Exhibit 10.23


 


 


PORTIONS
OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH


THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR


CONFIDENTIAL
TREATMENT.  SUCH PORTIONS ARE DESIGNATED
[REDACTED].


 


 


FIRST AMENDMENT TO AGREEMENT


 


THIS FIRST AMENDMENT TO AGREEMENT
(“Amendment”) is entered into as of December 12, 2002, by and between Hawaiian
Airlines, Inc., a corporation organized under the laws of the State of Hawaii
(the “Carrier”) and U.S. Bank National Association (“Bank”).


 


RECITALS


 


A.                                   Carrier
and Bank are parties to a certain Agreement with an effective date of December
31, 1999 (as the same may be further amended, extended, supplemented or
restated from time to time, the “Agreement”) pursuant to which Carrier and Bank
agreed to the terms and conditions whereby Bank processes payments of [REDACTED], and


 


B.                                     Carrier
and Bank have agreed to amend the Agreement as set forth herein, but only under
the terms and conditions set forth herein.


 


NOW, THEREFORE, IT IS HEREBY AGREED by and
between Carrier and Bank as follows:


 


1.                                       Definitions.
All capitalized terms used in this Amendment, unless otherwise defined herein,
shall have the meanings ascribed to them in the Agreement. All references
contained in the Agreement and the Schedules thereto to “Agreement” shall mean
the Agreement as amended hereby, and all references to “Schedule 2” shall mean
Schedule 2 to the Agreement as further amended hereby.


 


2.                                       Amendments to
Agreement. Section 23 of the Agreement is hereby amended and restated in
its entirety as follows:


 


Unless earlier terminated pursuant to Section 15 of this Agreement,
this Agreement shall continue in effect until December 31, 2003; provided,
however, that at any time during the term hereof of either party may terminate
this Agreement with or without cause upon ninety (90) days written notice to
the other party.


 


3.                                       Amendments to
Schedule 2. Schedule 2 of the Agreement is hereby amended and restated in
its entirety in the form attached hereto as Exhibit A.


 


4.                                       Representations
and Warranties. Carrier hereby represents and warrants to Bank that on and
as of the date hereof and after giving effect to this Amendment:


 


(a.)                               All
of Carrier’s representations and warranties contained in the Agreement  are true, correct and complete in all respects
as of the date hereof as though made on and as of such date; provided,
that references in Section 9.5  to
financial statements shall be to the most recent financial statements of such
type delivered to Bank by Carrier.


 


(b.)                              Carrier
has the power and legal right and authority to enter into this Amendment and
has duly authorized as appropriate the execution and delivery of this Amendment
and none of the agreements contained herein contravene or constitute, or


 

















 


upon
performance would constitute, a default under any agreement, instrument or
indenture to which Carrier is a party or a signatory or a provision of
Carrier’s Articles or Certificate of Incorporation, bylaws or, to the best of
Carrier’s knowledge, any other agreement or requirement of law, or result in
the imposition of any lien on any of its property under any agreement binding
on or applicable to Carrier or any of its property except, if any, in favor of
Bank.


 


(c.)                               Carrier
is duly organized and in good standing under the laws of the state of its
organization and is qualified to do business in each state where the nature of
its activities or the character of its properties makes such qualification
necessary or desirable and the failure to so qualify would have a material
adverse effect on the assets or operations of such Carrier.


 


(d.)                              Upon
the effective date of this Amendment, this Amendment and the Agreement, as
modified hereby, will constitute the legal, valid and binding obligations of
Carrier enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting the
rights of creditors generally, and to the exercise of judicial discretion in
accordance with general principles of equity.


 


5.                                       Ratification
of  Agreement; Acknowledgment. 
Except as expressly modified under this Amendment, all of the terms,
conditions, provisions, agreements, requirements, promises, obligations,
duties, covenants and representations of Carrier and Bank, respectively, under
the Agreement and all related agreements are hereby ratified by Carrier and
Bank, respectively.


 


6.                                       Effective
Date.  This Amendment shall become
effective upon execution and delivery of duly executed counterparts hereof by
Bank and Carrier.


 


7.                                       Reimbursement
of  Expenses.  Promptly upon
execution of this Agreement, Carrier shall reimburse Bank for all reasonable
out-of-pocket expenses (including attorneys' fees and legal expenses of Dorsey
& Whitney LLP, counsel for Bank) incurred in connection with this Amendment
and all related agreements.


