-FS142-06 C-FS142-07 C-FS142-08 C-FS142-09 C-FS142-02 C-FS142-05 C-FS142-20 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 23 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Loading/High Bay Storage CMU damaged at roll-up door opening X X Column guards, bollards Loading/High Bay Storage Loading dock sprinklers need to be installed between steel beams - too low. Decking at steel framing needs painting X X X X X Head height is very critical! Loading/High Bay Storage Loading dock drain trough too high X X X X X rework the finish elevations Loading/High Bay Storage Loading dock elevation to be adjusted X X X X X Design never worked, there is not curb or sidewalk Loading/High Bay Storage Clean around tube steel at base and caulk X X X Messy Loading/High Bay Storage Ceiling fan is too large, hung too low for this space. Ceiling lights will be in conflict X X X X X Loading/High Bay Storage Door FS149A incomplete, touch up painting, install finish hardware X X Office Touch up perimeter of fire alarm X X Gaps and holes Office Install millwork and finish up base X X Flooring, sealing? Office Wiring incomplete at West wall X Office Wiring incomplete at South wall X Office Touch up caulking, paint at window frame - typical. Entire areas need cleaning X X Office Light fixture or speaker missing at ceiling X Headset/work Finish millwork install and baseboards X X Headset/work Unused pentration at West wall X X X Clean it up, caulk Headset/work Touch up wall and finish cover over door X X Messy Headset/work Unused penetration at North wall X X Cap it and remove the tape Headset/work Condensate label coming off the piping X X Valuable Goods Storage Touch up around the fire alarm device on the wall X X Valuable Goods Storage Unused penetration on East wall X X Cap and remove the masking tape Valuable Goods Storage Unused penetration on West wall X X Cap and remove the masking tape Valuable Goods Storage Flash/close up top of wall to steel X X X X X Valuable Goods Storage Touch up the bottom of the CMU wall perimeter X Valuable Goods Storage Floor requires cleaning/grinding before sealer X Supplies Caulk/seal between tube column and CMU X X X X X Supplies Touch up around the fire alarm device at North wall X X X Supplies Unused penetration at West wall X X cap if not to be used Supplies Unused penetration at East wall X X Supplies Floor requires cleaning/grinding before sealing X Supplies Flash/seal top of wall to steel X X X X X C-FS151-05 C-FS151-06 C-FS152-01 C-FS152-02 C-FS152-03 C-FS149-13 C-FS149-14 C-FS149-15 SUPPLIES FS154 C-FS151-01 C-FS151-02 C-FS151-03 C-FS151-04 C-FS149-19 C-FS153-01 C-FS153-02 C-FS153-03 C-FS153-04 C-FS153-05 C-FS153-06 OFFICE FS151 HEADSET/WORK FS152 VALUABLE GOODS STORAGE FS153 C-FS154-01 C-FS154-02 C-FS154-03 C-FS154-04 C-FS154-05 C-FS154-06 C-FS152-04 C-FS152-05 TOOL STORAGE FS155 C-FS149-16 C-FS149-17 C-FS149-18 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 24 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Tool Storage Touch up walls at covers and receptacles - typical X X Messy Tool Storage Touch up around the fire alarm device on North wall X Tool Storage Two unused pentrations in South wall X Clean and cap, not masking tape Tool Storage Unused penetration in East wall X Tool Storage Unused penetration in West wall X Tool Storage Touch up East wall pipe penetration X X Messy Tool Storage Floor needs cleaning/grinding before floor sealer X Tool Storage Touch up the bottom of the CMU wall perimeter X Controlled Materials Touch up door and frame FS156 X X Controlled Materials Door FS156 missing hinge X X Controlled Materials Touch wall switch at East wall X X Messy Controlled Materials Floor needs cleaning/grinding before floor sealer X Controlled Materials Touch up the bottom of the CMU wall perimeter X Controlled Materials Touch up North wall at penetrations and in corner X X Controlled Materials Unmask device on North wall X Controlled Materials Unused/unfinished work at North wall X Cap it, or use it Controlled Materials Touch up around the finish plate over the door X X Messy Circulation Complete installation of storefront doors and card reader wiring X X Circulation Walk-off mat not installed X Circulation Walls not prepped for finish filler and painting X X Circulation Floor requires/grinding followed by sealer X X Circulation Repair damage to ductwork insulation X X Circulation Patch holes in CMU wall at Electrical Room door X X Circulation Remove nail from North wall at CMU joint X X Main Electrical Room Crack in slab originating from conduit penetration - fix and seal/caulk X X X Main Electrical Room Saw cut joints need cleaning and finishing X X Protect equipment from all dust!!! Main Electrical Room Touch up floor at conduit penetrations X X Main Electrical Room J-box on West wall missing cover X Main Electrical Room Incomplete wiring at overhead near ductwork X X Main Electrical Room Electrical wiring incomplete over double Door FS158A X Main Electrical Room Patch CMU chips and holes in West wall by Door FS158B X X Data/Comm Room Seal tops of wiring penetrations from conduits X Data/Comm Room Clean/grind floor and seal. Base required? X Protect all the equipment from dust!!!!! Communications Clean floor and apply sealer X C-FS156-01 C-FS160-01 COMMUNICATIONS FS160 C-FS156-02 C-FS158-03 C-FS158-06 C-FS156-07 C-FS156-08 C-FS156-09 C-FS155-06 C-FS155-07 C-FS155-08 C-FS155-01 C-FS155-02 C-FS155-03 C-FS155-04 C-FS155-05 CONTROLLED MATERIALS FS156 C-FS158-02 C-FS158-07 CIRCULATION FS157 - at Grid Line 3 C-FS158-04 C-FS157-01 C-FS157-02 C-FS157-03 C-FS157-04 C-FS157-05 C-FS157-06 C-FS157-07 C-FS158-01 C-FS156-03 C-FS156-04 C-FS156-05 C-FS156-06 C-FS159-01 C-FS159-02 MAIN ELECTRICAL ROOM FS158 DATA/COMM ROOM FS159 C-FS158-05 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 25 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Communications Cable tray at East wall needs fire bagging when wiring is complete X X Communications Door FS160 needs grouting. Touch up door and frame X X Copy/Work Room Finish painting walls and finish base work. Install shelving and millwork and work counters X Copy/Work Room Wall base not installed X Copy/Work Room Unmask fire alarm at East wall, and fill gaps around device X Copy/Work Room Switch cover missing at South wall X Copy/Work Room Complete install of light fixtures X Open Office Unmask fire alarm on South wall and fill gaps around the perimeter - typical X Open Office Complete install of light fixtures X Open Office Wall base not installed X Open Office Finish painting of all walls X Open Office Finish up all electrical devices on the walls X Open Office Repair broken conduit at floor. Carpet already installed X X X Open Office Make carpet install better at floor conduits X X X Open Office Touch up/ finish painting on tube steel column X Open Office Anodize damage to aluminum glass frames, clean frames and glass. Install roller shades. X X X Open Office Column on North wall needs to be refinished X Open Office Repair small tears in the duct insulation X X Conference Room Wall paint not complete with final coat X Conference Room Base incomplete at finish floor X Conference Room Finish electrical plates and work not complete X Conference Room Light fixture at ceiling not installed X Lobby Door FS164 glass lite not installed X X Lobby Electrical devices and finish plates not done X Lobby Base not installed at finish floor X Lobby Wall paint not complete with final coat X Circulation Walk-off mat not installed at front door X Circulation Storefront Door FS165 incomplete X Circulation Slab floor requires cleaning/grinding and then sealing X X Circulation Walls not prepped and painted X Circulation Saw cut joints at slab need cleaning and caulking X Before sealing floor C-FS162-10 C-FS163-04 C-FS165-01 C-FS165-02 C-FS164-02 C-FS164-03 C-FS164-04 C-FS160-02 C-FS160-03 COPY/WORK ROOM FS161 OPEN OFFICE FS162 CONFERENCE FS163 C-FS161-01 C-FS161-02 C-FS161-03 C-FS165-03 C-FS165-04 C-FS164-01 C-FS163-03 C-FS161-04 C-FS161-05 C-FS162-01 C-FS162-11 C-FS163-01 C-FS163-02 C-FS162-02 C-FS162-03 C-FS162-04 C-FS162-05 C-FS162-06 C-FS162-07 C-FS162-08 C-FS162-09 C-FS165-05 LOBBY FS164 - off Grid Line C/5.4 and connects to Open Office FS162 CIRCULATION FS165 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 26 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Break Room Missing base at finish floor X Break Room Wall needs final coat of paint after all the millwork and touch ups X Break Room Overhead lights not installed X Break Room Millwork, countertop, plumbing not installed. Appliances need to be supplied too. X Break Room Damage to anodized aluminum frames at windows. Roller shades needs to be installed, glass cleaned X File Room Base at finish floor incomplete X File Room Wall needs final coat of paint X File Room Finish hardware at door incomplete X File Room Unmask fire alarm device at West wall X File Room Overhead light fixtures not installed X Training Walls need finish painting X Screens? Whiteboards? Training Complete finish hardware installation Door CS123 X Training Base at wall after carpeting X Training Floor needs to be cleaned, sealed and carpeted X Training Soffit and ceiling, lighting incomplete X Training Refinish, repaint tube steel column X X Training Gap between curtain wall and aluminum storefront X X Clean and then install roller shades Training Electrical floor box work incomplete X X Training Finsh electrical provisions at East wall - typical throughout X Training Offices Finish millwork install and then finish base throughout room X Training Offices Electrical and data work incomplete X Training Offices Light fixtures not installed. Projection mounts? X Training Offices Door CS126 hardware not installed X Training Offices Seal conduit penetration in East wall, repaint X X Training Offices Cabling incomplete. Finish and install fire bagging X Mechanical Structural steel framing incomplete with doors X X X X ? Hawaiian Air may change to roll-up door? Need to resolve before shoring is removed Mechanical Paint underside of metal deck and gyp board walls X Mechanical Repair lagging X X X Typical; holes in duct for TAB/ Need to be sealed? Mechanical Remove and patch CMU where stud fasteners remain X X X Mechanical Remove shoring after structural work complete X C-FS166-05 C-FS168-01 C-FS168-02 C-CS127-04 C-CS127-05 C-CS127-02 C-CS127-03 C-CS123-03 C-CS123-04 C-CS123-05 C-CS123-06 C-CS127-01 C-CS123-01 C-FS168-04 C-FS168-05 C-CS123-02 C-FS166-03 C-FS166-04 C-CS123-07 C-CS123-08 C-CS126-04 C-CS126-05 C-FS168-03 C-CS126-06 C-FS166-01 C-FS166-02 C-CS126-02 C-CS126-03 TRAINING OFFICES CS126 BREAK ROOM FS166 FILE ROOM FS168 - inside Open Office FS162 TRAINING CS123 - at Grid Line 7 MECHANICAL ROOM CS127 TRAINING CS128, CS129 and CS130 aka Command Center C-CS123-09 C-CS126-01 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 27 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Training Operable partions to be installed when carpeting done X Training Soffits not complete, projection mounts X X Training Floor to be cleaned/sealed and carpeting X X Training Electrical and data floor boxes incomplete X Training Install finish base after carpeting is installed X Training Install light fixtures, projection mounts, power X X X Drawings not completed for contract work Training Complete mechanical provision outside at corridor, finish drywall work X X X Training Remove shoring after structural work in corridor done X X X Training Unmask items on West wall, projection screens, TV mounts, white boards X Training Finish painting X Mechanical Structural steel framing incomplete with doors X X X X ? Hawaiian Air may change to roll-up door? Need to resolve before shoring is removed Mechanical Paint underside of metal deck and gyp board walls X Mechanical Remove and patch CMU where stud fasteners remain X X X Mechanical Finish on drywall incomplete X X X Mechanical Remove shoring after structural work complete X Storage Floors to be cleand/grind and sealer applied X Storage Finished switch plates not installed X Storage Light fixtures not installed X Mezzanine Clean and touch up rungs to roof ladder X X Mezzanine Seal floor penetrations by East wall X X Mezzanine Floor needs cleaning/grinding beofre floor sealer X Mezzanine 2 - unused pentrations on East wall or more work to be done? X Mezzanine Seal 3 pipe pentrations by south wall X X Mezzanine Seal duct penetrations at South wall - typical X X X Looks unfinished Mezzanine Caulk gaps in wall at seat of joist girder in south wall X X Mezzanine Seal pentration of copper pipe at South wall X X Mezzanine Remove wood wedge and seal floor penetration at West side X X Mezzanine Unused pentration on South wall; cap X Stair S9 Touch up stair treads and landing - typical X X Clean all paint, drywall, make clean gray Stair S9 Repair damaged lagging at pipe X Stair S9 Repair large crack in slab at CMU by handrail and adjacent holes in CMU X X X C-FS200-08 C-CS128-04 C-CS128-05 C-CS128-06 C-CS128-07 C-CS128-08 C-CS128-09 C-CS128-10 C-CS131-01 C-CS131-02 C-S9-02 C-S9-03 C-CS128-01 C-CS128-02 C-CS128-03 C-FS200-01 C-S9-01 C-FS200-02 C-FS200-03 C-FS200-04 C-FS200-05 C-FS200-06 C-FS200-07 MEZZANINE FS200 STAIR S9 - going up to Mezzanine C-FS200-09 C-FS200-10 C-CS131-03 C-CS131-04 C-CS131-05 C-CS138-01 C-CS138-02 C-CS138-03 MECHANICAL ROOM CS131 STORAGE CS138 and CS139 - inside Training Rooms Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 28 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Sidewalk Handrails at Stair S11 not painted X Sidewalk Handrail base plate floating 2" above grade X X X Sidewalk Patch/repair damaged stair nosings at Stair S11 X X X Sidewalk Touch up and complete painting at all pipe columns Sidewalk Remove tape from Electric Room lock box X X Clean box of dirt Sidewalk Finish painting Door FS158B X Sidewalk Finish painting Door FS159 X Sidewalk Door 159 missing hinge X Sidewalk Pipe railings need painting per specifications X Sidewalk Sheet metal siding over storefront incomplete X Sidewalk Soffit incomplete at storefront Door FS165 X Sidewalk Storefront Door FS165 frame caps not installed X Sidewalk Black cast iron pipes to be painted? ? ? Sidewalk Finish caulking exterior of expansion joint X X Sidewalk Cracks in sidewalk need remediation X X Sidewalk Exterior lighting incomplete X Sidewalk Doors CS129B and CS130B missing door hinges X Cargo Floor requires cleaning/grind and apply sealer X Cargo Deficient installation of gable end fans X X X X X No drawings Cargo No power to ceiling fans X X X X X Cargo No power to roll-up doors X X X X X Cargo No power to dock levelers X X X X X Cargo Flash and caulk around exterior louvers X X X X X Cargo Caulk transom over man door C121H on Line 38 X X Cargo Install Door C121H on Line 38 X Cargo Dual Dock not installed due to pit being built wrong, no power provisions to dock leveler X X X X X Cargo Dual Dock not installed due to pit being built wrong, no power provisions to dock leveler X X X X X Cargo Touch up bollard painting - typical throughout X X X X Bollards and barriers for the new shelving in the center not shown on drawings Cargo Assess cracking slab on West side by docks X X X Cargo Repair sawcut overcut joints, clean and finish caulk X X X Cargo Scale trim pieces need to be installed correctly - miters don't match X X X Typical at 2 scales, messy work Cargo Stainless steel corner guards on column corners - typical throughout X X X Cargo Flash and caulk side of man door C121K South side X X X X X Cargo Door C121K South side missing threshold X X X X Cargo Flash and caulk over louvers on East side - typical on Line N and 38 X X X X X C-Exterior-06 C-Exterior-07 C-Exterior-08 C-Exterior-09 C-Exterior-10 D-C121-17 D-C121-18 D-C121-10 D-C121-11 D-C121-12 D-C121-13 D-C121-14 D-C121-15 D-C121-16 C-Exterior-11 C-Exterior-12 C-Exterior-02 C-Exterior-03 C-Exterior-04 C-Exterior-05 C-Exterior-01 SECTOR C EXTERIOR C-Exterior-13 C-Exterior-14 C-Exterior-15 C-Exterior-16 C-Exterior-17 SECTOR D - FIRST FLOOR CARGO C121 D-C121-01 D-C121-02 D-C121-03 D-C121-04 D-C121-05 D-C121-06 D-C121-07 D-C121-08 D-C121-09 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 29 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Cargo Abandoned scale pit plates are warped - Line N X X X Cargo Scale pit plates to be fastened? X X X X Cargo More cracking at slab at cast in place pits X X X X Need fix Cargo Man Door C121N North side of Line N missing threshold X X X Cargo Assess cracking slab at Grid 29/H X X X X Need fix Cargo Patch holes in Line 29 CMU wall left of hose reel, repaint X X X Cargo Construction joints to be cleaned and caulked X Cargo Cargo Loading Dock Header Clearance X Addendum #2 (04-26-16) Cargo Cargo truck clearance when backed to door X X Addendum #2 (04-26-16) Cargo Cubiscan scale Platform "bowed" X X Addendum #2 (04-26-16) Cargo Rollup Door Heights and Delineators all doors X X Addendum #2 (04-26-16) D-C121-30 Cargo ULD shelving in center of Cargo X X X Not ordered. Addendum #2 (04-26-16) D-C121-31 Cargo Complete fire suppression at ULD shelving. X X X Addendum #2 (04-26-16) D-C121-32 Cargo Bollards or traffic barriers at ULD shelving X X X Not ordered. Addendum #2 (04-26-16) D-C121-33 Cargo At loading dock confirm bumpers and clearance to avoid hitting concrete header. X X X Addendum #2 (04-26-16) D-C121-34 Cargo Exterior lighting at loading dock X X X Addendum #2 (04-26-16) D-C121-35 Cargo (F to G) Install chain link cages for valuable goods. X Delta 20. Addendum #2 (04-26-16) Cooler Install Dynaco cooler Door C127D on West entrance into cooler X X X Not ordered, or go back to the Rite Hite door. Confirm with HA Cooler Complete trench drain work at Door C127B X Cooler Install power to roll-up Door C127B on West side X ? Cooler Patch wall penetration at CMU for sprinkler line. X X Cooler Paint the underside of the canopy West side and framing and plates; similar on the East side X X Cooler Complete door hardware and wiring at Door C127H X X Cooler Patch and paint conduit penetrations in Northeast corner X Cooler Remove plastic protective film at walls and doors - typical X Cooler Complete electrical installations in Southwest corner X Cooler Clean sawcut joints and caulk and clean/grind floor and apply sealer X X Cooler Complete installation of Cooler man door X Cooler Paint all bollards and barriers - interior and exterior X Traffic yellow Cooler Ceiling fans mounted on the wrong side; shelves to be in this postion X X X X X Roof fans do not sit on a curb! Cooler Shelving to be installed on the South side of the Cooler X X Not purchased Cooler Install Dynaco door C127A on West side going into Cargo X X Not purchased Cooler Complete Cooler Door C127G X Cooler Install Dynaco Door C127F on East side X Not purchased Cooler Seal conduit penetrations through cooler ceiling - typical X Cooler Patch and paint conduit penetrations in Northeast corner X Cooler Install power to roll-up door C127C on East side X X X Cooler Complete door hardware at Door C127J X Cooler Complete electrical installations in the Southeast corner X D-C121-29 D-C121-22 D-C121-23 D-C121-24 D-C121-25 D-C127-04 D-C127-05 D-C127-06 D-C127-07 D-C127-08 D-C127-09 D-C127-10 D-C127-11 D-C121-28 D-C121-19 D-C121-20 D-C121-21 D-C121-27 D-C127-19 D-C127-01 D-C127-20 D-C127-21 D-C127-22 D-C127-02 D-C127-03 D-C121-26 D-C127-18 COOLER BUILDING C127 - attached to Cargo Line 38 D-C127-12 D-C127-13 D-C127-14 D-C127-15 D-C127-16 D-C127-17 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 30 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Cooler Cargo SS AG Inspection Table and Light X Addendum #2 (04-26-16) Cooler Roof condenser/equipment not on isolation mounts X X X Addendum #2 (04-26-16) Cargo Exterior Loading dock pipe railings need painting X Cargo Exterior Bollards need prep and painting X Cargo Exterior Man Door C121H missing hinge for door, needs paint touch up X X Cargo Exterior Structural steel barriers need prep and finish paint X Cargo Exterior Lower rail at roof ladder needs zinc touch up before painting X X X Cargo Exterior Fix grout and make water-tight at Cooler East wall Line 38 X X X Grout cracking Cargo Exterior Clean/fix CMU chips at Door C121Q opening, paint X X X Cargo Exterior Sprinkler drain line needs preservation - rusting X X X Also needs cleaning of gunky stuff Cargo Exterior Door C121K missing hinge X X X Cargo Exterior Caulk/flash tube steel to CMU X X X X X Cargo Exterior Paint Line N bollards X Cargo Exterior Line N canopy needs painting, roofing, flashing X Cargo Exterior Cart chargers not installed at Line N or 24 X X X X Cargo Exterior Standard CMU block walls not sealed?? X Cargo Exterior Line 24 canopies needs painting throughout X X X Cargo Exterior Door S118D missing hardware X Circulation Complete installing door hardware and touch up CMU wall paint X Circulation Complete installation of building expansion joint gasket and seal daylight gap/s. Unmask pipes when painting is complete X X X Circulation Unmask piping and touch up painting at CMU repairs X X Circulation Remove paint from copper pipe (overspray) and repair damaged pipe insulation and repaint X X Circulation Patch hole in CMU wall and make good if not going to be used. Repaint. X X X Circulation Complete electrical provisions in corridor, after all painting done X Circulation Complete electrical provisions in corridor, after all painting done and seal all penetrations through the wall. X Circulation All light fixtures installed? X X X HA to decide, dim Circulation Confirm locker layout in corridor, and location of the outlets. Slab to be cleaned/grind, sawcut joint caulked and floor sealed X X Circulation Complete installation of walk-off mats at doorways as required (typical) X Addendum #2 (04-26-16) D-C127-23 D-Exterior -05 D-Exterior -06 D-Exterior -07 D-Exterior -08 D-Exterior -09 D-Exterior -10 D-Exterior -11 D-Exterior -12 D-Exterior -13 D-Exterior -14 D-Exterior -15 D-Exterior -16 CIRCULATION C100 - between Grid Line 27 and 27.4 CIRCULATION C101 - at Men's and Women's Restroom E-C100-07 E-C100-08 E-C100-09 D-Exterior -04 E-C100-02 E-C100-03 E-C100-04 E-C100-05 E-C100-06 SECTOR E - FIRST FLOOR CARGO EXTERIOR D-Exterior -01 D-Exterior -02 D-Exterior -03 E-C100-01 D-C127-24 E-C100-10 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 31 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Circulation Transition between CMU and drywall not flush; match top and bottom walls X X Circulation Complete painting on walls X Circulation Clean and seal floors, complete painting of walls, base work X Circulation