An appraisal is
only an estimate of value. It does not necessarily indicate the price at which
an aircraft may be purchased or sold in the market. An appraisal should not be
relied on as a measure of realizable value. The proceeds realized on a sale of
any aircraft may be less than its appraised value. In particular, the
appraisals of the aircraft are estimates of the values of the aircraft assuming
the aircraft are in a certain condition, which may not be the case. If the Loan
Trustee exercised remedies under one or more Indentures, the value of the
related aircraft will depend on various factors, including:
·
market
and economic conditions;
·
the
supply of similar aircraft;
·
the
availability of buyers;
·
the
condition of the aircraft; and
·
whether
the aircraft are sold separately or as a block.
Accordingly, we cannot
assure you that the proceeds realized on any exercise of remedies would be
sufficient to satisfy in full payments due on the Equipment Notes for any
aircraft or the full amount of distributions expected to be paid on the
Certificates.
Failure to perform maintenance responsibilities may
deteriorate the value of the Aircraft.
To the extent described in
the Indentures, we will be responsible for the maintenance, service, repair and
overhaul of the Aircraft. If we fail to perform adequately these
responsibilities, the value of the Aircraft may be reduced. In addition, the
value of the Aircraft may deteriorate even if we fulfill our maintenance
responsibilities. As a result, it is possible that upon a liquidation, there
will be less proceeds than anticipated to repay the holders of Equipment Notes.
See Description of the Equipment NotesCertain Provisions of the Indentures.
Inadequate levels of insurance may result in
insufficient proceeds to repay holders of related Equipment Notes.
To the extent described in
the Indentures, we must maintain public liability, property damage and all-risk
aircraft hull insurance on the Aircraft. If we fail to maintain adequate levels
of insurance, the proceeds which could be obtained upon an event of loss of an
aircraft may be insufficient to repay the holders of the related Equipment
Notes. See Description of the Equipment NotesCertain Provisions of the
IndenturesInsurance.
It may be difficult and expensive to exercise
repossession rights with respect to an Aircraft.
There will be no general geographic restrictions on
our ability to operate the Aircraft. Although we do not currently intend to do
so, we may register the Aircraft in specified foreign jurisdictions and/or
lease the Aircraft. It may be difficult, time-consuming and expensive for a
Loan Trustee to exercise repossession rights if an Aircraft is located outside
the United States, is registered in a foreign jurisdiction or is leased to a
foreign or domestic operator. Additional difficulties may exist if a lessee is
the subject of a bankruptcy, insolvency or similar event.
In addition, some jurisdictions may allow for other
liens or other third party rights to have priority over a Loan Trustees
security interest in an Aircraft. As a result, the benefits of the related Loan
Trustees security interest in an Aircraft may be less than they would be if
the Aircraft were located or registered in the United States.
Upon repossession of an
Aircraft, the Aircraft may need to be stored and insured. The costs of storage
and insurance can be significant and the incurrence of such costs could reduce
proceeds available to repay the holders of the Equipment Notes.
S-
25
Payments to Certificateholders will be subordinated to
certain amounts payable to other parties.
Under the Intercreditor Agreement, the Liquidity
Provider will receive payment of all amounts owed to it, including
reimbursement of drawings made to pay interest on the Class A and Class B
Certificates, before the holders of any class of Certificates receive any
funds. In addition, the Subordination Agent and the Trustees will receive some
payments before the holders of any class of Certificates receive distributions.
Payments of principal on
the Certificates are subordinated to payments of interest on the Certificates,
subject to certain limitations and certain other payments. Consequently, a
payment default under any Equipment Note or a Triggering Event may cause the
distribution of interest on the Certificates or such other amounts from
payments received with respect to principal on one or more series of Equipment
Notes. If this occurs, the interest accruing on the remaining Equipment Notes
may be less than the amount of interest expected to be distributed on the remaining
Certificates. This is because the interest on the Certificates may be based on
a Pool Balance that exceeds the outstanding principal balance of the remaining
Equipment Notes. As a result of this possible interest shortfall, the holders
of the Certificates may not receive the full amount expected after a payment
default under any Equipment Note even if all Equipment Notes are eventually
paid in full. For a more detailed discussion of the subordination provisions of
the Intercreditor Agreement, see Description of the Intercreditor AgreementPriority
of Distributions.
The proceeds
actually payable to Certificateholders in connection with an Equipment Note
buyout maybe less than the outstanding principal of, and accrued interest on,
the Equipment Notes that have been purchased.
After the occurrence of
certain events with respect to an Indenture, any junior Certificateholder has
the right to purchase the senior Equipment Notes issued under such Indenture. The
proceeds of an Equipment Note buyout will be paid to the Subordination Agent
and will be applied according to the priority of payment specified in the
Intercreditor Agreement. See Description of the Intercreditor AgreementIntercreditor
RightsEquipment Note Buyout Right of Subordinated Certificateholders. Although the purchase price for Equipment
Notes bought out will be equal to the outstanding principal amount of, and
accrued interest on, the Equipment Notes purchased and other amounts payable
with respect to such Equipment Notes, together with a proportionate portion of
the amounts owed to the Liquidity Provider for the corresponding Class of
Certificates, because the priority of payment under the Intercreditor Agreement
provides for payments to certain other persons before payments are made to the
holders of the Certificates, the actual proceeds payable to the holders of the
relevant Class of Certificates may be less than the outstanding principal
amount of, and accrued interest on, the Equipment Notes that have been
purchased. See Description of the Intercreditor AgreementPriority of
Distributions. In addition, after such purchase, the purchased Equipment Notes
will no longer be subject to the cross-subordination provisions of the
Intercreditor Agreement. See Description of the Intercreditor AgreementIntercreditor
RightsEquipment Note Buyout Right of Subordinated Certificateholders.
The exercise of remedies will be controlled by the
Controlling Party.
If an event of default under an Indenture is
continuing, subject to specified conditions, the Controlling Party may direct
the Loan Trustee under the related Indenture to exercise remedies under the
Indenture, including accelerating the applicable Equipment Notes or foreclosing
the lien on the Aircraft securing such Equipment Notes. See Description of the
Certificates
Indenture Events of
Default and Certain Rights Upon An Indenture Event of Default.
The Controlling
Party will be:
·
The
Class A Trustee.
S-
26
·
Upon
payment of Final Distributions to the holders of Class A Certificates, the
Class B Trustee.
·
Under
specified circumstances, and notwithstanding the foregoing, the Liquidity
Provider with the largest amount owed to it.
Subject to certain
conditions, notwithstanding the foregoing, (a) if one or more holders of
the Class B Certificates have purchased the Series A Equipment Notes
or (b) if one or more holders of Additional Certificates of any Class have
purchased the Series A Equipment Notes and Series B Equipment Notes
and the Additional Equipment Notes of each series (if any) ranking senior to
the series corresponding to such Class, in each case, issued under an
Indenture, the holders of the majority in aggregate unpaid principal amount of
Equipment Notes issued under such Indenture, rather than the Controlling Party,
shall be entitled to direct the Loan Trustee in exercising remedies under such
Indenture; provided, that so long as the Subordination Agent holds not less
than the majority in aggregate unpaid principal amount of such Equipment Notes,
the Controlling Party shall be entitled to direct the Loan Trustee under such
Indenture.
As a result of the
foregoing, if the Trustee for a Class of Certificates is not the
Controlling Party with respect to an Indenture (or, in the case of an Indenture
under which there has been an Equipment Note buyout as described in the
preceding paragraph, where such Trustee holds less than a majority of the
outstanding principal amount of Equipment Notes issued under such Indenture),
the Certificateholders of that Class will have no rights to participate in
directing the exercise of remedies under such Indenture.
The proceeds from the disposition of any Aircraft or
Equipment Notes may not be sufficient to pay all amounts distributable to the
holders of Certificates.
The market for any
Aircraft or Equipment Notes, as the case may be, during any event of default
under an Indenture may be very limited, and we cannot assure you as to the
price at which they could be sold.
Some
Certificateholders will receive a smaller amount of principal distributions
than anticipated and will not have any claim for the shortfall against us
(except in the second bullet point below), any Loan Trustee or any Trustee if
the Controlling Party takes the following actions:
·
It
sells any Equipment Notes for less than their outstanding principal amount; or
·
It
sells any Aircraft for less than the outstanding principal amount of the
related Equipment Notes.
The Equipment Notes held
by the Subordination Agent will be cross-collateralized. However, a
cross-default in the Indentures occurs only if all amounts owing under any
Equipment Note held by the Subordination Agent issued under another Indenture
or other amounts secured by another Indenture with respect to which the
Subordination Agent then holds any Equipment Notes, which amounts are then due
and payable, have not been paid in full on the Final Payment Date, and in the
case of amounts owing other than principal, interest or Make-Whole Premium,
such failure shall continue for twenty (20) Business Days after receipt by us
of notice of such amounts. Therefore, prior to the triggering of the
cross-default, if the Equipment Notes issued under one or more Indentures are
in default and the Equipment Notes issued under the remaining Indentures are
not in default, no remedies will be exercisable under such remaining
Indentures.
S-
27
The ratings of the Certificates may be lowered or
withdrawn in the future.
It is
a condition to the issuance of the Certificates that Moodys and Standard &
Poors rate the Certificates not less than the ratings set forth below:
Certificates
|
|
|
|
Moodys
|
|
Standard
& Poors
|
|
Class A
|
|
|
A3
|
|
|
|
A-
|
|
|
Class B
|
|
|
Ba1
|
|
|
|
BBB-
|
|
|
A rating is not a recommendation to purchase, hold or
sell Certificates and the rating does not address market price of the
Certificates or suitability of investing in the Certificates for a particular
investor. A rating may not remain for any given period of time and a Rating
Agency may lower or withdraw entirely a rating if in its judgment circumstances
in the future so warrant. These circumstances may include a downgrading of the
debt of Northwest or any Liquidity Provider by a Rating Agency.
The rating of the Certificates is based primarily on
the default risk of the Equipment Notes, the availability of the Liquidity
Facilities for the benefit of holders of the Class A and Class B
Certificates, the collateral value provided by the Aircraft relating to the
Equipment Notes, the cross-collateralization provisions applicable to the
Indentures and the subordination provisions applicable to the Certificates.
These ratings address the likelihood of timely payment of interest (at the
Stated Interest Rate and without any premium) when due on the Certificates and
the ultimate payment of principal distributable under the Certificates by the
Final Legal Distribution Date. The ratings do not address the possibility of
certain defaults, optional redemptions or other circumstances, which could
result in the payment of the outstanding principal amount of the Certificates
prior to the Final Expected Regular Distribution Date. Any cash collateral held
as a result of the cross-collateralization of the Equipment Notes will not be
entitled to the benefits of Section 1110 of the Bankruptcy Code. The
ratings apply only to the Certificates and not the Equipment Notes, regardless
of whether any such Equipment Notes are purchased by a Certificateholder
pursuant to the purchase rights described under Description of the
Intercreditor AgreementIntercreditor RightsEquipment Note Buyout Rights of
Subordinated Certificateholders.
Standard & Poors has indicated that its
rating applies to a unit consisting of Certificates representing the Trust
Property and escrow receipts initially representing undivided interests in
certain rights to the Deposits initially totaling $454,343,000. Amounts
deposited under the Escrow Agreements are not entitled to the benefits of Section 1110
of the Bankruptcy Code. Counsel for Northwest will opine to the underwriters
that, subject to the assumptions and qualifications contained in such counsels
opinion, amounts deposited under the Escrow Agreements are not property of
Northwest. Neither the Certificates nor the escrow receipts may be separately
assigned or transferred.
The reduction, suspension
or withdrawal of the ratings of the Certificates will not, by itself,
constitute an event of default under the pass through trust agreements.
The Certificates will not provide any protection
against highly leveraged or extraordinary transactions.
The Certificates, the
Equipment Notes and the underlying agreements will not contain any financial or
other covenants or event risk provisions protecting the Certificateholders in
the event of a highly leveraged or other extraordinary transaction affecting us
or our affiliates.
There are no restrictive
covenants in the transaction documents relating to our ability to incur future
indebtedness.
The Certificates,
Equipment Notes and the underlying agreements will not (i) require us to
maintain any financial ratios or specified levels of net worth, revenues,
income, cash flow or liquidity and therefore
S-
28
do not
protect Certificateholders in the event that we experience significant adverse
changes in our financial condition or results of operations, (ii) limit
our ability to incur additional indebtedness or (iii) restrict our ability
to pledge our assets. In light of the absence of such restrictions, we may
conduct our business in a manner that may cause the market price of the
Certificates to decline or otherwise may result in restriction or impairment of
our ability to pay amounts due under the Equipment Notes and/or the related
agreements.
The ability to resell the Certificates may be limited.
Prior to this offering,
there has been no public market for the Certificates. Neither we nor any Trust
intends to apply for listing of the Certificates on any securities exchange or
otherwise. The underwriters may assist in resales of the Certificates, but they
are not required to do so, and any market-making activity may be discontinued
at any time without notice at the sole discretion of each underwriter. A
secondary market for the Certificates may not develop. If a secondary market
does develop, it might not continue or it might not be sufficiently liquid to
allow you to resell any of your Certificates. If an active public market does
not develop, the market price and liquidity of the Certificates may be
adversely affected.
Less than all of the funds held in escrow as deposits
may be used to purchase the Equipment Notes.
Under certain circumstances, less than all of the
funds held in escrow as Deposits may be used to purchase Equipment Notes by the
Delivery Period Termination Date. See Description of the Deposit AgreementsUnused
Deposits. If any funds remain as Deposits with respect to any Trust after the
Delivery Period Termination Date, they will be withdrawn by the Escrow Agent
for that Trust and distributed, together with interest thereon, to the
Certificateholders of such Trust. See Description of the CertificateObligation
to Purchase Equipment Notes.
S-
29
BUSINESS
The Company
Northwest Airlines, Inc. was incorporated under
the laws of the State of Minnesota on April 16, 1934. Corporate
headquarters is located at 2700 Lone Oak Parkway, Eagan, Minnesota 55121
(telephone number (612) 726-2111.
NWA Corp. is the
direct parent corporation of Northwest. Northwest operates the worlds sixth
largest airline, as measured by revenue passenger miles for the six months
ended June 30, 2007, and is engaged in the business of transporting
passengers and cargo. Northwest began operations in 1926. Northwests business
focuses on the operation of a global airline network through its strategic
assets that include:
·
domestic
hubs at Detroit, Minneapolis/St. Paul and Memphis;
·
an
extensive Pacific route system with a hub in Tokyo;
·
a
transatlantic joint venture with KLM, which operates through a hub in
Amsterdam;
·
a
domestic and international alliance with Continental and Delta;
·
membership
in SkyTeam, a global airline alliance with KLM, Continental, Delta, Air France,
Alitalia, Aeroméxico, CSA Czech Airlines, Korean Air and Aeroflot;
·
agreements
with three domestic regional carriers, Pinnacle, Mesaba and Compass, each of which
operates as Northwest Airlink;
·
a
cargo business that operates a dedicated freighter fleet of aircraft through
hubs in Anchorage and Tokyo.
Northwests business
strategies are designed to utilize these assets to the Companys competitive
advantage.
Operations and
Route Network
Northwest and its Airlink
partners operate substantial domestic and international route networks and
directly serve more than 240 destinations in 26 countries in North America,
Asia and Europe.
Domestic System
Northwest operates its domestic system through its
hubs at Detroit, Minneapolis/St. Paul and Memphis.
Detroit.
Detroit
is the ninth largest origination/destination hub in the United States. Northwest
and its Airlink carriers together serve over 140 destinations from Detroit. For
the three months ended March 31, 2007, they enplaned 54% of originating
passengers from Detroit, while the next largest competitor enplaned 12%.
Minneapolis/St.
Paul.
Minneapolis/St.
Paul is the eighth largest origination/destination hub in the United States.
Northwest and its Airlink carriers together serve over 150 destinations from
Minneapolis/St. Paul. For the three months ended March 31, 2007, they
enplaned 58% of originating passengers from Minneapolis/St. Paul, while the
next largest competitor enplaned 13%.
Memphis.
Memphis
is the seventeenth largest origination/destination hub in the United States.
Northwest and its Airlink carriers together serve 80 destinations from Memphis.
For the three months ended March 31, 2007, they enplaned 57% of
originating passengers from Memphis, while the next largest competitor enplaned
11%.
S-
33
Other Domestic System
Operations.
Domestic non-hub operations
include service to as many as 20 destinations from Indianapolis, service from
several heartland cities to New York, Washington D.C. and Florida destinations,
and service from several west coast gateway cities to Hawaii.
International
System
Northwest operates international flights to the
Pacific and/or the Atlantic regions from its Detroit, Minneapolis/St. Paul and
Memphis hubs, as well as from gateway cities including Boston, Honolulu, Los Angeles,
San Francisco, Seattle and Portland.
Pacific.
Northwest
has served the Pacific market since 1947 and has one of the worlds largest
Pacific route networks. Northwests Pacific operations are concentrated at
Narita International Airport in Tokyo, where it has 376 permanent weekly
takeoffs and landings (slots) as of June 30, 2007, the most for any
non-Japanese carrier. Under the United StatesJapan bilateral aviation
agreement, Northwest has the right to operate unlimited frequencies between any
point in the United States and Japan as well as extensive fifth freedom
rights. Fifth freedom rights allow Northwest to operate service from any
gateway in Japan to points beyond Japan and to carry Japanese originating
passengers. Northwest and United Airlines, Inc. (United) are the only
U.S. passenger carriers that have fifth freedom rights from Japan. Northwest
uses these slots and rights to operate a network linking nine U.S. gateways and
12 Asian destinations via Tokyo. The Asian destinations served via Tokyo are
Bangkok, Beijing, Busan, Guam, Guangzhou, Hong Kong, Manila, Nagoya, Saipan,
Seoul, Shanghai, and Singapore. Additionally, Northwest flies nonstop between
Detroit and Osaka and Nagoya, and uses its fifth freedom rights to fly beyond
Osaka to Taipei and beyond Nagoya to Manila. Northwest also operates nonstop
service between Nagoya and Guam and Saipan and between Osaka and Guam and
Honolulu.
Atlantic.
Northwest
and KLM operate an extensive transatlantic network pursuant to a commercial and
operational joint venture. This joint venture benefits from having antitrust
immunity, which allows for coordinated pricing, scheduling, product development
and marketing. In 1992, the United States and the Netherlands entered into an open-skies
bilateral aviation treaty, which authorizes the airlines of each country to
provide international air transportation between any U.S.Netherlands city pair
and to operate connecting service to destinations in other countries. Northwest
and KLM operate joint service between Amsterdam and 17 cities in the United
States, Canada and Mexico, as well as between Amsterdam and India. Codesharing
between Northwest and KLM has been implemented on flights to 58 European, eight
Middle Eastern, 13 African, five Asian and 180 U.S. cities. Codesharing is an
agreement whereby an airlines flights can be marketed under the two-letter
designator code of another airline, thereby allowing the two carriers to
provide joint service with one aircraft. After September 2007, the
Northwest-KLM joint venture can be terminated on three years notice. In May 2004,
Air France acquired KLM, and KLM and Air France became wholly-owned
subsidiaries of a new holding company.
In June 2007,
Northwest, together with KLM, Air France, Delta, Alitalia, and Czech Airlines,
filed an application with the U.S. Department of Transportation for
transatlantic antitrust immunity, including antitrust immunity for a new
four-way transatlantic joint venture among Northwest, KLM, Air France and Delta.
Approval of the pending antitrust immunity application is one of the conditions
precedent to implementation of the four-way Northwest/KLM/Air France/Delta
transatlantic joint venture. Air France, Delta, Alitalia, and Czech Airlines
currently operate under a separate grant of antitrust immunity from Northwest
and KLM. Six-way antitrust immunity would create the framework for Northwest to
achieve a similar type of transatlantic commercial integration with Delta and
Air France as it has today with KLM.
Alliances
In addition to its transatlantic joint venture with
KLM, Northwest has strengthened its network through other alliance
partnerships. Long-term alliances are an effective way for Northwest to enter
S-
34
markets that it would not
be able to serve alone. Alliance relationships can include codesharing,
reciprocal frequent flyer programs, through luggage check-in, reciprocal
airport lounge access, joint marketing, sharing of airport facilities and joint
procurement of certain goods and services.
Since 1998, Northwest and Continental have been in a
domestic and international commercial alliance that connects the two carriers
networks and includes extensive codesharing, frequent flyer program reciprocity
and other cooperative marketing programs. The alliance agreement has a term
through 2025.
In August 2002, the Company entered into a commercial
alliance agreement with Continental and Delta. This agreement is designed to
connect the three carriers domestic and international networks and provides
for codesharing, reciprocity of frequent flyer programs, airport club use and
other cooperative marketing programs. The combined network has increased
Northwests presence in the South, East and Mountain West regions of the United
States, as well as in Latin America. The alliance agreement has a term through June 12,
2013; after that date, it continues in effect until terminated on not less than
12 months notice.
In September 2004, Northwest, together with KLM
and Continental Airlines, joined the global SkyTeam Alliance. The addition of
Northwest, KLM and Continental made SkyTeam the worlds second largest airline
alliance. The ten members of the SkyTeam alliance, Northwest, KLM, Continental,
Delta, Air France, Alitalia, AeroMéxico, CSA Czech Airlines, Korean Air, and
Aeroflot currently serve over 372 million passengers annually with more than
14,700 daily departures to 744 destinations in 151 countries. Northwest
customers are now able to accrue and redeem frequent flyer miles in their
WorldPerks accounts and enjoy travel on any flight operated by a SkyTeam
Alliance member carrier. This alliance affords customers the benefits and
service options when traveling on multiple airlines while being treated
similarly to a customer traveling on a single airline. The alliance agreement
has a term through June 12, 2012, and if not terminated on that date,
continues in effect for five more years.
Northwest also has domestic frequent flyer and
codesharing agreements with several other airlines including Alaska Airlines,
Horizon Air, Hawaiian Airlines, American Eagle, Gulfstream International
Airlines, Midwest Airlines and Big Sky Airlines. In Central America, Northwest
has a frequent flyer agreement with Copa Airlines. In the Pacific, Northwest
has frequent flyer agreements with Malaysia Airlines, Japan Airlines, Cebu
Pacific Airlines, Air Tahiti Nui, and China Southern. In the Atlantic, in
addition to its extensive relationship with KLM, Northwest has frequent flyer
agreements with KLM cityhopper, Air Europa, Jet Airways of India, Kenya
Airways, Kingfisher Airlines of India and Malev Hungarian Airlines.
Northwest and its SkyTeam
Alliance and other travel partners currently provide a global network to over
1,000 cities in more than 160 countries on six continents.
S-
35
DESCRIPTION OF THE
CERTIFICATES
The Certificates will be
issued pursuant to two separate Trust Supplements (each, a
Trust Supplement
) to be entered
into among Northwest, NWA Corp. and the Trustee pursuant to the terms of a pass
through trust agreement among NWA Corp., Northwest and the Trustee, dated as of
June 3, 1999 (the
Basic Agreement
).
The following summary of the particular terms of the Certificates offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Certificates set forth
in the accompanying prospectus under the caption Description of the
Certificates. The statements under this caption are a summary and do not
purport to be complete. The summary makes use of terms defined in and is
qualified in its entirety by reference to all of the provisions of the Basic
Agreement, a form of which has been filed as an exhibit to the Registration
Statement of which the accompanying prospectus is a part, and to all of the
provisions of the Trust Supplements which, together with the forms of the
related Participation Agreements and Indentures and the Liquidity Facilities,
Note Purchase Agreement, Escrow Agreements, Deposit Agreements and
Intercreditor Agreement, will be filed by NWA Corp. with the Commission as
exhibits to a Current Report on Form 8-K, a Quarterly Report on Form 10-Q
or an Annual Report on Form 10-K. Except as otherwise indicated, the
following summary relates to each of the Trusts and the Certificates issued by
each Trust. The terms and conditions governing each of the Trusts will be
substantially the same, except as described under Description of the
Intercreditor Agreement-Priority of Distributions below and except that the
principal amount, the interest rate, scheduled repayments of principal and
maturity date applicable to the Equipment Notes held by each Trust and the
final expected distribution date (the
Final Expected
Distribution Date
) applicable to each Trust will differ.
Citations to the relevant sections of the Basic Agreement appear below in
parentheses unless otherwise indicated.
General
The Certificates of each Trust will be issued in fully
registered form only and will be subject to the provisions described below
under Book Entry; Delivery and Form. Each Certificate will represent a
fractional undivided interest in one of two Northwest Airlines 2007-1
Pass Through Trusts (the
Class A Trust
and the
Class B Trust
, and,
collectively, the
Trusts
). The Trusts will be
formed pursuant to the Basic Agreement and the Trust Supplements (together with
the Basic Agreement, collectively, the
Pass
Through
Trust Agreements
).
The Certificates are referred to herein as the
Class A
Certificates
and the
Class
B
Certificates
. Each Certificate will represent a fractional
undivided interest in the Trust created by the Basic Agreement and the
applicable Trust Supplement pursuant to which such Certificate is issued.
The property of
each Trust (the
Trust Property
)
will consist of:
·
subject
to the Intercreditor Agreement, Equipment Notes acquired under the Note
Purchase Agreement and issued by Northwest in connection with each separate
secured loan transaction with respect to each Aircraft to finance a portion of
the purchase price of such Aircraft by Northwest.
·
the
rights of such Trust to acquire Equipment Notes under the Note Purchase
Agreement.
·
the
rights of such Trust under the applicable Escrow Agreement to request the
Escrow Agent to withdraw from the applicable Depositary funds sufficient to
enable each such Trust to purchase Equipment Notes during the Delivery Period.
·
the
rights of such Trust under the Intercreditor Agreement (including all monies
receivable in respect of such rights).
·
monies
receivable under the Liquidity Facility for such Trust.
·
funds
from time to time deposited with the Trustee in accounts relating to such
Trust.
S-
36
Certificates will be
issued only in minimum denominations of $1,000 or integral multiples thereof,
except that one Certificate of each Trust may be issued in a different
denomination. (Section 3.01)
The Certificates represent
interests in the respective Trusts and all payments and distributions thereon
will be made only from the Trust Property. (Section 3.08) The Certificates
do not represent an interest in or obligation of Northwest, NWA Corp., the
Trustee, any of the Loan Trustees in their individual capacities, or any
affiliate of any thereof.
Pursuant to the Escrow
Agreement applicable to each of the Class A and Class B Trusts, the
holders of the Certificates of each such Trust, (the
Certificateholders
)
as holders of the Escrow Receipts
affixed to each Certificate will be entitled to certain rights with respect to
payments and withdrawals that are required to be made by the applicable
Depositary under the applicable Deposit Agreement. Accordingly, any transfer of
a Certificate will have the effect of transferring the corresponding rights
with respect to such payments, and rights with respect to payments and
withdrawals to be made under the applicable Deposit Agreement may not be
separately transferred by holders of the Certificates. Rights with respect to
the Deposits, payments and withdrawals to be made under the applicable Deposit
Agreement and the Escrow Agreement relating to a Trust, except for the right to
request withdrawals for the purchase of Equipment Notes, will not constitute
Trust Property of such Trust.
Payments and Distributions
The following description
of distributions on the Certificates should be read in conjunction with the
description of the Intercreditor Agreement which may have the consequence of
altering the effect of the following provisions in a default situation. See Description
of the Intercreditor AgreementPriority of Distributions. Interest with
respect to the Equipment Notes held in each Trust will accrue at the applicable
rate per annum for Certificates to be issued by such Trust payable on May 1
and November 1 of each year, commencing on the first such date to occur
after initial issuance thereof. The non-default interest rate applicable to
each Class of Certificates is referred to as the
Stated
Interest Rate
for such
Trust. All such interest payments will be distributed to Certificateholders of
such Trust on each such date until the Final Distribution Date for such Trust,
subject to the Intercreditor Agreement. Interest is calculated on the basis of
a 360-day year consisting of twelve 30-day months.
Interest will accrue on
the Deposits relating to each Trust at a rate equal to the interest rate
applicable to the Certificates issued by such Trust. The Deposits relating to a
Trust and interest paid thereon will not be subject to the subordination
provisions applicable to the Certificates.
Payments of interest on
the Deposits with respect to each Trust will be made by the applicable
Depositary to the Paying Agent for distribution to the holders of Escrow
Receipts as described below. Payments of principal, Make-Whole Premium (if any)
and interest on the Equipment Notes or with respect to other Trust Property
held in each Trust will be distributed by the Trustee to Certificateholders of
such Trust on the date receipt of such payment is confirmed, except in the case
of certain types of Special Payments.
Payments of interest
applicable to the Certificates to be issued by each Trust will be supported by
a separate Liquidity Facility to be provided by the Liquidity Provider for the
benefit of the holders of such Certificates in an aggregate amount sufficient
to pay interest thereon at the Stated Interest Rate for such Trust on the next
three successive Regular Distribution Dates (without regard to any future
payments of principal on such Certificates).
The
Liquidity Facility with respect to each Trust does not cover interest payable
by the applicable Depositary on the Deposits relating to such Trust.
Furthermore, the Liquidity Facility does not provide for drawings thereunder to
pay for principal of or premium on such Certificates, any interest on such
Certificates in excess of the Stated Interest Rates, or, notwithstanding the
subordination provisions of the Intercreditor Agreement, principal of or
interest or premium on the Certificates of any other Class.
S-
37
Therefore, only the holders of the Certificates to be
issued by a particular Trust are entitled to receive and retain the proceeds of
drawings under the Liquidity Facility for such Trust. See Description of the
Liquidity Facilities.
Payments of principal of
the Series A and Series B Equipment Notes are scheduled to be
received by the Trustee on May 1 and November 1 in certain years
depending upon the terms of the Equipment Notes held in such Trust.
Scheduled payments of
interest on the Deposits and of interest or principal on the Equipment Notes
are herein referred to as
Scheduled Payments
,
and May 1 and November 1
of each year are herein referred to as
Regular Distribution Dates
.
See
Description of the Equipment Notes-Principal and Interest Payments. The
Final Legal Distribution Date
for the Class A Certificates
is May 1, 2021 and for the Class B Certificates is May 1, 2019.
The Paying Agent with
respect to each Escrow Agreement will distribute on each Regular Distribution
Date to the Certificateholders of the Trust to which such Escrow Agreement
relates all Scheduled Payments received in respect of the related Deposits, the
receipt of which is confirmed by the Paying Agent on such Regular Distribution
Date. The Trustee of each Trust will distribute, subject to the Intercreditor
Agreement, on each Regular Distribution Date to the Certificateholders of such
Trust all Scheduled Payments received in respect of Equipment Notes held on
behalf of such Trust, the receipt of which is confirmed by the Trustee on such
Regular Distribution Date. Each Certificateholder of each Trust will be
entitled to receive its proportionate share, based upon its fractional interest
in such Trust, of any distribution in respect of Scheduled Payments of interest
on the Deposits relating to such Trust and, subject to the Intercreditor
Agreement, of principal or interest on Equipment Notes held by the
Subordination Agent on behalf of such Trust. Each such distribution of
Scheduled Payments will be made by the applicable Paying Agent or Trustee to
the Certificateholders of record of the relevant Trust on the record date
applicable to such Scheduled Payment subject to certain exceptions. (Sections
4.01 and 4.02; Escrow Agreement, Section 2.03) If a Scheduled Payment is not
received by the applicable Paying Agent or Trustee on a Regular Distribution
Date but is received within five days thereafter, it will be distributed on the
date received to such holders of record. If it is received after such five-day
period, it will be treated as a Special Payment (as defined below) and
distributed as described below.
Any payment in respect of,
or any proceeds of, any Equipment Note, Collateral under (and as defined in)
any Indenture other than a Scheduled Payment (each, a
Special
Payment
) will be distributed on, in the case of an early
redemption or a purchase of any Equipment Note, the date of such early
redemption or purchase (which is a Business Day), and otherwise on the Business
Day specified for distribution of such Special Payment pursuant to a notice
delivered by each Trustee as soon as practicable after the Trustee has received
funds for such Special Payment (each a
Special Distribution Date
,
each Special Distribution Date and
Regular Distribution Date, a
Distribution Date
).
Any such distribution will be
subject to the Intercreditor Agreement.
Any unused Deposits to be
distributed after the Delivery Period Termination Date, or the occurrence of a
Triggering Event, together with accrued and unpaid interest thereon (each, also
a
Special Payment
), will be
distributed on a date 15 days after the Paying Agent has received notice of the
event requiring such distribution (also a Special Distribution Date).
However, if such date is within ten
days before or after a Regular Distribution Date, such Special Payment will be
made on such Regular Distribution Date. Payments made on or with respect to a
Deposit are not subject to the Intercreditor Agreement.
Each Paying Agent, in the
case of the Deposits, and each Trustee, in the case of Trust Property, will
mail a notice to the Certificateholders of the applicable Trust stating the
scheduled Special Distribution Date, the related record date, the amount of the
Special Payment and the reason for the Special Payment. In the case of a redemption
or purchase of the Equipment Notes held in the related Trust or any
distribution of unused Deposits after the Delivery Period Termination Date or
the occurrence of a
S-
38
Triggering
Event, such notice will be mailed not less than 15 days prior to the date such
Special Payment is scheduled to be distributed, and in the case of any other
Special Payment, such notice will be mailed as soon as practicable after the
Trustee has confirmed that it has received funds for such Special Payment. (Section 4.02(c);
Trust Supplements, Section 6.01; Escrow Agreement, Sections 2.03 and 2.06)
Each distribution of a Special Payment, other than a final distribution, on a
Special Distribution Date for any Trust will be made by the Paying Agent or the
Trustee, as applicable, to the Certificateholders of record of such Trust on
the record date applicable to such Special Payment. (Section 4.02(b)) SeeIndenture
Event of Defaults and Certain Rights upon an Indenture Event of Default and Description
of the Equipment Notes-Redemption.
Each Pass Through Trust
Agreement will require that the Trustee establish and maintain, for the related
Trust and for the benefit of the Certificateholders of such Trust, one or more
non-interest bearing accounts (the
Certificate Account
)
for the deposit of payments
representing Scheduled Payments received by such Trustee. Each Pass Through
Trust Agreement will require that the Trustee establish and maintain, for the
related Trust and for the benefit of the Certificateholders of such Trust, one
or more accounts (the
Special Payments Account
)
for the deposit of payments
representing Special Payments received by such Trustee, which are to be
non-interest bearing except in certain circumstances where the Trustee may
invest amounts in such account in certain permitted investments. Pursuant to
the terms of each Pass Through Trust Agreement, the Trustee will be required to
deposit any Scheduled Payments relating to the applicable Trust received by it
in the Certificate Account of such Trust and to deposit any Special Payments so
received by it in the Special Payments Account of such Trust. (Section 4.01;
Trust Supplements, Section 6.01) All amounts so deposited will be
distributed by the Trustee on a Regular Distribution Date or a Special
Distribution Date, as appropriate. (Section 4.02; Trust Supplements, Section 6.01)
Each Escrow Agreement
requires that the Paying Agent establish and maintain, for the benefit of the
Receiptholders, one or more accounts (the
Paying Agent Account
),
which are to be non-interest
bearing. Pursuant to the terms of the Escrow Agreement, the Paying Agent is
required to deposit interest on Deposits relating to such Trust and any unused
Deposits withdrawn by the Escrow Agent in the Paying Agent Account. All amounts
so deposited will be distributed by the Paying Agent on a Regular Distribution
Date or Special Distribution Date, as appropriate.
The final distribution for
each Trust will be made only upon presentation and surrender of the
Certificates for such Trust at the office or agency of the Trustee specified in
the notice given by the Trustee of such final distribution. The Trustee will
mail such notice of the final distribution to the Certificateholders of such
Trust, specifying the date set for such final distribution and the amount of
such distribution. (Section 11.01) See Termination of the Trusts below.
Distributions in respect of Certificates issued in global form will be made as
described in Book-Entry; Delivery and Form below.
If any Distribution Date
is a Saturday, Sunday or other day on which commercial banks are authorized or
required to close in New York, New York, Minneapolis, Minnesota, Boston,
Massachusetts or Wilmington, Delaware (any other day being a
Business Day
)
,
distributions scheduled to
be made on such Regular Distribution Date or Special Distribution Date will be
made on the next succeeding Business Day with the same force and effect as if
made on such scheduled date and without additional interest.
Pool Factors
The
Pool Balance
for each Trust or for the
Certificates issued by any Trust indicates, as of any date, the original
aggregate face amount of the Certificates of such Trust less the aggregate
amount of all payments made in respect of the Certificates of such Trust or in
respect of Deposits relating to such Trust other than payments made in respect
of interest or Make-Whole Premium thereon or reimbursement of any costs and
expenses in connection therewith. The Pool Balance for each Trust as of any
Regular Distribution Date or Special Distribution Date shall be computed after
giving effect to any Special
S-
39
Distribution
with respect to unused Deposits, the payment of principal if any on the
Equipment Notes or other Trust Property held in such Trust and the distribution
thereof to be made on that date.
The
Pool Factor
for each Trust as of any
Regular Distribution Date or Special Distribution Date is the quotient (rounded
to the seventh decimal place) computed by dividing (i) the Pool Balance by
(ii) the original aggregate face amount of the Certificates of such Trust.
The Pool Factor for each Trust as of any Regular Distribution Date or Special
Distribution Date shall be computed after giving effect to any Special
Distribution with respect to unused Deposits, the payment of principal if any
on the Equipment Notes or other Trust Property held in such Trust and the
distribution thereof to be made on that date. Assuming that no early redemption
or purchase, or default, in respect of any Equipment Notes shall have occurred,
the Pool Factor for each Trust will be 1.0000000 on the date of issuance of the
Certificates; thereafter, the Pool Factor for each Trust will decline as
described herein to reflect reductions in the Pool Balance of such Trust. The
amount of a Certificateholders pro rata share of the Pool Balance of a Trust
can be determined by multiplying the par value of the holders Certificate of
such Trust by the Pool Factor for such Trust as of the applicable Regular
Distribution Date or Special Distribution Date. Notice of the Pool Factor and
the Pool Balance for each Trust will be mailed to Certificateholders of such
Trust on each Regular Distribution Date and Special Distribution Date.
The following table sets
forth an illustrative aggregate principal amortization schedule for the
Equipment Notes held in each Trust (the
Assumed Amortization Schedule
)
and resulting Pool Factors with respect to such
Trust.
The scheduled distribution
of principal payments for any Trust will be affected if any Equipment Notes
held in such Trust are redeemed or purchased or if a default in payment on such
Equipment Notes occurred. Accordingly, the aggregate principal amortization
schedule applicable to a Trust and the resulting Pool Factors may differ from
those set forth in the following table.
|
|
Class A
|
|
Class B
|
|
Regular
Distribution Date
|
|
|
|
Scheduled Payments
of Principal ($)
|
|
Expected
Pool Factor
|
|
Scheduled Payments
of Principal ($)
|
|
Expected
Pool Factor
|
|
At Issuance
|
|
|
$
|
0.00
|
|
|
1.0000000
|
|
|
$
|
0.00
|
|
|
1.0000000
|
|
May 1, 2008
|
|
|
0.00
|
|
|
1.0000000
|
|
|
0.00
|
|
|
1.0000000
|
|
November 1, 2008
|
|
|
0.00
|
|
|
1.0000000
|
|
|
0.00
|
|
|
1.0000000
|
|
May 1, 2009
|
|
|
1,059,842.75
|
|
|
0.9968690
|
|
|
6,859,892.58
|
|
|
0.9407839
|
|
November 1, 2009
|
|
|
5,201,286.84
|
|
|
0.9815032
|
|
|
5,606,090.59
|
|
|
0.8923908
|
|
May 1, 2010
|
|
|
6,101,665.04
|
|
|
0.9634775
|
|
|
12,817,090.33
|
|
|
0.7817508
|
|
November 1, 2010
|
|
|
4,081,427.60
|
|
|
0.9514200
|
|
|
8,612,862.09
|
|
|
0.7074027
|
|
May 1, 2011
|
|
|
5,900,943.94
|
|
|
0.9339873
|
|
|
6,406,626.59
|
|
|
0.6520993
|
|
November 1, 2011
|
|
|
6,043,398.53
|
|
|
0.9161337
|
|
|
5,889,233.83
|
|
|
0.6012621
|
|
May 1, 2012
|
|
|
5,573,321.72
|
|
|
0.8996689
|
|
|
5,995,794.53
|
|
|
0.5495050
|
|
November 1, 2012
|
|
|
7,664,401.41
|
|
|
0.8770265
|
|
|
3,685,845.31
|
|
|
0.5176880
|
|
May 1, 2013
|
|
|
7,797,608.82
|
|
|
0.8539906
|
|
|
2,943,788.04
|
|
|
0.4922765
|
|
November 1, 2013
|
|
|
8,113,880.02
|
|
|
0.8300203
|
|
|
2,429,793.79
|
|
|
0.4713020
|
|
May 1, 2014
|
|
|
8,520,488.12
|
|
|
0.8048489
|
|
|
1,701,982.99
|
|
|
0.4566101
|
|
November 1, 2014
|
|
|
8,230,751.44
|
|
|
0.7805334
|
|
|
1,680,302.06
|
|
|
0.4421054
|
|
May 1, 2015
|
|
|
7,992,886.83
|
|
|
0.7569206
|
|
|
1,616,236.02
|
|
|
0.4281537
|
|
November 1, 2015
|
|
|
7,815,045.69
|
|
|
0.7338331
|
|
|
1,501,344.48
|
|
|
0.4151937
|
|
May 1, 2016
|
|
|
7,547,038.27
|
|
|
0.7115375
|
|
|
1,485,537.17
|
|
|
0.4023702
|
|
November 1, 2016
|
|
|
7,301,909.44
|
|
|
0.6899660
|
|
|
1,455,497.38
|
|
|
0.3898061
|
|
May 1, 2017
|
|
|
7,086,299.60
|
|
|
0.6690314
|
|
|
1,404,321.31
|
|
|
0.3776836
|
|
November 1, 2017
|
|
|
6,872,098.08
|
|
|
0.6487297
|
|
|
43,752,760.91
|
|
|
0.0000000
|
|
May 1, 2018
|
|
|
6,664,421.95
|
|
|
0.6290415
|
|
|
0.00
|
|
|
0.0000000
|
|
November 1, 2018
|
|
|
6,463,072.43
|
|
|
0.6099481
|
|
|
0.00
|
|
|
0.0000000
|
|
May 1, 2019
|
|
|
6,267,856.86
|
|
|
0.5914314
|
|
|
0.00
|
|
|
0.0000000
|
|
November 1, 2019
|
|
|
200,198,354.62
|
|
|
0.0000000
|
|
|
0.00
|
|
|
0.0000000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-
40
The Pool Factor and Pool
Balance of each Trust will be recomputed if there has been an early redemption,
purchase, or a default in the payment of principal or interest in respect of one
or more issues of the Equipment Notes held in a Trust, as described in Indenture
Events of Default and Certain Rights Upon an Indenture Event of Default and
Description of the Equipment NotesRedemption, or a special distribution
attributable to unused Deposits after the Delivery Period Termination Date or
the occurrence of a Triggering Event. In the event of (i) any such
redemption, purchase or default or (ii) any other change in the schedule
of repayments from the Assumed Amortization Schedule, the Pool Factors and the
Pool Balances of each Trust so affected will be recomputed after giving effect
thereto and notice thereof will be mailed to the Certificateholders of such
Trust promptly after the Delivery Period Termination Date in the case of clause
(ii) and promptly after the occurrence of any event described in clause
(i).
Reports to
Certificateholders
On each Regular
Distribution Date and Special Distribution Date, the applicable Paying Agent
and Trustee, as the case may be, will include with each distribution of a
Scheduled Payment or Special Payment, respectively, to Certificateholders of
the related Trust a statement, giving effect to such distribution to be made on
such Regular Distribution Date or Special Distribution Date, setting forth the
following information (per $1,000 aggregate principal amount of Certificate for
such Trust, as to (i), (ii), (iii) (iv) and (v) below):
(i) the
aggregate amount of funds distributed on such Distribution Date under the Pass
Through Trust Agreement and under the Escrow Agreement, indicating the amount
allocable to each source, including any portion thereof paid by the Liquidity
Provider;
(ii) the amount
of such distribution under the Pass Through Trust Agreement allocable to
principal and the amount allocable to Make-Whole Premium (if any);
(iii) the amount
of such distribution under the Pass Through Trust Agreement allocable to
interest;
(iv) the amount
of such distribution under the Escrow Agreement allocable to interest;
(v) the amount
of such distribution under the Escrow Agreement allocable to unused Deposits,
if any; and
(vi) the Pool
Balance and the Pool Factor for such Trust.
With respect to the Certificates registered in the
name of Cede, as nominee for DTC, on the record date prior to each Distribution
Date, the applicable Trustee will request from DTC a securities position
listing setting forth the names of all DTC Participants reflected on DTCs
books as holding interests in the Certificates on such record date. On each
Distribution Date, the applicable Trustee will mail to each such DTC
Participant the statement described above and will make available additional
copies as requested by such DTC Participant for forwarding to holders of
Certificates.
In addition, after the end of each calendar year, the applicable
Paying Agent and Trustee, as the case may be, will prepare for each
Certificateholder of each Trust at any time during the preceding calendar year
a report containing the sum of the amounts determined pursuant to clauses (i),
(ii), (iii), (iv) and (v) above with respect to the Trust for such
calendar year or, in the event such person was a Certificateholder during only
a portion of such calendar year, for the applicable portion of such calendar
year, and such other items as are readily available to such Trustee and which a
Certificateholder shall reasonably request as necessary for the purpose of such
Certificateholders preparation of its U.S. federal income tax returns. Such
report and such other items shall be prepared on the basis of information
supplied to the applicable Paying Agent and Trustee, as the case may be, by the
DTC Participants and shall be delivered by such Trustee to such DTC
Participants to be available for forwarding by such
S-
41
DTC Participants to
Certificate Owners in the manner described above. See Book-Entry; Delivery
and Form.
With respect to the
Certificates issued in definitive form, the applicable Trustee will prepare and
deliver the information described above to each Certificateholder of record of
each Trust as the name of such Certificateholder appears on the records of the
registrar of the Certificates.
Indenture Events of
Default and Certain Rights Upon an Indenture Event of Default.
Since the Equipment Notes issued under an Indenture
will be held in more than one Trust, a continuing Indenture Event of Default
under such Indenture would affect the Equipment Notes held by each such Trust. There
is no cross-acceleration provision in the Indentures and the only cross-default
in the Indentures will occur if all amounts owing under any Equipment Note held
by the Subordination Agent issued under another Indenture or certain other
amounts secured by another Indenture with respect to which the Subordination
Agent then holds any Equipment Notes, which amounts are then due and payable,
have not been paid in full on the Final Payment Date and in the case of amounts
other than principal, interest or Make-Whole Premium, such failure shall have
continued unremedied for twenty (20) Business Days after receipt by Northwest
of written demand therefor. Consequently, prior to triggering the
cross-default, events resulting in an Indenture Event of Default under any
particular Indenture may or may not result in an Indenture Event of Default
under any other Indenture. If an Indenture Event of Default occurs in fewer
than all of the Indentures, notwithstanding the treatment of Equipment Notes
issued under any Indenture under which an Indenture Event of Default has
occurred, payments of principal and interest on all of the Equipment Notes
issued pursuant to Indentures with respect to which an Indenture Event of
Default has not occurred will continue to be distributed to the holders of the
Certificates as originally scheduled, subject to the Intercreditor Agreement.
See Description of the Intercreditor AgreementPriority of Distributions.
In the event that the same institution acts as Trustee
of more than one Trust, in the absence of instructions from the
Certificateholders of any such Trust, such Trustee could be faced with a
potential conflict of interest upon an Indenture Event of Default. In such
event, the Trustee has indicated that it would resign as Trustee of one or all
such Trusts, and a successor trustee would be appointed in accordance with the
terms of the applicable Pass Through Trust Agreement. U.S. Bank Trust National
Association will be the initial Trustee under each Trust.
Upon the occurrence and continuation of any Indenture
Event of Default under any Indenture, the Controlling Party will direct the
Loan Trustee thereunder in the exercise of remedies and may accelerate and sell
all (but not less than all) of the Equipment Notes issued under such Indenture
to any person, subject to certain limitations. The proceeds of such sale will
be distributed pursuant to the provisions of the Intercreditor Agreement. Any
proceeds received by the applicable Trustee upon any such sale shall be
deposited in the applicable Special Payments Account and shall be distributed
to the Certificateholders of such Trust on a Special Distribution Date.
(Sections 4.01 and 4.02) The market for Equipment Notes at the time of the
existence of any Indenture Event of Default may be very limited, and there can
be no assurance as to the price at which they could be sold. If such Trustee
sells any such Equipment Notes for less than their outstanding principal amount,
certain Certificateholders will receive a smaller amount of principal
distributions than anticipated and will not have any claim for the shortfall
against Northwest, NWA Corp., any Liquidity Provider or any Trustee.
S-
42
Subject to certain conditions, notwithstanding the
foregoing, if Certificateholders have exercised their right to buy Equipment
Notes with respect to an Indenture after the occurrence of an Equipment Note
Buyout Event, the holders of the majority in aggregate unpaid principal amount
of Equipment Notes issued under such Indenture, rather than the Controlling
Party, shall be entitled to direct the Loan Trustee in exercising remedies
under such Indenture; provided, that so long as the Subordination Agent holds
not less than the majority in aggregate unpaid principal amount of such
Equipment Notes, the Controlling Party shall be entitled to direct the Loan
Trustee under such Indenture. The proceeds of such sale will be distributed
pursuant to the provisions of the Intercreditor Agreement and will be subject
to the subordination provisions set forth therein. See Description of the Intercreditor
AgreementPriority of Distributions. After such purchase, the purchased
Equipment Notes will no longer be subject to the cross-subordination
provisions of the Intercreditor Agreement. If any Certificateholder has
exercised its right to buy Equipment Notes with respect to an Indenture, the
payments and/or proceeds distributable under such Indenture will first be
distributed to the holder of the Equipment Notes so purchased to pay all
principal and interest due on such Equipment Notes and all other amounts
related thereto under such Indenture prior to the distribution of any amount to
the Subordination Agent for distribution in accordance with the Intercreditor
Agreement.
Any amount, other than Scheduled Payments received on
a Regular Distribution Date or within five days thereafter, distributed to the
Trustee of any Trust by the Subordination Agent on account of the Equipment
Notes or other Trust Property held in such Trust following an Indenture Event
of Default under any Indenture shall be deposited in the Special Payments
Account for such Trust and shall be distributed to the Certificateholders of
such Trust on a Special Distribution Date. (Section 4.02)
Any funds representing payments received with respect
to any defaulted Equipment Notes held in a Trust, or the proceeds from the sale
of any Equipment Notes, held by such Trustee in the Special Payments Account for
such Trust shall, to the extent practicable, be invested and reinvested by such
Trustee in Permitted Investments pending the distribution of such funds on a
Special Distribution Date. (Section 4.04)
Permitted Investments
are defined as obligations
of the United States or agencies or instrumentalities thereof the payment of
which is backed by the full faith and credit of the United States and which
mature in not more than 60 days or such lesser time as is required for the
distribution of any such funds on a Special Distribution Date. (Section 1.01)
Each Pass Through Trust Agreement provides that the
Trustee of the related Trust shall, within 90 days after the occurrence of
any default, give to the Certificateholders of such Trust notice, transmitted
by mail, of all uncured or unwaived defaults with respect to such Trust known
to it, provided that, except in the case of default in the payment of
principal, Make-Whole Premium, if any, or interest on any of the Equipment
Notes or other Trust Property held in such Trust, the applicable Trustee shall
be protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interests of such Certificateholders. (Section 7.01)
The term default as used in this paragraph only with respect to any Trust
means the occurrence of an Indenture Event of Default under any Indenture
pursuant to which Equipment Notes held by such Trust were issued, as described
above, except that in determining whether any such Indenture Event of Default
has occurred, any grace period or notice in connection therewith will be
disregarded.
Each Pass Through Trust Agreement contains a provision
entitling the Trustee of the related Trust, subject to the duty of such Trustee
during a default to act with the required standard of care, to be offered
reasonable security or indemnity by the holders of the Certificates of such
Trust before proceeding to exercise any right or power under such Pass Through
Trust Agreement at the request of such Certificateholders. (Section 7.02(e))
In certain cases, the
holders of the Certificates of a Trust evidencing fractional undivided
interests aggregating not less than a majority in interest of such Trust may on
behalf of the holders of all the
S-
43
Certificates
of such Trust waive any past event of default and its consequences under the
related Pass Through Trust Agreement or, if the Trustee of such Trust is the
Controlling Party, may direct the Trustee to instruct the applicable Loan
Trustee to waive any past Indenture Event of Default with respect to such Trust
and thereby annul any direction to such Loan Trustee with respect thereto,
provided, however,
the consent of
each holder of a Certificate of a Trust is required to waive (i) a default
in the deposit of any Scheduled Payment or Special Payment or in the
distribution thereof, (ii) a default in payment of the principal,
Make-Whole Premium, if any, or interest with respect to any of the Equipment
Notes held in such Trust and (iii) a default in respect of any covenant or
provision of the related Pass Through Trust Agreement that cannot be modified
or amended without the consent of each Certificateholder of such Trust affected
thereby. (Section 6.05) Each Indenture will provide that, with certain
exceptions, the holders of the majority in aggregate unpaid principal amount of
the Equipment Notes issued thereunder may on behalf of all such holders waive
any past default or Indenture Event of Default thereunder. Notwithstanding the
foregoing provisions of this paragraph, however, pursuant to the Intercreditor
Agreement, only the Controlling Party will be entitled to waive any such past
default or Indenture Event of Default, except with respect to any Indenture
under which Equipment Notes have been purchased after the occurrence of an
Equipment Note Buyout Event.
Purchase Rights of
Certificateholders
Upon the occurrence and during the continuation of a
Certificate Buyout Event, so long as no holder of Additional Certificates has
elected to purchase all of the Class A Certificates and Class B
Certificates as described in the next succeeding paragraph (upon such election
and notification thereof, such right of the Class B Certificateholders and
the holders of any Refinancing Certificates of the same Class will be
suspended), upon ten days written notice to the Trustee and each other
Certificateholder of the same Class, the Class B Certificateholders and
any Refinancing Certificateholders of the same class (other than Northwest or
any of its affiliates) will have the right to purchase all but not less than
all of the Class A Certificates on the third business day following the
expiry of such ten day notice period.
If any Additional Certificates are issued, the holders
of Additional Certificates (other than Northwest or any of its Affiliates) will
have the right to purchase all of the Class A and Class B
Certificates and all of the other Additional Certificates (if any) ranking
senior to such Additional Certificates and, if Refinancing Certificates are
issued for such Additional Certificates, holders of such Refinancing
Certificates will have the same right to purchase certificates as holders of
such Additional Certificates.
In each case the purchase price will be equal to the
Pool Balance of the revelant Class or Classes of Certificates plus accrued and
unpaid interest thereon to the date of purchase, without any Make-Whole Premium,
but including any other amounts then due and payable to the Certificateholders
of such Class or Classes. In each case, if prior to the end of the ten-day
period, any other Certificateholder of the same Class notifies the
purchasing Certificateholder that the other Certificateholder wants to
participate in such purchase, then such other Certificateholder may join with
the purchasing Certificateholder to purchase the Certificates pro rata based on
the interest in the Trust held by each Certificateholder.
Certificate
Buyout Event
means that a Northwest Bankruptcy Event has
occurred and is continuing and the following events in either clause (A) or
(B) have occurred: (A) (i) the 60-Day Period has expired
and (ii) Northwest has not entered into one or more agreements under Section 1110(a)(2)(A) of
the Bankruptcy Code to perform all of its obligations under all of the
Indentures and has not cured defaults under all of the Indentures in accordance
with Section 1110(a)(2)(B) of the Bankruptcy Code or, if it has
entered into such agreements, has at any time thereafter failed to cure any
default under any of the Indentures in accordance with Section 1110(a)(2)(B) of
the Bankruptcy Code; or (B) prior to the expiry of the 60-Day
Period, Northwest shall have abandoned any Aircraft.
S-
44
PTC Event of
Default
A
PTC Event of Default
is defined under each Pass
Through Trust Agreement as the failure to pay within 10 Business Days of the
due date thereof,
·
the
outstanding Pool Balance of the applicable Class of Certificates on the
Final Legal Distribution Date for such Class or
·
interest
due on the applicable Class of Certificates on any Distribution Date
(unless the Subordination Agent shall have made an Interest Drawing, or a
withdrawal from the Cash Collateral Account for such class of Certificates with
respect thereto in an aggregate amount sufficient to pay such interest and
shall have distributed such amount to the Trustee entitled thereto).
Any failure to make
expected principal distributions on any Class of Certificates on any
Regular Distribution Date (other than the Final Legal Distribution Date) will
not constitute a PTC Event of Default with respect to such Certificates.
Obligation to
Purchase Equipment Notes
Each Trustee will be obligated to purchase the
corresponding series of Equipment Notes issued with respect to the Aircraft
during the Delivery Period, subject to the terms and conditions of a Note
Purchase Agreement and the applicable Participation Agreement.
Under the Note Purchase Agreement, Northwest agrees to
finance each Aircraft by entering into a secured debt financing.
The Note Purchase Agreement provides for the relevant
parties to enter into a participation agreement (each, a
Participation Agreement
,
and together with the other
Participation Agreements, the
Participation Agreements
)
and an indenture (each, an
Indenture
,
and
together with the other Indentures, the
Indentures
)
relating to the
financing of such Aircraft.
The description of such agreements in this prospectus
supplement is based on the forms of such agreements to be utilized pursuant to
the Note Purchase Agreement.