 


8.                                       Merger and
Integration, Superseding Effect. 
This Amendment, from and after the date hereof, embodies the entire
agreement and understanding between the parties hereto, and supersedes and has
merged into it all prior oral and written agreements, on the same subjects by
and between the parties hereto with the effect that this Amendment, shall
control with respect to the specific subjects hereof and thereof.


 


9.                                       Governing Law.  This Amendment shall be governed by and
construed in accordance with the laws of the State of Minnesota.


 


10.                                 Counterparts.  This Amendment may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed
to be an original, and all of which counterparts of this Agreement when taken
together, shall constitute one and the same instrument.


 


2

















 


IN WITNESS WHEREOF, the parties hereto have
duly executed this Amendment as of the day and year first written above.


 


 


	
   

  	
  U.S. BANK
  NATIONAL ASSOCIATION

  
	
   

  
	
   

  
	
   

  	
  By

  	
  /s/

  
	
   

  	
   

  	
  Its
  Authorized Representative

  
	
   

  
	
   

  
	
  Accepted and
  Agreed as of

  December 19th, 2002

  
	
   

  
	
  HAWAIIAN
  AIRLINES, INC.

  
	
   

  
	
   

  
	
  By

  	
  /s/ Christine R. Deister

  	
   

  
	
   

  	
  Its Exec.
  V.P., CRO & Treasurer

  
	
   

  
	
   

  
	
  By

  	
  /s/ Lyn Flanigan Anzai

  	
   

  
	
   

  	
  Its Vice
  President, General Counsel and

  Corporate Secretary

  
					



 


3

















 


EXHIBIT A TO

FIRST AMENDMENT TO AGREEMENT


 


 


AMENDED AND RESTATED SCHEDULE 2

EXPOSURE PROTECTION


 

















 


SCHEDULE 2


 


1.                                      Certain
Definitions.


 


All terms not otherwise defined herein that
are capitalized and used herein shall have the meanings given to them in the
Agreement. Except as may be expressly provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP. To the extent
any change in GAAP affects any computation or determination required to be made
pursuant to this Agreement, such computation or determination shall be made as
if such change in GAAP had not occurred unless the Bank agrees in writing on an
adjustment to such computation or determination to account for such change in
GAAP. As used in this Schedule 2, the following terms shall have the meanings
indicated:


 


“ASM” shall mean available seat miles


 


“Capitalized Leases” shall mean a lease (or other agreement
conveying the right to use) real or personal property with respect to which at
least a portion of the rent or other amounts thereon constitute Capitalized
Lease Obligations.


 


“Capitalized Lease Obligations” shall mean the obligations of
Carrier to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real or personal property which obligations are
required to be classified and accounted for as a capital lease on the balance
sheet of Carrier under GAAP.


 


“Cash Reserves” shall mean [REDACTED]


 


“Cure of First Stage Triggering Event” shall mean Carrier’s cure
(which in the case of all financial covenants shall mean compliance therewith
at a level that equals or exceeds that necessary to avoid the occurrence of a
First Stage Triggering Event for two consecutive months following the latest
date of any outstanding First Stage Triggering Event) of all outstanding First
Stage Triggering Events and the non-occurrence of any new Triggering Event.


 


“Cure of Second Stage Triggering Event” shall mean Carrier’s
cure of all outstanding Second Stage Triggering Events and the non-occurrence
of any new Second Stage Triggering Event, which in the case of (i) each of the
Cash Reserve Triggering Event, the Minimum Days of Cash Triggering Event, and
the financial information delivery Triggering Event, described respectively in
Section (g)(i), (g)(ii) and (i) of the definition of Second Stage Triggering
Event, shall mean performance at a level that equals or exceeds that necessary
to avoid occurrence


 


A-1

















 


of a Second Stage Triggering Event of the types described therein for
two consecutive month periods following the latest date of any outstanding
Second Stage Triggering Event related to such Triggering Events, (ii) the load
factor Triggering Event, described in Section (g)(iii) of the definition of
Second Stage Triggering Event, shall mean performance at a level that equals or
exceeds that necessary to avoid occurrence of a Second Stage Trigger Event of
such type for eight consecutive weeks following the latest date of any
outstanding Second Stage Triggering Event related to such load factor
Triggering Event, (iii) EBIT Triggering Event, described in Section (g)(v) of
the definition of Second Stage Triggering Event, shall mean performance at a
level that equals or exceeds that necessary to avoid the occurrence of a Second
Stage Triggering Event of such type for one quarter following the latest date
of any outstanding Second Stage Triggering Event related to such EBIT
Triggering Event.