Transition between CMU and drywall not flush; match top and bottom walls X X Men's Restroom Complete finish hardware install, touch up paint on frame and door X X Men's Restroom Complete electrical work for plumbing fixtures, and then the tile work. Install plumbing fixtures X X X Men's Restroom Complete toilet accessories, toilet seat. X X X Are stall widths adequate? Men's Restroom Complete gyp board work on ceiling and finish painting X X Men's Restroom Correct mitered tile - there's no joint for grout X X X Just set flush Men's Restroom Complete installation of cover plates over electrical junction boxes - typical X X Men's Restroom Rework ceramic tile corner to match base; square vs. rounded - in two places X X X X Men's Restroom Remove steel rod that is cut flush to CMU wall. Patch and paint X X X Janitor's Closet Complete finish hardware on door, door bumpers, mop holder. Finish painting X X Janitor's Closet Complete finish around junction box and repaint X X X Janitor's Closet Complete painintg on all walls X Service Center Complete millwork installation and electrical data provisions and Owner supplied equipment X X Service Center Confirm millwork placement vs. power and data outlets. FIDS missing, etc. X X X X Work never got on to the drawings and electrical on backgrounds all messed up, incomplete or wrong Service Center Complete cased opening, Parcel Bin and draft curtain X X Not ordered yet Service Center Complete HVAC and electrical ceiling penetrations - seal X X Service Center Complete painting, clean paint off braided expansion fire pipe section. X X Office Complete millwork install, finish up flooring work, electrical and data X X Office Complete touch ups at drywall and touch up painting X X MEN'S RESTROOM C102 JANITOR C103 SERVICE CENTER C108 OFFICE C109 STORAGE C110 - Grid D/28 E-C101-03 E-C102-02 E-C102-03 E-C102-04 E-C102-05 E-C102-06 E-C102-07 E-C103-02 E-C108-04 E-C108-01 E-C108-02 E-C108-03 E-C108-05 E-C102-08 E-C101-01 E-C101-02 E-C101-04 E-C102-01 E-C109-01 E-C103-01 E-C103-03 E-C109-02 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 32 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Storage Complete door hardware and card reader. Paint frame and door X X Storage Provide adjustable shelving as shown on plans. Is there blocking? X X Storage Caulk at duct penetration through wall. Finish painting walls X X Open Office Complete finish door hardware and card reader X X Open Office Complete cabinet and countertop work and finish base at floors. Confirm the floor outlets vs. HA lateral files X X X Electrical drawing not correct? Open Office Confirm electrical and data locations. Grommets at countertop? Finish rubber base X X Open Office Repair all damage duct insulation and paint to match X X Open Office Complete installation of cabinets, countertops and rubber base at floors. Grommets at countertop? X X Open Office Complete installation of cabinets, countertops and rubber base at floors. Grommets at countertop? Floor outlet in the right location? Need to confirm Owner furnished equipment and to fit X X Open Office Clean out all cabinets and shelves - dirty, typical throughout X X Open Office Make the quad outlet level (crocked) and touch up paint on walls X X Office Complete finish hardware install and finish touch up painting at door, frame and walls X Office Fix gaps at electrical and data outlets/plates X X Office Complete electrical provision at the ceiling space X Office Complete touch at wall and HVAC register, paint X X Office Caulk bottom at floor of linoleum to metal door frames X X X Typical throughout Circulation Complete door hardware, card reader, rubber bumpers, touch up paint X X Circulation Complete CMU patch work and touch up paint at walls and frame/door X X Circulation Complete all cabling in trays. Cap all abandoned or future conduits X X Circulation Caulk bottom at floor of linoleum to metal door frames X X X Typical throughout Circulation At the top and bottom of the rubber base, just at the corner, caulk the gaps X X Linoleum overcut Audit Office Complete door finish hardware, card reader provisions. Paint door and frame X X Audit Office Caulk gaps around receptacles and finish plates X X OPEN OFFICE C111 OFFICE C113 CIRCULATION C114 - Grid 28/C AUDIT OFFICE C115 E-C110-03 E-C111-01 E-C111-08 E-C113-01 E-C113-02 E-C113-03 E-C113-05 E-C114-01 E-C114-02 E-C113-04 E-C114-03 E-C111-02 E-C114-04 E-C114-05 E-C115-01 E-C115-02 E-C110-01 E-C110-02 E-C111-03 E-C111-04 E-C111-05 E-C111-06 E-C111-07 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 33 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Audit Office Fix gaps at typ board and CMU corner, repaint X X Audit Office Rubber base is in, but not the millwork and countertop. Look at the work to be completed in this room. X X Women's Restroom Complete installation of door hardware, rubber bumpers, touch up paint at door and frame X Women's Restroom Correct mitered tile - there's no joint for grout X X X Just set flush Women's Restroom Review layout of partitions. Water supply may be in conflict and require moving. Complete tile work and all toilet accessories X X X X Women's Restroom Complete access panel work and touch up ceiling and paint X X Women's Restroom Review finish of drywall work and maybe refinish X X Women's Restroom Review clearances for ADA requirements in the toilet stall X X X Women's Restroom Complete wall access panel and touch up paint X X Women's Restroom Complete paint above door frame on the inside X Storage Complete finish hardware at door and touch up painting X X Storage Complete electrical provisions and unmask smoke detector X X Storage On the inside, touch up door and frame, complete hardware X X Comm Room Complete door hardware and card reader installation X Comm Room Complete data and communication wiring X Comm Room Complete electrical provisions, new conduits to be painted, pipe penetrations to be sealed. Remove tape from plywood to show 'Dricon' plywood X X Too late to paint plywood Circulation Complete CMU patch and touch up paint, corner guards X X Circulation Re-do CMU wall patch above door at conduit and repaint X X X Messy Circulation Adjust pipe brackets again for proper fit and fix insulation, repaint X X X Circulation Paint all newly installed conduits to match existing X X Circulation Paint holudays in steel beams in corridor X X Circulation Complete electrical provisions, if conduit not to be used - cap. Corner guards - typical X X Bag/Cargo Hold Inside Bag Hold at top of door header remove blue tape and refinish door and frame and install door bumpers X X Bag/Cargo Hold Is fire sprinkler and light fixture in conflict? X X X North west corner in Bag Hold Bag/Cargo Hold Power and Data outlets in conflict with shelving X X X E-C119-02 E-C119-03 E-C119-04 E-C119-05 WOMEN'S RESTROOM C116 STORAGE C117 COMM ROOM C118 CIRCULATION C119 - at Grid Line F BAG/CARGO HOLD C120 E-C117-02 E-C117-03 E-C118-01 E-C118-02 E-C118-03 E-C120-02 E-C120-03 E-C119-01 E-C119-06 E-C120-01 E-C116-08 E-C117-01 E-C115-03 E-C115-04 E-C116-01 E-C116-07 E-C116-06 E-C116-02 E-C116-03 E-C116-04 E-C116-05 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 34 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Bag/Cargo Hold Power and Data outlets in conflict with shelving X X Confirm with Hawaiian Airlines Bag/Cargo Hold Patch all wall penetrations and repaint. All new conduits to be painted X X Bag/Cargo Hold Shelf unit hitting junction box X OK with Hawaiian Airlines? Bag/Cargo Hold Patch the ceiling at the North east corner and paint. New conduits to be painted to match existing. X X X Bag/Cargo Hold Power and Data outlets below shelving; confirm OK with HA X X X Under Mezzanine Patch and finish the plate at the junction box - West wall X Under Mezzanine Is piping insulation complete on West wall? Seal all penetrations at the CMU walls - typical. X X Under Mezzanine Is piping insulation complete on West wall? X X Under Mezzanine Seal penetrations and paint the new conduit to match existing X X Under Mezzanine Traffic barriers not installed on West, North and East walls X X X The KTA drawings shows them Under Mezzanine Light fixtures to be installed no lower than the I-beams X X X X Under Mezzanine Floor slab to be cleaned/grind, joints caulked and floor sealed X X X Under Mezzanine Newly installed conduits to be painted to match existing X Under Mezzanine At North east corner, patch CMU grout and repaint X X Under Mezzanine Clean scuffed up CMU and touch up paint X X X Under Mezzanine Seal pipe penetrations goint out on East wall. Shelving to be in this area! X X X X Need pipe guards Under Mezzanine Delineators for 'clear head height' was to be installed at ductwork to coincide with roll-up door height. X X X X X Under Mezzanine Paint new conduits and provide guards around columns X X Under Mezzanine Fire Sprinkler Piping under Supply Mezzanine - Clearance Issue X X Addendum #2 (04-26-16) Ag Inspection Office Touch up door and frame as needed X Ag Inspection Office Finish up millwork in Ag office. X X Outlets in right place? Grommets on countertop? Ag Inspection Office Light fixtures not installed X Ag Inspection Office Unmask fire alarm device X Ag Inspection Office Clean out sawcut joints, caulk and finish floor and base work. X X Animal Hold Touch up door and frame as needed X Animal Hold Anchoring of frame - screw to be flush with frame X X X Scewed Animal Hold Patch pukas around fire alarm device X X Animal Hold Unmask and clean all the mechanical equipment X Animal Hold Condensate drain to floor - the floor does not slope to drain X X X X AG INSPECTION C122 ANIMAL HOLD C123 E-C121-07 E-C121-08 E-C121-09 E-C121-10 E-C121-11 E-C123-02 E-C123-03 E-C123-04 E-C123-05 E-C120-08 E-C120-04 E-C120-05 E-C120-06 E-C120-07 E-C122-01 E-C122-05 E-C123-01 E-C121-12 E-C121-13 E-C122-03 E-C122-04 E-C121-01 E-C122-02 UNDER MEZZANINE - No numbering but part of C121 E-C121-02 E-C121-03 E-C121-04 E-C121-05 E-C121-06 E-C121-14 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 35 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Animal Hold Clean sawcut joints, caulk and use appropriate caulking for an epoxy floor X X X Complete drain work too. Animal Hold Floor ponds in Northeast corner X X X Animal Hold Patch the overcut at the CMU wall receptacle X X Conference Room Finish hanging door, finish hardware and wiring X X Conference Room Finish up lighting and ceiling work X X Conference Room Clean sawcut joints, caulk, grind floor and apply finish. Base? X X Conference Room Clean sawcut joints, caulk, grind floor and apply finish. Base? Install white board? X X Conference Room Finish acoustical tile ceiling and lights X Sprinkler Valves Finish and clean up hardware installed, install rubber bumpers X X Sprinkler Valves Clean and complete grout patching at the perimeter bottom, repaint X X Sprinkler Valves Clean off paint or tape on the flush bolts X X Sprinkler Valves Repaint the walls where conduit and junction boxes were removed X X Sprinkler Valves Repaint the walls where conduit and junction boxes were removed X X Sprinkler Valves Repaint the walls where conduit and junction boxes were removed. Paint the new conduits. X X Sprinkler Valves Clean and fix around seal of the drain into sleeve X X X Messy Sprinkler Valves Patch the pukas in the CMU and repaint X X Controlled Materials Complete security wiring at the door, and finish hardware work. Jamb grouted? X X Controlled Materials Touch up painting all around man door frame X X Controlled Materials Bollards on the inside need to be painted traffic yellow X X Controlled Materials Hole exists near roll up door header but is patched on the corridor side. Patch and paint if not needed X X X Controlled Materials Overhead roll-up door and electrical provisions not completed X X X X Controlled Materials Expansion joint work at GL C and 26.1 needs to be installed X X X X Controlled Materials Espansion joint work at ceiling to be completed X X X X Controlled Materials Unmask all fire sprinklers X Controlled Materials Underside of decking, foam spray cleaned in some areas, some not. Make all good and repaint X X Controlled Materials The floor is not cleaned and the sealer is incomplete X X X Controlled Materials Patch and paint the puka in the Southeast corner of the room X X E-C128-07 E-C128-08 E-C128-01 SPRINKLER VALVES ROOM C128 E-C124-01 E-C124-02 E-C124-03 E-S117-10 E-S117-11 E-C128-04 E-C128-05 E-C128-06 CONTROLLED MATERIALS S117 CONFERENCE ROOM C124 E-C124-04 E-C124-05 E-C128-02 E-C128-03 E-S117-02 E-S117-03 E-S117-04 E-S117-09 E-C123-06 E-C123-07 E-C123-08 E-S117-01 E-S117-05 E-S117-06 E-S117-07 E-S117-08 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 36 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Controlled Materials Parts and pieces of shelving to be completed and installed X Electrical Complete installation of door hardware, touch up paint on door and frame. Cap conduits not to be used X X Electrical Complete electrical provisions. Remove temp power cord and patch/paint wall when work complete. Cap conduits not to be used. X X Electrical Seal all conduits going through ceiling, cap conduits not to be used, paint new conduits to match existing X X Electrical Clean all slab joints and caulk. Clean and seal floor X X X COVER ALL EQUIPMENT!!!!!!! Electrical Complete all electrical work, clean and label panel work X High Bay Storage Touch up paint on all the bollards -typical X X High Bay Storage At the intersecting CMU walls the expansion joint is not complete X X High Bay Storage All of the stainless steel corner guards need to be installed X High Bay Storage At Grid Line D/24 the cart chargers have not been installed per the Change Orders No. 1 and 5 X X X X ? High Bay Storage At the louvers, all the debris should be cleaned out - typical X X High Bay Storage Hopefully the threshold can fit under Door S118G X X High Bay Storage Patch around the junction boxes and repaint. Work around the tube steel columns looks incomplete X X X 'bug holes' High Bay Storage All the motorized roll up doors do not have electical provisions to power up X X X X X In the original RFP High Bay Storage All the column covers to be installed X High Bay Storage At GL 24/K and L a conduit and incomplete work. At this bay, the header is not caulked to the CMU wall - all the others are finished caulked X X X High Bay Storage At GL 24, install roll-up Door S118E X High Bay Storage Typical at all the roll-up doors and tube steel frame - seal and caulk the gap between steel and CMU, can see daylight. Finish below louver frame too, caulking? X X X X High Bay Storage Typical at all the roll-up doors and tube steel frame - seal and caulk the gap between steel and CMU, can see daylight. Need finish hardware installed at Door S118D X X X X High Bay Storage Need electrical provisions for the motor driven roll-up Door S121B X X X High Bay Storage At GL 27/M under Stair S10 grout the little bug hole in the corner and repaint X X High Bay Storage Confirm with HA on where to store the surplus shelving not being fabricated and installed. X At is present location may be OK. High Bay Storage At the high Bay shelves on the East side shows signs of rust. Commercial Shelving to rehabilitate shelves. Complete installation with 4 anchor bolts X X X Supposed to be powder coated E-C129-01 E-C129-02 E-C129-03 E-C129-04 E-C129-05 ELECTRICAL C129 - at Grid Line 27/D E-S118-01 E-S118-02 E-S117-12 E-S118-08 E-S118-09 E-S118-10 E-S118-11 E-S118-12 E-S118-13 E-S118-14 E-S118-15 E-S118-16 E-S118-17 E-S118-05 HIGH BAY STORAGE S118 E-S118-03 E-S118-04 E-S118-06 E-S118-07 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 37 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le High Bay Storage At the high Bay shelves on the East side shows signs of rust. Commercial Shelving to rehabilitate shelves. X X X High Bay Storage After completion of shelving, complete the fire suppression system at the highest level, and mid-level as designed X High Bay Storage Complete installation with 4 anchor bolts - typical throughout X High Bay Storage Renew the joint at the base of the CMU walls, clean the drips on the wall at Line 27 and repaint X X X Dirty water drips from Mezzanine level High Bay Storage Under Stair S6 all pipe pentrations to be sealed X High Bay Storage Under Stair S6 all pipe pentrations to be sealed X Tire Storage Repaint or touch up all the painted bollards X X Tire Storage Daylight between louver to tube steel and CMU to tube steel. Seal these penetrations. Caulk bottom of louver to CMU X X X X Tire Storage Installation of roll-up door S121E to frame got holes that need to be patched and painted X X X Tire Storage Installation of roll-up door S121E to frame got holes that need patched. Tube steel with gap at underside of header neads to sealed, as attached to header has spalled the concrete X X X X X Tire Storage There is daylight between CMU and tube steel; needs to be sealed X X X X X Tire Storage Conduit from opposite side may not be used; confirm and patch wall X X Tire Storage The underside of the lintel beam to be finished - can see the cells. Weld marks to be cleaned and re-painted X X X Tire Storage The roll up doors do not have power provisions to operate X X X X X Tire Storage The unistrut framing to hold up the lights does not have any engineered drawings. X X X X Tire Storage Confirm that tire racks been ordered. X Confirm with HA catalog cuts. Addendum #2 (04-26-16) Mezzanine Finish barrier at top of Stair S10. How does the rest of the handrail work? X X X X Mezzanine Finish barrier on the East side of the Mezzanine X Mezzanine Half of the slab was not completed - the Ewa side X X X Mezzanine The removable guard rails don't work safely X X X HA to re-do with new design Mezzanine Finish all remaining guard rails and chain link fencing. Fire alarm pull stations and devices to bee installed X X Mezzanine Slab still needs to be fixed X X X Mezzanine Dimples in the slab need to match the rest of the slab X X X Mezzanine Removable rail at Stair S6 to remain; Hawaiian to redesign X X X Mezzanine Slab still needs to be fixed X X X E-S118-18 E-S118-19 E-S118-20 E-S118-21 E-S118-22 E-S200-01 E-S200-02 E-S200-03 E-S200-04 E-S200-05 E-S200-06 E-S200-07 MEZZANINE S200 E-S200-08 E-S200-09 E-S118-23 E-S121-01 E-S121-02 E-S121-03 E-S121-04 E-S121-05 E-S121-06 E-S121-07 E-S121-08 E-S121-09 TIRE STORAGE S121 E-S121-10 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 38 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Mezzanine All of the steel column penetrations at the slab, Grid C needs to be sealed properly - not with plywood X X X X X Mezzanine All of the steel column penetrations at the slab, Grid C needs to be sealed properly - not with plywood X X X X X Mezzanine At Grid C, the two differing materials to be sealed X X X X X Big gap Mezzanine Vertical joint needs to be sealed X X X X X Big gap Mezzanine New conduits to be painted to match existing X X Mezzanine Electrical provisions or fire alarm to be completed X Mezzanine Electrical provisions or fire alarm to be completed X Mezzanine Complete chain link fencing and paint conduits X Mezzanine Traffic barrier plates not sitting flush with floor - correct or fix X X Mezzanine Gable end fan supports not engineered and designed. No power, automatic control, shrouds X X X X X Mezzanine Ceiling fans do not have electrical provisions to operate. Where are the controls for these fans? X X X X X Electrical Room Patch the pukas on the East CMU walls and repaint X X Electrical Room Seal penetrations through the floor - typical X Electrical Room Seal penetrations through the floor - typical X Electrical Room Seal all penetrations through the wall and conduits X X Electrical Room Seal all penetrations through the wall and conduits and paint the conduits and JB to match existing X X Electrical Room Seal all penetrations - patch the overcut at the drywall at ceiling X X Electrical Room Seal all penetrations through the drywall at the ceiling X X Electrical Room Unmask the smoke detector X Electrical Room Seal all penetrations through the metal deck X X X X X The ceiling may not meet Code Electrical Room Unmask all louvers and make clean X Electrical Room Door frame to be cleaned, install rubber bumpers - typical. Drilled puka at joints to be patched. Electrical Room Adjust/fix the keyed cylinders - spins and not working properly. X X Electrical Room Ceiling not constructed to meet code. X X X X X Addendum #2 (04-26-16) Elevator Equipment Room Behind Eevator and Electrical rooms, clean the deck and get equipment tested X X Remove candlesticks and caution tape Elevator Equipment Room Seal all penetrations through floor and cap conduits not used X X Elevator Equipment Room Fix the vertical caulk joint and finish paint X X X Elevator Equipment Room Unmask the fire alarm and smoke detector X X Elevator Equipment Room Floor needs to be clean, sealed and rubber base X X X Elevator Equipment Room Straighten the boxes on the West wall X X Elevator Equipment Room Ceiling not constructed to meet code. X X X X X Addendum #2 (04-26-16) E-S201-08 E-S201-02 E-S201-03 E-S201-04 E-S201-05 E-S201-06 E-S201-07 E-S201-12 E-S202-01 E-S202-02 E-S202-03 E-S202-04 E-S202-05 E-S202-06 E-S200-12 E-S200-13 E-S200-17 E-S200-18 E-S200-19 E-S200-20 ELECTRICAL S201 E-S201-09 E-S201-10 E-S201-11 E-S200-10 E-S200-11 E-S200-14 E-S200-15 E-S200-16 E-S201-01 EQUIPMENT ELEVATOR S202 - Mezzanine Level E-S201-13 E-S202-24 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 39 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Stairs At top of stair, patch puka and repaint X X Stairs At top landing, gap may need to be highlighted. X X Is gap too big? Stairs Patch gouges on CMU wall and clean/repaint dirty wall X X X Stairs Finished grout needs painting at CMU wall X X Stairs Finished grout needs painting at CMU wall X X Stairs Cane barrier at bottom of stair is dirty, needs cleaning. X X Handrail is for top portion of stairway? Won't work. Too long? Stairs Clean stair of drips on treads and risers - typical X X Stairs At the top landing the gap to the Mezzanine slab may be too great X X Open Yard Windows at Line C to get aluminum sunshades installed X X X Shades may not meeet size of window frames Open Yard Line C and 21 canopies in its entirety to get painted X Open Yard Clean and touch up doors with asphalt splatter X X X Open Yard Paint bollards and seal the CMU block walls X Hangar 1L Cannot install S/S corner guards as outlets at corner; typical throughout. Guards to be modified? X X X Hangar 1L Gable end fans installed