AMENDMENT NO. 1 TO LEASE
THIS AMENDMENT NO. 1 TO LEASE (herein called "Amendment No. 1"), dated
January 1, 1997 between First Security Bank, National Association (successor in
interest to First Security Bank of Utah, N.A.), not in its individual capacity
but solely as Owner Trustee for the benefit of Aircraft Income Partners L.P.
("AIP") ("Lessor") and HAWAIIAN AIRLINES, INC., a Hawaii corporation ("Lessee").
WITNESSETH:
WHEREAS, Lessor and Lessee have heretofore entered into that certain
Aircraft Lease dated as of September 12, 1994 (as amended, the "Lease
Agreement", defined terms used herein as therein defined), which provides for
the execution of a Lease Amendment for the purpose of, among other things,
amending the Lease Agreement and any prior Lease Supplements thereto; and
WHEREAS, the Lease Agreement was supplemented by that certain Lease
Supplement No. 1 dated as of September 12, 1994, and were recorded as one
instrument by the Federal Aviation Administration (the "FAA") on October 14,
1994, as Conveyance No. MM009442; and
WHEREAS, Lessor and Lessee have agreed to amend certain terms of the
Lease Agreement as noted herein, among other things, to permit Lessee to acquire
the Aircraft from Lessor pursuant to a lease intended as security.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and pursuant to the Lease Agreement, the Lessor and Lessee hereby
amend the Lease Agreement as follows:
A. AMENDMENTS TO THE LEASE AGREEMENT.
1. Section 1 is amended by replacing the following definitions in their
entirety:
Airframe Return Condition Percentage means 50% if this Lease terminates
on or prior to November 30, 1999, 37.5% if this Lease terminates on or
prior to November 30, 2000, and 25% if this Lease terminates after
November 30, 2000.
Basic Lease Term shall mean the period from and including September 12,
1994 until, through and including November 30. 2002.
Daily Lease Rate shall mean the monthly Basic Rent then in effect
divided by thirty.
Expiration Date shall mean November 30, 2002.
Lease Interest Rate shall mean 9.0%.
2. The definition of Basic Rent Date is amended by adding the following
clause to the end thereof:
"provided, that after the Tuesday prior to the date of this
Amendment, and continuing throughout the remainder of the Basic
Lease Term, the Basic Rent Dates shall be (i) the first Business
Day of each calendar month, commencing with February, 1997 and
(ii) and the last day of the Basic Lease Term."
3. The last grammatical paragraph of Section 10(b) and Sections 20 and
24 are deleted in their entirety.
4. Section 3(b) of the Lease Agreement is hereby amended in its
entirety to read as follows:
"(b) The Lessee shall pay to the Lessor as basic rent (herein
referred to as Basic Rent) (i) in advance on the Delivery Date
and on the Tuesday of the second calendar week next following
the Delivery Date and on the Tuesday of each calendar week
thereafter at the rate of United States Dollars $13,850 for each
such week, until August 1, 1995 and at $15,000 for each such
week until the Tuesday prior to the date of this Amendment No.1,
(ii) a down payment in the amount of $450,000 on the date of
this Amendment No. 1, (iii) in arrears on the Basic Rent Payment
Date occurring in February, 1997 in an amount equal to $360,000
less the amount previously paid during the period from September
1, 1996 through the date of this Amendment No. 1, and (iv) in
arrears on each Basic Rent Date in an amount equal to $72,000
for each month preceding such Basic Rent Date commencing with
the Basic Rent Date occurring in March, 1997, until the Basic
Rent Date occurring in December, 1999 and on each Basic Rent
Date occurring thereafter in an amount equal to $50,000 for each
month preceding such Basic Rent Date."
5. Section 21 is amended in its entirety to read as follows:
"SECTION 21. Purchase of Aircraft.
(a) If this Lease has not been terminated, (i) the Lessee
shall have the option to purchase the Aircraft at any time on
any Basic Rent Date before the expiration of the Basic Lease
Term at a purchase price equal to the Casualty Value of the
Aircraft on such Basic Rent Date (such Basic Rent Date, the
Purchase Date) and (ii) the Lessee shall purchase the Aircraft
on the Expiration Date for a purchase price equal to $1.00 plus,
in each case, all applicable sales taxes, if any, with respect
to such purchase.
