SECURED CONVERTIBLE PROMISSORY NOTE
$3,000,000 January 18, 1996
FOR VALUE RECEIVED, the undersigned HAWAIIAN AIRLINES, INC., a
Hawaii corporation (the "Maker") hereby promises to pay to the order of
AIRLINE INVESTORS PARTNERSHIP, L.P. ("AIP"), or its assigns (the "Payee"),
at Xxxxx's address set forth in the Loan Agreement referred to below, or
at such other place as the holder (the "Holder") of this Promissory Note
(the "Note") may from time to time designate in writing, in lawful money
of the United States and in immediately available funds, at the times and
in the manner provided hereinbelow, the principal sum of THREE MILLION
DOLLARS ($3,000,000.00) (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Loans made by AIP to the Maker
under the Loan Agreement referred to below), together with interest on the
unpaid principal amount of each such Loan, at such address, in like money
and funds, for the period commencing on the date of such Loan until such
Loan shall be paid in full or the principal amount thereof shall have been
converted into shares of Class A Common Stock of the Maker as provided in
the Loan Agreement, at the rate per annum provided in the Loan Agreement.
The date and amount of each Loan made by AIP to the Maker, and
each payment or conversion made on account of the principal thereof, shall
be recorded by AIP on its books and, prior to any transfer of this Note,
endorsed by AIP on the schedule attached hereto or any continuation
thereof, each of which recordations or endorsements shall constitute prima
facie evidence of the matters set forth therein; PROVIDED that the failure
of AIP to make any such recordation or endorsement shall not affect the
obligations of the Maker to make a payment when due of any amount owing
under the Loan Agreement or hereunder in respect of the Loans made by AIP.
This Note is the Secured Convertible Promissory Note referred to
in the Loan Agreement dated as of January 15 1996 (as modified and
supplemented and in effect from time to time, the "Loan Agreement")
between the Maker and AIP and incorporated by reference herein, and
evidences Loans made by AIP thereunder. Terms used but not defined in
this Note have the respective meanings assigned to them in the Loan
Agreement.
The obligations of the Maker under this Note, the Loans and the
Loan Agreement are secured by certain property of Maker pursuant to that
certain Chattel Mortgage and Security Agreement dated as of January
,1996, between the Maker and AIP (the "Mortgage") and incorporated by
reference herein. THE LIEN OF THE MORTGAGE ON CERTAIN COLLATERAL (OTHER
THAN THE SPECIFIED COLLATERAL, AS DEFINED IN THE MORTGAGE) IS SUBORDINATE
TO (I) THE LIEN CREATED BY THAT CERTAIN LOAN AND SECURITY AGREEMENT, DATED
AS OF SEPTEMBER 12, 1994, BETWEEN MAKER AND THE CIT GROUP/CREDIT FINANCE,
INC. ("CIT") PURSUANT TO AN INTERCREDITOR AND
SUBORDINATION AGREEMENT, DATED AS OF JANUARY 15, 1996, BETWEEN CIT AND AIP
AND (II) THE LIEN CREATED BY THAT CERTAIN ROTABLE SPARE PARTS CHATTEL
MORTGAGE AND SECURITY AGREEMENT, DATED AS OF OCTOBER 30, 1992, BETWEEN
MAKER AND AEROUSA, INC. ("AEROUSA") PURSUANT TO AN INTERCREDITOR AND
SUBORDINATION AGREEMENT, DATED AS OF JANUARY 15, 1996, BETWEEN AEROUSA AND
AIP.
The aggregate principal outstanding under this Note, together
with interest accruing thereon shall be due and payable on the earliest of
(i) the Closing, (ii) February 10, 1996 and (iii) the date of termination
of the Stock Purchase Agreement in accordance with its terms. The
principal sum hereof, together with all accrued but unpaid interest, may
be prepaid at any time, in whole or in part, without premium or penalty.
All prepayments hereunder shall be applied as follows: first, to any and
all costs, fees or expenses due and owing hereunder, the Loan Agreement
and/or under the Mortgage (if any); second, to any and all accrued and
unpaid interest hereunder; and third, to outstanding principal hereunder.
The outstanding principal amount of this Note, in whole or in
part, is convertible into shares of Class A Stock at the option of the
Holder at any time, or from time to time, on or prior to maturity, upon
the terms and subject to the conditions specified in the Loan Agreement.
The outstanding principal amount of this Note shall be converted into
shares of Class A Stock upon the occurrence, if at all, of the Closing.
From and after maturity (whether by acceleration or otherwise),
the entire principal balance and (to the extent permitted by law) all
accrued and unpaid interest and all other sums (if any) due and owing
hereunder shall be payable on demand and shall bear interest until paid at
the rate specified in the Loan Agreement.
If any payment of principal, interest or other charges is stated
hereunder to be due and payable on a day which is not a Business Day (as
defined hereinbelow), then the due date for such payment shall be extended
to the next succeeding Business Day, provided that, in any such event,
such payment shall include interest accruing during such extension in
accordance with the terms of this Note.
In the event that an Event of Default shall occur and be
continuing, then, and in any such event and at any time thereafter, so
long as such Event of Default shall then be continuing, all amounts of
principal, interest and other sums and charges hereunder and under the
Loan Agreement including any Additional Amounts and the Mortgage may, at
the option of the Holder, be declared (by written notice to the Maker at
its address set forth in the Loan Agreement, but without presentment,
demand, protest, notice or any other formality, all of which are hereby
waived; provided, that if an Event of Default referred to in Section 9(f)
or (g) of the Loan Agreement shall have occurred, then in every such case,
all amounts of principal, interest, and other charges hereunder and under
the Loan
Agreement, including any Additional Amounts and the Mortgage shall
immediately, and without further act, become due and payable) to be,
whereupon the same shall henceforth become, immediately due and payable,
anything herein to the contrary notwithstanding.
This Note shall be governed by and construed in accordance with
the laws of the State of New York.
IN WITNESS WHEREOF, this Note has been duly executed as of the
date first above written.
HAWAIIAN AIRLINES, INC.
By: /S/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Its: Chairman, President and Chief
Executive Officer
By: /S/ Xxx X. Xxxxx
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Xxx X. Xxxxx
Its: Vice President, General Counsel
and Corporate Secretary
SCHEDULE OF LOANS, PREPAYMENTS AND CONVERSIONS
This Note evidences Loans made under the within-described Loan
Agreement on the dates and in the principal amounts set forth below,
subject to the payments, conversions and prepayments of principal set
forth below:
AMOUNT PAID, UNPAID
DATE MADE, PAID PRINCIPAL AMOUNT PREPAID OR PRINCIPAL NOTATION
OR CONVERTED OF LOAN CONVERTED AMOUNT MADE BY
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