However, the terms of the financing agreements
actually entered into may be modified from the forms of such agreements and,
consequently, may differ from the description of such agreements contained in
this Prospectus Supplement. See Description of the Equipment Notes. Although
such changes are permitted, under the Note Purchase Agreement the terms of
such agreements must not vary the Required Terms. In addition, Northwest is
obligated to certify to the Trustees that any substantive modifications do not
materially and adversely affect the Certificateholders. Northwest must also
obtain written confirmation from each Rating Agency that the use of financing
agreements modified in any material respect from the forms attached to the Note
Purchase Agreement will not result in a withdrawal, suspension or downgrading
of the rating of any Class of Certificates, it being understood that if
confirmation from each Rating Agency shall have been received with respect to
any financing agreements and such financing agreements are utilized for any
subsequent Aircraft (or Substitute Aircraft) without material modification, no
additional confirmation from any Rating Agency shall be required. Further,
under the Note Purchase Agreement, it is a condition precedent to the
obligation of each Trustee to purchase the Equipment Notes related to the
financing of an Aircraft that no Triggering Event shall have occurred. The
Trustees will have no obligation to purchase Equipment Notes on or after the
Cut-Off Date.
S-
45
The Required Terms,
as defined in the Note Purchase Agreement, mandate that:
·
The
initial principal amount and principal amortization schedule for each of the Series A
Equipment Notes and Series B Equipment Notes issued with respect to each
Aircraft shall be as set forth in Appendix V to this prospectus supplement.
·
The
interest rate applicable to each Series of Equipment Notes must be equal
to the rate applicable to the Certificates issued by the corresponding Trust.
·
The
payment dates for the Equipment Notes must be May 1 and November 1.
·
The
amounts payable under the all-risk aircraft hull insurance maintained with
respect to each Aircraft must be sufficient to pay 105% of the unpaid principal
amount of the related Equipment Notes, subject to standard deductibles and
certain rights of self-insurance.
·
(a) The
past due rate in the Indentures, (b) the Make-Whole Premium payable under
the Indentures, (c) the provisions relating to the redemption of Equipment
Notes in the Indentures and (d) the indemnification of the Loan Trustees,
Subordination Agent, Liquidity Provider, Trustees and registered holders of the
Equipment Notes (in such capacity, the Note Holders) with respect to
certain taxes and expenses, in each case shall be as set forth in the form of
Participation Agreement attached as an exhibit to the Note Purchase
Agreement.
·
In
the case of the Indentures, modifications are prohibited (i) to the
Granting Clause of the Indentures so as to deprive the Note Holders under
all the Indentures of a first priority security interest in the Aircraft and
certain of Northwests rights under the purchase agreement with the Aircraft
manufacturer or to eliminate the obligations intended to be secured thereby, (ii) to
certain provisions relating to the issuance, redemption, payments, and ranking
of the Equipment Notes (including the obligation to pay the Make-Whole Premium
in certain circumstances), (iii) to certain provisions regarding Indenture
Events of Default and remedies relating thereto, (iv) to certain
provisions relating to any replaced airframe or engines with respect to an
Aircraft and (v) to the provision that New York law will govern the
Indentures.
·
In
the case of the Participation Agreements, modifications are prohibited (i) to
certain conditions to the obligations of the Trustees to purchase the Equipment
Notes issued with respect to an Aircraft involving good title to such Aircraft,
obtaining a certificate of airworthiness with respect to such Aircraft, and
filings of certain documents with the FAA, (ii) to the provisions
restricting the Note Holders ability to transfer such Equipment Notes, (iii) to
certain provisions requiring the delivery of legal opinions and (iv) to
the provision that New York law will govern the Participation Agreement.
·
In
the case of the Participation Agreements and Indentures, modifications are
prohibited in any material adverse respect as regards the interest of the
Note Holders, the Subordination Agent, the Liquidity Provider or the Loan
Trustee in the definition of Make-Whole Premium.
Notwithstanding the foregoing, any such forms of
financing agreements may be modified to correct or supplement any such
provision which may be defective or to cure any ambiguity or correct any
mistake, provided that any such action shall not materially adversely affect
the interests of the Note Holders, the Subordination Agent, the Liquidity
Provider, the Loan Trustee or the Certificateholders.
Under the Note Purchase Agreement, it is a condition
precedent to the obligation of each Trustee to purchase the Equipment Notes
related to the financing of an Aircraft that no Triggering Event shall have
occurred.
The Trustees have no right
or obligation to purchase Equipment Notes after the Delivery Period Termination
Date.
S-
46
Merger,
Consolidation and Transfer of Assets
Northwest will be
prohibited from consolidating with or merging into any other corporation or
transferring substantially all of its assets as an entirety to any other
corporation unless
·
the surviving successor or
transferee corporation shall:
(i) be a citizen
of the United States as defined in Section 40102(a)(15) of Title 49 of
the United States Code, as amended, relating to aviation (the
Aviation Act
);
(ii) be a
United States certificated air carrier; and
(iii) expressly assume all of the obligations of
Northwest contained in the Pass Through Trust Agreements, the Indentures, the
Participation Agreements and any other operative documents;
·
immediately
after giving effect to such transaction, no Indenture Event of Default, in the
case of an Aircraft shall have occurred and be continuing; and
·
Northwest
shall have delivered a certificate and an opinion or opinions of counsel
indicating that such transaction complies with such conditions. (Section 5.02)
The Pass Through Trust
Agreements and the Indentures will not contain any covenants or provisions
which may afford the applicable Trustee or Certificateholders protection in the
event of a highly leveraged transaction, including transactions effected by
management or affiliates, which may or may not result in a change in control of
Northwest or NWA Corp.
Modifications of the
Pass Through Trust Agreements and Certain Other Agreements
Each Pass Through
Trust Agreement will contain provisions permitting, at the request of the
Company, the execution of amendments or supplements to such Pass Through Trust
Agreement or, if applicable, to the Deposit Agreements, the Escrow Agreements,
the Intercreditor Agreement, the Note Purchase Agreement or any Liquidity
Facility without the consent of the holders of any of the Certificates of such
Trust:
·
to
provide for the formation of a Trust, to issue an additional series of
Certificates and to enter into Trust Supplements setting forth the terms of any
series of Certificates.
·
to
evidence the succession of another corporation to Northwest or NWA Corp. and
the assumption by such corporation of Northwests or NWA Corp.s, as the case
may be, obligations under such Pass Through Trust Agreement, the Note Purchase
Agreement or any Liquidity Facility.
·
to
add to the covenants of Northwest or NWA Corp. for the benefit of holders of
such Certificates or to surrender any right or power conferred upon Northwest
or NWA Corp. in such Pass Through Trust Agreement, the Intercreditor Agreement,
the Note Purchase Agreement or any Liquidity Facility.
·
except where Certificateholder consent is
required by the Trust Supplement (Sections 9.02(1)-9.02(6)) and as
described below, to correct or supplement any provision of such Pass Through
Trust Agreement, the Deposit Agreements, the Escrow Agreements, the
Intercreditor Agreement, the Note Purchase Agreement or any Liquidity Facility
which may be defective or inconsistent with any other provision in such Pass
Through Trust Agreement, the Intercreditor Agreement, the Note Purchase
Agreement or any Liquidity Facility, as applicable, or to cure any ambiguity or
to modify any other provision with respect to matters or questions arising
under such Pass Through Trust Agreement, the Deposit Agreements, the Escrow
Agreements, the Intercreditor Agreement, the Note Purchase Agreement or any
Liquidity Facility, provided that such action will not materially adversely
affect the interests of the holders of such Certificates; to
S-
47
correct any mistake in
such Pass Through Trust Agreement, the Intercreditor Agreement, the Note
Purchase Agreement or any Liquidity Facility; or, as provided in the
Intercreditor Agreement, to give effect to or provide for a Replacement
Facility.
·
to
comply with any requirement of the Commission, any applicable law, rules or
regulations of any exchange or quotation system on which the Certificates are
listed, or any regulatory body.
·
to
modify, eliminate or add to the provisions of such Pass Through Trust
Agreement, the Deposit Agreements, the Escrow Agreements, the Intercreditor
Agreement, the Note Purchase Agreement or any Liquidity Facility to such extent
as is necessary to continue the qualification of such Pass Through Trust
Agreement (including any supplemental agreement) under the Trust Indenture Act
of 1939, as amended (the
Trust Indenture Act
),
or any similar federal
statute enacted after the execution of such Pass Through Trust Agreement, and
to add to such Pass Through Trust Agreement, the Deposit Agreements, the Escrow
Agreements, the Intercreditor Agreement, the Note Purchase Agreement or any
Liquidity Facility such other provisions as may be expressly permitted by the
Trust Indenture Act.
·
to
evidence and provide for the acceptance of appointment under such Pass Through
Trust Agreement, the Deposit Agreements, the Escrow Agreements, the
Intercreditor Agreement, the Note Purchase Agreement or any Liquidity Facility
by a successor Trustee and to add to or change any of the provisions of such
Pass Through Trust Agreement, the Deposit Agreements, the Escrow Agreements,
the Intercreditor Agreement, the Note Purchase Agreement or any Liquidity Facility
as is necessary to provide for or facilitate the administration of the Trusts
under the Basic Agreement by more than one Trustee.
In each case, such modification or supplement may not
adversely affect the status of the Trust as either a grantor trust under
Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle A of the Code,
or a partnership for U.S. federal income tax purposes. (Trust Supplements, Section 5.01)
Each Pass Through
Trust Agreement also contains provisions permitting the execution, with the
consent of the holders of the Certificates of the related Trust evidencing
fractional undivided interests aggregating not less than a majority in interest
of such Trust of supplemental trust agreements adding any provisions to or
changing or eliminating any of the provisions of such Pass Through Trust
Agreement, the Deposit Agreements, the Escrow Agreements, the Intercreditor
Agreement, the Note Purchase Agreement or any Liquidity Facility to the extent
applicable to such Certificateholders or of modifying the rights and
obligations of such Certificateholders under such Pass Through Trust Agreement,
the Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the
Note Purchase Agreement or any Liquidity Facility. No such amendment or supplement
may, without the consent of the holder of each Certificate so affected thereby:
·
reduce
in any manner the amount of, or delay the timing of, any receipt by the Trustee
of payments on the Equipment Notes or other Trust Property held in such Trust
or distributions in respect of any Certificate related to such Trust, or change
the date or place of any payment in respect of any Certificate, or make
distributions payable in coin or currency other than that provided for in such
Certificates, or impair the right of any Certificateholder of such Trust to
institute suit for the enforcement of any such payment when due,
·
permit
the disposition of any Equipment Note held in such Trust, except as provided in
such Pass Through Trust Agreement, or otherwise deprive any Certificateholder
of the benefit of the ownership of the applicable Equipment Notes,
·
alter
the priority of distributions specified in the Intercreditor Agreement,
S-
48
·
reduce
the percentage of the aggregate fractional undivided interests of the Trust
provided for in such Pass Through Trust Agreement, the consent of the holders
of which is required for any such supplemental trust agreement or for any
waiver provided for in such Pass Through Trust Agreement, or
·
modify
any of the provisions relating to the rights of the Certificateholders in
respect of the waiver of Indenture Events of Default or receipt of payment. (Section 9.01).
In the
event that a Trustee, as holder (or beneficial owner through the Subordination
Agent) of any Equipment Note in trust for the benefit of the Certificateholders
of the relevant Trust or as Controlling Party under the Intercreditor
Agreement, receives (directly or indirectly through the Subordination Agent) a
request for a consent to any amendment, modification, waiver or supplement
under any Indenture, any Participation Agreement, any Equipment Note or any
other related document, the Trustee will forthwith send a notice of such
proposed amendment, modification, waiver or supplement to each
Certificateholder of the relevant Trust registered on the register of such
Trust as of the date of such notice. The Trustee will request from the
Certificateholders a direction as to:
·
whether
or not to take or refrain from taking (or direct the Subordination Agent to
take or refrain from taking) any action which a holder of such Equipment Note
or the Controlling Party has the option to direct.
·
whether
or not to give or execute (or direct the Subordination Agent to give or
execute) any waivers, consents, amendments, modifications or supplements as a
holder of such Equipment Note or as Controlling Party.
·
how
to vote (or direct the Subordination Agent to vote) any Equipment Note if a
vote has been called for with respect thereto.
Provided,
in a case where the Certificateholders are entitled to direct the Trustee, such
a request for Certificateholder direction has been made, in directing any
action or casting any vote or giving any consent as the holder of any Equipment
Note (or in directing the Subordination Agent in any of the foregoing):
·
other
than as Controlling Party, the Trustee will vote for or give consent to any
such action with respect to such Equipment Note in the same proportion as that
of (x) the aggregate face amount of all Certificates actually voted in
favor of or for giving consent to such action by such direction of
Certificateholders to (y) the aggregate face amount of all outstanding
Certificates of the relevant Trust.
·
as
the Controlling Party, the Trustee will vote as directed in any direction by
the Certificateholders evidencing fractional undivided interests aggregating
not less than a majority in interest in the relevant Trust.
For purposes of the second
preceding sentence, a Certificate is deemed actually voted if the
Certificateholder has delivered to the Trustee an instrument evidencing such
Certificateholders consent to such direction prior to one Business Day before
the Trustee directs such action or casts such vote or gives such consent.
Notwithstanding the foregoing, but subject to certain rights of the
Certificateholders under the relevant Pass Through Trust Agreement and subject
to the Intercreditor Agreement, the Trustee may, in its own discretion and at
its own direction, consent and notify the relevant Loan Trustee of such consent
(or direct the Subordination Agent to consent and notify the relevant Loan
Trustee of such consent) to any amendment, modification, waiver or supplement
under the relevant Indenture, Participation Agreement, any relevant Equipment
Note or any other related document, if an Indenture Event of Default under any
Indenture has occurred and is continuing, or if such amendment, modification,
waiver or supplement does not materially adversely affect the interests of the
Certificateholders. See Description of the Intercreditor AgreementVoting of
Equipment Notes. (Section 10.01)
S-
49
Termination of the Trusts
The obligations of
Northwest, if any, and the Trustee with respect to a Trust will terminate upon
the distribution to Certificateholders of such Trust of all amounts required to
be distributed to them pursuant to the applicable Pass Through Trust Agreement
and the disposition of all property held in such Trust. The Trustee will send
to each Certificateholder of record of such Trust notice of the termination of
such Trust, the amount of the proposed final payment and the proposed date for
the distribution of such final payment for such Trust. The final distribution
to any Certificateholder of such Trust will be made only upon surrender of such
Certificateholders Certificates at the office or agency of the applicable
Trustee specified in such notice of termination. (Section 11.01)
The Trustee
The Trustee for each Trust
will be U.S. Bank Trust National Association. With certain exceptions, the
Trustee makes no representations as to the validity or sufficiency of the Basic
Agreement, the Trust Supplements, the Certificates, the Equipment Notes, the
Indentures, or other related documents. (Sections 7.03 and 7.14) The
Trustee of any Trust shall not be liable, with respect to the Certificates of
such Trust, for any action taken or omitted to be taken by it in good faith in
accordance with the direction of the holders of a majority in principal amount
of outstanding Certificates of such Trust. Subject to certain provisions, the
Trustee shall be under no obligation to exercise any of its rights or powers
under any Pass Through Trust Agreement at the request of any holders of
Certificates issued thereunder unless there shall have been offered to the
Trustee reasonable indemnity. (Section 7.02(e)) Each Pass Through Trust
Agreement provides that the Trustee in their individual or any other capacity
may acquire and hold Certificates issued thereunder and, subject to certain
conditions, may otherwise deal with Northwest and NWA Corp. with the same rights
they would have if they were not the Trustee. (Section 7.04)
Book-Entry; Delivery and Form
Upon issuance, each Class of
Certificates will be represented by one or more fully registered global
certificates. Each global certificate will be deposited with, or on behalf of,
The Depository Trust Company (
DTC
) and
registered in the name of Cede & Co (
Cede
),
or its nominee.
No person acquiring an
interest in such Certificates
(
Certificate Owner
) will
be entitled to receive a certificate representing
such persons interest in such Certificates, except as set forth in the
Prospectus under Book Entry RegistrationDefinitive Certificates. Unless and
until definitive certificates
(
Definitive Certificates
)
are issued under the limited circumstances described
herein, all references to actions by Certificateholders of each Class shall
refer to actions taken by DTC upon instructions from DTC Participants, and all
references herein to distributions, notices, reports and statements to
Certificateholders of each Class shall refer, as the case may be, to
distributions, notices, reports and statements to DTC or Cede, as the
registered holder of such Certificates, or to DTC Participants for
distribution to Certificate Owners in accordance with DTC procedures.
DTC Participants
refers to the
participants in DTC who clear and settle securities transactions through DTCs
electronic book-entry system.
None of Northwest, NWA
Corp. or the Trustee will have any liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in
the Certificates held by Cede, as nominee for DTC, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
S-
50
DESCRIPTION OF THE
LIQUIDITY FACILITIES
The following summary
describes certain terms of the Liquidity Facilities and certain provisions of
the Intercreditor Agreement relating to the Liquidity Facilities. The summary
does not purport to be complete and is qualified in its entirety by reference
to the provisions of the Liquidity Facilities and such provisions of the
Intercreditor Agreement, each of which will be filed as an exhibit to an Annual
Report on Form 10-K, a Quarterly Report on Form 10-Q, or
a Current Report on Form 8-K to be filed by NWA Corp. with the
Commission. The provisions of the Liquidity Facilities are substantially
identical except as otherwise indicated.
General
The Liquidity Provider
will enter into a separate revolving credit agreement with the Subordination
Agent with respect to the Certificates of the Class A Trust and the Class B
Trust (each, a
Liquidity Facility
) pursuant
to which the Liquidity Provider will make one or more advances to the
Subordination Agent that will be used solely to pay interest on such
Certificates when due, subject to certain limitations. The Liquidity Facility
for each of the Class A and Class B Trusts is intended to enhance the
likelihood of timely receipt by the Certificateholders of such Trust of the
interest payable on the Certificates of such Trust at the Stated Interest Rate
therefor on up to three consecutive semiannual Regular Distribution Dates. If
interest payment defaults occur which exceed the amount covered by or available
under the Liquidity Facility for a Trust, the Certificateholders of such Trust
will bear their allocable share of the deficiencies to the extent that there
are no other sources of funds.
Drawings
The aggregate amount available under the Liquidity
Facilities for the Class A and Class B Trusts at March 31, 2009, the Delivery
Period Termination Date, assuming that Equipment Notes in the maximum principal
amount with respect to all Aircraft are acquired by the Trusts, will be $35,679,381.69
and $13,950,054.90, respectively.
Except as otherwise provided below, the Liquidity
Facilities for the Class A and Class B Trusts will enable the Subordination
Agent to make interest drawings (
Interest Drawings
)
thereunder on any Regular Distribution Date to pay interest then due and
payable on the Certificates of such Trust at the Stated Interest Rate for such
Trust to the extent that the amount, if any, available to the Subordination
Agent on such Regular Distribution Date is not sufficient to pay such interest.
The maximum amount available to be drawn under a Liquidity Facility with
respect to the Class A or Class B Trust on any Regular Distribution Date
to fund any shortfall of interest on Certificates of such Trust will not exceed
the then Maximum Available Commitment under such Liquidity Facility.
Maximum Available
Commitment
at any time under each Liquidity Facility is an
amount equal to the then Required Amount of such Liquidity Facility less the
aggregate amount of each Interest Drawing outstanding under such Liquidity
Facility at such time, provided that following a Downgrade Drawing, a Final
Drawing, a Special Termination Drawing or a Non-Extension Drawing under a
Liquidity Facility, the Maximum Available Commitment under such Liquidity
Facility will be zero.
Required Amount
means, for any day and with respect to the Class A or Class B Trust,
the sum of the aggregate amount of interest, calculated at the Stated Interest
Rate applicable to the Certificates issued by such Trust, that would be payable
on such Certificates on each of the three successive semiannual Regular
Distribution Dates immediately following such day or, if such day is a Regular
Distribution Date, on such day and the succeeding two Regular Distribution
Dates, in each case calculated based on the Pool Balance for such Class on
such day and without regard to expected future payments of principal on such
Certificates.
S-
54
The Liquidity Facilities for the Class A and Class B
Certificates will not provide for drawings thereunder to pay for principal of
or premium on the Certificates of such Class or any interest on the
Certificates of such Class in excess of the Stated Interest Rate for such Class or
more than three semiannual installments of interest thereon or principal of or
interest or premium on the Certificates of any other Class. (Liquidity Facilities,
Section 2.02; Intercreditor Agreement, Section 3.5). In addition, the
Liquidity Facility with respect to each Trust will not provide for drawings
thereunder to pay any amounts payable with respect to the Deposits relating to
such Trust.
Each payment by the Liquidity Provider will reduce by
the same amount the Maximum Available Commitment under such Liquidity Facility,
subject to reinstatement as hereinafter described. With respect to any Interest
Drawings under a Liquidity Facility, upon reimbursement of the Liquidity
Provider in full for the amount of such Interest Drawings plus interest
thereon, the Maximum Available Commitment under such Liquidity Facility will be
reinstated to an amount not to exceed the then Required Amount of such Liquidity
Facility; provided, however, that such Liquidity Facility will not be so
reinstated at any time if (i) a Liquidity Event of Default has occurred
and is continuing and (ii) less than 65% of the then aggregate outstanding
principal amount of all Equipment Notes are Performing Equipment Notes. With
respect to any other drawings under such Liquidity Facility, amounts available
to be drawn thereunder are not subject to reinstatement. Following the
reduction of the Pool Balance for the applicable Trust, the Maximum Commitment
of the Liquidity Facility for such Trust will be automatically reduced from
time to time to an amount equal to the Required Amount for such Trust.
(Liquidity Facilities, Section 2.04(a))
Performing
Equipment Note
means an Equipment Note with respect to which no
payment default has occurred and is continuing (without giving effect to any
Acceleration);
provided
that in the event of a
bankruptcy proceeding under the Bankruptcy Code in which Northwest is a debtor
any payment default existing during the 60-Day Period (or such longer
period as may apply under Section 1110(b) of the Bankruptcy Code or
as may apply for the cure of such payment default under Section 1110(a)(2)(B) of
the Bankruptcy Code) shall not be taken into consideration until the expiration
of the applicable period. (Intercreditor Agreement, Section 1.1)
Replacement of
Liquidity Facilities
If at any time the short-term unsecured or short-term
issuer credit rating of the Liquidity Provider for any Trust then issued by
either Rating Agency is lower than the Threshold Rating applicable to such
Trust, the Liquidity Facility provided by such Liquidity Provider may be
replaced by a Replacement Facility. If such Liquidity Facility is not replaced
with a Replacement Facility within 30 days after notice of the downgrading
and as otherwise provided in the Intercreditor Agreement, the Subordination
Agent will draw the then Maximum Available Commitment under such Liquidity
Facility (the
Downgrade Drawing
). The
Subordination Agent will deposit the proceeds of any Downgrade Drawing in a
cash collateral account (the
Cash Collateral Account
)
for such Class of Certificates and will use these proceeds for the same
purposes and under the same circumstances and subject to the same conditions as
cash payments of Interest Drawings under such Liquidity Facility would be used.
(Liquidity Facilities, Section 2.02(c); Intercreditor Agreement, Section 3.5(c))
A
Replacement Liquidity
Facility
for any Liquidity Facility means an irrevocable
liquidity facility (or liquidity facilities) in substantially the form of the
replaced Liquidity Facility, including reinstatement provisions, or in such
other form (which may include a letter of credit) as will permit the Rating
Agencies to confirm in writing their respective ratings then in effect for the
Certificates (before downgrading of such ratings, if any, as a result of the
downgrading of the applicable Liquidity Provider) in a face amount (or in an
aggregate face amount) equal to the amount of interest payable on the
Certificates of such Trust (at the Stated Interest Rate for such Trust, and
without regard to expected future principal payments) on the three Regular
Distribution Dates following the date of replacement of such Liquidity Facility
(or if such day is a Regular Distribution Date, on such day and the succeeding
two Regular Distribution Dates) and
S-
55
issued by a person (or
persons) having unsecured short-term debt ratings and short-term issuer credit
ratings issued by both Rating Agencies that are equal to or higher than the
Threshold Rating for the relevant Class. (Intercreditor Agreement, Section 1.1)
The provider of any Replacement Facility will have the same rights (including,
without limitation, priority distribution rights and rights as Controlling
Party) under the Intercreditor Agreement as the replaced Liquidity Provider.
Threshold Rating
means the short-term unsecured debt rating of P-1 by Moodys and the
short-term issuer credit rating of A-1 by Standard & Poors, in
the case of the Liquidity Provider for each Trust.
The Liquidity
Facility for each Trust will provide that the relevant Liquidity Providers
obligations thereunder will expire on the earliest of:
·
364 days
after the initial issuance date of the Certificates (
Issuance
Date
).
·
The date on
which the Subordination Agent
delivers to such Liquidity Provider a certification that all of the
Certificates of such Trust have been paid in full.
·
The
date on which the Subordination Agent delivers to such Liquidity Provider a
certification that a Replacement Liquidity Facility has been substituted for
such Liquidity Facility.
·
The
fifth Business Day following receipt by the Subordination Agent of a
Termination Notice or Special Termination Notice from such Liquidity Provider
(see Liquidity Events of Default).
·
The
date on which no amount is or may (by reason of reinstatement) become available
for drawing under such Liquidity Facility.
·
The
date on which the Liquidity Provider honors a Downgrade Drawing, a
Non-Extension Drawing, a Special Termination Drawing or a Final Drawing.
(Liquidity Facilities, Sections 1.01 and 2.04(b))
Each Liquidity Facility provides that it will be automatically
extended for additional 364-day periods unless the Liquidity Provider
provides notice of non-extension.
The Intercreditor Agreement will provide for the
replacement of any Liquidity Facility for any Trust if it is scheduled to
expire earlier than 15 days after the Final Legal Distribution Date for
the Certificates of such Trust if such Liquidity Facility is not extended at
least 25 days prior to its then scheduled expiration date. If such
Liquidity Facility is not so extended or replaced by the 25th day prior to its
then scheduled expiration date, the Subordination Agent will draw its then
Maximum Available Commitment (the
Non-Extension Drawing
).
The Subordination Agent will deposit the proceeds of the Non-Extension Drawing
in the Cash Collateral Account for the related Class of Certificates as
cash collateral to be used for the same purposes and under the same
circumstances, and subject to the same conditions, as cash payments of Interest
Drawings under such Liquidity Facility would be used. (Liquidity Facilities, Section 2.02(b);
Intercreditor Agreement, Section 3.5(d))
Subject to certain limitations, Northwest may, at its
option, arrange for a Replacement Liquidity Facility at any time to replace any
Liquidity Facility for any Trust (including without limitation any Replacement
Liquidity Facility described in the following sentence). Subject to certain
conditions, Calyon, acting through its New York branch, as the Liquidity
Provider, may, at its option, arrange for a Replacement Liquidity Facility for
any Trust at any time. In addition, any Liquidity Provider may, at its option,
arrange for a Replacement Liquidity Facility to replace a non-extended
Liquidity Facility during the period no earlier than 40 days and no later
than 25 days prior to the then scheduled expiration date of such Liquidity
Facility. (Intercreditor Agreement, Section 3.5 (e)) If any Replacement
Liquidity Facility is provided at any time after a Downgrade Drawing or a
Non-Extension Drawing under any Liquidity Facility, the funds with respect to
such Liquidity Facility on deposit in the Cash Collateral Account for such
Trust will be returned to the Liquidity Provider being replaced. (Intercreditor
Agreement, Section 3.5(f))
S-
56
Upon receipt by the
Subordination Agent of a Termination Notice with respect to any Liquidity
Facility from the applicable Liquidity Provider, the Subordination Agent will request
a final drawing (
Final Drawing
)
under such Liquidity Facility in an amount equal to the then Maximum Available
Commitment thereunder. The Subordination Agent will hold the proceeds of such
Final Drawing in the Cash Collateral Account for the related Trust as cash
collateral to be used for the same purposes and under the same circumstances,
and subject to the same conditions, as cash payments of Interest Drawings under
such Liquidity Facility would be used. (Liquidity Facilities, Section 2.02(d);
Intercreditor Agreement, Section 3.5(i))
Reimbursement of
Drawings
The Subordination Agent
must reimburse amounts drawn under any Liquidity Facility by reason of an
Interest Drawing, Final Drawing, Downgrade Drawing, Special Termination Drawing
or Non-Extension Drawing and interest thereon, but only to the extent that the
Subordination Agent has funds available therefor.
Interest Drawings, Special Termination Drawings and
Final Drawings
Amounts drawn by reason of an Interest Drawing,
Special Termination Drawing or the Final Drawing will be immediately due and
payable, together with interest on the amount of such drawing. From the date of
each such drawing to (but excluding) the third business day thereafter,
interest will accrue at the Base Rate plus 1.00% per annum. Thereafter,
interest will accrue at LIBOR for the applicable interest period plus 1.00% per
annum.
Base Rate
means a fluctuating interest rate per annum in effect from time to time, which
rate per annum is at all times equal to (a) the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a business day, for the next preceding business day) by
the Federal Reserve Bank of New York, or if such rate is not so published for
any day that is a business day, the average of the quotations for such day for
such transactions received by the applicable Liquidity Provider from three
Federal funds brokers of recognized standing selected by it, plus (b) one-quarter
of one percent (0.25%) per annum.
LIBOR
means, with respect to any interest period, (i) the rate per annum
appearing on display page 3750 (British Bankers AssociationLIBOR) of the
Dow Jones Markets Service (or any successor or substitute therefor) at
approximately 11:00 A.M. (London time) two business days before the first
day of such interest period, as the rate for dollar deposits with a maturity
comparable to such interest period, or (ii) if the rate calculated
pursuant to clause (i) above is not available, the average (rounded
upwards, if necessary, to the next 1/16 of 1%) of the rates per annum at which
deposits in dollars are offered for the relevant interest period by three banks
of recognized standing selected by the applicable Liquidity Provider in the
London interbank market at approximately 11:00 A.M. (London time) two
business days before the first day of such interest period in an amount
approximately equal to the principal amount of the advance to which such
interest period is to apply and for a period comparable to such interest
period.
Downgrade Drawings, Non-Extension Drawings and Special
Termination Drawings
The amount drawn
under any Liquidity Facility by reason of a Downgrade Drawing, a Non-Extension
Drawing or a Special Termination Drawing will be treated as follows:
·
Such
amount will be released on any Distribution Date to the applicable Liquidity
Provider to the extent that such amount exceeds the Required Amount.
S-
57
·
Any
portion of such amount withdrawn from the Cash Collateral Account for such
Certificates to pay interest on such Certificates will be treated in the same
way as Interest Drawings.
·
The
balance of such amount will be invested in Eligible Investments.
Any Downgrade Drawing, Non-Extension
Drawing or Special Termination Drawing under any of the Liquidity Facilities,
other than any portion thereof applied to the payment of interest on the
Certificates, will bear interest (i) at the Base Rate with respect to the
period from the date of such drawing to (but excluding) the third business day
thereafter, (ii) from and after such third business day, subject to
clause (iii) below, at a rate equal to the investment earnings on the
amounts deposited in the relevant Cash Collateral Account plus a specified
margin (provided that a commitment fee will continue to be payable on the
amount of such Downgrade Drawing or Non-Extension Drawing) and (iii) from
and after the date, if any, on which any Downgrade Drawing, Non-Extension
Drawing or Special Termination Drawing is converted into a Final Drawing as
described under Liquidity Events of Default, at a rate equal to LIBOR for
the applicable interest period (or, as described in the first paragraph under Interest
Drawings, Special Termination Drawings and Final Drawings above, the Base
Rate) plus 1.00% per annum.
Liquidity Events of
Default
Events of Default
under each Liquidity Facility (each, a
Liquidity
Event of Default
) will consist of:
·
The
acceleration of all the Equipment Notes (provided, that if such acceleration
occurs during the Delivery Period, the aggregate principal amount thereof
exceeds $200,000,000).
·
Certain
bankruptcy or similar events involving Northwest. (Liquidity Facilities, Section 1.01)
If any Liquidity
Event of Default under any Liquidity Facility has occurred and is continuing
and less than 65% of the aggregate outstanding principal amount of all
Equipment Notes are Performing Equipment Notes, the applicable Liquidity
Provider may, in its discretion, give a notice of termination of such Liquidity
Facility (a
Final Termination Notice
).
With respect to any Liquidity Facility, if the Pool Balance of the related Class of
Certificates is greater than the aggregate outstanding principal amount of the
related Series of Equipment Notes (other than any such Equipment Notes
previously sold or with respect to which the Aircraft securing such Equipment
Notes have been disposed of) at any time during the 18-month period prior
to the Final Payment Date, the Liquidity Provider under such Liquidity Facility
may, in its discretion, give a notice of special termination of such Liquidity
Facility (a
Special Termination Notice
and, together with the Final Termination Notice, a
Termination
Notice
). The Termination Notice will have the following
consequences:
·
The related
Liquidity Facility will expire
on the fifth Business Day after the date on which such Termination Notice is
received by the Subordination Agent.
·
The
Subordination Agent will promptly request, and the applicable Liquidity
Provider will make, a Final Drawing or Special Termination Drawing, as
applicable, thereunder in an amount equal to the then Maximum Available
Commitment thereunder.
·
Any Drawing remaining
unreimbursed as of the date of termination will be automatically converted into
a Final Drawing under such Liquidity Facility.
·
All
amounts owing to the applicable Liquidity Provider automatically will be
accelerated.
Notwithstanding the
foregoing, the Subordination Agent will be obligated to pay amounts owing to
the applicable Liquidity Provider only to the extent of funds available
therefor after giving effect to the payments in accordance with the provisions
set forth under Description of the Intercreditor AgreementPriority of
Distributions. (Liquidity Facilities, Section 6.01) Upon the
circumstances described below
S-
58
under Description
of the Intercreditor AgreementIntercreditor RightsControlling Party, a
Liquidity Provider may become the Controlling Party with respect to the
exercise of remedies under the Indentures. (Intercreditor Agreement, Section 2.6(c))
Liquidity Provider
The Liquidity Provider will be Calyon, acting through
its New York branch. Calyon was formed on April 30, 2004 by the
consolidation of Crédit Agricole Indosuez and the corporate and investment
banking division of Crédit Lyonnais. Calyons long-term unsecured debt is rated
Aa2 by Moodys, AA by Fitch and AA- by Standard & Poors and its
short-term unsecured debt is rated P-1 by Moodys, F1+ by Fitch and A-1+
by Standard & Poors.
The above description of Calyon has been provided by
Calyon, acting through its New York Branch. However, Calyon has not been
involved in the preparation of, and does not accept responsibility for, this
prospectus supplement.
S-
59
DESCRIPTION OF THE
INTERCREDITOR AGREEMENT
The following summary
describes certain provisions of the Intercreditor Agreement. The summary does
not purport to be complete and is qualified in its entirety by reference to the
provisions of the Intercreditor Agreement which will be filed as an exhibit to
an Annual Report on Form 10-K, a Quarterly Report on Form 10-Q,
or to a Current Report on Form 8-K to be filed by NWA Corp. with the
Commission.
Intercreditor
Rights
Controlling Party
With respect to any Indenture at any given time, the
Trustee and the Liquidity Provider will agree that the Loan Trustee under such
Indenture will be directed in taking, or refraining from taking, any action
under such Indenture or with respect to the Equipment Notes issued under such
Indenture, by the holders of at least a majority of the outstanding principal
amount of the Equipment Notes issued under such Indenture, so long as no
Indenture Event of Default has occurred and is continuing under such Indenture.
For so long as the Subordination Agent is the registered holder of the
Equipment Notes, the Subordination Agent will act with respect to the preceding
sentence in accordance with the directions of the Trustees for whom the
Equipment Notes issued under such Indenture are held as Trust Property, to the
extent constituting, in the aggregate, directions with respect to the required
principal amount of Equipment Notes. (Intercreditor Agreement, Section 2.6(a))
At any time an Indenture Event of Default has occurred
and is continuing under an Indenture, the Loan Trustee under such Indenture
will be directed in taking, or refraining from taking, any action thereunder or
with respect to the Equipment Notes issued under the related Indenture,
including Acceleration of such Equipment Notes or foreclosing the lien on the
related Aircraft, by the Controlling Party, subject to the limitations
described below. (Intercreditor Agreement, Section 2.6(a)) Notwithstanding
the foregoing, no amendment, modification, consent or waiver will, without the
consent of each Liquidity Provider and the affected Certificateholders, reduce
the amount of principal or interest payable by Northwest under any Equipment
Note issued under any Aircraft Indenture. (Intercreditor Agreement, Section 9.1(b))
See Description of the CertificatesIndenture Event of Defaults and Certain
Rights Upon an Indenture Event of Default for a description of the rights of
the Certificateholders of each Trust to direct the respective Trustees.
The
Controlling Party
will be:
·
The
Class A Trustee.
·
Upon
payment of Final Distributions to the holders of Class A Certificates, the
Class B Trustee.
·
Under
certain circumstances, and notwithstanding the foregoing, the Liquidity
Provider with the largest amount owed to it, as discussed in the next
paragraph.
At any time after 18 months from the earliest to
occur of (x) the date on which the entire available amount under any
Liquidity Facility has been drawn (excluding a Downgrade Drawing, Non-Extension
Drawing or Special Termination Drawing but including a Final Drawing or a
Downgrade Drawing, a Non-Extension Drawing or Special Termination Drawing that
has been converted into a Final Drawing under such Liquidity Facility) and
remains unreimbursed, (y) the date on which the entire amount of any Downgrade
Drawing or Non-Extension Drawing or Special Termination Drawing on deposit in
the relevant Cash Collateral Account up to the Required Amount as of such date
has been withdrawn from the relevant Cash Collateral Account to pay interest on
the relevant Class of Certificates and remains unreimbursed and (z) the
date on which all Equipment Notes have been accelerated, the Liquidity Provider
with the higher outstanding amount of unreimbursed Liquidity Obligations (so
long as such
S-
60
Liquidity Provider has not
defaulted in its obligation to make any advance under any Liquidity Facility)
will have the right to become the Controlling Party with respect to any
Indenture.
Subject to certain conditions, notwithstanding the
foregoing, (a) if one or more holders of the Class B Certificates
have purchased the Series A Equipment Notes or (b) if one or more
holders of Additional Certificates has purchased the Series A Equipment
Notes and Series B Equipment Notes, in each case, issued under an
Indenture, the holders of the majority in aggregate unpaid principal amount of
Equipment Notes issued under such Indenture, instead of the Controlling Party,
shall be entitled to direct the Loan Trustee in taking, or refraining from
taking, any action under such Indenture or with respect to such Equipment
Notes, including exercising remedies thereunder; provided, that so long as the
Subordination Agent holds not less than the majority in aggregate unpaid
principal amount of such Equipment Notes, the Controlling Party shall be entitled
to direct the Loan Trustee under such Indenture. Any Equipment Notes issued
under such Indenture that have not been purchased by a Certificateholder shall,
during the continuance of an Indenture Event of Default under such Indenture,
be subject to direction by the Controlling Party.
For purposes of
giving effect to the rights of the Controlling Party, the Trustees (other than
the Controlling Party) will irrevocably agree, and the Certificateholders
(other than the Certificateholders represented by the Controlling Party) will
be deemed to agree by virtue of their purchase of Certificates, that the
Subordination Agent, as record holder of the Equipment Notes, will exercise its
voting rights in respect of the Equipment Notes as directed by the Controlling
Party. (Intercreditor Agreement, Section 2.6(b)) For a description of
certain limitations on the Controlling Partys rights to exercise remedies, see
Description of the Equipment NotesRemedies.
Final
Distributions
means, with respect to the Certificates of
any Trust on any Distribution Date, the sum of (x) the aggregate amount of
all accrued and unpaid interest on such Certificates (excluding interest
payable, if any, on the Deposits relating to such Trust) and (y) the Pool
Balance of such Certificates as of the immediately preceding Distribution Date
(less the amount of the Deposits for such Class of Certificates as of such
preceding Distribution Date other than any portion of such Deposits thereafter
used to acquire Equipment Notes pursuant to the Note Purchase Agreement). For
purposes of calculating Final Distributions with respect to the Certificates of
any Trust, any premium paid on the Equipment Notes held in such Trust that has
not been distributed to the Certificateholders of such Trust (other than such
premium or a portion thereof applied to the payment of interest on the
Certificates of such Trust or the reduction of the Pool Balance of such Trust)
will be added to the amount of such Final Distributions. (Intercreditor
Agreement, Section 1.1)
Equipment Note Buyout Right of Subordinated
Certificateholders
Upon the occurrence and during the continuation of an
Equipment Note Buyout Event, so long as no holder of Additional Certificates
has elected to exercise its right to purchase Equipment Notes issued under such
Indentures as described below (upon such election and notification thereof,
such right of the Class B Certificateholders will be suspended) any Class B
Certificateholder may, upon 15 days written notice to the Subordination Agent,
each Trustee (and each such Trustee shall promptly provide such notice to all
Certificateholders of its Trust) and each applicable Loan Trustee given on or
before the date which is six months after the occurrence of the applicable
Equipment Note Buyout Event, purchase on the third Business Day next following
the expiry of such 15-day notice period all, but not less than all, of
the Series A Equipment Notes issued under any one or more of the
Indentures for a purchase price equal to the aggregate Note Target Price for such
Series A Equipment Notes plus an amount equal to the Excess Liquidity
Obligations accrued in respect of such Indentures as of the date of purchase.
If prior to the end of such 15-day period, any other holder of the Class B
Certificates notifies the Subordination Agent, each Trustee (and each such
Trustee shall promptly notify all Certificateholders of its Trust, including
the purchasing Class B Certificateholder) and each applicable Loan Trustee
that it wishes to participate in
S-
61
such purchase, then such
other Class B Certificateholder may join with the purchasing Class B
Certificateholder to purchase such Series A Equipment Notes pro rata based
on the interest in the Class B Trust held by each such Class B
Certificateholder compared to such interests held by all participating Class B
Certificateholders.
If any Additional Certificates are issued and an
Equipment Note Buyout Event has occurred and is continuing, regardless of
whether any Class B Certificateholder has elected to exercise its right to
purchase Equipment Notes, any holder of such Additional Certificates upon 15
days notice to the Subordination Agent, each Trustee (and each such Trustee
shall promptly provide such notice to all Certificateholders of its Trust) and
each applicable Loan Trustee given on or before the date which is six months
after the occurrence of the applicable Equipment Note Buyout Event, purchase on
the third Business Day next following the expiry of such 15-day notice
period all, but not less than all, of the Series A Equipment Notes and Series B
Equipment Notes issued under any one or more Indentures for a purchase price
equal to the sum of the aggregate Note Target Price for such Series A
Equipment Notes and Series B Equipment Notes plus an amount equal to the
Excess Liquidity Obligations accrued in respect of such Indentures as of the
date of purchase. If any Refinancing Certificates are issued, the holders of
such Refinancing Certificates may have the same right to purchase Equipment
Notes as the Class they refinanced. See Possible Issuance of Additional
Certificates and Refinancing of Certificates.
The right of any holder of Class B Certificates
or Additional Certificates to purchase Equipment Notes as described above will
be subject to such purchase being exempt from, or not subject to, the
registration requirements of the Securities Act of 1933, as amended, and in
compliance with other applicable securities laws. Each purchaser will be
required to provide to the Subordination Agent reasonably satisfactory evidence
of compliance with such laws.
Equipment Note Buyout
Event
means the occurrence and continuation of (i) a
Certificate Buyout Event or (ii) an Indenture Event of Default (as defined
in the Intercreditor Agreement) under any Indenture that has continued for a
period of five years without an Actual Disposition Event occurring with respect
to the Equipment Notes issued under such Indenture.
Excess Liquidity
Obligations
means, with respect to an Indenture, an amount
equal to the sum of (i) the amount of fees payable to the Liquidity
Provider under each Liquidity Facility, multiplied by a fraction, the numerator
of which is the then outstanding aggregate principal amount of the Series A
Equipment Notes and the Series B Equipment Notes issued under such
Indenture and the denominator of which is the then outstanding aggregate
principal amount of all Series A Equipment Notes and Series B
Equipment Notes, (ii) interest on any Non-Extension Drawing, Downgrade
Drawing or Special Termination Drawing payable under each Liquidity Facility in
excess of investment earnings on such drawings, multiplied by the fraction
specified in clause (i) above, (iii) if any payment default by
Northwest exists with respect to interest on any Series A Equipment Notes
or Series B Equipment Notes, interest on any Interest Drawing (or portion
of any Downgrade Drawing, Non-Extension Drawing or Special Termination Drawing
that is used to pay interest on the Certificates) or Final Drawing payable
under each Liquidity Facility in excess of the sum of (a) investment
earnings from any Final Drawing plus (b) any interest at the past due rate
actually payable (whether or not in fact paid) by Northwest on the overdue
scheduled interest on the Equipment Notes in respect of which such Interest
Drawing (or portion of any Downgrade Drawing, Non-Extension Drawing or Special
Termination Drawing that is used to pay interest on the Certificates) or Final
Drawing was made by the Liquidity Provider, multiplied by a fraction the
numerator of which is the aggregate overdue amounts of interest on the Series A
Equipment Notes and Series B Equipment Notes issued under such Indenture
(other than interest becoming due and payable solely as a result of
Acceleration of any such Equipment Notes) and the denominator of which is the
then aggregate overdue amounts of interest on all Series A Equipment Notes
and Series B Equipment Notes (other than interest becoming due and payable
solely as a result of Acceleration of any such Equipment Notes), and (iv) any
other amounts owed to the Liquidity Provider by the Subordination Agent as
S-
62
borrower under each
Liquidity Facility other than amounts due as repayment of advances thereunder
or as interest on such advances, except to the extent payable pursuant to
clauses (ii) and (iii) above, multiplied by the fraction specified in
clause (i) above. The fractions specified in this definition will be
revised if Additional Certificates with credit support similar to the Liquidity
Facilities are issued. See Possible Issuance of Additional Certificates and
Refinancing of Certificates.
Note Target Price
means for any Equipment Note issued under any Indenture: (i) the aggregate
outstanding principal amount of such Equipment Note, plus (ii) the accrued
and unpaid interest thereon, together with all other sums owing on or in
respect of such Equipment Note (including, without limitation, enforcement
costs incurred by the Subordination Agent in respect of such Equipment Note).
The purchase price payable in connection with an
exercise of the Equipment Note buyout right shall be paid to the Subordination
Agent. The Subordination Agent shall distribute any such payment in the order
of priority described in Priority of Distributions.
After one or more Class B Certificateholders, or
one or more holders of Additional Certificates, as the case may be, have
exercised their Equipment Note buyout right and purchased any Series A
Equipment Notes (and, if applicable, Series B Equipment Notes), (i) any
proceeds or payments made with respect to such Equipment Notes will be paid
directly to the holders of such Equipment Notes pro rata and will not be
subject to the subordination provisions of the Intercreditor Agreement (but the
holders of such Equipment Notes shall remain bound by the provisions in the
Intercreditor Agreement relating to limitations on the exercise of remedies
(see Limitation on Exercise of Remedies)) and (ii) if and to the extent
the Loan Trustee under the related Indenture receives any amounts with respect
to Excess Liquidity Obligations under such Indenture or reimbursement of
enforcement costs incurred by the Subordination Agent in respect of such
Equipment Notes that, in each case, represent amounts previously paid by such
Certificateholders in connection with the purchase of such Equipment Notes, such
Loan Trustee shall pay such amounts to the holders of such Equipment Notes pro
rata. Any proceeds or payments made with respect to any Series of
Equipment Notes issued under the related Indenture that has not been purchased
pursuant to the buyout rights described above will continue to be paid to the
Subordination Agent and be subject to the subordination provisions of the
Intercreditor Agreement.
Each purchasing Certificateholder will have to
acknowledge, consent and agree that, notwithstanding the purchase of any
Equipment Notes under any Indenture pursuant to the buyout rights described
above, the cross-collateralization provisions of such Indenture will remain
unchanged and in full force and effect and cannot be otherwise amended,
modified or waived in any manner without the prior written consent of the
Subordination Agent acting on the instructions of each Trustee.
Any taxes incurred by the relevant Loan Trustee, the
Subordination Agent or the relevant Trustee in connection with the sale of any
Equipment Note pursuant to the exercise by one or more Certificateholders of
the buyout right described above shall be paid by such purchasing
Certificateholders on a pro rata basis.
If Northwest or any of its
affiliates is an owner of a Class B Certificate (or an Additional
Certificate), it will not be entitled to purchase Equipment Notes upon the
occurrence of an Equipment Note Buyout Event.
Limitation on Exercise of Remedies
So long as any Certificates are outstanding, during
nine months after the earlier of (x) the acceleration of the Equipment
Notes under any Indenture or (y) the bankruptcy or insolvency of
Northwest, without the consent of each Trustee, no Aircraft subject to the lien
of such Indenture or such Equipment Notes may be sold, if the net proceeds from
such sale would be less than the Minimum Sale Price for such Aircraft or such
Equipment Notes.
S-
63
Minimum Sale Price
means, with respect to any Aircraft or the Equipment Notes issued in respect of
such Aircraft, at any time, the lesser of (1) in the case of the sale of
an Aircraft, 75%, or in the case of the sale of related Equipment Notes, 85% of
the Appraised Current Market Value of such Aircraft and (2) the sum of the
aggregate Note Target Price of such Equipment Notes and an amount equal to the
Excess Liquidity Obligations in respect of the Indenture under which such
Equipment Notes were issued.
Following the occurrence and during the continuation
of an Indenture Event of Default under any Indenture, in the exercise of
remedies pursuant to such Indenture, the Loan Trustee under such Indenture may
be directed to lease the Aircraft to any person (including Northwest) so long
as the Loan Trustee in doing so acts in a commercially reasonable manner
within the meaning of Article 9 of the Uniform Commercial Code as in
effect in any applicable jurisdiction (including Sections 9-610 and 9-627
thereof).
The foregoing provisions apply whether the exercise of
remedies under an Indenture is being directed by the Controlling Party or by
the Instructing Holder.
If following a Northwest Bankruptcy Event and during
the pendency thereof, the Controlling Party receives a proposal from or on
behalf of Northwest to restructure the financing of any one or more of the
Aircraft, the Controlling Party shall promptly thereafter give the
Subordination Agent and each Trustee notice of the material economic terms and
conditions of such restructuring proposal whereupon the Subordination Agent
acting on behalf of each Trustee shall post such terms and conditions of such
restructuring proposal on DTCs internet bulletin board or make such other
commercially reasonable efforts as the Subordination Agent may deem appropriate
to make such terms and conditions of such restructuring proposal available to
all Certificateholders. Thereafter, neither the Subordination Agent nor any
Trustee, whether acting on instructions of the Controlling Part or
otherwise, may, without the consent of each Trustee, enter into any term sheet,
stipulation or other agreement (a
Restructuring Arrangement
)
(whether in the form of an adequate protection stipulation, an extension under Section 1110(b) of
the Bankruptcy Code or otherwise) to effect any such restructuring proposal
with or on behalf of Northwest unless and until the material economic terms and
conditions of such restructuring shall have been made available to all
Certificateholders for a period of not less than 15 calendar days (except that
such requirement shall not apply to any such term sheet, stipulation or other
agreement that is entered into on or prior to the expiry of the 60-Day
Period and that is effective for a period not longer than three months from the
expiry of the 60-Day Period (an
Interim Restructuring
Arrangement
)).
In addition, the foregoing provisions shall (i) not
apply to any extension of a Restructuring Arrangement with respect to which
such provisions have been complied with in connection with the original entry
of such Restructuring Arrangement, if the possibility of such extension has
been disclosed in satisfaction of the requirements of such provisions and such
extension shall not amend or modify any of the other terms and conditions of
such Restructuring Arrangement and (ii) apply to the initial extension of
an Interim Restructuring Arrangement beyond the three months following the
expiry of the 60-Day Period but not to any subsequent extension of such
Interim Restructuring Arrangement, if the possibility of such subsequent
extension has been disclosed in satisfaction of the requirements of such
provisions and such subsequent extension shall not amend or modify any of the
other terms and conditions of such Interim Restructuring Arrangement.
In the event that any
Certificateholder gives irrevocable notice of the exercise of (i) its
right to buy out any Equipment Notes (as described in Equipment Note Buyout
Right of Subordinated Certificateholders) or (ii) its right to purchase
all (but not less than all) of the Class of Certificates represented by
the then Controlling Party (as described in Description of the CertificatesPurchase
Rights of Certificateholders), in either case, prior to the expiry of the 15-day
notice period specified above, such Controlling Party may not direct the
Subordination Agent or any Trustee to enter into (i) the case of such
Equipment Note buyout, any such restructuring proposal with respect to the
Aircraft related to such Equipment Notes, or (ii) in the case of such
purchase of Certificates, any such restructuring
S-
64
proposal
with respect to any of the Aircraft, in either case, unless and until such Certificateholder
fails to purchase such Equipment Notes or Class of Certificates, as
applicable, on the date that it is required to make such purchase.
Post Default Appraisals
Upon the occurrence and continuation of an Indenture
Event of Default under any Indenture, the Subordination Agent will be required
to obtain three desktop appraisals from the appraisers selected by the
Controlling Party setting forth the current market value, current lease rate
and distressed value (in each case, as defined by the International Society of
Transport Aircraft Trading or any successor organization) of the Aircraft
subject to such Indenture, in each case based on an assumed half-time status of
the Aircraft, without regard to actual maintenance data with respect thereto
(each such appraisal, an
Appraisal
and the current market value appraisals being referred to herein as the
Post Default Appraisals
). For so
long as any Indenture Event of Default shall be continuing under any Indenture,
and without limiting the right of the Controlling Party to request more
frequent Appraisals, the Subordination Agent will be required to obtain updated
Appraisals on the date that is 364 days from the date of the most recent
Appraisal (or if a Northwest Bankruptcy Event shall have occurred and is
continuing, on the date that is 180 days from the date of the most
recent Appraisal) and shall post such Appraisals on DTCs internet bulletin
board or make such other commercially reasonable efforts as the Subordination
Agent may deem appropriate to make such Appraisals available to all
Certificateholders.
Appraised
Current Market Value
of any Aircraft means the lower of the
average and the median of the three most recent Post Default Appraisals of such
Aircraft.
Priority of
Distributions
The payments in
respect of the Equipment Notes and certain other payments received on any
Distribution Date will be promptly distributed by the Subordination Agent on
such Distribution Date in the following order of priority:
·
to
the Subordination Agent, any Trustee, any Certificateholder and the Liquidity
Provider to the extent required to pay certain out-of-pocket costs and expenses
actually incurred by the Subordination Agent (or reasonably expected to be
incurred by the Subordination Agent for the period ending on the next
succeeding Regular Distribution Date, which shall not exceed $150,000 unless
approved in writing by the Controlling Party) or any Trustee or to reimburse
any Certificateholder or the Liquidity Provider in respect of payments made to
the Subordination Agent or any Trustee in connection with the protection or
realization of the value of the Equipment Notes or any Trust Indenture Estate
(collectively, the
Administration Expenses
);
·
to
the Liquidity Provider (a) to the extent required to pay all accrued and
unpaid Liquidity Expenses or (b) in the case of a Special Payment on
account of the redemption, purchase or prepayment of all of the Equipment Notes
issued pursuant to an Indenture (an
Equipment Note Special
Payment
), so long as no Indenture Event of Default has occurred
and is continuing under any Indenture, the amount of accrued and unpaid
Liquidity Expenses that are not yet due, multiplied by the Applicable Fraction
or, if an Indenture Event of Default has occurred and is continuing, clause
(a) will apply;
S-
65
·
to
the Liquidity Provider (i) (a) to the extent required to pay the
aggregate amount of accrued and unpaid interest on the Liquidity Obligations
or, (b) in the case of an Equipment Note Special Payment, so long as no
Indenture Event of Default has occurred and is continuing under any Indenture,
to the extent required to pay accrued and unpaid interest then in arrears on
the Liquidity Obligations plus an amount equal to the amount of accrued and
unpaid interest on the Liquidity Obligations not in arrears, multiplied by the
Applicable Fraction or, if an Indenture Event of Default has occurred and is
continuing, clause (a) will apply and (ii) if a Special Termination
Drawing has been made and has not been converted into a Final Drawing, the
outstanding amount of such Special Termination Drawing;
·
to
(i) the Liquidity Provider to the extent required to pay the outstanding
amount of all Liquidity Obligations and (ii) if applicable with respect to
any particular Liquidity Facility unless to replenish the Cash Collateral
Account with respect to such Liquidity Facility up to the Required Amount for
the related Class of Certificates, in the case of this clause (ii), (x) less
than 65% of the aggregate outstanding principal amount of all Equipment Notes
are Performing Equipment Notes and a Liquidity Event of Default has occurred
and is continuing under such Liquidity Facility or (y) a Final Drawing has
occurred under such Liquidity Facility;
·
to
the Subordination Agent, any Trustee or any Certificateholder to the extent
required to pay certain fees, taxes, charges and other amounts payable;
·
to
the Class A Trustee (a) to the extent required to pay accrued and
unpaid interest at the Stated Interest Rate on the Pool Balance of the Class A
Certificates or (b) in the case of an Equipment Note Special Payment, so
long as no Indenture Event of Default has occurred and is continuing under any
Indenture, to the extent required to pay any such interest that is then due
together with (without duplication) accrued and unpaid interest at the Stated
Interest Rate on the outstanding principal amount of the Series A
Equipment Notes held in the Class A Trust being redeemed, purchased or
prepaid or, if an Indenture Event of Default has occurred and is continuing,
clause (a) will apply;
·
to
the Class B Trustee (a) to the extent required to pay accrued and
unpaid Class B Adjusted Interest on the Class B Certificates or (b) in
the case of an Equipment Note Special Payment, so long as no Indenture Event of
Default has occurred and is continuing under any Indenture, to the extent
required to pay any such Class B Adjusted Interest that is then due or, if
an Indenture Event of Default has occurred and is continuing, clause (a) will
apply;
·
to
the Class A Trustee to the extent required to pay Expected Distributions
on the Class A Certificates;
·
to
the Class B Trustee (a) to the extent required to pay accrued and
unpaid interest at the Stated Interest Rate on the Pool Balance of the Class B
Certificates (other than Class B Adjusted Interest paid above) or, (b) in
the case of an Equipment Note Special Payment, so long as no Indenture Event of
Default has occurred and is continuing under any Indenture, to the extent
required to pay any such interest that is then due (other than Class B
Adjusted Interest paid above) together with (without duplication) accrued and
unpaid interest at the Stated Interest Rate on the outstanding principal amount
of the Series B Equipment Notes held in the Class B Trust and being
redeemed, purchased or prepaid or, if an Indenture Event of Default has
occurred and is continuing, clause (a) will apply; and
·
to
the Class B Trustee to the extent required to pay Expected Distributions
on the Class B Certificates.