 


“First Stage Triggering Event” shall mean Carrier’s failure to
maintain any one or more of the following:


 


(a)                                  as
of the last day of each calendar month, Cash Reserves in an aggregate amount of
not less than [REDACTED];


 


(b)                                 as
of the last day of each calendar month, a Minimum Days of Cash in excess of [REDACTED]


 


“GAAP” shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of any
date of determination.


 


“Indebtedness” shall mean with respect to any Person at the time
of any determination, without duplication, all obligations, contingent or
otherwise, of such Person which in accordance with GAAP should be classified
upon the balance sheet of such Person as liabilities, but in any event
including: (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (c) all obligations of such Person upon which interest
charges are customarily paid or accrued, (d) all obligations of such Person
under conditional sale or other title retention agreements relating to property
purchased by such Person, (e) all obligations of such Person issued or assumed
as the deferred purchase price of property or services excluding accounts
payable arising in the ordinary course of business, (f) all obligations of
others secured by any Lien on property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (g) all
Capitalized Lease Obligations of such Person, (h) all obligations of such
Person in respect of interest rate protection agreements, (i) all obligations
of such Person, actual or contingent, as an account party in respect of


 


A-2

















 


letters of credit or bankers’ acceptances and (j) all obligations of
any partnership or joint venture as to which such Person is or may become
personally liable. Indebtedness shall not include current accruals incurred in
the ordinary course of business so long as the same are not of the type
encompassed by clauses (a)-(j) above.


 


“Interest Expense” shall mean for any period of determination,
the aggregate amount, without duplication, of interest paid, accrued or
scheduled to be paid in respect of any Indebtedness of Carrier including (a)
all but the principal component of payments in respect of conditional sale
contracts, Capitalized Leases and other title retention agreements, (b)
commissions, discounts and other fees and charges with respect to letters of
credit and bankers’ acceptance financings and (c) net costs (excluding fees
paid in full for and at the time of purchase of an interest rate cap) under
interest rate protection agreements, in each case determined in accordance with
GAAP.


 


“Lien” shall mean any security interest, mortgage, pledge, lien,
charge, encumbrance, title retention agreement or analogous instrument or
device (including the interest of each lessor under any Capitalized Lease), in,
of or on any assets or properties of Carrier, now owned or hereafter acquired,
whether arising by agreement or operation of law.


 


“Material Adverse Occurrence” shall mean any occurrence of
whatsoever nature (including, without limitation, any adverse determination in
any litigation, arbitration or governmental investigation or proceeding),
which, in the reasonable determination of Bank, does, or is likely to,
materially adversely affect the then present or prospective financial condition
of Carrier or does, or is likely to, materially impair the ability of Carrier
to perform its obligations under this Agreement.


 


“Minimum Days of Cash” shall mean as of any date of
determination, the number of days of cash calculated by dividing the amount of
Cash Reserves as of the end of each month by the amount that is the result of
dividing (i) the sum of monthly operating expenses and interest expenses, minus
depreciation and amortization, and minus non-cash special charges or non-cash
extraordinary items for such month by (ii) thirty-one (31) days.


 


“Person” shall mean any individual, partnership, corporation, or
other entity.


 


“RPM” shall mean revenue passenger mile. RPMs equal the total
number of passengers enplaned multiplied by the average distance flown, for any
given period.


 


“Second Stage Triggering Event” shall mean any of the following:


 


(a)                                  the
commencement of any bankruptcy, insolvency, moratorium, liquidation,
reorganization, dissolution, arrangement or other similar proceeding by or
against Carrier, any application for,


 


A-3

















 


consent by
Carrier to, or acquiescence by Carrier in, the appointment of any trustee,
receiver, or other custodian for Carrier or a substantial part of its property,
any appointment of a trustee, receiver or other custodian for Carrier or a
substantial part of its property, or any assignment by Carrier for the benefit
of creditors;


 


(b)                                 a
Material Adverse Occurrence;


 


(c)                                  the
merger or consolidation of Carrier, or entry by Carrier into any analogous
reorganization or transaction, with any other corporation, company or other
entity;


 


(d)                                 the
sale, transfer, lease or other conveyance of all or any substantial part of
Carrier’s assets;


 


(e)                                  any
change in the ownership or control of Carrier which Bank deems to constitute a
Material Adverse Occurrence;


 