(b) Not less than 30 days prior to the Purchase Date, the
Lessee may indicate, by written notice to the Lessor, the
Lessee's intention to exercise the Lessee's purchase option
described above.
(c) On the Purchase Date or on the Expiration Date, as the
case may be, the Lessee shall purchase from the Lessor and the
Lessor shall sell to the Lessee, on an as is, where is basis
with any and all faults, without representation or warranty
(except as to the absence of Lessor Liens), the Aircraft for a
cash consideration, payable in immediately available funds,
equal to the applicable purchase price thereof plus all
applicable sales taxes, if any, with respect to such purchase
plus all accrued and unpaid Basic Rent and all Supplemental Rent
then due. Upon payment of such cash consideration, the Lessor
shall, upon the request of the Lessee, execute and deliver to
the Lessee, or to the Lessee's assignee or nominee, a ▇▇▇▇ of
sale, without representations or warranties (except as to Lessor
Liens), for the Aircraft, together with such other documents as
may be required to release the Aircraft from the terms and scope
of this Lease and to transfer title thereto to the Lessee or
such assignee or nominee, in such form as may reasonably be
requested by the Lessee, all at the Lessee's expense. Such sale
shall be closed in a jurisdiction reasonably designated by the
Lessee and reasonably acceptable to the Lessor."
6. Section 17 (a) is amended by replacing the text beginning with the
third sentence in clause (ii) and ending with the last sentence thereof in its
entirety with the following:
"The Lessee shall, without further demand, forthwith pay to the
Lessor an amount equal to any unpaid Rent due and payable for
all periods up to and including the Basic Rent Date following
the date on which the Lessor has declared this Lease to be in
default, plus, as liquidated damages for loss of a bargain and
not as a penalty, an amount equal to the Casualty Value of the
Aircraft on such Basic Rent Date, provided, that on payment of
such amounts by Lessee, Lessor shall transfer title to the
Aircraft to Lessee, without representation or warranty except
for the absence of Lessor Liens.
and adding a new clause (iii) thereto to read in its entirety as follows:
"(iii) Lessor may exercise, in addition to all other rights and
remedies granted to it in this Lease and in any other instrument
or agreement securing, evidencing or relating to this Lease, all
rights and remedies of a secured party under the New York
Uniform Commercial Code."
7. Section 22(d) is amended in its entirety to read as follows:
"This Lease represents the entire agreement of the parties with
respect to the subject matter hereof and supersedes any and all
prior understandings."
8. A new Section 28 is inserted to read in its entirety as follows:
"SECTION 28. Grant of Security Interest.
(a) As security for the due and punctual payment of all Rent and
other liabilities of Lessee hereunder and the performance and
observance by the Lessee of all of the covenants made by it in
this Lease or in any agreement, document or certificate
delivered in connection with this Lease, the Lessee hereby
grants to the Lessor a first lien on and a security interest in
all of the Lessee's right, title and interest in the following,
in each case, as to each type of property below, whether now
owned or hereafter acquired by the Lessee, wherever located and
whether now or hereafter existing (the "Collateral"):
(i) the Aircraft, including without limitation, the
Engines and all Parts and other accessories thereto;
(ii) each sublease of the Aircraft, whenever entered
into, together with all renewals of any such
sublease executed from time to time and all payments
of rent and all other amounts due and to become due
thereunder;
(iii) all warranties (including without limitation
warranties of title, merchantability, fitness for a
particular purpose, quality and freedom from
defects) and rights of recourse against
manufacturers, assemblers, sellers and others in
connection with the foregoing, if any;
(iv) all documents, instruments, chattel paper and
general intangibles held, issued or arising in
connection with any of the foregoing;
(v) all rents, issues, profits, products, revenues,
earnings and other income of the foregoing and all
the right, title and interest of every nature
whatsoever of the Lessee in and to the same and
every part thereof; and
(vi) all proceeds (including without limitation
insurance proceeds) of the foregoing.