without engineered drawings for the supports. Shrouds to the gable louvers not designed or installed X X X X X Power not provided to fans, controllers, wall switch Hangar 1L Floor needs to be cleaned prior to turnover to Hawaiian Airlines X HA to finish epoxy floor - By Others Hangar 1L Sawcut joints to be cleaned and caulked. Need to verify compatible material for epoxy (by HA) X Hangar 1L 5-ton overhead crane to be tested and re-certified with permanent power X Hangar 1L Foam system to be tested and cleaned at dispensers X X Hangar 1L Trench drains need to be opened, cleaned and tested X Hangar 1L Fall arrest system 1L to be turned over to HA and not to be installed X X DCK cannabelized this set due to missing parts. Turnover remainder to HA. Hangar 1L Remanant and rubbish needs to be trashed X X Hangar 1L Computer Briefing Chip in CMU wall at door opening X X X X Fire shutters at all windows, per Code Computer Briefing Touch up paint at door frame after grout and patch at CMU X X X Computer Briefing Missing electrical device over West door X Computer Briefing Touch up around electrical outlet on North wall X X X E- Exterior-01 E- Exterior-02 E- Exterior-03 E- Exterior-04 OPEN YARD EXTERIOR - Diamond Head side of facility COMPUTER BRIEFING H101 F-H101-04 E-S10-02 E-S10-03 F-H101-01 F-H100-1L-01 F-H101-02 F-H101-03 SECTOR F - FIRST FLOOR HANGAR H100 1 LEFT - Southwest corner E-S6-01 E-S6-02 E-S10-01 E-S6-03 F-H100-1L-02 F-H100-1L-03 F-H100-1L-04 STAIRS S10 - in Tire Storage up to Mezzanine F-H100-1L-05 F-H100-1L-06 F-H100-1L-07 F-H100-1L-08 F-H100-1L-09 F-H100-1L-10 E-S6-04 E-S6-05 STAIRS S6 - in High Bay up to Mezzanine Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 40 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Computer Briefing Electrical light fixtures not installed X Computer Briefing South door missing finish hardware X Storage Light fixture not installed X Storage Floor requires cleaning/grinding before application of sealer X Storage Touch up fireproofing at conduit X X Storage Touch up door and frame - painting X Storage Light fixture not installed X Storage Floor requires cleaning/grinding before application of sealer X Storage Repair damage at West wall X X Storage Touch up door and frame - painting X Storage Door H103 missing hardware, strike plate, etc. X Maint Supervisior Office Light fixture not installed X Maint Supervisior Office Floor requires cleaning/grinding before application of sealer and rubber base X X Finish Schedule is not correct Maint Supervisior Office Repair damage at the bottom portion of the Eat wall X X Maint Supervisior Office Door H104 missing the intermediate hinge X X Fire shutters at all windows, per Code Dock Office Missing device cover over door X X X Needs help Dock Office Holes at CMU around electrical and data outlets X X X Dock Office Wiring for electronic door hardware incomplete, jambs not grouted X X X Fire shutters at all windows, per Code Dock Office Electrical light fixtures not installed X Dock Office Lagging on ductwork to be repaired/replaced X X Dock Office Missing service window and revised millwork X X X Change Order No. 5. Addendum #2 (04-26- 16) Avionics Batteries Expansion joint at NW corner of room incomplete X X Avionics Batteries Electrical and data outlets need touch up, coordinated with 400 Hz power, inverter X X X X X 400 Hz provisions and power to roll-up doors Avionics Batteries West door glass light frame missing screws X Avionics Batteries Touch up paint at door, frame and wall at West door X X Avionics Batteries Touch up junction box opening East wall X X 7-feet from North wall Avionics Batteries Saw cuts in floor slab need caulking X X Avionics Batteries Chip in CMU block by firm alarm East wall X X X Avionics Batteries Comm cables and cable tray at South side is incomplete X X X Looks funky Avionics Batteries Touch up paint at bollard East side of overhead door X Avionics Batteries Touch up wall by overhead door spacer plates X X X Poor workmanship Avionics Batteries Touch up paint at column and wall at grounding cable X X X STORAGE H102 STORAGE H103 F-H102-03 F-H102-04 F-H103-01 F-MS100-02 F-MS100-03 F-H102-01 F-H105-05 F-H105-01 F-H105-02 F-H105-03 F-H105-04 F-MS100-05 F-MS100-09 F-MS100-10 F-MS100-08 F-H103-05 F-H101-05 F-H101-06 F-MS100-06 F-H104-02 F-H104-03 F-MS100-04 F-MS100-01 F-H104-01 MAINTENANCE SUPERVISOR OFFICE H104 F-H104-04 AVIONICS BATTERIES MS100 F-MS100-07 DOCK OFFICE H105 F-MS100-11 F-H103-02 F-H103-03 F-H103-04 F-H102-02 F-H105-06 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 41 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Avionics Batteries Touch up West wall at paint mark X Avionics Batteries Expansion joint at Southwest corner not correct X X X X Was this ever designed? Avionics Batteries Base of CMU wall needs completing - typical throughout X X Avionics Batteries Touch up floor penetrations - typical throughout X X X Poor workmanship Avionics Batteries Repair duct insulation North of air handler unit X X Taping is messy workmanship Avionics/Batteries A/C shop spaces seal at trench drains (typical all A/C spaces with roll-up doors) X X Addendum #2 (04-26-16) Emergency Equipment Touch up bollard West of North door X Emergency Equipment Touch up wall East and West of North door X Emergency Equipment Complete/touch up at base of CMU wall - typical at perimeter X X Emergency Equipment Touch up paint on West wall X Blotchy, dirty Emergency Equipment Missing threshold East door X X X Emergency Equipment Material on window glass - needs cleaning X X Emergency Equipment Touch up around electrical outlet and data receptacles - typical throughout X X Emergency Equipment Touch up paint on West wall near South side X X Emergency Equipment Repair chain for overhead door X X X Need electrical power Emergency Equipment Touch up paint at column and wall at grounding cable X X X Emergency Equipment Touch up welds and paint at welded spacer plates for the overhead door framing X X X Welds look teribble Emergency Equipment Flash or seal East side of overhead coiling door X X X X Can see daylight Emergency Equipment Comm cables not installed yet in cable tray on South side X Emergency Equipment Repair lagging on chill water piping X X Emergency Equipment Unknown electrical wiring dangling from overhead X Emergency Equipment Repair lagging and seal duct at air handler unit X X Paint Booth Side and top lights not connected X X X X X Electricians say no power going to Booth Paint Booth Stainless steel panels need cleaning throughout X X Paint Booth Exterior roll-up door missing X X X X Ordered? Need power to operate Paint Prep Caulking in CMU joint separating X X X Paint Prep Caulking at CMU joints incomplete X X 4-feet West of door Paint Prep Opening at electrical boxes unfinished X X Paint Prep Fix CMU gouge in wall 2-feet from floor X X Paint Prep Touch up paint North wall at East wall corner X Paint Prep Caulking at South wall perimeter unsatisfactory. Pipe penetrations to be filled X X X Paint Prep Base of CMU wall perimeters caulked unsatisfactory X Paint Prep Grate sections of trench drains not installed X Paint Prep Touch up column where grounding cable was welded X X X Paint Prep Caulking at floor at column unsatisfactory X X X EMERGENCY EQUIPMENT MS101 aka Raft Room F-MS101-15 F-MS102-02 - F-MS103-08 F-MS100-12 F-MS101-09 F-MS101-16 F-MS102-01 F-MS103-01 F-MS103-05 F-MS103-06 F-MS103-07 F-MS101-02 F-MS101-03 F-MS101-04 F-MS100-15 F-MS100-16 F-MS103-02 F-MS103-03 F-MS103-04 F-MS101-10 PAINT BOOTH MS102 PAINT PREP MS103 F-MS103-09 F-MS103-10 F-MS101-05 F-MS101-06 F-MS101-07 F-MS101-08 F-MS101-01 F-MS100-13 F-MS100-14 F-MS101-11 F-MS101-12 F-MS101-13 F-MS101-14 F-MS100-17 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 42 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Paint Prep Firestop cushions at cable tray North wall incomplete X X X Composite Lay-Up Touch up patch in North Wall and MS106 side X X X Composite Lay-Up Touch up North wall at electric box X X Composite Lay-Up Paint junction box cover and touch up around box X Painting Composite Lay-Up Touch up door framing at South door X Painting Composite Lay-Up Touch up around receptacle cover westside of South door X Composite Lay-Up Touch up steel column, clean burn marks on wall at ground strap weld X X X Composite Lay-Up Touch up sealing at West wall pentrations X X X Messy Composite Lay-Up Touch up paint at bottom of steel column X Composite Lay-Up Touch/repair lagging on ductwork X Composite Lay-Up Touch up base of perimeter CMU X X Composite Lay-Up Seal or flash top of all tube columns at transon/louver; typical throughout X X X 'Rat hole' Oxygen Room Touch up puka at receptacle plate, repaint X X Oxygen Room Touch up grout at North wall at east side X X X Cracks, and cracking Oxygen Room Clean wall and touch up paint at East wall at pipe X Oxygen Room Touch up steel column at ground strap weld X X X Oxygen Room Touch up door frame at South door X Oxygen Room Clean window frame of overspray and repaint South wall corner at west side X X Oxygen Room Touch up bottom of door X Overspray Oxygen Room Caulk/seal saw cut joints in slab on grade and finsh seal X X X Interiors, Seats, Structure Tire marks on floor X X X Interiors, Seats, Structure Penetrations in CMU way not sealed X X X Fire safing required??? Interiors, Seats, Structure Incomplete repair at CMU wall at Dr MS-106B X X Interiors, Seats, Structure Caulking at base perimeter and wall unsatisfactory X X X Interiors, Seats, Structure Caulking at column pourback at slab unsatisfactory X Interiors, Seats, Structure Caulking at CMU joint separating X X Interiors, Seats, Structure Touch up wall at Northeast crane support column X X Interiors, Seats, Structure Unsatisfactory condition at base of East CMU wall X X X Interiors, Seats, Structure Receptacles crooked on South wall X X Interiors, Seats, Structure Fire alarm unit mounting unsatisfactory on South wall X X Interiors, Seats, Structure Crane stops not finished at 4 places in shop X X X What needs to be done?? Interiors, Seats, Structure Column unpainted behind cable tray X Office No base installed for floor covering X X X Millwork not installed! Office Junction box cover not painted X X Office Touch up insulation at CW lines X F-MS106-10 F-MS106-08 F-MS106-09 F-MS105-07 F-MS106-06 F-MS106-07 COMPOSITE LAY-UP MS104 OXYGEN MS105 F-MS105-08 F-MS106-01 F-MS106-12 F-MS105-01 F-MS105-02 F-MS105-03 F-MS105-04 F-MS105-05 F-MS107-02 F-MS106-11 F-MS104-05 INTERIORS, SEAT AND STRUCTURE SHOPS MS106 F-MS103-11 OFFICE MS107 F-MS104-09 F-MS104-10 F-MS105-06 F-MS106-03 F-MS106-04 F-MS106-05 F-MS104-01 F-MS104-02 F-MS104-11 F-MS107-03 F-MS106-02 F-MS104-03 F-MS104-04 F-MS104-06 F-MS104-07 F-MS104-08 F-MS107-01 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 43 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Office Blanked out penetration in East wall not painted X X Office Hole in window frame South side of East window opening X X X Office Aluminum frame for East window damaged X X X Office Finish and clean grout at South side of West window X X X Office Caulking at CMU joint separating X X Office Caulking at Northwest corner of CMU incomplete X X X Circulation Touch up paint around Door MS121 X X Circulation Touch up holes in CMU West wall at North end, repaint X X Circulation Touch up paint at North end door in Circulation X X Circulation Touch up grout at corner of West and North walls X X X Circulation Touch up grout at corner East and North walls, all the way up X X X Circulation Repair chipped and gouges in CMU wall under light X Circulation Repaint Door MS11 for Electrical Room; oversprayed X Circulation Touch up wall North of MS110 Janitor Closet X Clean concrete splatter; repaint Circulation Touch up wall about 8-feet South of MS110 Janitor Closet X Dirty Circulation South door, left side, missing glass light X Circulation Touch up door header frame, South Side X X X Repaint Circulation Touch up door to MS106 Interior, Seat Shop X Repaint Circulation Touch up door, frame and surrounding walls at MS120 Unisex Restroom X X X Repaint Janitor Unmask valve after painting X Clean up Janitor Rust bleeding through paint on piping X Janitor Unmask small pipe after painting X Janitor Repair damage to wall behind copper pipe X Repaint Janitor Touch up chip in CMU wall on East side X Repaint Janitor Touch up grout line corner on North and East walls X X Repaint Janitor Touch up grout line at corner of South and East wall X X Repaint Janitor Touch up grout void behind hot water pipe and repaint X Janitor Coulking maissing around janitor sink perimeter X X X Janitor Finish of FRP panels to floor unacceptable X X Gap Janitor Touch up overspray on door X Janitor Patch puka in CMU at top (header) X X X Janitor Caulk/seal around pipe penetrations at ceiling X X X Repaint Electrical Cap JB and touch up paint at dirty CMU wall - East side X X Electrical Complete all electrical work and cap unused conduits X Electrical Caulk the vertical joint at the CMU wall - West side X Electrical Complete the installation of the threshold X Electrical Unmask the smoke detector X Electrical Panels to have finished covers? X F-MS111-04 F-MS111-05 F-MS111-06 F-MS111-02 F-MS111-03 F-MS108-12 F-MS111-01 F-MS110-09 F-MS110-10 F-MS110-11 F-MS110-12 F-MS108-06 CIRCULATION MS108 - running North to South F-MS108-01 F-MS107-04 F-MS107-05 F-MS107-06 F-MS107-07 F-MS107-08 F-MS108-07 F-MS108-08 F-MS108-09 JANITOR MS110 F-MS110-04 F-MS110-05 F-MS110-06 F-MS110-07 F-MS110-08 F-MS107-09 F-MS108-02 F-MS108-03 F-MS108-04 F-MS108-10 F-MS110-13 F-MS108-05 F-MS108-11 F-MS108-13 F-MS110-02 F-MS110-03 F-MS110-01 ELECTRICAL MS111 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 44 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Electrical Floor to be cleaned and sealed. Remove temp power cord when permanent power established X X Electrical Empty conduit at ceiling to be used? Cap if not being used. Paint all new conduits in room to match existing X X Comm Room Empty junction box East of North door X X Comm Room Work at raceway incomplete and need finish cover X X Needs cleaning Comm Room Work at raceway incomplete and need finish cover X X Comm Room Touch up paint over door and below cable tray X X Comm Room Empty junction box X X Comm Room Wall penetration not sealed at waterline X X X Comm Room East wall paint noot good - touch up or repaint X X X Comm Room Chip on CMU block East of door X X X Comm Room Complete/touch up at base of CMU wall - typical at perimeter X X Room needs cleaning Unisex Restroom Toilet seat not installed X Unisex Restroom Touch up hole near ceiling register X X Does damper control work for TAB? Unisex Restroom Touch up at firm alarm mounting X X X 'Rat holes' Unisex Restroom Wall tile out of alignment X X Floors not sealed Unisex Restroom Paint run on South side door frame X X Unisex Restroom Re-do drywall of gouge at South wall X X X Unisex Restroom Grout incomplete North side of door X X X Unisex Restroom Repaint door frame X Unisex Restroom Toilet seat not installed X Unisex Restroom Touch up at firm alarm mounting X X X 'Rat holes' Unisex Restroom Grout line at wall tiles too deep X X X Unisex Restroom Touch up gouge in West wall X X Unisex Restroom Touch up grout in North wall X X Unisex Restroom Touch up grout in North wall X X Unisex Restroom Touch up grout in North wall at corner X X Unisex Restroom Touch up South side of door opening X X X Unisex Restroom Touch up gouge in CMU East wall X X Unisex Restroom Touch up East and South corner of walls X X Unisex Restroom Repair hole in ceiling near register X X Hangar 1R Traffic barriers incomplete North side of the Hangar offices X Hangar 1R Cannot install S/S corner guards as outlets at corner; typical throughout. Guards to be modified? X X X F-MS111-07 F-MS120-01 F-MS121-05 F-MS119-07 F-MS119-08 F-MS121-08 F-MS121-09 F-MS119-01 F-MS119-09 SECTOR G - FIRST FLOOR F-MS121-02 F-MS121-03 F-MS121-04 F-MS120-08 F-MS121-01 F-MS121-10 F-MS121-11 F-MS121-06 F-MS121-07 COMMUNICATIONS MS119 UNISEX RESTROOM MS120 UNISEX RESTROOM MS121 F-MS120-02 F-MS120-03 F-MS120-04 F-MS120-05 F-MS120-06 F-MS120-07 F-MS111-08 F-MS119-04 F-MS119-05 F-MS119-06 F-MS119-02 F-MS119-03 G-H100-1R-01 HANGAR H100 1 RIGHT - Northwest corner G-H100-1R-02 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 45 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Hangar 1R Gable end fans installed without engineered drawings for the supports. Shrouds to the gable louvers not designed or installed X X X X X Power not provided to fans, controllers, wall switch Hangar 1R Floor needs to be cleaned prior to turnover to Hawaiian Airlines X HA to finish epoxy floor - By Others Hangar 1R Sawcut joints to be cleaned and caulked. Need to verify compatible material for epoxy (by HA) X Hangar 1R Depressed slab between Grids J and K not complete X X X X X Hangar 1R RUBB cables between Grids L and M have slack in them - need tightening? X Hangar 1R Exisiting stored materials to be removed to complete overhead work - electrical materials X Hangar 1R Fall protection at position 1R incomplete X X Hangar 1R Foam system to be cleaned and tested X Hangar 1R Exisiting stored materials to be removed to complete overhead work - sheet metal materials X Hangar 1R Trench drains needs to be opened, cleaned and tested X Agent Copy/Work Room Finish up all millwork install and the finish bases X X Agent Copy/Work Room Missing device over door X Agent Copy/Work Room Device missing at South wall X Agent Copy/Work Room Light fixtures not installed X X Fire shutters at all windows Line Office Repair damaged drywall at South wall, repaint X X X Line Office Missing device over Door H107 X Line Office Finish up all millwork install and the finish bases X X Line Office Light fixtures not installed X X Fire shutters at all windows Office Finish up millwork and then finish rubber base X X Office Install light fixtures X X Fire shutters at all windows Office Touch up around fire alarm device X X Inspection Engineer Light fixtures not installed X X Fire shutters at all windows Inspection Engineer Wall base for flooring not installed X Waiting for millwork Inspection Engineer Touch up around outlets at CMU wall openings X X X Inspection Engineer Electrical device not installed over East door X Inspection Engineer Light switch at East door not mounted flush to wall X X X Inspection Engineer Electronic wiring and finish hardware incomplete X X Jambs not solid grouted, yet Storage Light fixtures at ceiling not installed X G-H107-02 G-H107-04 G-H109-01 G-H109-02 G-H109-03 G-H106-01 G-H110-01 G-H106-04 G-H109-06 LINE OFFICE H107 OFFICE H108 INSPECTION ENGINEER H109 G-H109-04 G-H109-05 G-H107-01 G-H108-01 G-H107-03 G-H108-03 STORAGE H110 AGENT COPY/WORK ROOM H106 G-H100-1R-05 G-H108-02 G-H100-1R-04 G-H106-03 G-H100-1R-06 G-H100-1R-07 G-H100-1R-08 G-H100-1R-09 G-H100-1R-10 G-H100-1R-11 G-H100-1R-12 G-H106-02 G-H100-1R-03 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 46 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Storage Wall base for flooring not installed X Storage Touch up around outlets at CMU wall openings X X X Storage Fireproofing damaged adjacent to AHU at ceiling X X X Office Install rubber base at finish floor X Office Joint in resilient floor needs seaming X X Office Repair gouge in North wall X X Office Device over door missing/incomplete X X Fire shutters at all windows; Code Office Touch up wall below fire alarm device, bottom left X X Office Touch up around light switch and receptacles - typical X X Messy Office Door H111 missing hinge and wiring incomplete X X Womens Restroom Sinks and mirrors not installed X Womens Restroom Paper Towel dispenser to be installed X Womens Restroom Toilet partitions and toilets not installed X Womens Restroom Door FS101 missing hardware and needs to be cleaned and painted X Mens Restroom Lavatories not installed X Mens Restroom Toilet partitions and toilets not installed X Mens Restroom Urinals and partitions not installed X Mens Restroom Paper Towel dispenser to be installed X Mens Restroom Electrical box in South wall incomplete X Janitor Touch up door and frame X Janitor Touch up door and frame FS104 X Janitor Missing access panel at ceiling X X Janitor Unmask item on ceiling X Janitor Touch up door and frame on the interior X Janitor Need corner clip for FRP panel, and panels fall short of slab X X X No base but fill bottom Janitor Missing device at ceiling X Janitor Floor to be cleaned and sealed X Sink to be caulked at floor Compressor Room Touch up at switch and receptacle - typical X X Walls to be painted! Compressor Room Underside of metal decking requires painting X Compressor Room Floors to be cleaned/grind followed by sealing X Compressor Room Finish masking and painting of space, clean up X Compressor Room Clean South wall of drips before completing painting X X Compressor Room Touch up CMU base at wall to base - typical X X X G-FS102-05 WOMENS RESTROOM FS101 MENS RESTROOM FS102 G-FS101-01 G-FS101-02 G-FS101-03 G-FS101-04 G-FS102-01 G-H110-02 G-H110-03 JANITOR CLOSET FS 104 G-FS105-01 G-FS105-02 G-FS105-03 G-H110-04 G-FS105-05 G-FS104-01 G-FS104-02 G-FS104-03 G-FS104-04 G-FS104-05 G-FS104-06 G-FS104-07 G-FS104-08 G-H111-06 G-FS105-06 G-H111-07 OFFICE H111 G-FS102-02 G-FS102-04 G-H111-02 G-H111-03 G-H111-04 G-H111-05 G-H111-01 G-FS105-04 COMPRESSOR ROOM FS105 G-FS102-03 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 47 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Circulation Double Door FS103 missing screws at glass retainer X Circulation Floors to be cleaned/grind followed by sealing X Circulation Door FS138A missing hardware, touch up door and frame X X Circulation Touch up double door and frame FS138B X Circulation Touch up floor caulking at North wall X X Circulation Touch up around receptacles - typical X X X Circulation Touch up bottom of CMU to floor X X X Voids Circulation Touch up door and frame FS137 into Small Parts X Circulation Patch damage CMU entrance to Large Parts FS108 X X Corner guards as required General Storage Door FS107A touch up door and frame into General Storage X General Storage Overhead coiling door FS107B not installed with electrical provisions X General Storage Wiring incomplete at FS107A X General Storage Device missing at East wall X General Storage Touch up receptacles/covers on wall - typical X X X General Storage Floor to be clean/ground followed by sealing X General Storage Touch up CMU base at wall to base - typical X X X Large Parts Floor to be clean/ground followed by sealing X Large Parts Touch