(f)                                    the
maturity of any Indebtedness in the aggregate principal amount of [REDACTED] or more of Carrier shall be
accelerated, or Carrier shall fail to pay any such Indebtedness when due (after
the lapse of any applicable grace period) or, in the case of such Indebtedness
payable on demand, when demanded (after the lapse of any applicable grace period),
or any event shall occur or condition shall exist and shall continue for more
than the period of grace, if any, applicable thereto and shall have the effect
of causing, or permitting the holder of any such Indebtedness or any trustee or
other Person acting on behalf of such holder to cause, such Indebtedness to
become due prior to its stated maturity or to realize upon any collateral given
as security therefor;


 


(g)                                 Carrier’s
failure to maintain any one or more of the following:


 


(i)                                     as
of the last day of each calendar month, Cash Reserves in an aggregate amount of
not less than [REDACTED]


 


(ii)                                  as
of the last day of each calendar month, a Minimum Days of Cash in excess of 19
days;


 


(iii)                               an
amount of ASMs for a calendar month that is equal to at least [REDACTED] of the ASMs for the immediately
preceding calendar month;


 


(iv)                              the
average weekly load factor for any consecutive fourteen (14) days is less than
[REDACTED]


 


(v)                                 the
failure to have earnings, before interest and taxes, in the amounts and for the
time periods listed below;


 


A-4

















 


	
  4th
  Q 2002

  	
  1st Q 2003

  	
  2nd
  Q 2003

  	
  3rd Q 2003

  	
   

  
	
  [REDACTED]

  



 


(h)                                 if
negotiations between Carrier and any labor organization representing any of
Carrier’s employees concerning changes in rates of pay, rules or other working
conditions as defined in 45 U.S.C. Section 155 should result in either (a) an
invocation by any party of the services of the National Mediation Board or (b)
a proffer of services by the National Mediation Board itself; provided,
that in the case of the negotiations concerning changes in rates of pay, rules
or other working conditions as defined in 45 U.S.C. §155 between
Carrier and the labor organization representing Carrier’s employees that were
in existence at or about the time of the entry into the First Amendment to
Agreement, a Triggering Event shall occur only if such negotiations should
result in either (x) a termination of negotiation meetings between the parties
without an invocation by any party of the services of the National Mediation
Board or a proffer of services by the National Mediation Board itself, or (y)
the commencement of a “cooling  off’
period prior to the utilization of self help by the parties;


 


(1)                                  Carrier’s
failure to deliver required financial information within five Business Days
after notice is provided by Bank of Carrier’s failure to deliver when due any
financial, operational or other reports and certificates required to be
delivered pursuant to Section 25 of the Agreement and any provision of this
Schedule 2;


 


(j)                                     if
the Agreement is not renewed at least [REDACTED]
days prior to  its scheduled date of
expiration, Carrier gives written notice of its intent to terminate the
Agreement or Bank gives to Carrier notice of the termination of the Agreement;


 


“Triggering Event” shall mean a First Stage Triggering Event or
a Second Stage Triggering Event.


 


2.                                      Compliance
Certificate


 


As soon as practicable and in any event
within [REDACTED] Business Days
after the end of each fiscal month, Carrier shall furnish to Bank, together
with such supporting financial information as Bank may require, a compliance
certificate for the applicable month in the form attached hereto as Attachment
1 (such certificate and supporting financial information being the “Monthly
Compliance Certificate”) signed by the chief financial officer of Carrier and
demonstrating in reasonable detail the Cash Reserves, total and unrestricted
cash balances, and the monthly ASMs and RPMs.


 


As soon as practicable, and in any event no
later than the Thursday of each week (or if such a date is not a Business Day,
the next Business Day), Carrier shall furnish to Bank, together with such
supporting financial information as Bank may require, a compliance certificate
in the


 


A-5

















 


form attached hereto as
Attachment 2 (such certificate and supporting financial information being the
“Weekly Compliance Certificate”) signed by the chief financial officer of
Carrier and demonstrating in reasonable detail (i) the Cash Reserves and the
total and unrestricted cash balances each as of Saturday of the preceding week,
(ii) the ASMs for the preceding calendar week, and (iii) the RPMs for the
preceding calendar week.


