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PW4060 ENGINE FLEET MANAGEMENT PROGRAM AGREEMENT
  
    BY AND BETWEEN
  
    UNITED TECHNOLOGIES CORPORATION
  
    PRATT & WHITNEY DIVISION
  
    AND
  
    HAWAIIAN AIRLINES,
 INC.    
  

DATED AS OF OCTOBER 5, 2001  

         This document contains proprietary information of United Technologies Corporation, Pratt & Whitney Division ("Pratt & Whitney"). Pratt &
Whitney offers the information contained in this document on the express condition that you shall not disclose or reproduce the information in whole or in part without Pratt & Whitney's express
written consent. Neither receipt nor possession of this document alone, from any source, constitutes Pratt & Whitney's permission. Possessing, using, copying or disclosing this document by
anyone without Pratt & Whitney's express prior written consent may result in criminal and/or civil liability. 

 
 

PW4060 ENGINE FLEET MANAGEMENT PROGRAM AGREEMENT
  
    FOR
  
    HAWAIIAN AIRLINES, INC.    
  

        THIS PW4060 ENGINE FLEET MANAGEMENT PROGRAM AGREEMENT dated as of October 5, 2001 (this "FMP Agreement") is made by and between United Technologies
Corporation, acting through its Pratt & Whitney Division ("Pratt & Whitney"), a corporation organized and existing under the laws of the state of Delaware, and having an office and place
of business in East Hartford, Connecticut and Hawaiian Airlines, Inc. ("Hawaiian"), a corporation having an office and place of business in Honolulu, Hawaii. 

        WHEREAS
Hawaiian wishes to use Pratt & Whitney's PW4060 engine fleet management program services; and 

        WHEREAS
Pratt & Whitney is willing to provide PW4060 engine fleet management program services for FMP Eligible Engines, as defined below, upon the terms set forth in this FMP
Agreement. 

        PRATT &
WHITNEY AND HAWAIIAN HEREBY AGREE AS FOLLOWS: 

A.    DEFINITIONS  

        In this FMP Agreement, including the attachments hereto, the capitalized terms herein shall have the respective meanings set out below. Except as otherwise
provided, all references to "Attachments" refer to "Attachments" to this FMP Agreement. 

        "Aircraft"
means the 767 aircraft operated by Hawaiian on which FMP Eligible Engines are initially installed at the entry of such aircraft into the FMP Agreement. 

        "AOG
Event" occurs at the time that an Aircraft is unavailable for operational service solely because an FMP Eligible Engine installed on such Aircraft is unserviceable and incapable of
continued
operation after Hawaiian has performed reasonable on-wing corrective action and no replacement engine is available. An AOG Event terminates upon correction of the unserviceable condition
or at the time a replacement engine becomes available for operational service, whichever occurs first. 

        "Aviation
Authority" means all or any of the authorities, government departments, committees or agencies which, under the laws of the State of Registration of the relevant Aircraft, may
from time to time (i) have control or supervision of civil aviation in that state; or (ii) have
jurisdiction over the registration, airworthiness or operation of, or other matters relating to an Aircraft. 

        "AWAS"
means Ansett Worldwide Aviation, USA, Ansett Worldwide Aviation Netherlands, B.V., or, subject to Pratt & Whitney approval, any division, wholly-owned subsidiary, or
affiliate of Ansett Worldwide Aviation, USA. 

        "Buyer
Furnished Equipment" or "BFE" means the aircraft manufacturer-supplied or buyer furnished engine-mounted accessories (typically including such items as integrated drive generator,
quick accessory disconnect adapter, hydraulic pumps, shut-off valve and pressure regulating valve). 

        "Customized
Engine Maintenance Program" or "CEMP" means the program for off-wing maintenance and engine line maintenance established for Hawaiian in accordance with
Section D(1). 

        "Delivery
Duty Paid" or "DDP" shall have the meaning set forth in Incoterms 2000, as promulgated by the International Chamber of Commerce. 

        "ECM"
means engine condition monitoring. 

        "Engine
Flight Hour" or "EFH" means FMP Eligible Engine flight hour. 

        "Engine
Build-up Unit" or "EBU" means the set of engine-mounted hardware required to interface such engine with aircraft systems. These aircraft systems typically include
fuel, hydraulic, pneumatic, fire detection and electrical units. 

 

        "Extreme
Environmental Conditions" means atmospheric conditions typical of a severe environment including but not limited to high temperature or high concentrations of particulates such
as sand, volcanic ash, calcium sulfate or other contaminates. 

        "Ex
works" shall have the meanings set forth in Incoterms 2000. 

        "FAA"
means the Federal Aviation Administration of the United States of America or any successor agency thereto. 

        "FMP
Eligible Engines" means the PW4060 engines that are identified in Attachment I and Attachment II. 

        "FMP
Rate" has the meaning set forth in Section B. 

        "FMP
Spare Engine" means an engine provided by Pratt & Whitney for use by Hawaiian pursuant to this FMP Agreement. 

        "FOD"
means foreign object damage. 

        "General
Lease Agreement" means a lease agreement entered into by and between Pratt &Whitney and Hawaiian for a spare engine in accordance with Section C(1)(b) when an AOG
Event occurs as the result of an "Excluded Cause" set forth in Section C(1)(b)(ii). 

        "Initial
Refurbishment Visit" means the first Performance Restoration Shop Visit performed on each of the eight (8) engines in Fleet No.1. 

        "Life
Limited Parts" or "LLPs" refer to those FMP Eligible Engine parts defined as such in the Airworthiness Limitation section of the applicable Production Approval Holders manual. 

        "Parts
Manufacturer Approval" or "PMA" means the authority granted to a legal entity by the FAA and described in 14 C.F.R. § 21.303, to produce modification or replacement
parts for sale for installation on type certificated products. 

        "Performance
Restoration Shop Visit" or "PRSV" means the accomplishment of all specified disassembly, cleaning, inspection, repair or replacement of parts as required, restoration of
fits and clearances, reassemble and test tasks for the purpose of attaining a full service interval of parts, modules and engines. 

        "Pratt &
Whitney Facility" means the Pratt & Whitney Cheshire Engine Center. 

        "Production
Approval Holder" or "PAH" means an entity holding a type certificate issued under the authority of the Federal Aviation Regulation, Part 21. 

        "Program
Manager" has the meaning set forth in Section D(2)(a). 

        "Quick
Engine Change" or "QEC" means the components pre-mounted on an FMP Eligible Engine to facilitate an engine change. 

        "Spare
Engine Lease Agreement" means a lease agreement entered into by and between Pratt & Whitney and Hawaiian for FMP Spare Engines in accordance with Section C(1)(b). 

        "Specific
Conditions" has the meaning set forth in Section B(2). 

        "State
of Registration" means the country in which the Aircraft is registered. 

        "Term"
has the same meaning set forth in Section B. 

        "UTF"
means UT Finance Corporation, a wholly owned subsidiary of United Technologies Corporation and an affiliate of Pratt & Whitney. 

2

 

B.    TERM OF FMP AGREEMENT  

        Pratt & Whitney shall provide services under this FMP Agreement for eight (8) used engines leased by Hawaiian from International Leasing Financing
Corporation ("ILFC") which have completed the Initial Refurbishment Visit (the "Fleet No. 1"), for six (6) new engines leased by Hawaiian from AWAS (the "Fleet No. 2") and for
eighteen (18) new engines leased by Hawaiian from AWAS, Boeing or UTF plus the four (4) new spare engines leased from AWAS (the "Fleet No. 3). Each engine in Fleet No. 1
will be covered from each engine's delivery until the seventh anniversary of each engine's delivery to Hawaiian Airlines for services described in Section C(1)(b), and each engine in Fleet
No. 1 will be covered for services described in Section C(1)(a) following the Initial Refurbishment Visit until the seventh anniversary of each engine's delivery to Hawaiian. For engines
in Fleet No. 1, visits which are not Performance Restoration Shop Visits, such services described in Section C(1)(a) will be covered from engine delivery to the seventh anniversary of
each engine's delivery. Fleet No. 2 will be covered until the fifteenth anniversary of each engine's delivery to Hawaiian Airlines. Each engine in Fleet No. 3 will be covered until the
eighteenth anniversary of each engine's delivery to Hawaiian Airlines. 

	1.
	Pricing

	a.
	Pricing
For Fleet No. 1 

[Intentionally
Omitted] 

	b.
	Pricing
For Fleet No. 2 and Fleet No. 3 

[Intentionally
Omitted] 

	2.
	The
FMP Rate is predicated on the following specific conditions (the "Specific Conditions"):

	a.
	operation
and maintenance of the FMP Eligible Engines during the Term in accordance with instructions contained in Pratt & Whitney publications and other appropriate
manufacturer's publications;

	b.
	Hawaiian
accepting delivery of the firm aircraft and spare engines as described in Attachments I and II;

	c.
	Hawaiian
operating all FMP Eligible Engines during the Term;

	d.
	[Intentionally
Omitted]

	e.
	adoption
of, and compliance with, the CEMP;

	f.
	[Intentionally
Omitted]

	g.
	[Intentionally
Omitted]

	h.
	[Intentionally
Omitted]

	i.
	[Intentionally
Omitted]

	j.
	[Intentionally
Omitted] 

3

  

	3.
	Pratt &
Whitney reserves the right to make reasonable future and retroactive adjustments to the FMP Rate if there is a material variation in any of the Specific Conditions or if
the FMP Eligible Engines are subjected to Extreme Environmental Conditions. The adjustment (credit or debit) shall not apply retroactively to more than one (1) year of operation unless
significant additional information becomes available. Any adjusted FMP Rate shall be provided to Hawaiian at least thirty (30) days before its application. Once determined, the adjusted FMP
Rate shall remain in effect until there is another material change in the conditions upon which this FMP Agreement is predicated. 

C.    SERVICES  

        Pratt & Whitney shall provide or arrange to provide the following services to Hawaiian for its FMP Eligible Engines upon the terms set forth in this FMP
Agreement. The services described in Section C(1) are covered by the FMP Rate except as otherwise provided in Section C(2), which describes the services that are not covered by the FMP
Rate. Excluded services set forth in Section C(2) will be invoiced at the rates set forth in Attachment VII with such invoices including only the cost of repair/overhaul that occurs as a result
of excluded causes. 