up CMU base at wall to base - typical X X X Large Parts Unmask pipe at ceiling X X Large Parts Touch up South wall receptacle X X X Big gap Reserve Parts Storage Floor to be clean/ground followed by sealing X Reserve Parts Storage Touch up CMU base at wall to base - typical X X X Reserve Parts Storage Touch up receptacles/covers on wall - typical X X X Reserve Parts Storage Door FS110 to Hangar missing finish hardware X Reserve Parts Storage Touch up around fire alarm device X X X Engine Shop Floor to be clean/ground followed by sealing X Engine Shop Touch up receptacles/covers on wall - typical X X X Engine Shop Touch up West wall receptacle X X X Engine Shop Patch CMU on fin wall X X Corner guards as required Engine Shop Charging Outlets at Engine Shop Exterior X Addendum #2 (04-26-16) Engine Storage Floor to be clean/ground followed by sealing X Engine Storage Touch up CMU base at wall to base - typical X X X Engine Storage East wall seal gap beween CMU and steel column X X G-FS111-05 G-FS107-07 G-FS106-09 G-FS107-01 G-FS107-02 ENGINE SHOP FS111 ENGINE STORAGE FS112 G-FS110-01 G-FS110-02 RESERVE PARTS STORAGE FS110 G-FS111-03 G-FS111-04 G-FS112-01 GENERAL STORAGE FS107 G-FS106-07 G-FS110-05 G-FS110-03 G-FS110-04 G-FS106-01 G-FS108-01 G-FS108-02 G-FS108-03 G-FS108-04 G-FS112-02 G-FS112-03 G-FS111-01 G-FS111-02 LARGE PARTS FS108 G-FS106-04 G-FS106-05 G-FS106-06 G-FS106-08 G-FS107-03 G-FS107-04 G-FS107-05 G-FS107-06 CIRCULATION FS106 G-FS106-02 G-FS106-03 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 48 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Engine Storage Touch up around East wall data ports X Engine Storage Door FS113 touch up door and frame, remove tape from handle X Engine Storage Trolley crane paint wheel stops (4 places in Fleet Services Bay) X Electrical Room Clean South wall - typical for all walls X Paint? Electrical Room Clean ground plate and touch up paint at ground strap weld X X Electrical Room Touch up door X X Electrical Room Touch up door frame X X Paint Electrical Room Touch up grout at CMU corners X X Shrinking and cracking Electrical Room Seal, or blank off empty/future conduits X X Repair Bay No power to exhaust hose reels X X X Addendum #2 (04-26-16) Hydraulic Shop Touch up floor at pipe penetrations at East wall X X X Messy Hydraulic Shop Device missing at wall - typical X Hydraulic Shop Touch up West wall at switch X X X gaps and voids Hydraulic Shop Repair duct insulation at East wall X X X Messy, make it look better Repair Bay Overhead coiling doors not installed with electrical power provisions X X X X Repair Bay Caulk between tube steel column and walls - typical X X X X X Can see daylight. No details, drawings Repair Bay Touch up bollards X X Repair Bay Floor will require cleaning/grinding before sealer is applied X X X Repair Bay Patch concrete slab a steel column bases - typical X X X Chips, spalls Repair Bay Touch up wall opening at fire alarm device - typical X X X Repair Bay Paint CMU at overhead door openings X X All of exterior canopy requires painting Repair Bay Touch up floor at work stattion penetrations X X X Repair Bay Emergeny eye wash damaged and crocked X X X Repair Bay Touch up floor and seal pipe penetration X X X Repair Bay Touch up floor and base of CMU walls - typical X X X Messy Repair Bay Transon framing missing trim at man Door FS134 X X Office Complete touch up of exterior door and frame X X Office Install millwork and then finish base X X Office Touch up fire alarm device at wall X X Office Seal pipe petrations before millwork gets set X X X Office Touch up paint and caulk at windows X X Messy, oversprayed, dirty Office Touch up hole around electrical box, on wall X X X Big gaps Office Patch/caulk top of East window on left side X X X Office Adjust middle light fixture; hung crooked X X X G-FS133-01 G-FS133-02 G-FS133-03 G-FS133-04 G-FS133-05 G-FS133-06 G-FS133-07 G-FS133-08 G-FS133-09 G-FS133-10 G-FS133-11 G-FS133-12 REPAIR BAYS FS133 - SPANS into Sector I too OFFICE FS135 G-FS135-08 G-FS135-01 G-FS135-02 G-FS135-03 G-FS135-04 G-FS135-05 G-FS135-06 G-FS135-07 ELECTRICAL FS113 G-FS113-01 G-FS114-04 HYDRAULIC SHOP FS114 G-FS113-04 G-FS113-05 G-FS113-02 G-FS113-06 G-FS113-03 G-FS114-01 G-FS114-02 G-FS114-03 G-FS112-04 G-FS112-05 G-FS112-06 G-FS133-07 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 49 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Office Unmask light fixture X Office Data cabling incomplete X Office Seal upper and lower pentrations on wall and unmask box X X Office Hole in door frame; refinish X X X Small Tools Storage Touch up around light switch X X Gaps Small Tools Storage Clean paint off electrical outlet X Small Tools Storage Clean floor before sealing X X Small Tools Storage Touch up/clean up the base of the CMU wall perimeter X X Messy Small Parts Complete touch up of door and frame X Small Parts Touch up fire alarm unit on wall X X X Messy Small Parts Touch up/patch wall above door X X Small Parts Touch up wall around the receptacle - typical X Small Parts Floor requires cleaning/grinding before sealing X X Small Parts Finish install of light fixtures X Small Parts Wiring and finish hardware incomplete X Mechanical Floor requires cleaning and sealing X Cover all equipment !!! Mechanical Touch up around fire alarm device - typical X X Walls to be painted Mechanical Missing wall devices X X Walls need painting Mechanical Underside of metal decking requires painting X Mechanical Clean/touch up floor at North penetrations X X Messy Mechanical Touch up base of CMU wall - typical X X Voids at grout joints Mechanical Missing device on East wall X Foam Tank Room Light fixture missing at Unistruct over tank X Foam Tank Room Remove plastic sheeting over components X Piping, valves Foam Tank Room Touch up North wall junction box X X Messy. Walls to be painted? Foam Tank Room Touch up West wall junction box X X Foam Tank Room Touch up Door FS138C to Mechanical Room FS138 X Foam Tank Room Touch up around West wall junction box X X Patch/caulk? Foam Tank Room Clean East wall of dripping, efflorescence and paint walls X X Foam Tank Room Floor requires cleaning/grinding before sealing X X Cover/clean all equipment and fixtures!! Foam Tank Room Electrical device work incomplete at the West wall X Storage Touch up wall at fire alarm device X X Puka too big, gaps Storage Touch up around light switch X X Puka too big, gaps Storage Missing device on South wall X Storage Floor requires cleaning/grinding and sealing X Storage Touch up CMU base at walls - typical X X Messy, grout voids G-FS137-01 G-FS137-02 STORAGE FS140 G-FS136-04 SMALL TOOLS STORAGE FS136 SMALL PARTS FS137 FOAM TANK ROOM FS139 G-FS139-03 G-FS139-04 G-FS139-05 G-FS139-06 G-FS139-07 G-FS137-07 G-FS138-01 G-FS137-03 G-FS137-04 G-FS137-05 G-FS139-02 G-FS136-02 G-FS136-03 G-FS138-02 G-FS138-03 G-FS138-04 G-FS138-05 G-FS138-06 G-FS138-07 MECHANICAL ROOM FS138 G-FS140-01 G-FS140-02 G-FS140-03 G-FS135-09 G-FS135-10 G-FS135-11 G-FS139-01 G-FS139-08 G-FS139-09 G-FS135-12 G-FS136-01 G-FS137-06 G-FS140-04 G-FS140-05 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 50 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Storage Touch up Door FS140 door and frame X Storage Door FS140 missing hinge X COMM Room Patch/cover JB at CMU wall over door X X X COMM Room Complete touch up at door and frame X Walls to be painted? COMM Room Touch up and re-do caulking at door frame X X X Messy COMM Room Data cabling incomplete X COMM Room Data receptacle incomplete X COMM Room Touch up floor penetrations and clean X X Is floor sealed? COMM Room Seal/cap the unused future conduits X Cover all equipment and wiring first!!!!! Hangar 2L Cannot install S/S corner guards as outlets at corner; typical throughout. Guards to be modified? X X X Hangar 2L Floor needs to be cleaned prior to turnover to Hawaiian Airlines X HA to finish epoxy floor - By Others Hangar 2L Sawcut joints to be cleaned and caulked. Need to verify compatible material for epoxy (by HA) X Hangar 2L Foam system to be cleaned and tested X Hangar 2L Trench drains needs to be opened, cleaned and tested X Hangar 2L Depressed slab between Grids R and S not complete X X X X X Hangar 2L Fall protection install not complete, needs to be certified by Guardian X X Hangar 2L Turn over all remaining fall arrest rails and parts to Hawaiian Airlines X X Hangar 2L Dowels baskets for PCC paving fronting Hangar; might be interfereing with work X Hangar 2L Remaining drywall materials may be interfering with overhead work X Hangar 2L Remaining drywall materials may be interfering with overhead work X Hangar 2L Need flashing and sealing around Mega doors and louvers X X X X X Hangar 2L Need flashing and sealing around Mega doors and louvers X X X X X Hangar 2L Touch up RUBB steel at column leg at grounding, cap conduits X X Hangar 2L Major cracking at slab on grade between Grids W and X X X X Metal Fabrication Shop Touch up wall around receptacle cover plate X X Typical throughout Metal Fabrication Shop Touch up wall around receptacle cover plate X X Typical throughout Metal Fabrication Shop Caaulking at floor saw cut delaminating X X X Metal Fabrication Shop Touch up base of wall perimeter X X X Unfinished, messy Metal Fabrication Shop Touch up pipe bracket on East wall X X X Dirty, rusty SECTOR H - FIRST FLOOR G-FS140-07 G-FS167-04 COMM ROOM FS167 H-MS109-03 G-FS167-05 G-FS167-01 G-FS167-02 H-MS109-02 METAL FABRICATION SHOP MS109 H-MS109-01 G-FS167-03 H-MS109-04 H-MS109-05 G-FS167-06 G-FS167-07 G-FS140-06 H-H100-2L-04 H-H100-2L-11 H-H100-2L-12 H-H100-2L-13 H-H100-2L-14 H-H100-2L-15 H-H100-2L-05 H-H100-2L-06 H-H100-2L-07 HANGAR H100 2 LEFT - Southeast corner H-H100-2L-01 H-H100-2L-02 H-H100-2L-03 H-H100-2L-08 H-H100-2L-09 H-H100-2L-10 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 51 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Metal Fabrication Shop Touch up bollard top X Metal Fabrication Shop Touch up column at ground strap weld connection X X X Clean and repaint Metal Fabrication Shop Touch up paint on door frame South man door X X Metal Fabrication Shop Touch up paint blot on West wall X X Metal Fabrication Shop Touch up blot on North wall below outlet X X Metal Fabrication Shop Touch up bollard top X Testing Touch up wall under electrical cabinet X X Testing Touch up box on West wall and close cover X X Oversprayed Testing Touch up base of perimetr in room X X X Testing Touch up hole in wall over fire alarm device X X X Testing Touch up frame and opening at man door X X Testing Touch up both sides of overhead door opening X X Testing Touch up gouge in East wall X X Testing Clean/ re-do base at overhead door X X X Messy Testing Touch up the caulking at slab X X X Machine Shop Circulation Touch up weld areas at overhead door North side X X X Burn marks Machine Shop Circulation Touch up paint at bottom of bollard X Machine Shop Circulation West door missing threshold X X Machine Shop Circulation Touch up wall West of North overhead door X X Machine Shop Circulation Touch up hole in wall over fire alarm device X X X Machine Shop Circulation Caulking at base of South wall unsatisfactory X X X Machine Shop Circulation Touch up gouge in South wall X X X Machine Shop Circulation Touch up pipe bracket on East wall X X X Dirty, rusty Machine Shop Circulation Clean and touch up sill at louvers, eastside of the South overhead door X X Machine Shop Circulation Touch up paint overspray at louver frame East of south side door X X Machine Shop Circulation Repair floor at East side of the South man door. X X X 'Rat hole' at bottom? Machine Shop Circulation Clean and repair panic hardware on South door X X X Dirty Machine Shop Circulation Clean and touch junction box and cover on the West of the man door X X Machine Shop Circulation Touch up column base at Southwest corner of room X X Machine Shop Circulation Unmask fitting West of South man door X X Machine Shop Circulation Touch up wall at conduit bracket X X X 3 tries and looks bad Machine Shop Circulation Repair floor base of North overhead door tube steel on West side X X X Messy incomplete work Machine Shop Touch up weld at North door and frame X Machine Shop Touch up bollard at North man door X Clean and repaint Machine Shop Touch up caulking at bottom of bollard, North man door X Machine Shop Touch up caulking at base of North Wall X X H-MS114-03 H-MS114-01 H-MS114-02 H-MS113-13 H-MS113-02 H-MS113-05 H-MS113-06 H-MS113-07 H-MS113-08 MACHINE SHOP CIRCULATION MS113 H-MS113-17 H-MS114-04 MACHINE SHOP MS114 H-MS113-14 H-MS112-03 H-MS112-04 H-MS113-10 H-MS113-11 H-MS113-12 H-MS113-15 H-MS113-16 H-MS113-09 H-MS112-07 H-MS112-08 H-MS112-09 H-MS112-06 H-MS113-04 H-MS113-01 H-MS109-10 H-MS109-11 H-MS112-01 H-MS112-05 H-MS112-02 H-MS113-03 TESTING MS112 H-MS109-06 H-MS109-07 H-MS109-08 H-MS109-09 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 52 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Machine Shop North wall CMU joint is de-bonding; fix X Machine Shop North wall touch up paint at concrete splatter X Machine Shop Touch up grout in coner condition X X Northeast corner Machine Shop Clean and remove severe staining of floor X X X Clean and seal floor Machine Shop Touch up drilled holes at CMU wall by electrical box X X X Machine Shop Touch up opening of fire alarm box - North wall X X Machine Shop Repair damage conduit X X X Machine Shop Touch up welds at tube steel for the overhead door X X Machine Shop Touch up walls were welds have occurred for overhead door frame X X Machine Shop Receptacle device missing at West wall Hydraulic Shop Bollards cut off at base; bollards need to be redone to get adequate depth coverage X X X Will not accept tack welding, slab needs to be opened up. Hydraulic Shop Cut-off bollards - throwaway X Hydraulic Shop Conduit with wired receptacle broken; needs to be redone X X X Slab to be opened up Hydraulic Shop Touch up joint sealer at slab X X Messy Hydraulic Shop Touch up joint sealer at slab - typical X X Hydraulic Shop Touch up floor patches of pipe penetrations X X Messy Hydraulic Shop Touch up caulking at base of CMU walls - typical X Cracks on floor also not acceptable Hydraulic Shop Clean and finish paint at North overhead door opening X X Hydraulic Shop Receptacle covers crooked on North wall; try and make them line up straight X X Hydraulic Shop Touch up floor caulking at column pour back - typical X X Hydraulic Shop Touch up floor caulking at column pour back - typical X X Hydraulic Shop Touch up wall at fire alarm devise - at Office wall X X Hydraulic Shop Adjust/repair condensate drain pipe lagging X X X Hydraulic Shop Touch up/clean up at Southeast column base X Hydraulic Shop Touch up/clean up base of vent piping East side of South man door X X Hydraulic Shop Touch up transon framing East side of South man door X X Hydraulic Shop Touch up welds East and West sides at South overhead door X X Hydraulic Shop Patch concrete header West of South overhead door X X Hydraulic Shop Labeling on pipes peeling off on West side X X X Hydraulic Shop Seal compressed air piping penetrations at West Wall - typical X Hydraulic Shop Repair floor and caulking on Line Q X X Hydraulic Shop Chip out and patch excess concrete behind Southeast column X X Hydraulic Shop Paint inside flashing at Southeast column Tires and Drums Clean asphalt paving residue at bottom of man door X X Outside Tires and Drums Unmask door hinges and touch up exterior of man door X X Paint Tires and Drums Touch up caulking in Southeast corner X X H-MS115-18 H-MS115-19 H-MS115-20 H-MS115-21 H-MS115-22 H-MS115-23 H-MS116-01 H-MS116-02 H-MS116-03 TIRES AND DRUMS MS116 H-MS115-16 H-MS115-17 H-MS115-08 H-MS115-09 H-MS115-10 H-MS115-11 H-MS115-14 H-MS115-15 H-MS114-14 H-MS115-01 H-MS115-02 H-MS115-03 H-MS115-04 H-MS115-05 H-MS115-06 HYDRAULIC SHOP MS115 H-MS115-12 H-MS115-13 H-MS114-13 H-MS114-06 H-MS114-07 H-MS114-08 H-MS114-09 H-MS114-10 H-MS114-11 H-MS114-12 H-MS114-05 H-MS115-07 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 53 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Tires and Drums Trim gasket at receptacle cover and make straight X X Messy Tires and Drums Touch up grout joints in CMU at North and East walls X X Tires and Drums Touch up caulking Northwest corner and touch up wall painting X X Tires and Drums Overhead doors lacking anchors X X X X Bad installation; short changing again Tires and Drums Touch up walls throughout X X X Typical Tires and Drums Touch up welds at base of overhead door framing X X X Messy Tires and Drums Caulk/seal top of East and West wall on the inside X X Tires and Drums Confirm tire racks been ordered X Confirm selection of tire racks with HA. Addendum #2 (04-26-16) Tires and Drums Remove and replace damaged fascia/flashing above doors X X X Addendum #2 (04-26-16) Office No base at bottom of CMU walls at perimeter X X Need millwork installed Office Touch up gouges in drywall - typical X X Office Receptacle crocked in North wall X X Office Paint run/drips on North and East walls X X Office Stubout through floor North of the East door, for what?? X X Office No thresholds at East and West doors, touch up paint on all doors X X X Floor to be cleaned and sealed? Epoxy floor by others? Engine Shop Touch up wall at install fire alarm device X X X Engine Shop Touch up joint sealer to caulk at walls - typical X X Engine Shop Touch up joint sealer to caulk at column pour backs - typical X X Messy Engine Shop Touch up around wall receptacles; hole cut too big X X X Engine Shop Touch up paint on both sides of North overhead door X X Engine Shop Touch up bollard painting - typical X X Engine Shop North wall, remove tape and finish paint door and frame X X Engine Shop East wall, North man door threshold not installed X X Engine Shop East wall at North corner, seal penetration of copper piping through floor and wall X X Engine Shop Flash openings at the columns and wall for a full enclosure and eliminate the 'daylighting' X X X X X No details issued Engine Shop Repair flooring at column openings East wall X X Engine Shop Touch up tube steel and overhead door frame East wall at North door X X Engine Shop Clean up joint sealer at crane column pour backs X X X Typical, messy work Engine Shop Replaced crushed junction box at work station X X Engine Shop Flash and caulk between CMU and columns where there is 'daylighting' X X X X X No details issued Engine Shop Touch up door and frame at man door at South overhead door X X Engine Shop Make junction box fit better at CMU wall on the South wall X X Engine Shop Paint inside flashing at column East of Office MS117 X Engine Shop Touch up floor at work station conduit penetrations X X X Messy OFFICE MS1117 - inside Engine Shop H-MS118-01 H-MS118-02 H-MS118-03 H-MS117-03 H-MS117-04 H-MS116-08 H-MS116-09 H-MS116-10 H-MS117-05 H-MS117-06 H-MS118-04 H-MS118-10 H-MS118-10 H-MS118-12 H-MS118-13 H-MS118-14 H-MS118-15 H-MS118-16 H-MS118-17 H-MS118-18 H-MS118-19 ENGINE SHOP MS118 H-MS116-04 H-MS116-05 H-MS116-06 H-MS117-01 H-MS117-02 H-MS116-07 H-MS118-05 H-MS118-06 H-MS118-07 H-MS118-08 H-MS118-09 H-MS116-11 H-MS116-12 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 54 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Engine Shop Clean floor of all tire marks and seal?? Epoxy? By others, verify Engine Shop Repair floor North and south of East wall North ovehead door X X Engine Shop Clean overspray on Eaton electrical box mounted on crane column X X Engine Shop Repair bollard and repaint X X Engine Shop Missing receptacle cover on North wall at overhead door X Engine Shop Electrical receptacle in the middle of shop, reposition to floor level or cap off X X X Addendum #2 (04-26-16) Engine Shop Charging outlets at Engine Shop exterior Line 21 not installed. X X X Addendum #2 (04-26-16) Engine Shop Need as-built drawings of design changes at doghouse X X X Addendum #2 (04-26-16) Hangar 2R Cannot install S/S corner guards as outlets at corner; typical throughout. Guards to be modified? X X X Hangar 2R Floor needs to be cleaned prior to turnover to Hawaiian Airlines X HA to finish epoxy floor - By Others Hangar 2R Sawcut joints to be cleaned and caulked. Need to verify compatible material for epoxy (by HA) X Hangar 2R Foam system to be cleaned and tested X Hangar 2R Trench drains needs to be opened, cleaned and tested X Hangar 2R Fall arrest system incomplete and needs to be tested and certified by Guardian X X Hangar 2R Center fall arrest system incomplete X X Hangar 2R Doors and frames into Sector I needs touch up painting X X Hangar 2R Heat sensing system incomplete X X X Hangar 2R Flashing and closure needed at Louvers on Grid Line X X X X X X Hangar 2R Touch up grounding at RUBB columns and clean all concrete splatters X X Messy Hangar 2R Flash, trim. Finish up daylight space at Mega door X X X X X Hangar 2R Flash, trim Line X at Line 7 wall X X X X X Auto Lead Office Wiring incomplete at East wall X Auto Lead Office Wiring incomplete at South wall X Auto Lead Office Touch up receptacle on West wall X Auto Lead Office Clean up/seal/caulk sill at Eat window X X X Auto Lead Office Remove paint or recaulk at window frame X X X Messy Auto Lead Office Touch up grout in Northeast corner X X Auto Lead Office Touch up wall at motion light switch - bottom X Auto Lead Office Paint blanked penetrations at top of North wall X X Auto Lead Office Seal/caulk top of West wall at ceiling X X X Incomplete Auto Lead Office Access panel at ceiling incomplete X X H-MS118-25 H-MS118-20 H-MS118-21 H-MS118-22 H-MS118-23 H-MS118-24 I-FS115-02 I-FS115-03 I-FS115-04 I-FS115-05 I-FS115-06 I-FS115-10 I-FS115-08 I-FS115-09 I-FS115-07 SECTOR I - FIRST FLOOR AUTO LEAD OFFICE FS115 I-FS115-01 I-H100-2R-11 I-H100-2R-12 I-H100-2R-13 I-H100-2R-01 HANGAR H100 2 RIGHT - Northeast corner I-H100-2R-02 I-H100-2R-03 I-H100-2R-04 I-H100-2R-05 I-H100-2R-06 I-H100-2R-07 I-H100-2R-08 I-H100-2R-09 I-H100-2R-10 H-MS118-27 H-MS118-26 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 55 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Fabrication Shop Touch up caulking at joint to South wall X X Fabrication Shop Touch up caulking at CMU joint - debonding X X Fabrication Shop Touch up caulking at base of CMU wall perimeter - typical X X Fabrication Shop Touch up wall at receptacles - typical X X X Fabrication Shop Touch up wall at junction box on South wall X X X Fabrication Shop Repair lagging at piping on West wall X Fabrication Shop Unmask fitting and repair pipe to floor connection X X X Messy Fabrication Shop Touch up paint at doorway and frame in the East wall X X Typical Fabrication Shop