S-
66
If one or more Classes of Additional Certificates are
issued, the priority of distributions in the Intercreditor Agreement may be
revised such that certain obligations relating to the Additional Certificates
may rank ahead of certain obligations with respect to the Certificate. See Possible
Issuance of Additional Certificates and Refinancing of Certificates. (Intercreditor Agreement, Section 3.2)
Applicable Fraction
means, with respect to any Special Distribution Date, a fraction, the numerator
of which shall be the amount of principal of the applicable Series A Equipment
Notes and Series B Equipment Notes being redeemed, purchased or prepaid on
such Special Distribution Date and the denominator of which shall be the
aggregate unpaid principal amount of all Series A Equipment Notes and Series B
Equipment Notes outstanding as of such Special Distribution Date. The
definition of Applicable Fraction will be revised if Additional Certificates
are issued. See Possible Issuance of Additional Certificates and Refinancing
of Certificates.
Liquidity Obligations
means all principal, interest, fees and other amounts owing to a Liquidity
Provider under its Liquidity Facility or certain other agreements.
Liquidity Expenses
means all Liquidity Obligations other than (i) the principal amount of any
drawings under the Liquidity Facilities and (ii) any interest accrued on
any Liquidity Obligations.
Class B Adjusted
Interest
means, as of any Distribution Date, (I) any
interest described in clause (II) of this definition accruing prior
to the immediately preceding Distribution Date which remains unpaid and (II) interest
at the Stated Interest Rate for the Class B Certificates (x) for the
number of days during the period commencing on, and including, the immediately
preceding Distribution Date (or, if the current Distribution Date is the first
Distribution Date, the Issuance Date) and ending on, but excluding, the current
Distribution Date, on the Preferred B Pool Balance on such Distribution Date
and (y) on the principal amount calculated pursuant to clauses (B)(i),
(ii), (iii) and (iv) of the definition of Preferred B Pool Balance
for each Series B Equipment Note with respect to which a disposition,
distribution, sale or Deemed Disposition Event has occurred since the
immediately preceding Distribution Date (but only if no such event has
previously occurred with respect to such Series B Equipment Note), for
each day during the period, for each such Series B Equipment Note,
commencing on, and including, the immediately preceding Distribution Date (or,
if the current Distribution Date is the first Distribution Date, the Issuance
Date) and ending on, but excluding the date of disposition, distribution, sale
or Deemed Disposition Event with respect to such Series B Equipment Note,
Aircraft or Collateral under (and as defined in) the related Indenture, as the
case may be.
Preferred B Pool Balance
means, as of any date, the excess of (A) the Pool Balance of the Class B
Certificates as of the immediately preceding Distribution Date (or, if such
date is on or before the first Distribution Date, the original aggregate face
amount of the Class B Certificates) (after giving effect to distributions
made on such date) over (B) the sum of (i) the outstanding principal
amount of each Series B Equipment Note that remains unpaid as of such date
subsequent to the disposition of the Collateral under (and as defined in) the
related Indenture and after giving effect to any distributions of the proceeds
of such disposition applied under such Indenture to the payment of each such Series B
Equipment Note, (ii) the outstanding principal amount of each Series B
Equipment Note that remains unpaid as of such date subsequent to the scheduled
date of mandatory redemption of such Series B Equipment Note following an
Event of Loss with respect to the Aircraft subject to the lien of the related
Indenture and after giving effect to the distributions of any proceeds in
respect of such Event of Loss applied under such Indenture to the payment of
each such Series B Equipment Note, (iii) the excess, if any, of (x) the
outstanding amount of principal and interest as of the date of sale of each Series B
Equipment Note previously sold over (y) the purchase price received with
respect to the sale of such Series B Equipment Note (net of any applicable
costs and expenses of sale) and (iv) the outstanding principal amount of
any Series B Equipment Note with respect to which a Deemed Disposition
Event has occurred; provided, however, that if more than one of the clauses
(i), (ii), (iii) and (iv) is applicable to any one Series B Equipment
Note, only the amount
S-
67
determined pursuant to the
clause that first became applicable shall be counted with respect to such Series B
Equipment Note.
Non-Performing Equipment
Note
means an Equipment Note that is not a Performing Equipment
Note.
Expected Distributions
means, with respect to the Certificates of any Trust on any Distribution Date,
the difference between (x) the Pool Balance of such Certificates as of the
immediately preceding Distribution Date (or, if the Current Distribution Date
is the first Distribution Date, the original aggregate face amount of the
Certificates of such Trust) and (y) the Pool Balance of such Certificates
as of the Current Distribution Date calculated on the basis that (i) the
principal of the Non-Performing Equipment Notes held in such Trust has been
paid in full and such payments have been distributed to the holders of such
Certificates, (ii) the principal of the Performing Equipment Notes held in
such Trust has been paid when due (but without giving effect to any
Acceleration of Performing Equipment Notes except to the extent monies are
received as a result of such Acceleration) and such payments have been
distributed to the holders of such Certificates and (iii) the principal of
any Equipment Notes formerly held in such Trust that have been sold has been
paid in full and such payments have been distributed to the holders of such
Certificates.
Actual
Disposition Event
means, in
respect of any Equipment Note: (i) the disposition of the Aircraft (as
defined in the Indenture pursuant to which such Equipment Note was issued) for
cash, (ii) the occurrence of the mandatory redemption date for such
Equipment Note following an Event of Loss (as defined in such Indenture) with
respect to such Aircraft or (iii) the sale of such Equipment Note for
cash.
Deemed
Disposition Event
means, in
respect of any Equipment Note, the continuation of an Indenture Event of
Default in respect of such Equipment Note without an Actual Disposition Event
occurring in respect of such Equipment Note for a period of five years from the
date of the occurrence of such Indenture Event of Default.
For purposes of calculating Expected Distributions
with respect to the Certificates of any Trust, any Premium paid on the
Equipment Notes held in such Trust that has not been distributed to the
Certificateholders of such Trust (other than such Premium or a portion thereof
applied to the payment of interest on the Certificates of such Trust or the
reduction of the Pool Balance of such Trust) will be added to the amount of
Expected Distributions.
Interest Drawings under
the Liquidity Facilities and withdrawals from the Cash Collateral Accounts in
each case in respect of interest on the Certificates of any Trust will be
distributed to the Trustee for such Trust, notwithstanding the priority of
distributions set forth in the Intercreditor Agreement and otherwise described
herein. All amounts on deposit in the Cash Collateral Account for any Trust
which are in excess of the Required Amount for such Trust and all investment
earnings on such amounts on deposit in the Cash Collateral Account will be paid
to the applicable Liquidity Provider.
Voting of Equipment
Notes
In the event that the
Subordination Agent, as the registered holder of any Equipment Note, receives a
request for its consent to any amendment, modification or waiver under such
Equipment Note or other related document, (i) if no Indenture Event of
Default with respect thereto shall have occurred and be continuing, the
Subordination Agent shall request instructions for each Series of
Equipment Notes from the Trustee of the Trust which holds such Series of
Equipment Notes and shall vote or consent in accordance with the directions of
such Trustee and (ii) if any Indenture Event of Default shall have
occurred and be continuing with respect to such Indenture, the Subordination
Agent will exercise its voting rights as directed by the Controlling Party;
provided that no such amendment, modification or waiver shall, without the
consent of each affected Certificateholder and each Liquidity Provider, reduce
the amount of
S-
68
principal
or interest payable by Northwest under any Equipment Note, change the time of
payments or method of calculation of any amount under any Equipment Note,
provided that no such amendment, modification or waiver shall, without the
consent of each Liquidity Provider and each affected Certificateholder holding
Certificates representing a Fractional Undivided Interest in the Series of
Equipment Notes under the applicable Indenture held by the Subordination Agent,
reduce the amount of principal or interest payable by Northwest under any
Equipment Note, change the time of payments or method of calculation of any
amount under any Equipment Note. (Intercreditor Agreement, Section 9.1(b))
List of Certificateholders
Upon the occurrence of an
Indenture Event of Default the Subordination Agent shall instruct the Trustees
to, and the Trustees shall, request that DTC post on its Internet bulletin
board a securities position listing setting forth the names of all the parties
reflected on DTCs books as holding interests in the Certificates.
Reports
Promptly after the
occurrence of a Triggering Event or an Indenture Event of Default resulting
from the failure of Northwest to make payments on any Equipment Note and on
every Regular Distribution Date while the Triggering Event or such Indenture
Event of Default shall be continuing, the Subordination Agent will provide to
the Trustees, Liquidity Providers, Rating Agencies and Northwest a statement
setting forth the following information:
(i) after a bankruptcy of Northwest, with
respect to each Aircraft, whether such Aircraft is (A) subject to the 60-day
period of Section 1110 of the Bankruptcy Code (the
60-Day
Period
), (B) subject to an election by Northwest under Section 1110(a) of
the Bankruptcy Code; (C) covered by an agreement contemplated by Section 1110(b) of
the Bankruptcy Code or (D) not subject to any of (A), (B) or (C);
(ii) to the best of the Subordination Agents
knowledge, after requesting such information from Northwest, (A) whether
the Aircraft are currently in service or parked in storage, (B) the
maintenance status of the Aircraft, and (C) location of the Engines (as
defined in the Indentures). Northwest has agreed to provide such information
upon request of the Subordination Agent but no more frequently than every three
months with respect to each Aircraft, so long as it is subject to the lien of
an Indenture;
(iii) the current Pool Balance of the Certificates,
the Preferred B Pool Balance and outstanding principal amount of all Equipment
Notes;
(iv) the expected amount of interest which will
have accrued on the Equipment Notes and on the Certificates as of the next
Regular Distribution Date;
(v) the amounts paid to each person on such
Distribution Date pursuant to the Intercreditor Agreement;
(vi) details of the amounts paid on such
Distribution Date identified by reference to the relevant provision of the
Intercreditor Agreement and source of payment (by Aircraft and party);
(vii) if the Subordination Agent has made a Final
Drawing under any Liquidity Facility;
(viii) the amounts currently owed to any Liquidity
Provider;
(ix) the amounts drawn under each Liquidity
Facility; and
(x) after the
occurrence of a Northwest Bankruptcy Event, any operational reports filed by
Northwest with the Bankruptcy Court which are available to the Subordination
Agent on a non-confidential basis.
S-
69
The Subordination
Agent
U.S. Bank National Association, a national banking
association, will be the Subordination Agent under the Intercreditor Agreement.
Northwest and its affiliates may from time to time enter into banking and
trustee relationships with the Subordination Agent and its affiliates. The
Subordination Agents address is 1 Federal Street, 3
rd
Floor, Boston, Massachusetts 02110, Attention:
Corporate Trust Department.
The Subordination Agent may resign at any time, in
which event a successor Subordination Agent will be appointed as provided in
the Intercreditor Agreement. Either the Controlling Party or the Liquidity Provider
may remove the Subordination Agent for cause as provided in the Intercreditor
Agreement. In such circumstances, a successor Subordination Agent will be
appointed as provided in the Intercreditor Agreement. Any resignation or
removal of the Subordination Agent and appointment of a successor Subordination
Agent does not become effective until acceptance of the appointment by the
successor Subordination Agent.
S-
70
DESCRIPTION OF THE
EQUIPMENT NOTES
The following description
of the terms of the Equipment Notes supplements (and, to the extent
inconsistent therewith, replaces) the description of the general terms and
provisions relating to the Equipment Notes, the Indentures, the Participation
Agreements and the Note Purchase Agreement set forth in the Prospectus. The
summaries make use of terms defined in and are qualified in their entirety by
reference to all of the provisions of the Equipment Notes, the Indentures, the
Participation Agreements and the Note Purchase Agreement, which will be filed
as exhibits to an Annual Report on Form 10-K, a Quarterly
Report on Form 10-Q, or a Current Report on Form 8-K to
be filed by NWA Corp. with the Commission. Except as otherwise indicated, the
following summaries relate to the Equipment Notes, the Indenture and the
Participation Agreement that may be applicable to each Aircraft.
General
With respect to each
Aircraft, the Equipment Notes will be issued in two series, the
Series A Equipment Notes
, and
the
Series B Equipment Notes
(together, the
Equipment Notes
). See Possible
Issuance of Additional Certificates and Refinancing of Certificates for the
possible issuance of additional Equipment Notes. The Equipment Notes with respect
to each Aircraft will be issued under a separate Indenture between Northwest
and U.S. Bank National Association, as indenture trustee thereunder (each, a
Loan Trustee
). The Indentures will
not provide for defeasance, or discharge upon deposit of cash or certain
obligations of the United States, notwithstanding the description of defeasance
in the Prospectus. Northwests obligations under the Equipment Notes issued
with respect to each Aircraft will be general obligations of Northwest.
Subordination
Series A Equipment Notes issued in respect of an
Aircraft will rank equally with one another in right of payment and will rank
senior to other Equipment Notes issued in respect of such Aircraft.
Series B Equipment Notes issued in respect of an Aircraft will be
subordinated in right of payment to the Series A Equipment Notes issued in
respect of such Aircraft. (Indentures, Section 2.15)
On each Equipment Note payment date, payments of
interest and principal due on Series A Equipment Notes issued in respect of
an Aircraft will be made prior to payments of interest and principal due on Series B
Equipment Notes issued in respect of such Aircraft. (Indentures, Article III)
If Northwest elects to issue Additional Equipment
Notes with respect to an Aircraft, they will be subordinated in right of
payment to the Series A and Series B Equipment Notes issued with
respect to such Aircraft. See Possible Issuance of Additional Certificates and
Refinancing of Certificates.
With respect to amounts
received following an Indenture Event of Default under an Indenture, after
payment in full of the Series A and Series B Equipment Notes (and any
Additional Equipment Notes) issued under such Indenture, any excess proceeds
will be available to pay any shortfalls then due in respect of Equipment Notes
issued under each other Indenture and held by the Subordination Agent in the
following order of prioritySeries A, Series B and Additional
Equipment Notesratably as to each such series. In the absence of any such
shortfall, excess proceeds, if any, will be held by the relevant Loan Trustee
as additional collateral for such other Equipment Notes. See Security.
Principal and Interest Payments
Subject to the provisions of the Intercreditor
Agreement, interest paid on the Equipment Notes held in each Trust will be
passed through to the Certificateholders of each such Trust on the dates and at
the rate per annum applicable to the Certificates issued by such Trust until
the final expected Regular Distribution Date for such Trust. Subject to the
provisions of the Intercreditor Agreement, principal paid
S-
74
on the Equipment Notes
held in each Trust will be passed through to the Certificateholders of such
Trust in scheduled amounts until the final expected Regular Distribution Date
for such Trust.
Interest will be payable on the unpaid principal
amount of each Equipment Note at the rate applicable to such Equipment Note on May 1
and November 1, of each year, commencing on the first such date to occur
after initial issuance thereof. Such interest will be computed on the basis of
a 360-day year of twelve 30-day months. Overdue amounts of
principal, Make-Whole Premium and interest on such Series of Equipment
Notes will bear interest at a rate equal to at least 1.00% per annum over the
applicable rate on such Series of Equipment Notes.
Scheduled principal payments on the Equipment Notes
will be made on May 1 and November 1 in certain years. See Description
of the CertificatesPool Factors for a discussion of the scheduled payments of
principal of the Equipment Notes and possible revisions thereto and
The final payment made under each Equipment Note will
be in an amount sufficient to discharge in full the unpaid principal amount,
Make-Whole Premium (if any) and to the extent permitted by law, interest and
any other amounts payable but unpaid.
If any date scheduled for
a payment of principal, Make-Whole Premium (if any) or interest with respect to
the Equipment Notes is not a Business Day, such payment will be made on the
next succeeding Business Day with the same force and effect as if made on such
scheduled payment date and without any additional interest.
Redemption
If an Event of Loss occurs with respect to an Aircraft
and such Aircraft is not replaced by Northwest under the related Indenture, the
Equipment Notes issued with respect to such Aircraft will be redeemed, in
whole, in each case at a price equal to the aggregate unpaid principal amount
thereof, together with accrued interest thereon, to the date of redemption and
other amounts payable to the holders of the Equipment Notes under the
applicable Indenture and Participation Agreement, but without Make-Whole
Premium, on a Special Distribution Date. (Indentures, Section 2.10(a))
All, but not less than all, of the Equipment Notes
issued with respect to an Aircraft may be redeemed prior to maturity at any
time at the option of Northwest, in each case at a price equal to 100% of the
unpaid principal thereof, together with accrued interest thereon to, but not
including, the date of redemption, plus a Make-Whole Premium, if any, and
certain other amounts. (Indentures, Section 2.11(a)) If notice of such a
redemption is given in connection with the redemption of Equipment Notes with
respect to an Aircraft, such notice may be revoked not later than three days
prior to the proposed redemption date. (Indentures, Section 2.12)
Northwest may elect to redeem the Series B
Equipment Notes with respect to all Aircraft in connection with a refinancing
of such Series at any time. See Possible Issuance of Additional Certificates
and Refinancing of Certificates. The redemption price in the case of such
refinancing of Series B Equipment Notes will be equal to 100% of the
aggregate unpaid principal amount of all Equipment Notes of such Series,
together with accrued and unpaid interest thereon to, but not including, the
date of redemption, plus a Make-Whole Premium, if any, and certain other
amounts. (Indentures, Section 2.11(b))
Additionally, Northwest may elect to redeem all (but
not less than all) of the Series B Equipment Notes with respect to all the
Aircraft at any time; provided, that the Series B Equipment Notes may be
so redeemed only if the Rating Agencies shall have provided a confirmation that
such redemption will not result in a withdrawal, suspension or downgrading of
the ratings on any Class of Certificates then rated by the Rating Agencies
that will remain outstanding. The redemption price in the case of such optional
redemption of the Series B Equipment Notes will be equal to the aggregate
unpaid principal amount thereof, together with accrued and unpaid interest
thereon to, but not including, the date of redemption,
S-
75
plus Make-Whole Premium,
if any, and certain other amounts. Such redemption of the Series B
Equipment Notes may occur without the issuance of any new equipment notes.
(Indentures, Section 2.11(c))
Make-Whole Premium
means, with respect to any Equipment Note, the amount (as determined by an
independent investment banker selected by Northwest and reasonably acceptable
to the relevant Loan Trustees) by which (a) the present value of the
remaining scheduled payments of principal and interest from the redemption date
to maturity of such Equipment Note computed by discounting each payment on a
semiannual basis from each payment date under the applicable Indenture
(assuming a 360-day year of twelve 30-day months) using a discount
rate equal to the Treasury Yield plus the Make-Whole Spread exceeds (b) the
outstanding principal amount of such Equipment Note plus accrued interest to
the date of determination.
For purposes of determining the Make-Whole Premium,
Treasury Yield
means, at the time
of determination with respect to any Equipment Note, the interest rate
(expressed as a semiannual equivalent and as a decimal and, in the case of
United States Treasury bills, converted to a bond equivalent yield) determined
to be the per annum rate equal to the semiannual yield to maturity for United
States Treasury securities maturing on the Average Life Date of such Equipment
Note and trading in the public securities markets either as determined by
interpolation between the most recent weekly average yield to maturity for two
series of United States Treasury securities trading in the public securities
markets, (A) one maturing as close as possible to, but earlier than, the
Average Life Date of such Equipment Note and (B) the other maturing as
close as possible to, but later than, the Average Life Date of such Equipment
Note, in each case as published in the most recent H.15(519) or, if a
weekly average yield to maturity for United States Treasury securities maturing
on the Average Life Date of such Equipment Note is reported in the most recent
H.15(519), such weekly average yield to maturity as published in such
H.15(519).
H.15(519)
means the weekly
statistical release designated as such, or any successor publication, published
by the Board of Governors of the Federal Reserve System. The date of
determination of a Make-Whole Premium will be the third Business Day prior to
the applicable payment or redemption date and the
most
recent H.15(519)
means the H.15(519) published prior to
the close of business on the third Business Day prior to the applicable payment
or redemption date.
Average Life Date
for any Equipment Note to be redeemed means the date which follows the
redemption date by a period equal to the Remaining Weighted Average Life at the
redemption date of such Equipment Note.
Remaining Weighted Average
Life
of an Equipment Note, at the redemption date of such
Equipment Note, means the number of days equal to the quotient obtained by
dividing (a) the sum of the products obtained by multiplying (i) the
amount of each then remaining installment of principal of such Equipment Note,
including the payment due on the maturity date of such Equipment Note, by (ii) the
number of days from and including the redemption date to but excluding the
scheduled payment date of such principal installment, by (b) the then
unpaid principal amount of such Equipment Note.
Make-Whole
Spread
means (i) in the case of Series A Equipment
Notes, 0.45% and (ii) in the case of Series B Equipment Notes, 0.60%.
Security
The Equipment Notes issued with respect to each
Aircraft will be secured by a first priority security interest in the Aircraft,
as well as all rents, profits and other income of such Aircraft, certain rights
under the aircraft purchase agreement between Northwest and the Aircraft
manufacturer, all requisition proceeds with respect to such Aircraft, all
insurance proceeds with respect to the Aircraft (other than proceeds under
third party liability policies), all monies and securities deposited with the
related Loan Trustee, and all proceeds of the foregoing. (Indentures, Granting
Clause).
S-
76
The obligations under each Indenture will be
cross-collateralized as each Indenture will secure all amounts owing under all
the Indentures. As a result of the cross-collateralization, any proceeds from
the exercise of remedies with respect to an Aircraft in excess of the amounts
due with respect to such Aircraft will be available to cover any shortfalls
then due under Equipment Notes then held by the Subordination Agent issued with
respect to the other Aircraft. In the absence of any such shortfall, excess
proceeds, if any, will be held by the relevant Loan Trustee as additional collateral
for such other Equipment Notes. Any cash collateral held as a result of the
cross-collateralization of the Equipment Notes would not be entitled to the
benefits of Section 1110 of the Bankruptcy Code.
A cross-default in the Indentures occurs only if all
amounts owing under any Equipment Note held by the Subordination Agent issued
under another Indenture or other amounts secured by another Indenture with
respect to which the Subordination Agent then holds any Equipment Notes, which
amounts are then due and payable, have not been paid in full on the Final
Payment Date and, in the case of amounts other than principal, interest or
Make-Whole Premium, such failure shall have continued unremedied for twenty
(20) Business Days after receipt by Northwest of written demand therefor.
Therefore, prior to the triggering of the cross-default, if the Equipment Notes
issued under one or more Indentures are in default and the Equipment Notes
issued under the remaining Indentures are not in default, no remedies will be exercisable
under such remaining Indentures.
So long as no Related Payment Default or Indenture
Event of Default under any other Indenture has occurred and is continuing
(except in the case of a redemption of Equipment Notes in connection with an
Event of Loss with respect to an Aircraft in which case such limitation shall
not apply), if (x) Northwest exercises its right to redeem all the
Equipment Notes under an Indenture or (y) in any other
circumstance
, all of the Equipment Notes
under an Indenture are paid in full, the Aircraft subject to the lien of such
Indenture would be released. Once the lien on an Aircraft is released, that
Aircraft will no longer secure the amounts owing under the other Indentures.
Related Payment Default
means, with respect to any Indenture, the failure by Northwest to pay when due (i) any
amount of principal of, or interest on, any Equipment Note issued under any
other Indenture or (ii) any other amounts secured by any other Indenture
(other than principal or interest on the Equipment Notes issued thereunder) in
excess, either individually or in the aggregate, of $25,000.
In addition, if an
Equipment Note ceases to be held by the Subordination Agent (as a result of
sale upon the exercise of remedies, the exercise by Certificateholders of their
right to buy Equipment Notes or otherwise), it will cease to be entitled to the
benefits of cross-collateralization. After any exercise by Certificateholders
of their right to buy Equipment Notes under any Indenture, the remaining
Equipment Notes issued under such Indenture that continue to be held by the
Subordination Agent will continue to be entitled to the benefits of
cross-collateralization.
Loan to Value
Ratios of Equipment Notes
The tables in Appendix VI show the aggregate loan to
aircraft value ratios for the Equipment Notes issued for each Aircraft as of May 1,
2009 and each Regular Distribution Date occurring thereafter. The LTV was
obtained by dividing (i) the outstanding balance (assuming no payment
default) of such Equipment Notes determined immediately after giving effect to
the payments scheduled to be made on each such Regular Distribution Date by (ii) the
assumed value (the
Assumed
Aircraft Value
) of the Aircraft securing such Equipment
Notes. The table assumes that (i) no prepayments of interest or principal
on the Equipment Notes will occur and (ii) no payment defaults shall have
occurred and be continuing with respect to the Equipment Notes.
The tables in Appendix VI
are based on the assumption that the value of the Aircraft set forth opposite
the initial Regular Distribution Date included in the table depreciates by
approximately 3% of the initial appraised value per year. Other rates or
methods of depreciation would result in materially
S-
77
different
loan to Aircraft value ratios, and no assurance can be given (i) that the
depreciation rates and method assumed for the purposes of the tables are the
ones most likely to occur or (ii) as to the actual future value of any
Aircraft. Thus the table should not be considered a forecast or prediction of
expected or likely loan to Aircraft value ratios, but simply a mathematical
calculation based on one set of assumptions.
Limitation of
Liability
The Equipment Notes issued with respect to the
Aircraft will be direct obligations of Northwest and will be guaranteed by NWA
Corp.
Except as otherwise
provided in the Indentures, no Loan Trustee, in its individual capacity, will
be answerable or accountable under the Indentures or under the Equipment Notes
under any circumstances except, among other things, for its own willful
misconduct or gross negligence.
Indenture Events of
Default, Notice and Waiver
Indenture Events of Default under each Indenture will
include: (i) the failure by Northwest to pay any interest, principal or
Make-Whole Premium, if any, under any Equipment Note issued thereunder within
10 Business Days after the same shall have become due, or the failure by
Northwest to pay any other amounts payable to the Note Holders under such
Indenture or the related Participation Agreement within 10 Business Days after
Northwest receives written demand from the related Loan Trustee or holder of an
Equipment Note, (ii) any representation or warranty made by Northwest in
such Indenture, the related Participation Agreement, or certain related documents
furnished to the Loan Trustee or any holder of an Equipment Note pursuant
thereto being false or incorrect when made in any material respect that
continues to be material and adverse to the interests of the Loan Trustee or
Note Holders and remains unremedied after notice and specified cure periods, (iii) failure
by Northwest to perform or observe in any material respect, any covenant or
obligation for the benefit of the Loan Trustee or holders of Equipment Notes
under such Indenture or certain related documents that continues after notice
and specified cure periods, (iv) the occurrence of certain events of
bankruptcy, reorganization or insolvency of Northwest or (v) if any
amounts owing under any Equipment Note held by the Subordination Agent issued
under another Indenture or other amounts secured by another Indenture with
respect to which the Subordination Agent then holds any Equipment Notes, which
amounts are then due and payable, have not been paid in full on the Final
Payment Date and, in the case of amounts other than principal, interest or
Make-Whole Premium, such failure shall have continued unremedied for twenty
(20) Business Days after receipt by Northwest of written demand therefor. (Indentures,
Section 4.01) The only cross-default provision in the Indentures is an
event of default under each Indenture which occurs if any amounts secured by
any other Indenture that are due and payable on the Final Payment Date are not
paid in full on the Final Payment Date. Consequently, prior to the triggering
of the cross-default, events resulting in an Indenture Event of Default under
any particular Indenture may or may not result in an Indenture Event of Default
under any other Indenture. Until the triggering of the cross-default, if the
Equipment Notes issued with respect to one or more Aircraft are in default and
the Equipment Notes issued with respect to the remaining Aircraft are not in
default, no remedies will be exercisable under the Indentures with respect to
the remaining Aircraft.
The holders of a majority
in aggregate unpaid principal amount of the Equipment Notes outstanding on such
date issued with respect to any Aircraft, by notice to the Loan Trustee, may on
behalf of all the holders waive any existing default and its consequences under
the Indenture with respect to such Aircraft, except a default in the payment of
the principal of, or premium or interest on any such Equipment Notes or a
default in respect of any covenant or provision of such Indenture that cannot
be modified or amended without the consent of each holder of Equipment Notes.
(Indentures, Section 4.06)
S-
78
Remedies
Each Indenture provides that if an Indenture Event of
Default occurs and is continuing, the related Loan Trustee may, and upon
receipt of written demand from the holders of a majority in principal amount of
the Equipment Notes outstanding under such Indenture will, declare the
principal of all such Equipment Notes issued thereunder immediately due and
payable, together with all accrued but unpaid interest thereon (but without
Make-Whole Premium). If certain events of bankruptcy, reorganization or
insolvency occur with respect to Northwest, such amounts shall, subject to
applicable law, be due and payable without any declaration or other act on the
part of the related Loan Trustee or holders of the Equipment Notes. The holders
of a majority in principal amount of Equipment Notes outstanding under such
Indenture may rescind any such declaration at any time before the judgment or
decree for the payment of the money so due is entered if (i) there has
been paid to the related Loan Trustee an amount sufficient to pay all principal
and interest on any such Equipment Notes, to the extent such amounts have
become due otherwise than by such declaration of acceleration and (ii) all
other Indenture Events of Default and events which with the giving of notice or
lapse of time or both would become Indenture Events of Default under such
Indenture have been cured or waived. (Indentures, Section 4.02(b))
Each Indenture provides that if an Indenture Events of
Default under such Indenture has occurred and is continuing, the related Loan
Trustee may exercise certain rights or remedies available to it under such
Indenture or under applicable law.
Until the triggering of the cross-default, as described
in Indenture Events of Default; Notice and Waiver, if the Equipment Notes
issued in respect of one Aircraft are in default, the Equipment Notes issued in
respect of the other Aircraft may not be in default, and, if not, no remedies
will be exercisable under the applicable Indentures with respect to such other
Aircraft.
Section 1110 of the Bankruptcy Code (
Section 1110
) provides that,
subject to the limitation specified therein, the right of lessors and
conditional vendors of, and holders of security interests in, equipment (as
defined in Section 1110) to take possession of such equipment in
compliance with the provisions of a lease, conditional sale contract or
security agreement, as the case may be, and to enforce any of its rights or
remedies thereunder, is not affected after 60 days after the date of the
order for relief in a case under Chapter 11 of the Bankruptcy Code by any
provision of the Bankruptcy Code. Section 1110 provides that the right to
take possession of an aircraft and enforce other remedies may not be exercised
for 60 days following the date of the order for relief in reorganization
proceedings and may not be exercised at all after such 60-day period (or
such longer period consented to by the lessor, conditional vendor or holder of
a security interest and approved by the court), if the trustee in
reorganization agrees, subject to the approval of the court, to perform the
debtors obligations that become due on or after such date and cures all
existing defaults (other than defaults resulting solely from the financial
condition, bankruptcy, insolvency or reorganization of the debtor, the
appointment of a trustee or custodian or the failure to satisfy any penalty
rate or provision relating to a default arising from any failure by the debtor
to perform nonmonetary obligations under the applicable agreement).
Equipment
is defined in Section 1110,
in part, as an aircraft, aircraft engine, propeller, appliance, or spare part
(as defined in section 40102 of title 49 of the U.S. Code) that is
subject to a security interest granted by, leased to, or conditionally sold to
a debtor that, at the time such transaction is entered into, holds an air
carrier operating certificate issued pursuant to chapter 447 of title 49 of the
U.S. Code for aircraft capable of carrying 10 or more individuals or 6,000 pounds
or more of cargo.
Cadwalader, Wickersham &
Taft LLP, special counsel to Northwest, has advised the Loan Trustees that, if
Northwest were to become a debtor under Chapter 11 of the Bankruptcy Code, the
Loan Trustee would be entitled to the benefits of Section 1110 with
respect to the airframe and engines comprising the related Aircraft, but may
not be entitled to such benefits with respect to any replacement of an Aircraft
after an Event of Loss in the future. The replacement of any Aircraft is
conditioned upon the
S-
79
contemporaneous
delivery of an opinion of counsel to the effect that the related Loan Trustees
entitlement to benefits of Section 1110 would not be diminished as a
result of such replacement. This opinion is subject to certain qualifications
and assumptions, including the assumptions that Northwest at the time of
entering into the applicable Indenture holds an air carrier operating
certificate issued pursuant to chapter 447 of title 49 of the U.S. Code for
aircraft capable of carrying 10 or more individuals or 6,000 pounds or
more of cargo. See Certain Provisions of the IndenturesEvents of Loss. The
opinion of Cadwalader, Wickersham & Taft LLP, does not address the
availability of Section 1110 with respect to the bankruptcy proceedings of
any possible lessee of an Aircraft, if it is leased by Northwest. For a
description of certain limitations on the Loan Trustees exercise of rights
contained in the Indenture, see Indenture Events of Defaults, Notice and
Waiver.
Modification of
Indentures
Without the consent of holders of a majority in
principal amount of the Equipment Notes outstanding under any Indenture, the
provisions of such Indenture and the Participation Agreement corresponding
thereto may not be amended or modified, except to the extent indicated below.
Certain provisions of any Indenture and the
Participation Agreement related thereto may be amended or modified by the
parties thereto without the consent of the relevant Loan Trustee or any holders
of the Equipment Notes outstanding under such Indenture, subject to certain
conditions. Any Indenture may be amended without the consent of the holders of
Equipment Notes to, among other things, cure any defect or inconsistency in such
Indenture or the Equipment Notes issued thereunder, provided that such change
does not adversely affect the interests of any such holder or to provide for
the re-issuance thereunder of Series B Equipment Notes or the issuance
thereunder of one or more additional series of equipment notes (and the
re-issuance or issuance of equipment notes of the same designation under other
Indentures) and any related credit support arrangements. See Possible Issuance
of Additional Certificates and Refinancing of Certificates. (Indentures, Section 10.01(b))
Without the consent of the
holder of each Equipment Note outstanding under any Indenture affected thereby,
no amendment of or supplement to such Indenture may among other things (a) reduce
the principal amount of, or Make-Whole Premium, if any, or interest payable on,
any Equipment Notes issued under such Indenture or change the date on which any
principal or Make-Whole Premium, if any, or interest is due and payable, (b) create
any security interest with respect to the property subject to the lien of such
Indenture, except as provided in such Indenture, or deprive any holder of an
Equipment Note issued under such Indenture of the benefit of the lien of such
Indenture upon the property subject thereto or (c) reduce the percentage
in principal amount of outstanding Equipment Notes issued under such Indenture
necessary to modify or amend any provision of such Indenture or to waive
compliance therewith. (Indentures, Section 10.01(a))
Indemnification
Northwest will be required to indemnify each Loan
Trustee, each Liquidity Provider, the Subordination Agent, the Escrow Agent,
the Paying Agent and each Trustee, but not the holders of Certificates (unless
otherwise expressly agreed to by Northwest), for certain losses, claims and
other matters. Prior to seeking indemnification from the Indenture Estate, the
Loan Trustee will demand and take necessary action to pursue indemnification
under the Participation Agreement. If necessary, the Loan Trustee will be
entitled to indemnification from the Indenture Estate for any liability,
obligation, loss, damage, penalty, claim or action to the extent not reimbursed
by Northwest. The Loan Trustee will not be indemnified, however, for actions
arising from its gross negligence, willful misconduct or, in the case of
handling funds, negligence, or for the inaccuracy of any representation or
warranty made in its individual capacity under the Indenture.
S-
80
The Loan Trustee will not
be under any obligation to take any action, risk liability or expend its own
funds under the Indenture if it has reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk is not reasonably
assured to it.
The Guaranty
NWA Corp. will
irrevocably, fully and unconditionally guarantee the payment and performance of
all obligations of Northwest as obligor under the relevant Equipment Notes. If
Northwest fails to make a payment or perform a nonfinancial obligation when due
for any reason, including liquidation, bankruptcy or reorganization, NWA Corp.
will make the payment and perform the nonfinancial obligations. Each Guaranty
will be an absolute, present and continuing guaranty of performance and payment
rather than collectibility, and will not be contingent upon any attempt to
collect payment from or file suit against Northwest.
Certain Provisions
of the Indentures
Maintenance
Each Aircraft will be owned by Northwest.
Northwest will be obligated under each Indenture,
among other things and at its expense, to cause the related Aircraft to be duly
registered in the name of Northwest, to pay all costs of operating the Aircraft
and, to the extent set forth in such Indenture, to maintain, service, repair
and overhaul the Aircraft (or cause the Aircraft to be maintained, serviced,
repaired and overhauled) so as to keep the Aircraft in as good an operating
condition as when initially subjected to the lien of the Indenture, ordinary
wear and tear excepted, and in such condition as may be necessary to enable the
airworthiness certification of such Aircraft to be maintained in good standing
at all times (a) under the Federal Aviation Act except, subject to certain
limitations, when all aircraft of the same model and type powered by engines of
the same type and registered in the United States have been grounded by the
FAA, or (b) subject to certain limitations, under the applicable laws of
any other jurisdiction in which the Aircraft may be registered. Notwithstanding
anything to the contrary set forth above, Northwest will also be required to
cause the Aircraft then subject to such Indentures to be maintained in
accordance with maintenance standards approved by, or substantially equivalent
to those required by, the FAA or the central civil aviation authority of
Canada, France, Germany, Japan, the Netherlands or the United Kingdom. In all
cases Northwest will utilize, except when a lease is in effect, the same manner
and standards of maintenance, service, repair or overhaul used by Northwest
with respect to similar aircraft operated by Northwest in similar circumstances
and, during any period that a lease is in effect, cause the lessee thereunder
to agree to utilize the same manner and standards of maintenance, service,
repair or overhaul used by such lessee with respect to similar aircraft
operated by such lessee in similar circumstances. (Indentures, Section 7.02(a))
Northwest will not (and will not permit any lessee to)
maintain, use, service, repair, overhaul or operate any Aircraft in violation
of any law or any rule, regulation, order or certificate of any government
having jurisdiction over such Aircraft, or in violation of any airworthiness
certificate, license or registration relating to such Aircraft, except to the
extent Northwest (or any lessee) is in good faith contesting the validity or
application of any such requirements, in any reasonable manner which, and among
other things specified in each Indenture does not materially adversely affect
the relevant Loan Trustee. (Indentures, Section 7.02(a))
Northwest must make (or cause to be made) all
alterations, modifications and additions to each Airframe and Engine necessary
to meet the applicable standards of the FAA or any other applicable
governmental authority of another jurisdiction in which the Aircraft may be
registered;
provided, however,
that Northwest (or
any lessee) may in good faith contest the validity or application of any such
standards in
S-
81
any reasonable manner
which, among other things specified in each Indenture, does not adversely
affect the relevant Loan Trustee. Northwest (or any lessee) may add further
parts and make other alterations, modifications and additions to any Airframe
or any Engine as Northwest (or any lessee)
may deem desirable in the proper conduct of its business, including
removal of parts determined by Northwest (or any Lessee) in its reasonable
judgment to be obsolete or no longer suitable or appropriate for use, so long
as such alterations, modifications or additions, do not, among other things
specified in each Indenture, (x) materially diminish the value, utility or
remaining useful life of such Airframe or Engine, below the value, utility or
remaining useful life thereof immediately prior to such alteration, modification,
addition or removal (assuming such Airframe or Engine was maintained in
accordance with the Indenture), except that the value (but not the utility or
remaining useful life) of any Airframe or Engine may be reduced from time to
time by the value of the obsolete parts which are removed so long as the
aggregate value of such obsolete parts removed and not replaced shall not
exceed $300,000. In certain circumstances, Northwest (or any lessee) is
permitted to remove parts which were added by Northwest (or any lessee)
(without replacement) from an Airframe or Engine so long as certain conditions
are met and any such removal does not, among other things specified in each
Indenture, diminish or impair the value, utility or remaining useful life which
such Airframe or Engine would have had at such time had such addition,
alteration or modification not occurred. (Indentures, Section 7.03)
Except as set forth above,
Northwest will be obligated to replace or cause to be replaced all parts (other
than severable parts added at the option of Northwest or unsuitable parts that
Northwest is permitted to remove to the extent described above) that are
incorporated or installed in or attached to any Airframe or any Engine and
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use. Any such replacement parts become
subject to the lien of the related Indenture in lieu of the part replaced.
(Indentures, Section 7.03(a))
Registration, Leasing and Possession
Subject to the second succeeding sentence, Northwest
is required to keep each Aircraft duly registered under the Federal Aviation
Act with the FAA, and to record each Indenture under the Federal Aviation Act
(Indentures, Section 7.02(a)). In addition, Northwest will register the international
interests created pursuant to the Indentures under the Convention on
International Interests in Mobile Equipment and the Protocol to the Convention
on International Interests in Mobile Equipment on Matters Specific to Aircraft
Equipment which were signed in Cape Town, South Africa on November 16,
2001 (the
Cape Town Convention
)
(Participation Agreements, Section 11(b)). Although Northwest has no current intention to
do so, Northwest will be permitted, under certain circumstances, to register an
Aircraft in certain jurisdictions outside the United States, subject to certain
conditions specified in the related Participation Agreement. These conditions
include a requirement that the lien of the related Indenture will continue as a
first priority security interest in the applicable Aircraft. (Indentures, Section 7.02(a);
Participation Agreements, Section 8(f)) Northwest will also be permitted,
subject to certain limitations, to lease any Aircraft to any United States
certificated air carrier or to certain foreign entities. In addition, subject
to certain limitations, Northwest will be permitted to transfer possession of
any Airframe or any Engine other than by lease, including transfers of
possession by Northwest or any Lessee in connection with certain interchange
and pooling arrangements, transfers to the United States government and any
instrumentality or agency thereof, wet leases and transfers in connection
with maintenance or modifications. (Indentures, Section 7.02(b)) There are no general geographical
restrictions on Northwests (or any lessees) ability to operate the Aircraft.
The extent to which the relevant Loan Trustees lien would be recognized in an
Aircraft if such Aircraft were located in certain countries is uncertain. In
addition, any exercise of the right to repossess an Aircraft may be difficult,
expensive and time-consuming, particularly when such Aircraft is located
outside the United States and has been registered in a foreign jurisdiction or
leased to a foreign operator, and may be subject to the limitations and
requirements of applicable law, including the need to obtain consents or
approvals for deregistration
S-
82
or re-export of the
Aircraft, which may be subject to delays and political risk. When a defaulting
Lessee or other permitted transferee is the subject of a bankruptcy, insolvency
or similar event such as protective administration, additional limitations may
apply. Northwest currently indends to lease the Aircraft to Compass, subject to
the terms and limitations of the Indentures. However, the obligation to make
all payments under the Equipment Notes and the Indentures will remain with
Northwest.
In addition, at the time of foreclosing on the lien on
the Aircraft under the related Indenture, an Airframe subject to such Indenture
may not be equipped with Engines subject to the same Indenture and, in such
case, Northwest will be required to deliver engines attached to such Airframe
which have not less than equivalent value, utility and remaining useful life
(without regard to hours and cycles) as the Engines subject to such Indenture.
Notwithstanding Northwests agreement in each Indenture, in the event Northwest
fails to deliver engines that are attached on repossessed Aircraft, it could be
difficult, expensive and time-consuming to assemble an Aircraft consisting of
an Airframe and Engines subject to the Indenture. See Risk FactorsFactors
Related to the Certificates and the OfferingRepossession rights with respect
to an Aircraft.
The Cape Town Convention
provides that, subject to certain exceptions, a registered international
interest has priority over a subsequently registered interest and over an
unregistered interest for purposes of the law of those jurisdictions that have
ratified the Cape Town Convention. There are many jurisdictions in the world
that have not ratified the Cape Town Convention, and the Aircraft may be
located in any such jurisdiction from time to time. There is no legal precedent
with respect to the application of the Cape Town Convention in any jurisdiction
and therefore it is unclear how the Cape Town Convention will be applied.
Liens
Northwest will be required
to maintain each Aircraft free of any liens, other than the respective rights
of Northwest, as owner of the Aircraft, the lien of the Indenture, and any
other rights existing pursuant to the operative documents related thereto, the
rights of others in possession of the Aircraft in accordance with the terms of
the Indenture and other than certain other customary liens permitted under such
documents, including liens for taxes either not yet due or being contested in
good faith by appropriate proceedings so long as such proceedings do not, among
other things as may be specified in each Indenture, involve any material danger
of the sale, forfeiture or loss of or any interest therein; materialmens,
mechanics and other similar liens arising in the ordinary course of business
securing obligations that are not overdue for a period of more than
60 days, or are being contested in good faith by appropriate proceedings
not involving any material danger of the sale, forfeiture or loss of such
Airframe or Engines or any interest therein; judgment liens so long as such judgment
is discharged, vacated or reversed within 60 days or the execution of such
judgment is stayed pending appeal or discharged, vacated or reversed within
60 days after the expiration of such stay; any other lien with respect to
which Northwest (or any lessee) has provided a bond or other security adequate
in the reasonable opinion of the relevant Loan Trustee and any lien approved in
writing by the Loan Trustee. (Indentures, Section 7.01)
Insurance
Subject to certain exceptions, Northwest is obligated,
at its or any lessees expense, to maintain or cause to be maintained on each
Aircraft, with insurers of recognized responsibility, public liability and
property damage insurance (exclusive of manufacturers product liability
insurance) and all-risk aircraft hull insurance, in such amounts, covering such
risks and in such form as Northwest (or, if a lease is then in effect, as the
lessee) customarily maintains with respect to other aircraft owned or operated
by Northwest (or, if a lease is then in effect, by the lessee), in each case
similar to such Aircraft; provided, however, that, except to the extent of any
self-insurance, the all-risk hull insurance shall be at least in an amount
equal to 105% of the unpaid principal amount of the related Equipment Notes and
the public liability and property
S-
83
damage insurance shall be
in an amount of not less than (i) $200,000,000 per occurrence with respect
to an Aircraft. (Indentures, Sections 7.04(a) and 7.04(b))
Subject to certain exceptions, the policies covering
loss of or damage to an Aircraft shall be made payable, up to the unpaid
principal amount of the related Equipment Notes plus all accrued and unpaid
interest thereon, to the related Loan Trustee for any loss involving proceeds
in excess of $3,500,000 and the entire amount of any loss involving proceeds of
$3,500,000 or less shall be paid to Northwest so long as the related Loan
Trustee has not notified the insurers that an Indenture Event of Default
exists. (Indentures, Sections 7.04(b) and 7.04(g))
With respect to any insurance required, Northwest may
self-insure by way of deductible, premium adjustment or otherwise under a
program applicable to all aircraft in Northwests fleet; provided, that, the
aggregate amount of such self-insurance during any policy year shall not be in
excess of the lower of (a) 50% of the largest replacement value of any
single aircraft in Northwests fleet or (b) 1½% of the average aggregate
insurable value of all aircraft on which Northwest carries insurance. In
addition, Northwest (and any lessee) may self-insure to the extent of any
applicable minimum amount of hull or liability insurance deductible imposed by
the aircraft hull or liability insurers. (Indentures, Section 7.04(d))
In respect of each Aircraft, Northwest is required to
cause the relevant Loan Trustee and certain other persons to be included as
additional insureds as their respective interests may appear under all
insurance policies required by the terms of the Indenture with respect to such
Aircraft. (Indentures, Sections 7.04(a) and 7.04(b))
Subject to certain customary exceptions, Northwest may
not operate (or permit any lessee to operate) any Aircraft in any area that is
excluded from coverage by any insurance policy in effect with respect to such
Aircraft and required by the Indenture. (Indentures, Section 7.02(a))
Northwests obligation to
provide any required insurance shall be satisfied if indemnification from, or
insurance provided by, the United States government or one of certain other
permitted foreign governments or any agency or instrumentality thereof, against
the risks requiring such insurance under such Indenture is at least equal, when
added to the amount of insurance against such risks otherwise maintained by
Northwest (or any lessee), to the amount of insurance against such risks
otherwise required. (Indentures, Section 7.04(f))
Events of Loss
If an Event of Loss occurs with respect to any
Aircraft, Northwest will be obligated either (i) to replace such Aircraft
or (ii) to pay to the applicable Loan Trustee the outstanding principal
amount of the Equipment Notes relating to such Aircraft plus accrued and unpaid
interest thereon), together with certain additional amounts, but, in any case,
without any Make-Whole Premium. If Northwest elects to replace such Aircraft,
it must do so no later than the Business Day next succeeding the 120th day
after the related Event of Loss, with an airframe or airframe and engines of
the same or improved make and model free and clear of all liens (other than
certain permitted liens) and having a value, utility and remaining useful life
(without regard to hours or cycles) at least equal to such Aircraft immediately
prior to the Event of Loss, assuming maintenance thereof in accordance with the
related Indenture. Northwest is also required to provide to the relevant Loan
Trustee opinions of counsel to the effect, among other things, that (i) certain
specified documents have been duly filed for recordation under the Federal
Aviation Act (or comparable applicable law of the relevant jurisdiction of
registration) and certain registrations made with the International Registry
under the Cape Town Convention, if applicable, and (ii) such Loan Trustee
will be entitled to receive the benefits of Section 1110 with respect to
any such replacement airframe (unless, as a result of a change in law or court
interpretation, such benefits are not then available). If Northwest elects to
pay to the applicable Loan Trustee the outstanding principal amount of the
Equipment Notes relating to such Aircraft plus accrued and unpaid interest
thereon or elects to replace such Aircraft but fails to do
S-
84
so within the time periods
specified therefor, Northwest must make such payment not later than the
Business Day next succeeding 120 days after the related Event of Loss.
Upon the payment of the outstanding principal amount of the Equipment Notes
issued with respect to such Aircraft, together with all other amounts then due
and unpaid with respect to such Aircraft, which must be at least sufficient to
pay in full as of the date of payment the principal amount of the related
Equipment Notes and all accrued and unpaid interest due thereon (but without
any Make-Whole Premium), the lien of the Indenture relating to such Aircraft
will terminate with respect to such Aircraft, and the obligation of Northwest
thereafter to make the scheduled interest and principal payments with respect
to such Equipment Notes will cease. Amounts in excess of the amounts due and
owing under the Equipment Notes issued with respect to such Aircraft will be
distributed by such Loan Trustee to Northwest (Indentures, Sections 3.02 and
7.06(a))
If an Event of Loss occurs with respect to an Engine
alone, Northwest will be required to replace such Engine within 60 days
from the date of such Event of Loss with another engine, free and clear of all
liens (other than certain permitted liens), of the same or improved make and
model (subject to certain exceptions) and having a value, utility and remaining
useful life (without regard to hours or cycles) at least equal to the Engine
being replaced (assuming that such Engine had been maintained in accordance
with the Indentures). (Indentures, Section 7.06(b))
An
Event of Loss
with respect
to an Aircraft, Airframe or any Engine means any of the following events with respect
thereto:
(i)
loss of such property
or its use due to destruction or damage rendering repair uneconomic or such
property permanently unfit for normal use;
(ii)
any damage to such
property which results in an insurance settlement with respect to such property
on the basis of a total loss or constructive or compromised total loss;
(iii)
the theft, disappearance,
confiscation, condemnation or seizure of, or requisition of title to or use of,
such property (other than a requisition for use by the United States government
or certain other specified governments of registry of the Aircraft or any
agency or instrumentality thereof), involving, in the case of any event
referred to in this clause (iii) (other than a requisition of title),
loss of possession of such property for a period of more than 180 consecutive
days or, in the case of a requisition of title, such requisition has not been
reversed within 90 days;
(iv)
as a result of any law,
rule, regulation, order or other action by the FAA, or any other governmental
authority of the country of registry of such property, the use of such property
in the normal course of business of air transportation shall have been
prohibited for 180 consecutive days, unless Northwest (or any lessee), prior to
the expiration of such 180-day period, has undertaken and is diligently
carrying forward all steps necessary or desirable to permit normal use of such
property, but in any event (subject to certain limitations) if such prohibition
has continued for a period of three years; and
(v)
with respect to any
Engine, any divestiture of title to or interest in an Engine in connection with
pooling or certain other arrangements or any event with respect to an Engine
that is deemed to be an Event of Loss will be an Event of Loss with respect to
such Engine.
An Event of Loss with respect to an Aircraft is deemed
to have occurred if an Event of Loss occurs with respect to the Airframe which
is a part of such Aircraft. (Indentures, Annex A)
S-
85
POSSIBLE ISSUANCE
OF ADDITIONAL CERTIFICATES
AND REFINANCING OF CERTIFICATES
Issuance of
Additional Certificates
Northwest may elect to issue one or more additional
series of equipment notes (the
Additional Equipment Notes
)
at any time and from time to time with respect to any Aircraft, which will be
funded from sources other than this offering (the
Offering
)
but will be issued under the same Indenture as the Equipment Notes for such
Aircraft. Any Additional Equipment Note issued under an Indenture will be
subordinated in right of payment to the Series A Equipment Notes and Series B
Equipment Notes issued under such Indenture. Northwest will fund the sale of
any Additional Equipment Notes through the sale of pass through certificates
(the
Additional Certificates
)
issued by one or more Northwest pass through trusts (each, an
Additional Trust
).
The trustee of each Additional Trust will become a
party to the Intercreditor Agreement and the Intercreditor Agreement will be
amended by written agreement to provide for the subordination of the Additional
Certificates to the Administration Expenses, the Liquidity Obligations, the Class A
Certificates and the Class B Certificates. The priority of distributions
under the Intercreditor Agreement may be revised, however, with respect to each
class of Additional Certificates to provide for distribution of Adjusted
Interest with respect to each such class of Additional Certificates
(calculated in a manner substantially similar to the calculation of Class B
Adjusted Interest) after Class B Adjusted Interest, but before Expected
Distributions on the Class A Certificates.
Any such issuance of
Additional Equipment Notes and Additional Certificates, and any such amendment
of the Intercreditor Agreement is contingent upon each Rating Agency providing
written confirmation that such actions will not result in a withdrawal,
suspension, or downgrading of the rating of any Class of Certificates then
outstanding.
Refinancing of
Certificates
Northwest may elect to
redeem and re-issue Series B Equipment Notes (or any series of Additional
Equipment Notes) then outstanding (any such re-issued Equipment Notes, the
Refinancing Equipment Notes
) in
respect of all (but not less than all) of the Aircraft. In such case, Northwest
will fund the sale of such Refinancing Equipment Notes through the sale of pass
through certificates (the
Refinancing Certificates
)
issued by one or more Northwest pass through trusts (each, a
Refinancing Trust
). The trustee of
each Refinancing Trust will become a party to the Intercreditor Agreement, and
the Intercreditor Agreement will be amended by written agreement to provide for
the subordination of the Refinancing Certificates to the Administration
Expenses, the Liquidity Obligations, the Class A Certificates and, if
applicable, the Class B Certificates in the same manner that the
corresponding class of refinanced Certificates was subordinated. Such issuance
of Refinancing Equipment Notes and Refinancing Certificates, and any such
amendment of the Intercreditor Agreement is contingent upon each Rating Agency
providing written confirmation that such actions will not result in a
withdrawal, suspension, or downgrading of the rating of any Class of
Certificates that remains outstanding.
Additional Liquidity
Facilities
The Additional
Certificates and Refinancing Certificates may have the benefit of credit
support similar to the Liquidity Facilities and claims for fees, interest,
expenses, reimbursement of advances and other obligations arising from such credit
support may rank equally with similar claims in respect of the Liquidity
Facilities, so long as the prior written consent of the Liquidity Providers
shall have been obtained and each Rating Agency shall have provided written
confirmation that such actions will not result in a withdrawal, suspension, or
downgrading of the rating of any Class of Certificates then outstanding.
S-
86
CERTAIN U.S.
FEDERAL INCOME TAX CONSIDERATIONS
General
The following discussion represents the opinion of
Cadwalader, Wickersham & Taft LLP, special counsel to Northwest (
Tax Counsel
) as to the principal
U.S. federal income tax consequences to Certificateholders of the purchase,
ownership and disposition of the Certificates. Except as otherwise specified,
the discussion is addressed to beneficial owners of the Certificates that are
citizens or residents of the United States, corporations or partnerships
(including entities treated as such for U.S. federal income tax purposes)
created or organized in or under the laws of the United States, any State or
the District of Columbia, estates the income of which is subject to U.S.
federal income taxation regardless of its source or, generally, trusts if a
court within the United States is able to exercise primary supervision over the
administration of such trust, and one or more of the foregoing persons have the
authority to control all substantial decisions of such trust that will hold the
Certificates as capital assets (
U.S. Certificateholders
). This
discussion does not address the tax treatment of U.S. Certificateholders that
may be subject to special tax rules, such as banks, insurance companies,
dealers in securities or commodities, tax-exempt entities, holders that will
hold Certificates as part of a straddle or holders that have a functional
currency other than the U.S. dollar, nor does it address the tax treatment of
U.S. Certificateholders that do not acquire Certificates as part of the
initial offering. This summary does not purport to be a comprehensive
description of all of the tax considerations that may be relevant to a decision
to purchase the Certificates, and in particular does not describe any tax
consequences arising under the laws of any state or local taxing jurisdiction
in the United States or under the laws of any foreign country or taxing
jurisdiction thereof.
This discussion is based
upon the tax laws of the United States as in effect on the date of this
Prospectus Supplement, as well as judicial and administrative interpretations
thereof (in final or proposed form) available on or before such date. All of
the foregoing are subject to change or differing interpretations, which could
apply retroactively. Prospective investors should note that no rulings have
been or will be sought from the Internal Revenue Service (the
IRS
) with respect to any of the
U.S. federal income tax consequences discussed below, and no assurance can
be given that the IRS will not take contrary positions. This discussion
supplements the discussion in the Prospectus under the heading United States
Federal Income Tax Consequences and supersedes it to the extent inconsistent
therewith.
Prospective investors should consult their
own tax advisors with respect to the federal, state, local and foreign tax
consequences of the purchase, ownership and disposition of the Certificates.