        1.    Services
Included in the FMP Rate 

        a.    Elements
of off-wing maintenance provided at the Pratt & Whitney Facility (or other facilities designated by Pratt & Whitney) in accordance with
the CEMP including: 

            i.  [Intentionally
Omitted] 

          ii.  [Intentionally
Omitted] 

          iii.  [Intentionally
Omitted] 

          iv.  [Intentionally
Omitted] 

          v.  [Intentionally
Omitted] 

          vi.  [Intentionally
Omitted] 

        vii.  [Intentionally
Omitted] 

        viii.  [Intentionally
Omitted] 

          ix.  [Intentionally
Omitted] 

        b.    FMP
Spare Engines 

            i.  When
Hawaiian requires FMP Spare Engines to replace FMP Eligible Engines covered by this FMP Agreement, which are removed for off-wing maintenance required
as a result of normal FMP Eligible Engine operation, Pratt & Whitney shall provide FMP Spare Engines, including an engine removal and transport stand, under the FMP Rate except as set forth
below. 

          ii.  A
FMP Spare Engine shall be provided at additional cost when any FMP Eligible Engine of Hawaiian's is unavailable due to any of the following Excluded Causes: 

        (a)  [Intentionally Omitted] 

        (b)  [Intentionally Omitted] 

        (c)  [Intentionally Omitted] 

        (d)  [Intentionally Omitted] 

        (e)  [Intentionally Omitted] 

4

 

          (f)  [Intentionally Omitted] 

        (g)  [Intentionally Omitted] 

        (h)  [Intentionally Omitted] 

          (i)  [Intentionally Omitted] 

          iii.  If
Hawaiian requires a FMP Spare Engine as a result of one (1) or more of the Excluded Causes noted above in Section C(1)(b)(ii), Hawaiian shall pay to
Pratt & Whitney the then-prevailing Pratt & Whitney daily lease rate for the FMP Spare Engine thus provided. Additionally, any FMP Eligible Engine flight hours flown on a FMP
Spare Engine provided due to such Excluded Cause shall be included in the total actual fleet hours applied to the FMP Rate. In the event Pratt & Whitney is unable to provide a FMP Spare Engine
to Hawaiian, Pratt & Whitney shall make reasonable efforts to identify a replacement engine from a third party. The terms under which such a replacement engine is provided to Hawaiian shall be
mutually established between Hawaiian and the third party. 

          iv.  Pratt &
Whitney's obligation to provide a FMP Spare Engine to Hawaiian shall in all circumstances be subject to the execution by Hawaiian and Pratt &
Whitney of a Spare Engine Lease Agreement satisfactory to Hawaiian and Pratt & Whitney. 

        2.    Services
Not Included in the FMP Rate 

        a.    Elements
of off-wing maintenance not included in the FMP Rate: 

            i.  [Intentionally
Omitted] 

          ii.  [Intentionally
Omitted] 

          iii.  [Intentionally
Omitted] 

          iv.  [Intentionally
Omitted] 

          v.  [Intentionally
Omitted] 

          vi.  [Intentionally
Omitted] 

        vii.  [Intentionally
Omitted] 

        viii.  [Intentionally
Omitted] 

          ix.  [Intentionally
Omitted] 

          x.  [Intentionally
Omitted] 

          xi.  [Intentionally
Omitted] 

        xii.  [Intentionally
Omitted] 

        xiii.  [Intentionally
Omitted] 

        xiv.  [Intentionally
Omitted] 

D.    PARTIES' RESPONSIBILITIES  

        1.    Customized
Engine Maintenance Program ("CEMP") 

        Pratt &
Whitney shall provide to Hawaiian a CEMP for the FMP Eligible Engines, consistent with Pratt & Whitney's and other PAHs' approved technical data, and shall
incorporate applicable service bulletins and Aviation Authority airworthiness directive requirements. 

5

 

        The
CEMP shall establish maintenance requirements, including those related to the determination of the off-wing maintenance schedule. The CEMP shall be no less rigorous than
the instructions for continued airworthiness of the Aircraft issued by the Aircraft's manufacturer and PAHs of components of the Aircraft and shall comply with all requirements of the Aviation
Authority of the Aircraft, so long as such Aviation Authority imposes aircraft maintenance standards which comport with and are not materially different from those standards imposed by the FAA. The
preparation of line maintenance task cards shall be the responsibility of Hawaiian or its designated line maintenance provider. 

        Hawaiian
shall review and approve the CEMP and shall incorporate the relevant provisions of the CEMP into its continuous airworthiness maintenance program. Hawaiian shall also obtain any
and all necessary approvals of that program from the Aviation Authority and any other regulatory authority having jurisdiction. During the Term, Hawaiian shall at all times comply with the
requirements of its continuous airworthiness maintenance program utilizing its presently established providers of on-wing line maintenance and Pratt & Whitney's designated
off-wing maintenance facility. 

        2.    Program
Management 

        a.    Program
Manager 

        Pratt &
Whitney shall appoint a principal contact person from Pratt & Whitney to be the program manager (the "Program Manager") for Hawaiian under this FMP Agreement. The
Program Manager shall identify Hawaiian's maintenance requirements for FMP Eligible Engines and FMP Spare Engines and schedule engine maintenance in a manner consistent with the CEMP. The Program
Manager shall consult with Hawaiian and give due consideration to Hawaiian's operational requirements when scheduling FMP Eligible Engine removals (including, but not limited to time stagger
removals). The
Program Manager shall also coordinate any additional support required hereunder to assist Hawaiian with troubleshooting and problem resolution. 

        b.    Program
Coordinator 

        Hawaiian
shall appoint a person at Hawaiian's facility to be the principal point of contact from Hawaiian for this FMP Agreement (the "Program Coordinator"). 

        c.    Engine
Condition Monitoring ("ECM") 

            i.  Pratt &
Whitney shall perform ECM of FMP Eligible Engines to identify trends in engine performance. Pratt & Whitney will work with Hawaiian to establish
methods to satisfy requirements for compliance with Hawaiian's ETOPS requirements. 

          ii.  Hawaiian
shall provide data for ECM in accordance with Pratt & Whitney's specified parameters, format and data collection process, no less than twice per week.
If Aircraft are equipped to electronically transmit ECM data, then Hawaiian shall arrange for automatic transmission of such requested ECM data to Pratt & Whitney's ground station i.d. HFDPWCR
via ARINC, SITA or other routing acceptable to Pratt & Whitney. 

        d.    Life
Limited Parts Tracking and Management 

        Pratt &
Whitney shall track and manage LLPs with a view to ensuring that the replacement of LLPs is concurrent with scheduled engine maintenance visits. Pratt & Whitney
shall use commercially reasonable efforts to ensure that a FMP Eligible Engine does not require a shop visit solely for the purpose of replacing LLPs. 

6

   
        3.    Record Keeping 

        While
the FMP Eligible Engines are in its possession, Hawaiian shall maintain records on the accumulated hours and cycles for all LLPs and other serialized parts that Pratt &
Whitney may specify. If requested by Hawaiian, Pratt & Whitney will make accessible its internal hours/cycles tracking model at no charge. As maintenance is performed on each FMP Eligible
Engine over time, detailed records concerning the work performed shall be kept in the following manner: All records of the performance of maintenance tasks that are required by the applicable Aviation
Authority shall be generated and maintained (i) by Pratt & Whitney or its designated maintenance provider in the case of the off-wing
maintenance, and (ii) by Hawaiian in the case of line maintenance. The party generating and maintaining the records shall make such records available to
the other party in order to ensure compliance with the requirements of this FMP Agreement and the applicable Aviation Authority. Records shall be in the English language and shall include FMP Eligible
Engine maintenance records, configuration records, FMP Eligible Engine test cell data and FAA Form 337 or other applicable Aviation Authority approved documents. Following each
off-wing maintenance visit, Pratt & Whitney or its designated maintenance provider shall provide a report identifying the service bulletins incorporated during that shop visit. The
CEMP related service bulletins and airworthiness directives will be identified separately on that report. Pratt & Whitney may perform periodic audits to ensure that adequate records are
maintained. 

        4.    Monthly
Operational Reporting 

        No
later than the fifth calendar day of each month throughout the Term, Hawaiian shall provide the Program Manager with a complete monthly statement of the previous month's flight data
for the FMP Eligible Engines and FMP Spare Engines substantially in the form set forth in Attachment VI (the "Monthly Operational Report"). Pratt & Whitney may perform periodic audits to ensure
the accuracy of such reports. 

        5.    Licenses,
Registrations, Etc. 

        Hawaiian
shall obtain, as of the Effective Date, and shall maintain or cause to be maintained, all consents, licenses, approvals, registrations and authorizations required  (i) to operate the Aircraft in
compliance with the laws of Hawaiian's jurisdiction of organization and the State of Registration and  (ii) for the performance by Hawaiian of its obligations under this FMP Agreement. 

E.    ENGINE TRANSPORTATION  

        Hawaiian, or its subcontracted personnel, shall perform the engine change of FMP Eligible Engines and then transport the removed FMP Eligible Engines Ex works to
Pratt & Whitney's Facility (or other facility designated by Pratt & Whitney) within five (5) days. Pratt & Whitney will provide one way return transportation of FMP
Eligible Engines to Hawaiian's facility at no charge to Hawaiian. Risk of loss remains with Hawaiian both ways. 

F.    AOG GUARANTEE  

        Pratt & Whitney shall provide Hawaiian the following AOG Event Guarantee during the Term: 

        1.    In
the event the number of Hawaiian's ready spare engines falls below one (1), Pratt & Whitney will make commercially reasonable efforts to identify a replacement
engine that may be made available to Hawaiian in an expedited manner should Hawaiian need spare engines pursuant to Section F(2). 

        2.    [Intentionally
Omitted] 

        3.    In
the event Hawaiian experiences an AOG Event during the Term which is the result of an Excluded Cause as defined in Section C(1)(b)(ii), Hawaiian shall pay to
Pratt & Whitney the 

7

 

then-prevailing Pratt & Whitney daily lease rate for the FMP Spare Engine thus provided. Additionally, any FMP Eligible EFH flown on a FMP Spare Engine provided due to such
Excluded Cause shall be included in the total actual fleet hours applied to the FMP Rate. 

        4.    Pratt &
Whitney's obligation to provide any spare engine to Hawaiian shall in all circumstances be subject to the execution of a General Lease Agreement between
Hawaiian and Pratt & Whitney. Following the resolution of the AOG, Hawaiian shall return to Pratt & Whitney any spare engine provided to Hawaiian pursuant to this Section F within
seven (7) calendar days of the arrival date of such FMP Eligible Engine back to East Hartford, CT or other mutually agreeable location (the "Arrival Date"). Pratt & Whitney shall give
Hawaiian at least seven (7) days prior notice of the Arrival Date. Spare engines shall be subject to the same installation and removal criteria as FMP Eligible Engines. 