Touch up paint - East wall X X Fabrication Shop Complete louver in door at Janitor Closet door X X Fabrication Shop Wiring incomplete on door to Hangar X X Fabrication Shop Touch up wall at fire alarm device on East wall X X Fabrication Shop Touch up cover plate on South wall X X Fabrication Shop Unmask cover plate on South wall X Fabrication Shop Remove paint from door bumper or replace - East wall X X X Fabrication Shop Door to Bulk Storage missing door and wall bumpers X X Fabrication Shop Cable Tray Needs to be above 18ft. X Addendum #2 (04-26-16) Bulk Material Storage Unmask device on wall, fire alarm? X Bulk Material Storage Conduits incomplete on West wall X X Bulk Material Storage Wiring, device incomplete at East wall X X Bulk Material Storage Efflorescence on CMU wall X X X Bulk Material Storage Touch up paint on door and frame X X X Bulk Material Storage Bottom door hinge missing screws and all dirty X X X Bulk Material Storage Clean off masking of door handle and thumb turn X X On the inside Unisex Restroom Toilet seat and lavatory not installed X Unisex Restroom Wiring incomplete at West wall X Unisex Restroom Touch up caulking at door frame and wall X X Unisex Restroom Unmask door closer X Unisex Restroom Wiring incomplete at North wall X Unisex Restroom Touch up wall/JB at fire alarm device X Unisex Restroom Toilet seat and lavatory not installed X Unisex Restroom Electrical devices not complete X Unisex Restroom Electrical devices not complete X Unisex Restroom Junction box plate not installed at electric sensor X Unisex Restroom Touch up caulking at Southwest corner X X Janitor's Closet Floor sink and fittings not installed X Janitor's Closet Finish plate missing at motion detector on North wall X JANITOR FS121 I-FS121-01 I-FS121-02 I-FS116-09 I-FS116-10 I-FS116-11 I-FS116-12 I-FS120-04 I-FS120-05 I-FS120-01 I-FS120-02 I-FS120-03 I-FS116-17 I-FS120-06 I-FS122-01 I-FS122-02 I-FS122-03 I-FS122-04 I-FS122-05 I-FS116-01 I-FS117-02 I-FS116-13 I-FS116-14 I-FS116-15 I-FS116-16 I-FS117-01 FABRICATION SHOP FS116 - includes METAL SHOP FS118 and CIRCULATION FS119 I-FS116-02 I-FS116-03 I-FS116-04 I-FS116-05 BULK MATERIAL STORAGE FS117 I-FS116-06 I-FS117-03 I-FS116-07 I-FS116-08 UNISEX RESTROOM FS120 - from Hangar side UNISEX RESTRROM FS122 - from CIRCULATION FS119 I-FS117-04 I-FS117-05 I-FS117-06 I-FS117-07 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 56 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Janitor's Closet Corner clip for FRP cut short for base to slab X X X X Big joint at slab Janitor's Closet Electrical device incomplete on West wall X Janitor's Closet Louver in door not installed X Janitor's Closet Touch up wall at electrical device X X Janitor's Closet Touch up wall and caulking around door X X Shop Lead Office Baseboards? Millwork not installed X X Shop Lead Office Touch up paint at window sill X X Shop Lead Office Touch up paint at window frame and clean off caulking X X Messy Shop Lead Office Touch up blanked penetrations top of CMU X X Shop Lead Office Ceiling access panel incomplete X X Paint Booth Unmask door closer Door FS125B X Paint Booth Touch up caulk around door frame Door FS125B X Paint Booth Touch up framing and panels on paint booth exterior - typical X X X Paint Booth Remove masking from wall over Door FS125B X Paint Booth Electric lights not connected X X X X NO POWER PROVIDED TO BOOTH!!! Paint Booth Touch up vent piping North side of paint booth X X Paint Booth Unmask copper waterline X Paint Booth Door closer missing cover Door FS125A X X Paint Booth Unmask door and wall at Door FS126B to Paint Prep X X Paint Booth Unmasked compressed ait valves X Paint Booth Remove plastic bag around sprinkler heads - typical X Paint Booth Touch up interior wall and butt straps - typical X Paint Booth Clean stainless steel frame at overhead door X Paint Prep Unmask/uncover Door FS125B to Paint Booth X Paint Prep Touch up CMU grout in corners - typical X X Paint Prep Wiring complete - typical X Paint Prep Remove masking from compressed air valve handles X Typical Paint Prep Elec/comm device work incomplete X Paint Prep Remove masking from copper water line X Paint Prep Touch up/recaulk CMU control joint right side of door X Paint Prep Seal penetrations in West wall X X Paint Prep Touch up overspray on South Wall near door X X Wash Bay Touch up floor at vent pipe pentrations X X X Messy Wash Bay Touch up base of CMU wall perimeter X X Messy Wash Bay Overhead electrical fixture incomplete X Wash Bay Clean floor or grind before ceiling X X X Wash Bay Touch up door and frame and remove plastic from handle X I-FS127-04 I-FS127-05 I-FS127-02 I-FS127-03 I-FS121-03 I-FS121-04 I-FS121-05 I-FS121-06 I-FS121-07 I-FS125-12 I-FS126-08 PAINT BOOTH #2 - FS125 I-FS126-09 I-FS127-01 PAINT PREP - FS126 I-FS125-11 I-FS125-13 I-FS126-06 I-FS126-07 I-FS126-01 I-FS126-02 I-FS126-03 I-FS126-04 I-FS126-05 I-FS125-08 I-FS125-09 I-FS125-10 SHOP LEAD OFFICE FS124 WASH BAY FS127 I-FS124-03 I-FS124-04 I-FS124-05 I-FS125-01 I-FS125-02 I-FS125-03 I-FS125-05 I-FS125-06 I-FS125-07 I-FS124-01 I-FS124-02 I-FS125-04 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 57 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Wash Bay Touch up grout in CMU corners - typical X X X Messy Tire Shop Man door missing glass lite X Tire Shop Caulk/seal between door jamb and steel column X X X X Can see daylight Tire Shop Caulk/seal between CMU and tube steel column below louver X X X X Can see daylight Tire Shop Touch up/clean junction boxes on North wall, install all screws on plates X Tire Shop Caulk/seal between tube steel and door X X X X Can see daylight Tire Shop Caulk around louver panels (typical) X X X X Can see daylight Tire Shop Clean/grind floor and apply sealer X X Tire Shop Millwork and sink not installed on South wall X X Tire Shop Door frame to Wash Bay not concrete grouted. Complete and fix frame of holes X X Tire Shop Door to Wash Bay, clean panic hardware X Tire Shop Touch up caulk and paint at office windows (typical) X X Messy Tire Shop Overhead coiling door FS128B and power not installed X X X Tire Storage Door FS128A missing glass lite X Tire Storage Caulk/seal between Door FS128A door frame and steel tube column X X X X Can see daylight Tire Storage Caulk/seal between CMU/louver and steel tube column X X X X Can see daylight Tire Storage Patch floor at column base and re-shim and caulk door frame X X Tire Storage Touch up wall penetration at steel column at Line 4 and X X X X Tire Storage Touch up paint at compressed air piping X Tire Storage Touch up louver opening at sills at East wall - typical X X Tire Storage Remove foreign material inside louver and screen X X Tire Storage Flash/seal opening at Line X column at Southeast corner X X X X Tire Storage Patch holes in south wall CMU X X Repaint Tire Storage Touch up caulking and joint sealer at saw cuts Tire Storage Have tire racks been ordered? X Confirm again with HA. Addendum #2 (04- 26-16) Office Elec/comm device work incomplete X Office Missing floor base X X MILLWORK NOT INSTALLED!!! Office Unmask light fixture X Office Touch up caulking at top of North wall X Office Touch up/paint back of tube steel X X Office Touch up paint, caulking around windows X X X Messy Office Office door missing X I-FS127-06 I-FS129-01 I-FS129-02 I-FS129-03 I-FS129-04 I-FS129-06 I-FS129-07 I-FS129-08 I-FS129-09 TIRE STORAGE FS129 I-FS129-05 I-FS129-11 I-FS130-01 OFFICE FS130 I-FS128-03 I-FS128-04 I-FS128-05 I-FS128-06 TIRE SHOP FS128 I-FS128-07 I-FS128-08 I-FS128-09 I-FS128-10 I-FS128-11 I-FS128-12 I-FS130-02 I-FS130-03 I-FS129-10 I-FS130-04 I-FS130-05 I-FS130-06 I-FS130-07 I-FS128-02 I-FS128-01 I-FS129-12 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 58 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le General Work Shop Touch up wall at electrical plates X X X Typical General Work Shop Cover missing at junction box above piping X General Work Shop Touch up wall at fire alarm device on East wall X X General Work Shop Touch up door and frame to Paint Booth X General Work Shop Millwork and sink nor installed on South wall, touch up penetrations at wall - messy X X X General Work Shop Touch up and seal pipe penetration (drain) at South wall X X X X Paper stuffed in wall? Should be finished with flange when millwork done. Outlets in the right place? In the cabinet! General Work Shop Door in South and East wall frames not grouted X X X General Work Shop Overhead coiling door and power not installed - FS131B X X X Stair 3 - 2nd level Drywall repairs needed at landing. Repaint walls X X X Stair 3 Handrails needs to be reinstalled and walls repainted X X X Stair 3 Handrails needs to be painted X X Needs cleaning throughout Stair 3 - 1st floor Remove sample sign and touch up walls X Stair 3 - 1st floor Patch overcut at drywall for light conduit and repaint X X Circulation Paint walls X Circulation Coiled comm cable above elevator, incomplete X X Need cover? Circulation Damaged gyp board above elevator X X X Circulation Gap on right side of elevator next to Mezzanine door frame X X X X Expansion joint? Circulation Right side of elevation switch for what? X X X Circulation Gaps it floor tile grouting X X X Open Office Opening/gaps at web joist ends above header beams along West wall openings; not closed or consistent X X X X 'Rat holes' Open Office Electrical floor outlets not flush with carpet X X X Tripping hazard Open Office Window shade valance puckering - typical with most X Open Office Ospho damaged aluminum window framing along west wall and along Grid Line B X X Backcharge to DCK Open Office Unpainted Unistrut support for cable tray on south wall X X X Open Office Oversized hole at electrical outlet above Electrical Room A206 X X Open Office Insufficient lighting at Line B between Grids 18 and 21 where benching system to be located X X X Open Office Open junction box at Comm Room A203 for ?? X X X At the Blue wall Open Office Additional Power for 2nd Level Workstations at GL B 18-21 X Addendum #2 (04-26-16) Open Office TPO Roof seam delamination between Grids 21-25 X X Addendum #2 (04-26-16) I-FS131-06 I-FS131-02 I-FS131-03 I-FS131-04 I-FS131-05 I-FS131-01 A-A204-03 A-A204-04 I-FS131-07 GENERAL WORK SHOP FS131 - includes CIRCULATION FS123 I-FS131-08 A-A204-05 A-A204-06 A-CS200-03 A-CS200-04 A-CS200-06 A-A204-07 A-A204-08 OFFICE OPEN A204 A-CS200-01 A-CS200-02 ANNEX OFFICES SECOND FLOOR - SECTOR A CIRCULATION CS200 A-CS200-05 A-A204-01 A-A204-02 STAIR S3 - Far Makai side A-S3-01 A-S3-02 A-S3-03 A-A204-09 A-S3-04 A-S3-05 A-A204-10 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 59 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Circulation Gap between CMU and drywall X X X X Expansion joint? Electrical Room Missing threshold X X X Electrical Room Holes in floor X X X Electrical Room Through penetration fire-rated sealed? X X X Used the right material? Janitor Closet Missing threshold X X X Janitor Closet Exposed cut angle iron on floor X X From fall protection cable stanchion Janitor Closet Wall paint touch up throughout X Janitor Closet Ceiling paint touch up X Women's Restroom Missing door silencers - rubber bumpers X Women's Restroom Cut in tile above towel dispenser X X X Women's Restroom Trim partition top track flush and make square X X X Women's Restroom Toilet partition missing latch and silencers/bumper X Women's Restroom Secure toilet paper dispenser at ADA stall X X Women's Restroom Gap at perimeter of access panel X X X Set inside of tile wall Circulation Touch up paint at Yellow wall X X Work Area/Copy No countertops with splashes X Work Area/Copy Electrical outlets and Data outlets in cabinets below the drawers X X X X Not acceptable Circulation Touch up wall corner and repaint X X Circulation Caulk edge of flooring to column? X X X Looks bad Men's Restroom Hole in the ceiling X X X Why? Men's Restroom No urinal sensor X X Men's Restroom Missing toilet paper dispenser and seat cover dispenser X Needs major cleaning, all dirty Men's Restroom Unsightly screw/s at toilet partition mounting X X X X Men's Restroom Finish trim upper track of partition X X X Make flush edge finish Men's Restroom Caulk tile joint at East wall X X X Men's Restroom Touch up paint X X X Men's Restroom Finish up door latches, bumpers at partitions X X X A-A206-03 A-A205-01 CIRCULATION A205 A-A208-04 A-A208-05 A-A208-06 A-A211-01 A-A212-02 A-A209-01 CIRCULATION A209 WORK AREA/COPY ROOM A210 A-A208-03 A-A212-03 A-A212-04 A-A207-01 A-A207-03 A-A212-05 A-A212-07 A-A207-02 A-A206-01 A-A206-02 ELECTRICAL A206 A-A211-02 A-A210-01 A-A210-02 A-A212-08 JANITOR A207 CIRCULATION A211 A-A212-01 A-A207-04 A-A208-01 WOMEN'S RESTROOM A208 MEN'S RESTROOM A212 A-A212-06 A-A208-02 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 60 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Men's Restroom Clean out panel access is inside of tile face X X X X Mechanical Unpainted walls X X Mechanical Unpainted ceiling X X Mechanical Unfinished edges at drywall through wall cut-out X X X Conference Room Surface mounted data conduit on storefront aluminum framing X X X Data line for i-Pad mounting bracket Conference Room Open junction box behind TV mount, installation not complete X X X Conference Room Hole in carpet X Conference Room Aluminum window frames with surface damage from Ospho X X Conference Room Bent electrical stub out at floor X X X Conference Room Puckered window shade valance X Conference Room Surface mounted data conduit on storefront aluminum frame not correct X X X X Conference Room Damage surface on aluminum frame from Ospho splatters X X Conference Room Damaged surface of aluminum storefront door X X Conference Room Damage perimeter sealant at left of entry door X X X Conference Room Puckered window shade valance X Conference Room TV mount prevent access to electrical outlet X X X X Conference Room Labeling on overhead pipe peeling off X Mechanical Walls not painted X X Mechanical Ceiling/metal descking not painted X X Mechanical Holes in drywall penetration X X X Mechanical Tears in duct insulation X X Mechanical West wall through penetrations with unfinished gyp board X X X Looks bad Huddle 1 All electrical finish plates be be cleaned of plastic protective film. X Huddle 1 All jambs need rubber bumpers - typical X Huddle 2 Top of door squeaky X X Huddle 2 All electrical finish plates be be cleaned of plastic protective film. Entry door need rubber bumpers installed at jamb. X MECHANICAL A216 A-A214-02 A-A214-03 A-A215-01 A-A215-02 A-A215-03 A-A216-02 A-A215-05 A-A215-06 A-A215-07 CONFERENCE A215 A-A216-03 A-A216-04 A-A216-05 A-A215-04 A-A216-01 A-A214-05 A-A214-06 MECHANICAL A213 A-A212-09 A-A214-04 A-A217-01 A-A217-02 A-A218-01 A-A218-02 HUDDLE ROOM 1 A217 A-A214-01 HUDDLE ROOM 2 A218 HUDDLE ROOM 3 A219 CONFERENCE A214 A-A213-01 A-A213-02 A-A213-03 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 61 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Huddle 3 All electrical finish plates be be cleaned of plastic protective film. Entry door need rubber bumpers installed at jamb. X Huddle 4 All electrical finish plates be be cleaned of plastic protective film. Entry door need rubber bumpers installed at jamb. X Reception Paint wall at top of stairs; missing railings X X Reception Finish at corner with bases incomplete X X X Reception West wall window frame damaged by Ospho X X X Reception Glass top rail wobble - not safe, or secured well X X X Main Reception Doghouse Windows incomplete, sun shades to be installed, flashing missing, not a finished look X X X X Addendum #2 (04-26-16) Open Office Floor outlets not flush with carpet X X X Open Office Window frames damaged by Ospoh splatters X X Open Office Gaps at web joist ends above wall header - typical X X X X 'Rat holes' Open Office Cable tray wall penetration not sealed X X X Open Office Empty junction box in ceiling above A217 Huddle Room X X Open Office Window shade valances puckering - typical X Communication Floor penetrations not sealed X X X Communication Wall penetration not sealed X X X Communication Comm floor sleeves open - not sealed X X X Huddle Room 1 Door silencers not installed - rubber bumpers X X Huddle Room 2 Door silencers not installed - rubber bumpers X X Huddle Room 2 Squeaky doors hinges X Door silencers not installed - rubber bumpers X X Typical at all doors Huddle Room 4 Door silencers not installed - rubber bumpers X X Conference Room Surface mounted conduit at storefront frame unacceptable X X X X for i-Pad bracket Conference Room Ospho damaged aluminum frames X XB-A221-02 B-A201-04 OFFICE OPEN A201 B-A203-01 ANNEX OFFICES SECOND FLOOR - SECTOR B B-A201-06 B-A221-01 B-A218-01 B-A218-02 B-A217-01 HUDDLE ROOM 1 A217 HUDDLE ROOM 2 A218 COMMUNICATION A203 B-A201-01 B-A201-02 B-A201-03 A-A220-01 B-A220-01 HUDDLE ROOM 3 A219 A-A219-01 B-A203-03 RECEPTION A200 - at Stair No. S1 B-A200-01 B-A200-02 B-A203-02 B-A200-03 B-A200-04 B-A200-05 HUDDLE ROOM 4 A220 CONFERENCE A221 B-A201-05 HUDDLE ROOM 4 A220 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 62 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Conference Room Open junction box behind TV mounting bracket X X Conference Room Puckering window valance X Conference Room Drywall gap above Comm outlet X X Conference Room Cut in carpet at floor outlet X X X Conference Room Surface mounted conduit at storefront frame unacceptable X X X X for i-Pad bracket Conference Room Ospho damaged aluminum frames X X Conference Room Puckering window valance X Mechanical Room Wall not painted X X Mechanical Room Ceiling not painted X X Mechanical Room Holes in duct insulation X X X Mechanical Room Floor penetrations need to be sealed - 2 places X X Mechanical Room West wall electrical penetrations need to be sealed X X Mechanical Room West wall gyp board cut opening with raw edges X X X Janitor Missing threshold X X Raw carpet edge not good Janitor Unpainted wall behind ducts - South side X X Janitor Door silencers not installed - rubber bumpers X X Women's Restroom Missing door silencers (rubber bumpers) - typical X X Women's Restroom Open junction box in ceiling X Women's Restroom Toilet parttion missing door latch and bumper - typical X X Women's Restroom Toilet partitions screws exposed at top of frame X X X X Women's Restroom Floor tile grout joints need to be sealed X X X Typical in all restrooms Circulation Ospho damage on window frames Grid Line B X X X Copy.Work Room Missing countertops X Copy.Work Room Glass top rail wobble - not safe, or secured well X X X Copy.Work Room Electrical and data outlets installed behind cabinets and access inside the cabinet X X X X Typical throughout Comm Room Hole cutout in door jamb X X X Comm Room Missing threshold X X Comm Room Empty or for future use conduits should be capped X Ongoing/more work to be done? Comm Room Unpainted unistrut frames overhead X X X B-A228-02 B-A225-04 B-A225-05 B-A226-01 B-A221-03 B-A223-03 B-A223-04 B-A224-02 B-A223-01 B-A223-05 B-A223-06 B-A227-02 B-A227-03 B-A227-01 B-A228-04 B-A221-04 B-A221-05 B-A222-01 B-A222-02 B-A222-03 B-A223-02 CIRCULATION A229 - outside Men's Restroom CONFERENCE A222 MECHANICAL A223 JANITOR A224 WOMEN'S RESTROOM A225 CIRCULATION A226 COPY/WORK ROOM A227 COMMUNICATIONS A228 B-A228-01 B-A228-03 B-A225-03 B-A225-01 B-A225-02 B-A224-01 B-A224-03 B-A221-06 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 63 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Circulation Aluminum frame damaged with Ospho splatter, Line B X X X Circulation Puckering at window valance shade X X Typical for most valances Men's Restroom Finish work for sensors, replace back board, reinstall tile, grout and install urinals and screen X X X X Men's Restroom Toilet partition doors missing latch with silencers X Men's Restroom Missing toilet sensors at back wall X Men's Restroom Sensor, wall tile, and toilet - all incomplete X X Men's Restroom Floor tile grout needs to be sealed X X X Mechanical Room Walls need to be painted X X X Mechanical Room Ceiling needs to be painted X X X Mechanical Room Duct insulation torn - fix it X X Conference Room Aluminum frames damaged by Ospho - typical X X Conference Room Surface mounted conduit at storefront entry X X X X for i-Pad bracket for meeting info Conference Room Window shade valance puckering - typical X X Conference Room Installation of backer board and white board all messed up X X X Conference Room Repair hole at carpet next to floor outlet X Conference Room Surface mounted comm conduit at storefront door - relocate X X X X Conference Room Ospho damaged storefront aluminum X X X Conference Room Repair hole at carpet next to floor outlet X Conference Room Window shade valance puckering - typical X X Conference Room Repair screw holes in West wall X X Electrical Room Gap in ceiling drywall at sprinkler escutcheon plate X X X Electrical Room Floor penetrations need to be fire stopped X X X Electrical Room Duct going through wall cannot be 'foam filled'. Needs intumescent firestopping material X X X X Electrical Room Firestopping material to be labeled X X Mechanical Room Walls not painted X X X Mechanical Room Ceilings not painted X X X Mechanical Room Hole in the floor, for what? X X Mechanical Room Tears in duct insulation X X X Mechanical Room Open junction box on East wall, for what? X X X Finish up work C-A235-03 B-A232-01 B-A232-02 B-A232-03 B-A232-04 B-A230-04 B-A230-05 B-A231-02 B-A232-05 C-A233-05 C-A234-02 C-A233-01 C-A234-01 C-A234-04 ELECTRICAL A234 B-A230-01 B-A230-02 B-A230-03 MECHANICAL A231 CONFERENCE A232 C-A235-01 C-A235-05 MECHANICAL A235 CIRCULATION A236 B-A231-01 B-A231-03 C-A234-03 C-A235-04 B-A229-01 B-A229-02 MEN'S RESTROOM A230 C-A235-02 C-A233-02 C-A233-03 ANNEX OFFICES SECOND FLOOR - SECTOR C CONFERENCE A233 C-A233-04 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 64 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Circulation Threshold to exit door to roof unfinished X X X Circulation Deadbolt at door correct hardware? X X X Open Office Ospho damage to aluminum frames - typical X X X Open Office Gaps/openings at web joist ends to top of wall header beams - typical X X X X 'Rat holes' Open Office Floor outlet plates not flush to carpet X X Open Office No countertops with backsplash. Backsplash will be higher than window sill X X X X X Open Office Unfinished gyp board edges around junction box above Room A228 Comm Room X X X Circulation Unfinished dywall, unpainted CMU, steel post and expansion joint X X X Circulation Crack in wall to be fixed and wall needs painting X X X Circulation Ceiling needs to get finish paint X Circulation