 


3.                                      Exposure
Protection


 


Subject to Section 4 of this Schedule 2, Bank
may retain and hold all funds paid to it by a Card Association on account of
Sales Slips submitted by Carrier to Bank as Reserved Funds until the Deposit
equals the amount required hereunder, as determined in accordance with Sections
4 and 8 of this Schedule 2. Throughout the term of this Agreement, the Deposit
amount shall be subject to adjustment as provided in Section 4 of this Schedule
2. Bank will hold the Deposit as security for the due and punctual payment of
and performance by Carrier of all its obligations under this Agreement, whether
now existing or hereafter arising (the “Obligations”). Carrier hereby grants to
Bank a continuing first security interest in its interest (if any) in the
Deposit and in all amounts added to the Deposit at any time and in all monies,
securities, instruments purchased therewith, all interest, profits and/or
dividends accruing thereon and proceeds thereof; to secure payment of all
Obligations of Carrier to Bank, whether now existing or hereinafter arising.
Carrier hereby acknowledges that notwithstanding the foregoing grant of a
security interest, Reserved Funds represent only a future right to payment owed
to Carrier hereunder, payment of which is subject to the terms and conditions
of this Agreement, and do not constitute funds of Carrier.


 


Carrier further acknowledges that Bank
disputes the existence of any interest of Carrier in rights to payment from
Cardholders or Card issuers arising out of the Sales Slips described below and
further acknowledges that to the extent that Carrier may have an interest
therein, such right is subordinate to the interest of Bank. To the extent of
Carrier’s interest therein, if any, Carrier hereby grants to Bank a first
priority security interest in all Sales Slips initiated in the United States
bearing a Transaction Date on or prior to the date of termination of this
Agreement and all rights to payment (including, without limitation, actual
collections held by Bank on account of Sales Slips), from Cardholders or Card
issuers for United States initiated Travel Costs incurred on a Transaction Date
on or prior to the date of termination of this Agreement and paid for by Cards,
in the amount of and as a result of such Sales Slips, in accordance with this
Agreement, and in any or all proceeds thereof; whether now existing or
hereafter created or arising, to secure payment of the Obligations of Carrier
to Bank, whether now in existence or hereafter arising. Such security interest
is in addition to Bank’s security interest in the Deposit. Carrier further
agrees that during the term of this Agreement, Carrier shall not grant, or
attempt to grant, to any other party or suffer to exist in favor of any other
party any interest in the Deposit, in any Sales Slips and rights to payment
from Cardholders or Card issuers or in any proceeds thereof.


 


Carrier will do all acts and things, and will
execute, endorse, deliver, file or record all instruments and agreements
(including pledges, assignments, security agreements, financing statements,
continuation statements, etc.) reasonably requested by Bank, in form reasonably
satisfactory to Bank, to establish, perfect, maintain and continue the
perfection and priority of the


 


A-6

















 


security interest of Bank in
Carrier’s interest (if any) in the Deposit, all Sales Slips and rights to
payment from Cardholders or Card issuers and all proceeds of the foregoing, and
Carrier will pay the reasonable costs and expenses of all filings and recordings,
including taxes thereon and all searches reasonably necessary or deemed
necessary by Bank, to establish and determine the validity and priority of such
security interest of Bank. Carrier’s address as stated in the preamble to the
Agreement is Carrier’s chief executive office. Carrier hereby irrevocably
appoints Bank (and all Persons, officers, employees or agents designated by
Bank), its agent and attorney-in-fact to do all such acts and things
contemplated by this paragraph in the name of Carrier.  Without limiting the foregoing, Carrier
hereby authorizes Bank to file one or more financing statements or continuation
statements in respect hereof; and amendments thereto, relating to any part of
the collateral described herein without the signature of Carrier.  A carbon, photographic or other reproduction
of this Agreement or of a financing statement shall be sufficient as a
financing statement and may be filed in lieu of the original in any or all
jurisdictions which accept such reproductions.


 


4.                                      Adjustments
to Deposit


 


Bank will use the Methodology described in
Section 8 of this Schedule 2 (the “Methodology”) to calculate Gross Exposure
(as defined in Section 8 of this Schedule 2) on a daily, weekly, bi-weekly, or
monthly basis, as the Bank elects in its sole discretion. Carrier acknowledges
that Bank has explained to it and it understands Bank’s Methodology for
determining Gross Exposure and the amount of the Deposit and hereby agrees to
be bound by such Methodology and the determinations made by Bank as a result
thereof. Carrier understands that Gross Exposure includes, among other things,
the value of Travel Costs for goods or services sold to Cardholders who used
their Cards to purchase such goods or services with respect to which Carrier
has not yet provided such goods or services. Bank and Carrier may change the
Methodology by mutual agreement.