G.    THRUST CONVERSION  

[Intentionally
Omitted] 

H.    INVOICING AND PAYMENTS  

        Hawaiian
shall pay to Pratt & Whitney on a monthly basis: 

        1.    the
FMP Rate (as escalated pursuant to the provisions of Attachment III) multiplied by the actual fleet hour utilization of the FMP Eligible Engines and FMP Spare
Engines (the "Services Fee"); 

        2.    all
other applicable fees and charges incurred during such period and any retroactive debit or credit adjustments pursuant to Section B(3) or Attachment III, as
set forth below. 

        Included
in the monthly invoice, Pratt & Whitney will debit or credit Hawaiian's account with Pratt & Whitney (or cash if no amounts are then payable to Pratt &
Whitney by Hawaiian) with such debits or credits as may be elsewhere defined in this FMP Agreement. This credit may only be applied to Hawaiian's monthly invoices issued under this FMP Agreement. 

        Pratt &
Whitney shall invoice Hawaiian for the Services Fee and all additional charges by the twentieth (20th) day of each month for the immediately preceding calendar month. 

        All
such invoiced amounts shall be due upon receipt of invoice and paid, net cash, in United States Dollars by wire transfer to: 

Pratt &
Whitney

Account No. 52-23725

Bank One

Routing No. 071000013 

        [Intentionally
Omitted] 

I.    TERMS AND CONDITIONS  

        1.    This
FMP Agreement incorporates the Fleet Management Program Standard Terms and Conditions of Sale set out in Attachment IV. In the event of any inconsistency between the
provisions of this FMP Agreement and Attachment IV, the provisions of this FMP Agreement shall govern. 

        2.    Any
obligation of Pratt & Whitney to station equipment or personnel at Hawaiian's facility is contingent upon Pratt & Whitney being able to do so without
creating a tax presence in such jurisdiction(s). 

8

 

        3.    The
intent of this FMP Agreement is to provide the specified services to Hawaiian. Under no circumstances shall there be any duplication of benefits provided to Hawaiian
under any other applicable guarantee plan, sales warranty, service policy, or any special benefit of any kind offered to Hawaiian for the benefit of Hawaiian as a result of the same condition or
event. 

        4.    This
FMP Agreement supersedes and replaces all previous negotiations, commitments, oral or written understandings, proposals or agreements in connection with a PW4060
engine fleet management program for Hawaiian. 

J.    NOTICES  

        Any notice, demand, claim, notice of claim, request or communication required or permitted to be given under the provision of this FMP Agreement shall be in
writing and shall be deemed to have been duly given (i) upon delivery if delivered in person, (ii) on
the date of mailing if mailed by registered or
certified mail, postage prepaid and return receipt requested, (iii) on the date of delivery to a national overnight courier service, or
(iv) upon transmission by facsimile (if such transmission is confirmed by the addressee) if delivered through such services to the following addresses,
or to such other address as any party may request by notifying in writing all of the other parties to this FMP Agreement in accordance with this Section J. 

If
to Pratt & Whitney to: 

Pratt &
Whitney

Cheshire Engine Center

500 Knotter Drive

Cheshire, Connecticut 06410 

Attention:
General Manager

Telephone: 203-250-4520

Fax: 203-250-4767 

With
a copy to: 

Pratt &
Whitney

400 Main Street MS 132-05

East Hartford, Connecticut 06108 

Attention:
Vice President, Contracts Management

Telephone: 860-565-3667

Fax: 860-565-0892 

If
to Hawaiian to: 

Hawaiian
Airlines, Inc.

3375 Koapaka St., Suite G350

Honolulu, HI 96819 

Attention:
Robert W. Zoller, Jr. 

or
in each case to such other person or addresses as either party may notify in writing to the other. Any such notice shall be deemed to have been received on the date of personal delivery, the date
set forth on the Postal Service return receipt, or the date of delivery shown on the records of the overnight courier, as applicable. 

9

 

        IN
WITNESS WHEREOF, the parties have caused this FMP Agreement to be duly executed as of the day and year first above written. 

	

Accepted:
	
HAWAIIAN AIRLINES, INC.
	

By	
 	

 
	 	 	

	Typed

Name	 	 
	 	 	

	Title	 	 
	 	 	

	Date:	 	 
	 	 	

	
HAWAIIAN AIRLINES, INC.
	

By	
 	

 
	 	 	

	Typed

Name	 	 
	 	 	

	Title	 	 
	 	 	

	Date	 	 
	 	 	

	Accepted:
	 	 	

	
UNITED TECHNOLOGIES CORPORATION

PRATT & WHITNEY
	

By	
 	

 
	 	 	

	Typed

Name	 	

David Viar
	 	 	

	

Title	
 	

General Manager, The Americas — Western Region
	 	 	

	Date	 	 
	 	 	

10

 
 

Table of Contents    
  

	

A.	
 	

DEFINITIONS	
 	

1
	

B.	
 	

TERM OF FMP AGREEMENT	
 	

3
	

C.	
 	

SERVICES	
 	

4
	

D.	
 	

PARTIES' RESPONSIBILITIES	
 	

5
	

E.	
 	

ENGINE TRANSPORTATION	
 	

7
	

F.	
 	

AOG GUARANTEE	
 	

7
	

G.	
 	

THRUST CONVERSION	
 	

8
	

H.	
 	

INVOICING AND PAYMENTS	
 	

8
	

I.	
 	

TERMS AND CONDITIONS	
 	

8
	

J.	
 	

NOTICES	
 	

9
	

ATTACHMENT I	
 	

 
	

ATTACHMENT II PART A	
 	

 
	

ATTACHMENT II PART B	
 	

 
	

ATTACHMENT III	
 	

 
	

ATTACHMENT IV	
 	

 
	

ATTACHMENT V	
 	

 
	

ATTACHMENT VI	
 	

 
	

ATTACHMENT VII	
 	

 
	

ATTACHMENT VII APPENDIX A	
 	

 
	

ATTACHMENT VII APPENDIX B	
 	

 
	

ATTACHMENT VII APPENDIX C	
 	

 

 
 

ATTACHMENT I
  
    FMP ELIGIBLE ENGINES
  SERIAL NUMBERS FOR FLEET NO. 1    
  

	

1.	
 	

TBD	
 	

5.	
 	

TBD
	2.	 	TBD	 	6.	 	TBD
	3.	 	TBD	 	7.	 	TBD
	4.	 	TBD	 	8.	 	TBD

	

Aircraft Delivery Schedule

	(1)	 	February	 	2002
	(1)	 	April	 	2002
	(1)	 	April	 	2002
	(1)	 	May	 	2002

 
 

ATTACHMENT II PART A
  
    FMP ELIGIBLE ENGINES
  SERIAL NUMBERS FOR FLEET NO. 2    
  

	

1.	
 	

729023
	2.	 	729024
	3.	 	TBD
	4.	 	TBD
	5.	 	TBD
	6.	 	TBD

	

Aircraft Delivery Schedule

	(1)	 	October	 	2001
	(1)	 	November	 	2001
	(1)	 	December	 	2001

 
 

ATTACHMENT II PART B
  
    FMP ELIGIBLE ENGINES
  SERIAL NUMBERS FOR FLEET NO. 3    
  

	

1.	
 	

TBD	
 	

10.	
 	

TBD	
 	
Spare Engines
	2.	 	TBD	 	11.	 	TBD	 	1.	 	TBD
	3.	 	TBD	 	12.	 	TBD	 	2.	 	TBD
	4.	 	TBD	 	13.	 	TBD	 	3.	 	TBD
	5.	 	TBD	 	14.	 	TBD	 	4.	 	TBD
	6.	 	TBD	 	15.	 	TBD	 	 	 	 
	7.	 	TBD	 	16.	 	TBD	 	 	 	 
	8.	 	TBD	 	17.	 	TBD	 	 	 	 
	9.	 	TBD	 	18.	 	TBD	 	 	 	 

	

Aircraft Delivery Schedule

	(1)	 	September	 	2002
	(1)	 	October	 	2002
	(1)	 	November	 	2002
	(1)	 	December	 	2002
	(1)	 	January	 	2003
	(1)	 	February	 	2003
	(1)	 	March	 	2003
	(1)	 	May	 	2003

	

Spare Engine Delivery Schedule

	(1)	 	November	 	2001	 	(used engine on a 10 month lease to bridge the gap from EIS to September 2002)
	(2)	 	September	 	2002	 	 
	(1)	 	March	 	2003	 	 
	(1)	 	April	 	2003	 	 

 
 

ATTACHMENT III    
  

 
 

    ESCALATION
  PERTAINING TO THE FMP RATE    
  

[Intentionally Omitted] 

 
 

ATTACHMENT IV
  
    UNITED TECHNOLOGIES CORPORATION
  Pratt & Whitney Division ("Pratt & Whitney")
  
    PW4060 FLEET MANAGEMENT AGREEMENT
  
    TERMS AND CONDITIONS OF SALE    

 

 
 

ARTICLE 1—DEFINITIONS    
  

        1.1  "Buyer" as used herein shall mean the purchaser of Fleet Management Services provided pursuant to this Agreement. 

        1.2  "Equipment" as used herein shall mean the Eligible Engines, including related modules, Parts, Components, Engine
Build-up Units ("EBU") and Buyer Furnished Equipment ("BFE"). 

        1.3  "Exchange Part" as used herein shall mean Buyer's parts and line replaceable units which are offered in exchange for
Pratt & Whitney RMS parts defined below, in connection with Off-wing Maintenance. 

        1.4  "Operating and Maintenance History" as used herein shall mean all information relative to the Equipment's modification
level, total time, time since overhaul, time since shop repair, the date of removal and reason for removal. 

        1.5  "RMS Parts" shall mean Pratt & Whitney new or serviceable Rotable Material Service modules and parts which are
exchanged for Buyer's Exchange Parts in connection with Off-wing Maintenance. 

        1.6  "SMS Parts" shall mean used and new serviceable parts held by Pratt & Whitney for direct sale or for use in
connection with Off-wing Maintenance. 

 
 

ARTICLE 2—BUYER WARRANTIES OF EQUIPMENT CONDITION    
  

        2.1  Buyer
hereby warrants that, to the best of its knowledge and belief, unless otherwise disclosed in writing before Equipment delivery to Pratt & Whitney, all
articles of Equipment delivered for maintenance services, including Exchange Parts: 

        2.1.1    are
of proper configuration per the Engine Manual; 

        2.1.2    were
produced in compliance with applicable Federal Aviation Regulations and Joint Aviation Requirements; 

        2.1.3    have
not been involved in an accident, subjected to extreme environmental conditions or abnormal operating temperatures, or otherwise operated outside
the limitations of the applicable type certificate as specified in the type certificate holder's engine manual, maintenance manual and other approved technical data; 

        2.1.4    do
not embody repairs or modifications not performed in full compliance with applicable regulatory requirements; and 

        2.1.5    are
repairable at the level of the engine within the type certificate holder's approved technical data. 