Tax Status of the Trusts
In the opinion of Tax
Counsel, each Trust will not be classified as an association or a publicly
traded partnership taxable as a corporation for U.S. federal income tax
purposes and will not be subject to U.S. federal income tax. Each Trust
will file U.S. federal income tax returns and report to investors on the basis
that it is a grantor trust under Subpart E, Part I of Subchapter J of
chapter 1 of Subtitle A of the Code, and each Certificateholder by accepting a
Certificate has agreed to treat the applicable Trust similarly for federal
income tax purposes. If a Trust were treated as a partnership for U.S. federal
income tax purposes rather than as a grantor trust, in the opinion of
Cadwalader, Wickersham & Taft LLP, the consequences to U.S.
Certificateholders and, to the extent described below, Non-U.S.
Certificateholders, would not be materially different. See Taxation of
Certificate holdersTrusts Classified as Partnerships below. The Trusts, however,
are not indemnified for any U.S. federal income taxes that may be imposed upon
them, and the imposition of any such taxes on a Trust could result in a
reduction in amounts available for distributions to Certificateholders of such
Trust. The remainder of this discussion describes the consequences of the
treatment of each Trust as a grantor trust. Certificateholders who are not U.S. Persons
should consult their own tax advisors as to the suitability to them of an
investment in the Certificates.
S-
87
Taxation of U.S. Certificateholders
Generally
A U.S. Certificateholder will be treated as owning its
pro rata undivided interest in each of the Equipment Notes, and any other
property held by the related Trust as well as its pro rata undivided interest
in the relevant Deposits related to such Trust. Accordingly, each U.S.
Certificateholders share of interest paid on the Equipment Notes will be
taxable as ordinary income, as it is paid or accrued, in accordance with such
owners method of accounting for U.S. federal income tax purposes. Each U.S. Certificateholders
share of interest income on the Deposits will be taxable as it is paid or
accrued, in accordance with such holders method of accounting for U.S. federal
income tax purposes. Alternatively, the Deposits may be subject to the original
issue discount (
OID
) rules, with the result
that a U.S. Certificateholder may be required to include any such OID
income from a Deposit using the accrual method of accounting regardless of its
normal method. The U.S. federal income tax treatment of a U.S. Certificateholders
share of Make-Whole Premium, if any, paid on the Equipment Notes is unclear,
and U.S. Certificateholders should consult their own tax advisor with respect
thereto. Any amounts received by a Trust from Interest Drawings under the
relevant Liquidity Facility will be treated for U.S. federal income tax
purposes as having the same characteristics as the payments they replace.
Each U.S.
Certificateholder will be entitled to deduct, consistent with its method of accounting,
its pro rata share of fees and expenses paid or incurred by the corresponding
Trust as provided in Section 162 or 212 of the Code. Certain fees and
expenses, including fees paid to the Trustee and the Liquidity Provider, will
be borne by parties other than the Certificateholders. It is possible that such
fees and expenses will be treated as constructively received by the Trust, in
which event a U.S. Certificateholder will be required to include in income and
will be entitled to deduct its pro rata share of such fees and expenses. If a
U.S. Certificateholder is an individual, estate or trust, the deduction
for such holders share of such fees or expenses will be allowed only to the
extent that all of such holders miscellaneous itemized deductions, including
such holders share of such fees and expenses, exceed 2% of such holders
adjusted gross income. In addition, in the case of U.S. Certificateholders who
are individuals, certain otherwise allowable itemized deductions will be
subject generally to additional limitations on itemized deductions under the
applicable provisions of the Code.
Effect of Subordination of Subordinated
Certificateholders
If any Trust (such Trusts being the
Shortfall Trusts
and the related
Certificates being the
Shortfall Certificates
)
receives less than the full amount of the receipts of principal or interest
paid with respect to the Equipment Notes held by it (any shortfall in such
receipts being the
Shortfall Amounts
) because
of the subordination of the Equipment Notes held by such Trust under the
Intercreditor Agreement, the corresponding owners of beneficial interests in
the Shortfall Certificates issued by such Trust (the
Shortfall
Certificateholders
) would probably be treated for U.S. federal
income tax purposes as if they had (1) received as distributions their
full share of such receipts, (2) paid over to the relevant senior classes
of Certificateholders an amount equal to their share of such Shortfall Amount,
and (3) retained the right to reimbursement of such amounts to the extent
of future amounts payable to such Shortfall Certificateholders with respect to
such Shortfall Amount.
Under this analysis, (1) Shortfall
Certificateholders incurring a Shortfall Amount would be required to include as
current income any interest or other income of the related Shortfall Trust that
was a component of the Shortfall Amount, even though such amount was in fact
paid to another class or classes of Certificateholders, (2) a loss would
only be allowed to such Shortfall Certificateholders when their right to
receive reimbursement of such Shortfall Amount became worthless (i.e., when it
becomes clear that funds will not be available from any source to reimburse
such loss), and (3) reimbursement of such Shortfall Amount prior to such a
claim of worthlessness would not be taxable income to Shortfall
S-
88
Certificateholders
because such amount was previously included in income. These results should not
significantly affect the inclusion of income for Shortfall Certificateholders
on the accrual method of accounting, but could accelerate inclusion of income
to Shortfall Certificateholders on the cash method of accounting by, in effect,
placing them on the accrual method.
Original Issue Discount
It is anticipated that the
Equipment Notes will not be issued with OID for U.S. federal income tax
purposes. Generally, a holder of a debt instrument issued with OID that is not
de minimis must include such OID in income for U.S. federal income tax purposes
as it accrues, in advance of the receipt of the cash attributable to such
income, under a method that takes into account the compounding of interest.
Sale or Other Disposition of the Certificates
Upon the sale, exchange or
other disposition of a Certificate (including any related Deposit), a U.S. Certificateholder
generally will recognize capital gain or loss (subject to the possible
recognition of ordinary income under the market discount rules) equal to the
difference between the amount realized on the disposition (other than any
amount attributable to accrued interest which will be taxable as ordinary
income) allocable to the related Equipment Notes or other Trust property and
the related Deposit and the U.S. Certificateholders adjusted tax basis in the
related Equipment Notes and any other assets held by the corresponding Trust on
the one hand, and the related Deposit, on the other hand. A U.S. Certificateholders
adjusted tax basis in its undivided interest in related Equipment Notes will
equal the holders cost for its Certificate (other than the portion thereof
allocated to Deposits and not yet applied to the purchase of Equipment Notes or
distributed) less any payments of principal received and any previously
recognized losses. A U.S. Certificateholders basis allocable to the related
Deposit will be such U.S. Certificateholders pro rata share of the dollar
amount thereof. Net long-term capital gains of non-corporate taxpayers
generally are taxed at a lower maximum rate for property held for more than one
year than ordinary income and short-term capital gains of such taxpayer. The
deductibility of capital losses are subject to limitation.
Trusts Classified as Partnerships
If a Trust is classified
as a partnership (and not as a publicly traded partnership taxable as a
corporation) for U.S. federal income tax purposes, income or loss with respect
to the assets held by such Trust will be calculated at the Trust level but the
Trust itself will not be subject to U.S. federal income tax. A U.S.
Certificateholder would be required to report its share of such Trusts items
of income and deduction on its tax return for its taxable year within which the
Trusts taxable year (which should be a calendar year) ends as well as income
from its interest in the relevant Deposits. A U.S. Certificateholders basis in
its interest in the Trust would be equal to its purchase price therefor
(including its share of any funds withdrawn from the Depositary and used to
purchase Equipment Notes), plus its share of the Trusts net income, minus its
share of any net losses of the Trust, and minus the amount of any distributions
from the Trust. In the case of an original purchaser of a Certificate that is a
calendar year taxpayer, income or loss generally should be the same as it would
be if the Trust were classified as a grantor trust, except that income or loss
would be reported on an accrual basis even if the U.S. Certificateholder
otherwise uses the cash method of accounting. Non-U.S. Certificateholders (as
defined below) should not be subject to U.S. withholding tax to the extent
provided under Non-U.S. Certificateholders below and should not be
treated as engaged in a U.S. trade or business solely by reason of a Trust
being classified as a partnership.
Non-U.S. Certificateholders
Subject to the discussion of backup withholding below,
payments of principal and interest (including OID, if any) on the Equipment
Notes or with respect to the Deposits to, or on behalf of, any beneficial
S-
89
owner of a Certificate
that is not a U.S. Person (a
Non-U.S. Certificateholder
)
will not be subject to U.S. federal withholding tax, provided, in the case
of interest, that (i) such Non-U.S. Certificateholder does not actually or
constructively own 10% or more of the total combined voting power of all
classes of the stock of Northwest, (ii) such Non-U.S. Certificateholder is
not (x) a bank receiving interest pursuant to a loan agreement entered
into in the ordinary course of its trade or business, or (y) a controlled
foreign corporation for U.S. tax purposes that is related to Northwest, and (iii) either
(A) the Non-U.S. Certificateholder certifies on Form W-8BEN,
under penalties of perjury, that it is not a U.S. Person and provides its name
and address or (B) a securities clearing organization, bank or other
financial institution that holds customers securities in the ordinary course
of its trade or business (a financial institution) and holds the Certificate
certifies on Form W-8IMY, under penalties of perjury, that the beneficial
owner is a Non-U.S. Certificateholder and such owner has furnished to it the
applicable certification or other proof of foreign status, provided that the
U.S. Treasury Department has not published a determination that a certificate
from such financial institution cannot be relied upon. Such an intermediary
that holds a Certificate may be required to attach the beneficial owners Form W-8BEN
to the Form W-8IMY. Non-U.S. Certificateholders should consult their own
tax advisors as to the information required to be furnished to such an
intermediary or other pass-through entity.
If a Non-U.S. Certificateholder cannot satisfy the
requirements described above, payments of interest on the Equipment Notes or on
the Deposits made to a Non-U.S. Certificateholder with respect to a Certificate
will be subject to a 30% U.S. withholding tax unless the beneficial owner of
the Certificate provides a properly executed (i) Form W-8BEN (or
successor form) claiming an exemption from, or reduction in the rate of,
withholding under the benefit of an applicable tax treaty or (ii) Form W-8ECI
(or successor form) stating that the interest paid on the Equipment Note is not
subject to U.S. withholding tax because such interest income is effectively
connected with the beneficial owners conduct of a trade or business in the
United States.
Any capital gain realized upon the sale, exchange,
retirement or other disposition of a Certificate or upon receipt by a Non-U.S.
Certificateholder of a Make Whole-Premium (unless treated as additional
interest under the two preceding paragraphs) will not be subject to U.S.
federal income or withholding taxes if (i) such gain is not effectively
connected with a U.S. trade or business of the Non-U.S. Certificateholder
and (ii) in the case of an individual, such Non-U.S.
Certificateholder is not present in the United States for 183 days or more in
the taxable year of the sale, exchange, retirement or other disposition or
receipt.
Any interest or gain
described in the three preceding paragraphs will be subject to regular U.S.
federal income tax at graduated rates (and in certain cases, a branch profits
tax) if it is effectively connected with the conduct of a U.S. trade or
business by a Non-U.S. Certificateholder.
Backup Withholding
In general, information reporting requirements will
apply to certain payments within the United States of principal, interest,
OID and Make-Whole Premium on the Certificates, and to payments of the proceeds
of certain sales of Certificates made to U.S. Certificateholders other than
certain exempt recipients (such as corporations). A backup withholding tax at
a rate of 28% may apply to such payments if the holder fails or has failed to
provide an accurate taxpayer identification number or otherwise establish an
exemption or fails to report in full interest income.
Backup withholding is not an additional tax. Any
amounts withheld under the backup withholding rules will be allowed as a
refund or credit against such holders U.S. federal income tax liability, if
any, provided the required information is furnished to the IRS.
S-
90
CERTAIN ERISA
CONSIDERATIONS
A fiduciary of an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as in effect on
the date of this prospectus supplement (ERISA), should consider the fiduciary
responsibility requirements under ERISA in the context of the particular
circumstances of such plan before authorizing an investment in the
Certificates. Such fiduciary should determine whether the investment satisfies
ERISAs diversification and prudence requirements and whether the investment is
in accordance with the documents and instruments governing the plan. In
addition, ERISA and Section 4975 of the Code prohibit a wide range of
transactions (
Prohibited Transactions
)
involving an employee benefit plan (including any entity deemed to hold plan
assets) or individual retirement account subject to ERISA and/or Section 4975
of the Code (
ERISA Plans
), and persons
who have certain specified relationships to the ERISA Plan (parties in
interest, within the meaning of ERISA and disqualified persons, within the
meaning of the Code). Such transactions may require correction and may cause
an ERISA Plan fiduciary to incur certain liabilities and the parties in
interest or disqualified persons to be subject to excise taxes.
Each of the Trustees, Loan Trustees, the Underwriters,
the Liquidity Providers and Northwest may be a party in interest or a
disqualified person with respect to an ERISA Plan purchasing the Certificates;
therefore, the purchase by an ERISA Plan of the Certificates may give rise to a
direct or indirect Prohibited Transaction. Any person who is, or who in
acquiring the Certificates is or may be using the assets of, an ERISA Plan may
acquire the Certificates, if such person determines that a statutory or an
administrative exemption from the Prohibited Transaction rules discussed
below or otherwise available is applicable to such persons acquisition and
holding of the Certificates (or any interest therein).
Certain statutory or administrative exemptions from
the Prohibited Transaction rules under ERISA and the Code may be available
to an ERISA Plan that is purchasing the Certificates. Included among these
exemptions are: PTCE 90-1, regarding investments by insurance company
pooled separate accounts; PTCE 91-38, regarding investments by bank
collective investment funds; PTCE 84-14, regarding transactions effected
by a qualified professional asset manager; PTCE 95-60, regarding
transactions effected by insurance company general accounts or PTCE 96-23,
regarding investments by an in-house professional asset manager. Certain of
these exemptions, however, do not afford relief from the Prohibited Transaction
rules under Section 406(b) of ERISA and Section 4975(c)(1)(E)(F) of
the Code. In addition, there can be no assurance that any of these
administrative exemptions will be available with respect to any particular
transaction involving the Certificates.
If an ERISA Plan acquires a Certificate, the ERISA
Plans assets may include both the Certificate acquired and an undivided
interest in the underlying assets of the related Trust, unless the actual
investment by benefit plan investors in the Certificates is not significant
within the meaning of the DOL plan assets regulations. In this regard, the
extent to which Certificates issued by a particular Trust (or any interests
therein) are held by, or on behalf of, benefit plan investors Plans will not
be monitored.
Consequently, the Trust assets could be deemed to be plan
assets of such ERISA Plan for purposes of the fiduciary responsibility
provisions of ERISA and the Prohibited Transaction rules. Any person who
exercises any authority or control with respect to the management or
disposition of the assets of an ERISA Plan is considered to be a fiduciary of
such ERISA Plan. The Trustee could, therefore, become a fiduciary of ERISA
Plans that have invested in the Certificates and be subject to the general
fiduciary requirements of ERISA in exercising its authority with respect to the
management of the assets of the related Trust. If the Trustee becomes a
fiduciary with respect to the ERISA Plans purchasing the Certificates, there
may be an improper delegation by such ERISA Plans of the responsibility to
manage plan assets. In order to avoid such Prohibited Transactions, each
investing ERISA Plan, by acquiring such Certificates (or an interest therein),
will be deemed to have directed the Trustee to invest in the assets held in
such Trust. Any ERISA Plan purchasing the Certificates should also ensure that
any statutory or administrative exemption from
S-
91
the Prohibited Transaction
rules on which such ERISA Plan relies with respect to its purchase or
holding of the Certificates also applies to such ERISA Plans indirect
acquisition and holding of the assets of the Trust.
Governmental plans and certain church plans (each as
defined under ERISA) and non-U.S. plans are not subject to the Prohibited
Transaction rules. Such plans may, however, be subject to federal, state or
local laws or regulations that may affect their investment in the Certificates.
Any fiduciary of such a governmental or church plan considering an acquisition
of the Certificates must determine the need for, and the availability, if
necessary, of any exemptive relief under any such laws or regulations.
The foregoing discussion is general in nature and is
not intended to be all inclusive. Any fiduciary of an ERISA Plan, governmental
plan or church plan considering the purchase and holding of the Certificates
should consult with its legal advisors regarding the consequences of such
purchase and holding. By its acquisition and holding of a Certificate (or any
interest therein), each Certificateholder will be deemed to have represented
and warranted that either (i) no assets of an ERISA Plan, an entity which
may be deemed to hold the assets of an ERISA Plan or of another employee
benefit plan not subject to ERISA or the Code (such as a governmental, church
or non-U.S. plan) have been used to acquire and hold the Certificate (or an
interest therein), or (ii) one or more prohibited transaction statutory or
administrative exemptions applies such that the use of such plan assets to
purchase or hold any Certificate will not constitute a non-exempt prohibited
transaction under ERISA or Section 4975 of the Code or a violation under
any federal, state or local law that is substantially similar to the provisions
of Title I of ERISA or Section 4975 of the Code.
EACH ERISA PLAN FIDUCIARY (AND EACH FIDUCIARY FOR A
GOVERNMENTAL OR CHURCH PLAN SUBJECT TO RULES SIMILAR TO THOSE IMPOSED ON ERISA
PLANS UNDER ERISA AND/OR SECTION 4975 OF THE CODE) SHOULD CONSULT WITH ITS
LEGAL ADVISER CONCERNING AN INVESTMENT IN ANY OF THE CERTIFICATES.
S-
92
UNDERWRITING
Subject
to the terms and conditions set forth in the underwriting agreement dated the
date of this prospectus supplement, we have agreed to cause the Trusts to sell
to each of the underwriters the following respective aggregate face amounts of
the Certificates:
Underwriters
|
|
|
|
Face Amount
of Class A
Certificates
|
|
Face Amount
of Class B
Certificates
|
|
Morgan
Stanley & Co. Incorporated
|
|
$
|
152,022,000
|
|
$
|
50,027,000
|
|
Citigroup Global
Markets Inc.
|
|
76,010,000
|
|
26,013,000
|
|
J.P. Morgan
Securities Inc.
|
|
50,673,000
|
|
17,342,000
|
|
Calyon Securities
(USA) Inc.
|
|
25,336,000
|
|
8,671,000
|
|
Deutsche Bank
Securities Inc.
|
|
25,336,000
|
|
8,671,000
|
|
Credit Suisse
Securities (USA) LLC
|
|
9,121,000
|
|
3,121,000
|
|
Total
|
|
$
|
338,498,000
|
|
$
|
115,845,000
|
|
The underwriting agreement provides that the
obligations of the underwriters are subject to certain conditions precedent.
The underwriters will be obligated to purchase all of the Certificates if any
Certificates are purchased. If an underwriter defaults on its purchase
commitment, the purchase commitments of the non-defaulting underwriters may be
increased or the offering of the Certificates may be terminated.
The aggregate proceeds from the sale of the
Certificates will be $454,343,000. We will pay the underwriters a commission of
$3,634,744. We estimate that our out-of-pocket expenses for this offering, not
including underwriting discounts and commissions, will be approximately $1,200,000.
The
underwriters propose initially to offer the Certificates at the public offering
prices on the cover page of this prospectus supplement and to certain
dealers at such prices less the concessions not in excess of the amounts set
forth below. The underwriters and such dealers may allow discounts not in
excess of the amounts set forth below on sales to other broker/dealers. After
the initial public offering of the Certificates, the public offering prices,
concessions and discounts may change.
Certificates
|
|
|
|
Concession to
Dealers
|
|
Discount to
Broker/Dealers
|
|
Class A
|
|
|
0.475
|
%
|
|
|
0.250
|
%
|
|
Class B
|
|
|
0.475
|
%
|
|
|
0.250
|
%
|
|
The Certificates are new securities for which there
currently is no market. Neither we nor any Trust intends to apply for listing
of the Certificates on any securities exchange or otherwise. The underwriters
have advised us that one or more of them currently intend to make a market in
the Certificates as permitted by applicable law. The underwriters are not
obligated, however, to make a market in the Certificates, and any such
market-making may be discontinued at any time at the sole discretion of the
underwriters. Accordingly, no assurance can be given as to the development or
liquidity of any market for the Certificates.
The underwriting agreement provides that Northwest and
NWA Corp. will indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended. If
Northwest and NWA Corp. are unable to provide this indemnification, Northwest
and NWA Corp. will contribute to payments that the underwriters may be required
to make in respect of those liabilities.
The underwriting agreement also provides that between
the date of this prospectus supplement and the closing date specified on the
cover page of this prospectus supplement, Northwest and NWA Corp. shall
not, without prior written consent of Morgan Stanley & Co.
Incorporated and Citigroup Global
S-
93
Markets Inc., offer, sell
or enter into any agreement to sell directly or indirectly, any equipment
notes, pass through certificates, equipment trust certificates or equipment
purchase certificates secured by aircraft owned or leased by Northwest or NWA
Corp. (or rights relating thereto) other than the Certificates or Equipment
Notes relating thereto.
From time to time in the ordinary course of their
respective businesses, the underwriters and certain of their respective
affiliates have engaged and in the future may engage in investment and
commercial banking or other transactions of a financial nature with Northwest
and NWA Corp., including the provision of certain advisory services and the
making of loans to us and our affiliates, for which they have received and in
the future may receive customary fees and expenses. Calyon, acting through its
New York branch, an affiliate of Calyon Securities (USA) Inc., will act as the
Liquidity Provider. Citibank, N.A., an affiliate of Citigroup Global
Markets Inc., will act as Escrow Agent, and Credit Suisse, New York Branch, an
affiliate of Credit Suisse Securities (USA) LLC, will act as Depositary.
Northwest expects that delivery of the Certificates
will be made against payment therefor on or about the closing date specified on
the cover page of this prospectus supplement, which will be the fifth business
day following the date hereof (this settlement cycle being referred to as T+
5). Under Rule 15c6-1 of the SEC under the Securities Exchange Act
of 1934, trades in the secondary market generally are required to settle in
three business days, unless the parties to the trade expressly agree otherwise.
Accordingly, purchasers who wish to trade Certificates on the date hereof or
the first business day after the date hereof will be required, by virtue of the
fact that the Certificates initially will settle in T+ 5, to specify an
alternate settlement cycle at the time of any trade to prevent a failed
settlement and should consult their own advisor.
To facilitate the offering of the Certificates, the
underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the Certificates. Specifically, the underwriters may sell
more Certificates than they are obligated to purchase under the underwriting
agreement, creating a short position in the Certificates for their own account.
In addition, to cover their short positions or to stabilize the price of the
Certificates, the underwriters may bid for, and purchase, Certificates in the
open market. Finally, the underwriters may reclaim selling concessions allowed
to an agent or a dealer for distributing Certificates in the offering, if the
underwriters repurchase previously distributed Certificates in transactions to
cover syndicate short positions, in stabilization transactions or otherwise.
Any of these activities may stabilize or maintain the market price of the
Certificates above independent market levels. The underwriters are not required
to engage in these activities, and may end any of these activities at any time.
In compliance with NASD
guidelines, the maximum compensation to the underwriters in connection with the
sale of the securities pursuant to this prospectus supplement and the
accompanying prospectus will not exceed 8% of the total public offering price
to the public of the securities as set forth on the cover page of this prospectus
supplement. It is anticipated that such maximum compensation will be
significantly less than 8%.
S-
94
LEGAL MATTERS
The validity of the
Certificates offered hereby will be passed upon for NWA Corp. and Northwest by
Simpson Thacher & Bartlett LLP, New York, New York, and for the
Underwriters by Shearman & Sterling LLP, New York, New York.
Certain federal income tax matters with respect to the Trust and
Certificateholders will be passed upon by Cadwalader, Wickersham &
Taft LLP, special tax counsel to Northwest. The respective counsel for
Northwest and the Underwriters may rely upon an opinion from Michael Miller, the
Vice President, Law and Secretary of NWA Corp. and Northwest, as to certain
matters of Minnesota law. Shearman & Sterling LLP has also acted on
behalf of Calyon, acting through its New York Branch, as Liquidity Provider and
Credit Suisse, New York Branch, as Depositary.
S-
95
EXPERTS
The consolidated financial statements and schedule of
NWA Corp. appearing in NWA Corp.s Annual Report on Form 10-K for the year
ended December 31, 2006 and managements assessment of the effectiveness of
internal control over financial reporting as of December 31, 2006 included
therein, have been audited by Ernst & Young LLP, independent registered
public accounting firm, as set forth in their reports thereon included therein (which
contain an explanatory paragraph describing conditions that raise substantial
doubt about NWA Corp.s ability to continue as a going concern as described in
Notes 1 and 2 to the consolidated financial statements), and incorporated
herein by reference. Such financial
statements and schedule, and managements assessment have been incorporated
herein by reference in reliance upon such reports given on the authority of
such firm as experts in accounting and auditing.
The references to AISI, BK and MBA, and to their
respective appraisal reports, are included in this prospectus supplement in
reliance upon the authority of each firm as an expert with respect to the
matters contained in its appraisal report.
S-
96
APPENDIX I
INDEX OF CERTAIN
DEFINED TERMS
The
following is an index showing the page in this prospectus supplement where
certain defined terms appear.
Defined Term
|
|
|
|
Page
|
60 Day Period
|
|
S-69
|
|
Actual Disposition
Event
|
|
S-68
|
|
Additional
Certificates
|
|
S-86
|
|
Additional
Equipment Notes
|
|
S-86
|
|
Additional Trust
|
|
S-86
|
|
Administration
Expenses
|
|
S-65
|
|
Aircraft
|
|
S-3
|
|
AISI
|
|
S-4
|
|
Applicable
Fraction
|
|
S-67
|
|
Appraisal
|
|
S-65
|
|
Appraised Current
Market Value
|
|
S-65
|
|
Appraisers
|
|
S-72
|
|
Assumed Aircraft
Value
|
|
S-77
|
|
Assumed
Amortization Schedule
|
|
S-40
|
|
Average Life Date
|
|
S-76
|
|
Aviation Act
|
|
S-47
|
|
Bankruptcy Code
|
|
S-16
|
|
Base Rate
|
|
S-57
|
|
Basic Agreement
|
|
S-36
|
|
BK
|
|
S-4
|
|
Business Day
|
|
S-39
|
|
Cape Town
Convention
|
|
S-82
|
|
Cash Collateral
Account
|
|
S-55
|
|
Cede
|
|
S-50
|
|
Certificate
Account
|
|
S-39
|
|
Certificate
Buyout Event
|
|
S-44
|
|
Certificate Owner
|
|
S-50
|
|
Certificateholders
|
|
S-37
|
|
Certificates
|
|
S-30
|
|
Class A
Certificates
|
|
S-36
|
|
Class A
Trust
|
|
S-36
|
|
Class B
Adjusted Interest
|
|
S-67
|
|
Class B
Certificates
|
|
S-36
|
|
Class B
Trust
|
|
S-36
|
|
Code
|
|
S-17
|
|
Company
|
|
S-1
|
|
Compass
|
|
S-1
|
|
Continental
|
|
S-1
|
|
Controlling Party
|
|
S-60
|
|
Deemed
Disposition Event
|
|
S-68
|
|
Definitive
Certificates
|
|
S-50
|
|
Delivery Period
|
|
S-71
|
|
Delivery Period
Termination Date
|
|
S-4
|
|
I-
1
Delta
|
|
S-1
|
|
Deposit
|
|
S-51
|
|
Deposit Account
|
|
S-51
|
|
Deposit
Agreements
|
|
S-51
|
|
Depositary
|
|
S-52
|
|
Distribution Date
|
|
S-38
|
|
DHS
|
|
S-21
|
|
DOT
|
|
S-21
|
|
Downgrade Drawing
|
|
S-55
|
|
DTC
|
|
S-50
|
|
DTC Participants
|
|
S-50
|
|
EMB-175 LR
|
|
S-3
|
|
Embraer 175 LR
|
|
S-3
|
|
Equipment
|
|
S-79
|
|
Equipment Notes
|
|
S-74
|
|
Equipment Note
Buyout Event
|
|
S-62
|
|
Equipment Note
Special Payment
|
|
S-65
|
|
ERISA
|
|
S-17
|
|
ERISA Plans
|
|
S-91
|
|
Escrow Agent
|
|
S-53
|
|
Escrow Agreements
|
|
S-53
|
|
Escrow Receipts
|
|
S-53
|
|
Event of Loss
|
|
S-85
|
|
Excess Liquidity
Obligations
|
|
S-62
|
|
Excusable Delay
|
|
S-72
|
|
Expected
Distributions
|
|
S-68
|
|
FAA
|
|
S-3
|
|
Final
Distributions
|
|
S-61
|
|
Final Drawing
|
|
S-57
|
|
Final Expected
Distribution Date
|
|
S-36
|
|
Final Legal
Distribution Date
|
|
S-38
|
|
Final Payment
Date
|
|
S-15
|
|
Final Termination
Notice
|
|
S-58
|
|
Fitch
|
|
S-52
|
|
GAAP
|
|
S-31
|
|
H.15(519)
|
|
S-76
|
|
Indenture
|
|
S-45
|
|
Instructing
Holders
|
|
S-9
|
|
Intercreditor
Agreement
|
|
S-8
|
|
Interest Drawings
|
|
S-54
|
|
Interim
Restructuring Arrangement
|
|
S-64
|
|
Internal Revenue
Code
|
|
S-23
|
|
IRS
|
|
S-87
|
|
Issuance Date
|
|
S-56
|
|
KLM
|
|
S-1
|
|
LIBOR
|
|
S-57
|
|
Liquidity Event
of Default
|
|
S-58
|
|
Liquidity
Expenses
|
|
S-67
|
|
Liquidity
Facility
|
|
S-54
|
|
I-
2
Liquidity Obligations
|
|
S-67
|
|
Loan Trustee
|
|
S-74
|
|
LTVs
|
|
S-4
|
|
Make-Whole
Premium
|
|
S-76
|
|
Make-Whole Spread
|
|
S-76
|
|
Maximum Available
Commitment
|
|
S-54
|
|
MBA
|
|
S-4
|
|
Mesaba
|
|
S-1
|
|
Minimum Sale
Price
|
|
S-64
|
|
Moodys
|
|
S-17
|
|
most recent
H.15(519)
|
|
S-76
|
|
NOL
|
|
S-23
|
|
Non-Extension
Drawing
|
|
S-56
|
|
Non-Performing
Equipment Note
|
|
S-68
|
|
Non-U.S.
Certificateholders
|
|
S-90
|
|
Northwest
|
|
S-1
|
|
Note Purchase
Agreement
|
|
S-13
|
|
Note Target Price
|
|
S-63
|
|
NWA Corp
|
|
iii
|
|
Offering
|
|
S-86
|
|
OID
|
|
S-88
|
|
OPEC
|
|
S-19
|
|
Participation
Agreements
|
|
S-45
|
|
Pass Through
Trust Agreements
|
|
S-36
|
|
Paying Agent
|
|
S-53
|
|
Paying Agent
Account
|
|
S-39
|
|
Performing
Equipment Note
|
|
S-55
|
|
Permitted
Investments
|
|
S-43
|
|
Pinnacle Airlines
|
|
S-1
|
|
Plan
|
|
S-20
|
|
Pool Balance
|
|
S-39
|
|
Pool Factor
|
|
S-40
|
|
Post Default
Appraisals
|
|
S-65
|
|
Preferred B Pool
Balance
|
|
S-67
|
|
Prohibited
Transactions
|
|
S-91
|
|
PTC Event of
Default
|
|
S-45
|
|
Rating Agencies
|
|
S-17
|
|
Receiptholder
|
|
S-53
|
|
Refinancing
Certificates
|
|
S-86
|
|
Refinancing
Equipment Notes
|
|
S-86
|
|
Refinancing Trust
|
|
S-86
|
|
Regular
Distribution Dates
|
|
S-38
|
|
Related Payment
Default
|
|
S-77
|
|
Remaining
Weighted Average Life
|
|
S-76
|
|
Replacement
Liquidity Facility
|
|
S-55
|
|
Required Amount
|
|
S-54
|
|
Restructuring
Arrangement
|
|
S-64
|
|
SARS
|
|
S-20
|
|
Scheduled
Payments
|
|
S-38
|
|
I-
3
SEC
|
|
S-1
|
|
Section 1110
|
|
S-79
|
|
Series A
Equipment Notes
|
|
S-74
|
|
Series B
Equipment Notes
|
|
S-74
|
|
Shortfall Amounts
|
|
S-88
|
|
Shortfall
Certificateholders
|
|
S-88
|
|
Shortfall Certificates
|
|
S-88
|
|
Shortfall Trusts
|
|
S-88
|
|
SOP 90-7
|
|
S-31
|
|
Special
Distribution Date
|
|
S-38
|
|
Special Payment
|
|
S-38
|
|
Special Payments
Account
|
|
S-39
|
|
Special
Termination Notice
|
|
S-58
|
|
Standard &
Poors
|
|
S-17
|
|
Stated Interest
Rate
|
|
S-37
|
|
Substitute
Aircraft
|
|
S-73
|
|
Tax Counsel
|
|
S-87
|
|
Termination
Notice
|
|
S-58
|
|
Threshold Rating
|
|
S-56
|
|
Treasury Yield
|
|
S-76
|
|
Trust Indenture
Act
|
|
S-48
|
|
Trust Property
|
|
S-36
|
|
Trust Supplement
|
|
S-36
|
|
Trusts
|
|
S-36
|
|
TSA
|
|
S-21
|
|
U.S.
Certificateholders
|
|
S-87
|
|
yield
|
|
S-21
|
|
I-
4
APPENDIX II
AIRCRAFT
APPRAISALS
NORTHWEST
AIRLINES, INC.
Department A4010
2700 Lone Oak Parkway
Eagan, MN 55121
Sight
Unseen Base Value Opinion
27 New E
mbraer
175 LR
Aircraft Fleet
AISI
File No.: A7S044BVO-13
Report
Date: 26 September 2007
Values as of: 01 July 2007
Headquarters: 26072 Merit Circle,
Suite 123, Laguna Hills, CA 92653
TEL: 949-582-8888 FAX: 949-582-8887 E-MAIL:
mail@AISI.aero
II-
1
26 September 2007
NORTHWEST AIRLINES,
INC.
Department A4010
2700 Lone Oak Parkway
Eagan, MN 55121
Subject:
AISI
Report A7S044BVO-13; Sight Unseen Base Value Opinion,
27 New EMR-175 LR Aircraft Fleet
Reference:
Northwest
Airline e-mail messages, 25 June 26 September 2007
Dear Ladies and Gentlemen:
We are pleased to offer Northwest Airlines, Inc.
(Northwest) the Aircraft Information Services, Inc. (AISI) opinion of the
sight unseen base values as of 01 July 2007 of a portfolio of 27 selected
new EMR-175 LR Aircraft as identified and defined in the referenced
messages and in Table I herein (the Aircraft).
AISI
understands that all EMR-175 LR Aircraft herein will eventually be
retrofitted or delivered to the higher 175AR standard which provides more
utility and is of a higher market value than the 175LR, however all EMR-175
LR Aircraft are valued herein as EMR-175 LR Aircraft.
1.
Methodology
and Definitions
The standard terms of reference for commercial
aircraft value are base value and current market value of an average
aircraft. Base value is a theoretical value that assumes a hypothetical
balanced market while current market value is the value in the real market;
both assume a hypothetical average aircraft condition. All other values are
derived from these values. AISI value definitions are consistent with the
current definitions of the International Society of Transport Aircraft Trading
(ISTAT), those of 01 January 1994. AISI is a member of that
organization and employs an ISTAT Certified and Senior Certified Appraiser.
AISI defines a base value as that of a transaction
between an equally willing and informed buyer and seller, neither under
compulsion to buy or sell, for a single unit cash transaction with no hidden
value or liability, with supply and demand of the sale item roughly in balance
and with no event which would cause a short term change in the market. Base
values are typically given for aircraft in new condition, average half-life
condition, or adjusted for an aircraft in a specifically described condition
at a specific time.
An average aircraft is an operable airworthy
aircraft in average physical condition and with average accumulated flight
hours and cycles, with clear title and standard unrestricted certificate of
airworthiness, and registered in an authority which does not represent a
penalty to aircraft value or liquidity, with no damage history and with inventory
configuration and level of modification which is normal for its intended use
and age.
AISI assumes average condition unless otherwise
specified in this report. AISI also assumes that airframe, engine and component
parts are from the original equipment manufacturer (OEM) and that
Headquarters: 26072 Merit Circle, Suite 123, Laguna Hills, CA 92653
TEL: 949-582-8888 FAX: 949-582-8887 E-MAIL: mail@AISI.aero
II-
2
maintenance, maintenance
program and essential records are sufficient to permit normal commercial
operation under a strict airworthiness authority.
Half-life condition assumes that every component or
maintenance service which has a prescribed interval that determines its service
life, overhaul interval or interval between maintenance services, is at a
condition which is one-half of the total interval. An adjusted appraisal
reflects an adjustment from half life condition for the actual condition,
utilization, life remaining or time remaining of an airframe, engine or
component.
It should be noted that AISI and ISTAT value
definitions apply to a transaction involving a single aircraft, and that
transactions involving more than one aircraft are often executed at
considerable and highly variable discounts to a single aircraft price, for a
variety of reasons relating to an individual buyer or seller.
AISI defines a current market value, which is
synonymous with the older term fair market value as that value which reflects
the real market conditions including short term events, whether at, above or
below the base value conditions. Assumptions of a single unit sale and
definitions of aircraft condition, buyer/seller qualifications and type of
transaction remain unchanged from that of base value. Current market value
takes into consideration the status of the economy in which the aircraft is
used, the status of supply and demand for the particular aircraft type, the
value of recent transactions and the opinions of informed buyers and sellers.
Note that for a current market value to exist, the seller may not be under
duress. Current market value assumes that there is no short term time
constraint to buy or sell.
AISI defines a distressed market value as that value
which reflects the real market condition including short term events, when the
market for the subject aircraft is so depressed that the seller is under
duress. Distressed market value assumes that there is a time constraint to sell
within a period of less than 1 year. All other assumptions remain
unchanged from that of current market value.
AISI encourages the use of base values to consider
historical trends, to establish a consistent baseline for long term value
comparisons and future value considerations, or to consider how actual market
values vary from theoretical base values. Base values are less volatile than
current market values and tend to diminish regularly with time. Base values are
normally inappropriate to determine near term values.
AISI encourages the use of current market values to
consider the probable near term value of an aircraft when the seller is not
under duress. AISI encourages the use of distressed market values to consider
the probable near term value of an aircraft when the seller is under duress.
No physical inspection of
the Aircraft or their essential records was made by AISI for the purposes of
this report, nor has any attempt been made to verify information provided to
us, which is assumed to be correct and applicable to the Aircraft. If more than
one aircraft is contained in this report than it should be noted that the
values given are not directly additive, that is, the total of the given values
is not the value of the fleet but rather the sum of the values of the
individual aircraft if sold individually over time so as not to exceed demand.
2.
Valuations
It is our considered opinion that the sight unseen new
base and current market values as of 01 July 2007 of the Aircraft are
as follows in Table I attached hereto, subject to the assumptions, definitions,
and disclaimers herein.
AISI consents to the inclusion of this appraisal
report dated 26 September 2007 in the NWA 2007-1 Prospectus and to
the reference to AISIs name in the Prospectus under the caption Experts.
Unless
otherwise agreed by Aircraft Information Services, Inc. (AISI) in writing,
this report shall be for the sole use of the client/addressee. This report is
offered as a fair and unbiased assessment of the
II-
3
subject aircraft. AISI has no past, present, or
anticipated future interest in any of the subject aircraft. The conclusions and
opinions expressed in this report are based on published information,
information provided by others, reasonable interpretations and calculations thereof
and are given in good faith. AISI certifies that this report has been
independently prepared and it reflects AISIs conclusions and opinions which
are judgments that reflect conditions and values current at the time of this
report. The values and conditions reported upon are subject to any subsequent
change. AISI shall not be liable to any party for damages arising out of
reliance or alleged reliance on this report, or for any partys action or
failure to act as a result of reliance or alleged reliance on this report.
Sincerely,
|
AIRCRAFT
INFORMATION SERVICES, INC.
|
|
Fred Bearden
|
CEO
|
II-
4
Table
1
AISI File: A7S044BVO-13
Report Date: 26 September 2007
Values as of 01 July 2007
Then
Delivery Current Million US Dollars for New Aircraft Values @ 3.0% Inflation
No.
|
|
Aircraft Type
|
|
Regn No.
|
|
DoM
|
|
Engine Type
|
|
MTOW
|
|
New BV
|
|
|
1
|
|
|
EMB 175 LR
|
|
N612CZ
|
|
01-Jan-08
|
|
CF34-8E5
|
|
85,517
|
|
|
29.91
|
|
|
|
2
|
|
|
EMB 175 LR
|
|
N613CZ
|
|
01-Jan-08
|
|
CF34-8E5
|
|
85,517
|
|
|
29.91
|
|
|
|
3
|
|
|
EMB 175 LR
|
|
N614CZ
|
|
01-Jan-08
|
|
CF34-8E5
|
|
85,517
|
|
|
29.91
|
|
|
|
4
|
|
|
EMB 175 LR
|
|
N615CZ
|
|
01-Feb-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.00
|
|
|
|
5
|
|
|
EMB 175 LR
|
|
N616CZ
|
|
01-Feb-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.00
|
|
|
|
6
|
|
|
EMB 175 LR
|
|
N617CZ
|
|
01-Feb-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.00
|
|
|
|
7
|
|
|
EMB 175 LR
|
|
N619CZ
|
|
01-Mar-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.08
|
|
|
|
8
|
|
|
EMB 175 LR
|
|
N620CZ
|
|
01-Mar-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.08
|
|
|
|
9
|
|
|
EMB 175 LR
|
|
N621CZ
|
|
01-Apr-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.17
|
|
|
|
10
|
|
|
EMB 175 LR
|
|
N622CZ
|
|
01-Apr-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.17
|
|
|
|
11
|
|
|
EMB 175 LR
|
|
N623CZ
|
|
01-May-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.26
|
|
|
|
12
|
|
|
EMB 175 LR
|
|
N624CZ
|
|
01-May-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.26
|
|
|
|
13
|
|
|
EMB 175 LR
|
|
N625CZ
|
|
01-Jun-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.34
|
|
|
|
14
|
|
|
EMB 175 LR
|
|
N626CZ
|
|
01-Jun-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.34
|
|
|
|
15
|
|
|
EMB 175 LR
|
|
N627CZ
|
|
01-Jun-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.34
|
|
|
|
16
|
|
|
EMB 175 LR
|
|
N628CZ
|
|
01-Jul-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.43
|
|
|
|
17
|
|
|
EMB 175 LR
|
|
N629CZ
|
|
01-Jul-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.43
|
|
|
|
18
|
|
|
EMB 175 LR
|
|
N630CZ
|
|
01-Aug-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.52
|
|
|
|
19
|
|
|
EMB 175 LR
|
|
N631CZ
|
|
01-Aug-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.52
|
|
|
|
20
|
|
|
EMB 175 LR
|
|
N632CZ
|
|
01-Sep-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.60
|
|
|
|
21
|
|
|
EMB 175 LR
|
|
N633CZ
|
|
01-Sep-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.60
|
|
|
|
22
|
|
|
EMB 175 LR
|
|
N634CZ
|
|
01-Sep-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.60
|
|
|
|
23
|
|
|
EMB 175 LR
|
|
N635CZ
|
|
01-Oct-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.69
|
|
|
|
24
|
|
|
EMB 175 LR
|
|
N636CZ
|
|
01-Oct-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.69
|
|
|
|
25
|
|
|
EMB 175 LR
|
|
N637CZ
|
|
01-Nov-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.78
|
|
|
|
26
|
|
|
EMB 175 LR
|
|
N638CZ
|
|
01-Nov-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.78
|
|
|
|
27
|
|
|
EMB 175 LR
|
|
N639CZ
|
|
01-Dec-08
|
|
CF34-8E5
|
|
85,517
|
|
|
30.87
|
|
|
II-
5
1295 Northern Boulevard
Manhasset, New York 11030
(516) 365-6272
·
Fax (516) 365-6287
September 26,
2007
Northwest
Airlines, Inc.
2700 Lone Oak Parkway, M/S A4010
Eagan, MN 55121
Gentlemen:
In response to your
request, BK Associates, Inc. is pleased to provide this opinion on the
base values (BV) of 27 Embraer 175 LR aircraft, each powered by
General Electric CF34-8 engines (Aircraft). The Aircraft are further
identified in the attached Figure 1 by expected delivery date to Northwest
Airlines. The aircraft are being built to the specifications of the 175AR but
will be operated as 175LRs until the AR model is certified in 2Q/2008. After
the AR model is certified, they may all be re-certified as ARs.
CONCLUSIONS
Based upon our knowledge
of these aircraft and engine models; our knowledge of the capabilities and uses
to which they have been put in various parts of the world; our knowledge of the
marketing of aircraft; and our knowledge of aircraft generally; it is our
opinion that the BV of each of the Aircraft in millions of U.S. dollars is as
shown in Figure 1.
DEFINITIONS
According to the
International Society of Transport Aircraft Tradings (ISTAT) definition of Base
Value, to which BK Associates subscribes, the base value is the Appraisers
opinion of the underlying economic value of an aircraft in an open,
unrestricted, stable market environment with a reasonable balance of supply and
demand, and assumes full consideration of its highest and best use. An
aircrafts base value is founded in the historical trend of values and in the
projection of future value trends and presumes an arms length, cash
transaction between willing, able and knowledgeable parties, acting prudently,
with an absence of duress and with a reasonable period of time available for
marketing. The base value normally refers to a transaction involving a single
aircraft. When multiple aircraft are acquired in the same transaction, the
trading price of each unit may be discounted.
MARKET DISCUSSION & METHODOLOGY
For a newly delivered aircraft one can argue that,
almost by definition, the base value is approximately equal to the actual
selling price. Without the existence of white tails or finished aircraft for
which there is no buyer, the very existence of a buyer and seller at the agreed
price suggests the market is in balance and the purchase price is the base
value.
We do not know the purchase price of any of the
Aircraft but we do know that for the ERJ 175, the list price from the
manufacturer is $31.7 million, respectively, but discounts also apply. We also
know that nobody pays list price and the discount is normally at least 15
percent. Discounts of 15 to 25 percent are often applied for airlines, such as
Northwest, placing large orders. Further, we are aware of some actual prices
for recently delivered aircraft and we conclude the current new aircraft value
is $26.5 million for the Embraer 175 LR. This value escalates for the
future deliveries over the next year.
II-
6
It is the convention for
aircraft appraisals for comparison purposes to determine a value for an
aircraft that is at half-time between major maintenance events. Adjustments are
then made to account for the actual time remaining. In the case of a new
aircraft, which has not accumulated any flight time, this adjustment is
irrelevant and the adjusted base value is just equal to the new price.
ASSUMPTIONS & DISCLAIMER
It should be understood that BK Associates has neither
inspected the Aircraft nor the maintenance records, but has relied upon the
information provided by you and in the BK Associates database. The assumptions
have been made that at the time of delivery all Airworthiness Directives have
been complied with. Further, we have assumed unless otherwise stated, that the
Aircraft is in typical configuration for the type. Deviations from these
assumptions can change significantly our opinion regarding the value.
BK Associates, Inc. has no present or
contemplated future interest in the Aircraft, nor any interest that would
preclude our making a fair and unbiased estimate. This appraisal represents the
opinion of BK Associates, Inc. and reflects our best judgment based on the
information available to us at the time of preparation and the time and budget
constraints imposed by the client. It is not given as a recommendation, or as
an inducement, for any financial transaction and further, BK
Associates, Inc. assumes no responsibility or legal liability for any
action taken or not taken by the addressee, or any other party, with regard to
the appraised equipment. By accepting this appraisal, the addressee agrees that
BK Associates, Inc. shall bear no such responsibility or legal liability.
This appraisal is prepared for the use of the addressee and shall not be
provided to other parties without the express consent of the addressee.
BK
Associates, Inc. hereby consents to the inclusion of our report dated
September 26, 2007 in the Prospectus and to the reference to our firms
name in the Prospectus under the caption Experts.
|
Sincerely,
|
|
BK
ASSOCIATES, INC.
|
|
|
|
John F. Keitz
|
|
President
|
|
ISTAT
Senior Certified Appraiser
And Appraiser Fellow
|
JFK/kf
Attachment
|
|
II-7
FIGURE
1
NORTHWEST
AIRLINES AIRCRAFT BASE VALUES
|
|
|
|
|
|
Engine
|
|
Delivery
|
|
|
|
|
|
MSN
|
|
Regist
|
|
Model
|
|
Date
|
|
BV
|
|
|
|
|
|
|
|
|
|
|
|
($millions)
|
|
EMB-175 LR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
N612CZ
|
|
CF34-8E5
|
|
Jan-08
|
|
|
26.70
|
|
|
|
|
N/A
|
|
N613CZ
|
|
CF34-8E5
|
|
Jan-08
|
|
|
26.70
|
|
|
|
|
N/A
|
|
N614CZ
|
|
CF34-8E5
|
|
Jan-08
|
|
|
26.70
|
|
|
|
|
N/A
|
|
N615CZ
|
|
CF34-8E5
|
|
Feb-08
|
|
|
26.70
|
|
|
|
|
N/A
|
|
N616CZ
|
|
CF34-8E5
|
|
Feb-08
|
|
|
26.70
|
|
|
|
|
N/A
|
|
N617CZ
|
|
CF34-8E5
|
|
Feb-08
|
|
|
26.70
|
|
|
|
|
N/A
|
|
N619CZ
|
|
CF34-8E5
|
|
Mar-08
|
|
|
26.70
|
|
|
|
|
N/A
|
|
N620CZ
|
|
CF34-8E5
|
|
Mar-08
|
|
|
26.70
|
|
|
|
|
N/A
|
|
N621CZ
|
|
CF34-8E5
|
|
Apr-08
|
|
|
26.90
|
|
|
|
|
N/A
|
|
N622CZ
|
|
CF34-8E5
|
|
Apr-08
|
|
|
26.90
|
|
|
|
|
N/A
|
|
N623CZ
|
|
CF34-8E5
|
|
May-08
|
|
|
26.90
|
|
|
|
|
N/A
|
|
N624CZ
|
|
CF34-8E5
|
|
May-08
|
|
|
26.90
|
|
|
|
|
N/A
|
|
N625CZ
|
|
CF34-8E5
|
|
Jun-08
|
|
|
26.90
|
|
|
|
|
N/A
|
|
N626CZ
|
|
CF34-8E5
|
|
Jun-08
|
|
|
26.90
|
|
|
|
|
N/A
|
|
N627CZ
|
|
CF34-8E5
|
|
Jun-08
|
|
|
26.90
|
|
|
|
|
N/A
|
|
N628CZ
|
|
CF34-8E5
|
|
Jul-08
|
|
|
27.10
|
|
|
|
|
N/A
|
|
N629CZ
|
|
CF34-8E5
|
|
Jul-08
|
|
|
27.10
|
|
|
|
|
N/A
|
|
N630CZ
|
|
CF34-8E5
|
|
Aug-08
|
|
|
27.10
|
|
|
|
|
N/A
|
|
N631CZ
|
|
CF34-8E5
|
|
Aug-08
|
|
|
27.10
|
|
|
|
|
N/A
|
|
N632CZ
|
|
CF34-8E5
|
|
Sep-08
|
|
|
27.10
|
|
|
|
|
N/A
|
|
N633CZ
|
|
CF34-8E5
|
|
Sep-08
|
|
|
27.10
|
|
|
|
|
N/A
|
|
N634CZ
|
|
CF34-8E5
|
|
Sep-08
|
|
|
27.10
|
|
|
|
|
N/A
|
|
N635CZ
|
|
CF34-8E5
|
|
Oct-08
|
|
|
27.30
|
|
|
|
|
N/A
|
|
N636CZ
|
|
CF34-8E5
|
|
Oct-08
|
|
|
27.30
|
|
|
|
|
N/A
|
|
N637CZ
|
|
CF34-8E5
|
|
Nov-08
|
|
|
27.30
|
|
|
|
|
N/A
|
|
N638CZ
|
|
CF34-8E5
|
|
Nov-08
|
|
|
27.30
|
|
|
|
|
N/A
|
|
N639CZ
|
|
CF34-8E5
|
|
Dec-08
|
|
|
27.30
|
|
|
II-
8
aviation consulting
Desktop Appraisal of:
27 EMB-175 LR Aircraft
Client:
Northwest Airlines
Date:
September
26, 2007
Washington D.C.
2107 Wilson Boulevard
Suite 750
Arlington, Virginia 22201
Tel: 1 703 276 3200
Fax: 1 703 276 3201
New York
245 Park Avenue
24th Floor
New York, New York 10167
Tel: 1 212 372 8966
Fax: 1 212 792 4001
Frankfurt
Frankfurt Trianon
Mainzer Landstrasse 16
60325 Frankfurt
Germany
Tel: 49 (0) 69 97168 436
Tokyo
|
|
|
3-16-16
Higashiooi
|
Shinagawa-ku
|
Tokyo 140-0011
|
Japan
|
Tel/Fax: 81 1
3763 6845
|
www.mba.aero
II-
9
I. Introduction and Executive Summary
Table of Contents:
I.
|
|
Introduction
|
II.
|
|
Value
Definitions/Terminology
|
III.
|
|
Current Market
Conditions
|
IV.
|
|
Valuation
|
V.
|
|
Covenants
|
Morten Beyer & Agnew
(mba)
has been retained by Northwest Airlines (the Client) to provide a Desktop
Appraisal to determine the Half-time Base Values of twenty-seven (27) EMB-175 LR
aircraft, as of June 2007. The aircraft are further identified in Section IV of
this report.
In performing this appraisal, mba relied on industry
knowledge and intelligence, confidentially obtained data points, its market
expertise and current analysis of market trends and conditions, along with
information extrapolated from its semi-annual publication mba
Future Aircraft ValuesRegional (FAV).
Based
on the information set forth in this report, it is our opinion that the
Half-time Base Value of the aircraft in this portfolio as of June 2007 are as
follows and as more fully set forth in Section IV.
|
|
Base Value
|
|
|
|
($US)
|
|
(27) EMB-175
LR
|
|
733,390,000
|
|
Section II of this report presents definitions of
various terms, such as Current Base Value and Current Market Value as
promulgated by the Appraisal Program of the International Society of Transport
Aircraft Trading (ISTAT). ISTAT is a non-profit association of management
personnel from banks, leasing companies, airlines, manufacturers, brokers, and
others who have a vested interest in the commercial aviation industry and who have
established a technical and ethical certification program for expert
appraisers.
II. Definitions
Desktop Appraisal
A desktop appraisal is
one, which does not include any inspection of the aircraft or review of its
maintenance records. It is based upon assumed aircraft condition and
maintenance status or information provided to the appraiser or from the
appraisers own database. A desktop appraisal would normally provide a value
for a mid-time, mid-life aircraft. (ISTAT Handbook)
Base Value
The ISTAT definition of Base Value (BV) has,
essentially, the same elements of Market Value except that the market
circumstances are assumed to be in a reasonable state of equilibrium. Thus, BV
pertains to an idealized aircraft and market combination, but will not
necessarily reflect the actual CMV of the aircraft in question at any point in
time. BV is founded in the historical trend of values and value in use, and is
generally used to analyze historical values or to project future values.
ISTAT defines Base Value
as the Appraisers opinion of the underlying economic value of an aircraft,
engine, or inventory of aircraft parts/equipment (hereinafter referred to as
the asset), in an open,
II-10
unrestricted,
stable market environment with a reasonable balance of supply and demand. Full
consideration is assumed of its highest and best use. An assets Base Value
is founded in the historical trend of values and in the projection of value
trends and presumes an arms-length, cash transaction between willing, able,
and knowledgeable parties, acting prudently, with an absence of duress and with
a reasonable period of time available for marketing. In most cases, the Base
Value of an asset assumes the physical condition is average for an asset of its
type and age. It further assumes the maintenance time/life status is at
mid-time, mid-life (or benefiting from an above-average maintenance status if
it is new or nearly new, as the case may be). Since Base Value pertains to a
somewhat idealized asset and market combination it may not necessarily reflect
the actual current value of the asset in question, but is a nominal starting
value to which adjustments may be applied to determine an actual value. Because
it is related to long-term market trends, the Base Value definition is commonly
applied to analyses of historical values and projections of residual values.
Qualifications
mba is a recognized provider of aircraft and
aviation-related asset appraisals and inspections. mba and its principals have
been providing appraisal services to the aviation industry for 40 years; and
its employees adhere to the rules and ethics set forth by the
International Society of Transport Aircraft Traders (ISTAT). mba employs three
ISTAT Certified Appraisers, one of the largest certified staff in the industry.
mbas clients include most of the worlds major airlines, lessors, financial
institutions, and manufacturers and suppliers. mba maintains office in
Washington, New York, Frankfurt, and Tokyo.
mba publishes the semi-annual
Future Aircraft Values
(FAV), a three-volume compendium of current and projected aircraft values for
the next 20 years for over 150 types of jet, turboprop, and cargo aircraft.
mba also provides
consulting services to the industry relating to operations, marketing, and
management with emphasis on financial/operational analysis, airline safety
audits and certification, utilizing hands-on solutions to current situations.
mba also provides expert testimony and witness support on cases involving
collateral/asset disputes, bankruptcies, financial operations, safety,
regulatory and maintenance concerns.
III. Current
Market Conditions
General Market Observation
The demand for and value of new and used jet transport
aircraft is primarily driven by the state of the world economy. In periods of
strong prosperity, traffic grows at high single digit rates limiting slack
capacity. Over the years, we have observed that traffic growth is closely
correlated to growth in regional and world domestic product. However, over the
long term, the trend has been toward traffic lagging domestic product growth,
with lower peaks, and deeper declines indicating maturity in the airline
industry.
In periods of decline (as observed in the early 1990s)
a large surplus of aircraft existed on the market with a disastrous effect on
short-term prices. Eventually, values returned to normal levels, being driven
by the inherent economies and suitability of the individual aircraft types.