Missing roller shades on the inside and exterior sun louvers X Circulation Metal railings needs finish painting X Elevator Stainless steel door jamb damaged on right side, not grouted X X X Elevator Clean up and touch up paint around elevator door frame X X Stair S4 Stairs and railing need clean up and complete painting X Stair S4 Handrails need to be installed and walls painted X X Confirm blocking in walls to accept rails Se ct o r Sh ee t N o . Se ri es East of Gate 2 Remove (4) concrete pile butts and dispose of properly offsite. Yellow paint may contain lead. X X Per Hazardous Material Report East of Gate 2 Remove concrete pile butt at job sign X X At Gate 2 Inventory construction waste materials and dispose of properly X X X C-A237-01 C-A237-02 C-A237-03 S-C103-01 S-C103-02 S-C103-03 C-A237-04 C-A237-05 C-S4-01 C-S4-02 C-E1-01 C-E1-02 N ee d D e si gn N ew S co p e o f W o rk CIRCULATION CS201 - going to Stair S4 C-A236-01 C-A236-02 Sheet C103 SITEWORK - Areas noted from Civil drawing sheet number Item Area Description In co m p lete C o n tr ac t W o rk U n ac ce p ta b le R e- w o rk t o m ak e go o d Err o rs a n d O mm is si o n s Notes OFFICE OPEN A237 C-CS201-01 C-CS201-02 C-CS201-03 C-CS201-04 C-CS201-05 ELEVATOR 1 - at Main Lobby STAIR S4 - Mauka Ewa side of facility Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 65 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le end of Aokea Place Demolish existing fire hydrant P4754 located adjacent to existing HA parking lot X X South end Remove concrete pile butt and dispose of properly X X X Yellow paint may have lead South End Remove stockpiled concrete and asphalt debris X X X Ewa parking stalls (3) Install FEV sign and post per Det. 6/C602 X Fuel Efficient Vehicles Ewa parking lot Install pavement markings per layout plan X Ewa parking lot Complete accessible stall layouts and markings, Det. 1 and 3/C602 X Front entry Install the 3 flagpoles with flags X X Front entry Install NO SMOKING sign per Det. 6/C602 X Front entry Install card reader at main lobby entrance X X Elliott exit Install pavement markings when all work and HMA is complete, STOP sign, landscaping X Elliott exit Install white crosswalk marking when driveway complete X Elliott exit Install 7.5' concrete sidewalk ramp and drop curb X East side Elliott exit Install 4' concrete drop curb X West side Elliott exit Provide smooth riding connection to existing pavement and after HECO ductbank work X X X Drawings are complete and approved by HECO Elliott Strret Install 'No Right Turn' sign per Det. 6/C602 X After the bus stop Elliott exit Install "Do Not Enter' sign at driveway, Det. 6/C602 X Elliott exit, parking lot Install 'Stop' sign per DOT standards X Elliott curve Review area where highway traffic barrier were to be installed; too many underground utilities to set concrete anchors X X X X Design needed. All trench work to be finished with HMA Elliott curve Install 'No Left Turn' sign, Det. 6/C602 X Ewa side Finish up the landscaping and irrigation X X Revised and not on any plans - see WRSA Aokea Place No BSDC grounding wire installed at fence along Aokea Place X X X NO PARKING signs needed on fencing AOA requirement GSE Yard - FS loading dock Concrete curb and sidewalk on plans is to be re-designed; loading dock and sidewalk to be one plane - no curb X X X X New design never issued. GSE Yard - FS loading dock Install PCC pavement section at loading dock X X X X New design never issued. GSE Yard Complete all underground utilities and complete hot mix asphalt pavement X S-C104-01 S-C105-01 Sheet C104 Sheet C202 Sheet C105 Sheet C107 S-C202-01 S-C201-01 S-C201-04 S-C201-05 S-C201-02 S-C201-03 S-C107-01 S-C201-10 S-C201-11 S-C201-12 S-C201-13 S-C201-14 S-C201-16 Sheet C201 S-C201-15 S-C201-06 S-C201-07 S-C201-08 S-C201-09 S-C201-17 S-C202-02 S-C202-03 S-C202-04 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 66 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le GSE Yard Complete pavement and all pavement markings and appurtenances X X X New layout never issued for review and acceptance Wash Equipment Building Install water monitoring station at North east corner? X X X X X New layout never issued for review and acceptance; original location was at the Southwest corner closest to the drain inlet in the Yard. Controlled Materials side Adjust chain link gate heights; to tall X X X X Curbs vs. gate height Grid Line 4 Paint bollards traffic yellow X GSE Yard Install bollards around parking area. X X X X New layout never issued. 6" or 8"; might be 6" GSE Yard Install concrete wheel stops X X X X New layout never issued for review and approval. GSE Yard Bollards stored in Yard but no final layout X X X New layout never issued for review and approval. GSE Yard - LPG slab Tank slab missing bumpout for control panel, power conduits not complete, emergency shut-off conduit not installed or located on building and anchor bolts not confirmed to be in right place X X X X New layout and infrastructure not identified for install and construction Fuel tank area Confirm final layout and design, construct slab and infrastructure, finish pave area with HMA X X New layout never issued for review and approval. PCC fronting Hangar Install aircraft-rated PCC along Grid Line X. Confirm the jointing plan again with the adjacent Hardstands X X X New layout never issued for review and approval. Grid Line X Paint 6" bollards fronting Paint Prep X GSE Yard LPG Tank foundation not to plan X X X X Bolts not squared and in right location. Addendum #2 (04-26-16) Site Plan No. 2 Provide 4" conduit for future AOA gate at the end of Aokea Place X X X Addendum #2 (04-26-16) Ewa parking area Install pavement markings throughout West lot X Supply parking Install pavement marking in lot outside Supply X Supply parking Install striping and 'STOP' at Supply lot X Supply parking Install striping and 'STOP' at Supply lot X Ewa parking area Install white 'stop' striping on concrete pavement X X X Replace rejected concrete pavement first! Ewa parking area Install 'STOP' pavement marking X X Replace rejected concrete pavement first! Supply parking Install 24" wide detectable warning strip at ramp entrance X Tactile Cargo offices lot Complete accessible stall layouts per Det. 2/C602 X Cargo offices lot Verify grades at the accessible stalls X X Portions of this pavement might be rejected Cargo offices lot Install FEV sign and post X Cargo offices lot Install 'No Smoking' sign and post. Clean up and install landscaping and irrigation X Cargo offices lot Install FEV sign and post X Cargo loading dock Paint bollards at Cargo Loading Dock area- typical X Southwest Cargo area Complete installation of AOA fence X Southwest Cargo area Drill at existing Hardstand to install AOA fence posts X S-C202-15 S-C202-13 S-C203-01 S-C203-02 S-C203-03 S-C203-04 S-C203-05 S-C203-06 S-C203-07 S-C203-08 S-C203-09 S-C202-14 S-C202-12 Sheet C203 S-C202-07 S-C202-08 S-C202-09 S-C202-10 S-C202-11 S-C203-10 S-C203-11 S-C203-12 S-C203-13 S-C203-14 S-C203-15 S-C202-05 S-C202-06 S-C202-16 S-C202-17 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 67 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le Southwest Cargo area Complete installation of sliding gate, controller at Cargo Staging area X Southwest Cargo area Repair cracked pavement panels near fire hydrant and sliding gate X X X Southwest Cargo area Assess and fix the craccked concrete pavement near sliding gate X X X Southwest Cargo area Cracking at concrete pavement at joints and keyways not acceptable X X X Southwest Cargo area Cracking at concrete pavement at joints and keyways not acceptable X X X Southwest Cargo area Cracking at concrete pavement at joints and keyways not acceptable X X X Access E driveway Cracking at concrete pavement at joints and keyways not acceptable X X X Southwest Cargo area Concrete pavement is cracking; pavement has been rejected X X X Southwest Cargo area Concrete pavement is cracking; pavement has been rejected X X X Southwest Cargo area Concrete pavement is cracking; pavement has been rejected X X X Supply Loading Dock Pavement does not drain to drain inlet; this pavement rejected X X X Cargo loading dock Review ramp angle and functionality test X X X X Container might hit header before dock bumper Supply loading dock Review ramp angle and functionality test X X X X Container might hit header before dock bumper Cargo loading dock Assess the concrete pavement when all materials are removed X X Southwest Cargo area Assess the concrete pavement when all materials are removed X X Containers and spools stored Southwest Cargo area Assess the concrete pavement when all materials are removed X X West side Southwest Cargo area Rework/ re-do concrete curb that’s crooked X X X Southwest Cargo area Where is the monument sign to be located? X X Must be approved by DOT-A East side of Hangar Place aircraft rated PCC pavement along Grid Line X X Verify jointing plan to match Hardstands Open Yard Complete drain inlet slab top pour and complete hot mix asphalt pavement X Open Yard Complete pavement marking when HMA is complete X Open Yard QC issues with center of swale X X X Uneven edges Open Yard QC issues with HMA at door openings X X X Uneven, can cause tripping East side of Cargo Hangar Grinding required in some areas of Cargo PCC X X X East side of Cargo Hangar Spall repair required at concrete edge X X X Before finish HMA is done East side of Cargo Hangar Spall repair required at concrete edges and joints X X X East side of Cargo Hangar Concrete pads for equipment shown - not required X Still shows up on drawings East side of Cargo Hangar Concrete pads for equipment shown - not required X Still shows up on drawings East side of Cargo Hangar Concrete pads for equipment shown - not required X Still shows up on drawings East side of Cargo Hangar 4" wide parking stripe 7' from building X Confirm with Hawaiian Air first Sheet C204 S-C204-07 S-C204-08 S-C204-09 S-C204-10 S-C204-11 S-C204-12 S-C203-28 S-C203-29 S-C203-30 S-C203-31 S-C203-32 S-C203-17 S-C203-18 S-C024-05 S-C204-06 S-C203-25 S-C203-26 S-C203-27 S-C203-16 S-C203-24 S-C203-19 S-C203-20 S-C203-21 S-C203-22 S-C203-23 S-C203-33 S-C204-01 S-C204-02 S-C204-03 S-C204-04 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 68 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le East side of Cargo Hangar Chain link fences and gates shown on drawings NOT to be installed X Drawings not updated Cargo Staging Area Install the 3-tiered ULD racks on the slab, and secure X X X Need to purchase Cargo Staging Area Finish HMA paving west end of ULD slab X Addendum #2 (04-26-16) Fuel Rack Grounding of wheel not done per plan X X X Need outage request, within the AOA. Addendum #2 (04-26-16) corner Elliott and Aokea Confirm DMH G1 has FloGard +Plus FGP - RF24F installed X X Elliott 'death curve' Only 5 out of 7 seepage pits installed at NW corner X X Gate 2 Concrete washout waste to be cleaned up and removed from site X X Backcharge to DCK Gate 2 Jensen precast box for Hersey meter in GSE Yard stored at gate X X Gate2 Concrete curb work at Elliott St driveway incomplete X Gate 2 A/C to be sawcut to accept HMA for driveway X X Gate 2 - new Elliott St. driveway Pavement markings required when curbs and HMA complete X new Elliott St. driveway 'No Entry' sign to be installed X west parking area Install filter at Drain Inlet 'A3' and confirm positive drainage X X Evidence of ponding and not draining Elliott 'death curve' Unidentified wooden access cover at temporary trench patch X X X All trench patching to be sawcut out and road red0ne with hot mix asphalt GSE Yard Confirm revised grading at West end of GSE Yard X X X Aokea Place Uneven hot mix asphalt surface and poor drainage fronting transformers X X Aokea Place Poor quality control on grading and HMA paving and swale X X X Aokea Place Vegetation penetrating asphalt paving near Drain Manhole E1 X X X Aokea Place Final grading not complete for PCC ramp off Aokea into GSE Yard X X X GSE Yard Confirm waste oil piping has adequate cover in GSE Yard X X X X GSE Yard Verify grading design at Fleet Services Loading Dock X X X GSE Yard Trough at downspout will be higher than finish grade X X X X Just not going to work in this area GSE Yard Downspout connection detail with grate of differing heights and trough length X X X X GSE Yard Grate openings 1" X 1-5/8" a tripping hazard X X X X An ADA problem too? GSE Yard Repair mortar bed collar at DMH E3 frame and cover X X X GSE Yard Finish backfillling, grading and base course placement for final pavement X X X No drawings. Are all the underground utilities in? GSE Yard Finish work associated with Drain COTG E4 in GSE Yard X X Sheet C207 SOUTH RAMP FUEL RACK S-SR Fuel Rack-01 Sheet C206 S-C301-10 S-C204-13 S-C206-01 S-C302-08 S-C302-09 S-C302-10 S-C302-13 S-C301-05 S-C301-06 S-C301-07 S-C301-08 S-C302-04 S-C302-05 S-C302-06 S-C302-07 S-C302-03 S-C301-01 S-C301-02 S-C301-03 S-C301-04 S-C301-09 Sheet C301 Sheet C302 S-C302-11 S-C302-12 S-C302-01 S-C302-02 S-C206-02 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 69 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le PPC fronting Hangar Backfill and finish grading on east side to get ready for PCC pavement X X X Door drains to be fixed first Typical throughout Provide downspout guards per 1D, 2D,3D/A800 X Addendum #2 (04-26-16) west side near Supply Install FloGard +Plus Catch Basin Filter at Drain Inlet A2 X X west side near Supply Install FloGard +Plus Catch Basin Filter at Drain Inlet A1 X X Supply Loading Dock Inadequate drainage to drain inlet fronting loading dock X X X PCC to be totally redone Supply parking area Damaged concrete collar around COTG near Grid AB/23 X X X Open Yard Downspout connection detail inconsistent on GL 21 vs 24 X X X X Open Yard Confirm drain for fire sprinkler system near GL C/24 X X It's buried under asphalt paving Open Yard Pavement adjacent to Drain COTG C5 could be tripping hazard right at the doorway X X X Due to concrete collar West side of Cargo Staging Drain COTG C1-01 appears to be missing - design discrepancy? X X X X Under the concrete? Cargo Staging Area Three (3) unidentified COTG to the Southwest of the Cooler Building X X X For what? No drawings. Cargo Staging Area Confirm location of Drain COTG C10-2 for downspout connection X X X Where? Drawings revised? Cargo Staging Area Added Drain COTG appears to be for downspout connection? X X X Where are the revised drawings? Open Yard Downspout troughs of differing lengths X X X X A DCK in-house change Open Yard Grate openings of 1" x 1-5/8" in troughs - tripping hazard X X X X Meets ADA? Open Yard Roof downspout discharge oxiding grate and splashes to back aluminum panel X X X X DCK said a collar could be added Tire and Drum Room Door gets hung up at checked plate and doesn't swing open X X X X Plate put in to satisfy ADA Tire and Drum Room Diamond plate cover not secured at GL 21/U X X X Bad design Open Yard Reconstruct top for Drain Inlet D1 X X X X Wrong rebar, not enough rebar Open Yard Finish grading and base course and paving in Open Yard X X Drain Inlet incomplete Open Yard Finish grading and base course and paving in Open Yard X X Drain Inlet incomplete Open Yard Drywell buried near GL H/24 in Open Yard for the sprinkler drain X X X Where are Hazardous bins sitting? Cargo Staging Area Inspect South portion beyond the temporary AOA fence X Cargo Staging Area Touch up 2H:1V slope along G & L project tie-in X X X Cargo Staging Area Confirm demolition of the temporary DI south of Cargo Staging X X near Gate 2 Uncover and expose top of SMH A-20 X X near Gate 2 Expose and mark stubout for 2-inch non-potable irrigation lateral X X S-C303-08 S-C303-09 S-C303-10 S-C303-11 S-C306-01 S-C306-02 S-C306-03 Sheet C304 Sheet C306 Sheet C303 S-C304-05 S-C303-01 S-C304-06 S-C401-01 S-C303-04 S-C303-05 S-C304-01 S-C304-02 S-C304-03 S-C302-14 S-C303-06 S-C303-07 S-C304-07 S-C304-08 S-C304-09 Sheet C401 S-C401-02 S-C303-02 S-C303-03 S-C304-04 S-C302-15 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 70 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le near Gate 2 Locate sewer COTG A-21 - appears to be missing or buried X X No final drawings near Gate 2 Locate sewer COTG A-22- appears to be buried or missing X X G/L A at 4 Locate sewer COTG A-23 - appears to be buried or missing X X Under the a.c. pavement? Elliott Street Sawcut and trench patch diagonal across Elliott and HMA trench X X X No drawings locating the force main Elliott Street Temporary trench patch is failing X X X Aokea and Elliott needs repaving Aokea Place Restore centerline marking after repaving trench X X X Aokea Place Sawcut trench and clean and repave with HMA X X X Needs to be done Aokea Place Expose/restore buried water valve for FH at Sta 0+57.38 WL F X X X No drawings for this work Aokea Place Confirm FH location at transformer; put in place to clear gates to open X X X X No drawings for this work. Does not line up with the other FH at Aokea Aokea Place Determine FH number with DOTA. Sta 0+57.38 X DOTA to issue and paint numbers. Can't find valve so FH not operational Aokea Place Determine FH number with DOTA. Sta 1+60.12 WL F X Curbs not painted yellow Aokea Place Determine FH number with DOTA. Sta 3+10.21 WL F X Curbs not painted yellow Aokea Place Confirm water valve at Aokea is operational. Sta 4+26.57 WL F X X X At 3- cluster valves Aokea Place Remove steel plate, backfill and patch wwith HMA X X Get related work done first end of Aokea Place Sawcut and pave trench patch with HMA X X X Aokea Place at PBX Bldg FH numbering correct? Sta 0+31.86 WL B X Number handwritten, DOTA to number. Curb not painted yellow GSE Yard Sewer manhole A-00 top slab remains to be poured in GSE Yard X X X No drawings GSE Yard Determine FH number by DOTA FH Sta 2+25.25 WL C X Pavement not done, no drawings GSE Yard Remove temporary waterline - PVC and waterhose X Behind pump house GSE Yard Pour top of water meter box with cover; needs to be vehicle rated X X X X No drawings GSE Yard Provide drawings for Water meter and backflow preventer and bollard locations X X X X X Need drawings GSE Yard Complete water valve box installation at Sta 2+25.25 WL C X X X X Need drawings GSE Yard Complete sewer COTG D-03A installation at Sta 2+25.44 SL D X X X No drawings GSE Yard Complete sewer COTG installation, west of O/W separator X X No drawings for GSE Yard. What elevation? GSE Yard Finish installation of oil water separator with manhole frame and cover X X X X X Need drawings with elevations GSE Yard Complete sewer COTG installation, East of O/W separator X X Pipe may have been hit GSE Yard Complete sewer COTG D-02 installation at Sta 0+67.41 SL D X X GSE Yard Complete water valve box installation on WL E at Sta 0+99 WL C X X GSE Yard Install DC meter (Hersey fire serice meter) at Sta 0+15 WL E X X X Need drawings GSE Yard Complete COTG D-01 installation at Sta 0+21.97 SL D X X Need elevation of GSE Yard GSE Yard Locate missing sewer COTG D-03 at Sta 1+48.04 SL D X X S-C402-15 S-C402-16 S-C401-03 S-C401-04 S-C401-05 S-C401-06 S-C401-07 S-C402-01 S-C402-17 S-C402-18 S-C402-19 Sheet C402 S-C402-20 S-C402-21 S-C402-22 S-C402-23 S-C402-24 S-C402-25 S-C402-26 S-C402-03 S-C402-04 S-C402-05 S-C402-06 S-C402-07 S-C402-08 S-C402-09 S-C402-10 S-C402-02 S-C402-11 S-C402-12 S-C402-13 S-C402-14 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 71 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le off GL X on PCC Complete water valve box installation at Sta 1+35.52 WL B X X GL X at 4 FH Sta 1+35.52 WL B number? X DOTA GL X at 4 Verify valve box is correct for use on PCC pavement that is 17.5" thick X X X PCC pavement area - East side Complete ARV installation on WL B near Sta 1+00 X X X No drawings on what's being done PCC pavement area - East side Sewer COTG near GL X/9 X X X X Not advisable from day one and not aircraft rated PCC pavement area - East side Installation of mullion pit drain is questionable at GL X/9 X X X X PVC under PCC pavement with aircraft traffic! PCC pavement area - East side Installation of mullion pit drain is questionable at GL X/12 X X X X PVC under PCC pavement with aircraft traffic! PCC pavement area - East side Sewer COTG near GL X/13 for pit drain X X X X X Not advisable from day one and not aircraft rated PCC pavement area - East side Installation of mullion pit drain is questionable at GL X/13 X X X X PVC under PCC pavement with aircraft traffic! PCC pavement area - East side Complete installation of Utility Stands and electric hanholes for future pole lighting X X X X No drawings to date PCC pavement area - East side Confirm adequate cover for piping and conduits to the North utility stand X X X No drawings to date Typical Fire Hydrants Curbs at fire hydrants to be painted traffic yellow X Addendum #2 (04-26-16) Aokea Lace Fencing Fire Chief requires "No Parking" signage X X Addendum #2 (04-26-16) West side parking Identify and number the fire hydrants X DOTA and Doonwood Cargo parking Identify and number the fire hydrants, located to meet code clearances? X X X DOTA and Doonwood for numbering Cargo parking Uncover and reveal Sewer COTG A-12 near GL 28 west of Supply X X X X Drawings revised? Cargo parking Identify and number the fire hydrant X DOTA and Doonwood to number Cargo loading dock Sewer COTG A-11A needs isolation from surrounding pavement X X X Drawings revised? Cargo Staging area Identify and number the fire hydrant X DOTA and Doonwood PCC pavement area - East side Sewer COTG near GL X/16 for pit drain X X X X Not advisable from day one and not aircraft rated PCC pavement area - East side Complete water valve box installation at Sta 4+72.74 WL B X PCC pavement area - East side Determine FH number at GL X/18 Sta 4+72.74 WL B X X PCC pavement area - East side Complete installation of Utility Stands and electric hanholes for future pole lighting X X X No drawings to date PCC pavement area - East side Confirm adequate cover for piping and conduits to the South utility stand X X X No drawings to date PCC pavement area - East side Complete installation of oil water separator near GL X/20 X X X No drawings to date PCC pavement area - East side Complete installation of sewer COTG for oil water separator X X S-C403-01 S-C403-02 S-C403-03 S-C403-04 S-C403-05 S-C403-06 Sheet C403 S-C402-30 S-C402-34 S-C402-35 S-C402-36 S-C402-37 S-C404-01 S-C404-02 S-C404-03 S-C404-04 S-C404-05 S-C404-06 S-C404-07 Sheet 404 S-C402-27 S-C402-31 S-C402-32 S-C402-33 S-C402-28 S-C402-29 S-C402-38 S-C402-39 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 72 of 73 Completed: 160308