        2.2  Buyer
further warrants that, to the best of its knowledge and belief, no Exchange Parts contain component parts not manufactured by the type certificate holder or an
authorized supplier thereof, nor any repairs or modifications not within the type certificate holder's approved technical data and performed by a repair station properly certified and rated by the
United States Federal Aviation Administration. Pratt & Whitney reserves the right to reject Exchange Parts not meeting the criteria described above. 

 
 
 

ARTICLE 3—MATERIAL SUPPORT    
  

        3.1  Under
ordinary conditions, parts removed from Buyer's engines shall be reinstalled in the same engine. If original parts cannot be reinstalled because of repair lead
times, scrap condition, supersedure, or other circumstances, the following material support services will be used by Pratt & Whitney. 

        3.1.1    New
Parts 

        New
parts may be used to replace scrap, superseded and, in some instances, long lead time repair/modification material. 

        3.1.2    Pratt &
Whitney RMS Parts 

        Pratt &
Whitney reserves the right to install RMS Parts as required for maintaining engines in accordance with the Buyer's properly approved inspection and maintenance plan. When
RMS Parts are used, and Exchange Parts are accepted by Pratt & Whitney as set forth below, title for title exchanges result and Buyer's repaired Exchange parts are returned to the
Pratt & Whitney RMS inventory. 

        Buyer's
Exchange Parts shall comply with the requirements of this Agreement, including, without limitation, the Warranties of Equipment Condition stated in Article 2 entitled
"Buyer Warranties of Equipment Condition". If, within sixty (60) days of receipt of Buyer's Exchange Parts ("Inspection Period"), Pratt & Whitney rightfully rejects an Exchange Part on
the grounds of noncompliance with such terms, Pratt & Whitney shall at its discretion: 

        1.    require
that Buyer replace the Exchange Part with another repairable Exchange Part conforming to the requirements of this Agreement within thirty (30) days; or 

        2.    scrap
the Exchange Part and invoice Buyer for the price of a new or, if available, a used serviceable replacement part. 

        Buyer
will reimburse Pratt & Whitney for all labor associated with the subject Exchange Part up until the date that Pratt & Whitney rejects the Exchange Part. 

        Acceptance
by Pratt & Whitney occurs at the earlier of: 

        1.    notice
by Pratt & Whitney that it has accepted the Exchange Part; or 

        2.    the
expiration of the Inspection Period, provided that Pratt & Whitney has not required a replacement part or scrapped the part. 

        With
respect to the exchange of life limited parts, Pratt & Whitney will adjust invoice prices to reflect the differential in life limits between the RMS Part and the Exchange
Part. A credit or debit will be calculated as follows:

	

 Credit or

Debit	
 	

=	
 	

Removed Part

Remaining Life	
 	

-	
 	

Installed Part

Remaining Life	
 	

x	
 	

Then - Current

Manufacturer's

List Price
	 	 	 	 	
	 	 	 	 
	 	 	 	 	Engine Manual Life Limit	 	 	 	 

        Title
to the Exchange Part vests, and risk of loss passes, only upon Acceptance. Buyer warrants that at the time of acceptance, it transfers good title to the material to be exchanged,
free and clear of liens or encumbrances of any kind. 

        If
Buyer fails to deliver its exchange part within thirty (30) days from the date Pratt & Whitney provides the corresponding RMS part, Pratt & Whitney, at its
option, may invoice Buyer for the price of a new, or if available, used serviceable replacement part. 

2

 

        3.1.3    Pratt &
Whitney SMS Parts 

        If
available, SMS Parts will be used in the same manner as the new parts described in Paragraph 3.1.1 above. 

        3.2  All
Buyer Exchange Parts must be accompanied by life limited parts records if applicable. Such documentation shall confirm that the parts were originally manufactured or
sold by Pratt & Whitney or the original equipment type certificate holder under its approved manufacturing quality assurance system. 

 
 

ARTICLE 4—TITLE, DELIVERY, AND RISK OF LOSS    
  

        4.1  The
FOB point for Equipment delivered for repair, and redelivered to Buyer under this Agreement shall be Pratt & Whitney's overhaul repair facility in Cheshire,
Connecticut, or such other overhaul and repair facility that Pratt & Whitney designates during this Agreement. The FOB point for Pratt & Whitney Spare Engines and LRUs provided under
this Agreement shall be Pratt & Whitney's designated Spare Engine storage location. Buyer shall be responsible for all transportation cost and risk of loss associated with shipment of the Spare
Engines and Equipment to the designated location. 

        4.2  Before
Equipment is ready for delivery FOB Pratt & Whitney's designated facility under this Agreement, Buyer shall furnish written shipping instructions in
respect of such Equipment as promptly as possible. In the absence of such instructions, Pratt & Whitney may, at any time beginning ten (10) days after forwarding notice to Buyer by mail
or otherwise that the Equipment is ready for shipment, arrange for shipment of Equipment by a carrier of its own selection to Buyer's place of business or other destination reasonably believed to be
suitable. Buyer will hold Pratt & Whitney harmless for loss or damage attributed to negligence, either in selection of the carrier or in agreeing to contract terms on Buyer's behalf. 

 
 

ARTICLE 5—INSPECTION    
  

        If any Equipment appears not to have been serviced in accordance with this Agreement, Buyer shall, within thirty (30) days after receipt thereof, notify
Pratt & Whitney of such condition and afford Pratt & Whitney a reasonable opportunity to inspect the Equipment and make an appropriate adjustment or replacement. The remedies afforded
Buyer under Article 7, entitled, "Warranties, Remedies and Limitations", shall be exclusive for defects discovered upon inspection. Buyer shall not delay payment pending such inspection. 

 
 

ARTICLE 6—SPARE ENGINES    
  

        6.1  Spare
Engine Support 

        To
the extent specified in this Agreement, Pratt & Whitney will provision, procure, and maintain a number of Spare Engines. 

        6.2  Spare
Engine Records Maintenance 

        Buyer
will maintain any records, logs and other materials required by the Federal Aviation Regulation and Joint Aviation Requirements to be maintained in respect of the Spare Engines,
regardless of upon whom such requirements are, by their terms, imposed, except for those records which Pratt & Whitney is required to maintain under the terms of this Agreement. 

        6.3  Equipment
Lease Terms and Conditions 

        Pratt &
Whitney's Spare Engine Lease Agreement shall govern all Spare Equipment support provided under this Agreement. As specified therein, the term "Lessee" shall mean "Buyer",
and the term "Lessor" shall mean Pratt & Whitney. 

3

 

        6.4  Title
to Spare Engines 

        Nothing
in this Agreement shall operate to transfer title to any Spare Engine (or any records or logs relating thereto). Buyer acknowledges and agrees, that every Spare Engine delivered
to it pursuant to this Agreement shall at all times remain the property of Pratt & Whitney. Pratt & Whitney may, at its option, and its own cost and expense, cause this Agreement and the
leasing of any Spare Engine to be recorded, as appropriate, with the FAA, the JAA, or any other applicable government agency. As a condition to Pratt & Whitney's obligation to deliver Spare
Engines hereunder, Buyer shall take all steps necessary for Pratt & Whitney to properly record and perfect its interest in Spare Engines. 

 
 

ARTICLE 7—WARRANTIES, REMEDIES, AND LIMITATIONS    
  

        In addition to Pratt & Whitney's obligation to perform maintenance services as specified in the Agreement, the following warranties are provided: 

        7.1  Services 

        [Intentionally
Omitted] 

4

  

        7.2  Parts 

        The
warranties and remedies for Pratt & Whitney provided parts delivered under this Agreement shall be as set forth below: 

        7.2.1    Defects 

        [Intentionally
Omitted] 

        7.2.2    Title

        Pratt &
Whitney warrants to Buyer that it conveys good title to parts sold hereunder. Pratt & Whitney's liability and Buyer's remedy under this warranty are limited to the
removal of any title defect or, at the election of Pratt & Whitney, to the replacement of the parts or components thereof which are defective in title; provided, however, that the rights and
remedies of the parties with respect to patent infringement shall be limited to the provisions of Paragraph 7.2.4, "Patent Infringement", below. 

        7.2.3    Spare
Engines 

        Pratt &
Whitney warrants to Buyer that, at the time Spare Engines are delivered to Buyer, Pratt & Whitney is the owner of the Spare Engines or otherwise fully empowered to
provide the Spare Engines for Buyer's temporary use in accordance with this Agreement. 

        7.2.4    Patent
Infringement 

        Pratt &
Whitney shall conduct, at its own expense, the entire defense of any claim, suit or action alleging that, without further combination, the use or resale by Buyer or any
subsequent purchaser or user of the parts delivered hereunder directly infringes any United States patent, and shall indemnify and hold harmless Buyer, but only on the conditions that  (i)
Pratt & Whitney receives prompt written notice of such claim, suit or action and full opportunity and authority to assume the sole defense
thereof, including settlement and appeals, and all information available to Buyer and defendant for such defense; (ii) said parts are made according to
a specification or design furnished by Pratt & Whitney or, if a process patent is involved, the process performed with such parts is recommended in writing by Pratt & Whitney; and  (iii) the claim, suit or action is brought against Buyer. Provided all of the foregoing conditions have been met, Pratt & Whitney shall, at its
own expense, either settle said claim, suit or action or shall pay all damages, excluding indirect, incidental or consequential damages, and costs awarded by the court therein. If the use or resale of
such parts is finally enjoined, Pratt & Whitney shall, at Pratt & Whitney's option, (i) procure for defendant the right to use or resell
the parts, (ii) replace them with equivalent non-infringing parts, (iii) modify them so they
become non-infringing but equivalent, or (iv) remove them and refund the purchase price (less a reasonable allowance for use, damage and
obsolescence). If a claim, suit or action is based on a design or specification furnished by Buyer or on the performance of a process not recommended in writing by Pratt & Whitney, or on the
use or sale of the parts delivered hereunder in combination with other parts not delivered to Buyer by Pratt & Whitney, Buyer shall defend, indemnify, and hold Pratt & Whitney and its
affiliates harmless from any and all claims, suits or actions and all costs, expenses, damages, losses, settlements or judgments arising from or relating thereto. 