Commencing in late 2000, the majority of global
economies began a slip into recession with slowing traffic growth, a trend that
was accelerated by the terrorist attacks on September 11, 2001. The
destruction of economic value and loss of consumer confidence, combined with
continued military conflict in the Middle East and the SARS epidemic of 2003,
slowed the pace of recovery and stifled the demand for new aircraft.
II-11
However, 2005 saw renewed
optimism within the industry, with passenger levels finally climbing back to
pre-September 11
th
levels. This helped both Airbus &
Boeing to reach record levels for new orders with Airbus claiming 1,111
(1)
new orders in 2005 and Boeing reporting 1,028
(2)
, for a total of 2,139
aircraft.
For 2006, the count was
790
(1)
and 1,044
(2)
, respectively, for a total of 1,834 aircraft. At
June 27 Year-to-Date, the tally is Airbus471 and Boeing510. These are
confirmed orders and do not include Commitments or Letters of Intent. This
continued high order count is attributed to high fuel prices forcing carriers
to retire the less fuel-efficient aircraft in their fleet, as well as the fleet
replacement cycle. The continued strength of the 787 with 186 additional orders
(total program 634) orders as the re-emergence of the A350 with the A350XWB
claiming 141 orders has also contributed to the strong order cycle.
With
the dramatic increase in new orders, both manufacturers can be expected to
increase production levels to meet the demand. Large backlogs of A320 and 737NG
family aircraft, along with the impending entry into service of the
A350 & 787 will force both Airbus and Boeing to deliver aircraft at
record levels. mba expects the previous high of 957 deliveries in 2002 to be
eclipsed by 2009.
As deliveries ramp-up,
more middle-aged A320, 737-300/-400, 757, 767 and MD-80
aircraft will be placed on the market. Current financial trends among
established carriers do not give much encouragement that surpluses will be
meaningfully reduced once the newer deliveries commence (mid-2008).
Although traffic has returned, yields and pricing power have not kept pace. Add
the current high cost of jet fuel, continued uncertainties in the Middle East
and the future still holds many hurdles.
Asia remains the most
active geographical aircraft market, with India being seen as a strong number
two. Aircraft ten years and newer are prime targets for migration to Asia, and
lease rates for relatively new widebody aircraft are continuing to increase.
Embraer E-Jet Family
The Embraer E-Jet family
comprises four variants, the EMB-170/-175/-190/-195. They
were launched in 1999 with the 70-seat EMB-170 which entered service in
March 2004. The EMB-175 followed in July 2005, incorporating a 6 feet
fuselage stretch over the EMB-170 and MGTOW increase of 3,300 lbs.
The EMB-170/-175
are the base models of the family with the EMB-190/-195 being stretched
versions with a larger wing, improved landing gear structure and upgraded
engines. The EMB-190 gained its FAA certification in September 2005 and
the first was shortly delivered to launch customer JetBlue, who ordered 100
aircraft and a further 100 options. The EMB-195 entered service one year later,
in September 2006, with FlyBe who ordered 14 with 12 options.
Fleet Status
|
|
|
|
EMBRAER 175
|
|
Orders
|
|
|
99
|
|
|
Cancellations
|
|
|
0
|
|
|
Deliveries
|
|
|
33
|
|
|
Backlog
|
|
|
66
|
|
|
Destroyed/ Retired
|
|
|
0
|
|
|
Not in Service/Parked
|
|
|
0
|
|
|
Active Aircraft
|
|
|
33
|
|
|
Number of Operators
|
|
|
6
|
|
|
Average Daily
Utilization (Hrs)
|
|
|
4.0
|
|
|
Average Fleet Age (Yrs)
|
|
|
1.2
|
|
|
Source: AvSoft
Acas
Database, May 2007
(1)
Source: www.airbus.com
(2)
Source: www.boeing.com
II-12
The
fuselage of the EMB-190 and EMB-195 was lengthened 15 and 23 feet,
respectively, over the EMB-175, increasing passenger capacity to over 100
seats. Higher Thrust and FADEC equipped CF34-10E engines replace the CF34-8E
powering the EMB-190/-195 with close to 5,000 lbs more thrust then the EMB-170/-175.
All four variants are offered in LR (Long Range) and AR (Advanced Range)
configuration (see Table below).
|
|
EMB-170
|
|
EMB-175
|
|
EMB-190
|
|
EMB-195
|
|
STD
|
|
|
1,800
|
nm
|
|
|
1,700
|
nm
|
|
|
1,800
|
nm
|
|
|
1,500
|
nm
|
|
LR
|
|
|
2,000
|
|
|
|
1,900
|
|
|
|
2,300
|
|
|
|
1,900
|
|
|
AR
|
|
|
2,100
|
|
|
|
2,000
|
|
|
|
2,400
|
|
|
|
2,200
|
|
|
Order numbers for E-Jet family have been very strong
considering the program is still in its early stages. Current demand for the
E-Jet family is high, as they are seen as a replacement for the older BAe-146
and the Fokker 70. So far, the EMB-190/-195 has been the best seller
eclipsing the orders of the A318 and 737-600. mba believes values for the
E-Jet family will remain strong despite the long term competition with the
Bombardier CRJ-700/-900 and the future entry into service of the
Sukhoi Superjet 100 in 2008, and the AVIC ARJ21 and CRJ-1000 in 2009.
According to Back Aviation
Solutions as of June 2007, there are no EMB-175s available for sale or
lease.
IV.
Valuation
In developing the Values of the aircraft in this
portfolio, mba did not inspect the aircraft or the records and documentation
associated with the aircraft, but relied on partial information supplied by the
Client. This information was not independently verified by mba. Therefore, we
used certain assumptions that are generally accepted industry practice to
calculate the value of aircraft when more detailed information is not available.
The principal
assumptions for the aircraft in this portfolio are as follows:
1.
The aircraft is in
good overall condition.
2.
The overhaul
status of the airframe, engines, landing gear and other major components are
the equivalent of mid-time/mid-life, or new, unless otherwise stated.
3.
The historical
maintenance documentation has been maintained to acceptable international
standards.
4.
The specifications
of the aircraft are those most common for an aircraft of its type and vintage.
5.
The aircraft is in
a standard airline configuration.
6.
The aircraft is
current as to all Airworthiness Directives and Service Bulletins.
7.
Its modification
status is comparable to that most common for an aircraft of its type and
vintage.
8.
Its utilization is
comparable to industry averages.
9.
There is no
history of accident or incident damage.
10.
In the case of the Base
and Market Value, no accounting is made for lease revenues, obligations or
terms of ownership unless otherwise specified.
II-
13
NORTHWEST
AIRLINESPORTFOLIO DESCRIPTION
|
No.
|
|
|
Aircraft Type
|
|
Serial
Number
|
|
Registration
|
|
Date of
Manufacture
|
|
MTOW (lbs)
|
|
Engine Type
|
|
Operator
|
|
|
1
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N612CZ
|
|
|
|
Jan-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
2
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N613CZ
|
|
|
|
Jan-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
3
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N614CZ
|
|
|
|
Jan-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
4
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N615CZ
|
|
|
|
Feb-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
5
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N616CZ
|
|
|
|
Feb-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
6
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N617CZ
|
|
|
|
Feb-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
7
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N619CZ
|
|
|
|
Mar-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
8
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N620CZ
|
|
|
|
Mar-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
9
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N621CZ
|
|
|
|
Apr-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
10
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N622CZ
|
|
|
|
Apr-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
11
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N623CZ
|
|
|
|
May-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
12
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N624CZ
|
|
|
|
May-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
13
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N625CZ
|
|
|
|
Jun-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
14
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N626CZ
|
|
|
|
Jun-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
15
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N627CZ
|
|
|
|
Jun-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
16
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N628CZ
|
|
|
|
Jul-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
17
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N629CZ
|
|
|
|
Jul-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
18
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N630CZ
|
|
|
|
Aug-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
19
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N631CZ
|
|
|
|
Aug-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
20
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N632CZ
|
|
|
|
Sep-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
21
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N633CZ
|
|
|
|
Sep-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
22
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N634CZ
|
|
|
|
Sep-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
23
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N635CZ
|
|
|
|
Oct-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
24
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N636CZ
|
|
|
|
Oct-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
25
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N637CZ
|
|
|
|
Nov-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
26
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N638CZ
|
|
|
|
Nov-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest
Airlines
|
|
|
27
|
|
|
EMB-175 LR
|
|
|
TBD
|
|
|
|
N639CZ
|
|
|
|
Dec-08
|
|
|
|
85,517
|
|
|
CF34-8E5
|
|
Northwest Airlines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
II-14
Northwest
AirlinesPortfolio Valuation
($US Millions)
No.
|
|
Aircraft Type
|
|
Registration
|
|
DOM
|
|
Base Value
|
|
Newness
Adj.
|
|
BV w/
Newness
|
|
MTOW
Adj.
|
|
Half-Time
Base Value
|
|
|
1
|
|
|
EMB-175 LR
|
|
|
N612CZ
|
|
|
Jan-08
|
|
|
$
|
26.80
|
|
|
|
$
|
0.00
|
|
|
$
|
26.80
|
|
|
$
|
0.14
|
|
|
|
$
|
26.94
|
|
|
|
2
|
|
|
EMB-175 LR
|
|
|
N613CZ
|
|
|
Jan-08
|
|
|
26.80
|
|
|
|
0.00
|
|
|
26.80
|
|
|
0.14
|
|
|
|
26.94
|
|
|
|
3
|
|
|
EMB-175 LR
|
|
|
N614CZ
|
|
|
Jan-08
|
|
|
26.80
|
|
|
|
0.00
|
|
|
26.80
|
|
|
0.14
|
|
|
|
26.94
|
|
|
|
4
|
|
|
EMB-175 LR
|
|
|
N615CZ
|
|
|
Feb-08
|
|
|
26.80
|
|
|
|
0.04
|
|
|
26.84
|
|
|
0.14
|
|
|
|
26.98
|
|
|
|
5
|
|
|
EMB-175 LR
|
|
|
N616CZ
|
|
|
Feb-08
|
|
|
26.80
|
|
|
|
0.04
|
|
|
26.84
|
|
|
0.14
|
|
|
|
26.98
|
|
|
|
6
|
|
|
EMB-175 LR
|
|
|
N617CZ
|
|
|
Feb-08
|
|
|
26.80
|
|
|
|
0.04
|
|
|
26.84
|
|
|
0.14
|
|
|
|
26.98
|
|
|
|
7
|
|
|
EMB-175 LR
|
|
|
N619CZ
|
|
|
Mar-08
|
|
|
26.80
|
|
|
|
0.09
|
|
|
26.89
|
|
|
0.14
|
|
|
|
27.03
|
|
|
|
8
|
|
|
EMB-175 LR
|
|
|
N620CZ
|
|
|
Mar-08
|
|
|
26.80
|
|
|
|
0.09
|
|
|
26.89
|
|
|
0.14
|
|
|
|
27.03
|
|
|
|
9
|
|
|
EMB-175 LR
|
|
|
N621CZ
|
|
|
Apr-08
|
|
|
26.80
|
|
|
|
0.13
|
|
|
26.93
|
|
|
0.14
|
|
|
|
27.07
|
|
|
|
10
|
|
|
EMB-175 LR
|
|
|
N622CZ
|
|
|
Apr-08
|
|
|
26.80
|
|
|
|
0.13
|
|
|
26.93
|
|
|
0.14
|
|
|
|
27.07
|
|
|
|
11
|
|
|
EMB-175 LR
|
|
|
N623CZ
|
|
|
May-08
|
|
|
26.80
|
|
|
|
0.18
|
|
|
26.98
|
|
|
0.14
|
|
|
|
27.12
|
|
|
|
12
|
|
|
EMB-175 LR
|
|
|
N624CZ
|
|
|
May-08
|
|
|
26.80
|
|
|
|
0.18
|
|
|
26.98
|
|
|
0.14
|
|
|
|
27.12
|
|
|
|
13
|
|
|
EMB-175 LR
|
|
|
N625CZ
|
|
|
Jun-08
|
|
|
26.80
|
|
|
|
0.22
|
|
|
27.02
|
|
|
0.14
|
|
|
|
27.16
|
|
|
|
14
|
|
|
EMB-175 LR
|
|
|
N626CZ
|
|
|
Jun-08
|
|
|
26.80
|
|
|
|
0.22
|
|
|
27.02
|
|
|
0.14
|
|
|
|
27.16
|
|
|
|
15
|
|
|
EMB-175 LR
|
|
|
N627CZ
|
|
|
Jun-08
|
|
|
26.80
|
|
|
|
0.22
|
|
|
27.02
|
|
|
0.14
|
|
|
|
27.16
|
|
|
|
16
|
|
|
EMB-175 LR
|
|
|
N628CZ
|
|
|
Jul-08
|
|
|
26.80
|
|
|
|
0.27
|
|
|
27.07
|
|
|
0.14
|
|
|
|
27.21
|
|
|
|
17
|
|
|
EMB-175 LR
|
|
|
N629CZ
|
|
|
Jul-08
|
|
|
26.80
|
|
|
|
0.27
|
|
|
27.07
|
|
|
0.14
|
|
|
|
27.21
|
|
|
|
18
|
|
|
EMB-175 LR
|
|
|
N630CZ
|
|
|
Aug-08
|
|
|
26.80
|
|
|
|
0.31
|
|
|
27.11
|
|
|
0.14
|
|
|
|
27.25
|
|
|
|
19
|
|
|
EMB-175 LR
|
|
|
N631CZ
|
|
|
Aug-08
|
|
|
26.80
|
|
|
|
0.31
|
|
|
27.11
|
|
|
0.14
|
|
|
|
27.25
|
|
|
|
20
|
|
|
EMB-175 LR
|
|
|
N632CZ
|
|
|
Sep-08
|
|
|
26.80
|
|
|
|
0.36
|
|
|
27.16
|
|
|
0.14
|
|
|
|
27.30
|
|
|
|
21
|
|
|
EMB-175 LR
|
|
|
N633CZ
|
|
|
Sep-08
|
|
|
26.80
|
|
|
|
0.36
|
|
|
27.16
|
|
|
0.14
|
|
|
|
27.30
|
|
|
|
22
|
|
|
EMB-175 LR
|
|
|
N634CZ
|
|
|
Sep-08
|
|
|
26.80
|
|
|
|
0.36
|
|
|
27.16
|
|
|
0.14
|
|
|
|
27.30
|
|
|
|
23
|
|
|
EMB-175 LR
|
|
|
N635CZ
|
|
|
Oct-08
|
|
|
26.80
|
|
|
|
0.40
|
|
|
27.20
|
|
|
0.14
|
|
|
|
27.34
|
|
|
|
24
|
|
|
EMB-175 LR
|
|
|
N636CZ
|
|
|
Oct-08
|
|
|
26.80
|
|
|
|
0.40
|
|
|
27.20
|
|
|
0.14
|
|
|
|
27.34
|
|
|
|
25
|
|
|
EMB-175 LR
|
|
|
N637CZ
|
|
|
Nov-08
|
|
|
26.80
|
|
|
|
0.45
|
|
|
27.25
|
|
|
0.14
|
|
|
|
27.39
|
|
|
|
26
|
|
|
EMB-175 LR
|
|
|
N638CZ
|
|
|
Nov-08
|
|
|
26.80
|
|
|
|
0.45
|
|
|
27.25
|
|
|
0.14
|
|
|
|
27.39
|
|
|
|
27
|
|
|
EMB-175 LR
|
|
|
N639CZ
|
|
|
Dec-08
|
|
|
26.80
|
|
|
|
0.49
|
|
|
27.29
|
|
|
0.14
|
|
|
|
27.43
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
$
|
723.60
|
|
|
|
$
|
6.01
|
|
|
$
|
729.61
|
|
|
$
|
3.78
|
|
|
|
$
|
733.39
|
|
|
V. Covenants
This report has been prepared for the exclusive use of
Northwest Airlines and shall not be provided to other parties by mba without
the express consent of Northwest Airlines. mba certifies that this report has been
independently prepared and that it fully and accurately reflects mbas opinion
as to the Half-time Base Value, as requested. mba further certifies that it
does not have, and does not expect to have, any financial or other interest in
the subject or similar aircraft and engine.
II-15
This
report represents the opinion of mba as to the Half-time Base Value of the
subject aircraft, as requested, and is intended to be advisory only, in nature.
Therefore, mba assumes no responsibility or legal liability for any actions
taken, or not taken, by Northwest Airlines or any other party with regard to the
subject aircraft and engine. By accepting this report, all parties agree that
mba shall bear no such responsibility or legal liability.
|
|
Sincerely,
|
|
|
MORTEN
BEYER & AGNEW, INC.
|
|
|
|
September 26, 2007
|
|
Robert F. Agnew
|
|
|
President &
CEO
|
|
|
Morten
Beyer & Agnew, Inc.
|
|
|
ISTAT
Certified Senior Appraiser
|
II-16
APPENDIX
III
ASSUMED
AIRCRAFT VALUES
The values
of the Aircraft in the table below are presented subject to the assumptions and
qualifications set forth in Description of the Equipment NotesSecurityLoan
to Value Ratios of Equipment Notes.
Date
|
|
|
|
N612CZ
|
|
N613CZ
|
|
N614CZ
|
|
N615CZ
|
|
N616CZ
|
|
N617CZ
|
|
N619CZ
|
|
N620CZ
|
|
N621CZ
|
|
N622CZ
|
|
N623CZ
|
|
N624CZ
|
|
N625CZ
|
|
N626CZ
|
|
At Delivery
|
|
$ 26,940,000
|
|
$ 26,940,000
|
|
$ 26,940,000
|
|
$ 26,980,000
|
|
$ 26,980,000
|
|
$ 26,980,000
|
|
$ 27,030,000
|
|
$ 27,030,000
|
|
$ 27,070,000
|
|
$ 27,070,000
|
|
$ 27,120,000
|
|
$ 27,120,000
|
|
$ 27,160,000
|
|
$ 27,160,000
|
|
1-May-09
|
|
25,727,700
|
|
25,727,700
|
|
25,727,700
|
|
26,170,600
|
|
26,170,600
|
|
26,170,600
|
|
26,219,100
|
|
26,219,100
|
|
26,257,900
|
|
26,257,900
|
|
26,306,400
|
|
26,306,400
|
|
26,345,200
|
|
26,345,200
|
|
1-Nov-09
|
|
25,323,600
|
|
25,323,600
|
|
25,323,600
|
|
25,765,900
|
|
25,765,900
|
|
25,765,900
|
|
25,813,650
|
|
25,813,650
|
|
25,851,850
|
|
25,851,850
|
|
25,899,600
|
|
25,899,600
|
|
25,937,800
|
|
25,937,800
|
|
1-May-10
|
|
24,919,500
|
|
24,919,500
|
|
24,919,500
|
|
25,361,200
|
|
25,361,200
|
|
25,361,200
|
|
25,408,200
|
|
25,408,200
|
|
25,445,800
|
|
25,445,800
|
|
25,492,800
|
|
25,492,800
|
|
25,530,400
|
|
25,530,400
|
|
1-Nov-10
|
|
24,515,400
|
|
24,515,400
|
|
24,515,400
|
|
24,956,500
|
|
24,956,500
|
|
24,956,500
|
|
25,002,750
|
|
25,002,750
|
|
25,039,750
|
|
25,039,750
|
|
25,086,000
|
|
25,086,000
|
|
25,123,000
|
|
25,123,000
|
|
1-May-11
|
|
24,111,300
|
|
24,111,300
|
|
24,111,300
|
|
24,551,800
|
|
24,551,800
|
|
24,551,800
|
|
24,597,300
|
|
24,597,300
|
|
24,633,700
|
|
24,633,700
|
|
24,679,200
|
|
24,679,200
|
|
24,715,600
|
|
24,715,600
|
|
1-Nov-11
|
|
23,707,200
|
|
23,707,200
|
|
23,707,200
|
|
24,147,100
|
|
24,147,100
|
|
24,147,100
|
|
24,191,850
|
|
24,191,850
|
|
24,227,650
|
|
24,227,650
|
|
24,272,400
|
|
24,272,400
|
|
24,308,200
|
|
24,308,200
|
|
1-May-12
|
|
23,303,100
|
|
23,303,100
|
|
23,303,100
|
|
23,742,400
|
|
23,742,400
|
|
23,742,400
|
|
23,786,400
|
|
23,786,400
|
|
23,821,600
|
|
23,821,600
|
|
23,865,600
|
|
23,865,600
|
|
23,900,800
|
|
23,900,800
|
|
1-Nov-12
|
|
22,899,000
|
|
22,899,000
|
|
22,899,000
|
|
23,337,700
|
|
23,337,700
|
|
23,337,700
|
|
23,380,950
|
|
23,380,950
|
|
23,415,550
|
|
23,415,550
|
|
23,458,800
|
|
23,458,800
|
|
23,493,400
|
|
23,493,400
|
|
1-May-13
|
|
22,494,900
|
|
22,494,900
|
|
22,494,900
|
|
22,933,000
|
|
22,933,000
|
|
22,933,000
|
|
22,975,500
|
|
22,975,500
|
|
23,009,500
|
|
23,009,500
|
|
23,052,000
|
|
23,052,000
|
|
23,086,000
|
|
23,086,000
|
|
1-Nov-13
|
|
22,090,800
|
|
22,090,800
|
|
22,090,800
|
|
22,528,300
|
|
22,528,300
|
|
22,528,300
|
|
22,570,050
|
|
22,570,050
|
|
22,603,450
|
|
22,603,450
|
|
22,645,200
|
|
22,645,200
|
|
22,678,600
|
|
22,678,600
|
|
1-May-14
|
|
21,686,700
|
|
21,686,700
|
|
21,686,700
|
|
22,123,600
|
|
22,123,600
|
|
22,123,600
|
|
22,164,600
|
|
22,164,600
|
|
22,197,400
|
|
22,197,400
|
|
22,238,400
|
|
22,238,400
|
|
22,271,200
|
|
22,271,200
|
|
1-Nov-14
|
|
21,282,600
|
|
21,282,600
|
|
21,282,600
|
|
21,718,900
|
|
21,718,900
|
|
21,718,900
|
|
21,759,150
|
|
21,759,150
|
|
21,791,350
|
|
21,791,350
|
|
21,831,600
|
|
21,831,600
|
|
21,863,800
|
|
21,863,800
|
|
1-May-15
|
|
20,878,500
|
|
20,878,500
|
|
20,878,500
|
|
21,314,200
|
|
21,314,200
|
|
21,314,200
|
|
21,353,700
|
|
21,353,700
|
|
21,385,300
|
|
21,385,300
|
|
21,424,800
|
|
21,424,800
|
|
21,456,400
|
|
21,456,400
|
|
1-Nov-15
|
|
20,474,400
|
|
20,474,400
|
|
20,474,400
|
|
20,909,500
|
|
20,909,500
|
|
20,909,500
|
|
20,948,250
|
|
20,948,250
|
|
20,979,250
|
|
20,979,250
|
|
21,018,000
|
|
21,018,000
|
|
21,049,000
|
|
21,049,000
|
|
1-May-16
|
|
20,070,300
|
|
20,070,300
|
|
20,070,300
|
|
20,504,800
|
|
20,504,800
|
|
20,504,800
|
|
20,542,800
|
|
20,542,800
|
|
20,573,200
|
|
20,573,200
|
|
20,611,200
|
|
20,611,200
|
|
20,641,600
|
|
20,641,600
|
|
1-Nov-16
|
|
19,666,200
|
|
19,666,200
|
|
19,666,200
|
|
20,100,100
|
|
20,100,100
|
|
20,100,100
|
|
20,137,350
|
|
20,137,350
|
|
20,167,150
|
|
20,167,150
|
|
20,204,400
|
|
20,204,400
|
|
20,234,200
|
|
20,234,200
|
|
1-May-17
|
|
19,262,100
|
|
19,262,100
|
|
19,262,100
|
|
19,695,400
|
|
19,695,400
|
|
19,695,400
|
|
19,731,900
|
|
19,731,900
|
|
19,761,100
|
|
19,761,100
|
|
19,797,600
|
|
19,797,600
|
|
19,826,800
|
|
19,826,800
|
|
1-Nov-17
|
|
18,858,000
|
|
18,858,000
|
|
18,858,000
|
|
19,290,700
|
|
19,290,700
|
|
19,290,700
|
|
19,326,450
|
|
19,326,450
|
|
19,355,050
|
|
19,355,050
|
|
19,390,800
|
|
19,390,800
|
|
19,419,400
|
|
19,419,400
|
|
1-May-18
|
|
18,453,900
|
|
18,453,900
|
|
18,453,900
|
|
18,886,000
|
|
18,886,000
|
|
18,886,000
|
|
18,921,000
|
|
18,921,000
|
|
18,949,000
|
|
18,949,000
|
|
18,984,000
|
|
18,984,000
|
|
19,012,000
|
|
19,012,000
|
|
1-Nov-18
|
|
18,049,800
|
|
18,049,800
|
|
18,049,800
|
|
18,481,300
|
|
18,481,300
|
|
18,481,300
|
|
18,515,550
|
|
18,515,550
|
|
18,542,950
|
|
18,542,950
|
|
18,577,200
|
|
18,577,200
|
|
18,604,600
|
|
18,604,600
|
|
1-May-19
|
|
17,645,700
|
|
17,645,700
|
|
17,645,700
|
|
18,076,600
|
|
18,076,600
|
|
18,076,600
|
|
18,110,100
|
|
18,110,100
|
|
18,136,900
|
|
18,136,900
|
|
18,170,400
|
|
18,170,400
|
|
18,197,200
|
|
18,197,200
|
|
1-Nov-19
|
|
17,241,600
|
|
17,241,600
|
|
17,241,600
|
|
17,671,900
|
|
17,671,900
|
|
17,671,900
|
|
17,704,650
|
|
17,704,650
|
|
17,730,850
|
|
17,730,850
|
|
17,763,600
|
|
17,763,600
|
|
17,789,800
|
|
17,789,800
|
|
III-
1
Date
|
|
|
|
N627CZ
|
|
N628CZ
|
|
N629CZ
|
|
N630CZ
|
|
N631CZ
|
|
N632CZ
|
|
N633CZ
|
|
N634CZ
|
|
N635CZ
|
|
N636CZ
|
|
N637CZ
|
|
N638CZ
|
|
N639CZ
|
|
At Delivery
|
|
$ 27,160,000
|
|
$ 27,210,000
|
|
$ 27,210,000
|
|
$ 27,250,000
|
|
$ 27,250,000
|
|
$ 27,300,000
|
|
$ 27,300,000
|
|
$ 27,300,000
|
|
$ 27,340,000
|
|
$ 27,340,000
|
|
$ 27,390,000
|
|
$ 27,390,000
|
|
$ 27,430,000
|
|
1-May-09
|
|
26,345,200
|
|
26,393,700
|
|
26,393,700
|
|
26,841,250
|
|
26,841,250
|
|
26,890,500
|
|
26,890,500
|
|
26,890,500
|
|
26,929,900
|
|
26,929,900
|
|
26,979,150
|
|
26,979,150
|
|
27,018,550
|
|
1-Nov-09
|
|
25,937,800
|
|
25,985,550
|
|
25,985,550
|
|
26,432,500
|
|
26,432,500
|
|
26,481,000
|
|
26,481,000
|
|
26,481,000
|
|
26,519,800
|
|
26,519,800
|
|
26,568,300
|
|
26,568,300
|
|
26,607,100
|
|
1-May-10
|
|
25,530,400
|
|
25,577,400
|
|
25,577,400
|
|
26,023,750
|
|
26,023,750
|
|
26,071,500
|
|
26,071,500
|
|
26,071,500
|
|
26,109,700
|
|
26,109,700
|
|
26,157,450
|
|
26,157,450
|
|
26,195,650
|
|
1-Nov-10
|
|
25,123,000
|
|
25,169,250
|
|
25,169,250
|
|
25,615,000
|
|
25,615,000
|
|
25,662,000
|
|
25,662,000
|
|
25,662,000
|
|
25,699,600
|
|
25,699,600
|
|
25,746,600
|
|
25,746,600
|
|
25,784,200
|
|
1-May-11
|
|
24,715,600
|
|
24,761,100
|
|
24,761,100
|
|
25,206,250
|
|
25,206,250
|
|
25,252,500
|
|
25,252,500
|
|
25,252,500
|
|
25,289,500
|
|
25,289,500
|
|
25,335,750
|
|
25,335,750
|
|
25,372,750
|
|
1-Nov-11
|
|
24,308,200
|
|
24,352,950
|
|
24,352,950
|
|
24,797,500
|
|
24,797,500
|
|
24,843,000
|
|
24,843,000
|
|
24,843,000
|
|
24,879,400
|
|
24,879,400
|
|
24,924,900
|
|
24,924,900
|
|
24,961,300
|
|
1-May-12
|
|
23,900,800
|
|
23,944,800
|
|
23,944,800
|
|
24,388,750
|
|
24,388,750
|
|
24,433,500
|
|
24,433,500
|
|
24,433,500
|
|
24,469,300
|
|
24,469,300
|
|
24,514,050
|
|
24,514,050
|
|
24,549,850
|
|
1-Nov-12
|
|
23,493,400
|
|
23,536,650
|
|
23,536,650
|
|
23,980,000
|
|
23,980,000
|
|
24,024,000
|
|
24,024,000
|
|
24,024,000
|
|
24,059,200
|
|
24,059,200
|
|
24,103,200
|
|
24,103,200
|
|
24,138,400
|
|
1-May-13
|
|
23,086,000
|
|
23,128,500
|
|
23,128,500
|
|
23,571,250
|
|
23,571,250
|
|
23,614,500
|
|
23,614,500
|
|
23,614,500
|
|
23,649,100
|
|
23,649,100
|
|
23,692,350
|
|
23,692,350
|
|
23,726,950
|
|
1-Nov-13
|
|
22,678,600
|
|
22,720,350
|
|
22,720,350
|
|
23,162,500
|
|
23,162,500
|
|
23,205,000
|
|
23,205,000
|
|
23,205,000
|
|
23,239,000
|
|
23,239,000
|
|
23,281,500
|
|
23,281,500
|
|
23,315,500
|
|
1-May-14
|
|
22,271,200
|
|
22,312,200
|
|
22,312,200
|
|
22,753,750
|
|
22,753,750
|
|
22,795,500
|
|
22,795,500
|
|
22,795,500
|
|
22,828,900
|
|
22,828,900
|
|
22,870,650
|
|
22,870,650
|
|
22,904,050
|
|
1-Nov-14
|
|
21,863,800
|
|
21,904,050
|
|
21,904,050
|
|
22,345,000
|
|
22,345,000
|
|
22,386,000
|
|
22,386,000
|
|
22,386,000
|
|
22,418,800
|
|
22,418,800
|
|
22,459,800
|
|
22,459,800
|
|
22,492,600
|
|
1-May-15
|
|
21,456,400
|
|
21,495,900
|
|
21,495,900
|
|
21,936,250
|
|
21,936,250
|
|
21,976,500
|
|
21,976,500
|
|
21,976,500
|
|
22,008,700
|
|
22,008,700
|
|
22,048,950
|
|
22,048,950
|
|
22,081,150
|
|
1-Nov-15
|
|
21,049,000
|
|
21,087,750
|
|
21,087,750
|
|
21,527,500
|
|
21,527,500
|
|
21,567,000
|
|
21,567,000
|
|
21,567,000
|
|
21,598,600
|
|
21,598,600
|
|
21,638,100
|
|
21,638,100
|
|
21,669,700
|
|
1-May-16
|
|
20,641,600
|
|
20,679,600
|
|
20,679,600
|
|
21,118,750
|
|
21,118,750
|
|
21,157,500
|
|
21,157,500
|
|
21,157,500
|
|
21,188,500
|
|
21,188,500
|
|
21,227,250
|
|
21,227,250
|
|
21,258,250
|
|
1-Nov-16
|
|
20,234,200
|
|
20,271,450
|
|
20,271,450
|
|
20,710,000
|
|
20,710,000
|
|
20,748,000
|
|
20,748,000
|
|
20,748,000
|
|
20,778,400
|
|
20,778,400
|
|
20,816,400
|
|
20,816,400
|
|
20,846,800
|
|
1-May-17
|
|
19,826,800
|
|
19,863,300
|
|
19,863,300
|
|
20,301,250
|
|
20,301,250
|
|
20,338,500
|
|
20,338,500
|
|
20,338,500
|
|
20,368,300
|
|
20,368,300
|
|
20,405,550
|
|
20,405,550
|
|
20,435,350
|
|
1-Nov-17
|
|
19,419,400
|
|
19,455,150
|
|
19,455,150
|
|
19,892,500
|
|
19,892,500
|
|
19,929,000
|
|
19,929,000
|
|
19,929,000
|
|
19,958,200
|
|
19,958,200
|
|
19,994,700
|
|
19,994,700
|
|
20,023,900
|
|
1-May-18
|
|
19,012,000
|
|
19,047,000
|
|
19,047,000
|
|
19,483,750
|
|
19,483,750
|
|
19,519,500
|
|
19,519,500
|
|
19,519,500
|
|
19,548,100
|
|
19,548,100
|
|
19,583,850
|
|
19,583,850
|
|
19,612,450
|
|
1-Nov-18
|
|
18,604,600
|
|
18,638,850
|
|
18,638,850
|
|
19,075,000
|
|
19,075,000
|
|
19,110,000
|
|
19,110,000
|
|
19,110,000
|
|
19,138,000
|
|
19,138,000
|
|
19,173,000
|
|
19,173,000
|
|
19,201,000
|
|
1-May-19
|
|
18,197,200
|
|
18,230,700
|
|
18,230,700
|
|
18,666,250
|
|
18,666,250
|
|
18,700,500
|
|
18,700,500
|
|
18,700,500
|
|
18,727,900
|
|
18,727,900
|
|
18,762,150
|
|
18,762,150
|
|
18,789,550
|
|
1-Nov-19
|
|
17,789,800
|
|
17,822,550
|
|
17,822,550
|
|
18,257,500
|
|
18,257,500
|
|
18,291,000
|
|
18,291,000
|
|
18,291,000
|
|
18,317,800
|
|
18,317,800
|
|
18,351,300
|
|
18,351,300
|
|
18,378,100
|
|
III-
2
APPENDIX
IV
SCHEDULED
NOTE PRINCIPAL BALANCES
The Equipment Note
principal balances in the tables below are presented for each date, after
giving effect to the payments scheduled for such date, and on the assumption
that there will be no payment default or prepayment of any Equipment Note.
Series A Equipment Note Principal Balances
Date
|
|
|
|
N612CZ
|
|
N613CZ
|
|
N614CZ
|
|
N615CZ
|
|
N616CZ
|
|
N617CZ
|
|
N619CZ
|
|
N620CZ
|
|
N621CZ
|
|
N622CZ
|
|
N623CZ
|
|
N624CZ
|
|
N625CZ
|
|
N626CZ
|
|
At Issuance
|
|
$12,457,326.29
|
|
$12,457,326.29
|
|
$12,457,326.29
|
|
$12,475,822.68
|
|
$12,475,822.68
|
|
$12,475,822.68
|
|
$12,498,943.18
|
|
$12,498,943.18
|
|
$12,517,439.60
|
|
$12,517,439.60
|
|
$12,540,560.07
|
|
$12,540,560.07
|
|
$12,559,056.48
|
|
$12,559,056.48
|
|
1-May-09
|
|
12,236,829.97
|
|
12,236,829.97
|
|
12,236,829.97
|
|
12,447,485.87
|
|
12,447,485.87
|
|
12,447,485.87
|
|
12,470,553.86
|
|
12,470,553.86
|
|
12,489,008.26
|
|
12,489,008.26
|
|
12,512,076.22
|
|
12,512,076.22
|
|
12,530,530.62
|
|
12,530,530.62
|
|
1-Nov-09
|
|
12,008,272.25
|
|
12,008,272.25
|
|
12,008,272.25
|
|
12,254,998.98
|
|
12,254,998.98
|
|
12,254,998.98
|
|
12,277,710.25
|
|
12,277,710.25
|
|
12,295,879.27
|
|
12,295,879.27
|
|
12,318,590.51
|
|
12,318,590.51
|
|
12,336,759.53
|
|
12,336,759.53
|
|
1-May-10
|
|
11,799,212.02
|
|
11,799,212.02
|
|
11,799,212.02
|
|
12,026,101.92
|
|
12,026,101.92
|
|
12,026,101.92
|
|
12,048,389.01
|
|
12,048,389.01
|
|
12,066,218.66
|
|
12,066,218.66
|
|
12,088,505.73
|
|
12,088,505.73
|
|
12,106,335.35
|
|
12,106,335.35
|
|
1-Nov-10
|
|
11,638,445.95
|
|
11,638,445.95
|
|
11,638,445.95
|
|
11,868,388.01
|
|
11,868,388.01
|
|
11,868,388.01
|
|
11,890,382.81
|
|
11,890,382.81
|
|
11,907,978.64
|
|
11,907,978.64
|
|
11,929,973.44
|
|
11,929,973.44
|
|
11,947,569.24
|
|
11,947,569.24
|
|
1-May-11
|
|
11,404,644.83
|
|
11,404,644.83
|
|
11,404,644.83
|
|
11,655,726.52
|
|
11,655,726.52
|
|
11,655,726.52
|
|
11,677,327.21
|
|
11,677,327.21
|
|
11,694,607.75
|
|
11,694,607.75
|
|
11,716,208.45
|
|
11,716,208.45
|
|
11,733,488.97
|
|
11,733,488.97
|
|
1-Nov-11
|
|
11,213,505.53
|
|
11,213,505.53
|
|
11,213,505.53
|
|
11,421,578.24
|
|
11,421,578.24
|
|
11,421,578.24
|
|
11,442,744.99
|
|
11,442,744.99
|
|
11,459,678.39
|
|
11,459,678.39
|
|
11,480,845.14
|
|
11,480,845.14
|
|
11,497,778.54
|
|
11,497,778.54
|
|
1-May-12
|
|
10,986,994.48
|
|
10,986,994.48
|
|
10,986,994.48
|
|
11,230,155.14
|
|
11,230,155.14
|
|
11,230,155.14
|
|
11,250,967.14
|
|
11,250,967.14
|
|
11,267,616.74
|
|
11,267,616.74
|
|
11,288,428.74
|
|
11,288,428.74
|
|
11,305,078.35
|
|
11,305,078.35
|
|
1-Nov-12
|
|
10,546,646.98
|
|
10,546,646.98
|
|
10,546,646.98
|
|
10,884,655.51
|
|
10,884,655.51
|
|
10,884,655.51
|
|
10,894,901.56
|
|
10,894,901.56
|
|
10,943,217.48
|
|
10,943,217.48
|
|
10,953,463.51
|
|
10,953,463.51
|
|
10,961,660.33
|
|
10,961,660.33
|
|
1-May-13
|
|
10,226,821.12
|
|
10,226,821.12
|
|
10,226,821.12
|
|
10,554,596.36
|
|
10,554,596.36
|
|
10,554,596.36
|
|
10,564,533.12
|
|
10,564,533.12
|
|
10,611,379.40
|
|
10,611,379.40
|
|
10,621,316.13
|
|
10,621,316.13
|
|
10,629,265.52
|
|
10,629,265.52
|
|
1-Nov-13
|
|
9,916,676.88
|
|
9,916,676.88
|
|
9,916,676.88
|
|
10,234,530.50
|
|
10,234,530.50
|
|
10,234,530.50
|
|
10,244,167.26
|
|
10,244,167.26
|
|
10,289,588.61
|
|
10,289,588.61
|
|
10,299,225.35
|
|
10,299,225.35
|
|
10,306,934.75
|
|
10,306,934.75
|
|
1-May-14
|
|
9,615,919.33
|
|
9,615,919.33
|
|
9,615,919.33
|
|
9,924,153.49
|
|
9,924,153.49
|
|
9,924,153.49
|
|
9,933,499.28
|
|
9,933,499.28
|
|
9,977,539.01
|
|
9,977,539.01
|
|
9,986,884.78
|
|
9,986,884.78
|
|
9,994,361.41
|
|
9,994,361.41
|
|
1-Nov-14
|
|
9,324,262.52
|
|
9,324,262.52
|
|
9,324,262.52
|
|
9,623,170.17
|
|
9,623,170.17
|
|
9,623,170.17
|
|
9,632,233.74
|
|
9,632,233.74
|
|
9,674,933.84
|
|
9,674,933.84
|
|
9,683,997.41
|
|
9,683,997.41
|
|
9,691,248.25
|
|
9,691,248.25
|
|
1-May-15
|
|
9,041,429.20
|
|
9,041,429.20
|
|
9,041,429.20
|
|
9,331,294.38
|
|
9,331,294.38
|
|
9,331,294.38
|
|
9,340,084.22
|
|
9,340,084.22
|
|
9,381,485.40
|
|
9,381,485.40
|
|
9,390,275.23
|
|
9,390,275.23
|
|
9,397,307.09
|
|
9,397,307.09
|
|
1-Nov-15
|
|
8,767,150.56
|
|
8,767,150.56
|
|
8,767,150.56
|
|
9,048,248.66
|
|
9,048,248.66
|
|
9,048,248.66
|
|
9,056,772.98
|
|
9,056,772.98
|
|
9,100,219.85
|
|
9,100,219.85
|
|
9,105,439.06
|
|
9,105,439.06
|
|
9,112,258.50
|
|
9,112,258.50
|
|
1-May-16
|
|
8,501,166.00
|
|
8,501,166.00
|
|
8,501,166.00
|
|
8,773,764.00
|
|
8,773,764.00
|
|
8,773,764.00
|
|
8,782,030.79
|
|
8,782,030.79
|
|
8,820,951.39
|
|
8,820,951.39
|
|
8,829,218.17
|
|
8,829,218.17
|
|
8,835,831.60
|
|
8,835,831.60
|
|
1-Nov-16
|
|
8,243,222.86
|
|
8,243,222.86
|
|
8,243,222.86
|
|
8,507,579.60
|
|
8,507,579.60
|
|
8,507,579.60
|
|
8,515,596.60
|
|
8,515,596.60
|
|
8,553,333.14
|
|
8,553,333.14
|
|
8,561,350.12
|
|
8,561,350.12
|
|
8,567,763.71
|
|
8,567,763.71
|
|
1-May-17
|
|
7,993,076.16
|
|
7,993,076.16
|
|
7,993,076.16
|
|
8,249,442.62
|
|
8,249,442.62
|
|
8,249,442.62
|
|
8,257,217.30
|
|
8,257,217.30
|
|
8,293,805.78
|
|
8,293,805.78
|
|
8,301,580.46
|
|
8,301,580.46
|
|
8,307,800.19
|
|
8,307,800.19
|
|
1-Nov-17
|
|
7,750,488.37
|
|
7,750,488.37
|
|
7,750,488.37
|
|
7,999,107.87
|
|
7,999,107.87
|
|
7,999,107.87
|
|
8,006,647.52
|
|
8,006,647.52
|
|
8,042,122.81
|
|
8,042,122.81
|
|
8,049,662.45
|
|
8,049,662.45
|
|
8,055,694.16
|
|
8,055,694.16
|
|
1-May-18
|
|
7,515,229.23
|
|
7,515,229.23
|
|
7,515,229.23
|
|
7,756,337.69
|
|
7,756,337.69
|
|
7,756,337.69
|
|
7,763,649.35
|
|
7,763,649.35
|
|
7,798,045.27
|
|
7,798,045.27
|
|
7,805,356.92
|
|
7,805,356.92
|
|
7,811,206.23
|
|
7,811,206.23
|
|
1-Nov-18
|
|
7,287,075.48
|
|
7,287,075.48
|
|
7,287,075.48
|
|
7,520,901.62
|
|
7,520,901.62
|
|
7,520,901.62
|
|
7,527,992.12
|
|
7,527,992.12
|
|
7,561,341.47
|
|
7,561,341.47
|
|
7,568,431.96
|
|
7,568,431.96
|
|
7,574,104.35
|
|
7,574,104.35
|
|
1-May-19
|
|
7,065,810.66
|
|
7,065,810.66
|
|
7,065,810.66
|
|
7,292,576.25
|
|
7,292,576.25
|
|
7,292,576.25
|
|
7,299,452.20
|
|
7,299,452.20
|
|
7,331,786.77
|
|
7,331,786.77
|
|
7,338,662.72
|
|
7,338,662.72
|
|
7,344,163.48
|
|
7,344,163.48
|
|
1-Nov-19
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
IV-
1
Date
|
|
|
|
N627CZ
|
|
N628CZ
|
|
N629CZ
|
|
N630CZ
|
|
N631CZ
|
|
N632CZ
|
|
N633CZ
|
|
N634CZ
|
|
N635CZ
|
|
N636CZ
|
|
N637CZ
|
|
N638CZ
|
|
N639CZ
|
|
At Issuance
|
|
$
|
12,559,056.48
|
|
$
|
12,582,176.98
|
|
$
|
12,582,176.98
|
|
$
|
12,537,998.37
|
|
$
|
12,537,998.37
|
|
$
|
12,561,003.90
|
|
$
|
12,561,003.90
|
|
$
|
12,561,003.90
|
|
$
|
12,579,408.28
|
|
$
|
12,579,408.28
|
|
$
|
12,602,413.82
|
|
$
|
12,602,413.82
|
|
$
|
12,620,491.35
|
|
1-May-09
|
|
12,530,530.62
|
|
12,553,598.60
|
|
12,553,598.60
|
|
12,537,998.37
|
|
12,537,998.37
|
|
12,561,003.90
|
|
12,561,003.90
|
|
12,561,003.90
|
|
12,579,408.28
|
|
12,579,408.28
|
|
12,602,413.82
|
|
12,602,413.82
|
|
12,620,491.35
|
|
1-Nov-09
|
|
12,336,759.53
|
|
12,359,470.79
|
|
12,359,470.79
|
|
12,357,592.23
|
|
12,357,592.23
|
|
12,380,266.75
|
|
12,380,266.75
|
|
12,380,266.75
|
|
12,398,406.30
|
|
12,398,406.30
|
|
12,421,080.82
|
|
12,421,080.82
|
|
12,438,517.54
|
|
1-May-10
|
|
12,106,335.35
|
|
12,128,622.45
|
|
12,128,622.45
|
|
12,132,538.01
|
|
12,132,538.01
|
|
12,154,799.58
|
|
12,154,799.58
|
|
12,154,799.58
|
|
12,172,608.79
|
|
12,172,608.79
|
|
12,194,870.37
|
|
12,194,870.37
|
|
12,212,352.72
|
|
1-Nov-10
|
|
11,947,569.24
|
|
11,969,564.06
|
|
11,969,564.06
|
|
11,994,735.96
|
|
11,994,735.96
|
|
12,016,744.68
|
|
12,016,744.68
|
|
12,016,744.68
|
|
12,034,351.61
|
|
12,034,351.61
|
|
12,056,360.34
|
|
12,056,360.34
|
|
12,073,640.41
|
|
1-May-11
|
|
11,733,488.97
|
|
11,755,089.67
|
|
11,755,089.67
|
|
11,774,413.93
|
|
11,774,413.93
|
|
11,796,018.41
|
|
11,796,018.41
|
|
11,796,018.41
|
|
11,813,301.91
|
|
11,813,301.91
|
|
11,834,906.37
|
|
11,834,906.37
|
|
11,851,487.06
|
|
1-Nov-11
|
|
11,497,778.54
|
|
11,518,945.28
|
|
11,518,945.28
|
|
11,557,207.04
|
|
11,557,207.04
|
|
11,578,412.97
|
|
11,578,412.97
|
|
11,578,412.97
|
|
11,595,377.64
|
|
11,595,377.64
|
|
11,616,583.55
|
|
11,616,583.55
|
|
11,632,845.40
|
|
1-May-12
|
|
11,305,078.35
|
|
11,325,890.34
|
|
11,325,890.34
|
|
11,337,564.11
|
|
11,337,564.11
|
|
11,358,367.01
|
|
11,358,367.01
|
|
11,358,367.01
|
|
11,375,009.28
|
|
11,375,009.28
|
|
11,395,812.17
|
|
11,395,812.17
|
|
11,411,751.60
|
|
1-Nov-12
|
|
10,961,660.33
|
|
11,012,025.47
|
|
11,012,025.47
|
|
11,176,479.23
|
|
11,176,479.23
|
|
11,197,565.10
|
|
11,197,565.10
|
|
11,197,565.10
|
|
11,212,105.59
|
|
11,212,105.59
|
|
11,233,192.19
|
|
11,233,192.19
|
|
11,249,358.35
|
|
1-May-13
|
|
10,629,265.52
|
|
10,678,099.17
|
|
10,678,099.17
|
|
10,957,650.76
|
|
10,957,650.76
|
|
10,978,230.81
|
|
10,978,230.81
|
|
10,978,230.81
|
|
10,992,775.67
|
|
10,992,775.67
|
|
11,013,362.94
|
|
11,013,362.94
|
|
11,029,127.54
|
|
1-Nov-13
|
|
10,306,934.75
|
|
10,354,283.45
|
|
10,354,283.45
|
|
10,686,048.54
|
|
10,686,048.54
|
|
10,695,985.31
|
|
10,695,985.31
|
|
10,695,985.31
|
|
10,742,831.57
|
|
10,742,831.57
|
|
10,752,768.31
|
|
10,752,768.31
|
|
10,760,014.83
|
|
1-May-14
|
|
9,994,361.41
|
|
10,040,270.28
|
|
10,040,270.28
|
|
10,361,992.83
|
|
10,361,992.83
|
|
10,371,629.60
|
|
10,371,629.60
|
|
10,371,629.60
|
|
10,417,050.91
|
|
10,417,050.91
|
|
10,426,687.67
|
|
10,426,687.67
|
|
10,433,694.20
|
|
1-Nov-14
|
|
9,691,248.25
|
|
9,751,683.02
|
|
9,751,683.02
|
|
10,047,746.89
|
|
10,047,746.89
|
|
10,057,092.70
|
|
10,057,092.70
|
|
10,057,092.70
|
|
10,101,132.39
|
|
10,101,132.39
|
|
10,110,478.17
|
|
10,110,478.17
|
|
10,117,251.93
|
|
1-May-15
|
|
9,397,307.09
|
|
9,440,466.24
|
|
9,440,466.24
|
|
9,743,011.90
|
|
9,743,011.90
|
|
9,752,075.48
|
|
9,752,075.48
|
|
9,752,075.48
|
|
9,798,273.20
|
|
9,798,273.20
|
|
9,816,192.52
|
|
9,816,192.52
|
|
9,830,201.07
|
|
1-Nov-15
|
|
9,112,258.50
|
|
9,154,105.13
|
|
9,154,105.13
|
|
9,447,498.10
|
|
9,447,498.10
|
|
9,456,287.95
|
|
9,456,287.95
|
|
9,456,287.95
|
|
9,497,689.10
|
|
9,497,689.10
|
|
9,506,478.93
|
|
9,506,478.93
|
|
9,512,807.94
|
|
1-May-16
|
|
8,835,831.60
|
|
8,876,405.55
|
|
8,876,405.55
|
|
9,158,263.44
|
|
9,158,263.44
|
|
9,169,448.92
|
|
9,169,448.92
|
|
9,169,448.92
|
|
9,209,590.63
|
|
9,209,590.63
|
|
9,218,114.96
|
|
9,218,114.96
|
|
9,224,231.56
|
|
1-Nov-16
|
|
8,567,763.71
|
|
8,607,103.66
|
|
8,607,103.66
|
|
8,883,018.98
|
|
8,883,018.98
|
|
8,891,285.78
|
|
8,891,285.78
|
|
8,891,285.78
|
|
8,930,206.35
|
|
8,930,206.35
|
|
8,938,473.14
|
|
8,938,473.14
|
|
8,944,383.71
|
|
1-May-17
|
|
8,307,800.19
|
|
8,345,943.61
|
|
8,345,943.61
|
|
8,613,517.25
|
|
8,613,517.25
|
|
8,621,534.24
|
|
8,621,534.24
|
|
8,621,534.24
|
|
8,659,270.76
|
|
8,659,270.76
|
|
8,667,287.75
|
|
8,667,287.75
|
|
8,672,998.49
|
|
1-Nov-17
|
|
8,055,694.16
|
|
8,092,677.38
|
|
8,092,677.38
|
|
8,352,163.37
|
|
8,352,163.37
|
|
8,359,938.05
|
|
8,359,938.05
|
|
8,359,938.05
|
|
8,396,526.50
|
|
8,396,526.50
|
|
8,404,301.19
|
|
8,404,301.19
|
|
8,409,818.07
|
|
1-May-18
|
|
7,811,206.23
|
|
7,847,064.50
|
|
7,847,064.50
|
|
8,098,709.11
|
|
8,098,709.11
|
|
8,106,248.75
|
|
8,106,248.75
|
|
8,106,248.75
|
|
8,141,724.02
|
|
8,141,724.02
|
|
8,149,263.67
|
|
8,149,263.67
|
|
8,154,592.53
|
|
1-Nov-18
|
|
7,574,104.35
|
|
7,608,871.80
|
|
7,608,871.80
|
|
7,852,913.83
|
|
7,852,913.83
|
|
7,860,225.47
|
|
7,860,225.47
|
|
7,860,225.47
|
|
7,894,621.39
|
|
7,894,621.39
|
|
7,901,933.04
|
|
7,901,933.04
|
|
7,907,079.50
|
|
1-May-19
|
|
7,344,163.48
|
|
7,377,873.24
|
|
7,377,873.24
|
|
7,614,544.20
|
|
7,614,544.20
|
|
7,621,634.68
|
|
7,621,634.68
|
|
7,621,634.68
|
|
7,654,984.03
|
|
7,654,984.03
|
|
7,662,074.52
|
|
7,662,074.52
|
|
7,667,044.05
|
|
1-Nov-19
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
IV-
2
Series B Equipment Note Principal Balances
Date
|
|
|
|
N612CZ
|
|
N613CZ
|
|
N614CZ
|
|
N615CZ
|
|
N616CZ
|
|
N617CZ
|
|
N619CZ
|
|
N620CZ
|
|
N621CZ
|
|
N622CZ
|
|
N623CZ
|
|
N624CZ
|
|
N625CZ
|
|
N626CZ
|
|
At Issuance
|
|
$
|
4,380,789.89
|
|
$
|
4,380,789.89
|
|
$
|
4,380,789.89
|
|
$
|
4,361,427.07
|
|
$
|
4,361,427.07
|
|
$
|
4,361,427.07
|
|
$
|
4,337,223.54
|
|
$
|
4,337,223.54
|
|
$
|
4,313,528.59
|
|
$
|
4,313,528.59
|
|
$
|
4,289,325.05
|
|
$
|
4,289,325.05
|
|
$
|
4,269,962.22
|
|
$
|
4,269,962.22
|
|
1-May-09
|
|
3,641,456.76
|
|
3,641,456.76
|
|
3,641,456.76
|
|
3,941,929.35
|
|
3,941,929.35
|
|
3,941,929.35
|
|
3,934,127.22
|
|
3,934,127.22
|
|
3,988,948.95
|
|
3,988,948.95
|
|
3,981,146.81
|
|
3,981,146.81
|
|
3,974,905.09
|
|
3,974,905.09
|
|
1-Nov-09
|
|
3,360,798.28
|
|
3,360,798.28
|
|
3,360,798.28
|
|
3,617,421.37
|
|
3,617,421.37
|
|
3,617,421.37
|
|
3,609,307.59
|
|
3,609,307.59
|
|
3,662,708.90
|
|
3,662,708.90
|
|
3,654,595.11
|
|
3,654,595.11
|
|
3,648,104.07
|
|
3,648,104.07
|
|
1-May-10
|
|
2,905,554.76
|
|
2,905,554.76
|
|
2,905,554.76
|
|
3,152,017.29
|
|
3,152,017.29
|
|
3,152,017.29
|
|
3,143,867.80
|
|
3,143,867.80
|
|
3,193,898.64
|
|
3,193,898.64
|
|
3,185,749.12
|
|
3,185,749.12
|
|
3,179,229.59
|
|
3,179,229.59
|
|
1-Nov-10
|
|
2,618,354.15
|
|
2,618,354.15
|
|
2,618,354.15
|
|
2,847,344.31
|
|
2,847,344.31
|
|
2,847,344.31
|
|
2,839,056.41
|
|
2,839,056.41
|
|
2,887,253.77
|
|
2,887,253.77
|
|
2,878,965.84
|
|
2,878,965.84
|
|
2,872,335.58
|
|
2,872,335.58
|
|
1-May-11
|
|
2,417,835.46
|
|
2,417,835.46
|
|
2,417,835.46
|
|
2,611,705.07
|
|
2,611,705.07
|
|
2,611,705.07
|
|
2,603,393.71
|
|
2,603,393.71
|
|
2,649,902.04
|
|
2,649,902.04
|
|
2,641,590.65
|
|
2,641,590.65
|
|
2,634,941.61
|
|
2,634,941.61
|
|
1-Nov-11
|
|
2,187,886.08
|
|
2,187,886.08
|
|
2,187,886.08
|
|
2,411,209.66
|
|
2,411,209.66
|
|
2,411,209.66
|
|
2,402,927.40
|
|
2,402,927.40
|
|
2,447,839.60
|
|
2,447,839.60
|
|
2,439,557.32
|
|
2,439,557.32
|
|
2,432,931.52
|
|
2,432,931.52
|
|
1-May-12
|
|
2,006,136.52
|
|
2,006,136.52
|
|
2,006,136.52
|
|
2,181,230.07
|
|
2,181,230.07
|
|
2,181,230.07
|
|
2,172,910.05
|
|
2,172,910.05
|
|
2,216,221.98
|
|
2,216,221.98
|
|
2,207,901.94
|
|
2,207,901.94
|
|
2,201,245.93
|
|
2,201,245.93
|
|
1-Nov-12
|
|
2,006,136.52
|
|
2,006,136.52
|
|
2,006,136.52
|
|
2,118,164.65
|
|
2,118,164.65
|
|
2,118,164.65
|
|
2,120,030.02
|
|
2,120,030.02
|
|
2,129,848.96
|
|
2,129,848.96
|
|
2,131,714.33
|
|
2,131,714.33
|
|
2,133,206.67
|
|
2,133,206.67
|
|
1-May-13
|
|
1,986,721.56
|
|
1,986,721.56
|
|
1,986,721.56
|
|
2,052,105.27
|
|
2,052,105.27
|
|
2,052,105.27
|
|
2,053,910.98
|
|
2,053,910.98
|
|
2,063,428.53
|
|
2,063,428.53
|
|
2,065,234.24
|
|
2,065,234.24
|
|
2,066,678.84
|
|
2,066,678.84
|
|
1-Nov-13
|
|
1,924,791.85
|
|
1,924,791.85
|
|
1,924,791.85
|
|
1,988,119.98
|
|
1,988,119.98
|
|
1,988,119.98
|
|
1,989,867.96
|
|
1,989,867.96
|
|
1,999,093.38
|
|
1,999,093.38
|
|
2,000,841.36
|
|
2,000,841.36
|
|
2,002,239.77
|
|
2,002,239.77
|
|
1-May-14
|
|
1,864,810.32
|
|
1,864,810.32
|
|
1,864,810.32
|
|
1,926,145.58
|
|
1,926,145.58
|
|
1,926,145.58
|
|
1,927,837.70
|
|
1,927,837.70
|
|
1,936,779.99
|
|
1,936,779.99
|
|
1,938,472.11
|
|
1,938,472.11
|
|
1,939,825.83
|
|
1,939,825.83
|
|
1-Nov-14
|
|
1,806,717.62
|
|
1,806,717.62
|
|
1,806,717.62
|
|
1,866,120.81
|
|
1,866,120.81
|
|
1,866,120.81
|
|
1,867,758.89
|
|
1,867,758.89
|
|
1,876,426.77
|
|
1,876,426.77
|
|
1,878,064.84
|
|
1,878,064.84
|
|
1,879,375.33
|
|
1,879,375.33
|
|
1-May-15
|
|
1,750,456.21
|
|
1,750,456.21
|
|
1,750,456.21
|
|
1,807,986.28
|
|
1,807,986.28
|
|
1,807,986.28
|
|
1,809,572.08
|
|
1,809,572.08
|
|
1,817,974.00
|
|
1,817,974.00
|
|
1,819,559.78
|
|
1,819,559.78
|
|
1,820,828.44
|
|
1,820,828.44
|
|
1-Nov-15
|
|
1,695,970.30
|
|
1,695,970.30
|
|
1,695,970.30
|
|
1,751,684.41
|
|
1,751,684.41
|
|
1,751,684.41
|
|
1,753,219.63
|
|
1,753,219.63
|
|
1,758,058.66
|
|
1,758,058.66
|
|
1,762,898.99
|
|
1,762,898.99
|
|
1,764,127.19
|
|
1,764,127.19
|
|
1-May-16
|
|
1,643,205.81
|
|
1,643,205.81
|
|
1,643,205.81
|
|
1,697,159.36
|
|
1,697,159.36
|
|
1,697,159.36
|
|
1,698,645.67
|
|
1,698,645.67
|
|
1,706,539.98
|
|
1,706,539.98
|
|
1,708,026.28
|
|
1,708,026.28
|
|
1,709,215.34
|
|
1,709,215.34
|
|
1-Nov-16
|
|
1,592,110.29
|
|
1,592,110.29
|
|
1,592,110.29
|
|
1,644,357.01
|
|
1,644,357.01
|
|
1,644,357.01
|
|
1,645,796.00
|
|
1,645,796.00
|
|
1,653,448.19
|
|
1,653,448.19
|
|
1,654,887.17
|
|
1,654,887.17
|
|
1,656,038.38
|
|
1,656,038.38
|
|
1-May-17
|
|
1,542,632.89
|
|
1,542,632.89
|
|
1,542,632.89
|
|
1,593,224.87
|
|
1,593,224.87
|
|
1,593,224.87
|
|
1,594,618.11
|
|
1,594,618.11
|
|
1,602,035.64
|
|
1,602,035.64
|
|
1,603,428.86
|
|
1,603,428.86
|
|
1,604,543.46
|
|
1,604,543.46
|
|
1-Nov-17
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
1-May-18
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
1-Nov-18
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
1-May-19
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
1-Nov-19
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
IV-
3
Date
|
|
|
|
N627CZ
|
|
N628CZ
|
|
N629CZ
|
|
N630CZ
|
|
N631CZ
|
|
N632CZ
|
|
N633CZ
|
|
N634CZ
|
|
N635CZ
|
|
N636CZ
|
|
N637CZ
|
|
N638CZ
|
|
N639CZ
|
|
At Issuance
|
|
$
|
4,269,962.22
|
|
$
|
4,241,426.61
|
|
$
|
4,241,426.61
|
|
$
|
4,284,738.77
|
|
$
|
4,284,738.77
|
|
$
|
4,260,650.21
|
|
$
|
4,260,650.21
|
|
$
|
4,260,650.21
|
|
$
|
4,237,047.28
|
|
$
|
4,237,047.28
|
|
$
|
4,212,958.70
|
|
$
|
4,212,958.70
|
|
$
|
4,194,014.75
|
|
1-May-09
|
|
3,974,905.09
|
|
4,028,166.49
|
|
4,028,166.49
|
|
4,284,738.77
|
|
4,284,738.77
|
|
4,260,650.21
|
|
4,260,650.21
|
|
4,260,650.21
|
|
4,237,047.28
|
|
4,237,047.28
|
|
4,212,958.70
|
|
4,212,958.70
|
|
4,194,014.75
|
|
1-Nov-09
|
|
3,648,104.07
|
|
3,699,882.72
|
|
3,699,882.72
|
|
4,235,051.98
|
|
4,235,051.98
|
|
4,227,642.12
|
|
4,227,642.12
|
|
4,227,642.12
|
|
4,237,047.28
|
|
4,237,047.28
|
|
4,212,958.70
|
|
4,212,958.70
|
|
4,194,014.75
|
|
1-May-10
|
|
3,179,229.59
|
|
3,227,630.56
|
|
3,227,630.56
|
|
3,717,893.25
|
|
3,717,893.25
|
|
3,710,213.53
|
|
3,710,213.53
|
|
3,710,213.53
|
|
3,762,397.04
|
|
3,762,397.04
|
|
3,754,717.31
|
|
3,754,717.31
|
|
3,748,573.55
|
|
1-Nov-10
|
|
2,872,335.58
|
|
2,918,875.39
|
|
2,918,875.39
|
|
3,372,827.07
|
|
3,372,827.07
|
|
3,364,955.98
|
|
3,364,955.98
|
|
3,364,955.98
|
|
3,415,209.51
|
|
3,415,209.51
|
|
3,407,338.41
|
|
3,407,338.41
|
|
3,401,041.55
|
|
1-May-11
|
|
2,634,941.61
|
|
2,679,787.69
|
|
2,679,787.69
|
|
3,124,990.98
|
|
3,124,990.98
|
|
3,117,093.45
|
|
3,117,093.45
|
|
3,117,093.45
|
|
3,165,603.10
|
|
3,165,603.10
|
|
3,157,705.58
|
|
3,157,705.58
|
|
3,151,763.55
|
|
1-Nov-11
|
|
2,432,931.52
|
|
2,476,187.32
|
|
2,476,187.32
|
|
2,888,301.74
|
|
2,888,301.74
|
|
2,880,385.19
|
|
2,880,385.19
|
|
2,880,385.19
|
|
2,927,209.35
|
|
2,927,209.35
|
|
2,919,292.81
|
|
2,919,292.81
|
|
2,913,335.56
|
|
1-May-12
|
|
2,201,245.93
|
|
2,242,893.91
|
|
2,242,893.91
|
|
2,667,876.05
|
|
2,667,876.05
|
|
2,659,957.67
|
|
2,659,957.67
|
|
2,659,957.67
|
|
2,705,160.97
|
|
2,705,160.97
|
|
2,697,242.60
|
|
2,697,242.60
|
|
2,691,283.89
|
|
1-Nov-12
|
|
2,133,206.67
|
|
2,143,398.72
|
|
2,143,398.72
|
|
2,402,298.56
|
|
2,402,298.56
|
|
2,393,704.71
|
|
2,393,704.71
|
|
2,393,704.71
|
|
2,439,125.71
|
|
2,439,125.71
|
|
2,430,531.12
|
|
2,430,531.12
|
|
2,424,031.66
|
|
1-May-13
|
|
2,066,678.84
|
|
2,076,557.56
|
|
2,076,557.56
|
|
2,207,462.52
|
|
2,207,462.52
|
|
2,198,993.93
|
|
2,198,993.93
|
|
2,198,993.93
|
|
2,242,583.89
|
|
2,242,583.89
|
|
2,234,108.07
|
|
2,234,108.07
|
|
2,227,705.73
|
|
1-Nov-13
|
|
2,002,239.77
|
|
2,011,814.82
|
|
2,011,814.82
|
|
2,078,002.11
|
|
2,078,002.11
|
|
2,079,807.85
|
|
2,079,807.85
|
|
2,079,807.85
|
|
2,089,325.39
|
|
2,089,325.39
|
|
2,091,131.12
|
|
2,091,131.12
|
|
2,092,951.69
|
|
1-May-14
|
|
1,939,825.83
|
|
1,949,106.58
|
|
1,949,106.58
|
|
2,013,213.19
|
|
2,013,213.19
|
|
2,014,961.19
|
|
2,014,961.19
|
|
2,014,961.19
|
|
2,024,186.61
|
|
2,024,186.61
|
|
2,025,934.61
|
|
2,025,934.61
|
|
2,027,708.99
|
|
1-Nov-14
|
|
1,879,375.33
|
|
1,872,448.88
|
|
1,872,448.88
|
|
1,950,460.26
|
|
1,950,460.26
|
|
1,952,152.39
|
|
1,952,152.39
|
|
1,952,152.39
|
|
1,961,094.68
|
|
1,961,094.68
|
|
1,962,786.83
|
|
1,962,786.83
|
|
1,964,516.52
|
|
1-May-15
|
|
1,820,828.44
|
|
1,829,547.54
|
|
1,829,547.54
|
|
1,889,681.29
|
|
1,889,681.29
|
|
1,891,319.38
|
|
1,891,319.38
|
|
1,891,319.38
|
|
1,896,489.60
|
|
1,896,489.60
|
|
1,889,271.95
|
|
1,889,271.95
|
|
1,883,497.84
|
|
1-Nov-15
|
|
1,764,127.19
|
|
1,772,578.40
|
|
1,772,578.40
|
|
1,830,816.16
|
|
1,830,816.16
|
|
1,832,401.97
|
|
1,832,401.97
|
|
1,832,401.97
|
|
1,840,803.88
|
|
1,840,803.88
|
|
1,842,389.70
|
|
1,842,389.70
|
|
1,844,034.32
|
|
1-May-16
|
|
1,709,215.34
|
|
1,717,406.94
|
|
1,717,406.94
|
|
1,776,467.70
|
|
1,776,467.70
|
|
1,775,341.79
|
|
1,775,341.79
|
|
1,775,341.79
|
|
1,783,485.94
|
|
1,783,485.94
|
|
1,785,021.17
|
|
1,785,021.17
|
|
1,786,625.34
|
|
1-Nov-16
|
|
1,656,038.38
|
|
1,663,978.40
|
|
1,663,978.40
|
|
1,718,595.96
|
|
1,718,595.96
|
|
1,720,082.27
|
|
1,720,082.27
|
|
1,720,082.27
|
|
1,727,976.59
|
|
1,727,976.59
|
|
1,729,462.91
|
|
1,729,462.91
|
|
1,731,027.93
|
|
1-May-17
|
|
1,604,543.46
|
|
1,612,239.67
|
|
1,612,239.67
|
|
1,665,129.56
|
|
1,665,129.56
|
|
1,666,568.55
|
|
1,666,568.55
|
|
1,666,568.55
|
|
1,674,220.75
|
|
1,674,220.75
|
|
1,675,659.75
|
|
1,675,659.75
|
|
1,677,186.92
|
|
1-Nov-17
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
1-May-18
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
1-Nov-18
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
1-May-19
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
1-Nov-19
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
IV-
4
APPENDIX V
SCHEDULED NOTE AMORTIZATION PAYMENTS
The Equipment Note amortization
payments in the tables below are presented on the assumption that there will be
no payment default or prepayment of any Equipment Note.