 
Se ct o r R o o m N o . Se ri es The items on this Master Listing are opinions based on visual observations on accessible areas or information made available from subs and vendors and is not limited to the content. This list is not expressed or inplied to be complete. N ee d /C o n fi rm D e si gn N ew S co p e o f W o rk HNL TMP Maintenance Site and Cargo State Project Nos. AO1125-14, AO1125-15 and AO1127-17 Room Description In co m p lete C o n tr ac t W o rk Notes R e- w o rk t o m ak e go o d Err o rs a n d O m is si o n s Item U n ac ce p ta b le PCC pavement area - East side Confirm adequate cover for conduits and piping for oil water separator X X X No drawings to date Open Yard Verify locaction of fire hydrant - might be too far away from building X X Right location? Open Yard Remove and replace concrete collar at sewer COTG near GL L/24 X X X Open Yard Confirm location and purpose of COTG near GL L/21 X X X Does not show up on drawings. East of Cargo Modified waterline, added ARV along WL D near Sta 4+90 X X Where are the revise drawings? East of Cargo Identify and number fire hydrant X DOTA and Doonwood East of Cooler Building Unknown COTG installed X X X X Where are the revise drawings? East of Cargo Uncover/reveal Sewer COTG B-03 to trench drain on GL N/35- 37 X X X Confirm design is adequate East of Cargo Confirm trench drain connection at roll-up door between GL N/33-34 X X X Connected? Clean out? East of Cargo Sewer COTG B-06 was revised to manhole -confirm design X X X No revised drawings, confirm design is adequate East of Cargo Sewer COTG B--05 appears to be missing - confirm design X X X X No revised drawings, confirm design is adequate East of Cargo Confirm trench drain connection at roll-up door between GL N/35-37 X X X Connected? Clean out? East of Cargo Sewer COTG added near trench drain along GL N/26-27 X X No revised drawings, confirm design is adequate East of Cargo Sewer COTG added near trench drain along GL N/24-25 X X No revised drawings, confirm design is adequate East of Cargo Sewer COTG C-01 appears to be missing - confirm design X X X X No revised drawings, confirm design is adequate Open Yard Sewer COTG C-02 was revised to manhole - confirm design X X X X No revised drawings, confirm design is adequate Open Yard Fire hydrant numbering by DOTA and Doonwood Open Yard Sewer COTG C-03 was revised to manhole - confirm design X X X X No revised drawings, confirm design is adequate East of Cargo Sewer COTG B-02 was revised to manhole - confirm design X X X X No revised drawings, confirm design is adequate East of Cargo/Cooler Need another bollard at the fire hydrant? X X X The other corner FH has 4 vs. 3 S-C404-14 S-C404-15 S-C404-16 S-C404-17 S-C404-18 S-C404-19 S-C404-20 S-C404-23 S-C404-24 S-C404-25 S-C404-13 S-C404-21 S-C404-22 S-C404-26 S-C404-12 S-C404-08 S-C404-09 S-C404-10 S-C404-11 S-C404-27 Wesley R. Segawa and Associates C:\Users\Jordan.Akers\Downloads\(4 of 4) exhibit e 73 of 73 Completed: 160308