        7.3  EXCLUSIVE
WARRANTIES AND REMEDIES—THE FOREGOING WARRANTIES ARE EXCLUSIVE AND ARE GIVEN AND ACCEPTED IN LIEU OF  (i) ANY AND ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE; AND (ii) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN CONTRACT, TORT OR STRICT LIABILITY AGAINST PRATT & WHITNEY OR
ANY OF ITS AFFILIATES, WHETHER OR NOT ARISING FROM THE NEGLIGENCE, ACTUAL OR 

5

 

IMPUTED, OF PRATT & WHITNEY OR SUCH AFFILIATE. PRATT & WHITNEY DOES NOT WARRANT ANY PARTS, WHETHER SUPPLIED BY PRATT & WHITNEY OR NOT, THAT WERE NOT ORIGINALLY SOLD BY
PRATT & WHITNEY. THE REMEDIES OF BUYER SHALL BE LIMITED TO THOSE PROVIDED HEREIN TO THE EXCLUSION OF ANY AND ALL OTHER REMEDIES INCLUDING, WITHOUT LIMITATION, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES. NO AGREEMENT VARYING OR EXTENDING THE FOREGOING WARRANTIES, REMEDIES OR THIS LIMITATION WILL BE BINDING UPON PRATT & WHITNEY UNLESS IN WRITING, SIGNED BY A DULY
AUTHORIZED OFFICER OF PRATT & WHITNEY. 

 
 

ARTICLE 8—EXCUSABLE DELAYS    
  

        Pratt & Whitney shall not be charged with any liability for delay or nondelivery when due to delays of suppliers, acts of God or the public enemy,
compliance in good faith with any applicable foreign or domestic governmental regulation or order, whether or not it proves to be invalid, fires, riots, labor disputes, unusually severe weather or any
other cause beyond the reasonable commercial efforts of
Pratt & Whitney. To the extent that such causes actually delay deliveries on the part of Pratt & Whitney, the time for the performance shall be extended for as many days beyond the
delivery date as is required to obtain removal of such causes. 

 
 

ARTICLE 9—TAXES    
  

        In addition to the price for Services and Equipment provided hereunder, any and all taxes (not including any income or excess profit taxes) which may be imposed
by any taxing authority, arising from the sale, delivery or use of Pratt & Whitney's products and for which Pratt & Whitney may be held responsible for collection or payment, either on
its own behalf or that of Buyer, shall be paid by Buyer to Pratt & Whitney. Buyer shall be responsible for any and all interest and penalties relating to nonpayment or late payment of such
taxes due in any jurisdiction. 

 
 

ARTICLE 10—MATERIAL DISPOSITION    
  

        10.1 With
respect to work covered under the Services Rate, Equipment or parts thereof received from Buyer, which in the reasonable opinion of Pratt & Whitney have no
value other than as scrap because they cannot be repaired to a serviceable condition, shall be disposed of by Pratt & Whitney, and no accountability or liability for such parts shall be imposed
on Pratt & Whitney by Buyer. Title to all such Equipment shall vest in Pratt & Whitney. 

        10.2 With
respect to Excess Work, Equipment or parts thereof received from Buyer, which in the reasonable opinion of Pratt & Whitney have no value other than as scrap
because they cannot be repaired to a serviceable condition, shall be disposed of by Pratt & Whitney, and no accountability or liability for such parts shall be imposed on Pratt & Whitney
by Buyer. Pratt & Whitney agrees, however, to return to Buyer, at Buyer's expense, parts which are either scrap, superseded or uneconomical to repair if so indicated on the face of Buyer's
Purchase Order or supplement thereto. In any event, Buyer's instructions regarding scrap disposition must be received by Pratt & Whitney within thirty (30) days after shipment of an
engine to Buyer or all scrap will be disposed of locally. To assist Buyer in identification of scrap parts returned at its request, such scrap may be shipped in an altered state which will indicate
that it is clearly unfit for service use. 

        10.3 With
respect to Excess Work, parts for which there are currently no repair procedures and which, in the opinion of Pratt & Whitney, have potential to be repaired
to a serviceable condition sometime in the future, shall be returned, unaltered, to Buyer at Buyer's expense. 

6

 

 
 

ARTICLE 11—LIABILITY LIMITATION    
  

        11.1 The
price allocable under this Agreement to any product or service alleged to be the cause, or in any way arising from or related to the cause, of any loss or damage to
Buyer shall be the ceiling limit on Pratt & Whitney's liability, except for the gross negligence or willful misconduct of Pratt & Whitney, whether founded in contract, tort (including
negligence) or strict liability, arising out of or resulting from (i) this Agreement or the performance or breach thereof,  (ii) the design, manufacture,
delivery, sale, overhaul, repair, replacement, or (iii) the use of any
such product or the furnishing of any such service. In no event shall Pratt & Whitney have any liability for any indirect, incidental, special or consequential damages. 

        11.2 For
purposes of this Article, the "price allocable" shall be: (i) in the case of products or services provided under the
Services Rate, Pratt & Whitney's monthly maintenance service charge for the applicable engine, (ii) in the case of Equipment provided for Buyer's
temporary use under the Equipment Support provisions, Pratt & Whitney's customary daily lease charge, and (iii) in the case of any other products
or services provided under this Agreement, the price charged by Pratt & Whitney in relation to the product or service alleged to be the cause of loss or damage. 

 
 

ARTICLE 12—SELLER'S INSURANCE    
  

        Except as otherwise set forth herein, Pratt & Whitney agrees that Buyer's Equipment will, while in the care, custody and control of Pratt & Whitney,
be adequately protected from loss, damage or destruction under the terms of Pratt & Whitney's insurance. Such protection will commence upon Equipment delivery to Pratt & Whitney and will
remain until Equipment is redelivered to Buyer. 

 
 

ARTICLE 13—TERM AND TERMINATION    
  

        13.1 This
Agreement shall be effective for the term specified. 

        13.2 Either
party may terminate this Agreement without prejudice to any rights then accrued for material breach upon ninety (90) days written notification to the
other party of such intent to terminate,
provided the notice specifies the cause for termination and such cause remains uncured for ninety (90) days after receipt of the notice. 

        13.3 With
or without notice, Pratt & Whitney may terminate this Agreement with immediate effect but without prejudice to any rights then accrued in the event Buyer
does not pay within thirty (30) days of the due date any amount payable under this Agreement in the manner in which it is expressed to be payable. 

        13.4 Upon
early termination of this agreement, if Pratt & Whitney is the non-defaulting party, Pratt & Whitney will re-price previously
provided services covered by the FMP Rate at Pratt & Whitney's then-current standard rates and charges in effect at the time such service was provided and invoice Buyer for any
deficiency in amounts collected to date in respect of such services. If, instead of a deficiency, there is a surplus in the amount collected, Pratt & Whitney will credit this amount to
Hawaiian's account with Pratt & Whitney, provided the aircraft lessor makes no claim to this overage. Hawaiian shall only use this credit to pay for subsequent shop visits on Eligible Engines
at the Pratt & Whitney Facility at Pratt & Whitney's then-current standard rates and charges. 

 
 

ARTICLE 14—EXCLUSION OF BENEFITS    
  

        Pratt & Whitney reserves the right to exclude from any credit due, amounts incurred as the result of a failure by Buyer to comply with any of the
requirements specified in this Agreement. 

7

 

 
 

ARTICLE 15—NOTICES—DEEMED RECEIPT    
  

        15.1 Any
notice provided under this Agreement shall be deemed to have been received by the party to whom it is addressed (and reference herein to receipt by any party shall
include deemed receipt): 

        15.1.1    in
the case of notice given by prepaid airmail letter post at the expiration of ten (10) days after posting; or 

        15.1.2    in
the case of notice given by facsimile when dispatched provided that the sender has received a receipt indicating proper transmission and for the
purpose of determining the time of deemed receipt of notice given by facsimile the letter confirmation of such notice shall be disregarded; or 

        15.1.3    In
the case of notice delivered by hand on delivery. 

 
 

ARTICLE 16—INSPECTION OF RECORDS    
  

        Except for records that Pratt & Whitney is responsible for maintaining under the terms of this Agreement, Buyer shall maintain all Eligible Engine
operation and maintenance records required by airworthiness authorities with applicable jurisdiction. Buyer shall make all records available for inspection by Pratt & Whitney or its designated
representatives at all reasonable times during this Agreement. 

 
 

ARTICLE 17—ASSIGNMENT AND SUBCONTRACTING    
  

        This Agreement and the right to receive credits or payment hereunder may not be assigned by either Party, in whole or in part, without the prior written consent
of the other Party, such consent not to be unreasonably withheld, except that Pratt & Whitney may assign, without recourse to Pratt & Whitney or United Technologies Corporation, its
interest, rights and obligations in this Agreement to any subsidiary or affiliate succeeding in interest to the commercial engine fleet management business of United Technologies Corporation, or in
connection with the merger, consolidation, reorganization or voluntary sale or transfer of its assets. 

 
 

ARTICLE 18—CONFIDENTIAL OR PROPRIETARY INFORMATION AND PROPERTY    
  

        Each party shall keep confidential and otherwise protect from disclosure all information and property obtained from the other in connection with this Agreement
and identified in writing as confidential or proprietary. Upon request, and in the event of completion, termination or cancellation of this Agreement, the recipient of confidential or proprietary
information shall return all such information and property or make such other disposition thereof as is directed by the disclosing party. 

 
 

ARTICLE 19—NON-WAIVER AND PARTIAL INVALIDITY    
  

        Any and all failures, delays, or forbearances of either party in insisting upon or enforcing at any time or times any provisions of this Agreement, or to exercise
any rights or remedies under this Agreement,
shall not be construed as a waiver or relinquishment of any such provisions, rights, or remedies in those or any other instances; rather, the same shall be and remain in full force and effect.
Further, if any provision of this Agreement becomes void or unenforceable by law, the remainder shall be valid and enforceable. 

 
 

ARTICLE 20—FURTHER ASSURANCE    
  

        Each party expressly agrees that at any time and from time to time it shall execute and deliver such further documents and do such other acts and things as the
other party may reasonably request in 

8

 

order to give effect to this Agreement or which are necessary for the consummation of the transactions and other matters contemplated by this Agreement. 

 
 

ARTICLE 21—BUYER'S FINANCIAL STATUS    
  

        If, before expiration of this Agreement, a receiver or trustee is appointed for any of Buyer's property, or Buyer is adjudicated as bankrupt under the applicable
bankruptcy laws of any jurisdiction, or application for reorganization under the applicable bankruptcy laws of any jurisdiction is filed by or against Buyer which shall not be dismissed within ninety
(90) days, or if Buyer becomes insolvent or makes an assignment for the benefit of creditors, or takes or attempts to take the benefit of any insolvency acts, or an execution is issued pursuant
to a judgment rendered against Buyer, or should Buyer refuse to make payment to Pratt & Whitney in accordance with any of its obligations to Pratt & Whitney, or Buyer has not made
payment to Pratt & Whitney of invoices for a period of ninety (90) days, Pratt & Whitney may, at its option in any of such events, terminate this Agreement by giving Buyer written
notice of its intention to do so, and Pratt & Whitney shall thereupon be relieved of any further obligations to Buyer. Buyer shall reimburse Pratt & Whitney for its actual and reasonable
termination costs and expenses and a reasonable allowance for profit. If permitted by applicable law, Pratt & Whitney shall be entitled to sell any Equipment in Pratt & Whitney's
possession or control to satisfy any obligation of Buyer for Services rendered or parts provided by Pratt & Whitney to Buyer. 