Series A Equipment Note Amortization Payments
Date
|
|
|
|
N612CZ
|
|
N613CZ
|
|
N614CZ
|
|
N615CZ
|
|
N616CZ
|
|
N617CZ
|
|
N619CZ
|
|
N620CZ
|
|
N621CZ
|
|
N622CZ
|
|
N623CZ
|
|
N624CZ
|
|
N625CZ
|
|
N626CZ
|
|
1-May-09
|
|
$ 220,496.32
|
|
$ 220,496.32
|
|
$ 220,496.32
|
|
$ 28,336.81
|
|
$ 28,336.81
|
|
$ 28,336.81
|
|
$ 28,389.32
|
|
$ 28,389.32
|
|
$ 28,431.34
|
|
$ 28,431.34
|
|
$ 28,483.85
|
|
$ 28,483.85
|
|
$ 28,525.86
|
|
$ 28,525.86
|
|
1-Nov-09
|
|
228,557.72
|
|
228,557.72
|
|
228,557.72
|
|
192,486.89
|
|
192,486.89
|
|
192,486.89
|
|
192,843.61
|
|
192,843.61
|
|
193,128.99
|
|
193,128.99
|
|
193,485.71
|
|
193,485.71
|
|
193,771.09
|
|
193,771.09
|
|
1-May-10
|
|
209,060.23
|
|
209,060.23
|
|
209,060.23
|
|
228,897.06
|
|
228,897.06
|
|
228,897.06
|
|
229,321.24
|
|
229,321.24
|
|
229,660.61
|
|
229,660.61
|
|
230,084.78
|
|
230,084.78
|
|
230,424.18
|
|
230,424.18
|
|
1-Nov-10
|
|
160,766.07
|
|
160,766.07
|
|
160,766.07
|
|
157,713.91
|
|
157,713.91
|
|
157,713.91
|
|
158,006.20
|
|
158,006.20
|
|
158,240.02
|
|
158,240.02
|
|
158,532.29
|
|
158,532.29
|
|
158,766.11
|
|
158,766.11
|
|
1-May-11
|
|
233,801.12
|
|
233,801.12
|
|
233,801.12
|
|
212,661.49
|
|
212,661.49
|
|
212,661.49
|
|
213,055.60
|
|
213,055.60
|
|
213,370.89
|
|
213,370.89
|
|
213,764.99
|
|
213,764.99
|
|
214,080.27
|
|
214,080.27
|
|
1-Nov-11
|
|
191,139.30
|
|
191,139.30
|
|
191,139.30
|
|
234,148.28
|
|
234,148.28
|
|
234,148.28
|
|
234,582.22
|
|
234,582.22
|
|
234,929.36
|
|
234,929.36
|
|
235,363.31
|
|
235,363.31
|
|
235,710.43
|
|
235,710.43
|
|
1-May-12
|
|
226,511.05
|
|
226,511.05
|
|
226,511.05
|
|
191,423.10
|
|
191,423.10
|
|
191,423.10
|
|
191,777.85
|
|
191,777.85
|
|
192,061.65
|
|
192,061.65
|
|
192,416.40
|
|
192,416.40
|
|
192,700.19
|
|
192,700.19
|
|
1-Nov-12
|
|
440,347.50
|
|
440,347.50
|
|
440,347.50
|
|
345,499.63
|
|
345,499.63
|
|
345,499.63
|
|
356,065.58
|
|
356,065.58
|
|
324,399.26
|
|
324,399.26
|
|
334,965.23
|
|
334,965.23
|
|
343,418.02
|
|
343,418.02
|
|
1-May-13
|
|
319,825.86
|
|
319,825.86
|
|
319,825.86
|
|
330,059.15
|
|
330,059.15
|
|
330,059.15
|
|
330,368.44
|
|
330,368.44
|
|
331,838.08
|
|
331,838.08
|
|
332,147.38
|
|
332,147.38
|
|
332,394.81
|
|
332,394.81
|
|
1-Nov-13
|
|
310,144.24
|
|
310,144.24
|
|
310,144.24
|
|
320,065.86
|
|
320,065.86
|
|
320,065.86
|
|
320,365.86
|
|
320,365.86
|
|
321,790.79
|
|
321,790.79
|
|
322,090.78
|
|
322,090.78
|
|
322,330.77
|
|
322,330.77
|
|
1-May-14
|
|
300,757.55
|
|
300,757.55
|
|
300,757.55
|
|
310,377.01
|
|
310,377.01
|
|
310,377.01
|
|
310,667.98
|
|
310,667.98
|
|
312,049.60
|
|
312,049.60
|
|
312,340.57
|
|
312,340.57
|
|
312,573.34
|
|
312,573.34
|
|
1-Nov-14
|
|
291,656.81
|
|
291,656.81
|
|
291,656.81
|
|
300,983.32
|
|
300,983.32
|
|
300,983.32
|
|
301,265.54
|
|
301,265.54
|
|
302,605.17
|
|
302,605.17
|
|
302,887.37
|
|
302,887.37
|
|
303,113.16
|
|
303,113.16
|
|
1-May-15
|
|
282,833.32
|
|
282,833.32
|
|
282,833.32
|
|
291,875.79
|
|
291,875.79
|
|
291,875.79
|
|
292,149.52
|
|
292,149.52
|
|
293,448.44
|
|
293,448.44
|
|
293,722.18
|
|
293,722.18
|
|
293,941.16
|
|
293,941.16
|
|
1-Nov-15
|
|
274,278.64
|
|
274,278.64
|
|
274,278.64
|
|
283,045.72
|
|
283,045.72
|
|
283,045.72
|
|
283,311.24
|
|
283,311.24
|
|
281,265.55
|
|
281,265.55
|
|
284,836.17
|
|
284,836.17
|
|
285,048.59
|
|
285,048.59
|
|
1-May-16
|
|
265,984.56
|
|
265,984.56
|
|
265,984.56
|
|
274,484.66
|
|
274,484.66
|
|
274,484.66
|
|
274,742.19
|
|
274,742.19
|
|
279,268.46
|
|
279,268.46
|
|
276,220.89
|
|
276,220.89
|
|
276,426.90
|
|
276,426.90
|
|
1-Nov-16
|
|
257,943.14
|
|
257,943.14
|
|
257,943.14
|
|
266,184.40
|
|
266,184.40
|
|
266,184.40
|
|
266,434.19
|
|
266,434.19
|
|
267,618.25
|
|
267,618.25
|
|
267,868.05
|
|
267,868.05
|
|
268,067.89
|
|
268,067.89
|
|
1-May-17
|
|
250,146.70
|
|
250,146.70
|
|
250,146.70
|
|
258,136.98
|
|
258,136.98
|
|
258,136.98
|
|
258,379.30
|
|
258,379.30
|
|
259,527.36
|
|
259,527.36
|
|
259,769.66
|
|
259,769.66
|
|
259,963.52
|
|
259,963.52
|
|
1-Nov-17
|
|
242,587.79
|
|
242,587.79
|
|
242,587.79
|
|
250,334.75
|
|
250,334.75
|
|
250,334.75
|
|
250,569.78
|
|
250,569.78
|
|
251,682.97
|
|
251,682.97
|
|
251,918.01
|
|
251,918.01
|
|
252,106.03
|
|
252,106.03
|
|
1-May-18
|
|
235,259.14
|
|
235,259.14
|
|
235,259.14
|
|
242,770.18
|
|
242,770.18
|
|
242,770.18
|
|
242,998.17
|
|
242,998.17
|
|
244,077.54
|
|
244,077.54
|
|
244,305.53
|
|
244,305.53
|
|
244,487.93
|
|
244,487.93
|
|
1-Nov-18
|
|
228,153.75
|
|
228,153.75
|
|
228,153.75
|
|
235,436.07
|
|
235,436.07
|
|
235,436.07
|
|
235,657.23
|
|
235,657.23
|
|
236,703.80
|
|
236,703.80
|
|
236,924.96
|
|
236,924.96
|
|
237,101.88
|
|
237,101.88
|
|
1-May-19
|
|
221,264.82
|
|
221,264.82
|
|
221,264.82
|
|
228,325.37
|
|
228,325.37
|
|
228,325.37
|
|
228,539.92
|
|
228,539.92
|
|
229,554.70
|
|
229,554.70
|
|
229,769.24
|
|
229,769.24
|
|
229,940.87
|
|
229,940.87
|
|
1-Nov-19
|
|
7,065,810.66
|
|
7,065,810.66
|
|
7,065,810.66
|
|
7,292,576.25
|
|
7,292,576.25
|
|
7,292,576.25
|
|
7,299,452.20
|
|
7,299,452.20
|
|
7,331,786.77
|
|
7,331,786.77
|
|
7,338,662.72
|
|
7,338,662.72
|
|
7,344,163.48
|
|
7,344,163.48
|
|
V-
1
Date
|
|
|
|
N627CZ
|
|
N628CZ
|
|
N629CZ
|
|
N630CZ
|
|
N631CZ
|
|
N632CZ
|
|
N633CZ
|
|
N634CZ
|
|
N635CZ
|
|
N636CZ
|
|
N637CZ
|
|
N638CZ
|
|
N639CZ
|
|
1-May-09
|
|
$ 28,525.86
|
|
$ 28,578.38
|
|
$ 28,578.38
|
|
$ 0.00
|
|
$ 0.00
|
|
$ 0.00
|
|
$ 0.00
|
|
$ 0.00
|
|
$ 0.00
|
|
$ 0.00
|
|
$ 0.00
|
|
$ 0.00
|
|
$ 0.00
|
|
1-Nov-09
|
|
193,771.09
|
|
194,127.81
|
|
194,127.81
|
|
180,406.14
|
|
180,406.14
|
|
180,737.15
|
|
180,737.15
|
|
180,737.15
|
|
181,001.98
|
|
181,001.98
|
|
181,333.00
|
|
181,333.00
|
|
181,973.81
|
|
1-May-10
|
|
230,424.18
|
|
230,848.34
|
|
230,848.34
|
|
225,054.22
|
|
225,054.22
|
|
225,467.17
|
|
225,467.17
|
|
225,467.17
|
|
225,797.51
|
|
225,797.51
|
|
226,210.45
|
|
226,210.45
|
|
226,164.82
|
|
1-Nov-10
|
|
158,766.11
|
|
159,058.39
|
|
159,058.39
|
|
137,802.05
|
|
137,802.05
|
|
138,054.90
|
|
138,054.90
|
|
138,054.90
|
|
138,257.18
|
|
138,257.18
|
|
138,510.03
|
|
138,510.03
|
|
138,712.31
|
|
1-May-11
|
|
214,080.27
|
|
214,474.39
|
|
214,474.39
|
|
220,322.03
|
|
220,322.03
|
|
220,726.27
|
|
220,726.27
|
|
220,726.27
|
|
221,049.70
|
|
221,049.70
|
|
221,453.97
|
|
221,453.97
|
|
222,153.35
|
|
1-Nov-11
|
|
235,710.43
|
|
236,144.39
|
|
236,144.39
|
|
217,206.89
|
|
217,206.89
|
|
217,605.44
|
|
217,605.44
|
|
217,605.44
|
|
217,924.27
|
|
217,924.27
|
|
218,322.82
|
|
218,322.82
|
|
218,641.66
|
|
1-May-12
|
|
192,700.19
|
|
193,054.94
|
|
193,054.94
|
|
219,642.93
|
|
219,642.93
|
|
220,045.96
|
|
220,045.96
|
|
220,045.96
|
|
220,368.36
|
|
220,368.36
|
|
220,771.38
|
|
220,771.38
|
|
221,093.80
|
|
1-Nov-12
|
|
343,418.02
|
|
313,864.87
|
|
313,864.87
|
|
161,084.88
|
|
161,084.88
|
|
160,801.91
|
|
160,801.91
|
|
160,801.91
|
|
162,903.69
|
|
162,903.69
|
|
162,619.98
|
|
162,619.98
|
|
162,393.25
|
|
1-May-13
|
|
332,394.81
|
|
333,926.30
|
|
333,926.30
|
|
218,828.47
|
|
218,828.47
|
|
219,334.29
|
|
219,334.29
|
|
219,334.29
|
|
219,329.92
|
|
219,329.92
|
|
219,829.25
|
|
219,829.25
|
|
220,230.81
|
|
1-Nov-13
|
|
322,330.77
|
|
323,815.72
|
|
323,815.72
|
|
271,602.22
|
|
271,602.22
|
|
282,245.50
|
|
282,245.50
|
|
282,245.50
|
|
249,944.10
|
|
249,944.10
|
|
260,594.63
|
|
260,594.63
|
|
269,112.71
|
|
1-May-14
|
|
312,573.34
|
|
314,013.17
|
|
314,013.17
|
|
324,055.71
|
|
324,055.71
|
|
324,355.71
|
|
324,355.71
|
|
324,355.71
|
|
325,780.66
|
|
325,780.66
|
|
326,080.64
|
|
326,080.64
|
|
326,320.63
|
|
1-Nov-14
|
|
303,113.16
|
|
288,587.26
|
|
288,587.26
|
|
314,245.94
|
|
314,245.94
|
|
314,536.90
|
|
314,536.90
|
|
314,536.90
|
|
315,918.52
|
|
315,918.52
|
|
316,209.50
|
|
316,209.50
|
|
316,442.27
|
|
1-May-15
|
|
293,941.16
|
|
311,216.78
|
|
311,216.78
|
|
304,734.99
|
|
304,734.99
|
|
305,017.22
|
|
305,017.22
|
|
305,017.22
|
|
302,859.19
|
|
302,859.19
|
|
294,285.65
|
|
294,285.65
|
|
287,050.86
|
|
1-Nov-15
|
|
285,048.59
|
|
286,361.11
|
|
286,361.11
|
|
295,513.80
|
|
295,513.80
|
|
295,787.53
|
|
295,787.53
|
|
295,787.53
|
|
300,584.10
|
|
300,584.10
|
|
309,713.59
|
|
309,713.59
|
|
317,393.13
|
|
1-May-16
|
|
276,426.90
|
|
277,699.58
|
|
277,699.58
|
|
289,234.66
|
|
289,234.66
|
|
286,839.03
|
|
286,839.03
|
|
286,839.03
|
|
288,098.47
|
|
288,098.47
|
|
288,363.97
|
|
288,363.97
|
|
288,576.38
|
|
1-Nov-16
|
|
268,067.89
|
|
269,301.89
|
|
269,301.89
|
|
275,244.46
|
|
275,244.46
|
|
278,163.14
|
|
278,163.14
|
|
278,163.14
|
|
279,384.28
|
|
279,384.28
|
|
279,641.82
|
|
279,641.82
|
|
279,847.85
|
|
1-May-17
|
|
259,963.52
|
|
261,160.05
|
|
261,160.05
|
|
269,501.73
|
|
269,501.73
|
|
269,751.54
|
|
269,751.54
|
|
269,751.54
|
|
270,935.59
|
|
270,935.59
|
|
271,185.39
|
|
271,185.39
|
|
271,385.22
|
|
1-Nov-17
|
|
252,106.03
|
|
253,266.23
|
|
253,266.23
|
|
261,353.88
|
|
261,353.88
|
|
261,596.19
|
|
261,596.19
|
|
261,596.19
|
|
262,744.26
|
|
262,744.26
|
|
262,986.56
|
|
262,986.56
|
|
263,180.42
|
|
1-May-18
|
|
244,487.93
|
|
245,612.88
|
|
245,612.88
|
|
253,454.26
|
|
253,454.26
|
|
253,689.30
|
|
253,689.30
|
|
253,689.30
|
|
254,802.48
|
|
254,802.48
|
|
255,037.52
|
|
255,037.52
|
|
255,225.54
|
|
1-Nov-18
|
|
237,101.88
|
|
238,192.70
|
|
238,192.70
|
|
245,795.28
|
|
245,795.28
|
|
246,023.28
|
|
246,023.28
|
|
246,023.28
|
|
247,102.63
|
|
247,102.63
|
|
247,330.63
|
|
247,330.63
|
|
247,513.03
|
|
1-May-19
|
|
229,940.87
|
|
230,998.56
|
|
230,998.56
|
|
238,369.63
|
|
238,369.63
|
|
238,590.79
|
|
238,590.79
|
|
238,590.79
|
|
239,637.36
|
|
239,637.36
|
|
239,858.52
|
|
239,858.52
|
|
240,035.45
|
|
1-Nov-19
|
|
7,344,163.48
|
|
7,377,873.24
|
|
7,377,873.24
|
|
7,614,544.20
|
|
7,614,544.20
|
|
7,621,634.68
|
|
7,621,634.68
|
|
7,621,634.68
|
|
7,654,984.03
|
|
7,654,984.03
|
|
7,662,074.52
|
|
7,662,074.52
|
|
7,667,044.05
|
|
V-
2
Series B Equipment Note Amortization Payments
|
|
N612CZ
|
|
N613CZ
|
|
N614CZ
|
|
N615CZ
|
|
N616CZ
|
|
N617CZ
|
|
N619CZ
|
|
N620CZ
|
|
N621CZ
|
|
N622CZ
|
|
N623CZ
|
|
N624CZ
|
|
N625CZ
|
|
N626CZ
|
|
1-May-09
|
|
$ 739,333.13
|
|
$ 739,333.13
|
|
$ 739,333.13
|
|
$ 419,497.72
|
|
$ 419,497.72
|
|
$ 419,497.72
|
|
$ 403,096.32
|
|
$ 403,096.32
|
|
$ 324,579.64
|
|
$ 324,579.64
|
|
$ 308,178.24
|
|
$ 308,178.24
|
|
$ 295,057.13
|
|
$ 295,057.13
|
|
1-Nov-09
|
|
280,658.48
|
|
280,658.48
|
|
280,658.48
|
|
324,507.98
|
|
324,507.98
|
|
324,507.98
|
|
324,819.63
|
|
324,819.63
|
|
326,240.05
|
|
326,240.05
|
|
326,551.70
|
|
326,551.70
|
|
326,801.02
|
|
326,801.02
|
|
1-May-10
|
|
455,243.52
|
|
455,243.52
|
|
455,243.52
|
|
465,404.08
|
|
465,404.08
|
|
465,404.08
|
|
465,439.79
|
|
465,439.79
|
|
468,810.26
|
|
468,810.26
|
|
468,845.99
|
|
468,845.99
|
|
468,874.48
|
|
468,874.48
|
|
1-Nov-10
|
|
287,200.61
|
|
287,200.61
|
|
287,200.61
|
|
304,672.98
|
|
304,672.98
|
|
304,672.98
|
|
304,811.39
|
|
304,811.39
|
|
306,644.87
|
|
306,644.87
|
|
306,783.28
|
|
306,783.28
|
|
306,894.01
|
|
306,894.01
|
|
1-May-11
|
|
200,518.69
|
|
200,518.69
|
|
200,518.69
|
|
235,639.24
|
|
235,639.24
|
|
235,639.24
|
|
235,662.70
|
|
235,662.70
|
|
237,351.73
|
|
237,351.73
|
|
237,375.19
|
|
237,375.19
|
|
237,393.97
|
|
237,393.97
|
|
1-Nov-11
|
|
229,949.38
|
|
229,949.38
|
|
229,949.38
|
|
200,495.41
|
|
200,495.41
|
|
200,495.41
|
|
200,466.31
|
|
200,466.31
|
|
202,062.44
|
|
202,062.44
|
|
202,033.33
|
|
202,033.33
|
|
202,010.09
|
|
202,010.09
|
|
1-May-12
|
|
181,749.56
|
|
181,749.56
|
|
181,749.56
|
|
229,979.59
|
|
229,979.59
|
|
229,979.59
|
|
230,017.35
|
|
230,017.35
|
|
231,617.62
|
|
231,617.62
|
|
231,655.38
|
|
231,655.38
|
|
231,685.59
|
|
231,685.59
|
|
1-Nov-12
|
|
0.00
|
|
0.00
|
|
0.00
|
|
63,065.42
|
|
63,065.42
|
|
63,065.42
|
|
52,880.03
|
|
52,880.03
|
|
86,373.02
|
|
86,373.02
|
|
76,187.61
|
|
76,187.61
|
|
68,039.26
|
|
68,039.26
|
|
1-May-13
|
|
19,414.96
|
|
19,414.96
|
|
19,414.96
|
|
66,059.38
|
|
66,059.38
|
|
66,059.38
|
|
66,119.04
|
|
66,119.04
|
|
66,420.43
|
|
66,420.43
|
|
66,480.09
|
|
66,480.09
|
|
66,527.83
|
|
66,527.83
|
|
1-Nov-13
|
|
61,929.71
|
|
61,929.71
|
|
61,929.71
|
|
63,985.29
|
|
63,985.29
|
|
63,985.29
|
|
64,043.02
|
|
64,043.02
|
|
64,335.15
|
|
64,335.15
|
|
64,392.88
|
|
64,392.88
|
|
64,439.07
|
|
64,439.07
|
|
1-May-14
|
|
59,981.53
|
|
59,981.53
|
|
59,981.53
|
|
61,974.40
|
|
61,974.40
|
|
61,974.40
|
|
62,030.26
|
|
62,030.26
|
|
62,313.39
|
|
62,313.39
|
|
62,369.25
|
|
62,369.25
|
|
62,413.94
|
|
62,413.94
|
|
1-Nov-14
|
|
58,092.70
|
|
58,092.70
|
|
58,092.70
|
|
60,024.77
|
|
60,024.77
|
|
60,024.77
|
|
60,078.81
|
|
60,078.81
|
|
60,353.22
|
|
60,353.22
|
|
60,407.27
|
|
60,407.27
|
|
60,450.50
|
|
60,450.50
|
|
1-May-15
|
|
56,261.41
|
|
56,261.41
|
|
56,261.41
|
|
58,134.53
|
|
58,134.53
|
|
58,134.53
|
|
58,186.81
|
|
58,186.81
|
|
58,452.77
|
|
58,452.77
|
|
58,505.06
|
|
58,505.06
|
|
58,546.89
|
|
58,546.89
|
|
1-Nov-15
|
|
54,485.91
|
|
54,485.91
|
|
54,485.91
|
|
56,301.87
|
|
56,301.87
|
|
56,301.87
|
|
56,352.45
|
|
56,352.45
|
|
59,915.34
|
|
59,915.34
|
|
56,660.79
|
|
56,660.79
|
|
56,701.25
|
|
56,701.25
|
|
1-May-16
|
|
52,764.49
|
|
52,764.49
|
|
52,764.49
|
|
54,525.05
|
|
54,525.05
|
|
54,525.05
|
|
54,573.96
|
|
54,573.96
|
|
51,518.68
|
|
51,518.68
|
|
54,872.71
|
|
54,872.71
|
|
54,911.85
|
|
54,911.85
|
|
1-Nov-16
|
|
51,095.52
|
|
51,095.52
|
|
51,095.52
|
|
52,802.35
|
|
52,802.35
|
|
52,802.35
|
|
52,849.67
|
|
52,849.67
|
|
53,091.79
|
|
53,091.79
|
|
53,139.11
|
|
53,139.11
|
|
53,176.96
|
|
53,176.96
|
|
1-May-17
|
|
49,477.40
|
|
49,477.40
|
|
49,477.40
|
|
51,132.14
|
|
51,132.14
|
|
51,132.14
|
|
51,177.89
|
|
51,177.89
|
|
51,412.55
|
|
51,412.55
|
|
51,458.31
|
|
51,458.31
|
|
51,494.92
|
|
51,494.92
|
|
1-Nov-17
|
|
1,542,632.89
|
|
1,542,632.89
|
|
1,542,632.89
|
|
1,593,224.87
|
|
1,593,224.87
|
|
1,593,224.87
|
|
1,594,618.11
|
|
1,594,618.11
|
|
1,602,035.64
|
|
1,602,035.64
|
|
1,603,428.86
|
|
1,603,428.86
|
|
1,604,543.46
|
|
1,604,543.46
|
|
1-May-18
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
1-Nov-18
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
1-May-19
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
1-Nov-19
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
V-
3
|
|
N627CZ
|
|
N628CZ
|
|
N629CZ
|
|
N630CZ
|
|
N631CZ
|
|
N632CZ
|
|
N633CZ
|
|
N634CZ
|
|
N635CZ
|
|
N636CZ
|
|
N637CZ
|
|
N638CZ
|
|
N639CZ
|
|
1-May-09
|
|
$ 295,057.13
|
|
$ 213,260.20
|
|
$ 213,260.20
|
|
$ 0.00
|
|
$ 0.00
|
|
$ 0.00
|
|
$ 0.00
|
|
$ 0.00
|
|
$ 0.00
|
|
$ 0.00
|
|
$ 0.00
|
|
$ 0.00
|
|
$ 0.00
|
|
1-Nov-09
|
|
326,801.02
|
|
328,283.77
|
|
328,283.77
|
|
49,686.79
|
|
49,686.79
|
|
33,008.09
|
|
33,008.09
|
|
33,008.09
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
1-May-10
|
|
468,874.48
|
|
472,252.16
|
|
472,252.16
|
|
517,158.73
|
|
517,158.73
|
|
517,428.59
|
|
517,428.59
|
|
517,428.59
|
|
474,650.24
|
|
474,650.24
|
|
458,241.39
|
|
458,241.39
|
|
445,441.20
|
|
1-Nov-10
|
|
306,894.01
|
|
308,755.17
|
|
308,755.17
|
|
345,066.18
|
|
345,066.18
|
|
345,257.55
|
|
345,257.55
|
|
345,257.55
|
|
347,187.53
|
|
347,187.53
|
|
347,378.90
|
|
347,378.90
|
|
347,532.00
|
|
1-May-11
|
|
237,393.97
|
|
239,087.70
|
|
239,087.70
|
|
247,836.09
|
|
247,836.09
|
|
247,862.53
|
|
247,862.53
|
|
247,862.53
|
|
249,606.41
|
|
249,606.41
|
|
249,632.83
|
|
249,632.83
|
|
249,278.00
|
|
1-Nov-11
|
|
202,010.09
|
|
203,600.37
|
|
203,600.37
|
|
236,689.24
|
|
236,689.24
|
|
236,708.26
|
|
236,708.26
|
|
236,708.26
|
|
238,393.75
|
|
238,393.75
|
|
238,412.77
|
|
238,412.77
|
|
238,427.99
|
|
1-May-12
|
|
231,685.59
|
|
233,293.41
|
|
233,293.41
|
|
220,425.69
|
|
220,425.69
|
|
220,427.52
|
|
220,427.52
|
|
220,427.52
|
|
222,048.38
|
|
222,048.38
|
|
222,050.21
|
|
222,050.21
|
|
222,051.67
|
|
1-Nov-12
|
|
68,039.26
|
|
99,495.19
|
|
99,495.19
|
|
265,577.49
|
|
265,577.49
|
|
266,252.96
|
|
266,252.96
|
|
266,252.96
|
|
266,035.26
|
|
266,035.26
|
|
266,711.48
|
|
266,711.48
|
|
267,252.23
|
|
1-May-13
|
|
66,527.83
|
|
66,841.16
|
|
66,841.16
|
|
194,836.04
|
|
194,836.04
|
|
194,710.78
|
|
194,710.78
|
|
194,710.78
|
|
196,541.82
|
|
196,541.82
|
|
196,423.05
|
|
196,423.05
|
|
196,325.93
|
|
1-Nov-13
|
|
64,439.07
|
|
64,742.74
|
|
64,742.74
|
|
129,460.41
|
|
129,460.41
|
|
119,186.08
|
|
119,186.08
|
|
119,186.08
|
|
153,258.50
|
|
153,258.50
|
|
142,976.95
|
|
142,976.95
|
|
134,754.04
|
|
1-May-14
|
|
62,413.94
|
|
62,708.24
|
|
62,708.24
|
|
64,788.92
|
|
64,788.92
|
|
64,846.66
|
|
64,846.66
|
|
64,846.66
|
|
65,138.78
|
|
65,138.78
|
|
65,196.51
|
|
65,196.51
|
|
65,242.70
|
|
1-Nov-14
|
|
60,450.50
|
|
76,657.70
|
|
76,657.70
|
|
62,752.93
|
|
62,752.93
|
|
62,808.80
|
|
62,808.80
|
|
62,808.80
|
|
63,091.93
|
|
63,091.93
|
|
63,147.78
|
|
63,147.78
|
|
63,192.47
|
|
1-May-15
|
|
58,546.89
|
|
42,901.34
|
|
42,901.34
|
|
60,778.97
|
|
60,778.97
|
|
60,833.01
|
|
60,833.01
|
|
60,833.01
|
|
64,605.08
|
|
64,605.08
|
|
73,514.88
|
|
73,514.88
|
|
81,018.68
|
|
1-Nov-15
|
|
56,701.25
|
|
56,969.14
|
|
56,969.14
|
|
58,865.13
|
|
58,865.13
|
|
58,917.41
|
|
58,917.41
|
|
58,917.41
|
|
55,685.72
|
|
55,685.72
|
|
46,882.25
|
|
46,882.25
|
|
39,463.52
|
|
1-May-16
|
|
54,911.85
|
|
55,171.46
|
|
55,171.46
|
|
54,348.46
|
|
54,348.46
|
|
57,060.18
|
|
57,060.18
|
|
57,060.18
|
|
57,317.94
|
|
57,317.94
|
|
57,368.53
|
|
57,368.53
|
|
57,408.98
|
|
1-Nov-16
|
|
53,176.96
|
|
53,428.54
|
|
53,428.54
|
|
57,871.74
|
|
57,871.74
|
|
55,259.52
|
|
55,259.52
|
|
55,259.52
|
|
55,509.35
|
|
55,509.35
|
|
55,558.26
|
|
55,558.26
|
|
55,597.41
|
|
1-May-17
|
|
51,494.92
|
|
51,738.73
|
|
51,738.73
|
|
53,466.40
|
|
53,466.40
|
|
53,513.72
|
|
53,513.72
|
|
53,513.72
|
|
53,755.84
|
|
53,755.84
|
|
53,803.16
|
|
53,803.16
|
|
53,841.01
|
|
1-Nov-17
|
|
1,604,543.46
|
|
1,612,239.67
|
|
1,612,239.67
|
|
1,665,129.56
|
|
1,665,129.56
|
|
1,666,568.55
|
|
1,666,568.55
|
|
1,666,568.55
|
|
1,674,220.75
|
|
1,674,220.75
|
|
1,675,659.75
|
|
1,675,659.75
|
|
1,677,186.92
|
|
1-May-18
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
1-Nov-18
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
1-May-19
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
1-Nov-19
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
0.00
|
|
V-
4
APPENDIX VI
LOAN TO VALUE RATIOS
Series A Equipment Note Loan to Value Ratios
Date
|
|
|
|
N612CZ
|
|
N613CZ
|
|
N614CZ
|
|
N615CZ
|
|
N616CZ
|
|
N617CZ
|
|
N619CZ
|
|
N620CZ
|
|
N621CZ
|
|
N622CZ
|
|
N623CZ
|
|
N624CZ
|
|
N625CZ
|
|
N626CZ
|
|
1-May-09
|
|
47.6%
|
|
47.6%
|
|
47.6%
|
|
47.6%
|
|
47.6%
|
|
47.6%
|
|
47.6%
|
|
47.6%
|
|
47.6%
|
|
47.6%
|
|
47.6%
|
|
47.6%
|
|
47.6%
|
|
47.6%
|
|
1-Nov-09
|
|
47.4
|
|
47.4
|
|
47.4
|
|
47.6
|
|
47.6
|
|
47.6
|
|
47.6
|
|
47.6
|
|
47.6
|
|
47.6
|
|
47.6
|
|
47.6
|
|
47.6
|
|
47.6
|
|
1-May-10
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.4
|
|
47.4
|
|
47.4
|
|
47.4
|
|
47.4
|
|
47.4
|
|
47.4
|
|
47.4
|
|
47.4
|
|
47.4
|
|
47.4
|
|
1-Nov-10
|
|
47.5
|
|
47.5
|
|
47.5
|
|
47.6
|
|
47.6
|
|
47.6
|
|
47.6
|
|
47.6
|
|
47.6
|
|
47.6
|
|
47.6
|
|
47.6
|
|
47.6
|
|
47.6
|
|
1-May-11
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.5
|
|
47.5
|
|
47.5
|
|
47.5
|
|
47.5
|
|
47.5
|
|
47.5
|
|
47.5
|
|
47.5
|
|
47.5
|
|
47.5
|
|
1-Nov-11
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.3
|
|
1-May-12
|
|
47.1
|
|
47.1
|
|
47.1
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.3
|
|
47.3
|
|
1-Nov-12
|
|
46.1
|
|
46.1
|
|
46.1
|
|
46.6
|
|
46.6
|
|
46.6
|
|
46.6
|
|
46.6
|
|
46.7
|
|
46.7
|
|
46.7
|
|
46.7
|
|
46.7
|
|
46.7
|
|
1-May-13
|
|
45.5
|
|
45.5
|
|
45.5
|
|
46.0
|
|
46.0
|
|
46.0
|
|
46.0
|
|
46.0
|
|
46.1
|
|
46.1
|
|
46.1
|
|
46.1
|
|
46.0
|
|
46.0
|
|
1-Nov-13
|
|
44.9
|
|
44.9
|
|
44.9
|
|
45.4
|
|
45.4
|
|
45.4
|
|
45.4
|
|
45.4
|
|
45.5
|
|
45.5
|
|
45.5
|
|
45.5
|
|
45.4
|
|
45.4
|
|
1-May-14
|
|
44.3
|
|
44.3
|
|
44.3
|
|
44.9
|
|
44.9
|
|
44.9
|
|
44.8
|
|
44.8
|
|
44.9
|
|
44.9
|
|
44.9
|
|
44.9
|
|
44.9
|
|
44.9
|
|
1-Nov-14
|
|
43.8
|
|
43.8
|
|
43.8
|
|
44.3
|
|
44.3
|
|
44.3
|
|
44.3
|
|
44.3
|
|
44.4
|
|
44.4
|
|
44.4
|
|
44.4
|
|
44.3
|
|
44.3
|
|
1-May-15
|
|
43.3
|
|
43.3
|
|
43.3
|
|
43.8
|
|
43.8
|
|
43.8
|
|
43.7
|
|
43.7
|
|
43.9
|
|
43.9
|
|
43.8
|
|
43.8
|
|
43.8
|
|
43.8
|
|
1-Nov-15
|
|
42.8
|
|
42.8
|
|
42.8
|
|
43.3
|
|
43.3
|
|
43.3
|
|
43.2
|
|
43.2
|
|
43.4
|
|
43.4
|
|
43.3
|
|
43.3
|
|
43.3
|
|
43.3
|
|
1-May-16
|
|
42.4
|
|
42.4
|
|
42.4
|
|
42.8
|
|
42.8
|
|
42.8
|
|
42.7
|
|
42.7
|
|
42.9
|
|
42.9
|
|
42.8
|
|
42.8
|
|
42.8
|
|
42.8
|
|
1-Nov-16
|
|
41.9
|
|
41.9
|
|
41.9
|
|
42.3
|
|
42.3
|
|
42.3
|
|
42.3
|
|
42.3
|
|
42.4
|
|
42.4
|
|
42.4
|
|
42.4
|
|
42.3
|
|
42.3
|
|
1-May-17
|
|
41.5
|
|
41.5
|
|
41.5
|
|
41.9
|
|
41.9
|
|
41.9
|
|
41.8
|
|
41.8
|
|
42.0
|
|
42.0
|
|
41.9
|
|
41.9
|
|
41.9
|
|
41.9
|
|
1-Nov-17
|
|
41.1
|
|
41.1
|
|
41.1
|
|
41.5
|
|
41.5
|
|
41.5
|
|
41.4
|
|
41.4
|
|
41.6
|
|
41.6
|
|
41.5
|
|
41.5
|
|
41.5
|
|
41.5
|
|
1-May-18
|
|
40.7
|
|
40.7
|
|
40.7
|
|
41.1
|
|
41.1
|
|
41.1
|
|
41.0
|
|
41.0
|
|
41.2
|
|
41.2
|
|
41.1
|
|
41.1
|
|
41.1
|
|
41.1
|
|
1-Nov-18
|
|
40.4
|
|
40.4
|
|
40.4
|
|
40.7
|
|
40.7
|
|
40.7
|
|
40.7
|
|
40.7
|
|
40.8
|
|
40.8
|
|
40.7
|
|
40.7
|
|
40.7
|
|
40.7
|
|
1-May-19
|
|
40.0
|
|
40.0
|
|
40.0
|
|
40.3
|
|
40.3
|
|
40.3
|
|
40.3
|
|
40.3
|
|
40.4
|
|
40.4
|
|
40.4
|
|
40.4
|
|
40.4
|
|
40.4
|
|
1-Nov-19
|
|
0.0
|
|
0.0
|
|
0.0
|
|
0.0
|
|
0.0
|
|
0.0
|
|
0.0
|
|
0.0
|
|
0.0
|
|
0.0
|
|
0.0
|
|
0.0
|
|
0.0
|
|
0.0
|
|
VI-
1
Date
|
|
|
|
N627CZ
|
|
N628CZ
|
|
N629CZ
|
|
N630CZ
|
|
N631CZ
|
|
N632CZ
|
|
N633CZ
|
|
N634CZ
|
|
N635CZ
|
|
N636CZ
|
|
N637CZ
|
|
N638CZ
|
|
N639CZ
|
|
1-May-09
|
|
47.6
|
%
|
|
|
47.6
|
%
|
|
|
47.6
|
%
|
|
|
46.7
|
%
|
|
|
46.7
|
%
|
|
|
46.7
|
%
|
|
|
46.7
|
%
|
|
|
46.7
|
%
|
|
46.7
|
%
|
|
46.7
|
%
|
|
46.7
|
%
|
|
46.7
|
%
|
|
46.7
|
%
|
|
1-Nov-09
|
|
47.6
|
|
|
|
47.6
|
|
|
|
47.6
|
|
|
|
46.8
|
|
|
|
46.8
|
|
|
|
46.8
|
|
|
|
46.8
|
|
|
|
46.8
|
|
|
46.8
|
|
|
46.8
|
|
|
46.8
|
|
|
46.8
|
|
|
46.7
|
|
|
1-May-10
|
|
47.4
|
|
|
|
47.4
|
|
|
|
47.4
|
|
|
|
46.6
|
|
|
|
46.6
|
|
|
|
46.6
|
|
|
|
46.6
|
|
|
|
46.6
|
|
|
46.6
|
|
|
46.6
|
|
|
46.6
|
|
|
46.6
|
|
|
46.6
|
|
|
1-Nov-10
|
|
47.6
|
|
|
|
47.6
|
|
|
|
47.6
|
|
|
|
46.8
|
|
|
|
46.8
|
|
|
|
46.8
|
|
|
|
46.8
|
|
|
|
46.8
|
|
|
46.8
|
|
|
46.8
|
|
|
46.8
|
|
|
46.8
|
|
|
46.8
|
|
|
1-May-11
|
|
47.5
|
|
|
|
47.5
|
|
|
|
47.5
|
|
|
|
46.7
|
|
|
|
46.7
|
|
|
|
46.7
|
|
|
|
46.7
|
|
|
|
46.7
|
|
|
46.7
|
|
|
46.7
|
|
|
46.7
|
|
|
46.7
|
|
|
46.7
|
|
|
1-Nov-11
|
|
47.3
|
|
|
|
47.3
|
|
|
|
47.3
|
|
|
|
46.6
|
|
|
|
46.6
|
|
|
|
46.6
|
|
|
|
46.6
|
|
|
|
46.6
|
|
|
46.6
|
|
|
46.6
|
|
|
46.6
|
|
|
46.6
|
|
|
46.6
|
|
|
1-May-12
|
|
47.3
|
|
|
|
47.3
|
|
|
|
47.3
|
|
|
|
46.5
|
|
|
|
46.5
|
|
|
|
46.5
|
|
|
|
46.5
|
|
|
|
46.5
|
|
|
46.5
|
|
|
46.5
|
|
|
46.5
|
|
|
46.5
|
|
|
46.5
|
|
|
1-Nov-12
|
|
46.7
|
|
|
|
46.8
|
|
|
|
46.8
|
|
|
|
46.6
|
|
|
|
46.6
|
|
|
|
46.6
|
|
|
|
46.6
|
|
|
|
46.6
|
|
|
46.6
|
|
|
46.6
|
|
|
46.6
|
|
|
46.6
|
|
|
46.6
|
|
|
1-May-13
|
|
46.0
|
|
|
|
46.2
|
|
|
|
46.2
|
|
|
|
46.5
|
|
|
|
46.5
|
|
|
|
46.5
|
|
|
|
46.5
|
|
|
|
46.5
|
|
|
46.5
|
|
|
46.5
|
|
|
46.5
|
|
|
46.5
|
|
|
46.5
|
|
|
1-Nov-13
|
|
45.4
|
|
|
|
45.6
|
|
|
|
45.6
|
|
|
|
46.1
|
|
|
|
46.1
|
|
|
|
46.1
|
|
|
|
46.1
|
|
|
|
46.1
|
|
|
46.2
|
|
|
46.2
|
|
|
46.2
|
|
|
46.2
|
|
|
46.1
|
|
|
1-May-14
|
|
44.9
|
|
|
|
45.0
|
|
|
|
45.0
|
|
|
|
45.5
|
|
|
|
45.5
|
|
|
|
45.5
|
|
|
|
45.5
|
|
|
|
45.5
|
|
|
45.6
|
|
|
45.6
|
|
|
45.6
|
|
|
45.6
|
|
|
45.6
|
|
|
1-Nov-14
|
|
44.3
|
|
|
|
44.5
|
|
|
|
44.5
|
|
|
|
45.0
|
|
|
|
45.0
|
|
|
|
44.9
|
|
|
|
44.9
|
|
|
|
44.9
|
|
|
45.1
|
|
|
45.1
|
|
|
45.0
|
|
|
45.0
|
|
|
45.0
|
|
|
1-May-15
|
|
43.8
|
|
|
|
43.9
|
|
|
|
43.9
|
|
|
|
44.4
|
|
|
|
44.4
|
|
|
|
44.4
|
|
|
|
44.4
|
|
|
|
44.4
|
|
|
44.5
|
|
|
44.5
|
|
|
44.5
|
|
|
44.5
|
|
|
44.5
|
|
|
1-Nov-15
|
|
43.3
|
|
|
|
43.4
|
|
|
|
43.4
|
|
|
|
43.9
|
|
|
|
43.9
|
|
|
|
43.8
|
|
|
|
43.8
|
|
|
|
43.8
|
|
|
44.0
|
|
|
44.0
|
|
|
43.9
|
|
|
43.9
|
|
|
43.9
|
|
|
1-May-16
|
|
42.8
|
|
|
|
42.9
|
|
|
|
42.9
|
|
|
|
43.4
|
|
|
|
43.4
|
|
|
|
43.3
|
|
|
|
43.3
|
|
|
|
43.3
|
|
|
43.5
|
|
|
43.5
|
|
|
43.4
|
|
|
43.4
|
|
|
43.4
|
|
|
1-Nov-16
|
|
42.3
|
|
|
|
42.5
|
|
|
|
42.5
|
|
|
|
42.9
|
|
|
|
42.9
|
|
|
|
42.9
|
|
|
|
42.9
|
|
|
|
42.9
|
|
|
43.0
|
|
|
43.0
|
|
|
42.9
|
|
|
42.9
|
|
|
42.9
|
|
|
1-May-17
|
|
41.9
|
|
|
|
42.0
|
|
|
|
42.0
|
|
|
|
42.4
|
|
|
|
42.4
|
|
|
|
42.4
|
|
|
|
42.4
|
|
|
|
42.4
|
|
|
42.5
|
|
|
42.5
|
|
|
42.5
|
|
|
42.5
|
|
|
42.4
|
|
|
1-Nov-17
|
|
41.5
|
|
|
|
41.6
|
|
|
|
41.6
|
|
|
|
42.0
|
|
|
|
42.0
|
|
|
|
41.9
|
|
|
|
41.9
|
|
|
|
41.9
|
|
|
42.1
|
|
|
42.1
|
|
|
42.0
|
|
|
42.0
|
|
|
42.0
|
|
|
1-May-18
|
|
41.1
|
|
|
|
41.2
|
|
|
|
41.2
|
|
|
|
41.6
|
|
|
|
41.6
|
|
|
|
41.5
|
|
|
|
41.5
|
|
|
|
41.5
|
|
|
41.6
|
|
|
41.6
|
|
|
41.6
|
|
|
41.6
|
|
|
41.6
|
|
|
1-Nov-18
|
|
40.7
|
|
|
|
40.8
|
|
|
|
40.8
|
|
|
|
41.2
|
|
|
|
41.2
|
|
|
|
41.1
|
|
|
|
41.1
|
|
|
|
41.1
|
|
|
41.3
|
|
|
41.3
|
|
|
41.2
|
|
|
41.2
|
|
|
41.2
|
|
|
1-May-19
|
|
40.4
|
|
|
|
40.5
|
|
|
|
40.5
|
|
|
|
40.8
|
|
|
|
40.8
|
|
|
|
40.8
|
|
|
|
40.8
|
|
|
|
40.8
|
|
|
40.9
|
|
|
40.9
|
|
|
40.8
|
|
|
40.8
|
|
|
40.8
|
|
|
1-Nov-19
|
|
0.0
|
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
VI-
2
Series B Equipment Note Loan to Value Ratios
Date
|
|
|
|
N612CZ
|
|
N613CZ
|
|
N614CZ
|
|
N615CZ
|
|
N616CZ
|
|
N617CZ
|
|
N619CZ
|
|
N620CZ
|
|
N621CZ
|
|
N622CZ
|
|
N623CZ
|
|
N624CZ
|
|
N625CZ
|
|
N626CZ
|
|
1-May-09
|
|
62.1%
|
|
62.1%
|
|
62.1%
|
|
63.0%
|
|
63.0%
|
|
63.0%
|
|
63.0%
|
|
63.0%
|
|
63.2%
|
|
63.2%
|
|
63.1%
|
|
63.1%
|
|
63.1%
|
|
63.1%
|
|
1-Nov-09
|
|
62.2
|
|
62.2
|
|
62.2
|
|
63.3
|
|
63.3
|
|
63.3
|
|
63.2
|
|
63.2
|
|
63.4
|
|
63.4
|
|
63.4
|
|
63.4
|
|
63.3
|
|
63.3
|
|
1-May-10
|
|
59.0
|
|
59.0
|
|
59.0
|
|
59.8
|
|
59.8
|
|
59.8
|
|
59.8
|
|
59.8
|
|
60.0
|
|
60.0
|
|
59.9
|
|
59.9
|
|
59.9
|
|
59.9
|
|
1-Nov-10
|
|
58.2
|
|
58.2
|
|
58.2
|
|
59.0
|
|
59.0
|
|
59.0
|
|
58.9
|
|
58.9
|
|
59.1
|
|
59.1
|
|
59.0
|
|
59.0
|
|
59.0
|
|
59.0
|
|
1-May-11
|
|
57.3
|
|
57.3
|
|
57.3
|
|
58.1
|
|
58.1
|
|
58.1
|
|
58.1
|
|
58.1
|
|
58.2
|
|
58.2
|
|
58.2
|
|
58.2
|
|
58.1
|
|
58.1
|
|
1-Nov-11
|
|
56.5
|
|
56.5
|
|
56.5
|
|
57.3
|
|
57.3
|
|
57.3
|
|
57.2
|
|
57.2
|
|
57.4
|
|
57.4
|
|
57.4
|
|
57.4
|
|
57.3
|
|
57.3
|
|
1-May-12
|
|
55.8
|
|
55.8
|
|
55.8
|
|
56.5
|
|
56.5
|
|
56.5
|
|
56.4
|
|
56.4
|
|
56.6
|
|
56.6
|
|
56.6
|
|
56.6
|
|
56.5
|
|
56.5
|
|
1-Nov-12
|
|
54.8
|
|
54.8
|
|
54.8
|
|
55.7
|
|
55.7
|
|
55.7
|
|
55.7
|
|
55.7
|
|
55.8
|
|
55.8
|
|
55.8
|
|
55.8
|
|
55.7
|
|
55.7
|
|
1-May-13
|
|
54.3
|
|
54.3
|
|
54.3
|
|
55.0
|
|
55.0
|
|
55.0
|
|
54.9
|
|
54.9
|
|
55.1
|
|
55.1
|
|
55.0
|
|
55.0
|
|
55.0
|
|
55.0
|
|
1-Nov-13
|
|
53.6
|
|
53.6
|
|
53.6
|
|
54.3
|
|
54.3
|
|
54.3
|
|
54.2
|
|
54.2
|
|
54.4
|
|
54.4
|
|
54.3
|
|
54.3
|
|
54.3
|
|
54.3
|
|
1-May-14
|
|
52.9
|
|
52.9
|
|
52.9
|
|
53.6
|
|
53.6
|
|
53.6
|
|
53.5
|
|
53.5
|
|
53.7
|
|
53.7
|
|
53.6
|
|
53.6
|
|
53.6
|
|
53.6
|
|
1-Nov-14
|
|
52.3
|
|
52.3
|
|
52.3
|
|
52.9
|
|
52.9
|
|
52.9
|
|
52.9
|
|
52.9
|
|
53.0
|
|
53.0
|
|
53.0
|
|
53.0
|
|
52.9
|
|
52.9
|
|
1-May-15
|
|
51.7
|
|
51.7
|
|
51.7
|
|
52.3
|
|
52.3
|
|
52.3
|
|
52.2
|
|
52.2
|
|
52.4
|
|
52.4
|
|
52.3
|
|
52.3
|
|
52.3
|
|
52.3
|
|
1-Nov-15
|
|
51.1
|
|
51.1
|
|
51.1
|
|
51.7
|
|
51.7
|
|
51.7
|
|
51.6
|
|
51.6
|
|
51.8
|
|
51.8
|
|
51.7
|
|
51.7
|
|
51.7
|
|
51.7
|
|
1-May-16
|
|
50.5
|
|
50.5
|
|
50.5
|
|
51.1
|
|
51.1
|
|
51.1
|
|
51.0
|
|
51.0
|
|
51.2
|
|
51.2
|
|
51.1
|
|
51.1
|
|
51.1
|
|
51.1
|
|
1-Nov-16
|
|
50.0
|
|
50.0
|
|
50.0
|
|
50.5
|
|
50.5
|
|
50.5
|
|
50.5
|
|
50.5
|
|
50.6
|
|
50.6
|
|
50.6
|
|
50.6
|
|
50.5
|
|
50.5
|
|
1-May-17
|
|
49.5
|
|
49.5
|
|
49.5
|
|
50.0
|
|
50.0
|
|
50.0
|
|
49.9
|
|
49.9
|
|
50.1
|
|
50.1
|
|
50.0
|
|
50.0
|
|
50.0
|
|
50.0
|
|
1-Nov-17
|
|
41.1
|
|
41.1
|
|
41.1
|
|
41.5
|
|
41.5
|
|
41.5
|
|
41.4
|
|
41.4
|
|
41.6
|
|
41.6
|
|
41.5
|
|
41.5
|
|
41.5
|
|
41.5
|
|
1-May-18
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
1-Nov-18
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
1-May-19
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
1-Nov-19
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
VI-
3
Date
|
|
|
|
N627CZ
|
|
N628CZ
|
|
N629CZ
|
|
N630CZ
|
|
N631CZ
|
|
N632CZ
|
|
N633CZ
|
|
N634CZ
|
|
N635CZ
|
|
N636CZ
|
|
N637CZ
|
|
N638CZ
|
|
N639CZ
|
|
1-May-09
|
|
63.1%
|
|
63.2%
|
|
63.2%
|
|
63.2%
|
|
63.2%
|
|
63.1%
|
|
63.1%
|
|
63.1%
|
|
63.0%
|
|
63.0%
|
|
62.9%
|
|
62.9%
|
|
62.8%
|
|
1-Nov-09
|
|
63.3
|
|
63.5
|
|
63.5
|
|
63.5
|
|
63.5
|
|
63.4
|
|
63.4
|
|
63.4
|
|
63.3
|
|
63.3
|
|
63.2
|
|
63.2
|
|
63.1
|
|
1-May-10
|
|
59.9
|
|
60.0
|
|
60.0
|
|
60.9
|
|
60.9
|
|
60.9
|
|
60.9
|
|
60.9
|
|
61.0
|
|
61.0
|
|
61.0
|
|
61.0
|
|
60.9
|
|
1-Nov-10
|
|
59.0
|
|
59.2
|
|
59.2
|
|
60.0
|
|
60.0
|
|
59.9
|
|
59.9
|
|
59.9
|
|
60.1
|
|
60.1
|
|
60.1
|
|
60.1
|
|
60.0
|
|
1-May-11
|
|
58.1
|
|
58.3
|
|
58.3
|
|
59.1
|
|
59.1
|
|
59.1
|
|
59.1
|
|
59.1
|
|
59.2
|
|
59.2
|
|
59.2
|
|
59.2
|
|
59.1
|
|
1-Nov-11
|
|
57.3
|
|
57.5
|
|
57.5
|
|
58.3
|
|
58.3
|
|
58.2
|
|
58.2
|
|
58.2
|
|
58.4
|
|
58.4
|
|
58.3
|
|
58.3
|
|
58.3
|
|
1-May-12
|
|
56.5
|
|
56.7
|
|
56.7
|
|
57.4
|
|
57.4
|
|
57.4
|
|
57.4
|
|
57.4
|
|
57.5
|
|
57.5
|
|
57.5
|
|
57.5
|
|
57.4
|
|
1-Nov-12
|
|
55.7
|
|
55.9
|
|
55.9
|
|
56.6
|
|
56.6
|
|
56.6
|
|
56.6
|
|
56.6
|
|
56.7
|
|
56.7
|
|
56.7
|
|
56.7
|
|
56.6
|
|
1-May-13
|
|
55.0
|
|
55.1
|
|
55.1
|
|
55.9
|
|
55.9
|
|
55.8
|
|
55.8
|
|
55.8
|
|
56.0
|
|
56.0
|
|
55.9
|
|
55.9
|
|
55.9
|
|
1-Nov-13
|
|
54.3
|
|
54.4
|
|
54.4
|
|
55.1
|
|
55.1
|
|
55.1
|
|
55.1
|
|
55.1
|
|
55.2
|
|
55.2
|
|
55.2
|
|
55.2
|
|
55.1
|
|
1-May-14
|
|
53.6
|
|
53.7
|
|
53.7
|
|
54.4
|
|
54.4
|
|
54.3
|
|
54.3
|
|
54.3
|
|
54.5
|
|
54.5
|
|
54.4
|
|
54.4
|
|
54.4
|
|
1-Nov-14
|
|
52.9
|
|
53.1
|
|
53.1
|
|
53.7
|
|
53.7
|
|
53.6
|
|
53.6
|
|
53.6
|
|
53.8
|
|
53.8
|
|
53.8
|
|
53.8
|
|
53.7
|
|
1-May-15
|
|
52.3
|
|
52.4
|
|
52.4
|
|
53.0
|
|
53.0
|
|
53.0
|
|
53.0
|
|
53.0
|
|
53.1
|
|
53.1
|
|
53.1
|
|
53.1
|
|
53.0
|
|
1-Nov-15
|
|
51.7
|
|
51.8
|
|
51.8
|
|
52.4
|
|
52.4
|
|
52.3
|
|
52.3
|
|
52.3
|
|
52.5
|
|
52.5
|
|
52.4
|
|
52.4
|
|
52.4
|
|
1-May-16
|
|
51.1
|
|
51.2
|
|
51.2
|
|
51.8
|
|
51.8
|
|
51.7
|
|
51.7
|
|
51.7
|
|
51.9
|
|
51.9
|
|
51.8
|
|
51.8
|
|
51.8
|
|
1-Nov-16
|
|
50.5
|
|
50.7
|
|
50.7
|
|
51.2
|
|
51.2
|
|
51.1
|
|
51.1
|
|
51.1
|
|
51.3
|
|
51.3
|
|
51.2
|
|
51.2
|
|
51.2
|
|
1-May-17
|
|
50.0
|
|
50.1
|
|
50.1
|
|
50.6
|
|
50.6
|
|
50.6
|
|
50.6
|
|
50.6
|
|
50.7
|
|
50.7
|
|
50.7
|
|
50.7
|
|
50.6
|
|
1-Nov-17
|
|
41.5
|
|
41.6
|
|
41.6
|
|
42.0
|
|
42.0
|
|
41.9
|
|
41.9
|
|
41.9
|
|
42.1
|
|
42.1
|
|
42.0
|
|
42.0
|
|
42.0
|
|
1-May-18
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
1-Nov-18
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
1-May-19
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
1-Nov-19
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
VI-
4
PROSPECTUS
$3,000,000,000
NORTHWEST AIRLINES, INC.