 


Prior to the occurrence of any Triggering
Event, the amount of the Deposit shall not be greater than [REDACTED] of Gross Exposure. From and after
the occurrence of a Triggering Event, the amount of the Deposit shall be
increased or decreased, as appropriate, based on the Methodology, to be in the
following amount for the specified periods of time (such amount for the
applicable date, the “Required Amount”)


 


(a)                                  During
any period in which (i) a First Stage Triggering Event has occurred and is
continuing and (ii) no Second Stage Triggering Event has occurred and is
continuing, the Deposit shall at all times be equal to the amount that is [REDACTED]  of Gross Exposure.


 


(b)                                 During
any period in which a Second Stage Triggering Event has occurred and is
continuing, the Deposit shall at all times be equal to the amount that is [REDACTED] of Gross Exposure.


 


(c)                                  Following
any period in which Carrier has effected a Cure of Second Stage Triggering
Event and so long as no other Triggering Event has occurred, the Deposit shall
be reduced to an amount equal to the amount that is [REDACTED] of Gross Exposure.


 


A-7

















 


(d)                                 Following
any period in which Carrier has effected a Cure of First Stage Triggering Event
and so long as no other Triggering Event has occurred, the Deposit shall be
reduced to an amount not greater than [REDACTED]
of Gross Exposure.


 


Upon the
occurrence of a Triggering Event, Carrier immediately, upon Bank’s written
demand therefor, shall remit to Bank by wire transfer an amount sufficient to
increase the amount of the Deposit to the Required Amount. Without limiting the
foregoing, any increases to the Deposit required to be made under this
Agreement may be made, at Bank’s sole discretion, by Bank immediately
withholding on a daily basis as Reserved Funds an amount up to [REDACTED] of amounts otherwise payable to
Carrier under the Agreement until the Deposit is at least equal to the Required
Amount


 


Upon Carrier’s
Cure of First Stage Triggering Event, and no later than the fifth (5th)  Business
Day after Bank’s receipt of the Monthly Compliance Certificate that
demonstrates such cure, Bank will remit to the Carrier an amount that will
reduce the amount of the Deposit to an amount not greater than [REDACTED] of Gross Exposure. Upon Carrier’s
Cure of Second Stage Triggering Event that does not qualify as a Cure of First
Stage Triggering Event, and no later than the [REDACTED] Business Day after Bank’s receipt of the applicable
Weekly and Monthly Compliance Certificates that demonstrate such cure, Bank
will remit to the Carrier an amount that will reduce the amount of the Deposit
to an amount equal to [REDACTED of
Gross Exposure.


 


Other than as
provided in the immediately preceding paragraph, Bank shall remit to the
Carrier by the second (2nd) Business Day after any determination is made by
Bank that Carrier is entitled to a payment hereunder, any amount necessary to
reduce the Deposit to the Required Amount. Bank may reduce the amount due
Carrier under this Section 4 by the amount of any increase required to be made
to the Deposit resulting from Bank’s Methodology applied prior to the date the
funds are to be remitted to the Carrier hereunder.


 


The amount of
the Deposit to be maintained hereunder may be reduced in accordance with
Section 10 of this Schedule 2 pursuant to which Bank, in its sole discretion,
may accept an irrevocable standby letter of credit in lieu of all or a portion
of the required Deposit.


 


5.                                      Control
and Nature of Deposit


 


Carrier
acknowledges that any funds remitted to Bank by Carrier and funds paid to Bank
by Card Associations and held by Bank as the Deposit may be commingled with
other funds of Bank and further acknowledges that all such funds, and any
investment of funds shall be in the name and control of Bank, and Carrier shall
have no interest in any securities, instruments or other contracts or any
interest, dividends or other earnings accruing thereon or in connection
therewith. It is the understanding of the parties that the sole obligation of
Bank with respect to the Deposit shall be the obligation to pay to Carrier
amounts equal to the amount attributable to Travel Costs with respect to which
Carrier has provided goods or services and that such obligation on the part of
Bank is at all times subject to the terms of this Agreement.  To the extent permitted by applicable law or
regulation, all amounts held as the Deposit will be invested in the name of
Bank so as to result in a yield equal to the monthly average of the H-15 index
for


 


A-8

















 


overnight federal funds
transactions, or any other equivalent investment approved by the Bank. The
amount so earned shall be credited to the Deposit.