(b) This Lease shall constitute a security agreement under the
New York Uniform Commercial Code. Without limiting the
generality of the foregoing, it is the intent of the parties to
this Lease that the security interest granted herein constitute
a "purchase money equipment security interest" in the Collateral
for the purposes of Title 11 U.S.C. Section 1110. It is the
intent of the parties to this Lease, that, to the extent
consistent with the provisions of Title 11 U.S.C. or any
analogous section of the Federal bankruptcy laws as amended from
time to time, title of the Lessor to the Collateral and the
right of the Lessor to take possession of the Collateral in
compliance with the provisions of this Lease shall not be
affected by the provisions of the Federal bankruptcy laws as
amended from time to time; including, without limitation, the
provisions of Section 362 or 363 of such Title, or other
analogous part of any superseding statutes, as amended from time
to time. The Lessee agrees, to the extent permitted by law, in
any bankruptcy proceeding that it will not challenge the
exercise by the Lessor of its rights under Section 1110 of the
Bankruptcy Code or any successor statute.
(c) The security interest granted herein constitutes a perfected
security interest in the Collateral in favor of the Lessor, as
security for this Lease, and is prior to all other liens on the
Collateral in existence on the date hereof. The Lessee shall
maintain the security interest created herein as a perfected
security interest having at least the priority described herein
and shall defend such security interest against the claims and
demands of any and all persons whomsoever.
(d) The Lessee hereby authorizes the Lessor to take all action
(including without limitation, the filing of any Uniform
Commercial Code financing statements or amendments thereto with
the signature of the Lessee) which the Lessor may reasonably
deem necessary or desirable to perfect or otherwise obtain the
benefits of the security interest.
(e) At any time and from time to time, upon the written request of the
Lessor and at the sole expense of the Lessee, the Lessee will promptly and duly
execute and deliver such further instruments and documents and take such further
actions as the Lessor may reasonably request for the purpose of obtaining or
preserving the full benefits of this security interest and of the rights and
powers granted herein related to such interest, including without limitation,
the filing of any financing or continuation statements under the Uniform
Commercial Code in effect in any jurisdiction with respect to the security
interest created hereby.
9. Exhibit C to the Lease Agreement shall be amended in its entirety to
read as set forth in Exhibit C attached hereto.
10. Exhibit E ("Termination Values") to the Lease Agreement shall be
deleted in its entirety.
B. MISCELLANEOUS.
1. Except as set forth herein, all terms and provisions contained in
the Lease Agreement shall remain in full force and effect.
2. Lessee hereby confirms its agreement to pay to Lessor Basic Rent and
Supplemental Rent for the Aircraft throughout the Basic Lease Term in accordance
with Section 3 of the Lease Agreement.
3. This Amendment No. 1 is being delivered in the State of New York and
shall in all respects be governed by, and construed in accordance with, the laws
of the State of New York, including all matters of construction, validity and
performance.
4. This Amendment No. 1 may be executed in several counterparts, each
fully-executed counterparts all of which shall be deemed an original, and all
such counterparts shall constitute one and the same instrument. To the extent
that this Amendment No. 1 constitutes chattel paper, as such term is defined in
the Uniform Commercial Code as in effect in any applicable jurisdiction, no
security interest in this Amendment No. 1 may be created through the transfer or
possession of any counterpart other than the counterpart marked as the
"Original."
IN WITNESS WHEREOF, Lessor and Lessee have caused Amendment No. 1 to be
duly executed and delivered as of the date and year first above written.
First Security Bank, National Association
(successor in interest to Firs Security Bank of
Utah, N.A.), not in its individual capacity but
solely as Owner Trustee for the benefit of
Aircraft Income Partners L.P.
By:_______________________
HAWAIIAN AIRLINES, INC.
By: /s/▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President-Finance, Treasurer
and Assistant Corporate Secretary
By: /s/▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇ ▇. ▇▇▇▇▇
Vice President, General Counsel
and Corporate Secretary