Pass Through Certificates
Applicable Underlying
Payments Fully and Unconditionally Guaranteed
by
NORTHWEST AIRLINES CORPORATION
Northwest Airlines, Inc. may from time to time
offer pass through certificates. Pass through certificates may be issued in one
or more series in amounts, at prices and on terms to be determined at the time
of the offering.
The pass through
certificates will represent interests in the assets of one or more pass through
trusts formed to finance the acquisition of specified aircraft. The assets of
the pass through trusts will include equipment notes issued
(a) on a
nonrecourse basis by one or more owner trustees pursuant to separate leveraged
lease transactions to finance or refinance a portion of the cost of aircraft
which have been or will be leased to Northwest Airlines, Inc., or
(b) with
recourse to Northwest Airlines, Inc. to finance all or a portion of the
cost of, or to purchase all or a portion of the outstanding debt with respect
to, aircraft which have been or will be purchased and owned by Northwest
Airlines, Inc.
The pass through certificates will not represent
interests in or obligations of Northwest Airlines, Inc. or any of its
affiliates. Northwest Airlines Corporation will fully and unconditionally
guarantee the lease and recourse obligations of Northwest Airlines, Inc.
referred to above.
When we decide to sell a particular series of pass
through certificates, we will provide the specific terms of those certificates
in a prospectus supplement. You should read this prospectus and any prospectus
supplement carefully before you invest. This prospectus may not be used for
sales of pass through certificates unless accompanied by a prospectus
supplement.
The pass through certificates
may be sold to or through underwriters, through dealers or agents or directly
to purchasers. The prospectus supplement will set forth the names of any
underwriters, dealers or agents involved in the sale of the pass through
certificates in respect of which this prospectus is being delivered, the
proposed amounts, if any, to be purchased by underwriters and the compensation,
if any, of such underwriters or agents.
Investing in the
securities offered in this prospectus involves risks. See Risk Factors
beginning on page 4 of this prospectus.
Neither the Securities and Exchange Commission nor any
state securities commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this prospectus. Any representation to
the contrary is a criminal offense.
The date of this prospectus is August 1, 2003
TABLE
OF CONTENTS
You should rely only on the information provided in
this prospectus and any prospectus supplement, including the information
incorporated by reference. We have not authorized anyone to provide you with
different information. Northwest Airlines, Inc. will offer to sell the
securities and seek offers to buy the securities, only in jurisdictions where
offers and sales are permitted. The information contained in or incorporated by
reference in this prospectus is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus or of any
sales of the securities.
2
ABOUT THIS
PROSPECTUS
This prospectus is part of registration statements
that we filed with the Securities and Exchange Commission, or SEC, utilizing a shelf
registration process. Under this shelf process, we may sell pass through
certificates described in this prospectus in one or more offerings up to a
total dollar amount of $3,000,000,000 or the equivalent of this amount in
foreign currencies or foreign currency units.
This prospectus provides you with a general
description of the pass through certificates we may offer. Each time we offer
pass through certificates, we will provide you with a prospectus supplement
that will describe the specific amounts, prices and terms of the offered
securities. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement together with additional information described below
under Where You Can Find More Information.
This prospectus does not contain all of the information
in the registration statements. Statements we make in this prospectus about the
contents of any contract, agreement or other document are not necessarily
complete. If that contract, agreement or other document has been filed as an
exhibit to the registration statements, we refer you to the exhibit for a more
complete description. The information in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or any sale of the securities.
In this prospectus, Northwest
refers to Northwest Airlines, Inc., NWA Corp. to Northwest Airlines
Corporation and the Company, we, us or our to NWA Corp. and its
consolidated subsidiaries.
WHERE YOU CAN FIND
MORE INFORMATION
This prospectus is part of a Registration Statement on
Form S-3 that we filed with the Securities and Exchange Commission (SEC).
Certain information in the registration statement has been omitted from this
prospectus in accordance with the rules of the SEC. NWA Corp. files annual,
quarterly and current reports, proxy statements and other information with the
SEC. You may read and copy any document we file at the SECs public reference
rooms at 450 Fifth Street, N.W., Room 1024, Washington, DC 20549. Please
call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Our SEC filings are also available to the public over
the Internet at the SECs web site at http://www.sec.gov. Northwest is not
required to file separate reports, proxy and information statements or other
information with the SEC pursuant to the Securities Exchange Act of 1934, as
amended (the Exchange Act). Instead, we have provided information with
respect to Northwest, to the extent required, in filings made by NWA Corp.
The SEC allows us
to incorporate by reference the information we file with them, which means
that we can disclose important information to you by referring you to those
documents. The information incorporated by reference is considered to be a part
of this prospectus, and information that we file later with the SEC will
automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until
the selling securityholders have sold all the notes or common stock issuable
upon conversion of the notes.
·
Annual
Report on Form 10-K for the year ended December 31, 2002;
·
Quarterly
Report on Form 10-Q for the quarter ended March 31, 2003; and
·
Current
Reports on Form 8-K filed January 24, 2003, April 21,
2003, May 15, 2003, May 16, 2003, July 17, 2003 and August 1,
2003.
3
You may request a copy of these filings (other than
exhibits to them) at no cost, by writing or telephoning us at the following
address:
Secretarys Office
Northwest Airlines Corporation
5101 Northwest Drive, Dept. A1180
St. Paul, Minnesota 55111-3034
Telephone: (612) 726-2111
DISCLOSURE
REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Exchange Act. These forward-looking
statements are subject to a number of risks and uncertainties, all of which are
difficult to predict and many of which are beyond our control. Forward-looking
statements are typically identified by the words may, will, believe, expect,
anticipate, intend, estimate and similar expressions. Actual results
could differ materially from those contemplated by these forward-looking
statements as a result of a number of factors.
We believe that the material risks and uncertainties
that could affect the outlook of an airline operating in the global economy
include the future level of air travel demand, our future load factors and
yields, the airline pricing environment, increased costs for security, the cost
and availability of aviation insurance coverage and war risk coverage, the
general economic condition of the U.S. and other regions of the world, the
price and availability of jet fuel, the war in Iraq and its aftermath, the
possibility of additional terrorist attacks or the fear of such attacks,
concerns about Severe Acute Respiratory Syndrome (SARS), labor negotiations
both at other carriers and us, low-fare carrier expansion, capacity decisions
of other carriers, actions of the U.S. and foreign governments, foreign
currency exchange rate fluctuations, inflation and other factors discussed
herein.
In light of these risks and uncertainties, we cannot
assure you that the results and events contemplated by the forward-looking
statements contained in this prospectus will in fact be realized. Potential
investors should not place undue reliance on these forward-looking
statements. We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
All subsequent written or oral forward-looking statements attributable to
us or persons acting on our behalf are expressly qualified in their entirety by
the factors described above.
4
RISK FACTORS
You should read carefully this entire prospectus and
the documents incorporated by reference in this prospectus before investing in
the securities offered in this prospectus.
The airline industry is intensely competitive.
The airline industry is
highly competitive. Our competitors include all the other major domestic
airlines as well as foreign, national, regional and new entrant airlines, some
of which have more financial resources or lower cost structures than the
company. On most of our routes, we compete with at least one of these carriers.
Airline revenues are sensitive to numerous factors, and the actions of other
carriers in the areas of pricing, scheduling and promotions can have a
substantial impact on overall industry revenues. Such factors may become even
more significant in periods when the industry experiences large losses, as
airlines under financial stress may institute pricing structures intended to
achieve near-term survival rather than long-term viability.
Industry revenues have declined significantly and we
continue to experience significant operating losses.
Since early 2001, the U.S. airline industry has
suffered a significant decline in revenues versus what would have been expected
based on historical growth trends. This shortfall has been caused by a number
of factors.
The rapid growth of low cost airlines has had a
profound impact on industry revenues. Using the advantage of low unit costs,
these carriers offer lower fares, particularly those targeted at business
passengers, in order to shift demand from larger, more-established airlines. As
a result of growth, these low cost carriers now transport nearly 25% of all
domestic U.S. passengers compared to less than 10% a decade ago. They now
compete for, and thus influence industry pricing on, approximately 75% of all
domestic U.S. passenger ticket sales compared to less than 20% a decade ago. As
a result of their better financial performance, low cost carriers are expected
to continue to grow their market share.
While the advent of Internet travel web sites has
driven significant distribution cost savings for airlines, it has had a large
negative impact on airline revenues. Having access to perfect pricing
information, air travel consumers have become more efficient at finding lower
fare alternatives than in the past. The increased price consciousness of
travelers, as well as the growth in distribution channels, has further
motivated airlines to price aggressively to gain fare advantages through
certain channels.
The U.S. airline industry is one of the most heavily
taxed of all industries. Taxes and fees now represent approximately 25% of what
a passenger pays for an average domestic airline ticket, a percentage even
greater than that for alcohol and tobacco products. These taxes and fees have
grown significantly in the past decade, most recently with the introduction of
a $2.50 security fee imposed on each passenger flight segment, subject to a $10
per roundtrip cap. We believe that every dollar of tax or fee increase imposed
on airline passengers roughly translates into a dollar of reduced airline
revenue, particularly over the long run.
The attacks of September 11, 2001 materially
impacted and continue to impact air travel. Concerns about further terrorist
attacks, which are unlikely to abate any time soon, have had a negative impact
on air travel demand. Furthermore, security procedures introduced at airports
since the attacks have increased, both in reality and in perception, the
inconvenience of flying and thus further reduced demand.
While the factors noted are believed to be lasting, if
not permanent, and could in fact worsen over time, some of the current airline
industry revenue shortfall is believed to be cyclical in nature. U.S. airline
revenues have historically been and continue to be influenced by the strength
of the U.S. economy. Furthermore, airline business revenues are greatly
influenced by the growth in corporate profitability. The current sluggishness
of both the economy and corporate profitability is adversely affecting airline
revenues.
5
The airline industry revenue decline has been further
exacerbated in early 2003. In January, United Airlines introduced a new pricing
structure, reducing its highest business fares by 40-50%. This action and the
resulting match by other airlines has reduced average fares without a
corresponding increase in demand. The war with Iraq and its aftermath have also
materially affected future airline bookings, particularly for international
travel. The outbreak of severe acute respiratory syndrome, or SARS, also
resulted in a material reduction in revenues and bookings, especially on routes
to and from Asian destinations. The spread of SARS, if it persists for an
extended period, may materially adversely affect the airline industry, especially
those airlines, including ourselves, with an extensive Pacific route network.
We have experienced a
significant reduction in our operating revenues while incurring significant
losses during the past two years. Operating revenues decreased 4.2% from 2001
to 2002 and 11.9% from 2000 to 2001. In addition, our net losses were
$798 million for the year ended December 31, 2002, or an 88.7%
increase compared to the net loss in 2001, and $423 million for the year
ended December 31, 2001, or a 265.2% decrease compared to the net income
for 2000. For the three months ending March 31, 2003, operating revenues
increased 3.2% from the same period in 2002 and the net loss of
$396 million represents a 131.6% increase from the net loss of
$171 million reported for the three-month period ending
March 31, 2002. We do not anticipate that the revenue environment for us
will materially improve during the remainder of 2003.
Due to industry
seasonality, operating results for any interim periods are not necessarily
indicative of those for the entire year.
The airline industry is
both cyclical and seasonal in nature. Due to seasonal fluctuations, the companys
operating results for any interim period are not necessarily indicative of
those for the entire year. The companys second and third quarter operating
results have historically been more favorable due to increased leisure travel
on domestic and international routes during the spring and summer months. In
addition, our operating results for any interim period could be below the
expectations of investors and the financial community. In that event, the price
of our securities could decline.
Airline bankruptcies could adversely affect the
industry.
Since September 11,
2001 several air carriers have sought to reorganize under Chapter 11 of the
United States Bankruptcy Code, including United Airlines, Inc., the second
largest domestic air carrier. Successful completion of such reorganizations
could present us with competitors with significantly lower operating costs
derived from labor, supply, and financing contracts renegotiated under the
protection of the Bankruptcy Code. In addition, historically, air carriers
involved in reorganizations have undertaken substantial fare discounting in
order to maintain cash flows and to enhance continued customer loyalty. Such
fare discounting could further lower yields for all carriers, including the
company. Further, the market value of aircraft would likely be negatively
impacted if a number of air carriers, including United Air Lines, Inc.,
seek to reduce capacity by eliminating aircraft from their fleets.
Attempts to reduce labor costs may not be successful.
Wages, salaries and benefits are our largest costs,
representing 41% of our operating revenues in 2002. In light of the current
revenue environment, a number of other airlines are attempting to significantly
reduce labor expenses in order to get overall costs in line with revenues. We
have begun preliminary discussions with our labor groups, and we are similarly
seeking permanent reductions in wage, benefit structures and work rules. We
cannot predict the outcome of negotiations to amend our labor contracts at this
time.
6
As of
December 31, 2002, we had approximately 44,300 full-time equivalent
employees of whom approximately 2,200 were foreign nationals working primarily
in Asia. Unions represent approximately 91% of our employees. Collective
bargaining agreements provide standards for wages, hours of work, working
conditions, settlement of disputes and other matters.
The
major agreements with domestic employees became amendable or will become
amendable on various dates as follows:
Employee
Group
|
|
|
|
Approximate
Number of Full-time
Equivalent
Employees Covered
|
|
Union
|
|
Amendable
Date
|
Pilots
|
|
5,600
|
|
Air Line Pilots
Association, International
|
|
9/13/03
|
Agents and Clerks
|
|
9,700
|
|
International
Association of Machinists & Aerospace Workers
|
|
2/25/03
|
Equipment Service
Employees and Stock Clerks
|
|
6,500
|
|
International Association of Machinists & Aerospace Workers
|
|
2/25/03
|
Flight Attendants
|
|
9,300
|
|
Professional Flight
Attendants Association
|
|
5/30/05
|
Mechanics and Related Employees
|
|
7,700
|
|
Aircraft Mechanics Fraternal Association
|
|
5/11/05
|
Changes in
government regulation could increase our operating costs and limit our ability
to conduct our business.
Airlines are subject to
extensive regulatory requirements. In the last several years, Congress has
passed laws and the U.S. Federal Aviation Administration has issued a number of
maintenance directives and other regulations. These requirements impose
substantial costs on airlines. Additional laws, regulations, taxes and airport
rates and charges have been proposed from time to time that could significantly
increase the cost of airline operations or reduce revenues. Congress and the
U.S. Department of Transportation have also proposed the regulation of airlines
responses to their competitors activities. The ability of U.S. carriers to
operate international routes is subject to change because the applicable
arrangements between the U.S. and foreign governments may be amended from time
to time, or because appropriate slots or facilities may not be available. The
company cannot give assurance that laws or regulations enacted in the future
will not adversely affect it.
We are vulnerable to increases in aircraft fuel costs.
Because fuel costs are a
significant portion of our operating costs (12.7% for 2002), significant
changes in fuel costs would materially affect our operating results. Fuel
prices continue to be susceptible to, among other factors, political unrest in
Venezuela and the war with Iraq and its aftermath. Due to these and other
events that would affect the global supply of aircraft fuel, the company may
experience higher fuel prices or have to curtail scheduled services. A one-cent
change in the cost of a gallon of fuel (based on 2002 consumption) would impact
operating expenses by approximately $1.6 million per month. Changes in
fuel prices may have a greater impact on the company than some of its
competitors because of the composition of its fleet. We hedge some of our
future fuel purchases to protect against potential spikes in price. However,
these hedging strategies may not always be effective.
7
Our insurance costs
have increased substantially, and further increases in insurance costs could harm
our business.
Following
September 11, 2001, aviation insurers significantly increased airline
insurance premiums and reduced the maximum amount of coverage available to
airlines. Total aviation and property insurance expenses were $94 million
higher in 2002 than in 2000. As a result of the Airline Stabilization Act, the
Homeland Security Act and the Emergency Wartime Supplemental Appropriations
Act, the federal government assumes most war risk coverage. This coverage is
scheduled to expire on August 31, 2004. While the government may again
extend the deadline for when it will discontinue providing excess war risk
coverage, we cannot assure that any extension will occur, or if it does, how
long the extension will last. Should the government stop providing excess war
risk coverage to the airline industry, it is expected that the premiums charged
by aviation insurers for this coverage would be substantially higher than the
premiums currently charged by the government. Aviation insurers could further
increase insurance premiums in the event of a new terrorist attack or other
events adversely affecting the airline industry. Significant increases in
insurance premiums could negatively impact our financial condition and results
of operations.
Our indebtedness and
other obligations, including pension funding liabilities, are substantial.
We have substantial levels of indebtedness. As of
March 31, 2003, the company had long-term debt and capital lease
obligations, including current maturities, of $7.07 billion. Of this
indebtedness, 41% bears interest at floating rates. The amount of long-term
debt that matures in 2003 is $235 million. Additionally, $631 million
matures in 2004, $1.44 billion in 2005, $571 million in 2006 and
$682 million in 2007. As of March 31, 2003, the principal portion of
future minimum lease payments under capital leases were $57 million for
2003, $46 million for 2004, $40 million for 2005, $29 million
for 2006 and $32 million for 2007. These levels of indebtedness do not
include the obligation to redeem $226 million of convertible preferred
stock in 2003 and non-recourse mandatorily redeemable preferred securities of
one of the companys subsidiaries of $564 million. The amount of our
indebtedness could limit our ability to obtain additional financing or could
adversely affect our future financing costs, either of which could negatively
affect the ability to operate our business or make future capital expenditures.
Our ability to service our indebtedness and obligations could be adversely affected
by many factors, including general economic conditions and other factors beyond
our control.
We also have several noncontributory pension plans
covering substantially all of our employees. Funding obligations under these
plans are governed by the Employee Retirement Income Security Act of 1974,
as amended. As of December 31, 2002, our pension plans were underfunded by
$3.95 billion as calculated in accordance with SFAS No. 87, Employers
Accounting for Pensions. On a current liability basis utilized for cash
contribution purposes, the plans were underfunded by approximately
$3.1 billion. Before the impact of a conditional authorization to
reschedule some of the payments, our 2003 pension contributions associated with
the 2003 plan year were estimated to be $468 million. We also had, as of
March 31, 2003, $223 million of mandatory contributions related to
the 2002 plan year remaining to be paid in 2003. Pension funding requirements
are dependent upon various factors, including interest rate levels, asset returns,
regulatory requirements for funding purposes and changes to pensions plan
benefits. Absent favorable changes to these factors, we will have to satisfy
the underfunded amounts of our plans through cash contributions over time.
On November 5, 2002, we submitted an application
to the Internal Revenue Service (IRS) for authorization to reschedule, over a
five-year period beginning in April 2004, the $454 million in
2003 plan year contributions required under the pension plans for contract and
salaried employees. On April 15, 2003, the IRS approved the application,
subject to our satisfaction of the conditions imposed by the Pension Benefit
Guaranty Corporation (PBGC). We have reached an agreement with the PBGC
(subject to final documentation) to satisfy the conditions for waiving plan
year 2003 contributions by
8
granting the plans a lien
on some of our assets (certain domestic slots, routes, aircraft and engines),
the values of which exceed the amount of rescheduled contributions.
We have also submitted an application to the
Department of Labor to permit us to contribute common stock of Pinnacle
Airlines Corp. to the pension plans in lieu of making some of the required
contributions in cash. In January 2003, the Department of Labor issued a
proposed prohibited transaction exemption that would allow us to contribute
common stock of Pinnacle Airlines Corp. to satisfy a portion of the
contribution requirements to Northwests pension plans in 2003 and 2004. The
proposed exemption contemplates that the pension plans will have the right at
any time to sell the shares back to us for cash at the greater of their value
at the time of contribution or the prevailing market value. We then contributed
1.9 million shares, or 12.9%, of the Pinnacle Airlines Corp. common stock
to the pension plans to satisfy approximately $44 million of our
$223 million scheduled funding requirement for the 2002 plan year.
However, as a result of the plans option to sell the shares back to the
Company, the contribution of the $44 million was not recognized on our
financial statements as we continue to fully consolidate Pinnacle Airlines and
do not reflect a reduction in the pension liability for accounting purposes. We
intend to contribute additional common stock of Pinnacle Airlines Corp. to
satisfy a portion of future pension contributions, including the remainder of
2002 plan year requirements. The Department of Labor held a hearing on
May 5, 2003 relating to the proposed prohibited transaction exemption.
In addition, we operate in a capital-intensive
industry. Periodically, we are required to make significant capital
expenditures for new aircraft and related equipment. There can be no assurance
that sufficient financing will be available for all aircraft and other capital
expenditures.
For the year ended
December 31, 2002, earnings were inadequate to cover fixed charges by
approximately $1.28 billion.
We are exposed to foreign currency exchange rate
fluctuations.
We conduct a significant
portion of our operations in foreign locations. As a result, we have operating
revenues and, to a lesser extent, operating expenses, as well as assets and
liabilities, denominated in foreign currencies, principally the Japanese yen.
Fluctuations in such foreign currencies can significantly affect our operating
performance and the value of our assets located outside of the United States.
From time to time, we use financial instruments to hedge our exposure to the
Japanese yen. However, these hedging strategies may not always be effective.
THE COMPANY
NWA Corp. is the
indirect parent corporation of Northwest. Northwest operates the worlds fourth
largest airline, as measured by revenue passenger miles, and is engaged in the
business of transporting passengers and cargo. Northwest began operations in
1926. Northwests business focuses on the development of a global airline
network through its strategic assets that include:
·
domestic
hubs in Detroit, Minneapolis/St. Paul and Memphis;
·
an
extensive Pacific route system with a hub in Tokyo;
·
a
trans-Atlantic alliance with KLM Royal Dutch Airlines, which operates
through a hub in Amsterdam; and
·
a
domestic and international alliance with Continental Airlines, Inc. and
Delta Airlines, Inc.
Northwest has developed strategies that are designed
to utilize these assets to the companys competitive advantage.
9
Our principal executive
offices are located at 2700 Lone Oak Parkway, Eagan, Minnesota 55121 and our
telephone number is (612) 726-2111. Our Internet address is www.nwa.com.
Information on our website is not incorporated into this prospectus and is not
a part of this prospectus.
GENERAL OUTLINE OF
TRUST STRUCTURE
A separate
Northwest Airlines pass through trust will be formed for each series or class
of pass through certificates. Each pass through trust will be formed pursuant
to the basic pass through trust agreement (the form of which has been filed
with the SEC and is incorporated by reference in the registration statement of
which this prospectus is a part) and a trust agreement supplement to be entered
into among Northwest, NWA Corp. and U.S. Bank Trust National Association (as
successor to State Street Bank and Trust Company of Connecticut, National
Association) as pass through trustee under the pass through trust. Each pass
through certificate in a series or class will represent a fractional undivided
interest in the related pass through trust and will have no rights, benefits or
interests in respect of any other pass through trust. The property of each pass
through trust will consist of
·
equipment
notes issued on a nonrecourse basis by one or more owner trustees pursuant to
separate leveraged lease transactions to finance or refinance a portion of the
equipment cost of aircraft, including engines, which have been or will be
leased to Northwest pursuant to a separate lease agreement for each leased
aircraft (which we refer to as leased aircraft equipment notes), or with
recourse to Northwest to finance all or a portion of the equipment cost of, or
to purchase all or a portion of the outstanding debt with respect to, aircraft,
including engines which have been or will be purchased and owned by Northwest
(which we refer to as owned aircraft equipment notes);
·
the
rights of the pass through trust to acquire equipment notes under a note
purchase or refunding agreement;
·
in
the case of a delayed purchase of aircraft, the rights of the pass through
trust in respect of certain escrowed funds;
·
if
so specified in the related prospectus supplement, the rights of the pass
through trust under an intercreditor agreement with respect to cross-subordination
or other intercreditor matters;
·
if
so specified in the related prospectus supplement, monies receivable under any
liquidity facility arrangements for such pass through trust; and
·
funds
from time to time deposited with the related pass through trustee.
At the time of execution and delivery of each trust
agreement supplement, the pass through trustee will enter into note purchase or
refunding agreements pursuant to which it will purchase one or more equipment
notes relating to the aircraft described in the applicable prospectus
supplement. All equipment notes that constitute the property of a pass through
trust will have identical interest rates (in each case equal to the rate
applicable to the pass through certificates issued by the pass through trust).
The maturity dates of the equipment notes acquired by each pass through trust
will occur on or before the final distribution date for the pass through
certificates issued by the pass through trust. The pass through trustee for a
pass through trust will distribute the amount of payments of principal,
premium, if any, and interest received by it as holder of the equipment notes
to the pass through certificateholders of the pass through trust. See Description
of the Certificates and Description of the Equipment Notes.
Interest paid on the equipment notes held in a pass
through trust will be passed through to the holders of the pass through
certificates of that pass through trust on the dates and at the rate per annum
set forth in the applicable prospectus supplement until the final distribution
date for that pass through trust. Principal paid on the equipment notes held in
a pass through trust will be passed through to the holders of the pass through
certificates of that pass through trust in scheduled amounts on the dates set
forth in the
10
applicable prospectus
supplement until the final distribution date for that pass through trust. The
equipment notes issued with respect to any aircraft will be secured by a
security interest in that aircraft and, in the case of leased aircraft
equipment notes, by a security interest in the related lease, including the
right to receive rentals payable by Northwest.
The leased aircraft equipment notes will be issued
under separate trust indentures between a bank, trust company or other
institution specified in the related prospectus supplement, as loan trustee,
and an institution specified in the related prospectus supplement acting, not
in its individual capacity, but solely as owner trustee of a separate trust for
the benefit of one or more institutional investors which are owner
participants. With respect to each leased aircraft, the related owner
participant(s) will provide from sources other than the equipment notes, a
portion of the equipment cost of that aircraft. No owner participant, however,
will be personally liable for any amount payable under the equipment notes (or
the equipment note indenture under which they were issued). Simultaneously with
the acquisition of each leased aircraft by an owner trust, the owner trustee
will lease that aircraft to Northwest pursuant to a separate lease. Although
the leased aircraft equipment notes will be issued by an owner trust and will
not be direct obligations of, or guaranteed by, Northwest, the amounts
unconditionally payable by Northwest under the lease will be sufficient to pay
in full when due all payments required to be made on the corresponding
equipment notes.
The owned aircraft equipment notes will be issued
under separate equipment note indentures between a loan trustee and Northwest.
NWA Corp. will
fully and unconditionally guarantee to the holders from time to time of pass
through certificates
·
with
respect to owned aircraft equipment notes, the full and prompt payment of
principal, premium, if any, and interest on those equipment notes when and as
the same shall become due and payable, whether at maturity, upon redemption or
otherwise; and
·
with
respect to leased aircraft equipment notes, the full and prompt payment of all
amounts payable by Northwest under the related lease when and as the same shall
become due and payable.
NWA Corp.s guarantee will be enforceable without any
need first to enforce the obligations of Northwest against Northwest.
With respect to equipment
notes of differing payment priorities issued in respect of one or more
aircraft, which will be purchased by separate pass through trusts, the rights
of the holders of the pass through certificates will be subject to an
intercreditor agreement.
USE OF PROCEEDS
Except as set forth in a prospectus supplement for a
specific offering of pass through certificates, the proceeds from the sale of
the pass through certificates will be used by the pass through trustee(s) to
purchase leased aircraft equipment notes and owned aircraft equipment notes.
Any portion of the
proceeds from the sale of pass through certificates not used by the pass
through trustee to purchase equipment notes on or prior to the date specified
in the applicable prospectus supplement will be distributed on a special
distribution date to the pass through certificateholders, together with
interest, but without a premium. See Description of Certificates-Special
Distribution Upon Unavailability of Aircraft.
11
RATIO OF EARNINGS
TO FIXED CHARGES
We
have set forth below the ratio of earnings to fixed charges for NWA Corp. and
its consolidated subsidiaries for the periods indicated.
|
|
Year Ended December 31,
|
|
Three
Months
Ended
March 31
|
|
|
|
1998
|
|
1999
|
|
2000
|
|
2001
|
|
2002
|
|
2003
|
|
|
|
(Dollars in millions)
|
|
Ratio of earnings
to fixed charges
|
|
|
|
1.64x
|
|
1.53x
|
|
|
|
|
|
|
|
|
|
Deficiency of earnings
to fixed charges
|
|
$
|
452
|
|
|
|
|
|
$
|
690
|
|
$
|
1,277
|
|
|
$
|
435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DESCRIPTION OF THE
CERTIFICATES
The following description of the pass through
certificates summarizes certain general terms and provisions of the pass
through certificates to which any prospectus supplement may relate. This
summary relates to the basic pass through trust agreement (the form of which
has been filed with the SEC and is incorporated by reference in the
registration statement of which this prospectus is a part) and each of the
trust agreement supplements, the pass through trusts to be formed thereby and
the pass through certificates to be issued by each pass through trust except to
the extent, if any, described in the applicable prospectus supplement. The
prospectus supplement that accompanies this prospectus contains a glossary of
the material terms used with respect to the specific series or class of pass
through certificates being offered thereby. The trust agreement supplement
relating to each series or class of pass through certificates and the forms of
the material operative agreements relating thereto (including, if applicable,
note purchase or refunding agreement, equipment note indenture, lease, trust
agreement, participation agreement, intercreditor agreement and liquidity
arrangement) will be filed as exhibits to a post-effective amendment to the
Registration Statement of which this prospectus is a part, a Current Report on Form 8-K,
a Quarterly Report on Form 10-Q or an Annual Report on Form 10-K,
as applicable, filed by NWA Corp. with the SEC.
The pass through certificates offered pursuant to this
prospectus will be limited to $3,000,000,000 aggregate public offering price
(or its equivalent (based on the applicable exchange rate at the time of sale)
in one or more foreign currencies or currency units).
To the extent that any
provision in any prospectus supplement is inconsistent with any provision in this
summary, the provision of such prospectus supplement will control.
General
Each pass through certificate will represent a
fractional undivided interest in the pass through trust created by a trust
agreement supplement. All payments and distributions on account of the pass
through certificates will be made only from the related trust property (see General
Outline of Trust Structure). Each pass through certificate will represent a
pro rata share of the outstanding principal amount of the equipment notes held
in the related pass through trust. Unless otherwise specified in the applicable
prospectus supplement, each pass through certificate will be issued in minimum
denominations of $1,000 or any integral multiple thereof (except that one pass
through certificate of each pass through trust may be issued in an odd amount,
due to the fact that the aggregate amount offered by such pass through trust
may not represent an integral multiple of $1,000).
The pass through certificates will not represent an
interest in or obligation of Northwest, NWA Corp., the trustee, any of the loan
trustees or owner trustees in their individual capacities, any owner
participant, or any affiliate of any thereof. Each pass through
certificateholder by its acceptance of a pass through certificate agrees to
look solely to the income and proceeds from the trust property as provided in
the basic
12
pass through trust
agreement and the applicable trust agreement supplement and to its rights under
NWA Corp.s guarantee.
The equipment notes issued under an equipment note
indenture may be held in more than one pass through trust. Similarly, one pass
through trust may hold equipment notes issued under more than one equipment
note indenture. If a pass through trust holds more than one equipment note, we
refer to the equipment note indentures under which those equipment notes were
issued as related equipment note indentures. Unless otherwise provided in a
prospectus supplement, only equipment notes having the same priority of
payment, also called a class or series of equipment notes, may be held in
the same pass through trust.
Interest will be passed through to pass through
certificateholders of each pass through trust at the rate per annum payable on
the equipment notes held in such pass through trust, as set forth for such pass
through trust on the cover page of the applicable prospectus supplement.
You should refer to
the prospectus supplement that accompanies this prospectus for a description of
the specific series or class of pass through certificates being offered
thereby, including:
·
the
specific designation and title of the pass through certificates;
·
the
regular distribution dates (as defined below) and special distribution dates
applicable to the pass through certificates;
·
the
currency or currencies (including currency units) in which such pass through
certificates may be denominated;
·
the
specific form of the pass through certificates, including whether or not the
pass through certificates are to be issued in accordance with a book-entry
system;
·
a
description of the equipment notes to be purchased by the pass through trust,
including the period or periods within which, the price or prices at which, and
the terms and conditions upon which the equipment notes may or must be redeemed
or defeased in whole or in part, by Northwest or, with respect to leased
aircraft equipment notes, the owner trustee which is the issuer, the payment
priority of the equipment notes in relation to any other equipment notes issued
with respect to the related aircraft, any additional security or liquidity
enhancements therefor and any intercreditor or other rights or limitations
between or among the holders of equipment notes of different priorities issued
by the same owner trustee;
·
a
description of the related aircraft, including whether the aircraft is leased
to or owned by Northwest;
·
a
description of the note purchase or refunding agreement and of the equipment
note indentures, including a description of the indenture events of default,
the remedies exercisable upon the occurrence of indenture events of default and
any limitations on the exercise of those remedies;
·
if
the pass through certificates relate to leased aircraft equipment notes, a
description of the lease, the owner trust agreement and participation
agreement, including the name of the owner trustee, a description of the lease
events of default, the remedies exercisable upon the occurrence of lease events
of default and any limitations on the exercise of those remedies, and the
rights of the owner trustee, if any, and/or owner participant, if any, to cure
failures of Northwest to pay rent under the lease;
·
the
extent, if any, to which the provisions of the operative documents applicable
to the equipment notes may be amended without the consent of the holders of, or
only upon the consent of the holders of a specified percentage of aggregate
principal amount of, the equipment notes;
13
·
cross-default
or cross-collateralization provisions in the equipment note indentures;
·
subordination
provisions among the holders of pass through certificates, including any cross
subordination provisions among the holders of pass through certificates in
separate pass through trusts; and
·
any
other special terms pertaining to such pass through certificates.
If any pass through
certificates are denominated in one or more foreign currencies or currency
units, the restrictions, certain United States federal income tax
considerations, specific terms and other information with respect to those pass
through certificates and the foreign currency or currency units will be set
forth in the applicable prospectus supplement.
Book-Entry
Registration
General
Unless otherwise specified in the applicable
prospectus supplement, each series or class of pass through certificates will
be represented by one fully registered global certificate. Each global
certificate will be deposited with, or on behalf of, The Depository Trust
Company (DTC) and registered in the name of Cede & Co. (Cede), or
its nominee. No person acquiring a beneficial interest in a global pass through
certificate will be entitled to physical delivery of a definitive certificate
except as set forth below under Definitive Certificates.
Unless and until definitive pass through certificates
are issued, all references to actions by pass through certificateholders refer
to actions taken by DTC, or its nominee, as the registered holder of the global
pass through certificate, upon instructions from DTC Participants (as defined
below), and all references to distributions, notices, reports and statements to
pass through certificateholders refer, as the case may be, to distributions,
notices, reports and statements to DTC or its nominee, as the registered holder
of the pass through certificates, or to DTC Participants for distribution to
the beneficial owners of interests in the global pass through certificates in
accordance with DTC procedures. Unless and until definitive certificates are
issued, the only Certificateholder will be Cede, as nominee of DTC.
Beneficial owners will not be recognized by the pass through trustee as pass
through certificateholders, as such term is used in the pass through trust
agreement, and beneficial owners will be permitted to exercise the rights of
pass through certificateholders only indirectly through DTC and DTC
Participants.
Northwest has been advised that DTC is a limited
purpose trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a clearing corporation within the
meaning of the New York Uniform Commercial Code and clearing agency
registered pursuant to section 17A of the Exchange Act. DTC was created to
hold securities for its participants (DTC Participants) and to facilitate the
clearance and settlement of securities transactions between DTC Participants
through electronic book-entries, thereby eliminating the need for physical
transfer of certificates. DTC Participants include securities brokers and
dealers, banks, trust companies and clearing corporations. Indirect access to the
DTC system also is available to others such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
DTC Participant either directly or indirectly (Indirect Participants).
Purchases, sales and transfers of the ownership of, or
other interests in, the pass through certificates must be made by or through
DTC Participants and Indirect Participants, which will receive a credit for the
pass through certificates on DTCs record. The ownership interest of each
beneficial owner of the pass through certificates is in turn recorded on the
Direct Participants and Indirect Participants records.
DTC has advised Northwest that it will take any action
permitted to be taken by a pass through certificateholder under the basic pass
through trust agreement only at the direction of one or more DTC
14
Participants to whose
accounts with DTC the pass through certificates are credited. Additionally, DTC
has advised Northwest that in the event any action requires approval by pass
through certificateholders of a certain percentage of beneficial interest in
each pass through trust, DTC will take such action only at the direction of and
on behalf of DTC Participants whose holders include undivided interests that
satisfy any such percentage. DTC may take conflicting actions with respect to
other undivided interests to the extent that such actions are taken on behalf
of DTC Participants whose holders include such undivided interests.
Distributions of principal and interest on the global
pass through certificates will be made by the pass through trustee to CEDE, as
nominee for DTC. DTC will forward such payments in same-day funds to DTC
Participants who are credited with ownership of the pass through certificates
in amounts proportionate to the principal amount of the DTC Participants
respective holdings of beneficial interests in the pass through certificates.
DTC Participants will thereafter forward payments to Indirect Participants or
beneficial owners, as the case may be, in accordance with customary industry
practices. The forwarding of distributions to the pass through certificate
beneficial owners will be the responsibility of the DTC Participants.
Under the rules, regulations and procedures creating
and affecting DTC and its operations (the Rules), DTC is required to make
book-entry transfers of the pass through certificates among DTC Participants on
whose behalf it acts with respect to the pass through certificates and to
receive and transmit distributions of principal, premium, if any, and interest
with respect to the pass through certificates. DTC Participants and Indirect
Participants with which beneficial owners of the pass through certificates have
accounts similarly are required to make book-entry transfers and receive and
transmit such payments on behalf of their respective customers. Accordingly,
although beneficial owners of pass through certificates will not possess the
pass through certificates, the Rules provide a mechanism by which the
beneficial owners will receive payments and will be able to transfer their
interests.
Because DTC can only act on behalf of DTC
Participants, who in turn act on behalf of Indirect Participants, the ability
of a beneficial owner of pass through certificates to pledge its pass through
certificates to persons or entities that do not participate in the DTC system,
or to otherwise act with respect to such pass through certificates, may be
limited due to the lack of a physical certificate for such pass through
certificates.
Neither Northwest, NWA Corp. nor the Trustee will have
any liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in the pass through certificates held
by Cede, as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
The applicable prospectus
supplement will specify any additional book-entry registration procedures
applicable to pass through certificates denominated in a currency other than
United States dollars.
Same-Day Settlement
and Payment
So long as the pass through certificates are
registered in the name of Cede, as nominee for DTC, all payments made by
Northwest to the loan trustee under any equipment note indenture will be in
immediately available funds. Such payments, including the final distribution of
principal with respect to the pass through certificates of any pass through
trust, will be passed through to DTC in immediately available funds.
Secondary trading in
long-term notes and debentures of corporate issuers is generally settled in
clearinghouse or next-day funds. In contrast, secondary trading in pass through
certificates is generally settled in immediately available or same-day funds.
Any pass through certificates registered in the name of Cede, as nominee for
DTC, will trade in DTCs Same-Day Funds Settlement System until maturity, and
secondary market trading activity in the pass through certificates will
therefore be required by DTC to
15
settle
in immediately available funds. No assurance can be given as to the effect, if
any, of settlement in same-day funds on trading activity in the pass through
certificates.
Definitive
Certificates
Unless the applicable prospectus supplement specifies
otherwise, if DTC is at any time unwilling or unable to continue as depositary
and a successor depositary is not appointed by Northwest within ninety days,
pass through certificates in definitive, certificated form will be issued in
exchange for the applicable global pass through certificates. In addition,
Northwest may at any time and in its sole discretion determine not to have any
of the pass through certificates of a series or class represented by one or
more global certificates. In that event, pass through certificates in
definitive certificated form will be issued in exchange for the applicable
global pass through certificates. Further, if Northwest so specifies, an owner
of a beneficial interest in a global pass through certificate may, on terms
acceptable to Northwest and DTC, receive definitive, certificated pass through
certificates registered in the name of that beneficial owner or its designee.
Upon the occurrence of any event described in the
immediately preceding paragraph, the pass through trustee will be required to
notify all beneficial owners through DTC Participants of the availability of
definitive certificates. Upon surrender by DTC of the certificates representing
the pass through certificates and receipt of instructions for re-registration,
the pass through trustee will reissue the pass through certificates as
definitive pass through certificates to the beneficial owners.
Distributions of principal, premium, if any, and
interest on pass through certificates will thereafter be made by the pass
through trustee directly in accordance with the procedures set forth in the
basic pass through trust agreement and the applicable trust agreement
supplement, to holders in whose names the definitive pass through certificates
were registered at the close of business on the applicable record date. These
distributions will be made by check mailed to the address of the holder as it
appears on the register maintained by the pass through trustee. The final
payment on any pass through certificate, however, will be made only upon
presentation and surrender of the definitive pass through certificate at the
office or agency specified in the notice of final distribution to pass through
certificateholders.
Definitive pass through
certificates will be freely transferable and exchangeable at the office of the
pass through trustee upon compliance with the requirements set forth in the
basic pass through trust agreement and the applicable trust agreement
supplements. No service charge will be imposed for any registration of transfer
or exchange, but payment of a sum sufficient to cover any tax or other
governmental charge shall be required.
Payments and
Distributions
Payments of
principal, premium, if any, and interest on the equipment notes held in each
pass through trust will be distributed by the pass through trustee, upon
receipt, to the pass through certificateholders of that pass through trust on
the dates and in the currency specified in the applicable prospectus
supplement, except
·
in
certain cases when some or all of those equipment notes are in default as
described in the applicable prospectus supplement; and
·
that
those payments are subject to the effect of any cross-subordination or
other intercreditor provisions set forth in the prospectus supplement for a
series or class of pass through certificates.
16
Scheduled payments of principal, premiums, if any, and
interest on, the unpaid principal amount of the equipment notes held in each
pass through trust will be scheduled to be received by the pass through trustee
on the regular distribution dates specified in the applicable prospectus
supplement. See Description of the Equipment Notes General. Subject to the
effect of any cross-subordination or other intercreditor provisions set
forth in the prospectus supplement for a series or class of pass through certificates,
each pass through certificateholder of each pass through trust will be entitled
to receive a pro rata share of any distribution in respect of scheduled
payments of principal, premium, if any, and interest made on the equipment
notes held in the pass through trust.
Payments of principal,
premium, if any, and interest received by a pass through trustee on account of
the early redemption, if any, of the equipment notes held in the pass through
trust will be distributed on the special distribution dates provided in the
applicable prospectus supplement. In addition, payments (other than scheduled
payments received on a regular distribution date) received by a pass through
trustee following a default under the equipment notes held in the pass through
trust will be distributed on a special distribution date. However, unless
otherwise specified in the applicable prospectus supplement, following a
default under the equipment notes held in a pass through trust, payments
received by the pass through trustee as a result of a drawing on a regular
distribution date under any liquidity facility specified in the applicable
prospectus supplement will be distributed on such regular distribution date.
The pass through trustee will mail notice to the pass through certificateholders
of record of the applicable pass through trust not less than 20 days prior
to the special distribution date on which any payment is to be distributed by
the pass through trustee.
Pool Factors
The pool factor (as
defined below) for a pass through trust will decline in proportion to the
scheduled repayments of principal on the equipment notes held in that pass
through trust as described in the applicable prospectus supplement unless there
has been
·
an
early redemption,
·
a
purchase of an issue of leased aircraft equipment notes by the owner trustee
after an indenture default,
·
a
default in the payment of principal in respect of one or more issues of the
equipment notes held in a pass through trust or
·
certain
actions have been taken following a default thereon, as described in the
applicable prospectus supplement,
in which event the pool factor and the pool balance
(as defined below) of each pass through trust so affected will be recomputed
after giving effect to these events and notice thereof will be mailed to the
pass through certificateholders of the pass through trust. Each pass through
trust will have a separate pool factor.
Unless otherwise described in the applicable
prospectus supplement, the pool balance for each pass through trust or for
the pass through certificates issued by any pass through trust indicates, as of
any date, the original aggregate face amount of the pass through certificates
of such pass through trust less the aggregate amount of all payments made in
respect of the pass through certificates of such pass through trust (other than
payments made in respect of interest or premium thereon or reimbursement of any
costs and expenses in connection therewith). The pool balance for a pass
through trust as of any distribution date will be computed after giving effect
to any payments on the equipment notes or other trust property held in that
pass through trust and the distribution thereof to be made on that date.
17
Unless otherwise
described in the applicable prospectus supplement, the pool factor for a pass
through trust as of any distribution date is the quotient (rounded to the
seventh decimal place) computed by dividing
·
the
pool balance by
·
the
aggregate original principal amount of the equipment notes held in that pass
through trust.
The pool factor for a pass
through trust as of any distribution date will be computed after giving effect
to the payment of principal, if any, on the equipment notes held in that pass
through trust and distribution thereof to be made on that date. The pool factor
for each pass through trust will initially be 1.0000000. Thereafter, the pool
factor for a pass through trust will decline as described above to reflect
reductions in the pool balance of that pass through trust. The amount of a pass
through certificateholders pro rata share of the pool balance of a pass
through trust can be determined by multiplying the original denomination of the
holders pass through certificate by the pool factor for the pass through trust
as of the applicable distribution date. The pool factor and the pool balance
for a pass through trust will be mailed to pass through certificateholders of
that pass through trust on each distribution date.
Reports to
Certificateholders
On each
distribution date, the pass through trustee will deliver to the pass through
certificateholders of the related pass through trust, a statement, giving
effect to the distribution to be made on that distribution date, setting forth
the following information:
·
the
amount of the distribution that is allocable to principal and the amount
allocable to premium, if any (per $1,000 aggregate principal amount of pass
through certificate);
·
the
amount of the distribution that is allocable to interest (per $1,000 aggregate
principal amount of pass through certificate) below; and
·
the
pool balance and the pool factor for the pass through trust.
If so specified in
the related prospectus supplement, the pass through trustee for a series or
class of pass through certificates may include in this statement additional
information, such as
·
the
aggregate amount of funds distributed on the distribution date and the source
of such funds and
·
in
the case of a delayed purchase, certain information regarding any escrowed
funds.
So long as the pass through certificates are
registered in the name of Cede, as nominee for DTC, on the record date prior to
each distribution date, the pass through trustee will request from DTC a
Securities Position Listing setting forth the names of all DTC Participants
reflected on DTCs books as holding interests in the pass through certificates
on such record date. On each distribution date, the pass through trustee will
mail to each DTC Participant the statement described above and will make
available additional copies as requested by a DTC Participant for forwarding to
holders of beneficial interests in the pass through certificates.
In addition, after the end of each calendar year, the
pass through trustee will prepare for each person which was a pass through
certificateholder at any time during the preceding calendar year, a report
containing the sum of the amounts determined pursuant to the first two bullets
above for that calendar year or, in the event such person was a pass through
certificateholder during only a portion of that calendar year, for the
applicable portion of the calendar year. In addition, after the end of each
calendar year, the pass through trustee will prepare for each person which was
a pass through certificateholder at any time during the preceding calendar
year, such other items as are readily available to the pass through trustee and
which a pass through certificateholder reasonably requests as necessary for the
preparation of its federal income tax returns. Such report and such other items
will be prepared on the basis of
18
information supplied to
the pass through trustee by the DTC Participants and will be delivered by the
pass through trustee to the DTC Participants to be available for forwarding by
the DTC Participants to holders of beneficial interests in the pass through
certificates in the manner described above.