 


6.                                      Right
of Offset


 


At any time that an amount is due Bank from
Carrier and Bank does not obtain payment of such amount due as provided in this
Agreement, Bank shall have the right to apply or set off any amounts otherwise
owed by Bank to Carrier hereunder, including, without limitation, any amounts
attributable to the Deposit, to the amount owed by Carrier.


 


7.                                      Retention
of Deposit


 


During the period not to exceed [REDACTED] months from the earlier of
termination of this Agreement or, if applicable, from the date upon which
Carrier permanently ceases flight operations, Bank shall have no obligation to
reduce the Deposit amount to an amount that is less than Gross Exposure and may
retain the Deposit in an amount equal to Gross Exposure until such time as the
Bank determines that Carrier has no further Obligations or potential
Obligations to Bank under this Agreement. In the event that any cessation of
flight operations by Carrier is temporary, Bank, at its option, may establish
and maintain separate flight calendars in the determination of Gross Exposure.
A flight calendar may be established to determine Gross Exposure arising from
Travel Costs purchased or paid by a customer of Carrier through use of a Card
with a Transaction Date for such purchase or payment that is prior to the
commencement of the temporary cessation (“Pre-Cessation Travel Costs”). An
additional flight calendar may be established to determine Gross Exposure
arising from Travel Costs purchased or paid by a customer of Carrier through
use of a Card with a Transaction Date for such purchase or payment that is on
or after the date of the commencement of the temporary cessation. In the event
of temporary cessation of flight operations by Carrier, Bank will not be obligated
to make any payments to Carrier on account of Sales Slips that were or are
submitted to it by Carrier with respect to Pre-Cessation Travel Costs for a
period of [REDACTED] months after
the commencement of such temporary cessation.


 


8.                                      Methodology


 


“Gross Exposure” shall be calculated by the Bank on a daily basis as
follows:


 


(a)                                  [REDACTED]


 


(b)                                 [REDACTED]


 


A-9

















 


(c)                                  [REDACTED]


 


(d)                                 [REDACTED]


 


(e)                                  [REDACTED]


 


(f)                                    [REDACTED]


 


(g)                                 [REDACTED]


 


9.                                      Standby
Letter of Credit


 


The amount of the Deposit which Bank may
maintain pursuant to this Schedule 2 shall be decreased by the amount remaining
to be drawn upon any valid and outstanding irrevocable standby letter of credit
for the benefit of and expressly accepted by Bank, in its sole discretion, in
lieu of maintaining the amount of the Deposit in the Required Amount under
Section 4 of this Schedule 2. Any such letter of credit shall be in form and
substance acceptable to Bank and issued by a financial institution acceptable
to Bank, as determined by Bank in its sole discretion. The sum of the amount
remaining to be drawn upon any valid and outstanding standby letter of credit
and the amount of the Deposit maintained hereunder (“Aggregate Coverage”) shall
at all


 


A-10

















 


times be no less than the
Required Amount and Bank may withhold from payment to Carrier Reserved Funds in
accordance with Section 4 of Schedule 2 to the extent necessary to cause
Aggregate Coverage to be not less than the Required Amount. At such time as the
Bank may no longer draw on the letter of credit, Bank may require that the
Deposit equal the Required Amount.


 


Upon the occurrence of any event that gives
rise to Bank’s right under this Agreement (i) to make demand on Carrier for
payment to Bank, (ii) to apply amounts represented by the Deposit to
obligations of Carrier under the Agreement or (iii) otherwise to retain and not
pay to Carrier amounts paid to Bank by MasterCard International or the Visa
System on account of Sales Slips submitted to Bank by Carrier, then Bank, at
its option, may draw on any standby letter of credit issued for its benefit
with respect to the Agreement without first taking any of the actions described
in clauses (i), (ii) and (iii) above.


 


In addition to Bank’s rights as set forth
above, Bank, at its option, may draw (in one or more draws) up to the lesser of
(i) the amount equal to [REDACTED]
of Gross Exposure less the amount of the Deposit on the date of any such draw
or (ii) the full amount remaining undrawn on a standby letter of credit upon
the occurrence of any one or more of the following events or as otherwise
provided below: (a) commencement whether by or against Carrier, of any
bankruptcy, reorganization, debt arrangement or other proceeding under any
bankruptcy, reorganization, debt arrangement or other proceeding under any
bankruptcy or insolvency law; (b) receipt by Bank of notification from the
issuer of the standby letter of credit that such issuer has elected not to
renew the standby letter of credit; (c) notification of termination of the
Agreement by either party; or (d) a substantial number of the scheduled flights
of Carrier fail to operate on any particular day.  In addition, Bank may draw upon the standby letter of credit
pursuant to any other condition for draw provided in the standby letter of
credit, and, in any event, on or after the thirtieth day prior to expiration of
the standby letter of credit. No failure to draw, or delay in making a draw, on
the standby letter of credit shall impair Bank’s right to draw thereon at a
later time.