 
 

ARTICLE 22—EXPORT MATTERS    
  

        22.1 The
export and re-export of goods and related technical information under this Agreement is subject to the export laws of the United States of America.
Buyer shall be responsible for applying for, obtaining and maintaining all required export licenses and approvals and complying with all applicable export reporting requirements. Pratt &
Whitney does not guarantee the issuance of such licenses or their continuation in effect once issued. It shall be a condition precedent to Pratt & Whitney's
obligations hereunder that all necessary and desirable export licenses and approvals shall be timely granted and continue in effect during the term of this Agreement. 

        22.2 Buyer
agrees that it will not, directly or indirectly, export or re-export any goods or technical information received from Pratt & Whitney to any
destination if such export or re-export would violate the laws of the United States of America. Buyer agrees to indemnify and hold harmless Pratt & Whitney, its subsidiaries,
affiliates, stockholders, directors, officers, employees and agents, from and against any claim, damage, injury, loss or expense (including attorney's fees) resulting or arising from any breach of
Buyer's obligations under this Section 22.2. 

 
 

ARTICLE 23—WARRANTY CREDITS    
  

        Any claims for adjustment to which Buyer would normally be entitled under the manufacturer's engine warranty and/or service policies in relation to the Services
provided pursuant to this Agreement will be processed and administered by Pratt & Whitney. Remittance (if any) from the manufacturer shall be to the account of Pratt & Whitney. 

 
 

ARTICLE 24—APPLICABLE LAWS/SERVICE OF PROCESS    
  

        24.1 This
Agreement shall be interpreted in accordance with, and the construction thereof shall be governed by, the laws of the State of Connecticut, USA without regard to
principles of conflicts of laws. 

        24.2 Buyer
agrees that any legal action or proceeding against it may be brought and determined in such court as may from time to time be the court of general jurisdiction in
the State of Connecticut. 

9

 

        24.3 Buyer
hereby represents that it has, prior to signing this Agreement, appointed an agent for service of process in Connecticut and undertakes that it shall at all times
maintain such agent for service of process in Connecticut during the term of this Agreement. 

 
 

ARTICLE 25—CAPTIONS/ORDER OF PRECEDENCE/MERGER OF NEGOTIATIONS    
  

        25.1 Captions
as used in these terms and conditions are for convenience of reference only and shall not be deemed or construed as in any way limiting or extending the
language of the provisions to which such captions may refer. 

        25.2 In
the event that there are any conflicts or inconsistencies between the provisions of this Agreement, or the attachments hereto or any Purchase Order, the provisions
of this Agreement shall govern. 

        25.3 This
Agreement does not change or modify any special programs or guarantees which may be in effect between Pratt & Whitney and Buyer. 

        This
Agreement contains the entire understanding between the parties with respect to the subject matter hereof and shall supersede all previous communications, representations and
agreements, either oral or written, between the parties hereto with respect to the subject matter hereof. No amendment or modification of this Agreement shall be binding upon either party unless set
forth in a written instrument signed by both parties. The rights and remedies afforded to the parties or the Buyer pursuant to any provision of this Agreement are in addition to any other rights and
remedies afforded by any other provisions of this Agreement, by law, or otherwise. 

10

 
 

ATTACHMENT V
  
    PW4060 ENGINE FLEET MANAGEMENT PROGRAM AGREEMENT
  
    PRATT & WHITNEY SERVICE BULLETIN COMPLIANCE CODE DEFINITIONS    
  

	Compliance

Code Number
 
	 	Compliance Connotation
	 	Compliance Definition

	

1	
 	

Hard Time/Threshold Limit	
 	

Accomplish prior to next flight.
	

2	
 	

Hard Time/Threshold Limit	
 	

Accomplish at first layover of the aircraft at a line station or maintenance base capable of compliance with the accomplishment instruction.
	

3	
 	

Hard Time/Threshold Limit	
 	

Accomplish within            hours or            cycles.
	

4	
 	

Nonquantified Time	
 	

Accomplish at the first visit of an engine or module to a maintenance base capable of compliance with the accomplishment instructions regardless of the planned maintenance action or the reason for engine removal.
	

5	
 	

Nonquantified Time	
 	

Accomplish when the engine is disassembled sufficiently to afford access to the affected subassembly (i.e., modules, accessories, components, build groups) and to all affected spare subassemblies.
	

6	
 	

Nonquantified Time	
 	

Accomplish when the subassembly (i.e., modules, accessories, components, build groups) is disassembled sufficiently to afford access to the affected part and to all affected spare parts.
	

7	
 	

Nonquantified Time	
 	

Accomplish when supply of superseded parts has been depleted.
	

8	
 	

Operator's Decision	
 	

Accomplish based upon experience with the prior configuration.

 
 

ATTACHMENT VI
  
    PW4060 ENGINE FLEET MANAGEMENT PROGRAM AGREEMENT
  
    MONTHLY OPERATIONAL REPORT
  
    FOR
  
    HAWAIIAN AIRLINES, INC.    
  

        During the monthly calendar period
beginning                        , the average Aircraft flight hours was as indicated below. 

        The
following will be provided by submission of this form, or an equivalent method of electronic reporting containing the requested data. 

	Fleet Management Program Monthly Utilization Reporting Template

	Customer

Name
	 	Month-

Year
	 	A/C Tail No.
	 	Engine

Position
	 	ESN
	 	Engine

Model
	 	Flight

Hours*
	 	Flight

Cycles*
	 	Hours/

Cycle*
	 	Avg T/O

Derate**
	 	Average

Ambient

Temp***
	 	Comments

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	*
	Rounded
to the nearest tenth.

	**
	Rounded
to the nearest tenth of a percentage point.

	***
	Rounded
to the nearest whole degree in Fahrenheit or half degree in Celsius. 

	 	 	 
	 	 	 
	 	 	

	 	 	AUTHORIZED

HAWAIIAN AIRLINES, INC.

SIGNATURE
	 	 	 
	 	 	 
	

 	
 	

	 	 	PRATT & WHITNEY

FIELD REPRESENTATIVE

VERIFICATION / SIGNATURE

 
 

ATTACHMENT VII    
  

        The rates and charges contained herein are valid for work performed on Equipment delivered to Pratt & Whitney on or before December 31, 2001. Rates
and charges for worked performed after December 31, 2001 will be adjusted annually in accordance with Appendix D to this attachment. 

I.    FIXED PRICES  

        A.    FIXED
PRICES FOR ENGINE MAINTENANCE 

        1.    Heavy
Maintenance 

[Intentionally
Omitted] 

        2.    Gas
Path Repair and Maintenance 

[Intentionally
Omitted] 

        3.    Hot
Section Maintenance 

[Intentionally
Omitted] 

        B.    FIXED
PRICE PER ENGINE MODULE 

        The
following fixed rates and charges for basic labor associated with Module heavy maintenance apply per Engine. Kit & Bin fixed prices are listed in Appendix B hereto. 

Low Pressure Compressor ("LPC")

[Intentionally
Omitted] 

High Pressure Compressor ("HPC")

[Intentionally
Omitted] 

Low Pressure Turbine ("LPT")

[Intentionally
Omitted] 

High Pressure Turbine ("HPT")

[Intentionally
Omitted] 

Turbine Exhaust Case

[Intentionally
Omitted] 

Diffuser / Combustor 1st Turbine Nozzle Group

[Intentionally
Omitted] 

Main Accessory Gearbox

[Intentionally
Omitted] 

Angle Gearbox

[Intentionally
Omitted] 

Fan Cases

[Intentionally
Omitted] 

Intermediate Case Assembly

[Intentionally
Omitted] 

 

High Pressure Compressor Drum Rotor Blade Tip Grinding

[Intentionally
Omitted] 

QEC

[Intentionally
Omitted] 

Engine Test In Conjunction With Engine Shop Visit

[Intentionally
Omitted] 

        C.    FIXED
PRICES FOR REPAIR OF PARTS 

        Fixed
prices will be charged for most Parts repaired by Pratt & Whitney. Part repairs which are not fixed priced will be charged at Pratt & Whitney's
Over-and-Above labor and material rates stated in Section II of this Attachment. 

II.    OVER-AND-ABOVE RATES  

        A.    PRATT &
WHITNEY LABOR RATE 

[Intentionally
Omitted] 

        B.    MATERIAL
PRICES—NEW PARTS 

        New
Parts, except Kit and Bin Parts for Engines and Modules, will be charged at the then-current manufacturer's new part list price. Kit and Bin Parts for miscellaneous
workscopes not included in the workscopes set forth in Appendix A will be charged on a fixed price basis in accordance with Appendix B to this Attachment VII. 

        C.    MATERIAL
PRICES—USED SERVICEABLE PARTS 

        Used
serviceable material sold under the Serviceable Material Sales ("SMS") Program shall be priced as follows: 

        Life
limited parts will be provided on a pro rata cycle remaining basis, in accordance with the following calculation:

	SMS Part Remainint Life
 Pratt & Whitney Engine Manual Life Limit	 	x	 	Then - Current

Manufacturer's

List Price

[Intentionally
Omitted] 

        D.    MATERIAL
HANDLING CHARGES 

        Material
handling charges will be applied to Pratt & Whitney furnished new or used serviceable Parts and customer furnished Parts required to accomplish
Over-and-Above Work performed hereunder. These charges are expressed below as a percentage of the applicable Part price up to the maximum charge per Part or extended line item. 

[Intentionally
Omitted] 

        E.    EXCHANGE
MATERIAL 

[Intentionally
Omitted] 

2

 

        Adjustments
for warranty benefits and any differential residual value for life limited parts as designated by the manufacturer will also be provided, calculated in accordance with the
following formula: 

	

 Credit or

Debit	
 	

=	
 	

Removed Part

Remaining Life	
 	

-	
 	

Installed Part

Remaining Life	
 	

x	
 	

Then - Current

Manufacturer's

List Price
	 	 	 	 	
	 	 	 	 
	 	 	 	 	Pratt & Whitney Engine Manual Life Limit	 	 	 	 

        F.    SUBCONTRACT
CHARGES 

[Intentionally
Omitted] 

All Rates, Charges and Prices are Expressed in United States Dollars

3

 
 

ATTACHMENT VII, APPENDIX A    
  

 
 

[Intentionally Omitted]    

 
 

ATTACHMENT VII, APPENDIX B
  
    PW4000 KIT & BIN PARTS FIXED PRICE LISTING    
  

        With the exception of Engine model conversions, the following fixed prices are valid for Kit & Bin parts used to reassemble PW4000 series Engines and
Modules delivered to Pratt & Whitney on or before December 31, 2001. These fixed prices will be adjusted annually relative to the Pratt & Whitney Commercial Spare Parts Price List
prices. The adjustment will be based on the percent change in the Pratt & Whitney spare parts prices for the effective year of the adjustment. For the purpose of this Appendix B,
Kit & Bin Parts shall mean those Parts such as O'rings, gaskets, packings, seals, nuts, bolts, washers and external clips and clamps required for reassembly. Prices are based on average
consumption and include minor modifications to Engines or Modules. 