If at any time the pass
through certificates are issued in the form of definitive certificates, the
pass through trustee will prepare and deliver the information described above
to each pass through certificateholder of record as the name and period of
beneficial ownership of such pass through certificateholder appears on the
records of the registrar of the pass through certificates.
Voting of Equipment
Notes
Subject to the
effect of any cross-subordination provisions set forth in the related
prospectus supplement, a pass through trustee, as holder of the equipment notes
held in the pass through trust, has the right to vote and give consents and
waivers under the equipment note indentures. The basic pass through trust
agreement and related trust agreement supplement set forth
·
the
circumstances in which the pass through trustee may direct any action or cast
any vote as the holder of the equipment notes held in the applicable pass
through trust at its own discretion;
·
the
circumstances in which the pass through trustee must seek instructions from the
pass through certificateholders; and
·
the
percentage of pass through certificateholders required to direct the pass
through trustee to take any action.
If specified in the
related prospectus supplement, the right of a pass through trustee to vote and
give consents and waivers with respect to the equipment notes held in the
related pass through trust may, in the circumstances set forth in the
intercreditor agreement, be exercisable by another person specified in the
prospectus supplement.
Events of Default
and Certain Rights Upon an Event of Default
The prospectus supplement related to a series or class
of pass through certificates will specify the events of default under the pass
through trust agreement and the events of default under the equipment note
indentures. With respect to leased aircraft equipment notes, the indenture
events of defaults will include events of default under the related lease. With
respect to any equipment notes which are supported by a liquidity facility, the
indenture events of default may include events of default under the liquidity
facility. Unless otherwise provided in a prospectus supplement, all of the
equipment notes issued under the same equipment note indenture will relate to
one or more specific aircraft and there will be no cross-collateralization
or cross-default provisions in the equipment note indentures. Events
resulting in an event of default under any particular equipment note indenture
will not necessarily result in an event of default under any other equipment
note indenture.
As described below under Cross-Subordination
Issues, a prospectus supplement may provide the terms of any cross-subordination
provisions among pass through trusts which hold separate, but related equipment
notes. If these provisions are provided, payments made under an equipment note
indenture under which an event of default has not occurred (and as to which
payments continue to be made as scheduled) may be distributed first to the
holders of the pass through certificates issued under the pass through trust
which holds the most senior equipment notes issued under all related equipment
note indentures.
With respect to leased aircraft equipment notes, the
ability of the owner trustee or owner participant to cure indenture events of
default, including indenture events of default that result from the occurrence
of a lease event of default, will be described in the prospectus supplement.
Unless otherwise provided in a
19
prospectus supplement, a
drawing under a liquidity facility for the purpose of making a payment of
interest as a result of the failure by Northwest to have made a corresponding
payment under the equipment notes or leases, as applicable, will not cure an
indenture event of default related to such failure by Northwest.
The prospectus supplement related to a series or class
of pass through certificates will set forth the percentage of pass through
certificateholders entitled to direct the pass through trustee to take any
action under the equipment notes held in the pass through trust and, if
applicable, equipment notes issued under any other related equipment note
indenture. If the equipment notes outstanding under an equipment note indenture
are held by more than one pass through trust, then the ability of the pass
through certificateholders in any one pass through trust to cause the loan
trustee for the equipment notes held in that pass through trust to accelerate
those equipment notes or to direct the exercise of remedies by the loan trustee
under the equipment note indenture will depend, in part, upon the proportion
between the aggregate principal amount of the equipment notes held in that pass
through trust and the aggregate principal amount of all equipment notes
outstanding under the same equipment note indenture. In addition, if cross
subordination provisions are applicable to any series or class of pass through
certificates, then the ability of the pass through certificateholders of any one
pass through trust to cause the loan trustee for the equipment notes held in
that pass through trust to accelerate those equipment notes or to direct the
exercise of remedies by the loan trustee under the equipment note indenture
will depend, in part, upon the class or series of equipment notes held in that
pass through trust.
If the equipment notes outstanding under an equipment
note indenture are held by more than one pass through trust, then each pass
through trust will hold equipment notes with different terms from the equipment
notes held in the other pass through trusts and therefore the pass through
certificateholders of a pass through trust may have divergent or conflicting
interests from those of the pass through certificateholders of the other pass
through trusts holding equipment notes relating to the same equipment note
indenture. In addition, so long as the same institution acts as pass through
trustee of each pass through trust, in the absence of instructions from the
pass through certificateholders of any such pass through trust, the pass
through trustee for such pass through trust could for the same reason be faced
with a potential conflict of interest upon an indenture event of default. In
such event, the pass through trustee has indicated that it would resign as pass
through trustee of one or all such pass through trusts, and a successor trustee
would be appointed in accordance with the terms of the basic pass through trust
agreement.
The prospectus supplement for a series or class of
pass through certificates will specify whether and under what circumstances the
pass through trustee may or must sell for cash all or part of the equipment
notes. Any proceeds received by the pass through trustee upon any equipment
note sale will be deposited in a special payments account established by the
pass through trustee for the benefit of the pass through certificateholders of
the related pass through trust. The market for equipment notes in default may
be very limited, and there can be no assurance that they could be sold for a
reasonable price. Furthermore, so long as the same institution acts as pass
through trustee of multiple pass through trusts, it may be faced with a
conflict in deciding from which pass through trust to sell equipment notes to
available buyers. If the pass through trustee sells any equipment notes for
less than their outstanding principal amount, the pass through
certificateholders of the related pass through trust will receive a smaller
amount of principal distributions than anticipated and will not have any claim
for the shortfall against Northwest, any owner trustee, owner participant, the
pass through trustee or (except for NWA Corp.s guarantee) their affiliates.
Furthermore, neither the pass through trustee nor the pass through certificateholders
of a pass through trust could take any action with respect to any remaining
equipment notes held in that pass through trust so long as no indenture event
of defaults exist with respect to those remaining equipment notes.
20
With respect to any
pass through trust, the following amounts will be deposited into the special
payments account and distributed to the related pass through certificateholders
on a special payments date:
·
Any
amount (other than scheduled payments received on a regular distribution date)
distributed to the pass through trustee by the loan trustee under the related
equipment note indenture following an indenture event of default.
·
If
a prospectus supplement provides that the applicable owner trustee may, under
circumstances specified therein, redeem or purchase the related equipment
notes, the price paid by the owner trustee to the pass through trustee for
those equipment notes.
Any funds held by a pass through trustee in the
special payments account for the related pass through trust which represent
payments on account of equipment notes which are in default, or the proceeds
from the sale by the pass through trustee of any equipment notes held in the
trust, will, to the extent practicable, be invested and reinvested by the pass
through trustee in certain permitted investments specified in the related
prospectus supplement.
The basic pass through trust agreement provides that
the pass through trustee will, within 90 days after the occurrence of a
pass through trust default, give the related pass through certificateholders
notice, transmitted by mail, of all uncured or unwaived pass through trust
defaults known to it. However, the pass through trustee will be protected in
withholding notice of any pass through trust default, other than default in the
payment of principal, premium, if any, or interest on any of the equipment
notes held in the pass through trust, if it in good faith determines that the
withholding of notice is in the interests of the pass through certificateholders.
The term default as used in this paragraph means the occurrence of an event
of default with respect to a pass through trust as described above, except that
in determining whether any event of default has occurred, any grace period or
notice requirement will be disregarded.
The basic pass through trust agreement contains a
provision entitling the pass through trustee of a pass through trust, subject
to the duty of the pass through trustee during a default to act with the
required standard of care, to be offered reasonable security or indemnity by
the pass through certificateholders of that pass through trust before
proceeding to exercise any right or power under the basic pass through trust
agreement at the request of the pass through certificateholders.
The prospectus supplement
for a series or class of pass through certificates will specify the percentage
of pass through certificateholders entitled to waive, or to instruct the pass
through trustee to waive, any past event of default under the pass through
certificates and thereby annul any direction given as a result of that event.
The prospectus supplement for a series or class of pass through certificates
will also specify the percentage of pass through certificateholders (and
whether of such pass through trust or of any other pass through trust holding
equipment notes issued under related equipment note indentures) entitled to
waive, or to instruct the pass through trustee or the loan trustee to waive,
any past indenture event of default under the equipment notes held in that pass
through trust and thereby annul any direction given as a result of that event.
Merger,
Consolidation and Transfer of Assets
Northwest will be
prohibited from consolidating with or merging into any other corporation or
transferring substantially all of its assets as an entirety to any other
corporation unless
·
the
surviving successor or transferee corporation (a) is a citizen of the
United States (as defined in Section 40102(a)(15) of Title 49 of the
United States Code) holding a carrier operating certificate issued by the
Secretary of Transportation pursuant to Chapter 447 of Title 49, United States
Code, for aircraft capable of carrying 10 or more individuals or 6,000 pounds
or more of cargo and with respect to which there is in force an air carrier
operating certificate issued pursuant to Part 121 of
21
the regulations under the
sections of Title 49, United States Code, relating to aviation and (b) expressly
assume all of the obligations of Northwest contained in the basic pass through
trust agreement and any trust agreement supplement, the note purchase or
refunding agreements and the equipment note indentures and, with respect to any
leased aircraft equipment notes, the participation agreements and the leases,
and any other operative documents;
·
immediately
after giving effect to such transaction, no indenture event of default or lease
event of default has occurred or is continuing; and
·
Northwest has delivered a
certificate and an opinion or opinions of counsel indicating that such
transaction, in effect, complies with these conditions.
Modifications of
the Basic Agreement
The
basic pass through trust agreement permits Northwest, NWA Corp. and the pass
through trustee to enter into a supplemental trust agreement, without the consent
of the holders of any of the pass through certificates,
·
to
provide for the formation of a pass through trust and the issuance of a series
or class of pass through certificates,
·
to
evidence the succession of another corporation to Northwest or NWA Corp. and
the assumption by such corporation of Northwests or NWA Corp.s obligations
under the basic pass through trust agreement and the applicable trust agreement
supplement,
·
to
add to the covenants of Northwest or NWA Corp. for the benefit of holders of
pass through certificates, or to surrender any right or power in the basic pass
through trust agreement conferred upon Northwest or NWA Corp.,
·
to
cure any ambiguity or correct or supplement any defective or inconsistent
provision of the basic pass through trust agreement or the applicable trust
agreement supplement or to make any other provisions with respect to matters or
questions arising under those agreements, provided the action does not
adversely affect the interests of the holders of such pass through
certificates,
·
to
modify, eliminate or add to the provisions of the basic pass through trust
agreement to the extent necessary to continue the qualification of the basic
pass through trust agreement (including any supplemental agreement) under the
Trust Indenture Act of 1939, as amended, and to add to the basic pass through
trust agreement other provisions expressly permitted by the Trust Indenture
Act,
·
to
provide for a successor pass through trustee or to add to or change any
provision of the basic pass through trust agreement as necessary to facilitate
the administration of the pass through trusts thereunder by more than one pass
through trustee,
·
to
add, eliminate or change any provisions under the basic pass through trust
agreement that will not adversely affect the pass through certificateholders in
any material respect, provided that in each case, such modification does not
cause the corresponding pass through trust to become taxable as an association
within the meaning of Treasury Regulation Section 301.7701-2 or a publicly
traded partnership within the meaning of Section 7704 of the Code taxable
as a corporation and
·
to
make any other amendments or modifications to the basic pass through trust
agreement, provided such amendments or modifications shall only apply to pass
through certificates issued thereafter.
The
basic pass through trust agreement also contains provisions permitting
Northwest, NWA Corp. and the pass through trustee of a pass through trust, with
the consent of the pass through certificateholders of that pass through trust
evidencing fractional undivided interests aggregating not less than a majority
in
22
interest, and, with respect to any leased aircraft,
with the consent of the applicable owner trustee (whose consent cannot be
unreasonably withheld), to execute supplemental trust agreements adding any
provisions to or changing or eliminating any of the provisions of the basic
pass through trust agreement, to the extent relating to such pass through
trust, and the applicable trust agreement supplement, or modifying the rights
of the pass through certificateholders. However, no supplemental trust
agreement may, without the consent of each pass through certificateholder
affected thereby,
·
reduce
in any manner the amount of, or delay the timing of, any receipt by the pass
through trustee of payments on the equipment notes held in that pass through
trust or any distributions in respect of any pass through certificate related
to that pass through trust,
·
or
change the date or place of any payment in respect of any pass through
certificate, or make distributions payable in coin or currency other than that
provided for in the pass through certificates, or impair the right of any pass
through certificateholder of that pass through trust to institute suit for the
enforcement of any such payment when due,
·
permit
the disposition of any equipment note held in that pass through trust, except
as provided in the basic pass through trust agreement or the applicable trust
agreement supplement, or otherwise deprive any pass through certificateholder
of the benefit of the ownership of the applicable equipment notes,
·
reduce
the percentage of the aggregate fractional undivided interests of the pass
through trust, the consent of the holders of which is required for any
supplemental trust agreement or for any waiver provided for in the basic pass
through trust agreement or the trust agreement supplement,
·
modify
any of the provisions relating to the rights of the pass through
certificateholders in respect of the waiver of events of default or receipt of
payment or
·
cause the pass through
trust to become taxable as an association within the meaning of Treasury
Regulation Section 301.7701-2 or a publicly traded partnership
within the meaning of Section 7704 of the Code taxable as a corporation.
Modification of Indenture and Related Agreements
The prospectus supplement
will specify the pass through trustees obligations in the event that the pass
through trustee, as the holder of any equipment notes held in a pass through
trust, receives a request for its consent to any amendment, modification or
waiver under the equipment note indenture or other documents relating to the
applicable equipment notes (including any lease or any liquidity facility).
Cross-Subordination Issues
The equipment notes issued
under an equipment note indenture may be held in more than one pass through
trust and one pass through trust may hold equipment notes issued under more
than one equipment note indenture. Unless otherwise provided in a prospectus
supplement, only equipment notes of the same class or series may be held in the
same pass through trust. In such event, payments made on account of a
subordinate class or series of equipment notes issued under an equipment note
indenture may, under circumstances described in the related prospectus
supplement, be subordinated to the prior payment of all amounts owing to pass
through certificateholders of a pass through trust which holds senior equipment
notes issued under all related equipment note indentures. The prospectus
supplement for an issuance of pass through certificates will describe any such
cross-subordination provisions and any related terms, including the
percentage of pass through certificateholders under any pass through trust
which are permitted to grant waivers of defaults under any related equipment
note indenture, to consent to the amendment or modification of any related
equipment note indentures or to direct the exercise of remedial actions under
any related equipment note indentures.
23
Termination of the
Pass Through Trusts
The obligations of
Northwest, NWA Corp. and the pass through trustee with respect to a pass
through trust will terminate upon the distribution to pass through
certificateholders of that pass through trust of all amounts required to be
distributed to them pursuant to the basic pass through trust agreement and the
applicable trust agreement supplement and the disposition of all property held
in that pass through trust. The pass through trustee for a pass through trust will
send to each pass through certificateholder of record, notice of the
termination of the pass through trust, the amount of the proposed final payment
and the proposed date for the distribution of the final payment for that pass
through trust. The final distribution to any pass through certificateholder of
a pass through trust will be made only upon surrender of the pass through
certificateholders pass through certificates at the office or agency of the
pass through trustee specified in the notice of termination.
Delayed Purchase
In the event that, on the
delivery date of any pass through certificates, all of the proceeds from the
sale of the pass through certificates are not used to purchase the equipment
notes contemplated to be held in the pass through trust, those remaining
equipment notes may be purchased by the pass through trustee at any time on or
prior to a subsequent date specified in the applicable prospectus supplement.
In this event, the proceeds from the sale of pass through certificates not used
to purchase equipment notes will be held under an arrangement described in the
applicable prospectus supplement pending the purchase of the equipment notes
not so purchased. If any proceeds are not subsequently used to purchase
equipment notes by the date specified in the prospectus supplement, those
proceeds will be returned to the holders of the related pass through
certificates.
NWA Corp.s
Guarantee
NWA Corp. will
unconditionally guarantee
·
with
respect to owned aircraft equipment notes, the full and prompt payment of
principal, premium, if any, and interest thereon when and as due and payable,
whether at maturity, upon redemption or otherwise; and
·
with
respect to leased aircraft equipment notes, the full and prompt payment of all
amounts payable by Northwest under the related lease when and as the same shall
become due and payable.
NWA Corp.s guarantee will
be enforceable without any need first to enforce any equipment note or lease
against Northwest. NWA Corp.s guarantee will be an unsecured obligation of NWA
Corp.
Liquidity Facility
The related prospectus
supplement may provide that one or more payments of interest on the pass
through certificates of one or more series or classes will be supported by a
liquidity facility issued by an institution identified in the related
prospectus supplement. The provider of a liquidity facility will have a claim
senior to the pass through certificateholders as specified in the related
prospectus supplement.
The Trustee
The pass through trustee
for each series or class of pass through certificates will be identified in the
prospectus supplement. With certain exceptions, the pass through trustee will
make no representations as to the validity or sufficiency of the basic pass
through trust agreement, the trust agreement supplements, the pass through
certificates, the equipment notes, the equipment note indentures, the leases or
other related documents. With respect to any series or class of pass through
certificates, the pass through trustee shall not be liable for any action taken
or omitted to be taken by it in good faith in accordance with the
24
direction
of the holders of a majority in principal amount of outstanding pass through
certificates of that series or class. Subject to these provisions, no pass
through trustee will be under any obligation to exercise any of its rights or
powers under the basic pass through trust agreement at the request of any
holders of pass through certificates issued thereunder unless those holders
have offered to the pass through trustee indemnity satisfactory to it. The
basic pass through trust agreement provides that the pass through trustee in
its individual or any other capacity may acquire and hold pass through
certificates and, subject to certain conditions, may otherwise deal with
Northwest, NWA Corp. and, with respect to the leased aircraft, with any owner
trustee and owner participant with the same rights it would have if it were not
the pass through trustee.
The
pass through trustee may resign under any or all of the pass through trusts at
any time, in which event Northwest will be obligated to appoint a successor
pass through trustee. If a pass through trustee
·
ceases
to be eligible to continue as pass through trustee or
·
becomes
incapable of acting as pass through trustee or
·
becomes
insolvent,
Northwest may remove that
pass through trustee. In addition, upon the occurrence of any of these events
any person who has been a pass through certificateholder of the related pass
through trust for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
removal of the pass through trustee and the appointment of a successor pass
through trustee. Any resignation or removal of the pass through trustee and appointment
of a successor pass through trustee will not become effective until acceptance
of the appointment by the successor pass through trustee. Pursuant to the
resignation and successor pass through trustee provisions, it is possible that
a different pass through trustee could be appointed to act as the successor
pass through trustee. All references in this prospectus to the pass through
trustee should be read to take into account the possibility that the pass
through trusts could have different successor pass through trustees in the
event of a resignation or removal.
The basic pass through
trust agreement provides that Northwest will pay the pass through trustees
fees and expenses and indemnify the pass through trustee against certain
liabilities.
DESCRIPTION
OF THE EQUIPMENT NOTES
The statements made under
this caption are summaries and reference is made to the entire prospectus and
detailed information appearing in the applicable prospectus supplement. Where
no distinction is made between owned aircraft equipment notes and leased
aircraft equipment notes, or between their respective equipment note
indentures, such statements refer to any equipment notes and any equipment note
indenture.
To the extent that any
provision in any prospectus supplement is inconsistent with any provision in
this summary, the provision of such prospectus supplement will control.
General
All
equipment notes will be issued under a separate equipment note indenture,
·
in
the case of leased aircraft equipment notes, between the related owner trustee
of a trust for the benefit of an owner participant who is the beneficial owner
of the related aircraft, and the related loan trustee, or
·
between
Northwest and the related loan trustee.
The equipment notes issued
pursuant to the first bullet point of the preceding sentence will be
nonrecourse obligations of the applicable owner trust. Each equipment note will
be authenticated under an
25
equipment note indenture
by the loan trustee. All equipment notes issued under the same equipment note
indenture will relate to, and be secured by, one or more aircraft identified
and described in the related prospectus supplement. In the case of leased
aircraft equipment notes, those aircraft will be leased to Northwest pursuant
to a lease between the owner trustee under the applicable owner trust and
Northwest. In the case of owned aircraft equipment notes, those aircraft will
be owned by Northwest.
With respect to each
aircraft which is leased to Northwest, the related owner trustee has acquired
or will acquire those aircraft from Northwest or the manufacturer of the
aircraft, as the case may be, and will grant a security interest in those
aircraft to the related loan trustee as security for the payments of the
related equipment notes. In addition, the related owner trustee will lease
those aircraft to Northwest pursuant to a lease which will be assigned to the
related loan trustee. Pursuant to each lease, Northwest will be obligated to
make or cause to be made rental and other payments to the related loan trustee
on behalf of the related owner trustee in amounts that will be sufficient to
make payments of the principal, premium, if any, and interest required to be
made in respect of the related equipment notes when and as due and payable.
The
obligations of Northwest
·
to
pay rent under each lease;
·
under
the owned aircraft equipment notes; and
·
under
the equipment note indenture for owned aircraft equipment notes
will be general
obligations of Northwest. Except in certain circumstances involving Northwests
purchase of a leased aircraft and the assumption of the equipment notes related
thereto, the leased aircraft equipment notes will be issued by an owner trust
and will not be obligations of, or guaranteed by, Northwest.
Principal and Interest Payments
Interest received by a
pass through trustee on the equipment notes held in a pass through trust will
be passed through to the pass through certificateholders of that pass through
trust on the dates and at the rate per annum set forth in the applicable
prospectus supplement until the final distribution for that pass through trust.
Principal received by a pass through trustee on the equipment notes held in a
pass through trust will be passed through to the pass through
certificateholders of that pass through trust in scheduled amounts on the dates
set forth in the applicable prospectus supplement until the final distribution
date for that pass through trust.
If any date scheduled for
any payment of principal, premium, if any, or interest on the equipment notes
is not a business day in the jurisdictions identified in the applicable
prospectus supplement, that payment will be made on the next succeeding
business day without any additional interest.
Redemption
The applicable prospectus
supplement will describe the circumstances, whether voluntary or involuntary,
under which the equipment notes may be redeemed or purchased prior to the
stated maturity date thereof, in whole or in part, the premium, if any,
applicable upon certain redemptions or purchases and other terms applying to
the redemptions or purchases of such equipment notes.
Security
The
leased aircraft equipment notes issued by an owner trust will be secured by
·
an
assignment by the related owner trustee to the related loan trustee of many of
its rights under the lease, including the right to receive payments of rent
thereunder,
26
·
a
mortgage in the aircraft granted to the related loan trustee, subject to the
rights of Northwest under the lease or leases, and
·
an
assignment to the related loan trustee of certain of the owner trustees rights
under the aircraft purchase agreement between Northwest and the related
manufacturer.
Under the terms of each lease, Northwests obligations
in respect of the aircraft leased to it will be those of a lessee under a net
lease. Accordingly, Northwest will be obligated, among other things and at its
expense, to cause each leased aircraft to be duly registered, to pay all costs
of operating such aircraft and to maintain, service, repair and overhaul (or
cause to be maintained, serviced, repaired and overhauled) the leased aircraft.
The assignment by
an owner trustee to the related loan trustee of its rights under a lease will
exclude, among other things,
·
rights
of the owner trustee and the related owner participant relating to
indemnification by Northwest for certain matters,
·
insurance
proceeds payable to the owner trustee in its individual capacity and to the
owner participant under liability insurance maintained by Northwest pursuant to
the lease or by the owner trustee or owner participant,
·
insurance
proceeds payable to the owner trustee in its individual capacity or to the
owner participant under certain casualty insurance maintained by the owner
trustee or owner participant pursuant to the lease and
·
any
rights of the owner participant or owner trustee to enforce payment of the
foregoing amounts and their respective rights to the proceeds of the foregoing.
The owned aircraft
equipment notes will be secured by
·
a
mortgage granted to the related loan trustee of all of Northwests right, title
and interest in and to the aircraft, and
·
if
so provided in the related prospectus supplement, an assignment to the loan
trustee of certain of Northwests rights under the aircraft purchase agreement
between Northwest and the related manufacturer.
Under the terms of each equipment note indenture
related to owned aircraft equipment notes, Northwest will be obligated, among
other things and at its expense, to cause each owned aircraft to be duly
registered, to pay all costs of operating such aircraft and to maintain,
service, repair and overhaul (or cause to be maintained, serviced, repaired and
overhauled) such aircraft.
The prospectus supplement will specify the required
insurance coverage for the aircraft.
Northwest will be required, except under certain
circumstances, to keep each aircraft registered under the Federal Aviation Act
of 1958, as amended (the Federal Aviation Act), and to record the equipment
note indentures and the leases, if applicable, among other documents, under the
Federal Aviation Act. This recordation will give the related loan trustee a
perfected security interest in the related aircraft whenever it is located in
the United States or any of its territories and possessions. The Convention on
the International Recognition of Rights in aircraft (the Convention) provides
that this security interest will also be recognized, with certain limited
exceptions, in those jurisdictions that have ratified or adhere to the
Convention.
27
Northwest will have the right, subject to certain
conditions, at its own expense to register each aircraft in countries other
than the United States. Each aircraft may also be operated by Northwest or
under lease, sublease or interchange arrangements in countries that are not
parties to the Convention. The extent to which the related loan trustees
security interest would be recognized in an aircraft located in a country that
is not a party to the Convention, and the extent to which this security
interest would be recognized in a jurisdiction adhering to the Convention if
the aircraft is registered in a jurisdiction not a party to the Convention, is
uncertain. Moreover, in the case of an equipment note indenture event of
default, the ability of the related loan trustee to realize upon its security
interest in an aircraft could be adversely affected as a legal or practical
matter if the aircraft was registered or located outside the United States.
Unless otherwise specified in the applicable
prospectus supplement, the equipment notes will not be cross-collateralized
and consequently the equipment notes issued in respect of any one aircraft will
not be secured by any other aircraft or, in the case of leased aircraft
equipment notes, the lease. Unless and until an indenture event of default with
respect to a leased aircraft equipment note has occurred and is continuing, the
related loan trustee may exercise only limited rights of the related owner
trustee under the related lease.
Funds, if any, held from time to time by the loan
trustee, will be invested and reinvested by the loan trustee. These investments
and reinvestments will be at the direction of Northwest in certain investments
described in the related equipment note indenture. These investments will not be
made at the direction of Northwest in the case of a lease event of default or
an equipment note indenture event of default, as applicable. The net amount of
any loss resulting from any investments made at the direction of Northwest will
be paid by Northwest.
Section 1110
of the Bankruptcy Code provides that the right of lessors, conditional vendors
and holders of security interests with respect to equipment (as defined in
Section 1110 of the Bankruptcy Code) to take possession of this equipment
in compliance with the provisions of a lease, conditional sale contract or
security agreement, as the case may be, is not affected after 60 days
after the filing of a petition under Chapter 11 of the Bankruptcy Code by
·
the
automatic stay provision of the Bankruptcy Code, which provision enjoins
creditors remedies except with the courts approval,
·
the
provision of the Bankruptcy Code allowing the trustee in reorganization to use
property of the debtor during the reorganization period,
·
Section 1129
of the Bankruptcy Code, which governs the confirmation of plans of
reorganization in Chapter 11 cases, and
·
any
power of the bankruptcy court to enjoin a repossession.
Section 1110 provides that the right to take
possession of an aircraft may not be exercised for 60 days following the
date of commencement of the reorganization proceedings and may not be exercised
at all after this 60-day period (or a longer period if consented to by
the lessor, conditional vendor or holder of a security interest), if the
trustee in reorganization agrees to perform the debtors obligations that
become due on or after such date and cures all existing defaults (other than
defaults resulting solely from the financial condition, bankruptcy, insolvency
or reorganization of the debtor, the appointment of a trustee or custodian or
the failure to satisfy any penalty rate or provision relating to a default
arising from any failure by the debtor to perform nonmonetary obligations under
the applicable agreement). Equipment is defined in Section 1110 of the
Bankruptcy Code, in part, as an aircraft, aircraft engine, propeller,
appliance, or spare part (as defined in section 40102 of title
49) that is subject to a security interest granted by, leased to or
conditionally sold to a debtor that is a citizen of the United States (as
defined in section 40102 of title 49) holding an air carrier
operating certificate issued by the Secretary of
28
Transportation pursuant to
chapter 47 of title 49 for aircraft capable of carrying 10 or more individuals
or 6,000 pounds or more of cargo.
Section 1110 does not prevent the trustee or
debtor-in-possession from rejecting a lease or demanding a renegotiation of a
lease as a condition to not rejecting the lease. In addition, if more than one
aircraft are leased pursuant to a master lease and accompanying lease
supplement, the applicability of Section 1110 might be determined on an
aircraft-by-aircraft basis. Assuming Section 1110 is applicable to all
aircraft subject to a master lease, Section 1110 may not prevent the trustee
or debtor-in-possession from complying with the provisions of Section 1110
with respect to some lease supplements, and thereby retaining possession of the
related aircraft, and not complying with the provisions of Section 1110
with respect to other lease supplements, and thereby enabling a repossession of
other aircraft.
In connection with
any issuance of pass through certificates under this prospectus and the
applicable prospectus supplement, Northwest will receive an opinion from its
counsel to the effect that
·
with
respect to any aircraft leased to Northwest, the related owner trustee, as
lessor under the lease, and the related loan trustee, as assignee of the owner
trustees rights under the lease pursuant to the related equipment note
indenture, would be entitled to the benefits of Section 1110 of the
Bankruptcy Code with respect to the aircraft initially delivered under the
lease and subjected to the related equipment note indenture or
·
with
respect to any aircraft which is owned by Northwest, the loan trustee under the
related equipment note indenture would be entitled to the benefits of Section 1110
of the Bankruptcy Code with respect to the aircraft initially subjected to the
related equipment note indenture.
These opinions will not
address the possible replacement of an aircraft after an event of loss (as
defined in the equipment note indenture) in the future.
Ranking of
Equipment Notes
Some of the equipment
notes related to one or more aircraft, as described in the related prospectus
supplement, may be subordinated and junior in right of payment to other
equipment notes related to the same aircraft. The terms of the subordination,
if any, will be described in the related prospectus supplement.
Payments and
Limitation of Liability
Each leased aircraft will be leased by the related
owner trustee to Northwest for a term which commences on the delivery date of
the aircraft to the owner trustee and expires on a date not earlier than the
latest maturity date of the related equipment notes, unless previously
terminated as permitted by the terms of the related lease. The basic rent and
other payments under each lease will be payable by Northwest in accordance with
the terms specified in the applicable prospectus supplement, and will be
assigned by the owner trustee under the related equipment note indenture to the
related loan trustee to provide the funds necessary to pay principal, premium,
if any, and interest due from the owner trustee on the related equipment notes.
In certain cases, the basic rent payments under a lease may be adjusted, but
each lease will provide that under no circumstances will rent payments by
Northwest be less than the scheduled payments on the related equipment notes.
The balance of any basic rent payment under a lease, after payment of amounts
due on the related equipment notes, will be paid over to the applicable owner
participant.
None of the owner trustees, the owner participants or
the loan trustees will be personally liable for amounts payable under the
leased aircraft equipment notes issued by an owner trust. Except as provided in
the equipment note indenture related to any leased aircraft equipment notes,
neither the owner trustees nor the loan trustees will be personally liable for
any amount payable under these equipment note
29
indentures. Additionally,
except as otherwise provided in the related equipment note indenture, no owner
trustee will be personally liable for any statements, representations,
warranties, agreements or obligations under the equipment note indentures or
under the leased aircraft equipment notes except for its own willful misconduct
or gross negligence. None of the owner participants will have any duty or
responsibility under the equipment note indentures or under the leased aircraft
equipment note to the related loan trustee or to any holder of any leased
aircraft equipment note.
Except in the
circumstances referred to above, all amounts payable under any equipment notes
issued by an owner trust in connection with the lease of aircraft to Northwest,
other than payments made in connection with an optional redemption or purchase
by the related owner trustee or the related owner participant, will be made
only from
·
the
assets subject to the lien of the related equipment note indenture or the
income and proceeds received by the related loan trustee therefrom, including
rent payable by Northwest under the related lease); and
·
if so provided in the
related prospectus supplement, the applicable liquidity facility.
Defeasance of the
Indentures and the Equipment Notes in Certain Circumstances
Unless otherwise specified in the applicable
prospectus supplement, each equipment note indenture provides that the
obligations of the loan trustee, the owner trustee or Northwest, as applicable,
under that applicable equipment note indenture will be deemed to have been
discharged and paid in full (except for certain obligations, including the
obligations to register the transfer or exchange of equipment notes, to
maintain paying agencies and to hold money for payment in trust) on the 91st
day after the irrevocable deposit with the loan trustee of money or certain
obligations of the United States which will provide money in an aggregate
amount sufficient to pay when due principal, premium, if any, and interest on
all related equipment notes in accordance with their terms. A discharge may
occur only if, among other things, there has been published by the Internal
Revenue Service a ruling to the effect that holders of the related equipment
notes will not recognize income, gain or loss for federal income tax purposes
as a result of the deposit, defeasance and discharge and will be subject to
federal income tax on the same amount and in the same manner and at the same
time as would have been the case if the deposit, defeasance and discharge had
not occurred.
Upon
·
a
defeasance,
·
payment
in full of the principal, premium, if any, and interest on all equipment notes
issued under an equipment note indenture on the maturity date or
·
deposit
with the loan trustee no earlier than one year prior to the maturity date of
money sufficient for payment in full of the principal, premium, if any, and
interest on all equipment notes issued under an equipment note indenture on the
maturity date,
the holders of these
equipment notes will have no beneficial interest in or other rights with
respect to the related aircraft or other assets subject to the lien of the
equipment note indenture and the lien will terminate.
Assumption of Lease
Obligations by Northwest
Unless otherwise specified
in the applicable prospectus supplement, upon the exercise by Northwest of any
purchase options it may have under a lease prior to the end of the term of that
lease, Northwest may assume on a full recourse basis all of the obligations of
the owner trustee (other than its obligations in its individual capacity) under
the related equipment note indenture, including the obligations to make
30
payments
in respect of the equipment notes. In this event, certain relevant provisions
of the lease, including provisions relating to maintenance, possession and use
of the related aircraft, liens, insurance and events of default, will be
incorporated into the assumed equipment note indenture, and the equipment notes
issued under the assumed equipment note indenture will not be redeemed and will
continue to be secured by such aircraft.
Liquidity Facility
The related prospectus
supplement may provide that one or more payments of interest on the related
equipment notes of one or more series or classes or distributions made by the
pass through trustee of the related pass through trust will be supported by a
liquidity facility. The provider of the liquidity facility will be identified
in the related prospectus supplement. Unless otherwise provided in the related
prospectus supplement, the provider of the liquidity facility will have a
senior claim upon the assets securing the equipment notes.
Intercreditor
Issues
Equipment notes may be
issued in different classes or series, which means that the equipment notes may
have different payment priorities even though they are issued by the same
issuer and relate to the same aircraft. In this event, the related prospectus
supplement will describe the priority of distributions among the equipment
notes and any liquidity facilities, the ability of any class or series to
exercise and/or enforce any remedies with respect to the related aircraft and,
if applicable, the related lease, and certain other intercreditor terms and
provisions.
UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES
General
The following discussion represents the opinion of
Cadwalader, Wickersham & Taft LLP as to the principal U.S. federal
income tax consequences to pass through certificateholders of the purchase,
ownership and disposition of the pass through certificates. Except as otherwise
specified, the discussion is addressed to beneficial owners of pass through
certificates (U.S. Certificateholders) that are citizens or residents of the
United States, corporations, partnerships or other entities created or
organized in or under the laws of the United States or any State, estates the
income of which is subject to U.S. federal income taxation regardless of its
source or, generally, trusts if a court within the United States is able to
exercise primary supervision over the administration of such trust, and one or
more of the foregoing persons have the authority to control all substantial
decisions of such trust (U.S. Persons) that will hold the pass through
certificates as capital assets. This discussion does not address the tax
treatment of U.S. Certificateholders that may be subject to special tax rules,
such as banks, insurance companies, traders in securities that elect to use a
mark-to-market method of accounting for their securities holdings, dealers in
securities or commodities, tax-exempt entities, certificateholders that hold
pass through certificates as part of a hedging, integrated, conversion or
constructive sale transaction or a straddle or holders that have a functional
currency other than the U.S. Dollar, nor does it address the tax treatment of
U.S. Certificateholders that do not acquire pass through certificates as part
of the initial offering. This discussion does not describe any tax consequences
arising under the laws of any State, locality or taxing jurisdiction other than
the United States.
If a partnership holds pass through certificates, the
tax treatment of a partner will generally depend upon the status of the partner
and the activities of the partnership. Partners of a partnership holding pass
through certificates should consult their own tax advisors. If you are partner
of a partnership holding our pass through certificates, you should consult your
tax advisors.
31
This discussion is based
upon the tax laws of the United States as in effect on the date of this
prospectus, as well as judicial and administrative interpretations thereof (in
final or proposed form) available on or before such date. All of the foregoing
are subject to change or differing interpretations, which could apply
retroactively. Prospective investors should note that no rulings have been or
will be sought from the Internal Revenue Service (the IRS) with respect to
any of the federal income tax consequences discussed below, and no assurance
can be given the IRS will not take contrary positions. Prospective investors
should consult their own tax advisors with respect to the federal, state, local
and foreign tax consequences of the purchase, ownership and disposition of the
pass through certificates.
Tax Status of the
Pass Through Trusts
In the opinion of
Cadwalader, Wickersham & Taft LLP, special counsel to Northwest, each
pass through trust will not be classified as an association or a publicly traded
partnership taxable as a corporation for U.S. federal income tax purposes and
will not be subject to federal income tax. Each pass through trust will file
federal income tax returns and report to investors on the basis that it is a
grantor trust under Subpart E, Part I of Subchapter J of the Code. If a
pass through trust were treated as a partnership for U.S. federal income tax
purposes rather than as a grantor trust, in the opinion of Cadwalader,
Wickersham & Taft LLP, the consequences to U.S. Certificateholders
and, to the extent described below, Non-U.S. Certificateholders, would not be
materially different. See Trusts Classified as Partnerships below. The
remainder of this discussion describes the consequences of the treatment as a
grantor trust. Pass through certificateholders who are not U.S. Persons should
consult their own tax advisors as to the suitability to them of an investment
in the pass through certificates.
Taxation of
Certificateholders Generally
A U.S. Certificateholder will be treated as owning its
pro rata undivided interest in each of the equipment notes and any other
property held by the related pass through trust. Accordingly, each U.S.
Certificateholders share of interest paid on the equipment notes will be
taxable as ordinary income, as it is paid or accrued, in accordance with such
owners method of accounting for U.S. federal income tax purposes and a U.S.
Certificateholders share of premium, if any, paid on the equipment notes will
be treated as capital gain. Any amounts received by a pass through trust from
drawings under a liquidity facility will be treated for U.S. federal income tax
purposes as having the same characteristics as the payments they replace.
Each U.S.
Certificateholder will be entitled to deduct, consistent with its method of
accounting, its pro rata share of fees and expenses paid or incurred by the
corresponding pass through trust as provided in Section 162 or 212 of the
Code. Certain fees and expenses, including fees paid to the pass through
trustee and the liquidity facility provider, will be borne by parties other
than the pass through certificateholders. It is possible that such fees and
expenses will be treated as constructively received by the pass through trust,
in which event a U.S. Certificateholder will be required to include in income
and will be entitled to deduct its pro rata share of such fees and expenses. If
a U.S. Certificateholder is an individual, estate or trust, the deduction for
such holders share of such fees or expenses will be allowed only to the extent
that all of such holders miscellaneous itemized deductions, including such
holders share of such fees and expenses, exceed 2% of such holders adjusted
gross income. In addition, in the case of U.S. Certificateholders who are
individuals, certain otherwise allowable itemized deductions will be subject
generally to additional limitations on itemized deductions under the applicable
provisions of the Code.
Effect of
Subordination of Subordinated Certificateholders
If any pass through trust with respect to a series or
class which is subordinated with respect to other pass through trusts of the
same series or class (such pass through trusts being the Subordinated Trusts
and the related pass through certificates being the Subordinated Certificates)
receives less than the full
32
amount of the receipts of
principal or interest paid with respect to the equipment notes held by it (any
shortfall in such receipts being the Shortfall Amounts) because of the
subordination of the equipment notes held by that pass through trust under an
intercreditor agreement, the corresponding owners of beneficial interests in
the Subordinated Certificates (the Subordinated Certificateholders) would
probably be treated for federal income tax purposes as if they had (1) received
as distributions their full share of such receipts, (2) paid over to the
relevant preferred class of pass through certificateholders an amount equal to
their share of such Shortfall Amount, and (3) retained the right to
reimbursement of such amounts to the extent of future amounts payable to such
Subordinated Certificateholders with respect to such Shortfall Amount.
Under this
analysis,
·
Subordinated
Certificateholders incurring a Shortfall Amount would be required to include as
current income any interest or other income of the corresponding Subordinated
Trust that was a component of the Shortfall Amount, even though such amount was
in fact paid to the relevant preferred class of pass through
certificateholders,
·
a
loss would only be allowed to the Subordinated Certificateholders when their
right to receive reimbursement of the Shortfall Amount became worthless (i.e.,
when it becomes clear that funds will not be available from any source to
reimburse such loss), and
·
reimbursement
of the Shortfall Amount prior to a claim of worthlessness would not be taxable
income to Subordinated Certificateholders because the reimbursed amount was
previously included in income.
These results should not
significantly affect the inclusion of income for Subordinated
Certificateholders on the accrual method of accounting, but could accelerate
inclusion of income to Subordinated Certificateholders on the cash method of
accounting by, in effect, placing them on the accrual method.
Original Issue
Discount
The equipment notes may be
issued with original issue discount (OID), which may require U.S.
Certificateholders to include the OID in gross income in advance of the receipt
of the stated interest on the equipment notes. The prospectus supplement will
state whether any equipment notes to be held by the related pass through trust
will be issued with OID. Generally, a holder of a debt instrument issued with
original issue discount that is not
de
minimis
must include the original issue discount in income for
federal income tax purposes as it accrues, in advance of the receipt of the
cash attributable to such income, under a method that takes into account the
compounding of interest.
Market Discount
Generally, the term market discount means the excess
of the remaining principal amount of a pass through certificate over the holders
tax basis in that pass through certificate immediately after its acquisition,
subject to a de minimis exception.
A holder who acquires a pass through certificate at a
market discount will be required to treat any gain realized on the disposition
of this pass through certificate, except in certain nonrecognition
transactions, as ordinary income to the extent of the market discount treated
as accrued but not included in income during the period that the holder held
the pass through certificate. Further, a disposition of a pass through
certificate by gift (and in certain other circumstances) could result in the
recognition of market discount income, computed as if the pass through
certificate had been sold for its fair market value.
33
In the case of a partial principal payment on
indebtedness subject to the market discount rules, Section 1276 of the
Code requires that the partial payment be included in gross income as ordinary
income to the extent it does not exceed the market discount that has accrued
during the period the indebtedness was held. The amount of any accrued market
discount later required to be included in income upon a disposition, or
subsequent partial principal payment, will be reduced by the amount of accrued
market discount previously included in income.
Until Treasury regulations are issued, the explanatory
Conference Committee Report to the Tax Reform Act of 1986 (the Conference
Report) indicates that holders of installment obligations, such as the
equipment notes, with market discount may elect to accrue market discount
either
·
on
the basis of a constant interest rate or
·
in
the ratio to the total amount of remaining market discount that the amount of
stated interest paid in the accrual period bears to the total amount of stated
interest remaining to be paid on the installment obligation as of the beginning
of such period.
Under Section 1277 of the Code, if in any taxable
year interest paid or accrued on indebtedness incurred or continued to purchase
or carry indebtedness subject to the market discount rules exceeds the
interest currently includable in income with respect to this indebtedness,
deduction of the excess interest must be deferred to the extent of the market
discount allocable to the taxable year. The deferred portion of any interest
expense will generally be deductible when such market discount is included in
income upon the sale or other disposition (including repayment) of the
indebtedness.
A holder of a pass through certificate acquired at a
market discount may elect under Section 1278 of the Code, in the manner
provided by Revenue Procedure 92-67, 1992-34 I.R.B. 6, to
include such discount in income as it accrues. The current inclusion election
applies to all market discount obligations acquired on or after the first day
to which the election applies, and may not be revoked without the consent of
the IRS. If a holder of a pass through certificate elects to include market
discount in income as it accrues, the foregoing rules of Section 1276
and 1277 of the Code with respect to the recognition of ordinary income on a
sale or other disposition of such pass through certificate and the deferral of
interest deductions on indebtedness related to such pass through certificate
would not apply.
The IRS is authorized to
issue regulations to implement the market discount provisions of the Code. No
regulations have been issued or proposed. It is impossible to anticipate what
effect, if any, regulations could have on the pass through certificateholders.
Amortizable Bond
Premium
A U.S. Certificateholder should generally be
considered to have acquired an interest in an equipment note at a premium to
the extent the purchasers tax basis allocable to its interest exceeds the
remaining principal amount of the equipment note allocable to its interest. In
that event, a U.S. Certificateholder who holds a pass through certificate as a
capital asset may elect to amortize that premium as an offset to interest
income under Section 171 of the Code with corresponding reductions in the
U.S. Certificateholders tax basis in its pass through certificate. In the case
of installment obligations (such as the equipment notes), the Conference Report
indicates a Congressional intent that amortization will be in accordance with
the same rules that will apply to the accrual of market discount on
installment obligations (see discussion above).
Under certain
circumstances, amortizable bond premium may be determined by reference to any
early call date. It is unclear how the amortizable bond premium rules apply
where, as in the case with the equipment notes, the amount of redemption
premium payable on an early call date is unknown. In addition, the treatment of
any unamortized bond premium remaining at the time of an early call is unclear.
34
The U.S.
Certificateholders are urged to consult their own tax advisors as to the
treatment of any amortizable bond premiums.
Sale or Other
Disposition of the Certificates
Upon the sale, exchange or
other disposition of a pass through certificate, a U.S. Certificateholder will
recognize gain or loss equal to the difference between the amount realized on
the disposition (other than any amount attributable to accrued interest which
will be taxable as ordinary income) and the U.S. Certificateholders adjusted
tax basis in the related equipment notes and any other assets held by the
corresponding pass through trust. A U.S. Certificateholders adjusted tax basis
will equal the holders cost for its pass through certificate, plus any accrued
OID or market discount previously included in income or less any amortized bond
premium or any previously recognized losses or prior principal payments. Any
gain or loss generally will be capital gain or loss (other than accrued market
discount not previously included in income) if the pass through certificate was
held as a capital asset.
Trusts Classified
as Partnerships
If a Trust is classified
as a partnership (and not as a publicly traded partnership taxable as a
corporation) for U.S. federal income tax purposes, income or loss with respect
to the assets held by the Trust will be calculated at the Trust level but the
Trust itself will not be subject to U.S. federal income tax. A U.S.
Certificateholder would be required to report its share of the Trusts items of
income and deduction on its tax return for its taxable year within which the
Trusts taxable year (which should be a calendar year) ends as well as income
from its interest in the relevant Deposits. A U.S. Certificateholders basis in
its interest in the Trust would be equal to its purchase price therefor
(including its share of any funds withdrawn from the Depositary and used to
purchase Equipment Notes), plus its share of the Trusts net income, minus its
share of any net losses of the Trust, and minus the amount of any distributions
from the Trust. In the case of an original purchaser of a Certificate that is a
calendar year taxpayer, income or loss generally should be the same as it would
be if the Trust were classified as a grantor trust, except that income or loss
would be reported on an accrual basis even if the U.S. Certificateholder
otherwise uses the cash method of accounting. A subsequent purchaser, however,
generally would be subject to tax on the same basis as an original holder with
respect to its interest in the Trust, and would not be subject to the market
discount rules or the bond premium rules during the duration of the
Trust. Non-U.S. Certificateholders (as defined below) should not be subject to
U.S. withholding tax to the extent provided under Foreign Certificateholders
below and should not be treated as engaged in a U.S. trade or business solely
by reason of a Trust being classified as a partnership.
Foreign
Certificateholders
Subject to the
discussion of backup withholding below, payments of principal and interest
(including OID) on the equipment notes to, or on behalf of, any beneficial
owner of a pass through certificate that is not a U.S. Person (a Non-U.S.
Certificateholder) will not be subject to U.S. federal withholding tax;
provided, in the case of interest, that
·
such
Non-U.S. Certificateholder does not actually or constructively own 10% or more
of the total combined voting power of all classes of the stock of any owner
participant (in the case of leased aircraft equipment notes) or of Northwest
(in the case of owned aircraft equipment notes),
·
such
Non-U.S. Certificateholder is not (i) a bank receiving interest pursuant
to a loan agreement entered into in the ordinary course of its trade or
business or (ii) a controlled foreign corporation for U.S. tax purposes
that is related to an owner participant (in the case of leased aircraft
equipment notes) or of Northwest (in the case of owned aircraft equipment
notes), and
35
·
either
(A) the Non-U.S. Certificateholder certifies on Form W-8BEN,
under penalties of perjury, that it is not a U.S. Person and provides its name
and address or (B) a securities clearing organization, bank or other
financial institution that holds customers securities in the ordinary course
of its trade or business (a financial institution) and holds the Certificate
certifies on Form W-8IMY, under penalties of perjury, that the
beneficial owner is a Non-U.S. Certificateholder and such owner has furnished
to it the applicable certification or other proof of foreign status. Such an
intermediary or a pass-through entity that holds the Certificate may be
required to attach the beneficial owners Form W-8BEN to the Form W-8IMY.
Non-U.S. Certificateholders should consult their own
tax advisors as to the information required to be furnished to such an
intermediary or other pass-through entity.
Any capital gain
realized upon the sale, exchange, retirement or other disposition of a pass
through certificate or upon receipt of premium paid on an equipment note by a
Non-U.S. Certificateholder will not be subject to U.S. federal income or
withholding taxes if
·
such
gain is not effectively connected with a U.S. trade or business of the holder
and
·
in
the case of an individual, the Non-U.S. Certificateholder is not present in the
United States for 183 days or more in the taxable year of the sale,
exchange, retirement or other disposition or receipt.
Any interest or gain
described in the two preceding paragraphs will be subject to U.S. federal
income tax and return filing requirements if it is effectively connected with
the conduct of a U.S. trade or business by a Non-U.S. Certificateholder.
Backup Withholding
In general, information reporting requirements will
apply to certain payments within the United States of principal, interest, OID
and premium on the pass through certificates, and to payments of the proceeds
of certain sales of pass through certificates made to U.S. Certificateholders
other than certain exempt recipients (such as corporations). A backup
withholding tax at a rate of 28% (which rate will be increased after 2010 to
31%) may apply to such payments if the holder fails or has failed to provide an
accurate taxpayer identification number or otherwise establish an exemption or
fails to report in full interest income. With respect to Non-U.S.
Certificateholders, payments made on a pass through certificate and proceeds
from the sale of a pass through certificate owned by a Non-U.S.
Certificateholder will generally not be subject to such information reporting
requirements or backup withholding tax if such Non-U.S. Certificateholder
provides the applicable statement as to its non-U.S. status or otherwise
establishes an exemption.
Backup withholding is not
an additional tax. Any amounts withheld under the backup withholding rules will
be allowed as a refund or credit against the holders U.S. federal income tax
liability, if any, provided the required information is furnished to the IRS.
IRS Form 8886
Disclosure
U.S. Certificateholders
that recognize a loss on a sale or exchange of a pass through certificate for
federal income tax purposes in excess of certain threshold amounts should
consult their tax advisors as to the need to file IRS Form 8886
(disclosing certain potential tax shelters) with their federal income tax
returns.
36
ERISA
CONSIDERATIONS
Unless otherwise indicated
in the applicable prospectus supplement, interests in the pass through
certificates may, subject to certain legal restrictions, be purchased and held
by an employee benefit plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (ERISA)), subject
to Title I of ERISA, a plan subject to Section 4975 of the Code and any
other plan, account or arrangement subject to any federal, state, local,
non-U.S. or other laws or regulations that are similar to any of the provisions
of Title I of ERISA or Section 4975 of the Code (Similar Laws). A
fiduciary of any such plan, account or arrangement must determine that the
purchase and holding of an interest in a pass through certificate is consistent
with its fiduciary duties and will not constitute or result in a non-exempt
prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code, or a violation under any applicable Similar Laws.
PLAN OF
DISTRIBUTION
Northwest may sell
the offered securities in one or more of the following ways from time to time:
·
by
or through underwriters,
·
by
itself directly to investors or other persons,
·
through
dealers or agents or
·
through
a combination of any of these methods of sale.
The offered
securities may be sold
·
at
a fixed price or prices, which may be changed,
·
from
time to time at market prices prevailing at the time of sale,
·
at
prices related to those market prices, or
·
at
negotiated prices.
The prospectus
supplement relating to an offering of offered securities will set forth the
terms of that offering, including:
·
the
name or names of any underwriters, dealers or agents involved in the offer and
sale of the offered securities,
·
any
underwriting compensation paid by Northwest to underwriters, dealers or agents
in connection with the offering and any discounts, concessions or commissions
allowed by underwriters to participating dealers,
·
the
purchase price of the offered securities and the proceeds to Northwest from the
sale,
·
any
delayed delivery arrangements,
·
the
initial public offering price, and
·
any
securities exchanges on which the offered securities may be listed.
Dealer trading may take place in certain of the
offered securities, including offered securities not listed on any securities
exchange. Any initial public offering price and any discounts or commissions
allowed or reallowed or paid to dealers may change.
In connection with the sale of offered securities,
underwriters may be deemed to have received compensation from Northwest in the
form of underwriting discounts or commissions and may also receive
37
commissions from
purchasers of offered securities for whom they may act as agent. Underwriters
may sell offered securities to or through dealers, and those dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions, which may be changed from time to time,
from the purchasers for whom they may act as agent.
If Northwest directly uses a dealer in the sale of
offered securities, Northwest will sell the offered securities to the dealer,
as principal. The dealer may then resell the offered securities to the public
at varying prices to be determined by the dealer at the time of resale. The
applicable prospectus supplement will set forth the terms of any of those
sales.
Northwest may offer and sell offered securities
through agents designated by Northwest from time to time. The applicable
prospectus supplement will set forth any commissions payable by Northwest to
the agent. Unless the applicable prospectus indicates otherwise, the agent will
be acting on a best efforts basis for the period of its appointment.
Northwest may directly solicit offers to purchase
offered securities and sell them directly to institutional investors or others
who may be deemed to be underwriters within the meaning of the Securities Act
of 1933 with respect to any resale of the offered securities. The applicable
prospectus supplement will describe the terms of any of those sales.
Except as set forth in the applicable prospectus
supplement, no director, officer or employee of Northwest or NWA Corp. will
solicit or receive a commission in connection with direct sales by Northwest of
the offered securities, although these persons may respond to inquiries by
potential purchasers and perform ministerial and clerical work in connection
with any of these direct sales.
Underwriters, dealers and agents participating in the
distribution of the Offered Securities may be deemed to be underwriters, and
any discounts and commissions received by them and any profit realized by them
on resale of the Offered Securities may be deemed to be underwriting discounts
and commissions under the Securities Act of 1933. Underwriters, dealers and
agents may be entitled, under agreements with Northwest and NWA Corp., to
indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act of 1933 as a result of material
misstatements and omissions. Underwriters, dealers and agents may also be
entitled to reimbursement by Northwest and NWA Corp. for certain expenses.
Underwriters, dealers and agents may engage in transactions with, or perform
services for, NWA Corp., Northwest and NWA Corp.s other subsidiaries in the
ordinary course of business.
If the applicable prospectus supplement so indicates,
we will authorize agents, underwriters or dealers to solicit offers from
institutions to purchase securities from us at the public offering price
indicated in the prospectus supplement through delayed delivery contracts
providing for payment and delivery on a specified date in the future. The
prospectus supplement will specify the conditions of these contracts and the
commission payable for solicitation of the contracts.
If Northwest uses an underwriter or underwriters in
the sale of any offered securities, the applicable prospectus supplement will
contain a statement as to the underwriters intention, if any, at the date of
the prospectus supplement to make a market in the offered securities. No
assurances can be given that there will be a market for the offered securities.
The applicable prospectus
supplement will set forth the place and time of delivery for the offered
securities. Northwest will issue the debt securities that are issuable upon
exercise of warrants upon payment of the exercise price and otherwise in
accordance with the relevant terms applicable to the warrants as described in
the applicable prospectus supplement.
38
LEGAL OPINIONS
Unless the applicable
prospectus supplement indicates otherwise, the validity of the pass through
certificates and NWA Corp.s guarantee will be passed upon for Northwest and
NWA Corp. by Simpson Thacher & Bartlett, New York, New York. In
rendering that opinion, Simpson Thacher & Bartlett will be relying as
to matters of Minnesota law on an opinion from the Vice President, Law and
Secretary of NWA Corp. and Northwest. Unless the applicable prospectus supplement
indicates otherwise, Simpson Thacher & Bartlett will rely on the
opinion of counsel for the pass through trustee as to certain matters relating
to the authorization, execution and delivery of such pass through certificates
by, and the valid and binding effect thereof on, such pass through trustee.
Certain federal income tax matters will be passed upon by Cadwalader,
Wickersham & Taft LLP, New York, New York, special tax counsel to
Northwest.
EXPERTS
Ernst & Young LLP, independent auditors, have
audited the consolidated financial statements and schedule of NWA Corp., as set
forth in their report, which is included in NWA Corp.s Annual Report on Form 10-K
for the year ended December 31, 2002 and incorporated by reference in this
prospectus. Such consolidated financial statements and schedule are
incorporated by reference in this prospectus in reliance on Ernst &
Young LLPs report, given on their authority as experts in accounting and
auditing.
39
Northwest Airline (NYSE:NWA)
Historical Stock Chart
From Jun 2024 to Jul 2024
Northwest Airline (NYSE:NWA)
Historical Stock Chart
From Jul 2023 to Jul 2024