 


Carrier acknowledges that it
has no interest in any proceeds of any draw on any letter of credit issued for
the benefit of Bank and that upon any draw on any letter of credit, Bank shall
be entitled to hold the proceeds thereof for payment of the Obligations under
the Agreement and apply such proceeds in payment thereof as and when Bank deems
appropriate. Bank shall have no obligation to remit to any person or entity any
excess proceeds of any draw on the letter of credit until expiration of the
period specified in Section 7 of this Schedule 2. In the event of any dispute
between Carrier and the issuer of such letter of credit or any subrogee
thereof, or any other person or entity with respect to entitlement to any
proceeds of the letter of credit, Bank may retain all such proceeds until final
resolution of such dispute by a court of competent jurisdiction, subject to
Bank’s right to retain and apply proceeds in payment of the Obligations. In the
event that Bank draws on the letter of credit and holds the proceeds thereof at
a time when Carrier is conducting normal flight operations, Bank, at its
option, may include such proceeds in its calculation of coverage for Gross Exposure
and make remittances to Carrier in accordance with Section 4 of this Schedule 2
as if the proceeds were part of the Deposit.


 


A-11

















 


ATTACHMENT 1

TO SCHEDULE 2

TO AGREEMENT


 


MONTHLY COMPLIANCE
CERTIFICATE


 


This Monthly Compliance
Certificate is being submitted pursuant to Section 2 of Schedule 2 of the
Agreement dated as of December 31, 1999 (the “Agreement”) by and between
Hawaiian Airlines, Inc. (“Carrier”) and U.S. Bank National Association (“Bank”).
The undersigned, being the Chief Financial Officer of Carrier, hereby certifies
that, to the best of his/her knowledge after reasonable investigation as of the
date of this Certificate, the following are true and correct and were compiled
from the books and records of the Carrier in accordance with the terms of the
Agreement.


 


	
   

  	
   

  	
   

  	
  Present

  Month

  	
   

  	
  Immediately

  Preceding

  Month

  	
   

  	
  Second

  Preceding

  Month

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Cash Reserves

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a) 
  Unrestricted Cash Balance

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b) 
  Total Cash Balance

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Available Seat Miles

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Revenue Passenger Miles

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Triggering Events  No Triggering Event has occurred and
  is continuing except:

  	
   

  



 


[Describe here any Triggering Event]


 


All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in Schedule 2
of the Agreement thereto.


 


	
  Dated                                ,
         

  	
   

  
	
   

  	
  HAWAIIAN
  AIRLINES, INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Its

  	
   

  
				



 


A-12

















 


ATTACHMENT 2
TO SCHEDULE 2

TO AGREEMENT


 


WEEKLY COMPLIANCE
CERTIFICATE


 


This Weekly Compliance Certificate is being
submitted pursuant to Section 2 of Schedule 2 of the
Agreement dated as of December 31, 1999 (the “Agreement”) by and between
Hawaiian Airlines, Inc. (“Carrier”) and U.S. Bank National Association
(“Bank”). The undersigned, being the Chief Financial Officer of Carrier or a
duly authorized representative thereof, hereby certifies that, to the best of
his/her knowledge after reasonable investigation as of the date of this
Certificate, the following are true and correct and were compiled from the
books and records of the Carrier in accordance with the terms of the Agreement.


 


	
   

  	
   

  	
   

  	
  Present

  Month

  	
   

  	
  Immediately

  Preceding

  Month

  	
   

  	
  Second

  Preceding

  Month

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Cash Reserves

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a) 
  Unrestricted Cash Balance

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b) 
  Total Cash Balance

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Available Seat Miles

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Revenue Passenger Miles

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Triggering Events  No Triggering Event has occurred and
  is continuing except:

  	
   

  



 


[Describe here any Triggering Event]


 


All capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in Schedule 2 of the
Agreement thereto. This Weekly Compliance Certificate may be sent to Bank by
e-mail (unsigned) at an e-mail address designed from time to time by Bank.


 


	
  Dated                                ,
         

  	
   

  
	
   

  	
  HAWAIIAN
  AIRLINES, INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Its

  	
   

  
				



 


A-13