        Charges
for nuts, bolts, washers, packings, gaskets, and similar Parts that are details of a Part assembly are not included in the Kit & Bin fixed prices listed below and will be
invoiced as applicable. It should be noted that the part number for such a Part might be the same as a Kit & Bin Part used in the final assembly of Engines, Modules and major Engine
assemblies/Build Groups listed below. However, the consumption of these Parts used in the subassembly process have not been included in the prices listed below. 

        [Intentionally
Omitted] 

 
 

ATTACHMENT VII, APPENDIX C
  
    IN-HOUSE MINOR REPAIRS
  
    INCLUDED IN
  
    MAINTENANCE SERVICES FIXED PRICES    
  

        All of the fixed prices for Engine Maintenance that are provided in Attachments VII include the following minor repairs when such are accomplished at the engine
overhaul facility performing the Maintenance Services on the relevant Equipment (referred to herein as "In-House Minor Repairs"): 

Welding
(without the need for heat treatment) 

Blending
(such as blending of fan blades) 

Shot-peening

Machining
(as with a lathe) 

Boring
(as required for bushing replacement) 

Drilling
(as required for replacement of rivets, removal of seized bolts, stubs, and plugs) 

Surface
Treating (including painting, graphite varnishing but excluding plating) 

RTV
replacement (such as on blades and stators) 

In-situ
repairs (repairs normally done on site) 

        All
other repairs performed at the engine overhaul facility performing the Maintenance Services on the relevant Equipment that are not listed above shall be invoiced at the applicable
Over-and-Above Rates. 

 
 

ATTACHMENT VII, APPENDIX D    
  

 
 

    PRATT & WHITNEY    
  

 
 

    ESCALATION
  PERTAINING TO THE EIGHT (8) INITIAL REFURBISHMENT VISITS    
  

 
 

[Intentionally Omitted]    

QuickLinks

PW4060 ENGINE FLEET MANAGEMENT PROGRAM AGREEMENT BY AND BETWEEN UNITED TECHNOLOGIES CORPORATION PRATT & WHITNEY DIVISION AND HAWAIIAN AIRLINES, INC.

PW4060 ENGINE FLEET MANAGEMENT PROGRAM AGREEMENT FOR HAWAIIAN AIRLINES, INC.

Table of Contents

ATTACHMENT I FMP ELIGIBLE ENGINES SERIAL NUMBERS FOR FLEET NO. 1

ATTACHMENT II PART A FMP ELIGIBLE ENGINES SERIAL NUMBERS FOR FLEET NO. 2

ATTACHMENT II PART B FMP ELIGIBLE ENGINES SERIAL NUMBERS FOR FLEET NO. 3

ATTACHMENT III

ESCALATION PERTAINING TO THE FMP RATE

ATTACHMENT IV UNITED TECHNOLOGIES CORPORATION Pratt & Whitney Division ("Pratt & Whitney") PW4060 FLEET MANAGEMENT AGREEMENT TERMS AND CONDITIONS OF SALE

ARTICLE 1—DEFINITIONS

ARTICLE 2—BUYER WARRANTIES OF EQUIPMENT CONDITION

ARTICLE 3—MATERIAL SUPPORT

ARTICLE 4—TITLE, DELIVERY, AND RISK OF LOSS

ARTICLE 5—INSPECTION

ARTICLE 6—SPARE ENGINES

ARTICLE 7—WARRANTIES, REMEDIES, AND LIMITATIONS

ARTICLE 8—EXCUSABLE DELAYS

ARTICLE 9—TAXES

ARTICLE 10—MATERIAL DISPOSITION

ARTICLE 11—LIABILITY LIMITATION

ARTICLE 12—SELLER'S INSURANCE

ARTICLE 13—TERM AND TERMINATION

ARTICLE 14—EXCLUSION OF BENEFITS

ARTICLE 15—NOTICES—DEEMED RECEIPT

ARTICLE 16—INSPECTION OF RECORDS

ARTICLE 17—ASSIGNMENT AND SUBCONTRACTING

ARTICLE 18—CONFIDENTIAL OR PROPRIETARY INFORMATION AND PROPERTY

ARTICLE 19—NON-WAIVER AND PARTIAL INVALIDITY

ARTICLE 20—FURTHER ASSURANCE

ARTICLE 21—BUYER'S FINANCIAL STATUS

ARTICLE 22—EXPORT MATTERS

ARTICLE 23—WARRANTY CREDITS

ARTICLE 24—APPLICABLE LAWS/SERVICE OF PROCESS

ARTICLE 25—CAPTIONS/ORDER OF PRECEDENCE/MERGER OF NEGOTIATIONS

ATTACHMENT V PW4060 ENGINE FLEET MANAGEMENT PROGRAM AGREEMENT PRATT & WHITNEY SERVICE BULLETIN COMPLIANCE CODE DEFINITIONS

ATTACHMENT VI PW4060 ENGINE FLEET MANAGEMENT PROGRAM AGREEMENT MONTHLY OPERATIONAL REPORT FOR HAWAIIAN AIRLINES, INC.

ATTACHMENT VII

ATTACHMENT VII, APPENDIX A

[Intentionally Omitted]

ATTACHMENT VII, APPENDIX B PW4000 KIT & BIN PARTS FIXED PRICE LISTING

ATTACHMENT VII, APPENDIX C IN-HOUSE MINOR REPAIRS INCLUDED IN MAINTENANCE SERVICES FIXED PRICES

ATTACHMENT VII, APPENDIX D

PRATT & WHITNEY

ESCALATION PERTAINING TO THE EIGHT (8) INITIAL REFURBISHMENT VISITS

[Intentionally Omitted]<Page>

                                                                   EXHIBIT 4.8

THIS INVESTMENT WARRANT AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF
HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH
ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.

Dated January 31, 2002                                                Void after
                                                                    June 3, 2012

                              AMENDED AND RESTATED
                               INVESTMENT WARRANT

                                 DSI TOYS, INC.

     THIS AMENDED AND RESTATED INVESTMENT WARRANT OF DSI TOYS, INC. (HEREINAFTER
THE "INVESTMENT WARRANT") AMENDS AND RESTATES IN ITS ENTIRETY THAT CERTAIN
INVESTMENT WARRANT OF DSI TOYS, INC. (THE "COMPANY") MADE IN FAVOR OF MVII, LLC,
A CALIFORNIA LIMITED LIABILITY COMPANY (THE "HOLDER"), DATED MARCH 19, 2001,
WHICH IS HEREBY TERMINATED, CANCELED AND REPLACED BY THIS INVESTMENT WARRANT.
THIS CERTIFIES THAT, for cash paid in the amount of TWO MILLION SEVEN HUNDRED
THOUSAND AND NO/100 DOLLARS ($2,700,000.00) (the "PURCHASE PRICE") on or about
March 19, 2001, the Holder is entitled to receive from the Company, at any time
or from time to time during the period specified in Paragraph 2, ONE MILLION
EIGHT HUNDRED THOUSAND (1,800,000) fully paid and nonassessable shares of the
Company's common stock, $0.01 par value per share (the "COMMON STOCK"). The term
"OPTION SHARES," as used herein, refers to the shares of Common Stock receivable
hereunder. The term "DEEMED CONVERSION PRICE," as used herein is $1.50 per
Option Share and refers to the price per share paid by the Holder for the right
to receive the Option Shares in accordance with the terms of this Investment
Warrant.

     This Investment Warrant is subject to the following terms, provisions, and
conditions:

     1. MANNER OF CONVERSION; ISSUANCE OF CERTIFICATES. Subject to the
provisions set forth herein, this Investment Warrant may be converted by any
Holder and/or its registered assigns, in whole or in part, by the surrender of
this Investment Warrant together with a completed conversion agreement in the
form attached to this Investment Warrant (the "CONVERSION AGREEMENT"), to the
Company during normal business hours on any business day at the Company's
principal executive offices (or such other office or agency of the Company as it
may designate by notice to the Holder).

                                     Page 1
<Page>

The Option Shares received upon conversion shall be deemed to be issued to the
Holder, as the record owner of such shares, as of the close of business on the
date on which this Investment Warrant shall have been surrendered and the
completed Conversion Agreement shall have been delivered. Certificates for the
Option Shares shall be delivered to the Holder within a reasonable time, not to
exceed three business days after this Investment Warrant shall have been so
converted. The certificates so delivered shall be in such denominations as may
be requested by the Holder and shall be registered in the name of the Holder or
such other name as shall be designated by such Holder.

     2. PERIOD OF CONVERSION. This Investment Warrant may be converted, at the
option of the Holder, in whole or in part, at any time from and after June 3,
2002, until 5:00 p.m., Central time, June 3, 2012 (the "EXERCISE PERIOD"),
unless it expires and terminates earlier as provided herein.

     3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants and
agrees as follows:

        a. SHARES TO BE FULLY PAID. All Option Shares will, upon issuance in
accordance with the terms of this Investment Warrant, be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof.

        b. RESERVATION OF SHARES. During the Exercise Period, the Company shall
at all times have authorized, and reserved for the purpose of issuance upon
exercise of this Investment Warrant, a sufficient number of shares of Common
Stock to provide for the conversion of this Investment Warrant.

        c. SUCCESSORS AND ASSIGNS. This Investment Warrant will be binding upon
any entity succeeding to the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets.

     4. CONSOLIDATION, MERGER OR SALE. From and after the date of this
Investment Warrant, in case of any consolidation of the Company with, or merger
of the Company into, any other corporation, or in case of any sale or conveyance
of all or substantially all of the assets of the Company other than in
connection with a plan of complete liquidation of the Company, then as a
condition of such consolidation, merger or sale or conveyance, adequate
provision will be made whereby the Holder of this Investment Warrant will have
the right to acquire and receive such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for the number of shares
of Common Stock immediately acquirable and receivable had this Investment
Warrant been converted at that time had such consolidation, merger or sale or
conveyance not taken place. "Common Stock" for the purposes of this Paragraph 4,
includes the Common Stock or shares resulting from any subdivision or
combination of such Common Stock, or in the case of any reorganization,
reclassification, consolidation, merger or sale of the character referred to in
this Paragraph, the stock or other securities or property provided for in such
Paragraph.