 
 


Exhibit 12

Hawaiian Holdings, Inc.
Computation of Ratio of Earnings to Fixed Charges
 
 
Year ended December 31,
 
 
2012
 
2013
 
2014
 
2015
 
2016
 
 
(in thousands, except ratio of earnings to fixed charges)
Earnings:
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
85,786

 
$
86,410

 
$
113,477

 
$
295,688

 
$
379,464

 
Total fixed charges (see below)
88,836

 
96,459

 
112,443

 
104,652

 
88,433

 
Interest capitalized
(10,524
)
 
(12,625
)
 
(8,024
)
 
(3,261
)
 
(2,651
)
Earnings as adjusted
$
164,098

 
$
170,244

 
$
217,896

 
$
397,079

 
$
465,246

 
 
 
 
 
 
 
 
 
 
 
Fixed Charges:
 
 
 
 
 
 
 
 
 
 
Interest and amortization of debt discount and issuance cost
$
43,522

 
$
50,453

 
$
64,240

 
$
55,678

 
$
36,612

 
Portion of rental expense representative of the interest factor
45,314

 
46,006

 
48,203

 
48,974

 
51,821

Total fixed charges
$
88,836

 
$
96,459

 
$
112,443

 
$
104,652

 
$
88,433

Ratio of earnings to fixed charges (a)
1.85

 
1.76

 
1.94

 
3.79

 
5.26

Coverage deficiency
$
—

 
$
—

 
$
—

 
$
—

 
$
—



_______________________________________________________________________________
(a)
For purposes of calculating this ratio, earnings consist of income (loss) before income taxes plus fixed charges, net of capitalized interest. Fixed charges consist of interest expense, the amount amortized for debt discount and issuance cost, and the portion of rental expense representative of interest expense.




Exhibit 21.1
LIST OF SUBSIDIARIES OF HAWAIIAN HOLDINGS, INC.
Hawaiian Airlines, Inc.
Hawaiian Gifts, LLC
Airline Contract Maintenance and Equipment, Inc.
HA 3049 Ualena Street, LLC







Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the following Registration Statements:
(1)
Registration Statement (Form S-8 No. 333-127732),
(2)
Registration Statement (Form S-8 No. 333-172356),
(3)
Registration Statement (Form S-3 No. 333-187255),
(4)
Registration Statement (Form S-8 No. 333-204383);
of our reports dated February 16, 2017 , with respect to the consolidated financial statements and schedule of Hawaiian Holdings, Inc. and the effectiveness of internal control over financial reporting of Hawaiian Holdings, Inc., included in this Annual Report (Form 10‑K) of Hawaiian Holdings, Inc. for the year ended December 31, 2016 .
/s/ ERNST & YOUNG LLP  
 
Honolulu, Hawai'i
February 16, 2017






Exhibit 31.1
CERTIFICATION

I, Mark B. Dunkerley, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Hawaiian Holdings, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date:
February 16, 2017
By:
 
/s/ MARK B. DUNKERLEY



 
Mark B. Dunkerley
  President and Chief Executive Officer





Exhibit 31.2
CERTIFICATION

I, Shannon L. Okinaka, certify that:
1.    I have reviewed this Annual Report on Form 10-K of Hawaiian Holdings, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date:
February 16, 2017
By:
 
/s/ SHANNON L. OKINAKA
 
 
 
 
Shannon L. Okinaka
 Executive Vice President, Chief Financial Officer and Treasurer





Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Hawaiian Holdings, Inc. (the Company) for the period ended December 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Mark B. Dunkerley, President and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date:
February 16, 2017
By:
 
/s/ MARK B. DUNKERLEY
 
 
 
 
Mark B. Dunkerley
  President and Chief Executive Officer





Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Hawaiian Holdings, Inc. (the Company) for the period ended December 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Shannon L. Okinaka, Executive Vice President, Chief Financial Officer and Treasurer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date:
February 16, 2017
By:
 
/s/ SHANNON L. OKINAKA
 
 
 
 
Shannon L. Okinaka
 Executive Vice President, Chief Financial Officer and Treasurer