                                     Page 2
<Page>

     5. ISSUE TAX. The issuance of certificates for Option Shares upon the
conversion of this Investment Warrant shall be made without charge to the Holder
or such shares for any issuance tax or other costs in respect thereof, provided
that the Company shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issuance and delivery of any certificate
in a name other than the Holder of this Investment Warrant.

     6. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER. This Investment Warrant shall
not entitle the Holder to any voting rights or other rights as a shareholder of
the Company. No provision of this Investment Warrant, and no mere enumeration
herein of the rights or privileges of the Holder, shall give rise to any
liability of such Holder, whether such liability is asserted by the Company or
creditors of the Company.

     7. TRANSFER AND REPLACEMENT OF INVESTMENT WARRANT.

        a. RESTRICTION ON TRANSFER. This Investment Warrant and the rights
granted to the Holder are transferable, in whole or in part, upon surrender of
this Investment Warrant, together with a properly executed assignment in the
form attached hereto, at the office of the Company referred to in Paragraph 7(d)
below, PROVIDED, HOWEVER, that any transfer or assignment shall be subject to
the conditions set forth in Paragraph 7(e). Until due presentment for
registration of transfer on the books of the Company, the Company may treat the
registered Holder as the owner and Holder of this Investment Warrant for all
purposes, and the Company shall not be affected by any notice to the contrary.

        b. REPLACEMENT OF INVESTMENT WARRANT. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Investment Warrant and, in the case of any such loss, theft,
or destruction, upon delivery of an indemnity agreement reasonably satisfactory
in form and amount to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Investment Warrant, the Company, at its
expense, will execute and deliver, in lieu thereof, a new Investment Warrant of
like tenor.

        c. CANCELLATION, PAYMENT OF EXPENSES. Upon the surrender of this
Investment Warrant in connection with any transfer or replacement as provided in
Paragraph 7, this Investment Warrant shall be promptly canceled by the Company.
The Company shall pay all taxes (other than securities transfer taxes) and all
other expenses (other than legal expenses, if any, incurred by the Holder) in
connection with the preparation, execution, and delivery of Investment Warrants
pursuant to this Paragraph 7.

                                     Page 3
<Page>

        D. REGISTER. The Company shall maintain, at its principal executive
offices (or such other office of the Company as it may designate by notice to
the Holder), a register for this Investment Warrant, in which the Company shall
record the name and address of the person in whose name this Investment Warrant
has been issued, as well as the name and address of each transferee and each
prior owner of this Investment Warrant.

        e. EXERCISE OR TRANSFER WITHOUT REGISTRATION. If, at the time of the
surrender of this Investment Warrant in connection with any conversion,
transfer, or exchange of this Investment Warrant, this Investment Warrant (or in
the case of any exercise, the Option Shares issuable hereunder) shall not be
registered under the Securities Act and under applicable state securities or
blue sky laws, the Company may require, as a condition of allowing such
exercise, transfer, or exchange (i) that the Holder or transferee of this
Investment Warrant, as the case may be, furnish to the Company a written opinion
of counsel, which opinion and counsel are reasonably acceptable to the Company,
to the effect that such exercise, transfer, or exchange may be made without
registration under said Act and under applicable state securities or blue sky
laws, and (ii) that the Holder or transferee execute and deliver to the company
an investment letter in form and substance acceptable to the Company. The first
Holder of this Investment Warrant, by taking and holding the same, represents to
the Company that such Holder is acquiring this Investment Warrant for investment
and not with a view to the distribution thereof.

        f. LEGEND. The Option Shares issued upon exercise of this Investment
Warrant shall contain a legend stating that their transfer is subject to
restriction as set forth in section 7(e) of this Investment Warrant and shall
further contain the following legend:

        "THESE SECURITIES ARE SUBJECT TO CERTAIN RIGHTS AND
        RESTRICTIONS CONTAINED IN A SHAREHOLDERS' AND VOTING AGREEMENT
        OF DSI TOYS, INC. DATED AS OF APRIL 15, 1999, COPIES OF WHICH
        ARE ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY. A COPY OF
        SUCH AGREEMENT WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER
        OF THIS CERTIFICATE UPON RECEIPT BY THE COMPANY AT ITS
        PRINCIPAL OFFICE OF A WRITTEN REQUEST FROM THE HOLDER
        REQUESTING SUCH COPIES."

     8. NOTICES. All notices, requests and other communications required or
permitted to be given or delivered hereunder to the Holder of this Investment
Warrant shall be in writing, and shall be personally delivered, or shall be sent
by certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed to such Holder at the address shown for such Holder on the
books of the Company, or at such other address as shall have been furnished to
the Company by notice from such Holder. All notices, requests, and other
communications required or permitted to be given or delivered hereunder to the
Company shall be in writing, and shall be personally delivered, or shall be sent
by certified or registered mail or by recognized overnight courier, postage

                                     Page 4
<Page>

prepaid and addressed to the office of the Company at 1100 W. Sam Houston
Parkway North, Suite A, Houston, Texas 77043, Attention: President, or at such
other address as shall have been furnished to the Holder of this Investment
Warrant by notice from the Company. Any such notice, request or other
communication may be sent by facsimile, but shall in such case be subsequently
confirmed by a writing personally delivered or sent by certified or registered
mail or by recognized overnight mail courier as provided above. All notices,
requests and other communications shall be deemed to have been given either at
the time of the receipt thereof by the person entitled to receive such notice at
the address of such person for purposes of this Paragraph 8 or, if mailed by
registered or certified mail or with a recognized overnight mail courier upon
deposit with the United States Post Office or such overnight mail courier, if
postage is prepaid and the mailing is properly addressed, as the case may be.

     9. GOVERNING LAW. THIS INVESTMENT WARRANT SHALL BE GOVERNED AND
CONSTRUED AND ENFORCED IN ALL RESPECTS IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS WITHOUT REGARD TO THE BODY OF LAW CONTROLLING CONFLICTS OF LAW.

     10. MISCELLANEOUS.

        a. AMENDMENTS. This Investment Warrant may only be amended by an
instrument signed by the Company and the Holder.

        b. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Investment Warrant are inserted for purposes of reference
only, and shall not affect the meaning or construction of any of the provisions
of this Investment Warrant.

        c. SEVERABILITY AND SAVINGS CLAUSE. If any one or more of the provisions
contained in this Investment Warrant is for any reason (i) objected to,
contested, or challenged by any court, government authority, agency, department,
commission or instrumentality of the United States or any state or political
subdivision thereof, or any securities industry self-regulatory organization
(collectively, "GOVERNMENTAL AUTHORITY"), or (ii) held to be invalid, illegal,
or unenforceable in any respect, the Company and the Holder agree to negotiate
in good faith to modify such objected to, contested, challenged, invalid,
illegal, or unenforceable provision. It is the intention of the Company and the
Holder that there shall be substituted for such objected to, contested,
challenged, invalid, illegal, or unenforceable provision a provision as similar
to such provision as may be possible and yet be acceptable to any objecting
Governmental Authority and be valid, legal and enforceable. Further, should any
provisions of this Investment Warrant ever be reformed or rewritten by a
judicial body, those provisions as rewritten will be binding, but only in that
jurisdiction, on the Holder and the Company as if contained in the original
Investment Warrant. The invalidity, illegality, or unenforceability of any one
or more provisions of this Investment Warrant will not affect the validity and
enforceability of any other provisions of this Investment Warrant.

                                     Page 5
<Page>

     IN WITNESS WHEREOF, the undersigned has executed this Investment Warrant as
of the date first set forth above.

                                            DSI TOYS, INC.

                                            By: /s/ ROBERT L. WEISGARBER
                                               ---------------------------------
                                            Name:   ROBERT L. WEISGARBER
                                                 -------------------------------
                                            Title:  CHIEF FINANCIAL OFFICER
                                                  ------------------------------

                                     Page 6
<Page>

                              [FORM OF ASSIGNMENT]

                   (TO BE EXECUTED BY THE REGISTERED HOLDER IF
             SUCH HOLDER DESIRES TO TRANSFER THE INVESTMENT WARRANT)

     FOR VALUE RECEIVED, ___________________________ hereby sells, assigns and
transfer unto

     Name:
                 -----------------------------------
     Address:
                 -----------------------------------

     Taxpayer ID/Social Security No.:
                                      -----------------------------------

the accompanying Investment Warrant, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint:

attorney, to transfer the accompanying Investment Warrant on the books of the
Company, with full power of substitution. The transferee's tax identification or
social security number is: ______________________________.

Dated: ___________________, 200__.

                                             [HOLDER]

                                             By:
                                                   -----------------------------
                                             Name:
                                                   -----------------------------
                                             Title:
                                                   -----------------------------

                                     NOTICE

     The signature to the foregoing Assignment must correspond to the name as
written upon the face of the accompanying Investment Warrant or any prior
assignment thereof in every particular, without alteration or enlargement or
change whatsoever.

                                     Page 7
<Page>

                         [FORM OF CONVERSION AGREEMENT]

                   (TO BE EXECUTED BY THE REGISTERED HOLDER IF
             SUCH HOLDER DESIRES TO CONVERT THE INVESTMENT WARRANT)

To:
    -----------------------------

The undersigned hereby irrevocably elects to convert the accompanying Investment
Warrant to receive _________ shares of Common Stock issuable thereunder and
requests that certificates for such shares be issued in the name of:

     Name:
                ---------------------------
     Address:
                ---------------------------

     Taxpayer ID/Social Security No.:
                                      ---------------------------

The undersigned represents that it is acquiring the shares of Common Stock for
its own account and not with a view to distributions, and it will not sell these
shares unless they have been registered under the Securities Act of 1933 or an
exemption from such registration requirement is available.

If such number of shares of Common Stock shall not be all the shares of Common
Stock into which the accompanying Investment Warrant may be converted, a new
Investment Warrant for the balance remaining of such shares of Common Stock
shall be registered in the name of and delivered to:

     Name:
                ---------------------------
     Address:
                ---------------------------

     Taxpayer ID/Social Security No.:
                                      ---------------------------

Dated:_______________________, 200__.

                                            [HOLDER]

                                             By:
                                                   -----------------------------
                                             Name:
                                                   -----------------------------
                                             Title:
                                                   -----------------------------

                                     NOTICE

     The signature to the foregoing Election must correspond to the name as
written upon the face of the accompanying Investment Warrant or any prior
assignment thereof in every particular, without alteration or enlargement or
change whatsoever.

                                     Page 8

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